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

not as a casual occupation.

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

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

* AIRCRAFT – perfected if it was established that the passenger had checked in Case: Jose Mendoza vs. Philippine Airlines Inc
at the departure counter, passed through customs and immigration, boarded the - The test of whether one is a common carrier by air is whether he holds
shuttle bus and proceeded to the ramp of the aircraft and baggage already loaded out that he will carry for hire, so long as he has room, goods of
to the aircraft. everyone bringing goods to him for carriage, not whether he is
carrying as a public employment or whether he carries to a fixed place
* Public Utility Bus or Jeepneys or Street Cars – once it stops it is in effect making
a continuous offer to riders; perfected when passenger is already attempting to CHARTER PARTY:
board the vehicle - 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.
* TRAINS – perfected when a person:
a. purchased a ticket/ possess sufficient fare with which to pay for his Q: What is the effect of charter party?
passage A: It may transform a common carrier into a private carrier. However, it must be
b. presented himself at the proper place and in a proper manner to be a bareboat or demise charter where the charterer mans the vessel with his own
transported people and becomes, in effect, the owner for the voyage or service stipulated
c. has a bona fide intention to use facilities of the carrier
2 types:
Parties: shipper & carrier 1. Contract of Affreightment
- involves the use of shipping space on vessels leased by the
Shipper – the person who delivers the goods to the carrier for transportation; owner in part or as a whole, to carry goods for another
pays the consideration or on whose behalf payment is made - CC = observe extraordinary diligence; in case of loss,
deterioration or destruction of goods of goods, CCs are
Consignee – person to whom the goods are to be delivered. May be the shipper presumed to be at fault or have acted negligently
himself or a third person who is not actually a party to the contract - 2 types
i. Time charter: vessel is leased to the charterer
Perfection: for a fixed period of time
> contract to carry goods – consensual ii. Voyage charter: ship is leased for a single
> contract of carriage - act of delivery of goods ( goods are unconditionally placed voyage
in the possession and control of the carrier and upon their receipt by the carrier
for transportation) 2. Charter by demise/ Bareboat Charter
- whole vessel is let to the charterer with a transfer to him
CARRIER: of its entire command and possession and consequent
Common carriers (CC) (1732) control over its navigation including the master and the
– persons, corporations, firms or associations engaged in the business crew who are his servants.
of carrying or transporting passengers or goods or both, by land, - charter includes both vessel and crew—CC becomes
water, or air, for compensation, offering their services to the public. private carrier (PC) insofar as that particular voyage is
(NOT the means of transportation) concerned
– one that holds itself out as ready to engage in the transportation of - if it is already a PC- ordinary diligence in the carriage of
goods for hire as a public employment and not as a casual occupation. goods will suffice
- PC = undertaking is a single transaction, not a part of the
Tests for determining WON a party is a common carrier of goods: general business or occupation, although involving the
1. He must be engaged in the business of carrying goods for others as a carriage of goods for a fee; NO presumption of negligence
public employment, and must hold himself out as ready to engage in applies – whosoever alleges damage to or deterioration of


the goods carried has the burden of proving that the cause - Functions of arrastre operator:
was the negligence of the carrier. o Receive, handle, care for, and deliver all merchandise
imported and exported, upon or passing over
Distinction between Common Carriers and Private Carriers Government-owned wharves and piers in the port
COMMON CARRIER PRIVATE CARRIER o Record or check all merchandise which may be delivered
Extraordinary diligence in the Ordinary diligence in the carriage of to said port ant shipside
vigilance over the goods they carry goods will suffice o Furnish light, and water services and other incidental
In case of loss, destruction, or No such presumption applies to service in order to undertake its arrastre service
deterioration of goods, they are private carriers, for whosoever - Such service is in face, no different from those of a depositary or
presumed to have been at fault or to alleges damage to or deterioration n warehouseman
have acted negligently; burden of of the goods carried has the onus of
proving otherwise rests on them proving that the cause was the Stevedoring
negligence of the carrier - involves the loading and unloading of coastwise vessels calling at the
Cannot stipulate that it is exempt May validly enter into such port.
from liability for the negligence of its stipulation >>> Common carriers are public utilities, impressed with public interest and
agents or employees concern subject to regulation by the state.

Factors to be considered whether a carrier is common/private: GOVERNING LAWS

 Law applicable - read summary of rules on page 40 of book
o Common  Civil Code
o Private  contract Article 1766 (Civil Code). In all matters not regulated by this Code, the
 Diligence required rights and obligations of common carriers shall be governed by the Code
o Common  extraordinary diligence of Commerce and by special laws.
o Private  diligence of a good father of a family
 Burden of proof in relation to negligence NATURE OF BUSINESS
o Common – the carrier - Common Carriers exercise a sort of public office
o Private – on the party having a claim against the carrier - Consequently, common carriers are subject to regulation by the
Case: Planters Products, Inc. vs. CA
- It is therefore imperative that a public carrier shall remain as such, REGISTERED OWNER RULE/REGISTRATION LAWS
notwithstanding the charter of the whole or portion of a vessel by one - Governed by the Land Transportation and Traffic Code and
or more persons, provided the charter is limited to the ship only, as in administered by the Land Transportation Office
the case of a time-charter or voyage-charter. It is only when the - The registered owner of a vehicle is liable fro any damage caused by
charter includes both the vessel and its crew that a common carrier the negligent operation of the vehicle although the same was already
becomes private sold or conveyed to another person at the time of the accident.
- The registered owner is liable to the injured party subject to his right
True Test of Common Carrier Is the carriage of passengers or goods, provided it of recourse against the transferee or the buyer
has space, for all who opt to avail themselves of its transportation service for a - Applicable in case of lease
fee - Registered owner not liable if vehicle was taken form him without his
knowledge and consent.
Generally, private carriage is undertaken by spcial agreement and the carrier
does not hold hiself out to carry goods for the general public Q: what is the purpose of such law?
A: The main aim of motor vehicle registration is to identify the owner so that if
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International any accident happens, or that any damage or injury is caused by the vehicle on
- By definition, a contract of carriage is one whereby a certain person the public highways, responsibility therefor can be fixed on a definite individual
or association of persons obligate themselves to transport person, – the registered owner.
thing or new from one place to another for a fixed price
- It is obvious from the above definition that respondent is not an entity KABIT SYSTEM
engaged in the business of transporting either passengers or goods - The “registered owner” rule is applicable to people involved on a “kabit
and is therefore, neither a private nor a common carrier. Its covenant system”
with its customers is simply to make travel arrangements in their - arrangement whereby a person who has been granted a certificate of public
behalf. convenience allows other persons who own motor vehicles to operate
- It is in this sense that the contract between the parties in this case was them under his license, sometimes for a fee or percentage of the earnings
an ordinary one for services and not one of carriage; it is thus not --- contrary to public policy (thus VOID and INEXISTENT)
bound under the law to observe extraordinary diligence in the - parties to the “kabit system” cannot invoke the same as against each other
performance of its obligation. either to enforce their illegal agreement or to invoke the same to escape
liability --- pari delicto rule
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING - having entered into an illegal contract, neither can seek relief from the
courts and each must bear the consequences of his acts
Towage - also applicable to aircrafts and vessels – basic rule that no person can
- A vessel is hired to bring another vessel to another place operate a common carrier without securing a certificate of public
- e.g. a tugboat may be hired by CC to bring the vessel to a port convenience and necessity.
(operator of tugboat not CC)
- in maritime law: towing for the mere purpose of expediting her
voyage without reference to any circumstances of danger
Arrastre Case: Dizon vs. Octavio
- Arrastre operator’s functions has nothing to do with the trade and - the primary factors considered in the granting of a certificate of public
business of navigation nor to the use or operation of vessels convenience for the business of public transportation is the financial
- Services are not maritime capacity of the holder of the license, so that liabilities arising from
accidents may be duly compensated


- Thus, for the safety of passengers and the public who may have been - However, carriers may accept the goods and limit its liability by
wronged and deceived through the baneful kabit system, the stipulation.
registered owner of the vehicle is not allowed to prove that another
person has become the owner so that he may be thereby relived of If by reason of well-founded suspicion of falsity in the declaration as to the
responsibility contents of the package carrier should decide to examine and investigate it in the
presence of witnesses, with the shipper and consignee in attendance. If
CHAPTER 2 declaration of shipper is true, expenses occasioned by the examination and of
OBLIGATIONS OF THE PARTIES repacking the packages shall be for the account of the carrier

I. Obligations of the carrier Even if the cause of the loss, destruction or deterioration of the goods should be
caused by the character of the goods, or the faulty nature of the packing or of the
A. DUTY TO ACCEPT containers, the common carrier must exercise due diligence to forestall or lessen
- A common carrier granted a certificate of public convenience is duty the loss.
bound to accept passengers or cargo without any discrimination.
- It is illegal for domestic ship operators to refuse to accept or carry B. DUTY TO DELIVER THE GOODS
passengers or cargo without just cause. (Section 16, RA 9295)  Time of Delivery
- Where a carrier has made an express contract, the goods must be delivered
Note: In air transportation, passengers with confirmed tickets who were not within a specified time otherwise he is liable for any delay (indemnity for
allowed to board are provided with denied boarding compensation and priority damages).
boarding rules. - In the absence of any agreement, goods must be delivered at its
No compensation for refusal if it is because of: destination within a reasonable time (depending on the attending
1. government requisition of the space circumstances, nature of the goods; expected date of arrival in the BOL may
2. substitution of equipment of lesser capacity when required by be considered).
operational and or safety and/or other causes beyond the control of - In the absence of a special contract, a carrier is NOT an insurer against delay
the carrier, and in transportation of goods
3. if arrangements have been made for the passenger to take another
flight in a comparable air transportation which will arrive not later  Consequences/Effects of Delay
than three hours after the time of flight on which the confirmed space - Excusable delays in carriage suspend, but do not generally terminate, the
is held is supposed to arrive. (Civil Aeronautics Board Economic contract of carriage; when the cause is removed, the master must proceed
Regulation) with the voyage and make delivery.
- During the detention or delay, vessel continues to be liable as a common
Grounds for Valid Refusal to Accept Goods carrier, not a warehouseman, and remains duty bound to exercise
- GR: common carriers cannot lawfully decline to accept a particular class extraordinary diligence.
of goods
- EXC: it appears that for some sufficient reason the discrimination against Article 1740 (NCC). If common carrier negligently delays in transporting the
the traffic in such goods is reasonable and necessary: goods, a natural disaster shall not free it from responsibility.
i. dangerous objects or substances including dynamites and
other explosives Article 1747 (NCC). If common carrier delays , without just cause, in transporting
ii. goods are unfit for transportation the goods or changes the stipulated or usual route, the contract limiting its
iii. acceptance would result in overloading liability cannot be availed of in case of the loss, destruction, or deterioration of
iv. contrabands or illegal goods the goods.
v. goods injurious to health
vi. goods will be exposed to untoward danger like flood, capture Note: read page 72 of book for other provisions.
by enemies and the like
vii. goods like livestock will be exposed to diseases (1) Abandonment
viii. strike - In case of delay through the fault of the carrier, the consignee may
ix. failure to tender goods on time refuse to accept the goods or may leave the goods in the hands of the
carrier. It must be communicated to the carrier in writing.
Case: Fisher v. Yangco - This right must be exercised between the time of delay and before the
- factors in determining reasonable discrimination include: arrival of the goods at its destination.
i. suitability to the vessel for the transportation of such products; - The carrier must pay the full value of the goods as if they had been
ii. reasonable possibility of danger or disaster resulting from their lost or mislaid.
transportation in the form and under the conditions in which they
are offered for carriage; and Note: If abandonment is not made, indemnification for the losses and damages
iii. the general nature of the business done by the carrier. by reason of the delay cannot exceed the current price which the goods would
have on the day and at the place they are to be delivered.
(1) Hazardous and Dangerous Substances
- Carrier not properly equipped to transport dangerous chemicals or The value of the goods which the carrier must pay in case of loss or misplacement
explosives may validly refuse to accept the same for transport. shall be that what is declared in the bill of lading.
- Those which are not authorized by the Maritime Industry Authority to
carry such goods may also validly refuse the same for transport. Consignee must not defer the payment of the expenses and transportation
- There must be a Special Permit to Carry from the MARINA. (accept charges of the goods otherwise carrier may demand the judicial sale of the goods.
only if the said cargoes are covered by the necessary clearance from
appropriate government agencies)

(2) Unfit for Transport Case: Magellan Mfg. Marketing Corp. vs. CA
- Carriers may refuse to accept goods that are unfit for transportation - Abandonment may also be made by virtue of stipulation or agreement
- These goods may by nature be unfit for transportation or are unfit between parties
because of improper packaging or defect in their containers.
(2) Rights of Passengers in Case of Delay


- As to the rights and duties of the parties strictly arising out of delay, 2. the loss, deterioration, injury or death took place during the existence
the Civil Code is silent. However, the Code of Commerce provides for of the contract
such a situation:
Doctrine of Proximate Cause – there is presumption of negligence
ARTICLE 698. In case a voyage already begun should be interrupted, the If the goods are lost, destroyed or deteriorated, common carriers are presumed
passengers shall be obliged to pay the fare in proportion to the distance covered, to have acted negligently, unless they prove that they observed extraordinary
without right to recover for losses and damages if the interruption is due to diligence. In case of death of or injuries to passengers, common carriers are
fortuitous event of force majeure, but with a right to indemnity if the presumed to have been at fault or to have acted negligently, unless they prove
interruption should have been caused by the captain exclusively. If the that they observed extraordinary diligence.
interruption should be caused by the disability of the vessel and a passenger
should agree to await the repairs, he may not be required to pay any increased - Duration of Duty:
price of passage, but his living expenses during the stay shall be for his own
account. (1) Carriage of Goods
Note: the carrier is liable for any loss or damage, including any pecuniary loss or - Due diligence should be exercised the moment the goods are
loss of profit, which the passenger may have suffered by reason thereof. delivered to the carrier.
- Goods are deemed delivered to the carrier when the goods are
In case the vessel is not able to depart on time and the delay is unreasonable, ready for and have been placed in the exclusive possession,
the passenger may opt to have his/her ticket immediately refunded without any custody and control of the carrier for the purpose of their
refund service fee from the authorized issuing/ticketing office. immediate transportation and the carrier has accepted them

 Where and to Whom Delivered ARTICLE 1736. The extraordinary responsibility of the common carrier lasts from
a. Place – Goods should be delivered to the consignee in the place the time the goods are unconditionally placed in the possession of, and received
agreed upon by the parties. by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person who has a right to
The shipper may change the consignment of the goods provided that at the time receive them…
of ordering the change of the consignee the bill of lading signed by the carrier be
returned to him, in exchange for another wherein the novation of the contract ARTICLE 1737. The common carrier’s duty to observe extraordinary diligence
appears. The expenses occasioned by the change shall be for the account of the over the goods remains in full force and effect even when they are temporarily
shipper. unloaded or stored in transit, unless the shipper or owner has made use of the
right of stoppage in transitu. (common carrier becomes a warehouseman –
b. Consignee – Delivery must generally be made to the owner or ordinary diligence)
consignee or to someone lawfully authorized by him to receive the
goods for his account or to the holder of the negotiable instrument. ARTICLE 1738. The extraordinary liability of the common carrier continues to be
operative even during the time the goods are stored in a warehouse of the carrier
c. Delay to Transport Passengers – A carrier is duty bound to transport at the place if destination, until the consignee has been advised of the arrival of
the passenger with reasonable dispatch the goods and has had reasonable opportunity thereafter to remove them or
otherwise dispose of them.
Effects of ‘delayed and unfinished voyage’ in inter-island vessels:
 vessel cannot continue or complete her voyage for any cause – carrier (2) Carriage of Passengers
is under obligation to transport the passenger to his/her destination
at the expense of the carrier including free meals and lodging before By trains – the extraordinary responsibility of common carrier commences the
the passenger is transported to his/her destination; the passenger moment the person who purchases the ticket (or a ‘token’ or ‘card’) from the
may opt to have his/her ticket refunded in full if the cause of the carrier presents himself at the proper place and in a proper manner to be
unfinished voyage is due to the negligence of the carrier or to an transported with a bona fide intent to ride the coach.
amount that will suffice to defray transportation cost at the shortest
possible route if the cause of the unfinished voyage is fortuitous * Mere purchase of a ticket does not of itself create the relation of carrier and
event. passenger but it is an element in the inception of the relation.
 vessel is delayed in arrival at the port of destination – free meals
during mealtime * A proper person who enters upon the carrier’s premises (station, ticketing
 delay in departure at the point of origin due to carrier’s negligence; office, or waiting room) with the intention of becoming a passenger will ordinarily
fortuitous event - free meals during mealtime; carrier not obliged to be viewed as assuming the status of a passenger.
serve free meals
 carrier is not obliged to inform passengers of sailing schedule of the * One who goes to the railroad station to inquire as to the possibility of securing
vessel passage on a freight train, which he knows, by the rules of the company, is not
allowed to carry passengers, and to secure passage thereon if possible, is not
C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE entitled to the rights of a passenger but is a mere trespasser.
- Goods should be delivered in the same condition that they were
received and to transport the passengers without encountering any * One who rides upon any part of the vehicle or conveyance which is unsuitable
harm or loss. or dangerous, or which he knows is not intended for passengers, is not presumed
- Read page 79-80 for provisions to be a passenger.

ARTICLE 1755. A common carrier is bound to carry the passengers safely as far as * One who secures free passage by fraud or stealth is precluded from recovery
human care and foresight can provide, using the utmost diligence of very for injuries sustained through the negligence of the carrier, for he has not
cautious persons, with a due regard for all the circumstances. (Civil Code) assumed the status of a passenger.

- Presumption of Negligence * A person riding on a freight train, on a driver’s pass or similar arrangement, to
- Two conditions for the birth of the presumption of negligence: look after livestock being transported and as incident to such transportation is,
1. there exists a contract between the passenger or the shipper and the generally regarded as a passenger for hire.
common carrier


Motor vehicles like jeepneys and buses – are duty bound to stop their
conveyances for a reasonable length of time in order to afford passengers an Fire – not considered as a natural calamity or disaster
opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up or jerking of their Fire caused by lightning – a natural calamity
conveyances while they do so. Once a public utility bus or jeepney stops, it is
making a continuous offer to bus riders. Hijacking – does not fall under the categories of exempting causes; the common
carrier is presumed to be at fault or to have acted negligently unless there is a
Case: Dangwa Transportation Company vs. CA proof of extraordinary diligence on its part
- When the bus is not in motion there is no necessity for a person who
wants to ride the same to signal his intention to board. A public utility Mechanical defects – damage or injury resulting from mechanical defects is not a
bus, once it stops, is in effect making a continuous offer to bus riders damage or injury that was caused by fortuitous event; carrier is liable to its
- The premature acceleration of the bus in this case was a breach of such passengers for damages caused by mechanical defects of the conveyance
duty (breakage of a faulty drag-link spring, fracture of the vehicle’s right steering
knuckle, defective breaks)
Case: La Mallorca vs. CA - One of the reason why carrier is made liable despite the presence
- Duty to exercise utmost diligence with respect to passengers will not of mechanical defect is the absence of privity between the
ordinarily terminate until the passenger has, after reaching his passenger and the manufacturer
destination, safely alighted from the carrier’s conveyance or had a
reasonable opportunity to leave the carriers premises. And what is Case: Juntilla v. Fontanar
reasonable time or a reasonable delay within this rule is to be - “Tire-blowouts” was not considered as fortuitous event although it was
determined from all the circumstances. alleged that the tires were in good condition; no evidence was presented to
Case: Aboitiz Shipping Corporation vs. CA show that the evidence were due to adverse road conditions – the carrier
- Same ruling with La Mallorca vs. CA must prove all angles.
- That reasonableness of time should be made to depend on the attending - The explosion could have been caused by too much air pressure injected
circumstances of the case, such as the kind of common carrier, the into the tires and the fact that the jeepney was overloaded and speeding at
nature of its business, the customs of the place, and so forth, and the time of the accident.
therefore precludes a consideration of the time element per se without
taking into account such other factors OTHER INVALID DEFENSES
- The primary factor to be considered is the existence of a reasonable 1. Damage to cargo due to EXPLOSION of another cargo – not
cause as will justify the presence of the victim on or near the petitioner’s attributable to peril of the seas or accidents of navigation.
vessel. We believe there exists such a justifiable cause (baggage were 2. Damage by WORMS and RATS resulting to damage to cargoes – can’t
left) be cited as an excuse by the carrier.
3. Damage by WATER through a port which had been left open or
DEFENSES OF COMMON CARRIERS insufficiently fastened on sailing.
4. Carrier cannot escape liabilities to third persons if damage was caused
Article 1734 (No other defense may be raised: exclusive or closed list) by BARRATRY – where the master or crew of the ship committed
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity unlawful acts contrary to their duties – includes theft and fraudulently
2. Act of the public enemy in war, whether international or civil running the ship ashore.
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packing or in the containers Cases:
5. Order or act of competent public authority 1. Problem: A carrier bus on its way to its destination encountered an
6. Exercise of extraordinary diligence engine failure, thus, it has to be repaired for 2 days. And while in the
repair shop, a typhoon came resulting to the spoilage of cargoes.
Fortuitous Event – to be a valid defense must be established to be the proximate Answer: A typhoon although a natural disaster, is not a valid defense
cause of the loss if it is shown that it was not the only cause of the loss. Especially when
the facts indicate that the typhoon was foreseeable and could have
Note: Since common carrier is presumed is to be negligent, it has been observed been detected through the exercise of reasonable care. Cargoes
that the DOCTRINE of PROXIMATE CAUSE is INAPPLICABLE to a contract of should have been secured while the bus was being repaired for 2 days.
carriage. The injured passenger or owner of goods need not prove causation to
establish his case. 2. Problem: A passenger told the driver that he has valuable items in his
bag which was placed under his feet and he asked the driver (to which
The absence of causal connection is only a matter of defense. he is seated near) to watch for the bag while he is asleep.

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


If the passenger decides to file a case, al the passenger has to do authority of the latter is at the time overthrown, such an uprising may take
is to prove that she was a passenger of the bus and that she on the dignity of a civil war, and so matured and magnified, the parties are
suffered injuries while on board the bus. belligerent and are entitled to belligerent rights.
- Depredation by pirates (which are enemy of all civilized nation) excuses the
(b) Supposing that there were armed men who staged a hold-up carrier from liability.
while the bus was speeding along the highway. One of them - Common carriers may be exempted from responsibility only if the act of the
stole the passenger’s bag and wallet while pointing a gun him. Is public enemy has been the proximate and only cause of the loss. Moreover,
the bus liable? due diligence must be exercised to prevent or at least minimize the loss
Answer: No. Hand-carried luggages are governed by necessary before, during and after the performance of the act of the public enemy in
deposit. Besides, theft with use of arms or through irresistible order that the carrier may be exempted from liability for the loss,
force is a force majeure which exempts carriers from liability. destruction, or deterioration of the goods.

3. Hi-jacking cannot exculpate the carrier from liability if it is shown that IMPROPER PACKING
the employees of the carrier were not overwhelmed by the hijackers
and that there was no showing of irresistible force. Since, there were Character of the goods and defects in the packaging or in the containers are
4 employers while there were only 2 hijackers and only one of them defenses available to the common carrier. Similarly, the Carriage of Good by Sea
was armed with bladed weapon. Act provides that carrier shall not liable for:
ON THE OTHER HAND, a hijacking by 3 armed men is an event which 1. Wastage in bulk or weight or any damages arising form the inherent
is considered to be beyond the control of the carrier. Thus, the carrier defect, quality or vice of goods;
may be adjudged from liability if it can be proven that the hijacking 2. Insufficiency of packing;
was unforeseeable. 3. Insufficiency or inadequacy of the marks, or
4. Latent defects no discoverable by due diligence.
Case: Philippine American General Insurance Co. vs. MCG
- Even in cases where a natural disaster is the proximate and only cause However, NCC likewise provides:
of the loss, a common carrier is still required to exercise due diligence Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
to prevent or minimize loss before, during and after the occurrence of caused by the character of the goods, or the faulty nature of the packing or the
the natural disaster, for it to be exempt from liability under the law containers, the common carrier must exercise due diligence to forestall or
for the loss of the goods lessen the loss.

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


Art. 1759. Common carriers are liable for the death of or injuries to passengers - Rules that are applicable to goods that are being shipped are also
through the negligence or willful acts of the carrier’s employees, although such applicable to baggage delivered to the custody of the carrier. Arts. 1733.
employees may have acted beyond the scope of their authority or in violation 1734 and 1736 of Civil Code are applicable.
of the orders of the common carriers. - However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall
The liability does not cease even upon proof that they exercised diligence in the apply.
selection and supervision of their employees.
Distinction: W/N the baggage is in the personal custody of the passenger.
Art. 1763. Carrier is responsible for injuries suffered by a passenger on account  if yes, hand carried baggage
of the willful acts or negligence of other passengers or of strangers, if the  if no, checked-in baggage
common carrier’s employees through the exercise of the diligence of a good
father of a family could have prevented or stopped the act or omission. Art. 1998. The deposit of effects made by the travellers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be responsible
a. Employees for them as depositaries, provided that notice was given to them, or to their
- Carrier is liable for the acts of its employees. It can’t escape liability by employees, of the effects brought by the guests and that, on the part of the
claiming that it exercised due diligence in supervision and selection of latter, they take the precautions which said hotel-keepers or their substitutes
its employees (unlike in quasi-delicts). advised relative to the care and vigilance of their effects. (1783)

Reasons for the rule:

Art. 2000. The responsibility referred to in the two preceding articles shall
1. Undertaking of the carrier requires that its passenger that full
include the loss of, or injury to the personal property of the guests caused by
measure of protection afforded by the exercise of high degree of care
the servants or employees of the keepers of hotels or inns as well as strangers;
prescribed by law, inter alia from violence and insults at the hands of
but not that which may proceed from any force majeure. The fact that travellers
strangers and other passengers, but above all, from the acts of the
are constrained to rely on the vigilance of the keeper of the hotels or inns shall
carrier’s own servants.
be considered in determining the degree of care required of him. (1784a)
2. The liability of the carrier for the servant’s violation of duty to
performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed
utmost care prescribed by law. force majeure, unless it is done with the use of arms or through an irresistible
3. As between the carrier and the passenger, the former must bear the force. (n)
risk of wrongful acts or negligence of the carrier’s employees against
passenger, since it, and not the passenger, has the power to select Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to
and remove them. the acts of the guest, his family, servants or visitors, or if the loss arises from
the character of the things brought into the hotel. (n)
Rationale: On the other hand, if the ship owner derives profits from
the results of the choice of the captain and the crew, when the choice
turns out successful, it is also just that he should suffer the Art. 2003. The hotel-keeper cannot free himself from responsibility by posting
consequences of an unsuccessful appointment, by application of the notices to the effect that he is not liable for the articles brought by the guest.
rule of natural law contained in the partidas --- that he who enjoys the Any stipulation between the hotel-keeper and the guest whereby the
benefits derived from a thing must likewise suffer the losses that ensue responsibility of the former as set forth in articles 1998 to 2001 is suppressed
therefrom or diminished shall be void. (n)

- Note: Willful acts of the employees include theft Cases:

1. Despite the fact that the carrier gave notice that it shall not be liable
b. Other Passengers and Third Persons for baggage brought in by passengers, the carrier is still liable for lost
hand-carried luggage since it is governed by rules on necessary
- With respect to acts of strangers and other passengers resulting in deposits. Under Art. 20000, the responsibility of the depositary
injury to a passenger, the availability of such defense is also subject to includes the loss of property of the guest caused by strangers but not
the exercise of a carrier of due diligence to prevent or stop the act or that which may proceed from force majeure. Moreover, article 2001
omission. considers theft as force majeure if it is done with use of arms or
- Negligence of the carrier need not be the sole cause of the damage or through irresistible force.
injury to the passenger or the goods. The carrier would still be liable 2. Even if the passenger did not declare his baggage nor pay its charges
even if the contractual breach concurs with the negligent act or contrary to the regulations of the bus company, the carrier is still liable
omission of another person. in case of loss of the baggage. Since, it has the duty to exercise
extraordinary diligence over the baggage that was turned over to the
Remember: the negligence of the other river in a collision is NOT a carrier or placed in the baggage compartment of the bus. The non-
prejudicial question to an action against the carrier’s company. payment of the charges is immaterial as long as the baggage was
received by the carrier for transportation.
Article 1759. Common carriers are liable for the death of or injuries to passenger
through the negligence or willful acts of the former’s employees, although such II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER
employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers. A. NEGLIGENCE OF SHIPPER OR PASSENGER

- The obligation to exercise due diligence is not limited to the carrier.

The shipper is obliged to exercise due diligence in avoiding damage or
PASSENGER’S BAGGAGES - Nevertheless, contributory negligence on the part of the shipper/
- The term baggage has been defined to include whatever articles a passenger would only mitigate the carrier’s liability; it is not a total
passenger usually takes with him for his own personal use, comfort and excuse.
convenience - However, if the negligence of the shipper/ passenger is the proximate
and only cause of the loss, then, the carrier shall not be liable. The
carrier may overcome the presumption of negligence and may be


able to prove that it exercised extraordinary diligence in handling the
goods or in transporting the passenger. Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.
- Where a carrier’s employee is confronted with a sudden emergency,
The carrier may be able to prove that the only cause of the loss of the goods the fact that he is obliged to act quickly and without a chance for
is any of the following: deliberation must be taken into account, and he is not led to the same
1. Failure of the shipper to disclose the nature of the goods; degree of care that he would otherwise be required to exercise in the
2. Improper marking or direction as to the destination; absence of such emergency but must exercise only such care as any
3. Improper loading when he assumes such responsibility. ordinary prudent person would exercise under like circumstances and
conditions, and the failure on his part to exercise the best judgment
The shipper must likewise see to it that the goods are properly packed; the case renders possible does no establish lack of care and skill on his
otherwise, liability of the carrier may either be mitigated or barred part which renders the company liable.
depending on the circumstances.
Case: Compania Maritima vs. CA and Vicente Concepcion
Art. 1741. If the shipper or owner merely contributed to the loss, - While the act of private respondent in furnishing petitioner with an
destruction or deterioration of the goods, the proximate cause thereof inaccurate with of the payloader cannot successfully be used as an
being the negligence of the common carrier, the latter shall be liable in excuse by petitioner to avoid liability to the damage thus caused, said
damages, which however, shall be equitably reduced. act constitutes a CONTRIBUTORY CIRCUMSTANCE to the damage
caused on the payloader, which mitigates the liability for damages of
petitioner in accordance with Article 1741.
Art. 1761. The passenger must observe the diligence of a good father of a family
to avoid injury to himself.
Case: Philippine National Railways vs. CA
- While petitioner failed to exercise extraordinary diligence as required
Art. 1762. The contributory negligence of the passenger does not bar recovery by law, it appears that the deceased was chargeable with contributory
of damages for his death or injuries, if the proximate cause thereof is the negligence.
negligence of the common carrier, but the amount of damages shall be - Since he opted to sit on the open platform between the coaches of
equitably reduced. the train, he should have held tightly and tenaciously on the upright
metal bar found at the side of said platform to avoid falling off from
a. Last Clear Chance the speeding train

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

Passengers must take such risks incident to the mode of travel. Carriers are not Although either of the shipper or the consignor may pay the freight before or at
insurers of the lives of their passengers. Thus, in air travel, adverse weather time the goods are delivered to the carrier for shipment, nonetheless, it is the
conditions or extreme climatic changes are some of the perils involved in air consignor (whom the contract of carriage is made) who is primarily liable for the
travel, the consequence of which the passenger must assume or expect. payment of freight whether or not he is the owner of the goods. The obligation
to pay is implied from the mere fact that the consignor has placed the goods with
the carrier for the purpose of transportation.
However, there is no assumption of risk in a case wherein a passenger boarded a
carrier that was filled to capacity. The act of the passenger in taking the extension
c. Time to pay
chair does not amount to implied assumption of risk.
Code of Commerce provides that in the absence of any agreement, the consignee
Note: there is also no assumption of risk by the mere fact that the carrier posted
who is supposed to pay must do so within 24-hours from the time of delivery.
notices against such liability
Article 374. The consignees to whom the shipment was made may not defer
Problem: Although, there is a sign in the bus that says: “do not talk to the driver
the payment of the expenses and transportation charges of the goods they
while the bus is in motion, otherwise, the company would not assume
receive after the lapse of twenty-four hours following their delivery; and in case
responsibility for any accident:. Nonetheless, the passengers dared the driver to
of delay in this payment, the carrier may demand the judicial sale of the goods
race with another bus, as the bus speeds up in the attempt to overtake the other
transported in an amount necessary to cover the cost of transportation and the
bus, it failed to slow down. As a result, the bus turns turtle causing the death and
expenses incurred.
injuries to passengers. Is the bus company liable?
Answer: Yes. The bus company is obligated to exercise utmost diligence in
(1) Carriage of Passengers by Sea
carrying passengers. This liability cannot be eliminated or limited by simply
posting notices. The passenger cannot be said to have assumed the risk of being
With respect to carriage of goods by sea, the tickets are purchased in advance.
injured when he urged the driver to accept the dare. At most, the passengers can
Carriers are not supposed to allow passengers without tickets --- the carrier is
only be said to be guilty of contributory negligence which would mitigate the
bound to observe a “No Ticket, No Boarding Policy”. The carrier shall collect/
liability of the driver, since the proximate cause of the accident was the driver’s
inspect the passenger’s ticket within one hour from vessel’s departure as not to
willful and reckless act in running the race with the other bus.
disrupt resting or sleeping passengers.


- Generally, what should be determines is whether or not a reasonable
If the vessel is not able to depart on time and the delay is unreasonable, the man, exercising extraordinary diligence, could have foreseen and
passenger may opt to have his/ her ticket refunded without refund service fee. prevented the damage or loss that occurred.
Delayed voyage means “late departure of the vessel from its port of origin and/
or late arrival of the vessel to its port of destination”. Unreasonable delay means III. EFFECT OF STIPULATION
“the period of time that has lapsed without just cause and is solely attributable
to the carrier which has prejudiced the transportation of the passenger and/ or A. GOODS
cargoes to their port of destination. - The parties cannot stipulate that the carrier will NOT exercise ANY
diligence in the custody of goods
A passenger who failed to board the vessel can refund or revalidate the ticket - The law allows a stipulation whereby the carrier will exercise a degree
subject to surcharges. Revalidation means “the accreditation of the ticket that is of diligence which is less than extraordinary with respect to goods.
not used and intended to be used for another voyage.
Art. 1744. A stipulation between the common carrier and the shipper
(2) Carrier’s Lien owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary
If consignor or the consignee fails to pay the consideration for the transportation diligence shall be valid, provided it be:
of goods, the carrier may exercise his lien in accordance with Art. 375 of Code of
Commerce: 1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration other than the service
ARTICLE 375. The goods transported shall be especially bound to answer for the rendered by the common carrier (Note: Typically fare/freight); and
cost of transportation and for the expenses and fees incurred for them during 3. Reasonable, just and contrary to public policy.
their conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and B. PASSENGERS
once prescribed, the carrier shall have no other action than that corresponding - There can be no stipulation lessening the utmost diligence that is
to him as an ordinary creditor. owed to passengers.

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

A common carrier is bound to carry the passengers safely as far a
human care and foresight provide, using the utmost diligence of very cautious a. Warranty of Seaworthiness of Ship
persons, with due regard for all circumstances. - This is the first step that should be undertaken
- Extraordinary diligence requires that the ship which will
Extraordinary diligence: Calculated to protect the passengers from the transport the passengers and goods is seaworthy.
tragic mishaps that frequently occur in connection with rapid modern - Seaworthiness of the vessel is impliedly warranted.
transportation. - The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to make the ship seaworthy.
- There is no hard and fast rule in the exercise of extraordinary diligence
- Common carrier binds itself to carry the passengers safely as far as b. No duty to inquire
human care and foresight can provide, using the utmost diligence of - Because of the implied warranty of seaworthiness, shippers of
a very cautious person, with due regard for all the circumstances. goods, when transacting with common carriers, are not
- The duty even extends to the members of the crew or complement expected to inquire into the vessels seaworthiness, genuineness
operating the carrier of its licenses and compliance with all maritime laws. Passengers
cannot be expected to inquire everytime they board a common
Case: Kapalaran Bus Lines vs. Coronado carrier, whether the carrier possesses the necessary papers or
- If common carriers carefully observed the statutory standard of that all the carrier’s employees are qualified.
extraordinary diligence in respect of their own passengers, they - It is the carrier that carries such burden of proving that the ship
cannot help but simultaneously benefit pedestrians and the owners is seaworthy.
and passengers of other vehicles who are equally entitled to the safe - Sufficient evidence must be submitted and the presentation of
and convenient use of our roads and highways certificates of seaworthiness is not sufficient to overcome the
presumption of negligence.
A reasonable man or a good father of a family in the position of the carrier must
exercise extraordinary diligence in the performance of his contractual obligation. c. Meaning of Seaworthiness


- A vessel must have such degree of fitness which an owner who
is exercising extraordinary diligence would require his vessel to B. OVERLOADING
have at the commencement of the voyage, having regard to all
the probable circumstances of it. This includes fitness of the - Duty to exercise due diligence likewise includes the duty to take
vessel itself to withstand the rigors of voyage, fitness of the passengers or cargoes that are within the carrying capacity of the
vessel to store the cargoes and accommodate passengers to be vessel.
transported and that it is adequately equipped and properly
- Seaworthiness is that strength, durability and engineering skill
made a part of a ship’s construction and continued - The vessel itself may be suitable for the cargo but this is not enough
maintenance, together with a competent and sufficient crew, because the cargo must also be properly stored.
which would withstand the vicissitudes and dangers of the
elements which might reasonably be expected or encountered Cargo must generally not be placed on deck. The carrying of deck cargo raises the
during her voyage without loss or damage to her particular cargo presumption of unseaworthiness unless it can be shown that the deck cargo will
not interfere with the proper management of the ship.
Example: The carrier was able to establish that the ship itself was seaworthy
because the records reveal that the vessel was dry-docked and inspected by the D. NEGLIGENCE OF CAPTAIN AND CREW
Phil. Coast Guard before its first destination.
- Failure on the part of the carrier to provide competent captain and
A warranty of seaworthiness requires that it be properly laden, and provided with crew should be distinguished from the negligence of the said captain
a competent master, a sufficient number of competent officers and seamen, and and crew, because the latter is covered by the Limited Liability Rule
the requisite appurtenances and equipment. (liability of the shipowner may be limited to the value of the vessel).
The carrier shall be bound before and at the beginning of the voyage to exercise - If the negligence of the captain and crew can be traced to the fact that
due diligence to: they are really incompetent, the Limited Liability Rule cannot be
1. Make the ship seaworthy; invoked because the shipowner may be deemed negligent.
2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are carried, fit and safe for Rules on passenger safety
their reception, carriage, and preservation. - Negligence on the part of the captain and crew as well as the operator
includes failure to comply with the regulation issued by the Maritime
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, Industry Authority (MARINA) on the safety of the passengers
and discharge the goods carried. - Memorandum Circular No. 112 : passengers do not merely contract
for transportation because they have the right to be treated by the
Note: Seaworthiness is relative it its construction and its application depends on carrier and its employees with kindness, respect, courtesy and due
the facts of a particular case (ex. Length and nature of the voyage) consideration. They are entitled to be protected against personal
conduct, injurious language, indignities and abuses from the said
Fitness of the Vessel Itself carrier and its employees
- It is necessary that the vessel can be expected to meet the normal - Read Memorandum Circular No. 114: p. 204
hazards of the journey
- General Test of Seaworthiness: Whether the ship and its Case: Planters Products Inc. vs. CA
appurtenances are reasonably fit to perform the service undertaken. - The period during which private respondent was to observe the
degree of diligence required of it as a public carrier began from the
The ship must be “cargoworthy” time the cargo was unconditionally placed in its charge after the
- Even if the vessel was properly maintained and is free from defect, the vessel’s holds were duly inspected and passed scrutiny by the shipper,
carrier must not accept the goods that cannot properly be transported up to and until the vessel reached its destination and its hull was re-
in the ship examined by the consignee, but prior to unloading
- The ship must be efficiently strong and equipped to carry the - A ship owner is liable for damage to the cargo resulting from improper
particular kind of cargo which she has contracted to carry and her stowage ONLY when the stowing si done by stevedores employed by
cargo must be so loaded that it is safe for her to proceed on her him, and therefore under his control and supervision, not when the
voyage. same is done by the consignee or stevedores under the employ of the


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

Adequate Equipment Note: With respect to carriers by sea, the routes are subject to approval by
- With respect to vessels that carries passengers, the Maritime Industry MARINA and the same cannot generally be changed without the authorization
Authority prescribes rules which provide for indispensable equipment from said administrative agency
and facilities
- ex. Exit doors, life boats, live vests 2. Transshipment


- The act of taking cargo out of one ship and loading it into another; to Note: although overland transportation are not bound nor empowered to make
transfer goods from the vessel stipulated in the contract of an examination on the contents of packages or bags particularly those hand
affreightment to another vessel before the place of destination carried by passengers, such is different with regards to an airline company.
named in the contract has been reached.
- Transshipment of freight without legal excuse is a violation of the VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR
contract and subjects the carrier to liability if the freight is lost even - The aircraft must be in such a condition that it must be able to
by a cause otherwise excepted. withstand the rigors of flight.

Note: there is transshipment whether or not the same person, firm or entity owns Airworthiness – An aircraft, its engines propellers, and other components and
the vessels (what matters is the actual physical transfer of cargo from one vessel accessories, are of proper design and construction, and are safe for air navigation
to another) purposes, such design and construction being consistent with accepted
engineering practice and in accordance with aerodynamic laws and aircraft

A. CONDITION OF VEHICLE Proof of airworthiness is not by itself sufficient to prove exercise of extraordinary
- Common carriers that offer transportation by land are similarly diligence.
required to make sure that the vehicles that they are using are in good
order and condition. Case: Japan Airlines vs. CA
- The fact that the flight was cancelled due to fortuitous event does not
Rule on Mechanical Defects – If the carriers will replace certain parts of the motor mean that the carrier’s duty already ended. The carrier is still
vehicle, they are duty bound to make sure that the parts that they are purchasing obligated to look after the convenience and comfort of the passenger
are not defective. Hence, it is a long-standing rule that a carrier cannot escape - Thus the carrier was obligated to make the necessary arrangements
liability by claiming that the accident that resulted because of a defective break to transport the passenger on the first available flight.
or tire is due to a fortuitous event. This is true even if it can be established that
the tire that was subject of a blow-out is brand new. The duty to exercise A. INSPECTION
extraordinary diligence requires the carrier to purchase and use vehicle parts that - It is the duty of the carrier to make inquiry as to the general nature of
are not defective. the articles shipped and of their value before it consents to carry
them; and its failure to do so cannot defeat the shipper’s right to
B. TRAFFIC RULES recovery of full value of the package if lost, in the absence of showing
- The carrier fails to exercise extraordinary diligence if it will not comply of fraud or deceit on the part of the shipper.
with basic traffic rules. The Civil Code provides for a presumption of
negligence in case the accident occurs while the operator of the motor Where a common carrier has reasonable ground to suspect that the offered
vehicle is violating traffic rules. goods are of a dangerous character, the carrier has the right to know the
character of such goods and to insist inspection, if reasonable and practical under
In cases involving breach of contract of carriage, proof of violation of traffic rules the circumstances, as a condition of receiving and transporting such goods. To be
confirms that the carrier failed to exercise extraordinary diligence. subjected to unusual search, other than the routinary inspection procedure
customarily undertaken, there must exist proof that would justify cause for
Case: Mallari Sr and Jr vs. CA apprehension that the baggage is dangerous as to warrant exhaustive inspection,
- The rule is settled that a driver abandoning his proper lane for the or even refusal to accept carriage of the same.
purpose of overtaking another vehicle in an ordinary situation has the
duty to see to it that the road is clear and not to proceed if he cannot Case: Northwest Airlines vs. Laya
do so in safety - The fact that the plaintiff was greatly inconvenienced by the fact that
his attaché case was subjected to further inspection does not warrant
C. DUTY TO INSPECT imposition of liability because he was not singled out and
- There is no unbending duty to inspect each and every package or discriminated by the employees of the carrier
baggage that is being brought inside the bus or jeepney. The carrier is - Protection of passengers must take precedence over convenience
duty bound to conduct such inspection depending on the - Nevertheless, the implementation of security measures must be
circumstances. attended by basic courtesies

Case: Nocum vs. Laguna Tayabas Bus Company

- While it is true the passengers of appellant’s bus should not be made
to suffer for something over which they had no control, fairness CHAPTER 4
demands that in measuring a common carrier’s duty towards its BILL OF LADING
passengers, allowance must be given to the reliance that should be
reposed on the sense of responsibility of all the passengers in regard I. CONCEPTS, DEFINITION AND KINDS
to their common safety.
- It is to be presumed that a passenger will not take with him anything Bill of Lading (BOL)
dangerous to the lives and limbs of his co-passengers not to speak of - a written acknowledgement, signed by the master of a vessel or other
his own. authorized agent of the carrier, that he has received the described
- Not to be lightly considered is the right to privacy to which each goods from the shipper, to be transported on the expressed terms to
passenger is entitled be described the place of destination, and to be delivered to the
- In other words, inquiry may be verbally made as to the nature of a designated consignees of the parties.
passenger’s baggage when such is not outwardly perceptible, but - It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT OF
beyond this, constitutional boundaries are already in danger of being TITLE.
- SC held that carrier has succeeded in rebutting the presumption of A BOL is not necessary for the perfection of a contract of carriage. Thus, the
negligence by showing that it has exercised extraordinary diligence for obligation to exercise extraordinary diligence by the carrier is still required even
the safety of its passenger, according to the circumstances of each if there is no bill of lading.


In the absence of the bill of lading, disputes shall be determined on the basis of and it is nowhere questioned that a bill of lading is prima facie
the provisions in the New Civil Code and suppletory by the Code of Commerce. evidence of the receipt of the goods by the carrier


- It expresses the terms and conditions of the agreement between the
1. Clean Bill of Does not contain any notation indicating any defect in parties; names the parties; includes consignees etc. It is the law
Lading the goods. between the parties bound by its terms and conditions.
2. Foul Bill of One that contains the abovementioned notation.
Lading Contracts of Adhesion
3. Spent Bill of The goods are already delivered but the bill of lading - It is to be construed liberally in favor of the shipper who adhered to
Lading was not yet returned (upon delivery, the carrier is such bill as it is a contract of adhesion. The only participation of the
supposed to retrieve the covering bill of the goods) party is the signing of his signature or his adhesion thereto.
- The shipper or passenger is bound by the terms and conditions if there
is no occasion to speak of ambiguities or obscurities
4. Through Bill Issued by a carrier who is obliged to use the facilities of
- If the words appear to be contrary to the evident intention of the
of Lading other carriers as well as his own facilities for the
parties, the latter shall prevail over the former
purpose of transporting the goods from the city of the
seller to the city of the buyer, which BOL is honored by
ART. 24 (NCC). In all contractual property or other relations, when one of the
the second and other interested carriers who don’t
parties is at a disadvanatge on account of his moral dependence, ignorance
issue their own BOL.
indigence, mental weakness, tender age and other handicap, the court must be
5. On Board Bill -states that the goods have been received on board the vigilant for his protection.
vessel which is to carry the goods.
-apparently guarantees the certainty of shipping as well Parole Evidence Rule
as the seaworthiness of the vessel to carry the goods. - BOL is covered by the parol evidence rule, that the terms of the
-basically means that the goods are already inside the contract are conclusive upon the parties and evidence aliunde is not
vessel admissible to vary or contradict a complete enforceable agreement,
6. Received for -states that the goods have been received for shipment subject to well defined exceptions
Shipment Bill with or without specifying the vessel by which the goods - The mistake contemplated as an exception to the parol evidence rule
are to be shipped. is one which is a mistake of fact mutual to the parties.
-issued when conditions are not normal and there is - Note that if such is not raised inceptively in the complaint or in the
insufficiency of shipping space. answer, a party cannot later on be permitted to introduce parol
evidence thereon
7. Custody Bill of The goods are already receied by the carrier but the
Lading vessel indicated therein has not yet arrived in the port. Bill of Lading as Evidence
- The BOL is the legal evidence of the contract and the entries thereof
8. Port Bill of The vessel indicated in the BOL that will transport the constitutes prima facie evidence of the contract.
Lading goods is already in the port. - All the essential elements of a valid contract (cause, consent, object)
are present when such bill are issued.

Note: A party to a maritime contract would require an on board bill of lading III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE
because of its apparent guaranty of certainty of shipping as well as the - In a contractual obligation, the bill of lading can be categorized as an
seaworthiness of the vessel which is to carry the goods. actionable document under the Rules of Court. Hence, the bill of
lading must be properly pleaded either as causes of action or defenses
Effectivity of BOL - ART 1507 (NCC). A document of title in which it is stated that the goods
- upon its delivery to and acceptance by the shipper. referred to therein will be delivered to the bearer or to the order of any
- The acceptance of the bill without dissent raises the presumption that person named in such document is a negotiable document of title.
all the terms therein were brought to the knowledge of the shipper
and agreed to by him, and in the absence of fraud or mistake, he is - If the document of title contains the required words of negotiability
stopped thereafter from denying that he assented to such claims to make the instrument negotiable under Article 1507 of the NCC, the
(whether he reads the bill or not) document remains to be negotiable even if the words “not
negotiable” or non negotiable are places thereon
- The three fold nature of a bill of lading is obviously applicable only to o a. Bearer document- negotiated by delivery
carriage of goods o b. Order document- negotiated by indorsement of the
- As receipt and document of title: issued for goods specified person so named
- As contract: applies to tickets issued to passengers
- Effects of negotiation. Negotiation of the document has the effect of
I. RECEIPT manual delivery so as to constitute the transferee the owner of the
- As comprehending all methods of transportation, a BOL may be goods.
defined as a written acknowledgement of the receipt of goods and an
agreement to transport and to deliver them at a specified place to a BASIC STIPULATIONS
person named or on his order. - Provided for in the Code of Commerce
- Other terms, “shipping receipts”, “forwarders receipts”, and “receipts - (for overland transportation, maritime commerce and electronic
for transportation”. documents, please refer to the textbook for the codal pp. 203-210)
- (SC) the designation however is not material, and neither is the form
of the instrument. If it contains an acknowledgement by the carrier PROHIBITED AND LIMITING STIPULATION
of the receipt of goods for transportation it is, in legal effect a BOL.
- The issuance of a bill of lading carries the presumption that the goods 1. Exempting the carrier from any and all liability for loss or damage
were delivered to the carrier issuing the bill, for immediate shipment, occasioned by its own negligence - INVALID as it is contrary to public


2. Parties may stipulate that the diligence to be exercised by the carrier - When what ordinarily be considered packages are shipped in a
for the carriage of goods be less than extraordinary diligence if it is: container supplied by the carrier and the number of such units is
a. in writing and signed by both parties disclosed in the shipping documents, each of those units and not the
b. supported by a valuable consideration other than the container constitutes the package.
service rendered by the common carrier
c. the stipulation is just, reasonable and not contrary to law. Prescriptive periods
3. Providing an unqualified limitation of such liability to an agreed - Suit for loss or damage to the cargo should be brought within one year
valuation - INVALID after:
4. Limiting the liability of the carrier to an agreed valuation unless the a. delivery of the goods; or
shipper declares a higher value and pays a higher rate of freight- b. the date when the goods should be delivered. (Sec. 3[6])
The one-year prescriptive period is suspended by:
Note: the purpose of limiting stipulations in the bill of lading is to protect th 1. express agreement of the parties (Universal Shipping Lines, Inc. v.
common carrier. Such stipulation obliges the shipper/consignee to notify the IAC, 188 SCRA 170)
common carrier of the amount that the latter may be liable for in case of loss of 2. when an action is filed in court until it is dismissed. (Stevens & Co. v.
the goods Nordeutscher Lloyd, 6 SCRA 180)

Remember: Things to Remember:

1. The parties cannot stipulate so as to totally exempt the carrier from 1. Article 1757 provides that the responsibility of a common carrier to
exercising any degree of diligence whatsoever exercise utmost diligence for the safety of PASSENGERS CANNOT be
2. The parties cannot stipulate that the common carrier shall exercise dispensed with or lessened by stipulation or statement on tickets or
diligence less than the diligence of a good father of a family otherwise
2. Article 1750 of the Civil Code provides that a contract fixing the sum
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS: that may be recovered by the owner or shipper for the loss,
1. Inter-island - if goods arrived in damaged condition (Art. 366): destruction, or deterioration of the GOODS is VALID, if it is
a. If damage is apparent, the shipper must file a claim immediately (it may be oral REASONABLE and JUST under the circumstances, and has been FAIRLY
b. If damage is not apparent, he should file a claim within 24 hours from delivery. 3. It is unfair to deny the shipper the right to declare the actual value of
The filing of claim under either (1) or (2) is a condition precedent for recovery. his cargos and to recover such true value in case of loss or damage
If the claim is filed, but the carrier refuses to pay: enforce carrier’s liability in Note: it has been suggested that the signature of the shipper in the
court by filing a case: bill of lading with regards to the limitation applies only to reduction of
a. within 6 year, if no bill of lading has been issued; or diligence and not to the stipulated amount to be paid.
b. within 10 years, if a bill of lading has been issued. 4. It is unjust and contrary to public policy if the common carrier’s
liability for acts committed by thieves, or of robbers who do not act
2. Overseas –where goods arrived in a damaged condition from a foreign port to with grave or irresistible threat, violence or force, is dispensed with or
a Philippine port of entry: (COGSA) diminished
a. upon discharge of goods, if the damage is apparent, claim should be filled 5. The common carrier may EXEMPT itself from liability if he can prove
immediately; that:
b. if damage is not apparent, claim should be filled within 3 days from delivery. a. He observed extraordinary diligence
b. The proximate and only cause of the incident is a fortuitous
Filing of claim is not a condition precedent, but an action must be filed against event or force majeure
the carrier within a period of 1 year from discharge; if there is no delivery, the c. The proximate and only cause of the loss is the character
one-year period starts to run from the day the vessel left port (in case of of the goods or defects in the packing or in the containers
undelivered or lost cargo), or from delivery to the arrastre (in case of damaged d. The proximate and only cause of the loss is the order or act
cargo). of competent public authority
Where there was delivery to the wrong person, the prescriptive period is 10 years Note: to limit its liability or at least mitigate the same, the carrier can
because there is a violation of contract, and the carriage of goods by sea act does cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the DOCTIRNE
not apply to misdelivery. (Ang v. American SS Agencies (19 SCRA 631) OF AVOIDABLE CONSEQUENCES

CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65) Case: Sea-Land Service Inc. vs. IAC
- Liability of a common carrier for loss of or damage to goods
- Applies suppletorily to the Civil Code if the goods are to be shipped transported by it under a contract of carriage is governed by the laws
form a foreign port to the Philippines of the country of destination
- COGSA is applicable in international maritime commerce. It can be - COGSA is applicable up to the final port of destination and that the
applied in domestic sea transportation if agreed upon by the parties. fact that transshipment was made on an interisland vessel did not
(paramount clause) remove the contract of carriage of goods from the operation of said
- Under the Sec. 4 (5), the liability limit is set at $500 per package unless Act.
the nature and value of such goods is declared by the shipper. This is
deemed incorporated in the bill of lading even if not mentioned in it Case: Citadel Lines Inc. vs. CA
(Eastern Shipping v. IAC, 150 SCRA 463). - The duty of the consignee is to prove merely that the goods were
- If by agreement, another maximum amount than that mentioned may lost. Thereafter, the burden is shifted to the carrier to prove that it
be fixed provided that such maximum shall not be less than $500 and has exercised the extraordinary diligence required by law. And, its
in no event shall the carrier be liable for more than the amount of extraordinary responsibility lasts from the times that goods are
damage actually sustained unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or
Note that Art. 1749 of the NCC applies to inter-island trade. constructively, by the carrier to the consignee or to the person who
has the right to receive them
Meaning of Package
- If the goods are shipped in cartons, each carton is considered a Case: Everett Steamship Corporation vs. CA
package even if they are stored in container vans


- Considering that the shipper did not declare a higher valuation it had declared sum unless it proves the sum is greater than its
itself to blame for not complying with the situations actual value.
- The trial court’s ratiocination that private respondent could not have 3. hand-carry baggage - limited to 5,000 francs/passenger
“fairly and freely” agreed to the limited liability clause in the bill of
lading because the said conditions were printed in small letters does An agreement relieving the carrier from liability or fixing a lower limit is null and
not make the bill of lading invalid void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is caused by willful
WARSAW CONVENTION of 1929 misconduct or default on its part. (Art. 25)

WHEN APPLICABLE: Case: China Airlines vs. Daniel Chiok

- Applies to all international transportation of person, baggage or goods - The ticket-issuing airline acts as principal in a contract of carriage and
performed by aircraft for hire. is thus liable for the acts and the omissions of any errant carrier to
- “International transportation” means any transportation in which the which it may have endorsed any sector of the entire, continuous trip.
place of departure and the place of destination are situated either:
o within the territories of two High Contracting Parties Place of Destination- within the meaning of the Warsaw Convention, is
regardless of whether or not there be a break in the determined by the terms of the contract of carriage, or specifically the ticket
transportation or transshipment, or between the passenger and the carrier. It is the destination and not an agreed
o within the territory of a single High Contracting Party, if stopping place that controls for the purpose of ascertaining jurisdiction under the
there is an agreed stopping place within a territory subject Convention. (Case: Santos III vs. Northwest Orient Airlines and CA)
to the sovereignty, mandate or authority of another
power, even though that power is not a party to the ACTION FOR DAMAGES
Convention. 1. Condition precedent
A written complaint must be made within:
Transportation to be performed by several successive air carriers shall be - 3 days from receipt of baggage
deemed to be one undivided transportation, if it has been regarded by the parties - 7 days from receipt of goods
as a single operation, whether it has been agreed upon under the form of a single - in case of delay, 14 days from receipt of baggage/goods
contract or of a series of contracts, and it shall not lose its international character F otherwise the action is barred except in case of fraud on the part of the carrier.
merely because one contract or a series of contracts is to be performed entirely (Art. 26)
within a territory subject to the sovereignty, suzerainty, mandate, or authority of 2. Jurisdiction – governed by domestic law
the same High Contracting Party. (Art. 1) 3. Venue – at the option of the plaintiff:
a. court of domicile of the carrier;
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in b. court of its principal place of business;
the Philippines since an international law prevails over general law. c. court where it has a place of business through which the contract has been
WHEN NOT APPLICABLE: d. court of the place of destination. (Art. 28)
1. If there is willful misconduct on the part of the carrier’s employees. 4. Prescriptive period – 2 years from:
The Convention does not regulate, much less exempt, carrier from a. date of arrival at the destination
liability for damages for violating the rights of its passengers under the b. date of expected arrival
contract of carriage (PAL v. CA, 257 SCRA 33). --- if the damage is c. date on which the transportation stopped. (Art. 29)
similarly caused by any agent of the carrier acting within the scope of 5. Rule in case of various successive carriers,
his employment a. In case of transportation of passengers – the action is filed only against the
2. when it contradicts public policy; carrier in which the accident or delay occurred unless there is an
3. if the requirements under the Convention are not complied with. agreement whereby the first carrier assumed liability for the whole
1. Death or injury of a passenger if the accident causing it took place on b. In case of transportation of baggage or goods
board the aircraft or in the course of its operations; (Art. 17) i. the consignor can file an action against the first carrier and the carrier
2. Destruction, loss or damage to any luggage or goods, if it took place in which the damage occurred
during the carriage; (Art. 18) and ii. the consignee can file an action against the last carrier and the carrier
3. Delay in the transportation of passengers, luggage or goods. (Art. 19) in which the damage occurred. These carriers are jointly and
severally liable. (Art. 30)
NOTE: The Hague Protocol amended the Warsaw Convention by removing the
provision that if the airline took all necessary steps to avoid the damage, it could Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or
exculpate itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9) international travel
Code of Commerce applies to inter-island or domestic travel.
Remember: The said provisions merely declare the carrier liable for damages in
the enumerated cases if the conditions therein specified are present. Neither said Bill of Lading as Document of Title
provisions nor others in the aforementioned Convention regulate or exclude
liability for OTHER BREACHES of contract of carrier.  Bill of lading is a document of title under the Civil Code. It can be a
negotiable document of title.
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 A. Negotiability
liability. - It is negotiable if it is deliverable to the bearer, or to the order of any person
named in such document. (Art. 1507, Civil Code)
1. passengers - limited to 250,000 francs; a) Effect of Stamp or Notation “Non-Negotiable”
 except: agreement to a higher limit  the document remains to be negotiable even if the words “not-
2. goods and checked-in baggage - 250 francs/kg negotiable” or “non-negotiable” are placed thereon. - Art. 1510 (Civil
 except: consigner declared its value and paid a Code)
supplementary sum, carrier liable to not more than the
B. How Negotiated


a) Bearer document (Art. 1508 and 1511)  Solidary liability
- may be negotiated be delivery - In case the negligence of the carrier’s driver and a third person
concurs, the liability of the parties – carrier and his driver, third person
b) Order document (Sec. 38, NIL and Art. 1509, NCC) – is joint and several.
- can only be negotiated through the indorsement of the specified person so
- such indorsement may be in blank, to bearer or to a specified person.
A. Overland Transportation of Goods and Coastwise Shipping
 Where a negotiable document of title is transferred for value by a) When to file a claim with carrier
delivery, and the endorsement of the transferor is essential for - Art. 366 constitutes a condition precedent to the accrual of a
negotiation, the transferee acquires a right against the transferor to right of action against a carrier for damage caused to the
compel him to endorse the document. xxx (Art. 1515, Civil Code) merchandise.

C. Effects of Negotiation  Under Art. 366 of the Code of Commerce, an action for damages is
- has the effect of manual delivery so as to constitute the transferee the owner barred if the goods arrived in damaged condition and no claim is filed by
of the goods the shipper within the following period:
- results in the transfer of ownership because transfer of document likewise 1. Immediately if damage is apparent;
transfers control over the goods 2. within twenty four (24) hours from delivery if damage is not
- refer to Art. 1513 apparent.

Chapter 5 - The period does not begin to run until the consignee has received
Actions and Damages in Case of Breach possession of the merchandise that he may exercise over it the
ordinary control pertinent to ownership.
 Cause of action of a passenger and shipper: - This provision applies even to transportation by sea within the Phils.
a) against common carrier – based on culpa contractual or culpa aquiliana or coastwise shipping.
b) on the part of the driver – based on either culpa delictual or culpa aquiliana - Does NOT apply to misdelivery of goods.

Note: The source of obligation based on culpa contractual is separate and distinct Q: Why does it not apply to misdelivery of goods?
from quasi-delict. A: In such cases (misdelivery), there can be no question of claim for damages
suffered by the goods while in transport, since the claim for damages arises
Article 1903 (last paragraph) – 2 things are apparent: exclusively out of the failure to make delivery.
1. That when an injury is caused by the negligence of a servant or
employee there instantly arises a presumption of law that there was Case: Monica Roldan vs. Lim Ponzo and Co.
negligence on the part of the master or the employer either in the - Article 366 of the Commercial Code is limited to cases of claims for
selection of the servant or employee, or in supervision over him after damage to goods actually turned over by the carrier and received by
the selection, or both. the consignee.
2. That presumption is juris tantum and not juris et de jure (of law and of
right), and consequently may be rebutted  But the period prescribed in Art. 366 may be subject to modification by
agreement of the parties.
Note however: that Article 1903 of the Civil Code is not applicable to acts of  The validity of a contractual limitation of time for filing the suit itself
negligence which constitute the breach of contract. It is applicable only to culpa against a carrier shorter than the statutory period thereof has generally
contractual. been upheld as such stipulation merely affects the shipper’s remedy and
 The fundamental distinction between obligation of extra-contractual and does not affect the liability of the carrier.
those which arise from contract, rests upon the fact that in cases of non-
contractual obligation it is the wrongful or negligent act or omission itself b) Extinctive Prescription
which creates the vinculum juris, whereas in contractual relations the - six (6) years if there is no written contract (bill of lading)
vinculum (bond) exists independently of the breach of the voluntary duty - ten (10) years if there is written contract
assumed by the parties when entering into the contractual relation.
 This rule likewise applies to carriage of passengers for domestic
- There is one action but several causes of action
- The same act that breaches the contract may also be tort B. International Carriage of Goods by Sea
 A claim must be filed with the carrier within the following period:
Note: The cause of action of a passenger or shipper against the common carrier 1. if the damage is apparent, the claim should be filed immediately
can be culpa contractual or culpa aquiliana while the basis of liability on the part upon discharge of the goods; or
of the driver is either culpa delictual or culpa aquiliana. The driver of the carrier 2. within 3 days from delivery, if damage is not apparent.
is not liable based on contract because there is NO PRIVITY of contract between
him and the passenger or shipper.  Filing of claim is not condition precedent. Thus, regardless of whether the
notice of loss or damage has been given, the shipper can still bring an
If the negligence of third persons concurs with the breach, the liability of the third action to recover said loss or damage within one year after the delivery
person who was driving the vehicle and/or his employer may be based on quasi of the goods or the date when the goods should have been delivered
delict. The driver alone may be held criminally liable and civil liability may be
imposed upon him based on delict. In the latter case, the employer is subsidiarily a) Prescription
liable.  Action for damages must be filed within a period of one (1) year from
discharge of the goods.
Remember: It does not make any difference that the liability of one springs from  The period is not suspended by an extra-judicial demand. (Why?
the contract while that of the other arises from quasi-delict. If the owner and Transportation of goods by sea should be decided in as short a time as
driver of the other vehicle are not impleaded, the carrier may implead them by possible)
filing a third party complaint. o Case: Dole Philippines Inc. vs. Maritime Company of the
Philippines - the prescriptive period is not tolled or


interrupted by a written extra-judicial demand. Article 2. the failure to receive as a benefit that would have pertained to him
1155 is NOT applicable. (lucro cesante).
 The period does not apply to conversion or misdelivery. - It should be proven: cannot be decided based on the consideration of
 The one (1) year period refers to loss of goods and not to misdelivery. the judge; not to be based on the perception, observation and
consideration of the judge
- Damages arising from delay or late delivery are not the damage or loss - With respect to restorative medical procedure: to be entitled to actual
contemplated under the COGSA. The goods are not actually lost or damage, you need to have an EXPERT TESTIMONY. Without such, you
damaged. The applicable period is ten (10) years. cannot recover.
- Case: Domingo Ang vs. American Steamship Agencies
 What is to be resolved – in order to determine the  Damages may be recovered: Art. 2205 (Civil Code)
applicability of the prescriptive period of one year – is 1) For loss or impairment of earning capacity in cases of temporary or
whether or not there was loss of the goods subject matter permanent personal injury;
of the complaint. 2) For injury to the plaintiff’s business standing or commercial credit.
 Loss contemplates merely a situation where no delivery at
all was made by the shipper of the goods because the same  Damages cannot be presumed. The burden of proof rests on the plaintiff
had perished, gone out of commerce, or disappeared in who is claiming actual damages against the carrier.
such a way that their existence is unknown or they cannot
be recovered. (Note: It is not loss due to misdelivery or  In case of goods – the plaintiff is entitled to their value at the time of
delivery to the wrong person.) destruction. The award is the sum of money which plaintiff would have
to pay in the market for identical or essentially similar goods
 This rule applies in collision cases. The one (1) year period starts not from  For personal injury and even death – the claimant is entitled to all
the date of the collision but when the goods should have been delivered, medical expenses as well as other reasonable expenses that he incurred
had the cargoes been saved. to treat his or her relative’s injuries.
 In case of death – the plaintiff is entitled to the amount that he spent
Case: Maritime Agencies and Services Inc. vs. CA during the wake and funeral of the deceased. But, expenses after the
- When there is two destination of delivery, the one year period should burial are not compensable.
commence when the last item was delivered to the consignee.  Read Art. 2206 (Civil Code):
 death caused by a crime or quasi-delict shall be at least
Insurance P3,000; [The amount of fixed damages is now P50,000.00]
 The insurer who is exercising its right of subrogation is also bound by the  the defendant shall be liable for the loss of the earning
one (1) year prescriptive period. capacity of the deceased;
 However, it does not apply to the claim against the insurer for the  If deceased is obliged to give support, recipient may
insurance proceeds. The claim against the insurer is based on contract demand support from the person causing the death for a
that expires in ten (10) years. period not exceeding five years
 Spouse, legitimate and illegitimate descendant and
II. Recoverable Damages descendants may demand moral damages for mental
 Damages – is the pecuniary compensation, recompense or satisfaction anguish by reason of the death of the deceased
for an injury sustained, or as otherwise expressed, the pecuniary
consequences which the law imposes for the breach of some duty or
violation of some rights. 1) Loss of earning capacity

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

B. Kinds of Damages 2) Attorney’s fees

- refer to Art. 2208 of the Civil Code
Article 2216 provides that no proof of pecuniary loss is necessary in order that - attorney’s fees may be awarded in an action for breach of contract
moral, nominal, temperate, liquidated or exemplary damages may be of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.
adjudicated. The assessment of such damages, except liquidated ones, is left to - If awarded exemplary, one is entitled to attorney’s fees
the discretion of the court, according to the circumstances of each case. - 2 kinds: ordinary (compensation to the lawyer); extraordinary
However, proof of pecuniary loss is necessary if actual or compensatory damages (indemnity as a form of damages suffered due to the breach of
are being claimed. contract)
- You can be awarded if you show that you were forced to litigate and
a) Actual or Compensatory Damages when you are entitled to exemplary damage.
- only for the pecuniary loss suffered by him as he has duly proved - But this award is subject to the discretion of the court (you cannot
- not only the value of the loss suffered, but also that of the profits dictate – usually 10%-15%)
which the obligee failed to obtain
3) Interests
- 2 Kinds:  12% per annum – if it constitutes a loan or forbearance of money
1. the loss of what a person already possesses (daňo emergente);  6% per annum – if it does not constitute loan or forbearance of money
 12% - for final judgment


- More than nominal but less than compensatory damages.
Note: No interest, however, shall be adjudged on unliquidated claims for - Art. 2224 provides:
damages except when or until the demand can be established with reasonably  may be recovered when the court finds that some pecuniary loss has
certainty, the interest shall begin to run form the time the claim is made judicially been suffered but its amount cannot, from the nature of the case, be
or extrajudicially. provided with certainty.
- cannot co-exist with actual damages
b) Moral Damages - Definite proof of pecuniary loss cannot be offered, although the court is
- Includes physical suffering, mental anguish, fright, serious anxiety, convinced that there has been such loss.
besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injury. e) Liquidated Damages
- Though incapable of pecuniary computation, moral damages may be - Those agreed by the parties to a contract, to be paid in case of breach
recovered if they were the proximate result of the defendant’s wrongful act thereof.
or omission. - Ordinarily, the court cannot change the amount of liquidated
- Moral damages are not awarded to punish the defendant but to damages agreed upon by the parties. However, Art. 2227 of the Civil
compensate the victim Code provides that liquidated damages, whether intended as an
- May be recovered when there is death or there is malice or bad faith. (in indemnity or a penalty, shall be equitably reduced if they were
transportation of passengers) iniquitous or unconscionable.
- Refer to Art. 2219 and 2220 (enumerates cases when moral damages may
be awarded) f) Exemplary or Corrective Damages
- Generally, no moral damages may be awarded where the breach of - Requisites for the award of exemplary damages:
contract is not malicious. 1. They may be imposed by way of example in addition to compensatory
- Moral damages may be awarded if the contractual negligence is considered damages, and only after the claimant’s right to them has been
gross negligence. established.
- Subject to three conditions in transportation law: 2. They cannot be recovered as a matter of right, their determination
o Death depending upon the amount of compensatory damages that may be
o Malice or bad faith (must be done in the performance of awarded to the claimant.
the contract of carriage) 3. The act must be accompanied by bad faith or done in wanton,
o Physical Injuries fraudulent, oppressive or malevolent manner.
- Requisites:
o There must be an injury, whether physical, mental or Note: If gross negligence warrants the award of exemplary damages, with more
psychological, clearly sustained by the claimant reason is its imposition justified when the act performed is deliberate, malicious
o There must be a culpable act or omission factually and tainted with bad faith. The rationale behind exemplary or corrective damage
established is to provide an example or correction from public good.
o The wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant  The award of exemplary damages in breach of contract of carriage is
o The award of damages is predicated on any of the cases subject to the provisions under Art. 2232-2235 of the Civil Code.
stated in Art. 2219.

- Factors to consider that could affect the amount to be recovered: Case: Air France vs. Rafael Carrascoso and CA
o The extent of humiliation may also determine the amount - The inference of bad faith is there; it may be drawn from the facts
of moral damages that can be awarded and circumstances set forth therein. The contract was averred to
o The extent of pain and suffering likewise determines the establish the relation between the parties.
award - Deficiency in the complaint in stating that there was bad faith, if any,
o Official, political, social and financial standing of the was cured by the evidence.
offended party and the business and financial position of
the offender affect the amount of damages Case: Philippine Airlines Inc. vs. CA
o The age of the claimant. - Moral damages are recoverable in a breach of contract of carriage
where the air carrier thought its agents acted fraudulently or in bad
c) Nominal Damages faith.
- Refer to Art. 2221-2223 (Civil Code) - The contract of air carriage generates a relation attended with a
- It is adjudicated in order that the right of plaintiff may be vindicated or public duty. Neglect or malfeasance of the carrier’s employees
recognized, and not for the purpose of indemnifying the plaintiff for any naturally could give ground for an action for damages.
loss suffered by him.
- The assessment of nominal damages is left to the discretion of the court MARITIME LAW
according to the circumstances of the case.
- The award of nominal damages is also justified in the absence of competent A. CONCEPTS (Chapter 6)
proof of the specific amounts of actual damages suffered.
- Cannot co-exist with actual damages. Maritime Law – is the system of laws which particularly relates to the affairs and
- There is no loss in nominal damages, unlike in actual and temperate business of the sea, to ships, their crews and navigation and to marine
damages, loss is present which is proven and not proven but rather conveyance of persons and property
ascertained by the court, respectively.
Governing Laws:
Case: Japan Airlines vs. CA 1. New Civil Code – primary law on maritime commerce
- The award of moral damages was justified because JAL failed to make 2. Book III Code of Commerce – applied suppletorily
necessary arrangement to transport the plaintiffs on the first available 3. Special Laws
connecting flight to Manila. a. Salvage Law (Act No. 2616)
- Only Nominal damages were awarded in the absence of proof of b. Carriage of Goods by Sea Act (CA No. 65)
actual damages c. Ship Mortgage Decree of 1978 (PD 1521)



Art. 587: ship agent may exempt himself of the civil liabilities for the indemnities
Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara in favor of third persons by abandoning vessel with all equipments and freight it
 That which distinguishes the maritime from the civil law and even earned during voyage
from the mercantile law in general is the real and hypothecary nature
of the former Art. 590: co-owners civilly liable in proportion to their interest and may exempt
liability by abandonment of the part of the vessel belonging to him
 Evidence of this “real “ nature of maritime law:
o The limitation of the liability of the agents to the actual Limited liability rule – means that the liability of a shipowner for damages in case
value of the vessel and the freight money of loss is limited to the value of his vessel.
o The right to retain the cargo and the embargo and  No vessel, no liability.
detention of the vessel even cases where the ordinary civil  The civil liability for collision is merely co-existent with the interest in
law would not allow more than a personal action against the vessel; if there was total loss, liability is also extinguished.
the debtor or person liable
GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof
 This repeals the civil law to such extent that, in certain cases where still exists, he can escape liability by abandoning the vessel, its appurtenances
the mortgaged property is lost no personal action lies against the and its freight.
owner or agent of the vessel
Case: Monarch Insurance Co., Inc. vs. Court of Appeals
 Two reasons why it is impossible to do away with these privileges:  The total destruction of the vessel extinguishes maritime liens
o The risk to which the thing is exposed because there are no longer any res to which it can attach. This
o The real nature of maritime law, exclusively real, doctrine is based on the real and hypothecary nature of maritime law.
according to which the liability of the parties is limited to
a thing to which is at mercy of the waves Note: Since the Civil Code contains no provision regulating liability of shipowners
or agents in the event of total loss or destruction of the vessel, Article 587 of the
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Code of Commerce governs.
Corporation, Ltd.
Article 837, 587 and 590 of Code of Commerce cover only:
 The real and hypothecary nature of maritime law simply means that 1. Liability to third persons
the liability of the carrier in connection with losses related to 2. Acts of the captain
maritime contracts is confined to the vessel, which is hypothecated 3. Collisions
for such obligations or which stands as the guaranty for their
 Purpose: It was designed to offset such adverse conditions and to 1. Where the injury or death to a passenger is due either to the fault of
encourage people and entities to venture into maritime commerce the shipowner, or to the concurring negligence of the shipowner and
despite the risks and prohibitive cost of shipbuilding the captain (NEGLIGENCE)
 Thus, the liability of the vessel owner and agent arising from the
operation of such vessel were confined to the (1) vessel itself, (2) its GR: Shipowner is liable for the negligence of the captain in collision
equipment, (3) freight, (4) and insurance if any, which limitation cases
served to induce capitalists into effectively wagering their resources ---- liability is limited to value of the vessel
against the consideration of the large profits attainable in trade  Limited liability rule applies if the captain or the crew caused the
damage or injury as when unseaworthiness of the vessel was caused
Real – similar to transactions over real property where to effect against third by the negligence of the captain or crew during the voyage
persons, registration is necessary  However, if the failure to maintain the seaworthiness of the vessel can
be ascribed to the shipowner alone or the shipowner concurrently
Hypothecary – the liability of the owner of the value of the vessel is limited to the with the captain, then the limited liability principle cannot be invoked
Overloading, unseaworthiness even at the time of departure)
2. Where the vessel is insured (INSURANCE)
Article 837, 587, 590 and 643 – provides for limited liability of shipowner. (read
full provision)  Limited liability rule does not apply to insurance claims
Case: Vasquez vs. CA
Art. 837: civil liability incurred by the ship owner: liability limited to value of the
vessel + appurtenances + freightage earned during voyage - The total loss of the vessel did not extinguish the liability of the
carrier’s insrured
Art. 643: vessel and cargo lost by reason of capture or wreck: all rights shall be - Despite the loss of the vessel, therefore, its insurance answers
extinguished, both as regards the crew to demand any wages whatsoever, and as for the damages that a shipowner or agent, may be held liable
regards the ship agent to recover the advances made for by reason of the death of its passengers.
If a portion of the vessel or of the cargo, or both, should be saved, the
crew engaged on wages, including the captain, shall retain their rights on the 3. In the workmen’s compensation claims (WORKER’S COMPENSATION)
salvage, so far as they go, on the remainder of the vessel as well on the amount
of the freightage of the cargo saved; but sailors who are engaged on shares shall  The provisions of the Code of Commerce have no room in the
not have any right whatsoever on the salvage of the hull, but only the portion of application of the Workmen’s Compensation Act which seeks to
the freightage saved. If they should have worded to recover the remainder of the improve, and aims at the amelioration of, the condition of laborers
shipwrecked vessel they shall be given from the amount of the salvage an award and employees
in proportion of the efforts made and to the risks encountered in order to  If an accident is compensable under the Workmen’s Compensation
accomplish the salvage Act, 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 of the Code of Commerce


 Liability under the Workmen’s compensation Act, even if the vessel -liability: assumption that the shipowner is liable for the losses. There are no valid
was lost, is still enforceable against the employer or shipowner. defenses that shipowner can invoke to escape liability. Same concept with 1479.
Difference is that there is a fixed amount and there is qualification
4. Expenses for repairs and provisioning of the ship prior to the -under the limited liability – no fixed amount but amount is confined on the vessel
departure thereof
The question here: is this a right to limit the liability?
5. The vessel is not abandoned (ABANDONMENT) A: admittedly it is a right that only shipowner can exercise
 Abandonment of the vessel, its appurtenances and the freightage is
an indispensable requirement before the shipowner or ship agent can Q; how to exercise?
enjoy the benefits of the limited liability rule. If the carrier does not A: by way of pleading. But do not follow the way it was filed in yangco. Here it
want to abandon the vessel, he is still liable even beyond the value of was after judgment that the shipowner sought to abandon the ship to abandon
the vessel liability
 The only instance where abandonment is dispensed with is when the But right now, it is a matter of procedure. To limit liability by abandoning the
vessel was entirely lost. In such case, the obligation is extinguished. vessel; IF it is a matter of procedure, you check the rules of civil procedure
 Only shipowner and ship agent can make an abandonment
Q: so when does shipowner inform the court the right to limit liability?
PROCEDURE FOR ENFORCEMENT A: in a pleading and normally in an answer. IT will be raised as a defense. If
shipownver cannot allege, then that defense is deemed waiver. Therefore you
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance cannot seek abandonment after judgment was been rendered.
Corporation, Ltd.
- Rights of the parties to claim against an agent or owner of vessel may CASES:
be compared to those of creditors against an insolvent corporation
whose assets are not enough to satisfy the totality of claims as against Yangco vs. Lacerna
it. - even captain was aware of the typhoon and the vessel capsized, SC upheld
- Creditors must limit their recovery to what is left in the name of the limited liability
- In the sinking of a vessel, the claimants or creditors are limited in their Chua Hek Kong
recovery to the remaining value of accessible assets. In the case of lost - there being no exceptions, the court upheld limited liability
vessel, these assets are the insurance proceeds and pending
freightage for the particular voyage The more critical issue is on the EXCEPTIONS in the LLRule:
1. workmen’s compensation (Abueg case: the repairs constitue maritime lient)
PROTESTS 2. insurance coverage--- if the vessel is lost in the course of voyage and it is
- is the written statement by the master of a vessel or any authorized insured, is it automatic that the limited liability rule does not apply?
officer, attested by proper officer or a notary, to the effect that A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned very little
damages has been suffered by the ship about insurance: if the vessel is insured, the insurance proceeds shall answer the

Required under the following cases: If the plaintiff was injured or heirs will file action from insurance company, and
1. When the vessel makes an arrival under stress since shipowner cannot avail of limited liability, this is not advisable to the
2. Where the vessel is shipwrecked plaintiff because it has no privity of contract with the insurance company
3. Where the vessel has gone through a hurricane or the captain believe
that the cargo has suffered damages or averages Q: when does insurance argument come in?
4. Maritime collisions A: only when the shipowner will bring the insurance company to the case filed by
the plaintiff—by way of third party complaint. Once insurance company is
Q: when is it not required? impleaded then this can be used: that the owner cannot avail of limited liability.
1. when it does not fall under the four cases mentioned above But no shipowner will ever implead the insurance. Because they will be the one
2. when what is not involve is not a vessel who will claim the insurance without telling the plaintiffs. In the case, there is no
proof that the vessel is insured. Even if we know outside court, it is insured
ADMIRALTY JURISDICTION (RTC) because in the court, there is no proof that the vessel is insured. Court will not
- Section 19 (3) of BP 129 as amended by RA 7691 identify evidence not properly identified and recoded in court.
(3) In all actions in admiralty and maritime jurisdiction where
the demand or claim exceeds 300, 000 or in Metro manila, Q: is it really an exception in its strict sense?
where such demand or claim exceeds 400,000. A: Not really (CAPANAS). What is the implication if you properly invoke the LLRule
- if less  MTC – the plaintiff cannot avail beyond the value of the vessel.
If not apply – plaintiff will recover more than the value of vessel subject to rules
3 concepts: (they are the same) on claiming of damages.

1. real and hypothecary --- the supreme court did not explain the literal meaning But question, if vessel if covered with insurance, does this mean that plaintiff can
of it. recover to the amount applied? No, they can only recover until the coverage of
- real: refers to the risk in maritime that’s why there are privileges for the the insurance proceeds.
shipowner. Risks are certain to happen
- hypothecary: remember guaranty and collateral which is the vessel. For the 3. Negligence
particular voyage, the guaranty is the vessel wherein if the vessel is lost, the - common carrier is presumed negligent if common carrier. However, this does
shipowner no longer has the liability not apply when there is an invocation on limited liability. (in all cases except
MONARCH vs. CA) --- the rest of the case, the court has found negligence based
2. limited liabililty rule --- no literal explanation on the facts presented. You cannot invoke presumption of negligence so that
- limited: it means that the liability is limited to the value of the vessel limited liability rule will not apply.


Monarch _-- SC: since there is a presumption of negligence then LLR will not 1. managing agent
apply. But SC also said that if LLR is invoked, the initial burden to invoke 2. ship’s husband --- agent of the vessel
negligence shifts to the shipowner. They should prove that there is no privity or
knowledge on the negligence of the ship captain. If mortgagor does not pay:
1. judicial foreclosure – file actual case and implead the vessel as party defendant
Q: what is the relationship of Civil Code and LLR? (served to captain or authorized person); you can ask the court order to arrest
A: There is none. Under 1766 in all matters not provided by Civil Code, Code of the vessel.
Commerce or Special law will apply. There is no rule in Civil Code in limited 2. extrajudicial
liability rule thus Code of Commerce will apply. (but in monarch, this was not - the problem with vessel, mortgagee is not in possession of the vessel. It is with
applied--- all the negligence was related to the absence of exercising the mortgagor, you cannot sell the property not in your possession.
extraordinary diligence)
In PD 1521—the order of arrest can be asked
Note: that in the subsequent cases, Consolidated of Aboitiz case: there were Grounds to discharge
findings of facts of the negligence of Aboitiz. The point is when it comes to LLR, 1. irregularly issued (mortgagee na ilad. Wala pa diay due obligation
the Code of Commerce apply. You cannot invoke presumption of negligence. In 2. posting of a bond to discharge..the bond to be posted is double the value of
order to refute, petitioner should prove negligence. the claim.
Maritime lien on necessaries (5 requisites) – brief yourself cresent petroleum
Loadstar case case (look at book for requisites)
- the shipowner is aware of the typhoon
- insufficient manning – negligent B. VESSELS (Chapter 7)
- Captain playing mahjong – there was negligence. But SC said that it was
negligent because the shipowner did not prove that it was the first. Supposedly 1. General Concepts
facts are established in court proceedings and not on presumption.
 A vessel or watercraft is defined under PD No. 447 as any barge, lighter,
3. no vessel, no liability bulk carrier, passenger ship freighter, tanker, container ship, fishing boats,
or other artificial contrivance utilizing any source of motive power,
- they all mean one and the same such that the liability of the shipowner for the designed use or capable of being used as a means of transportation
losses is confined to the value of the vessel and the freight, if any. operating either as a common carrier, including fishing vessels covered
under PD No. 43,
and above notes) Except:
1. Those owned and/or operated by the Armed Forces of the Philippines
INSTANCES WHEN IT DOES NOT APPLY: and by the Foreign Government for its Military Purpose.
1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN NOT 2. Bancas, sailboat and other waterbone contrivance of less than three tons
MARITIME PROTEST capacity and not motorized.
2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor boat is
not a vessel under maritime law, it is only engaged in bay traffic. A vessel in
maritime law, should be engaged in transporting goods, persons, or both from Case: Yu Con vs. Ipil
one port to another) - The word vessel serves to designate every kind of craft by whatever
particular or technical name it may not be known or which nautical
(But to be sure: you file maritime and allege such bahala dili kelangan coz advancements may give it in the future
otherwise dismiss ang case) - The court held that a small vessel used for the transportation of
merchandise by sea and for the making of voyages from one port to
Since a vessel is a personal property, it can be mortgaged… another of these Islands, equipped and victualed for this purpose by
Same concept with mortgage but different rule its owner, is a vessel, within the purview of the Code of Commerce,
- PD 1521: for the determination of the character and effect of the relations
created between the owners of the merchandise laden on it and its
Q: what about process of extra judicial foreclosure of vessel? owner
A: chattel mortgage law should govern
 When the mercantile code speaks of vessels, they refer solely and
Q: what to remember under PD 1521? exclusively to mercantile ships, as they do not include warships, and
A: Section 4 furthermore, they almost always refer to craft which are not accessory to
registration, non waiver another as in the case of launches, lifeboats and etc.
Section17: priority of claims…
 Further, they refer exclusively to those which are engaged in the
Q: are there claims in maritime law over and above preferred mortgage? transportation of passengers and freight from one port to another or from
A: yes. Look at section 17. one place to another

Case: Poliand Industrial  They refer to merchant vessels and in NO WAY can they or should they be
- facts shows that the proceeds debted from hardwood was for the modification understood as referring to pleasure craft, yachts, pontoons, health service
of the vessel (extended for vessels benefit), for crews wage and harbor police vessels, etc.

Characteristics of maritime lien:  Ships ought to be understood in the sense of vessel serving the purpose of
1. maritime property maritime navigation or seagoing vessel, and not in the sense of vessel
2. travels with the property--- it cannot be extinguished devoted to the navigation of rivers
3. enforceable in an action in rem--- action directed to the property (crescent
case: ang gi kiha ang vessel)  The third book of the code of commerce, dealing with maritime commerce,
was evidently intended to define laws relative to merchant vessels and
Under section 22: persons authorize to procure repairs (presumed): maritime shipping; and as appears from said code, the vessel intended in


that book are such run by masters having special training with elaborate
apparatus of crew and equipment indicated in the code. A. Prescription (Code of Commerce)

 Only vessels engaged in what is ordinarily known as maritime commerce Article 573. Merchant vessels constitute property which may be acquired and
are within the provision of law conferring limited liability on the owner in transferred by any of the means recognized by law. The acquisition of a vessel
case of maritime disaster. must appear in a written instrument, which shall not produce any effect with
respect to third persons if not inscribed in the registry of vessels.
 Other vessel of minor nature not engaged in maritime commerce, such as
river boats and those carrying passengers from ship to shore, must be The ownership of a vessel shall likewise be acquired by possession in good faith,
governed, as to their liability to passenger, by the provision of the civil code continued for three years, with a just title duly recorded.
or other appropriate special provisions of law.
In the absence of any of these requisites, continuous possession for ten years
Case: Augusto Lopez vs. Juan Duruelo, et. al shall be necessary in order to acquire ownership.
- The code of commerce are not applicable to small craft which are only
subject to administrative (customs) regulations in the matter of port A captain may not acquire by prescription the vessel of which he is in command.
service and in the fishing industry
- Only vessels engaged in what is ordinarily known as maritime ARTICLE 575. Co-owners of vessels shall have the right of repurchase and
commerce are within the provisions of law conferring limited liability redemption in sales made to strangers, but they may exercise the same only
on the owner in case of maritime disaster within the nine days following the inscription of the sale in the registry, and by
- It is therefore clear that a passenger on a boat like the Jison, in the depositing the price at the same time.
case before use, is not required to make protest as a condition
precedent to his right of action for the injury suffered by him in the B. Sale (Code of Commerce)
collision described in the complaint – article 835 of the Code of
Commerce does not apply Article 576. In the sale of a vessel it shall always be understood as included the
CONSTRUCTION, EQUIPMENT AND MANNING rigging, masts, stores and engine of a streamer appurtenant thereto, which at the
time belongs to the vendor.
The Construction, equipment and manning of vessel are subject to the rules
issued by the Maritime Industry Authority (MARINA) and consistent with Article The arms, munitions of war, provisions and fuel shall not be considered as
574 of the Code of Commerce included in the sale.

Article 574. Builders of vessels may employ the materials and follow, with The vendor shall be under the obligation to deliver to the purchaser a certified
respect to their construction and rigging, the systems most suitable to their copy of the record sheet of the vessel in the registry up to the date of the sale.
interests. Ship owners and seamen shall be subject to what the laws and
regulations of the public administration on navigation, customs, health, safety of Article 577. If the alienation of the vessel should be made while it is on a voyage,
vessels, and other similar matters. the freightage which it earns from the time it receives its last cargo shall pertain
entirely to the purchaser, and the payment of the crew and other persons who
PERSONAL PROPERTY make up its complement for the same voyage shall be for his account.
If the sale is made after the vessel has arrived at the port of its destination, the
Vessels are considered personal property under the Civil Law. The Code of freightage shall pertain to the vendor, and the payment of the crew and other
Commerce likewise expressly acknowledges the special nature of a vessel as individuals who make up its complement shall be for his account, unless the
personal property. contrary is stipulated in either case.

Case: Philippine Refining Company vs. Jargue Article 578. If the vessel being on a voyage or in a foreign port, its owner or
- Vessels are personal property although occasionally referred to as a owners should voluntarily alienate it, either to Filipinos or to foreigners domiciled
peculiar kind of personal property in the capital or in a port of another country, the bill of sale shall be executed
- They are subject to mortgage agreeably to the provisions of the before the consul of the Republic of the Philippines at the port where it
Chattel Mortgage Law terminates its voyage and said instrument shall produce no effect with respect to
- The only difference between a chattel mortgage of a vessel and a third persons if it is not inscribed in the registry of the consulate. The consul shall
chattel mortgage of other personality is that it is not now necessary immediately forward a true copy of the instrument of purchase and sale of the
for a chattel mortgage of a vessel to be noted in the registry of the vessel to the registry of vessels of the port where said vessel is inscribed and
register of deeds, but it is essential that a record of documents registered.
affecting the title to a vessel be entered in the record of the Collector In every case the alienation of the vessel must be made to appear with a
of Customs at the port of entry statement of whether the vendor receives its price in whole or in part, or whether
he preserves in whole or in part any claim on said vessel. In case the sale is made
Case: Rubiso and Calixto vs. Rivera to a Filipino, this fact shall be stated in the certificate of navigation.
- Ships or vessels, whether moved by steam or by sail, partake, to a
certain extent, of the nature and conditions of real property, on When a vessel, being on a voyage, shall be rendered useless for navigation, the
account of their value and importance in the world of commerce captain shall apply to the competent judge on court of the port of arrival, should
- Transfer of vessels should be in writing and must be recorded in the it be in the Philippines; and should it be in a foreign country, to the consul of the
appropriate registry Republic of the Philippines, should there be one, or, where there is none, to the
judge or court or to the local authority; and the consul, or the judge or court, shall
2. OWNERSHIP order an examination of the vessel to be made.

ACQUISITION If the consignee or the insurer should reside at said port, or should have
representatives there, they must be cited in order that they may take part in the
 Vessel may be acquired or transferred by any means recognized by laws. proceedings on behalf of whoever may be concerned.
Thus, vessel may be sold, donated and may even be acquired through
prescription. REGISTRATION
 Under the present laws, vessels that are under the jurisdiction of MARINA  Vessels are now registered through MARINA. It is a long standing rule that
can be transferred only with notice to said administrative agency. the person who is the registered owner of the vessel is presumed to be the


owner of the vessel. For purposes of Maritime Commerce:
 It is a settled rule that the sale or transfer of the vessel is not binding on The words “captain” and “master” have the same meaning; both being
the third person unless the same is registered. chiefs or commanders of ships. Thus, the terms “captain” and “master” are
used synonymously in the Code of Commerce.
 Vessels are required to carry manifest coast-wise trade. MARINA regulations:
 A manifest is a declaration of the entire cargo. The object of a manifest is MASTER – the person having command of the ship. The same term is being used
to furnish custom officers with list of check against, to inform the revenue both for domestic trade and international trade.
officers what goods are being brought into a port of the country on a
vessel. BOAT CAPTAIN – a person authorized by the MARINA to act as officer and/or in
 The requirement that a vessel must carry a manifest is not complied with command of a boat/ship or has the qualification/license to act as such.
even if a bill of lading can be presented. A bill of lading is just a declaration
of a specific cargo rather than the entire cargo 3 Distinct Roles a captain commonly performs:
 Sec 906 of the Tariff and Custom Code provides that “manifest shall be (Inter-Orient Maritime case)
required for cargo and passengers transported from one place to another 1. He is a GENERAL AGENT OF THE SHIPOWNER;
only when one or both of such place is a port of entry.” 2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel (most
important role for this has something to do with the operation and
MORTGAGE preservation of the vessel during its voyage and the protection of the
 Since the term personal property includes vessel, they are subject to passengers, if any, and crew and cargo);
mortgage agreeably to the provisions of the Chattel Mortgage Law. 3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he
 Mortgage and other encumbrances over vessels are governed by the navigates.
provisions of presidential decree 1521 (Ship Mortgage Decree of 1978)
Based on the first aforementioned role, the captain is regarded as the GENERAL
OTHER CODE OF COMMERCE PROVISIONS AGENT of the shipowner and as such, he:
 The provisions of the Code of Commerce reproduced hereunder are
deemed modified not only by the Civil Code but also by special laws a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the freight earned;
c. Agree upon rates and decide whether to take cargo;
SAFETY REGULATIONS d. Has legal authority to enter into contracts with respect to the vessel and
 On February 23, 2000, the Maritime Industry Authority directed all the trading of the vessel, subject to applicable limitations established by
domestic shipowners and operators under Memorandum Circular No. 154 statute, contract or instructions and regulations of the shipowner.
to strictly comply with existing Safety-Related Policies, Guidelines, Rules All aforementioned functions verily commits to the captain the governance, care,
and Regulations and management of the vessel. Clearly then, the captain is vested with both
 Rules include: (read book page 488-489)
 Monitoring of compliances shall be undertaken by the Authority and its
Maritime Regional Offices, together with the needed coordination with
Arts. 610-612 of the Code of Commerce)
the Philippine Coast Guard
The MARINA shall have the power to inspect vessels and all equipment on board
to ensure compliance with safety standards
A ship’s captain must be accorded a REASONABLE MEASURE OF
DISCRETIONARY AUTHORITY to decide what the safety of the ship and of its crew
and cargo specifically requires on a stipulated ocean voyage.
In sum, the following are persons who take part in Maritime Commerce:
Presumption: A captain is knowledgeable as to the specific requirements of
seaworthiness and the particular risks and perils of the voyage he is to embark
 OFFICERS and CREW OF VESSELS Applicable Principle: The captain has control of ALL departments of service in the
vessel, and reasonable discretion as to its navigation.
Basic Principle in Admiralty Law: In navigating the vessel, the master must be
SHIPOWNER – the person who is primarily liable for damages sustained in the left free to exercise his own best judgment.
operation of vessel.
Requirements of Safe Navigation: The judgment and discretion of the captain of
Code of Commerce – places the primary responsibility on the owner of the vessel. a vessel may be confined within a straitjacket, even in this age of electronic
(Uses the term naviero which has been construed to include shipowner, ship communications.
agent and even the charterer who is considered as owner pro hac vice.)
PILOTAGE: Who is a pilot?
SHIP AGENT (Code of Commerce) – the person entrusted with provisioning of the
vessel, or who represents her in the port in which she happens to be. There Maritime Law: a person duly qualified, and licensed, to conduct a vessel into or
is also the intention under the Code of Commerce to make the ship agent out of ports, or in certain waters.
solidarily liable with the owner. The solidary liability applies both for breach
of contract and extra-contractual obligations such as tort. The ship agent, Broad sense: includes both (1) those whose duty it is to guide vessels into or out
even though he is not the owner, is liable in every way to the creditor for of ports, or in particular waters; and (2) those entrusted with the navigation of
losses and damages without prejudice to his right against the owner, the vessels on the high seas.
vessel and its equipment and freight. But his liability, however is subject to
the LIMITED LIABILITY RULE (Chapter 6 of the Aquino book). General understanding: a person taken on board at a particular place for the
purpose of conducting a ship through a river, road or channel, or from a port.


COMPULSORY PILOTAGE. In compulsory pilotage, states possessing harbors The Labor Code provisions apply to OFFICERS and CREW of merchant
enacted laws or promulgated rules requiring vessels approaching their ports to vessels in DOMESTIC Trade or COASTWISE Shipping. Hence, matters
take on board pilots licensed under local law. In the Philippines, compulsory concerning their dismissal or disciplinary action must be in accordance with
pilotage is being implemented in the Port of Manila, the latter being within the provisions of the Labor Code. For officers and crew who are working in
Manila Pilotage District. foreign vessels who are involved in overseas shipping, there must be
compliance with the applicable laws on overseas employment as well as
a. Master and Pilot (See Far Eastern Shipping case on page 520 of the Aquino regulations issued by the Philippine Overseas Employment Administration
book for the SC discussion on the duties of a pilot) (POEA).

b. Shipowner and Pilot CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and Marine
Engineer, Crew, and Captain (See pages 552-560 of the Aquino book).
GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused by his
own negligence or default to the OWNERS of the vessel, and to THIRD Parties --- those provided above… plus seamen, other members of the
PARTIES for damages sustained in a collision. Such negligence of the pilot complement including the stokers (incharge of boilers) and supercargo (agent of
in the performance of duty constitutes a MARITIME TORT. the shippers who has authority to sell goods while on voyage)

In cases of COLLISION: the COLLIDING VESSEL is prima facie responsible, 4 maritime contracts
hence, the burden of proof is upon the party claiming benefit of the 1. charter parties
exemption from liability. Thus, it must be shown affirmatively that the pilot 2. Botomry
was at fault, and that there was no fault on the part of the officers or crew, 3. Repondentia
which might have been conducive to the damage. The fact that the law 4. Marine insurance (incorporated in the subject insurance)
compelled the master to take the pilot does not exonerate the vessel from
liability. The injured party shall seek redress from the vessel. The owners ON PERSONS
of the vessel are responsible to the injured party for the acts of the pilot,
and they must be left to recover the amount as well as they can against Shipowner
him. - he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can invoke the LLR?
c. Pilot and his Association No jurisprudence. Personal opinion of sir: distinguish on the type of
charter party. If affreightment, shipowner retains possession,
The fact that the pilot is a member of an association does not make the command and navigation of the vessel. If bareboat it is vested upon
association jointly and severally liable. Article 2180 of the Civil Code does the charterer.
not apply because there is NO EMPLOYER-EMPLOYEE Relationship. - Jurisprudence: except for registration, the charterer is the temporary
owner of the vessel. With this, the charterer can invoke LLR (this part
Well-established is the rule that pilot associations are immune to vicarious no juris)
liability for the tort of their members. They are not the employer of their
members and exercise no control over them once they take the helm of Note: there is not distinction of liability of shipowner and ship agent. They are
the vessel. They are also not partnerships because the members do not civilly liable
function as agents for the association or for each other. Pilots’ associations
are also not liable for negligently assuring the competence of their There is a situation in maritime law that shipower and agent they are held liable
members because as PROFESSIONAL ASSOCIATIONS, they made no for the act or omission of a third person which is the ship captain or master.
guarantee of the professional conduct of their members to the general
public. ACTS of CAPTAIN
Case: Yucon case and Sweetlines case
CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino - In Yucon, money was entrusted to the captain and the money was
book) lost. SC concluded that shipowner was liable for the lost because the
captain failed to put up measures while in custody of the money. It
OFFICERS AND CREW OF VESSELS may not technically to an act but may refer to admission but would
fall under the term acts
COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce) - In sweetlines, bound for catbalogan but the captain chose to allow the
-- all the persons on board from the captain to the cabin boy, necessary for the passengers to disembark in tacloban. This time, this is the act of
management, maneuvers, and service, and therefore, it includes the CREW, the captain. The SC concluded that the damages sustained by passengers
SAILING MATES, ENGINEERS, STOKERS, and OTHER EMPLOYEES ON BOARD not bound for catbalogan are to shouldered by the shiponwer
having specific designations; but it SHALL NOT INCLUDE the passengers or the
persons whom the vessel is transporting. Indemnities in Favor of 3rd person: OTTA devt case sited in walter smith case
- In OTTA the owner of the pier was at the same time the owner of the
REGULATION OF MERCHANT MARINE PROFESSION goods. SC, because there was a relationship of owner of vessel and
The practice of marine profession is now governed by special laws and pertinent goods, then there is presumption of negligence new civil code prevails
rules issued by the: - Walter smith case: There was no relationship. Owner of port and
- MARINA; owner of goods are different. What was applied by court was the law
- BOARD OF MARINE DECK OFFICERS; on torts. No presumption of negligence. There should be proof of
- BOARD OF MARINE ENGINEER OFFICERS negligence. The owner of vessel proved that he exercised ordinary
diligence (required in ports). What was presented was the
MINIMUM SAFE MANNING competence of shipcaptain. The shipowner proved ordinary diligence
It is not enough that the officers manning the merchant vessel have all the in choosing the ship captain
qualifications imposed by the Philippine Merchant Marine Officers Act and
other special laws or regulations. It is also required that there is sufficient Contracts entered into by shipcaptain or master
number of officers and crew that are serving in the vessel. (Quality and
Quantity) Inter orient case: one role is they are the general agent of the shipowener. But if
the obligation contracted by the captain does not enure to the benefit of the
SECURITY OF TENURE vessel, then the shipowner has no liability. There is no conflict bec. 586


obligations contracted by the shipper while 1759 death or injury of passenger as - it is a contract, hence, parties are free to stipulate upon such terms and
result of contract of carriage. conditions that would suit their purposes subject to the caveat that these
should not be contrary to law or public policy
The case in point with the contracts entered into was the case Wing Kee. There
were supplies delivered. Shipagent was said to be liable. SC said at the time you Parties
were still an agent you were liable but at the time agency was terminated you 1. Charterer- merchant or a person who desire s to lease ship or vessel owned
are no longer liable. by another by transport of his or her goods for commercial purposes or persons
from one port to another
If both SO and SA are sued, being solidarily liable, the SA has right of recourse 2. Shipowner (SO)
over SO.
Shipcaptain or master 1. bareboat or demise charterer – shipowner leases to the charterer the whole
- The difference is with regard to the tonnage of the vessel (higher: vessel, transferring to the charterer the entire command, possession and
captain; lower: master; major patron and minor patron) consequent control over the vessel’s navigation, including the master and the
- The question on the shipcaptain or master is the exercise of discretion crew, who becomes the charterer’s “servants”
- Inter orient case: captain tayong did not want to proceed with the - charterer becomes an owner “pro hac vice”
voyage from Singapore to Africa bec. Of lack of oxygen and acetylene.
But because of order of management he proceeded. He was then 2. Contract of affreightment – charterer hires the vessel only, either for a
ordered to repatriated and then another captain took his place. He determinate period of time or for a single or consecutive voyage, with the SO
filed for illegal dismissal. The issue was the discretion exercised by the providing for the provision of the ship, wages of the master and crew, and
captain. WON he has the discretion not to proceed bec. Of lack of expenses for maintenance of the vessel
supply. SC said you should emphasize reasonable discretion--- it is the a. time charter – vessel is leased to a charterer for a fixed period of
captain’s duty time
- Inter Orient: triple roles of the captain --- general agent, commander b. voyage charter – vessel is leased for a single or particular voyage
and technical manager, representative of country
Shipcaptain and harbor pilot 1. consent of the contracting parties
- Harbor pilot: distinguish if voluntary or compulsory 2. an existing vessel which should be placed at the disposition of the
- Case cited by SC on proper relationship of captain and pilot. In far shipper
eastern shipping case 521 3rd par --- ther are occasion when the 3. the freight
master may and should interfere and even displace the pilot when he 4. compliance with requirements of art 652 of Code of commerce
is obviously incapacitate and intoxicated…. (look at the book) (Aticle 652 of the Code of Commerce provides that the charter party
- In this case, there is relevance on when the captain should interfere. shall contain, among others, the name, surname, and domicile of the
If it is voluntary (pilot engaged by shipowner) --- damages caused by charterer, and if he states that he is acting by commission, that of the
pilot, shipowner is liable. If compulsory, shipowner can escape liability person for whose account he makes the contract.)
- If compulsory distinguish whether there was circumstances that
would require the shipcaptain to interfere with the ship pilot. If there Caltex v. Sulpicio Lines
are circumstances but captain did not interfere then shipowner is There was a voyage charter; collision between MT Vector (tanker) and Doña Paz
liable. If there are circumstances and captain interfere but still there (owned by Sulpicio) ; breach of contract filed by the passengers’s heirs against
is damage, the shipowner will not be liable. Sulpicio ; 3d party complaint against registered owner of the tanker including
- Cebu Port Authority --- covered by compulsory pilotage Caltex ( that they were negligent and in bad faith by not seeing to it that the
tanker was seaworthy)
Chiefmate or sailing mate (then there are engineers)
- 2008 case, citing the article the code of commerce specifying the Issue: WON charterer shall be liable under Maritime Law?
functions of chiefmate being second in command of the vessel…
Chiefmate is a managerial employee (as provided in labor code --- loss Ruling: Liability cannot be attached to Caltex; the charter did not affect the
of trust and confidence business of Sulpicio as a common carrier ; rights and responsibilities of ownership
- still rested on the owner
- On security of tenure: distinguish DOMESTIN (labor code) abroad Planters Product v CA
(POEA).. there is a standard contract (poea prepared and drafted it - time charter; Planters purchased fertilizers from the US; voyage to the
and every seaman shall comply with this --- this is to protect filipino Philippines ; upon arrival, shortage in the cargo was discovered ; filed
seaman working abroad) that will be signed by every seaman actions against carrier fro damages ( breach of Contract) ; RTC ruled
stipulating the security of tenure, repatriation, benefits, etc. in favor of the Planters; Ca reversed & absolved carrier as it was
- Difference for abroad: bigger income but contractual (after contract converted from common carrier to private ;
go home).. DOMEstic, you can be a regular employee in accordance - Ruling : It cannot become a private carrier ; bareboat charter can
with the labor code become a private carrier but in contract of affreightment remains as
- JumpShip scenario: it is a valid ground to terminate a seaman common carrier ( action based on contract of carriage ; presumption
of negligence ) ; carrier was able to rebut the presumption of
Shipcaptain should conduct preliminary investigation for crimes conducted on negligence ( result the inherent character of the fertilizers)
Coastwise Lighterage v. CA
D. CHARTER PARTIES - WON private carrier would convert to a common carrier; contract of
Charter Parties - Ruling : reiterated Planters ruling ; but was not able to rebut
- a contract whereby the entire ship, or some of the principal part, is let by presumption of negligence ; did not exercise EO diligence ( hired
the owner to a merchant or other person for a specified time or use for the unlicensed patron)
conveyance of goods, consideration of payment of freight
Home Insurance v. American Steamship


- case mostly used by the common carrier as defense ; Home Insurance the goods to a degree less than extraordinary diligence shall be valid, provided
is subrogee (paid SMC of loss cargo shipped thru American Steamship it be:
; no reference as to what contract but there was a mention that it was (1) In writing, signed by the shipper or owner;
in affreightment (2) Supported by a valuable consideration other than the service
- Ruling : Common Carrier undertaking to carry special cargo (chartered rendered by the common carrier; and
to special person only ) become a private carrier and stipulation (3) Reasonable, just and not contrary to public policy.
exempting owner from liability for loss due to the negligence of its
agents is valid; Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
Shipowner can appoint senior officers for the vessel even if bareboat contract. (1) That the goods are transported at the risk of the owner or
But technically it is an affreightment. Most conflicts will occur if these various shipper;
principles will have to be mixed. (2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
The whereabouts of the vessel is important to know the time for loading and (3) That the common carrier need not observe any diligence in the
unloading… custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less
Policy – marina than that of a good father of a family, or of a man of ordinary
Implementing or enforcement --- Coastguard prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or
2 conditions implied in charter party omission of his or its employees;
1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter party (6) That the common carrier's liability for acts committed by thieves,
2. --- look at book (ala kaapas) or of robbers who do not act with grave or irresistible threat,
violence or force, is dispensed with or diminished;
JURISDICTION OF ADMIRALTY CASES (7) That the common carrier is not responsible for the loss,
- depends on the jurisdictional amount destruction, or deterioration of goods on account of the defective
- important element of the contract = the subject matter of the contract condition of the car, vehicle, ship, airplane or other equipment used
(nature and character) in the contract of carriage.

International Harvester v Aragon Art. 1746. An agreement limiting the common carrier's liability may be annulled
-involves loss of cargo shipped from LA to Manila; cargo owner filed an action by the shipper or owner if the common carrier refused to carry the goods unless
against common carrier the former agreed to such stipulation.
-SC said liability of petitioner was predicated upon the contract of carriage ;
admiralty would involve all maritime contract in whatever form and wherever Art. 1747. If the common carrier, without just cause, delays the transportation
made of the goods or changes the stipulated or usual route, the contract limiting the
Macondry v Delgado Brothers common carrier's liability cannot be availed of in case of the loss, destruction,
- Delgado was an operator of a pier service ; WON operator exercised or deterioration of the goods.
its duty in loading and unloading of cargos ; no contract of carriage ;
obligation was only to load the to the ship ; no application of admiralty Art. 1748. An agreement limiting the common carrier's liability for delay on
account of strikes or riots is valid.
- price of carriage Art. 1749. A stipulation that the common carrier's liability is limited to the value
- shall accrue according to what is stipulated in the contract of the goods appearing in the bill of lading, unless the shipper or owner declares
- should there be no stipulation or if it is ambiguous , rules shall be a greater value, is binding.
a. freight shall begin to run from the day of loading on the vessel
b. in charters with fixed period, the freight shall begin to run upon Art. 1750. A contract fixing the sum that may be recovered. by the owner or
that very day shipper for the loss, destruction, or deterioration of the goods is valid, if it is
c. If freight is charged according o weight , payment shall be made reasonable and just under the circumstances, and has been fairly and freely
according to gross weight , including the weight of the agreed upon.
Art. 1751. The fact that the common carrier has no competitor along the line or
LAST DAYS- period of time stipulated fro loading and unloading ( provided for in route, or a part thereof, to which the contract refers shall be taken into
charter party ) ; if no lay days provided for in the charter party, it is understood consideration on the question of whether or not a stipulation limiting the
that the charterer will unload and discharge cargoes within a reasonable time or common carrier's liability is reasonable, just and in consonance with public
with reasonable diligence policy.

Demurrage – a sum of money due by express contract for detention of the vessel Art. 1752. Even when there is an agreement limiting the liability of the common
in loading , beyond time allowed for that purpose in that charter party ; sum of carrier in the vigilance over the goods, the common carrier is disputably
which is usually fixed by the parties in the charter party ; liability for this exists presumed to have been negligent in case of their loss, destruction or
only when expressly stipulated deterioration.

Deadfreight – where the charterer failed to occupy the leased portion of the Art. 1753. The law of the country to which the goods are to be transported shall
vessel, he may thereby be liable by the shipowner for the deadfreight that govern the liability of the common carrier for their loss, destruction or
occurred deterioration.

STIPULATION IN CHARTER PARTIES Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's
baggage which is not in his personal custody or in that of his employee. As to
GR: parties are free to stipulate subject to art 1744 t01754 0f NCC other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be applicable.
Art. 1744. A stipulation between the common carrier and the shipper or owner
limiting the liability of the former for the loss, destruction, or deterioration of


ART. 653. if the cargo should be received without the charter party having been 3. The last lender is a preferred 3. The first lender is a preferred
signed, the contract shall be understood as executed In accordance with what creditor creditor
appears in the bill of lading, the sole evidence of title with regard to the cargo for
determining the rights and obligations of the ship agent, captain and charterer 4. Must have a collateral 4. May or may not have collateral

- If there is charter party or bill of lading (BOL) = no contract at all; but according 5. Collateral is the vessel or cargo 5. Maybe property, real or personal
to Blanco, if there is delivery and receipt of cargo combined with the GF and subject to maritime risk
mutual consent = contract present , better than BOL 6. Must be in writing 6. Need not be in writing but
interest shall not be due unless
E. LOANS ON BOTTOMRY AND RESPONDENTIA expressly stipulated in writing
7. To be binding on third person must 7. Need not be registered
LOAN ON BOTTOMRY – loan made by shipowner or ship agent guaranteed by be recorded in the registry of vessels
vessel itself and repayable upon arrival of vessel at destination; vessel/portion of port of registry of the vessel
8. Loss of collateral extinguishes the 8. Does not extinguished if there is
LOAN ON RESPONDENTIA – loan, taken on security of the cargo laden on a vessel, same a loss of the collateral (if any)
and repayable upon safe arrival of cargo at destination; cargo/goods
Consequences of loss of effects of the loans
1. Exposure of security to marine peril; 1. Effects of loans be lost due to accident of the sea during the time, and on the
2. Obligation of the debtor conditioned only upon safe arrival of the security occasion of the voyage which has been designated in the contract and proven
at the point of destination. that the cargo was on board
- lender losses the right to institute the action which would pertain to him
Requisites of a Loan on Bottomry/Respondentia:
1. Shipowner borrows money for use, equipment or repair of vessel Except: when the loss was
2. For a definite term and with extraordinary interest called premium 1. caused by inherent defect of the thing
3. Secured by pledged of vessel or portion thereof in the case on loan on 2. through fault or malice of the borrower
Bottomry; or pledge of goods in case of Respondentia 3. through barratry on the part of the captain
4. Loan repayment depends or conditioned on the safe arrival of goods for 4. caused by damages suffered by the vessel as a consequence of
respondentia and obligation to repay is extinguished if pledged goods are being engaged in a contraband
lost (Respondentia) 5. loaded the goods on a vessel different from that designated in the
5. Obligation to repay is extinguished if vessel is lost due to specified marine contract unless the change was caused by force majeure
perils in the course of voyage or within limited time (Bottomry)
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA: 2. The lenders on bottomry or respondentia shall suffer in proportion to their
 May be executed by means of: respective interest, the general average which may take place in the things upon
1. public instrument which the loans were made.
2. policy signed by the contracting parties and the broker taking part therein
3. private instrument (Art. 720) 3. In case of shipwreck, the amount for payment of the loan shall be deduced to
the proceeds of the effects which have been saved but only after deducting the
GR: The captain cannot contract loans on respondentia secured by the cargo, costs of the salvage.
and should he do so, the contract shall be void. Neither can he borrow money
or Bottomry for his own transactions. 4. If the loan should be on the vessel or any of her parts, the freight earned during
the voyage for which the loan was contracted shall also be liable for its payment,
EXCEPTIONS: as far as it may reach.
1. On the portion of the vessel he owns, provided no money has been previously
borrowed on the whole vessel, nor exists any other kind of lien or obligation 5. If the same vessel or cargo should be the object of the loan of Bottomry or
chargeable against her. respondentia and maritime insurance, the value of what may be saved in case of
2. When he is permitted to do so, he must necessarily state what interest he shipwreck shall be divided between the lender and the insurer, in proportion to
has in the vessel. the legitimate interest of each one, taking in consideration, for this purpose only,
CONTENTS OF THE LOAN CONTRACT: the principal with respect to the
1. kind, name and registry of the vessel;
2. name, surname and domicile of the captain; Maritime contracts include charter parties… and loans on bottomry and
3. names, surnames and domiciles of the borrower and the lender; respondentia are considered maritime contracts
4. amount of the loan and the premium stipulated; Q: why do we have to study this topic? Are these relevant?
5. time for repayment; A: they are hardly used at present. However, we have to study this just in case
6. goods pledged to secure repayment; this will be asked in the bar. Especially in the unique terms used in this topic..
7. voyage during which the risk is run (Art.721)
General provisions in contracts will govern
Basic provision you should not forget:
1. Bottomry – by the ship owner or ship agent; outside of the residence of the
1. there should be a marine risk
owners, the captain.
2. the condition that the vessel or the goods has perished then the right of the
2. Respondentia – only the owner of the cargo
lender to collect everything as well as stipulated interest is extinguished
(not sure if there are other more.. basin ala ko kaapas)
1. Not subject to Usury Law 1. Subject to Usury Law - It may refer to the vessel
- The bottom or the hull or the kill of the vessel can be pledged in this
2. Liability of the borrower is 2. Not subject to any contingency case
contingent on the safe arrival of the - The whole vessel can be a subject of a security or collateral
vessel or cargo at destination - PD. 1521: (is this different) --- loan is the principal, mortgage is the


- The contract of bottomry is principal, the mortgage under pd 1521 is B. Gross or General Average
merely a security  Damage or expenses deliberately caused in order to save the vessel, its cargo
- In pd 1521 under section 4 it is a requirement that the whole of the or both from real and known risk. (Art. 811)
vessel must be mortgaged (no jurisprudence on this matter whether  All the persons having an interest in the vessel and the cargo therein at the
a part of the vessel can be mortgaged) time of the occurrence of the average shall contribute to satisfy this average.
- In bottomry the whole or the part of the vessel can be the subject (Art. 812)
- IF the part of the vessel can be pledged, is it necessary that there
should be goods? No. no need for goods. REQUISITES:
1. common danger present
RESPONDENTIA 2. arising from accidents of sea, disposition of authority
- The vessel should have goods. The goods must be laden in the vessel 3. peril imminent and ascertained
- Is it necessary that the boat is on voyage? The vessel must be in the 4. part of vessel or cargo deliberately sacrificed
actual course of voyage because this is the objective of the law. 5. intended to save vessel or cargo
Because if the vessel is docked in the port the owner can simply obtain 6. proper legal steps and authority taken
loans. And besides there is no risk when the vessel is docked (but no
jurisprudence) Common danger
- means both the ship and the cargo, after has been loaded, are subject to the
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the bar) -- same danger, whether during the voyage, or in the port of loading or unloading,
- 5 differences that the danger arises from the accidents of the sea, disposition of authority, or
1. with respect to form --- can you validly execute a bottomry or respondentia faults of men, provided that circumstances producing the peril should be
verbally? You cannot. Bec under the code of commerce no judicial action can ascertained and imminent or may rationally be said to be certain and imminent
arise when the contract is not reduced in writing. But this is not the case in simple
loan. But in simple loan you take note the statute of frauds… if not in writing B - When the measure of precaution adopted solely and exclusively for the
and R, you can dismiss case due to failure to state cause of action. preservation of the vessel from the danger of seizure or capture and not for the
common safety is not considered as common danger
Q: why hardly used at present?
A: because of sophistication. Captains can just call up any agent the shipowner to Deliberate Sacrifice
deliver anything for the use of the vessel to deliver. … This contract was - voluntary sacrifice of a part for the benefit of the whole in order to justify the
recognized in medieval times. average contribution

* voluntary jettison- the casting away of some portion of the associated

F. AVERAGES AND COLLISIONS interests for the purpose of avoiding the common peril from the whole to a
particular portion of those interests
1. Averages - the goods on board refer to in jettison should be proven by means of bill of
2. Arrival Under Stress lading and with regards to those belonging to vessel by means of inventory
3. Collision prepared before the departure
4. Shipwreck
2 cases where there can also be general averages even if the sacrifice was not
* Averages – an extra-ordinary or accidental expense incurred during the voyage made during the voyage:
in order to preserve the cargo, vessel or both; and all damages or deterioration a. where the sinking of the vessel is necessary to extinguish a fire in a
suffered by the vessel from departure to the port of destination, and to the cargo port, roadstead, creek or bay
from the port of loading to the port consignment. (Art. 806) b. where cargo is transferred to lighten the ship on account of a storm
to facilitate entry into a port
A. Particular or Simple Average Art. 816: in order that the goods jettisoned may be included in the gross average
B. Gross or General Average and the owners entitled to indemnity – it is necessary that the cargo’s existence
on board be proven by a bill of lading; and with regard to those belonging to the
A. Particular or Simple Average vessel, by means of an inventory prepared before departure.

Damage or expenses caused to the vessel or cargo that did not inure to Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry to
common benefit, and borne by respective owners. (809) a port or roadstead, part of the cargo should be transferred to barges or lighters
 The owner of the goods which gave rise to the expense or suffered th e and be lost, the owner of the said part is entitled to indemnity as if the loss
damage shall bear this average. (Art. 810) originated from a gross average, the amount being distributed between the
res perit domino applies vessel and cargo from which it came.
if the vessel or goods are hypothecated by loan on bottomry and respondentia, If on the contrary the merchandise transferred should be saved and the vessel
the lender shall bear the loss in proportion to his interest should be lost, no liability may be demanded of the salvage.

Examples: see article 809 of the code of commerce Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, creek,
or bay, it should be decided to sink any vessel, this loss shall be considered gross
RULES ON AVERAGES: average, to which the vessels saved should contribute.
1. Averages is defined as damage deliberately caused or an expense
deliberately incurred due to a marine peril and which has resulted in saving Note: the loss or damage sustained by cutting away wreck or parts of the ship
both vessel and cargo or only the vessel or cargo. which have been previously carried away or effectively lost by accident shall not
2. Where both vessel and cargo are saved, it is general average; where only be made good as general average
the vessel or only the cargo is saved, it is particular average.
3. The person whose property has been saved must contribute to reimburse Sacrifice must be Successful
the damage caused or expense incurred if the situation constitutes general - no general contribution can be demanded if the vessel and other cargo that are
average. sought to be saved were in fact not saved (art. 860)


Law on averages does not apply if the CC is negligent.
- owners of the goods saved shall not be liable for the indemnification of those
- hence when the sacrifice was not successful in saving the ship, there will be no AVERAGES
general contribution
 Under the rule, deck cargo is permitted in coastwise shipping but prohibited in
Compliance with Legal Steps overseas shipping.
1. If deck cargo is located with the consent of the shipper on overseas trade,
- Procedure for recovery: (Art. 813-814) it must always contribute to general average, but should the same be
1. There must be a resolution of the captain, adopted after a deliberation jettisoned, it would not be entitled to reimbursement because there is
with the other officers of the vessel and after hearing all persons interested violation of the Y-A Rules.
in the cargoes. If the latter disagree, the decision of the captain should 2. If deck cargo is loaded with the consent of the shipper on coastwise
prevail but they shall register their objections. shipping, it must always contribute to general average and if jettisoned
2. The resolution must be entered in the logbook, stating the reasons and would be entitled to reimbursement.
motives for the dissent, and the irresistible and urgent causes if he acted
in his own accord. It must be signed, in the first case, by all persons present - may also be used to solve controversies where no provision of the
in the hearing. In the second case, by the captain and all the officers of the code of commerce is in point because the said rules embody the
vessel. custom of maritime states
3. The minutes must also contain a detail of all the goods jettisoned and those
injuries caused to those on board. AVERAGES
4. The captain shall deliver it to the maritime judicial authority of the first port - the same concept that was existing in medieval times can be applied at present
he may make, within 24 hours after his arrival, and to ratify it immediately
under oath. Relevance of averages (take note these ex. Connected to expenses under 806)
under 806 --- averages are:
- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON: o Extraordinary expenses – ex. If machine does not work,
1. those which are on the deck, preferring the heaviest one with the least you have to ask help of a tugboat… the expenses on the
utility and value; use of tugboat is a question of averages. This is
2. those which are below the upper deck, beginning with the one with extraordinary because it is not foreseen. --- assuming the
greatest weight and smallest value. (Art. 815) engine of the vessel was defective, can that be considered
an average? YES. (question now if it is particular or general)
o Damages or deterioration suffered – refer to the physical
Examples of General Average feature or attribute of the goods.
Read Art 811 of the Code of Commerce - these two are different


- shall be borne by those who benefited from the sacrifice; the shipowner and
the owner of the cargoes that were saved Hernandez – averages are losses. If there is a loss incurred, the loss will be
shouldered on where it falls. (ex. If you have goods transported from origin to
Contribution may be imposed to; destination but in process it was damaged by sea water. The shipper or owner
a. insurers ( Insurance Code of the Philippines) will shoulder the loss. What will shipper do to recover loss? If insured go after
- they are obliged to pay for the indemnification of the gross average provided insurance. Insurance then files action against common carrier due to negligence)
that the liability shall be limited to the proportion of contribution attaching to his --- if general average, there is special circumstance, the loss will not be
policy value where this is less than the contributing value of the thing insured shouldered on where it falls but wil be shouldered proportionately by persons
who have benefited the circumstance
b. lenders of bottomry and respondentia (Code of Commerce)
-obliged to pay in proportion to their respective interest, the general average 4 reqs for general averages (see above notes) – MEMORIZE; MAGSAYSAY VS.
which may take place in the goods which the loan is made AGAN
1. common danger TO Both vessel and cargo
Who is entitled to indemnity? 2. deliberate sacrifice
Owner of the goods which were sacrificed is entitled to receive the general 3. successful saving
contribution 4. compliance with the proper steps
1. goods carried on desk unless the rule special law or customs If no special circumstance, it is a particular or simple average --- the owner of the
of the place allow the same vessel will be the one who will shoulder the loss. The negligence of captain, the
2. goods that are not recorded in the books or records of the owner of the vessel will shoulder. But if there is special circumstance, the loss will
vessel be shouldered proportionately by those who benefited
3. fuel of the vessel if there is more than sufficient fuel for the
voyage Standard oil case – the ship captain will not release goods to the shipper unless
the shipper will contribute their share. The issue was the duty of the captain to
American Home Insurance v. CA liquidate – he did not file for the appropriate proceeding, you should result to
Art 848 states that claims shall not be admitted if they do not exceed 5% of the legal liquidation. Captain here failed TO INITIATE proper proceeding thus
interest which the claimant may have in the vessels or cargo if it is general shipowner is liable for actions of captain
average, and 1% of the goods damaged if particular average… deducting in both
cases the expenses of appraisal, unless there is an agreement to the contrary. Q: is the duty of captain to initiate a condition precedent?
A: no. even if ship captain does not initiate, the shipowner can still file the
It is clear that the damage of the cargo is particular average since the loss is less appropriate proceeding in court.
than 1% to the value of the cargo and there appears to be no allegations as to
any agreement defendants and consignee of the goods to the contrary, by COMMON DANGER – both to vessel and cargo. If one invokes general average
express provision of law, plaintiff is barred from suing for recovery. then that person must prove what he allege. In standard oil since ship captain


invoked gen aver – they should be the one to prove. Failure to prove, they cannot majeure. In this case each shall bear its own damage. (Art. 830)
ask for contribution from owners of the goods. 5. Two vessels may collide with each other without their fault by reason of a
third vessel. The third vessel will be liable for losses and damages. (Art. 831)
It is also possible that there are no goods involved. Only extraordinary expense 6. A vessel which is properly anchored and moored may collide with those
Phil. Home assurance case --- discussed also in chapter 3 --- when it exploded, nearby reasons of storm or other cause of force majeure. The vessel run
vessel got burned, another vessel came to the rescue to extinguish the fire and into shall suffer its own damage and expense. (Art. 832)
towed the vessel to the nearest destination. Goods were saved from the subject
vessel. The shipowner asked for contribution to the owner of the goods which  Cases covered by collision and allision:
were saved. SC said, shipowner did not comply legal steps 813-815 thus you 1. One vessel at fault – such vessel is liable for damage caused to innocent
cannot allege general averages. vessel as well as damages suffered by the owners of cargo of both vessels.
2. Both vessels at fault – each vessel must bear its own loss, but the shippers
If the averages are not general, it is particular. the shipowner will be solely liable… of both vessels may go against the ship owners who will be solidarily liable.
in the case of Magsaysay, there was no deliberate sacrifice. 3. Vessel at fault not known – same as rule as (2). (Doctrine of Inscrutable
SUCCESSFUL SAVING 4. Third vessel at fault – same rule as (1).
- Both vessel and goods must be saved 5. Fortuitous event – no liability. Each bears its own loss.
- If vessel not saved, no general averages. Even if goods were saved
- You have to start with resolution, placing of reso in the log book, Prerequisite to recovery:
accounting of goods thrown away starting those on deck and to follow  Protest should be made within 24 hours before the competent authority at
from those not on deck (read 83-815) the point of collision or at the first port of arrival, if in the Philippines and to the
Philippine consul, if the collision took place abroad. (Art. 835)
American Home insurance (take note this case--- bar)  Injuries to persons and damage to cargo of owners not on board on collision
- Transportation of tv sets, the shipcapatain was uprised of the time need not be protested. (Art. 836)
typhoon. Still captain continued with the journey. Then na abot ang
typhoon captain directed that the tv sets should be jettison. Saved DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT
vessel. Reklamo owner. Is there general average? No. if the APPLICABLE.
shipowner is negligent, the law on general averages does not apply.
Note that examples of the two types of averages are not exclusive. There is a DOCTRINE OF “INSCRUTABLE FAULT”
word “especially” thus there may be other example that may fall under this two  In case of collision where it cannot be determined which between the two
type of averages. vessels was at fault, both vessels bear their respective damage, but both should
be solidarily liable for damage to the cargo of both vessels.
- THIS CAN be stipulated in a contract that this rule will apply in respect NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall
to averages be limited only to the value of the vessel with all its appurtenances and freightage
- In the absence of stipulation in the contract in applying this rule, such earned during the voyage. When the latter is not sufficient to cover all the
rule is inapplicable liabilities, the indemnity due by reason of the death or injury of persons shall
have preference. (Arts. 837 and 838)
Q: ordinary expenses are not averages bec. They are foreseeable, are there
instance that they can be considered to be extraordinary ave H. ARRIVAL UNDER STRESS
A; if the parties agree that the averages will cover ordinary expenses. The code
of commerce does not prohibit the inclusion of other expenses under averages. * ARRIVAL UNDER STRESS – arrival of a vessel at a port of destination on account
of lack of provision, well founded fear of seizure, privateers, pirates, or accidents
G. COLLISIONS of sea disabling navigation. (Art. 819)
NOTE: Captain must make a protest
Collisions - impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary one. Steps to be taken in the determination of the propriety of arrival under stress
1. captain should determine during the voyage if there is a well founded fear
 3 Zones of Time in the Collision of vessels: of seizure, privateers of other valid grounds
1. First zone – all time up to the moment when risk of collision begins; 2. captain shall then assemble the officers
2. Second zone – time between moment when risk of collision begins and 3. captain shall summon the persons interested in the cargo who may be
moment it becomes a practical certainty; present and who may attend but without right to vote
3. Third zone – time when collision is certain and time of impact. 4. the officers shall determine and agree if there is well founded reason after
examining the circumstances; Captain shall have the deciding vote
 Error in Extremis - sudden movement made by a faultless vessel during the 5. agreement shall be drafter and the proper minutes shall be signed and
3rd zone of collision with another vessel which is at fault during the 2nd zone. entered into the log book
Even if such sudden movement is wrong, no responsibility will fall on said 6. objections and protests shall likewise be entered in the minutes
faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632).
- Absence of one of the steps, can still be considered arrival under stress.
 Rules on Collision of Vessels under Code of Commerce:
1. The collision may be due to the fault, negligence or lack of skill of the When not lawful:
captain, sailing mate, or any other member of the complement of the 1. lack of provisions due to negligence to carry according to usage and
vessel. The owner of the vessel at fault be liable for losses or damage. (Art. customs;
826) 2. risk of enemy not well known or manifest
2. The collision may be due to the fault of both vessels. Each vessel shall suffer 3. defect of vessel due to improper repair; and
its own losses, but as regards the owner of cargoes both vessels shall be 4. malice, negligence, want of foresight or lack of skill of captain. (Art. 820)
jointly and severally liable. (Art. 827)
3. If it cannot be determined which vessel is at fault. Each vessel shall also Who bears expenses:
suffer its own losses and both shall be solidarily liable for losses o damages  if arrival under stress is proper  shipowner or ship agent will only be
on the cargoes. (Art. 828) liable for the expenses of the arrival
4. The vessels may collide with each other through fortuitous event or force  if arrival under stress is improper  shipowner and ship agent will be


liable for the same expenses and, in addition, they shall be solidarily can unload them at the port of which they were consigned, he may make said
liable for damages caused to the cargoes by such arrival under stress port if the shippers or supercargoes present and the officers and passengers of
(Art. 821) the vessel consent thereto. But he is not required to do so even if he has the
consent during time of war or when the port is difficult and dangerous to make.
NOTE: … The owners of the cargo to defray all the expenses of this arrival and the
- After cessation of the cause of the arrival under stress, captain should payment of the freightage. (Art. 844)
continue voyage or else he shall be liable.  If cannot be, proceed to judicial sale complying with the formalities and on
publicity. (Art. 845)
Unloading of cargoes to make repairs:
- in order to make repairs to the vessel or because there is danger that I. SALVAGE LAW (Act No. 2616)
cargo may suffer damage  necessary to unload; captain must
request authorization from competent judge or court for removal, * SALVAGE – services one person renders to the owner of a ship or goods, by his
and carry it out w/ knowledge of the person interested in the cargo own labor, preserving the goods or the ship which the owner or those entrusted
- in a foreign port  Philippine Consul with the care of them have either abandoned in distress at sea, or are unable to
- in case of the vessel  expenses shall be for the account of the ship protect or secure.
owner or agent
- in case of the cargo  chargeable against the owners of the Kinds of Salvage:
merchandise for whose benefit the act was performed  Voluntary – compensation is dependent on the success.
- if both  expenses to be divided proportionately between the value  Under contract for a per diem or per horam wage – payable at all
of the vessel and cargo events.
(Art. 822)  Under contract for compensation – payable only in case of success.

Custody of cargo: Claim for valid salvage:

 intrusted to the captain (except in cases of force majeure) - Provides for a reward for voluntary salvage
(Art. 823) - Other persons who assist in saving the vessel or its cargo from
 if entire cargo or part thereof should appear to be damaged, or there shipwreck shall be entitled to a similar award
should be imminent danger of its being damaged
 captain may request judge of competent court / consul, the sale of Persons not entitled to salvage compensation:
all or part of the cargo 1. Crew of the vessel shipwrecked or which was in danger of shipwreck
 person taking cognizance shall authorize it (after examination and 2. He who shall have commenced the salvage in spite of opposition of
declaration) the captain or of his representatives
 captain shall justify the legality of his conduct, answering to the 3. He who shall have failed to comply with the provisions of Section 3
shipper for the price of the merchandise would have brought if they (Section 3. Tthe salvor who saves or picks up a vessel or merchandise
had arrived in good condition at sea, in the absence of the ship captain, ship owner or a
(Art. 824) representative of either of them, they being unknown, shall convey
and deliver the vessel or merchandise ASAP to the collector of customs
Liability of captain: if the port has a collector and otherwise to the provincial treasurer or
 captain responsible for the damages caused by his delay municipal mayor.)
 if cause of arrival under stress ceases  he should not continue the
voyage Requisites of compensation or salvage reward:
 if cause of arrival should have been the fear of enemies  1. Object must have been exposed to marine peril (fire, acts of pirate,
deliberation and resolution (in a meeting of officers of the vessel and thieves)
persons interested in the cargo) shall precede the departure 2. Salvage services rendered voluntarily and is not required as an existing
(Art. 825) duty or a form of contract (See Sec. 8)
* Pilots are not entitled to a reward – (Atty. Capanas)
* Shipwreck – the demolition or shattering of a vessel caused by her driving 3. Salvage services are successful in whole or in part
ashore or on rocks and shoals in the midseas, or by the violence of winds or waves 4. Valid vessel which is shipwrecked beyond the control of the crew or
in tempests shall have been abandoned (not necessary)
- loss of the vessel at sea as a consequence of its grounding, or running against * Courts will not interfere in the agreement of the parties except but where there
an object in sea or on the coast is no agreement or it is excessive the reward is fixed by the RTC judge.

 Loss or deteriorations of vessel or cargo caused by shipwreck or stranding  * Derelict – a ship or cargo which is abandoned and deserted at sea by those who
individually account of the owners; part which may be saved belonging to them, were in charge of it, without any hope of recovering it or without any intention
same proportion. (Art. 840) of returning to it
 If the wreck was due to malice, negligence or lack of skill of the captain, the - determined by ascertaining what was the intention and expectation of those in
owner of the vessel may demand indemnity from said captain. (Art. 841) charge of it when they quitted it
 The goods saved from the wreck to be specially bound for the payment of the - boat or vessel found entirely deserted or abandoned on the sea without hope
expenses of the respective salvage. (Art. 842) or intention of recovery or return by the master or the crew, whether resulting
 If several vessels sail under convoy, and any of them should be wrecked, the from wreck, accident, necessity, or voluntary abandonment
cargo saved will be distributed among the rest in proportion to the amount which
each one is able to take. … If any captain should refuse, without sufficient cause, JETSAM, FLOTSAM, LIGAN:
to receive what may correspond to him, the captain of the wrecked vessel to  Jetsam – goods that were thrown off a ship which was in danger
enter a marine protest against him. … If it is not possible to transfer to the other  Flotsam – goods that floated off the ship while ship was in danger or
vessels the entire cargo of the vessel wrecked, the goods of the highest value and when it sank
smallest volume to be saved first. Designation to be made by the captain with  Ligan – goods left as sea on the wreck or tied to a buoy so that they
concurrence of his officers. (Art. 843) can be recovered later
 The captain taking on-board the goods saved from the wreck to continue his
course to the port of destination and upon arrival he should deposit the goods Basis of entitlement to salvage reward (Circumstances to consider):
for disposal to their owners. … In case the captain changes his course, and if he 1. The labor expended by the salvors in rendering the salvage service


2. The promptitude, skill and energy displayed in rendering the service SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL TREASURER, OR MUNICIPAL
3. The value of the property employed by the salvors in rendering the A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.
service, and danger to which such property was exposed B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN
4. The risk incurred by the salvors in rescuing the property from the DANGER OF IMMEDIATE LOSS OR OF THOSE WHOSE CONSERVATION IS
5. The value of the property salved OBJECTION IS MADE TO SUCH SALE.
6. The degree of danger which the property was rescued C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE
Rights and obligations of salvors and owners: PAPER PUBLISHED, OF ALL THE DETAILS OF THE DISASTER, WITH A
 Salvor is entitled to compensation for services rendered. He has, STATEMENT OF THE MARK AND NUMBER OF THE EFFECTS REQUESTING ALL
under the Salvage Law, a lien upon the property salvaged. INTERESTED PERSONS TO MAKE THEIR CLAIMS.
 On the other hand, the owner does not denounce his right to the
property. There is no presumption of an intention to abandon such SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION OF THE
 A salvor, in maritime law, has an interest in the property; called a lien, but it VALUE, AND A BOND IS GIVEN BY THE OWNER OR HIS REPRESENTATIVE TO
never goes, in the absence of a contract expressly made, upon the idea of debt SECURE THE PAYMENT OF THE EXPENSES AND THE PROPER REWARD.
due from the owner to the salvor but upon the principle that the service creates OTHERWISE, THE DELIVERY SHALL NOR BE MADE UNTIL THE MATTER IS DECIDED
a property in the thing saved. BY THE COURT OF FIRST INSTANCE OF THE PROVINCE.


1. The reward is fixed by the RTC judge in the absence of agreement or where SECTION FIVE, THE THINGS SAVE SHALL BE SOLD AT PUBLIC AUCTION, AND THEIR
2. If sold (no claim being made within 3 months from publication), the BE DEPOSITED IN THE INSULAR TREASURY. IF THREE YEARS SHALL PASS WITHOUT
proceeds, after deducting expenses and the salvage claim, shall go to the ANYONE CLAIMING IT, ONE-HALF OF THE DEPOSIT SHALL BE ADJUDGED TO HIM
owner; if the latter does not claim it within 3 years, 50% of the said proceeds WHO SAVED THE THINGS, AND THE OTHER HALF TO THE INSULAR GOVERNMENT.
shall go to the salvors, who shall divide it equitably, and the other half to
3. If a vessel is the salvor, the reward shall be distributed as follows: ASSISTANCE:
a. 50% to the shipowner;
c. 25% to the officers and crew in proportion to their salaries SHIPWRECK;




- The shipowner and the ship agent may waive the benefit of any of the defenses
THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE BEEN EXPOSED TO THE in its favor provided not only under COGSA but also under other laws
Limiting provision
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED, - COGSA contains a provision that allows the shipper to recover only US$500 per
ENTIRELY OR PARTIALLY, BY ANOTHER VESSEL, THE REWARD FOR SALVAGE OR package unless there is a special declaration unless there the real value of the
THE REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO GIVE THE - declaration made by the shipper stating an amount bigger than $500 per
OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE REMAINDER OF THE package will make the carrier liable for such bigger amount but only if the amount
CREW THE OTHER FOURTH OF THE REWARD, IN PROPORTION TO THEIR so declared is the real value of the goods
ASSISTANCE, SHALL BE A CHARGE ON THE THINGS SALVAGED ON THEIR VALUE. - COGSA allows the carrier to discharge the good of the carrier discovers that the
goods are dangerous, inflammable or are explosives
- Adopted by the Philippines on October 22, 1936 through
Commonwealth Act No. 65
- New Civil Code  primary law on goods that are being transported
from a foreign port to the Philippines
- COGSA  remains to be a suppletory law for such type of
transportation – international shipping


* Goods – includes goods, wares, merchandise, and articles of every kinds

- does not include live animals and cargo which by the contract of
carriage is stated as being carried on deck and is so carried

 Carrier, and
 Shipper
- They are given their respective rights and obligations under COGSA.
- Carrier (covered by COGSA)  not limited to the shipowner; includes charterer
who enters into a contract of carriage with the shipper
- Charterer  charters a vessel and conducts his own business for his own
 after chartering the vessel, he uses the vessel to conduct a business
of transportation obtaining goods from 3rd persons to transport the latter’s goods

Duties of the carrier:

 Civil Code requires international carriers to exercise extraordinary
diligence in the performance of their contractual obligations
 Section 2 of COGSA  carrier’s obligation and liabilities in relation to
the loading, handling, stowage, carriage, custody, care and discharge
of such goods
 Section 3 of COGSA  responsibilities of the carrier under COGSA

Document of title required

- evidenced by the Bill of Lading
- BOL serves as prima facie evidence of the receipt by the carrier of the goods

Notice of claim and prescriptive period

* Notice of claim  must be made within 3 days from delivery if the damage is
not apparent; not mandatory
* Prescriptive period  1 year from delivery for the filing of the case is a
condition precedent or mandatory; does not apply to cases of misdelivery or

Defenses and immunities

- provided for by Section 4 of COGSA
- Section 49(1) of COGSA – carrier shall not be liable for loss or damages arising
from unseaworthiness
- New Civil Code – carrier will not be liable only if it can present proof that the
unseaworthiness was caused exclusively by any of the circumstances specified in
Art. 1734 of the NCC