TRANSPORTATION AND MARITIME LAW
A public utility is a business or service engaged in regularly supplying the public with some
General Considerations
Public Utilities
Article XII, 1987 Constitution
Art. XII, Section 11. No franchise, certificate or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at least 60% of
whose capital is owned by such citizens, nor shall such franchise, certificate or
authorization be exclusive in character or for a longer period than fifty years. Neither
shall any franchise or right be granted except under the condition that it shall be subject
to amendment, alteration or repeal by the Congress when the common good so requires.
The State shall encourage equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public utility enterprise
shall be limited to their proportionate share in its capital, and all the executive and
managing officers of such corporation or association must be citizens of the Philippines.
Section 17. In times of national emergency, when the public interest so requires, the State
may, during the emergency and under reasonable terms prescribed by it, temporarily take
over or direct the operation of any privately owned public utility or business affected with
public interest.
Section 18. The State may, in the interest of national welfare or defense, establish and
operate vital industries and, upon payment of just compensation, transfer to public
ownership utilities and other private enterprises to be operated by the Government.
Section 19. The State shall regulate or prohibit monopolies when the public interest so
requires. No combinations in restraint of trade or unfair competition shall be allowed.
(a) What is a public utility?
commodity or service of public consequence such as electricity, gas, water, transportation,
telephone or telegraph service. Apart from statutes which define the public utilities that are within
the purview of 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 term public utility implies a
public use and service to the public. (Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)
(b) What is a public service?
The Public Service Act (CA No. 146 as amended) provides that the term public service
"includes every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether permanent,
occasional or accidental, and done for general business purposes, any common carrier, railroad,
street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both
with or without fixed route and whatever may be its classification, freight or carrier service or any
class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged
in the transportation of passengers and freight or both, shipyard, marine repairshop,
[warehouse], wharf or dock, ice plant, ice refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and power, petroleum, sewerage system, wire or
wireless communications system, wire or wireless broadcasting stations and other similar public
services..." [Sec. 13(b)] (Albano vs Reyes)
Albano vs Reyes 175 SCRA 264
F: On 20 April 1987, the Phil. Ports Authority (PPA) adopted a resolution directing mgmt. to
prepare the Invitation to Bid and all relevant bidding documents necessary for the public bidding
of the development, mgmt., and operation of the Manila Intl. Container Terminal (MICT) and
authorized the Board Chairman Secretary Reyes to oversee and implement the project.
Secretary Reyes created a 7-man MICT Bidding Committee to evaluate all bids and recommend
to the Board the best bid. The PPA published the Invitation to Bid with the reservation that it had
the right to reject any bid and to accept such bid it may deem advantageous to the govt.
Seven companies submitted bids. The Committee recommended that the contract be awarded
to Intl. Container Terminal Services (ICTSI) on the ground that it offered the best technical and
financial proposal. Secretary Reyes awarded the contract to ICTSI. Before the contract could be
signed, two cases were filed questioning the legality or regularity of the bidding. The first was a
special action for prohibition with prelim injunction filed by Alo, a concerned taxpayer. The
second was a civil case for prohibition with prayer for TRO filed by Sharp Co. which actively
participated in the bidding.
The President approved the proposed MICT contract. The PPA and ICTFSI perfected the
contract. Rodolfo Albano, a member of the House of Representatives filed the present case
assailing the award of the contract on the ground that since the MICT is a public utility, it needs a
legislative franchise before it can legally operate as a public utility.
Issue : WON a legislative franchise is necessary.
Held : NO. Petition dismissed.
A franchise specially granted by Congress is not necessary for the operation of the MICT by a
private entity. A contract entered into by the PPA and such entity is substantial compliance with
the law. 1. Executive Order No. 30 authorized the PPA to take over, manage and operate the
MICT in accordance with PD 857 (Revised Charter of the PPA). PD 857 expressly empowers the
PPA to provide services within Port Districts "whether on its own, by contract or otherwise."
Therefore, under EO 30 and PD 857, the PPA may contract with ICTSI for the mgmt., operation
and devt. of the MICT.
Even if the MICT be considered a public utility or a public service on the theory that it is a wharf
or a dock as contemplated by the Public Service Act, its operation would not necessarily call for
a legislative franchise. Legislative franchises are not required before each and every public utility
may operate. The law has granted certain administrative agencies the power to grant licenses
for or to authorize the operation of certain public utilities.
That the Consti provides that the issuance of a franchise for the operation of a public utility shall
be subject to amendment, alteration or repeal by Congress does not necessarily imply that only
Congress has the power to grant such authorization. There are several laws granting specified
agencies in the Executive Dept. the power to issue such authorization for certain classes of
public utilities. [ 1. LTFRB wrt Certificates of Public Convenience authorizing the operation of
public land transportation services provided by motorized vehicles; 2. ERB wrt operation of
electric power utilities and services except electric coops]
Reading EO 30 and PD 857 together, the PPA has been empowered to undertake by itself or to
authorize the operation and mgmt. of the MICT by another by contract. The latter power having
been delegated to the PPA, a legislative franchise is no longer necessary. In this case, the PPA's
contracting with ICTSI is wholly within its jurisdiction and powers.
The award of the contract to ICTSI is all the authorization that is necessary. The award made by
the PPA and the President enjoys the presumption of validity and regularity of official action.
There is no evidence to the contrary.
Albano has standing to assail the contract. While the expenditure of public funds may not be
involved under the contract, public interest is definitely involved considering the important role of
the MICP in the economic devt. of the country and the magnitude of the amount involved. He
has sufficient standing since a public right (disclosure provision) is sought to be enforced.
There in no conflict among the 3 branches of govt. The Executive Dept. has not contravened an
act of Congress. There is no usurpation of powers of another branch.
TRANSPORTATION AND MARITIME LAW
the transportation of
passengers and freight
or both, shipyard,
6. The determination of
marine repairshop,
the winning bid should be
[warehouse], wharf or
left to the sound
dock, ice plant, ice
judgment of the PPA. It is
refrigeration plant,
in the best position to
canal, irrigation
evaluate the bids. It has
system, gas, electric
the technical expertise
light, heat and power,
which neither the Court
water supply and
nor Congress has. No
power, petroleum,
abuse of discretion has
sewerage system, wire
been shown.
or wireless
communications
system, wire or
wireless broadcasting
2. CA 146, as amended, stations and other
Sec 13 (b) similar public services:
Provided, however, that
a person engaged in
agriculture, not
The term public service otherwise a public
includes every person service, who owns a
that now or hereafter motor vehicle and uses
may operate, manage, it personally and/or
or control in the enters into a special
Philippines, for hire or contract whereby said
compensation, with motor vehicle is offered
general or limited for hire or
clientele, whether compensation to a third
permanent, occasional party or third parties
or accidental, and done engaged in agriculture,
for general business not itself or themselves
purposes, any common a public service, for
carrier, railroad, street operation by the latter
railway, traction for a limited time and
railway, sub-way motor for a specific purpose
vehicle, either for directly connected with
freight or passenger, or the cultivation of his or
both with or without their farm, the
fixed route and transportation,
whatever may be its processing, and
classification, freight or marketing of
carrier service or any agricultural products of
class, express service, such third party or third
steamboat, or parties shall not be
steamship line, considered as
pontines, ferries, and operating a public
water craft, engaged in
service for the owned public services,
purposes of this Act. but certificates of
public convenience or
certificates of public
convenience and
B. Transportation necessity shall not be
required of such
entities or
corporations: And
provided, further, That
1. Definition - A contract it shall have no
of transportation is one authority to require
whereby a certain person steamboats,
or association of persons motorships and
obligate themselves to steamship lines,
transport persons, things, whether privately
news from one place to owned or owned or
another for a fixed price. operated by any govt.
It is the removal of goods controlled corporation
or persons from one or instrumentality to
place to another. obtain certificates of
public convenience or
to prescribe their
definite routes or lines
Public Nature of service.

Public Service Act (b) The term public

service includes every
person that now or
hereafter may operate,
manage, or control in
Section 13 (a) The
the Philippines, for hire
Commission (PSC)
or compensation, with
shall have jurisdiction,
general or limited
supervision, and
clientele, whether
control over all public
permanent, occasional
services and their
or accidental, and done
franchises, eqpt., and
for general business
other properties, and in
purposes, any common
the exercise of its
carrier, railroad, street
authority, it shall have
railway, traction
the necessary powers
railway, sub-way motor
and the aid of the
vehicle, either for
public force: Provided,
freight or passenger, or
That public services
both with or without
owned or operated by
fixed route and
govt. entities or GOOCs
shall be regulated by
the Commission in the
same way as privately
whatever may be its agricultural products of
classification, freight or such third party or third
carrier service or any parties shall not be
class, express service, considered as
steamboat, or operating a public
steamship line, service for the
pontines, ferries, and purposes of this Act.
water craft, engaged in
the transportation of
passengers and freight
or both, shipyard, (c) The word "person"
marine repairshop, includes every
warehouse, wharf or individual, co-
dock, ice plant, ice partnership, joint stock
refrigeration plant, co. or corporation,
canal, irrigation whether domestic or
system, gas, electric foreign, their lessees,
light, heat and power, trustees, or receivers,
water supply and as well as any
power, petroleum, municipality, province,
sewerage system, wire city, GOOC, or agency
or wireless of the govt. of the
communications Philippines, and
system, wire or whatever other person
wireless broadcasting or entities that may
stations and other own or possess or
similar public services: operate public
Provided, however, that services.
a person engaged in
agriculture, not
otherwise a public
service, who owns a
motor vehicle and uses Section 14. The ff. are
it personally and/or exempted from the
enters into a special provisions of the
contract whereby said preceding section :
motor vehicle is offered
for hire or
compensation to a third
party or third parties Warehouses;
engaged in agriculture,
not itself or themselves Vehicles drawn by
a public service, for animals and bancas
operation by the latter moved by oar or sail,
for a limited time and and tugboats
for a specific purpose
directly connected with and lighters;
the cultivation of his or
their farm, the Airships within the
transportation, Philippines except as
processing, and regards the fixing of
marketing of
their maximum rates on paragraph that the
freight and passengers; service can be acquired
by the Republic of the
Philippines or any
instrumentality thereof
Radio companies upon payment of the
except with respect to cost price of its useful
the fixing of rates; eqpt., less reasonable
depn.; and likewise,
Public services owned that the certificate shall
or operated by any be valid only for a
instrumentality of the definite period of time;
Natl. Govt. or by any and that the violation of
GOOC, except with any of these conditions
respect to the fixing of shall produce the
rates. immediate cancellation
of the certificate
without the necessity
of any express action
on the part of the
Section 15. With the Commission.
exception of those
enumerated in the
preceding section, no
public service shall
operate in the In estimating the depn.,
Philippines without the effect of the use of
possessing a valid and the eqpt., its actual
subsisting certificate condition, the age of
from the PSC known as the model, or other
the certificate of public circumstances
convenience, or affecting its value in
certificate of public the market shall be
convenience and taken into
necessity as the case consideration.
may be, to the effect
that the operation of
said service and the
authorization to do The foregoing is
business will promote likewise applicable to
the public interests in a any extension or
proper and suitable amendment of
manner. certificates actually in
force and to those
which may hereafter be
issued, to permit to
The Commission may modify itineraries and
prescribe as a time schedules of
condition for the public services, and to
issuance of the authorizations to renew
certificate provided in and increase eqpt. and
the preceding properties.
 notice and hearing in
accordance with the
rules and provisions of
Section 16.
this Act, subject to the
Proceedings of the
limitations and
Commission, upon
exceptions mentioned
notice and hearing. The
and saving provisions
Commission shall have
to the contrary.
power, upon proper

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TRANSPORTATION AND MARITIME LAW
political subdivision of
the Philippines when, in
the judgment of the
To issue certificates ...
Commission, such
authorizing the
franchise or privilege will
operation of public
properly conserve the
services within the
public interests xxx
Philippines, whenever
the Commission finds
that the operation of
the public service
proposed and the To fix and determine
authorization to do individual or joint rates,
business will promote tolls, charges,
the public interest in a classifications, or
proper and suitable schedules thereof, as
manner. Provided, well as commutation,
that certificates will mileage, kilometrage,
be granted only to and other special rates
citizens of the which shall be imposed,
Philippines or of the observed and followed
US or to corps., co- thereafter by any public
partnerships, service ; Provided,
associations or joint further that in case the
stock companies public service equipment
constituted and of an operator is used
organized under the principally or
laws of the secondarily for the
Philippines; Provided, promotion of a private
that 60% of the stock business, the net profits
or paid-up capital ... of said business shall be
must belong entirely considered in relation
to citizens of the with the public service of
Philippines or of the such operator for the
US; Provided, further, purpose of fixing the
that no such rates.
certificate shall be
issued for a period of
more than 50 years.
To fix just and
reasonable standards,
classifications,
To approve, subject to regulations, practices,
constitutional measurements, or
limitations any service to be furnished,
franchise, privilege imposed, observed, and
granted under the followed thereafter by
provisions of Act No. any public service.
667, as amended by
Act. No. 1022, by any
To ascertain and fix reasonable extension of
adequate and its existing facilities,
serviceable standards where, in the judgment
for the measurement of said commission,
of quantity, quality, such extension is
pressure, initial reasonable and
voltage, or other practicable, and will
condition pertaining furnish sufficient
to the supply of the business to justify the
product or service construction and
rendered by any maintenance of the
public service, and to same, and when the
prescribe reasonable financial condition of the
regulations for the said public service
examination and test reasonably warrants the
of such product or original expenditure
service and for the required in making and
measurement thereof. operating such
extension.

To establish
reasonable rules, To direct any railroad,
regulations, street, railway or traction
instructions, co. to establish and
specifications, and maintain at any junction
standards, to secure or point of connection or
the accuracy of all intersection with any
meters and other line of said road or
appliances for track, or with any other
measurements. line of any other railroad,
street, railway or traction
co., such just and
reasonable connection
To compel any public as shall be necessary to
service to furnish promote the
safe, adequate, and convenience of shippers
proper service as of property, or of
regards the manner of passengers, and in like
furnishing the same manner to direct any
as well as the railroad, street railway or
maintenance of the traction co. engaged in
necessary material carrying merchandise, to
and eqpt. construct, maintain and
operate, upon
reasonable terms, a
switch connection with
any private sidetrack
To require any public which may be
service to establish, constructed by any
construct, maintain shipper to connect with
and operate any the railroad, street
railway or traction
company line where,
in the judgment of the
To fix and determine the
commission, such
proper and adequate
connection is
rates of depn. of the
reasonable
property of any public
service which will be
observed in proper and
adequate depn. account
and practicable, and to be carried for the
can be put in with protection of
safety, and will stockholders, or
furnish sufficient bondholders or
business to justify the creditors, in accordance
construction and with such rules,
maintenance of the regulations, and forms of
same. account as the
commission may
prescribe. Said rates
shall be sufficient to
To authorize, in its provide the amounts
discretion, any required over and above
railroad, street railway the expenses of
of traction company maintenance to keep
to lay its tracks such property in a state
across tracks of any of efficiency
other railroad, street corresponding to the
railway or traction progress of the industry.
company, or across Each public service shall
any public highway. conform its depreciation
accounts to the rates so
To direct any railroad determined and fixed,
or street railway co. to and shall set aside the
install such safety money so provided for
devices or to adopt out of its earnings and
such other carry the same in a
reasonable measures depreciation fund. The
as may in the income from such
judgment of the investments of money in
commission be such fund shall likewise
necessary for the be carried in such fund.
protection of the This fund shall not be
public at passing expended otherwise than
grade crossings of (1) for depreciation,
public highways and improvements,
railroads, (2) public extensions, new
highways and street constructions or
railways, or (3) additions to the property
railroads and street of such public service.
railways.
To amend, modify or To fix, determine, and
revoke at any time regulate, as the
any certificate under convenience of the state
the provisions of this may require, a special
act, whenever the type for auto buses,
facts and trucks and motor trucks,
circumstances on the to be hereafter
strength of which said constructed, purchased,
certificate was issued and operated by
have been operators after the
misrepresented or approval of this act; to
materially changed. fix and determine a
special registration fee
for auto-buses, trucks
and motor trucks so
To suspend or revoke constructed, purchased,
any certificate issued and operated: Provided,
under the provisions that said fees shall be
of this act whenever smaller than those
the holder thereof has charged for auto- buses,
violated or willfully trucks, and motor trucks
and consumatedly of types not made
refused to comply regulation under this
with any order, rule or subsection.
regulation of the
commission or any
provisions of this act:
Provided, that the Section 17. Proceedings
commission for good of commission without
cause, may prior to previous hearing:
the hearing suspend
for a period not
exceeding 30 days
any certificate or the (a) To investigate, upon
exercise of any right its own initiative, or upon
or authority issued or complaint in writing, any
granted under this act matter concerning any
by order of the public service as regards
commission, matters under its
whenever such step jurisdiction; to require
shall in the judgment any public service to
of the commission be furnish safe, adequate
necessary to avoid and proper service as
serious and the public interest may
irreparable damage or require and warrant; to
inconvenience to the enforce compliance with
public or to private any standard xxx and to
interests. prohibit or prevent any
public service from
operating without first
securing a certificate of
public convenience or issuance of the proper
public necessity and certificate xxx under the
convenience xxx and penalty, in the discretion
require existing of the commission, of
public services to pay the revocation and
the fees provided for cancellation of any
in this act for the acquired right.

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TRANSPORTATION AND MARITIME LAW
consumer who may
apply for such
examination, and in
case of defect, to
refund the fees paid
To require payment of
actual expenses
incurred in any
investigation if a
To permit any street
violation shall be
railway or traction
found; to assess costs
company to change its
not to exceed 25% with
existing gauge to
reference to such
standard steam railroad
investigation
gauge

To appraise and value

To grant any public
the property of any
service special permits
public service; in
to make extra or
relation thereto, to have
special trips within the
access to and use any
territory covered by its
books, documents or
certificate and to make
records in the
special excursions
possession of any
outside if the public
govt. dept., bureau,
interest or special
office, or political
circumstances so
subdivision
require; Provided
where the public
service cannot render
such extra service on
To provide, on motion its own line or in its
by or at the request of own territory, a special
any consumer, for the permit for such extra
examination and test of service may be granted
any appliance used for to any other public
the measuring of any service
product or service of a
public service, to enter
any premises where
said appliances may
To require any public
be, and other premises
service to keep its
of the public service,
books, records, and
for the purpose of
accounts; to adopt a
setting up and using on
uniform system of
said premises any
accounting as
apparatus necessary
approved by the
therefor, and to fix fees
auditor general
to be paid by the
 complete schedule of
every classification,
individual or joint rate,
To require any public
toll, fare or charge, and
service to furnish
in case of public
annual reports of
carriers, a complete
finances and
statement of itineraries
operations, covering
or routes
the 12 month period
ending December 31

o Section 18 - It shall
be unlawful for any
To require every public
individual, co-
service to file with the
partnership,
commission a written,
association,
verified statement
corporation or joint-
made by the owner,
stock company, their
president or secretary
lessees, trustees or
setting forth the
receivers xxx to engage
officers, authority,
in any public service
power and duties of
business without
every officer, as to
having first secured
disclose the source
from the commission a
and origin of each
certificate, except
administrative act or
grantees of legislative
rule
franchises expressly
exempting such
grantee from the reqts
of securing a certificate
To require any public from the commission,
service to comply with as well as those
the laws of the expressly exempted
Philippines and with from the jurisdiction of
any local resolution or the commission
ordinance or its charter

Section 19. Unlawful

To investigate acts - It shall be
accidents directly or unlawful for any public
indirectly arising from service :
or connected with the
maintenance or
operation of the public
service
(a) To provide or
maintain any service
that is unsafe, improper
or inadequate ,or
To require every public withhold or refuse any
service to file a service which can
reasonably be commission to be
demanded and unjust, unreasonable,
furnished, as unduly preferential, or
unjustly discriminatory,
in a final order which
shall be conclusive and
found and determined shall take effect in
by the commission in a accordance with the
final order which shall provisions of this act,
be conclusive and shall upon appeal or
take effect in otherwise.
accordance with this
act, upon appeal or
otherwise.
To refuse or neglect,
when requested by the
director of posts or his
To make or give, authorized
directly or indirectly, by representative to carry
itself or through its public mail on the
agents, attorneys or regular trips of any
brokers, or any of public land
them, discounts or transportation service
rebates on authorized maintained or operated
rates, or grant credit for by any such public
the payment of freight service, upon such
charges, or any undue terms and conditions
or unreasonable and for a consideration
preference or in such amount as may
advantage to any be agreed upon
person or corporation between the Director of
or to any locality or to Posts and the public
any particular person service carrier or fixed
or corporation or by the commission in
locality or any the absence of an
particular description agreement between the
of traffic or service, or Director of Posts and
subject any particular the carrier. In case the
person or corporation Director of Posts and
or locality or any the public service
particular description carrier are unable to
of traffic to any agree on the amount of
prejudice or the compensation to be
disadvantage in any paid for the carriage of
respect whatsoever; to the mail, the Director of
adopt, maintain, or Posts shall forthwith
enforce any regulation, request the
practice or commission to fix a
measurement which just and reasonable
shall be found or compensation for such
determined by the carriage and the same
shall be promptly fixed
by the commission in just an reasonable shall
accordance with be upon the public
section 16 of this act. service proposing the
same.

Section 20. Acts

requiring the approval To establish, construct,
of the Commission - maintain or operate
Subject to established new units or extend
limitations and existing facilities or
exceptions and saving make any other
provisions to the addition to or general
contrary, it shall be extension of the
unlawful for any public service.
service or for the
owner, lessee or
operator thereof,
without the approval (e) Hereafter to issue
and authorization of the any stock or stock
Commission previously certificates
had - representing an
increase of capital; or
issue any share of
stock without par
To adopt, establish, fix, value; or issue any
impose, maintain, bonds or other
collect or carry into evidence of
effect any individual or indebtedness payable
joint rates, in more than one year
commutation, mileage from the issuance
or other special rate, thereof, provided that it
toll, fare, charge, shall be the duty of the
classification or Commission, after
itinerary. The hearing, to approve any
Commission shall such issue maturing in
approve only those that more than one year
are just and reasonable from the date thereof,
and not nay that are when satisfied that the
unjustly discriminatory same is to be made in
or unduly preferential, accordance with law,
only upon reasonable and the purpose of
notice to the public such issue be
services and other approved by the
parties concerned, Commission.
giving them a
reasonable opportunity
to be heard and the
burden of the proof to (g) To sell, alienate,
show that the proposed mortgage, encumber or
rates or regulations are lease its property,
franchises, certificates, those of any public
privileges or rights or service. The approval
any part thereof; or herein required shall be
merge or consolidate given, after notice to
its property, franchises, the public and after
privileges or rights, or hearing, if it be
any part thereof, with

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TRANSPORTATION AND MARITIME LAW
violation of this
provision shall be void
and of no effect and
shown that there are
shall not be registered
just and reasonable
in the books of the
grounds for making the
public service
mortgage or
corporation. Nothing
encumbrance, for
herein contained shall
liabilities of more than
be construed to
one year maturity, or
prevent the holding of
the sale, alienation,
shares lawfully
lease , merger or
acquired.
consolidation to be
approved, and that the
same are not
detrimental to the
public interest, and in To sell, alienate or in
case of a sale, the date any manner transfer
on which the same is to shares of its capital
be consummated shall stock to any alien if the
be fixed in the order of result of that sale,
approval: Provided, alienation, or transfer
however, that nothing in itself or in
herein contained shall connection with
be construed to another previous sale
prevent the transaction shall be the reduction
from being negotiated to less than 60% of the
or completed before its capital stock belonging
approval or to prevent to Philippine citizens.
the sale, alienation, or Such sale, alienation or
lease by any public transfer shall be void
service of any of its and of no effect and
property in the ordinary shall be sufficient
course of its business. cause for ordering the
cancellation of the
certificate.

To sell or register in its

books the transfer or
sale of shares of its (b) The Certificate of
capital stock, if the Public Convenience
result of that sale in (CPC), the Certificate of
itself or in connection Public Convenience and
with another previous Necessity (CPCN), and
sale, shall be to vest in the Prior Operator Rule
the transferee more
than 40% of the
subscribed capital of
said public service. Any Difference between CPC
transfer made in and CPCN : A CPCN is
issued by the PSC to a
public service to which
any political subdivision
has granted a franchise
under Act 667 after the
PSC has approved the
same under Section
16(b). A CPC is any
authorization to operate a
public service issued by
the PSC. A CPC is an
authorization issued by
the Commission for the
operation of public
services for which no
franchise, either
municipal or legislative, is
required by law (e.g.
auto-trucks and motor
vehicles). A CPCN is an
authorization issued by
the PSC for the operation
of public services for
which a franchise is
required by law (e.g.
electric, telephone
services).
Nature of certificate : It
constitutes neither a
franchise nor a contract,
confers no property rights
and is a mere license or
privilege, and such
privilege is forfeited when
the grantee fails to
comply with his
commitments behind
which lies the paramount
interest of the public, for
public necessity cannot
be made to wait, nor
sacrificed for private
convenience.
However, certificates
represent property rights
to the extent that if the
rights which any public
utility is exercising
pursuant to lawful orders
of the PSC has been
invaded by another
public utility, in
appropriate cases
actions may be
maintained by the
complainant public utility.
Owners of public utilities
have the right to maintain
appropriate actions
against other public
utilities not authorized to
operate in competition
with the complainant.
Certificates are
considered as property
as used in Civil
Procedure as they have
material value and are
material assets. They are
subject to attachment
and seizure by legal
process, and may be
acquired by purchase.
Determination of WON
an issuance of a
certificate is for public
convenience - (1)
financial responsibility of
the applicant, (2)
reliability of the applicant,
(3) priority of filing the
application for a
certificate, and (4) priority
of operation
Prior operator rule - to
carry out the purpose
and intent for which the
PSC was created the law
contemplates that the
first licensee will be
protected in his
investment and will not
be subjected to a ruinous
competition. It is not
therefore the policy of the
law for the PSC to issue
a CPC to a second
operator to cover the
same field and in
competition with a first
operator who is rendering
sufficient, adequate and
satisfactory service, and
who in all things and
respects is complying
with the rules and
regulations of the PSC.
Accordingly, a CPC or
CPCN ought not to be
granted where there is no
complaint as to existing
rates and the co. in the
field is rendering
adequate services.
regular operators are
preferred over irregular
operators
prior operator is given
opportunity to improve
service
prior operator given
opportunity to extend
lines
basis of rule : to prevent
ruinous and wasteful
competition in order that
the interests of the public
would be conserved and
preserved; so long as the
operator complied with
the terms and conditions
of the license and the
reasonable demands of
the public, it is the duty of
the PSC to protect rather
than to destroy its
investment
Raymundo vs Luneta
Motor 58 Phil 889
F: Nicanor de Guzman
signing as Guzco Transit
purchased trucks from
Luneta Motor and
executed PNs
guaranteed by a chattel
mortgage on several
trucks. Failing to pay the
PNs, a suit for collection
was filed. A writ of
attachment was issued
and garnishment was
served on the PSC
attaching the right, title,
and participation of
Guzco Transit in the CPC
covering the bus
transportation lines
between Manila and
Rizal. The CFI ordered
the selling of these
certificates in a public
bidding in which Luneta
Motor was the highest
bidder.
Nine days after the
certificates were
attached, these were
sold to Raymundo
(including certificate No.
25951 which was not
included in the sale to
Luneta Motor Co.). The
approval of the sale was
sought from the PSC.
The PSC approved the
sale in the public bidding
and disapproved the sale
to Raymundo except with
respect to Certificate No.
25951 which Raymundo
could apply for its
approval.
Issue : Which of the two
sales should prevail?
public auction by virtue of
an attachment vs
voluntary sale
Held : Sale to Luneta
Motor Co. in a public
auction
The Public Service Law
authorizes certificates of
public convenience to be
secured by public service
operators from the PSC.
A CPC grants a right in
the nature of a limited
franchise. The Code of
Civil Procedure does not
exclude franchises or
certificates from the word
"property." The test by
which to determine WON
a property can be
attached and sold upon
execution is whether the
judgment debtor has
such a beneficial interest
therein that he can sell or
otherwise dispose of it for
value. The Public Service
Law permits the PSC to
approve the sale,
alienation, mortgaging,
encumbering or leasing
of property, franchises,
privileges, or rights or
any part thereof. If the
holder of a certificate can
voluntary sell it, there is
no reason why the same
cannot be sold
involuntarily pursuant to
court process.
CPCs have considerable
material value. They are
valuable assets. They
are subject to being sold
for consideration as
much as any other
property. They are even
more valuable than
ordinary properties,
taking into consideration
that they are not granted
to every one who applies
for them but only to those
who undertake to furnish
satisfactory and
convenient service to the
public. Though
intangible, they are of
value and are considered
properties which can be
seized through legal
process.
Batangas Transportation
Co. vs Orlanes 52 Phil
455
F: Orlanes sought to
have a CPC to operate a
line of auto trucks with
fixed times of departure
between Taal and
Bantilan, with the right to
receive passengers and
freight from intermediate
points. The evidence is
conclusive that at the
time of his application,
Orlanes was an irregular
operator between
Bantilan and Taal, and
that BTC was a regular passengers or freight at
operator between any of the points served
Batangas and Rosario. by the BTC which holds a
Orlanes sought to have prior license from the
his irregular operation PSC. His petition is
changed into a regular based on the fact that to
operation, and to set comply with the growing
aside and nullify the demands of the public,
prohibition against him in the BTC applied for a
his CPC that he shall not permit to increase the no.
have or receive any of trip hours at and

5
TRANSPORTATION AND MARITIME LAW
between the same places
and for an order that all
irregular operators be
prohibited from operating
unless they should
observe an interval of 2
hours before or one hour
after the regular hours of
the BTC. The PSC
granted the petition of
Orlanes.
Issue : WON a CPC
should be issued to a
second operator in a field
where, and in
competition with, a first
operator who is already
operating a sufficient,
adequate and
satisfactory service.
Held : NO. Decision of
PSC is revoked.
An autobus line is a
public utility, and as such,
is a common carrier and
an impt. factor in the
business affairs of the
community.
The PSC has the power
to specify and define the
terms and conditions
upon which any public
utility shall operate and to
make reasonable rules
and regulations for its
operation, and to fix the
compensation that it shall
receive for its service to
the public, and for good
cause may suspend or
even revoke a license
granted.
It is not the policy of the
law for the PSC to issue
a CPC to a second
operator to cover the
same field and in
competition with a first
operator who is rendering
sufficient, adequate and
satisfactory service, and
who in all things and
respects is complying
with the rules and
regulations of the PSC.
The power of the PSC to
issue a CPC is founded
on the condition
precedent that after a full
hearing and
investigation, it shall find
as a fact that the
proposed operation is for
the convenience of the
public.
So long as the first
operator keeps and
performs his terms and
conditions of its license
and complies with the
reasonable demands of
the public, it has more or
less of a vested and
preferential right over
another who seeks to natural monopolies, is at
acquire a later license to once the reason that the
operate over the same regulation of an existing
route. system of transportation,
which is properly serving
a given field, or may be
required to do so, is to be
To carry out the purpose preferred to competition
and intent for which the among several
PSC was created, the independent systems.
law contemplates that the While requiring a proper
first license will be service from a single
protected in his system for a territory in
investment and will not consideration for
be subjected to ruinous protecting it as a
competition. monopoly for all the
service required and in
conserving its resources,
no economic waste
results and service may
The primary purpose of be furnished at a
the PSC is to secure minimum cost.
adequate, sustained
service for the public at
the least possible cost
and to protect and
conserve investments Carmelo vs Monserrat 55
which have already been Phil 644
made for that purpose. A
CPCN for the operation
of an auto truck line in
occupied territory should F: Monserrat twice
not be granted where applied to Congress for
there is no complaint as an exclusive franchise to
to existing rates and the operate a taxicab service
co. in the field is in Manila. The Governor
rendering adequate General twice vetoed the
service. It is the duty of bill. Monserrat then
the PSC to protect rather applied to the PSC for a
than to destroy the CPC. It was granted.
investment of a public
utility.

Carmelo and Oriol then

applied to the PSC for a
The policy of regulation CPC to operate a taxicab
upon which the present service within Manila.
public utility commission Monserrat opposed. The
plan is based and which PSC denied the
tends to do away with application.
competition among public
utilities as they are
Held : There is no valid,
legal reason why
Monserrat should have
the exclusive right of
operating a taxicab
service. In the granting
and refusal of a CPC, the
question is what is for the
best interest of the
public. Tested by that
rule, it is hard to conceive
how it would be for the
best interests of the
public to have one
taxicab service only, and
how the public would be
injured by
the granting of the
certificate in question, for
it must be conceded that
two companies in the
field would stimulate the
business, and the public
would much sooner and
much easier become
educated in the use of
taxi.
Monserrat does not have
a vested right in the
business of any person
that might want the use
of a taxi, for the simple
reason that the use of
any taxi is the sole
discretion of the
customer. This is unlike
the BTC case which dealt
with an autobus service
with fixed schedules and
routes.
San Pablo vs Pantranco
South Express, Inc. 153
SCRA 199
F: Pantranco operates
passenger buses from
Metro Manila to Bicol and
Eastern Samar. It wrote
to the Maritime Industry
Authority (MARINA)
requesting authority to
lease/purchase MV Black
Double to be used in
operating a ferryboat
service from Matnog,
Sorsogon and Allen,
Samar that will provide
service to co. buses and
freight trucks that have to
cross the Bernardo Strait.
MARINA denied the
petition on the ground
that the Matnog- Allen
run is adequately
serviced by the Cardinal
Shipping Corp. and
Epitacio San Pablo and
that market conditions
cannot support the entry
of additional tonnage.
Pantranco acquired the
vessel. It then applied to
BOT claiming that it can
operate a ferry service in
connection with its
franchise for bus
operation in the highway
from Pasay City to
Tacloban City for the
purpose of continuing the
highway, which is
interrupted by a small
body of water, and that service. Before private
the proposed ferry respondent may be
operation is merely a issued a franchise or
necessary and incidental CPC for the operation of
service to its main the said service as a
service and obligation of common carrier, it must
transferring passengers comply with the usual
from Pasay City to reqts. of filing an
Tacloban City. Accdg. to application, payment of
it, there is no need to the fees, publication,
obtain a separate CPC to adducing evidence at a
operate a ferry service to hearing and affording the
cater exclusively to its oppositors the
passenger buses and opportunity to be heard.
ferry trucks. Pantranco
began operating its ferry
service. The BOT held
that the ferryboat service Considering the
is part of Pantranco's environmental
CPC and amended circumstances of the
Pantranco's CPC to case, the conveyance of
provide so. The two other passengers from Matnog
ferry boat services filed to Allen is not a ferryboat
motions for service but a coastwise
reconsideration. or interisland shipping
service. Under no
circumstances can the
sea between Matnog and
Issue : WON the sea can Allen be considered a
be considered as a continuation of the
continuation of the highway. While a
highway. WON a land ferryboat service has
transpo co. can be been considered as a
authorized to operate a continuation of the
ferry service or coastwise highway when crossing
or interisland shipping rivers or even lakes,
service along its which are small body of
authorized route as an waters separating the
incident to its franchise land, however, when as
without the need of filing in this case the two
a separate application for terminals are separated
the same. by an open sea, it cannot
be considered a
continuation of the
highway. Pantranco must
Held : The water secure a separate
transport service
between Matnog and
Allen is not a ferryboat
service but a coastwise CPC for the operation of
or interisland shipping an interisland or
coastwise shipping bus trips and issues
service. Its CPC cannot separate tickets
be merely amended to whenever they board the
include this water service MV Black Double. It
under the guise that it is cannot pretend that it
a mere private ferry issued tickets as a
service. private carrier and not as
a common carrier. It in
fact accepts walk in
passengers during the
Pantranco does not deny trips. It cannot claim that
that it charges its it is both a private carrier
passengers separately and a common carrier at
from the charges for the the same time.

6
TRANSPORTATION AND MARITIME LAW

In the case of Javellana (i) contract of

vs PSC, the Court transportation, defined -
differentiated between one whereby a certain
ferry service and person or association of
interisland or coastwide persons obligate
service. Ferry means themselves to transport
service either by barges persons, things or news
or rafts, even by motor or from one place to
steam vessels, between another for a fixed price
the banks of a river or
stream to continue the
highway which is
interrupted by a body of (ii) contract of
water, or in some cases, transportation, elements
to connect two points on
opposite shores of an
arm of the sea such as a
bay or lake which does
not involve too great a Parties to the contract :
distance or too long a
time to navigate. But
where the line or service
involves crossing a body 1. shipper - one who
of water which is wide gives rise to the contract
and dangerous with big of transportation by
waves, then such line or agreeing to deliver the
service belongs properly things or news to be
to interisland or transported, or to present
coastwide trade. his own person or those
of other or others in the
3. Private nature: rights case of transportation of
and obligations of parties passengers
inter se arising from
transactions relating to
transportation
2. carrier or conductor -
one who binds himself to
transport persons, things,
absent a transportation or news as the case may
contract be or one employed in or
engaged in the business
of carrying goods for
others for hire
arising from a
transportation contract
Persons or corporations
who undertake to
transport or convey
goods, property, or
persons from one place
to another, gratuitously or
for hire, and are
classified as private or
special carriers and
common or public
carriers
Regulation of the
Transportation Industry
The Department of
Transportation and
Communications
EO 125, Sec. 4.
Mandate. The DOTC
shall be the primary
policy, planning,
programming,
coordinating,
implementing,
regulating, and
administrative entity of
the Executive Branch
of the govt. in the
promotion, devt. and
regulation of
dependable and
coordinated networks
of transportation and
communication
systems, as well as in
the fast, safe, efficient,
and reliable postal,
transportation and
communication
services.
To accomplish such
mandate, the Dept.
shall have the ff.
objectives:
promote the devt. of
dependable and
coordinated networks
of transportation and
communication
systems;
guide govt. and private
investments in the
devt. of the country's
inter-modal
transportation and
communication system
in a most practical,
expeditious, and
orderly fashion for
maximum safety,
service and cost
effectiveness;
impose appropriate
measures so that
technical, economic
and other conditions
for the continuing
economic viability of
the transportation and
communication entities
are not jeopardized and
do not encourage
inefficiency and
distortion of traffic
patronage;
develop an integrated
plan for a nationwide
transmission system in
accordance with
national and intl.
telecommunications
service reqts.
including, among
others, radio and EO 125-A, Sec. 5. To
television broadcast accomplish its
relaying leased channel mandate, the Dept.
services and data shall have the ff.
transmission; powers and functions:

(a) formulate and

recommend national
policies and guidelines
guide govt. and private
for the preparation and
investments in the
implementation of
establishment,
integrated and
operation and
comprehensive
maintenance of an intl.
transportation and
switching system for
communications
incoming and outgoing
systems at the national,
telecommunication
regional and local
services;
levels; (b) establish and
administer
comprehensive and
integrated programs for
encourage the devt. of transportation and
a domestic communications, xxx
telecommunications call on any agency,
industry in corp., or organization
coordination with the xxx to participate and
concerned entities assist in the
particularly, the preparation and
manufacture of implementation of such
communications/electr program;
onics equipment and
components to
complement and
support, as much as
assess, review and
possible, the
provide direction to xxx
expansion,
research and devt.
development, operation
programs of the govt
and maintenance of the
xxx;
nationwide
telecommunication
network;

administer and enforce

all laws xxx in the field
of transportation and
Provide for a safe,
communication;
reliable and efficient
postal system for the
country.

coordinate with the

DPWH in the design,
location, devt,
rehabilitation, establish and prescribe
improvement, etc. of all rules xxx operation and
infrastructure projects maintenance of a
and facilities of the nationwide postal
Dept. xxx system xxx;

establish, operate and establish and prescribe

maintain a nationwide rules xxx issuance of
postal system xxx; CPCs for public land
transportation utilities,
such as motor vehicles,
trimobiles, and
issue certificates of railways;
public convenience for
the operation of public
land and
establish and prescribe
rules xxx inspection
and registration of air
rail transportation and land transportation
utilities and services; facilities, such as
motor vehicles,
trimobiles, and
aircrafts;

accredit foreign aircraft

and manufactures xxx;

establish and prescribe establish and prescribe

rules and regulations rules xxx issuance of
for identification of licenses xxx;
routes, zones and/or
areas of operation of establish and prescribe
particular operator of rules xxx enforcement
public land services; of laws governing
transportation xxx;

establish and prescribe

rules xxx for the determine, fix and/or
establishment, prescribe charges
operation and and/or rates pertinent
maintenance of such to the operation of
telecommunication public air and land
facilities in areas not transportation utility
adequately served by facilities and services
the private sector xxx; xxx;
establish and prescribe perform such other
rules xxx accreditation powers and functions
of driving schools; as it may be prescribed
by law, or as may be
administer and operate necessary, incidental,
the Civil Aviation or proper to its
Training Center xxx; mandate, or as may be
assigned from time to
time by the President.

7
TRANSPORTATION AND MARITIME LAW
the Dept. as an
attached agency xxx.
The Secretary of
(a) Air
Transportation and
Communications or his
designated
representative shall be
(i) Air Transportation the Chairman of the
Office Board xxx

EO 125, as amended by Sec. 25, RA 776. The

EO 125-A Civil Aeronautics
Administration shall be
under the
administrative
Sec. 10. Assistant supervision and control
Secretaries and Service of the Dept. of
Chiefs. xxx Commerce and
Industry (now the
DOTC) xxx

h) Office of the
Assistant Secretary for
Air Transportation (ii) Civil Aeronautics
Board

Sec. 11. xxx The

present Airport Offices RA 776, as amended
of the Bureau of Air
Transportation are
hereby abolished and
their functions are Section 5. The Civil
transferred to the Dept. Aeronautics Board
Airport Offices. xxx shall be composed of
the Secretary of
Commerce and
Industry (now DOTC)
Sec. 13. xxx as Chairman, the CAB
Administrator, the
Commanding Officer of
the Phil. Air Force, and
2 others to be
d) The Civil
appointed by the
Aeronautics Board is
President xxx
hereby transferred from
the Dept. of Tourism to
 authorize charters
whether domestic or
intl. and special air
Section 10 (A) Except
services or flights
as otherwise provided
herein, the Board shall
xxx;
have the power to
regulate the economic
approve or disapprove
aspect of air
increase of capital, sale
transportation, and
of equipment of an air
shall have the general
carrier engaged in air
supervision and
commerce,
regulation of, and
consolidation, merger,
jurisdiction and control
purchase, lease,
over, air carriers, as
operating contract, or
well as their property,
acquisition and control
property rights,
between domestic air
equipment, facilities,
carriers xxx
and franchise, in so far
as may be necessary
for the purpose of
carrying out the
provisions of this Act. inquire into the mgmt.
of the business of any
air carrier xxx;

require annual,
Section 10 (C) Powers
monthly, periodical and
and Duties of the CAB
special reports from
any carrier xxx;

prescribe the forms of

issue, deny, amend, any and all accounts,
revise, alter, modify, records, and
cancel, suspend, or memoranda of the
revoke xxx any movement of traffic, as
temporary operating well as of the receipt
permit or CPCN xxx and expenditures of
money and the length
of time such accounts,
records, and
fix and determine memoranda shall be
reasonable individual, preserved xxx;
joint or special rates,
charges, or fares which
an air carrier may
demand, collect or 8. require each officer
receive for any service and director of any air
in connection with air carrier to transmit a
commerce xxx report describing the
shares of stock or
other interest held by
such air carrier with treaties, a permit
any person engaged in authorizing a person to
any phase of engage in domestic air
aeronautics, and the commerce and/or air
holding of the stock in, transportation shall be
and control of, other issued only to citizens
persons engaged in of the Philippines.
any phase of
aeronautics.

(b) Land

Section 11. A CPCN is a

permit issued by the
Board authorizing a (i) Land Transportation
person to engage in air Office
commerce and/or air
transportation, foreign
and/or domestic.

Any permit may be EO 125-A

altered, amended,
modified, suspended,
canceled and revoked
by the Board xxx Section 9. Assistant
whenever the Board Secretaries and Service
finds such action to be Chiefs xxx
in the public interest.
e) Office of the
Assistant Secretary for
Land Transportation
There shall be attached
to the exercise of the
privileges xxx such
reasonable terms, Section 11. xxx The
conditions, or present Regional
limitations as, in the Offices of the Land
judgment of the Board, Transportation
the public interest may Commission are hereby
require. abolished and their
functions are
transferred to the
respective Department
xxx Regional offices for
Land Transportation.
xxx

Section 12. Except as

otherwise provided in
the Constitution and Section 13 (a) The Land
existing treaty or Transportation
Commission is hereby
abolished and its staff
functions are
(1) The Office of the
transferred to the
Assistant Secretary for
service offices of the
Land Transportation.
Dept. Proper and line
xxx
functions are
transferred to the Dept.
Regional Offices for
Land Transportation as
provided in Section 11 (ii) Land Transportation
herein. xxx The quasi- Franchising and
judicial powers and Regulatory
functions of the
Commission are
transferred to the Dept.
The corresponding Board
position structure and
staffing pattern shall be
approved and
prescribed by the
EO 202
Secretary xxx.

Sec.1. There is hereby

Administrative Code of
created in the DOTC,
1987, Title XV
the Land
Transportation
Franchising and
Regulatory Board.
Sec. 9. The Department
shall have the following
line offices :

8
TRANSPORTATION AND MARITIME LAW

Sec.2. The Board shall determine, prescribe,

be composed of a approve and
Chairman and 2 periodically review and
members with the same adjust reasonable
rank, salary and fares, rates and other
privileges of an related charges,
Assistant Secretary, relative to the operation
xxx of public land
transportation services
provided by motorized
vehicles;
Sec.4. The Secretary of
Transportation and
Communications,
through his duly issue preliminary or
designated permanent injunction
Undersecretary, shall xxx;
exercise administrative
supervision and control punish for contempt of
over the LTFRB. the Board, both direct
and indirect xxx;

issue subpoena and

subpoena duces tecum
Sec.5. Powers and
and to summon
functions:
witnesses to appear in
any proceedings of the
Board, to administer
oaths and affirmations;
prescribe and regulate
routes of service, xxx
zones or areas of
operation of public land
conduct investigations
transportation services
and hearings of
provided by motorized
complaints for violation
vehicles xxx;
of the public service
laws on land
transportation and of
the Board's rules and
issue, amend, revise, regulations xxx;
suspend or cancel
CPCs or permits
authorizing the
operation of public land
to review motu proprio
transportation services
the decisions, actions
provided by motorized
of the Regional
vehicles xxx;
Franchising and
Regulatory Office
herein created;
coordinate and
cooperate with other
govt. agencies and
entities xxx;
promulgate rules and
regulations governing perform such other
proceedings before the functions and duties as
Board and the Regional may be provided by
Franchising and law, or as may be
Regulatory Office xxx; necessary, or proper or
incidental to the
purposes and
objectives of this
fix, impose, and collect, Executive Order.
and periodically review
and adjust reasonable
fees and other related
charges for services Sec.6. The Board xxx
rendered; shall sit and render its
decision en banc; xxx
concurrence and
signature of at least 2
formulate, promulgate, members xxx
administer, implement
The decision shall be
and enforce rules and
appealable to the
regulations on land
Secretary within 30
transportation public
days from receipt of the
utilities, standards of
decision; Provided, that
measurements and/or
the Secretary may motu
design, and rules and
proprio review any
regulations requiring
decision or action of
operators of any public
the Board before the
land transportation
same becomes final.
service to equip, install
and provide in their
utilities and in their
stations such devices,
eqpt. facilities and Sec.7. There shall be a
operating procedures Regional Franchising
and techniques as may and Regulatory Office
promote safety, in each of the
protection, comfort and administrative regions
convenience to of the country which
persons and property shall be headed by a
in their charges as well Board Regional
as the safety of Manager having the
persons and property rank, salary and
within their areas of privileges of a Dept.
operations; Assistant Regional
Director. The Regional Sec. 17. The Board
Franchising and shall have an Executive
Regulatory Offices Director who shall also
shall hear and decide be appointed by the
uncontested President xxx. He shall
applications/petitions have the rank, salary
for routes, within their and privileges of a
respective Dept. Service Chief. He
administrative regions: shall assist the Board
Provided, that in the performance of
applications/petitions its powers and
for routes extending functions.
their respective
territorial jurisdictions
shall be heard and
decided by the Board. The Board shall be
supported by the
Technical Evaluation
Division, Legal
Administrative Code, Title Division, Management
XV Information Division,
Administrative Division
and Finance Division.

Sec. 15. The quasi-

judicial powers and
functions with respect Sec. 18. The Secretary
to land transportation of Transportation and
shall be exercised Communications shall
through the Land exercise administrative
Transportation and supervision and control
Regulatory Board. over the Board.

Sec. 16. The Board Sec. 19. Powers and

shall be composed of a functions of the Board:
Chairman and 2
members with the rank,
salary and privileges of
an Assistant Secretary, prescribe and regulate
all of whom shall be routes xxx;
appointed by the
President upon the issue, amend, revise,
recommendation of the suspend, or cancel
Secretary of CPCs or permits, xxx;
Transportation and
Communications xxx determine, prescribe,
approve and
periodically review and
adjust reasonable
fares xxx; regulations on land
transportation xxx;
issue injunctions xxx;

punish for contempt of

the Board xxx;
coordinate and
cooperate with other
issue subpoena and
govt. agencies and
subpoena duces tecum
entities concerned with
and to summon
any aspect involving
witnesses xxx;
public land
transportation services
conduct investigations
xxx;
and hearings of
complaints for violation
of

the public service laws perform such other

on land transportation functions and duties as
xxx; may be provided by
law, or as may be
review motu proprio necessary, or proper or
the decisions, actions incidental to the
of the Regional purposes and
Franchising and objectives of the Dept.
Regulatory Offices xxx;

Sec. 20. The Board

promulgate rules and shall xxx sit and decide
regulations governing en banc; concurrence
proceedings before the and signature of at
Board and the Regional least 2 members;
Franchising and decision shall be
Regulatory Office xxx; appealable to the
Secretary within 30
days from receipt of the
decision; the Secretary
fix, impose and collect, may motu proprio
and periodically review review any decision or
and adjust reasonable action of the Board
fees, and other related before it becomes final.
charges for services
rendered;

Sec. 21. Regional

Franchising and
formulate, promulgate, Regulatory Offices -
administer, implement hear and decide
and enforce rules and uncontested
applications/ petitions
for routes xxx;
Sec. 22. decisions of (c) Water
the Regional
Franchising and
Regulatory Offices
shall be appealable to (i) Maritime Industry
the Board within 30 Authority
days from receipt of the
decision.

9
TRANSPORTATION AND MARITIME LAW

undertake the safety

regulatory functions
pertaining to vessel
EO 125, Sec. 14 as
construction and
amended by EO 125-A,
operation including the
Sec. 3
determination or
manning levels and
issuance of certificates
of competency to
The Maritime Industry seamen;
Authority is hereby
retained and shall have
the ff. functions:

develop and formulate enforce laws, prescribe

plans, policies, projects and enforce rules and
xxx geared toward the regulations, including
promotion and devt. of penalties for violations
the maritime industry, thereof, governing
the growth and water transportation
effective regulation of and the Phil. merchant
shipping enterprises, marine xxx;
and for the national
security objectives of
the country;
undertake the issuance
of licenses to qualified
seamen and harbor,
establish, prescribe bay and
and regulate routes,
river pilots;
zones and/or areas of
operation of particular
determine, fix,
operators of public
prescribe charges/rates
water services;
pertinent to the
operation of public
water transport utilities
xxx;
issue CPCs for the
operation of domestic
and overseas water
carriers;
accredit marine
surveyors and maritime
register vessels as well
enterprises engaged in
as issue certificates,
shipbuilding, ship
licenses or document
repair xxx;
necessary or incident
thereto;
issue and register the
continuous discharge
book of Filipino
seamen;

establish and prescribe Common Carriers

rules and regulations,
standards and
procedures for the
efficient and effective A. In General
discharge of the above
functions;

Definitions; essential
elements
perform such other
functions as may now
or hereafter be
provided by law.
Art. 1732. Common
carriers are persons,
corporations, firms or
associations engaged
in the business of
carrying or
transporting
passengers or goods
or both, by land, water
or air, for
compensation, offering
their services to the
public.

Aguedo F. Agbayani,
COMMERCIAL LAWS
OF THE PHILIPPINES,
vol. 4, 1989 ed.
(hereinafter 4 Agbayani)

Transportation
defined.-- a contract of
transportation is one
whereby a certain person
or association of persons
obligate themselves to
transport persons, things,
or news from one place
to another for a fixed
(2) carrier or conductor.--
price
one who binds himself to
transport persons, things,
or news as the case may
be; one employed in or
Classification : engaged in the business
of carrying goods for
other for hire

As to object: (1) things;

(2) persons; (3) news
(3) consignee.-- the party
to whom the carrier is to
deliver the things being
As to place of travel: (1) transported; one to whom
land; (2) water; (3) air the carrier may lawfully
make delivery in
accordance with its
contract of carriage (but
the shipper and the
Parties to contract of consignee may be one
transportation: person)

(1) shipper or Freight defined.-- The

consignor.-- person to be terms has been defined
transported; one who as: (1) the price or
gives rise to the contract compensation paid for
of transportation by the transportation of
agreeing to deliver the goods by a carrier, at
things or news to be sea, from port to port. But
transported, or to present the term is also used to
his own person or those denote
of other or others in the
case of transportation of
passengers

10
TRANSPORTATION AND MARITIME LAW
Private carriers
defined.-- Those who
transport or undertake to
(2) the hire paid for the
transport in a particular
carriage of goods on land
instance for hire or
from place to place, or on
reward
inland streams or lakes.
The name is also applied
to (3) the goods or
merchandise transported
at sea, on land, or inland He must undertake to
streams or lakes. Thus carry goods of the kind to
the term is used in 2 which his business is
senses: to designate the confined.
price for the carriage,
also called freightage, or
to designate the goods
carried. He must undertake to
carry by the methods by
which his business is
conducted,
Contracts through
transportation agents.-- and over his established
A contract of roads.
transportation is not
changed, altered or (4) The transportation
affected by the mere fact must be for hire.
that the obligor avails of
other parties to effect the The true test is whether
transportation agreed the given undertaking is
upon, as in the case of a part of the business
transportation agents. engaged in by the carrier
which he has held out to
the general public as his
occupation rather than
the quantity or extent of
Carriers defined.--
the business actually
Persons or corporations
transacted, or the no.
who undertake to
and character of the
transport or convey
conveyances used in the
goods, property or
employment (the test is
persons, from one place
therefore the character of
to another, gratuitously or
the business actually
for hire, and are
carried on by the carrier.)
classified as private or
special carriers, and
common or public
carriers
Case : an airplane owner
is a common carrier
where he undertakes for
hire to carry all persons
who apply for passage
indiscriminately as long
as there is room and no
legal excuse for refusing;
airlines engaged in the
passenger service on
regular schedules on
definite routes, who
solicit patronage of the
traveling public, advertise
schedules for routes,
times of leaving and
rates of fare, and make
the usual stipulation as to
baggage are common
carriers

o y for anyone who wished

s to employ him
Co
mm
on
carr
iers
vs (1) the private carrier
Priv agrees
ate
carr
iers
:
in some special case with
some private individual to
carry

(1)
the
com
mon for hire
carri
er
hold
s
Characteristics of
hims
elf common carriers:
out
in
com
mon (1) The common carrier
, undertakes to carry for all
that
people indifferently; he
is,
holds himself out as
ready to engage in the
transportation of goods
for hire as a public
to employment and not as a
all casual occupation, and
pers he undertakes to carry
ons for all persons
who indifferently, within the
cho limits of his capacity and
the s ne to accept a particular
sph a class of goods for
ere ( carriage to the prejudice
of of the traffic in those
the goods
busi
nes
s
requ Exception : for some
ired sufficient reason, where
of the discrimination in such
him, goods is reasonable and
so necessary (substantial
that grounds)
he
is
bou
nd
to (3) No monopoly is
serv favored - the
e all Commission has the
who power to say what is a
appl reasonable
y compensation to the
and utility and to make
is reasonable rules and
liabl regulations for the
e for convenience of the
refu traveling public and to
enforce them

a
c
a the business for the
com
mon
carri
er is and is therefore not
bou
nd
to
carr
y all to regulation as a
who
offe
r
suc (4) Public convenience -
h for the best interests of
goo the public
ds
as it
is
Mea l be considered alike - the
nin i quantity, kind and quality
g of may be exactly the same,
Pub T and yet not be alike, so
lic far as the cost of
use transportation is
E
.-- It concerned
is
not C
conf
ined
to
privi
lege
d
indi
vidu
als,
but
is
ope
n to
the
inde
finit
e
publ
ic;
ther
e
mus
t be
a
right
whi
ch
the
law
com
pels
the
own
er
to
give
to
the
gen
eral
publ
ic.
Pub
Test for a common (2) shipments may be
carrier: alike although composed
of different classes of
merchandise - difference
in the charge for handling
(1) He must be engaged and transporting may
in the business of only be made when the
carrying goods for others difference is based upon
as a public employment, actual cost
and must hold himself
out as ready to engage in
the transportation of
goods for persons Determination of
generally as a business, justifiable refusal:
and not a casual
occupation.

11
TRANSPORTATION AND MARITIME LAW
explosions is not
sufficient to justify refusal
if it can be proven that in
the condition in which it is
offered for carriage there
This involves a is no real danger to the
consideration of the carrier nor reasonable
following-- ground to fear that the
vessel and those on
board will be exposed to
unnecessary or
suitability of the vessels unreasonable risks
of the company for the
transportation of such
products;
US vs Tan Piaco, 40 Phil
853

reasonable possibility of
danger or disaster,
resulting from their F: Tan Piaco rented two
transportation in automobile trucks and
was using them upon the
the form and under the highways of Leyte for the
conditions in which they purpose of carrying some
are offered for carriage; passengers and freight.
He carried passengers
the general nature of the and freight under a
business done by the special contract in each
carrier; case and had not held
himself out to carry all
all the attendant passengers and freight
circumstances which for all persons who might
might affect the question offer passengers and
of the reasonable freight. He was convicted
for violation of the Public
Utility Law for operating a
public utility without
necessity for the refusal permission from the
by the carrier to Public Utility
undertake the Commission.
transportation of this
class of merchandise

Issue: WON defendant

operated a public utility.
Case: The mere fact that NO.
the carriage of dynamites
may lead to destructive

Held: There is no public
use. The trucks were
used under special
agreements to carry
particular persons and
property.
Under the Public Service
Law, two things are
necessary : (1) the
individual, co-
partnership, etc. must be
a public utility; and (2)
the business in which
such individual, co-
partnership, etc. is
engaged must be for
public use. "Public use"
means the same as "use
by the public." The
essential feature of public
use is that it is not
confined to privileged
individuals, but is open to
the indefinite public. In
determining whether a
use is public, we must
look not only to the
character of the business
to be done, but also to
the proposed mode of
doing it. If the use is
merely optional with the
owners, or the public
benefit is merely
incidental, it is not a
public use, authorizing
the exercise of the
jurisdiction of the public
utility commission. There
must be, in general, a
right which the law
compels the owner to
give to the general
public. It is not enough
that the general
prosperity of the public is
promoted. Public use is
not synonymous with
public interest. The true
criterion by which to
judge the character of
the use is whether the
public may enjoy it by
right or only by
permission.
Home Insurance Co. vs
American Steamship
Agencies, 23 SCRA 24
F: A Peruvian firm
shipped fishmeal through
the SS Crowborough
consigned to the SMB
and insured by the Home
Insurance Co. The cargo
arrived with shortages.
SMB demanded and
Home Insurance Co. paid
P14,000 in settlement of
SMB's claim. Home
Insurance filed for
recovery from Luzon
Stevedoring and
American Steamship
Agencies. Luzon
Stevedoring claimed that
it merely delivered what it
received from the carrier
in the same condition it
received it. American
Steamship contended
that it was not liable
because of a stipulation
in the charter party that
the charterer and not the
shipowner was to be
liable for any loss or
damage to the cargo.
The CFI absolved Luzon
Stevedoring but ordered
American Steamship to
reimburse the
P14,000 to Home
Insurance, declaring that
Art. 587 of the Code of
Commerce makes the
ship agent civilly liable for
damages in favor of third
persons due to the
conduct of carrier's
captain
and that the stipulation in
the charter party
exempting owner from
liability is against public
policy under Art. 1744 of
NCC.
Issue : Is the stipulation
valid? YES.
Held : The provisions of
our Civil Code on
common carriers were
taken from Anglo-
American law. Under
American jurisprudence,
a common carrier
undertaking to carry a
special cargo or
chartered to a special
person only, becomes a
private carrier. As a
private carrier, a
stipulation exempting the
owner from liability for
the negligence of its
agents is not against
public policy and is
deemed valid.
The Civil Code provisions
on common carriers
should not be applied
where the carrier is not
acting as such but as a
private carrier. The
stipulation in the charter
party absolving the
owner from liability for
loss due to the
negligence of the agent
would be void only if the
strict public policy
governing CC is applied.
Such policy has no force
where the public at large
is not involved, as in the
case of a ship totally
chartered (as in this
case) for the use of a
single party. Based on
the stipulation, recovery
cannot be had, for loss or
damage to the cargo
against shipowners,
unless the same is due to
personal acts or
negligence of said owner
or its managers, as
distinguished from
agents or employees. No
personal act or
negligence has been
proved.
In a charter of the entire
vessel, the bill of lading
issued by the master to
the charterer, as shipper,
is in fact and legal
contemplation merely a
receipt and a document
of title and not a contract,
for the contract is the
charter party.
De Guzman vs CA, 168
SCRA 612
F: Cendana was a junk
dealer and was engaged
in buying used bottles
and scrap materials in
Pangasinan and brought
these to Manila for
resale. He used two 6-
wheeler trucks. On the
return trip to Pangasinan,
he would load his
vehicles with cargo which
various merchants
wanted delivered to
Pangasinan. For that
service, he charged
freight lower than regular
rates. General Milk Co.
contracted with him for
the hauling of 750
cartons of mild. On the
way to Pangasinan, one
of the trucks was
hijacked by armed men
who took with them the
truck and its cargo and
kidnapped the driver and
his helper. Only 150
cartons of milk were
delivered. The Milk Co.
sued to claim the value of
the lost merchandise
based on an alleged
contract of carriage.
Cendana denied that he
was a common carrier
and contended that he
could not be liable for the
loss since it was due to
force majeure. The TC
ruled that he was a
common carrier. The CA
reversed.
Issue : WON Cendana is
a common carrier. YES.
Held : Cendana is
properly characterized as
a common carrier even
though he merely
backhauled goods for
other merchants, and
even if it was done on a
periodic basis rather than
on a regular basis, and
even if his principal
occupation was not the
carriage of goods.
Art. 1732 makes no
distinction between one
whose principal business
activity is the carrying of
persons or goods or
both, and one who does
such carrying only as an
ancillary activity. It also
avoids making a
distinction between a
person or enterprise
offering transportation
services on a regular or
scheduled basis and one
offering service on an
occasional, episodic or
unscheduled basis.
Neither does it make a
distinction between a
carrier offering its
services to the general
public and one who
offers services or solicits
business only from a
narrow segment of the
population.
The fact that Cendana
does not hold a CPC is no
excuse to exempt him from
incurring liabilities as a CC.
Otherwise, it would be to
reward persons who fail to
comply with applicable
statutory reqts. and would
be offensive to public statute and implementing
policy. The liability arises regulations.
the moment a person or
firm acts as a common
carrier, without regard to
whether or not such carrier
has also complied with the Issue : WON Cendana
requirements of the may be held liable for the
applicable regulatory loss of the milk. NO.

12
TRANSPORTATION AND MARITIME LAW
Held: Common carriers
by the very nature of their
business and for reasons
of public policy are held
to a very high degree of
care and diligence (extra-
ordinary diligence) in the
carriage of goods as well
as passengers. Article
1734 establishes the
general rule that CC are
responsible for the loss,
destruction, or
deterioration of the goods
which they carry unless
the same is due to the
causes enumerated
therein. Such
enumeration is a closed
list. Causes falling
outside the list, even if
they are force majeure,
fall within the scope of
Art. 1735 which provides
that CC are presumed to
have been at fault or to
have acted negligently,
unless they prove that
they observed
extraordinary diligence
required under Art. 1733.
However, Art. 1745
provides that a CC
cannot be allowed to
divest or diminish his
responsibility even for
acts of strangers like
thieves or robbers,
except where such
thieves or robbers acted
with grave or irresistible
threat, violence or force.
The limits of
extraordinary diligence
are reached where there
is grave or irresistible
threat, violence or force.
In this case, the loss was
quite beyond the control
of the CC. Even CC are
not made absolute
insurers against all risks
of travel and of transport
of goods, and are not
liable for acts or events
which cannot be
foreseen or are
inevitable, provided that
they shall have complied
with the rigorous
standard of extraordinary
diligence.
Planters Products vs CA,
G.R. 101503 (Sept. 15,
1993)
F: Planters purchased
urea fertilizer from
Mitsubishi, New York.
The fertilizer was shipped
on MV Sun Plum, which
is owned by KKKK, from
Alaska to San Fernando,
La Union. A time charter
party was entered into
between Mitsubishi as
shipper/charterer and
KKKK as shipowner.
Upon arrival in the port,
PPI unloaded the cargo.
It took PPI 11 days to
unload the cargo. PPI
hired a marine and cargo
surveyor to determine if
there was any shortage.
A shortage and
contamination of the
fertilizer was discovered.
PPI sent a claim letter to
SSA, the resident agent
of KKKK for the amount
of the loss. An action for
damages was filed. SSA
contended that the
provisions on CC do not
apply to them because
they have become
private carriers by reason
of the charter-party. The
TC awarded damages.
The CA reversed.
Issue : Does a charter
party between a
shipowner and a
charterer transform a CC
into a private one as to
negate the civil law
presumption of
negligence in case of
loss or damage to its
cargo? NO.
Held : A charter-party is a
contract by which an
entire ship, or some
principal part thereof, is
let by the owner to
another person for a
specified time or use.
There are 2 kinds: (1)
contract of affreightment
which involves the use of
shipping space or
vessels leased by the
owner in part or as a
whole, to carry goods for
others; and (2) charter by
demise or bareboat
charter where the whole
vessel is let to the
charterer with a transfer
to him of its entire
command and
possession and
consequent control over
its navigation, including
the master and the crew,
who are his servants.
It is not disputed that the
carrier operates as a CC
in the ordinary course of
business. When PPI
chartered the vessel, the
ship captain, its officers
and crew were under the
employ of the shipowner
and therefore continued
to be under its direct
supervision and control.
Thus it continued to be a
public carrier.
It is therefore imperative
that a public carrier shall
remain as such,
notwithstanding the
charter of the whole or
portion of a vessel,
provided the charter is
limited to the ship only,
as in the case of a time-
charter or a voyage-
charter. It is only when
the charter includes both
the vessel and the crew,
as in a bareboat or
demise that a CC
becomes private, insofar
as such particular voyage
is concerned.
Issue : WON the carrier
is liable for damages.
NO.
Held : The presumption gushed in through a hole
of negligence on the part 2 inches wide and 22
of respondent carrier has inches long. As a
been overcome by the consequence, the
showing of extraordinary molasses at the cargo
zeal and assiduity tanks were contaminated
exercised by the carrier and rendered unfit for the
in the care of the cargo. use it was intended. This
prompted the consignee,
Pag-asa to reject the
shipment of molasses as
On the other hand, no a total loss. Thereafter,
proof was adduced by Pag-asa filed a formal
the petitioner showing claim w/ the insurer of its
that the carrier was cargo, herein pvt. resp.,
remiss in the exercise of Phil. Gen. Insurance Co.
due diligence in order to (Philgen) and against the
minimize the loss or carrier, herein petitioner
damage to the goods it Coastwise. Coastwise
carried. denied the claim and it
was Philgen w/c paid the
consignee the amount of
P700,000 representing
the value of the damaged
Coastwise Lighterage cargo of molasses.
Corp. vs. CA, GR No.
114167, July 12, 1995

In turn, Phil-gen filed an

action agsint Coastwise
F: Pag-asa Sales, Inc. bef. RTC -Mla. seeking to
entered into a contract to recover the P700,000 it
transport molasses from paid to Pag-asa. RTC
Negros to Mla. w/ ruled in favor of Philgen.
Coastwise, using the CA affirmed the RTC
latter's dumb barges. The decision. Hence, this
barges were towed in petition.
tandem by the tugboat
MT Marcia, w/c is
likewise owned by
Coastwise.
RULINGS: (1) Bareboat
charter and contract of
affreightment, difference;
Coastwise, by the
Upon reaching Mla. Bay, contract of affreightment,
while approaching Pier was not converted into a
18, one of the barges, private carrier, but
"Coastwise 9," struck an remained a common
unknown sunken object. carrier.-- Under the
The forward buoyancy demise or bareboat
compartment was charter of the vessel, the
damaged, and water
charterer will generally
be regarded as the
owner of the voyage or
service stipulated. The
charterer mans the
vessel w/ his own people
and becomes the owner
pro hac vice, subject to
liability to others for
damages caused by
negligence. To create a
demise, the owner of a
vessel must completely
and exclusively
relinquish possession,
command and navigation
thereof to the charterer;
anything short of such a
complete transfer is a
contract of affreightment
(time or voyage charter
party) or not a charter
party at all.
A contract of
affreightment is one in
w/c the owner of the
vessel leases part or all
of its space to haul goods
for others. It is a contract
for special service to be
rendered by the owner of
the vessel and under
such contract the general
owner retains the
possession, command
and navigation of the
ships, the charterer or
freighter merely having
use of the space in the
vessel in return for his
payment of the charter
hire. xxx
xxx
Although a charter party
may transform a common
carrier into a private one,
the same, however, is not
true in a contract of
affreightment on account
of the aforementioned
distinctions bet. the two.
Petitioner admits that the
contract it entered into w/
the consignee was one of
afreightment. We agree.
Pag-asa only leased 3 of
petitioner's vessels, in
order to carry cargo from
one point to another, but
the possession,
command and navigation
of the vessels remained
w/ petitioner.
(2) Petitioner is liable for
breach of contract of
carriage, having failed to
overcome the
presumption of
negligence w/ the loss
and destruction of goods
it transported, by proof of
its exercise of
extraordinary diligence.--
Mere proof of delivery of
goods to a carrier and
the subsequent arrival of
the same goods at the
place of destination in
bad order makes for a
prima facie case against
the carrier. Jesus
Constantino, the patron
of the vessel "Coastwise
9" admitted that he was
not licensed. This
violates the rule in the
Code of Commerce (Art.
609) w/c requires that
patrons must "have the
legal capacity to contract
in accordance w/ this Coastwise cannot safely
code, and prove the skill, claim to have
capacity and extraordinary diligence,
qualifications necessary by placing a person
to command and direct whose navigational skills
the vessel xxx and must are questionable, at the
be qualified xxx for the helm of the vessel w/c
discharge of the duties of eventually met the fateful
the position. xxx" accident. xxx Had the

13
TRANSPORTATION AND MARITIME LAW
patron been licensed, he
could be presumed to
have both the skill and
the knowledge that would
have prevented the
vessel's hitting the
sunken derelict ship that
lay on their way to Pier 8.
RAM.
2. Nature of business;
power of State to
regulate
Art. 1765. The [Public
Service Commission]
Board of
Transportation may, on
its own motion or on
petition of any
interested party, after
due hearing, cancel the
certificate of public
convenience granted to
any common carrier
that repeatedly fails to
comply with his or its
duty to observe
extraordinary diligence
as prescribed in this
Section.
4 Agbayani:
Common carriers are
subject to legislative
regulation.-- The
business of a common
carrier holds such a
peculiar relation to the
public interest that there
is superinduced upon it
the right of public
regulation. The business
of a common carrier is
affected with public
interest. When, therefore,
one devotes his property
to a use in which the
public has an interest,
he, in effect, grants to the
public an interest in that
use, and must submit to
be controlled by the
public for the common
good, to the extent of the
interest he had thus
created.
Limitation on power to
regulate.-- Such
regulations must not
have the effect of
depriving an owner of his
property without due
process of law, nor of
confiscating, or
appropriating private
property without just
compensation, nor of
limiting or prescribing
irrevocably vested rights
or privileges lawfully
acquired under a charter
or franchise [just
compensation, due
process of law]
When judiciary may
interfere with
legislative regulation of
Issue : WON the PSC
common carriers.-- The
may prescribe the 2
judiciary ought not to
conditions as a
interfere with legislative
prerequisite to the
regulations unless they
issuance of the CPCN.
are so plainly and
palpably unreasonable
as to make their
enforcement equivalent
to the taking of property Held : Yes. CA 146
for public use without provides a sufficient
such compensation as standard, which is public
under all circumstances interest, by which the
is just both to the owner PSC is guided in
and to the public. imposing such
conditions.

Pantranco vs PSC, 70
Phil 221 The business of a
common carrier holds
such a peculiar relation
to the public interest that
there is superinduced
F: Pantranco has been
upon it the right of public
engaged for the past 20
regulation. When private
years in the business of
property is affected with
transporting passengers
a public interest, it
by means of motor
ceases to be juris privati
vehicles in accordance
only. When, therefore,
with the CPCN issued to
one devotes his property
it. It filed with the PSC an
to a use in which the
application for
public has an interest,
authorization to operate
he, in effect, grants to the
10 addtl. new trucks. The
public an interest in that
application was granted
use, and must submit to
with two conditions : (1)
be controlled by the
that the CPCN would be
public for the common
valid for only 25 years
good, to the extent of the
and (2) that the service
interest he had thus
can be acquired by the
created. He may
govt. upon payment of
withdraw his grant by
cost price of its useful
discontinuing the use, but
eqpt. less reasonable
so long as he maintains
depreciation. Pantranco
the use, he must submit
challenged the
to control. Indeed this
constitutionality of Art.
right is so far beyond
15, CA 146 as an undue
question that it is settled
delegation of legislative
that the power of the
powers.
state to exercise
legislative control over
public
utilities may be exercised
through the board of
commissioners. This right
of the state to regulate
public utilities is founded
upon the police power,
and statutes for the
control and regulation of
utilities are a legitimate
exercise thereof, for the
protection of the public
as well as the utilities
themselves. Such
statutes are not
unconstitutional, either as
impairing the obligation
of contracts, taking
property without due
process, or denying the
equal protection of the
laws, especially
inasmuch as the question
WON private property
shall be devoted to a
public use and the
consequent burdens
assumed is ordinarily for
the owner to decide; and
if he voluntarily places
his property in public
service he cannot
complain that it becomes
subject to the regulatory
powers of the state. This
is more so in the light of
authorities which hold
that a CPC constitutes
neither a franchise nor a
contract, confers no
property rights and is a
mere license or privilege.
3. Nature and Basis of
Liability
Art. 1733. Common
carriers, from the
nature of their business
and for reasons of
public policy, are
bound to observe
extraordinary diligence
in the vigilance over
the goods and for the
safety of the
passengers
transported by them,
according to the
circumstances of each
case.
Such extraordinary
diligence in the
vigilance over the
goods is further
expressed in Articles
1734, 1735, and 1745,
Nos. 5,6, and 7, while
the extraordinary
diligence for the safety
of the passengers is
further set forth in
Articles 1755 and 1756.
Art. 1734. Common
carriers are responsible
for the loss,
destruction, or
deterioration of the
goods, unless the same
is due to any of the
following causes only:
Flood, storm,
earthquake, lightning,
or other natural
disaster or calamity;
 and contrary to public
policy:
Act of the public enemy
xxx
in war, whether
international or
That the common
carrier shall not be
civil;
responsible for the acts
or omissions of his or
Act or omission of the
its employees;
shipper or owner of the
goods;

The character of the

goods or defects in the That the common
packaging or in the carrier's liability for
containers; acts committed by
thieves, or of robbers
who do not act with
grave or irresistible
Order or act of threat, violence or
competent public force, is dispensed with
authority. or diminished;

Art. 1735. In all cases That the common

other than those carrier is not
mentioned in Nos. 1, 2, responsible for the
3, 4 and 5 of the loss, destruction, or
preceding article, if the deterioration of goods
goods are lost, on account of the
destroyed or defective condition of
deteriorated, common the car, vehicle, ship,
carriers are presumed airplane or other
to have been at fault or equipment used in the
to have acted contract of carriage.
negligently, unless they
prove that they
observed extraordinary
diligence as required in Art. 1755. A common
Art. 1733. carrier is bound to
carry the passengers
safely as far as human
care and foresight can
Art. 1745. Any of the ff. provide, using the
or similar stipulations utmost diligence of
shall be considered very cautious persons,
unreasonable, unjust with a due regard for all
circumstances.
14
TRANSPORTATION AND MARITIME LAW
Art. 1756. In case of
death of or injuries to
passengers, common
carriers are presumed
to have been at fault or
to have acted
negligently, unless they
prove that they
observed extraordinary
diligence as prescribed
in articles 1733 and
1755.
4 Agbayani:
Extraordinary diligence
required of common
carriers.-- The law
requires CC to exercise
extra-ordinary diligence
which means that they
must render service with
the greatest skill and
utmost foresight. The
extra-ordinary diligence
required of carriers in the
handling of the goods of
the shippers and
consignees last from the
time the cargoes are
loaded in the vessels
until they are discharged
and delivered to the
consignees.
Reasons for requiring
extra-ordinary
diligence.-- The nature
of the business of
common carriers and the
exigencies of public
policy demand that they
observe extra-ordinary
diligence; the business of
CC is impressed with a
special public duty and
therefore subject to
control and regulation by
the state. The public
must of necessity rely on
the care and skill of CC
in the vigilance over the
goods and safety of the
passengers
Rigorous law on
common carriers not
applicable to special
employment as
carrier.-- The laws
applicable to CC are
rigorous and should not
be extended to a person
who has neither
expressly assumed that
character, nor by his
conduct and from the
nature of his business
justified the belief on the
part of the public that he
intended to assume it.
Registered owner
primarily and solidarily
liable with driver, under
the "kabit system."--
Registered owner is
primarily and solidarily
liable for the damage
caused by the vehicle
registered in his name, responsibility that the law
even if the said vehicle fixes and places upon
had already been sold, him as an incident or
leased or transferred to consequence of
another person who was, registration -- where a
at the time of the registered owner allowed
accident, actually to evade responsibility by
operating the vehicle. proving who the
The operator of record supposed transferee or
continues to be the owner is, it would be
operator of the vehicle in easy for him by collusion
contemplation of law, as with others or otherwise,
regards the public and to escape said
third persons, and as responsibility and
such is responsible for transfer the same to an
the consequences indefinite person or to
incident to its operation; one who possesses no
such owner/operator of property with which to
record is held in respond financially for
contemplation of law as the damage or injury
the employer of the done; in case of an
driver. accident, the registered
owner should not be
allowed to disprove his
ownership to the
Kabit system.-- One prejudice of the person
whereby a person who injured or to be relieved
has been granted a from responsibility
certificate of public
convenience allows other
persons who own
vehicles to operate them Cangco vs MRR, 38 Phil
under such license, for a 768
fee or percentage of the
earnings. This is contrary
to public policy, and
therefore, void and F: Jose Cangco, an
inexistent; "this is a employee of MRR, was
pernicious system that riding on its train. As it
cannot be too severely drew up to the station,
condemned; it constitutes the plaintiff made his exit.
an imposition upon the As he alighted, his foot
good faith of the govt." stepped on a sack of
watermelons causing him
to slip and his right arm
was crushed. This
Reason for holding happened between 7 and
registered owner 8 p.m. and as
liable.-- The law does
not relieve the registered
owner directly of the
the railroad station was
lighted dimly by a single
light, objects on the
platform were difficult to
see.
Issue : WON MRR is
liable to pay damages for
the acts of its EEs.
Held : YES.
It cannot be doubted that
the EEs of the railroad
co. were guilty of
negligence in piling sacks
on the platform; their
presence constituted an
effective legal cause of
the injuries sustained by
Cangco.
It is impt. to note that the
foundation of the legal
liability of the defendant
is the contract of
carriage, and that the
obligation to respond for
the damage which
plaintiff has suffered
arises, if at all, from the
breach of that contract by
reason of the failure of
defendant to exercise
due care in its
performance. Its liability
is direct and immediate
(culpa contractual),
differing essentially, from
that presumptive
responsibility for the
negligence of its
servants, which can be
rebutted by proof of the
exercise of due care in
the selection and
supervision of EEs
(culpa aquiliana).
The liability of masters
and employers for the
negligent acts or
omissions of their
servants or agents, when
such act or omissions
cause damage which
amount to the breach of
a contract, is not based
upon a mere
presumption of the
master's negligence in
their selection or control,
and proof of exercise of
the utmost diligence and
care in this regard does
not relieve the master of
his liability for the breach
of his contract. When the
facts averred show a
contractual undertaking
by defendant for the
benefit of plaintiff, and it
is alleged that plaintiff
has failed or refused to
perform the contract, it is
not necessary for plaintiff
to specify in his
pleadings whether the
breach of the contract is
due to wilful fault or to
negligence on the part of
the defendant, or of his
servants or agents. Proof
of the contract and of its
nonperformance is
sufficient prima facie to
warrant recovery.
The contract of
defendant to transport
plaintiff carried with it, by
implication, the duty to
carry him in safety and to
provide safe means of
entering and leaving its
trains. That duty, being
contractual, was direct
and immediate, and its
nonperformance could
not be excused by proof
that the fault was morally
imputable to defendant's
servants.
Medina vs Cresencia, 99
Phil 506
F: A passenger jeepney
driven by Brigido
Avorque smashed into a
Meralco post resulting in
the death of Vicenta
Medina, one of its
passengers. In a criminal
case of homicide through
reckless imprudence,
Avorque pleaded guilty.
The right to file a
separate action for
damages was reserved.
Cresencia was still the
registered operator of the
jeepney in the records of
the Motor Vehicles Office
and the PSC, while
Rosario Avorque was the
owner at the time of the
accident.
Issue: WON Cresencia is
liable for breach of the
contract of carriage.
YES.
Ratio: The law requires
the approval of the PSC,
in order that a franchise,
or any privilege
pertaining thereto, may
be sold or leased without
infringing the certificate
issued to the grantee;
and that if property
covered by the franchise
is transferred or leased
without this requisite
approval, the transfer is
not binding against the
public or the PSC; and in
contemplation of law, the
grantee of record
continues to be
responsible under the
franchise in relation to
the PSC and to the
public. Since a franchise
is personal in nature, any
transfer or lease thereof
should be notified to the
PSC so that the latter
may take proper
safeguards to protect the
interest of the public.
Plaintiff's action is based
on the breach of the
carrier's contractual
obligation to carry his
passengers safely to
their destination (culpa
contractual). The liability
of the carrier is direct and
immediate.
Isaac vs A.L. Ammen
Trans. Co., 101 Phil 1046
15
TRANSPORTATION AND MARITIME LAW
F: Plaintiff boarded
defendant's bus as a
paying passenger from
Albay. The bus collided
with a pick-up truck
which was coming from
the opposite direction
trying to swerve from a
pile of gravel. As a result,
his left arm was
completely severed.
Plaintiff chose to hold
defendant liable on its
contractual obligation.
Plaintiff brought this
action for damages which
the lower court dismissed
holding the driver of the
pick-up negligent and not
that of the bus.
Issue : WON defendant
observed extra-ordinary
diligence or the utmost
diligence of a very
cautious person in
avoiding the collision.
YES.
Held : The facts of the
case show that the bus
and the pick-up were
approaching each other
head-on. The bus
swerved to the right and
went over a pile of stones
and gravel. Despite the
efforts of the bus driver,
the pick up car still hit the
rear left side of the bus.
The sense of caution one
should observe cannot
always be expected from
one who is placed
suddenly in a
predicament where he is
not given enough time to
take the proper course of
action under ordinary
circumstances.
Furthermore, plaintiff is
guilty of contributory
negligence since he
placed his left elbow
outside the window.
Ratio: A CC is bound to
carry the passengers
safely as far as human
care and foresight can
provide, using the utmost
diligence of very cautious
persons, with due regard
for all circumstances.
This extra-ordinary
diligence required of
common carriers is
calculated to protect the
passengers from the
tragic mishaps that
frequently occur in
connection with rapid
modern transportation.
This high standard of
care is imperatively
demanded by the
preciousness of human
life and by the
consideration that every
person must in every way
be safeguarded against
all injury.
Principles as to liability of
CC:
(1) the liability of a carrier
is contractual and arises
upon breach of its
obligation; there is
breach if it fails to exert
extra-ordinary diligence
accdg. to all the
circumstances of each
case
(2) a carrier is obliged to
carry its passenger with
the utmost diligence of a
very cautious person,
having due regard for all
the circumstances
(3) a carrier is presumed
to have been at fault or to
have acted negligently in
case of death of, or injury
to, passengers, it being it
duty to prove that it
exercised extra-ordinary
diligence
(4) the carrier is not an
insurer against all risks of
travel.
Fores vs Miranda, 105
Phil 266
F: Respondent, a
professor of Fine Arts,
was a passenger of a
jeep registered in the
name of Fores but
actually operated by
Carmen Sackerman.
While the jeep was
descending at Sta. Mesa
bridge at excessive
speed, the driver lost
control of it causing it to
swerve and hit the bridge
wall resulting to injuries
to its passengers
including respondent who
suffered a fracture of the
upper right humerus. In
an action for damages,
the CFI awarded actual
damages. The CA
reduced the actual
damages and added
moral damages and
attorney's fees.
Issue : WON the
approval of the PSC is
necessary for the sale of
a public service vehicle
even without conveying
therewith the authority to
operate the same. YES.
Held : A transfer made
without the requisite
approval of the PSC is
not effective and binding
in so far as the
responsibility of the
grantee under the
franchise in relation to
the public is concerned.
The law was designed
primarily for the
protection of the public
interest.
Issue : WON moral
damages may be
awarded.
Held : In case of breach
of contract (including one
of transportation), proof
of bad faith or fraud, i.e.,
wanton or deliberately
injurious conduct, is
essential to justify an
award of moral damages.
The exception to this is
when a mishap results in
the death of a passenger,
in which a CC is liable to
pay moral damages for
the mental anguish by
reason of the death of
the passenger. So where
the injured passenger
does not die, moral
damages are not
recoverable unless it is
proved that the carrier
was guilty of malice or
bad faith.
Under the law, the
presumption is that
common carriers acted
negligently but not
maliciously. The
distinction between fraud,
bad faith or malice in the
sense of deliberate or
wanton wrong doing and
negligence (as mere
carelessness) is too
fundamental in our law to
be ignored. A carrier's
bad faith is not to be
lightly inferred from a
mere finding that the
contract was breached
through negligence of the
carrier's employees.
Phil. Rabbit Bus Lines vs
IAC, 189 SCRA 159
F: Several passengers
boarded the jeepney
owned by spouses
Mangune and driven by
Manalo at Dau,
Pampanga bound for
Carmen, Rosales,
Pangasinan. Their
contract with Manalo was
P24 for the trip. Upon
reaching Tarlac, the right
wheel of the jeepney was
detached, so it was
running in an unbalanced
position. Manalo stepped
on the brake, making a
sudden U-turn and
encroaching on the right
of way of the other
vehicles. The Phil. Rabbit
bus bumped from behind
the jeepney. As a result
of the collision, 3 persons
died while the others
sustained injuries. Cases
were filed against the
spouses Mangune,
Manalo, Phil. Rabbit and
De los Reyes (driver).
Issue: Who should be
held liable? the
Mangunes and Filriters
Guaranty Assurance
Corp. (Insurance co.)
Ratio: The principle of
last clear chance would
call for application in a
suit between the owners
and drivers of two
colliding vehicles. It does
not arise where a
passenger demands
responsibility from the
carrier to enforce its
contractual obligations.
For it would be
inequitable to exempt the
negligent driver of the
jeepney and its owners
on the ground that the
other driver was likewise
guilty of negligence.
On the presumption that
the drivers who bump the
rear of another vehicle
are guilty and the cause
of the accident, unless
contradicted by other
evidence, the SC held
that the jeep made a
sudden U-turn which was
so abrupt that the other
driver de los Reyes did
not anticipate the sudden
U-turn.
The proximate cause of
the accident was the
negligence of Manalo
and the spouses
Mangune. In culpa
contractual, the carrier is
presumed to have been
at fault or to have acted
negligently, and this
disputable presumption
may only be overcome
by evidence that he had
observed extra-ordinary
diligence or that the
death or injury of the
passenger was due to a
fortuitous event.
The driver cannot be held
jointly liable with the
owners of the jeep in
case of breach of the
contract of carriage. The
contract of carriage is
between the carrier and
the passenger, and in the
event of contractual
liability, the carrier is
exclusively responsible
therefore to the
passenger, even if such
breach be due to the
negligence of the driver.
To make the driver jointly
liable would make the
carrier's liability personal
instead of merely
vicarious and
consequently, the victim
is entitled to recover only
the share which
corresponds to the driver.
4. Classes of common
carriers
Art. 1732. Common
carriers are persons,
corporations, firms or
associations engaged
in the business of
carrying or
transporting
passengers or goods
or both, by land, water,
or air, for
compensation, offering
their services to the
public.
Art. 1733. Common
carriers, from the
nature of their business
and for reasons of
public policy, are
bound to observe
extraordinary diligence in the vigilance over
the

16
TRANSPORTATION AND MARITIME LAW
of Commerce and by
special laws.
goods and for the
safety of the
passengers
transported by them, 4 Agbayani:
according to the
circumstances of each
case.
New Civil Code
Such extraordinary primarily governs
diligence in the common carriers.-- The
vigilance over the Provisions of the Civil
goods is further Code [1732-1766]
expressed in Articles primarily govern common
1734, 1735, and 1745, carriers and the
Nos. 5,6, and 7, while provisions of the Code of
the extraordinary Commerce [Overland
diligence for the safety Transportation and
of the passengers is Maritime Commerce] and
further set forth in special laws [Carriage of
Articles 1755 and 1756. Goods by Sea Act;
Salvage Act] have only
subsidiary application to
common carriers.
Art. 1755. A common
carrier is bound to
carry the passengers
safely as far as human Art. 1753, NCC. The law
care and foresight can of the country to which
provide, using the the goods are to be
utmost diligence of transported shall
very cautious persons, govern the liability of
with a due regard for all the common carrier for
circumstances. their loss, destruction
or deterioration.

5. Laws applicable
The provisions of the
NCC primarily govern
contracts of carriage of
Art. 1766. In all matters goods from foreign ports
not regulated by this to Philippine ports
Code, the rights and
obligations of common
carriers shall be
governed by the Code

Eastern Shipping Lines
vs IAC 150 SCRA 463
F: These two cases, both
for the recovery of value
of cargo insurance, arose
from the same incident,
the sinking of the M/S
ASIATICA when it caught
fire, resulting in the total
loss of ship and cargo.
In the first case, the M/S
ASIATICA, a vessel
operated by petitioner
Eastern Shipping Lines,
loaded at Kobe, Japan
for transportation to
Manila 5,000 pieces of
colorized lance pipes in
28 packages valued at
P256,039 consigned to
Phil. Blooming Mills and
7 cases of spare parts
valued at P92,361.75
consigned to Central
Textile Mills. Both sets of
goods were insured
against marine risk for
their stated value with
respondent Devt.
Insurance and Surety
Corporation.
In the second case, the
same vessel took on
board 128 cartons of
garment fabrics and
accessories, in 2
containers, consigned to
Mariveles Apparel
Corporation, and 2 cases
of surveying instruments
consigned to Aman
Enterprises and General
Merchandise. The 128
cartons were insured by
respondent Nisshin Fire
and Marine Insurance
Co. and Dowa Fire &
Marine Insurance Co.
En route for Manila, the
ship caught fire and
sank. The insurers paid
the corresponding marine
insurance values and
were subrogated to the
rights of the latter as the
insured. They filed suits
against the petitioner
Carrier and won (affirmed
by the CA). Petitioner
carrier denies liability on
the ff. grounds:
(a) that the loss was due
to an extraordinary
fortuitous even which is
an exempting
circumstance under Sec.
4(2)(b) of the Carriage of
Goods by Sea Act
(COGSA);
(b) that when fire is
established, the burden
of proving negligence is
shifted to the cargo
shipper.
Issues: (1)Which law
should govern : the Civil
Code or the Carriage of are responsible for the
Goods by Sea Act. loss, destruction, or
deterioration of the goods
unless the same is due to
any of the ff. causes only
(2)Who has the burden of (Art. 1734, NCC):
proof to show negligence
"(1) Flood, storm,
of the carrier.
earthquake, lightning or
other natural disaster or
calamity; xxx"

Ratio : (1) The law of the

country to which the
goods are to be
The Carrier claims that
transported governs the
the loss of the vessel by
liability of the common
fire exempts it from
carrier in case of their
liability under the phrase
loss, destruction or
"natural disaster or
deterioration. As the
calamity." However, we
cargoes in question were
are of the opinion that fire
transported from Japan
may not be considered a
to the Philippines, the
natural disaster or
liability of Petitioner
calamity. This must be so
Carrier is governed
as it arises almost
primarily by the Civil
invariably from some act
Code. However, in all
of man or by human
matters not regulated by
means. It does not fall
said Code, the rights and
within the category of an
obligations of common
act of God unless caused
carriers shall be
by lightning or by other
governed by the Code of
natural disaster or
Commerce and special
calamity. It may even be
laws. Thus, the COGSA,
caused by the actual fault
a special law, is
or privity of the carrier.
suppletory to the
provisions of the Civil
Code.

As the peril of fire is not

comprehended within the
exceptions in Article
(2) Under the Civil Code,
1734, then Article 1735
common carriers, from
provides that in all cases
the nature of their
other than those
business and for reasons
mentioned in Art. 1734,
of public policy, are
the CC shall be
bound to observe extra-
presumed to have been
ordinary diligence in the
at fault or to have acted
vigilance over goods,
negligently, unless it
accdg. to all the
proves that it has
circumstances of each
observed the extra-
case. Common carriers
ordinary diligence
required by law.
In this case, the
respective Insurers, as
subrogees of the cargo
shippers, have proven
that the transported
goods have been lost.
Petitioner carrier has also
proven that the loss was
caused by fire. The
burden then is upon
Petitioner carrier to prove
that it has exercised the
extra-ordinary diligence
required by law.
Having failed to
discharge the burden of
proving that it had
exercised the extra-
ordinary diligence
required by law,
Petitioner Carrier can not
escape liability for the
loss of the cargo.
And even if fire were to
be considered a natural
disaster within the
meaning of Art. 1734, it is
required under Art. 1739
of the same Code that
the natural disaster must
have been the proximate
and only cause of the
loss, and that the carrier
has exercised due
diligence to prevent or
minimize the loss before,
during or after the
occurrence of the
disaster. This petitioner
carrier has also failed to
establish satisfactorily.
Nor may Petitioner
Carrier seek refuge from
liability under the
COGSA. It is provided
therein that:
"Sec.4 (2). Neither the
carrier nor the ship shall
be responsible for loss or
damage arising or
resulting from: (b) Fire,
unless caused by the
actual fault or privity of
the carrier."
In this case, both the TC
and the CA, in effect,
found, as a fact, that
there was "actual fault" of
the carrier shown by lack
of diligence in that when
the smoke was noticed,
the fire was already big;
that the fire must have
started 24 hrs before the
same was noticed; and
that after the cargoes The foregoing suffices to
were stored in the show that the
hatches, no regular circumstances under
inspection was made as which the fire originated
to their condition during and spread are such as
the voyage. to show that Petitioner
carrier or its servants
were negligent in

17
TRANSPORTATION AND MARITIME LAW
of the passengers is
further set forth in
Articles 1755 and 1756.
connection therewith.
Consequently, the
complete defense
afforded by the COGSA
when the loss results (read discussion under
from fire is unavailing to [3] Nature and basis of
petitioner carrier. liability)

Common Carriers Art. 1734. Common

carriers are responsible
for the loss,
destruction, or
deterioration of the
Liability and presumption
goods, unless the same
of negligence
is due to any of the
following causes only:

Flood, storm,
Art. 1733. Common earthquake, lightning,
carriers, from the or other natural
nature of their business disaster or calamity;
and for reasons of
public policy, are Act of the public enemy
bound to observe in war, whether
extraordinary diligence international or civil;
in the vigilance over
the goods and for the Act or omission of the
safety of the shipper or owner of the
passengers goods;
transported by them,
according to the The character of the
circumstances of each goods or defects in the
case. packaging or in the
containers;

Order or act of
competent public
Such extraordinary
authority.
diligence in the
vigilance over the
goods is further
expressed in Articles
1734, 1735, and 1745, Art. 1735. In all cases
Nos. 5,6, and 7, while other than those
the extraordinary mentioned in Nos. 1, 2,
diligence for the safety 3, 4 and 5 of the
preceding article, if the
goods are lost, destroyed
or deteriorated, common
carriers are presumed to
have been at fault or to
have acted negligently,
unless they prove that
they observed
extraordinary diligence
as required in Art. 1733.
4 Agbayani:
Responsibility of
common carriers.-- In
general, CC are
responsible for the loss,
destruction, or
deterioration of the goods
carried by them. This
responsibility arises from
contract, as the relation
between a carrier and its
patrons is of a
contractual nature. A
failure on the carrier to
use extra-ordinary care in
carrying goods or
passengers safely is a
breach of contract and
constitutes culpa
contractual not culpa
aquiliana. While the
liability of a carrier as an
insurer is not recognized
in this jurisdiction, a
carrier is liable for
damages suffered by
goods carried if such
damages arise from its
negligence. The carrier is
also liable even in those
cases where the cause of
the loss or damage is
unknown.
Due extraordinary
diligence required,
carriers given wide
discretion in selection
and supervision of
persons to handle
goods.-- The law
requires CC to exercise
extra-o diligence which
means that they must
render service with the
greatest skill and utmost
foresight. The extra -o
diligence required of CC
in the handling of the
goods of the shipper and
the consignees lasts from
the time the cargoes are
loaded in the vessels
until they are discharged
and delivered to the
consignees. To comply
with this obligation, CC
should be afforded the
right of having a wide
discretion in the selection
and supervision of
persons who will handle
the goods.
Air carrier can
terminate services of
pilot for serious
misconduct and
drunkenness, because
of its duty of
extraordinary
dilignece.-- The CC can
terminate the services of
its drivers, pilots and EEs
for serious misconduct
and drunkenness
because of its duty of
extra-ordinary diligence.
Whenever a passenger
dies or is injured the
presumption is that the
CC is at fault
notwithstanding the fact
that it has exercised due
diligence of a good father
of a family in the
selection and supervision
of its EEs. Thus, extra-
ordinary measures and
diligence should be
exercised by it for the
safety of its passengers
and their belongings. A
CC can terminate an EE
whose continued service
is inimical to its interests
and the safety of the
passengers.
Carrier has duty to
keep and care for
goods carried.-- It is the
duty of the CC to
properly and carefully
handle, carry, keep and
care for the goods
carried and to exercise
due care to ascertain and
consider the nature of the
goods offered for
shipment and to use
such methods for their
care during the voyage
as their nature requires.
The carrier is liable for
injury to, or loss of, cargo
resulting from the failure
to properly care for and
handle the cargo en
route; and it is required to
provide adequate
ventilation for the safe
carriage of the cargo,
and provide reasonable
and ordinary inspection
and care in and about the
transportation of cargo. A
vessel should not accept
cargo unless it can be
given the type of storage
that its character
requires, for placing of
conditions in a bill of
lading does not relieve
the vessels of obligation
to take appropriate care
of the cargo.
Duty of carrier to
deliver cargo in good
condition as when
loaded.-- There is no
absolute obligation for a
CC to accept cargo. It
should not be accepted
unless it can be given the
type of storage that its
character requires.
Where a vessel accepts
a cargo for shipment for
valuable consideration, it
takes the risk of
delivering it in good
condition as when it was
loaded. And if the fact of
improper packing is
known to the carrier or
his servants, or apparent
upon ordinary
observation, but it
accepts the goods
notwithstanding such
condition, it is not
relieved of liability for
loss or injury resulting
therefrom.
In the exercise of extra-
ordinary diligence
required by law, the CC
must give due regard to
all circumstances and
take all steps necessary
to insure the safety of the
passengers and the
goods given the
circumstances.
Presumption of
negligence.-- Under Art.
1735, if the goods are
proved to have been lost,
destroyed or
deteriorated, CC are
presumed to have been
at fault or to have acted
negligently, unless they
prove that they have
observed the extra-o
diligence required by law.
The plaintiff needs only
to prove that the goods
he transported have
been lost, destroyed or
deteriorated
CC must then prove that
he has exercised extra-
ordinary diligence
required by law or that
the loss, etc. was due to
accident or some other
circumstances
inconsistent with its
liability
Mere proof of delivery of
goods in order to a
carrier, and of their arrival
at the place of
destination in bad order
makes out a prima facie
case against the CC
Defenses available to
CC:
Art. 1734
Art. 1735 (exercise of
extra-ordinary diligence
required by law)
Natural disaster: The CC
is exempt from liability if
he proves that the loss or
destruction of the
merchandise was due to
accident and force
majeure and not to fraud,
fault or negligence on the
part of the EEs and
owners of the CC.
CC cannot interpose the
defense that it exercised
due diligence in the
selection and supervision
of EEs. The liability of the
CC arises from breach of
the contract of carriage
and not from culpa
aquiliana. It is however
the duty of CC to teach
their drivers not to
overload vehicles, not to
exceed safe and legal
speed limits, and other
safety precautions.
Carrier not insurer.--
CC are not required to
exercise all the care, skill
and diligence of which
the human mind can
conceive nor such as will
free the transportation of
passengers from all
possible perils. A CC is
F: The Govt. of the
not an insurer of the
Philippines, acting
safety of the passengers
through the Insular
and is not absolutely and
Purchasing Agent,
at all events to carry
employed the services of
them safely and without
petitioner, Ynchausti
injury.
Steamship Co., a
common carrier for the
transportation, on

Ynchausti Steamship Co.

vs Dexter 41 Phil 289

18
TRANSPORTATION AND MARITIME LAW
board the steamship
Venus, from the port of
Manila to the port of
Appari, Cagayan, of
consignments of
merchandise, consisting
of 30 cases of Wine
Rose mineral oil of two 5-
gallon cans to the case.
On another occasion, the
Govt. also sent 96 cases
of Cock brand mineral oil,
ten gallons to the case.
The goods were
delivered by the shipper
to the carrier which
accordingly received
them, and to evidence
the contract of
transportation, the parties
duly executed and
delivered what is
popularly called Govt. bill
of lading, whereby it was
stipulated that the carrier,
Ynchausti, received the
above -mentioned
supplies in apparent
good condition, obliging
itself to carry said
supplies to the place
agreed upon.
Both shipments arrived
with one case missing
per shipment. Ynchausti
denied negligence.
However, upon
investigation, the Insular
Auditor decided that the
leakages were due to
Ynchausti's negligence.
The Insular Auditor
deducted the amount of
the lost goods from the
entire amount payable to
Ynchausti. Petitioner
refused to accept the
warrant. Hence, this
action was filed.
Issue : Is Ynchausti
liable for the loss? YES.
Ratio : Sec. 646 of the
Administrative Code
provided that when Govt.
property is transmitted
from one source to
another by carrier, it shall
be upon proper bill of
lading or receipt, from
such carrier; and it shall
be the duty of the
consignee or his
representative to make
all notation of any
evidence of loss,
shortage, or damage, on
the bill of lading or
receipt before
accomplishing it. It is
admitted by petitioner
that the consignee, at the
time the goods were
delivered, noted the
losses in the respective
bill of ladings. Such
notation made in
obedience to the code, is
competent evidence to
show that the shortage
did exist. Inasmuch as
the fact of loss was
proven, it results in the
presumption that the
petitioner was to blame
for the loss; and it was
incumbent upon the
petitioner to rebut that
presumption by proving
that the loss was not due
to any fault or negligence
of the petitioner.
The mere proof of
delivery of goods in good
order to a carrier, and of
their arrival at the place
of destination in bad
order, makes out a prima
facie case against the
carrier, so that if no
explanation is given as to
how the injury occurred,
the carrier must be held
responsible. It is
incumbent upon the
carrier to prove that the
loss was due to accident
or some other
circumstance
inconsistent with its
liability. Indeed, if the
Govt. had instituted an
action in court against
petitioner to recover the
value of the oil lost, it
would, based on the
facts, be entitled to
judgment. In the absence
of proof showing that the
carrier was not at fault for
the loss, the Insular
Auditor was entitled to
withhold the amount
admittedly due to the
petitioner for the freight
charges, a sum sufficient
to cover the value of the
oil lost in transit.
Mirasol vs Dollar 53 Phil
124
F: Mirasol was the owner
of two cases of
Encyclopedia Brittanica
shipped in good order
and condition on board
Dollar's steamship,
President Garfield, to be
transported from New
York to Manila. The
books arrived in bad
order and damaged
condition, resulting in
total loss of one case and
partial loss of the other.
Mirasol filed claims, but
Dollar refused to pay
alleging that the damage
was caused by sea water
and that Mirasol entered
into a contract providing
that Dollar will not be
held liable for loss or
damage of merchandise
resulting from "acts of
God" or "perils of the
sea," and that in no case
shall it be held liable
beyond $ 250 for any
article not enclosed in a
package unless a higher
value is stated therein
and ad valorem freight
paid or assessed
thereon. The LC ruled in
favor of Mirasol for
payment of P 2,080.
Issue : WON Dollar may
be held liable. YES.
Ratio: There was no
claim or pretense that
Mirasol signed the bill of
lading or that he knew of
its contents. In that
situation, he was not
legally bound by the
clause limiting Dollar's
liability.

Where it appears that a
bill of lading was issued
to a shipper containing a
clause limiting the
carrier's liability, printed
in fine letters on the back
of the bill of lading, which
the shipper did not
sign and of which he was
not advised, the shipper
is not bound by the
clause limiting liability
and the stipulation is void
or against public policy.
Shippers who are forced
to ship goods in an
ocean liner have legal
rights. When the goods
are delivered on board
the ship in good order
and condition and the
carrier delivers them to
the shipper in bad order
and condition, in an
action for damages, the
burden of proof shifted
and it devolves upon the
carrier to both allege and
prove that the goods
were damaged by reason
of some act which legally
exempts it from liability.
Having received the
boxes in good condition,
its legal duty was to
deliver them in the same
condition as received.
Dollar, having admitted
that the goods were
damaged while in transit
and in its possession, the
burden of proof then
shifted and it devolved
upon him to allege and
prove that the damage
was caused by reason of
some fact which
exempted it from liability.
As to when and how the
goods were damaged in
transit is a matter
peculiarly within the
knowledge of the carrier
and its employees. To
require Mirasol to prove
such, would force him to
rely upon the EEs of
Dollar's ship, which in
legal effect would be to
say that he could not
recover damages at all.
Since Dollar was not
even able to prove that
the goods were wet with
sea water due to a
fortuitous event, it must
be presumed that the
carrier was liable.
2. Exemption from
liability
Proof of the delivery of
the goods in good order
to a carrier, and of their
arrival at the place of
destination short or in
bad order, makes a
prima facie case; it is
incumbent on the carrier,
in order to exonerate
itself, to prove that the
loss or injury was due to
some circumstances
inconsistent with its
liability
(a) Natural disaster
Art. 1734. Common
carriers are responsible
for the loss,
destruction, or
deterioration of the
goods, unless the same
is due to any of the ff.
causes only:
(1) Flood, storm,
earthquake, lightning,
or other natural
disaster or calamity;
xxx
Art. 1739. In order that the
common carrier may be
exempted from
responsibility, the natural
disaster must have been
the proximate and only
cause of the loss.
However, the common
carrier must exercise due
diligence to prevent or
minimize loss before,
during and after the
occurrence of flood, storm,
or other natural disaster in
order that the common
carrier may be exempted
from liability for the loss,
destruction, or
deterioration of the goods.
The same duty is
incumbent upon the
common carrier in case of
an act of the public enemy
referred to in Art. 1734
(2).
Art. 1740. If the CC
negligently incurs in
delay in transporting
the goods, a natural
disaster shall not free
such carrier from
responsibility.
Art. 361. Merchandise
shall be transported at
the risk and venture of
the shipper, if the
contrary has not been
expressly stipulated.
As a consequence, all
the losses and
deteriorations which
the goods may suffer
during the
transportation by
reason of fortuitous
event, force majeure, or
the inherent nature and
defect of the goods,
shall be for the account
and risk of the shipper.
Proof of these
accidents is incumbent
upon the carrier. (Code
of Commerce.)
4 Agbayani:
19
TRANSPORTATION AND MARITIME LAW
diligence in minimizing
the loss, he may yet be
held liable
Effect of New Civil
notwithstanding the fact
Code.-- Transportation of
that the loss, destruction
the merchandise "at the
or deterioration of the
risk and venture of the
goods arose out of
shipper" means that the
natural disaster.
shipper will suffer losses
and deterioration arising
from fortuitous event,
force majeure, or
inherent nature and 3. Art. 1740 -- the CC
defects of the goods. It must not be in delay. If
does not mean that the the CC incurs in delay, a
carrier is free from natural disaster shall not
liability for losses and free it from responsibility.
deterioration arising from Under Art. 1165 par. 3, if
his negligence or fault, the obligor incurs delay,
w/c is presumed. Thus he shall be responsible
construed, par. 1 of Art. for any fortuitous event
361 is not inconsistent until he has effected
with Art. 1735 of the delivery.
NCC.

However, if between the

Requisites for defense delay or refusal of the CC
of natural disaster: to transport the goods
and the loss of the goods
due to an act of God
there intervened the
shipper's negligence,
1. Art. 1739 -- natural
thus causing a break in
disaster must have been
the chain of causation
the proximate and only
between the act of God
cause of the
which caused their loss
and the CC's fault, the
act of God is the
proximate cause of the
loss loss and the carrier's
delay or refusal to
2. The CC must exercise transport the goods, is
due diligence to prevent merely the remote cause.
or minimize the loss In such cases, the
before, during and after shipper is not even
the occurrence of flood, entitled to set up the
storm, or other natural claim of contributory
disaster. If the CC does negligence. It is then
not exercise due necessary that it be
established that the CC cargo was stored in YC's
was guilty of a willful or warehouse.
negligent act and that
between this willful or Several days later, the
negligent act and the act lorcha arrived and the
of God, no negligence on goods were loaded.
the part of the shipper However, as the lorcha
intervened. was being towed, a storm
arose, drove the lorcha to
the shore and wrecked it,
scattering the goods on
the beach. YC's laborers
Accident due to defects
proceeded to gather up
of carrier not caso
the goods. As it was
fortuito.-- Accidents
impossible to preserve
caused either by defects
the goods, they were
in the carrier or through
sold at a public auction.
the negligence of the
Plaintiff filed an action for
carrier is not caso
damages for P 20,000.
fortuito. The passenger
LC decided that plaintiff
or shipper has every right
was entitled only to P
to presume that the
14,642.63.
carrier is perfectly in
good condition and could
transport him safely and
securely to his
destination Issues: (1) WON the
carrier is relieved from
liability due to force
majeure. YES.
Tan Chiong San vs
Ynchausti & Co., 22 Phil
152
(2) WON the carrier is
liable for the loss of the
cargo and for failure to
deliver the same at the
F: Ynchausti and Co.
place of destination. NO.
received from Ong Bien
Sip in Manila 205
bundles of goods to be
conveyed by YC's
steamer to Gubat in Ratio: (1) It is a proven
Sorsogon, and there to fact that the loss or
be transhipped to damage to the goods
another vessel belonging shipped on the said
to YC and transported to lorcha was due to the
Catarman, in Samar. As force majeure which
the lorcha Pilar, which caused the wreck of the
was to transport the said craft. Accdg. to Art.
goods to Catarman was 361 of the Code of
not yet in Gubat when Commerce, merchandise
the cargo arrived, the shall be transported at
the risk and venture of
the shipper, unless the
contrary be expressly
stipulated. No such
stipulation appears of
record, therefore, all
damages and impairment
suffered by the goods in
transportation, by reason
of accident, force
majeure, or by virtue of
the nature or defect of
the articles, are for the
account and risk of the
shipper. The carrier is
exempt from liability if he
is able to prove, as he
did prove, that the loss or
destruction of the
merchandise was due to
accident and force
majeure and not to fraud,
fault or negligence on the
part of the captain or
owner of the ship -- that
the loss was a result of
the stranding of Pilar
because of the hurricane
that overtook it.
(2) The record bears no
proof that said loss
caused by the
destruction of Pilar
occurred through the
carelessness or
negligence of the
defendant, its agents or
patron of the lorcha. The
defendant as well as its
agents and patron had a
natural interest in
preserving the craft -- an
interest equal to that of
the plaintiff. The record
discloses that Pilar was
manned by an
experienced patron and a
sufficient number of
crewmen plus the fact
that it was fully equipped.
The crewmen took all the
precautions that any
diligent man should have
taken whose duty it was
to save the boat and its
cargo, and by the instinct
of self- preservation of
their lives. Considering,
therefore, the conduct of
the men of the defendant
Pilar and of its agents
during the disaster, the
defendant has not
incurred any liability
whatsoever for the loss
of the goods, inasmuch
as such loss was the
result of a fortuitous
event or force majeure,
and there was no
negligence or lack of
care or diligence on the
part of the defendant or
its agents.
Loss of a ship and of its
cargo, in a wreck due to
accident or force
majeure must, as a
general rule, fall upon
their respective owners,
except in cases where
the wrecking or stranding
of the vessel occurred
through malice,
carelessness or lack of
skill on the part of the
captain or because the
vessel put to sea is
insufficiently repaired and
prepared. (Art. 841, Code
of Commerce)
Martini Ltd. vs
Macondray & Co., 39
Phil 934
F: Martini shipped on
board the Easter, owned
by the Australian
Steamship Co.
represented in the
Philippines by
Macondray, 219 cases of
chemicals for Kobe,
Japan. Upon arrival in
Kobe, it was discovered
that the shipment was
damaged by rain and sea
water. Martini claims that
it was the ship's duty to
stow the cargo in the
hold and not to place it
on the deck exposed to
the elements. Macondray
denied any responsibility
on the ground that the
contract of affreightment
clearly states that the
cargo was to be carried
on deck at shipper's risk
as evidenced by the
words "on deck at
shipper's risk" stamped
on the bill of lading.
Ordinarily, when a
shipper wishes to avail of
space on board a ship,
he first obtains a shipping
order from the ship
owner. This shipping
order is authority for the
ship's officers to accept
the shipper's cargo.
When signed by the
ship's mate, this would
constitute the mate's
receipt showing that the
cargo has been taken
aboard. The shipper
would then present this
receipt to the agent of the
ship's company who
would then issue the bill
of lading. However, in
this case, the shipper
obtained the bill of lading
without first presenting
the mate's receipt (so as
to expedite the
negotiation of the bill with
the banks). By doing so,
the shipper entered into a
written guaranty, binding
himself to abide by the
terms of the mate's
receipt which in this case
obtained a stipulation
that the cargo shall be
shipped on or under the
deck at the option of the
ship and at shipper's risk.
In this case, plaintiff
protested the
arrangement but when
the defendant informed
them that the cargo could
be discharged if they
were dissatisfied, plaintiff
did not order its
discharge. The CFI ruled
for Martini.
Issues: (1) WON
plaintiff consented to
having the cargo carried
on deck. YES.
(2) WON defendant was
negligent and thus liable
for the damage to the
cargo. NO.
 cargo on deck. The bill of
lading plainly showed
that the cargo would be
Ratio: While Martini
so carried. The plaintiff
would have greatly
was duly notified as to
preferred for the cargo to
the manner by which was
be carried under the
the cargo was to be
hatches, they
shipped. They only
nevertheless consented
protested after the bill
for it to go on deck.
had been negotiated at
Codina, an EE of Martini,
the bank and even when
if attentive to the
there was time to stop
interests of his company,
the shipment, they failed
must have known from
to give the necessary
the tenor of the guaranty
instructions thereby
which he signed that
manifesting
defendant had reserved
acquiescence.
the right to carry the

20
TRANSPORTATION AND MARITIME LAW

In every contract of If goods shipped are

affreightment, losses by found to have been
dangers of the seas are damaged, the burden of
excepted from the risk proof is on the carrier to
which the carrier takes show that the damage
upon himself whether the was due to fortuitous
exception is expressed in events. But, even if the
contract or not. The damage is caused by
exception is made by law one of the excepted
and falls within the causes, the carrier is still
general principle that no responsible if the injury
one is responsible for might have been avoided
fortuitous events. But by the exercise of
then this general law is reasonable skill and
subject to the exception attention on their part.
that when the inevitable However, in this case,
accident is preceded by where the shipper
fault of the carrier, consented to the
without which it would not conditions of carriage,
have happened, then he the burden of proof is
becomes responsible for shifted to the shipper.
it.

As there is no allegation
The carrier is responsible or proof of negligence on
for safe and proper the part of the carrier in
storage of the cargo, and protecting the cargo from
there is no doubt that by rain or sea water and as
the general maritime law the complaint clearly
he is bound to secure the indicates that the
cargo safely under deck. damage was due to it
If he carries the goods on being kept on deck, and
deck without the consent such manner of carriage
of the shipper and the having been consented
goods are damaged or to by the plaintiff, the
lost in consequence of defendant is absolved. It
being exposed, the is not permissible for the
carrier cannot protect court, in the absence of
himself by showing that any allegation or proof of
they were damaged or negligence, to attribute
lost by the dangers of the negligence to the ship's
sea. When the shipper employees in the matter
consents to his goods of protecting the goods
being carried on deck, he from rains and storms.
takes the risk upon
himself.
Eastern Shipping Lines
vs IAC, 150 SCRA 463
Issue: Should petitioner
be exempted from liability
under Art. 1734 on the
ground that the loss of
the vessel by fire comes
under the phrase "natural
disaster or calamity?"
NO.
Ratio: Fire may not be
considered a natural
disaster or calamity. This
must be so as it arises
almost invariably from
some act of man or by
human means. It does
not fall within the
category of an act of God
unless caused by
lightning or by another
natural disaster or
calamity. It may even be
caused by the actual fault
or privity of the carrier.
Art. 1680 which
considers fire as an
extra-ordinary fortuitous
event does not apply
since it refers only to
leases of rural lands
where a reduction of rent
is allowed when more
than 1/2 of the fruits have
been lost due to such
event.
As the peril of fire is not
comprehended under Art.
1734, Art. 1735 applies
and the CC shall be
presumed to have been
at fault or to have acted
negligently, unless it
proves extra-ordinary
diligence. The burden is
on the CC.
The LC and the CA found
that there was lack of
diligence on the part of
CC amounting to actual
fault. Even if the fire were
to be considered a
natural disaster under
Art. 1734, it is required
under Art. 1739 that the
disaster must have been
the proximate and only
cause of the loss, and
that the CC exercised
due diligence to prevent
or minimize the loss
before, during or after the
occurrence of the
disaster. Nor may
petitioner seek refuge
under COGSA since fire
is only an exempting
circumstance if not
caused by actual fault or
privity of the carrier.
Issue: On the $500 Per
Package Limitation
Ratio: Petitioner carrier
avers that its liability
should not exceed $500
per package as provided
in Section 4(5) of the
COGSA, which reads:
"(5) Neither the carrier
nor the ship shall in any
event be or become
liable for any loss or
damage to or in
connection with the
transportation of goods in
an amount exceeding
$500 per package xxx or
in case of goods not
shipped in packages, per
customary freight unit, or
the equivalent of that
sum in other currency,
unless the nature and
value of such goods have
been declared by the
shipper before shipment
and inserted in the bill of
lading."
Article 1749, NCC also
allows the limitations of
liability in that it provides
that "a stipulation that the
CC's liability is limited to
the value of the goods
appearing in the bill of
lading, unless the shipper
or owner declares a
greater value, is binding."
of a higher value of the
goods by the shipper in
the bill of lading. The
provisions of the COGSA
on limited liability are as
much a part of a bill of
lading as though
physically in it and as
much a part thereof as
though placed therein by
agreement of the parties.
In these cases, there is
no stipulation in the
respective bills of lading
limiting the carrier's
liability for the loss or
destruction of the goods.
Nor is there a declaration
of a higher value of the
goods. Hence, petitioner
carrier's liability should
not exceed $ 500 per
package, or its peso
equivalent, at the time of
the payment of the value
of the goods lost, but in
no case "more than the
amount of damage
actually sustained."

The liability was

It is to be noted that the
computed as: 128
Civil Code does not of
cartons (shipping unit) x
itself limit the liability of
$500 = $64,000. The
the CC to a fixed amount
cartons and not the
per package, although
containers should be
the Code expressly
considered as the
permits a stipulation
shipping unit.
limiting such liability.
Thus, the COGSA, which
is suppletory to the Civil
Code, steps in and
supplements the Code by Dissenting : Yap, J.
establishing a statutory
provision limiting the
carrier's liability in the
absence of a declaration
There is no evidence that exempted from liability
the containers were for the loss,
carrier- supplied. The destruction, or
shipper must have saved deterioration of the
on freight charges by goods. The same duty
using containers for is incumbent upon the
shipment. The containers common carrier in case
should be considered as of an act of the public
the shipping unit. enemy referred to in
Art. 1734 (2).

(b) Act of public enemy

4 Agbayani:

Art. 1734. Common

carriers are responsible Acts of public enemy.--
for the loss, This defense is not
destruction, or absolute. Under 1739, in
deterioration of the order for the CC to be
goods, unless the same exempted from liability,
is due to any of the (1) the act of the public
following causes only: enemy must have been
the proximate and only
xxx cause; and (2) the CC
must have exercised due
(2) Act of the public diligence to prevent or
enemy in war, whether minimize the loss before,
international or civil; during and after the act
of the public enemy
causing the loss,
destruction or
Art. 1739. In order that deterioration of the
the common carrier goods.
may be exempted from
responsibility, the
natural disaster must
have been the (c) Act or omission of the
proximate and only shipper
cause of the loss.
However, the common
carrier must exercise
due diligence to
Art. 1734. Common
prevent or minimize
carriers are responsible
loss before, during and
for the loss,
after the occurrence of
destruction, or
flood, storm, or other
deterioration of the
natural disaster in
goods, unless the same
order that the common
is due to any of the
carrier may be
following causes only:
xxx (3) Act or omission of
the shipper or owner of
the goods;

21
TRANSPORTATION AND MARITIME LAW
deterioration of the
goods, unless the same
is due to any of the
following causes only:

Art. 1741. If the shipper (4) The character of the

or owner merely goods or defects in the
contributed to the loss, packaging or in the
destruction or containers;
deterioration of the
goods, the proximate
cause thereof being the
negligence of the
Art. 1742. Even if the
common carrier, the
loss, destruction, or
latter shall be liable in
deterioration of the
damages, which,
goods should be
however, shall be
caused by the
equitably reduced.
character of the goods,
or the faulty nature of
the packing or of the
containers, the
Act or omission of the common carrier must
shipper.-- The act or exercise due diligence
omission of the shipper to forestall or lessen
must be the proximate the loss.
cause of the loss,
destruction or
deterioration of the
goods. If the shipper
merely contributed to the
loss,etc. and the
proximate cause is still
the negligence of the CC,
the CC shall still be liable
for damages although the
damages shall be
equitably reduced.

(d) Character of goods,

etc.

Art. 1734. Common

carriers are responsible
for the loss,
destruction, or
Art. 366. Within the
twenty four hours
following the receipt of
Rule: As long as the
the merchandise, a
damage to the goods
claim may be brought
was due purely to the
against the carrier on
inherent nature or defect
account of damage or
of the goods or of the
average found therein
containers thereof, the
on opening the
CC cannot be held
packages, provided
responsible. However,
that the signs of the
under 1742, the CC must
damage or average
exercise due diligence to
giving rise to the claim
forestall or lessen the
may not be known from
loss for it to completely
the exterior part of the
escape liability.
packages, and in case
that they may be so
ascertained, said claim
shall only be admitted
at the time of the Govt. vs Ynchausti, 40
receipt of the Phil 219
packages.

F: Plaintiff shipped a
After the periods cargo of roofing tiles from
mentioned have Manila to Iloilo on a
elapsed, or after the vessel owned by
transportation charges Ynchausti. Defendant
have been paid, no stamped on the bill of
claim whatsoever shall lading the condition that
be admitted against the the goods have been
carrier with regard to accepted for
the condition in which transportation subject to
the goods transported the conditions prescribed
were delivered. (Code by the Insular Collector of
of Commerce.) Customs. The tiles were
delivered by defendant to
the consignee of the
plaintiff at Iloilo. Upon
delivery, it was found that
Claims for damages must
some of the tiles had
be made at the time the
been damaged. The LC
goods are delivered
absolved the defendant
unless the indications of
from any liability since
the damage cannot be
the defendant was able
ascertained from the
to prove that the tiles
exterior of the package,
were leaded, stored and
in which case such
discharged by hand labor
written claims must be
and not by any
made w/in 24 hours from
mechanical device.
delivery
Defendant proved,
without dispute from the the articles. The plaintiff,
plaintiff, that there was to hold the defendant
no negligence on its part, liable, was obliged to
the tiles being discharged prove that the damage to
by handlabor and not by the tiles, by virtue of their
mechanical device. nature, occurred on
account of the
defendant's negligence
or because the latter did
not take precaution
usually adopted by
careful persons.
Issue : WON the terms
and conditions of the bill
of lading were binding
upon the plaintiff. YES.
The defendant
proved,and the plaintiff
did not attempt to dispute
that the tiles were of a
Ratio: The defendant brittle and fragile nature
placed said stamp upon and that they were
the bill of lading before delivered to the
the plaintiff shipped the defendant without any
tiles, and that having packing or protective
shipped the tiles under covering. The plaintiff,
said bill, with the terms not having proved
and conditions of negligence on the part of
carriage stamped the defendant, is not
thereon, the govt. must entitled to recover
be deemed to have damages.
assented to said terms
and conditions. The
binding effect of the
conditions stamped on
Southern Lines vs CA, 4
the bill of lading did not
SCRA 256
proceed from the
Collector of Customs, but
from the actual contract
which the parties made.
Each bill of lading is a F: The city of Iloilo
contract and the parties requisitioned for rice from
thereto are bound by its NARIC in Manila. NARIC
terms. shipped from Manila to
Iloilo 1726 sacks of rice
on board the SS Gen.
Wright belonging to
Southern Lines. After the
The defendant, to free
city paid for the rice, it
itself from liability, was
was noted that 41 sacks
only obliged to prove that
were missing. The city
the damages suffered by
filed a complaint against
the tile were by virtue of
NARIC and Southern
the nature or defect of
Lines to recover the
amount. The LC
absolved NARIC but
ordered Southern Lines
to pay. The CA affirmed.
Issue: WON petitioner is
liable for the loss or
shortage. YES.
Ratio: Under Art. 361 of
the Code of Commerce,
the carrier, in order to
free itself from liability,
was only obliged to prove
that the damage suffered
by the goods were by
virtue of defects of the
articles. Under Art. 362,
the plaintiff in order to
hold the carrier liable,
was obliged to prove that
the damage to the goods
by virtue of their nature,
occurred on account of
the carrier's negligence
or because the carrier did
not take the precaution
adopted by careful
persons.
Petitioner claims
exemption based on the
fact that the sacks were
in bad condition and that
rice was improperly
packed causing a lot of
spillage of the rice while
it was being loaded.
Southern Lines'
contention is untenable,
for if the fact of improper
packing is known to the
carrier or its servants or
apparent upon ordinary
observation, but it
accepts the goods
notwithstanding such
condition, it is not
relieved of liability for
loss or injury resulting
therefrom. Furthermore,
the petitioner itself frankly
admitted that the strings
tying the bags of rice
were broken, that some
bags were with holes and
plenty of rice were spilled
inside the hull of the
vessel, and that the boat
personnel collected 26
sacks of rice, which they
distributed among
themselves. This shows
that the shortage resulted
from the negligence of
the petitioner.
This is an action for
refund of the amount
paid in excess of delivery
and is not for damages.
Therefore, the 24 hour
rule under Art. 366 does
not apply.
(e) Order of competent
authority
Art. 1734. Common
carriers are responsible
for the loss,
destruction, or
deterioration of the
goods, unless the same
is due to any of the
following causes only:
xxx
(5) Order or act of
competent public
authority.

22
TRANSPORTATION AND MARITIME LAW
An argument resulted in
the shooting of
Tumambing. The loading
Art. 1743. If through
of the scrap iron was
order of public
resumed but the acting
authority the goods are
mayor arrived and
seized or destroyed,
ordered Captain Niza to
the common carrier is
dump the scrap iron. The
not responsible,
acting mayor took the
provided said public
rest to the compound of
authority had power to
NASSCO and took
issue the order.
custody of the scrap iron.
Tumambing filed an
action for damages
against Ganzon based
4 Agbayani: on culpa contractual. The
TC and CA held Ganzon
liable.

Order or act of
competent authority.--
Under 1743, the CC is Held: Ganzon contended
not responsible for the that the scrap iron had
loss, etc. of the goods if not been unconditionally
the public authority had placed under his custody
power to issue the order. and control to make him
Where the officer acts liable. However, he
without legal process, the admitted that he received
CC will be held liable. the scraps of iron which
Tumambing delivered to
him. By the said act of
delivery, the scraps were
Ganzon vs CA, 161 unconditionally placed in
SCRA 646 the possession and
control of the common
carrier and upon their
receipt by the carrier for
transportation, the
F: Gelacio Tumambing
contract of carriage was
contracted the services
deemed perfected. The
of Ganzon to haul 305
carrier's extraordinary
tons of scrap iron from
responsibility for the loss,
Mariveles, Bataan to the
destruction, or
port of Manila on board
deterioration of the goods
the lighter LCT Batman.
commenced.
When half of the scrap
iron was already loaded,
the mayor of Mariveles
arrived and demanded P
5,000 from Tumambing.
Pursuant to Art. 1736,
such extra-ordinary
responsibility would
cease only upon the
delivery, actual or
constructive, by the
carrier to the consignee
or to the person who has
the right to receive them.
The fact that part of the
shipment had not been
loaded on board the
lighter did not impair the
said contract of
transportation as the
goods remained in the
custody and control of
the carrier, albeit still
unloaded.
Ganzon failed to show
that the loss was due to
any causes under Art.
1734. We cannot sustain
the theory of caso
fortuito. The carrier
raised the defense that
the loss was due to an
order or act of competent
public authority. The
carrier, however, failed to
show that the acting
mayor had the power to
issue the disputed order
or that it was lawful or
issued under legal
process of authority. The
order was part of the
pressure by the mayor to
shakedown Tumambing
for P 5,000. The order did
not constitute valid
authority for Ganzon to
carry out.
In any case, the
intervention of the
municipal officials was
not of a character that
would render impossible
the fulfillment by the
carrier of its obligation.
The petitioner was not
duty bound to obey the
illegal order to dump into
the sea the scrap iron.
There is absence of
sufficient proof that the
issuance of the order
was attended with such
force or intimidation as to
completely overpower
the will of the carrier's
EEs.
Melencio-Herrera,
Dissenting: Through the
order or act of competent
public authority, the
performance of the
contract was rendered
impossible. The captain
has no control over the
situation just as
Tumambing had no
control over the situation.
3. Duration of
Extraordinary
Responsibility
Art. 1736. The arrival of the goods and
extraordinary has reasonable
responsibility of the opportunity thereafter
common carrier lasts to remove them or
from the time the otherwise dispose of
goods are them.
unconditionally placed
in the possession of,
and received by the
carrier for 4 Agbayani:
transportation until the
same are delivered,
actually or
constructively, by the
carrier to the When carrier's
consignee, or to the responsibility begins.--
person who has a right Under Art. 1738, the
to receive them, extra-o responsibility of
without prejudice to the the CC begins from the
provisions of Art. 1738. time the goods are
delivered to the carrier.
The delivery to the CC
must place the goods to
be transported
Art. 1737. The common unconditionally in the
carrier's duty to possession of the CC
observe extra-ordinary and the CC must receive
diligence in the them. Otherwise, the
vigilance over the extra-ordinary
goods remains in full responsibility of the CC
force and effect even will not commence.
when they are
temporarily unloaded
or stored in transit,
unless the shipper or
owner has made use of When carrier's
the right of stoppage in responsibility
transitu. terminates.-- Under
1738, the extra-ordinary
responsibility of the CC is
terminated at the time the
goods are delivered to
Art. 1738. The extra- the consignee or the
ordinary liability of the person who has a right to
common carrier receive them (actual or
continues to be constructive delivery).
operative even during
the time the goods are
stored in a warehouse
of the carrier at the
place of destination Constructive delivery:
until the consignee has Notice by the CC that the
been advised of the cargo had already
arrived, placing them at
the disposal of the
shipper or consignee
releases CC from extra-
ordinary responsibility.
From such moment the
consignee or shipper
should exercise over the
cargo the ordinary control
pertinent to ownership
(should unload cargo
from the CC)
Shipper bound to
observe all diligence in
obtaining delivery of
goods.-- The shipper is
bound to observe all
diligence in obtaining
delivery of the goods.
Once the goods are
delivered, the extra-
ordinary responsibility of
the CC ceases.
Liability of shipper for
delay in obtaining
delivery of goods,
demurrage.-- The
shipper is liable for lost
earnings occasioned by
the unnecessary delay in
the use of the vehicles
belonging to the carrier,
due in turn to the failure
of the former, upon
receipt of notice of the
arrival of the goods at the
place of destination, to
unload forthwith and take
away the cargo from the
vehicles. This is a charge
for demurrage (addtl.
service provided by CC)
Effect of storing in
transit.-- Under 1737,
the temporary unloading
or storage of the goods
during the time that they
are being transported
does not interrupt the
extra-ordinary
responsibility of the CC
Exception: Where the
shipper or owner
exercises its right of
stoppage in transitu (the
act by which the unpaid
vendor of goods stops
their progress and
resumes possession of
them, while they are in
the course of transit from
him to the purchaser, and
not yet actually delivered
to the latter. This is
exercised when the
buyer is or becomes
insolvent.)
Responsibility of
carrier when right
exercised.-- The extra-
ordinary responsibility of
the CC ceases when the
goods being transported
are temporarily unloaded
or stored in transit be
reason of the exercise of
the right of stoppage in
transitu by the unpaid
seller. The CC holds the
goods in the capacity of
an ordinary bailee or
warehouseman upon the
theory that the exercise
of the right of stoppage
in transitu terminates the
contract of carriage
(ordinary diligence is
required)

23
TRANSPORTATION AND MARITIME LAW
of Cia Maritima for the
shipment of bales of
hemp from Davao to
Manila. The bales were
loaded into CC's lighters.
Effect of storage in One of the lighters sunk.
warehouse of carrier.-- The insurance co. paid
Under 1738, the extra- Macleod and filed to
ordinary responsibility of collect from CC. CC
the CC does not cease denied liability on the
notwithstanding the fact grounds that the hemp
that the goods being was loaded on a barge
transported are stored in owned by the CC free of
the warehouse of the CC charge, that there was no
at the place of bill of lading issued
destination. Extra- thereby resulting to the
ordinary responsibility nonexistence of a
ceases only after the contract of carriage, that
consignee has been the sinking was due to a
advised of the arrival of fortuitous event, and that
the goods and has had the insurance co. has no
reasonable opportunity to personality to sue.
remove them or
otherwise dispose of
them.

Held: There was a

complete contract of
carriage the
Liability as a consummation of which
warehouseman (ordinary has already begun when
diligence) arises only the shipper delivered the
when the consignee has cargo to the carrier and
been advised of the the latter took possession
arrival of the goods and of the same by placing it
has had reasonable on a lighter manned by
opportunity to remove its EEs, under which
them or otherwise Macleod became entitled
dispose of them to the privilege secured
to him by law for its safe
transportation and
delivery, and the carrier
Cia Maritima vs to the full payment of its
Insurance Co. of North freight upon completion
America, 12 SCRA 213 of the voyage. The
barges or lighters were
merely employed as the
first step of the voyage,
which is part of the
F: Macleod and Co.
contract.
contracted the services

The receipt of the goods
by the carrier has been
said to lie at the
foundation of the contract
to carry and deliver, and
if no goods are received
there can be no such
contract. The liability and
responsibility of the
carrier under a contract
for the carriage of goods
commence on their
actual delivery to, or
receipt by the carrier or
an authorized agent, of
the goods. The test as to
whether the relation of
shipper and carrier had
been established is: Had
the control and
possession of the goods
been completely
surrendered by the
shipper to the CC.
Whenever the control
and possession of goods
passes to the carrier and
nothing remains to be
done by the shipper, then
it can be said with
certainty that the relation
of shipper and carrier has
been established.
The bill of lading is not
indispensable to a
contract of carriage. It is
merely documentary
proof of the agreement of
the parties.
There was no force
majeure. The reason for
the damage or the loss
was lack of adequate
protections and
measures taken by the
carrier to prevent the
loss.
Lu Do vs Binamira, 101
Phil 120
F: Delta Co. of NY
shipped six cases of films
and photographic
supplies consigned to
Binamira. The shipped
arrived in Cebu and
discharged her cargo,
placing it in the
possession and custody
of the arrastre operator
appointed by the Bureau
of Customs. The cargo
was checked both by the
stevedoring co. as well
as by the arrastre
operator and was found
in good order. In the
contract of carriage,
however, it was
stipulated that the carrier
is no longer liable for the
cargo upon its delivery to
the hands of the custom
authorities. The cargo
was delivered to
Binamira and some
goods were missing.
Held: The general rule is
that CC's responsibility to
observe extra-ordinary
diligence lasts from the
time the goods are
placed in the possession
of the carrier until they
are delivered to the
consignee. BUT this rule
applies only when the
loss, destruction and
deterioration of the goods
F: Klepper shipped one
takes place while the
lift van containing
goods are in the
personal and household
possession of the carrier
effects from Yokohama to
and not after it has lost
Manila. While the lift van
control of them. While the
was being unloaded by
goods are in its
crane, it fell on the pier
possession, it is but fair
damaging its contents.
that it exercise extra-
The TC found for
ordinary diligence
Klepper.

in protecting them from

damage and if loss
occurs, the law presumes
that it was due to its fault
or negligence.
While delivery to the
customs authorities is not
delivery to the consignee,
the parties may however,
agree to limit the liability
of the carrier considering
that the goods have still
to go through the
inspection of the customs
authorities before they
are actually turned over
to the consignee. This
stipulation is not contrary
to morals or public policy.
This is a situation where
the CC loses control of
the goods because of
custom regulations and it
is unfair that it be made
responsible for any loss
or damage during such
interregnum.
APL vs Klepper, 110 Phil
243
Held: APL does not
question the finding that
the damage was due its
negligence but contends
that its liability cannot
exceed $500 based on
the bill of lading and Sec
4(5) of the COGSA.
Regardless of its
negligence, the carrier's
liability would attach
because being a CC, its
responsibility is extra-
ordinary and lasts from
the time the goods are
placed in its possession
until they are delivered,
actually or constructively,
to the consignee or to the
person who has a right to
receive them.
The carrier should only
pay $ 500; the shipper
who accepted the bill of
lading is bound by its
terms. COGSA is merely
suppletory to the
provisions of the NCC
which govern the
contract.
Agreement Limiting of the owner or
Liability shipper;

That the common

carrier will not be liable
for any loss,
As to diligence required
destruction or
deterioration of the
goods;

Art. 1744. A stipulation

between the common
carrier and the shipper
That the common
or owner limiting the
carrier need not
liability of the former
observe any diligence
for the loss or
in the custody of
destruction, or
deterioration of the
the goods;
goods to a degree less
than extra-ordinary
That the common
diligence shall be valid,
carrier shall exercise a
provided it be:
degree of diligence less
than that of a good
In writing, signed by
father of a family, or of
the shipper or owner;
a man of ordinary
prudence in the
Supported by a
vigilance over the
valuable consideration
movable transported;
other than the service
rendered by

the CC; and

That the common
Reasonable, just and carrier shall not be
not contrary to public responsible for the acts
policy. or omissions of his or
its employees;

Art. 1745. Any of the

following or similar That the common
stipulations shall be carrier's liability for
considered acts committed by
unreasonable, unjust thieves, or of robbers
and contrary to public who do not act with
policy: grave or irresistible
threat, violence or
That the goods are force, is dispensed with
transported at the risk or diminished;
24
TRANSPORTATION AND MARITIME LAW

(7) That the common Art. 1750. A contract

carrier is not fixing the sum that may
responsible for the be recovered by the
loss, destruction, or owner or shipper for
deterioration of goods the loss, destruction, or
on account of the deterioration of the
defective condition of goods is valid, if it is
the car, vehicle, ship, reasonable and just
airplane or other under the
equipment used in the circumstances, and has
contract of carriage. been fairly and freely
agreed upon.

Art. 1751. The fact that

the common carrier has Ysmael vs Barreto, 51
no competitor along Phil 90
the line or route, or a
part thereof, to which
the contract refers shall
be taken into F: Plaintiff sought to
consideration of the recover from defendant
question of whether or the alleged value of 4
not a stipulation cases of merchandise
limiting the common which it delivered to a
carrier's liability is vessel of defendant at
reasonable, just and in the port of Manila to be
accordance with public shipped to Surigao, but
policy. which were never
delivered to consignee.
Defendant relied on
clause 7 of the bill of
(b) As to amount liability lading where it provided
that actions not brought
within 60 days from the
time the cause of action
Art. 1749. A stipulation accrued shall be barred,
that the common and on clause 12 which
carrier's liability is provided that the
limited to the value of defendant is not liable for
the goods appearing in any package in excess of
the bill of lading, P 300 unless the value
unless the shipper or and contents of such
owner declares a package are correctly
greater value, is stated in the bill of lading
binding. at the time of the
shipment. Plaintiffs
complaint was filed a little
less than 6 months after
the shipment was made.
Held: The evidence
shows that 164 cases
were shipped valued at P
2,500 a case. The limit of
defendant's liability for
each case for loss or
damage from any cause
or for any reason, would
put it in the power of the
defendant to take the
whole cargo of 164 cases
at a value of P 300/ case,
or less than 1/8 of its
actual value. If that rule
should be sustained, no
silk would ever be
shipped. Such limitation
of value is
unconscionable and void
as against public policy.
The validity of
stipulations limiting the
carrier's liability is to be
determined by their
reasonableness and their
conformity to the sound
public policy. It cannot
lawfully stipulate for
exemption from liability
unless such exemption is
just and reasonable and
unless the contract is
freely and fairly made.
No contractual limitation
is reasonable which is
subversive of public
policy. A CC cannot limit
its liability for injury or
loss where such is
caused by its own
negligence, unskillfulness
or carelessness of its
EEs. The rule rests on
public policy. The shipper
and CC are not on equal
terms; the shipper is
entirely at the mercy of
the CC unless protected
by the law. Such
contracts are wanting in
the element of voluntary
assent.
The action was brought
within reasonable time
considering the distance
between Surigao and
Manila and the fact that
plaintiff had to make a full
investigation to
determine liability.
Stipulations limiting the
time for bringing suit
must be reasonable,
otherwise they can be
declared void.
Heacock vs Macondray,
42 Phil 205
F: Plaintiff shipped
Edmonton clocks from
NY to Manila on board
defendant's vessel. It
was agreed in the bill of
lading that the value of
the goods receipted do
not exceed $500 per
freight on or in proportion
for any part of a ton,
unless the value be
expressly stated in the
bill
and freight paid. It was
also agreed that in the
event of claims for
shortage or damage the
carrier shall not be liable
for more than the net
invoice price plus freight
and insurance less
charges, and any loss or
damage for which the
carrier may be liable shall
be adjusted pro rata on
said basis. The clocks
were not delivered
despite demands.
Plaintiff claimed P420 as
the
MV of the clocks, while
defendant claimed
P76.36 as the
proportionate freight ton
value.
Held: Three kinds of
stipulations have often
been made in a bill of
lading. First, one
exempting the carrier
from any and all liability
for loss or damage
occasioned by its own
negligence. Second, one
providing for an
unqualified limitation of
such liability to an agree
valuation. Third, one
limiting the liability of the
carrier to an agreed
valuation unless the
shipper declares a higher
value and pays a higher
rate of freight. The first
and second stipulations
are invalid as contrary to
public policy. The third is
valid and enforceable.
A stipulation in the bill of
lading limiting the liability
of the CC to a specified
amount unless the
shipper declares a higher
value and pays a higher
freight is valid and
enforceable. If a CC
gives to a shipper the
choice of 2 rates, the
lower of them
conditioned upon his
agreeing to a stipulated
valuation of his property
in case of loss, even by
the carrier's negligence, if
the shipper makes the
choice understandingly
and freely, and names
his valuation, he cannot
thereafter recover more
than the value which he
thus places upon his
property.
Shewaram vs PAL, 17
SCRA 606
F: Plaintiff bought a plane
ticket from Zamboanga to
Manila. When he arrived
in Manila, his suitcase
was tampered with and
his camera and radio
were lost. PAL contended
that plaintiff was bound
by the conditions printed
at the back of his ticket
which provided that the
liability of PAL for any
loss is limited to the
value of the thing unless
the passenger declares
in advance a higher
valuation and pays an
additional charge, and
that the value is
conclusively deemed not
to exceed P 100/ticket.
Held : Two requisites
must be fulfilled in order
that the liability of PAL be
limited according to the
stipulations behind the
ticket stub : (1) the
contract is just and
reasonable under the
circumstances; and (2) it
has been fairly and freely
agreed upon. (Art. 1750)
The fact that the
conditions are printed at
the back of the ticket stub
in letters so small that
they are hard to read
would not warrant the
presumption that plaintiff
was aware of those
conditions such that he
had "fairly and freely
agreed" to those
conditions. PAL has
admitted that passengers
do not sign the ticket.
Also the carrier cannot
limit his liability for injury
or loss of goods shipped
when such injury or loss
was caused by its own
negligence. (Arts. 1734,
1735)
Ong Yiu vs CA, 91
SCRA 223
F: Atty. Ong Yiu was a
passenger on a PAL
Cebu-Butuan flight to
attend court hearings in
Butuan. His suitcase was
accidentally sent to
Manila. PAL-Manila sent
the suitcase to Butuan
but the lock had been
opened and a folder
containing court
documents was missing.
Plaintiff refused to accept
the luggage. PAL-Cebu
delivered the luggage to
Ong Yiu with the promise
to investigate the matter.
Plaintiff sued and was
awarded moral and
exemplary damages. CA
reversed holding that
PAL was guilty of simple
negligence and denied
moral and exemplary
damages but ordered
PAL to pay P100, the
baggage liability
assumed by it under the
condition of carriage
printed on the back of the
ticket.
Held: PAL incurred delay
in the delivery of
petitioner's luggage.
However, there was no
bad faith. The liability of
PAL was limited to the
stipulations printed on
the back of the ticket.
While the passenger had
not signed the plane
ticket, he is nevertheless
bound by the provision
thereof; such provisions
have been held to be
part of the contract of
carriage and valid

25
TRANSPORTATION AND MARITIME LAW
and binding upon the
passenger regardless of
the latter's lack of
knowledge or assent to
the regulation. It is what
is known as a contract of
adhesion wherein one
party imposes a ready
made form of contract on
the other; it is not entirely
prohibited. The one who
adheres to the contract is
in reality free to reject it
entirely; if he adheres, he
gives his consent. A
contract limiting liability
upon an agree valuation
does not offend against
the policy of the law
forbidding one from
contracting against his
own negligence.
Considering that
petitioner had failed to
declare a higher value for
his baggage, he cannot
be permitted a recovery
in excess of P 100.00.
Besides, passengers are
advised not to place
valuable items inside
their baggage. Also,
there is nothing in the
evidence to show the
actual value of the goods
allegedly lost by
petitioner.
PAN AM vs IAC, 164
SCRA 268
F: This is a petition filed
by Pan Am to limit its
liability for lost baggage
containing promotional
and advertising materials
for films to be exhibited in
Guam and the US, clutch
bags, barong tagalogs
and personal belongings
of Rene Pangan to the
amount specified in the
airline ticket absent a
declaration of a higher
valuation and payment of
additional charges.
Pan Am contends that its
liability for lost baggage
is limited to $600 ($20 x
30 kilos) as the latter did
not declare a higher
value for his baggage.
Such stipulation is
printed at the back of the
ticket.
Held : Pan Am cited Ong
Yiu vs CA. Such case is
squarely applicable in
this case. The ruling in
Shewaram vs PAL is
inapplicable since it was
premised on the fact that
the conditions printed at
the back of the ticket
were so small and hard
to read.
Liability is limited to $600
as stipulated at the back
of the ticket.
The SC reversed the CA
ruling awarding
respondent damages for
lost profits. The rule laid
down in Mendoza vs PAL
provides that before
damages can be
awarded for loss of
profits on account of
delay or failure of
delivery, it must have
appeared that CC had
notice at the time of
delivery to him of the
particular circumstances
attending the shipment,
and which probably
would lead to such
special loss if he
defaulted. In the absence
of a showing that Pan
Am's attention was called
to the special
circumstances requiring
prompt delivery of the
luggage, it cannot be
held liable for the
cancellation of
respondent's contracts as
it could not have
foreseen such an
eventuality when it
accepted the luggage for
transit.
Pan Am vs Rapadas,
209 SCRA 67
F: Jose Rapadas was en
route from Guam to
Manila. While standing in
line to board the flight, he
was ordered by Pan Am's
handcarry control agent
to check in his Samsonite
attache case. He
protested on the ground
that other passengers
were permitted to
handcarry bulkier
baggages. He tried to
check-in without having
to register his attache
case. He was however
forced to register his
baggage. He gave his
attache case to his
brother who checked it in
for him without declaring
its contents or the value
of its contents. Upon
arriving in Manila, he was
given all his checked-in
baggages except the
attache case. Since he
felt ill, he sent his son to
request for the search of
the missing luggage. He
sent letters of demand to
Pan Am.
Pan Am offered to settle
the claim for $160,
representing the CC's
alleged limit of liability for
loss or damage to a
passenger's personal
property. Rapadas filed
this action for damages.
He alleged that Pan Am
discriminated or singled
him out in ordering that
his luggage be checked
in; that Pan Am
neglected its duty in the
handling and
safekeeping of his
attache case from the
point of embarkation in
Guam to his destination
in Manila; that the value
of the lost attache case
and its contents is
$42,403.90. According to
him, the loss resulted in
his failure to pay certain
obligations, failure to
remit money sent through
him to relatives, inability
to enjoy the fruits of his
retirement and vacation
pay and inability to return
to Tonga Construction
Co. to comply with then
existing contracts. During
the trial, he showed proof
of the contents of his
attache case.
Pan Am contended that
the claim was subject to
the Notice of Baggage
Liability Limitations
attached to the ticket.
Such notice was also
conspicuously posted in
its offices. It alleged that
its liability is limited to
$160 because Rapadas
did not declare a higher
value and did not pay the
corresponding additional
charges.
The lower court ruled in
favor of Rapadas. It
however did not find Pan
Am guilty of
discriminatory acts or
bad faith. CA affirmed the
decision.
Issue: WON a passenger
is bound by the terms of
a passenger ticket
declaring that the
limitations of liability set
forth in the Warsaw
Convention as amended
by the Hague Protocol
shall apply in case of
loss, damage or
destruction to a
registered luggage of a
passenger. YES. Pan Am
was ordered to pay $400
and P 10,000 as
attorney's fees and costs
of suit.
Held: There is no dispute
that there was a notice
appearing on page 2 of
the ticket stating that the
Warsaw Convention
governs in case of death
or injury to a passenger
or of loss, damage or
destruction to a
passenger's luggage.
Such notice should be
sufficient notice showing
the applicability of the
Warsaw limitations. The
passenger, upon
contracting with the
airline and receiving the
plane ticket, was
expected to be vigilant
insofar as his luggage is
concerned. If the
passenger fails to
adduce evidence to
overcome the
stipulations, he cannot
avoid the application of
the liability limitations.
The Warsaw Convention,
as amended, specifically
provides that it is
applicable to international
carriage which it defines
as "any carriage in which,
according to the
agreement between the
parties, the place of
departure and the place
of destination xxx are
situated either within the
territories of two High
Contracting Parties or
within the territory of a
single High Contracting
Party if there is an
agreed stopping place
within the territory of
another State xxx."
Nowhere in the Warsaw
Convention is such
detailed notice of
baggage liability
limitations required. It is
however a common, safe
and practical custom for
air carriers to indicate
beforehand the precise
sums equivalent to those
fixed by Art. 22(2) of the
Convention.
The facts show that
Rapadas actually refused
to register his attache
case. In attempting to
avoid registering the
luggage, he manifested a
disregard of airline rules
on allowable handcarried
baggages. Prudence
dictates that cash and
jewelry should be
removed from checked-in
luggage and placed in
one's pockets or
handcarried. The alleged
lack of enough time for
him to make a
declaration of a higher
value and to pay the
corresponding
supplementary charges
cannot justify his failure
to comply with the
requirement that will
exclude the application of
limited liability. Had he
readily complied with
airline regulations from
the start, this situation
would not have arisen.
While contracts of
adhesion are not entirely
prohibited, neither is
blind reliance on them
encouraged. In the face
of facts showing they
should be ignored
because of their basically
one- sided nature, the
Court does not hesitate
to rule out blind
adherence to their terms.
The SC is not saying that
passengers are always
bound to the stipulated
amounts printed on a
ticket, found in a contract
of adhesion, or printed
elsewhere but referred to
in handouts or forms.
The Court simply
recognizes that the
reasons behind
stipulations on liability
limitations arise from the
difficulty, if not
impossibility, of
establishing with a clear
preponderance of
evidence the contents of
a lost suitcase. Unless
the contents are
declared, it will always be
the word of a passenger
against that of the airline.
If the loss of life or
property is caused by the
gross negligence or
arbitrary acts of the
airline or the contents of
the lost luggage are
proved by satisfactory
evidence other than the
self-serving declarations
of one party, the Court
will not hesitate to
disregard the fine print in
a contract of adhesion.
Otherwise, the Court is
constrained to rule that
we have to enforce the Art. 1746. An
contract as it is the only agreement limiting the
reasonable basis to common carrier's
arrive at a just award. liability may be
annulled by the shipper
or owner if the CC
refused to carry the
(c) Factors affecting goods unless the
agreement former agree to such
stipulation.

26
TRANSPORTATION AND MARITIME LAW
limiting the liability of
the common carrier in
the vigilance over the
Art. 1747. If the
goods, the common
common carrier,
carrier is disputably
without just cause,
presumed to have been
delays the
negligent in case of
transportation of the
their loss, destruction
goods or changes the
or deterioration.
stipulated or usual
route, the contract
limiting the common
carrier's liability cannot
be availed of in case of 4 Agbayani:
the loss, destruction, or
deterioration of the
goods.
Kinds of stipulation
limiting liability.-- The
following stipulations are
Art. 1748. An often made in a bill of
agreement limiting the
common carrier's lading bill of lading:
liability for delay on
account of strikes or
riots is valid. 1. stipulation
exempting the CC from
any and all liability for
loss or damage
Art. 1751. The fact that occasioned by its own
the common carrier has negligence - VOID
no competitor along 2. stipulation
the line or route or a providing for an
part thereof, to which unqualified limitation of
the contract refers shall such liability to an agreed
be taken into stipulation - VOID
consideration on the
question of whether or
not a stipulation 3. stipulation limiting the
limiting the common liability of the CC to an
carrier's liability is agreed valuation unless
reasonable, just, and in the shipper declares a
consonance with public higher value and pays a
policy. higher rate of freight --
VALID and
ENFORCEABLE

Art. 1752. Even when

there is an agreement
When stipulation
limiting liability valid.--
Under 1744, the shipper
or owner and the CC
may stipulate to limit the
liability of the CC for the
loss, destruction or
deterioration of goods to
a degree less than extra-
ordinary diligence :
the stipulation must be in
writing and signed by
both parties;
the stipulation must be
supported by valuable
consideration other than
the service
rendered by the CC;
3. the stipulation must be
reasonable, just and not
contrary to public policy.
This applies only when
the CC is acting as such
but not when it acts as a
private carrier [in Home
Insurance vs American
Steamship Co., the SC
held that the Civil Code
provisions on CC should
not be applied where the
CC is not acting as such
but as a private carrier;
such policy has no force
where the public at large
is not involved]
The parties may stipulate
that the diligence to be
exercised by the CC be
less than extra-ordinary
diligence, provided that
the requirements under
Article 1744 are complied
with. However, the
parties cannot reduce the
diligence to less than that
of a good father of a
family. Art. 1745 provides
for 7 stipulations which
shall be considered
unreasonable, unjust and
contrary to public policy.
Construction of
stipulations limiting
common carrier's
liability.-- An exemption
in general words not
expressly relating to
negligence, even though
the words are wide
enough to include loss by
negligence or default of
CC's servants, must be
construed as limiting the
liability of the CC as
assurer, and not as
relieving him from the
duty of exercising
reasonable skill and care
Effect of lack of
competitor to common
carrier.-- Under 1751,
the lack of competition of
the CC shall be
considered in
determining WON a
stipulation limiting CC's
liability is reasonable, just
and in consonance with
public policy.
Examples of valid
stipulations:
1. 1748 - an agreement
limiting the CC's liability
for delay on account of
strikes or riots
2. 1749, Heacock vs
Macondray - a stipulation
that the CC's liability is
limited to the value of the
goods appearing in bill of
lading unless the shipper
or owner declares a
greater value
3. 1750 - a contract fixing
the sum that may be
recovered by the owner
or shipper for the loss,
destruction or
deterioration of the
goods, if it is reasonable
and just under the
circumstances, and has
been fairly and freely
agreed upon
Under 1746, an
agreement limiting the
CC's liability may be
annulled by the shipper
or owner if the CC
refused to carry the
goods unless the former
agreed to such
stipulation. The effect of
the shipper's consent
obtained by means of
refusal on the part of the
carrier to carry the goods
is to make the agreement
limiting the CC's liability
voidable at the instance
of the shipper
Principles : [St. Paul
Insurance vs Macondray,
70 SCRA 122]
1. A stipulation in the bill
of lading limiting the CC's
liability to the value of the
goods appearing in the
bill, unless the shipper or
owner declares a greater
value, is valid and
binding.
2. The insurer who pays
the insured on his claim
for damage is merely
subrogated to the rights
of the insured; therefore,
said insurer cannot
collect from the CC more
than what the insured
can collect from the CC.
3. The obligation to pay
the damage begins from
the date it fails to deliver
the shipment in good
condition to the
consignee (on the basis
of the rate of exchange
on that date).
Effect of delay in
transportation, etc.--
Under 1747, the CC
cannot avail of the
contract limiting his
liability in these cases :
(1) where the CC delays
the transportation of the
goods; (2) where the CC
changes the stipulated or
usual route [in both
cases, the delay or
change of route must be
without just cause]
Presumption as to
negligence in case of
limited liability.-- Under
1752, the presumption
continues even when
there is an agreement
limiting the liability of the
CC in the vigilance of the
goods. This presumption
is disputable or
rebuttable by evidence
that the CC exercised
extra-ordinary diligence.
5. Applicable Law in
foreign trade
Art. 1753. The law of
the country to which
the goods are to be
transported shall
govern the liability of
the common carrier for
their loss, destruction
or deterioration.
4 Agbayani:
The Civil Code governs
the liability of the CC in
case of loss, damage or
deterioration. Under
1766, in all matters not
regulated by the Civil
Code, the rights and
obligations of CC shall be
governed by the Code of
Commerce and by
special laws which are
suppletory to the
provisions of the Civil
Code.
6. Rules on Passenger
Baggage
Art. 1754. The
provisions of Arts.1733
to 1753 shall apply to
the passenger's
baggage which is not in
his personal custody or
in that of his
employees. As to other
baggage, the rules in
Articles 1998 and 2000
to 2003 concerning the
responsibility of hotel
keepers shall be
applicable.
Art. 1998. The deposit
of effects made by
travelers in hotels and
inns shall also be
regarded as necessary.
The keepers of hotels
and inns shall be
responsible for them as
depositaries, provided
that notice was given to
them, or to their
employees, of the
effects brought by the
guests and that, on the
part of the latter, they
take the precautions
27
TRANSPORTATION AND MARITIME LAW

which said hotel- Art. 2002. The

keepers or their hotelkeeper is not
substitutes advised liable for compensation
relative to the care and if the loss is due to the
vigilance of their acts of the guest, his
effects. family, servants or
visitors, or if the loss
arises from the
character of the things
Art. 2000. The brought into the hotel.
responsibility referred
to in the preceding
article shall include the
loss of, or injury to the Art. 2003. The
personal property of hotelkeeper cannot free
the guests caused by himself from
the servants or responsibility by
employees of the posting notices to the
keepers of hotels or effect that he is not
inns as well as by liable for the articles
strangers; but not that brought by the guest.
which Any stipulation
between the
hotelkeeper and the
guest where the
may proceed from any responsibility of the
force majeure. The fact former as set forth in
that travelers are Arts. 1998 to 2001 is
constrained to rely on suppressed or
the vigilance of the diminished shall be
keeper of the hotel or void.
inn shall be considered
in determining the
degree of care required
of him. Classes of baggage of
passengers.-- The law
makes a distinction
between (1) baggage in
Art. 2001. The act of a the custody of the
thief or robber, who has passengers or their EEs;
entered the hotel is not and (2) baggage not in
deemed force majeure, such custody but in that
unless it is done with of the CC.
the use of arms or
through irresistible
force.
Liability for baggage in
custody of passenger.--
Art. 1754 refers to Arts.
1998, 2000- 2003
concerning the
responsibility of hotel
keepers. Under 1998, the
baggage of passengers
in their personal custody
or in that of their EEs
while being transported
shall be regarded as
necessary deposits. The
CC shall be responsible
for such baggage as
depositaries, provided
that (1) notice was given
to them or to their EEs, of
the baggage brought by
their passengers, and
that
(2) the passengers take
the precautions which
said CCs advised relative
to the care and vigilance
of their baggage.
Responsibility for acts
of EEs, thieves.-- Under
2000, a CC is
responsible as a
depositary for the loss of
or injury to the baggage
in the personal custody
of passengers, caused
by the CC's servants or
EEs but not those
caused by force majeure.
Under 2001, the act of a
thief or robber, who has
entered the CC's vehicle
is not deemed force
majeure, unless it is done
with the use of arms or
through irresistible force.
Under 2002, the CC is
not liable if the loss of the
baggage in the personal
custody of the passenger
is due to the acts of the
passengers, his family,
servants or visitors, OR if
the loss arises from the
character of the
baggage.
Stipulations limiting
liability.-- Under 2003, a
CC cannot free himself
from responsibility by
posting notices to the
effect that he is not liable
for the baggage brought
by the passengers. Any
stipulation diminishing
the responsibility
required under 1998 to
2001 shall be void.
Liability for baggage
not in custody of
passenger.-- This refers
to baggage delivered to
the custody of the CC
and received by him, to
be carried in the same
manner as other goods
being transported by him.
As the CC has custody of
such baggage and are
carried like any other
goods, the provisions on
carriage of goods shall
apply (extra-ordinary
diligence in the vigilance
over the goods).
 nature of their business
and for reasons of
public policy, are
The moment the effects
bound to observe
of a passenger are
extraordinary diligence
unconditionally placed in
in the vigilance over
the possession of and
the goods and for the
received by a carrier for
safety of the
conveyance, the law
passengers
immediately imposes on
transported by them,
the CC extra-
according to the
circumstances of each
case.

ordinary responsibility for

the loss thereof which
lasts until the actual or
Such extraordinary
constructive delivery of
diligence in the
the effects to the
vigilance over the
passenger as the person
goods is further
who has the right to
expressed in Articles
receive them
1734, 1735, and 1745,
(presumption of
Nos. 5, 6, and 7, while
negligence exists but
the extraordinary
may be rebutted by proof
diligence for the safety
of exercise of
of the passengers is
extraordinary diligence or
further set forth in
causes under 1734).
Articles 1755 and 1756.

A CC is liable for the loss

of baggage although not
declared and the charges
not paid, if it accepted
them for transportation
Common Carrier of
Passengers
Art. 1755. A common
carrier is bound to
carry the passengers
safely as far as human
care and foresight can
provide, using the
utmost diligence of
very cautious persons,
with a due regard for all
circumstances.

Nature and extent of

responsibility

4 Agbayani:

Art. 1733. Common

carriers, from the
Common carriers must
exercise extraordinary
diligence in carrying
passengers.-- Art. 1755
shows clearly the high
degree of care and extra-
o diligence required of a
CC with respect to its
passengers.
Carrier's duty of
extraordinary diligence
extends also to crew
members.-- The duty to
exercise the utmost
diligence on the part of
CCs is for the safety of
passengers as well as for
the members of the crew
or the complement
operating the carrier. This
must be so for any
omission, lapse or
neglect thereof will
certainly result to the
damage, prejudice,
injuries or even death to
all aboard the plane.
Cangco vs MRR, 38 Phil
768
Facts: supra. EE riding
on train who stepped on
watermelons.
Held: The conduct of
plaintiff in undertaking to
alight while the train was
yet slightly underway was
not characterized by
imprudence and that he
was not guilty of
contributory negligence.
It is not negligence per
se for a traveler to alight
from a slowly moving
train.
MRR failed to exercise
due care in not providing
for safe exit of its
passengers. It also failed
to provide adequate
lighting for its station.
It is impt. to note that the
foundation of the legal
liability of the defendant
is the contract of
carriage, and that the
obligation to respond for
the damage which
plaintiff has suffered
arises, if at all, from the
breach of that contract by
reason of the failure of
defendant to exercise
due care in its
performance. Its liability
is direct and immediate
(culpa contractual),
differing essentially, from
that presumptive
responsibility for the
negligence of its
servants, which can be
rebutted by proof of the
exercise of due care in
the selection and
supervision of EEs
(culpa aquiliana).
The liability of masters such act or omissions
and employers for the cause damage which
negligent acts or amount to the breach of
omissions of their a
servants or agents, when

28
TRANSPORTATION AND MARITIME LAW

contract, is not based

upon a mere
presumption of the
master's negligence in
their selection or control,
and proof of exercise of
the utmost diligence and
care in this regard does
not relieve the master of
his liability for the breach
of his contract. When the Strong vs Iloilo-Negros
facts averred show a Air Express, 40 OG 269
contractual undertaking
by defendant for the
benefit of plaintiff, and it
is alleged that plaintiff F: Plaintiff was a
has failed or refused to passenger aboard
perform the contract, it is defendant's plane en
not necessary for plaintiff route from Iloilo to
to specify in his Manila. The plane's
pleadings whether the motors went dead and,
breach of the contract is notwithstanding the
due to willful fault or to efforts of its pilot, it
negligence on the part of plunged into the sea and
the defendant, or of his sank. The passengers
servants or agents. Proof and the pilot were
of the contract and of its rescued.
nonperformance is
sufficient prima facie to
warrant recovery.
Held : In aviation,
The contract of
inevitable accident is
defendant to transport
defined as one that is not
plaintiff carried with it, by
occasioned in any
implication, the duty to
degree remotely or
carry him in safety and to
directly by want of such
provide safe means of
skill or care as the law
entering and leaving its
holds for what man is
trains. That duty, being
bound to exercise.
contractual, was direct
Airplane companies are
and immediate, and its
not required to exercise
nonperformance could
all the care. Passengers
not be excused by proof
necessarily should take
that the fault was morally
upon the usual and
imputable to defendant's
ordinary perils to airplane
servants.
travel. A carrier is not an
insurer against all risks.
A carrier is not liable for
defects of ignition cables
used on his plane, nor of
the installation thereof,
which cables were
purchased from a
competent and reputable
manufacturer in the
absence of a showing
that it knew those defects
or that such kind of
ignition cable is not
ordinarily used on the
airplane operated by it.
The doctrine of res ipsa
loquitor cannot be
applied when there is no
proof that according to
the general experience of
mankind, the accident
was such that it does not
usually occur in the
ordinary course of events
without the negligence on
the part of those in
control.
Isaac vs A.L. Ammen
Trans. Co., 101 Phil
1046
F: supra. Passenger
aboard a bus who placed
his left arm on the
window lost his arm
when the bus collided
with a pick up.
Held : If the carrier's EE
is confronted with a
sudden emergency, he is
not held to the same
degree of care he would
otherwise be required in
the absence of such
emergency.
By placing his left arm on
the window, the
passenger is guilty of
contributory negligence,
and although contributory
negligence cannot relieve
the carrier but can only
reduce his liability (Art.
1762), this is a
circumstance which
militates against plaintiff's
position. It is negligence
per se for passengers to
protrude any part of his
body and that no
recovery can be had for
an injury.
Ratio: A CC is bound to
carry the passengers
safely as far as human
care and foresight can
provide, using the utmost
diligence of very cautious
persons, with due regard
for all circumstances.
This extraordinary
diligence required of
common carriers is
calculated to protect the
passengers from the
tragic mishaps that
frequently occur in
connection with rapid
modern transportation.
This high standard of
care is imperatively
demanded by the
preciousness of
human life and by the
consideration that every
person must in every way
be safeguarded against
all injury.
Principles as to liability of
CC:
(1) The liability of a
carrier is contractual and
arises upon breach of its
obligation; there is
breach if it fails to exert
extraordinary diligence
accdg. to all the
circumstances of each
case
A carrier is obliged to
carry its passenger with
the utmost diligence of a
very
cautious person, having
due regard for all the
circumstances
(3) A carrier is presumed
to have been at fault or to
have acted negligently in
case of death of, or injury
to, passengers, it being
its duty to prove that it
exercised extraordinary
diligence
(4) The carrier is not an
insurer against all risks of
travel
Landingin vs Pantranco,
33 SCRA 284
F: Plaintiffs are parents
of 2 girls who were
passengers on a
Pantranco bus on an
excursion trip from
Dagupan to Baguio. The
bus was open on one
side. The TC found that
the crossjoint of the bus
broke and the bus started
to roll back. Some
passengers jumped out.
The bus driver
maneuvered the bus
safely to the
mountainside. Two of the
girls who jumped were
seriously injured and
died.
Held : In Lasam vs
Smith, the court held that
accidents caused by
defects in the automobile
are not caso fortuito. The
rationale is that the
passenger has neither
the choice nor control
over the carrier in the
selection and use of the
equipment and
appliances in use by the
carrier.
When the passenger dies
or is injured, the
presumption is that the
CC is at fault or acted
negligently. This is only
rebutted by proof on the
carrier's part that it
observed extraordinary
diligence required in Art.
1733 and the utmost
diligence of very cautious
persons required in Art.
1755.
It does not appear that
the carrier gave due
regard for all the
circumstances with cross
joints' inspection the day
previous to the accident.
The bus was heavily
laden, and it would be
traversing mountainous,
circuitous and ascending
road. Thus the entire bus
would naturally be taxed
more heavily than it
would be under the
ordinary circumstances.
The mere fact that the
bus was inspected only
recently and found to be
in order would not
exempt carrier from
liability unless it is shown
that the particular
circumstances under
which the bus would
travel were also
considered.
Landicho vs BTC, 52
OG 764
F: Landicho boarded a
BTC bus. Before he did
so, the conductor helped
him in placing his two
baskets of chicken inside
the running board. After a
distance, he claimed that
he noticed one cage
falling and he called the
conductor's attention who
did not respond. He tried
to fix it himself resulting
in his fall in which he
suffered injuries.
Held : The facts show
that the cage was not
about to fall. Plaintiff was
probably dizzy or sleepy
that he fell from the truck.
It is true that defendant
being a CC is bound to
transport its passengers
from the point of origin to
the place of destination,
but the duty does not
encompass all the risks
attendant to a passenger
in transit, for then the co.
would be a good source
of stipend for a family
who would like to end it
all by simply boarding,
paying the fare and
intentionally falling off. It
is enough for the CC's
EEs to see to it that the
passenger places himself
safely inside the vehicle,
that it is operated
carefully and that its
mechanism is perfectly
alright to prevent
mishaps. It would be
unreasonable to exact
upon operators to
determine beforehand
whether a passenger is
likely to fall dizzy or
sleepy on the way, for
that is the lookout of the
passenger himself. A
passenger must see to it
that he seats himself in a
safe portion of the
vehicle.
29
TRANSPORTATION AND MARITIME LAW
of the defective eqpt, the
passenger has no
remedy against him. In
this case, the defect
could have been
Necesito vs Paras, 105 detected with the
Phil 75 exercise of utmost
diligence by the CC.

F: A mother and son

boarded a passenger 2. Duration of
autotruck of the Phil. responsibility
Rabbit Bus Lines. While
entering a wooden
bridge, its front wheels
swerved to the right, the
4 Agbayani:
driver lost control and the
truck fell into a creek.
The mother drowned; the
son was injured.
When relationship of
carrier and passenger
terminates.-- The
relation of CC and
Held : While the carrier is
passenger does not
not an insurer of the
cease at the moment that
safety of the passengers,
the passenger alights
it should nevertheless be
from the CC's vehicle at
held answerable for the
a place selected by the
flaws of its equipment if
CC at the point of
such flaws were
destination, but continues
discoverable. The liability
until the passenger had
of the CC rests upon
reasonable time or a
negligence or his failure
reasonable opportunity to
to exercise the utmost
leave the CC's premises.
degree of diligence that
What is a reasonable
the law requires. The
time or a reasonable
rationale of CC's liability
delay within this rule is to
for manufacturing
be determined from all
defects is the fact that
the circumstances
the passenger has
neither choice nor control
over the carrier in the
selection and use of the
eqpt. and appliances in La Mallorca vs CA, 17
use by the carrier. SCRA 739
Having no privity
whatever with the
manufacturer or vendor
F: Husband and wife
together with minor
children boarded a La
Mallorca bus. They
alighted from the bus.
The father returned to the
bus to get their baggage.
He was followed by his
daughter. While the
father was still on the
running board awaiting
for the conductor to give
his baggage, the bus
stated to run so that the
father had to jump. His
daughter was run over
and was killed. The bus
co. contended that when
she was killed, she was
no longer a passenger
and the contract of
carriage had terminated.
Held: Whether or not the
relation between carrier
and passenger does not
cease at the moment the
passenger alights from
the carrier's premises is
to be determined from
the circumstances.
In this case, there was no
utmost diligence. The
driver stopped the bus
but did not turn off the
engine. He started to run
the bus even before the
conductor gave him the
signal. The presence of
passengers near the bus
was not unreasonable
and the duration of the
responsibility still exists.
Bataclan vs Medina, 102
Phil 181
F: The bus of Medina
Trans left Cavite for
Pasay with 18
passengers. Around
dawn, the front tires burst
and the vehicles began
to zigzag until it fell into a
canal and turned turtle.
Some passengers were
able to get out while four
were trapped including
Bataclan. Later, 10 men
came to help, one of
them carrying a lighted
torch, fueled by
petroleum. A fire started,
burning the bus and the 4
passengers. Gas had
leaked when the bus
overturned.
Held: The proximate
cause of the death was
the overturning of the
vehicle which was
followed by the
negligence of the driver
and the conductor who
were on the road walking
back and forth.
They should have known
that with the position of
the bus, leakage was
possible aside from the
fact that gas when spilled
can be smelled from a
distance. The failure of
the driver and
conductor to have
cautioned or taken steps
to warn rescuers not to
bring a lighted torch too
near the bus constitutes
negligence on the part of
the agents of the carrier.
Aboitiz vs CA 179 SCRA
95
F: A farmer boarded a
boat owned by Aboitiz at
Mindoro bound for
Manila. When the vessel
arrived, Pioneer
Stevedoring took over
control of the cargoes
loaded at the vessel and
placed its crane
alongside the vessel.
One hour after he
disembarked, he went
back to get his cargo but
the crane hit him and he
died.
Held: Aboitiz is still liable
for his death under the
contract of carriage. The
relation of carrier and
passenger continues until
the passenger has been
landed at the port of
destination and has left
the vessel owner's dock.
Once created the
relationship will not
ordinarily terminate until
the passenger has safely
alighted from the carrier's
conveyance or had
reasonable opportunity
to leave the carrier's
premises. All persons
who remain on the
premises a reasonable
time after leaving the
conveyance are to be
deemed passengers and
what is reasonable time
is to be determined from
all circumstances and
includes a reasonable
time to see after his
baggage and prepare for
his departure. The CC-
passenger relationship is
not terminated merely by
the fact that the person
transported has been
carried to his destination
if the person remains in
the premises to claim his
baggage.
The test is the existence
of a reasonable cause as
will justify the presence
of the passenger near
the vessel.
A CC is bound to carry its
passengers as far as
human care and foresight
can provide, using the
utmost diligence of a very
cautious person with due
regard for all
circumstances.
PAL vs CA, G.R. 82619,
Sept. 1993
F: Pedro Zapatos was
among 21 passengers on
a PAL flight from Cebu to
Ozamis. The flight was
Cebu-Ozamis-Cotabato.
Fifteen minutes before
landing in Ozamis, the
pilot received a message
that the airport was
closed due to heavy rains
and inclement weather
and that he should
proceed to Cotabato City.
In Cotabato, PAL
informed the passengers
of their options and that
due to limited number of
seats in the other flights,
the basis for priority
would be the check-in
sequence at Cebu.
Zapatos chose to return
to Cebu but was not
accommodated because
he checked in as
passenger no. 9.
However, his personal
belongings including a
camera from Japan were
still on board the flight to
Manila. He tried to stop
the departure but his plea
fell on deaf ears. He was
given a free ticket to
Iligan City which he
received under protest.
He was left at the airport.
PAL neither provided him
with transportation from
the airport to the city
proper nor food and
accommodation for his
stay in Cotabato City.
The next day, he
purchased a ticket to
Iligan City. He informed
PAL that he would not
use the free ticket
because he was filing a
case against PAL. His
personal belongings
were never recovered.
PAL denied that it
unjustifiably refused to
accommodate Zapatos. It
alleged that there was
simply no more seat for
him on Flight 560 to
Manila; and that there
was force majeure which
was a valid justification
for the pilot to bypass
Ozamis City and proceed
directly to Cotabato City.
PAL contended that it did
not unjustifiably deny his
demand for priority over
confirmed passengers
which they could not
satisfy in view of the
limited seats. PAL also
asserted that it should
not be charged with the
task of looking after the
passengers' comfort and
convenience because the
diversion of the flight was
due to a fortuitous event,
and that if made liable,
an added burden is given
to PAL which is over and
beyond its duties under
the contract of carriage. It
argued that granting
there was negligence,
PAL cannot be liable in
damages in the absence
of fraud or bad faith.
The RTC held in favor of
plaintiff. The CA affirmed.
Held: The passenger's
complaint touched on
PAL's indifference and
inattention to his
predicament and not on
PAL's refusal to comply
with his demand for
priority over the other

30
TRANSPORTATION AND MARITIME LAW
has left the CC's
premises. Hence, PAL
necessarily would still
passengers. He claimed
have to exercise
that he was exposed to
extraordinary diligence in
the peril of Muslim rebels
safeguarding the comfort,
and that he suffered
convenience and safety
mental anguish, mental
of the stranded
torture, social humiliation,
passengers until they
besmirched reputation
have reached their final
and wounded feeling. He
destination. PAL was
referred to PAL's apathy.
therefore remiss in its
duty of extending utmost
care to Zapatos while
being stranded in
The contract of air Cotabato City.
carriage is a peculiar
one. Being imbued with
public interest, the law
requires common carriers
The CA held : "While the
to carry the passengers
failure of Zapatos to
safely as far as human
reach his destination xxx
care and foresight can
in accordance with the
provide, using the utmost
contract of carriage was
diligence of very cautious
due to the closure of the
persons, with due regard
airport on account of rain
for all the circumstances.
and inclement weather
In Air France vs
xxx it becomes the duty
Carrascoso, the SC held
of PAL to provide all
that the contract to
means of comfort and
transport passengers is
convenience to its
quite different from any
passengers when they
contractual relation in
would have to be left in a
that it invites people to
strange place in case of
avail of the comforts and
such by-passing. If the
advantages it offers. The
cause of non-fulfillment
diversion of the flight was
of the contract is due to a
due to a fortuitous event.
fortuitous event, it has to
However, such did not
be the sole and only
terminate PAL's contract
cause. Since part of the
with its passengers.
failure to comply with the
Being in the business of
obligation to deliver its
air carriage, PAL is
passengers safely to
deemed equipped to deal
their destination lay in
with situations like the
PAL's failure to provide
case at bar. The relation
comfort and convenience
of carrier and passenger
to its stranded
continues until the latter
passengers using
has been landed at the
extraordinary diligence,
port of destination and
the cause of non- passengers. This
fulfillment is not solely disputable presumption
and exclusively due to may only be overcome
fortuitous event, but due by superior evidence that
to something that PAL he had observed
could have prevented, extraordinary diligence
PAL becomes liable to prescribed in 1733, 1755,
the passenger." However 1756
the SC found that
although PAL was remiss
in its duty of extending
utmost care to Zapatos Where death or injury
while being stranded in results to the passenger
Cotabato City, there was because of the
no sufficient basis to negligence of the CC's
conclude that PAL failed Es, the CC is liable,
to inform him about his notwithstanding the fact
other options. that he had exercised all
the diligence of a good
father of a family, in the
selection and supervision
3. Presumption of of his EEs
negligence
xxx

Consequently, in an
action for damages, the
Art. 1756. In case of
issue is not WON the
death of or injuries to
party seeking damages
passengers, common
has adduced sufficient
carriers are presumed
evidence to show the
to have been at fault or
negligence of the CC but
to have acted
WON the carrier has
negligently, unless they
presented the required
prove that they
quantum of proof to
observed extraordinary
overcome the
diligence as prescribed
presumption that it has
in articles 1733 and
been at fault or that it
1755.
acted negligently in the
performance of its duty.

4 Agbayani:

In the exercise of
extraordinary diligence,
the CC must give due
Presumption of regard for all
negligence.-- CCs are circumstances in
presumed to have been connection with the
at fault or to have acted transport of passengers
negligently in case of
death or injuries to
 While the plaintiff-
passenger does not need
to prove the negligence
How presumption of
of the CC, he may not
negligence overcome.--
preclude the CC from
To overcome such
proving the legal defense
presumption, it must be
of negligence of the other
shown that the CC had
vehicle involved in the
observed the required
collision (the CC may file
extraordinary diligence or
a third-party complaint
that the accident was
against the other vehicle
for reimbursement)

caused by fortuituos
event. In order to
"Last clear chance"
constitute caso fortuito
rule not applicable to
that would exempt a
contracts of carriage.--
person from
The principle of last clear
responsibility, it is
chance applies only in a
necessary that :
suit between the owners
The event must be and drivers of two
independent of human colliding vehicles; it does
will; not apply where a
passenger demands
The occurrence must responsibility from the
render it impossible for CC to enforce its
the obligor to fulfill his contractual obligation; it
obligation in a would be iniquitous to
exempt the driver and his
normal manner; ER on the ground that
the other driver was also
The obligor must be free negligent
of a concurrent or
contributory fault or
negligence.
Court need not make
[Estrada vs Consolacion, express finding of
71 SCRA 523] carrier's fault or
negligence.-- The court
need not make an
express finding of fault or
Carrier not precluded negligence on the part of
from proving the CC in order to hold it
negligence of other responsible to pay the
carrier involved in damages sought by the
collision.-- passenger. By the
contract of carriage, the
CC assumes the express
obligation to observe
extraordinary diligence in
transporting the
passenger This is an
exception to general rule
4. Force Majeure
that negligence must be
proved.

Bachelor Express vs CA
188 SCRA 217
Carriers not ordinarily
liable for injuries to
passengers due to fires
or explosions caused
by articles brought into F: Bus No. 800 owned by
conveyance by other Bachelor Express and
passengers.-- CC is not driven by Cresencio
ordinarily liable for Rivera was the situs of a
injuries to passengers stampede which resulted
due to fires or explosions in the death of
caused by articles passengers Beter and
brought into conveyance Rautrat. The bus came
by other passengers. from Davao City on its
Fairness demands that in way to Cagayan de Oro
measuring the CC's duty passing Butuan City.
towards its passengers, While in Tabon-Tabon,
allowance should be Butuan, the bus picked
given to the reliance that up a passenger. A
should be reposed on the passenger suddenly
sense of responsibility of stabbed a PC soldier
all the passengers in which caused commotion
regard to their common and panic among the
safety (that the passengers. Two
passenger will not take passengers jumped out
with him anything (finding of the TC which
dangerous to his co- was reversed by the CA)
passengers.) For the of the bus and were
carrier to be liable, he found dead as a result of
must be aware, through head injuries. The
his EEs of the nature of passenger- assailant ran
the article or must have away from the bus but
had some reason to was killed by the police.
anticipate danger The parents of the dead
therefrom (circumstances passengers filed a
must show that there are complaint for a sum of
causes for apprehension money against the CC,
that the passenger's the owner and the driver.
baggage is dangerous
and that the CC fails to
act in the fact of such
evidence) [Nocum vs The CC denied liability and
Laguna Bus Co., 1969] alleged that the driver was
able to transport his
passengers safely to their
respective places of
destination except for the
two passengers who
jumped off the bus without
the knowledge and
consent, much less, the
fault of the driver; that the
31
CC exercised due
diligence in the choice of
its EEs to avoid as much
as possible accidents;
that the incident was not
a traffic or vehicular
accident but was an
incident very much
beyond the
TRANSPORTATION AND MARITIME LAW
control of the CC; that
the CC was not a party to
the incident as it was an
act of a third party who is
not in any way connected
with the CC and of which
they have no control and
supervision. The CC
argued that the incident's
proximate cause was the
act of the passenger who
ran amuck and which
triggered off the
commotion and panic.
The TC dismissed the
complaint. The CA
reversed and ordered the
CC, the owner and driver
solidarily liable to the
heirs of the deceased.
Held : The CC is liable for
the death of the
passengers.
Bachelor Express as a
CC is bound to carry its
passengers safely as far
as human care and
foresight can provide
using the utmost
diligence of very cautious
person, with due regard
for all the circumstances.
In this case where
passengers suffered
injuries which caused
their death, under 1756,
the CC is presumed to
have acted negligently
unless it can prove that it
had observed
extraordinary diligence.
The CC raised the
defense of caso fortuito.
Art. 1174 provides that
no person shall be
responsible for those
events which could not
be foreseen or which
though foreseen were
inevitable. In Lasam vs
Smith, the SC held that a
caso fortuito must have
the following elements:
(1) The cause of the
unforeseen and
unexpected occurrence
must be independent of
the human will; (2) It
must be impossible to
foresee the event; (3)
The occurrence must be
so as to render it
impossible for the debtor
to fulfill his obligation in a
normal manner; and (4)
The obligor must be free
from any participation in
the aggravation of the
injury resulting to the
creditor. The running
amuck of the passenger
was the proximate cause
of the incident and is
within the context of
force majeure.
However, in order that a
CC may be absolved
from liability in case of
force majeure, it is not
enough that the accident
was caused by force
majeure. The CC must
still prove that it was not
negligent in causing the
injuries resulting from
such accident. It must
prove that there was no
negligence or lack of
care and diligence on the
part of the CC.
The TC and the CA had
conflicting findings of
fact. The SC upheld the
findings of the CA-- the
driver did not
immediately stop the bus
at the height of the
commotion; the bus was
speeding from a full stop;
the victims fell from the
bus door when it was
opened or gave way
while the bus was still
running; the conductor
panicked and blew his
whistle after people had
already fallen off the bus;
the bus was not properly
equipped with doors in
accordance with law. It is
therefore clear that the
petitioners have failed to
overcome the
presumption of fault and
negligence found in the
law governing CCs.
The CC's argument that it
is not an insurer of its
passengers deserves no
merit in view of the failure
of the CC to prove that
the deaths of the 2
passengers were
exclusively due to force
majeure and not to the
failure of the CC to
observe extra-ordinary
diligence in transporting
safely the passengers to
their destinations as
warranted by law.
5. Limitation of liability;
validity of stipulations
Art. 1757. The
responsibility of the
common carrier for the
safety of passengers as
required in Arts. 1733
and 1755 cannot be
dispensed with or
lessened by stipulation,
by the posting of
notices, by statements
on tickets, or
otherwise.
Art. 1758. When a
passenger is carried
gratuitously, a
stipulation limiting the
common carrier's
liability for negligence
is valid, but not for
willful acts or gross
negligence.
The reduction of fare
does not justify any
limitation of the
common carrier's
liability.
Ticket given to a
passenger is a written
contract.-- Ticket given
to passenger is a written
contract with the ff.
elements: (1) the
consent of the
contracting parties
manifested by the fact
that the passenger
boards the ship and the
shipper consents or
accepts him in the ship
for transportation; (2)
cause or consideration
which is the fare paid by
the passenger as stated
in the ticket; (3) object,
which is the
transportation of the
passenger from the place
of departure to the place
of destination which are
stated in the ticket.
Passenger bound
notwithstanding his
failure to sign ticket
containing stipulation
limiting liability.-- Even
if the passenger failed to
sign the ticket, he is
nevertheless bound by
the provisions thereof.
Such provisions are part
of the contract of
carriage, regardless of
the passenger's lack of
knowledge or assent to
the regulation. It is what
is known as a contract of
adhesion which is not
entirely prohibited by law.
The one who adheres to
the contract is in reality
free to reject it entirely; if
he adheres, he gives his
consent. Accordingly,
where the CC incurred
delay, it is liable only for
the amount printed in the
ticket the passenger not
having declared a higher
value for his luggage nor
paid addtl. charges.
Dispensing with or
limiting liability.--
General rule: Under
1757, the extraordinary
diligence required under
1733 and 1755 for the
carriage of passengers
cannot be dispensed with
or lessened (1) by
stipulation, (2) by the
posting of notices, (3) by
statements on tickets, or
(4) otherwise
What cannot be
stipulated in a carriage of
passengers :
absolutely exempting the
CC from liability from the
passenger's death or
injuries;
lessening the
extraordinary diligence
required by law to the
diligence of a good
father of a family
Exception: Effect of
gratuitous carriage.--
Under 1758, the CC and
the passenger may
validly stipulate limiting
the CC's liability for
negligence where the
passenger is carried
gratuitously (but the
parties cannot stipulate
to entirely eliminate
liability of CC)
obligation of care is
imposed upon the driver
and owner as in the case
of one expressly invited
to ride

Effect of reduction of
fares.-- Under 1758
6. Responsibility for acts
(2), the reduction of fare
of EEs
does not justify

Art. 1759. Common

any limitation of the CC's
carriers are liable for
liability -- the law
the death of or injuries
requires gratuitous
to passengers through
passage.
the negligence or
willful acts of the
former's employees,
although such
The law is much stricter employees may have
with respect to carriage acted beyond the
of passengers as scope of their authority
compared with carriage or in violation of the
of goods: a stipulation orders of the common
limiting the CC's liability carrier.
in writing, signed by the
parties, supported by
sufficient consideration,
not contrary to law will
The liability of the
still be void where the
common carrier does
passenger is not carried
not cease upon proof
gratuitously.
that they exercised all
the diligence of a good
father of a family in the
selection and
Liability of owner of CC supervision of their
to accommodation employees.
passengers or invited
guests.-- [Lara vs
Valencia, 1958] an owner
of an automobile owes a
Art. 1760. The common
guest the duty to
carrier's responsibility
exercise ordinary or
prescribed in the
reasonable care to avoid
preceding article
injuring him; since one
cannot be eliminated or
riding in an automobile is
limited by stipulation,
no less a guest because
by the posting of
he asked for the privilege
notices, by statements
of doing so, the same
on the tickets, or Liability for negligence
otherwise. or willful acts of
employees.-- Under
1759, CC are held liable
for the death or injuries to
4 Agbayani: passengers caused by
the negligence or the
willful acts of their EEs,

32
TRANSPORTATION AND MARITIME LAW
although such EEs may
have acted beyond the
scope of their authority or
in violation of the orders
of the CC. The CC
cannot escape liability by
interposing the defense
that its EEs have acted
without any authority or
against the orders of the
CC
The passenger is entitled
to protection from
personal violence by the
CC or its agents or EEs
since the contract of
transportation obligates
the CC to transport a
passenger safely to his
destination and a CC is
responsible for the
misconduct of its EEs
Cardenas vs Fernando,
54 OG no. 4, p. 1043
(1957): (1) extraordinary
diligence required of CC:
calculated to protect the
passengers as
demanded by the
preciousness of human
life and by the
consideration that every
person must in every way
be safeguarded against
all injury; (2) liability for
injury of passenger is
based on a breach of
contract of carriage for
failure to bring the
passenger safely to his
destination
Reason for making the
CC liable for the
misconduct of its EEs
in their own interest.--
The servant is clothed
with delegated authority
and charged with the
duty by the CC, to
execute his undertaking
to carry the passenger
safely; when the EE
mistreats the passenger,
he violates the
contractual obligation of
the CC for which he
represents the CC
Liability of CC for
defects of its
equipment.-- A
passenger is entitled to
recover damages from a
CC for an injury resulting
from a defect in an
appliance purchased
from a manufacturer,
whenever it appears that
the defect would have
been discovered by the
CC if it had exercised the
degree of care which
under the circumstances
was incumbent upon it,
with regard to inspection
and application of the
necessary tests; for the
purposes of this doctrine,
the manufacturer is
considered as being in
law the agent or servant
of the CC, as far as
regards the work of
constructing the
appliance

Common carrier is
exempt from acts of EE
not done in line of
duty.-- The CC is exempt
from liability where the
EE was never in a
position in which it
became his duty to his
ER to represent him in
discharging any duty of
the CC towards the
passenger; the EE is
deemed as a stranger or
co-passenger since his
act was not done in the
line of duty
Defense of diligence in
selection, etc., of
employees.-- CC cannot
escape liability by
interposing defense that
he exercised due
diligence in the selection
and supervision of his
EEs; his liability is based
on culpa contractual
When relationship of
carrier and passenger
terminates.-- The
relation of CC and
passenger does not
cease at the moment that
the passenger alights
from the CC's vehicle at
a place selected by the
CC at the point of
destination, but continues
until the passenger had
reasonable time or a
reasonable opportunity to
leave the CC's premises.
What is a reasonable
time or a reasonable
delay within this rule is to
be determined from all
the circumstances
Elimination or
limitation of carrier's
liability.-- Under 1760,
the CC's liability for the
negligence or willful acts
of his EEs which cause
death of or injury to
passengers cannot be
eliminated or limited by
(1) stipulation, (2) by the
posting of notice, (3) by
statements on the tickets,
or (4) otherwise
Bataclan vs Medina, 104
Phil 181
F: supra. Bus turned
turtle with gas leaking
out. Rescuers brought
torches which resulted in
fire.
Held : There was a
breach of the contract of
carriage and negligence
on the part of the agent
of the CC, the driver. At
the time of the blowout of
the tires, the bus was
speeding. The proximate
cause of the death was
the overturning of the
vehicle which was
followed by the
negligence of the driver
and the conductor who
were on the road walking
back and forth. They
should have known that could foresee or avoid
with the position of the through the exercise of
bus, leakage was the degree of care and
possible aside from the diligence required of it.
fact that gas when The OCC did not impose
upon CC the absolute
liability for assaults of
their EEs upon the
spilled can be smelled passengers.
from a distance. The
failure of the driver and
conductor to have
cautioned or taken steps The act of the guard was
to warn rescuers not to entirely unforeseeable by
bring a lighted torch too MRR which had no
near the bus constitutes means to ascertain or
negligence on the part of anticipate that the two
the agents of the carrier. would meet nor could it
foresee every personal
rancor that might exist
between its EEs and its
De Gillaco vs MRR, 97 passengers. The
Phil 884 shooting was a caso
fortuito, both being
unforeseeable and
inevitable under the
circumstances.
F: Plaintiff's husband was
a passenger in the train
from Calamba to Manila.
When the train reached
the Paco Railroad, a train When the crime took
guard of MRR was in the place, the guard had no
station waiting for the duties to discharge. His
same train to take him to position would be that of
Tutuban to report for a passenger also waiting
duty. He had a long transportation and not of
standing grudge against an EE assigned to
Gillaco and he shot and discharge duties.
killed him upon seeing
him inside the train
coach.
Maranan vs Perez, 20
SCRA 412

Held : While a passenger

is entitled to protection
from personal violence F: A passenger in a
by the CC or its agents or taxicab was stabbed and
EEs, the responsibility of killed by the driver. The
the CC extends only to driver claimed self
those acts that the CC defense since accdg to
him, he was stabbed first
by the passenger. The
taxicab operator claimed
caso fortuito.
Held: The NCC unlike the
OCC makes the CC
absolutely liable for
intentional assaults
committed by its EEs
upon its passengers (Art.
1754). The CC's liability
is based on either (1)
respondeat superior or
(2) the CC's implied duty
to transport the
passenger safely. Under
respondeat superior (w/c
is the minority view), the
CC is liable only when
the act of the EE is within
the scope of his authority
and duty. Under the
second view, the CC is
liable as long as the
assault occurs within the
course of the
performance of the EE's
duty. It is no defense that
the act was done in
excess of authority or in
disobedience of the CC's
orders. The CC's liability
is absolute in the sense
that it practically secures
the passengers from
assaults committed by its
own EEs. Three cogent
reasons underlie this rule
: (1) the special
undertaking of the CC
requires that it furnish the
passengers the full
measure of protection
afforded by the exercise
of the high degree of
care prescribed in the
law, from violence and
insults in the hands of
strangers, other
passengers, and from its
own servants charged
with the passenger's
safety; (2) liability is
based on the CC's
confiding in the servant's
hands the performance
of his contract to safely
transport the passenger,
delegating therewith the
duty of protecting the
passenger with utmost
care prescribed by law;
(3) as between the CC
and the passenger, the
CC must bear the risk of
wrongful acts or
negligence of the CC's
EEs against passengers
since it has the power to
select and remove them.
It is the CC's obligation to
select its drivers with due
regard not only to their
technical competence
and physical ability but
also to their total
personality, including
patterns of behavior,
moral fiber, and social
attitude.
7. Responsibility for acts
of strangers and co-
passengers
Art. 1763. A common
carrier is responsible
for injuries suffered by
a passenger on
account of the willful
acts or negligence of
other passengers or of
strangers, if the
33
TRANSPORTATION AND MARITIME LAW
Agbayani,
COMMERCIAL LAW
REVIEWER, 1988 ed.)
common carrier's
employees through the
exercise of the
diligence of a good
father of a family could Pilapil vs CA 180 SCRA
have prevented or 546
stopped the act or
omission.

F: While on a bus, an
unidentified bystander
4 Agbayani: hurled a stone at the bus
and hit Pilapil above his
left eye. He sustained
some injuries to his eye.
The CC is responsible for
such willful acts or
negligence of other
passengers or of Held: The law does not
strangers, provided that make the CC an insurer
the CC's EEs could have of the absolute safety of
prevented or stopped the its passengers. Art. 1755
act or omission through qualifies the duty of the
the exercise of ordinary CC in exercising
diligence. If the injury vigilance to only such as
could not have been human care and foresight
avoided by the exercise can provide. The
of ordinary diligence on presumption created by
the part of the EEs of the law against the CC is
CC, the CC is not liable rebuttable by proof that
the CC had exercised
extraordinary diligence in
the performance of its
obligations and that the
Notice that the law
injuries suffered were
speaks of injuries
caused by fortuitous
suffered by the
events. The liability of the
passenger but not his
CC necessarily rests
death. However, there
upon its negligence, or its
appears to be no reason
failure to exercise the
why the common carrier
degree of diligence
should not be held liable
required by law. Under
under such
Art. 1763, the diligence
circumstances. The word
required, with regards to
"injuries" should be
its liability in cases when
interpreted to include
intervening acts of
"death." (Aguedo F.
strangers directly caused
the injury, is the diligence
only of a good father of a
family and not the
extraordinary diligence
generally required. The
rule is not so exacting as
to require one charged
with its exercise to take
doubtful or unreasonable
precautions to guard
against unlawful acts of
strangers. The CC would
only be negligent if the
tort caused by a third
person could have been
foreseen and prevented
by them.
The injury was in no way
connected to the
performance of the
obligation of the bus
company. It was caused
by a stranger, over which
the carrier had no control
or even knowledge of,
and which could not have
been prevented.
Bachelor Express vs CA,
180 SCRA 217
F: supra. A passenger
stabbed a PC officer
which caused a
commotion which
resulted in the death of 2
passengers.
Held: The CC raised the
defense of caso fortuito.
The running amuck of the
passenger was the
proximate cause of the
incident and is within the
context of force majeure.
However, in order that a
CC may be absolved
from liability in case of
force majeure, it is not
enough that the accident
was caused by force
majeure. The CC must
still prove that it was not
negligent in causing the
injuries resulting from
such accident. It must
prove that there was no
negligence or lack of
care and diligence on the
part of the CC.
The TC and the CA had
conflicting findings of
fact. The SC upheld the
findings of the CA-- the
driver did not
immediately stop the bus
at the height of the
commotion; the bus was
speeding from a full stop;
the victims fell from the
bus door when it was
opened or gave way
while the bus was still
running; the conductor
panicked and blew his
whistle after people had
already fallen off the bus;
the bus was not properly
equipped with doors in
accordance with law. It is
therefore clear that the
petitioners have failed to
overcome the
presumption of fault and
negligence found in the
law governing CCs.
The CC's argument that it
is not an insurer of its
passengers deserves no
merit in view of the failure
of the CC to prove that
the deaths of the 2
passengers were
exclusively due to force
majeure and not to the
failure of the CC to
observe extraordinary
diligence in transporting
safely the passengers to
their destinations as
warranted by law.
8. Duty of passenger;
effect of contributory
negligence
Art. 1761. The
passenger must
observe the diligence
of a good father of a
family to avoid injury to
himself.
Art. 1762. The
contributory
negligence of the
passenger does not bar
recovery of damages
for his death or
injuries, if the
proximate cause
thereof is the
negligence of the
common carrier, but
the amount of damages
shall be equitably
reduced.
Law does not protect
negligence of
passenger.-- Law does
not protect negligence of
passenger to the extent
of doing harm or damage
upon a public utility
Diligence required of
passenger.-- Diligence
of a good father of a
family to avoid injury to
himself.
Effect of negligence of
passenger.-- Where the
proximate cause of the
death of or injury to the
passenger is his own
negligence, and not that
of the CC, the CC is
exempted from liability
Effect of passenger's
contributory
negligence.--
Contributory negligence
on the part of the
passenger does not
justify the CC's
exemption from liability.
Where it is not the
proximate cause of the
death or injury, he or his
heirs are not barred from
recovery of damages,
provided of course that
the CC is the proximate
cause of his death or
injury
Cangco vs MRR 38 Phil
768
 passenger is guilty of
contributory negligence,
and although contributory
supra. EE riding on train
negligence cannot relieve
who stepped on
the carrier but can only
watermelons.
reduce his liability

Held: The conduct of

(Art. 1762), this is a
plaintiff in undertaking to
circumstance which
alight while the train was
militates against plaintiff's
yet slightly underway was
position. It is negligence
not characterized by
per se for passengers to
imprudence and that he
protrude any part of his
was not guilty of
body and that no
contributory negligence.
recovery can be had for
an injury.

The circumstances show

that it was no means so
In this case, the bus
risky for him to get off
driver had done what a
while the train was yet
prudent man could have
moving. It is not
done to avoid the
negligence per se for a
collision. The injury was
traveler to alight from a
due to passenger's fault.
slowly moving train.

Liability of air carrier

Isaac vs A. L. Ammen
under the Warsaw
Convention (Oct. 12,
1929)

F: supra. Passenger
aboard a bus who placed
his left arm on the
Art. 17. The carrier
window lost his arm
shall be liable for
when the bus collided
damages sustained in
with a pick up.
the event of death or
wounding of a
passenger or any other
bodily injury suffered
Held: By placing his left by a passenger, if the
arm on the window, the

34
TRANSPORTATION AND MARITIME LAW
shall not extend to any
transportation by land,
by sea, or by river
accident which caused
performed outside an
the damage so
airport. If however,
sustained took place
such transportation
on board the aircraft or
takes place in the
in the course of any of
performance of a
the operations of
contract for
embarking or
transportation by air,
disembarking.
for the purpose of
loading, delivery, or
transshipment, any
damage is presumed,
Art. 18. (1) The carrier subject to proof to the
shall be liable for contrary, to have been
damage sustained in the result of an event
the event of the which took place
destruction or loss of, during the
or of damage to, any transportation by air.
checked baggage or
any goods, if the
occurrence which
caused the damage so
Art. 19. The carrier
sustained took place
shall be liable for
during the
damages occasioned
transportation by air.
by delay in the
transportation by air of
passengers, baggage
or goods
The transportation by
air within the meaning
of the preceding
paragraph shall
SC has held that these
comprise the period
provisions merely declare
during which the
the carrier liable for
baggage or goods are
damages in the
in the charge of the
enumerated cases, if the
carrier, whether in an
conditions therein
airport or on board an
specified are present.
aircraft, or, in case of a
Neither said provisions
landing outside an
nor others in the
airport, in any place
Convention regulate or
whatsoever.
exclude liability for other
breaches of contract by
the carrier.

The period of the

transportation by air
Damages Recoverable Art. 2199. Except as
from Common Carriers provided by law or by
stipulation, one is
entitled to an adequate
compensation only for
In general such pecuniary loss
suffered by him as he
has duly proved. Such
compensation referred
to as actual or
Art. 1764. Damages in compensatory
cases comprised in this damages.
Section shall be
awarded with the title
XVIII of this book
concerning damages.
Article 2206 shall also Art. 2201. In contracts
apply to the death of a and quasi-contracts,
passenger caused by the damages for which
the breach of contract the obligor who acted
by a common carrier. in good faith is liable
shall be those that are
natural and probable
consequences of the
breach of the
Art. 2197. Damages obligation, and which
may be: the parties have
foreseen or could have
reasonably foreseen at
the time the obligation
Actual or was constituted.
compensatory;

Moral;
In case of fraud, bad
Nominal; faith, malice or wanton
attitude, the obligor
Temperate or moderate;
shall be responsible for
all damages which may
Liquidated;
be reasonably
attributed to the non-
Exemplary or
performance of the
corrective.
obligation.

2. Actual or
Art. 2203. The party
compensatory
suffering loss or injury
must exercise diligence
of a good father of a
family to minimize the
damages resulting from
the act or omission in If the deceased was
question. obliged to give support
according to the
provisions of article
291, the recipient who
Art. 1764. Damages in is not an heir called to
cases comprised in this the decedent's
Section shall be inheritance by the law
awarded with the title of testate or intestate
XVIII of this book succession, may
concerning damages. demand support from
Article 2206 shall also the person causing the
apply to the death of a death, for a period not
passenger caused by exceeding five years,
the breach of contract the exact duration to be
by a common carrier. fixed by the court;

Art. 2206. The amount The spouses, legitimate

of damages for death and illegitimate
caused by a crime or descendants and
quasi-delict shall be at ascendants of the
least P 3,000 (now deceased may demand
P50,000), even though moral damages for
there may have been mental anguish by
mitigating reason of the death of
circumstances. In the deceased.
addition:

Cariaga vs LTBCo., 110

The defendant shall be Phil 346
liable for the loss of the
earning capacity of the
deceased, and the
indemnity shall be paid F: Edgardo Cariaga, a
to the heirs of the fourth year medical
latter; such indemnity student of UST, was a
shall in every case be passenger of an LTBC
assessed and awarded bus which bumped
by the court, unless the against a train of MRR on
deceased on account the national highway
of permanent physical crossing a railroad tract
disability not caused by at Laguna de Bay.
the defendant, had no Cariaga suffered severe
earning capacity at the injuries on the head
time of his death; making him unconscious
during the first 35 days
after the accident,
reducing his intelligence
by 50% and rendering
him in a helpless
condition, virtually invalid,
both physically and
mentally. LTBC paid all
medical expenses plus
allowance during
convalescence. Later,
Cariaga's parents
brought an action to
recover damages from
LTBC and MRR in the
amount of P 312,000 as
actual, compensatory,
moral and exemplary
damages. LTBC
disclaimed liability and
filed a cross-complaint
against MRR for recovery
of expenses paid by it to
the plaintiff placing MRR
negligent for not
providing a crossing bar
at the national highway
railroad track. Laguna
CFI dismissed the cross-
complaint against MRR
and held LTBC liable for
P 10,000 as
compensatory damages
with interest. Plaintiff and
LTBC appealed.
Held: The train driver
was not negligent. He
sounded the train's
whistle four times before
the intersection, which
were heard even by the
35
bus passengers. The bus
did not slow down but
instead the bus driver
tried to pass the
intersection before the
train. In addition, another
LTBC bus which arrived
ahead of the bus in this
case, at the crossing
heeded the train whistle
by stopping and allowing
the train to pass. Clearly,
the bus driver was
negligent in totally
disregarding the warning.
On the other hand, MRR
cannot be held to be
contributorily negligent
because LTBC was not
able to discharge its
burden of proof when it
alleged that MRR
violated its charter by
failing to ring the
locomotive bell.
The evidence shows that
Ed C. had been rendered
physically and mentally
invalid by the accident.
He suffered head injuries
specifically a fractured
right forehead
necessitating the removal
of all the right frontal lobe
of his brain, which
reduced his intelligence
by 50% so that he can no
longer finish his medical
course. In addition, he
has to lead a quiet and
retired life
TRANSPORTATION AND MARITIME LAW
As regards the income
that he could possibly
earn as a doctor, P 300
because if the tantalum
(accdg. to LTBC witness,
plate which replaced a
Dr. Doria) could easily be
portion of his skull is
expected as minimum
pressed in or dented, it
monthly income of Ed C.
would cause his death.
had he finished his
studies. Compensatory
damages should be
increased to P 25,000.
LTBC admitted that
under Art. 2201, it is
liable for damages that
are the natural and
The claim for moral
probable consequences
damages could not be
of the breach and which
granted because Art.
the parties had foreseen
2219 enumerates the
or could have reasonably
instances when moral
foreseen at the time the
damages may be
obligation was
recovered and the
constituted. It however
present case does not
claims that the said
fall under any of them,
provision contemplates
even par. (2) thereof
only the medical,
because this case is not
hospital, and other
one of quasi-delict and
expenses in the total sum
could not be considered
of P 17,719.75. The SC
as such because of a
ruled that the income
pre-existing contractual
which Ed could earn if he
relation between Ed C.
should finish the medical
and LTBC. Neither could
course, and pass the
LTBC be liable under Art.
corresponding board
2220 because it did not
exams must be deemed
act fraudulently or in bad
included because they
faith. Attorney's fees
could have reasonably
could also not be granted
been foreseen by the
because this case does
parties at the time he
not fall under Art. 2208.
boarded the bus.

The claim by the parents

While his scholastic
for actual and
record may not be first
compensatory damages
rate, it is sufficient to
is also without merit
justify the assumption
because the present
that he could have
action is based upon a
finished his course and
breach of contract of
would have passed the
carriage and the parents
board exams in due time.
were not a party thereto,
and were not themselves
injured as a result of the
collision.
Pan Am vs IAC, 164
SCRA 268
F: supra. Baggage
containing promotional
and advertising materials
for films to be exhibited in
the US, clutch bags,
barong tagalogs and
personal belongings was
lost. PAN AM sought to
limit its liability to the
amount specified in the
ticket absent a
declaration of higher
valuation and the
payment of addtl.
charges.
Held: On the basis of
stipulations printed at the
back of the ticket, Pan
Am contends that its
liability for the lost
baggage of Pangan is
limited to $ 600.00 ($20 x
30 kilos) as the latter did
not declare a higher
value for his baggage
and pay the
corresponding charges.
The SC applied the ruling
in Mendoza vs PAL:
Before defendant could
be held to special
damages, such as
alleged loss of profits on
account of delay or
failure of delivery, it must
have appeared that he
had notice at the time of
delivery to him of the
particular circumstances
attending the shipment,
and which probably
would lead to such
special loss if he
defaulted. In order to
impose on the defaulting
party further liability than
for damages naturally
and directly, i.e. in the
ordinary course of things,
arising from a breach of
contract, such unusual or
extraordinary damages
must have been brought
within the contemplation
of the parties as the
probable result of the
breach at the time of or
prior to contracting. In the
absence of proof that
Pan Am's attention was
called to the special
circumstances requiring
prompt delivery of
Pangan's luggages,
petitioner cannot be held
liable for the cancellation
of Pangan's contracts as
it could not have
reasonably foreseen
such eventuality when it
accepted the luggage for
transit. Pan Am was not
privy to the contracts of
Pangan nor was its
attention called to the
condition therein
requiring delivery of the
promotional and
advertising materials on
or before a certain date.
No attorney's fees could
be awarded since there
was no unjustified refusal
by Pan Am to satisfy the
passenger's just and
valid claim.
Villa Rey Transit vs CA,
31 SCRA 511
F: Policronio Quintos
boarded a Villa Rey
Transit bus at Lingayen,
Pangasinan for Manila
and was seated on the
first seat right side. When
they reached the national
highway in Pampanga,
the bus frontally hit the
rear side of a bull cart
filled with hay. The end of
the bamboo pole tied to
the cart hit the windshield
and landed on the face of
Quintos who was seated
in front. He died of
cerebral injuries. His
sisters and surviving
heirs brought an action
against the bus co. The
TC and CA held Villa Rey
liable for P 63,750.00.
Held: The determination
of damages due is
dependent on 2 factors :
(1) on the no. of years on
the basis of which
damages shall be
computed (life
expectancy); and (2) rate
at which the losses
sustained should be
fixed.
CA determined life
expectancy accdg. to the
American Expectancy
Table of Mortality; and
since Quintos was
around 30 years old at
the time of his death : 2/3
x [80 - 30] = 33 1/3 years.
The bus co. wanted to
use the 4 year basis
adopted in Alcantara vs
Surro but the court held
that the case is not
controlling as it did not
lay down any rule on the
length of time to be used
in the computation of
damages. In fact, it
declared that there is no
fixed basis for
determination of
indemnity and much is
left to the discretion of
the court considering the
material damages
involved and that there
can be no exact or
uniform rule for
measuring the value of
human life and the
measure of damages
cannot be arrived at by
precise mathematical
calculations.
Villa Rey impugns the
decision on the ground
that damages will have to
be paid NOW where
most of those sought to
be indemnified will be
suffered years later. This
argument if offset by the
fact that payment of the
award will take place
upon the finality of the
decision, fixed at the rate
of P 2,184 per year and
did not anymore compute
the potentiality and
capacity of Quintos to flight from Iloilo to Manila.
increase his future The plane crashed on Mt.
income, upon conclusion Baco, Mindoro. The
of his training, when he plane, a PI-C133, was
would be promoted and manufactured in 1942
receive a higher salary. and was acquired by PAL
in 1948. It had been
certified airworthy by the
Civil Aeronautics
In determining the losses Administration. As a
sustained by the result of her son's death,
dependents and heirs of Mrs. Padilla demanded P
Quintos. they consist 600,000 as actual and
NOT of the full amount of compensatory damages
his earnings but of the plus exemplary damages
support they would have and P 60,000 attorney's
received from him had he fees.
not died. In fixing said
Prior to his death,
amount, the necessary
Nicanor Padilla was 29
living expenses should
years old, President and
therefore be deducted
General Manager of
from his earnings. The
Padilla Shipping Co. at
amount recoverable
Iloilo City, and a legal
would therefore be the
assistant of the Padilla
NET earnings, which is
Law Office. Upon
the portion which the
learning of the death of
beneficiaries would have
her son, she suffered
received. To this sum
shock and mental
must be added P12,000
anguish, because her
pursuant to Art. 104 and
son who was still single
107 of the RPC, in
was living with her.
relation to Art. 2206,
Nicanor had life
NCC and P 1,727.95 for
insurance of P 20,000,
the amount actually
the proceeds of which
spent by the sisters for
were paid to his sister.
his medical and burial
Eduardo Mate of the
expenses and
Allied Overseas Trading
Co. testified that the
deceased was one of the
incorporators of the co.
P 2, 500 attorney's fees. and also its VP with a
monthly salary of P 455.
Isaac Reyes, auditor of
Padilla Shipping Co.,
PAL vs CA, 185 SCRA declared that the
110 deceased was President
and General Manager
and received a salary of
P 1,500 per month.
F: In 1960, Nicanor
Padilla boarded the PAL
The RTC and the CA based on the life
awarded damages of P expectancy of the
477,000 as award for the deceased rather than on
expected income of the the life expectancy of the
deceased, P 10,000 as mother. Accdg. to it, the
moral damages; P life expectancy of the
10,000 as attorney's fees deceased or of the
and to pay the costs. PAL beneficiary, whichever is
appealed the decision shorter, is used in
since accdg. to it, the computing for amount of
court erred in computing damages.
the awarded indemnity

36
TRANSPORTATION AND MARITIME LAW

Art. 2217. Moral

damages include
physical suffering,
Held: Under Arts. 1764
mental anguish, fright,
and Article 2206 (1), the
serious anxiety,
award of damages for
besmirched reputation,
death is computed on the
wounded feelings,
basis of the life
moral shock, social
expectancy of the
humiliation, and similar
deceased and not of the
injury. Though
beneficiary. In this case,
incapable of pecuniary
the lower courts
computation, moral
determined the deceased
damages may be
gross annual income to
recovered if they are
be P 23,100 less P 9,200
the proximate result of
as living expenses,
the defendant's
resulting in a net income
wrongful act or
of P 13,900. The lower
omission.
court allowed the
deceased a life
expectancy of 30 years.
Multiplying his annual net
income by his life Art. 2216. No proof of
expectancy of 30 years, pecuniary loss is
the product is P 417,000, necessary in order that
which is the death moral, nominal,
indemnity due to his temperate, liquidated or
mother and only forced exemplary damages
heir. may be adjudicated.
The assessment of
such damages, except
liquidated ones, is left
to the discretion of the
Because of the long
court, according to the
delay in this case, the
circumstances of each
mother already died
case.
without being able to
receive the indemnity she
deserved. PAL is ordered
to pay her heirs the death
indemnity with legal rate Art. 2219. Moral
of interest of 6% per damages may be
annum. recovered in the
following analogous
cases :

3. Moral
A criminal offense Fores vs Miranda 105
resulting in physical Phil 266
injuries;

Quasi-delicts causing
physical injuries;
F: supra. While the
jeepney was descending
xxx
the Sta. Mesa bridge at
an excessive rate of
(10) Acts and actions
speed, the driver lost
referred to in Articles
control, causing it to
21, 26, 27, 28, 29, 30,
swerve and hit the bridge
32, 34 and 35. xxx
wall. Five of the
passengers were injured,
including the respondent.
The CA awarded moral
Art. 2220. Willful injury damages.
to property may be a
legal ground for
awarding moral
damages if the court
Held: Art. 1764 makes it
should find that, under
all the more evident that
the circumstances,
where the injured
such damages are
passenger does not die,
justly due. The same
moral damages are not
rule applies to
recoverable unless it is
breaches of contract
proved that the CC was
where the defendant
guilty of malice or bad
acted fraudulently or in
faith. In the case at bar,
bad faith.
there is no other
evidence of such malice
to support an award of
moral damages. To
Art. 2206. xxx award moral damages for
breach of contract,
without proof of bad faith
or malice on the part of
(3) The spouses, the CC, as required by
legitimate and Art. 2220, would be to
illegitimate violate the clear
descendants and provisions of the law, and
ascendants of the constitute unwarranted
deceased may demand legislation. A CC's bad
moral damages for faith is not to be lightly
mental anguish by inferred from a
reason of the death of
the deceased.

mere finding that the

contract was breached
through negligence of the
CC's EEs. The exception
is a mishap resulting to
the death of a passenger
in which case Art. 1764
makes the CC subject to
Art. 2206 (award of moral
damages).
Air France vs
Carrascoso, 18 SCRA
155
F: Plaintiff, a civil
engineer, was a member
of a group of 48 Filipinos
that left Manila for
Lourdes on March 30,
1958. Air France, through
its authorized agent,
PAL, issued to plaintiff a
first class round trip ticket
from Manila to Rome.
From Manila to Bangkok,
he traveled first class, but
at Bangkok, Air France
forced him to vacate the
first class seat that he
was occupying because
there was a white man
who had a better right to
the seat. There was a
commotion when plaintiff
first refused to give up
his seat, but he was
pacified by his fellow
Filipino passengers to
give up his seat and
transfer to another class.
The lower court
sentenced Air France to
pay P 25,000 as moral
damages, P 10,000 as
exemplary damages, the
difference in fare
between first class and
tourist class plus P 3,000
for attorney's fees and
costs of suit. The CA
reduced the refund from
P 393.20 to P 383.20.
Held: Air France
contended that the
issuance of the first class
ticket was no guarantee
that he would have a first
class ride, but such
would depend upon the
availability of first class
seats. The SC ruled that
it could not understand
how a reputable firm like
Air France could have
the indiscretion to give
out tickets it never meant
to honor at all. It received
the corresponding
amount in payment of
first-class tickets and yet
it allowed the passenger
to be at the mercy of its
EEs. Plaintiff was indeed
confirmed for first class
all the way to Rome.
There was contract to
furnish plaintiff a first
class passage. Said
contract was breached
when the CC failed to
furnish the first class
transportation at
Bangkok. Third, there
was bad faith when
petitioner's EE compelled
Carrascoso to leave his
first class
accommodation after he
was already seated and
to take a seat in the
tourist class by reason of
which he suffered
inconvenience,
embarrassments and
humiliation, thereby
causing him mental
anguish, serious anxiety,
wounded feelings, and
social humiliation,
resulting in moral
damages. It is true that
the complaint did not use
the term Bad Faith. But
the interference of BF is
there. The manager not
only prevented
Carrascoso from
enjoying his right to a first
class seat; worse, he
imposed his arbitrary will;
he forcibly ejected him
from his seat, made him
suffer the humiliation of
having to go to the tourist
class compartment -- just
to give way to another
passenger whose right
thereto has not been
established. This is
certainly BF. For the
willful malevolent act of
CC's manager, the CC-
ER must answer. Moral
damages are
recoverable.
CC's contract with
Carrascoso is attended
with public duty. The
expulsion of Carrascoso
is a violation of a public
duty by the CC -- a case
of quasi-delict. Damages
are proper. The manner
of ejectment of
Carrascoso fits into the
legal precept for
awarding exemplary
damages in addition to
moral damages.
Lopez vs Pan Am, 16
SCRA 431
F: Plaintiffs made first
class reservations with
defendant air carrier, in
its Tokyo-SF flight, which
reservation was
confirmed and first class
tickets issued; but
defendant's agent by
mistake canceled
plaintiff's reservations
and thereafter
deliberately withheld from
plaintiffs the information,
letting them go on
believing that their first
class reservations stood
valid and confirmed,
expecting some
cancellations of bookings
would be made before
the flight time, which
failed to occur. Upon
arrival in Tokyo, only then
were the plaintiffs
informed that there were
no accommodations for
them in the first class,
and they were
constrained, due to
pressing engagements in
the US, to take the flight
as tourist passengers,
which they did under
protest. Plaintiffs sued
the defendant for moral
and exemplary damages.
The Rizal CFI awarded
the plaintiffs moral and
exemplary damages and
attorney's fees. Upon
plaintiff's MFR, said
damages were increased
in amount.
37
TRANSPORTATION AND MARITIME LAW
Held: In so misleading
the plaintiffs into
purchasing first class
tickets in conviction that
they had confirmed
reservations when in fact
they had none, defendant
willfully and knowingly
placed itself into position
of having breached its
contract with plaintiffs.
Such actions of the
defendant may indeed
have been prompted by
nothing more than the
promotion of its self-
interest in holding on to
plaintiffs as passengers
and foreclosing on their
chances to seek the
service of other airlines
that may have been able
to afford to them first
class accommodations.
All the same, in legal
contemplation, such
conduct already amounts
to action in BF. For bad
faith means a breach of
a known duty through
some motive of interest
of ill will.
It may not be humiliating
to travel as tourist
passengers, but it is
humiliating to be
compelled to travel as
such, contrary to what is
rightfully to be expected
from the contractual
undertaking.
Plaintiffs are entitled to
moral damages.
Considering their official,
political, social and
financial standing, they
are awarded P 200,000
as moral damages, P
75,000 as exemplary
damages all with interest,
and P 50,000 as
attorney's fees
considering the standing
of plaintiff's counsel.
Ortigas vs Lufthansa, 64
SCRA 610
F: Plaintiff took a first
class accommodation on
Lufthansa Airlines in
Rome for his trip to
Manila, with confirmation
of the airlines office, but
its EE on seeing plaintiff's
Filipino nationality in his
passport, disallowed him
to board the place and
his seat was given to a
Belgian. Plaintiff having a
heart ailment was
advised by his physician
to take only a first class
seat, but he was
compelled to take an
economy seat with a
promise of the Lufthansa
EE that plaintiff will be
transferred to first class
in Cairo and onward to
Hongkong. Upon arrival
in Cairo, the promise was
not complied with. Similar
false representations
were made to him at
Dharnan and Calcutta.
Plaintiff sued the airlines
for damages. TC
awarded plaintiff moral
and exemplary damages.
Held: It is the opinion of
the SC that moral
damages should be
raised from P 100,000 to
P 150,000 and
exemplary damages be
increased from P 30,000
to P 100,000. It is our
considered view that
when it comes to
contracts of common
carriage, inattention and
lack of care on the part of
the CC resulting in the
failure of the passenger
to be accommodated in
the class contracted for
amounts to bad faith or
fraud which entitles the
passenger to an award of
moral damages in
accordance with Art.
2220. In this case, the
breach appears to be of
graver nature, since the
preference given to the
Belgian passenger over
plaintiff was done willfully
and in wanton disregard
of plaintiff's rights and his
dignity as a human being
and as a Filipino, who
may not be discriminated
against with impunity.
Since both Alitalia and
Lufthansa are members
of IATA and are agents of
each other, they are
bound by the mistakes
committed by a member
such as the mistake of
the Alitalia EE to inform
Ortigas that he could
travel first class instead
of only being waitlisted.
The award of higher
damages is justified by
the aggravation of the
situation when the
Lufthansa EE at Rome
falsely noted on Ortigas'
ticket that he was
traveling economy from
Rome to HK and which
was repeated four times.
Also taken into
consideration was the
heart condition of Ortigas
which gave him added
apprehension about
traveling economy
against the advice of the
doctor.
4. Exemplary
Art. 2229. Exemplary or
corrective damages are
imposed, by way of
example or correction
for the public good, in
addition to the moral,
temperate, liquidated or
compensatory
damages.
Art. 2232. In contracts
and quasi contracts,
the court may award
exemplary damages if
the defendant acted in
a wanton, fraudulent,
reckless, oppressive,
or malevolent manner.
Art. 2233. Exemplary
damages cannot be
recovered as a matter
of right; the court will
decide whether or not
they should be
adjudicated.
Mecenas vs CA, 180
SCRA 83
F: M/V Tacloban City
(TC) left Amlan, Negros
Oriental bound for
Manila. M/V Don Juan
(DJ) left Manila bound for
Bacolod. TC had visual
contact of DJ when they
were about 5 miles apart
and as a precaution, it
was steered to its left. DJ
had radar contact of TC
when they were four
miles apart and following
R18 of the International
Rules of the Road when
a collision is possible, it
was steered to its right.
At 10:30 PM, both
collided as a result of
which DJ sank 15
minutes later and
hundreds of its
passengers perished.
Petitioners, children of
the victims, filed a case
against Negros
Navigation, owner of DJ,
based on quasi-delict.
The RTC awarded
damages of P 400,000
for the death of plaintiffs'
parents and P 15,000 for
attorney's fees. The CA
modified the award to P
100,000 as actual and
compensatory damages.
Held: Before going into
the issue, the SC ruled
that the action which was
based on quasi-delict
should be appropriately
regarded as grounded on
contract, and indulged in
the presumption of
negligence on the part of
the CC although its EEs
may have acted beyond
the scope of their
authority or even in
violation of its
instructions. Its liability
would include moral
damages (Art. 1764) and
exemplary damages if
the defendants acted
recklessly or with gross
negligence (Art. 2332).
There is no question that
the defendants are
negligent. As found by
the CFI, DJ steered to
the right while TC
continued its course to
the left. There can be no
excuse for them not to
realize that with such
maneuvers, they will
collide. They executed
maneuvers inadequately
and too late, to avoid
collision. The question is
WON the defendants
were recklessly or
grossly negligent. The
SC ruled in the
affirmative.
As for the captain, he
was playing mahjong
before and up to the time
of the collision. WON he
was then off-duty is
immaterial; there is, both
realistically speaking and
in contemplation of law,
no such thing as off-duty
hours for the master of a
vessel at sea that is a CC
upon whom the law
imposes the duty of
extraordinary diligence.
When the collision
occurred, the captain
failed to supervise his
crew in the process of
abandoning the ship and
he failed to avail of
measures to prevent the
too rapid sinking of his
vessel, thus aggravating
the casualties.
As for Negros Aviation, in
permitting, or in failing to
discover and correct the
regularity of the captain's
mahjong sessions while
DJ was at sea, it must be
deemed grossly
negligent. It also sailed
with an overload (1,004
passengers and
crewmembers).
As for the failure of TC to
follow R18 by turning
right instead of left, the
SC ruled that it is not
applicable and will not
relieve DJ from
responsibility if the
collision could have been
avoided by proper care
and skill on her part or
even by a departure from
the rules. DJ is still at
fault when, upon seeing
TC turn to its left, it still
turned to its right
resulting in the collision.
The SC awarded moral
damages of P 307,000
and exemplary damages
of P 307,000 and
attorney's fees of P
15,000 together with
actual and compensatory
damages for wrongful
death of P 126,000 and P
60,000 for a total of P
815,000. Although the
petitioners only asked for
P 400,000 award of
damages granted by the
CFI, the SC increased it
to P 800,000 following
the doctrine that the SC
must consider and
resolve all issues which
must be decided in order
to render substantial
justice to the parties,
including issues not
explicitly raised by the
parties affected.
In discussing the rule of
exemplary damages in
law, the SC looks to it as
an instrument to serve
the ends of law and
public policy by
reshaping socially
deleterious behaviors,
specifically, in the case,
to compel CC to control
their EEs, to tame their
reckless instincts, and to
force them to take
adequate care of human 5. Nominal, Temperate
beings and their property. and Liquidated

38
TRANSPORTATION AND MARITIME LAW
Art. 1757. The
responsibility of a
common carrier for the
safety of passengers as
required in Arts. 1733
Art. 2221. Nominal and 1755 cannot be
damages are dispensed with or
adjudicated in order lessened by stipulation,
that a right of the by the posting of
plaintiff, which has notices, by statements
been violated or on tickets, or
invaded by the otherwise.
defendant, may be
vindicated or
recognized, and not for
the purpose of
Alitalia vs IAC, 192
indemnifying the
SCRA 10
plaintiff for any loss
suffered by him.

F: Dr. Felipa Pablo, an

associate professor of
Art. 2224. Temperate or
UP and a research
moderate damages,
grantee of the Phil.
which are more than
Atomic Energy
nominal but less than
Association was invited
compensatory
to take part at a meeting
damages, may be
sponsored by the United
recovered when the
Nations in Ispra, Italy.
court finds that some
She accepted the
pecuniary loss has
invitation and was then
been suffered but its
scheduled by the
amount cannot, from
organizers to read her
the nature of the case,
paper. She was to be the
be proved with
2nd speaker on the first
certainty.
day of the meeting. She
then booked passage
with Alitalia. She arrived
in Milan on the day
Art. 2226. Liquidated before the meeting in
damages are those accordance with the
agreed upon by the itinerary set for her by
parties to a contract, to Alitalia but her luggage
be paid in case of was delayed as it was in
breach thereof. one of the succeeding
flights from Rome to
Milan. However, the other
flights from Rome did not
have her baggage on
board. Her luggage the award of nominal
consisted of 2 suitcases-- damages to P 40,000.
one for her clothing and The increase was
personal items and the justified as follows--
other for her scientific considering the
papers, slides and other negligence committed by
research material. defendant, the amount of
P20,000 under present
inflationary conditions as
awarded to plaintiff as
Feeling desperate, she nominal damages is too
went to Rome to try to little to make up for the
locate her bags. She plaintiff's frustration and
inquired about her disappointment in not
suitcases in the being able to appear at
international and said conference, and for
domestic airports and the embarrassment and
filled out the forms humiliation she suffered
required by Alitalia for from the academic
people in her community for failure to
predicament. However, carry out an official
her baggage could not be mission for which she
found. Discouraged, she was singled out by the
returned to Manila faculty to represent her
without attending the institution and the
meeting in Ispra, Italy. country.

In Manila, she demanded Alitalia appealed on the

that Alitalia make following grounds: (1)
reparation for damages That the Warsaw
suffered by her. Alitalia Convention should have
offered her free airline been applied to limit
tickets which she Alitalia's liability; and (2)
rejected while instituting That there is no warrant
this action. Her bags in fact or in law for the
were located and award of nominal
forwarded to Ispra but damages and attorney's
only on the day after her fees.
scheduled appearance.
As she was no longer
there to accept delivery,
her bags were not Held: Under the Warsaw
actually returned to her Convention, an air carrier
until after 11 months. The is made liable for
CFI awarded nominal damages for: (1) The
damages of P 20,000 death, wounding or other
and attorney's fees of P bodily injury of a
5,000 plus costs of the passenger if the accident
suit. The IAC increased causing it took place on
board the aircraft or in
the course of its
operations of embarking
or disembarking; (2)
The destruction, or loss
of damage to, any
registered luggage or
goods, if the occurrence
causing it took place
during the carriage by air;
and (3) Delay in the
transportation by air of
passengers, luggage or
goods. The Convention
also limits the liability of
the carriers for each
passenger to 250,000
francs and for registered
baggage and cargo to
250 francs per kg unless
the passenger has
declared a higher rate
and has paid additional
charges. The Warsaw
Convention, however,
denies to the carrier
availment of the
provisions which exclude
or limit his liability, if the
damage is caused by his
wilful misconduct or by
such default on his part
as is considered to be
equivalent to wilful
misconduct or if the
damage is similarly
caused by any agent of
the carrier acting within
the scope of his
employment. The
Convention does not
thus operate as an
exclusive enumeration of
the instances of an
airline's liability, or as an
absolute limit of the
extent of that liability.
Such proposition is not
borne out by the
language of the
Convention. The
Convention should be
deemed a liability only in
those cases where the
cause of the death or
injury to person, or
destruction, loss or
damage to property or
delay in its transport is
not attributable to or
attended by any wilful
misconduct, bad faith,
recklessness, or
otherwise improper
conduct. The Convention
does not regulate or
exclude liability for other
breaches of contract by
the carrier. Otherwise, an
air carrier would be
exempt from any liability
for damages in the event
of its absolute refusal, in
bad faith, to comply with
a contract of carriage.
The Warsaw Convention
has invariably been held
inapplicable, or as not
restrictive of the carrier's
liability, where there was
satisfactory evidence of
malice or bad faith
attributable to its officers
and employees.
In the case at bar, no bad
faith or otherwise
improper conduct may be
ascribed to the EEs of
Alitalia. Dr. Pablo's
luggage was eventually
returned belatedly, but
without appreciable
damage. The fact is,
nevertheless, that some
special species of injury
was caused to her
because Alitalia
misplaced her baggage
and failed to deliver it to
her at the time appointed
-- a breach of its contract
of carriage -- with the
result that she was
unable to read her paper
that she had
painstakingly labored
over. The opportunity to
claim honor or distinction
for herself, for UP and for
the country, was
irretrievably lost to her.
She also underwent
profound distress and
anxiety, which gradually
turned into panic and
despair, when she
learned that her
suitcases were missing.
The compensation for the
injury suffered by Dr.
Pablo cannot under the
circumstances be
restricted to that
prescribed by the
Warsaw Convention for
delay in the transport of
baggage. She is not
entitled to be
compensated for loss or
damage to her luggage
since they were
ultimately delivered to
her. She is however
entitled to nominal
damages, which is
adjudicated in order that
a right of the plaintiff,
which has been violated
or invaded by the
defendant, may be
vindicated and
recognized, and not for
the purpose of
indemnifying the plaintiff
for any loss suffered.
As to the argument that
she failed to include a
specific claim for nominal
damages in her
complaint, it suffices that
her general prayer
includes "such other and
further just and equitable
relief in the premises."
Also absent any claim for
actual or compensatory
damages (she asked for
moral and exemplary
damages and attorney's
fees), and with proof of
Dr. Pablo's right being
violated, the issue of
nominal damages is
raised.
The award of P 5,000 for
attorney's fees is
reasonable. The law
authorizes recovery of
attorney's fees where the
defendant's act or
omission has compelled
the plaintiff to litigate with
third person or to incur
expenses to protect his
interest, or where the
court deems it just and
equitable.
Saludo vs CA 207 SCRA
498
F: After the death of
plaintiff's mother Crispina
Galdo, Saludo in
Chicago, Pomierski and undertakers which
Son Funeral Home, furnishes the air pouch in
made the necessary which the casket is
preparations and enclosed in and they see
arrangements for the to it that the remains are
shipment of the body taken to the proper air
from Chicago to the freigh terminal. CMAS
Philippines. They had the booked the shipment with
body embalmed and PAL, through its agent Air
secured a permit from Care International, with
the Philippine Vice Pomierski as shipper and
Consul in Chicago. The Maria Saludo as
Phil. Vice Consul sealed consignee. PAL Airway
the shipping case on Oct. Bill was issued for the
26,1976. On the same route from Chicago to SF
date, Pomierski brought on board TWA Flight 131
the remains to the of Oct. 27, 1976, and
Continental Mortuary Air from SF to Manila, on
Service (CMAS) which board PAL Flight 107 of
made the necessary Oct. 27, 1976, and from
arrangements such as Manila to Cebu on board
flights, transfers,etc. PAL Flight 149 of Oct. 29,
CMAS is a national 1976.
service used by

39
TRANSPORTATION AND MARITIME LAW
arrived in Manila on
October 30, 1976, a day
after its expected arrival
Maria Saludo and
on October 29, 1976.
Saturnino Saludo,
children of the deceased
were booked with United
Airlines from Chicago to
California and with PAL Plaintiffs then filed a case
from California to Manila. against PAL and TWA
When she learned of her before the CFI of Leyte,
mother's arrangements, praying for the award of
she changed actual damages of P
reservations from UA to 50,000, moral damages
TWA. She watched from of P 1,000,000,
the look-out area but she exemplary damages and
saw no body being attorney's fees and costs
brought on the flight. She of suit. The CFI and CA
reluctantly took the TWA absolved the two airline
flight with her cousin's companies. Plaintiffs
assurance to look into then appealed the
the matter. Upon arrival decision on the ff.
in SF, she went to the grounds: (1) That the
TWA counter to inquire delay in the delivery of
about her mother's the remains was due to
remains but she was told the fault of the airlines,
that they did not know (2) The one day delay in
anything about it. She the delivery constitutes
then called Pomierski breach of contract as
who then called CMAS would entitle them to
which in a matter of 10 damages, (3) That
minutes told him that the damages are recoverable
remains had been by petitioners for the
switched with another humiliating, arrogant, and
body and had been sent indifferent acts of the
to Mexico. Based on the EEs of TWA and PAL.
facts, there was a mix-up The airlines objected on
in Chicago Airport the ground that this
between the two bodies. petition only raises
Arrangements were factual questions. Since it
made to send the body to is precisely the
California through Texas. soundness of the
On October 28, 1976, the inferences or conclusions
remains arrived in SF that may be drawn from
and was received by PAL the factual issues which
at 7:45 p.m. The are here being assailed,
shipment was the issues raised in the
immediately loaded on petition indeed warrant a
PAL flight for Manila that second look.
same evening and

Held: (1) Petitioners
allege that private
respondents received the
casketed remains of
petitioner's mother on
Oct. 26, 1976 as
evidenced by the
issuance of the PAL
Airway Bill. From said
date, private respondents
were charged with the
responsibility to exercise
extraordinary diligence
so much so that for the
alleged switching of the
caskets on Oct. 27, 1976,
or one day after private
respondents received the
cargo, the latter must
necessarily be liable.
Petitioners relied on the
doctrine that the
issuance of the bill of
lading carries the
presumption that the
goods were delivered to
the carrier issuing the bill,
for immediate shipment,
and it is nowhere
questioned that a bill of
lading is prima facie
evidence of the receipt of
the goods by the carrier.
A bill of lading is a written
acknowledgment of the
receipt of the goods and
an agreement to
transport and deliver
them at a specified place
to a person named or on
his order. A bill of lading
is a receipt as to the
quantity and description
of the goods shipped and
a contract to transport
the goods to the
consignee or other
person therein
designated, on the terms
specified in such
instrument.
SC: An airway bill estops
the carrier from denying
receipt of goods.
However, as between the
shipper and the carrier,
when no goods have
been delivered for
shipment no recitals in
the bill can estop the
carrier from showing the
true facts. We must
therefore allow the airline
companies to explain,
why, despite the
issuance of the airway
bill and the date thereof,
they deny having
received the remains of
Saludo on Oct. 26, 1976.
As found by the CA, the
airway bill was issued,
not as evidence of
receipt of delivery but
merely as confirmation
for the booking made for
the SF-Manila flight
scheduled on October
27, 1976. It was not until
Oct. 28 that PAL received
physical delivery of the
body at SF. The
extraordinary
responsibility of CC
begins from the time the
goods are delivered to
the carrier.
This responsibility
remains in force even
when they are
temporarily unloaded or
stored in transit, unless
the shipper exercises the
right of stoppage in
transitu, and terminates
ony after the lapse of a
reasonable time for the
acceptance of the goods
by the consignee or other
person entitled to receive
them. For such duty to
commence, there must in
fact have been delivery
of the cargo subject of
the contract of carriage.
Only when such fact of
delivery has been
unequivocally esablished
can the reqt. of
extraordinary
responsibility arise.
As found by the CA, the
body was really received
by PAL on Oct. 28, 1976
and it was from such
date that it became
responsible for the
agreed cargo under the
airway bill.
Consequently, for the
switching of caskets prior
thereto which was not
caused by them and
subsequent events
caused thereby, PAL
cannot be held liable.
(2) Petitioners allege that
even assuming CMAS
was at fault, PAL would
still be liable because
whoever brought the
cargo to the airport or
loaded it on the plane did
so as agent of PAL.
SC: This contention is
without merit. When the
cargo was received from
CMAS, Air Care Intl,
PAL's agent and TWA
had no way of
determining its actual
contents, since the
casket was hermetically
sealed by the Philippine
Vice-Consul. They had to
rely on the information
given by CMAS. No
amount of inspection by
the airlines could have
guarded against the
switching that had taken
place. They had no
authority to unseal and
open the casket. It is the
right of the carrier to
require good faith on the
part of those persons
who deliver goods to be
carried by it. In the
absence of more definite
information, the carrier
has the right to accept
shipper's marks as to the
contents of the package
offered for transportation
and is not bound to
inquire particularly about
them. It can safely be
said that a CC is entitled
to fair representation of
the nature and value of
the goods to be carried,
with the concomitant right
to rely thereon, and that
a carrier has no
obligation to inquire into
the correctness or
sufficiency of such
information. The
consequent duty to
conduct an inspection
arises in the event that
there should be reason to
doubt the veracity of
such representations.
In this case, private
respondents had no
reason to doubt the truth
of the shipper's
representations. The
airway bill was issued on
the basis of such
representations.
Neither can they be held
accountable on the basis
of petitioner's theory that
whoever brought the
cargo to the airport or
loaded it on the plane did
so as an agent of private
respondents, so that
even if CMAS was
indeed at fault, the
liability would be
attributed to the airlines.
CMAS was not an agent
of private respondents. It
was hired to handle all
the necessary shipping
arrangements for the
transportation of the
remains. CMAS may be
classified as a forwarder,
which is regarded as the
agent of the shipper
(Pomierski) and not of
the crrier. It merely
contracts for the
transportation of goods
by carriers and has no
interest in the freight but
receives compensation
from the shipper as his
agent.
The facts of the case
would point to CMAS as
the culprit. In fact, even
the petitioners wrote
CMAS entertaining
serious doubts as to
whether they were
responsible for the mix-
up. But the court cannot
rule on the possible
liability of CMAS as such
is not at issue in this
case and there has not
been convincing
evidence on the matter.
(3) Petitioners contended
that TWA by agreeing to
transport the remains, it
made itself a party to the
contract of carriage nad
was therefore bound by
the airway bill. When
TWA shipped the
remains ten hours earlier
than scheduled, it
allegedly violated the
terms of the airway bill
which compounded, if not
directly caused, the
switching of the caskets.
The EEs of TWA
presumably caused the
mix-up by loading the
wrong casket on the
plane. TWA must be
presumed negligent
unless such is rebutted.
TWA contends that it
faithfully complied with
the obligations under the
airway bill. Said faithful
compliance was not
affected by the fact that
the remains were
shipped on an earlier
flight as there was no
fixed time for completion
of carriage stipulated on.
TWA did not undertake to
carry the cargo aboard
any specified aircraft, in
view of the condition on
the back of the airway
bill, which provides that "
xxx no time is fixed for
the completion of the
carriage, xxx and that
Carrier may without
notice substitute
alternate carriers or
aircrafts xxx."
SC : TWA's contention is
tenable. TWA can use
substitute aircraft, even
without notice and
without the assumption of
any obligation
whatsoever to carry the
goods on any specified
aircraft. This is clearly
sanctioned by the
contract of carriage.
When a CC undertakes
to convey goods, the law
implies a contract that
40
they shall be delivered at
destination within a
reasonable time, in the
absence of any
agreement as to the time
of delivery. In case at bar,
no special contract for
prompt delivery was
entered into by the
parties.
Condition No. 5 is
binding on the plaintiff
even if it is printed at the
back of the airway bill.
This is in the nature of a
contract of adhesion.
However, such condition
only serves to insulate
the carrier from liability in
those instances when the
changes in routes, flights
and schedules are clearly
justified by the peculiar
circumstances of a
particular cae, or by
general
TRANSPORTATION AND MARITIME LAW
transportation practices,
customs and usages, or
by contingencies,
emergencies in aviation,
such as weather
turbulence, mechanical
failure, reqts. of national
security and the like. In
this case, the delay in the
delivery of the remains
cannot be attributed to
the fault, negligence or
malice of private
respondents. When TWA
shipped the remains on
an earlier flight, it did so
in the exercise of sound
discretion and with
reasonable prudence --
they wanted to assure
that the shipment would
be received in SF in
sufficient time for transfer
to PAL. TWA knew of the
urgency of the shipment
due to the notation on the
airway bill : "xxx Please
return bag first available
flight to SFO."
(4) Petitioners alleged
that private respondents
are liable for tort on
account of humiliating,
arrogant and indifferent
acts of their officers and
personnel. They
contended that there was
no reason for the
personnel to disclaim
knowledge of the arrival
or whereabouts of the
body other than their
sheer arrogance,
indifference and extreme
insensitivity to their
feelings.
SC: It affirmed the CA's
findings that TWA EEs
did not deal with
petitioners in a grossly
humiliating, arrogant or
indifferent manner as to
amount to BF or malice.
It must be pointed out
that the lamentable
actuations of TWA's EEs
leave much to be
desired, particularly so
given the grief of
petitioners, their tension
and anxiety wrought by
the confusion and the
fear about where their
mother's remains were.
Airline companies are
sternly admonished to
strictly require their
personnel to be more
accommodating to
passengers and the
general public.
Petitioners agonized for 5
hours unattended to and
without any assurance
from the EEs of TWA.
Common sense should
have dictated that they
exert a little extra effort in
making more extensive
inquiry, by themselves or
through their superiors,
rather than just shrug off
the promblem with a
callous and uncaring
remark that they had no
knowledge about it.

The foregoing
observations do not
appear to be applicable
to PAl and its EEs.
(5) In the absence of
strong and positive
evidence of fraud, malice
or bad faith, moral
damages cannot be
awarded. Neither can
exemplary damages nor
attorney's fees, in the
absence of proof that
defendants acted with
malice, fraud or BF. The
censurable conduct of
TWA's EEs cannot be
said to have
approximated the
dimensions of fraud,
malice or BF.
Nonetheless, the facts
show that petitioners'
right to be treated with
due courtesy in
accordance with the
degree of diligence
required by law to be
exercised by every
common carrier was
violated by TWA and this
entitles them, at least, to
nominal damages from
TWA alone. Arts. 2221
and 2222 of the Civil
Code makes it clear that
nominal damages are
not intended for
indemnification of loss
suffered but for the
vindication or recognition
of a right violated or
invaded. They are
recoverable where some
injury has been done but
the amount of which the
evidence fails to show,
the assessment of
damages being left to the
discretion of the court
accdg. to the
circumstances of the
case. Nominal damages
of P 40,000 to be paid by
TWA was awarded in
favor of petitioners as a
reasonable amount in the
circumstances.
6. Attorney's Fees and
Interest
Art. 2208. In the
absence of stipulation,
attorney's fees and
expenses of litigation,
other than judicial
costs, cannot be
recovered, except:
When exemplary
damages are awarded;
When the defendant's
act or omission has
compelled the plaintiff
to litigate with third
persons or to incur
expenses to protect his
interest;
In criminal cases of
malicious prosecution
against the plaintiff;
In case of a clearly
unfounded civil action
or proceeding against
the plaintiff;
Where the defendant
acted in gross and
evident BF in refusing
Art. 2210. Interest may,
to satisfy the plaintiff's
in the discretion of the
plainly valid, just and
court, be allowed upon
demandable claim;
damages awarded for
breach of contract.

In actions for legal

support;
4 Agbayani:

In actions for the

recovery of wages or
household helpers,
laboreres and skilled Damages arising from
workers; death; factors to be
considered

In actions for indemnity

under workmen's number of years on the
compensation and basis of which the
employer's damages shall be
computed

the rate at which the

losses sustained should
liability laws;
be fixed. In the
determination of the
In a separate civil
action to recover civil
liability arising from a
crime;
losses or damages
When at least double sustained by dependents
judicial costs are and heirs of the
awarded; deceased, said damages
consist not of the full
In any other cases amount of his earnings,
where the court deems but of the support they
it just and equitable received or would have
that attorney's fees and received from him had he
expenses of litigation not died in consequence
should be recovered. of the negligence of
defendant.

In all cases, the

attorney's fees and In fixing the amount of
expenses of litigation support, only net
must be reasonable. earnings are to be
considered-- total Extent of liability of air
earnings less expenses carrier for death of
necessary in the creation passenger:
of such earnings less
living and incidental
expenses
(1) where there was no
satisfactory explanation
on the part of PAL as to
Damages recoverable how and why the
when death occurs due accident occurred, the
to commission of presumption is that it was
crime.-- (1) indemnity for at fault, under Art. 1756
the death of victim (P
50T); (2) indemnity for
loss of earning capacity
of the deceased; (3) (2) liability for lost
moral damages; (4) earnings are the
exemplary damages; (5) deceased passenger's
attorney's fees and net earnings during his
expenses of litigation; expected length of life
and (6) interest. based on accepted
Indemnity arising from mortality tables
the fact of death is fixed (compensatory damages)
whereas the others are
still subject to the
determination of the court
based on evidence
presented; indemnity for (3) PAL is not liable for
death is distinct and exemplary damages
separate from the other where it was not proven
forms of indemnity that it acted in a wanton,
fraudulent, reckless,
oppressive or malevolent
manner

Common carrier not

liable for moral
damages to passenger
injured due to [Davila vs PAL]
negligence of driver.-- A
CC's bad faith is not to
be lightly inferred from a
mere finding that the Nature of liability of air
contract was breached carrier to its
through negligence of the passengers:
CC's employees (Fores
vs Miranda)

[Zulueta vs Pan Am]

F: Filipino passenger
who went to relieve
himself was berated by
the captain for coming
back late to the plane
and was called a
monkey.
Held: A passenger is
entitled to courteous
treatment from the carrier
and its EEs and failure of
the CC to comply with
this obligation will entitle
41
the passenger to
damages.
The relation between CC
and passenger involves
special and peculiar
obligations and duties,
differing in kind and
degree, from those of
almost every legal or
contractual relation. On
account of the peculiar
situation of the parties,
the law implies a promise
and imposes upon the
TRANSPORTATION AND MARITIME LAW
language, indignities and
abuses from such
employees. So it is, that
CC the corresponding
any rude or discourteous
duty of protection and
conduct on the part of
courteous treatment.
EEs towards a
Therefore, the CC is
passenger gives the
under the absolute duty
latter an action for
of protecting his
damages against the CC.
passengers from assault
or insult by himself or his
servants.

Damages caused by CC
on third persons.--
Negligence refers to the
A contract to transport
failure to observe for the
passengers is quite
protection of the interests
different in kind and
of another person that
degree from any other
degree of care,
contractual relation. And
precaution, and vigilance
this, because of the
which the circumstances
relation which an air
justify demand, whereby
carrier sustains with the
such other person suffers
public. Its business is
injury
mainly with the traveling
public. It invites people to
avail of the comforts and
advantages it offers. The
contract of air carriage, Common carrier is
therefore, generates a liable only for damages
relation attended with a that are natural and
public duty. Neglect or probable consequence
malfeasance of the CC's of breach of contract.--
employees naturally Where the CC is guilty of
could give ground for an a breach of contract, but
action for damages. acted in GF, it is liable
only for the natural and
probable consequences
of the breach and which
the parties had foreseen
Passengers do not
or could have reasonably
contract merely for
foreseen at the time the
transportation. They have
obligation was
a right to be treated by
constituted (includes
the CC's EEs with
medical, hospital
kindness, respect,
expenses)
courtesy and due
consideration. They are
entitled to be protected
against personal
misconduct, injurious
Actual damages.-- (1)
lost income.-- includes
income to be earned by
the injured passenger or
deceased passenger had
he finished his course
(could have been
foreseen)
sum being carried by the
deceased passenger
which was lost
funeral expenses
attorney's fees
loss of merchandise
carried by the deceased
loss of baggage and
personal belongings
Exception to rule that
CC is not liable for
moral damages in
breach of contract:
(1) where the mishap
results in death of the
passenger
(2) where it is proved that
the CC was guilty of
fraud or BF, even if death
does not
result Ex. where
because of the BF of the
CC, the passenger
suffered social
humiliation,
wounded feelings,
serious anxiety and
mental anguish
Under 2206, the heirs of
the deceased passenger
may demand moral
damages in an amount
commensurate with the
mental anguish suffered
by them
xxx
In a case where the
passenger suffers
physical injuries because
of the CC's injuries, he
cannot recover moral
damages for such breach
of contract since it does
not fall under any of the
cases where moral
damages are recoverable
under Art. 2219
xxx
In determining the
amount of moral
damages, the TC may
consider the nature and
extent of the injuries and
the suffering occasioned
by them and the duration
thereof. The appellate
court should not interfere
unless such is palpably
and scandalously
excessive so as to
indicate that it was the
result of passion,
prejudice or corruption on
the part of the TC
BF justifying moral
damages must be in the
securing, execution and
enforcement of contract
of carriage. BF cannot be
imputed but must be
alleged and proved; mere
carelessness of the CC's
driver does not per se
constitute or justify an
inference of malice or BF
on the part of the CC
xxx
CC is subsidiarily liable
for moral damages in
actions ex delicto or
where the action is based
upon its liability arising
from a crime
xxx
CC is not ordinarily liable
for exemplary or
corrective damages
based upon the wrongful
act of its EE or driver
where it did not have
anything to do with the
wrongful act or had not
previously authorized or
subsequently ratified
such act (Art. 2332) This
cannot be presumed but
must be proven by
evidence; exemplary
damages cannot be
recovered as a matter of
right
Nominal and exemplary
damages awarded for
willful breach of contract
committed through agent
or EE
xxx
Where the CC has
incurred in delay in the
delivery of the luggage of
the offended party, but it
had not acted in BF nor
been guilty of gross
negligence, the offended
party is not entitled to
moral nor exemplary
damages but only to the
limited amount printed in
the plane ticket where
the offended party had
not declared a higher
value nor paid addtl.
transpo charges
Liability of air carriers
for moral and
exemplary damages.--
[Ortigas vs Lufthansa] (1)
Under the pool
arrangement among
different airlines of the
IATA agreement of which
Alitalia and Lufthansa are
signatories, both airlines
are constituted as agents
of each other in the
issuing of tickets and
other matters pertaining
to their relations with
those who would need
their services.
(2) When it comes to
contracts of common
carriage, inattention and
lack of care on the part of
the CC resulting in the
failure of the passenger
to be accommodated in
the class contracted for
amounts to BF or fraud
which entitles the
passenger to the award
of moral damages.
Where the passenger's
seat was given to a white
passenger, there is willful
breach giving rise to an
action for moral
damages.
(3) Exemplary damages
were awarded.
Defendant as an airline
should be made to pay
an amount that can really
serve as a deterrent
against a seeming
pattern of indifference
and unconcern, and
discrimination for racial
reasons, discernible in
the treatment of air
passengers.
[PAL vs CA, 106 SCRA
391] The duty to exercise
the utmost diligence on
the part of the CC is for
the safety of passengers
as well as for the
members of the crew or
the complement
operating the carrier. Any
omission, lapse or
neglect thereof will
certainly result to the
damage, prejudice,
injuries and even death
to all aboard the plane,
passengers, and crew
members alike.
xxx
[KLM vs CA] A provision
in passage ticket that
carriage by successive
air carriers is to be
regarded as a single
operation makes the
ticket-issuing carrier
liable for tortious conduct
of other carriers
xxx
Exemplary damages may
be awarded where the
vehicle involved in the
accident operated under
the kabit system, which is
a pernicious system in
violation of law and which
is in fraud of the traveling
public which has a right
to expect that the holder
of the certificate of
convenience be the one
to actually operate his
transport line.
xxx
CC is liable for nominal
damages for its failure to
bring passengers to their
destination which is in
violatin of their right as
passengers.
xxx
The CC is liable for the
negligence of his driver in
case of breach of
contract and cannot avail
of the defense that he
exercised due diligence
in the employment of his
driver. The action for
breach of contract
imposes on the CC a
presumption of liability
upon mere proof of injury
to the passenger.
xxx
An action for damages
against CC for breach of
contract is primary and
independent and does
not depend upon the
previous conviction of the
driver or EE.
Indemnification in a
criminal prosecution is
distinct from that
awarded as damages in
a civil action.
Other Principles :

42
TRANSPORTATION AND MARITIME LAW
against a driver in a
criminal case even when
a separate civil action
was filed against the ER.
Culpa contractual and an
The offended party has act or omission
the option between an punishable by law are
action for enforcement of two distinct sources of
civil liability based on obligation.
culpa criminal and an
action for recovery of
damages based on culpa
aquiliana. Responsibility
for negligence under the
Civil Code is entirely
separate from negligence
under the

Penal Code.

CODE OF COMMERCE
PROVISIONS ON
OVERLAND
An independent civil TRANSPORTATION
action based on quasi- COMMERCIAL
delict against the ER- CONTRACTS FOR
operator of a negligent TRANSPORTATION
driver cannot be OVERLAND
suspended by the filing of
a criminal action against
the driver.
Scope of Overland
Transportation

Death of driver is not a

hindrance to a separate
quasi-delict action Nature of Contract
against the CC-

Art. 349. A contract of

employer transportation by land
or waterways of any
kind shall be
considered
There is no error in commercial:
awarding civil damages
1. When it involves Bill of Lading
merchandise or any
object of commerce.

Definition, Subject Matter

(2) The provisions of

the Code of Commerce
governing sales, Art. 352. The bills of
partnership, agency, lading or tickets in
loan, deposit and cases of transportation
guaranty; of passengers may be
diverse, one for
(4) All laws, Acts, parts
persons and another
of Acts, rules of court,
for baggage; but all of
executive orders, and
them shall bear the
administrative
name of the carrier, the
regulations which are
date of shipment, the
inconsistent with this
point of departure and
Code. (Ibid.)
arrival, the cost, and
with regard to the
baggage, the number
and weight of the
There is now no packages, with such
distinction between a other statements which
transportation contract of may be necessary for
a CC under the Civil their easy
Code and a identification.
transportation contract
under the Code of
Commerce
A bill of lading may
defined as a written
acknowledgment of the
The New Civil Code does receipt of goods and an
not expressly repeal the agreement to transport
provisions of the Code of and to deliver them at a
Commerce on overland specified place to a
transportation; it makes person named or on his
such provisions order. It comprehends all
suppletory to the methods of
provisions of the Civil transportation.
Code on CCs.

Nature : (1) each bill is a

Contract of Carriage contract in itself and the
parties are bound by its it is also a symbol of the
terms goods covered by it

a bill of lading is also a A bill of lading is also a

receipt document of title. A
document of title is any
document used in

When, no matter what its object may be, the carrier is a

merchant or is the ordinary course of business in the sale or
transfer of goods, as proof of the possession or

customarily [habitually]
engaged in
transportation for the
A contract of air
public.
transportation may be
regarded as commercial
since it is analogous to
land and water
Requisites for a transportation. The
contract of reason for its non-
transportation by land inclusion in the Code of
or water to be Commerce was that at
commercial : the time of its
promulgation, air
transportation on a
commercial basis was
transportation of not yet known.
merchandise is always
commercial

transportation of person C. Effect of Civil Code

or news is commercial
only when the CC is a
merchant or
Art. 1766. In all matters
is habitually engaged in
not regulated by this
transportation for the
Code, the rights and
public
obligations of common
carriers shall be
* principal requirement :
governed by the Code
the CC is a merchant or
of Commerce and by
is habitually engaged in
special laws. (New Civil
transportation for the
Code.)
public; the object carried
is of little importance
Art. 2270. The control of goods, or
authorizing or purporting
following laws and
regulations are hereby to authorize the
repealed: possessor of the
document to transfer or
receive, either by
indorsement or by
delivery, goods
represented by such
document.

(b) Form, Contents

Art. 350. The shipper as

well as the carrier of
merchandise and
goods may mutually
demand of each other
the issuance of a bill of
lading in which there
shall be stated:

The name, surname,

and domicile of the
shipper.

The name, surname,

and domicile of the
carrier.

The name, surname,

and domicile of the
person to whom or to
whose order the goods
are addressed, or
whether they are to be
delivered to the bearer
of the said bill.

A description of the
goods, stating their
generic character, their
weight, and the
external marks or signs
of the packages 8.
containing the same. The
place and time at which
the delivery is to be
made to the consignee.
The cost of the 9.
transportation. The
damages to be paid by
The date of which the the carrier in case of
shipment is made. delay, if any agreement
is
The place of the made on this point.
delivery to the carrier.

43
TRANSPORTATION AND MARITIME LAW
Art. 351. In
transportation made by
railroads or other
enterprises which are
subject to schedules or
the time fixed by
regulations, it shall be
sufficient that the bills
of lading or the
declarations of
shipment furnished by
the shipper refer, with
respect to the rate,
terms, and special
conditions of the
transportation, to the
schedules and
regulations, the
application of which he
requests; and should
no schedule be
determined, the carrier
must apply the rate of
the merchandise
paying the lowest, with
the conditions inherent
therein, always
including such
statement or reference
to them in the bill of
lading which he
delivers to the shipper.
Many of the items
required in a bill of lading
may be omitted with
much advantage to
commerce, which aims to
have the greatest
number of transactions in
the last possible time
especially in cases where
there are tariffs or
regulations issued by the
carrier company. In this
case, the circumstances
relative to price, term and
conditions of carriage
may be omitted and
simple reference be
made to the tariff and
regulations under which
the transportation is to be
made. (Art. 351)
The form of the bill of
lading is not material : if it
contains an
acknowledgment by the
carrier of the receipt of
goods for transportation,
it is in legal effect, a bill
of lading
A ticket issued by a
carrier to a passenger is
not only a receipt for the
fare paid but is the
contract between the
passenger and the
carrier, of the
passenger's right to ride
in the CC's vehicle
Classes of bills of
lading :
1. negotiable B/L - where
it is stated that the goods
will be delivered to the
bearer, or to the order of
any person named in
such document
non-negotiable B/L - vessels which is to carry
where the goods are to the goods
be delivered to a
specified person

clean B/L - does not

8. received for shipment
indicate any defect in the
B/L - states that the
goods
goods have been
received for shipment
foul B/L - indicates that
with or w/o specifying the
the goods covered by it
vessel by which the
are in bad condition
goods are to be shipped;
issued when conditions
spent B/L - covers goods
are not normal and there
that have already been
is an insufficiency of
delivered by the CC
shipping space
without a

9. custody B/L - issued

surrender of a signed
by the CC to whom the
copy of the B/L; the
goods have been
subsequent delivery of
delivered for shipment
the spent B/L cannot give
but the steamer indicated
to the buyer of it any
in the B/L which is to
actual control of the
carry the goods has not
goods, or anything which
yet reached the port
can fairly be called
where the goods are held
delivery
for shipment

6. through B/L - issued

10. port B/L - issued by
by the CC who is obliged
the CC to whom the
to use the facilities of
goods have been
other carriers as well as
delivered and the
his own facilities for the
steamer indicated in the
purpose of transporting
B/L by which the goods
the goods from the city of
are to be shipped is
the seller to the city of
already in the port where
the buyer, which B/L is
the goods are held for
honored by the
shipment
subsequent interested
carriers who do not issue
their own ladings

Negotiation of Bills by
delivery/ by
indorsement
7. on board B/L - states
that the goods have been
received on board the
Effect of fraud, accident
on validity of negotiation :
not impaired where the
person to whom the bill
was negotiated paid
value thereof in GF
without notice of the
breach of duty or loss,
theft, fraud, accident,
mistake, duress or
conversion
Who may negotiate?
owner; any person to
whom possession or
custody of the bill has
been entrusted by the
owner
Rights acquired:
1. such title to the goods
as the person negotiating
the bill had or had ability
to convey to a buyer in
good faith for value
2. direct obligation of the
CC issuing the bill to hold
possession of the goods
for him according to the
terms of the B/L as fully
as if such CC contracted
directly with him
Transfer of non-
negotiable B/L
Rights acquired:
1. as against the
transferor, title to the
goods subject to the
terms of any agreement
with the transferor
2. right to notify the CC
who issued the bill and
thereby acquire the direct
obligations of such CC to
hold possession of the
goods for him accdg to
the terms of the
document; prior to
notification of the CC, the
title of the transferee may
be defeated by levy upon
the goods or a
subsequent purchaser
from the transferor of a
subsequent sale of the
goods by a transferor
(c) Function
Art. 353. The legal
basis of the contract
between the shipper
and the carrier shall be
the bills of lading, by
the contents of which
all disputes which may
arise with regard to
their execution and
fulfillment shall be
decided, no exceptions
being admissible other
than forgery or material
errors in the drafting
thereof.
 performance of the
contract shall be decided
by the contents of the B/L
After the contract has
issued by the CC --> the
been complied with, the
law admits no exceptions
bill of lading shall be
other than falsity and
returned to the carrier
material error in the
who may have issued
drafting of the B/L
it, and by virtue of the
exchange of this title
for the article
transported, the
respective obligations As a contract expressing
and actions shall be the terms and conditions
considered canceled, upon which the property
unless the same act the is to be transported, it is
claims which the to be regarded as
contracting parties merging all prior and
desire to reserve are contemporaneous
reduced to writing, agreements of the
exception being made parties, and in the
of the provisions of absence of fraud,
Article 366. concealment or mistake,
its terms or legal import,
when free from ambiguity
cannot be explained nor
added to by parol (Parol
In case the consignee,
Evidence Rule)
upon receiving the
goods, cannot return
the bill of lading
subscribed by the
carrier, due to its loss 2. Refusal to Transport
or for any other cause,
he shall give said
carrier a receipt for the
goods delivered, this Art. 356. Carriers may
receipt producing the refuse to accept
same effect as the packages which appear
return of the bill of unfit for transportation;
lading. and if said
transportation is to be
made by railway, and
the shipment is
B/L constitutes the legal insisted on, the
evidence of the contract company shall carry
of transportation --> all them, being exempt
disputes between the from all liability if its
parties regarding the objections are so
execution and stated in the bill of
lading.
44
TRANSPORTATION AND MARITIME LAW
who shall draft a
certificate of the result
of the examination, for
such purposes as may
be proper.
CC cannot ordinarily
refuse to carry a
particular class of goods
to the prejudice of the
If the declaration of the
traffic in those goods
shipper should be
correct, the expenses
exception : when the
caused by the
goods or packages are
examination and those
unfit for transportation
of carefully repacking
--> if transpo is insisted the packages shall be
upon, railroads cannot defrayed by the carrier,
refuse to carry them, but and in a contrary case
they shall be exempt by the shipper.
from all responsibility if
their objections are made
to appear in the B/L
If the CC has a well-
founded suspicion of
falsity in the declaration
3. Doubtful declaration of as to the contents of a
contents package, he may
examine it --> he must
follow the procedure
under 357

Art. 357. If by reason of

well-founded
suspicions of falsity in
the declaration of the 4. No bill of lading
contents of a package,
the carrier should
decide to examine it, he
shall do so before Art. 354. In the absence
witnesses, in the of a bill of lading the
presence of the shipper respective claims of the
or of the consignee. parties shall be decided
by the legal proofs that
each one may submit in
support of his claims,
Should the shipper or in accordance with the
consignee cited not general provisions
appear, the established in this
examinations shall be Code for commercial
made before a notary, contracts.
 there should be no
limitations as to form.
Art. 351. In
transportation made by
railroads or other
enterprises which are The B/L is not essential
subject to schedules or to the contract, although
the time fixed by it may become obligatory
regulations, it shall be by reason of the
sufficient that the bills regulations of companies
of lading or the or as a condition
declarations of imposed in the contract
shipment furnished by by agreement of the
the shipper refer, with parties themselves
respect to the rate,
terms, and special
conditions of the
transportation, to the Where no B/L is issued,
schedules and the disputes between the
regulations, the parties shall be decided
application of which he accdg. to the rules laid
requests; and should down in Art. 354
no schedule be
determined, the carrier
must apply the rate of
the merchandise
paying the lowest, with Responsibility of the
the conditions inherent Carrier
therein, always
including such
statement or reference
to them in the bill of When it commences
lading which he
delivers to the shipper.

Art. 355. The liability of

Bill not essential to
contract : While under
350, the shipper and the
CC may mutually
demand that a B/L is
made, it is not obligatory.
The fact that a B/L is not
issued does not preclude
the existence of a
contract of transpo.
Provided there is a
meeting of the minds and
from such meeting arise
rights and obligations,
the carrier shall begin
from the moment he
receives the
merchandise, in person
or through a person
entrusted therewith in
the place indicated for
their reception.
The responsibility of the
CC commences from the
moment he receives the
merchandise --> the
delivery must be made to Where there is an agreed
him personally or through route, the CC shall be
his duly authorized liable for losses due not
agent, and at the place only to the change of
indicated for receiving route but also to other
the merchandise causes, together with the
indemnity agreed upon
--> the CC may not avail
of the contract limiting his
2. Route liability in case of
unjustified change of
route

Art. 359. If there should

be an agreement
between the shipper Where there is no agreed
and the carrier with route, the carrier must
regard to the road over select one which may be
which the the shortest, least
transportation is to be expensive and practically
made, the carrier may passable
not change the route,
unless obliged to do so
by force majeure; and
should he do so 3. Care of Goods
without such cause, he
shall be liable for any
damage which may be
suffered by the goods Article 361. The
transported for any merchandise shall be
other cause transported at the risk
whatsoever, besides and venture of the
paying the amount shipper, if the contrary
which may have been was not expressly
stipulated for such a stipulated.
case.
Therefore, all damages
and impairment
suffered by the goods
When on account of during the
said force majeure the transportation, by
carrier is obliged to reason of accident,
take another route, force majeure, or by
causing an increase in virtue of the nature or
the transportation defect of the articles,
charges, he shall be shall be for the account
reimbursed for said and risk of the shipper.
increase after formal
proof thereof.
The proof of these It does not mean that the
accidents is incumbent CC is free from liability
on the carrier. for losses and
deterioration arising from
his negligence or fault,
which is presumed
When goods are
delivered on board a ship
in good order and
condition, and the Relate this with Art. 1734
shipper-owner delivers and 1735 of the Civil
them to the shipper in Code
bad order and condition,
it then devolves upon the
shipowner to both allege
and prove that the goods Art. 362. The carrier,
were damaged by reason however, shall be liable
of some fact which for the losses and
legally exempts him from damages arising from
liability the causes mentioned
in the foregoing article
if it is proved that they
occurred on account of
The shipper will suffer his negligence or
losses and deteriorations because he did not take
arising from fortuitous the precautions usually
event, force majeure, or adopted by careful
inherent nature and persons, unless the
defects of the goods (at shipper committed
the risk and venture of fraud in the bill of
the shipper) lading, making him
believe that the goods
were of a class or
quality different from
what they really were.

45
TRANSPORTATION AND MARITIME LAW
Art. 362 is in consonance
with Art. 1735, NCC -->
except that under 1732,
proof of extra-o diligence
is required and not just
If, notwithstanding the ordinary diligence as
precaution referred to implied under 362
in this article, the
goods transported run
the risk of being lost on
account of the nature
Where goods run risk of
or by reason of an
loss due to their nature,
unavoidable accident,
Art. 362 provides for the
there being no time for
remedy of sale by the CC
the owners to dispose
of the goods, placing
of the same, the carrier
them for the purpose at
shall proceed to their
the disposal of the
sale, placing them for
judicial authority or of the
this purpose at the
officials designated by
disposal of the judicial
special provisions
authority or of the
officials determined by
special provisions.

Burden of proof : the CC Art. 1734. Common

has the burden of proving
that the injury was
occasioned by one of the
excepted causes
The shipper then has the
burden to prove that
although the injury may
have been occasioned by
one of the excepted
causes, yet still the CC is
responsible if the injury
might have been avoided
by the exercise of
reasonable skill and
attention on his part
carriers are responsible
for the loss,
destruction, or
deterioration of the
goods, unless the same
is due to any of the ff.
causes only:
Flood, storm,
earthquake, lightning,
or other natural
disaster or calamity;
Act of the public enemy
in war, whether
international or civil;
Act or omission of the
shipper or owner of the
goods;

The character of the

goods or defects in the
packing or in the be obliged to pay the
containers; value of the goods not
delivered at the point
Order or act of where they should have
competent public been and at the time
authority. (New Civil the delivery should
Code.) have taken place.

Art. 1735. In all cases If part of the goods

other than those transported should be
mentioned in Nos. delivered the
1,2,3,4, and 5 of the consignee may refuse
preceding article, if the to receive them, when
goods are lost, he proves that he
destroyed or cannot make use
deteriorated, CCs are thereof without the
presumed to have been others.
at fault or to have acted
negligently, unless they
prove that they
observed extraordinary
Duty to deliver goods :
diligence as required in
duty to deliver the goods
Art. 1733. (Ibid.)
in the same condition in
which accdg. to the B/L
they were found at the
time they were received,
Delivery without damage or
impairment --> otherwise,
the CC is liable for
damages
Condition of Goods

Partial delivery: The

Art. 363. With the consignee may refuse to
exception of the cases receive the goods
prescribed in the delivered, if he can prove
second paragraph of that he cannot make use
Article 361, the carrier of them independently of
shall be obliged to those not delivered -->
deliver the goods true solution depends
transported in the same upon the economic use
condition in which, which the goods
according to the bill of transported have
lading, they were at the (consignee cannot be
time of their receipt, arbitrary and must justify
without any damage or his determination)
impairment, and should
he not do so, he shall
Estoppel of shipper by Art. 365. If, on account
laches : neglect or delay of the damage, the
of shipper to demand goods are rendered
immediately, or within a useless for sale or
reasonable time, the consumption for the
return of the use for which they are
merchandise shipped or properly destined the
its value in case of non- consignee shall not be
delivery constitutes bound to receive them,
estoppel by laches and may leave them in
the hands of the carrier,
demanding payment of
their value at the
Places the CC at a current market price
disadvantageous position that day.
to show that it had
fulfilled what it had
undertaken; makes it
difficult for the CC to If among the goods
prove delivery damages there should
be some in good
condition and without
any defect whatsoever,
Art. 364. If the effect of the foregoing provision
the damage referred to shall be applicable with
in Article 361 should be regard to the damaged
only a reduction in the ones, and the
value of the goods, the consignee shall receive
obligation of the carrier those which are sound,
shall be reduced to the this separation being
payment of the amount made by distinct and
of said reduction in separate articles, no
value, after appraisal object being divided for
by experts. the purpose, unless the
consignee proves the
impossibility of
conveniently making
use thereof in this
Where all the goods are form.
delivered but damage is
to such an extent that
their value is diminished,
the obligation of the CC
shall be reduced to the The same provision
payment of the amount shall be applied to
which, in the judgment of merchandise in bales
experts, constitute such or packages, with
difference in value --> distinction of the
subject of course to other packages which appear
damages under the NCC sound.
Where damage renders Art. 366. Within the
the goods useless for twenty-four hours
sale and consumption for following the receipt of
the purposes for which the merchandise a
they are properly claim may be made
destined: against the carrier on
account of damage or
average found upon
opening the packages,
1. if the damage affects provided that the
all goods, the consignee indications of the
may abandon all the damage or average
goods to the CC who giving rise to the claim
shall pay the cannot be ascertained
corresponding damages from the exterior of
said packages, in
which case said claim
shall only be admitted
at the time of the
2. if the damage affects receipt of the
only some of the goods, packages.
the consignee may
abandon only the
damaged goods --> but if
the consignee can prove
that it is impossible to After the periods
conveniently use the mentioned have
undamaged goods in that elapsed, or after the
form, without the transportation charges
damaged goods, the law have been paid, no
authorizes the consignee claim whatsoever shall
to abandon all the goods be admitted against the
carrier with regard to
the condition in which
the goods transported
were delivered.

46
TRANSPORTATION AND MARITIME LAW
to cases of claims for
damage to goods
actually turned over by
In case of damaged
the CC and received by
goods, the damage may
the consignee
either be (1)
ascertainable only by
opening of the packages,
or (2) ascertainable from
the outside part of the The conditions under Art.
package 366 are not limitation of
action but are conditions
precedent to a cause of
action --> if the shipper or
consignee fails to allege
In Case 1, the claim
and prove the conditions
against the CC for
under 366, he shall have
damages must be made
no right of action against
within 24 hours following
the CC
the receipt of the
merchandise

In Case 2, the claim must

be made at the time of The CC may require in
receipt the B/L that the goods be
examined at the time of
The claim must be made delivery thereof --> the
before the payment of CC may likewise waive
transportation charges ** such right
otherwise, no action for
damages may be
maintained against the CC

Art. 366 is modified by a

B/L prescribing a longer
period for filing of written
When period begins to
claim with the CC or its
run : period begins to run
agent
when the consignee
received possession of
the goods such that he
may exercise over it the
ordinary control pertinent The unilateral action of a
to ownership CC in stamping a
condition in the notice of
arrival, requiring
examination of bad order
cargo by the ship's agent
There must be delivery of
before removal from port
the merchandise by the
authorities as condition
CC to the consignee at
precedent to an action for
the place of destination
recovery cannot modify
--> Art. 366 applies only
or add conditions to the
B/L --> unreasonable and
unfair in that it allows CC
to avoid responsibility for
the loss of or damage to
their cargo when in
packages or covered
The purpose of short
period for claiming
damages : to afford the
CC a reasonable
opportunity and facilities
to check the validity of
the claims while the acts
are still fresh in the minds
of the person who took
part in the transaction
and the documents are
still available.
The consignee may file a
provisional claim : it is
not necessary that such
claim should state a
detailed list of the loss or
damage; they only have
to contain descriptions of
the shipments in question
sufficient to have allowed
the CC to make
reasonable verifications
of such claim --> the
determination of the
specific amount of
damages claimed should
be done carefully and
without haste and these
can be done only in a
formal claim which will be
filed after the provisional
claim
This stipulation is in the
nature of a limitation
upon the owner's right to
recovery --> the burden
of proof is on the CC to
show that the limitation
was reasonable and in
proper form or within the
time stated (see
Southern Lines vs CA)
A a stipulation in the B/L
providing for a shorter
period than the statutory
period within which to
bring action for breach
is valid --> does not in
any way defeat the right
to recover but merely
requires that said right be
asserted by action at an
earlier period (filing of
claims is different from
filing of suits)
Art. 367. If there should
occur doubts and
disputes between the
consignee and the
carrier with regard to
the condition of goods
transported at the time
of their delivery to the
former, the said goods
shall be examined by
experts appointed by
the parties, and in case
of disagreement, a third
one appointed by the
judicial authority, the
result of the
examination being
reduced to writing; and
if the persons
interested should not
agree to
the report of the
experts and could not
settle their disputes,
Where the B/L is issued
said judicial authority
to the order of the
shall order the deposit
shipper, the CC is under
of the merchandise in a
a duty not to deliver the
safe warehouse, and
merchandise except
the parties interested
upon presentation of the
shall make use of their
B/L duly indorsed by the
rights in the proper
shipper, and where the
manner.
CC delivered the goods
to another person who
did not present the B/L,
such CC is liable for
If doubts and disputes misdelivery --> duty to
should arise between the transport the goods
consignee and the CC safely and to deliver
with respect to the them to the person
condition of the goods indicated in the B/L
transported at the time of
the delivery, Art. 367
shall govern --> expert
opinion on the matter is
Misdelivery: Delivery to a
not conclusive on the
person different from that
parties
indicated in the B/L -->
different from non-
delivery

(b) To Whom Delivery

Made
In case of conflicting
orders of the shipper and
the consignee (where
Art. 368. The carrier one orders the return and
must deliver to the the other orders the
consignee without any delivery of the goods),
delay or obstruction there is no other
the merchandise recourse than to
received by him, by the determine at what
mere fact of being moment the right of the
designated in the bill of shipper to countermand
lading to receive it; and the shipment terminates
should he not do so he --> this moment can be
shall be liable for the no other than the time
damages which may when the consignee or
arise therefrom. legitimate holder of the
B/L appears with such
B/L before the CC and
makes himself a party to
The delivery must be the contract (prior to that
made to the consignee
time, he is a stranger to where the consignee
the contract) refused to pay the
transportation charges

where the consignee

refuses to receive the
(c) Judicial Deposit
goods

Art. 369. Should the

Judicial deposit shall
consignee be not found
produce all the effects of
at the domicile
delivery subject to third
indicated in the bill of
persons with better rights
lading, or should refuse
to pay the
transportation charges
and expenses, or to
receive the goods, the Duty to look for
deposit of said goods consignee : if consignee
shall be ordered by the is not present, he is
municipal judge, where entitled to reasonable
there is no judge of notice from the CC of
first instance, to be their arrival and a fair
placed at the disposal opportunity to take care
of the shipper or of and remove them
sender, without
prejudice to a person
having a better right,
this deposit having all : if the consignee is
the effects of a delivery. unknown to the CC, the
latter must use proper
and reasonable diligence
to find him, and if the
Judicial deposit as a consignee still cannot be
remedy: found, the goods may be
stored in a proper place
and the CC will have
performed his whole duty
and shall be discharged
where the consignee
from liability as a CC
cannot be found at the
residence indicated

47
TRANSPORTATION AND MARITIME LAW
Failure to look for
consignee and to give
him reasonable notice
shall make the CC liable
for damages resulting
from the delay in the
receipt of the goods by
the consignee --> apply
1738 on the liability of the
CC even when the goods
are deposited in its
warehouse until after the
consignee has been
given reasonable notice
and opportunity to
remove the goods
Art. 1752. Even when
there is an agreement
limiting the liability of
the CC in the vigilance
over the goods, the CC
is disputably presumed
to have been negligent
in case of their loss,
destruction or
deterioration. (New
Civil Code.)
(d) When to be made
Article 370. If a period
has been fixed for the
delivery of the goods, it
must be made within
the same, otherwise the
carrier shall pay the
indemnity agreed upon
in the bill of lading,
neither the shipper nor
consignee being
entitled to anything
else.
Should no indemnity
have been agreed upon
and the delay exceeds
the time fixed in the bill
of lading, the carrier
shall be liable for the
damages which may
have been caused by
the
delay.
Art. 358. Should no
period within which
goods are to be
delivered be previously
fixed, the carrier shall
be under the obligation
to forward them in the
first shipment of the
same or similar
merchandise which he
may make to the point
of delivery; and should
he not do so, the
damages occasioned
by the delay shall be
suffered by him.
Where period fixed for
delivery : the CC must
deliver the goods within
the time fixed --> for
failure to do so, the CC
shall pay indemnity
stipulated in the B/L,
neither the shipper nor
the consignee being
entitled to anything else
--> however, under the
CC, damages shall be
paid if the carrier refuses
to pay the stipulated
indemnity or is guilty of
fraud in the fulfillment of
his obligation (Art.
1126,NCC)
If no indemnity has been
stipulated and the delay
exceeds the time fixed in
the B/L, the CC shall be
liable for the damages
that the delay may have
caused, e.g. the
difference between the
MV of the goods at the
time when they should
have been delivered, and
the price at the time
when they were delivered
to which may be added
reasonable expenses
caused by delay
A CC in GF may be held
liable only for damages
that were foreseen or
might have been
foreseen at the time the
contract of transpo was
entered into --> before a
CC could be held liable
for special damages,
such as loss of profits on
account of the delay or
failure of deliver, he must
have notice at the time of
the delivery of the
particular circumstances
attending the shipment
and which would
probably lead to such
special loss if he
defaulted (Mendoza vs
PAL)
If the CC incurs in delay
in transporting the goods,
a natural disaster shall
not free such carrier from
responsibility; where the
CC without cause delays
the transportation of the
goods, the contract
limiting the CC's liability
cannot be availed of in
case of the loss,
destruction or
deterioration of the goods
Where property in the
hands of a CC is not
delivered within a
reasonable time after it
has reached its
destination, the CC in the
absence of any legal
exemption and after
demand has been made
and delivery refused, is
liable for a conversion of
the property --> the
consignee may waive
title to the property and
sue for conversion and is
entitled to the value of
the goods at the time
they should have been
delivered to him -->
subsequent tender of the
goods by the CC is not
available as a defense
If there has been
demand and the CC
tenders the goods, the
consignee cannot refuse
to receive the goods and
sue for conversion; his
sole remedy is an action
for damages on
account of the delay -->
there can only be
conversion if there has
been demand and the
CC refuses delivery
The time for delivery
when no period fixed :
the CC shall be bound to
forward them in the first
shipment of the same or
similar goods which he
makes to the point where
he must deliver them -->
should he not do so, the
damages caused by the
delay shall be for his
account
Art. 358 is not violated
when though the goods
were not shipped on the
train agreed upon, they
were shipped on another
train which arrived earlier
than the one agreed
upon
(e) Two or more carriers
Art. 373. A carrier who
delivers merchandise
to a consignee by
virtue of agreements or
combined services with
other carriers shall
assume the obligations
of the carriers who
preceded him,
reserving his right to
proceed against the
latter if he should not
be directly responsible
for the fault which
gives rise to the claim
of the shipper or of the
consignee.
The carrier making the
delivery shall also
assume all the actions
and rights of those who
may have preceded him
in the transportation.
The shipper and the
consignee shall have
an immediate right of
action against the
carrier who executed
the transportation
contract, or against the
other carriers who
received the goods
transported without
reservation.
The reservations made
by the latter shall not
however exempt them
from the liabilities they
may have incurred by
reason of their own act.
Successive carriers shall
assume the obligations of
previous carriers but
have a right of action
against previous carriers
is the latter are directly
responsible for the fault
giving rise to the claim of
the shipper
(f) Obligation to keep
registry
Art. 378. Transportation
agents shall be obliged
to keep a special
registry, with the
formalities required by
Article 36, in which
there shall be entered,
in progressive order of
number and dates, all
the goods the
transportation of which
is undertaken, stating
the circumstances
required by Articles 350
et seq. for the
respective bills of
lading.
(g) Compliance with
administrative regulations
Art. 377. The carrier
shall be liable for all the
consequences arising
from noncompliance on
his part with the
formalities prescribed
48
by the laws and
regulations of the
public administration
during the entire
course of the trip and
upon arrival at the
point of destination,
except when his
omission arises from
his having been
induced into error by
false statements of the
shipper in the
declaration of the
merchandise.
If the carrier has acted
in accordance with a
formal order received
from the shipper or
consignee of the
merchandise both shall
incur liability.
The CC is exempted
from responsibility where
his failure to comply
arises from having been
led into error by the
falsehood on the part of
the shipper in the
declaration of the
merchandise
The shipper or consignee
may become liable for
noncompliance with govt.
rules and regulations,
when the CC has acted
by virtue of a formal
order of the shipper or
consignee --> but the CC
continues to be liable
TRANSPORTATION AND MARITIME LAW
claim whatsoever shall
be admitted against the
carrier with regard to
the condition in which
the goods transported
Rights and Obligations of were delivered.
Shipper and/or
Consignee

Art. 357. If by reason of

well-founded
Right to Damages suspicions of falsity in
the declaration of the
contents of a package,
the carrier should
Condition imposed on decide to examine it, he
right shall do so before
witnesses, in the
presence of the shipper
or of the consignee.

Art. 366. Within the

twenty-four hours
following the receipt of
the merchandise a Should the shipper or
claim may be made consignee cited not
against the carrier on appear, the
account of damage or examinations shall be
average found upon made before a notary,
opening the packages, who shall draft a
provided that the certificate of the result
indications of the of the examination, for
damage or average such purposes as may
giving rise to the claim be proper.
cannot be ascertained
from the exterior of
said packages, in
which case said claim If the declaration of the
shall only be admitted shipper should be
at the time of the correct, the expenses
receipt of the caused by the
packages. examination and those
of carefully repacking
the packages shall be
defrayed by the carrier,
After the periods and in a contrary case
mentioned have by the shipper.
elapsed, or after the
transportation charges
have been paid, no
Art. 353. The legal receipt producing the
basis of the contract same effect as the
between the shipper return of the bill of
and the carrier shall be lading.
the bills of lading, by
the contents of which
all disputes which may
arise with regard to Effect of return of the
their execution and B/L or giving of the
fulfillment shall be receipt: The respective
decided, no exceptions obligations and actions of
being admissible other the parties against each
than forgery or material other shall be considered
errors in the drafting canceled, except where
thereof. in the same act of return
or giving of a receipt the
claims of the parties be
reduced to writing subject
After the contract has to the provisions of Art.
been complied with, the 366
bill of lading shall be
returned to the carrier
who may have issued
it, and by virtue of the (b) Amount of damages
exchange of this title for loss
for the article
transported, the
respective obligations
and actions shall be
considered canceled, Art. 372. The value of
unless the same act the the goods which the
claims which the carrier must pay in
contracting parties case of their being lost
desire to reserve are or mislaid shall be fixed
reduced to writing, in accordance with
exception being made what is stated in the bill
of the provisions of of lading, no proofs
Article 366. being allowed on the
part of the shipper that
there were among the
goods declared therein
articles of greater
In case the consignee, value, and money.
upon receiving the
goods, cannot return
the bill of lading
subscribed by the
carrier, due to its loss
or for any other cause,
he shall give said Horses, vehicles,
carrier a receipt for the vessels, equipments,
goods delivered, this and all the other
principal and Par. 2 especially binds
accessory means of the horses, vehicles,
transportation, shall be vessels and eqpt. and all
especially obligated in other principal and
favor of the shipper, accessory means of the
although with respect CC in favor of the shipper
to railroads said --> this lien is a security
obligation shall be for the payment of the
subordinated to the value of the goods which
provisions of the laws the CC must pay in case
of concession with of loss or misplacement
regard to property and
to those of this Code
with regard to the
manner and form of Art. 1744, NCC. A
making attachments stipulation between the
and seizures against CC and the shipper or
the said companies. owner limiting the
liability of the former
for the loss,
destruction or
The value of the goods deterioration of the
stated in the B/L is goods to a degree less
conclusive between the than extra-o diligence
parties and the shipper is shall be valid, provided
not allowed to prove a it be:
higher value
in writing, signed by
the shipper or owner;

supported by a
It is only when the CC's
valuable consideration
fault is so gross as to
other than the service
amount to actual fraud,
rendered by the
that the actual amount of
the losses and damages
CC; and
suffered may be proved
by the shipper against
reasonable, just, and
the carrier
not contrary to public
policy. (New Civil
Code.)

Amount of damages for

delay

Art. 371. In cases of

delay on account of the
fault of the carrier, delivered, the damages
referred to in the shall not exceed such
foregoing articles, the value --> subject to Civil
consignee may leave Code provisions on
the goods transported damages in case of delay
in the hands of the
carrier, informing him
thereof in writing
before the arrival of the 2. Right to abandon
same at the point of
destination.

Art. 371. In cases of

delay on account of the
When this fault of the carrier,
abandonment occurs, referred to in the
the carrier shall satisfy foregoing articles, the
the total value of the consignee may leave
goods, as if they had the goods transported
been lost or mislaid. in the hands of the
carrier, informing him
thereof in writing
before the arrival of the
Should the same at the point of
abandonment not destination.
occur the indemnity for
loss and damages on
account of the delays
cannot exceed the When this
current price of the abandonment occurs,
goods transported on the carrier shall satisfy
the day and at the place the total value of the
where the delivery was goods, as if they had
to have been made. The been lost or mislaid.
same provision shall be
observed in all cases
where this indemnity is
due.
Should the
abandonment not
occur the indemnity for
loss and damages on
Damages for delay (par. account of the delays
3) : Provided there is no cannot exceed the
express agreement as to current price of the
indemnity in the B/L and goods transported on
there is no fraud on the the day and at the place
part of the CC, and the where the delivery was
goods have a known to have been made. The
current price at the place same provision shall be
and on the day they observed in all cases
should have been
where this indemnity is
due.

49
TRANSPORTATION AND MARITIME LAW
Right of abandonment:
Exceptional but limited
right
The right must be
exercised during the
intervening period
between the moment
when the fault of the CC
produces a delay, which
is the generative cause
of the action, until the
moment just before the
arrival of the goods at the
place of delivery, by
communicating such
abandonment to the CC
in writing
Where these conditions
do not concur, the refusal
to accept cannot be
effective
Damages for
abandonment : Art. 371
(2) --> subject to Civil
Code
Art. 360. The shipper
may, without changing
the place where the
delivery is to be made,
change the
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 the
consignee the bill of
lading subscribed by
the carrier, if one were
issued, be returned to
him, exchanging it for
another containing the
novation of the
contract.
The expenses arising
from the change of
consignment shall be
defrayed by the
shipper.
Art. 365. If, on account
of the damage, the
goods are rendered
useless for sale or
consumption for the
use for which they are
properly destined the
consignee shall not be
bound to receive them,
and may leave them in
the hands of the carrier,
demanding payment of
their value at the
current market price
that day.
If among the goods
damages there should
be some in good
condition and without
any defect whatsoever,
the foregoing provision
shall be applicable with
regard to the damaged
If part of the goods
ones, and the
transported should be
consignee shall receive
delivered the
those which are sound,
consignee may refuse
this separation being
to receive them, when
made by distinct and
he proves that he
separate articles, no
cannot make use
object being divided for
thereof without the
the purpose, unless the
others.
consignee proves the
impossibility of
conveniently making
use thereof in this
form. Cases where consignee
may abandon goods :

The same provision

shall be applied to 1. Art. 363, in case of
merchandise in bales partial non-delivery
or packages, with where the consignee
distinction of the proves that he cannot
packages which appear make use of the goods
sound. capable of delivery
independently of those
not delivered

Art. 363. With the

exception of the cases
prescribed in the 2. Art. 365, where the
second paragraph of goods are rendered
Article 361, the carrier useless for sale and
shall be obliged to consumption for the
deliver the goods purposes for which they
transported in the same are properly destined
condition in which,
according to the bill of
lading, they were at the
time of their receipt, 3. Art. 371, where there
without any damage or is delay through the fault
impairment, and should of the carrier
he not do so, he shall
be obliged to pay the
value of the goods not
delivered at the point
2. Right to change
where they should have
consignment
been and at the time
the delivery should
have taken place.
Art. 360. The shipper this payment, the
may, without changing carrier may demand the
the place where the judicial sale of the
delivery is to be made, goods he transported
change the to a sufficient amount
consignment of the to cover the
goods delivered to the transportation charges
carrier, and the latter and the expenses
shall comply with his incurred.
orders, provided that at
the time of making the
change of the
Railroad corporations
have the power to detain
freight, goods or luggage,
consignee the bill of to answer for the freight,
lading subscribed by storage and other
the carrier, if one were transportation charges
issued, be returned to
him, exchanging it for
another containing the
novation of the In case of failure of the
contract. shipper, owner or
consignee to pay for
The expenses arising
such charges, the CC
from the change of
has the power to sell
consignment shall be
such freight, goods, or
defrayed by the
luggage at public auction
following the procedure
shipper.
under the law

3. Obligation to pay
Art. 375. The goods
transportation charges
transported shall be
specifically bound to
answer for the
transportation charges
Art. 374. The and for the expenses
consignees to whom and fees caused by the
the remittance may same during their
have been made may transportation, and
not defer the payment until the time of their
of the expenses and delivery.
transportation charges
on the goods that they
received after twenty-
four hours have
This special right shall
elapsed from the time
be limited to eight days
of the delivery; and in
after the delivery has
case of delay in making
been made, and after
said prescription the
carrier shall have no
further right of action
Two sanctions for the
than that
enforcement by the CC
corresponding to an
of the payment of
ordinary creditor.
expenses and transpo
charges :

Art. 376. The

preference of the
Art. 374 - judicial sale of
carrier to the payment
the goods transported
of what is due him for
the transportation and Art. 375 - creating a lien
expenses of the goods in favor of the CC on the
delivered to the goods transported --> 8
consignee shall not be day
affected by the
bankruptcy of the latter, period has been
provided the action is increased to 30 days by
brought within the the NCC
eight days mentioned
in the foregoing article. The purpose of the lien
and time limit: Reciprocal
to that established in
favor of the shipper
Art. 2241. With under
reference to specific
movable property of
the debtor, the ff.
claims or liens shall be Art. 372(par. 2); time limit
preferred : rests on the necessity
which the consignee
xxx must have for alienation
of the goods, by which
(9) Credits for the CC is given a period
transportation, upon relatively urgent
the goods carried, for pertaining to the said
the price of the goods transported -->
contract and incidental after the time has
expenses, until their prescribed, his
delivery and for thirty preference prescribes
days thereafter. (New and his only remedy is by
Civil Code.) ordinary action

50
TRANSPORTATION AND MARITIME LAW
The mere fact that the
goods remain in the
possession of the CC
because they have not
been removed by the
consignee, and the right
of the CC to demand the
sale of the goods to
satisfy the cost of
transportation and other
expenses, do not deprive
the CC of its right to
demand in a proper
action the amounts owing
to it by reason of the
contract of transpo
The bankruptcy of the
consignee shall not cut
off the preference of the
CC, provided that the
claim is made w/in 30
days from date of
delivery (NCC)
5. Obligation to return bill
of lading
Art. 353. The legal
basis of the contract
between the shipper
and the carrier shall be
the bills of lading, by
the contents of which
all disputes which may
arise with regard to
their execution and
fulfillment shall be
decided, no exceptions
being admissible other
than forgery or material
errors in the drafting
thereof.
After the contract has
been complied with, the
bill of lading shall be
returned to the carrier
who may have issued
it, and by virtue of the
exchange of this title
for the article
transported, the
respective obligations
and actions shall be
considered canceled,
unless the same act the
claims which the
contracting parties
desire to reserve are
reduced to writing,
exception being made
of the provisions of
Article 366.
In case the consignee,
upon receiving the
goods, cannot return
the bill of lading
subscribed by the
carrier, due to its loss
or for any other cause,
he shall give said
carrier a receipt for the
goods delivered, this
receipt producing the
same effect as the
return of the bill of
lading.
Under par. 2, Art. 353,
after the contract of
transpo has been
complied with, the B/L personally effect the
shall be returned to the transportation of
issuing CC in exchange commercial goods,
for the goods transported contract to do so
which are delivered to through others, either
the shipper or consignee as contracts for a
special and fixed
transaction or as
freight and
Where the consignee transportation agents.
upon receiving the goods
cannot return the B/L to
the CC by reason of its
loss or any other cause, In either case they shall
par. 3, Art. 353 provides be subrogated to the
that he must give the CC place of the carriers
a receipt of the goods with regard to the
delivered obligations and liability
of the latter, as well as
with regard to their
right.
Effect of return of the
B/L or giving of the
receipt: The respective
obligations and actions of IV. ADMIRALTY AND
the parties against each MARITIME COMMERCE
other shall be considered
canceled, except where
in the same act of return
or giving of a receipt the A. Concept of Admiralty;
claims of the parties be Jurisdiction over
reduced to writing subject Admiralty Cases
to the provisions of Art.
366

BP 129, Sec. 19.

Regional Trial Courts
shall exercise exclusive
original jurisdiction:
G. Applicability of
Provisions

xxx

Art. 379. The provisions

contained in Article 349
et seq. shall also be (3) In all actions in
understood as relating admiralty and maritime
to persons who, jurisdiction where the
although they do not demand or claim
exceeds one hundred same or different
thousand pesos parties, embodied in
(P100,000) xxx. the same complaint,
the amount of the
demand shall be the
totality of the claims in
BP 129, Sec. 33. all the causes of action,
Metropolitan Trial irrespective of whether
Courts, Municipal Trial the causes of action
Courts and Municipal arose out of the same
Circuit Trial Courts or different actions.
shall exercise:

(1) Exclusive original

jurisdiction over civil International Harvester
actions and probate vs Aragon 84 Phil 363
proceedings, testate
and intestate, including
the grant of provisional
remedies in proper
F: The S/S Belle of the
cases, where the value
Sea took on board in LA,
of the personal
goods for shipment to
property, estate or
Manila and covered by
amount of the demand
B/L No. 105. The S/S
does not exceed one
Belle of the Sea arrived
hundred thousand
in Manila and discharged
pesos (P100,000), or in
her cargo at the govt.
Metro Manila where
piers under the
such personal property,
supervision and custody
estate, or amount of the
of the defendant Manila
demand does not
Terminal Inc. Of the
exceed Two hundred
entire shipment, one
thousand pesos
carton of assorted
(P200,000), exclusive of
samples with a stipulated
interest, damages of
value of P200 was not
whatever kind,
delivered to plaintiff
attorney's fees,
Yaras and Co. The latter
litigation expenses, and
filed a complaint with the
costs, the amount of
Municipal Court of Manila
which must be
against International
specifically alleged:
Harvester, as agent of
Provided, That interest,
the S/S Belle of the Sea
damages of whatever
and Manila Terminal Inc.
kind, attorney's fees,
The complaint charged
litigation expenses, and
that the merchandise
costs shall be included
was lost through the
in the determination of
negligence of either of
the filing fees:
the defendants. Before
Provided, further, That
trial could proceed, the
where there are several
International Harvester
claims or causes of
Inc. (IH) filed a motion to
action between the
dismiss on the ground
that the court had no
jurisdiction. The motion
was denied. Prohibition
proceedings were
instituted before the CFI
of Manila to stop the
judge from proceeding
with the action. The
petition was granted and
the respondents now
appeal.
Held : It is clear from the
complaint that IH is being
held liable only on the
assumption that the
goods had been lost in
transit or before being
discharged at the pier.
The liability of IH is
predicated on the
contract of carriage by
sea between IH and
Yaras & Co. as
evidenced by the B/L,
independently of the
liability of the Manila
Terminal Co. as operator
of an arrastre service.
Admiralty has jurisdiction
over all maritime
contracts, in whatever
form, wherever they were
executed or are to be
performed, but not over
non-maritime contracts.
Whether or not a contract
is maritime depends not
on the place where the
contract is made and is
to be executed, making
the locality the test, but
on the subject matter of
51
the contract, making the
true criterion a maritime
service or a maritime
transaction. Specifically,
admiralty has jurisdiction
of a proceeding in rem or
in personam for the
breach of a contract of
affreightment, whether
evidenced by a B/L or a
charter party. And typical
of a controversy over
contracts of affreightment
is a suit of one party
against the other for loss
or damage to the cargo.
This is the very case
before us, because the
respondent Yaras & Co.
seeks to recover from the
petitioner IH the value of
certain lost cargo.
The contention of Yaras
that the admiralty
jurisdiction is not involved
because the contract in
question was made upon
land and to be terminated
upon land, merely
reflects the English rule
which had long been
rejected in the US. It is
now well-settled in the
latter country that the
jurisdiction of admiralty in
matters of contract
depends upon the
subject matter, i.e., the
nature and character of
the contract and that the
English rule which
conceded jurisdiction
only to contracts made
upon and to be
performed upon
navigable waters, is
inadmissible, the true
TRANSPORTATION AND MARITIME LAW
wherein it was struck by
the still turning propeller
of the steamer. The boat
criterion being that the
sunk and Lopez was
contract has reference to
thrown into the water
maritime service or
against the propeller
maritime transaction.
wherein he suffered a
Under the law, the CFI
bruise in the breast, two
has jurisdiction over
serious fractures of the
admiralty cases.
bones of the left leg and
a compound fracture of
the left femur. As a result,
Lopez was hospitalized
Vessels from February 28 to
October 19, 1927 or eight
months. Lopez filed a
complaint and sought
Meaning damages amounting to
P120,000 alleging that he
suffered injuries due to
the negligence and
inexperience having only
Lopez vs Duruelo 52
been in its third day of
Phil 229
apprenticeship on the
day of the accident. It
was also alleged that
Jison was overloaded
F: Augusto Lopez, of when it carried 14
Silay, Occidental Negros, passengers instead of its
wanted to embark on the capacity for eight or nine.
interisland steamer San The defendants assigned
Jacinto bound for Iloilo. in it demurrer that the
The steamer was plaintiff did not show a
anchored some half a right of action since the
mile from the shore or complaint did not allege
port of Silay. In order to that a protest had been
board the steamer, Lopes presented by the plaintiff
boarded the motor boat within 24 hours after the
Jison at the landing occurrence, to the
which was then engaged competent authority of
in conveying passengers the port where the
and luggage to and from accident occurred as
the steamer. Whether provided under the Code
due to negligence or of Commerce. CFI
incompetence of dismissed the complaint,
Duruelo, the engineer of hence the appeal.
Jison aged 16, as
alleged, the boat
approached too near to
the stern of the steamer
Held : Assuming that
article 835 of the Code of
Commerce states a
condition precedent to
the maintenance of an
action in a case requiring
protest, such as protest
is nevertheless not
necessary in the case at
bar. The article is found
in the section dealing
with collisions and the
context shows the
collisions intended are
collisions of sea-going
vessels. Said article
cannot be applied to
small boats engaged in
river and bay traffic. The
vessels intended in the
Third Book of the Code
of Commerce which
deals with maritime
commerce and in which
Art. 865 is found was
evidently intended to
define the law relative to
merchant vessels and
marine shipping, and the
vessels intended in that
Book are such as are run
by masters having
special training with the
elaborate apparatus of
crew and equipment
indicated in the Code.
The word "vessel" used
in the section was not
intended to include all
ships, craft, or floating
structures of every kind
without limitation, and the
provision of that section
should not be held to
include minor craft
engaged only in river or
bay traffic. Vessels of
minor nature, such as
river boats and those
carrying passengers from
ship to shore are
governed as to their
liability in passengers, by
the Civil Code.
The word ship and
vessel, in their
grammatical sense are
applied to designate
every kind of craft, large
or small, merchant or
war, a signification which
does not differ essentially
from its juridical meaning
according to which
vessels for the purpose
of the Code of
Commerce, are
considered not only
those engaged in
navigation whether
coastwise or high seas,
but also floating docks,
pontoons,dredges,
scows, and other floating
apparatus for the service
of the industry or
maritime commerce.
Yet notwithstanding these
principles from which it
would seem that any
floating apparatus which
serves directly for the
transportation of things or
persons or which
indirectly is related to this
industry, ought to be
subjected to the
principles of the Code
with reference to
ownership, transfer,
rights, registrations, etc.
they are not applicable to
small craft which are only
subject to administrative
regulations in the matter
of port service and in the
fishing industry.

But even if The Code Of
Commerce was
applicable, a protest still
need not be made since
under Art. 836, want of
protest cannot prejudice
a person not in a
condition to make known
his wishes. A person who
has suffered injuries like
that of the plaintiff cannot
be supposed to be in a
condition to make a
protest.
2. Nature and acquisition
of vessels
In the absence of any
of these requisites,
uninterrupted
possession for ten
years shall be
necessary in order to
acquire ownership.
A captain cannot
acquire by prescription
the ship of which he is
in command.
Vessels: Those engaged
in navigation , whether
coastwise or on the high
seas, including floating
docks, pontoons,
dredges, scows and any
other floating apparatus
destined for the services
of the industry or
maritime commerce

Art. 573. Merchant

vessels constitute
property which may be
Vessels engaged in the
acquired and
business of carrying or
transferred by any of
transporting passengers
the means recognized
or goods for
by law. The acquisition
compensation, offering
of a vessel must be
their services to the
included in a written
public are common
instrument, which shall
carriers --> governed
not produce any effect
primarily by the Civil
with regard to third
Code provisions on
persons if not recorded
common carriers and
in the registry of
subsidiarily by the Code
vessels. The ownership
of Commerce and special
of a vessel shall also
laws
be acquired by the
possession thereof in
good faith for three
years, with a good title
duly recorded. The Code of Commerce
regulates merchant ships
or those engaged in the
transportation of
passengers and freight Possession in GF will
from one port to another ripen into ownership in 3
or from place to another years; if the possession
is otherwise, it will ripen
into ownership in 10
years
The Code of Commerce
does not refer to
pleasure ships, yachts,
pontoons, health service There can be no
and harbor police prescription in favor of
vessels, floating the captain because the
storehouses, warships or nature of the possession
patrol vessels, coast of the captain is such that
guard vessels, fishing he is only an agent of the
vessels, towboats and owner, a depositary of
other craft destined to the vessel
other uses, such as coast
and geodetic survey,
scientific research and
exploration, crafts The acquisition of a
engaged in the loading vessel must appear in a
and the discharge of written instrument and
vessels, or transhipments such instrument must be
from one vessel to registered in order that
another the transfer may affect
third persons

Vessels of a minor nature

not engaged in maritime Art. 574. Builders of
commerce, such as, river vessels may employ
boats and those carrying the material and follow
passengers from ship to with regard to their
shore, must be governed construction and
as to their liability to rigging the systems
passengers, by the most suitable to their
provisions of the Civil interest. Ship owners
Code and seamen shall be
subject to the
provisions of the laws
and regulations of the
Modes of acquisition: public administration
(1) purchase and sale, on navigation,
(2) prescription, (3) customs, health, safety
construction, (4) capture, of vessels, and other
(5) donation, (6) similar matters.
succession, and (7) other
means, such as barter
The business of considered a public utility
constructing and and no CPC shall be
repairing vessels or parts required thereof
thereof shall not be

52
TRANSPORTATION AND MARITIME LAW
prescription. (New Civil
Code.)

3. Registration;
certificates issued;
distinctions

Art. 585. For all

purposes of law not
modified or restricted Tariff and Customs
by the provisions of Code, Sec. 802
this Code, vessels shall
continue to be
considered as personal
property.
vessels - every sort of
boat, craft or other
artificial contrivance
used, or capable of
Vessels are considered being used, as a means
personal or movable of transportation on
property; but they water
partake to a certain
extent, of the nature and duly registered -
conditions of real person, natural or
property, on account of juridical, registered
their value and with the proper govt.
importance in the world agencies, as Bureau of
of commerce Commerce, SEC,
NACIDA, BOI, Export
Incentives Board or Oil
Commission, as now or
Art. 712. Ownership is may hereafter be
acquired by occupation required by law.
and by intellectual
creation. Ownership
and other real rights
over property are PD 761 as amended by
acquired and PD 1064, 1521
transmitted by

law, by donation, by
testate and intestate
Sec. 806. Upon
succession, and in
registration of a vessel
consequence of certain
of domestic ownership,
contracts, by tradition.
and of more than 15
tons gross, a certificate
They may also be
of Philippine registry
acquired by means of
shall be issued for it. If
the vessel is of
domestic ownership operation of the
and of 15 tons gross or registered project.
less, the taking of the
certificate of Philippine
registry shall be
optional with the Rule III, Marina Rules
owner. and Regulations:

Domestic ownership Subjects of

means ownership Registration:
vested in the citizens of
the Philippines or
corporations or
association organized
under the laws of the All vessels used in Phil.
Philippines at least 60% waters, not being
of the C/S or capital of transients of foreign
which is wholly owned registry, shall be
by citizens of the registered with the
Philippines, and in the MARINA. To this end, it
case of corporations or shall be the duty of the
associations which will master, owner and
engage in coastwise agent of every such
trade the president and vessel to make
managing directors application to the
thereof shall be such proper MARINA district
citizens xxx office for registration
thereof within 15 days
after the vessel
becomes subject to
such registration.
xxx an enterprise duly
registered with the
Board of Investments
WON entirely owned by
foreign nationals, may
register its own vessels
xxx if such vessels are
to be used exclusively
to transport its own raw
materials and finished
products in Philippine
waters as an incident to
its manufacturing,
processing or business
activity registered with
the BOI and certified to
by said Board as an
essential element in the
A vessel of 3 tons these rules and
gross or less shall not regulations relative to
be registered unless registration and
the owner shall so navigation, except in so
desire, nor shall far as may be
documents licenses of prescribed by
any kind be required regulations of MARINA.
for such vessel, but the
proper fee shall be
charged for
measurement when The Phil. Coast Guard is
measurement is vested with exclusive
necessary, except authority over the
when the same is registration and
engaged in towing or documentation of Phil.
carrying of articles and vessels, as well as the
passengers for hire. issuance of all
certificates, licenses, or
other documents
necessary or incident to
3) All undocumented such registration
vessels shall be
numbered in such form
as may be prescribed
by the Administrator. The registration shall be
effected at its home port
or at the nearest Coast
Guard district or station
when the home port does
not have such

Certificates of
Philippine register:
Vessels exempt from upon registration of a
Registration : vessel of domestic
ownership and of more
than 15 tons gross, a
certificate of Phil. register
AFP vessels, vessels shall be issued for it
owned and/or operated
by the AFP or by The purpose of
foreign govt. for certificates of register of
military purposes, and vessels : to declare the
bancas, sail boats and nationality of a vessel
other water craft which engaged in trade with
are not motorized of foreign nations and to
less than 3 gross tons enable her to assert that
shall not be subject to nationality wherever
the requirements of found
Privileges of certificate:
It confers upon the
vessel the right to
engage, consistently with
law, in the Philippines
coastwise trade and
entitles it to the
protection of the
authorities and the flag of
the Philippines in all ports
and on the high seas,
and at the same time
secures to it the same
privileges and subjects it
to the same disabilities
as, under the laws of the
Philippines, pertain to
foreign built vessels
transferred abroad to
citizens of the Philippines
Certificates of
ownership : upon
registration of a vessel of
more than 5 tons gross, a
certificate of ownership
shall be issued for it
4. Significance of
registration of
transactions affecting
vessels
Presumption of
ownership from
registration : the
presumption is that the
person in whose name a
vessel is registered has
legal title thereto --> but
such is not conclusive
proof against the real
owners
It is essential that a
record of documents
affecting the title of a
vessel be entered in the
Philippine Coast Guard
Arroyo vs Yu 54 Phil 511
F: The appeal of Yu
relates to the preferences
to the ten lorchas as
between herself and the
PNB. Among the facts
found by the trial judge is
that they were owned by
Lim Ponzo
Navigation Co. They
were mortgaged to Po
Pauco to guarantee a
loan of P20,000. This
was duly registered with
the register of deeds. Po
Pauco later mortgaged
them in favor of PNB and
registered with the
register of deeds but was
recorded in the Office of
Collector of Customs
much later. Meanwhile,
Yu secured a judgment
against Lim Ponzo
Navigation Co. The
notice of seizure was
recorded by the collector
of customs of Iloilo on
which date the records of
the office disclosed the
vessels as free from
encumbrances.
HELD : Sec. 1171 of AC thereof. It is now not
has modified the necessary for a chattel
provisions of the Chattel mortgage of a vessel to
Mortgage Law, be noted in the
particularly Sec. 4

53
TRANSPORTATION AND MARITIME LAW
register of deeds. But it is
essential that a record of
documents affecting the
title of a vessel be
entered in the office of
the collector of customs
at a port of entry. This is
designed to protect
persons who deal with a
vessel on the strength of
the record title.
Mortgages on vessels.,
although not recorded,
are good as between the
parties. But as against
creditors of the
mortgagor, an
unrecorded mortgage is
valid.
However, we find an
explanation of the delay
of registration with the
collector of customs-
because of doubts
entertained by the latter
relative to the
applicability of Act No.
3324 to a mortgage
executed in 1918 in favor
of a Chinese subject.
This uncontradicted fact
must be taken as curing
the bank's defective title.
That the collector did not
perform his duty was no
fault of PNB.
Judgment affirmed in part
in the sense that as
between Yu and PNB,
the latter has a superior
right to its claim for
P20,000, and set aside in
part in the sense that the
record is remanded for
further proceedings.
Rubiso vs Rivera 37 Phil
72
F: Defendant Rivera
acquired by purchase the
pilot boat Valentina on a
date prior to that of the
purchase and
adjudication at public
auction by plaintiff
Rubiso. But the sale at
public auction to Rubiso
was recorded in the
office of the collector of
customs on Jan. 27,
1915 and in the
commercial registry on
March 4, 1915, while the
sale to Rivera was
entered in the customs
registry only on March
17, 1915. Lower court
decided for plaintiff.
Defendant appealed.
HELD : The requisite of
registration in the registry
of the purchase of a
vessel is necessary and
indispensable in order
that the purchaser's
rights may be maintained
against a claim filed by a
third person. Such
registration is required
both Art. 573 of the Code
of Commerce in
connection with Sec 2 of
Act No. 1900 which Act
amended said article.
The amendments solely
consisted in charging the
Insular Collector of
Customs, as at present,
with the fulfillment of the
duties of the commercial
register concerning the
registering of vessels, so
that the registration of a
bill of sale of a vessel
shall be made in the
Insular Collector of
Customs, who, since
May 18, 1909, has been
performing the duties of
the commercial registry
in place of this latter
official. In view of said
legal provisions, it is
undeniable that
defendant's rights cannot
prevail over those
acquired by plaintiff in the
ownership of said boat, in
as much as defendant's
registration came after
plaintiff's registration.
Persons Participating in
Maritime Commerce
Shipowners and
shipagents
Art. 586. The owner of a
vessel and ship agent
shall be civilly liable for
the acts of the captain
and for the obligations
contracted by the latter
to repair, equip, and
provision the vessel,
provided the creditors
proves that the amount
claimed was invested
therein.
By agent is understood
the person entrusted
with the provisioning of
a vessel, or who
represents her in the
port in which she
happens to be.
Art. 587. The ship agent
shall also be civilly
liable for the
indemnities in favor of
third persons which
arise from the conduct
of the captain in the
care of the goods
which the vessel
carried; but he may
exempt himself
therefrom by
abandoning the vessel
with all her equipments
and the freightage he
may have earned
during the voyage.
Art. 588. Neither the
owner of the vessel nor
the agent shall be liable
for the obligations
contracted by the
captain if the latter
exceeds his powers
and privileges inherent
in his position or those
which may have been
conferred upon him by
the former.
However, if the
amounts claimed were
made use of for the
benefit of the vessel,
the owner or agent
shall be liable.
Liability of shipowner and
shipagent :
under Art. 857, for the
acts of the captain
for contracts entered into
by the captain to repair,
equip and provision the
vessel,
provided that the amount
claimed was invested for
the benefit of the vessel
(3) for the indemnities in
favor of third persons
which may arise from the
conduct of the captain in
the care of the goods
transported, as well as
for the safety of
passengers transported
(4) for damages to third
persons for tort or quasi-
delict committed by the
captain, except collision
with another vessel
(5) under Art. 826, for
damages in case of
collision due to the fault,
negligence, or want of
skill of the captain, sailing
mate, or any other
member of the
complement
The agent is liable to the
shippers and owners of
the cargo transported by
it, for losses and
damages occasioned to
such cargo without
prejudice to his rights
against the owner of the
ship, to the extent of the
value of the vessel, its
equipment and the freight
Under 588, the
shipowner and the
shipagent are not liable
for the obligations
contracted by the captain
if he exceeds his
authority, unless the
amounts claimed were
invested for the benefit of
the vessel --> however
under Art. 1759, NCC,
the ship owner is liable
for the death of or injuries
to the passengers which
are caused by the
negligence or wilful acts
of his EEs although such
EEs may have acted
beyond the scope of their
authority or in violation of
the orders of the
shipowner
Art. 589. If two or more
persons should be part
owners of a merchant
vessel, an association
shall be presumed as
established by the part
owners.
This association shall A vessel cannot be
be governed by the detained, attached or
resolutions of a levied upon execution
majority of the in her entirety for the
members. private debts of a part
owner, but the
A majority shall be the proceedings shall be
relative majority of the limited to the interest
voting members. the debtor may have in
the vessel, without
If there should be only interfering with her
two part owners, in navigation.
case of disagreement
the vote of the member
having the largest
interest shall be
Art. 590. The co-owners
decisive. If the interests
of a vessel shall be
are equal, it shall be
civilly liable, in the
decided by lot.
proportion of their
contribution to the
common fund, for the
results of the acts of
The representation of the captain, referred to
the smallest part in the in Article 587.
ownership shall have
one vote; and
proportionately the
other part owners as
Each part owner may
many votes as they
exempt himself from
have parts equal to the
this liability by the
smallest one.
abandonment before a
notary of the part of the
vessel belonging to
him.

54
TRANSPORTATION AND MARITIME LAW

Art. 591. All the part The sale of the vessel

owners shall be liable, shall be made at a
in proportion to their public auction, subject
respective ownership, to the provisions of the
for the expenses which law of civil procedure
are incurred by virtue unless the part owners
of a resolution of the unanimously agree
majority. otherwise, subject
always to the right of
They shall likewise be pre-emption and
liable in the same redemption mentioned
proportion for the in Article 575.
expenses of
maintenance,
equipment, and
provisioning of the
Art. 593. The owners of
vessel, necessary for
a vessel shall have
navigation.
preference in her
charter over other
persons, offering equal
conditions and price. If
Art. 592. The two or more of the
resolutions of the former should claim
majority with regard to said right the one
the repair, equipment, having greater interest
and provisioning of the shall be preferred, and
vessel in the port of should they have an
departure shall bind the equal interest it shall
minority, unless they be decided by lot.
renounce their
participation therein,
which must be
acquired by the other
Art. 594. The part
part owners after a
owners shall elect the
judicial appraisement
manager who is to
of the value of the
represent them in the
portion or portions
capacity of agent.
assigned.
The appointment of
director or agent shall
be revocable at the will
The resolutions of the of the
majority relating to the
dissolution of the partners.
association and sale of
the vessel shall also be
binding on the minority.
Art. 595. The agent, be matter shall be decided
he at the same time an by lot.
owner of a vessel or a
manager for an owner
or for an association of
co- owners, must be Art. 597. The agent
qualified to trade and shall select and enter
must be recorded in the into an agreement with
merchant's registry of the captain, and shall
the province. contract in the name of
the owners, who shall
be bound in all that
refers to repairs, details
The agent shall of equipment,
represent the armament, provisions,
ownership of the fuel, and freight of the
vessel, and may in his vessel, and, in general,
own name and in such in all that relates to the
capacity take judicial requirements of
and extrajudicial steps navigation.
in all that relates to
commerce.

Art. 598. The agent

cannot order a new
Art. 596. The agent may voyage, nor make
discharge the duties of contracts for a new
captain of the vessel, charter, nor insure the
subject, in every case, vessel, without the
to the provisions authority of her owner
contained in Article or by virtue of a
609. resolution of the
majority of the co-
If two or more co- owners, unless these
owners request the powers were granted
position of captain, the him in the certificate of
disagreement shall be his appointment.
decided by a vote of
the members; and if the
vote should result in a
tie, the position shall
If he should insure the
be given to the part
vessel without
owner having the larger
authority therefor he
interest in the vessel.
shall be subsidiarily
liable for the solvency
of the underwriter.

If the interest of the

petitioners should be
the same, and there
Art. 599. The managing
should be a tie, the
agent of an
association, shall give * Note : an executory
his co-owners an action is no longer
account of the results recognized in this
of each voyage of the jurisdiction
vessel, without
prejudice to always
having the books and
correspondence Art. 601. Should there
relating to the vessel be any profits, the co-
and to its voyages at owners may demand of
their disposal. the managing agent the
amount due them, by
means of an executory
action without further
Art. 600. After the requisite than the
account of the acknowledgment of the
managing agent has signatures in the
been approved by a instrument approving
relative majority, the the account.
co-owners shall satisfy
the expenses in
proportion to their
interest, without Art. 602. The agent
prejudice to the civil or shall indemnify the
criminal actions which captain for all the
the minority may deem expenses he may have
fit to institute made from his own
afterwards. funds or from those of
other persons, for the
benefit of the vessel.

In order to enforce the

payment, the managing
agents shall be entitled Art. 603. Before a
to an executory action, vessel goes out to sea
which shall be the agent may at his
instituted by virtue of a discretion, discharge
resolution of the the captain and
majority, and without members of the crew
further proceedings whose contract did not
than the state a definite period
acknowledgment of the nor a definite voyage,
signatures of the paying them the
persons who voted for salaries earned
the resolution. according to their
contracts, and without
any indemnity
whatsoever, unless
there is an expressed
and specific agreement
in respect thereto.
 for reasons of
insubordination in
serious matters,
Art. 604. If the captain or
robbery, theft, habitual
any other member of the
drunkenness, and
crew should be
damage caused to the
discharged during the
vessel or to its cargo
voyage, they shall
by malice or manifest
receive their salary until
or proven negligence.
their return to the place
where the contract was
made, unless there are
good reasons for the
discharge, all in Art. 606. If the captain
accordance with Art. 636 should be a part owner
et seq. of this Code. in the vessel, he may
not be discharged
unless the agent
returns to him the
amount of his interest
Art. 605. If the
therein, which, in the
contracts of the captain
absence of an
and members of the
agreement between the
crew with the agent
parties, shall be
should be for a definite
appraised by experts
period or voyage, they
appointed in the
cannot be discharged
manner established in
until the fulfillment of
the law of civil
their contracts, except
procedure.

55
TRANSPORTATION AND MARITIME LAW
made contracts with
the former -
Art. 607. If the captain
For all the damages
who is a part owners
suffered by the vessel
should have obtained
and its cargo by reason
the command of the
of want of skill or
vessel by virtue of a
negligence on his part.
special agreement
If a misdemeanor or
contained in the
crime has been
articles of
committed he shall be
copartnership, he
liable in accordance
cannot be deprived
with the Penal Code.
thereof except for the
reasons mentioned in
Article 605.

For all the thefts and

robberies committed by
the crew, reserving his
Art. 608. In case of the
right of action against
voluntary sale of the
the guilty parties.
vessel, all contracts
between the agent and
captain shall terminate,
reserving to the latter
his right to the For the losses, fines,
indemnity which may and confiscations
be proper, according to imposed on account of
the agreements made violation of the laws
with the agent. and regulations of
customs, police, health,
and navigation.

The vessel sold shall

remain subject to the
security of the payment For the losses and
of said indemnity if, damages caused by
after the action against mutinies on board the
the vendor has been vessel, or by reason of
instituted, the latter faults committed by the
should be insolvent. crew in the service and
defense of the same, if
he does not prove that
he made full use of his
authority to prevent or
Art. 618. The captain
avoid them.
shall be civilly liable to
the ship agent and the
latter to the third
persons who may have
For those arising by
reason of a misuse of
powers and
Art. 618 provides for the
nonfulfillment of the
direct responsibility of the
duties which pertain to
shipowner and shipagent
him in accordance with
to third persons; the
Articles 610 and 612.
captain shall be civilly
liable to the ship agent
and the latter is the one
liable to third persons
For those arising by
reason of his going out This article applies to
of his course or taking breaches of contract and
a course which, in the tortious negligence of the
opinion of the officers captain
of the vessel, at a
meeting attended by But where the vessel is
the shippers or totally chartered for use
supercargoes who may of a single party, the
be on board, he should shipowner and that party
not have taken without may validly stipulate that
sufficient cause. the latter shall be exempt
from liability for the
negligence of the captain
and crew
No exception
whatsoever shall
exempt him from his
obligation. Reason for imposition
of liability on owner for
For those arising by damages suffered by
reason of his third persons
voluntarily entering a occasioned by the acts
port other than his of the captain: To place
destination, with the the primary liability upon
exception of the cases the person who has
or without the actual control over the
formalities referred to conduct of the voyage
in Article and who has the most
capital embarked in the
venture, namely, the
owner of the ship, leaving
8. For those arising by him to obtain recourse,
reason of the from other individuals
nonobservance of the who have been drawn
provisions contained in into the venture as
the regulations for shippers
lights and maneuvers
for the purpose of
preventing collisions.
The shippers and
passengers in making
contracts with the captain
do so through the
confidence they have in
the shipowner who
appointed him --> they
presume that the owner
made a most careful
investigation before
appointing him
Distinction between
liability for lawful and
unlawful acts :
The lawful acts and
obligations of the captain
beneficial to the vessel
may be enforced as
against the agent/owner
for the reason that such
obligations arise from the
contract of agency
( provided that the
captain does not exceed
his authority)
As to any liability incurred
by the captain through
his unlawful acts, the
ship agent is simply
subsidiarily liable
Liabilities of captain:
the responsibility of the
captain extends to every
fraudulent or negligent
act of any person in the
complement, in the
execution of his
employment --> he does
not respond for personal
injuries of the crew
arising from personal
quarrels but he is liable
for damages to persons
or property occasioned
by a maneuvering of the
vessel, for failure to
follow international rules
and regulations, for
failure to take the
precautions to prevent
every damage possible
to the vessel which has
suffered an average
Standard Oil vs Castelo
42 Phil 256
F: Castelo, owner of the
interisland steamer
Batangueno, contracted
with Chumbuque
stipulating that for a term
of one year, the latter
shall use it in conveying
cargo; that the crew
should be supplied by the
owner; and that the
charterer should have no
control over the captain
and crew than to specify
the voyages. Plaintiff
delivered petroleum
which was placed on
deck. While the steamer
was on her way, a
typhoon came,
compelling the captain to
jettison the petroleum.
When the storm abated,
the ship made port and
13 cases of petroleum
were recovered, but the
remainder was wholly
lost. Plaintiff brought
action to recover the
petroleum value against
the shipowner. CFI
rendered judgment for
plaintiff.
Held : Ordinarily, the loss
of cargo carried on deck
shall not be considered
as general average loss,
as expressed in the York-
Antwerp Rules. This rule,
first made during the
days of sailing vessels
has changed and it is
now generally held that
jettisoned goods carried
on deck, according to the
customs of trade, by
steam vessels navigating
coastwise and inland
waters, are entitled to
contribution as general
average loss. The reason
for this, in coastwise
trade, is that boats are
small and voyages are
short, with the result that
the coasting vessel can
use more circumspection
about the condition of the
weather at departure
time. It is evident
therefore, that the loss of
the petroleum is a
general average with the
result that plaintiff is
entitled to recover an
amount bearing such
proportion to its total loss
as the value of both ship
and cargo bears to the
value of ship and entire
cargo before jettison was
effected.
It is universally
recognized that the
captain is the
representative of the
owner and both under
Art. 586 of the Code of
Commerce, are civilly
liable for the acts of the
master. When jettison of
cargo occurs, it is the
duty of the captain to
effect the adjustment,
liquidating and
distribution of the general
average; his failure gave
rise to liability for which
the owner of the ship
must answer.
The owner of the ship
ordinarily has vastly more
capital embarked upon a
voyage than has any
shipper of cargo.
Moreover, the shipowner,
in captain's person, has
complete and exclusive
control of the crew and
ship navigation. It is
therefore proper that any
person whose property
may have been cast
should have a right of
action directly against the
shipowner for breach of
duty which the law
imposed on the captain
with respect to such
cargo. The evident
intention of the Com.
Code is to place primary
liability upon the person
who has actual control
over the conduct of the
voyage and who has
most capital in the
venture, namely, the
shipowner, leaving him to
obtain recourse, as it is
very easy to do, from
other individuals who
have been drawn into the
venture as shippers.
Defendant is therefore Action for recovery, if
liable. any, should be brought
not against the defendant
owner but against the
captain thereof.
Araullo, and Avancena,
dissenting :

(a) Responsibilities and

liabilities

56
TRANSPORTATION AND MARITIME LAW
Yu Con vs Ipil 41 Phil
770
F: Yu delivered to Ipil and
Solamo P 450 for
delivery from Catmon to
Cebu aboard a banca
named Maria of which
Lauron was the owner
and Ipil and Solamo, the
master and supercargo,
respectively. The money
together with various
merchandise belonging
to plaintiff was to be
carried from the port of
Cebu to Catmon in Cebu.
The money was placed
by Yu in his trunk and
was transferred to that of
Ipil. That night, the
window of the stateroom
in which the trunk
containing the money
was kept was broken
through by persons not
identified and through
which the said trunk was
stolen. It was found at
the trial that Ipil and
Solamo were negligent in
guarding the money
because they were
sound asleep at the time
of the theft and they
assigned no one to stand
guard during the night.
Their defense was that
Yu chartered and had
control and responsibility
of the banca and that the
theft was due to Yu's
negligence. The CFI held
Ipil and Solamo negligent
and held Lauron liable as
ER and shipowner under
Articles 586, 587 and 618
of the Code of
Commerce.
Held : Ipil and Solamo,
as carriers and
depositories of the
money were liable under
the Civil Code, the theft
not being a fortuitous
event or of force majeure
and they being manifestly
negligent and at fault.
As to the liability of
Lauron, the SC
proceeded by first
defining the banca
"Maria" as within the
meaning of the term
"vessel." Thus, according
to the foregoing
definitions (by the
Mercantile Code, by
Reus in Commentaries
on the Code of
Commerce, and by
Blanco) we hold that the
banca "Maria" chartered
by Yu Con from Lauron,
was a "vessel" under
Mercantile Law and the
Code of Commerce. Ipil,
the master of the banca,
was also held to be the
captain (masters are to
small vessels as captains
are to big ones). Under
Arts. 587 and 618, the
shipowner shall be civilly rise in the custody of the
liable to third persons effects laden on the craft,
when the captain of the and for all losses which,
vessel causes the through his fault or
damage or loss to goods negligence, may occur to
entrusted to him by said the merchandise or
third persons under a effects delivered to him
contract to carry said for their transportation as
goods. Thus, it is well well as for the damages
and god that the suffered by those who
shipowner be not held contracted with him, in
criminally liable for such consequence of
crimes or quasi crimes misdemeanors and
but he cannot be crimes committed by him
excused from liability for or by the members of the
the damage and harm crew of the craft.
which in consequence of
those acts may be
suffered by the third
parties who contracted Manila Steamship vs
with the captain in his Abdulhaman 100 Phil 32
double capacity of agent
and subordinate of the
shipowner himself. In
maritime commerce, the
shippers and passengers F: At around 7 p.m., M/L
in making contracts with Consuelo V, owned by
the captain do so through Lim Hong To, laden with
the confidence they have cargoes and passengers
in the shipowner who left Zamboanga City
appointed him. bound for Siokon under
the command of Faustino
Macrohon. Among her
passengers were plaintiff
Insa Abdulhaman, his
The owner of a minor wife, and their 5 kids. On
craft who has equipped the same night, the M/S
and victualed it for the Bowline Knot owned by
purpose of using it in the the Manila Steamship
transportation of Co. were navigating from
merchandise from one Maribojoc towards
port to another is under Zamboanga City. The
the law a shipowner and weather then was
the master of the craft is considered fair.
to be considered as its
captain in the legal At around 10 PM, without
acceptation of this word, any warning to the
and the former must be resting passengers, both
held civilly liable for vessels collided. M/L
indemnities in favor of Consuelo V capsized,
third parties to which the resulting in the death of
conduct of the Abdulhaman's five
master/captain may give children. The above facts
found by the Board of
Marine Inquiry, was used
by the CFI to hold the
owners of both vessels
solidarily liable to
Abdulhaman for P 20,784
as damages. The CA,
however,
exempted Lim from
liability by reason of the
sinking and total loss of
his vessel. Hence, this
petition by the Manila
Steamship Co.
questioning the
exemption of Lim while
also alleging its
exemption having had
exercised due diligence
in the selection of its
EEs.
Held : (1) While it is true
that plaintiff's action
against petitioner is
based on a tort or quasi-
delict, the tort in question
is not a civil tort under
the Civil Code but is a
maritime tort resulting in
a collision at sea,
governed by Arts. 826-
939 of the Code of
Commerce, while the
owners of both colliding
vessels are solidarily
liable for damages
caused. This direct
responsibility is
recognized in Art. 618 of
the Code of Commerce,
under which the captain
shall be civilly liable to
the ship agent, and the
latter is the one liable to
third persons.
In fact it is a general
principle well established
in the maritime law and
custom, that shipowners
and shipagents are civilly
liable for the acts of the
captain (Art. 586) and for
the indemnities due to
the third persons (Art.
587). This direct liability
moderated and limited by
the owner's right of
abandonment of the
vessel and earned freight
(Art. 587) has been
declared to exist not only
in the case of breached
contracts but also in
cases of tortious
negligence.
It is easy to see that to
admit the defense of the
diligence of a bonus
pater familias in the
selection and vigilance of
the officers and crew as
exempting the shipowner
from any liability for their
faults, would render
nugatory the solidary
liability in Art. 827 for the
greater protection of
injured parties.
(2) It is to be noted that
Macrohon was not duly
licensed as a shipmaster
and Lim knew of this fact
when it hired the former,
thus deliberately
increasing the risk to
which the unknowing
passengers would be
subjected. The liability of
Lim, cannot, therefore be
identical to that of a
shipowner who bears in
mind the safety of the
passengers by employing
duly licensed officers. To
hold, as the CA had
done, that Lim may limit
his liability to the value of
his vessels, is to erase all
differences between
compliance with law and
the deliberate disregard
thereof.
The international rule is
to the effect that the right
of abandonment of
vessels, as a legal
limitation of a
shipowner's liability, does
not apply to cases where
the injury of the average
is due to shipowner's
own fault.
The doctrine of limited
liability
Doctrine of limited liability
is provided for in Arts.
587, 590 and 837
Art. 587. The ship agent
shall also be civilly
liable for the
indemnities in favor of
third persons which
arise from the conduct
of the captain in the
care of the goods
which the vessel
carried; but he may
exempt himself
therefrom by
abandoning the vessel
with all her equipments
and the freightage he
may have earned
during the voyage.
A shipagent is liable
notwithstanding the
insolvency of the
principal/owner
BUT the ship agent may
exempt himself from
liability by abandoning
the vessel with all her
equipment and the freight
it may have earned
during the voyage --> the
effect of abandonment is
to extinguish the liability
of the shipagent
The ship agent's liability
is confined to that which
he is entitled as a matter
of right to abandon : the
vessel with all her eqpt.
and the freight it may
have earned during the
voyage and to the
insurance thereof
Limited liability is not
applicable when no
abandonment of vessel is
made
Effect of abandonment:
An abandonment
amounts to an offer of
the value of the vessel, of
her equipment, and
freight money earned -->
results in the cessation of
the responsibility of the
owner/agent
57
Abandonment cannot be
refused by creditors
This applies to all cases
where the owner/agent
may be held liable for the
negligent or illicit acts of
the captain
TRANSPORTATION AND MARITIME LAW
Effect of loss or
destruction of vessel:
The shipagent's liability is
merely co-extensive with
his interest in the vessel
such that the total loss
thereof results in its
extinction --> the total
destruction of the vessel
extinguishes a maritime
lien as there is no longer
any res to which it can
attach.
Thre (3) cases where
the loss of the vessel
extinguishes the
liability of the
shipowner:
(1) under 587, liability
arising from the conduct
of the captain in the
vigilance of the goods
and for the safety of the
passengers and for any
liability arising from the
negligent or illicit acts of
the captain for which the
shipowner or ship agent
may be held liable
(2) under 643, liability for
the wages of the captain
and the crew and for
advances made by the
shipagent if the vessel is
lost by shipwreck or
capture
(3) under 837, liability for
collision
Exceptions:
Doctrine does not apply
where shipowner is at
fault : the doctrine is
premised on the
condition that the death
or injury to the passenger
occurred by reason of the
fault or negligence of the
captain only
Doctrine does not apply
in cases of Workmen's
Compensation --> such
compensation has
nothing to do with
maritime commerce; it is
an item in the cost of
production which must be
included in the budget of
any well-managed
industry
Total destruction of the
vessel does not affect the
liability of the owner for
repairs on the vessel
completed before its loss
--> owners of a vessel
are liable for necessary
repairs; its liability for
repairs remains
unaffected by the loss of
the thing

Reason for limited
liability: This doctrine
had its origin when
maritime trade and sea
voyage was attended by
innumerable hazards and
perils --> to offset against
these adverse conditions
and to encourage
shipbuilding and maritime
commerce, it was
deemed necessary to
confine the liability of the
owner or agent arising
from the operation of a
ship to the vessel, eqpt.
and freight or insurance,
if any
Limited liability is
evidence of the real
and hypothecary nature
of maritime law:
(1) limitation of liability to
the actual value of the
vessel and freight; (2)
right to retain the cargo
and the embargo and
detention of the vessel in
cases where the ordinary
civil law would not allow
more than a personal
action against the debtor
or personal liable --> the
maritime creditor may
attach the vessel itself to
secure his claim without
waiting for a settlement
of his rights by a final
judgment, even to the
prejudice of a third
person
Manila Steamship vs
Abdulhaman 100 Phil 32
Issue : How is the
doctrine of limited liability
applied in this case with
M/V Consuelo?
Held : The direct liability
may be moderated or
limited by the
shipowner's right to
abandon the vessel and
earned freight. However,
this right of abandonment
of vessels, as a legal
limitation of a
shipowner's liability does
not apply to cases where
the injury or the average
is due to shipowner's
fault. Thus, the owner of
Consuelo is solidarily
liable with Manila
Steamship, the former
having caused the vessel
to sail without licensed
officers, for injuries
caused by the collision
over and beyond the
value of the said vessel.
In the application for
permission to operate,
despite lack of trained
crew, Lim Hong To even
declared expressly, "that
in case of any accident,
damage, or loss, I shall
assume full risks and
responsibility for all
consequences, thereof."
Hence, Lim cannot
escape liability because
of the sinking of the
vessel. Operating with an of P3,180. After the
unlicensed shipmaster rendition of the judgment,
constitutes such Yangco sought to
negligence as would abandon the vessel to
prevent the shipowner plaintiffs/respondents
from claiming the benefit with all its equipments.
of limited liability under Abandonment was
Art. 587. denied. The CA affirmed
the judgment.

Held : Art. 587 accords a

shipowner or agent the
Yangco vs Laserna 73
right of abandonment;
Phil 330
and by necessary
implication, his liability is
confined to that which he
is entitled as of right to
F: Petitioner Yangco's abandon -- the vessel
vessel SS Negros left with all her equipments
Romblon for Manila. The and the freight it may
captain was duly advised have earned during the
and his attention was voyage. In other words,
called by the passengers such liability is limited to
that typhoon Signal No. 2 the value of the vessel
was up. But the boat and other things
proceeded to sail after appertaining thereto such
some loading. The boat that a total loss thereof
was overloaded with results in its extinction.
cargo and passengers Although the article
(180 instead of only 123). appears to deal only with
After two weeks of the limited liability of
sailing, the sea became shipowners or agents for
too dangerous. The damages arising from the
captain ordered that they misconduct of the captain
return to Romblon and in the care of the goods
while turning, a big wave which the vessel carries,
caught them on the side this is a mere deficiency
causing it to capsize. of language and in no
Among the passengers way indicates the true
who perished were the extent of such liability, to
relatives of respondents wit, the benefit of limited
Laserna. liability applies in all
cases (as regards both
goods and passengers of
the vessel) wherein the
In the separate civil shipowner or agent may
action for damages for properly be held for the
the death of the negligent or illicit acts of
passengers, the CFI held the captain.
Yangco liable for a total
The reason for the limited
liability is the real and
hypothecary nature of
maritime law as
distinguished from civil
law and mercantile law in
general. As evidence of
this real nature, we have
(1) the limitation of the
liability of the agents to
the actual value of the
vessel and the freight
money and (2) the right
of the maritime creditor to
retain the cargo, and the
embargo and detention
of the vessel in cases
where the ordinary civil
law would not allow more
than a personal action
against the debtor or
person liable. Thus, even
assuming that Yangco is
liable for breach of
contract because his
relationship to the
passengers rests on a
contract of carriage, the
exclusively real and
hypothecary nature of
maritime law still
operates to limit his
liability to the value of the
vessel or to the
insurance thereon, if any.
In this case, the vessel
was not insured. Whether
the abandonment of the
vessel sought by the
petitioner in instant case
was in accordance with
law or not, is immaterial.
The vessel having totally
perished, any act of
abandonment would be
an idle ceremony.
Petitioner is absolved
from all complaints.
Abueg vs San Diego 77
Phil 730
F: Bartolome San Diego
was the owner of 2
motorships, San Diego II
and Bartolome S.
Dionisia Abueg is the
widow of Amado Nunez,
who was a machinist on
board the M/S San Diego
II. Marciana de Salvacion
is the widow of Victoriano
Salvacion, who was a
machinist on board the
M/S Bartolome S.
Rosario Oching is the
widow of Francisco
Oching, who was the
captain of the M/S
Bartolome S. The 2
ships, while engaged in
fishing operations around
Mindoro Island on
October 1941, were
caught by a typhoon as a
consequence of which
they were sunk and
totally lost. Nunez,
Salvacion and Oching
while acting in their
capacities perished in the
shipwreck. The vessels
were not covered by any
insurance. The widows
were awarded
compensation under the
Workmen's
Compensation Act by the
CFI.
Held : The real and
hypothecary nature of the
liability of the shipowner
or agent embodied in the
provisions of the against these adverse
Maritime Law, had its conditions and to
origin in the prevailing encourage shipbuilding
conditions of the and maritime commerce,
maritime trade and sea it was deemed necessary
voyages during the to confine the liability of
medieval ages, attended the owner or agent
by innumerable hazards arising from the operation
and perils. To offset

58
TRANSPORTATION AND MARITIME LAW
of a ship to the vessel,
equipment, and freight,
or insurance, if any, so
that if the shipowner or
agent abandoned the
ship, equipment, and
freight, his liability was
extinguished.
The provisions of the
Code of Commerce
regarding maritime
commerce have no room
in the application of the
Workmen's
Compensation Act which
seeks to improve, and
aims at the amelioration
of, the condition of
laborers and EEs. Said
Act creates a liability to
compensate EEs and
laborers in cases of injury
received by or inflicted
upon them, while
engaged in the
performance of their work
or employment, or the
heirs and dependents of
such laborers and EEs in
the event of death
caused by their
employment.
The officers of motor
ships engaged in fishing
are industrial EEs and
are entitled to the
benefits of the
Workmen's
Compensation Act. If an
accident is compensable
under the WCA, it must
be compensated even
when the workman's right
is not recognized by or is
in conflict with other
provisions of the Civil
Code or Code of
Commerce. The reason
is that the WCA was
enacted in abrogation of
existing laws.
Heirs of Amparo de los
Santos vs CA 186 SCRA
649
F: M/V Mindoro owned
by Compania Maritima
sailed from Manila bound
for New Washington,
Aklan. Said vessel met
typhoon Welming on the
Sibuyan Sea, causing the
death of many of its
passengers, although
about 136 survived.
Mauricio de los Santos
declared that he, his wife
and 4 children were
aboard the boat together
with their household
utensils valued at P
1,000, with the intention
of living in Aklan
permanently. His wife
and his children were
among the casualties.
The Board of Marine
Inquiry found that the
captain and some
officers of the crew were
negligent in operating the
vessel and imposed upon
them a suspension
and/or revocation of their
license certificates. This
decision could not be
executed against the
captain who perished
with the vessel. The
shipowner alleged that
no negligence was ever
established and in fact
they took all the
necessary precautions in
operating the vessel.
Furthermore, the loss of
lives as a result of the
drowning of some
passengers, including the
relatives of the plaintiffs,
was due to force majeure
because of the strong
typhoon Welming. It also
presented the findings of
the Board of Marine
Inquiry recommending
that the captain be
exonerated and that the
ship was in seaworthy
condition. The CFI
dismissed the complaint
in view of lack of
sufficient evidence. The
CA ruled that while
concurring negligence on
the part of the captain is
imputable to Maritima,
Maritima could not be
held liable in damages
based on the principle of
limited liability of the
shipowner or shipagent
under Art. 587 of the
Code of Commerce.
Held : There is no
dispute as to the finding
of the captain's
negligence. The present
controversy centers on
the questions of
Maritima's negligence
and of the application of
Art. 587 of the Code of
Commerce. Under this
provision, a shipowner or
agent has the right of
abandonment; and by
necessary implication,
his liability is confined to
that which he is entitled
as of right to abandon --
the vessel with all her
equipments and the
freight it may have
earned during the
voyage. This rule is
found necessary to offset
against the innumerable
hazards and perils of a
sea voyage and to
encourage shipbuilding
and marine commerce.
The limited liability
doctrine applies not only
to the goods but also in
all cases like death or
injury to passengers
wherein the shipowner of
agent may properly be
held liable for the
negligent or illicit acts of
the captain. Art. 587
speaks only of situations
where the fault or
negligence is committed
solely by the captain. In
cases where the
shipowner is likewise to
be blamed, Art. 587 does
not apply. Such a
situation will be covered
by the Civil Code
provisions on CCs.
Owing to the nature of
their business and for
reasons of public policy,
they are required to
observe EO diligence.
Maritima's claim that it
had no information of
typhoon Welming until
after the boat was at sea
is untenable in light of
modern technology which
enables it to detect any
incoming atmospheric
disturbances. In fact, the
Weather Bureau issued a
total of 17 warnings or
advisories of typhoon
Welming. In allowing the
ship to depart late from
Manila despite the
typhoon advisories,
Maritima displayed lack
of foresight and minimum
concern for the safety of
its passengers taking into
account the surrounding
circumstances of the
case.
While the captain was
negligent for overloading
the ship, Maritima shares
equally in his negligence.
M/V Mindoro was cleared
for departure at 2 PM by
the Bureau of Customs
and the Coast Guard but
its departure was
delayed for 4 hours.
Maritima could not
account for the delay
because it neither
checked from the captain
the reasons behind the
delay. It was due to this
interim that there is great
probability that
unmanifested cargo and
passengers were loaded.
Maritima presented
evidence of the
seaworthy condition of
the ship prior to its
departure, including the
installation of life saving
equipment and other
navigational instruments.
But it could not present
evidence that it
specifically installed a
radar which could have
allowed the vessel to
navigate safely for
shelter during the storm.
An important device such
as the radar could have
enabled the ship to pass
through the river and to
safety.
Maritima's lack of EO
diligence coupled with
the negligence of the
captain were the
proximate causes of the
sinking of M/V Mindoro.
Maritima is liable for the
deaths and injury of the
victims. It was ordered to
pay death indemnities to
the heirs of the victims,
moral damages, actual
damages and attorney's
fees.
(c) Specific rights and
prerogatives
Art. 575. Part owners of
vessels shall enjoy the
right of pre-emption
and redemption in the
sales made to
strangers; but they can
only exercise it within
the nine days following
the record of the sale in
the registry and by
delivering the price at
once.
Art. 593. The owners of If two or more co-
a vessel shall have owners request the
preference in her position of captain, the
charter over other disagreement shall be
persons, offering equal decided by a vote of
conditions and price. If the members; and if the
two or more of the vote should result in a
former should claim tie, the position shall
said right the one having be given to the part
greater interest shall be owner having the larger
preferred, and should interest in the vessel.
they have an equal
interest it shall be
decided by lot.
If the interest of the
petitioners should be
the same, and there
Art. 594. The part should be a tie, the
owners shall elect the matter shall be decided
manager who is to by lot.
represent them in the
capacity of agent.

Art. 609. Captains,

masters or patrons of
The appointment of vessels must be
director or agent shall Filipinos, have legal
be revocable at the will capacity to contract in
of the accordance with this
Code, and prove the
skill, capacity, and
qualifications
partners. necessary to command
and direct the vessel,
as established by
marine or navigation
laws, ordinances, or
Art. 596. The agent may regulations, and must
discharge the duties of not be disqualfied
captain of the vessel, according to the same
subject, in every case, for the discharge of the
to the provisions duties of the position.
contained in Article
609.

59
TRANSPORTATION AND MARITIME LAW
Sec. 3. The Philippine
Coast Guard shall
perform the following
If the owner of a vessel
functions : (e) to issue
desires to be the
licenses and
captain thereof, without
certificates to officers,
having the legal
pilots, major and minor
qualifications therefor,
patrons and seamen,
he shall limit himself to
as well as suspend and
the financial
revoke such licenses
administration of the
and certificates.
vessel, and shall intrust
the navigation to a
person possessing the
qualifications required
by said ordinances nd Art. 609. Captains and
regulations. masters of vessels
must be Filipinos
having legal capacity to
bind themselves in
accordance with this
Art. 601. Should there
Code, and must prove
be any profits, the co-
that they have the skill,
owners may demand of
capacity, and
the managing agent the
qualifications required
amount due them, by
to command and direct
means of an executory
the vessel, as
action without further
established by marine
requisite than the
laws, ordinances, or
acknowledgment of the
regulations, or by those
signatures in the
of navigation, and that
instrument approving
they are not
the account.
disqualified according
to the same for the
discharge of the duties
of that position.
2. Captains and Masters

If the owner of a vessel

(a) Qualifications and desires to be the
licensing captain thereof and
does not have the legal
qualifications therefore,
he shall limit himself to
RA 5173 the financial
administration of the
vessel, and shall
entrust her navigation
to the person
possessing the (b) Inherent Powers
qualifications required
by said ordinances and
regulations.
Art. 610. The following
powers are inherent in
the position of captain
notes: or master of a vessel:

1. To appoint or make
contracts with the crew
in the absence of the
Captain - one who
ship agent and propose
governs vessels that
said crew, should said
navigate the high seas or
agent be present; but
ships of large dimensions
the agent may not
and importance, although
employ any member
they may be engaged in
against the captain's
coastwise trade
express refusal.

Master - one who

To command the crew
commands smaller ships
and direct the vessel to
engaged exclusively in
the port to its
coastwise trade
destination, in
captain and master have accordance with the
the same meaning for instructions he may
maritime commerce have received from the
ship agent.
patron - bancas

Roles of the captain :

general agent of the

shipowner

technical director of the

vessels

represents the
government of the
country under whose flag
he navigates
To impose, in To provide in similar
accordance with the urgent cases and on a
contracts and the laws voyage, for the repairs
and regulations of the to the hull and engines
merchants marine, on of the vessel and to her
board the vessel, rigging and equipment
correctional which are absolutely
punishment upon those necessary in order for
who do not comply her to be able to
with his orders or who continue and conclude
conduct themselves her voyage; but if she
against discipline, should arrive at a point
holding a preliminary where there is a
investigation on the consignee of the
crimes committed on vessel, he shall act in
board the vessel on the concurrence with the
high seas, which he latter.
shall turn over to the
authorities, who are to
take cognizance
thereof, at the first port
touched.

notes: The first three

powers cannot be
renounced as they relate
To make contracts for
to public order and are
the charter of the
vested in the captain as a
vessel in the absence
delegation of public
of the ship agent or of
authority
the consignee, acting
in accordance with the
instructions received
and protecting the
interests of the owner Art. 611. In order to
with utmost care. comply with the
obligations mentioned
in the foregoing article,
and when he has no
funds and does not
To adopt all the
expect to receive any
measures which may
from the agent, the
be necessary to keep
captain shall procure
the vessel well
the same in the
supplied and equipped,
successive order
purchasing all that may
stated below:
be necessary for the
purpose, provided
there is no time to
request instructions of
the agent. By requesting said
funds of the
consignees of the
vessel or the
correspondents of the
ship agent.
Art. 583. If while on a
voyage the captain
should find it
By applying to the necessary to contract
consignees of the one or more of the
cargo or to the persons obligations mentioned
interested in subdivisions 8 and 9
of articl 580, he shall
therein. apply to the judge or
court if he is in the
By drawing on the ship Philippine territory, and
agent. otherwise to the consul
of the Republic of the
By borrowing the Philippines, should
amount required by there be one, and in his
means of a bottomry absence, to the judge
loan. or court or proper local
authority, presenting
By selling a sufficient the certificate of the
amount of the cargo to registration sheet
cover the amount treated of in Article 612
absolutely necessary to and the instruments
repair the vessel and to proving the obligation
equip her to pursue the contracted.
voyage.

The judge or court, the

In the two last cases he consul, or the local
must apply to the authority, as the case
judicial authority of the may be, in view of the
port, if in the result of the
Philippines and to the proceedings institutied,
Filipino consul, if in a shall make a temporary
foreign country; and memorandum of their
where there should be result in the certificate,
none, to the local in order that it may be
authority, proceeding in recorded in the registry
accordance with the when the vessel
prescriptions of Article returns to the port of its
583, and with the registry, or so that it
provisions of the law of can be admitted as a
civil procedure. legal and

60
TRANSPORTATION AND MARITIME LAW
preferred obligation in
case of sale before its
return, by reason of the
sale of the vessel on
account of a
declaration of
unseaworthiness.
The omission of this
formality shall make
the captain personally
liable for the credits
prejudiced on his
account.
(the ff. is not required by
the outline)
Art. 612. The following
duties are inherent in
the office of captain:
To have on board
before starting on a
voyage a detailed
inventory of the hull,
engines, rigging,
tackle, stores, and
other equipments of
the vessel; the
navigation certificate;
the roll of the persons
who make up the crew
of the vessel, and the
contracts entered into
with the crew; the list
of passengers; the
health certificate; the
certificate of the
registry proving the
ownership of the
vessel; and all the
obligations which
encumber the same up
to that date; the
charters or
authenticated copies
thereof; the invoices or
manifest of the cargo,
and the instrument of
the expert visit or
inspection, should it
have been made at the
port of departure.
To have a copy of this
Code on board.
To have three folioed
and stamped books,
placing at the
beginning of each one
a note of the number of
folios it contains,
signed by the marine
official, and in his
absence by the
competent authority.
In the first book, which
shall be called "log
book," he shall enter
every day the condition
of the atmosphere, the
prevailing winds, the
course sailed, the
rigging carried, the
horsepower of the
engines, the distance
covered, the
maneuvers executed,
and other incidents of
navigation. He shall
also enter the damage
suffered by the vessel
in her hull engines,
rigging, and tackle, no
matter what is its
cause, as well as the
imperfections and
averages of the cargo,
In the third book, called
and the effects and
"freight book," he shall
consequence of the
record the entry and
jettison, should there
exit of all the goods,
be any; and in cases of
stating their marks and
grave resolutions
packages, names of the
which require the
shippers and of the
advice or a meeting of
consignees, ports of
the officers of the
loading and unloading,
vessel, or even of the
and the freight earned.
passengers and crew,
In the same book he
he shall record the
shall record the names
decision adopted. For
and places of sailing of
the informations
the passengers and the
indicated he shall make
number of packages of
use of the binnacle
which their baggage
book, and of the steam
consists, and the price
or engine book kept by
of the passage.
the engineer.

To make, before
In the second book,
receiving the freight,
called the "accounting
with the officers of the
book", he shall enter all
crew, and the two
the amounts collected
experts, if required by
and paid for the
the shippers and
account of the vessel,
passengers, an
entering specifically
examination of the
article by article, the
vessel, in order to
sources of the
ascertain whether she
collection, and the
is watertight, and
amounts invested in
whether the rigging and
provisions, repairs,
engines are in good
acquisition of rigging
condition; and if she
or goods, fuel, outfits,
has the equipment
wages, and all other
required for good
expenses. He shall
navigation, preserving
furthermore enter
a certificate of the
therein a list of all the
memorandum of this
members of the crew,
inspection, signed by
stating their domiciles,
all the persons who
their wages and
may have taken part
salaries, and the
therein, under their
amounts they may have
liability.
received on accounts,
either directly or by
delivery to their
families.
The experts shall be favorable season it
appointed one by the takes place, he allows
captain of the vessel merchandise to be
and the other one by carried on deck, he
the persons who must hear the opinion
request the of the officers of the
examination, and in vessel, and have the
case of disagreement a consent of the shippers
third shall be appointed and of the agent.
by the marine authority
of the port.

To demand a pilot at
the expense of the
To remain constantly vessel whenever
on board the vessel required by navigation,
with the crew during and principally when a
the time the freight is port, canal, or river, or
taken on board and a roadstead or
carefully watch the anchoring place is to
stowage thereof; not to be entered with which
consent to any neither he, the officers
merchandise or goods nor the crew are
of a dangerous acquainted.
character to be taken
on, such as
inflammable or
explosive substances, To be on deck at the
without the precautions time of sighting land
which are and to take command
recommended for their on entering and leaving
packing, management ports, canals,
and isolation; not to roadsteads, and rivers,
permit that any freight unless there is a pilot
be carried on deck on board discharging
which by his duties. He shall not
spend the night away
from the vessel except
for serious causes or
reason of its by reason of official
disposition, volume, or business.
weight makes the work
of the sailors difficult,
and which might
endanger the safety of To present himself,
the vessel; and if, on when making a port in
account of the nature distress, to the
of the merchandise, the maritime authority if in
special character of the the Philippines and to
shipment, and the Filipino consul if in
principally the a foreign country,
before twenty-four absence, of members
hours have elapsed, of the crew.
and make a statement
of the name, registry,
and port of departure of
the vessel, of its cargo, To conduct himself
and reason of arrival, according to the rules
which declaration shall and precepts contained
be vised by the in the instructions of
authority of by the the agent, being liable
consul if after for all that he may do in
examining the same it violation thereof.
is found to be
acceptable, giving the
captain the proper
certificate in order to
show his arrival under To give an account to
stress and the reasons the agent from the port
therefore. In the where the vessel
absence of marine arrives, of the reason
officials or of the therefore, taking
consul, the declaration advantage of the
must be made before semaphore, telegraph,
the local authority. mail, etc., according to
the cases; notify him
the freight he may have
received, stating the
name and domicile of
To take the steps the shippers, freight
necessary before the earned, and amounts
competent authority in borrowed on bottomry
order to enter in the bond, advise him of his
certificate of the vessel departure, and give him
in the registry of the any information and
vessels, the obligations date which may be of
which he may contract interest.
in accordance with
Article 583.

To observe the rules on

the situation of lights
To put in a safe place and evolutions to
and keep all the papers prevent
and belongings of any
members of the crew collisions.
who might die on the
vessel, drawing up a To remain on board in
detailed inventory, in case of danger to the
the presence of vessel, until all hope to
passengers as save her is lost, and
witnesses, and, in their before abandoning her
to hear the officers of
the crew, abiding by the
decision of the
majority; and if he
To comply with the
should have to take a
obligations imposed by
boat he shall take with
the laws and rules of
him, before anything
navigation, customs,
else, the books and
health, and others.
papers, and then the
articles of most value,
being obliged to prove
in case of the loss of
the books and papers Notes: Although the
that he did all he could duties in Art. 612 are
to save them. inherent in the captain,
the civil liability arising
from the non-fulfillment
thereof is not limited to
the captain, since while
In case of wreck he
the captain is liable to the
shall make the proper
shipagent, the shipagent
protest in due form at
is liable to third persons
the first port reached,
(Art. 618).
before the competent
authority or Filipino
consul, within twenty-
four hours, stating
therein all the incidents (not included in the
of the wreck, in outline)
accordance with case 8
of this article.

61
TRANSPORTATION AND MARITIME LAW
proceeding with the
proof of the facts, it not
being permitted to
Art. 622. If when on a
open the hatches until
voyage the captain
after this has been
should receive news of
done.
the appearance of
privateers or men of
war against his flag, he
shall be obliged to
make the nearest The captain shall
neutral port, inform his proceed in the same
agents or shippers, and manner if, the vessel
await an occasion to having been wrecked,
sail under convoy or he is saved alone or
until the danger is over with part of his crew, in
or to receive final which case he shall
orders from the ship appear before the
agent or shippers. nearest authority, and
make a sworn
statement of the facts.

(not included in the

outline)

Art. 624. A captain

whose vessel has gone
through a hurricane or
who believes that the
cargo has suffered
damages or averages,
shall make a protest
thereon before the
competent authority at
the first port he
touches within the
twenty-four hours
following his arrival,
and shall ratify it within
the same period when
he arrives at the place
of his destination,
immediately
The authority or the his personal liability,
consul abroad shall turn over the cargo,
verify the said facts, without any
receiving sworn defalcation, to the
statements of the consignees, and, in a
members of the crew proper case, the vessel,
and passengers who rigging, and freights to
may have been saved, the agent, after having
and taking such other obtained the necessary
steps as may help in permission from the
arriving at the facts, he health and customs
shall make a statement officers and fulfilled the
of the result of the other formalities
proceedings in the log required by the
book and in that of the regulations of the
sailing mate, and shall administration.
deliver the original
records of the
proceedings to the
captain, stamped and [If, by reason of the
folioed, with a absence of the
memorandum of the consignee or on
folios, which he must account of the
rubricate, for their nonappearance of a
presentation to the legal holder of the
judge or court of the invoices, the captain
port of destination. does not know to
whom he is to make the
legal delivery of the
cargo, he shall place it
The statement of the at the disposal of the
captain shall be proper judge or court
believed if it is in or authority, in order
accordance with those that he may decide with
of the crew and regard to its deposit,
passengers; if they preservation, and
disagreed, the latter custody.]
shall be accepted,
unless there is proof to
the contrary.
Notes: Under 619, the
delivery of the cargo at
the port of discharge
(not included in the terminates the captain's
outline) responsibility as to the
cargo

Art. 625. Upon arrival at

the port of destination,
the captain shall, under
INTER-ORIENT MARINE
ENTERPRISES V. NLRC
[235 S 634 (1994)]
F: 1. Captain Rizalino
Tayong was employed by
petitioner shipwoners as
master of a vessel for
one year. His instructions
were to replenish bunker
and diesel fuel and to sail
to South
Africa , and there to load
120,000 metric tons of
coal.
While in HK, a storm hit,
and precautionary
measures were taken
since the vessel was 14
years old and the turbo-
charger was leaking. The
Captain requisitioned for
supplies of oxygen and
acetylene necessary for
the repairs. The vessel
sailed from HK to
Singapore.
While in Singapore, the
supplies were not
available, hence after
consultation with the
Chied Engineer, the
Captain decided to delay
departure and wait for
the supplies.
After the supplies were
delivered, the vessel
sailed for South Africa,
where upon arrival, the
Captain was instructed to
turn over his post to a
new captain. He was
then repatriated to the
Philippines.
Captain Tayong filed with
the POEA a complaint for
illegal dismissal, which
was dismissed.
On appeal, the NLRC
reversed and ordered the
shipowner to pay his
salary for the unexpired
contract plus one month
leave benefit, and
attorney's fees. Hence,
this appeal.
ISSUE: W/N CAPTAIN
TAYONG WAS
ILLEGALLY
DISMISSED?
HELD: Yes.
It is well settled that
confidential and
managerial employees
cannot be arbitrarily
dismissed at any time,
and without case as
reasonably established in
an appropriate
investigation.

The captain of a vessel is
a confidential and
managerial employee
within the meaning of the
above doctrine. A master
or captain, for purposes
of maritime commerce, is
one who has command
of a vessel. A captain
commonly performs three
(3) distinct roles: (1) he is
a general agent of the
shipowner; (2) he is also
commander and
technical director of the
vessel; and (3) he is a
representative of the
country under whose flag
he navigates. Of these
roles, by far the most
important is the role
performed by the captain
as commander of the
vessel, for such role
(which to our mind, is
analogous to that of
"Chief Executive Officer"
[CEO] of a present-day
corporate enterprise) has
to do with the operation
and protection of the
vessel during its voyag
and the protection of the
passengers (if any) and
crew and cargo. In his
role as general agent of
the shipowner, the
captain has authority to
sign bills of lading, carry
goods aboard and and
deal with the freight
earned, agree upon rates
and decide whether to
take cargo. The ship
captain, as agent of the
shipowner, has legal
authority to enter into
contracts with respect to
the vessel and the
trading of the vessel,
subkect to applicable
limitations established by
statute, contract or
instructions and
regulations of the
shipowner. To the captain
is committed the
governance, care and
management of the
vessel. Clearly, the
captain is veste with both
management and
fiduciary functions.
More importantly, a ship's
captain must be
accorded a reasonable
measure of discretionary
authority to decide what
the safety of the ship and
its crew and cargo
specifically requires on a
stipulated ocean voyage.
The captain is held
responsible, and properly
so, for such safety.
Compagnie de
Commerce v. Hamburg is
instructive in this
connection. In that case,
the captain of a German
vessel at the port of
Saigon decided to head
for the port of Manila
instead of the ports of
Dunkirk and Hamburg
because of WWI has
been declared and in his
judgment, the vessel
could not reach its
destination. The
charterer sued for
damages arising from the
breach of the charter
party, and unauthorized
sale of the Cargo. The
SC held that the master court which he took - to
of the vessel had flee Saigon for the port of
reasonable grounds to Manila - with the result
apprehend that the that the shipowner was
vessel was in danger of relieved from liability for
seizure of captur by the the deviation from the
French authorities in stipulated route and from
Saigon and was justified liability for the damage to
by necessity to elect the the cargo.

62
TRANSPORTATION AND MARITIME LAW
and that he is a man
worthy of trust of the
shipowner
(c) Prohibited acts and
transactions

Art. 617. The captain

may not contract loans
Art. 613. A captain who
on respondentia
navigates for freight in
secured by the cargo,
common or on shares
and should he do so
may not make any
the contract shall be
separate transaction
void.
for his own account,
and should he do so
Neither may he borrow
the profits shall belong
money on bottomry for
to the other persons
his own transactions,
interested, and the
except on the portion
losses shall be borne
of the vessel he owns,
by him alone.
provided no money has
been previously
borrowed on the whole
vessel, and provided
Art. 615. Without the there does not exist
consent of the ship any other kind of lien or
agent, the captain may obligation chargeable
not have himself against the vessel.
substituted by another When he is permitted to
person; and should he do so, he must
do so, besides being necessarily state what
liable for all the acts of interest he has in the
the substitute and vessel.
bound to pay the
indemnities mentioned
in the foregoing article,
the substitute as well
In case of violation of
as the captain may be
this article the
discharged by the ship
principal, interest, and
agent.
costs shall be charged
to the private account
of the captain, and the
ship agent may
Notes: The duties of a furthermore discharge
captain are essentially him.
personal due to the
confidence given to him
arising from the fact that
he possesses the
Art. 621. A captain who
required technical ability
borrows money on the
hull, engine, rigging, or
tackle of the vessel, or
who pledges or sells
The judge or court, the
merchandise or
consul or the local
provisions outside of
authority as the case
the cases and without
may be in view of the
the formalities
result of the
prescribed in this
proceedings instituted,
Code, shall be liable for
shall make a temporary
the principal, interest,
memorandum in the
and costs, and shall
certificate of their
indemnify for the
result, in order that it
damages he may
may be recorded in the
cause.
registry when the
vessel returns to the
port of her registry, or
so that it can be
He who commits fraud admitted as a legal and
in his accounts shall preferred obligation in
reimburse the amount case of sale before the
defrauded, and shall be return, by reason of the
subject to the sale of the vessel by
provisions of the Penal virtue of a declaration
Code. of unseaworthiness.

Art. 583. If the ship The lack of this

being on a voyage the formality shall make
captain should find it the captain personally
necessary to contract liable to the creditors
one or more of the who may be prejudiced
obligations mentioned through his fault.
in Nos. 8 and 9 of
Article 580, he shall
apply to the judge or
court if he is in
Notes: Obligations
Philippine territory, and
covered by this article :
otherwise to the
(1) price which has not
Filipino consul, should
been paid to the last
there be one, and in his
vendor;
absence to the judge or
court or to the proper
local authority,
presenting the
certificate of the (2) for materials and
registry of the vessel labor in the construction
treated of in Article 612, of the vessel; (3) for the
and the instruments repair, equipment and
proving the obligation
contracted.
provisioning with the
victuals and fuel; (4) loan
on bottomry before
departure of the vessel;
(5) insurance premiums
under Art. 580 pars. 8
and 9.
3. Other Officers and
Crew
notes:
Art. 626 - 631 : sailing
mate or second in
command Art. 632 - 633 :
second mate or third in
command
Complement of a vessel
or crew - all the persons
on board, from the
captain to the cabin boy,
necessary for the
management,
maneuvers, and service;
includes the sailing
mates, engineers,
stokers, and other
employees.
(a) Contracts and
formalities
Art. 634. The captain
may make up his crew
with the number he
may consider
advisable, and in the
absence of Filipino
sailors he may ship
foreigners residing in
the country, the number
thereof not to exceed
one-fifth of the total
crew. If in foreign ports
the captain should not
find a sufficient number
of Filipino sailors, he
may make up the crew
with foreigners, with
the consent of the
consul or marine
authorities.
The agreements which
the captain may make
with the members of
the crew and others
who go to make up the
complement of the
vessels, to which
reference is made in
Article 612 (obligations
inherent in the office of
captain) must be
reduced to writing in
the account book
without the intervention
of a notary public or
clerk of court, signed
by the parties thereto,
and vised by the
marine authority if they
are executed in Filipino
territory, or by the
consuls or consular
agents of the
Philippines if executed
abroad, stating therein
all the obligations
which each one
contracts and all the
rights they acquire,
said authorities taking
care that these
obligations and rights
are recorded in a
concise and clear perform or to do the
manner, which will not services or works for
give rise to doubts or which he has signed
claims. himself in the vessel in
consideration of the
compensation stipulated

The captain shall take

care to read to them the
articles of this Code (b) Duties and liabilities
which concern them,
stating in the said
document that they
were read. Art. 635. A sailor who
has been contracted to
serve on a vessel
cannot rescind his
If the book includes the contract nor fail to
requisites prescribed in comply therewith
Article 612, and there except by reason of a
should not appear any legitimate impediment
signs of alterations in which may have
its entries, it shall be occurred.
admitted as evidence in
questions which may
arise between the
captain and the crew Neither can he pass
with regard to the from the service of one
agreements contained vessel to another
therein and the without obtaining the
amounts paid on written consent of the
account of the same. vessel on which he
may be.

Every member of the

crew may demand of If, without obtaining
the captain a copy, said permission, the
signed by the latter, of sailor who has signed
the agreement and of for one vessel should
the liquidation of his sign for another one,
wages, as they appear the second contract
in the book. shall be void, and the
captain may choose
between forcing him to
fulfill the service to
Notes: The contract with which he first bound
a seaman has the nature himself or look for a
of a lease of service, in person to substitute
virtue of which one him at his expense.
person binds himself to
63
TRANSPORTATION AND MARITIME LAW
Art. 637. Neither may
the captain discharge a
sailor during the time
Said sailor shall
of his contract except
furthermore lose the
for just cause, the
wages earned on his
following being
first contract to the
considered as such:
benefit of the vessel for
which he may have
The perpetration of a
signed.
crime which disturbs
order on the vessel.
A captain who, knowing
that a sailor is in the
Repeated
service of another
insubordination, want
vessel, should have
of discipline, or non-
made a new agreement
fulfillment of the
with him, without
having requested the
service.
permission referred to
in the foregoing
Incapacity and
paragraphs, shall be
repeated negligence in
personally liable to the
the fulfillment of the
captain of the vessel to
service which he
which the sailor first
should render.
belonged for that part
of the indemnity,
referred to in the third
paragraph of this
article, which the sailor Habitual drunkenness.
may not be able to pay.
Any occurrence which
incapacitates the sailor
to perform the work
entrusted to him, with
(c) Rights the exception of that
provided in Article 644.

Art. 636. Should there

be no fixed period for Art. 644. A seaman who
which a sailor has been falls sick shall not lose
contracted, he cannot his right to wages
be discharged until the during the voyage,
end of the return unless the sickness is
voyage to the port the result of his own
where he enlisted. fault. At any rate, the
costs of the attendance
and cure shall be
defrayed from the
common funds, in the
form of a loan.
Should this not be the
case, it shall be paid by
the captain personally.
If the sickness should
comee from an injury
received in the service
or defense of the
After the voyage has
vessel, the seaman
begun, and during the
shall be attended and
same and until the
cured at the expense of
conclusion thereof, the
the common funds
captain may not abandon
deducting, before
any member of his crew
anything else, from the
on land or on the sea,
proceeds of the
unless, as the accused of
freightage the cost of
a crime, his
the attendance and
imprisonment and
cure.
delivery to the competent
authority in the first port
touched should be
proper, which shall be
6. Desertion. obligatory to the captain.

The captain may, Art. 638. If, after the

however, before setting crew has been
out on a voyage and engaged, the voyage is
without giving any reason revoked by the will of
whatsoever, refuse to the ship agent or of the
permit a sailor whom he charterers, before or
may have engaged to go after the vessel has put
on board, and may leave to sea, or if the vessel
him on land, in which is for the same reason
case his wages have to given a different
be paid as if he had destination from that
rendered services. fixed in the agreement
with the crew, the latter
shall be indemnified on
account of the
The indemnity shall be rescission of the
paid from the funds of the contract, according to
vessel if the captain the following cases:
should have acted for
reasons of prudence and
in the interest of the
safety and good service If the revocation of the
of the vessel. voyage should be
decided before
departure of the vessel
from the port, each shall receive the
sailor engaged shall be amount corresponding
given one month's to the time they might
salary, besides what have been on board
may be due him, in and to the time they
accordance with his may require to arrive at
contract, for the the port of destination,
services rendered to the captain being
the vessel up to the obliged, furthermore, to
date of the revocation. pay said sailors in both
cases the passage to
the said port or to the
port of sailing of the
If the agreement should vessel, as may be
have been for a fixed convenient for them.
amount for the whole
voyage, what may be
due for said month and
days shall be If the ship agent or the
determined in charterers of the vessel
proportion to the should give it a
approximate duration destination different
of the voyage, in the from that fixed in the
judgment of the agreement, and the
experts, in the manner members of the crew
established by the law should not agree
of civil procedure; and thereto, they shall be
if the proposed voyage given by way of
should be of such short indemnity half the
duration that it is amount fixed in the first
calculated at case, in addition to
approximately one what may be due them
month, the indemnity for the part of the
shall be fixed at fifteen monthly wages
days, discounting in all corresponding to the
cases the sums days which may have
advanced. elapsed from the date
of their agreements.

If the revocation should

take place after the If they accept the
vessel has put to sea, change, and the
the sailors engaged for voyage, on account of
a fixed amount for the greater distance or of
voyage shall receive other reasons, should
the entire salary which give rise to an increase
may have been offered of wages, the latter
them if the voyage had shall be adjusted
terminated; and those privately, or through
engaged by the month friendly adjusters in
case of disagreement. A declaration of war or
Even if the voyage interdiction of
should be shortened to commerce with the
a nearer point, this power to whose
shall not give rise to a territory the vessel was
reduction in the wages bound.
agreed upon.

The blockade of the

Should the revocation port of its destination
or change of the or the breaking out of
voyage originate from an epidemic after the
the shippers or agreement.
charterers, the ship
agent shall have a right
to demand of them the
indemnity which may The prohibition to
be justly due. receive in said port the
goods which make up
the cargo of

Art. 639. Should the the vessel.

revocation of the
voyage arise from a The detention or
just cause independent embargo of the same
of the will of the ship by order of the
agent and the government, or for any
charterers, and the other reason
vessel should not have independent of the will
left the port, the of the agent.
members of the crew
shall no other right
than to collect the
wages earned up to the The inability of the
day the revocation was vessel to navigate.
made.

Art. 641. If, after a

Art. 640. The following voyage has been
shall be just causes for begun, and any of the
the revocation of the first three causes
voyage: mentioned in the
foregoing article
should occur, the
sailors shall be paid at
the port

64
TRANSPORTATION AND MARITIME LAW
caused by the
negligence or lack of
skill of the captain,
which the captain may
engineer, or sailing
deem advisable to
mate, they shall
make for the benefit of
indemnify the crew for
the vessel and cargo,
the damages suffered,
according to the time
always without
they may have served
prejudice to the
thereon; but if the
criminal liability which
vessel is to continue its
may be proper.
voyage, the captain and
the crew may mutually
demand the
enforcement of the
contract. Art. 642. If the crew has
been engaged on
shares it shall not be
entitled, by reason of
the revocation, delay,
In case of the
or greater extension of
occurrence of the
the voyage, to anything
fourth cause, the crew
but the proportionate
shall continue to be
part of the indemnity
paid half wages, if the
which may be paid to
agreement is by month;
the common funds by
but if the detention
the persons
should exceed three
responsible for said
months, the contract
occurrences.
shall be rescinded and
the crew shall be paid
what they should have
earned according to the
contact, as if the Art. 643. If the vessel
voyage had been made. and her cargo should
And if the agreement be totally lost by
should be for a fixed reason of capture or
sum for the voyage, the shipwreck, all rights
contract must be shall be extinguished,
complied with in the both as regards the
terms agreed upon. right of the crew to
demand any wages and
as regards the right of
the ship agent to
recover the advances
In the fifth case, the
made.
crew shall have no
other right than to
collect the wages
earned; but if the
disability of the vessel If a portion of the
should have been vessel or of the cargo,
or of both, should be or defense of the
saved, the crew vessel, the sailor shall
engaged on wages, be attended and treated
including the captain, at the expense of the
shall retain their rights common funds,
on the salvage, as far deducting, before
as possible, on the anything else, from the
remainder of the vessel proceeds of the
as well as on the value freightage, the cost of
of the freightage or the the attendance and
cargo saved; but treatment.
sailors who are
engaged on shares
shall have no right on
the salvage of the hull, Art. 645. If a sailor
but only on the portion should die during the
of the freightage saved. voyage, his heirs shall
(If they should have be given the wages
worked to recover the earned and not
remainder of the received, according to
shipwrecked vessel, his contract and the
they shall be given cause of his death,
from the amount of the namely ---
salvage an award in
proportion to the
efforts made and to the
risks encountered in
order to accomplish the If he died a natural
salvage.) death and was engaged
on wages, that which
may have been earned
up to the date of his
death shall be paid.
Art. 644. A sailor who
falls sick shall not lose
his right to wages
during the voyage,
unless his sickness is If the contract was for a
the result of his own fixed sum for the whole
fault. At any rate, the voyage, half the
costs of medical amount earned shall be
attendance and paid if the sailor died
treatment shall be on the voyage out, and
defrayed from the the whole amount if he
common funds, in the died on the return
form of a loan. voyage.

If the sickness should And if the contract was

be caused by an injury on shares and the
received in the service death occurred after
the voyage was begun,
the heirs shall be paid liquidation and
the entire portion due payment to take place
the sailor; but if the between one voyage
latter died before the and the other. // After a
departure of the vessel new voyage has been
from the port, the heirs undertaken, credits of
shall not be entitled to such kind pertaining to
claim anything. the preceding voyage
shall lose the
preference.

If death occurred in the

defense of the vessel,
the sailor shall be Art. 647. The officers
considered as living, and the crew of the
and his heirs shall be vessel shall be
paid, at the end of the exempted from all
voyage, the full amount obligations contracted,
of wages or the entire if they deem if proper,
part of the profits in the following cases;
which may be due him
as others of his class. If, before the beginning
of the voyage, the
captain attempts to
change it, or there
occurs a naval war with
The sailor shall
the power to which the
likewise be considered
vessel was destined.
as present if he was
captured while
defending the vessel, in
order to enjoy the
benefits as the rest; but If a disease should
should he have been break out and be
captured on account of officially declared
carelessness or other epidemic in the port of
accident not related to destination.
the service, he shall
only receive the wages
due up to the day of his
capture. If the vessel should
change owner or
captain.

Art. 646. The vessel

with her engines,
rigging, equipment, and 4. Supercargoes
freightage shall be
liable for the wages
earned by the crew
engaged per month or
for the trip, the
Art. 649. Supercargoes
shall discharge on
board the vessel the
Art. 650. All the
administrative duties
provisions contained in
which the agent or
the second section of
shippers may have
Title III, Book II, with
assigned them; they
regard to qualifications,
shall keep an account
manner of making
and record of their
contracts, and
transactions in a book
liabilities of factors
which shall have the
shall be applicable to
same conditions and
supercargoes.
requisites as required
for the accounting
book of the captain,
and shall respect the
latter in his duties as Now governed by the
chief of the vessel. provisions on agency

The powers and Art. 651. Supercargoes

liabilities of the captain cannot, without special
shall cease, when there authorization or
is a supercargo, with agreement, make any
regard to that part of transaction for their
the administration own account during the
legitimately conferred voyage, with the
upon the latter, but exception of the
shall continue in force ventures which, in
for all acts which are accordance with the
inseparable from his custom of the port of
authority and office. destination, they are
permitted to do.

Supercargo: An agent of
the owner of the goods Neither shall they be
shipped as cargo on a permitted to invest in
vessel, who has charge the return trip more
of the cargo on board, than the profits from
sells the same to the best the ventures, unless
advantage in the foreign there is a special
markets, buys cargo to authorization therefor
be brought back on the from the principals.
return voyage of the ship,
and comes home with it

65
TRANSPORTATION AND MARITIME LAW
the merchandise from
the time they are
loaded in the port of
shipment until they are
unloaded in the port of
D. Accidents and their consignment.
Damages in Maritime
Commerce

Art. 807. The petty and

ordinary expenses
RISKS, DAMAGES, AND incident to navigation,
ACCIDENTS OF such as those of
MARITIME COMMERCE pilotage of coasts and
ports, lighterage and
towage, anchorage,
inspection, health,
Averages quarantine lazaretto,
and other so-called
port expenses, costs of
barges, and unloading,
until the merchandise
Nature and Kinds
is placed on the wharf,
and other usual
expenses of navigation
shall be considered
Art. 806. For the ordinary expenses to
purposes of this Code be defrayed by the
the following shall be shipowner, unless
considered averages: there is an express
agreement to the
All extraordinary or contrary.
accidental expenses
which may be incurred
during the voyage for
the preservation of the
Art. 808. Averages shall
vessel or cargo, or
be:
both.

Simple or particular.
All damages or
deterioration which the
General or gross.
vessel may suffer from
the time it puts to sea
at the port of departure
until it casts anchor at
the port of destination, Averages consist of 2
and those suffered by items :
 Simple or Particular

Expenses : to constitute
an average, an expense
must be: Defined

extraordinary or
accidental
Art. 809. As a general
incurred during the
rule, simple or
voyage
particular averages
include all the
incurred in order to
expenses and damages
preserve the vessel,
caused to the vessel or
cargo or both
to her cargo which
have not inured to the
Damages or deterioration
: to constitute an
average, it must be:

common benefit and

profit of all the persons
interested in the vessel
a. have been suffered
and her cargo,
from the time the vessel
especially the
puts to sea from
following:

The losses suffered by

the port of departure until
it casts anchor in the port
of destination
b. have been suffered
by the merchandise from
the time they are
the cargo from the time
of its embarkation until
it is unloaded, either on
account of the inherent
defect of the goods or
by reason of a marine
accident or force
majeure, and the
expenses incurred to
avoid and repair the
same.

loaded in the port of

shipment until they are
unloaded in the port

of consignment
The losses and which the proper
expenses suffered by amount shall be
the vessel in its hull, charged.
rigging, arms, and
equipments, for the
same causes and
reasons, from the time The victuals and wages
it puts to sea from the of the crew while the
port of departure until it vessel is in quarantine.
anchors in the port of
destination. The loss inflicted upon
the vessel or cargo by
reason of an impact or
collision with another,
The losses suffered by if it is accidental and
the merchandise unavoidable. If the
loaded on deck, except accident should occur
in coastwise through the fault or
navigation, if the negligence of the
marine ordinances captain, the latter shall
allow it. be liable for all the
damage caused.

The wages and victuals

of the crew when the Any loss suffered by
vessel is detained or the cargo through the
embargoed by a faults, negligence, or
legitimate order or barratry of the captain
force majeure, if the or of the crew, without
charter has been prejudice to the right of
contracted for a fixed the owner to recover
sum for the voyage. the corresponding
indemnity from the
captain, the vessel, and
the freight.
The necessary
expenses on arrival at
port, in order to make
repairs or secure Distinguishing feature :
an expense incurred or
provisions. damage suffered which
has not inured to the
The lowest value of the common benefit and
goods sold by the profit of all persons
captain in arrivals interested in the vessel
under stress for the and its cargo
payment of provisions
and to save the crew, to
meet any other need of
the vessel against
(b) Effects
 of the vessel detained
during the time the
settlement or
Art. 810. The owner of
redemption is being
the goods which gave
made.
rise to the expense or
suffered the damage
shall bear the simple or
particular averages.
The goods jettisoned to
lighten the vessel,
whether they belong to
the cargo, to the
Gross or General
vessel, or to the crew,
and the damage
suffered through said
act by the goods which
Defined are kept on board.

Art. 811. As a general The cables and masts

rule, general or gross which are cut or
averages shall include rendered useless, the
all the damages and anchors and the chains
expenses which are which are abandoned,
deliberately caused in in order to save the
order to save the cargo, the vessel, or
vessel, its cargo, or both.
both at the same time,
from a real and known
risk, and particularly
the following:
The expenses of
removing or
transferring a portion
of the cargo in order to
The goods or cash lighten the vessel and
invested in the place it in condition to
redemption of the enter a port or
vessel or of the cargo roadstead, and the
captured by enemies, damage resulting
privateers, or pirates, therefrom to the goods
and the provisions, removed or transferred.
wages, and expenses

66
TRANSPORTATION AND MARITIME LAW

The damage suffered The wages and victuals

by the goods of the of the crew of a vessel
cargo by the opening chartered by the
made in the vessel in month, during the time
order to drain it and that it is embargoed or
prevent its sinking. detained by force
majeure or by order of
The expenses caused the Government, or in
in order to float a order to repair the
vessel intentionally damage caused for the
stranded for the common benefit.
purpose of saving it.

The depreciation
The damage caused to resulting in the value of
the vessel which had to the goods sold at
be opened, scuttled or arrivals under stress in
broken in order to save order to repair the
the cargo. vessel by reason of
gross average.

The expenses for the

treatment and The expenses of the
subsistence of the liquidation of the
members of the crew average.
who may have been
wounded or crippled in
defending or saving the
vessel.

The wages of any

member of the crew
held as hostage by
enemies, privateers, or
pirates, and the
necessary expenses
which he may incur in
his imprisonment, until
he is returned to the
vessel or to his
domicile, should he
prefer it.
Art. 817. If in the real and known risk --> it
lightening a vessel on is the deliverance from
account of a storm, in an immediate peril, by a
order to facilitate its common sacrifice, that
entry into a port or constitutes the essence
roadstead, part of her of general average
cargo should be
transferred to lighters
or barges and be lost,
the owner of said part Requisites for general
shall be entitled to average:
indemnity, as if the loss
had originated from a
gross average, the
amount thereof being
distributed between the 1. there must be a
vessel and cargo from common danger --> the
which it came. ship and cargo are
subject to the same
danger and that the
danger arises from
accidents of the sea,
If, on the contrary, the dispositions of the
merchandise authorities or faults of
transferred should be men, provided that the
saved and the vessel circumstances producing
should be lost, no the peril should be
liability may be ascertained and
demanded of the imminent
salvage.

2. for the common safety,

Art. 818. If, as a part of the vessel or the
necessary measure to cargo or both is
extinguish a fire in port, sacrificed deliberately
roadstead, creek, or
bay, it should be 3. from the expenses or
decided to sink any damages caused follows
vessel, this loss shall the successful saving of
be considered gross the vessel
average, to which the
vessels saved shall and cargo
contribute.
4. the expenses or
damages should have
been incurred or inflicted
Distinguishing feature: after taking legal steps
Expense or damage and authority
suffered deliberately in
order to save the vessel,
its cargo or both from a
(b) Essential Requisites against the captain,
unless the urgency of
the case should be
such that the time
Art. 813. In order to necessary for previous
incur the expenses and deliberation was
cause the damages wanting.
corresponding to gross
average, there must be
a resolution of the
captain, adopted after Art. 814. The resolution
deliberation with the adopted to cause the
sailing mate and other damages which
officers of the vessel, constitute general
and after hearing the average must
persons interested in necessarily be entered
the cargo who may be in the log book, stating
present. the motives and
reasons on which it is
based, the votes
against it and the
If the latter should reason for the dissent,
object, and the captain should there be any,
and officers or a and the irresistible and
majority of them, or the urgent causes which
captain, if opposed to impelled the captain if
the majority, should he acted of his own
consider certain accord.
measures necessary,
they may be executed
under his
responsibility, without In the first case the
prejudice to the right of minutes shall be signed
the shippers to proceed by all the persons
against the captain present who could do
before the competent so before taking action,
judge or court, if they if possible; and if not,
can prove that he acted at the first opportunity.
with malice, lack of In the second case, it
skill, or negligence. shall be signed by the
captain and by the
officers of the vessel.

If the persons
interested in the cargo,
being on board the In the minutes, and
vessel, have not been after the resolution,
heard, they shall not shall be stated in detail
contribute to the gross all the goods
average, their share jettisoned, and mention
being chargeable shall be made of the
injuries caused to
those kept on board.
The captain shall be
Art. 860. If,
obliged to deliver one
notwithstanding the
copy of these minutes
jettison of the
to the maritime judicial
merchandise, breakage
authority of the first
of masts, ropes, and
port he may make,
equipment, the vessel
within twenty- four
should be lost running
hours after his arrival,
same risk, no
and to ratify it
contribution
immediately under
whatsoever by reason
oath.
of gross average shall
be proper.

Formalities for incurring

gross average :
there must be an
assembly of the sailing
mate and other officers
with the captain including
those with interests in the
cargo
there must be a
resolution of the captain
the resolution shall be
entered in the log book,
with the reasons and
motives and the votes for
and against the
resolution
The owners of the
goods saved shall not
be liable for the
indemnification of
those jettisoned, lost or
damaged.
The goods that were not
sacrificed shall not be
liable for the
indemnification of those
sacrificed - One of the
requisites of general
average is lacking, that
is, success in saving the
vessel and remaining
cargo

the minutes shall be

Magsaysay Inc. vs Agan
signed by the parties
96 Phil. 504
within 24 hours upon
arrival at the first port the
captain makes, he shall
deliver one copy of these F: Plaintiff's vessel SS
minutes to the maritime Antonio left for Manila for
judicial authority thereat Basco, Batanes with
general cargo owned by where the cargoes were
the different shippers delivered. On the theory
including that of the that the expenses
defendant. Upon incurred in floating the
reaching Aparri, it vessel constituted a
accidentally ran aground. general average to which
Plaintiff had it refloated both the ship and cargo
by Luzteveco for should contribute, plaintiff
compensation. After asked from the shippers
refueling, the vessel a deposit or bond to
proceeded to Basco answer for

67
TRANSPORTATION AND MARITIME LAW
have no application
where the stranding was
unintentional.
contribution to the
average. All shippers
The following are the
acceded except the
requisites for a general
defendant. In action to
average: 1) there must
recover said contribution,
be common danger, 2)
the Manila CFI decided
for the common safety
for the plaintiff.
part of the vessel or
Defendant appealed
cargo or both is
contending that the
sacrificed deliberately, 3)
floating of a vessel,
from the expenses or
unintentionally stranded
damages caused follows
inside a port and at the
the successful saving of
mouth of a river during a
the vessel and cargo,
fine weather, does not
and 4) the expenses or
constitute general
damages should have
average expenses.
been incurred or inflicted
after taking the proper
legal steps and authority.

Held: In classifying
averages into simple or
particular and general or
It is the deliverance from
gross and defining each
an immediate peril, by
class, the Code of
reason of a common
Commerce at the same
sacrifice, that constitutes
time enumerate certain
the essence of a general
specific cases as coming
average. Where there is
specially under one or
no proof that the
the other class. While the
stranded vessel had to
expenses incurred in
be put afloat to save it
putting the vessel afloat
from imminent danger,
may well come under No.
and what does appear is
2 of Art. 809 - referring to
that the vessel had to be
expenses suffered by the
salvaged in order to
vessel due to an accident
enable it to proceed to its
of the sea or force
port of destination, the
majeure- said expenses
expenses incurred in
do not fit into any of the
floating the vessel do not
specific cases of general
constitute general
average enumerated in
average. It is the safety
ART. 811. No. 6 of Art.
of the property, and not
811 mentions expenses
of the voyage which
caused to afloat a vessel,
constitutes the true
but it specifically refers to
foundation of general
a vessel intentionally
average.
stranded for the purpose
of saving it, and would
 were prepaid to ultimate
destination and
defendant reserved the
The expenses incurred
right to forward the
for the common safety of
machineries at its own
the vessel and cargo in
expense by some other
this case did not arise
means in case of its
from the imminent peril of
inability to effect
both. The cargo could
discharge at the port of
have been unloaded by
destination. When the
the owners had they
voyage was almost
been required to do so.
completed at the China
The refloating was a
Sea, war broke out
success, but as the
between Germany and
sacrifice was for the
Russia, and the ship put
vessel's benefit -- to
in to the port of Manila,
enable it to proceed to its
where it was interned.
destination -- and not for
Captain of the vessel
the purpose of saving the
refused to surrender the
cargo, the cargo owners
machineries to the
are not in law bound to
owner's agent unless the
contribute to expenses.
latter would agree to
The final requisite has
subject said cargo to
not been proved for it
liability upon general
does not appear that the
average to satisfy the
expenses in question
cost and expenses of the
were incurred after
vessel incident to its stay
following the procedure
in Manila. Plaintiff did not
laid down in Art. 913.
assent and brought an
action for recovery of the
machineries plus
damages. The plaintiff
Decision reversed. later obtained said cargo
by a writ of replevin and
forwarded it to

International Harvester Vladivostok by another

vs Hamburg American
Line 42 Phil 845
F: In the spring of 1917,
defendant undertook to
carry agricultural
machineries, belonging
to the plaintiff, from
Hamburg to Vladivostok,
Russia. Freight charges
streamer. Defendant
denied liability asserting
its lien on the cargo for
general average. Trial
court awarded the
plaintiff damages.
Defendant appealed.
Held: It is clear that the
cargo in question is not
liable to a general
average. It is not claimed
that said cargo was
contraband of war and
being neutral goods, they
were not liable to
forfeiture in the event of
capture by the enemies
of the ship's flag. It
follows that when the
master of the vessel
decided to take refuge in
Manila, he acted
exclusively with a view to
the vessel's protection.
There was no common
danger to the ship and
cargo; and, therefore, it
was not a case for a
general average.
The outbreak of the war
between Germany and
Russia absolved the
defendant from
conveying the cargo to
Russia, and no damage
could be recovered by
the plaintiff from the
defendant for the latter's
failure to convey the
cargo to the port of
destination on that ship.
But by the terms of the
contract of affreightment,
the defendant was bound
to forward the cargo to
Vladivostok at its
expense, not necessarily
by a streamer of
defendant. It does not by
any means follow that it
is not liable for the
expenses incurred by the
plaintiff in completing the
unfinished portion of the
voyage in another ship.
Defendant is, therefore,
liable for the cost of
forwarding the cargo by
another line, the full
freight having been
received by the ship at
the commencement of
the voyage.
Judgment affirmed.
Compagnie de
Commerce vs Hamburg
36 Phil 590
F: In July 1914,
defendant's vessel
undertook to carry a
cargo of rice meal in the
French port of Saigon for
delivery to Dunkirk under
a contract of
affreightment with a
French shipper. While the
loading of the cargo was
made, rumors of the
outbreak of war between
French and Germany
spread. The master of
the German vessel, after
completion of the loading
of the cargo and after
being refused by the
French Governor at
Saigon for a pass of
safe-conduct, fled with
his vessel and her cargo
and took refuge in
Manila. Considering the
nature of the cargo and
its impossibility of being
delivered to its
destination within
reasonable time, the
master of the vessel
consulted the shipper's
instruction as to the
disposition of the cargo,
but the shipper's agent
refused to assume
responsibility.
Defendant's agent in
Manila, upon the court's
authority secured by the
master of the vessel, sold
said rice meal and
deposited the proceeds
thereof with the court
minus the expenses
incident to the sale.
Plaintiff filed an action for
recovery of the proceeds
of the sale and the
resulting damages.
Defendant also claimed,
in a cross-complaint,
contribution from plaintiff
for general average for
the expenses incurred by
the vessel's stay in
Manila. Trial court
decided for the plaintiff
including damages for
the defendant's breach of
the charter party. Both
parties appealed.
Held: The danger from
which the master of the
vessel fled was a real
and not merely an
imaginary one. Seizure at
the hands of the enemy,
though not inevitable,
was a possible outcome
of a failure to leave the
port of Saigon; and it
cannot be said that under
the conditions existing at
the time when the master
elected to flee from that
port, there were no
grounds for a reasonable
apprehension of danger
from seizure by French
authorities, and therefore
no necessity for flight.
The deviation of the
vessel therefore, from the
route prescribed in her
charter party, and the
subsequent
abandonment by the
master of the voyage
contemplated in the
contract of affreightment,
must be held to have
been justified by the
necessity under which
the master was placed to
elect that course which
would remove and
preserve the vessel from
danger of seizure by the
public enemy of the flag
which the vessel sailed;
and that neither the
vessel nor her owners
are liable for the resultant
damages suffered by the
owner of the cargo.
The claim for general
average by the
shipowner, however,
cannot be sustained
under the provisions of
the York-Antwerp Rules.
An examination of the
entire body of these rules
discloses that general
average is never allowed
thereunder unless the
loss or damage sought to
be made good as general
average has been
incurred for the `common
safety'. It is very clear
that in fleeing from the
port of Saigon and taking
refuge in Manila, the
master of the vessel was
not acting for the
common safety of the
vessel and her cargo. proceeds of the sale to
The French cargo was plaintiff should be
absolutely secure from affirmed, but recovery of
danger of seizure or damages by plaintiff
confiscation so long as it should be reversed.
remained in the port of Defendant cannot claim
Saigon, and there can be for general average.
no question that the flight
of the vessel was a
measure of precaution
adopted solely and Judgment modified.
exclusively for the
preservation of the
vessel from danger of
seizure or capture.
Delivery of the net (c) Effects

68
TRANSPORTATION AND MARITIME LAW

Art. 816. In order that

the goods jettisoned
may be included in the
Art. 812. In order to
gross average and the
satisfy the amount of
owners thereof be
the gross or general
entitled to indemnity, it
averages, all the
shall be necessary in
persons having an
so far as the cargo is
interest in the vessel
concerned that their
and cargo therein at the
existence on board be
time of the occurrence
proven by means of the
of the average shall
bill of lading; and with
contribute.
regard to those
belonging to the
vessel, by means of the
inventory prepared
(d) Jettison before the departure, in
accordance with the
first paragraph of
Article 612.
Art. 815. The captain
shall direct the jettison,
and shall order the
goods cast overboard
in the following order:

Those which are on (e) Jason Clause

deck, beginning with
those which embarrass
the maneuver or
damage the vessel, Jason Clause, Rule D,
preferring, if possible, York-Antwerp Rules
the heaviest ones with
the least utility and
value.

Those which are below

the upper deck, always
beginning with those of
the greatest weight and
smallest value, to the
amount and number
absolutely
indispensable.
Rights to contribution in
general average shall not
be affected, though the
The liquidation shall be
event which gave rise to
made in the port of
the sacrifice or
unloading, if it is a
expenditure may have
Philippine
been due to the fault of
one of the parties to the port.
adventure; but this shall
not prejudice any If the average occurred
remedies which may be outside of the
open against that party jurisdictional waters of
for such fault. the Philippines, or the
cargo has been sold in
a foreign port by
reason of an arrival
Proof and Liquidation of under stress, the
Averages liquidation shall be
made in the port of
arrival.

Modes

If the average has

occurred near the port
of destination, so that
Art. 846. Those
said port can be made,
interested in the proof
the proceedings
and liquidation of
mentioned in rules 1
averages may mutually
and 2 shall be held
agree and bind
there.
themselves at any time
with regard to the
liability, liquidation and
payment thereof.
Art. 847. In the case
In the absence of where the liquidation of
agreements, the the averages is made
following rules shall be privately by virtue of
observed: agreement, as well as
when a judicial
authority intervenes at
the request of any
The proof of the
average shall take
place in the port where
the repairs are made, of the parties interested
should any be who do not agree
necessary, or in the thereto, all of them
port of unloading. shall be cited and
heard, should they not
have renounced this
right.

Should they not be

present or should they
have no legal (2) Appraisal of general
representative, the average
liquidation shall be
made by the consul in a
foreign port, and where
there is none, by the Art. 850. If by reason of
competent judge or one or more accidents
court, according to the of the sea, particular
laws of the country and and gross averages of
for the account of the the vessel, of the
proper party. cargo, or of both,
should take place on
the same voyage, the
expenses and damages
When the corresponding to each
representative is a average shall be
person well known in determined separately
the place where the in the port where the
liquidation is made, his repairs are made, or
intervention shall be where the merchandise
admitted and shall is discharged, sold, or
produce legal effects, utilized.
even though he be
authorized only by a
letter of the ship agent,
the shipper, or the For this purpose the
insurer. captains shall be
obliged to demand of
the expert appraisers
and of the contractors
Art. 848. Claims for making the repairs, as
averages shall not be well as of those
admitted if they do not appraising and taking
exceed 5 per cent of part in the unloading,
the interest which the repair, sale, or
claimant may have in utilization of the
the vessel or in the merchandise, that in
cargo if it be gross their appraisements or
average, and 1 per cent estimates and accounts
of the goods damaged they set down
if particular average, separately and
deducting in both accurately the
cases the expenses of expenses and damages
appraisal, unless there pertaining to each
is an agreement to the average, and in those
contrary. of each average those
corresponding to the
vessel and to the by experts and
cargo, also stating liquidators appointed
separately whether or by themselves, in
not there are damages which case did shall be
proceeding from so done if the
inherent defect of the interested parties
thing and not from agree.
accident of the sea;
and in case there
should be expenses
common to the If an agreement is not
different averages and possible, the captain
to the vessel and its shall apply to the
cargo, the amount competent judge or
corresponding to each court, who shall be the
must be estimated and one in the port where
stated distinctly. these proceedings are
to be held in
accordance with the
provisions of this
Art. 851. At the instance Code, or to the consul
of the captain, the of the Philippines
adjustment, liquidation, should there be one,
and distribution of and should there be
gross averages shall be none, to the local
held privately, with the authority when they are
consent of all the to be held in a foreign
parties in interest. port.

For this purpose, within Art. 852. If the captain

forty-eight hours, does not comply with
following the arrival of the provisions of the
the vessel at the port, preceding article, the
the captain shall ship agent or the
convene all the shippers shall demand
persons interested in the liquidation, without
order that they may prejudice to the action
decide as to whether they may bring to
the adjustment or demand indemnity from
liquidation of the gross him.
average is to be made

69
TRANSPORTATION AND MARITIME LAW
the inherent defect of
the things.

The experts shall also

declare whether the
Under Art. 851, the repairs may be made
captain is required to immediately, or
initiate the proceedings whether it is necessary
for the adjustment, to unload the vessel in
liquidation and order to examine and
distribution of any gross repair it.
average; it is his duty to
take the proper steps to
protect any shipper
whose goods may have
With regard to the
been jettisoned for the
merchandise, if the
general safety ==> if the
average should be
captain does not comply
visible at a mere
with his duty under 851,
glance, the examination
the shipowner or shipper
thereof must be made
has the right to maintain
before they are
an action against the
delivered. Should it not
captain for
be visible at the time of
indemnification for the
unloading, said
loss --> this does not
examination may be
involve the suppression
made after the delivery,
of the right of action of
provided that it is done
the shipper against the
within forty-eight hours
shipowner
from the unloading,
and without prejudice
to the other proofs
which the experts may
Art. 853. After the deem proper.
experts have been
appointed by the
persons interested, or
by the court, and after
Art. 854. The valuation
the acceptance, they
of the objects which
shall proceed to the
are to contribute to the
examination of the
gross average, and that
vessel and of the
of those which
repairs required and to
constitute the average,
the appraisal of their
shall be subject to the
cost, separating these
following rules:
losses and damages
from those arising from
The merchandise saved
which is to contribute
to the payment of the
Merchandise lost,
gross average shall be
which constitutes the
valued at the current
gross average, shall be
price at the port of
appraised at the value
unloading, deducting
which merchandise of
the freightage, customs
its kind may have in the
duties, and expenses of
port of unloading,
unloading, as may
provided that its kind
appear from a material
and quality appear in
inspection of the same,
the bill of lading; and
without taking the bills
should they not appear,
of lading into
the value shall be that
consideration, unless
stated in the invoices
there is an agreement
of the purchase issued
to the contrary.
in the port of shipment,
adding thereto the
expenses and
freightage
If the liquidation is to subsequently arising.
be made in the port of
departure, the value of
the merchandise
loaded shall be
The masts cut down,
determined by the
the sails, cables, and
purchase price,
other equipment of the
including the expenses
vessel rendered
until they are placed on
useless for the purpose
board, the insurance
of saving it, shall be
premium excluded.
appraised at the
current value,
deducting one-third by
reason of the difference
If the merchandise between new and old.
should be damaged, it
shall be appraised at its
true value.
This deduction shall
If the voyage having
not be made with
been interrupted, the
respect to anchors and
merchandise should
chains.
have been sold in a
foreign port, and the
The vessel shall be
average cannot be
appraised at its true
estimated, the value of
value in the condition
the merchandise in the
in which it is
port of arrival, or the
net proceeds obtained found.
at the sale thereof,
shall be taken as the
contributing capital.
The freightage shall shipper or (2) without his
represent 50 per cent consent --> if stowed on
by way of contributing deck with his consent, he
capital. takes the risk upon
himself of the perils
arising from the dangers
of the sea and any
Art. 855. The damage will be borne by
merchandise loaded on the owner [particular
the upper deck of the average]
vessel shall contribute
to the gross average
should it be saved; but
there shall be no right --> if stowed on deck
to indemnify if it should without his consent, the
be lost by reason of captain does so at his
having been jettisoned own risk; the captain
for common safety, cannot protect himself by
showing that they are
damaged or lost by
dangers of the sea
except when the marine
ordinances allow its
shipment in this
manner in coastwise The carriage of gasoline
navigation. on deck by coastwise or
interisland vessels is
The same shall take allowed by marine
place with that which is regulations --> the loss of
on board and is not petroleum for common
included in the bills of safety and benefit will
lading or inventories, constitute a general
according to the cases. average.

In any case the Art. 857. After the

shipowner and the appraisement of the
captain shall be liable goods saved and of
to the shippers for the those lost which
damages from the constitute the gross
jettison, if the storage average, has been
on the upper deck was concluded by the
made without the experts, the repairs, if
consent of the latter. any, made on the
vessel, and, in this
case, the accounts of
the same approved by
The goods may be the persons interested
stowed on deck (1) with or by the judge or
the consent of the court, the entire record
shall be turned over to Immediately thereafter
the liquidator he shall proceed with
appointed, in order that the distribution of the
he may proceed with amount of the average,
the distribution of the for which purpose he
average. shall fix:

(3) Liquidation of general The contributing

average capital, which he shall
determine by the value
of the cargo, in
accordance with the
Art. 858. In order to rules established in
effect the liquidation, Article 854.
the liquidator shall
examine the protest of
the captain, comparing
it, if necessary, with the That of the vessel in its
log book, and all the actual condition,
contracts which may according to a
have been made among statement of experts.
the persons interested
in the average, the The 50 per cent of the
appraisements, expert amount of the
examinations, and freightage, deducting
accounts of repairs the remaining 50 per
made. If, as a result of cent for wages and
this examination, he maintenance of the
should find any defect crew.
in the procedure which
might injure the rights
of the persons
interested or affect the After the amount of the
liability of the captain, gross average has
he shall call attention been determined in
thereto in order that it accordance with the
may be corrected, if provisions of this
possible, and otherwise Code, it shall be
he shall include it in the distributed pro rata
exordial of the among the goods
liquidation. which are to cover the
same.

Art. 865. The

distribution of the
gross average shall not
be final until it has
been agreed to, or in Art. 866. After the
the absence thereof, liquidation has been
until it has been approved, it shall be
approved by the judge the duty of the captain
or court, after an to collect the amount of
examination of the the contribution, and
liquidation and a he shall be liable to the
hearing of the persons owners of the goods
interested who may be averaged for the
present or of their damages they may
representatives. suffer through his
delay or negligence.

70
TRANSPORTATION AND MARITIME LAW
Rules 2 to 7, in so far
as they are applicable.

(4) Liquidation of
particular average
Art. 867. If the persons
contributing should not
pay the amount of the
contribution at the end
Art. 869. The experts
of the third day after
whom the court or the
having been required to
persons interested may
do so, the goods saved
appoint, as the case
shall be proceeded
may be, shall proceed
against, at the request
with the examination
of the captain, until
and appraisement of
payment has been
the averages in the
made from their
manner prescribed in
proceeds.
Articles 853 and 854,
Rules 2 to 7, in so far
as they are applicable.

Art. 868. If the person

interested in receiving
the goods saved
Arrivals Under Stress
should not give
security sufficient to
answer for the amount
corresponding to the
gross average, the Causes
captain may defer the
delivery thereof until
payment has been
made. Art. 819. If during the
voyage the captain
should believe that the
vessel cannot continue
Art. 869. The experts the trip to the port of
whom the court or the destination on account
persons interested may of the lack of
appoint, as the case provisions, well-
may be, shall proceed founded fear of seizure,
with the examination privateers, or pirates,
and appraisement of or by reason of any
the averages in the accident of the sea
manner prescribed in disabling it to navigate,
Articles 853 and 854, he shall assemble the
officers and shall
summon the persons for the voyage
interested in the cargo according to usage and
who may be present, custom, or if they
and who may attend should have been
the meeting without the rendered useless or
right to vote; and if, lost through bad
after examining the stowage or negligence
circumstances of the in their care.
case, the reason
should be considered
well-founded, the
arrival at the nearest If the risk of enemies,
and most convenient privateers, or pirates
port shall be agreed should not have been
upon, drafting and well known, manifest,
entering the proper and based on positive
minutes, which shall be and provable facts.
signed by all, in the log
book.

If the defector the

vessel should have
The captain shall have arisen from the fact
the deciding vote, and that it was not repaired,
the persons interested rigged, equipped, and
in the cargo may make prepared in a manner
the objections and suitable for the voyage,
protests they may or from some
deem proper, which erroneous order of the
shall be entered in the captain.
minutes in order that
they may make use
thereof in the manner
they may consider
advisable. 4. Whenever malice,
negligence, want of
foresight, or lack of
skill on the part of the
captain exists in the act
causing the damage.

Art. 820. An arrival shall

not be considered
lawful in the following Arrival under stress:
cases: Arrival of a vessel at the
nearest and most
convenient port, if during
the voyage the vessel
If the lack of provisions cannot continue the trip
should arise from the to the port of destination
failure to take the due to : (1) lack of
necessary provisions provisions, (2) well-
founded fear of seizure,
privateers, or pirates, (3)
by reason of any
accident of the sea
disabling it to navigate
(b) Formalities
Art. 819. If during the
voyage the captain
should believe that the
vessel cannot continue
the trip to the port of
destination on account
of the lack of
provisions, well-
founded fear of seizure,
privateers, or pirates,
or by reason of any
accident of the sea
disabling it to navigate,
he shall assemble the
officers and shall
summon the persons
interested in the cargo
who may be present,
and who may attend
the meeting without the
right to vote; and if,
after examining the
circumstances of the
case, the reason
should be considered
well-founded, the
arrival at the nearest
and most convenient
port shall be agreed
upon, drafting and
entering the proper
minutes, which shall be
signed by all, in the log
book.
The captain shall have
the deciding vote, and
the persons interested
in the cargo may make
the objections and
protests they may
deem proper, which
shall be entered in the
minutes in order that
they may make use
thereof in the manner
they may consider
advisable.
Formalities : 1. assembly
of the officers including
all interested parties
drafting and entering in
the log book the proper
minutes, which shall be
signed by all
entry in the log book of
the objections and
protests of the persons
interested in the cargo
Art. 822. If in order to
make repairs to the
vessel or because there
is danger that the cargo
may suffer damage, it
should be necessary to
unload, the captain
must request
authorization from the
competent judge or
court for the removal,
and carry it out with the
knowledge of the
person interested in the
cargo, or his
representative, should
there be any.
In a foreign port, it shall
be the duty of the
Filipino consul, where
there is one, to give the
authorization.
In the first case, the
expenses shall be for
the account of the ship
agent or owner, and in
the second, they shall
be chargeable against
the owners of the
merchandise for whose
benefit the act was
performed.
If the unloading should
take place for both
reasons, the expenses
shall be divided
proportionately
between the value of
the vessel and that of
the cargo.
71
(c) Expenses
Art. 821. The expenses
of an arrival under
stress shall always be
for the account of the
shipowner or agent, but
they shall not be liable
for the damages which
may be caused the
shippers by reason of
the arrival, provided the
latter is legitimate.
Otherwise, the ship
agent and the captain
shall be jointly liable.
Art. 822. If in order to
make repairs to the
vessel or because there
is danger that the cargo
may suffer damage, it
should be necessary to
unload, the captain
must request
TRANSPORTATION AND MARITIME LAW
authorization from the
competent judge or
court for the removal,
and carry it out with the
knowledge of the
person interested in the
cargo, or his
representative, should
there be any.
In a foreign port, it shall
be the duty of the
Filipino consul, where
there is one, to give the
authorization.
In the first case, the
expenses shall be for
the account of the ship
agent or owner, and in
the second, they shall
be chargeable against
the owners of the
merchandise for whose
benefit the act was
performed.
If the unloading should
take place for both
reasons, the expenses
shall be divided
proportionately
between the value of
the vessel and that of
the cargo.
Requisites for the
captain to unload the
cargo arriving under
stress:
the unloading must be
necessary to make
repairs or there must be
danger that the cargo
may suffer damage
the captain must be
authorized by either a
competent court or the
Phil. consul, depending
on the port of arrival
Responsibility of Captain
Art. 823. The custody
and preservation of the
cargo which has been
unloaded shall be
entrusted to the
captain, who shall be
responsible for the
same, except in cases
of force majeure.
Art. 824. If the entire
cargo or part thereof
should appear to be
damaged, or there
should be imminent
danger of its being
damaged, the captain
may request of the
competent judge or
court, or of the consul
in a proper case, the
sale of all or of part of persons interested in
the former, and the the cargo who may be
person taking present, in accordance
cognizance of the with the provisions
matter shall authorize contained in Article
it, after an examination 819, shall precede the
and declaration of departure.
experts,
advertisements, and
other formalities
required by the case, The captain has the duty
and an entry in the to continue the voyage
book, in accordance without delay after the
with the provisions of cause of the arrival under
Article 624. stress has ceased-->
otherwise, he shall be
liable for damages
caused by the delay
The captain shall, in a
proper case, justify the
legality of his conduct,
under the penalty of 3. Collisions
answering to the
shipper for the price
the merchandise would
have brought if it had
arrived in good Collision: impact of two
condition at the port of vessels both of which are
destination. moving Allision: striking
of a moving vessel
against one that is
stationary

Art. 825. The captain

shall be responsible for
the damages caused by
his delay, if after the Cases of collision :
cause of the arrival
under stress has
ceased, he should not
continue the voyage. 1. due to the fault,
negligence or lack of skill
of the captain, sailing
mate or the complement
If the cause of the of the vessel --> under
arrival should have 826, the shipowner shall
been the fear of be liable for the losses
enemies, privateers, or and damages
pirates, a deliberation
and resolution in a
meeting of the officers
of the vessel and
due to the fault of both
vessels --> under 827,
each vessel shall suffer
Nautical Rules to
its own losses, but as
determine negligence :
regards the owners of the
cargoes, both vessels
shall be jointly and
severally liable
1. When 2 vessels are
about to enter a port, the
farther one must allow
the nearer to enter first; if
where it cannot be
they collide, the fault is
determined which of the
presumed to be
2 vessels is at fault -->
imputable to the one who
under 828, each vessel
arrived later, unless it can
shall suffer its own
be proved that there was
losses, and both shall
no fault on its part.
also be solidarily
responsible for the losses
and damages caused to
their cargoes
When 2 vessels meet,
the smaller should give
the right of way to the
larger one.
collision due to fortuitous
event or force majeure
--> under 830, each
vessel shall bear its own
damages A vessel leaving port
should leave the way
clear for another which
may be entering

where two vessels collide

with each other without
their fault but by reason
of the fault of a third the same port.
vessel --> under 831, the
owner of the third vessel
causing the collision shall
be liable for the losses 4. The vessel which
and damages 6. a vessel leaves later is presumed
which is properly to have collided against
anchored and moored one who has left
may collide with those
nearby by reason of a
storm or other cause of
force majeure --> under
earlier.
832, the vessel run into
shall suffer its own
damages and expenses
There is also a
presumption against the
vessel which sets sail at
9. The same rule applies
night.
to those vessels which
do not have buoys to
indicate the location of its
anchors to prevent
The presumption also damage to these vessels
works against the vessel which may approach it.
with spread sails which
collides with

Zones in time of
collisions (3 time
another which is at zones):
anchor, and cannot
move, even when the
crew of the latter has
received word to lift
1. all the time up to the
anchor, when there was
moment when the risk of
not sufficient time to do
collision may have said
so or there was fear of a
to have
greater damage or other
legitimate reason.

begun

7. The vessel which is

not properly moored or
does not observe the
proper distances, has the --> within this zone, no
presumption against rule is applicable
itself. because none is
necessary. Each vessel
is free to direct its course
as it deems best with
reference to the
8. The vessel which is
movements of the other
moored at a place not
vessel.
used for the purpose, or
which is improperly
moored or does not have
sufficient cables, or
which has been left 2. the time between the
without watch, has also moment when the risk of
against itself the collission begins and the
presumption. moment when it has
become a practical
necessity.

72
TRANSPORTATION AND MARITIME LAW
3. the time between the
moment when collission
has become a practical
certainty and the moment
of actual contact
Effect of fault of
privileged vessel
during third zone :
If a vessel having a right
of way suddenly changes
its course during the third
zone, in an effort to avoid
an imminent collision due
to the fault of another
vessel, such act may be
said to be done in
extremis, and even if
wrong, cannot create
responsibility on the part
of said vessel with the
right of way. Thus, it has
been held that fault on
the part of the sailing
vessel at the moment
preceding a collission,
that is, during the third
division of time, does not
absolve the steamship
which has suffered
herself and a sailing
vessel to get into such
dangerous proximity as
to cause inevitable harm
and confusion, and a
collision results as a
consequence. The
steamer having a far
greater fault in allowing
such proximity to be
brought about is
chargeable with all the
damages resulting from
the collission; and the act
of the sailing vessel
having been done in
extremis and even
wrong, is not responsible
for the result.
Classes and Effects
Fortuitous
Art. 830. If a vessel
should collide with
another through
fortuitous event or
force majeure, each
vessel and its cargo
shall bear its own
damages.
Art. 832. If, by reasons
of a storm or other
cause of force majeure,
a vessel which is
properly anchored and
moored should collide
with those nearby,
causing them damages,
the injury occasioned
shall be considered as
particular average of
the vessel run into.
Each to his own damage
--> particular damage
(2) Culpable

Under the express

provisions of 827, the
Art. 826. If a vessel shipowners cannot
should collide with successfully maintain an
another, through the action against the other
fault, negligence, or for the loss or injury to
lack of skill of the his vessel
captain, sailing mate,
or any other member of
the complement, the
owner of the vessel at
fault shall indemnify
the losses and
damages suffered, after Art.831. If a vessel
an expert appraisal. should be forced by a
third vessel to collide
with another, the owner
of the third vessel shall
indemnify the losses
Where the obligation
and damages caused,
arises from tortious act
the captain thereof
and not from contract,
being civilly liable to
both the owner and the
said owner.
shipagent should be
declared liable

(3) Inscrutable Fault

Art. 827. If the collision

is imputable to both
vessels, each one shall
suffer its own Art. 828. The provisions
damages, and both of the preceding article
shall be solidarily are applicable to the
responsible for the case in which it cannot
losses and damages be determined which of
occasioned to their the two vessels has
cargoes. caused the collision.

Defense of due diligence Relation of Art. 827 to

of a good father of a Art. 828
family in the selection
and vigilance of the
officers and crew cannot
be used to render Art. 828 must be
nugatory the solidary considered an extension
liability under 827 of Art. 827
The rule of liability under for the loss or injury to
Art. 827 is applicable not his vessel
only to the case where
both vessels may be
shown to be actually
blameworthy but also to (b) Presumption of loss
the case where it is by collision
obvious that only one
was at fault but the proof
does not show which

Art.833. A vessel which,

Under Arts. 827 and 828,
in case of collision
between two vessels at
sea, both are solidarily
liable for the loss of
cargo carried by either to
the full extent of the
value thereof, not only in
the cse where both
vessels may be shown to
be actually blameworthy
but also in the case
where it is shown that
only one ws at fault but
the proof does not show
it --> it makes no
difference that the
negligence imputable to
the two vessels may
have differed somewhat
in character and degree
and that the negligence
of the sunken ship was
somewhat more marked
than that of the ther
The doctrine of last clear
chance cannot be raised
--> under the express
provisions of Art. 827,
under which the evidence
disclosing that both
vessels are blameworthy,
the owners of neither can
successfully maintain an
action against the other
upon being run into,
sinks immediately, as
well as that which,
having been obliged to
make a port to repair
the damages caused by
the collision, is lost
during the voyage or is
obliged to be stranded
in order to be saved,
shall be presumed as
lost by reason of
collision.
Liabilities
Shipowner or agent
Art. 837. The civil
liability incurred by the
shipowners in the
cases prescribed in
this section, shall be
understood as limited
to the value of the
vessel with all its
appurtenances and
freightage earned
during the voyage.
Art. 838. When the
value of the vessel and
her appurtenances
should not be sufficient
to cover all the
liabilities, the indemnity
due by reason of the
death or injury of
persons shall have
preference.
Limited liability : limited to
the value of the vessel
73
and the freight earned
during the voyage
[provided for in Arts. 587,
590 and 837]
Damages may be
recovered to the extent of
what may be salvaged or
of the freightage received
or of the value of the
insurance recoverable
TRANSPORTATION AND MARITIME LAW
Art. 835. The action for
the recovery of losses
and damages arising
from collisions cannot
be admitted if a protest
or declaration is not
presented within
(2) Captain, pilot, others twenty-four hours
before the competent
authority of the point
where the collision
took place, or that of
Art. 829. In the cases
the first port of arrival
above mentioned the
of the vessel, if in
civil action of the
Philippine territory and
owner against the
to the consul of the
person causing the
Philippines, if it
injury as well as the
occurred in a foreign
criminal liabilities,
country.
which may be proper,
are reserved.

Art. 836. With respect

to damages caused to
Art. 834. If the vessels
persons or to the
colliding with each
cargo, the absence of a
other should have
protest may not
pilots on board
prejudice the persons
discharging their duties
interested who were
at the time of the
not on board or were
collision, their
not in a condition to
presence shall not
make known their
exempt the captains
wishes.
from the liabilities they
incur, but the latter
shall have the right to
be indemnified by the
pilots, without Art. 835 establishes a
prejudice to the condition precedent
criminal liability which before any action for the
the latter may incur. recovery of damages
arising from collisions
may be admitted -->
presentation of a protest
or declaration within 24
(3) conditions; protests
hours before the proper
authorities [competent
authority at the point
where the collision took
place or of the first port of
arrival of the vessel or to
the consul of the
Philippines if it occurred
in a foreign country]
The requirement of
protest is not necessary
with respect to small
boats engaged in river
and bay traffic and boats
manned by a group of
fishermen
Reason for requiring
protest: Neccesity of
preventing fictitious
collisions and improper
indemnities
Summary of cases
where protest is
required:
under 612, when the
vessel makes an arrival
under stress
under 612, 624 and 843,
where the vessel is
shipwrecked
under 624, where the
vessel has gone through
a hurricane or when the
captain believes that the
cargo has suffered
damages or averages
under 835, in case of
maritime collisions
Art. 839. If the collision
should take place
between Philippine
vessels in foreign
waters, of if having
taken place in the open
seas, and the vessels
should make a foreign
port, the Filipino consul
in said port shall hold a
summary investigation
of the accident,
forwarding the
proceedings to the
Secretary of the
Department of Foreign
Affairs for continuation
and conclusion.
4. Shipwrecks
Art. 840. The losses
and deteriorations
suffered by a vessel
and her cargo by
reason of shipwreck or
stranding shall be
individually for the
account of the owners,
the part which may be
saved belonging to
them in the same
proportion.
Art. 841. If the wreck or
standing should be
caused by the malice,e
negligence, or lack of
skill of the captain, or
because the vessel put
to sea insufficiently
repaired and equipped,
the ship agent or the
Where a ship and its
shippers may demand
cargo are saved together,
indemnity of the
the salvage allowance
captain for the
should be charged
damages caused to the
against the ship and
vessel or to the cargo
cargo in proportion of
by the accident, in
their respective values,
accordance with the
the same as in general
provisions contained in
averages and neither is
Articles 610, 612, 614,
liable for the salvage due
and 621.
from the other

Shipwreck: Loss of a
vessel at sea, either by
being swallowed up by
the waves, by running
against another vessel or
thing at sea, or on coast
--> renders the ship
incapable of navigation
Under 841, in case the
wreck or stranding is due
to the (1) malice,
negligence, or lack of
skill of the captain, or (2)
because the vessel put to
sea was insufficiently
repaired and equipped,
the captain shall be liable
Art. 842. The goods
saved from the wreck
shall be specially
bound for the payment
of the expenses of the
respective salvage, and
the amount thereof
must be paid by the
owners of the former
before they are
delivered to them, and
with preference over
any other obligation if
the merchandise
should be sold.
Where a personal action
is brought by the salvor
against the owner of the
ship, the liability of the
latter is limited to such
part of the salvage
compensation due for the
entire service as is
proportionate to the value
of the ship
Art. 843. If several
vessels sail under
convoy, and any of
them should be
wrecked, the cargos
saved shall be
distributed among the
rest in proportion to the
amount which each one
is able to take.
If any captain should
refuse, without
sufficient cause, to
receive what may
correspond to him, the
captain of the wrecked
vessels shall enter a
protest against him,
before two sea officials,
of the losses and
damages resulting
therefrom, ratifying the
Salvage Law (Act No.
protest within twenty-
2616)
four hours after arrival
at the first port, and
including it in the
proceedings he must
institute in accordance Section 1. When in
with the provisions case of shipwreck, the
contained in Article vessel or its cargo shall
612. be beyond the control
of the crew, or shall
have been abandoned
by them, and picked up
and conveyed to a safe
If it is not possible to
place by other persons,
transfer to the other
the latter shall be
vessels the entire
entitled to a reward for
cargo of the vessel
the salvage.
wrecked, the goods of
the highest value and
smallest volume shall
be saved first, the
designation thereof to Those who, not being
be made by the captain included in the above
with the concurrence of paragraph, assist in
the officers of his saving a vessel or its
vessel. cargo from shipwreck,
shall be entitled to a
like reward.

74
TRANSPORTATION AND MARITIME LAW
Derelict.-- A ship or her
cargo which is
abandoned and deserted
Salvage.-- The
at sea by those who are
compensation allowed to
in charge of it, without
persons by whose
any hope of recovering it,
voluntary assistance a
or without any intention
ship at sea or her cargo
of returning it --> if those
or both have been saved
in charge of the property
in whole or in part from
left it with the intention of
impending sea peril, or
finally leaving it, it is a
such property recovered
derelict and the change
from actual peril or loss,
of their intention and an
as in cases of
attempt to return to it will
shipwrecks, derelict or
not change its nature
recapture -- a service
which one person,
renders to the owner of a
ship or goods by his own
labor, preserving the ex. a schooner which has
goods or ship which the capsized in the high
owner or those entrusted seas, deserted by her
with the care of them captain with no intention
to return, is a derelict

either abandoned in
distress at sea or are a vessel, though not
unable to protect and abandoned, may be the
secure ---> a permit is subject of salvage, if at
required to engage in the time the services
salvage business were rendered, there was
a probable, threatening
danger to the vessel or
its cargo --> if the vessel
towed is aided in
Shipwreck-- means a
escaping present or
ship which has received
prospective danger, the
injuries rendering her
service is one of salvage
incapable by navigation;
an the towage is merely
loss of a vessel at sea,
incidental
either by being
swallowed up by the
waves, running against a
thing at sea, or on the
coast Rights of finder of
derelict: The finder who
takes possession with
the intention of saving
her, gains a right of
possession which he can
maintain against the true rendered contributed to
owners. The owner does such
not renounce his right of
property. This is not success
presumed to be
intentional, nor does the
finder acquire any such
right. But the owner thus Distinction between
abandons temporarily, salvage and towage is of
his right of possession, importance to the crew of
which is transferred to the salvaging ship : if the
the finder who becomes contract for towage is in
bound to preserve the fact towage, then the
property with GF and crew does not have any
bring it to a place of interest or rights with the
safety for the owner's renumeration pursuant to
use; in return, he the contract; BUT if the
acquires a right to be owners of the respective
paid for his service a vessels are of a salvage
reasonable and proper nature, the crew of the
compensation out of the salvaging ship is entitled
property itself. He is not to salvage, and can look
bound to part with the to the salvaged vessel for
possession until he is its share
paid or the property is
taken into the possession Captain towing vessel
of the law preparatory to cannot invoke equity in
the amount of salvage quasi-contract of towage
being legally asserted --> there is an express
provision of law (Art.
2142, NCC) applicable to
the relationship of quasi-
Elements of a valid contract of towage,
salvage: where the crew is not
entitled to compensation
separate from that of the
vessel
a marine peril

Section 2. If the captain

of the vessel, or the
service voluntarily
person acting in his
rendered when not
stead, is present, no
required as an existing
one shall take from the
duty or from special
sea, or from the shores,
or coast merchandise
contract
or effects proceeding
3. success, in whole or in from a shipwreck or
part, or that the services proceed to the salvage
of the vessel, without
the consent of such
captain or person
acting in his stead.
Section 3. He who shall
save or pick up a
vessel or merchandise
at sea, in the absence
of the captain of the
vessel, owner or a
representative of either
of them, they being
unknown, shall convey
and deliver such vessel
or merchandise, as
soon as possible, to
the Collector of
Customs, if the port
has a collector, and
otherwise to the
provincial treasurer or
municipal mayor.
Section 4. After the
salvage is
accomplished, the
owner or his
representative shall
have the right to the
delivery of the vessel
or the things saved,
provided that he pays
or gives a bond to
secure the expenses
and the proper reward.
Salvor has an interest in
the property; this is called
a lien, but it is not a debt
due by the owner to the
salvor for services
rendered but upon the
principle that the service
creates a property in the
thing saved --> he is, to
all intents and purposes,
a joint owner and if, the
property is lost he must
bear his share like other
joint owners.
Payment of
compensation where
vessel and cargo salvage
: where a ship and its
cargo are saved together,
the salvage allowance
should be charged
against the ship and
cargo in the proportion of
their respective values,
as in the case of general
average
Section 5. The
Collector of Customs,
provincial treasurer, or
municipal mayor, to
whom a salvage is
reported, shall order:
That the things saved
be safeguarded and
inventoried.
The sale at public
auction of the things
saved which may be in
danger of immediate
loss or those whose
conservation is
evidently prejudicial to
the interests of the
owner, when no
objection is made to
such sale.
The advertisement
within the 30 days
subsequent to the
salvage, in one of the
local newspapers or in deducting the
the nearest newspaper expenses and the
published, of all the proper reward shall be
details of the disaster, deposited in the insular
with a statement of the treasury. If three years
mark and number of shall pass without
the effects requesting anyone claiming it,
all interested persons one-half of the deposit
to make their claims. shall be adjudged to
him who saved the
things, and the other
half to the insular
Section 6. If, while the government.
vessel or thing saved
are at the disposition of
the authorities, the
owner or his Section 8. The
representative shall following shall have no
claim them, such right to a reward for
authorities shall order salvage or assistance:
their delivery to such
owner or his The crew of the vessel
representative, shipwrecked or which
provided that there is was in danger of
no controversy over shipwreck;
their value, and a bond
is given by the owner He who shall have
or his representative to commenced the
secure the payment of salvage in spite of
the expenses and the opposition of the
proper reward. captain or his
Otherwise, the delivery representative; and
shall not be made until
the matter is decided
by the CFI (RTC) of the
province. He who shall have
failed to comply with
the provisions of
Section 3.
Section 7. No claim
being presented in the
three months
subsequent to the Section 9. If, during the
publication of the danger, an agreement
advertisements is entered into
prescribed in concerning the amount
subsection (c) of of the reward for
Section 5, the things salvage or assistance,
saved shall be sold at its validity may be
public auction, and impugned because it is
their proceeds, after excessive, and it may
be required to be proportionate to the
reduced to an amount circumstances.

75
TRANSPORTATION AND MARITIME LAW
preceding section, as
well as in the absence
of an agreement, the
reward for salvage or
assistance shall be
fixed by the RTC of the
province where the
Kinds of salvage things salvaged are
service: found, taking into
account principally the
expenditures made to
recover, or save the
vessel or the cargo or
voluntary - wherein the
both, the zeal
compensation is
demonstrated, the time
dependent upon success
employed, the services
rendered, the excessive
rendered under a
expenses occasioned,
contract for a pier diem
the number of persons
or per horam wage,
who aided, the danger
payable at all
to which they and their
vessels were exposed
events
as well as that which
menaced the things
Where the compensation
recovered or salvaged,
is dependent upon
and the value of such
success, it may be very
things after deducting
much larger than mere
the expenses.
quantum meruit --> as a
reward for perilous
services

Reasons for allowing

salvage compensation
to salving vessel:
Such contracts for
salvage will not be set
aside unless corruptly
entered into, or made
under fraudulent to reward promptness,
representations, a clear energy, efficiency, and
mistake or suppression heroic endeavor in
of important facts, under saving life and property
compulsion or contrary to in peril;
equity and good
conscience

Section 10. In a case

coming under the last
to compensate the use Section 11. From the
and service of the vessel proceeds of the sale of
as an indispensable the things saved shall
instrument for the be deducted, first, the
salvage; expenses of their
custody, conversation,
advertisement, and
auction, as well as
recognizes the danger whatever taxes or
and risk to which the duties they should pay
crew and the vessel were for their entrance; then
exposed to in saving the there shall be deducted
ship and property and the expenses of
life. salvage; and from the
net amount remaining
shall be taken the
reward for the salvage
or assistance which
The amount should be shall not exceed 50% of
liberal enough to cover such amount
the expenses and to give remaining.
an extra sum as a reward
for the services rendered;
should be liberal enough
to offer an inducement to
others to render like Section 12. If in the
services in similar salvage or in the
emergencies in the rendering of assistance
future; BUT should not different persons shall
be so high as to cause have intervened the
vessels in need of reward shall be divided
assistance to hesitate between them in
because of ruinous cost proportion to the
services which each
one may have
rendered, and in case
of doubt, in equal parts.
"Public policy
encourages the hardy
and adventurous mariner
to engage in these
laborious and sometimes Those who, in order to
dangerous enterprises, save persons, shall
and with a view to have been exposed to
withdraw from him every the same dangers shall
temptation to also have a right to
embezzlement and participation in the
dishonesty, the law reward.
allows him, in case he is
successful, a liberal
compensation."
No other person has the
right to interfere with the
salvage of a vessel or
cargo if the salvor is able
to effect the salvage with
fidelity and vigor --> if
their means are
inadequate, they are
bound to accept
additional assistance if
offered
Taking passengers from
a sinking ship, without
rendering any service in
rescuing the vessel, is
not a salvage service,
being a duty of humanity
and not for reward --> the
Salvage Act, giving
salvors of human life a
fair share or
remuneration offered to
salvors of the vessel,
refers to a situation
where both lives and
property were
simultaneously imperiled
and both are rescued at
the same time
Section 13. If a vessel
or its cargo shall have
been assisted or saved,
entirely or partially, by
another vessel, the
reward for salvage or
for assistance shall be
divided between the
owner, the captain, and
the remainder of the
crew of the latter
vessel, so as to give
the owner a half, the
captain a fourth, and all
the remainder of the
crew the other fourth of
the reward, in
proportion to their
respective salaries, in
the absence of an
agreement to the
contrary. The expenses
of salvage, as well as
the reward for salvage
or assistance, shall be
a charge on the thing
salvaged or their value.
The owner of the salving
vessel has always been
considered as entitled to
salvage reward for the
use of his vessel in
rendering salvage
services, though he was
not present when the
salvage service was
rendered -->
remuneration is awarded
on account of the danger
to which the service
exposes their property
and the risk which they
run of loss in suffering
their vessels engaged in
such perilous
undertaking.
Section 14. This Act
shall take effect on its
passage. Enacted
2/4/16.
MRR vs Macondray 37
Phil 850
F: On April 6, 1915 the
steamer Seward owned
by Macondray & Co. left
Saigon for the Philippine
Islands, encountering a
moderately high sea. James did not exceed P
Laden with a cargo of 20,000 and that the value
rice, the weight of which, of the cargo was
taken with the condition approximately P 54,000.
of the sea, caused the The defendant company
vessel to spring a leak, had no interest in the
and her master felt cargo, other than that of
compelled to return to the carrier, and the cargo
Saigon. At this juncture, was owned by shippers
the steamship Hondagua whose names do not
owned by plaintiff, was appear of record.
sighted, whereupon the
Seward flew the
international distress
signal asking for Plaintiff filed an action in
assistance. The the CFI of Manila,
Hondagua changed her seeking to recover from
course and approached defendant P 75,000, the
the Seward. Seward had alleged value of the
indicated that it had salvage service. The CFI
sprung a leak and wished ordered the defendant to
to be taken in tow. In pay P 4,000 to the
response to signals from plaintiff. Both appealed.
the Hondagua, the
Seward sent her boat to
the Hondagua for a
heaving line, by means of
which a hawser was Issues : Is the plaintiff
passed from the entitled to recover
Hondagua to the Seward renumeration for saving
and the former, with the the cargo as well as for
latter in tow, then saving the ship? What is
proceeded at half speed the reasonable
towards Saigon. Shortly compensation which
afterwards, the Seward should be allowed?
signaled that the leak
was gaining rapidly. The
Hondagua went full
speed ahead, until their Held : There is no
arrival at Cape St. question as to the liability
James, at the mouth of of defendant for the
the Saigon River. The service rendered by
towing occupied some 4 plaintiff. Nor is there any
or 5 hours and covered a dispute over the fact that
distance of 20 to 30 the service rendered was
miles. a salvage service and
renumerable as such.
Where a ship and its
cargo are saved together,
The court found that the as a result of services
value of the Seward upon carried on with a view to
her arrival at Cape St. saving both, the salvage
allowance should be salved both ship and
apportioned between the cargo brings before the
ship and cargo in the court in his salvage
proportion of their action only the ship, or
respective values, the only the cargo, he will get
same as in a case of judgment only for such
general average; and amount of reward as the
neither is liable for the court finds to be due in
salvage due from the respect of the
other. If one who have

76
TRANSPORTATION AND MARITIME LAW
fixing of the
compensation goes
beyond the limits of a
value of that property
quantum meruit for the
which is before the court.
work and labor done and
Not only is the salvage
involves the assessment
charge a separate and
of a bounty. The amount
divisible burden as
to be allowed is in part
between ship and cargo,
determined upon
but also as between
considerations of equity
portions of the cargo
and public policy; and it
belonging to different
is not proper to make the
owners. There is no
ship or the ship's owner
common liability for the
liable for the whole
amounts due from the
amount. But where the
ship or other portions of
owner of the cargo has
the cargo when the ship
not been made a party to
and cargo, or either, are
the action, no recovery
brought into the custody
can be had in this action
of the court as a result of
in regard to the service
a proceeding in rem. The
rendered to the cargo.
rule of liability must be
the same where a
personal action is
instituted against the
owners of the one or the In fixing the
other. The personal compensation, the ff.
liability of each must be circumstances are taken
limited to the portion of into consideration: (1) the
the salvage charge which labor expended by the
should be borne by his salvors in rendering the
own property. salvage service; (2) the
promptitude, skill and
energy displayed in
rendering the service and
saving the property; (3)
If it had been alleged and
the value of the property
proved that the ship was
employed by the salvors,
unseaworthy when she
and the danger to which
put to sea or that the
such property was
necessity for the salvage
exposed; (4) the risk
service was due to the
incurred by the salvors in
negligence of the master,
rescuing the property
or of the ship's owner, the
from the impending peril;
latter might have been
(5) the value of the
liable, at least between
property salved; and (6)
himself and the shipper,
the degree of danger
for the entire cost of the
from which the property
service. But when the
was rescued.
claim is put upon the
basis of salvage, the
 receive them because of
the ruinous cost. That the
salvor is entitled, as of
In applying these criteria
bounty, to something
to this case, the ff.
more than mere
circumstances are
renumeration for his own
pertinent : the Hondagua
work and the risk
was delayed in her
incurred by him is
voyage about nine hours.
conceded; but the
This delay caused her to
interests of commerce
enter Iloilo, the port of
should also be
destination, in the early
considered. Towage is
hours of the morning
not considered a salvage
instead of the late
service of high order of
afternoon of the previous
merit and where the risk
day; but the unloading of
is inconsiderable and
her cargo was not
other conditions
thereby retarded. Under
favorable, the
the charter party contract
compensation to be
under which she was
allowed should be
operating, the Hondagua
modest in its amount.
was earning about P
300/day, which was
considered reasonable
compensation for her
use, including the In this case, the sum of P
services of officers and 1,000 is adequate for the
crew. The service service rendered.
rendered did not involve
any further expenditure
of labor on the part of the
salvors, no unusual Barrios vs Go Thong 7
display of skill and SCRA 535
energy and the condition
of the sea was not such
as to involve any special
risk either to Hondagua
or her crew. Finally, the F: Plaintiff Barrios was
danger from which the the captain of MV Henry
Seward was rescued was I, a vessel of William
real since the ship was Lines, Inc. At about 8:00
confronted by a serious p.m. of May 1, 1958,
peril. In determining the plaintiff as captain
amount of the award, the received an SOS or
aim should be to hold out distress signal by
to seafaring men a fair blinkers from the MV
inducement to the Alfredo, owned by the
performance of salvage defendant Carlos Go
service without fixing a Thong & Co. Answering
scale of compensation so the SOS call, the plaintiff
high as to cause vessels as captain of MV Henry,
in need of such services which was then sailing
to hesitate and decline to from Dumaguete City,
altered the course of said
vessel, and headed
towards the MV Don
Alfredo, which plaintiff
found to be in trouble,
due to engine failure and
the loss of her propeller,
for which reason, it was
drifting slowly southward
from Negros Island
towards Borneo in the
open China Sea, at the
mercy of a moderate
easterly wind. At about
8:25 p.m. on the same
day, May 1, 1958, the MV
Henry, under the
command of the plaintiff,
succeeded in getting
near the MV Don Alfredo
-- in fact as near as about
7 meters from the latter
ship -- and with the
consent and knowledge
of the
approaching the vicinity
of Negros Oriental, the
MV Lux, a sister ship of
MV Don Alfredo, was
sighted heading towards
the two vessels. At the
request and instance of
the captain of MV Don
Alfredo, the plaintiff
caused the tow lines to
be released, thereby also
releasing the MV Don
Alfredo.
Issue: WON the service
rendered by plaintiff
constituted salvage or
towage, and if so, WON
plaintiff may recover from
defendant compensation
for such service.

Held :(1) According to

Sec. 1 of the Salvage
Law, those who assist in
captain and/or master of
saving a vessel or its
the MV Don Alfredo, the
cargo from shipwreck,
plaintiff caused the latter
shall be entitled to a
vessel to be tied to, or
reward (salvage).
well-secured and
"Salvage" has been
connected with two lines
defined as the
from the MV Henry; and
compensation allowed to
the latter had the MV
persons by whose
Don Alfredo in tow and
assistance a ship or her
proceeded towards the
cargo has been saved, in
direction of Dumaguete
whole or in part, form
City, as evidenced by a
impending peril on the
written certificate to this
sea, or in recovering
effect executed by the
such property from actual
Master, the Chief
loss, as in case of
Engineer, the Chief
shipwreck, derelict or
Officers, and the Second
recapture. There was no
Engineer of the MV Don
marine peril in this case.
Alfredo, who were then
Although defendant's
on board the latter ship at
vessel was in a helpless
the time of the
condition due to engine
occurrence. When both
failure, it did not drift too
vessels were
far from the place where
it was. As found by the
LC, the weather was fair,
(2) But plaintiff's service
clear and good. The
can be considered as a
waves were small and
quasi- contract of
too slight, so much so,
towage. In consenting to
that there were only
plaintiff's offer to tow the
ripples on the sea, which
vessel, the defendant
was quite smooth. During
through its captain,
the towing of the vessel
thereby impliedly entered
on the same night, there
into a juridical relation of
was moonlight. Although
towage with the owner of
said vessel was drifting
the MV Henry. If the
towards the open sea,
contract thus created is
there was no danger of
one for towage, then only
its foundering or being
the owner of the towing
stranded, as it was far
vessel , to the exclusion
from any island or rocks.
of the crew of the said
In case of danger of
vessel, may be entitled to
stranding, its anchor
renumeration. And as the
could be released, to
vessel-owner, William
prevent such occurrence.
Lines, had expressly
There was no danger
waived its claim for
that defendant's vessel
compensation for the
would sink, in view of the
towage service rendered
smoothness of the sea
to defendant, it is clear
and the fairness of the
that plaintiff, whose right
weather. That there was
if at all depends upon
absence of danger is
and not separate from
shown by the fact that
the interest, is not
said vessel or its crew
entitled to payment for
did not even find it
such towage services.
necessary to lower its
Neither may the plaintiff
launch and two motor
captain invoke equity in
boats, in order to
support of his claim for
evacuate its passengers
compensation against
no were the cargo in
defendant. There being
danger of perishing. All
an express provision of
that the vessel's crew
law (Art. 2142, NCC)
members could no do
applicable to the
was to move the vessel
relationship created in
on its own power. That
this case, that is, that of a
did not make the vessel a
quasi-contract of towage
quasi-derelict,
where the crew is not
considering that even
entitled to compensation
before the plaintiff-
separate from that of the
appellant extended the
vessel, there is no
help to the distressed
occasion to resort to
ship, a sister vessel was
equitable considerations.
known to be on its way to
succor it.
SPECIAL CONTRACTS A charter party is a
OF MARITIME contract by virtue of
COMMERCE which the owner or agent
of a vessel binds himself
to transport merchandise
or persons for a fixed
Charter Parties price. It is a contract by
which the owner or agent
of the vessel leases for a
certain price the whole or
a portion of the vessel for
Definition; as common the transportation of
carrier goods or persons from
one port to another.

77
TRANSPORTATION AND MARITIME LAW
apply to them because
they have become
private carriers by reason
Towage is not a charter
of the charter-party. The
party; instead it is a
TC awarded damages.
contract for the hire of
The CA reversed.
services by virtue of
which a vessel is
engaged to tow another
vessel from one port to
another for a Issue : Does a charter
consideration party between a
shipowner and a
charterer transform a CC
into a private one as to
negate the civil law
Planters Products vs CA
presumption of
G.R. 101503 (Sept. 15,
negligence in case of
1993)
loss or damage to its
cargo? NO.

F: Planters purchased
urea fertilizer from
Held : A charter-party is a
Mitsubishi,New York. The
contract by which an
fertilizer was shipped on
entire ship, or some
MV Sun Plum, which is
principal part thereof, is
owned by KKKK, from
let by the owner to
Alaska to San Fernando,
another person for a
La Union. A time charter
specified time or use.
party was entered into
There are 2 kinds : (1)
between Mitsubishi as
contract of affreightment
shipper/charterer and
which involves the use of
KKKK as shipowner.
shipping space or
Upon arrival in the port,
vessels leased by the
PPI unloaded the cargo.
owner in part or as a
It took PPI 11 days to
whole, to carry goods for
unload the cargo. PPI
others; and (2) charter by
hired a marine and cargo
demise or bareboat
surveyor to determine if
charter where the whole
there was any shortage.
vessel is let to the
A shortage and
charterer with a transfer
contamination of the
to him of its entire
fertilizer was discovered.
command and
PPI sent a claim letter to
possession and
SSA, the resident agent
consequent control over
of KKKK for the amount
its navigation, including
of the loss. An action for
the master and the crew,
damages was filed. SSA
who are his servants.
contended that the
provisions on CC do not
 exercised by the carrier
in the care of the cargo.
On the other hand, no
It is not disputed that the
proof was adduced by
carrier operates as a CC
the petitioner showing
in the ordinary course of
that the carrier was
business. When PPI
remiss in the exercise of
chartered the vessel, the
due diligence in order to
ship captain, its officers
minimize the loss or
and crew were under the
damage to the goods it
employ of the shipowner
carried.
and therefore continued
to be under its direct
supervision and control.
Thus it continued to be a
public carrier. b. Kinds

It is therefore imperative Classes of charter

that a public carrier shall party:
remain as such,
notwithstanding the
charter of the whole or
portion of a vessel, as to extent of vessel
provided the charter is hired
limited to the ship only,
as in the case of a time-
charter or a voyage-
charter. It is only when
the charter includes both total
the vessel and the crew,
partial - the charterer
as in a bareboat or
does not as a rule
demise that a CC
acquire the right to fix the
becomes private, insofar
date
as such particular voyage
is concerned.
when the vessel should
depart, unless such right
is expressly granted in
the contract
Issue : WON the carrier
is liable for damages. (2) as to time
NO.
until a fixed day or for a
determined number of
days or month
Held : The presumption
of negligence on the part for a voyage
of respondent carrier has
been overcome by the
showing of extraordinary
zeal and assiduity (3) as to freightage

for a fixed amount for the
whole cargo
for a fixed rate per ton
for so much per month
Maritime Agencies vs CA
187 SCRA 346
F: Transcontinental
Fertilizer Co. of London
chartered from Hongkong
Island Shipping Co. the
motor vessel Hongkong
Island for the shipment of
bagged urea from
Odessa, USSR to the
Philippines. The parties
signed a Uniform
General Charter dated
August 1979. The
consignee was Atlas
Fertilizer Co. while the
insurer was the Union
Insurance Society of
Canton. Maritime
Agencies was appointed
as the charterer's agent
and Macondray as the
owner's agent. The
vessel arrived in Manila
to unload part of its cargo
and then proceeded to
Cebu to discharge the
rest of the cargo. The
consignee filed a formal
claim for shortlanded
bags. The consignee
also filed a claim against
Viva Customs Brokerage
for the unrecovered
spillage. These claims
having been rejected, the
consignee went to Union,
which paid the total
indemnity of P
113,123.86 pursuant to
the insurance contract.
As subrogee of the
consignee, Union filed a
claim for reimbursement
against Hongkong Island
Co., Maritime Agencies
and/or Viva Customs
Brokerage. Viva was
dropped from the
complaint while
Macondray Co. was
impleaded.
The RTC found
Hongkong Island liable
for the shortlanded bags
while Maritime Agencies
was held liable for the
spillage during discharge.
The RTC ordered
Hongkong Island and its
local agent Macondray to
pay P 87,000+ and
Maritime Agencies to pay
P 36,000+ to Union
Insurance. CA exempted
Hongkong Island and
Macondray exempt from
liability. Thus this petition.
Maritime pleads non-
liability on the ground
that it was only the
charterer's agent and
should not answer for
whatever responsibility
might have attached to
the principal. Union
asked that Maritime
should be made solidarily
liable since its principal
had not been impleaded.
Held : There are 3
general categories of
charters:
1. Demise or bareboat
charter - involves the
transfer of full possession
and control of the vessel
for the period covered by
the contract, the
charterer obtaining the
right to use the vessel
and carry whatever cargo
it chooses, while
manning and supplying
the ship as well
2. Time Charter - contract
to use a vessel for a
particular period of time,
the charterer obtaining
the right to direct the
movements of the vessel
during the chartering
period, although the
owner retains possession
and control
3. Voyage Charter -
contract for the hire of a
vessel for one or a series
of voyages usually for the
purpose of transporting
goods for the charterer;
the voyage charter is a
contract of affreightment
and is considered a
private carriage
- being a private carriage,
the parties may freely
contract respecting
liability for damages to
the goods and other
matters; responsibility for
the cargo loss falls on the
one who agreed to
perform the duty involved
in accordance with the
terms of the voyage
charter
This case involves a
voyage charter.In the
present case, the
charterer was
responsible for loading,
stowage and discharging
at the ports visited, while
the owner was
responsible for the care
of the cargo. Par. 2 of the
Uniform General Charter
provided that the owner
shall be responsible for
loss or damage or delay
in the delivery of goods
caused by improper or
negligent stowage of the
goods or by personal
want of due diligence in
making the vessel
seaworthy and properly
manned. However, the
owner shall not be liable
for any other cause, even
from the neglect of the
captain or the crew or
any other person
employed by the owner
on board, or for any
unseaworthiness of the
vessel on loading or
commencement of the
voyage.
In cases at bar, the TC
found that there were
shortlanded bags, which
could only mean that
they were damaged or the presumption is that
lost on board the vessel they were damaged or
before unloading of the lost during the voyage as
shipment. The entire a result of their negligent
cargo was covered by a improper storage. The
clean B/L. As the bags shipowner should be held
were in good order when liable.
received by the vessel,

78
TRANSPORTATION AND MARITIME LAW
The filing of the claim
must be within one year,
in accordance with the
COGSA. Otherwise, the
carrier and the ship shall
be discharged from
liability. The one year
period should commence
from Oct. 20, 1979, the
date when the last item
was delivered to the
consignee. Union filed
the complaint against
Hongkong within the one
year period but tardily
against
Macondray. The action
has prescribed with
respect Macondray but
not against the principal,
Hongkong Island.
As regards the goods
damaged or lost during
unloading, the charterer
is liable thereof, having
assumed this activity
under the charter party
free of expense to the
vessel. The difficulty is
that Transcontinental has
not been impleaded and
so is beyond the court's
jurisdiction. The liability
imposed on it cannot be
borne by Maritime which
is a mere agent and is
not answerable for the
injury caused by its
principal (unless the
principal is undisclosed).
In this case, the charterer
did not represent itself as
a carrier and indeed
assumed responsibility
only for the unloading of
the cargo. Maritime acted
in representation of the
charterer and not of the
vessel. As a mere
charterer's agent, it
cannot be held solidarily
liable with
Transcontinental for the
losses/damages to the
cargo outside the
custody of the vessel.
Transcontinental was
disclosed as the
charterer's principal and
Maritime only acted
within the scope of its
authority.
The TC's findings were
upheld except for some
modifications. The liability
of Macondray can no
longer be enforced
because of prescription.
Maritima cannot be held
liable for the principal's
acts.
c. Forms and Effects
Art. 652. A charter party
must be drawn in
duplicate and signed
by the contracting
parties, and when
either does not know
how or is not able to do
so, by two witnesses at
his request.
The charter party shall
include, besides the
condition stipulated,
the following
circumstances:
The kind, name, and
tonnage of the vessel.
Her flag and port or
registry.
The name, surname,
and domicile of the
captain.
The name, surname,
and domicile of the
agent, if the latter
should make the
charter party.
The name, surname,
and domicile of the
charterer, and if he
states that he is acting
by commission, that of
the person for whose
account he makes the
contract.
The port of loading and
unloading.
The capacity, number of
tons or weight, or
measure which they
respectively bind
themselves to load and
transport, or whether it is
the total cargo.
8. The freightage to be
paid, stating whether it
is to be a fixed amount
for the voyage or so
much per month, or for
the space to be
occupied, or for the
weight or measure of
the goods of which the
cargo consists, or in
any other manner
whatsoever agreed
upon.
The amount of primage
to be paid the captain.
The days agreed upon
for loading and
unloading.
The lay days and extra
lay days to be
allowed and the rate
of
demurrage.
Art. 653. If the freight
should be received
without the charter
party having been
signed, the contract
shall be understood as
executed in accordance
with what appears in
the bill of lading, which
shall be the only
instrument with regard
to the freight to
determine the rights
and obligations of the
ship agent, of the
captain, and of the
charterer.
If the cargo is received
without a charter party,
the B/L shall be
considered the contract
of the parties
Q: If there is no charter
party and B/L, would
there be a valid contract?
A: Taking Art. 653
literally, the answer is no.
However, if we take into
account the fact that
delivery of the cargo
does not constitute the
making of a contract but
rather the partial
performance thereof, the
mere fact of delivery and
receipt of such cargo, the
GF and mutual consent
with which they have
been made, should be a
better substitute for the
charter party than is the
B/L which is nothing
more than the proof of
such delivery.
Primage.-- Formerly, a
small allowance or
compensation payable to
the master and marines
of a ship; to the former
for the use of his cables
and ropes to discharge
the goods of the
merchant; to the latter for
lading and unlading in
any port of haven
Primage, at present, it is
no longer a gratuity to the
master, unless especially
stipulated; but it belongs to
owners or freighters and is
nothing but an increase of
the freight rate.
Demurrage.-- Sum
which is fixed by the
contract of carriage, or
which is allowed, as
remuneration to the
owner of a ship for the
detention of his vessel
beyond the number of
days allowed by the
charter party for loading
and unloading or for
sailing; it is an extended
freight or reward to the
vessel in compensation
for the earnings she is
improperly caused to
lose
Lay days.-- Days
allowed to charter parties
for loading and unloading
the cargo
Art. 654. The charter
parties executed with
the intervention of a
broker, who certifies to
the authenticity of the
signatures of the
contracting parties
made in his presence,
shall be full evidence in
court; and, if they
should be conflicting,
that which agrees with
the one which the the captain to recover
broker must keep in his damages.
registry, if kept in
accordance with law,
shall govern.
Art. 656. If in the
charter party the time
in which the loading
The contracts shall and unloading are to
also be admitted as take place is not stated,
evidence, even though the usages of the port
a broker has not taken where these acts take
part therein, if the place shall be
contracting parties observed. After the
acknowledge the stipulated or customary
signatures of the same period has passed, and
as their own. should there not be in
the freight contract an
express provision
fixing the
Should no broker have indemnification for the
taken part in the delay, the captain shall
charter party and the be entitled to demand
signatures be not demurrage for the lay
acknowledged, doubts days and extra lay days
shall be decided by which may have
what is provided for in elapsed in loading and
the bill of lading, and, unloading.
in the absence thereof,
by the proofs
submitted by the
parties. Art. 657. If during the
voyage the vessel
should be rendered
unseaworthy the
Art. 655. Charter parties captain shall be obliged
executed by the captain to charter at his
in the absence of the expense another one in
ship agent shall be good condition, to
valid and effective, carry the cargo to its
even though in destination, for which
executing them he purpose he shall be
should have acted in obliged to look for a
violation of the orders vessel not only at the
and instructions of the port of arrival but also
agent or shipowner; in the neighboring
but the latter shall have ports within a distance
a right of action against of 150 kilometers.

79
TRANSPORTATION AND MARITIME LAW

If the captain, through Articles 659 to 664 :

indolence or malice, Some of the goods being
should not furnish a transported may : (1) be
vessel to take the cargo sold by the captain to pay
to its destination, the for necessary repairs; (2)
shippers, after be jettisoned for the
requesting the captain common safety; (3) be
to charter a vessel lost by reason of
within an unextendible shipwreck or stranding;
period, may charter one (4) be seized by pirates
and apply to the or enemies; (5) suffer
judicial authority for deteriorations or
the summary approval dimunitions; or (6)
of the charter party increase by natural
which they may have cause in weight or size
made.

Goods that shall not pay

The same authority freightage:
shall judicially compel
the captain to carry out
for his account and
under his responsibility Art. 660 - goods
the charter made by the jettisoned for the
shippers. common safety but the
amount of freightage that
should have been paid
shall be considered as a
If the captain, general average and
notwithstanding his shall be computed in
diligence, should not proportion to the distance
find a vessel to charter, covered when they were
he shall deposit the jettisoned
cargo at the disposal of
the shippers, to whom
he shall communicate
the facts on the first Art. 661 - merchandise
opportunity, the freight lost by reason of
being adjusted in such shipwreck or stranding; if
cases by the distance freight had been paid in
covered by the vessel, advance, it shall be
with no right to any returned
indemnification
whatsoever.
Art. 661 - goods seized between that registered
by pirates or enemies; and her true capacity
freight paid in advance not being permissible.
shall be returned

Goods required to pay

freightage:
If the shipowner or the
captain should contract
to carry a greater
amount of cargo than
Art. 659 - goods sold by the vessel can carry, in
the captain to pay for the view of her tonnage,
necessary repairs to the they shall indemnify
hull, machinery or the shippers whose
equipment or for contracts they do not
unavoidable and urgent fulfill for the losses
needs --> but the freight they may have caused
may not be required to them by reason of their
be paid in full default, according to
the cases, viz:

Art. 663 - goods which

suffer deterioration or If the vessel has been
dimunition on account of chartered by one
(a) inherent defects or shipper only, and there
bad quality of packing, or should appear to be an
of (b) fortuitous event error or fraud in her
capacity, and the
charterer should not
wish to rescind the
Art. 644 - goods that contract, when he has a
increase in size or weight right to do so, the
by natural cause freightage shall be
reduced in proportion
to the cargo the vessel
cannot receive, the
person from whom the
d. Rights and Obligations vessel is chartered
of Shipowners being furthermore
obliged to indemnify
the charterer for the
losses he may have
Art. 669. The shipowner caused him.
of the captain shall
observe in charter
parties the capacity of
the vessel or that If, on the contrary, there
expressly designated in should be several
its registry, a difference charter parties, and by
greater than 2 per cent reason of the want of
space all the cargo and the increase in the
contracted for cannot price of the charter,
be received, and none should there be any,
of the charterers being for his account.
desires to rescind the Should he not be able
contract, preference to make this change,
shall be given to the the voyage shall be
person who has undertaken at the time
already loaded and agreed upon; and
arranged the cargo in should no time have
the vessel, and the rest been fixed, within
shall take the place fifteen days from the
corresponding to them time the loading began,
in the order of the should nothing to the
dates of their contracts. contrary have been
stipulated.

Should there be no
priority, the charterers If the owner of the part
may load, if they wish, of the cargo already
in proportion to the loaded should procure
weight or space they some more at the same
may have engaged, and price and under similar
the person from whom or proportionate
the vessel was conditions to those
chartered shall be accepted for the freight
obliged to indemnify received, the person
them for losses and from whom the vessel
damages. is chartered or the
captain may not refuse
to accept the rest of the
cargo; and should he
do so, the charterer
shall have a right to
demand that the vessel
Art. 670. If the person put to sea with the
from whom the vessel cargo she may have on
is chartered, after board.
receiving a part of the
cargo, should not find
sufficient to make up at
least three fifths of the
Art. 671. After three-
amount the vessel can
fifths of the vessel is
hold, at the price he
loaded, the person
may have fixed, he may
from whom she is
substitute for that
chartered may not,
transportation another
without the consent of
vessel inspected and
the charterers or
declared suitable for
shippers, substitute the
the same voyage, the
vessel designated in
expenses of transfer,
the charter party with excess may be
another one, under the admitted in accordance
penalty of making with the price
himself thereby liable stipulated in the
for all the losses and contract if it can be well
damages occurring stowed without
during the voyage to incurring the other
the cargo of those who shippers, but if in order
did not consent to the to stow said cargo it
change. should be necessary to
stow it in such manner
as to throw the vessel
out of trim the captain
Art. 672. If the vessel must refuse it or
has been chartered in unload it at the
whole, the captain may expense of its owner.
not, without the
consent of the person
chartering her, accept
cargo from any other The captain may
person; and should he likewise, before leaving
do so, said charterer the port, unload the
may oblige him to merchandise
unload it and to clandestinely placed on
indemnify him for the board, or transport it, it
losses suffered he can do so and keep
thereby. the vessel in trim,
demanding by way of
freightage the highest
price which may have
Art. 673. The person been stipulated for said
from whom the vessel voyage.
is chartered shall be
liable for all the losses
caused the charterer by
reason of the voluntary Art. 675. If the vessel
delay of the captain in has been chartered to
putting to sea, receive the cargo in
according to the rules another port, the
prescribed, provided he captain shall appear
has been requested to before the consignee
put to sea at the proper designated in the
time through a notary charter party, and
or judicially. should the latter not
deliver the cargo to
him, he shall inform the
charterer and await his
Art. 674. If the charterer instructions, the lay
should carry to the days agreed upon, or
vessel more cargo than those allowed by
that contracted for, the custom in the port,
beginning to run in the within the time
meantime, unless there necessary therefore, he
is an express shall make efforts to
agreement to the find cargo; and should
contrary. he not find any after the
lay days and extra lay
days have elapsed, he
shall make a protest
Should the captain not and return to the port
receive an answer where the charter was
made.

80
TRANSPORTATION AND MARITIME LAW
a blockade should take
place during the
voyage.
The charterer shall pay
the freightage in full,
discounting that which
may have been earned
on the merchandise In such case the
which may have been captain must proceed
carried on the voyage to the nearest safe and
out or on the return neutral port, requesting
trip, if carried for the and awaiting orders
account of third from the shipper; and
persons. the expenses and
salaries accruing
during the detention
shall be paid as general
average.
The same shall be done
if a vessel, having been
chartered for the round
trip, should not be
given any cargo for her If, by orders of the
return. shipper, the cargo
should be discharged
at the port of arrival,
the freightage for the
voyage out shall be
Art. 676. The captain
paid in full.
shall lose the
freightage and shall
indemnify the
charterers if the latter
should prove, even Art. 678. If the time
against the certificate necessary, in the
of inspection, if one opinion of the judge or
has been made at the court, to receive orders
port of departure, that from the shippers
the vessel was not in a should have elapsed
condition to navigate at without the captain
the time of receiving having received any
the cargo. instructions, the cargo
shall be deposited, and
it shall be liable for the
payment of the
freightage and
Art. 677. The charter
expenses incurred by
party shall subsist if
reason of the delay,
the captain should not
which shall be paid
have any instructions
from the proceeds of
from the charterer, and
the part first sold.
a declaration of war or
 Art. 671- not to change
the vessel after 3/5 of the
vessel has been loaded,
Obligations of
without the consent of
shipowner:
the charterers or
shippers

Art. 669 - to observe in

the charter parties, the
Art. 672 - if the vessel
capacity of the vessel,
has been chartered in
and to indemnify the
whole, not to accept
shippers whose contracts
cargo from any other
are not fulfilled for the
person without the
losses they may have
consent of the charterer
suffered by the failure of
the shipowner to observe
the capacity of the vessel

Art. 673 - to answer for

losses arising from delay
in putting to sea
Art. 670 - to undertake a
voyage at the time
Art. 676 - to have the
agreed upon or within 15
vessel in a condition to
days from loading if no
navigate at the time of
time is stipulated, even if
receiving the cargo
the shipowner should not
find cargo sufficient to
Art. 677 - in case of
make up at least 3/5 of
declaration of war or
the amount which the
blockade during the
vessel may hold, where
voyage, where the
he fails to exercise his
captain has not received
right to change vessel
any instructions from the
charterer, for the captain
to proceed to the nearest
safe and neutral port,
Art. 670 - where the requesting and awaiting
shipowner should not find orders from the shippers
cargo sufficient to make
up at least 3/5 of the
amount which the vessel
may hold, to accept other
Rights of Shipowner:
cargo procured by the
owner of the freight
already loaded under the
same price and
conditions 1. Art. 670 - where the
cargo is not sufficient to
make up at least 3/5 of
the amount which the
vessel may hold, he may
substitute anohter vessel
inspected and declared
suitable for the voyage
--> expenses of transfer
and increase in price of
the charter shall be paid
by him
2. Art. 674 - to collect the
freight in accordance with
the price stipulated for
cargo in excess of that
agreed upon is such
excess can be properly
stowed 3. Art. 674 - to
refuse and unload at the
expense of the owner
excess cargo that cannot
be properly stowed
Art. 674 - to unload
merchandise
clandestinely placed on
board, or to transport
them if he can do so,
demanding the highest
freightage
Art. 675- to find freight to
take place of freight not
received, if the vessel
has been chartered to
receive cargo in another
port, after he receives no
cargo from the consignee
and after he receives no
answer from the
charterer
Art. 675 - to receive
freight in full, discounting
that which may have
been earned on the
merchandise carried as
substitute
Art. 677 - to have the
charter party subsist
notwithstanding the
declaration of war or a
blockade during the
voyage, and to receive in
such cases, the
freightage in full where
the shipper orders that
the cargo should be
discharged at the port of
arrival
e. Obligations of
charterers
Art. 679. The charterer
of an entire vessel may
subcharter the whole or
part thereof for the
amounts he may
consider most
convenient, the captain
not being allowed to
refuse to receive on
board the cargo
delivered by the
second charterers,
provided the conditions
of the first charter are
not changed, and that
the price agreed upon
is paid in full, even
though the full cargo is
not loaded, with the
limitation established
in the next article.
 Art. 682. If the
merchandise should
have been shipped for
Art. 680. A charterer
the purpose of illicit
who does not complete
commerce, and was
the full cargo he bound
taken on board with the
himself to ship shall
knowledge of the
pay the freightage of
person from whom the
the amount he fails to
vessel was chartered or
load, if the captain
of the captain, the
does not take other
latter, jointly with the
freight to complete the
owner of the
load of the vessel, in
merchandise, shall be
which case he shall pay
liable for all the losses
the first charterer the
which may be caused
difference should there
to other shippers, and
be any.
even though it may
have been agreed, they
cannot demand any
indemnity whatsoever
Art. 681. If the charterer from the charterer for
should ship goods the damage caused the
different from those vessel.
indicated at the time of
executing the charter
party, without the
knowledge of the
Art. 683. In case of
person from whom the
making a port to repair
vessel was chartered or
the hull, machinery, or
of the captain, and
equipment of the
should thereby give
vessel, the shippers
rise to losses, by
must wait until the
reason of confiscation,
vessel is repaired,
embargo, detention, or
being permitted to
other causes, to the
unload her at their own
person from whom the
expense should they
vessel was chartered or
deem it advisable. If,
to the shippers, the
for the benefit of cargo
person giving rise
which runs the risk of
thereto shall be liable
deterioration, the
with the value of his
shippers or the court,
shipment and
or the consul, or the
furthermore with his
competent authority in
property, for the full
a foreign land should
indemnity to all those
order the merchandise
injured through his
to be unloaded, the
fault.
expenses of unloading
and reloading shall be
for the account of the
former.
81
TRANSPORTATION AND MARITIME LAW
pay the captain the
freightage due and the
other expenses for
Art. 684. If the
which the cargo may be
charterer, without the
liable.
occurrence of any

The primage must be

of the cases of force
paid in the same
majeure mentioned in
proportion and at the
the foregoing article,
same time as the
should wish to unload
freightage, all the
his merchandise before
changes and
arriving at the port of
modifications to which
destination, he shall
the latter should be
pay the full freightage,
subject also governing
the expenses of the
the former.
arrival made at his
request, and the losses
and damages caused
the other shippers,
should there be any. Art. 687. The charterers
and shippers may not
abandon merchandise
damaged on account of
its own inherent defect
Art. 685. In charters for
or of fortuitous event
transportation of
for the payment of the
general freight any of
freightage and other
the shippers may
expenses.
unload the
merchandise before the
beginning of the
voyage, paying one half
the freightage, the The abandonment shall
expense of stowing and be proper, however, if
restoring the cargo, the cargo should
and any other damage consist of liquids which
which may be caused may have leaked out,
the other shippers. there remaining in the
containers not more
than one-fourth of their
contents.
Art. 686. After the
vessel has been
unloaded and the cargo
placed at the disposal Obligations of the
of the consignee, the charterer:
latter must immediately
 Art. 684 - where the
charterer unloads goods
before arriving at port of
Art. 680 - to pay the
destination without any
freight in full even if the
force majeure occurring,
charterer does not
to pay (1) expenses of
complete the full cargo
arrival, (2) full freight and
he bound himself to ship
(3) for the damages and
losses caused to other
shippers, if any

Art. 681- to answer with

the value of his shipment
and other property for the
Art. 685 - where the
losses suffered by the
charterer unloads before
shipowner, captain or
the beginning of the
other shippers arising
voyage, (1) to pay 1/2 of
from confiscation,
the freight, (2) to pay for
embargo, detention, or
the expenses of stowing
other causes, where the
and restowing the cargo,
charterer loads goods
(3) to pay any other
different from those
damage which he may
stated at the time of the
have caused other
execution of the charter
shippers
party

Art. 686 - to pay for

Art. 682 - to be jointly
freight, other expenses
liable with the captain for
and the primage after the
losses which may be
vessel has been
caused to the other
unloaded and the cargo
shippers where the
placed at the disposal of
charterer ships goods for
the consignee
illicit commerce with the
knowledge of the
shipowner or captain

Art. 687 - not to abandon

merchandise damaged
on account of inherent
Art. 682 - in case of
defect or fortuitous event,
making a port to repair
for the payment of the
the hull, machinery or
freight and other
equipment of the vessel,
expenses
to wait until the vessel is
repaired or to pay for the
expenses of unloading
should the charterer
choose to unload Rescission
Art. 688. A charter party whom the vessel was
may be annulled at the chartered shall
request of the indemnify the charterer
charterer: for the losses he may
suffer.

If before loading the

vessel he should In the fourth case the
abandon the charter, person from whom the
paying half the vessel was chartered
freightage agreed shall have a right to the
upon. freightage in full for the
voyage out.

If the capacity of the

vessel should not If the charter should
agree with that stated have been made by the
in the certificate of month, the charterers
tonnage, or if there be shall pay the full
an error in the freightage for one
statement of the flag month, if the voyage is
under which she sails. for a port in the same
waters; and two
months, if for a port in
different waters.
If the vessel should not
be placed at the
disposal of the
charterer within the (From one port to
period and in the another of the
manner agreed upon. Peninsula (Philippines)
and adjacent islands,
the freightage for one
month only shall be
If, after the vessel has paid.)
put to sea, she should
return to the port of
departure, on account
of risk from pirates, If a vessel should make
enemies, or bad a port during the
weather, and the voyage in order to
shippers should agree make urgent repairs
to unload her. and the charterers
should prefer to
dispose of the
merchandise.
In the second and third
cases the person from
When the delay does
not exceed thirty days,
the shippers shall pay
In such case the
the full freightage for
vendor shall indemnify
the voyage out.
the charterer for the
losses he may

suffer.
Should the delay
exceed thirty days, they If the new owner of the
shall pay the freight in vessel should not load
proportion to the it for his own account
distance covered by the charter party shall
the vessel. be respected, and the
vendor shall indemnify
the purchaser if the
former did not inform
him of the charter
Art. 689. At the request
pending at the time of
of the person from
making the sale.
whom the vessel is
chartered the charter
party may be
rescinded:
Art. 690. The charter
If the charterer at the party shall be
termination of the extra rescinded and all
lay days does not place action arising
the cargo alongside the therefrom shall be
vessel. extinguished if, before
the vessel puts to sea
from the port of
departure, any of the
In such case the following cases should
charterer must pay half occur:
of the freightage
stipulated besides the
demurrage due for the
lay days and extra lay A declaration of war or
days. interdiction of
commerce with the
power to whose ports
the vessel was to make
If the person from its voyage.
whom the vessel was
chartered should sell it
before the charterer
has begun to load it A condition of blockage
and the purchaser of the port of
should load it for his destination of said
own account. vessel, or the breaking
out of an epidemic after
the contract was embargo of the vessel
executed. by order of the
government, or for any
other reason
independent of the will
The prohibition to of the ship agent.
receive at the said port
the merchandise
constituting the cargo
of the vessel. The inability of the
vessel to navigate,
without fault of the
captain or ship
An indefinite detention,
agent.
by reason of an

82
TRANSPORTATION AND MARITIME LAW
entitled to the
freightage for the
voyage out, if, by
The unloading shall be
reason of a declaration
made for the account of
of war, closing of ports,
the charterer.
or interdiction of
commercial relations
during the voyage, the
vessel should make the
Art. 691. If the vessel port designated for
cannot put to sea on such a case in the
account of the closing instructions of the
of the port of departure, charterer.
or any other temporary
cause, the charter shall
remain in force without
right of either of the
Loans on Bottomry and
contracting parties to
Respondentia
claim damages.

Loan on Bottomry,
The subsistence and
defined
wages of the crew shall
be considered as
general average.
During the interruption
the charterer may, at A contract in the nature
the proper timer and for of a mortgage, by which
his own account, the owner of the ship
unload and load the borrows money for the
merchandise, paying use, equipment and
demurrage if the repair of the vessel and
reloading should for a definite term, and
pledges the ship (or the
keel or bottom of the
ship) as a security for its
repayment, with maritime
continue after the
or extraordinary interest
cause for the detention
on account of the
has ceased.
maritime risks to be
borne by the lender, it
being stipulated that if
the ship be lost in the
Art. 692. A charter party course of the specific
shall be partially voyage or during the
rescinded, unless there limited time, by any of the
is an agreement to the perils enumerated in the
contrary, and the contract, the lender shall
captain shall only be also lose his money.
 Real, unilateral,
aleatory contract:
b. Loan on
Respondentia, defined

delivery of the amount

loaned is necessary for
the perfection of the
One made on the goods
contract
laden on board the ship,
and which are to be sold
although there are
or exchanged in the
reciprocal benefits, the
course of the voyage, the
contract produces
borrower's personal
obligations only for
responsibility being
deemed the principal
security for the
performance of the
contract, which is one party, the borrower
therefore called who must return the
respondentia. The lender amount borrowed plus
must be paid his principal premium 3. lender really
and interest, thought the runs known risks
ship perishes, provided
that the goods are saved.

Distinguished from
ordinary loans:
c. Character of Loan

Ordinary loan loan

Art. 719. A loan in on bottomry and
which, under any respondentia
condition whatever, the
repayment of the sum
loaned and of the
premium stipulated
1. first lender has
depends upon the safe
arrival in port of the preference last
goods on which it is lender has preference over
made, or of the price
they may receive in
case of accident, shall
be considered a loan over subsequent lenders
on bottomry or
respondentia. previous ones
2. must be paid
absolutely loan
is required to be paid Marine insurance
only
bottomry/respondentia
loans

upon

at all events, WON thing 1. indemnity is paid after

safe arrival of the indemnity is
the thing given as paid in advance by

given as security is lost way of loan

or security at port
of destination

destroyed loss has occurred

3. subject to Usury Law 2. when marine peril

no limit as to occurs, when marine
rate of interest in peril causes the loss

view of diff. classes and of the

various
the obligation of the
risks in a maritime
voyage insurer vessel or
cargo, the obligation of
the

Marine insurance vs
Bottomry and
Respondentia Loans:
becomes absolute
borrower to
pay is extinguished

The borrower is in effect

indemnified for his loss,
at least, to the extent of 3. consensual contract
the loan --> in case of
loss of the thing given as real contract
security, the borrower is --perfected from the
under no obligation to
pay the loan
* governed by Insurance
Act moment of
delivery of the thing
loaned
When loss does not
extinguish loan: (Art.
731)
where the loss is caused
by inherent defect of the
thing
where the loss is caused
by fault or malice of
borrower
where loss is caused by
barratry on the part of the
captain
where loss is caused by
damage to the vessel as
a consequence of its
engaging in contraband
5. where loss arose from
having loaded the
merchandise on a vessel
different from that
designated in the
contract, except if
change is due to force
majeure
d. Forms and Requisites
Art. 720. Loans on
bottomry or
respondentia may be
executed:
By means of a public
instrument.
By means of a policy
signed by the
contracting parties and
the broker taking
part therein.
By means of a private
instrument.
Under whichever of
these forms the
contract is executed, it
shall be entered in the
certificate of the
registry of the vessel
and shall be recorded
in the registry of
vessels, without which
requisites the credits of
this kind shall not have,
with regard to other
credits, the preference
which, according to
their nature, they
should have, although
the obligation shall be
valid between the
contracting parties.
The contracts made
during a voyage shall
be governed by the
provisions of Articles
583 and 611, and shall
be effective with regard
to third persons from
the date of

83
TRANSPORTATION AND MARITIME LAW

their execution, if they Effect of registration:

should be recorded in
the registry of vessels
of the port of registry of
the vessel before the the loan shall have, with
lapse of eight days regard to other credits,
following its arrival. If the preference which,
said eight days should according to its nature, it
elapse without the should have (Art. 580 -
record having been 8th in the order of
made in the registry of preference)
vessels, the contracts
made during the
voyage of a vessel
shall produce no effect
with regard to third effective against third
persons, except from persons from the time of
the day and date of execution/registration
their inscription.

Art. 721. In a contract

In order that the policy on bottomry or
of the contracts respondentia the
executed in accordance following must be
with No.2 may have
binding force, they
must conform to the
registry of the broker stated:
who took part therein.
With respect to those The kind, name, and
executed in accordance registry of the vessel.
with No. 3 the
acknowledgment of the The name, surname,
signature shall be and domicile of the
required. captain.

The names, surnames,

and domiciles of the
person giving and the
Contracts which are
person receiving the
not reduced in writing
loan.
shall not give rise to
judicial action.
The amount of the loan
and the premium
stipulated.
If the loan is
constituted on the hull
The time for repayment.
of the vessel, the
rigging, equipment and
The goods pledged to
other goods,
secure repayment.
provisions, fuel, steam
engines, and the
The voyage during
freightage earned
which the risk is run.
during the voyage on
which the loan is made,
shall also be
considered as included
Art. 722. The contracts in the liability for the
may be made to order, loan.
in which case they
shall be transferable by
indorsement, and the
indorsee shall acquire
If the loan is made on
all the rights and shall
the cargo, all that
incur all the risks
which constitutes the
corresponding to the
same shall be subject
indorser.
to the repayment; and if
on a particular object of
the vessel or of the
cargo, only the object
e. On What Constituted concretely and
specifically mentioned
shall be liable.

Art. 724. The loans may

be constituted jointly or
separately: Art. 725. No loans on
bottomry may be made
on the salaries of the
crew or on the profits
On the hull of the expected.
vessel.

On the rigging.
f. Amount
On the equipment,
provisions, and fuel.

On the engine, if the

vessel is a steamer.

On the merchandise Art. 723. Loans may be

loaded. made in goods and in
merchandise, fixing
their value in order to
determine the principal
of the loan.
g. By whom

Art. 726. If the lender

Art. 728. The loan
should prove that he
which the captain takes
loaned an amount
at the point of
larger than the value of
residence of the
the object liable for the
owners of the vessel
bottomry loan, on
shall only affect that
account of fraudulent
part thereof which
measures employed by
belongs to the captain,
the borrower, the loan
if the other owners or
shall be valid only for
their agents should not
the amount at which
have given their
said object is appraised
express authorization
by experts.
therefor or should not
have taken part in the
transaction.

The surplus principal

shall be returned with
legal interest for the
If one or more of the
entire time required for
owners should be
repayment.
requested to furnish
the amount necessary
to repair or provision
the vessel, and they
Art. 727. If the full should not do so within
amount of the loan twenty-four hours, the
contracted in order to interest which the
load the vessel should parties in default may
not be used for the have in the vessel shall
cargo, the balance shall be liable for the loan in
be returned before the proper proportion.
clearing.

The same procedure

shall be observed with
Outside of the
regard to the goods
residence of the
taken as loan, if they
owners, the captain
were not loaded.
may contract loans in
accordance with the
provisions of Articles
583 and 611.
The excess shall be valid
only as an ordinary loan
Art. 617. The captain
may not contract loans
on respondentia
Art. 611. In order to
secured by the cargo,
comply with the
and should he do so
obligations mentioned
the contract shall be
in the foregoing article,
void.
and when he has no
funds and does not
Neither may he borrow
expect to receive any
money on bottomry for
from the agent, the
his own transactions,
captain shall procure
except on the portion
the same in the
of the vessel he owns,
successive order
provided no money has
stated below:
been previously
borrowed on the whole
vessel, and provided
there does not exist
any other kind of lien or By requesting said
obligation chargeable funds of the
against the vessel. consignees of the
When he is permitted to vessel or the
do so, he must correspondents of the
necessarily state what ship agent.
interest he has in the
vessel.

By applying to the
consignees of the
In case of violation of cargo or to the persons
this article the interested therein. 3. By
principal, interest, and drawing on the ship
costs shall be charged agent.
to the private account
of the captain, and the
ship agent may
furthermore discharge By borrowing the
him. amount required by
means of a bottomry
loan.

84
TRANSPORTATION AND MARITIME LAW
and the instruments
proving the obligation
contracted.
5. By selling a
sufficient amount of the
cargo to cover the
amount absolutely
necessary to repair the The judge or court, the
vessel and to equip her consul or the local
to pursue the voyage. authority as the case
may be in view of the
In the two last cases he result of the
must apply to the proceedings instituted,
judicial authority of the shall make a temporary
port, if in the memorandum in the
Philippines and to the certificate of their
Filipino consul, if in a result, in order that it
foreign country; and may be recorded in the
where there should be registry when the
none, to the local vessel returns to the
authority, proceeding in port of her registry, or
accordance with the so that it can be
prescriptions of Article admitted as a legal and
583, and with the preferred obligation in
provisions of the law of case of sale before the
civil procedure. return, by reason of the
sale of the vessel by
virtue of a declaration
of unseaworthiness.
Art. 583. If the ship
being on a voyage the
captain should find it
necessary to contract The lack of this
one or more of the formality shall make
obligations mentioned the captain personally
in Nos. 8 and 9 of liable to the creditors
Article 580, he shall who may be prejudiced
apply to the judge or through his fault.
court if he is in
Philippine territory, and
otherwise to the
Filipino consul, should h. Effects of Contract
there be one, and in his
absence to the judge or
court or to the proper
local authority,
presenting the Art. 719. A loan in
certificate of the which, under any
registry of the vessel condition whatever, the
treated of in Article 612, repayment of the sum
loaned and of the entire time required for
premium stipulated repayment.
depends upon the safe
arrival in port of the
goods on which it is
made, or of the price Art. 727. If the full
they may receive in amount of the loan
case of accident, shall contracted in order to
be considered a loan load the vessel should
on bottomry or not be used for the
respondentia. cargo, the balance shall
be returned before
clearing.

Art. 729. Should the The same procedure

goods on which money shall be observed with
is taken not be regard to the goods
subjected to risk, the taken as loan, if they
contract shall be were not loaded.
considered a simple
loan, with the
obligation on the part
of the borrower to Art. 730. Loans made
return the principal and during the voyage shall
interest at the legal have preference over
rate, if that agreed those made before the
upon should not be clearing of the vessel,
lower. and they shall be
graduated in the
inverse order of their
dates.
Art. 726. If the lender
should prove that he
loaned an amount
larger than the value of The loans for the last
the object liable for the voyage shall have
bottomry loan, on preference over prior
account of fraudulent ones.
measures employed by
the borrower, the loan
shall be valid only for
the amount at which
said object is appraised Should several loans
by experts. have been made at the
same port of arrival
under stress and for
the same purpose, all
of them shall be paid
The surplus principal pro rata.
shall be returned with
legal interest for the
 B/L - real contract; exists
only after delivery of the
goods to be transported
F. BILL OF LADING
is made

B/L operates both as a

1. Contents
receipt and as a contract;
it is a receipt for the
goods shipped and a
contract to transport and
deliver the same as Art. 706. The captain
stipulated and the shipper shall
have the obligation of
drawing up the bill of
lading, in which shall
be stated:
A stipulation that a CC's
liability is limited to the
The name, registry, and
value of the goods
tonnage of the vessel.
appearing in the B/ L,
unless the owner
The name of the
declares a greater value,
captain and his
is valid and binding
domicile.

The port of loading and

that of unloading.
Bill of Lading vs
Charter party The name of the
shipper.

The name of the

consignee, if the bill of
1. Charter party - entire
lading is issued in the
or complete contract
name of a specified
B/L - private receipt person.
which the captain gives
to accredit that such
goods belong to such
persons The quantity, quality,
number of packages,
and marks of the
merchandise.
2. Charter party -
The freightage and the
consensual party, which
primage stipulated.
can be dissolved by
means of indemnity for
losses and damages

The bill of lading may

be issued to bearer, to
order, or in the name of of the bill of lading as
a specified person, and may be considered
must be signed within necessary by the
twenty- four hours after parties; but, when they
the cargo has been are issued to order or
received on board, the to bearer, there shall be
shipper being entitled stated in all the copies,
to demand the be they the first four or
unloading at the the subsequent ones,
expense of the captain the destination of each
should the latter not one, stating whether it
sign it, and, in any is for the ship agent,
case, the losses and for the captain, for the
damages suffered shipper, or for the
thereby. consignee. If the copy
sent to the latter should
have a duplicate, this
circumstance and the
Art.707. Four true fact that it is not valid
copies of the original except in default of the
bill of lading shall be first one must be stated
made, and all of them therein.
shall be signed by the
captain and by the
shipper. Of these
copies the shipper Art. 713. If before the
shall keep one and delivery of the cargo a
send another to the new bill of lading
consignee; the captain should be demanded of
shall take two, one for the captain, on the
himself and the other allegation that the
for the ship agent. failure to present the
previous ones is on
account of their loss or
for any other just
There may also be cause, he shall be
drawn as many copies obliged to issue it,

85
TRANSPORTATION AND MARITIME LAW
the account of the ship
agent, without
prejudice to his right of
provided that security
action against the first
for the value of the
captain, if he ceased to
cargo is given to his
be such through his
satisfaction; but
own fault. Should said
without changing the
examination not be
consignment and
made, it shall be
stating therein the
understood that the
circumstances
new captain accepts
prescribed in the last
the cargo as it appears
paragraph of Article
from the bills of lading.
707, when dealing with
the bills of lading
referred to therein,
under penalty, should
he not do so, of being 2. Probative Value
liable for said cargo if
improperly delivered
through his fault.
Art. 709. A bill of lading
drawn up in
accordance with the
Art. 714. If before the provisions of this title
vessel puts to sea the shall be proof as
captain should die or between those
should cease to hold interested in the cargo
his position through and between the latter
any cause, the shipper and the insurers,
shall have the right to evidence to the
demand of the new contrary being
captain the ratification reserved by the latter.
of the first bills of
lading, and the latter
must do so, provided
that all the copies Art. 710. If the bills of
previously issued be lading do not agree,
presented or returned and no change or
to him, and it should erasure appears in any
appear from an of them, those in the
examination of the possession of the
cargo that they are shipper or consignee
correct. signed by the captain
shall be proof against
the latter or ship agent
in favor of the
The expenses arising consignee or the
from the examination of shipper; and those
the cargo shall be for possessed by the
captain or ship agent
signed by the shipper
shall be proof against
Art. 693. If the passage
the shipper or
price has not been
consignee in favor of
agreed upon, the judge
the captain or ship
or court shall
agent.
summarily fix it, after a
statement of experts.

B/L - proof of the

agreement between the
Art. 699. If the contract
parties
is rescinded, before or
after the
commencement of the
voyage, the captain
Issuance of B/L is merely shall have a right to
prima facie evidence of claim payment for what
the receipt of the he may have furnished
merchandise by the the passengers.
carrier or his agent; not
conclusive evidence

Defective and irregular

Art. 704. In order to
B/L may be cured by
collect the fare and
other complementary
expenses of
documents
sustenance, the captain
may retain the goods
PASSENGERS ON SEA
belonging to the
VOYAGE
passenger, and in case
of their sale, he shall be
given preference over
other creditors, acting
Nature of Contract in the same way as in
the collection of
freightage.

Art. 695. The right to

passage, if issued to a
specified person, may Art. 694. Should the
not be transferred passenger not arrive on
without the consent of board at the time fixed,
the captain or of the or should he leave the
consignee. vessel without
permission from the
captain, when the latter
is ready to leave the
2. Obligations of port, the captain may
Passengers continue the voyage
and demand the full
passage price.
 damages if the
interruption is due to a
fortuitous event or to
Art. 700. In all that
force majeure, but with
pertains to the
a right to indemnify if
preservation of order
the interruption should
and discipline on board
have been caused by
the vessel, the
the captain exclusively.
passengers shall be
If the interruption
subject to the orders of
should be by reason of
the captain, without
the disability of the
any distinction
vessel, and the
whatsoever.
passenger should
agree to await the
repairs, he may not be
required to pay any
3. Rights of Passengers increased price of
passage, but his living
expenses during the
delay shall be for his
Art. 697. If before own account.
beginning the voyage it
should be suspended
through the sole fault
of the captain or ship In case of delay in the
agent, the passengers departure of the vessel,
shall be entitled to have the passengers have a
their passage refunded right to remain on
and to recover for board and to be
losses and damages; furnished food for the
but if the suspension account of the vessel,
was due to an unless the delay is due
accidental cause, or to to an accidental cause
force majeure, or to any or to force majeure. If
other cause beyond the the delay should
control of the captain exceed 99ten days, the
or ship agent, the passengers requesting
passengers shall only the same shall be
be entitled to the return entitled to the return of
of the passage money. the fare; and if it is due
exclusively to the
captain or ship agent
they may furthermore
Art. 698. In case a demand indemnity for
voyage already begun losses and damages.
should be interrupted,
the passengers shall be
obliged to pay only the
fare in proportion to the A vessel exclusively
distance covered, and destined to the
without right to recover transportation of
for losses and
passengers must take for any deviation from
them directly to the said schedule
port or ports of
destination, no matter
what the number of
passengers may be, Sweet Lines vs CA 121
making all the stops SCRA 769
indicated in its
itinerary.

F: Private respondents
purchased first-class
In the Philippines, there tickets from petitioner in
is no law which requires Cebu City. They were to
shipowners to publish a board petitioner's vessel
schedule of the arrivals M/V Sweet Grace, bound
and departures of their for Catbalogan, Western
vessels in the different Samar. Instead of
ports of call, and which departing at the
holds them liable in scheduled hour of about
damages to passengers midnight, the vessel
sailed at around 3 A.M.

86
TRANSPORTATION AND MARITIME LAW
only to be towed back to
Cebu due to engine
trouble, arriving back at
Cebu at about 4 PM.
After repairs, the vessel
was only able to leave
around 8 A.M. of the next
day.
Instead of docking at
Catbalogan, which was
the first port of call, the
vessel proceeded directly
to Tacloban. Private
respondents had no
recourse but to
disembark and board a
ferryboat to Catbalogan.
Hence this suit for
damages for breach of
contract of carriage. The
TC and CA decided in
favor of plaintiffs.
Issue: WON defendant is
liable.
Held: The governing
provisions are found in
the Code of Commerce.
Art. 614 provides that a
captain who agreed to
make a voyage and who
fails to fulfill his
undertaking, without
being prevented by
fortuitous event or force
majeure, shall indemnify
all the losses which his
failure may cause,
without prejudice to
criminal penalties which
may prosper. Art. 698
also provides for the
captain's liability.
The crucial factor then is
the existence of a
fortuitous event or force
majeure. Without it, the
right to damages and
indemnity exists against
a captain who fails to
fulfill his undertaking or
where the interruption
has been caused by the
captain exclusively.
As found by both courts
below, there was no
fortuitous event or force
majeure which prevented
the vessel from fulfilling
its undertaking of taking
private respondents to
Catbalogan. Mechanical
defects in the CC are not
considered caso fortuito
that exempts the CC
from responsibility. Even
granting that the engine
failure was a fortuitous
event, it accounted only
for the delay in the
departure. When the
vessel left Cebu, there
was no longer any force
majeure that justified the
by-passing a port of call.
The vessel was
completely repaired
when it left Cebu for
Samar and Leyte. In fact,
after docking at Tacloban
City, the vessel left for
Manila to complete its
voyage.
Petitioner cannot rely on
the conditions in small
bold print at the back of
the ticket reading: "The
passenger's acceptance
of this ticket shall be
considered as an
acceptance of the
conditions:
In case the vessel cannot
continue or complete the
trip for any cause
whatsoever,
the carrier reserves the
right to bring the
passenger to his/her
destination at the
expense of the carrier or
to cancel the tickets and
refund the passenger the
value of his/her ticket.
11. The sailing schedule
of the vessel xxx is
subject to change without
previous
notice."
Even assuming that
those conditions are
applicable to case at bar,
petitioner did not comply
with the same. It did not
cancel the ticket nor did it
refund the value of the
tickets to private
respondents. Besides, it
was not the vessels'
sailing schedule that was
involved. The complaint
is directed not at the
delayed departure the
next day but at the by-
passing of Catbalogan,
their destination. Had
petitioner notified them
previously and offered to
bring them to their
destination at its expense
or refunded the value of
the tickets purchased,
perhaps this controversy
would not have arisen.
Furthermore, the
conditions relied upon by
petitioner cannot prevail
over Arts. 614 and 698 of
the Code of Commerce.
The voyage to
Catbalogan was
interrupted by the captain
upon instruction of
management. The
interruption was not due
to fortuitous event or
force majeure nor to
disability of the vessel.
Having been caused by
the captain upon
instructions of
management, the
passengers' right to
indemnity is evident. The
owner of a vessel and
the ship agent shall be
civilly liable for the acts of
the captain under Art.
586 of the Code of
Commerce.
The passengers are also passengers during the
entitled to moral voyage shall be
damages on account of deemed included in the
the BF on the part of the price of the passage;
carrier. They did not give but should it be for
notice of the change of their account, the
schedule. Knowing fully captain shall be under
well that it would take 15 the obligation, in case
hours to repair the of necessity, to supply
vessel, they informed the the food necessary for
passengers that it would their sustenance at a
take only a few hours. reasonable price.
They did not offer to
refund the tickets of the
passengers nor provide
them transportation from Art. 705. In case of the
Bacolod City to death of a passenger
Catbalogan. during the voyage the
captain shall be
authorized, with
respect to the body, to
4. Responsibilities of take the steps required
Captain by the circumstances,
and shall carefully take
care of the papers and
goods of said
passenger which may
be on board, complying
with the provisions of
Art. 701. The case No. 10 of Article
convenience or the 612 with regard to
interest of the members of the crew.
passengers shall not
obligate nor empower
the captain to stand in-
shore or enter places
Art. 612. The following
which may take the
duties are inherent in
vessel out of her
the office of captain:
course, nor to remain
in the ports he must or
is under the necessity
of touching for a period
longer than that To have on board
required by the needs before starting on a
of navigation. voyage a detailed
inventory of the hull,
engines, rigging,
tackle, stores, and
other equipments of
Art. 702. In the absence
the vessel; the
of an agreement to the
navigation certificate;
contrary, the
the roll of the persons
subsistence of the
who make up the crew maneuvers executed,
of the vessel, and the and other incidents of
contracts entered into navigation. He shall
with the crew; the list also enter the damage
of passengers; the suffered by the vessel
health certificate; the in her hull engines,
certificate of the rigging, and tackle, no
registry proving the matter what is its
ownership of the cause, as well as the
vessel; and all the imperfections and
obligations which averages of the cargo,
encumber the same up and the effects and
to that date; the consequence of the
charters or jettison, should there
authenticated copies be any; and in cases of
thereof; the invoices or grave resolutions
manifest of the cargo, which require the
and the instrument of advice or a meeting of
the expert visit or the officers of the
inspection, should it vessel, or even of the
have been made at the passengers and crew,
port of departure. he shall record the
decision adopted. For
the informations
indicated he shall make
To have a copy of this use of the binnacle
Code on board. book, and of the steam
or engine book kept by
To have three folioed the engineer.
and stamped books,
placing at the
beginning of each one
a note of the number of In the second book,
folios it contains, called the "accounting
signed by the marine book", he shall enter all
official, and in his the amounts collected
absence by the and paid for the
competent authority. account of the vessel,
entering specifically
article by article, the
sources of the
In the first book, which collection, and the
shall be called "log amounts invested in
book," he shall enter provisions, repairs,
every day the condition acquisition of rigging
of the atmosphere, the or goods, fuel, outfits,
prevailing winds, the wages, and all other
course sailed, the expenses. He shall
rigging carried, the furthermore enter
horsepower of the therein a list of all the
engines, the distance members of the crew,
covered, the stating their domiciles,
their wages and stating their marks and
salaries, and the packages, names of the
amounts they may have shippers and of the
received on accounts, consignees, ports of
either directly or by loading and unloading,
delivery to their and the freight earned.
families. In the same book he
shall record the names
and places of sailing of
the passengers and the
In the third book, called number of packages of
"freight book," he shall which their baggage
record the entry and consists, and the price
exit of all the goods, of the passage.

87
TRANSPORTATION AND MARITIME LAW
stowage thereof; not to
consent to any
merchandise or goods
To make, before
of a dangerous
receiving the freight,
character to be taken
with the officers of the
on, such as
crew, and the two
inflammable or
experts, if required by
explosive substances,
the shippers and
without the precautions
passengers, an
which are
examination of the
recommended for their
vessel, in order to
packing, management
ascertain whether she
and isolation; not to
is watertight, and
permit that any freight
whether the rigging and
be carried on deck
engines are in good
which by reason of its
condition; and if she
disposition, volume, or
has the equipment
weight makes the work
required for good
of the sailors difficult,
navigation, preserving
and which might
a certificate of the
endanger the safety of
memorandum of this
the vessel; and if, on
inspection, signed by
account of the nature
all the persons who
of the merchandise, the
may have taken part
special character of the
therein, under their
shipment, and
liability.
principally the
favorable season it
takes place, he allows
merchandise to be
The experts shall be carried on deck, he
appointed one by the must hear the opinion
captain of the vessel of the officers of the
and the other one by vessel, and have the
the persons who consent of the shippers
request the and of the agent.
examination, and in
case of disagreement a
third shall be appointed
by the marine authority
of the port.

To remain constantly
on board the vessel
with the crew during
the time the freight is
taken on board and
carefully watch the
To demand a pilot at is found to be
the expense of the acceptable, giving the
vessel whenever captain the proper
required by navigation, certificate in order to
and principally when a show his arrival under
port, canal, or river, or stress and the reasons
a roadstead or therefor. In the absence
anchoring place is to of marine officials or of
be entered with which the consul, the
neither he, the officers declaration must be
nor the crew are made before the local
acquainted. authority.

To be on deck at the To take the steps

time of sighting land necessary before the
and to take command competent authority in
on entering and leaving order to enter in the
ports, canals, certificate of the vessel
roadsteads, and rivers, in the registry of the
unless there is a pilot vessels, the obligations
on board discharging which he may contract
his duties. He shall not in accordance with
spend the night away Article 583.
from the vessel except
for

To put in a safe place

and keep all the papers
serious causes or by and belongings of any
reason of official members of the crew
business. 8. To present who might die on the
himself, when making a vessel, drawing up a
port in distress, to the detailed inventory, in
maritime authority if in the presence of
the Philippines and to passengers as
the Filipino consul if in witnesses, and, in their
a foreign country, absence, of members
before twenty-four of the crew.
hours have elapsed,
and make a statement
of the name, registry,
and port of departure of To conduct himself
the vessel, of its cargo, according to the rules
and reason of arrival, and precepts contained
which declaration shall in the instructions of
be vised by the the agent, being liable
authority of by the for all that he may do in
consul if after violation thereof.
examining the same it
To give an account to In case of wreck he
the agent from the port shall make the proper
where the vessel protest in due form at
arrives, of the reason the first port reached,
therefor, taking before the competent
advantage of the authority or Filipino
semaphore, telegraph, consul, within twenty-
mail, etc., according to four hours, stating
the cases; notify him therein all the incidents
the freight he may have of the wreck, in
received, stating the accordance with case 8
name and domicile of of this article.
the shippers, freight
earned, and amounts To comply with the
borrowed on bottomry obligations imposed by
bond, advise him of his the laws and rules of
departure, and give him navigation, customs,
any information and health, and others.
date which may be of
interest.

Art. 703. A passenger

shall be considered a
To observe the rules on shipper of the goods he
the situation of lights carries on board, and
and evolutions to the captain shall not be
prevent responsible for what
the former may keep
collisions. under his immediate
and special custody,
To remain on board in unless the damage
case of danger to the arises from an act of
vessel, until all hope to the captain or of the
save her is lost, and crew.
before abandoning her
to hear the officers of
the crew, abiding by the
decision of the
Art. 1754. The
majority; and if he
provisions of Arts. 1733
should have to take a
to 1753 shall apply to
boat he shall take with
the passenger's
him, before anything
baggage which is not in
else, the books and
his personal custody or
papers, and then the
in that of his employee.
articles of most value,
As to the other
being obliged to prove
baggage, the rules in
in case of the loss of
Articles 1998 and 2000
the books and papers
to 2003 concerning the
that he did all he could
responsibility of hotel-
to save them.
keepers shall be
applicable. (New Civil
Code.)
Art. 1766 - goods from
foreign country shipped
to the Philippines,
governed by the Civil
J. Carriage of Goods by Code
Sea Act (Commonwealth
Act. No. 65, Public Act
No. 521, 74the US
Congress)
COGSA - applicable to all
transportation of goods
by sea in foreign trade to
and from Philippine ports
Sec. 1. That the
provisions of Public
Act No. 521 of the 74th
Congress of the United
does not apply to purely
States, approved on
domestic transport
April 16, 1936, be
accepted, as it is
hereby accepted to be
made applicable to all
contracts for the Laws applicable to a
carriage of goods by contract for the carriage
sea to and from of goods by sea:
Philippine ports in
foreign trade: Provided,
that nothing in this Act
shall be construed as Distinguish - common
repealing any existing carrier (Civil Code)
provision of the Code
of Commerce which is
not in force, or as
limiting its application.
private carrier

Where is the vessel

Notes: In relation to Civil
Code :
Art. 1753 - governed by
law of place of
destination, if shipped to
a foreign country,
governed by law of
foreign country
going?
a. Common carrier
coming to the Phils. =
what law applies? 1st:
Civil Code
2nd: COGSA (it's more
specific than Code of
Commerce)

in foreign trade

3rd: Code of Commerce
Private carrier coming to
the Phils. in foreign trade
1st: COGSA (because it's
more specific)
2nd: Code of Commerce
3rd: Civil Code
(provisions not on
88
common carriers e.g.
torts, contracts)
From the Phils. to a
foreign country: apply
laws of such foreign
country (Art. 1753)
with respect to vessels
destined for foreign ports,
the COGSA doesn't apply
unless parties make it
applicable.
TRANSPORTATION AND MARITIME LAW
approval. (Approved
October 22,

Q: In what situations
1936).
does COGSA primarily
apply?

TITLE I
A: Where the parties
expressly stipulate that
COGSA shall govern
their respective rights Sec. 1. When used in
and obligations. this Act-

Q: Can the COGSA apply The term "carrier"

in domestic shipping? includes the owner or
the charterer who
enters into a contract
of carriage with a
shipper.
A: Generally, NO.

The term "contract of

EXCEPTION: when
carriage" applies only
parties agree to make it
to contracts of carriage
apply.
covered by a bill of
lading or any similar
document of title,
insofar as such
Q: What application document relates to the
does COGSA have in carriage of goods by
carriage of passengers? sea, including any bill
of lading or any similar
document as aforesaid
issued under or
A: None. Applies only to pursuant to a charter
carriage of goods. party from the moment
at which such bill of
lading or similar
document of title
regulates the relations
Sec. 2. This Act shall
between a carrier and a
take effect upon its
holder of the same.
 entitled to the rights
and immunities
hereinafter set forth.
The term "goods"
includes goods, wares,
merchandise, and
articles of ever kind
whatsoever, except live
animals and cargo
which by the contract RESPONSIBILITIES
of carriage is stated as AND LIABILITIES
being carried on deck
and is so carried.

Sec. 3. (1) The carrier

shall be bound before
The term "ship" means and at the beginning of
any vessel used for the the voyage to exercise
carriage due diligence to-

of goods by sea.

(e) The term "carriage

of goods" covers the Make the ship
period from the time seaworthy;
when the goods are
loaded to the time
when they are
discharged from the Properly man, equip,
ship and supply the ship;

(c) Make the holds,

refrigerating and
RISKS cooling chambers, and
all other parts of the
ship in which goods
are carried, fit and safe
for their reception,
Sec. 2. Subject to the
carriage, and
provisions of Section 6,
preservation
under every contract of
carriage of goods by
sea, the carrier in
relation to the loading,
handling, stowage, The carrier shall
carriage, custody, care, properly and carefully
and discharge of such load, handle, stow,
goods shall be subject carry, keep, care for,
to the responsibilities and discharge the
and liabilities and goods carried.
 weight which he has
reasonable ground for
suspecting not
After receiving the
accurately to represent
goods into his charge
the goods actually
the carrier, or the
received or which he
master or agent of the
has had no reasonable
carrier, shall, on
means of checking.
demand of the shipper,
issue to the shipper a
bill of lading showing
among other things-
Such a bill of lading
shall be prima facie
evidence of the receipt
by the carrier of the
The loading marks
goods as therein
necessary for
described in
identification of the
accordance with
goods as the same are
paragraphs (3) (a), and
furnished in writing by
(c), of this section: (The
the shipper before the
rest of the provision is
loading of such goods
not applicable to the
starts, provided such
Philippines).
marks are stamped or
otherwise shown
clearly upon the goods
if uncovered, in such a
manner as should The shipper shall be
ordinarily remain deemed to have
legible until the end of guaranteed to the
the voyage. carrier the accuracy at
the time of shipment of
the marks, number,
quantity, and weight, as
furnished by him; and
Either the number of
the shipper shall
packages or pieces, or
indemnify the carrier
the quantity or weight,
against all loss,
as the case may be, as
damages, and
furnished in writing by
expenses arising or
the shipper.
resulting from
inaccuracies in such
particulars. The right of
the carrier to such
The apparent order and indemnity shall in no
conditions of the way limit his
goods: Provided, that responsibility and
no carrier, master, or liability under the
agent of the carrier, contract of carriage to
shall be bound to state any person other than
or show in the bill of the shipper.
lading any marks,
number, quantity, or
Unless notice of loss or The notice in writing
damage and the need not be given if the
general nature of such state of the goods has
loss or damage be at the time of their
given in writing to the receipt been the
carrier or his agent at subject of joint survey
the port of discharge or or inspection.
at the time of the
removal of the goods
into the custody of the
person entitled to In any event the carrier
delivery thereof under and the ship shall be
the contract of discharged from all
carriage, such removal liability in respect of
shall be prima facie loss or damage unless
evidence of the delivery suit is brought within
by the carrier of the one year after delivery
goods as described in of the goods or the
the bill of lading. If the date when the goods
loss or damage is not should have been
apparent, the notice delivered: Provided,
must be given within that, if a notice of loss
three days of the or damage, either
delivery. apparent or concealed,
is not given as
provided for in this
section, that fact shall
Said notice of loss or not affect or prejudice
damage may be the right of the shipper
endorsed upon the to bring suit within one
receipt for the goods year after the deliver of
given by the person the goods or the date
taking delivery thereof. when the goods should
have been delivered.

89
TRANSPORTATION AND MARITIME LAW
Any clause, covenant,
or agreement in a
contract of carriage
In the case of any
relieving the carrier of
actual or apprehended
the ship from liability
loss or damage, the
for loss or damage to
carrier and the receiver
or in connection with
shall give all
the goods, arising from
reasonable facilities to
negligence, fault, or
each other for
failure in the duties and
inspecting and tallying
obligations provided in
the goods
this section, or
lessening such liability
otherwise than as
provided in this Act,
After the goods are shall be null and void
loaded the bill of lading and of no effect. A
to be issued by the benefit of insurance in
carrier, master, or agent favor of the carrier, or
of the carrier to the similar clause, shall be
shipper shall if the deemed to be a clause
shipper so demands, relieving the carrier
be a "shipped" bill of from liability.
lading: Provided, that if
the shipper shall have
previously taken up
any document of title to
Notes: Prescriptive
such goods, he shall
period under Section
surrender the same as
3(6). - the carrier and the
against the issue of the
agent shall be
"shipped" bill of lading,
discharged form liability
but at the option of the
in respect of loss or
carrier such document
damage unless suit is
of title may be noted at
brought within 1 year
the port of shipment by
from:
the carrier, master, or
agent with the name or
in case of damaged
names of the ship or
goods: from the time
ships upon which the
delivery of the goods was
goods have been
made
shipped and the date or
dates of shipment, and
in case of non-delivery
when so noted the
(i.e., lost goods): from
same shall for the
the date the goods
purpose of this section
should have
be deemed to
constitute a "shipped"
bill of lading.

been delivered
 Mere proposal for
arbitration or fact that
there have been initial
Cases of misdelivery or
negotiations does not
conversion not covered.
suspend the running of
the period for prescription

1 year-prescriptive period
in Sec. 3 (6) applies only
NOTE: Prof. Quimbo
where there is loss or
does not agree with this
damage.
SC ruling. If there is a
misdelivery or
conversion, there is a
case of loss from the
Loss contemplates only point of view of the
where no delivery at all consignee or shipper.
was made by the carrier
of the goods because the
same had perished, gone
out of commerce, or
Q: Is the prescriptive
disappeared in such a
period under the COGSA
way that their existence
interrupted from the time
is unknown or they
of the making of extra-
cannot be recovered
judicial demand or filing
of judicial action as
provided in Art. 1155,
NCC?
Hence, in case of
misdelivery (delivery to
wrong person) or
conversion of the goods,
A: No. 1 year period is a
the rules on prescription
special prescriptive
found in the Civil Code
period, uniform
shall apply (10 years for
worldwide
contracts; 4 years for
tortious obligations)

Rationale behind the 3-

day notice and relatively
Shipper, consignee or
short prescriptive period:
legal holder of B/L may
invoke the prescriptive
period and have the right
to file suit within one year
after delivery of the to provide carrier an
goods or failure to opportunity to look for the
deliver. lost goods

to discover who was at

fault
in case of transshipment,
to determine, when and
where damage occurred
COGSA: Sec. 3(6)

If loss or damage is
apparent - protest as
Shipper, consignee or soon as receipt of goods
legal holder of bill may
invoke prescriptive period
although the proviso in
Sec. 3 (6) gives the If not apparent -> within 3
impression that it is the days of delivery
shipper alone who can
invoke the same.

Code of Commerce: Art.

366 apparent - protest at
But prescriptive period time of receipt
does not apply to the
action by an insurer as
subrogee of the
consignee.
non-apparent - within 24
hours after receipt
WARSAW: Art. 26

Stipulation in bill limiting in case of damage:

carrier's liability contrary
to sec. 3(8) is void; e.g. of baggage - within 3
provision in the bill days from receipt of
excepting th owner form goods - within 7 days
liability for loss or
damage of cargo unless
written notice is thereof
was given to the carrier
in case of delay: within
within 30 days; such a
14 days from receipt
provision is contrary to a
provision of the COGSA
since Sec. 3 provides
that even if a notice of
loss or damage is not failure to comply with the
given as required, that 3-days notice
fact shall not prejudice requirement under
the right of the shipper to COGSA does not affect
bring suit within 1 year the right of the shipper to
after delivery of the bring action provided he
goods. brings the same within 1
year

Notice requirements:
To be distinguished from
the notice requirement in
the WARSAW convention
and Code of Commerce,
where the notice
requirement is a
condition precedent for
the right of action against
the shipowner to accrue.
RIGHTS AND
IMMUNITIES
Sec. 4. (1) Neither the
carrier not the ship
shall be liable for loss
or damage arising or
resulting from
unseaworthiness
unless caused by want
of due diligence on the
part of the carrier to
make the ship
seaworthy and to
secure that the ship is
properly manned,
equipped, and
supplied, and to make
the holds, refrigerating
and cooling chambers,
and all other parts of
the ship in which
goods are carried fit
and safe for their
reception, carriage, and
preservation, in
accordance with the
provisions of
paragraph (1) of
90
Section (3). Whenever
loss or damage has
resulted from
unseaworthiness, the
burden of proving the
exercise of due
diligence shall be on
the carrier or other
person claiming
exemption under this
section.
(2) Neither the carrier
not the ship shall be
responsible for loss or
damage arising or
resulting from-
Act, neglect, or default
of the master, mariner,
pilot, or the servants of
the carrier in the
navigation or in the
management of the
ship;
Fire, unless caused by
the actual fault or
privity of the carrier;
Perils, dangers, and
accidents of the sea or
other navigable water;
Act of God;
Act of war;
Act of public enemies;
TRANSPORTATION AND MARITIME LAW
Insufficiency or
inadequacy of marks;
Arrest or restraint of
Latent defects not
princes, rulers, or
discoverable by due
people, or seizure
diligence; and
under legal process;
Any other cause arising
Quarantine restrictions;
without the actual fault
and privity of the
Act or omission of the
carrier and without the
shipper or owner of the
fault or neglect of the
goods, his agent or
agents or servants of
representative;;
the carrier, but the
burden of proof shall
be on the person
claiming the benefit of
Strikes or lockouts or this exception to show
stoppage or restraint of that neither the actual
labor from whatever fault or privity of the
cause, whether partial carrier not the fault or
or general: Provided, neglect of the agents or
that nothing herein servants of the carrier
contained shall be contributed to the loss
construed to relive a or damage.
carrier from
responsibility for the
carrier's own acts:

The shipper shall not

be responsible for loss
or damage sustained
Riots and civil by the carrier or the
commotions; ship arising or
resulting from any
Saving or attempting to cause without the act,
save life or property at or neglect of the
sea; shipper, his agents, or
his
Wastage in bulk or
weight or any other
loss or damage arising
from inherent defect,
quality, or vice of the An deviation in saving
goods; or attempting to save
life or property at sea,
or any reasonable
deviation shall not be
deemed to be an
Insufficiency of infringement or breach
packing; of this Act or of the
contract of carriage, the shipper another
and carrier shall not be maximum amount than
liable for any loss or that mentioned in this
damage resulting paragraph may be
therefrom: Provided, fixed: Provided, that
however, that if the such maximum shall
deviation is for the not be less than the
purpose of loading or figure above named. In
unloading cargo or no event shall the
passengers it shall, carrier be liable for
prima facie, be more than the amount
regarded as of damage actually
unreasonable. sustained.

Neither the carrier nor Neither the carrier nor

the ship shall in any the ship shall be
event be or become responsible in any
liable for any loss or event for loss or
damage to or in damage to or in
connection with the connection with the
transportation of goods transportation of the
in an amount goods if the nature or
exceeding $500 per value thereof has been
package of lawful knowingly and
money of the United fraudulently mis-stated
States, or in case of by the shipper in the
goods not shipped in bill of lading.
packages, per
customary freight unit,
or the equivalent of that
sum in other currency,
unless the nature and
value of such goods
have been declared by
the shipper before
shipment and inserted
in the bill of lading.
This declaration, if
embodied in the bill of
lading, shall be prima
facie evidence, but
shall not be conclusive
on the carrier.

By agreement between
the carrier, master or
agent of the carrier, and
(6) Goods of an freely and fairly agreed
inflammable, explosive, upon or that it is against
or dangerous nature to public policy, since the
the shipment whereof, LAW ITSELF PROVIDES
the carrier, master or FOR SAID LIMITATION;
agent of the carrier, has THE SAME IS DEEMED
not consented with READ INTO THEIR
knowledge of their CONTRACT
nature and character,
may at any time before
discharge be landed at
any place or destroyed Package - means
or rendered innocuous individual packaging of
by the carrier without the goods - does not
compensation, and the cover 1 container van
shipper of such goods
shall be liable for all
damages and expenses
directly or indirectly
arising out Parties may agree to
amount of liability less
than $500 under Sec.
4(5). By providing that
$500 is the maximum
of or resulting from liability, the law does not
such shipment. If any disallow an agreement
such goods shipped for liability at a lesser
with such knowledge amount. Moreover, Art.
and consent shall 1749 of the NCC
become a danger to the expressly allows th
ship or cargo, they may limitation of the carrier's
in like manner be liability. (Eastern v. Great
landed at any place, or American)
destroyed or rendered
innocuous by the
carrier without liability
on the part of the
carrier except to SURRENDER OF
general average if any. RIGHTS AND
IMMUNITIES AND
INCREASE OF
RESPONSIBILITIES
AND LIABILITIES
Notes: Amount
recoverable in case of
loss: $500/package, even
if not stipulated
Sec. 5. A carrier shall
be at liberty to
surrender in whole or
in part all or any of his
The plaintiff cannot rights and immunities
dispute said limitation on or to increase any of
the ground that it was not his responsibilities and
liabilities under this such goods, or his
Act, provided such obligation as to
surrender or increase seaworthiness, (so far
shall be embodied in as the stipulation
the bill of lading issued regarding
to the shipper. seaworthiness is not
contrary to public
policy), or the care or
diligence of his
The provisions of this servants or agents in
Act shall not be regard to the loading,
applicable to charter handling, stowage,
parties; but if bills of carriage, custody, care
lading are issued in the and discharge of the
case of a ship under a goods carried by sea;
charter party, they shall provided, that in this
comply with the terms case no bill of lading
of this Act. Nothing in has been or shall be
this Act shall be held to issued and that the
prevent the insertion in terms agreed shall be
a bill of lading of any embodied in a receipt
lawful provisions which shall be a non-
regarding general negotiable document
average. and shall be marked as
such.

SPECIAL CONDITIONS
Any agreement so
entered into shall have
full legal effect:
Provided, that this
Sec. 6. Notwithstanding section shall not apply
the provisions of the to ordinary commercial
preceding section, a shipments made in the
carrier, master or agent ordinary course of
of the carrier, and a trade but only to other
shipper shall, in regard shipments where the
to any particular goods character or condition
be at liberty to enter of the property to be
into any agreement in carried or the
any terms as to the circumstances, terms
responsibility and and conditions under
liability of the carrier which the carriage is to
for such goods, and as be performed are such
to the rights and as reasonable to justify
immunities of the a special agreement.
carrier in respect to

91
TRANSPORTATION AND MARITIME LAW
Sec. 7. Nothing
contained in this Act
shall prevent a carrier
or a shipper from
entering into any
agreement, stipulation,
condition, reservation,
or exemption as to the
responsibility and
liability of the carrier or
the ship for the loss or
damage to or in
connection with the
custody and care and
handling of goods prior
to the loading on and
subsequent to the
discharge from the ship
on which the goods are
carried by sea.
Sec. 8. The provisions
of this Act shall not
affect the rights and
obligations of the
carrier under the
provisions of the
Shipping Act, 1916, or
under the provisions of
Section 4281 to 4292,
inclusive, of the
Revised Statutes of the
United States, or of any
amendments thereto,
or under the provisions
of any other enactment
for the time being in
force relating to the
limitation of the liability
of the owners of
seagoing vessels.
TITLE II
Sec. 9. Nothing
contained in this Act
shall be construed as
permitting a common
carrier by water to
discriminate between
competing shippers
similarly placed in time
and circumstances,
either
with respect to their
right to demand and
receive bills of lading
subject to the
provisions of this Act;
or
when issuing such bills
of lading either in the
surrender of any of the
carrier's rights and
immunities or in the
increase of any of the
carrier's
responsibilities and
liabilities pursuant to
Section 5, Title I, of this
Act;
in any other way
prohibited by the
Shipping Act, 1916, as
amended.
Sec. 10. (Not applicable
to the Philippines.)
 application to
transportation to or
from ports of the
Sec. 11. When under
Philippine Islands. The
the custom of any trade
term "foreign trade"
the weight of any bulk
means the
cargo inserted in the
transportation of goods
bill of lading is a weight
between the ports of
ascertained or
the United States and
accepted by a third
ports of foreign
party other than the
countries. Nothing in
carrier or the shipper
this Act shall be held to
and the fact that the
apply to contracts for
weight as ascertained
carriage of goods by
or accepted is stated in
sea between any port
the bill of lading, then
of the United States or
notwithstanding
its possession:
anything in this Act, the
Provided, however, that
bill of lading shall not
any bill of lading or
be deemed to be prima
similar document of the
facie evidence against
title which is evidence
the carrier of the
of a contract for the
receipt of goods of the
carriage of goods by
weight so inserted in
sea between such
the bill of lading, and
ports, containing an
the accuracy thereof at
express statement that
the time of shipment
it shall be subject to
shall not be deemed to
the provisions of this
have been guaranteed
Act, shall be subjected
by the shipper.
hereto as fully as if
subject hereto by the
express provisions of
this Act: Provided,
Sec. 12. (Not applicable further, that every bill
to the Philippines.) of lading or similar
document of title which
is evidence of a
contract for the
Sec. 13. This act shall carriage of goods by
apply to all contracts sea from
for carriage of goods
by sea to or from ports
of the United States in
foreign trade. As used ports of the United
in this Act the term States in foreign trade,
"United States" shall contain a
includes its districts, statement that it shall
territories, and have effect subject to
possessions: Provided, the provisions of this
however, that the Act.
Philippine Legislature
may by law exclude its
 suspension of Title I
hereof, and any
provisions thereof
Notes: American
which may have been
Insurance vs Cia
thereafter made for
Maritima : contract of
carriage of goods by
carriage from NY with
sea. Any proclamation
final destination in Cebu.
of suspension or
COGSA is applicable
rescission of any such
despite the fact that from
suspension shall take
Manila to Cebu, the
effect on the date
goods were transshipped
named therein, which
on an interisland vessel.
date shall be not less
Transshipment was not a
than ten days from the
separate transaction from
issue of the
that originally entered
proclamation.
into by the parties but
was part of the carrier's
contractual obligation.

Any contract for the

carriage of goods by
sea, subject to the
Sec. 14. Upon the
provisions of this Act,
certification of the
effective during any
Secretary of Commerce
period when Title I
that the foreign
hereof, or any part
commerce of the
thereof, is suspended,
United States in its
shall be subject to all
competition with that of
provisions of law now
foreign nations is
or hereafter applicable
prejudiced by the
to that part of Title I
provisions, or any of
which may have thus
them, of the Title I of
been suspended.
this Act, or by the laws
of any foreign country
or countries relating to
the carriage of goods
by sea, the President of Sec. 15, COGSA. This
the United States may, Act shall take effect
from time to time by ninety days after the
proclamation, suspend date of its approval; but
any or all provisions of nothing in this Act shall
Title I of this Act for apply during a period
such periods of time or not to exceed one year
indefinitely as may be following its approval
designated in the to any contract for the
proclamation., The carriage of goods by
President may at any sea, made before the
time rescind such date on which this Act
suspension of Title I is approved nor to any
hereof, and any time bill of lading or similar
rescind such document of title
issued, whether before UNIFICATION OF
or after such date of CERTAIN RULES
approval in pursuance RELATING TO INTL.
of any such contract as TRANSPORTATION BY
aforesaid. AIR AND THE
ADDITIONAL
PROTOCOL THERETO,
1929
Sec. 16, COGSA. This
Act may be cited as the
"Carriage of Goods by
Sea Act." WHEREAS, a
Convention for the
Unification of Certain
Rules Relating to
Approved, April 16, International
1936. Transportation by Air &
an Additional Protocol
thereto relating to
Article 2 of the
Convention were
V. International Air signed at Warsaw by
Transport the plenipotentiaries of
32 countries;

A. The Warsaw
Convention, 51 O.G. WHEREAS, Article 38 of
5084 (October 1955); the aforesaid
Convention provides
that a Government on
behalf of which this
Presidential Proclamation Convention has not
No. 201, 51 O.G. 4933 been signed, shall be
(October 1955) allowed to adhere
thereto at any time after
the Convention has
come into force, by
means of a notification
MAKING PUBLIC THE
addressed to the
ADHERENCE OF THE
Government of the
R.P. TO THE
Republic of Poland;
CONVENTION FOR THE

92
TRANSPORTATION AND MARITIME LAW
38 (2) of said
Convention; and,

WHEREAS, the Senate

WHEREAS, the
of the Congress of the
adherence of the
Philippines, by its
Republic of the
Resolution No. 19
Philippines
adopted on May 16,
Government, pursuant
1950, concurred in the
to Art. 38(3) of said
adherence by the
Convention, took effect
Republic of the
as from the 90th day
Philippines
after November 9, 1950.
Government to the said
Convention & the said
Protocol in accordance
with the Philippine
Constitution, subject to NOW, THEREFORE, be
the reservation, as it known that I, Ramon
provided in the Magsaysay, Republic of
Additional Protocol, the Philippines
that the 1st paragraph President, in pursuance
of Art. 2 of the of the aforesaid
Convention shall not concurrence of the
apply to international Senate of the Congress
transportation that may of the Philippines, and
be performed by the subject to the
Republic of the reservation as provided
Philippines; in the Additional
Protocol that the First
paragraph of Art.2 of
the Convention shall
not apply to
WHEREAS, the
international
Republic of the
transportation that may
Philippines
be performed by the
Government has
Republic of the
formally adhered to the
Philippines, do hereby
said Convention its
proclaim and make
Additional Protocol, &
public the said
the Government of the
Convention and said
Republic of Poland was
Protocol, a copy of
notified of said
which is hereto
adherence on
attached, to the end
November 9, 1950,
that the same and
when the instrument of
every article and clause
adherence was
thereof may be
registered in
observed & fulfilled
accordance with Article
with good faith by the
Republic of the
Philippines and the
citizens thereof.
B. Constitutionality

Notes: If common
SANTOS V.
carrier, Civil Code first
NORTHWEST AIRLINES
applies, then Warsaw
[210 S 256 (1992)]
Convention.

F: 1. A Filipino minor was

Situations where Warsaw
informed by Northwest
is applicable is in private
that he had no
carriers.
reservations for his
flights, and had to be
waitlisted, despite a
previous confirmation. He
The only criterion for the sued for damages.
Warsaw Convention to
be applicable is: it is
applicable to ALL
international
Northwest moved to
transportation of persons,
dismiss on the ground of
baggage, or goods
lack of jurisdiction based
performed by aircraft for
on Art.28 (1) of the
hire.
Warsaw Convention,
where the complaint
could be instituted in the
territory of one of the
International transport: contracting parties before
where there's transport the court of the
by AIR & there is a point
of contact in 2 high domicile of the carrier;
contracting parties
(countries which have principal place of
acceded to the business;
Convention).
where it has a place of
business through which
the contract had been
made; and
E.g. transportation by
PAL from Manila to San
place of destination.
Francisco

Federal Express -
transporation of goods
FIRST ISSUE: W/NOT
THE WARSAW
CONVENTION IS
UNCONSTITUTIONAL?
HELD: No. Art. 28 (1) of
Warsaw Con. is
constitutional. Although
the case can be decided
on other grounds without
resolving the
constitutional question,
the Warsaw Convention
is a treaty commitment
voluntarily assumed by
the Philippine
Government and as
such, has the force and
effect of law. The
presumption is that this
joint legislative-executive
act was first carefully
studied and determined
to be constitutional
before it was adopted.
Petitioner's allegation
have not overcome this
presumption. Moreover,
the treaty since 1950 has
not been rejected by the
Philippine Government.
SECOND ISSUE:
W/NOT THE WC
SHOULD BE
RENDERED
IRRELEVANT BY THE
DOCTRINE OF REBUS
SIC STANTIBUS?
HELD: No. The
circumstance that the
airline industry was still in
infancy when the
Convention was made,
alone, is not sufficient
justification for the
rejection of the treaty at
this time. The changes
recited by petitioner were
not entirely unforeseen
although they were
expected in a general
sense only. (Check
Art.41).
THIRD ISSUE: W/NOT
THE REQUISITS OF
THE WC IS MERELY A
MATTER OF VENUE OR
JURISDICTION?
HELD: Jurisdiction
The wording of Art. 32,
which indicates the
places where the action
for damages "must" be
brought, underscores the
mandatory nature of Art.
28 (1).
This characterization is
consistent with one of the
objectives of the
convention, which is to
regulate in a uniform
manner the conditions of
international
transportation by air.
FOURT ISSUE: W/NOT
PHILIPPIN COURTS
HAVE JURISDICTION
OVER THIS CASE?
HELD: No. Art. 28 (1)
provides that an action
for damage must be
brought at the option of
the plaintiff: (a) before
the court of the domicile
of the carrier;
the court of its principal
place of business;
the court where it has a
place of business thru
w/c the contract had
been made;
the court of the place of
destination.
In this case, the ff. were
not followed, and hence
the Philippines, not being
one of the courts
mentioned in Art.28 (1),
does not have jurisdiction
over the case.
court of domicile is
Minnesota, U.S.A;
principal place of
business of carrier is also
U.S.A;
place of business where
contract was made was
in San Francisco;
place of destination is
also San Francisco,
Santos having purchased
a round trip-ticket from
SFO-TYO-MNL, then
back to TYO- SFO. The
"ultimate destination"
being San Francisco.
The court called upon to
determine the
applicability of the
limitation provision must
first be vested with the
appropriate jurisdiction. If
the carrier is indeed is
indeed not guilty of
WILLFUL
MISCONDUCT, it can
avail itself of the
limitations set forth in this
article. But it can be done
only if the action has first
been commenced
properly under the rules
set forth in Art.28 (1).
Notes: The enumeration
of the causes of action in
the WC is not an
exclusive list. You can
have a cause of action
even if it is not:
death or wounding of
passenger;
damage or loss or
destruction of checked
baggage;
delay in transportation of
passengers, luggage and
goods.
The case of Northwest is
actually overbooking.
Delay still a cause of
action under WC.
Note however, that the the Convention favors
limitations of liability in the carrier.

93
TRANSPORTATION AND MARITIME LAW
stopping place within a
territory subject to the
sovereignty, suzerainty,
mandate, or authority
of another power, even
though that power is
not a party to this
C. When Applicable convention.
Transportation without
such an agreed
stopping place between
territories subject to
Art. 1. (1) This
the sovereignty,
convention shall apply
suzerainty, mandate, or
to all international
authority of the same
transportation of
High Contracting Party
persons, baggage, or
shall not be deemed to
goods performed by
be international for the
aircraft for hire. It shall
purposes of this
apply equally to
Convention.
gratuitous
transportation by
aircraft performed by
an air transportation
enterprise. Transportation to be
performed by several
successive air carriers
shall be deemed, for
the purposes of this
For the purpose of this
Convention, to be one
convention the
undivided
expression
transportation, if it has
"international
been rendered by the
transportation" shall
parties as a single
mean any
operation, whether it
transportation in which,
has been agreed upon
according to the
under the form of a
contract made by the
single contract or of a
parties, the place of
series of contracts is to
departure and the place
be performed entirely
of destination, whether
w/in a territory subject
or not there be a break
to the sovereignty,
in the transportation or
suzerainty, mandate, or
a transshipment, are
authority of the same
situated either within
High Contracting Party.
the territories of two
High Contracting
Parties, or within the
territory of a single
High Contracting Party, Art. 2. (1) This
if there is an agreed convention shall apply
to transportation checked baggage, or
performed by the state any goods, if the
or by legal entities occurrence which
constituted under caused the damage so
public law provided it sustained took place
falls within the during the
conditions laid down in transportation by air.
Art .1.

The transportation by
(2) This convention air within the meaning
shall not apply to of the proceeding
transportation paragraph shall
performed under the comprise the period
terms of any during which the
international postal baggage or the goods
convention. are in charge of the
carrier, whether in an
airport or on board an
aircraft, or in the case
D. Liabilities Under the of a landing outside an
Convention airport, in any place
whatsoever.

Art. 17. The carrier

shall be liable for The period of the
damage sustained in transportation by air
the event of the death shall not extend to any
or wounding of a transportation by land,
passenger or any other by sea, or by river
bodily injury suffered performed outside of
by a passenger, if the an airport. If however,
accident which caused such transportation
the damage so takes place in the
sustained took place performance of a
on board the aircraft or contract for
in the course of any of transportation by air,
the operations of for the purpose of
embarking or loading, delivery, or
disembarking. transshipment,any
damage is presumed,
subject to proof to the
contrary, to have been
the result of an event
Art. 18. (1) The carrier which took place
shall be liable for during the
damage sustained in transportation by air.
the event of the
destruction or loss of,
or of damage to, any

Art. 19. The carrier
shall be liable for
damage occasioned by
delay in the
transportation by air of
passengers,baggage,
or goods.
NORTHRWEST V.
CUENCA [14 S 1063
(1965)]
F: Nicolas Cuenca, an
official delegate of
Philippines to a
conference in Tokyo, was
transferred from first
class to tourist class
despite his first class
ticket. The Northwest
agent also treated him
rudely in front of other
passengers. Northwest
argues that according to
the Warsaw Convention,
Arts. 17, 18, 19, an air
carrier is liable only in the
event of (a) death of a
passenger or injury
suffered by him; (b) of
destruction or loss of, or
damage to any checked
baggage/goods; & (c)
delay in the
transportation by air of
passengers, baggage or
goods.
ISSUE: W/NOT CUENCA
HAS A CAUSE OF
ACTION THOUGH NOT
AMONG THOSE
MENTIONED IN THE
WC?
HELD: Yes. The said
articles merely declare
the carrier liable for
damages in the
enumerated cases, if the
conditions therein
specified are present.
Neither the provisions of
said articles nor others
regulate or exclude
liability for other
breaches of contract by
the carrier. Under
petitioner's theory, an air
carrier would be exempt
from any liability for
damages in the event of
its absolute refusal, in
bad faith, to comply with
a contract of carriage,
which is absurd.
ALITALIA V. IAC [192
SCRA 10 (1990)]
F: Dr. Felipa Pablo, an
Associate UP Professor
and research grantee of
the Philippine Atomic
Energy Agency was
scheduled to speak in a
UN meeting in Ispra,
Italy. She arrived in Milan
a day before the meeting,
but her luggage (where
her speech was) was
delayed, and arrived a
day after the meeting.
She returned to Manila
before the meeting.
ISSUE: W/NOT THE WC
SHOULD APPLY TO
LIMIT ALITATLIA'S
LIABILITY?
HELD: No. The WC does
not operate as an
absolute limit of the
extent of an airline's
liability. It does not
regulate or exclude
liability for other
breaches of contract by
the carrier.
Under the WC, an air
carrier is made liable for
damages for delay in the
transportation by air of
passengers, luggage or
goods. The WC also
limits the liability of the
carrier to 250 francs per
kilo of the total weight of
the package. The WC
denies to the carrier
availment of the
provisions which exclude
or limit his liability, if the
damage is caused by his
willful misconduct or by
such default on his part
as, in accordance with
the law of the court
94
seized of the case, is
considered as willful
misconduct, or if the
damage is caused by any
agent of the carrier acting
w/in the scope of his
employment.
2. The WC does not
regulate or exclude
liability for other
breaches of contract by
the carrier or misconduct
of its officers and
employees or for some
particular or exceptional
damage. The WC has
been held inapplicable
where there was proof of
malice or bad faith
attributable to its officers
and employees. Here,
however, there was no
bad faith on the part of
the employees.
Nominal damages
however, was awarded
because of the presence
of some special species
of injury caused to Dr.
Pablo.
E. Limitations on Liability
TRANSPORTATION AND MARITIME LAW

carrier shall be limited

to a sum of 250 francs
per kilogram (Now $20
RE: PASSENGERS
per kilo), unless the
consignor has made, at
the time when the
package was handed
Art.22. (1) In the over to the carrier, a
transportation of special declaration of
passengers the liability the value of the
of the carrier for each delivery and has paid a
supplementary sum if
the case so requires. In
that case, the carrier
passenger shall be will be liable to pay a
limited to the sum of sum not exceeding the
125,000 francs. (Now declared sun, unless he
$100,000) Where, in proves that the sum is
accordance w/ the law grater that the actual
of the court to w/c the value to the consignor
case is submitted, at delivery.
damages may be
awarded in the form of
periodical payments,
the equivalent capital As regards objects of
value of the said w/c the passenger
payments shall not be takes charge himself,
exceed 125,000 francs. the liability of the
Nevertheless, by carrier shall be limited
special contract, the to 5,000 francs per
carrier and the passenger.
passenger may agree
to a higher limit of
liability.

The sums mentioned

above shall be deemed
to refer to the French
RE: BAGGAGE/GOODS franc consisting of 65
1/2 milligrams of gold
at the standard of
fineness of nine
(2) In the transportation hundred thousandths.
of checked baggage These sums may be
and of goods, the converted into any
liability of the national currency in
round figures.
 quasi-delict, you can still
sue under Warsaw,
invoking Art.24 (1).
Art. 23. Any provision
tending to relieve the
carrier of liability or to
fix a lower limit that
which is laid down in PAN AM v. IAC (164
this convention shall SCRA)
be null and void, but
the nullity of any such
provision shall not
involve the nullity of F: Pangan's luggages
the whole contract, didn't arrive w/ his flight.
which shall remain As a consequence the
film exhibitions he set up
& promoted for, was
cancelled. CFI ordered
subject to the PanAm to pay for
provisions of this P83,000 for actual
convention. damages. PanAm
contended that such
award was beyond the
limitation of liability set
Art. 24. (1) In the cases
forth in the Warsaw Con.,
covered by Arts.18
the provisions of such
& 19 any action for
being found at the back
damages,
of the ticket.
HOWEVER FOUNDED,
can only be brought
subject to the
conditions and limit
set out ISSUE: WON Pangan is
in this convention. bound by such Warsaw
provisions & hence is
entitled only to $600 ($20
standard X 30 kilos) ----
(2) In the case covered
YES.
by Art.17, the
provisions of the
preceding paragraph
shall also apply,w/o
prejudice to the Such provisions have
question as to who are been held to be a part of
the persons who have the contract of carriage,
the right to bring suit & is valid & binding upon
and what are their the passenger regardless
respective rights. of the latter's lack of
knowledge or assent to
the regulation.

NOTES: Even if you

base your claim on
A contract limiting liability
upon an agreed valuation
does not offend against
the policy of the law
forbidding one from
contracting against his
own negligence.
Inasmuch as Pangan
failed to declare any
higher value for his
luggage & to pay add'l
charges, PanAm's liability
is limited to $600, as
stipulated at the back of
the ticket.
FELICIANO v. PAN AM
(CA CASE)
F: Feliciano, & her Co.
asked P182,000 for the
value of the contents of
her lost luggage
(including loss of
possible opportunities).
PanAm contends its
liability if limited by the
Warsaw Con. to not more
than $20 per kilo. TC
held that there was no
issue of fact except as to
amount& awarded $600
($20 X 30 kgs).
Was TC correct? ---
YES.
Indeed, SC has granted
damages on the ground
of fraud or bad faith due
to the personal
misconduct of airline
employees. This case,
however, the contract of
carriage of PET's
baggage is based on the
conditions in the airline.
Such contract is
governed by Art.22(2).
Since there is no
evidence that PET had
declared a higher value
for her lost luggage for
w/c the corresponding
value, the Warsaw Con.
should apply.
F. When limitations
unavailable
Art. 3. (1) For the
transpo. of passengers
the carrier must deliver
a passenger ticket w/c
shall contain the ff.
particulars:
The place & date of
issue;
The place of departure
& of destination;
The agreed stopping
places, provided that
the carrier may reserve
the right to alter the
stopping places in case
of necessity, and that if
he exercises that right,
the alteration shall not
have the effect of
depriving the
transportation of its
intl. character;
 misconduct or by such
default on his part as,
in accordance w/ the
The name & address of
law of the court to w/c
the carrier/s;
the case is submitted,
A statement that the is considered to be
transpo. is subject to equivalent to wilful
the rules relating to misconduct.
liability established by
this convention.

(2) Similarly the carrier

shall not be entitled to
(2) The absence, avail himself of the said
irregularity, or loss of provisions, is the
the passenger ticket damage is caused
shall not affect the under the same
existence or the validity circumstances by any
of the contract of agent of the carrier
transportation, w/c acting w/in the scope of
shall none the less be his employment.
subject to the rules of
this convention.
Nevertheless, if the
carrier accepts a NOTES: Q: In what
passenger w/o a cases can carrier NOT
passenger ticket invoke limitations?
having been delivered
he shall not be entitled
to avail himself of
those provisions of this 1. wilfull misconduct
Convention w/c (Art.25)
exclude or limit his
liability. default amounting to
wilful misconduct accdg.
to court where action is
brought;
Art.25. (1) The carrier
shall not be entitled to accepting passengers
avail himself of the w/o passenger ticket
provisions of this (Art.3-2);
convention w/c exclude
or limit his liability, if accepting goods w/o air
the damage is caused waybill/baggage w/o
by his wilful baggage check.

95
TRANSPORTATION AND MARITIME LAW
Q: Can carrier rely on
WC if it was guilty of
wilfull misconduct?
A: YES. It just can't avail
of the limitation on
liability. Thus it can still
invoke the provisions on
NOTICE or
PRESCRIPTION/LACK
OF CAUSE OF ACTION.
e.g. If damage wasn't
one of the enumerations
in the WC, & case was
filed beyond the 2 year
requirement. The carrier
can invoke prescription.
But if suit is brought w/in
2 years, carrier may be
liable for a higher amount
than the limitation.
The only time when WC
isn't applicable is when
it's not intl. air transport.
There is nothing in Art.25
w/c says that the WC
doesn't apply entirely.
ALITALIA v.IAC (supra)
The Convention does not
regulate or exclude
liability for other
breaches of contract by
the carrier or misconduct
of its officers and
employees or for some
particular or exceptional
damage. The Con. has
been held inapplicable
where there was proof of
malice or bad faith
attributable to its officers
& employees. HERE,
HOWEVER, no bad faith
of EES. Nominal
damages however, was
awarded because of the
presence of some special
species of injury caused
to Dr. Pablo.
TWA v. CA (165 SCRA)
F: Vinluan, ACCRA
lawyer, was downgraded
from 1st class to
economy & was issued
refund
application, in his MNL-
Europe-NYK- SFO-MNL
flight. (His NYK-SFO
flight particularly) He also
noticed that white
Caucasian passengers
who checked in later than
him were given
preference in 1st class
seats, w/c became
available due to "no
show" passengers. He
sued in CFI for breach of
contract & bad faith.
ISSUE: WON Warsaw
Con. limit on liability can
be availed of --- NO.
There was obvious
discrimination &
humiliation to w/c Vinluan
was subjected. Such
inattention & lack of care
for interest of its
passengers amount to
bad faith w/c entitles
passenger to moral
damages.
NOTES: His entire trip,
even though he availed
of the services of other
airlines, is equal to one
transport.
E.g. MNL-SFO via PAL }
one continuing
SFO-NYK via United }
ticket
Hence, if injury appears
in SFO-NYK, Warsaw
can be applied.
F. Conditions of Liability
Art.26. (1) Receipt by
the person entitled to
the delivery of baggage
of goods w/ o
complaint shall be
prima facie evidence
that the same have
been delivered in good
condition & in
accordance w/ the
document of transpo.
(2)In case of damage,
the person entitled to
delivery must complain
to the carrier forthwith
after the discovery of
the damage, and at the
latest, within 3 days
from the date of receipt
in the case of
BAGGAGE and 7 days
from the date of receipt
in the case of GOODS.
In case of DELAY the
complaint must be
made at the latest w/in
14 days from the date
on w/c the baggage or
goods have been
placed at his disposal.
(3) Every complaint
must be made in
writing upon the
document of
transportation or by
separate notice in
writing dispatched w/in
the times aforesaid.
(4) Failing complaint
w/in the times
aforesaid, no action
shall lie against the
carrier, save in the case
of fraud on his part.
NOTE: No notice Art. 28(1) provides that
requirement in case or a an action for damage
person's death or injury. must be brought at the
option of the plaintiff:

Art. 27. In the case of

death of the person before the court of the
liable, an action for domicile of the carrier;
damages lies in
accordance w/ th terms
of this convention
against those legally the court of its
representing his estate. principal place of
business;

the court where it has a

Art. 28. (1) An action for place of business thru
damage must be w/c the contract had
brought at the option of been made;
the plaintiff, in the
territory of one of the
High Contracting
Parties, either before the court of the place of
the court of the destination.
domicile of the carrier
or of his principal place
of business , or where
he has a place of
business through w/c xxx
the contract has been
made, or before the
court at the place of
destination. In this case, the ff. were
not followed, and hence
the Phils., not being one
of the courts mentioned
(2) Questions of in Art.28 (1), does not
procedure shall be have jurisdiction over the
governed by the law of case.
the court to w/c the
court of domicile is U.S.,
case is submitted.
Minnesota;

principal place of
business of carrier is
SANTOS v. also US;
NORTHWEST (supra)
place of business where
contract was made was
in San Francisco;
place of destination is infringe the rules laid
also San Francisco, down by this
Santos having purchased convention, whether by
a round trip-ticket from deciding the law to be
SFO-TYO-MNL, then applied or by altering
back to TYO- SFO. The the rules as to
"ultimate destination" jurisdiction, shall be
being San Francisco. null and void.
Nevertheless, for the
transportation of
goods, arbitration
Art. 32. Any clause clauses shall be
contained in the allowed, subject to this
contract an all special convention, if the
agreements entered arbitration is to take
into before the damage place within one of the
occurred by which the jurisdictions referred to
parties purport to in the first paragraph of
Article 28.

96