LAW ON TRANSPORTATION AND PUBLIC UTILITIES

1.

Contract of Transportation person obligates himself to transport persons

or property from one place to another for a consideration.
2.
2 KINDS:
1. CARRIAGE OF PASSENGERS
Parties: common carrier & passenger (carried gratuitously or not)
Passenger one who travels in a public conveyance by virtue of contract,
express or implied, with the carrier as to the payment of fare or that which is
accepted as an equivalent thereof
Perfection:
2 types of contracts of carriage of PASSENGERS:
> contract to carry (agreement to carry the passenger at some future date)
consensual contract and perfected by mere consent
* AIRCRAFT perfected even without issuance of ticket as long as there was
already meeting of minds with respect to the subject matter and
consideration
> Contract of Carriage
real contract; not until the facilities of the carrier are actually used can the
carrier be said to have assumed the obligation of the carrier; perfected by
actual use.
* AIRCRAFT perfected if it was established that the passenger had checked
in at the departure counter, passed through customs and immigration,
boarded the shuttle bus and proceeded to the ramp of the aircraft and
baggage already loaded to the aircraft.
* Public Utility Bus or Jeepneys or Street Cars once it stops it is in effect
making a continuous offer to riders; perfected when passenger is already
attempting to board the vehicle
* TRAINS perfected when a person:
a. purchased a ticket/ possess sufficient fare with which to pay for
his passage
b. presented himself at the proper place and in a proper manner to
be transported
c. has a bona fide intention to use facilities of the carrier
2. CARRIAGE OF GOODS
Parties: shipper & carrier
Shipper the person who delivers the goods to the carrier for transportation;
pays the consideration or on whose behalf payment is made
Consignee person to whom the goods are to be delivered. May be the
shipper himself or a third person who is not actually a party to the contract

3.
4.

Characteristics of Common carriers (CC):

no distinction between one whose principal business is the
transportation of persons/goods and one who does such as an
ancillary business (sideline)
no distinction between regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled
business
still a CC even if services offered to a limited clientele (between
the general public and a narrow segment of the general
population)
Still considered a CC even if he did not secure a Certificate of
Public Convenience
No distinction as to the means of transporting, as long as it is by
land, water or air
The Civil Code does not provide that the transportation should be
by motor vehicle
Still a CC even if he has no fixed and publicly know route,
maintains no terminals, and issues no tickets
pipeline operators are CCs not necessarily motor vehicles (Case:
First Philippine Industrial Corp. vs. CA)
Case: Jose Mendoza vs. Philippine Airlines Inc
The test of whether one is a common carrier by air is whether he
holds out that he will carry for hire, so long as he has room, goods
of everyone bringing goods to him for carriage, not whether he is
carrying as a public employment or whether he carries to a fixed
place
CHARTER PARTY:
Contract by which an entire ship or some principal part thereof is
let by the owner to another person for a specified time or use.
Q: What is the effect of charter party?
A: It may transform a common carrier into a private carrier. However, it must
be a bareboat or demise charter where the charterer mans the vessel with his
own people and becomes, in effect, the owner for the voyage or service
stipulated
2 types:
1.

Contract of Affreightment
involves the use of shipping space on vessels leased by
the owner in part or as a whole, to carry goods for
another
CC = observe extraordinary diligence; in case of loss,
deterioration or destruction of goods of goods, CCs are
presumed to be at fault or have acted negligently
2 types
i. Time charter: vessel is leased to the charterer
for a fixed period of time
ii. Voyage charter: ship is leased for a single
voyage

2.

Charter by demise/ Bareboat Charter

whole vessel is let to the charterer with a transfer to
him of its entire command and possession and
consequent control over its navigation including the
master and the crew who are his servants.

Perfection:
> contract to carry goods consensual
> contract of carriage - act of delivery of goods ( goods are unconditionally
placed in the possession and control of the carrier and upon their receipt by
the carrier for transportation)
CARRIER:
Common carriers (CC) (1732)

persons, corporations, firms or associations engaged in the

business of carrying or transporting passengers or goods or both,
by land, water, or air, for compensation, offering their services to
the public. (NOT the means of transportation)

one that holds itself out as ready to engage in the transportation

of goods for hire as a public employment and not as a casual
occupation.

He must be engaged in the business of carrying goods for others

as a public employment, and must hold himself out as ready to
engage in the transportation of goods for persons generally as a
business and not as a casual occupation.
He must undertake to carry good of the kind to which his business
is confined.
He must undertake to carry by the method by which his business is
conducted and over his established roads.
Transportation must be for hire.

Tests for determining WON a party is a common carrier of goods:

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charter includes both vessel and crewCC becomes

private carrier (PC) insofar as that particular voyage is
concerned
if it is already a PC- ordinary diligence in the carriage of
goods will suffice
PC = undertaking is a single transaction, not a part of
the general business or occupation, although involving
the carriage of goods for a fee; NO presumption of
negligence applies whosoever alleges damage to or
deterioration of the goods carried has the burden of
proving that the cause was the negligence of the
carrier.

Distinction between Common Carriers and Private Carriers

COMMON CARRIER
PRIVATE CARRIER
Extraordinary diligence in the Ordinary diligence in the carriage of
vigilance over the goods they carry
goods will suffice
In case of loss, destruction, or No such presumption applies to
deterioration of goods, they are private carriers, for whosoever
presumed to have been at fault or to alleges damage to or deterioration n
have acted negligently; burden of of the goods carried has the onus of
proving otherwise rests on them
proving that the cause was the
negligence of the carrier
Cannot stipulate that it is exempt May validly enter into such
from liability for the negligence of its stipulation
agents or employees
Factors to be considered whether a carrier is common/private:

Law applicable
o
Common Civil Code
o
Private contract

Diligence required
o
Common extraordinary diligence
o
Private diligence of a good father of a family

Burden of proof in relation to negligence

o
Common the carrier
o
Private on the party having a claim against the carrier
Case: Planters Products, Inc. vs. CA
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by
one or more persons, provided the charter is limited to the ship
only, as in the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew that a
common carrier becomes private
True Test of Common Carrier Is the carriage of passengers or goods, provided
it has space, for all who opt to avail themselves of its transportation service
for a fee
Generally, private carriage is undertaken by spcial agreement and the carrier
does not hold hiself out to carry goods for the general public
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International
By definition, a contract of carriage is one whereby a certain
person or association of persons obligate themselves to transport
person, thing or new from one place to another for a fixed price
It is obvious from the above definition that respondent is not an
entity engaged in the business of transporting either passengers
or goods and is therefore, neither a private nor a common carrier.
Its covenant with its customers is simply to make travel
arrangements in their behalf.
It is in this sense that the contract between the parties in this case
was an ordinary one for services and not one of carriage; it is thus
not bound under the law to observe extraordinary diligence in the
performance of its obligation.
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING

Towage
Arrastre
-

A vessel is hired to bring another vessel to another place

e.g. a tugboat may be hired by CC to bring the vessel to a port
(operator of tugboat not CC)
in maritime law: towing for the mere purpose of expediting her
voyage without reference to any circumstances of danger
Arrastre operators functions has nothing to do with the trade
and business of navigation nor to the use or operation of vessels
Services are not maritime
Functions of arrastre operator:
o
Receive, handle, care for, and deliver all merchandise
imported and exported, upon or passing over
Government-owned wharves and piers in the port
o
Record or check all merchandise which may be
delivered to said port ant shipside
o
Furnish light, and water services and other incidental
service in order to undertake its arrastre service
Such service is in face, no different from those of a depositary or
warehouseman

Stevedoring
involves the loading and unloading of coastwise vessels calling at
the port.
>>> Common carriers are public utilities, impressed with public interest and
concern subject to regulation by the state.
GOVERNING LAWS
read summary of rules on page 40 of book
Article 1766 (Civil Code). In all matters not regulated by this Code, the
rights and obligations of common carriers shall be governed by the
Code of Commerce and by special laws.
NATURE OF BUSINESS
Common Carriers exercise a sort of public office
Consequently, common carriers are subject to regulation by
the State
REGISTERED OWNER RULE/REGISTRATION LAWS
Governed by the Land Transportation and Traffic Code and
administered by the Land Transportation Office
The registered owner of a vehicle is liable fro any damage caused
by the negligent operation of the vehicle although the same was
already sold or conveyed to another person at the time of the
accident.
The registered owner is liable to the injured party subject to his
right of recourse against the transferee or the buyer
Applicable in case of lease
Registered owner not liable if vehicle was taken form him without
his knowledge and consent.
Q: what is the purpose of such law?
A: The main aim of motor vehicle registration is to identify the owner so that
if any accident happens, or that any damage or injury is caused by the vehicle
on the public highways, responsibility therefor can be fixed on a definite
individual the registered owner.
KABIT SYSTEM
The registered owner rule is applicable to people involved on a kabit
system
arrangement whereby a person who has been granted a certificate of
public convenience allows other persons who own motor vehicles to
operate them under his license, sometimes for a fee or percentage of
the earnings --- contrary to public policy (thus VOID and INEXISTENT)
parties to the kabit system cannot invoke the same as against each
other either to enforce their illegal agreement or to invoke the same to
escape liability --- pari delicto rule
having entered into an illegal contract, neither can seek relief from the
courts and each must bear the consequences of his acts

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also applicable to aircrafts and vessels basic rule that no person can
operate a common carrier without securing a certificate of public
convenience and necessity.

Case: Dizon vs. Octavio

the primary factors considered in the granting of a certificate of
public convenience for the business of public transportation is the
financial 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 wronged and deceived through the baneful kabit system, the
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 responsibility
CHAPTER 2
OBLIGATIONS OF THE PARTIES
I. Obligations of the carrier
A. DUTY TO ACCEPT
- A common carrier granted a certificate of public convenience is
duty bound to accept passengers or cargo without any
discrimination.
- It is illegal for domestic ship operators to refuse to accept or carry
passengers or cargo without just cause. (Section 16, RA 9295)
Note: In air transportation, passengers with confirmed tickets who were not
allowed to board are provided with denied boarding compensation and
priority boarding rules.
No compensation for refusal if it is because of:
1.
government requisition of the space
2.
substitution of equipment of lesser capacity when required by
operational and or safety and/or other causes beyond the control
of the carrier, and
3. if arrangements have been made for the passenger to take
another flight in a comparable air transportation which will arrive
not later than three hours after the time of flight on which the
confirmed space is held is supposed to arrive. (Civil Aeronautics
Board Economic Regulation)
Grounds for Valid Refusal to Accept Goods
GR: common carriers cannot lawfully decline to accept a particular
class of goods
EXC: it appears that for some sufficient reason the discrimination
against the traffic in such goods is reasonable and necessary:
i. dangerous objects or substances including dynamites and
other explosives
ii. goods are unfit for transportation
iii. acceptance would result in overloading
iv. contrabands or illegal goods
v. goods injurious to health
vi. goods will be exposed to untoward danger like flood,
capture by enemies and the like
vii. goods like livestock will be exposed to diseases
viii. strike
ix. failure to tender goods on time
Case: Fisher v. Yangco
factors in determining reasonable discrimination include:
i. suitability to the vessel for the transportation of such products;
ii. reasonable possibility of danger or disaster resulting from their
transportation in the form and under the conditions in which
they are offered for carriage; and
iii. the general nature of the business done by the carrier.
(1) Hazardous and Dangerous Substances

Carrier not properly equipped to transport dangerous chemicals or

explosives may validly refuse to accept the same for transport.
Those which are not authorized by the Maritime Industry
Authority to carry such goods may also validly refuse the same for
transport.
There must be a Special Permit to Carry from the MARINA. (accept
only if the said cargoes are covered by the necessary clearance
from appropriate government agencies)

(2) Unfit for Transport

Carriers may refuse to accept goods that are unfit for
transportation
These goods may by nature be unfit for transportation or are unfit
because of improper packaging or defect in their containers.
However, carriers may accept the goods and limit its liability by
stipulation.
If by reason of well-founded suspicion of falsity in the declaration as to the
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 declaration of shipper is true, expenses occasioned by the examination and
of repacking the packages shall be for the account 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 containers, the common carrier must exercise due diligence to
forestall or lessen the loss.
B. DUTY TO DELIVER THE GOODS
Time of Delivery
- Where a carrier has made an express contract, the goods must be
delivered within a specified time otherwise he is liable for any delay
(indemnity for damages).
- In the absence of any agreement, goods must be delivered at its
destination within a reasonable time (depending on the attending
circumstances, nature of the goods; expected date of arrival in the BOL
may be considered).
- In the absence of a special contract, a carrier is NOT an insurer against
delay in transportation of goods
Consequences/Effects of Delay
- Excusable delays in carriage suspend, but do not generally terminate,
the contract of carriage; when the cause is removed, the master must
proceed with the voyage and make delivery.
- During the detention or delay, vessel continues to be liable as a
common carrier, not a warehouseman, and remains duty bound to
exercise extraordinary diligence.
Article 1740 (NCC). If common carrier negligently delays in transporting the
goods, a natural disaster shall not free it from responsibility.
Article 1747 (NCC). If common carrier delays , without just cause, in
transporting the goods or changes the stipulated or usual route, the contract
limiting its liability cannot be availed of in case of the loss, destruction, or
deterioration of the goods.
Note: read page 72 of book for other provisions.
(1) Abandonment
In case of delay through the fault of the carrier, the consignee may
refuse to accept the goods or may leave the goods in the hands of
the carrier. It must be communicated to the carrier in writing.
This right must be exercised between the time of delay and before
the arrival of the goods at its destination.
The carrier must pay the full value of the goods as if they had been
lost or mislaid.
Note: If abandonment is not made, indemnification for the losses and
damages by reason of the delay cannot exceed the current price which the
goods would have on the day and at the place they are to be delivered.

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The value of the goods which the carrier must pay in case of loss or
misplacement shall be that what is declared in the bill of lading.
Consignee must not defer the payment of the expenses and transportation
charges of the goods otherwise carrier may demand the judicial sale of the
goods.

Case: Magellan Mfg. Marketing Corp. vs. CA

Abandonment may also be made by virtue of stipulation or
agreement between parties
(2) Rights of Passengers in Case of Delay
As to the rights and duties of the parties strictly arising out of
delay, the Civil Code is silent. However, the Code of Commerce
provides for such a situation:
ARTICLE 698. In case a voyage already begun should be interrupted, the
passengers shall be obliged to pay the fare in proportion to the distance
covered, without right to recover for losses and damages if the interruption
is due to fortuitous event of force majeure, but with a right to indemnity if
the interruption should have been caused by the captain exclusively. If the
interruption should be caused by the disability of the vessel and a passenger
should agree to await the repairs, he may not be required to pay any
increased price of passage, but his living expenses during the stay shall be for
his own account.
Note: the carrier is liable for any loss or damage, including any pecuniary loss
or loss of profit, which the passenger may have suffered by reason thereof.

C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE

- Goods should be delivered in the same condition that they were
received and to transport the passengers without encountering
any harm or loss.
- Read page 79-80 for provisions
ARTICLE 1755. A common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances. (Civil
Code)
- Presumption of Negligence
- Two conditions for the birth of the presumption of negligence:
1.
there exists a contract between the passenger or the shipper and
the common carrier
2.
the loss, deterioration, injury or death took place during the
existence of the contract
Doctrine of Proximate Cause there is presumption of negligence
If the goods are lost, destroyed or deteriorated, common carriers are
presumed to have acted negligently, unless they prove that they observed
extraordinary diligence. In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence.
- Duration of Duty:
(1)

In case the vessel is not able to depart on time and the delay is
unreasonable, the passenger may opt to have his/her ticket immediately
refunded without any refund service fee from the authorized
issuing/ticketing office.
Where and to Whom Delivered
a. Place Goods should be delivered to the consignee in the place
agreed upon by the parties.
The shipper may change the consignment of the goods provided that at the
time of ordering the change of the consignee the bill of lading signed by the
carrier be returned to him, in exchange for another wherein the novation of
the contract appears. The expenses occasioned by the change shall be for
the account of the shipper.
b.

Consignee Delivery must generally be made to the owner or

consignee or to someone lawfully authorized by him to receive the
goods for his account or to the holder of the negotiable
instrument.

c.

Delay to Transport Passengers A carrier is duty bound to

transport the passenger with reasonable dispatch

Effects of delayed and unfinished voyage in inter-island vessels:

vessel cannot continue or complete her voyage for any cause

carrier is under obligation to transport the passenger to his/her
destination at the expense of the carrier including free meals and
lodging
before the passenger is transported to his/her
destination; the passenger may opt to have his/her ticket refunded
in full if the cause of the unfinished voyage is due to the
negligence of the carrier or to an amount that will suffice to defray
transportation cost at the shortest possible route if the cause of
the unfinished voyage is fortuitous event.

vessel is delayed in arrival at the port of destination free meals

during mealtime

delay in departure at the point of origin due to carriers

negligence; fortuitous event - free meals during mealtime; carrier
not obliged to serve free meals

carrier is not obliged to inform passengers of sailing schedule of

the vessel

Carriage of Goods
- Due diligence should be exercised the moment the goods are
delivered to the carrier.
- Goods are deemed delivered to the carrier when the goods
are ready for and have been placed in the exclusive
possession, custody and control of the carrier for the
purpose of their immediate transportation and the carrier
has accepted them

ARTICLE 1736. The extraordinary responsibility of the common carrier lasts

from the time the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee or to the person
who has a right to receive them
ARTICLE 1737. The common carriers duty to observe extraordinary diligence
over the goods remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless the shipper or owner has
made use of the right of stoppage in transitu. (common carrier becomes a
warehouseman ordinary diligence)
ARTICLE 1738. The extraordinary liability of the common carrier continues to
be operative even during the time the goods are stored in a warehouse of
the carrier at the place if destination, until the consignee has been advised of
the arrival of the goods and has had reasonable opportunity thereafter to
remove them or otherwise dispose of them.
(2)

Carriage of Passengers

By trains the extraordinary responsibility of common carrier commences

the moment the person who purchases the ticket (or a token or card) from
the carrier presents himself at the proper place and in a proper manner to be
transported with a bona fide intent to ride the coach.
* Mere purchase of a ticket does not of itself create the relation of carrier
and passenger but it is an element in the inception of the relation.
* A proper person who enters upon the carriers premises (station, ticketing
office, or waiting room) with the intention of becoming a passenger will
ordinarily be viewed as assuming the status of a passenger.

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* One who goes to the railroad station to inquire as to the possibility of

securing passage on a freight train, which he knows, by the rules of the
company, is not allowed to carry passengers, and to secure passage thereon
if possible, is not entitled to the rights of a passenger but is a mere
trespasser.
* One who rides upon any part of the vehicle or conveyance which is
unsuitable or dangerous, or which he knows is not intended for passengers,
is not presumed to be a passenger.
* One who secures free passage by fraud or stealth is precluded from
recovery for injuries sustained through the negligence of the carrier, for he
has not assumed the status of a passenger.
* A person riding on a freight train, on a drivers pass or similar arrangement,
to look after livestock being transported and as incident to such
transportation is, generally regarded as a passenger for hire.
Motor vehicles like jeepneys and buses are duty bound to stop their
conveyances for a reasonable length of time in order to afford passengers an
opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up or jerking of their
conveyances while they do so. Once a public utility bus or jeepney stops, it is
making a continuous offer to bus riders.

contract of carriage. The injured passenger or owner of goods need not

prove causation to establish his case.
The absence of causal connection is only a matter of defense.
Requisites of Fortuitous Event:
1.
The cause of the unforeseen and the unexpected occurrence, or of
the failure of the debtor to comply with his obligation, must be
independent of the human will
2.
It must be impossible to foresee the event which constitutes the
caso fortuito, or if it can be foreseen, it must be impossible to avoid
3. The occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner
4. The obligor (debtor) must be free from any participation in or the
aggravation of the injury resulting to the creditor
In order for the common carrier to be exempted from responsibility, the
natural disaster must have been the proximate and only cause of the loss.
However, the common carrier must exercise due diligence to prevent or
minimize loss before, during and after the occurrence of flood, storm or
other natural disaster in order that the common carrier may be exempted
from liability for the loss, destruction, or deterioration of the goods.
Fire not considered as a natural calamity or disaster
Fire caused by lightning a natural calamity

Case: Dangwa Transportation Company vs. CA

- When the bus is not in motion there is no necessity for a person who
wants to ride the same to signal his intention to board. A public utility
bus, once it stops, is in effect making a continuous offer to bus riders
- The premature acceleration of the bus in this case was a breach of
such duty
Case: La Mallorca vs. CA
- Duty to exercise utmost diligence with respect to passengers will not
ordinarily terminate until the passenger has, after reaching his
destination, safely alighted from the carriers conveyance or had a
reasonable opportunity to leave the carriers premises. And what is
reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances.
Case: Aboitiz Shipping Corporation vs. CA
- Same ruling with La Mallorca vs. CA
- That reasonableness of time should be made to depend on the
attending circumstances of the case, such as the kind of common
carrier, the nature of its business, the customs of the place, and so
forth, and therefore precludes a consideration of the time element
per se without taking into account such other factors
- The primary factor to be considered is the existence of a reasonable
cause as will justify the presence of the victim on or near the
petitioners vessel. We believe there exists such a justifiable cause
(baggage were left)
DEFENSES OF COMMON CARRIERS
Article 1734 (No other defense may be raised: exclusive or closed list)
1. Flood, storm, earthquake, lightning, or other natural disaster or
calamity
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packing or in the
containers
5. Order or act of competent public authority
6. Exercise of extraordinary diligence
Fortuitous Event to be a valid defense must be established to be the
proximate cause of the loss
Note: Since common carrier is presumed is to be negligent, it has been
observed that the DOCTRINE of PROXIMATE CAUSE is INAPPLICABLE to a

Hijacking does not fall under the categories of exempting causes; the
common carrier is presumed to be at fault or to have acted negligently unless
there is a proof of extraordinary diligence on its part
Mechanical defects damage or injury resulting from mechanical defects is
not a damage or injury that was caused by fortuitous event; carrier is liable to
its passengers for damages caused by mechanical defects of the conveyance
(breakage of a faulty drag-link spring, fracture of the vehicles right steering
knuckle, defective breaks)
- One of the reason why carrier is made liable despite the
presence of mechanical defect is the absence of privity
between the passenger and the manufacturer
Case: Juntilla v. Fontanar
- Tire-blowouts was not considered as fortuitous event although it was
alleged that the tires were in good condition; no evidence was
presented to show that the evidence were due to adverse road
conditions the carrier must prove all angles.
- The explosion could have been caused by too much air pressure
injected into the tires and the fact that the jeepney was overloaded and
speeding at the time of the accident.
OTHER INVALID DEFENSES
1.
Damage to cargo due to EXPLOSION of another cargo not
attributable to peril of the seas or accidents of navigation.
2.
Damage by WORMS and RATS resulting to damage to cargoes
cant be cited as an excuse by the carrier.
3. Damage by WATER through a port which had been left open or
insufficiently fastened on sailing.
4. Carrier cannot escape liabilities to third persons if damage was
caused by BARRATRY where the master or crew of the ship
committed unlawful acts contrary to their duties includes theft
and fraudulently running the ship ashore.
Cases:
1.

Problem: A carrier bus on its way to its destination encountered an

engine failure, thus, it has to be repaired for 2 days. And while in
the repair shop, a typhoon came resulting to the spoilage of
cargoes.
Answer: A typhoon although a natural disaster, is not a valid
defense if it is shown that it was not the only cause of the loss.
Especially when the facts indicate that the typhoon was
foreseeable and could have been detected through the exercise of

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reasonable care. Cargoes should have been secured while the bus
was being repaired for 2 days.
2.

Problem: A passenger told the driver that he has valuable items in

his bag which was placed under his feet and he asked the driver
(to which he is seated near) to watch for the bag while he is
asleep.
(a)

There have been incidents of throwing of stones at passing

vehicles in the North Express Way. While the bus was
traversing the super highway, a stone hurled from the
overpass and hit the passenger resulting to injuries. Can the
passenger hold the bus liable for damages?
Answer: Yes. The incident was foreseeable due the prior
incidents of stone hurling. The bus should have exercised
utmost diligence and employed adequate precautionary
measures to secure safety of passengers since the incident
was foreseeable. .
HOWEVER, if the stone throwing was entirely unforeseeable
and the carrier exercised the utmost diligence, then, the bus
cant be held liable.
Nonetheless, the burden of proof is on the carrier to prove
such exercise of diligence. It is up to the carrier to overthrow
the presumption of negligence.
If the passenger decides to file a case, al the passenger has to
do is to prove that she was a passenger of the bus and that
she suffered injuries while on board the bus.

(b) Supposing that there were armed men who staged a hold-up
while the bus was speeding along the highway. One of them
stole the passengers bag and wallet while pointing a gun
him. Is the bus liable?
Answer: No. Hand-carried luggages are governed by
necessary deposit. Besides, theft with use of arms or through
irresistible force is a force majeure which exempts carriers
from liability.
3.

Hi-jacking cannot exculpate the carrier from liability if it is shown

that the employees of the carrier were not overwhelmed by the
hijackers and that there was no showing of irresistible force. Since,
there were 4 employers while there were only 2 hijackers and only
one of them was armed with bladed weapon.
ON THE OTHER HAND, a hijacking by 3 armed men is an event
which is considered to be beyond the control of the carrier. Thus,
the carrier may be adjudged from liability if it can be proven that
the hijacking was unforeseeable.

Case: Philippine American General Insurance Co. vs. MCG

Even in cases where a natural disaster is the proximate and only
cause of the loss, a common carrier is still required to exercise due
diligence to prevent or minimize loss before, during and after the
occurrence of the natural disaster, for it to be exempt from
liability under the law for the loss of the goods
Case: Pilapil vs. CA
Facts: a bystander alongside national highway hurled a stone at
the left side of the bus, hitting petition above his left eye which
resulted to partial loss of the left eyes vision
SC: A common carrier does not give its consent to become an
insurer of any and all risks to passengers and goods. It merely
undertakes to perform certain duties to the public as the law
imposes, and holds itself liable for any breach thereof.
The law does not make the carrier an insurer of the absolute
safety of its passengers
Article 1763: A common carrier is responsible for injuries suffered by
a passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carriers employees
through the exercise of the diligence of a good father of a family
could have prevented or stopped the act or omission

Clearly, a tort committed by a stranger which causes

injury to a passenger does not accord the latter a cause
of action against the carrier. The negligence for which a
common carrier is held responsible is the negligent
omission by the carriers employees to prevent the tort
from being committed when the same could have been
foreseen and prevented by them

Case: Franklin Gacal vs. PAL

It is therefore not enough that the event should not have been
foreseen or anticipated, as is commonly believed, but it must be
one impossible to foresee or to avoid.
The mere difficulty to foresee the happening is not the
impossibility to foresee the same
PUBLIC ENEMY
- Presupposes a state of war and refers to the government of a foreign
nation at war with the country to which the carrier belongs, though not
necessarily with that to which the owner of the gods owes allegiance.
- Thieves, rioter, and insurrectionists are not included. They are merely
private depredators for whose acts a carrier is answerable.
- Rebels in insurrection against their own government are generally not
embraced in the definition of public enemy. However, if the rebels hold
a portion of territory, they have declared their impendence, cast off
their allegiance and has organized armed hostility to the government,
and the authority of the latter is at the time overthrown, such an
uprising may take on the dignity of a civil war, and so matured and
magnified, the parties are belligerent and are entitled to belligerent
rights.
- Depredation by pirates (which are enemy of all civilized nation) excuses
the carrier from liability.
- Common carriers may be exempted from responsibility only if the act of
the public enemy has been the proximate and only cause of the loss.
Moreover, due diligence must be exercised to prevent or at least
minimize the loss before, during and after the performance of the act of
the public enemy in order that the carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods.
IMPROPER PACKING
Character of the goods and defects in the packaging or in the containers are
defenses available to the common carrier. Similarly, the Carriage of Good by
Sea Act provides that carrier shall not liable for:
1.
Wastage in bulk or weight or any damages arising form the
inherent defect, quality or vice of goods;
2.
Insufficiency of packing;
3. Insufficiency or inadequacy of the marks, or
4. Latent defects no discoverable by due diligence.
However, NCC likewise provides:
Art. 1742. Even if the loss, destruction, or deterioration of the goods should
be caused by the character of the goods, or the faulty nature of the packing
or the containers, the common carrier must exercise due diligence to
forestall or lessen the loss.
Thus, if the carrier accepted the goods knowing the fact of improper
packing or even if the carrier does not know but the defect was nonetheless
apparent upon ordinary observation, it is not relived from liability for loss or
injury to goods resulting therefrom.
Cases:
1.

Problem: A carrier knowing that some of a cargo of sacks of rice

had big holes and others had openings just loosely tied with
strings resulting to the spillage of rice during the trip. Thus, there
was shortage in the delivery of the cargoes. When sued due to the
shortage, the carrier interposed a defense that it was not liable
since the shortage was due to the defective condition of the sacks.
Decide.

Page 6

Answer: Carrier must still exercise extraordinary diligence if the

fact of improper packing is known to the carrier or its servants, or
apparent upon ordinary observation. If the carrier accepted the
cargo without protests or exception notwithstanding such
condition, he is not relived of liability for damage resulting
therefrom. Apply Article 1742.

Note: Willful acts of the employees include theft

b.

Other Passengers and Third Persons

With respect to acts of strangers and other passengers resulting in

injury to a passenger, the availability of such defense is also
subject to the exercise of a carrier of due diligence to prevent or
stop the act or omission.
Negligence of the carrier need not be the sole cause of the
damage or injury to the passenger or the goods. The carrier would
still be liable even if the contractual breach concurs with the
negligent act or omission of another person.

ORDER OF PUBLIC AUTHORITY

Art. 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible, provided said
public authority had power to issue order.
Cases:
1.

2.

Carrier was not excused from liability since the order of an acting
mayor was not considered as a valid order of a public authority. It
is required that public authority who issued the order must be duly
authorized to issue the order.
Carriage of Goods by Sea Act provides that carrier shall not
responsible for loss or damage resulting from arrest or restraint
of princes, rulers, or people, or seizure under legal process and
from quarantine restrictions.

Remember: the negligence of the other river in a collision is NOT a

prejudicial question to an action against the carriers company.
Article 1759. Common carriers are liable for the death of or injuries to
passenger through the negligence or willful acts of the formers employees,
although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.

DEFENSES IN CARRIAGE OF PASSENGERS

- Primary defense of carrier is exercise of extraordinary diligence in
transporting passengers. Even if there is a fortuitous event, the carriers must
also present proof of exercise of extraordinary diligence.
Art. 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the carriers
employees, although such employees may have acted beyond the scope of
their authority or in violation of the orders of the common carriers.
The liability does not cease even upon proof that they exercised diligence in
the selection and supervision of their employees.
Art. 1763. Carrier is responsible for injuries suffered by a passenger on
account of the willful acts or negligence of other passengers or of
strangers, if the common carriers employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act
or omission.
a.
-

Employees
Carrier is liable for the acts of its employees. It cant escape liability
by claiming that it exercised due diligence in supervision and
selection of its employees (unlike in quasi-delicts).

Reasons for the rule:

1.
Undertaking of the carrier requires that its passenger that full
measure of protection afforded by the exercise of high degree of
care prescribed by law, inter alia from violence and insults at the
hands of strangers and other passengers, but above all, from the
acts of the carriers own servants.
2.
The liability of the carrier for the servants violation of duty to
performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with
utmost care prescribed by law.
3. As between the carrier and the passenger, the former must bear
the risk of wrongful acts or negligence of the carriers employees
against passenger, since it, and not the passenger, has the power
to select and remove them.
Rationale: On the other hand, if the ship owner derives profits from
the results of the choice of the captain and the crew, when the
choice turns out successful, it is also just that he should suffer the
consequences of an unsuccessful appointment, by application of the
rule of natural law contained in the partidas --- that he who enjoys
the benefits derived from a thing must likewise suffer the losses that
ensue therefrom

PASSENGERS BAGGAGES
- The term baggage has been defined to include whatever articles a
passenger usually takes with him for his own personal use, comfort
and convenience
- Rules that are applicable to goods that are being shipped are also
applicable to baggage delivered to the custody of the carrier. Arts.
1733. 1734 and 1736 of Civil Code are applicable.
- However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall
apply.
Distinction: W/N the baggage is in the personal custody of the passenger.
if yes, hand carried baggage
if no, checked-in baggage
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be
responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that,
on the part of the latter, they take the precautions which said hotel-keepers
or their substitutes advised relative to the care and vigilance of their
effects. (1783)
Art. 2000. The responsibility referred to in the two preceding articles shall
include the loss of, or injury to the personal property of the guests caused
by the servants or employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force majeure. The fact
that travellers are constrained to rely on the vigilance of the keeper of the
hotels or inns shall be considered in determining the degree of care
required of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered the hotel is not
deemed force majeure, unless it is done with the use of arms or through an
irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due
to the acts of the guest, his family, servants or visitors, or if the loss arises
from the character of the things brought into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself from responsibility by
posting notices to the effect that he is not liable for the articles brought by
the guest. Any stipulation between the hotel-keeper and the guest whereby
the responsibility of the former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void. (n)

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Cases:
1.

2.

Despite the fact that the carrier gave notice that it shall not be
liable for baggage brought in by passengers, the carrier is still
liable for lost hand-carried luggage since it is governed by rules on
necessary deposits. Under Art. 20000, the responsibility of the
depositary includes the loss of property of the guest caused by
strangers but not that which may proceed from force majeure.
Moreover, article 2001 considers theft as force majeure if it is done
with use of arms or through irresistible force.
Even if the passenger did not declare his baggage nor pay its
charges contrary to the regulations of the bus company, the
carrier is still liable in case of loss of the baggage. Since, it has the
duty to exercise extraordinary diligence over the baggage that
was turned over to the carrier or placed in the baggage
compartment of the bus. The non-payment of the charges is
immaterial as long as the baggage was received by the carrier for
transportation.

II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER

A.

NEGLIGENCE OF SHIPPER OR PASSENGER

The obligation to exercise due diligence is not limited to the

carrier. The shipper is obliged to exercise due diligence in avoiding
damage or injury.
Nevertheless, contributory negligence on the part of the shipper/
passenger would only mitigate the carriers liability; it is not a
total excuse.
However, if the negligence of the shipper/ passenger is the
proximate and only cause of the loss, then, the carrier shall not be
liable. The carrier may overcome the presumption of negligence
and may be able to prove that it exercised extraordinary diligence
in handling the goods or in transporting the passenger.

The carrier may be able to prove that the only cause of the loss of the
goods is any of the following:
1.
Failure of the shipper to disclose the nature of the goods;
2.
Improper marking or direction as to the destination;
3. Improper loading when he assumes such responsibility.
The shipper must likewise see to it that the goods are properly
packed; otherwise, liability of the carrier may either be mitigated or
barred depending on the circumstances.
Art. 1741. If the shipper or owner merely contributed to the loss,
destruction or deterioration of the goods, the proximate cause thereof
being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Art. 1761. The passenger must observe the diligence of a good father of a
family to avoid injury to himself.
Art. 1762. The contributory negligence of the passenger does not bar
recovery of damages for his death or injuries, if the proximate cause
thereof is the negligence of the common carrier, but the amount of
damages shall be equitably reduced.
a.

Last Clear Chance

A negligent carrier is liable to a negligent passenger in placing himself in

peril, if the carrier was aware of the passengers peril, or should have been
aware of it in the reasonable exercise of due care, had in fact an opportunity
later than that of the passenger to avoid an accident.
Last clear chance applies in a suit between the owners and drivers of colliding
vehicles. It does not arise where a passenger demands responsibility from
the carrier to enforce its contractual obligations. For it would be inequitable

to exempt the negligent driver of the carrier and its owner on the ground
that the other driver was likewise guilty of negligence.
b.

Assumption of Risk

Passengers must take such risks incident to the mode of travel. Carriers are
not insurers of the lives of their passengers. Thus, in air travel, adverse
weather conditions or extreme climatic changes are some of the perils
involved in air travel, the consequence of which the passenger must assume
or expect.
However, there is no assumption of risk in a case wherein a passenger
boarded a carrier that was filled to capacity. The act of the passenger in
taking the extension chair does not amount to implied assumption of risk.
Note: there is also no assumption of risk by the mere fact that the carrier
posted notices against such liability
Problem: Although, there is a sign in the bus that says: do not talk to the
driver while the bus is in motion, otherwise, the company would not assume
responsibility for any accident:. Nonetheless, the passengers dared the driver
to race with another bus, as the bus speeds up in the attempt to overtake the
other bus, it failed to slow down. As a result, the bus turns turtle causing the
death and injuries to passengers. Is the bus company liable?
Answer: Yes. The bus company is obligated to exercise utmost diligence in
carrying passengers. This liability cannot be eliminated or limited by simply
posting notices. The passenger cannot be said to have assumed the risk of
being injured when he urged the driver to accept the dare. At most, the
passengers can only be said to be guilty of contributory negligence which
would mitigate the liability of the driver, since the proximate cause of the
accident was the drivers willful and reckless act in running the race with the
other bus.
Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.
Where a carriers employee is confronted with a sudden
emergency, the fact that he is obliged to act quickly and without a
chance for deliberation must be taken into account, and he is not
led to the same degree of care that he would otherwise be
required to exercise in the absence of such emergency but must
exercise only such care as any ordinary prudent person would
exercise under like circumstances and conditions, and the failure
on his part to exercise the best judgment the case renders
possible does no establish lack of care and skill on his part which
renders the company liable.
Case: Compania Maritima vs. CA and Vicente Concepcion
While the act of private respondent in furnishing petitioner with
an inaccurate with of the payloader cannot successfully be used as
an excuse by petitioner to avoid liability to the damage thus
caused, said act constitutes a CONTRIBUTORY CIRCUMSTANCE to
the damage caused on the payloader, which mitigates the liability
for damages of petitioner in accordance with Article 1741.
Case: Philippine National Railways vs. CA
While petitioner failed to exercise extraordinary diligence as
required by law, it appears that the deceased was chargeable with
contributory negligence.
Since he opted to sit on the open platform between the coaches
of the train, he should have held tightly and tenaciously on the
upright metal bar found at the side of said platform to avoid falling
off from the speeding train
B.

FREIGHT

a.

Amount to be Paid

The regulation of rates is founded upon the valid exercise of the Police Power
of the state in order to protect the public from arbitrary and excessive rates

Page 8

while maintaining the efficiency and quality of services rendered. The fixing
of just and reasonable rates involves a balancing of investor and the
consumer interest.
Although the consideration that should be paid to the carrier is still subject to
the agreement between parties, what can be agreed upon should not be
beyond the maximum amount fixed by appropriate government agency.
b.

Who will pay

Although either of the shipper or the consignor may pay the freight before or
at time the goods are delivered to the carrier for shipment, nonetheless, it is
the consignor (whom the contract of carriage is made) who is primarily liable
for the payment of freight whether or not he is the owner of the goods. The
obligation to pay is implied from the mere fact that the consignor has placed
the goods with the carrier for the purpose of transportation.
c.

Using the term in broader sense, damages in the nature of demurrage are
recoverable for a breach of the implied obligation to load or unload the cargo
with reasonable dispatch, but only by the party to whom the duty is owed
and only against on who is a party to the shipping contract. Notice of arrival
of vessels or conveyances, or their placement for purposes of unloading is
often a condition precedent to the right to collect demurrage charges.
CHAPTER 3
EXTRAORDINARY DILIGENCE
I. RATIONALE
A common carrier is bound to carry the passengers safely as far a
human care and foresight provide, using the utmost diligence of very
cautious persons, with due regard for all circumstances.

Time to pay

Code of Commerce provides that in the absence of any agreement, the

consignee who is supposed to pay must do so within 24-hours from the time
of delivery.
Article 374. The consignees to whom the shipment was made may not
defer the payment of the expenses and transportation charges of the goods
they receive after the lapse of twenty-four hours following their delivery; and
in case of delay in this payment, the carrier may demand the judicial sale of
the goods transported in an amount necessary to cover the cost of
transportation and the expenses incurred.
(1)

Technically, liability for demurrage exists only when expressly stipulated in

the contract.

Carriage of Passengers by Sea

With respect to carriage of goods by sea, the tickets are purchased in

advance. Carriers are not supposed to allow passengers without tickets --- the
carrier is bound to observe a No Ticket, No Boarding Policy. The carrier
shall collect/ inspect the passengers ticket within one hour from vessels
departure as not to disrupt resting or sleeping passengers.
If the vessel is not able to depart on time and the delay is unreasonable, the
passenger may opt to have his/ her ticket refunded without refund service
fee.
Delayed voyage means late departure of the vessel from its port of origin
and/ or late arrival of the vessel to its port of destination. Unreasonable
delay means the period of time that has lapsed without just cause and is
solely attributable to the carrier which has prejudiced the transportation of
the passenger and/ or cargoes to their port of destination.

Extraordinary diligence: Calculated to protect the passengers from

the tragic mishaps that frequently occur in connection with rapid modern
transportation.
II. HOW DUTY IS COMPLIED WITH
There is no hard and fast rule in the exercise of extraordinary
diligence
Common carrier binds itself to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence
of a very cautious person, with due regard for all the
circumstances.
The duty even extends to the members of the crew or
complement operating the carrier
Case: Kapalaran Bus Lines vs. Coronado
If common carriers carefully observed the statutory standard of
extraordinary diligence in respect of their own passengers, they
cannot help but simultaneously benefit pedestrians and the
owners and passengers of other vehicles who are equally entitled
to the safe and convenient use of our roads and highways
A reasonable man or a good father of a family in the position of the carrier
must exercise extraordinary diligence in the performance of his contractual
obligation.
Generally, what should be determines is whether or not a
reasonable man, exercising extraordinary diligence, could have
foreseen and prevented the damage or loss that occurred.
III. EFFECT OF STIPULATION

A passenger who failed to board the vessel can refund or revalidate the
ticket subject to surcharges. Revalidation means the accreditation of the
ticket that is not used and intended to be used for another voyage.
(2)

Carriers Lien

If consignor or the consignee fails to pay the consideration for the

transportation of goods, the carrier may exercise his lien in accordance with
Art. 375 of Code of Commerce:
ARTICLE 375. The goods transported shall be especially bound to answer for
the cost of transportation and for the expenses and fees incurred for them
during their conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made,
and once prescribed, the carrier shall have no other action than that
corresponding to him as an ordinary creditor.

A. GOODS
The parties cannot stipulate that the carrier will NOT exercise ANY
diligence in the custody of goods
The law allows a stipulation whereby the carrier will exercise a
degree of diligence which is less than extraordinary with respect
to goods.
Art. 1744. A stipulation between the common carrier and the shipper
owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration other than the service
rendered by the common carrier (Note: Typically fare/freight); and
3. Reasonable, just and contrary to public policy.

DEMURRAGE
Demurrage is the compensation provided for the contract of affreightment
for the detention of the vessel beyond the time agreed on for loading and
unloading. It is the claim for damages for failure to accept delivery. In broad
sense, very improper detention of a vessel may be considered a demurrage.

B. PASSENGERS
There can be no stipulation lessening the utmost diligence that is
owed to passengers.

Page 9

Art. 1757. The responsibility of a common carrier for the safety of

passengers as required in Arts. 1733 and 1755 cannot be dispensed
with or lessened by stipulation, by the posting of notices, by
statements on tickets, or otherwise. (Note: Absolute; extraordinary
at all times.)
Gratuitous passenger A stipulation limiting the common carriers liability for
negligence is valid, but not for willful acts of gross negligence. The reduction
of fare does not justify any limitation.
Case: Lara vs. Valencia
Diligence owed to accommodation passengers is only ordinary
diligence
However, this case is not controlling with respect to common
carriers because the defendant in the said case was not a common
carrier
IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
A. SEAWORTHINESS
a.

b.

c.

Warranty of Seaworthiness of Ship

This is the first step that should be undertaken
Extraordinary diligence requires that the ship which will
transport the passengers and goods is seaworthy.
Seaworthiness of the vessel is impliedly warranted.
The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to make the ship seaworthy.

No duty to inquire
Because of the implied warranty of seaworthiness, shippers
of goods, when transacting with common carriers, are not
expected to inquire into the vessels seaworthiness,
genuineness of its licenses and compliance with all maritime
laws. Passengers cannot be expected to inquire everytime
they board a common carrier, whether the carrier possesses
the necessary papers or that all the carriers employees are
qualified.
It is the carrier that carries such burden of proving that the
ship is seaworthy.
Sufficient evidence must be submitted and the presentation
of certificates of seaworthiness is not sufficient to overcome
the presumption of negligence.
Meaning of Seaworthiness
A vessel must have such degree of fitness which an owner
who is exercising extraordinary diligence would require his
vessel to have at the commencement of the voyage, having
regard to all the probable circumstances of it. This includes
fitness of the vessel itself to withstand the rigors of voyage,
fitness of the vessel to store the cargoes and accommodate
passengers to be transported and that it is adequately
equipped and properly manned.
Seaworthiness is that strength, durability and engineering
skill made a part of a ships construction and continued
maintenance, together with a competent and sufficient
crew, which would withstand the vicissitudes and dangers of
the elements which might reasonably be expected or
encountered during her voyage without loss or damage to
her particular cargo

A warranty of seaworthiness requires that it be properly laden, and provided

with a competent master, a sufficient number of competent officers and
seamen, and the requisite appurtenances and equipment.
The carrier shall be bound before and at the beginning of the voyage to
exercise due diligence to:
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are carried, fit and safe
for their reception, carriage, and preservation.
The carrier shall properly and carefully load, handle, stow, carry, keep, care
for, and discharge the goods carried.
Note: Seaworthiness is relative it its construction and its application depends
on the facts of a particular case (ex. Length and nature of the voyage)
Fitness of the Vessel Itself
It is necessary that the vessel can be expected to meet the normal
hazards of the journey
General Test of Seaworthiness: Whether the ship and its
appurtenances are reasonably fit to perform the service
undertaken.
The ship must be cargoworthy
Even if the vessel was properly maintained and is free from defect,
the carrier must not accept the goods that cannot properly be
transported in the ship
The ship must be efficiently strong and equipped to carry the
particular kind of cargo which she has contracted to carry and her
cargo must be so loaded that it is safe for her to proceed on her
voyage.

The vessel must be adequately equipped and properly manned.

On top of regular maintenance and inspection, Captains, masters
or patrons of vessels must prove the skill, capacity, and
qualifications necessary to command and direct the vessel.
If the owner of a vessel desires to be the captain without having
the legal qualifications, he shall limit himself to the financial
administration of the vessel and shall entrust the navigation to a
qualified person.
Note: It is not an excuse that the carrier cannot afford the salaries of
competent and licensed crew or that latter is unavailable.
Adequate Equipment
With respect to vessels that carries passengers, the Maritime
Industry Authority prescribes rules which provide for
indispensable equipment and facilities
ex. Exit doors, life boats, live vests
B. OVERLOADING
-

C. PROPER STORAGE
-

Example: The carrier was able to establish that the ship itself was seaworthy
because the records reveal that the vessel was dry-docked and inspected by
the Phil. Coast Guard before its first destination.

10

Duty to exercise due diligence likewise includes the duty to take

passengers or cargoes that are within the carrying capacity of the
vessel.

The vessel itself may be suitable for the cargo but this is not
enough because the cargo must also be properly stored.

Cargo must generally not be placed on deck. The carrying of deck cargo
raises the presumption of unseaworthiness unless it can be shown that the
deck cargo will not interfere with the proper management of the ship.

Page

D. NEGLIGENCE OF CAPTAIN AND CREW

-

Failure on the part of the carrier to provide competent captain and

crew should be distinguished from the negligence of the said
captain and crew, because the latter is covered by the Limited
Liability Rule (liability of the shipowner may be limited to the value
of the vessel).
If the negligence of the captain and crew can be traced to the fact
that they are really incompetent, the Limited Liability Rule cannot
be invoked because the shipowner may be deemed negligent.

Rules on passenger safety

Negligence on the part of the captain and crew as well as the
operator includes failure to comply with the regulation issued by
the Maritime Industry Authority (MARINA) on the safety of the
passengers
Memorandum Circular No. 112 : passengers do not merely contract
for transportation because they have the right to be treated by
the carrier and its employees with kindness, respect, courtesy and
due consideration. They are entitled to be protected against
personal conduct, injurious language, indignities and abuses from
the said carrier and its employees
Read Memorandum Circular No. 114: p. 204
Case: Planters Products Inc. vs. CA
The period during which private respondent was to observe the
degree of diligence required of it as a public carrier began from
the time the cargo was unconditionally placed in its charge after
the vessels holds were duly inspected and passed scrutiny by the
shipper, up to and until the vessel reached its destination and its
hull was re-examined by the consignee, but prior to unloading
A ship owner is liable for damage to the cargo resulting from
improper stowage ONLY when the stowing si done by stevedores
employed by him, and therefore under his control and supervision,
not when the same is done by the consignee or stevedores under
the employ of the latter

E. DEVIATION AND TRANSSHIPMENT

1.

Deviation
- If there is an agreement between the shipper and the carrier as to
the road over which the conveyance is to be made (subject to the
approval by the Maritime Industry Authority), the carrier may not
change the route, unless it be by reason of force majeure. Without
this cause, he shall be liable for all the losses which the goods may
suffer, aside from paying the sum stipulated for that case.
- When on account of the force majeure, the carrier had to take
another route which resulted to an increase in transportation
charges, he shall be reimbursed upon formal proof.

Note: With respect to carriers by sea, the routes are subject to approval by
MARINA and the same cannot generally be changed without the
authorization from said administrative agency
2.

Transshipment
- The act of taking cargo out of one ship and loading it into another;
to transfer goods from the vessel stipulated in the contract of
affreightment to another vessel before the place of destination
named in the contract has been reached.
- Transshipment of freight without legal excuse is a violation of the
contract and subjects the carrier to liability if the freight is lost
even by a cause otherwise excepted.

Note: there is transshipment whether or not the same person, firm or entity
owns the vessels (what matters is the actual physical transfer of cargo from
one vessel to another)

11

V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND

A. CONDITION OF VEHICLE
Common carriers that offer transportation by land are similarly
required to make sure that the vehicles that they are using are in
good order and condition.
Rule on Mechanical Defects If the carriers will replace certain parts of the
motor vehicle, they are duty bound to make sure that the parts that they are
purchasing are not defective. Hence, it is a long-standing rule that a carrier
cannot escape liability by claiming that the accident that resulted because of
a defective break or tire is due to a fortuitous event. This is true even if it can
be established that the tire that was subject of a blow-out is brand new. The
duty to exercise extraordinary diligence requires the carrier to purchase and
use vehicle parts that are not defective.
B. TRAFFIC RULES
The carrier fails to exercise extraordinary diligence if it will not
comply with basic traffic rules. The Civil Code provides for a
presumption of negligence in case the accident occurs while the
operator of the motor vehicle is violating traffic rules.
In cases involving breach of contract of carriage, proof of violation of traffic
rules confirms that the carrier failed to exercise extraordinary diligence.
Case: Mallari Sr and Jr vs. CA
The rule is settled that a driver abandoning his proper lane for the
purpose of overtaking another vehicle in an ordinary situation has
the duty to see to it that the road is clear and not to proceed if he
cannot do so in safety
C. DUTY TO INSPECT
There is no unbending duty to inspect each and every package or
baggage that is being brought inside the bus or jeepney. The
carrier is duty bound to conduct such inspection depending on the
circumstances.
Case: Nocum vs. Laguna Tayabas Bus Company
While it is true the passengers of appellants bus should not be
made to suffer for something over which they had no control,
fairness demands that in measuring a common carriers duty
towards its passengers, allowance must be given to the reliance
that should be reposed on the sense of responsibility of all the
passengers in regard to their common safety.
It is to be presumed that a passenger will not take with him
anything dangerous to the lives and limbs of his co-passengers not
to speak of his own.
Not to be lightly considered is the right to privacy to which each
passenger is entitled
In other words, inquiry may be verbally made as to the nature of a
passengers baggage when such is not outwardly perceptible, but
beyond this, constitutional boundaries are already in danger of
being transgressed
SC held that carrier has succeeded in rebutting the presumption of
negligence by showing that it has exercised extraordinary
diligence for the safety of its passenger, according to the
circumstances of each case
Note: although overland transportation are not bound nor empowered to
make an examination on the contents of packages or bags particularly those
hand carried by passengers, such is different with regards to an airline
company.
VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR
The aircraft must be in such a condition that it must be able to
withstand the rigors of flight.

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Airworthiness An aircraft, its engines propellers, and other components

and accessories, are of proper design and construction, and are safe for air
navigation purposes, such design and construction being consistent with
accepted engineering practice and in accordance with aerodynamic laws and
aircraft science.
Proof of airworthiness is not by itself sufficient to prove exercise of
extraordinary diligence.
Case: Japan Airlines vs. CA
The fact that the flight was cancelled due to fortuitous event does
not mean that the carriers duty already ended. The carrier is still
obligated to look after the convenience and comfort of the
passenger
Thus the carrier was obligated to make the necessary
arrangements to transport the passenger on the first available
flight.

KINDS of BILL of LADING:

1. Clean Bill of
Lading
2. Foul Bill of
Lading
3. Spent Bill of
Lading

Does not contain any notation indicating any defect

in the goods.
One that contains the abovementioned notation.

4. Through Bill
of Lading

Issued by a carrier who is obliged to use the facilities

of other carriers as well as his own facilities for the
purpose of transporting the goods from the city of
the seller to the city of the buyer, which BOL is
honored by the second and other interested carriers
who dont issue their own BOL.

5. On Board Bill

-states that the goods have been received on board

the vessel which is to carry the goods.
-apparently guarantees the certainty of shipping as
well as the seaworthiness of the vessel to carry the
goods.
-basically means that the goods are already inside the
vessel
-states that the goods have been received for
shipment with or without specifying the vessel by
which the goods are to be shipped.
-issued when conditions are not normal and there is
insufficiency of shipping space.

A. INSPECTION
It is the duty of the carrier to make inquiry as to the general nature
of the articles shipped and of their value before it consents to
carry them; and its failure to do so cannot defeat the shippers
right to recovery of full value of the package if lost, in the absence
of showing of fraud or deceit on the part of the shipper.
Where a common carrier has reasonable ground to suspect that the offered
goods are of a dangerous character, the carrier has the right to know the
character of such goods and to insist inspection, if reasonable and practical
under the circumstances, as a condition of receiving and transporting such
goods. To be subjected to unusual search, other than the routinary
inspection procedure customarily undertaken, there must exist proof that
would justify cause for apprehension that the baggage is dangerous as to
warrant exhaustive inspection, or even refusal to accept carriage of the
same.
Case: Northwest Airlines vs. Laya
The fact that the plaintiff was greatly inconvenienced by the fact
that his attach case was subjected to further inspection does not
warrant imposition of liability because he was not singled out and
discriminated by the employees of the carrier
Protection of passengers must take precedence over convenience
Nevertheless, the implementation of security measures must be
attended by basic courtesies

CHAPTER 4
BILL OF LADING
I. CONCEPTS, DEFINITION AND KINDS
Bill of Lading (BOL)
a written acknowledgement, signed by the master of a vessel or
other authorized agent of the carrier, that he has received the
described goods from the shipper, to be transported on the
expressed terms to be described the place of destination, and to
be delivered to the designated consignees of the parties.
It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a
DOCUMENT OF TITLE.
A BOL is not necessary for the perfection of a contract of carriage. Thus, the
obligation to exercise extraordinary diligence by the carrier is still required
even if there is no bill of lading.
In the absence of the bill of lading, disputes shall be determined on the basis
of the provisions in the New Civil Code and suppletory by the Code of
Commerce.

12

6. Received for
Shipment Bill

7. Custody Bill
of Lading
8. Port Bill of
Lading

The goods are already delivered but the bill of lading

was not yet returned (upon delivery, the carrier is
supposed to retrieve the covering bill of the goods)

The goods are already receied by the carrier but the

vessel indicated therein has not yet arrived in the
port.
The vessel indicated in the BOL that will transport
the goods is already in the port.

Note: A party to a maritime contract would require an on board bill of lading

because of its apparent guaranty of certainty of shipping as well as the
seaworthiness of the vessel which is to carry the goods.
Effectivity of BOL
upon its delivery to and acceptance by the shipper.
The acceptance of the bill without dissent raises the presumption
that all the terms therein were brought to the knowledge of the
shipper and agreed to by him, and in the absence of fraud or
mistake, he is stopped thereafter from denying that he assented
to such claims (whether he reads the bill or not)

THE 3-FOLD NATURE OF THE BILL OF LADING

The three fold nature of a bill of lading is obviously applicable only
to carriage of goods
As receipt and document of title: issued for goods
As contract: applies to tickets issued to passengers

I. RECEIPT
As comprehending all methods of transportation, a BOL may be
defined as a written acknowledgement of the receipt of goods
and an agreement to transport and to deliver them at a specified
place to a person named or on his order.
Other terms, shipping receipts, forwarders receipts, and
receipts for transportation.
(SC) the designation however is not material, and neither is the
form of the instrument. If it contains an acknowledgement by the
carrier of the receipt of goods for transportation it is, in legal
effect a BOL.
The issuance of a bill of lading carries the presumption that the
goods were delivered to the carrier issuing the bill, for immediate

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shipment, and it is nowhere questioned that a bill of lading is

prima facie evidence of the receipt of the goods by the carrier
II. CONTRACT
It expresses the terms and conditions of the agreement between
the parties; names the parties; includes consignees etc. It is the
law between the parties bound by its terms and conditions.
Contracts of Adhesion
It is to be construed liberally in favor of the shipper who adhered
to such bill as it is a contract of adhesion. The only participation of
the party is the signing of his signature or his adhesion thereto.
The shipper or passenger is bound by the terms and conditions if
there is no occasion to speak of ambiguities or obscurities
If the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former
ART. 24 (NCC). In all contractual property or other relations, when one of the
parties is at a disadvanatge on account of his moral dependence, ignorance
indigence, mental weakness, tender age and other handicap, the court must
be vigilant for his protection.
Parole Evidence Rule
BOL is covered by the parol evidence rule, that the terms of the
contract are conclusive upon the parties and evidence aliunde is
not admissible to vary or contradict a complete enforceable
agreement, subject to well defined exceptions
The mistake contemplated as an exception to the parol evidence
rule is one which is a mistake of fact mutual to the parties.
Note that if such is not raised inceptively in the complaint or in the
answer, a party cannot later on be permitted to introduce parol
evidence thereon
Bill of Lading as Evidence
The BOL is the legal evidence of the contract and the entries
thereof constitutes prima facie evidence of the contract.
All the essential elements of a valid contract (cause, consent,
object) are present when such bill are issued.
III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE
In a contractual obligation, the bill of lading can be categorized as
an actionable document under the Rules of Court. Hence, the bill
of lading must be properly pleaded either as causes of action or
defenses
ART 1507 (NCC). A document of title in which it is stated that the
goods referred to therein will be delivered to the bearer or to the
order of any person named in such document is a negotiable
document of title.
-

If the document of title contains the required words of

negotiability to make the instrument negotiable under Article 1507
of the NCC, the document remains to be negotiable even if the
words not negotiable or non negotiable are places thereon
o
o

a. Bearer document- negotiated by delivery

b. Order document- negotiated by indorsement of the
specified person so named

Effects of negotiation. Negotiation of the document has the effect

of manual delivery so as to constitute the transferee the owner of
the goods.

1.

2.

3.
4.

Note: the purpose of limiting stipulations in the bill of lading is to protect th

common carrier. Such stipulation obliges the shipper/consignee to notify the
common carrier of the amount that the latter may be liable for in case of loss
of the goods
Remember:
1.
The parties cannot stipulate so as to totally exempt the carrier
from exercising any degree of diligence whatsoever
2.
The parties cannot stipulate that the common carrier shall exercise
diligence less than the diligence of a good father of a family
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS:
1. Inter-island - if goods arrived in damaged condition (Art. 366):
a. If damage is apparent, the shipper must file a claim immediately (it may be
oral or written);
b. If damage is not apparent, he should file a claim within 24 hours from
delivery.
The filing of claim under either (1) or (2) is a condition precedent for
recovery.
If the claim is filed, but the carrier refuses to pay: enforce carriers liability
in court by filing a case:
a. within 6 year, if no bill of lading has been issued; or
b. within 10 years, if a bill of lading has been issued.
2. Overseas where goods arrived in a damaged condition from a foreign port
to a Philippine port of entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim should be filled
immediately;
b. if damage is not apparent, claim should be filled within 3 days from
delivery.
Filing of claim is not a condition precedent, but an action must be filed
against the carrier within a period of 1 year from discharge; if there is no
delivery, the one-year period starts to run from the day the vessel left port (in
case of undelivered or lost cargo), or from delivery to the arrastre (in case of
damaged cargo).
Where there was delivery to the wrong person, the prescriptive period is 10
years because there is a violation of contract, and the carriage of goods by
sea act does not apply to misdelivery. (Ang v. American SS Agencies (19
SCRA 631)
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
-

BASIC STIPULATIONS
Provided for in the Code of Commerce
(for overland transportation, maritime commerce and electronic
documents, please refer to the textbook for the codal pp. 203-210)

PROHIBITED AND LIMITING STIPULATION

13

Exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence - INVALID as it is contrary to
public policy.
Parties may stipulate that the diligence to be exercised by the
carrier for the carriage of goods be less than extraordinary
diligence if it is:
a. in writing and signed by both parties
b. supported by a valuable consideration other than the
service rendered by the common carrier
c.
the stipulation is just, reasonable and not contrary to
law.
Providing an unqualified limitation of such liability to an agreed
valuation - INVALID
Limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freightVALID and ENFORCEABLE.

Applies suppletorily to the Civil Code if the goods are to be

shipped form a foreign port to the Philippines
COGSA is applicable in international maritime commerce. It can be
applied in domestic sea transportation if agreed upon by the
parties. (paramount clause)
Under the Sec. 4 (5), the liability limit is set at $500 per package
unless the nature and value of such goods is declared by the

Page

shipper. This is deemed incorporated in the bill of lading even if

not mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463).
If by agreement, another maximum amount than that mentioned
may be fixed provided that such maximum shall not be less than
$500 and in no event shall the carrier be liable for more than the
amount of damage actually sustained

Note that Art. 1749 of the NCC applies to inter-island trade.

Meaning of Package
If the goods are shipped in cartons, each carton is considered a
package even if they are stored in container vans
When what ordinarily be considered packages are shipped in a
container supplied by the carrier and the number of such units is
disclosed in the shipping documents, each of those units and not
the container constitutes the package.
Prescriptive periods
Suit for loss or damage to the cargo should be brought within one
year after:
a. delivery of the goods; or
b. the date when the goods should be delivered. (Sec. 3[6])
The one-year prescriptive period is suspended by:
1.
express agreement of the parties (Universal Shipping Lines, Inc. v.
IAC, 188 SCRA 170)
2.
when an action is filed in court until it is dismissed. (Stevens & Co.
v. Nordeutscher Lloyd, 6 SCRA 180)
Things to Remember:
1.
Article 1757 provides that the responsibility of a common carrier
to exercise utmost diligence for the safety of PASSENGERS
CANNOT be dispensed with or lessened by stipulation or
statement on tickets or otherwise
2.
Article 1750 of the Civil Code provides that a contract fixing the
sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the GOODS is VALID, if it is
REASONABLE and JUST under the circumstances, and has been
FAIRLY AND FREELY AGREED UPON
3. It is unfair to deny the shipper the right to declare the actual value
of his cargos and to recover such true value in case of loss or
damage
Note: it has been suggested that the signature of the shipper in
the bill of lading with regards to the limitation applies only to
reduction of diligence and not to the stipulated amount to be paid.
4. It is unjust and contrary to public policy if the common carriers
liability for acts committed by thieves, or of robbers who do not
act with grave or irresistible threat, violence or force, is dispensed
with or diminished
5. The common carrier may EXEMPT itself from liability if he can
prove that:
a. He observed extraordinary diligence
b. The proximate and only cause of the incident is a
fortuitous event or force majeure
c.
The proximate and only cause of the loss is the
character of the goods or defects in the packing or in
the containers
d. The proximate and only cause of the loss is the order or
act of competent public authority
Note: to limit its liability or at least mitigate the same, the carrier
can cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the
DOCTIRNE OF AVOIDABLE CONSEQUENCES
Case: Sea-Land Service Inc. vs. IAC
Liability of a common carrier for loss of or damage to goods
transported by it under a contract of carriage is governed by the
laws of the country of destination

14

COGSA is applicable up to the final port of destination and that the

fact that transshipment was made on an interisland vessel did not
remove the contract of carriage of goods from the operation of
said Act.

Case: Citadel Lines Inc. vs. CA

The duty of the consignee is to prove merely that the goods were
lost. Thereafter, the burden is shifted to the carrier to prove that it
has exercised the extraordinary diligence required by law. And, its
extraordinary responsibility lasts from the times that goods are
unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person
who has the right to receive them
Case: Everett Steamship Corporation vs. CA
Considering that the shipper did not declare a higher valuation it
had itself to blame for not complying with the situations
The trial courts ratiocination that private respondent could not
have fairly and freely agreed to the limited liability clause in the
bill of lading because the said conditions were printed in small
letters does not make the bill of lading invalid
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
Applies to all international transportation of person, baggage or
goods performed by aircraft for hire.
International transportation means any transportation in which
the place of departure and the place of destination are situated
either:
o
within the territories of two High Contracting Parties
regardless of whether or not there be a break in the
transportation or transshipment, or
o
within the territory of a single High Contracting Party, if
there is an agreed stopping place within a territory
subject to the sovereignty, mandate or authority of
another power, even though that power is not a party
to the Convention.
Transportation to be performed by several successive air carriers shall be
deemed to be one undivided transportation, if it has been regarded by the
parties as a single operation, whether it has been agreed upon under the
form of a single contract or of a series of contracts, and it shall not lose its
international character merely because one contract or a series of contracts
is to be performed entirely within a territory subject to the sovereignty,
suzerainty, mandate, or authority of the same High Contracting Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in
the Philippines since an international law prevails over general law.
WHEN NOT APPLICABLE:
1.
If there is willful misconduct on the part of the carriers
employees. The Convention does not regulate, much less exempt,
carrier from liability for damages for violating the rights of its
passengers under the contract of carriage (PAL v. CA, 257 SCRA
33). --- if the damage is similarly caused by any agent of the carrier
acting within the scope of his employment
2.
when it contradicts public policy;
3. if the requirements under the Convention are not complied with.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident causing it took place
on board the aircraft or in the course of its operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if it took
place during the carriage; (Art. 18) and
3. Delay in the transportation of passengers, luggage or goods. (Art.
19)

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NOTE: The Hague Protocol amended the Warsaw Convention by removing

the provision that if the airline took all necessary steps to avoid the damage,
it could exculpate itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)

ii. the consignee can file an action against the last carrier and the
carrier in which the damage occurred. These carriers are jointly
and severally liable. (Art. 30)

Remember: The said provisions merely declare the carrier liable for damages
in the enumerated cases if the conditions therein specified are present.
Neither said provisions nor others in the aforementioned Convention
regulate or exclude liability for OTHER BREACHES of contract of carrier.

Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or

international travel
Code of Commerce applies to inter-island or domestic travel.
Bill of Lading as Document of Title

The Convention does not thus operate as an exclusive enumeration of the

instances of an airlines liability, or as an absolute limit of the extent of that
liability.
LIMIT OF LIABILITY
1.
passengers - limited to 250,000 francs;

except: agreement to a higher limit

2.
goods and checked-in baggage - 250 francs/kg

except: consigner declared its value and paid a

supplementary sum, carrier liable to not more than the
declared sum unless it proves the sum is greater than its
actual value.
3. hand-carry baggage - limited to 5,000 francs/passenger
An agreement relieving the carrier from liability or fixing a lower limit is null
and void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is caused by willful
misconduct or default on its part. (Art. 25)
Case: China Airlines vs. Daniel Chiok
The ticket-issuing airline acts as principal in a contract of carriage
and is thus liable for the acts and the omissions of any errant
carrier to which it may have endorsed any sector of the entire,
continuous trip.
Place of Destination- within the meaning of the Warsaw Convention, is
determined by the terms of the contract of carriage, or specifically the ticket
between the passenger and the carrier. It is the destination and not an
agreed stopping place that controls for the purpose of ascertaining
jurisdiction under the Convention. (Case: Santos III vs. Northwest Orient
Airlines and CA)
ACTION FOR DAMAGES
1. Condition precedent
A written complaint must be made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of baggage/goods
F otherwise the action is barred except in case of fraud on the part of the
carrier. (Art. 26)
2. Jurisdiction governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business through which the contract has
been made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers the action is filed only against
the carrier in which the accident or delay occurred unless there is an
agreement whereby the first carrier assumed liability for the whole
journey.
b. In case of transportation of baggage or goods
i. the consignor can file an action against the first carrier and the
carrier in which the damage occurred

15

Bill of lading is a document of title under the Civil Code. It can be a

negotiable document of title.

A. Negotiability
- It is negotiable if it is deliverable to the bearer, or to the order of any
person named in such document. (Art. 1507, Civil Code)
a) Effect of Stamp or Notation Non-Negotiable

the document remains to be negotiable even if the words notnegotiable or non-negotiable are placed thereon. - Art. 1510
(Civil Code)
B. How Negotiated
a) Bearer document (Art. 1508 and 1511)
- may be negotiated be delivery
b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- can only be negotiated through the indorsement of the specified person so
named.
- such indorsement may be in blank, to bearer or to a specified person.

Where a negotiable document of title is transferred for value by

delivery, and the endorsement of the transferor is essential for
negotiation, the transferee acquires a right against the transferor
to compel him to endorse the document. xxx (Art. 1515, Civil
Code)

C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the transferee the
owner of the goods
- results in the transfer of ownership because transfer of document likewise
transfers control over the goods
- refer to Art. 1513
Chapter 5
Actions and Damages in Case of Breach
Cause of action of a passenger and shipper:
a) against common carrier based on culpa contractual or culpa aquiliana
b) on the part of the driver based on either culpa delictual or culpa
aquiliana
Note: The source of obligation based on culpa contractual is separate and
distinct from quasi-delict.
Article 1903 (last paragraph) 2 things are apparent:
1.
That when an injury is caused by the negligence of a servant or
employee there instantly arises a presumption of law that there
was negligence on the part of the master or the employer either in
the selection of the servant or employee, or in supervision over
him after the selection, or both.
2.
That presumption is juris tantum and not juris et de jure (of law and
of right), and consequently may be rebutted
Note however: that Article 1903 of the Civil Code is not applicable to acts of
negligence which constitute the breach of contract. It is applicable only to
culpa contractual.

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 The fundamental distinction between obligation of extra-contractual

and those which arise from contract, rests upon the fact that in cases
of non-contractual obligation it is the wrongful or negligent act or
omission itself which creates the vinculum juris, whereas in contractual
relations the vinculum (bond) exists independently of the breach of
the voluntary duty assumed by the parties when entering into the
contractual relation.
CONCURRENT CAUSES OF ACTION
There is one action but several causes of action
The same act that breaches the contract may also be tort
Note: The cause of action of a passenger or shipper against the common
carrier can be culpa contractual or culpa aquiliana while the basis of liability on
the part of the driver is either culpa delictual or culpa aquiliana. The driver of
the carrier is not liable based on contract because there is NO PRIVITY of
contract between him and the passenger or shipper.

The validity of a contractual limitation of time for filing the suit itself
against a carrier shorter than the statutory period thereof has
generally been upheld as such stipulation merely affects the
shippers remedy and does not affect the liability of the carrier.

b) Extinctive Prescription
six (6) years if there is no written contract (bill of lading)
ten (10) years if there is written contract

This rule likewise applies to carriage of passengers for domestic

transportation.

B. International Carriage of Goods by Sea

A claim must be filed with the carrier within the following period:
1.
if the damage is apparent, the claim should be filed immediately
upon discharge of the goods; or
2.
within 3 days from delivery, if damage is not apparent.

If the negligence of third persons concurs with the breach, the liability of the
third person who was driving the vehicle and/or his employer may be based
on quasi delict. The driver alone may be held criminally liable and civil liability
may be imposed upon him based on delict. In the latter case, the employer is
subsidiarily liable.

Remember: It does not make any difference that the liability of one springs
from the contract while that of the other arises from quasi-delict. If the
owner and driver of the other vehicle are not impleaded, the carrier may
implead them by filing a third party complaint.

a) Prescription
Action for damages must be filed within a period of one (1) year from
discharge of the goods.
The period is not suspended by an extra-judicial demand. (Why?
Transportation of goods by sea should be decided in as short a time
as possible)
o
Case: Dole Philippines Inc. vs. Maritime Company of the
Philippines - the prescriptive period is not tolled or
interrupted by a written extra-judicial demand. Article
1155 is NOT applicable.
The period does not apply to conversion or misdelivery.
The one (1) year period refers to loss of goods and not to misdelivery.

Solidary liability
In case the negligence of the carriers driver and a third person
concurs, the liability of the parties carrier and his driver, third
person is joint and several.
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD
A. Overland Transportation of Goods and Coastwise Shipping
a) When to file a claim with carrier
Art. 366 constitutes a condition precedent to the accrual of a
right of action against a carrier for damage caused to the
merchandise.

The period does not begin to run until the consignee has received
possession of the merchandise that he may exercise over it the
ordinary control pertinent to ownership.
This provision applies even to transportation by sea within the
Phils. or coastwise shipping.
Does NOT apply to misdelivery of goods.

Q: Why does it not apply to misdelivery of goods?

A: In such cases (misdelivery), there can be no question of claim for damages
suffered by the goods while in transport, since the claim for damages arises
exclusively out of the failure to make delivery.
Case: Monica Roldan vs. Lim Ponzo and Co.
Article 366 of the Commercial Code is limited to cases of claims for
damage to goods actually turned over by the carrier and received
by the consignee.

16

Under Art. 366 of the Code of Commerce, an action for damages is

barred if the goods arrived in damaged condition and no claim is filed
by the shipper within the following period:
1.
Immediately if damage is apparent;
2.
within twenty four (24) hours from delivery if damage is not
apparent.
-

But the period prescribed in Art. 366 may be subject to modification

by agreement of the parties.

Filing of claim is not condition precedent. Thus, regardless of whether

the notice of loss or damage has been given, the shipper can still
bring an action to recover said loss or damage within one year after
the delivery of the goods or the date when the goods should have
been delivered

Damages arising from delay or late delivery are not the damage or
loss contemplated under the COGSA. The goods are not actually
lost or damaged. The applicable period is ten (10) years.
Case: Domingo Ang vs. American Steamship Agencies

What is to be resolved in order to determine the

applicability of the prescriptive period of one year is
whether or not there was loss of the goods subject
matter of the complaint.

Loss contemplates merely a situation where no delivery

at all was made by the shipper of the goods because
the same had perished, gone out of commerce, or
disappeared in such a way that their existence is
unknown or they cannot be recovered. (Note: It is not
loss due to misdelivery or delivery to the wrong
person.)
This rule applies in collision cases. The one (1) year period starts not
from the date of the collision but when the goods should have been
delivered, had the cargoes been saved.

Case: Maritime Agencies and Services Inc. vs. CA

When there is two destination of delivery, the one year period
should commence when the last item was delivered to the
consignee.
Insurance

The insurer who is exercising its right of subrogation is also bound by

the one (1) year prescriptive period.

However, it does not apply to the claim against the insurer for the
insurance proceeds. The claim against the insurer is based on contract
that expires in ten (10) years.

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II. Recoverable Damages

Damages is the pecuniary compensation, recompense or

satisfaction for an injury sustained, or as otherwise expressed, the
pecuniary consequences which the law imposes for the breach of
some duty or violation of some rights.
A. Extent of Recovery (Contractual Breach: Art. 220, NCC)

Carrier in good faith is liable only to pay for the damages that are
the natural and probable consequences of the breach of the
obligation and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.

Carrier in bad faith or guilty of gross negligence liable for all

damages, whether the same can be foreseen or not. Those which
may be reasonably attributed to the non-performance of the
obligation.
Note: The carrier who may be compelled to pay has the right of recourse
against the employee who committed the negligent, willful or fraudulent act.

1) Loss of earning capacity

Net Earning Capacity = Life Expectancy x [Gross Annual Income less
Necessary Living Expenses]

B. Kinds of Damages
Article 2216 provides that no proof of pecuniary loss is necessary in order that
moral, nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated ones, is left
to the discretion of the court, according to the circumstances of each case.
However, proof of pecuniary loss is necessary if actual or compensatory
damages are being claimed.
a) Actual or Compensatory Damages
only for the pecuniary loss suffered by him as he has duly proved
not only the value of the loss suffered, but also that of the profits
which the obligee failed to obtain
1.
2.
-

2 Kinds:
the loss of what a person already possesses (dao emergente);
the failure to receive as a benefit that would have pertained to him
(lucro cesante).
It should be proven: cannot be decided based on the
consideration of the judge; not to be based on the perception,
observation and consideration of the judge
With respect to restorative medical procedure: to be entitled to
actual damage, you need to have an EXPERT TESTIMONY. Without
such, you cannot recover.

Damages may be recovered: Art. 2205 (Civil Code)

1) For loss or impairment of earning capacity in cases of temporary or
permanent personal injury;
2) For injury to the plaintiffs business standing or commercial credit.

Damages cannot be presumed. The burden of proof rests on the

plaintiff who is claiming actual damages against the carrier.

In case of goods the plaintiff is entitled to their value at the time of

destruction. The award is the sum of money which plaintiff would
have to pay in the market for identical or essentially similar goods
For personal injury and even death the claimant is entitled to all
medical expenses as well as other reasonable expenses that he
incurred to treat his or her relatives injuries.
In case of death the plaintiff is entitled to the amount that he spent
during the wake and funeral of the deceased. But, expenses after the
burial are not compensable.
Read Art. 2206 (Civil Code):

death caused by a crime or quasi-delict shall be at least

P3,000; [The amount of fixed damages is now
P50,000.00]

the defendant shall be liable for the loss of the earning

capacity of the deceased;

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If deceased is obliged to give support, recipient may

demand support from the person causing the death for
a period not exceeding five years
Spouse, legitimate and illegitimate descendant and
descendants may demand moral damages for mental
anguish by reason of the death of the deceased

Life expectancy (2/3 x 80 age at death)

Net earnings based on the gross income of the victim minus the
necessary incidental living expenses which the victim would have
incurred if he were alive.
Amount of living expenses must be established. In the absence of
proof, it is fixed at fifty (50%) of the gross income.
Rules on loss of earning apply when the breach of the carrier resulted
in the plaintiffs permanent incapacity.

2) Attorneys fees
refer to Art. 2208 of the Civil Code
attorneys fees may be awarded in an action for breach of
contract of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.
If awarded exemplary, one is entitled to attorneys fees
2 kinds: ordinary (compensation to the lawyer); extraordinary
(indemnity as a form of damages suffered due to the breach of
contract)
You can be awarded if you show that you were forced to litigate
and when you are entitled to exemplary damage.
But this award is subject to the discretion of the court (you
cannot dictate usually 10%-15%)
3) Interests

12% per annum if it constitutes a loan or forbearance of money

6% per annum if it does not constitute loan or forbearance of

money

12% - for final judgment

Note: No interest, however, shall be adjudged on unliquidated claims for
damages except when or until the demand can be established with
reasonably certainty, the interest shall begin to run form the time the claim is
made judicially or extrajudicially.
b) Moral Damages
- Includes physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury.
- Though incapable of pecuniary computation, moral damages may be
recovered if they were the proximate result of the defendants
wrongful act or omission.
- Moral damages are not awarded to punish the defendant but to
compensate the victim
- May be recovered when there is death or there is malice or bad faith. (in
transportation of passengers)
- Refer to Art. 2219 and 2220 (enumerates cases when moral damages
may be awarded)
- Generally, no moral damages may be awarded where the breach of
contract is not malicious.
- Moral damages may be awarded if the contractual negligence is
considered gross negligence.
- Subject to three conditions in transportation law:
o
Death
o
Malice or bad faith (must be done in the performance
of the contract of carriage)
o
Physical Injuries

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- Requisites:
o
o
o
o

3.
There must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant
There must be a culpable act or omission factually
established
The wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant
The award of damages is predicated on any of the cases
stated in Art. 2219.

Factors to consider that could affect the amount to be recovered:

o
The extent of humiliation may also determine the
amount of moral damages that can be awarded
o
The extent of pain and suffering likewise determines
the award
o
Official, political, social and financial standing of the
offended party and the business and financial position
of the offender affect the amount of damages
o
The age of the claimant.

c) Nominal Damages
- Refer to Art. 2221-2223 (Civil Code)
- It is adjudicated in order that the right of plaintiff may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered by him.
- The assessment of nominal damages is left to the discretion of the court
according to the circumstances of the case.
- The award of nominal damages is also justified in the absence of
competent proof of the specific amounts of actual damages suffered.
- Cannot co-exist with actual damages.
- There is no loss in nominal damages, unlike in actual and temperate
damages, loss is present which is proven and not proven but rather
ascertained by the court, respectively.
Case: Japan Airlines vs. CA
The award of moral damages was justified because JAL failed to
make necessary arrangement to transport the plaintiffs on the
first available connecting flight to Manila.
Only Nominal damages were awarded in the absence of proof of
actual damages
d) Temperate or Moderate Damages
- More than nominal but less than compensatory damages.
- Art. 2224 provides:

may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be
provided with certainty.
- cannot co-exist with actual damages
- Definite proof of pecuniary loss cannot be offered, although the court is
convinced that there has been such loss.
e) Liquidated Damages
Those agreed by the parties to a contract, to be paid in case of
breach thereof.
Ordinarily, the court cannot change the amount of liquidated
damages agreed upon by the parties. However, Art. 2227 of the
Civil Code provides that liquidated damages, whether intended as
an indemnity or a penalty, shall be equitably reduced if they were
iniquitous or unconscionable.
f) Exemplary or Corrective Damages
Requisites for the award of exemplary damages:
1.
They may be imposed by way of example in addition to
compensatory damages, and only after the claimants right to
them has been established.
2.
They cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may
be awarded to the claimant.

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The act must be accompanied by bad faith or done in wanton,

fraudulent, oppressive or malevolent manner.

Note: If gross negligence warrants the award of exemplary damages, with

more reason is its imposition justified when the act performed is deliberate,
malicious and tainted with bad faith. The rationale behind exemplary or
corrective damage is to provide an example or correction from public good.

The award of exemplary damages in breach of contract of carriage is

subject to the provisions under Art. 2232-2235 of the Civil Code.

Case: Air France vs. Rafael Carrascoso and CA

The inference of bad faith is there; it may be drawn from the facts
and circumstances set forth therein. The contract was averred to
establish the relation between the parties.
Deficiency in the complaint in stating that there was bad faith, if
any, was cured by the evidence.
Case: Philippine Airlines Inc. vs. CA
Moral damages are recoverable in a breach of contract of carriage
where the air carrier thought its agents acted fraudulently or in
bad faith.
The contract of air carriage generates a relation attended with a
public duty. Neglect or malfeasance of the carriers employees
naturally could give ground for an action for damages.
MARITIME LAW
A. CONCEPTS (Chapter 6)
Maritime Law is the system of laws which particularly relates to the affairs
and business of the sea, to ships, their crews and navigation and to marine
conveyance of persons and property
Governing Laws:
1.
New Civil Code primary law on maritime commerce
2.
Book III Code of Commerce applied suppletorily
3. Special Laws
a. Salvage Law (Act No. 2616)
b. Carriage of Goods by Sea Act (CA No. 65)
c.
Ship Mortgage Decree of 1978 (PD 1521)
REAL AND HYPOTHECARY NATURE OF MARITIME LAW
Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara

That which distinguishes the maritime from the civil law and even
from the mercantile law in general is the real and hypothecary
nature of the former

Evidence of this real nature of maritime law:

o
The limitation of the liability of the agents to the actual
value of the vessel and the freight money
o
The right to retain the cargo and the embargo and
detention of the vessel even cases where the ordinary
civil law would not allow more than a personal action
against the debtor or person liable

This repeals the civil law to such extent that, in certain cases
where the mortgaged property is lost no personal action lies
against the owner or agent of the vessel

Two reasons why it is impossible to do away with these

privileges:
o
The risk to which the thing is exposed
o
The real nature of maritime law, exclusively real,
according to which the liability of the parties is limited
to a thing to which is at mercy of the waves

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Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
Corporation, Ltd.

The real and hypothecary nature of maritime law simply means

that the liability of the carrier in connection with losses related to
maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the
guaranty for their settlement
Purpose: It was designed to offset such adverse conditions and to
encourage people and entities to venture into maritime
commerce despite the risks and prohibitive cost of shipbuilding
Thus, the liability of the vessel owner and agent arising from the
operation of such vessel were confined to the (1) vessel itself, (2)
its equipment, (3) freight, (4) and insurance if any, which
limitation served to induce capitalists into effectively wagering
their resources against the consideration of the large profits
attainable in trade

Real similar to transactions over real property where to effect against third
persons, registration is necessary

Note: Since the Civil Code contains no provision regulating liability of

shipowners or agents in the event of total loss or destruction of the vessel,
Article 587 of the Code of Commerce governs.
Article 837, 587 and 590 of Code of Commerce cover only:
1.
Liability to third persons
2.
Acts of the captain
3. Collisions
EXCEPTIONS TO THE LIMITED LIABILITY RULE
1.
Where the injury or death to a passenger is due either to the fault
of the shipowner, or to the concurring negligence of the
shipowner and the captain (NEGLIGENCE)

GR: Shipowner is liable for the negligence of the captain in

collision cases
---- liability is limited to value of the vessel
Limited liability rule applies if the captain or the crew caused the
damage or injury as when unseaworthiness of the vessel was
caused by the negligence of the captain or crew during the voyage
However, if the failure to maintain the seaworthiness of the vessel
can be ascribed to the shipowner alone or the shipowner
concurrently with the captain, then the limited liability principle
cannot be invoked --- LIABILITY FOR THE DAMAGES IS TO THE
FULL EXTENT (ex. Overloading, unseaworthiness even at the time
of departure)

2.

Where the vessel is insured (INSURANCE)

Limited liability rule does not apply to insurance claims

Case: Vasquez vs. CA

Hypothecary the liability of the owner of the value of the vessel is limited to
the vessel itself
STATUTORY PROVISIONS
Article 837, 587, 590 and 643 provides for limited liability of shipowner.
(read full provision)
Art. 837: civil liability incurred by the ship owner: liability limited to value of
the vessel + appurtenances + freightage earned during voyage
Art. 643: vessel and cargo lost by reason of capture or wreck: all rights shall
be extinguished, both as regards the crew to demand any wages
whatsoever, and as regards the ship agent to recover the advances made
If a portion of the vessel or of the cargo, or both, should be saved,
the crew engaged on wages, including the captain, shall retain their rights on
the salvage, so far as they go, on the remainder of the vessel as well on the
amount of the freightage of the cargo saved; but sailors who are engaged on
shares shall not have any right whatsoever on the salvage of the hull, but
only the portion of the freightage saved. If they should have worded to
recover the remainder of the shipwrecked vessel they shall be given from the
amount of the salvage an award in proportion of the efforts made and to the
risks encountered in order to accomplish the salvage

3.

In the workmens
COMPENSATION)

The provisions of the Code of Commerce have no room in the

application of the Workmens Compensation Act which seeks to
improve, and aims at the amelioration of, the condition of
laborers and employees
If an accident is compensable under the Workmens
Compensation Act, it must be compensated even when the
workmans right is not recognized by or is in conflict with other
provisions of the Civil Code or of the Code of Commerce
Liability under the Workmens compensation Act, even if the
vessel was lost, is still enforceable against the employer or
shipowner.

Art. 587: ship agent may exempt himself of the civil liabilities for the
indemnities in favor of third persons by abandoning vessel with all
equipments and freight it earned during voyage

Art. 590: co-owners civilly liable in proportion to their interest and may
exempt liability by abandonment of the part of the vessel belonging to him

Limited liability rule means that the liability of a shipowner for damages in
case of loss is limited to the value of his vessel.

No vessel, no liability.

The civil liability for collision is merely co-existent with the interest
in the vessel; if there was total loss, liability is also extinguished.

19

compensation

claims

(WORKERS

4.

Expenses for repairs and provisioning of the ship prior to the

departure thereof

5.

The vessel is not abandoned (ABANDONMENT)

Abandonment of the vessel, its appurtenances and the freightage
is an indispensable requirement before the shipowner or ship
agent can enjoy the benefits of the limited liability rule. If the
carrier does not want to abandon the vessel, he is still liable even
beyond the value of the vessel
The only instance where abandonment is dispensed with is when
the vessel was entirely lost. In such case, the obligation is
extinguished.
Only shipowner and ship agent can make an abandonment

GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof
still exists, he can escape liability by abandoning the vessel, its appurtenances
and its freight.
Case: Monarch Insurance Co., Inc. vs. Court of Appeals

The total destruction of the vessel extinguishes maritime liens

because there are no longer any res to which it can attach. This
doctrine is based on the real and hypothecary nature of maritime
law.

The total loss of the vessel did not extinguish the liability of
the carriers insrured
Despite the loss of the vessel, therefore, its insurance
answers for the damages that a shipowner or agent, may be
held liable for by reason of the death of its passengers.

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PROCEDURE FOR ENFORCEMENT

Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
Corporation, Ltd.
Rights of the parties to claim against an agent or owner of vessel
may be compared to those of creditors against an insolvent
corporation whose assets are not enough to satisfy the totality of
claims as against it.
Creditors must limit their recovery to what is left in the name of
the corporation
In the sinking of a vessel, the claimants or creditors are limited in
their recovery to the remaining value of accessible assets. In the
case of lost vessel, these assets are the insurance proceeds and
pending freightage for the particular voyage
PROTESTS
is the written statement by the master of a vessel or any
authorized officer, attested by proper officer or a notary, to the
effect that damages has been suffered by the ship

Required under the following cases:

1.
When the vessel makes an arrival under stress
2.
Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the captain
believe that the cargo has suffered damages or averages
4. Maritime collisions
Q: when is it not required?
A:
1.
when it does not fall under the four cases mentioned above
2.
when what is not involve is not a vessel
ADMIRALTY JURISDICTION (RTC)
Section 19 (3) of BP 129 as amended by RA 7691
(3) In all actions in admiralty and maritime jurisdiction
where the demand or claim exceeds 300, 000 or in Metro
manila, where such demand or claim exceeds 400,000.
if less MTC
3 concepts: (they are the same)
1. real and hypothecary --- the supreme court did not explain the literal
meaning of it.
- real: refers to the risk in maritime thats why there are privileges for the
shipowner. Risks are certain to happen
- hypothecary: remember guaranty and collateral which is the vessel. For the
particular voyage, the guaranty is the vessel wherein if the vessel is lost, the
shipowner no longer has the liability
2. limited liabililty rule --- no literal explanation
- limited: it means that the liability is limited to the value of the vessel
-liability: assumption that the shipowner is liable for the losses. There are no
valid defenses that shipowner can invoke to escape liability. Same concept
with 1479. Difference is that there is a fixed amount and there is qualification
-under the limited liability no fixed amount but amount is confined on the
vessel

Q: so when does shipowner inform the court the right to limit liability?
A: in a pleading and normally in an answer. IT will be raised as a defense. If
shipownver cannot allege, then that defense is deemed waiver. Therefore
you cannot seek abandonment after judgment was been rendered.
CASES:
Yangco vs. Lacerna
- even captain was aware of the typhoon and the vessel capsized, SC upheld
limited liability
Chua Hek Kong
- there being no exceptions, the court upheld limited liability
The more critical issue is on the EXCEPTIONS in the LLRule:
1. workmens compensation (Abueg case: the repairs constitue maritime
lient)
2. insurance coverage--- if the vessel is lost in the course of voyage and it is
insured, is it automatic that the limited liability rule does not apply?
A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned very
little about insurance: if the vessel is insured, the insurance proceeds shall
answer the credit)
If the plaintiff was injured or heirs will file action from insurance company,
and since shipowner cannot avail of limited liability, this is not advisable to
the plaintiff because it has no privity of contract with the insurance company
Q: when does insurance argument come in?
A: only when the shipowner will bring the insurance company to the case
filed by the plaintiffby way of third party complaint. Once insurance
company is impleaded then this can be used: that the owner cannot avail of
limited liability.
But no shipowner will ever implead the insurance. Because they will be the
one who will claim the insurance without telling the plaintiffs. In the case,
there is no proof that the vessel is insured. Even if we know outside court, it
is insured because in the court, there is no proof that the vessel is insured.
Court will not identify evidence not properly identified and recoded in court.
Q: is it really an exception in its strict sense?
A: Not really (CAPANAS). What is the implication if you properly invoke the
LLRule the plaintiff cannot avail beyond the value of the vessel.
If not apply plaintiff will recover more than the value of vessel subject to
rules on claiming of damages.
But question, if vessel if covered with insurance, does this mean that plaintiff
can recover to the amount applied? No, they can only recover until the
coverage of the insurance proceeds.
3. Negligence
- common carrier is presumed negligent if common carrier. However, this
does not apply when there is an invocation on limited liability. (in all cases
except MONARCH vs. CA) --- the rest of the case, the court has found
negligence based on the facts presented. You cannot invoke presumption of
negligence so that limited liability rule will not apply.

The question here: is this a right to limit the liability?

A: admittedly it is a right that only shipowner can exercise

Monarch _-- SC: since there is a presumption of negligence then LLR will not
apply. But SC also said that if LLR is invoked, the initial burden to invoke
negligence shifts to the shipowner. They should prove that there is no privity
or knowledge on the negligence of the ship captain.

Q; how to exercise?
A: by way of pleading. But do not follow the way it was filed in yangco. Here
it was after judgment that the shipowner sought to abandon the ship to
abandon liability
But right now, it is a matter of procedure. To limit liability by abandoning the
vessel; IF it is a matter of procedure, you check the rules of civil procedure

Q: what is the relationship of Civil Code and LLR?

A: There is none. Under 1766 in all matters not provided by Civil Code, Code
of Commerce or Special law will apply. There is no rule in Civil Code in limited
liability rule thus Code of Commerce will apply. (but in monarch, this was not
applied--- all the negligence was related to the absence of exercising
extraordinary diligence)

20

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Note: that in the subsequent cases, Consolidated of Aboitiz case: there were
findings of facts of the negligence of Aboitiz. The point is when it comes to
LLR, the Code of Commerce apply. You cannot invoke presumption of
negligence. In order to refute, petitioner should prove negligence.
REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not presumption.
Loadstar case
- the shipowner is aware of the typhoon
- insufficient manning negligent
- Captain playing mahjong there was negligence. But SC said that it was
negligent because the shipowner did not prove that it was the first.
Supposedly facts are established in court proceedings and not on
presumption.

- the problem with vessel, mortgagee is not in possession of the vessel. It is

with the mortgagor, you cannot sell the property not in your possession.
In PD 1521the order of arrest can be asked
Grounds to discharge
1. irregularly issued (mortgagee na ilad. Wala pa diay due obligation
2. posting of a bond to discharge..the bond to be posted is double the value
of the claim.
Maritime lien on necessaries (5 requisites) brief yourself cresent petroleum
case (look at book for requisites)
B. VESSELS (Chapter 7)

3. no vessel, no liability

1. General Concepts

- they all mean one and the same such that the liability of the shipowner for
the losses is confined to the value of the vessel and the freight, if any.

MARITIME PROTEST (4 INSTANCES) REQUIRED (LOOK AT CODE OF

COMMERCE and above notes)
INSTANCES WHEN IT DOES NOT APPLY:
1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN NOT
MARITIME PROTEST
2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor boat
is not a vessel under maritime law, it is only engaged in bay traffic. A vessel in
maritime law, should be engaged in transporting goods, persons, or both
from one port to another)
(But to be sure: you file maritime and allege such bahala dili kelangan coz
otherwise dismiss ang case)
Since a vessel is a personal property, it can be mortgaged
Same concept with mortgage but different rule
PD 1521:
Q: what about process of extra judicial foreclosure of vessel?
A: chattel mortgage law should govern
Q: what to remember under PD 1521?
A: Section 4
registration, non waiver
Section17: priority of claims

Except:
1. Those owned and/or operated by the Armed Forces of the Philippines
and by the Foreign Government for its Military Purpose.
2. Bancas, sailboat and other waterbone contrivance of less than three
tons capacity and not motorized.

Case: Yu Con vs. Ipil

The word vessel serves to designate every kind of craft by
whatever particular or technical name it may not be known or
which nautical advancements may give it in the future
The court held that a small vessel used for the transportation of
merchandise by sea and for the making of voyages from one port
to another of these Islands, equipped and victualed for this
purpose by its owner, is a vessel, within the purview of the Code
of Commerce, for the determination of the character and effect of
the relations created between the owners of the merchandise
laden on it and its owner

When the mercantile code speaks of vessels, they refer solely and
exclusively to mercantile ships, as they do not include warships, and
furthermore, they almost always refer to craft which are not accessory
to another as in the case of launches, lifeboats and etc.

Further, they refer exclusively to those which are engaged in the

transportation of passengers and freight from one port to another or
from one place to another

They refer to merchant vessels and in NO WAY can they or should they
be understood as referring to pleasure craft, yachts, pontoons, health
service and harbor police vessels, etc.

Ships ought to be understood in the sense of vessel serving the

purpose of maritime navigation or seagoing vessel, and not in the
sense of vessel devoted to the navigation of rivers

The third book of the code of commerce, dealing with maritime

commerce, was evidently intended to define laws relative to merchant
vessels and maritime shipping; and as appears from said code, the
vessel intended in that book are such run by masters having special
training with elaborate apparatus of crew and equipment indicated in
the code.

Only vessels engaged in what is ordinarily known as maritime

commerce are within the provision of law conferring limited liability on

Q: are there claims in maritime law over and above preferred mortgage?
A: yes. Look at section 17.
Case: Poliand Industrial
- facts shows that the proceeds debted from hardwood was for the
modification of the vessel (extended for vessels benefit), for crews wage
Characteristics of maritime lien:
1. maritime property
2. travels with the property--- it cannot be extinguished
3. enforceable in an action in rem--- action directed to the property (crescent
case: ang gi kiha ang vessel)
Under section 22: persons authorize to procure repairs (presumed):
1. managing agent
2. ships husband --- agent of the vessel
If mortgagor does not pay:
1. judicial foreclosure file actual case and implead the vessel as party
defendant (served to captain or authorized person); you can ask the court
order to arrest the vessel.
2. extrajudicial

21

A vessel or watercraft is defined under PD No. 447 as any barge, lighter,

bulk carrier, passenger ship freighter, tanker, container ship, fishing
boats, or other artificial contrivance utilizing any source of motive
power, designed use or capable of being used as a means of
transportation operating either as a common carrier, including fishing
vessels covered under PD No. 43,

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the owner in case of maritime disaster.

Other vessel of minor nature not engaged in maritime commerce, such

as river boats and those carrying passengers from ship to shore, must
be governed, as to their liability to passenger, by the provision of the
civil code or other appropriate special provisions of law.

Case: Augusto Lopez vs. Juan Duruelo, et. al

The code of commerce are not applicable to small craft which are
only subject to administrative (customs) regulations in the matter
of port service and in the fishing industry
Only vessels engaged in what is ordinarily known as maritime
commerce are within the provisions of law conferring limited
liability on the owner in case of maritime disaster
It is therefore clear that a passenger on a boat like the Jison, in the
case before use, is not required to make protest as a condition
precedent to his right of action for the injury suffered by him in
the collision described in the complaint article 835 of the Code of
Commerce does not apply
CONSTRUCTION, EQUIPMENT AND MANNING

Article 573. Merchant vessels constitute property which may be acquired

and transferred by any of the means recognized by law. The acquisition of a
vessel must appear in a written instrument, which shall not produce any
effect with respect to third persons if not inscribed in the registry of vessels.
The ownership of a vessel shall likewise be acquired by possession in good
faith, continued for three years, with a just title duly recorded.
In the absence of any of these requisites, continuous possession for ten years
shall be necessary in order to acquire ownership.
A captain may not acquire by prescription the vessel of which he is in
command.
ARTICLE 575. Co-owners of vessels shall have the right of repurchase and
redemption in sales made to strangers, but they may exercise the same only
within the nine days following the inscription of the sale in the registry, and
by depositing the price at the same time.
B.

The Construction, equipment and manning of vessel are subject to the rules
issued by the Maritime Industry Authority (MARINA) and consistent with
Article 574 of the Code of Commerce
Article 574. Builders of vessels may employ the materials and follow, with
respect to their construction and rigging, the systems most suitable to their
interests. Ship owners and seamen shall be subject to what the laws and
regulations of the public administration on navigation, customs, health,
safety of vessels, and other similar matters.
PERSONAL PROPERTY
Vessels are considered personal property under the Civil Law. The Code of
Commerce likewise expressly acknowledges the special nature of a vessel as
personal property.
Case: Philippine Refining Company vs. Jargue
Vessels are personal property although occasionally referred to as
a peculiar kind of personal property
They are subject to mortgage agreeably to the provisions of the
Chattel Mortgage Law
The only difference between a chattel mortgage of a vessel and a
chattel mortgage of other personality is that it is not now
necessary for a chattel mortgage of a vessel to be noted in the
registry of the register of deeds, but it is essential that a record of
documents affecting the title to a vessel be entered in the record
of the Collector of Customs at the port of entry
Case: Rubiso and Calixto vs. Rivera
Ships or vessels, whether moved by steam or by sail, partake, to a
certain extent, of the nature and conditions of real property, on
account of their value and importance in the world of commerce
Transfer of vessels should be in writing and must be recorded in
the appropriate registry
2. OWNERSHIP
ACQUISITION

Vessel may be acquired or transferred by any means recognized by

laws. Thus, vessel may be sold, donated and may even be acquired
through prescription.
Under the present laws, vessels that are under the jurisdiction of
MARINA can be transferred only with notice to said administrative
agency.
A.

22

Prescription (Code of Commerce)

Sale (Code of Commerce)

Article 576. In the sale of a vessel it shall always be understood as included

the rigging, masts, stores and engine of a streamer appurtenant thereto,
which
at
the
time
belongs
to
the
vendor.
The arms, munitions of war, provisions and fuel shall not be considered as
included in the sale.
The vendor shall be under the obligation to deliver to the purchaser a
certified copy of the record sheet of the vessel in the registry up to the date
of the sale.
Article 577. If the alienation of the vessel should be made while it is on a
voyage, the freightage which it earns from the time it receives its last cargo
shall pertain entirely to the purchaser, and the payment of the crew and
other persons who make up its complement for the same voyage shall be for
his account.
If the sale is made after the vessel has arrived at the port of its destination,
the freightage shall pertain to the vendor, and the payment of the crew and
other individuals who make up its complement shall be for his account,
unless the contrary is stipulated in either case.
Article 578. If the vessel being on a voyage or in a foreign port, its owner or
owners should voluntarily alienate it, either to Filipinos or to foreigners
domiciled in the capital or in a port of another country, the bill of sale shall be
executed before the consul of the Republic of the Philippines at the port
where it terminates its voyage and said instrument shall produce no effect
with respect to third persons if it is not inscribed in the registry of the
consulate. The consul shall immediately forward a true copy of the
instrument of purchase and sale of the vessel to the registry of vessels of the
port where said vessel is inscribed and registered.
In every case the alienation of the vessel must be made to appear with a
statement of whether the vendor receives its price in whole or in part, or
whether he preserves in whole or in part any claim on said vessel. In case the
sale is made to a Filipino, this fact shall be stated in the certificate of
navigation.
When a vessel, being on a voyage, shall be rendered useless for navigation,
the captain shall apply to the competent judge on court of the port of arrival,
should it be in the Philippines; and should it be in a foreign country, to the
consul of the Republic of the Philippines, should there be one, or, where
there is none, to the judge or court or to the local authority; and the consul,
or the judge or court, shall order an examination of the vessel to be made.
If the consignee or the insurer should reside at said port, or should have
representatives there, they must be cited in order that they may take part in
the proceedings on behalf of whoever may be concerned.

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REGISTRATION

Vessels are now registered through MARINA. It is a long standing rule

that the person who is the registered owner of the vessel is presumed
to be the owner of the vessel.

It is a settled rule that the sale or transfer of the vessel is not binding
on the third person unless the same is registered.
SHIP'S MANIFEST

Vessels are required to carry manifest coast-wise trade.

A manifest is a declaration of the entire cargo. The object of a manifest

is to furnish custom officers with list of check against, to inform the
revenue officers what goods are being brought into a port of the
country on a vessel.

The requirement that a vessel must carry a manifest is not complied

with even if a bill of lading can be presented. A bill of lading is just a
declaration of a specific cargo rather than the entire cargo

Sec 906 of the Tariff and Custom Code provides that manifest shall be
required for cargo and passengers transported from one place to
another only when one or both of such place is a port of entry.
MORTGAGE

Since the term personal property includes vessel, they are subject to
mortgage agreeably to the provisions of the Chattel Mortgage Law.

Mortgage and other encumbrances over vessels are governed by the

provisions of presidential decree 1521 (Ship Mortgage Decree of 1978)
OTHER CODE OF COMMERCE PROVISIONS

The provisions of the Code of Commerce reproduced hereunder are

deemed modified not only by the Civil Code but also by special laws

way to the creditor for losses and damages without prejudice to his
right against the owner, the vessel and its equipment and freight. But
his liability, however is subject to the LIMITED LIABILITY RULE (Chapter
6 of the Aquino book).
CAPTAINS V. MASTERS OF VESSELS
For purposes of Maritime Commerce:
The words captain and master have the same meaning; both being
chiefs or commanders of ships. Thus, the terms captain and master
are used synonymously in the Code of Commerce.
MARINA regulations:
MASTER the person having command of the ship. The same term is being
used both for domestic trade and international trade.
BOAT CAPTAIN a person authorized by the MARINA to act as officer and/or
in command of a boat/ship or has the qualification/license to act as
such.
3 Distinct Roles a captain commonly performs:
(Inter-Orient Maritime case)
1.
He is a GENERAL AGENT OF THE SHIPOWNER;
2.
He is a COMMANDER and TECHNICAL DIRECTOR of the vessel (most
important role for this has something to do with the operation and
preservation of the vessel during its voyage and the protection of the
passengers, if any, and crew and cargo);
3.
He is a REPRESENTATIVE OF THE COUNTRY under whose flag he
navigates.
Based on the first aforementioned role, the captain is regarded as the
GENERAL AGENT of the shipowner and as such, he:

SAFETY REGULATIONS

On February 23, 2000, the Maritime Industry Authority directed all

domestic shipowners and operators under Memorandum Circular No.
154 to strictly comply with existing Safety-Related Policies, Guidelines,
Rules and Regulations

Rules include: (read book page 488-489)

Monitoring of compliances shall be undertaken by the Authority and

its Maritime Regional Offices, together with the needed coordination
with the Philippine Coast Guard
The MARINA shall have the power to inspect vessels and all equipment on
board to ensure compliance with safety standards

Has authority to sign bills of lading;

Carry goods aboard and deal with the freight earned;
Agree upon rates and decide whether to take cargo;
Has legal authority to enter into contracts with respect to the vessel
and the trading of the vessel, subject to applicable limitations
established by statute, contract or instructions and regulations of the
shipowner.
All aforementioned functions verily commits to the captain the governance,
care, and management of the vessel. Clearly then, the captain is vested with
both MANAGEMENT and FIDUCIARY functions.

C. PERSONS WHO TAKE PART IN MARITIME COMMERCE

POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND THE MASTER:

(See Arts. 610-612 of the Code of Commerce)

In sum, the following are persons who take part in Maritime Commerce:

SHIPOWNERS and SHIP AGENTS;

CAPTAINS and MASTERS OF VESSELS;
OFFICERS and CREW OF VESSELS

SHIPOWNER V. SHIP AGENT

SHIPOWNER the person who is primarily liable for damages sustained in the
operation of vessel.
Code of Commerce places the primary responsibility on the owner of the
vessel.
(Uses the term naviero which has been construed to include shipowner, ship
agent and even the charterer who is considered as owner pro hac vice.)
SHIP AGENT (Code of Commerce) the person entrusted with provisioning
of the vessel, or who represents her in the port in which she happens to
be. There is also the intention under the Code of Commerce to make the
ship agent solidarily liable with the owner. The solidary liability applies
both for breach of contract and extra-contractual obligations such as
tort. The ship agent, even though he is not the owner, is liable in every

23

a.
b.
c.
d.

DISCRETION OF CAPTAIN AND MASTER

A ships captain must be accorded a REASONABLE MEASURE OF
DISCRETIONARY AUTHORITY to decide what the safety of the ship and of its
crew and cargo specifically requires on a stipulated ocean voyage.
Presumption: A captain is knowledgeable as to the specific requirements of
seaworthiness and the particular risks and perils of the voyage he is to
embark upon.
Applicable Principle: The captain has control of ALL departments of service
in the vessel, and reasonable discretion as to its navigation.
Basic Principle in Admiralty Law: In navigating the vessel, the master must
be left free to exercise his own best judgment.
Requirements of Safe Navigation: The judgment and discretion of the
captain of a vessel may be confined within a straitjacket, even in this age of
electronic communications.
PILOTAGE: Who is a pilot?

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Maritime Law: a person duly qualified, and licensed, to conduct a vessel into
or out of ports, or in certain waters.
Broad sense: includes both (1) those whose duty it is to guide vessels into or
out of ports, or in particular waters; and (2) those entrusted with the
navigation of vessels on the high seas.
General understanding: a person taken on board at a particular place for the
purpose of conducting a ship through a river, road or channel, or from a port.
COMPULSORY PILOTAGE. In compulsory pilotage, states possessing harbors
enacted laws or promulgated rules requiring vessels approaching their ports
to take on board pilots licensed under local law. In the Philippines,
compulsory pilotage is being implemented in the Port of Manila, the latter
being within the Manila Pilotage District.
a.

Master and Pilot (See Far Eastern Shipping case on page 520 of the
Aquino book for the SC discussion on the duties of a pilot)

b.

Shipowner and Pilot

GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused
by his own negligence or default to the OWNERS of the vessel, and to
THIRD PARTIES for damages sustained in a collision. Such negligence of
the pilot in the performance of duty constitutes a MARITIME TORT.
In cases of COLLISION: the COLLIDING VESSEL is prima facie
responsible, hence, the burden of proof is upon the party claiming
benefit of the exemption from liability. Thus, it must be shown
affirmatively that the pilot was at fault, and that there was no fault on
the part of the officers or crew, which might have been conducive to
the damage. The fact that the law compelled the master to take the
pilot does not exonerate the vessel from liability. The injured party shall
seek redress from the vessel. The owners of the vessel are responsible
to the injured party for the acts of the pilot, and they must be left to
recover the amount as well as they can against him.

The practice of marine profession is now governed by special laws and

pertinent rules issued by the:
MARINA;
BOARD OF MARINE DECK OFFICERS;
BOARD OF MARINE ENGINEER OFFICERS
MINIMUM SAFE MANNING
It is not enough that the officers manning the merchant vessel have all
the qualifications imposed by the Philippine Merchant Marine Officers
Act and other special laws or regulations. It is also required that there is
sufficient number of officers and crew that are serving in the vessel.
(Quality and Quantity)
SECURITY OF TENURE
The Labor Code provisions apply to OFFICERS and CREW of merchant
vessels in DOMESTIC Trade or COASTWISE Shipping. Hence, matters
concerning their dismissal or disciplinary action must be in accordance
with provisions of the Labor Code. For officers and crew who are
working in foreign vessels who are involved in overseas shipping, there
must be compliance with the applicable laws on overseas employment
as well as regulations issued by the Philippine Overseas Employment
Administration (POEA).
CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and
Marine Engineer, Crew, and Captain (See pages 552-560 of the Aquino book).
Parties --- those provided above plus seamen, other members of the
complement including the stokers (incharge of boilers) and supercargo
(agent of the shippers who has authority to sell goods while on voyage)
4 maritime contracts
1. charter parties
2. Botomry
3. Repondentia
4. Marine insurance (incorporated in the subject insurance)
ON PERSONS

c.

Pilot and his Association

The fact that the pilot is a member of an association does not make the
association jointly and severally liable. Article 2180 of the Civil Code
does not apply because there is NO EMPLOYER-EMPLOYEE
Relationship.
Well-established is the rule that pilot associations are immune to
vicarious liability for the tort of their members. They are not the
employer of their members and exercise no control over them once
they take the helm of the vessel. They are also not partnerships
because the members do not function as agents for the association or
for each other. Pilots associations are also not liable for negligently
assuring the competence of their members because as PROFESSIONAL
ASSOCIATIONS, they made no guarantee of the professional conduct
of their members to the general public.

CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino

book)
OFFICERS AND CREW OF VESSELS
COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
-- all the persons on board from the captain to the cabin boy, necessary for
the management, maneuvers, and service, and therefore, it includes the
CREW, the SAILING MATES, ENGINEERS, STOKERS, and OTHER EMPLOYEES
ON BOARD not having specific designations; but it SHALL NOT INCLUDE the
passengers or the persons whom the vessel is transporting.
REGULATION OF MERCHANT MARINE PROFESSION

24

Shipowner
he has the privilege to invoke limited liability rule
what if with a charter party with charterer, who can invoke the
LLR? No jurisprudence. Personal opinion of sir: distinguish on the
type of charter party. If affreightment, shipowner retains
possession, command and navigation of the vessel. If bareboat it
is vested upon the charterer.
Jurisprudence: except for registration, the charterer is the
temporary owner of the vessel. With this, the charterer can invoke
LLR (this part no juris)
Note: there is not distinction of liability of shipowner and ship agent. They
are civilly liable
There is a situation in maritime law that shipower and agent they are held
liable for the act or omission of a third person which is the ship captain or
master.
ACTS of CAPTAIN
Case: Yucon case and Sweetlines case
In Yucon, money was entrusted to the captain and the money was
lost. SC concluded that shipowner was liable for the lost because
the captain failed to put up measures while in custody of the
money. It may not technically to an act but may refer to admission
but would fall under the term acts
In sweetlines, bound for catbalogan but the captain chose to allow
the passengers to disembark in tacloban. This time, this is the act
of captain. The SC concluded that the damages sustained by
passengers bound for catbalogan are to shouldered by the
shiponwer

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Indemnities in Favor of 3rd person: OTTA devt case sited in walter smith case
In OTTA the owner of the pier was at the same time the owner of
the goods. SC, because there was a relationship of owner of vessel
and goods, then there is presumption of negligence new civil code
prevails
Walter smith case: There was no relationship. Owner of port and
owner of goods are different. What was applied by court was the
law on torts. No presumption of negligence. There should be
proof of negligence. The owner of vessel proved that he exercised
ordinary diligence (required in ports). What was presented was
the competence of shipcaptain. The shipowner proved ordinary
diligence in choosing the ship captain
Contracts entered into by shipcaptain or master
Inter orient case: one role is they are the general agent of the shipowener.
But if the obligation contracted by the captain does not enure to the benefit
of the vessel, then the shipowner has no liability. There is no conflict bec. 586
obligations contracted by the shipper while 1759 death or injury of passenger
as result of contract of carriage.
The case in point with the contracts entered into was the case Wing Kee.
There were supplies delivered. Shipagent was said to be liable. SC said at the
time you were still an agent you were liable but at the time agency was
terminated you are no longer liable.
If both SO and SA are sued, being solidarily liable, the SA has right of recourse
over SO.
Shipcaptain or master
The difference is with regard to the tonnage of the vessel (higher:
captain; lower: master; major patron and minor patron)
The question on the shipcaptain or master is the exercise of
discretion
Inter orient case: captain tayong did not want to proceed with the
voyage from Singapore to Africa bec. Of lack of oxygen and
acetylene. But because of order of management he proceeded. He
was then ordered to repatriated and then another captain took his
place. He filed for illegal dismissal. The issue was the discretion
exercised by the captain. WON he has the discretion not to
proceed bec. Of lack of supply. SC said you should emphasize
reasonable discretion--- it is the captains duty
Inter Orient: triple roles of the captain --- general agent,
commander and technical manager, representative of country
Shipcaptain and harbor pilot
Harbor pilot: distinguish if voluntary or compulsory
Case cited by SC on proper relationship of captain and pilot. In far
eastern shipping case 521 3rd par --- ther are occasion when the
master may and should interfere and even displace the pilot when
he is obviously incapacitate and intoxicated. (look at the book)
In this case, there is relevance on when the captain should
interfere. If it is voluntary (pilot engaged by shipowner) --damages caused by pilot, shipowner is liable. If compulsory,
shipowner can escape liability
If compulsory distinguish whether there was circumstances that
would require the shipcaptain to interfere with the ship pilot. If
there are circumstances but captain did not interfere then
shipowner is liable. If there are circumstances and captain
interfere but still there is damage, the shipowner will not be liable.
Cebu Port Authority --- covered by compulsory pilotage
Chiefmate or sailing mate (then there are engineers)
2008 case, citing the article the code of commerce specifying the
functions of chiefmate being second in command of the vessel
Chiefmate is a managerial employee (as provided in labor code --loss of trust and confidence

25

Seaman
-

On security of tenure: distinguish DOMESTIN (labor code) abroad

(POEA).. there is a standard contract (poea prepared and drafted
it and every seaman shall comply with this --- this is to protect
filipino seaman working abroad) that will be signed by every
seaman stipulating the security of tenure, repatriation, benefits,
etc.
Difference for abroad: bigger income but contractual (after
contract go home).. DOMEstic, you can be a regular employee in
accordance with the labor code
JumpShip scenario: it is a valid ground to terminate a seaman

Shipcaptain should conduct preliminary investigation for crimes conducted

on board
D. CHARTER PARTIES
Charter Parties
a contract whereby the entire ship, or some of the principal part, is let
by the owner to a merchant or other person for a specified time or use
for the conveyance of goods, consideration of payment of freight
it is a contract, hence, parties are free to stipulate upon such terms and
conditions that would suit their purposes subject to the caveat that
these should not be contrary to law or public policy
Parties
1. Charterer- merchant or a person who desire s to lease ship or vessel
owned by another by transport of his or her goods for commercial purposes
or persons from one port to another
2. Shipowner (SO)
KINDS:
1. bareboat or demise charterer shipowner leases to the charterer the
whole vessel, transferring to the charterer the entire command, possession
and consequent control over the vessels navigation, including the master
and the crew, who becomes the charterers servants
- charterer becomes an owner pro hac vice
2. Contract of affreightment charterer hires the vessel only, either for a
determinate period of time or for a single or consecutive voyage, with the SO
providing for the provision of the ship, wages of the master and crew, and
expenses for maintenance of the vessel
a. time charter vessel is leased to a charterer for a fixed period
of time
b. voyage charter vessel is leased for a single or particular
voyage
REQUISITES OF A VALID CHARTER PARTY
1.
consent of the contracting parties
2.
an existing vessel which should be placed at the disposition of the
shipper
3. the freight
4. compliance with requirements of art 652 of Code of commerce
(Aticle 652 of the Code of Commerce provides that the charter party
shall contain, among others, the name, surname, and domicile of the
charterer, and if he states that he is acting by commission, that of
the person for whose account he makes the contract.)
Caltex v. Sulpicio Lines
There was a voyage charter; collision between MT Vector (tanker) and Doa
Paz (owned by Sulpicio) ; breach of contract filed by the passengerss heirs
against Sulpicio ; 3d party complaint against registered owner of the tanker
including Caltex ( that they were negligent and in bad faith by not seeing to it
that the tanker was seaworthy)
Issue: WON charterer shall be liable under Maritime Law?

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Ruling: Liability cannot be attached to Caltex; the charter did not affect the
business of Sulpicio as a common carrier ; rights and responsibilities of
ownership still rested on the owner
Planters Product v CA
time charter; Planters purchased fertilizers from the US; voyage to
the Philippines ; upon arrival, shortage in the cargo was discovered
; filed actions against carrier fro damages ( breach of Contract) ;
RTC ruled in favor of the Planters; Ca reversed & absolved carrier
as it was converted from common carrier to private ;
Ruling : It cannot become a private carrier ; bareboat charter can
become a private carrier but in contract of affreightment remains
as common carrier ( action based on contract of carriage ;
presumption of negligence ) ; carrier was able to rebut the
presumption of negligence ( result the inherent character of the
fertilizers)
Coastwise Lighterage v. CA
WON private carrier would convert to a common carrier; contract
of affreightment
Ruling : reiterated Planters ruling ; but was not able to rebut
presumption of negligence ; did not exercise EO diligence ( hired
unlicensed patron)
Home Insurance v. American Steamship
case mostly used by the common carrier as defense ; Home
Insurance is subrogee (paid SMC of loss cargo shipped thru
American Steamship ; no reference as to what contract but there
was a mention that it was in affreightment
Ruling : Common Carrier undertaking to carry special cargo
(chartered to special person only ) become a private carrier and
stipulation exempting owner from liability for loss due to the
negligence of its agents is valid;
Shipowner can appoint senior officers for the vessel even if bareboat
contract. But technically it is an affreightment. Most conflicts will occur if
these various principles will have to be mixed.
The whereabouts of the vessel is important to know the time for loading and
unloading
Policy marina
Implementing or enforcement --- Coastguard
2 conditions implied in charter party
1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter
party
2. --- look at book (ala kaapas)
JURISDICTION OF ADMIRALTY CASES
depends on the jurisdictional amount
important element of the contract = the subject matter of the
contract (nature and character)
International Harvester v Aragon
-involves loss of cargo shipped from LA to Manila; cargo owner filed an action
against common carrier
-SC said liability of petitioner was predicated upon the contract of carriage ;
admiralty would involve all maritime contract in whatever form and wherever
made
Macondry v Delgado Brothers
Delgado was an operator of a pier service ; WON operator
exercised its duty in loading and unloading of cargos ; no contract
of carriage ; obligation was only to load the to the ship ; no
application of admiralty

shall accrue according to what is stipulated in the contract

should there be no stipulation or if it is ambiguous , rules shall be
a. freight shall begin to run from the day of loading on the
vessel
b.
in charters with fixed period, the freight shall begin to run
upon that very day
c.
If freight is charged according o weight , payment shall be
made according to gross weight , including the weight of the
containers

LAST DAYS- period of time stipulated fro loading and unloading ( provided
for in charter party ) ; if no lay days provided for in the charter party, it is
understood that the charterer will unload and discharge cargoes within a
reasonable time or with reasonable diligence
Demurrage a sum of money due by express contract for detention of the
vessel in loading , beyond time allowed for that purpose in that charter party
; sum of which is usually fixed by the parties in the charter party ; liability for
this exists only when expressly stipulated
Deadfreight where the charterer failed to occupy the leased portion of the
vessel, he may thereby be liable by the shipowner for the deadfreight that
occurred
STIPULATION IN CHARTER PARTIES
GR: parties are free to stipulate subject to art 1744 t01754 0f NCC
Art. 1744. A stipulation between the common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service
rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or
shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in
the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence
less than that of a good father of a family, or of a man of ordinary
prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts
or omission of his or its employees;
(6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
Art. 1746. An agreement limiting the common carrier's liability may be
annulled by the shipper or owner if the common carrier refused to carry the
goods unless the former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays the
transportation of the goods or changes the stipulated or usual route, the
contract limiting the common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods.

FRIEGHT OR FREIGHTAGE
price of carriage

26

Page

Art. 1748. An agreement limiting the common carrier's liability for delay on
account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's liability is limited to the
value of the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has been fairly and freely
agreed upon.
Art. 1751. The fact that the common carrier has no competitor along the line
or route, or a part thereof, to which the contract refers shall be taken into
consideration on the question of whether or not a stipulation limiting the
common carrier's liability is reasonable, just and in consonance with public
policy.
Art. 1752. Even when there is an agreement limiting the liability of the
common carrier in the vigilance over the goods, the common carrier is
disputably presumed to have been negligent in case of their loss,
destruction or deterioration.
Art. 1753. The law of the country to which the goods are to be transported
shall govern the liability of the common carrier for their loss, destruction or
deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the
passenger's baggage which is not in his personal custody or in that of his
employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be applicable.
ART. 653. if the cargo should be received without the charter party having
been signed, the contract shall be understood as executed In accordance
with what appears in the bill of lading, the sole evidence of title with regard
to the cargo for determining the rights and obligations of the ship agent,
captain and charterer
- If there is charter party or bill of lading (BOL) = no contract at all; but
according to Blanco, if there is delivery and receipt of cargo combined with
the GF and mutual consent = contract present , better than BOL
E. LOANS ON BOTTOMRY AND RESPONDENTIA
LOAN ON BOTTOMRY loan made by shipowner or ship agent guaranteed
by vessel itself and repayable upon arrival of vessel at destination;
vessel/portion
LOAN ON RESPONDENTIA loan, taken on security of the cargo laden on a
vessel, and repayable upon safe arrival of cargo at destination; cargo/goods
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS:
1.
Exposure of security to marine peril;
2.
Obligation of the debtor conditioned only upon safe arrival of the
security at the point of destination.

May be executed by means of:

1.
public instrument
2.
policy signed by the contracting parties and the broker taking part
therein
3. private instrument (Art. 720)
GR: The captain cannot contract loans on respondentia secured by the
cargo, and should he do so, the contract shall be void. Neither can he
borrow money or Bottomry for his own transactions.
EXCEPTIONS:
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 chargeable against her.
2. When he is permitted to do so, he must necessarily state what interest he
has in the vessel.
CONTENTS OF THE LOAN CONTRACT:
1.
kind, name and registry of the vessel;
2.
name, surname and domicile of the captain;
3. names, surnames and domiciles of the borrower and the lender;
4. amount of the loan and the premium stipulated;
5. time for repayment;
6. goods pledged to secure repayment;
7.
voyage during which the risk is run (Art.721)
WHO MAY CONTRACT:
1.
2.

Bottomry by the ship owner or ship agent; outside of the residence of

the owners, the captain.
Respondentia only the owner of the cargo

DISTINCTIONS:
BOTTOMRY/ RESPONDENTIA

ORDINARY LOAN

1. Not subject to Usury Law

1. Subject to Usury Law

2. Liability of the borrower is

contingent on the safe arrival of the
vessel or cargo at destination
3. The last lender is a preferred
creditor

2. Not subject to any contingency

4. Must have a collateral

4. May or may not have collateral

5. Collateral is the vessel or cargo

subject to maritime risk
6. Must be in writing

5. Maybe property, real or

personal
6. Need not be in writing but
interest shall not be due unless
expressly stipulated in writing
7. Need not be registered

7. To be binding on third person

must be recorded in the registry of
vessels of port of registry of the
vessel
8. Loss of collateral extinguishes the
same

3. The first lender is a preferred

creditor

8. Does not extinguished if there

is a loss of the collateral (if any)

Consequences of loss of effects of the loans

Requisites of a Loan on Bottomry/Respondentia:
1.
Shipowner borrows money for use, equipment or repair of vessel
2.
For a definite term and with extraordinary interest called premium
3.
Secured by pledged of vessel or portion thereof in the case on loan on
Bottomry; or pledge of goods in case of Respondentia
4. Loan repayment depends or conditioned on the safe arrival of goods
for respondentia and obligation to repay is extinguished if pledged
goods are lost (Respondentia)
5.
Obligation to repay is extinguished if vessel is lost due to specified
marine perils in the course of voyage or within limited time
(Bottomry)
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:

27

1. Effects of loans be lost due to accident of the sea during the time, and on
the occasion of the voyage which has been designated in the contract and
proven that the cargo was on board
- lender losses the right to institute the action which would pertain to him
Except: when the loss was
1. caused by inherent defect of the thing
2. through fault or malice of the borrower
3. through barratry on the part of the captain
4. caused by damages suffered by the vessel as a consequence of
being engaged in a contraband

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5. loaded the goods on a vessel different from that designated in

the contract unless the change was caused by force majeure
2. The lenders on bottomry or respondentia shall suffer in proportion to their
respective interest, the general average which may take place in the things
upon which the loans were made.
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 costs of the salvage.

Q: why hardly used at present?

A: because of sophistication. Captains can just call up any agent the
shipowner to deliver anything for the use of the vessel to deliver. This
contract was recognized in medieval times.

F. AVERAGES AND COLLISIONS

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, as far as it may reach.

ACCIDENTS IN MARITIME COMMERCE:

1.
Averages
2.
Arrival Under Stress
3. Collision
4. Shipwreck

5. If the same vessel or cargo should be the object of the loan of Bottomry or
respondentia and maritime insurance, the value of what may be saved in case
of shipwreck shall be divided between the lender and the insurer, in
proportion to the legitimate interest of each one, taking in consideration, for
this purpose only, the principal with respect to the

* Averages an extra-ordinary or accidental expense incurred during the

voyage in order to preserve the cargo, vessel or both; and all damages or
deterioration suffered by the vessel from departure to the port of
destination, and to the cargo from the port of loading to the port
consignment. (Art. 806)

Maritime contracts include charter parties and loans on bottomry and

respondentia are considered maritime contracts
Q: why do we have to study this topic? Are these relevant?
A: they are hardly used at present. However, we have to study this just in
case this will be asked in the bar. Especially in the unique terms used in this
topic..

CLASSES OF AVERAGES:
A. Particular or Simple Average
B. Gross or General Average

General provisions in contracts will govern

Basic provision you should not forget:
1. there should be a marine risk
2. the condition that the vessel or the goods has perished then the right of
the lender to collect everything as well as stipulated interest is extinguished
(not sure if there are other more.. basin ala ko kaapas)

A. Particular or Simple Average

Damage or expenses caused to the vessel or cargo that did not inure to
common benefit, and borne by respective owners. (809)
The owner of the goods which gave rise to the expense or suffered th e
damage shall bear this average. (Art. 810)
res perit domino applies
if the vessel or goods are hypothecated by loan on bottomry and
respondentia, the lender shall bear the loss in proportion to his interest
Examples: see article 809 of the code of commerce

BOTTOMRY
It may refer to the vessel
The bottom or the hull or the kill of the vessel can be pledged in
this case
The whole vessel can be a subject of a security or collateral
PD. 1521: (is this different) --- loan is the principal, mortgage is the
accessory.
The contract of bottomry is principal, the mortgage under pd 1521
is merely a security
In pd 1521 under section 4 it is a requirement that the whole of the
vessel must be mortgaged (no jurisprudence on this matter
whether a part of the vessel can be mortgaged)
In bottomry the whole or the part of the vessel can be the subject
IF the part of the vessel can be pledged, is it necessary that there
should be goods? No. no need for goods.
RESPONDENTIA
The vessel should have goods. The goods must be laden in the
vessel
Is it necessary that the boat is on voyage? The vessel must be in
the actual course of voyage because this is the objective of the
law. Because if the vessel is docked in the port the owner can
simply obtain loans. And besides there is no risk when the vessel is
docked (but no jurisprudence)
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the
bar) --- 5 differences
1. with respect to form --- can you validly execute a bottomry or respondentia
verbally? You cannot. Bec under the code of commerce no judicial action can
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 and R, you can dismiss case due to failure to state cause of action.

28

RULES ON AVERAGES:
1.
Averages is defined as damage deliberately caused or an expense
deliberately incurred due to a marine peril and which has resulted in
saving both vessel and cargo or only the vessel or cargo.
2.
Where both vessel and cargo are saved, it is general average; where
only the vessel or only the cargo is saved, it is particular average.
3. The person whose property has been saved must contribute to
reimburse the damage caused or expense incurred if the situation
constitutes general average.
B. Gross or General Average
Damage or expenses deliberately caused in order to save the vessel, its
cargo or both from real and known risk. (Art. 811)
All the persons having an interest in the vessel and the cargo therein at the
time of the occurrence of the average shall contribute to satisfy this average.
(Art. 812)
REQUISITES:
1.
2.
3.
4.
5.
6.

common danger present

arising from accidents of sea, disposition of authority
peril imminent and ascertained
part of vessel or cargo deliberately sacrificed
intended to save vessel or cargo
proper legal steps and authority taken

Common danger
- means both the ship and the cargo, after has been loaded, are subject to the
same danger, whether during the voyage, or in the port of loading or
unloading, that the danger arises from the accidents of the sea, disposition of
authority, or faults of men, provided that circumstances producing the peril

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should be ascertained and imminent or may rationally be said to be certain

and imminent

3.

all the officers of the vessel.

The minutes must also contain a detail of all the goods jettisoned and
those injuries caused to those on board.
The captain shall deliver it to the maritime judicial authority of the first
port he may make, within 24 hours after his arrival, and to ratify it
immediately under oath.

- When the measure of precaution adopted solely and exclusively for the
preservation of the vessel from the danger of seizure or capture and not for
the common safety is not considered as common danger

4.

Deliberate Sacrifice
- voluntary sacrifice of a part for the benefit of the whole in order to justify
the average contribution

- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON:

1.
those which are on the deck, preferring the heaviest one with the least
utility and value;
2.
those which are below the upper deck, beginning with the one with
greatest weight and smallest value. (Art. 815)

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

interests for the purpose of avoiding the common peril from the whole to
a particular portion of those interests
- the goods on board refer to in jettison should be proven by means of bill of
lading and with regards to those belonging to vessel by means of inventory
prepared before the departure
2 cases where there can also be general averages even if the sacrifice was
not made during the voyage:
a. where the sinking of the vessel is necessary to extinguish a fire
in a port, roadstead, creek or bay
b. where cargo is transferred to lighten the ship on account of a
storm to facilitate entry into a port
Art. 816: in order that the goods jettisoned may be included in the gross
average and the owners entitled to indemnity it is necessary that the
cargos existence on board be proven by a bill of lading; and with regard to
those belonging to the vessel, by means of an inventory prepared before
departure.
Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry
to a port or roadstead, part of the cargo should be transferred to barges or
lighters and be lost, the owner of the said part is entitled to indemnity as if
the loss originated from a gross average, the amount being distributed
between the vessel and cargo from which it came.
If on the contrary the merchandise transferred should be saved and the
vessel should be lost, no liability may be demanded of the salvage.
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead,
creek, or bay, it should be decided to sink any vessel, this loss shall be
considered gross average, to which the vessels saved should contribute.
Note: the loss or damage sustained by cutting away wreck or parts of the
ship which have been previously carried away or effectively lost by accident
shall not be made good as general average
Sacrifice must be Successful
- no general contribution can be demanded if the vessel and other cargo that
are sought to be saved were in fact not saved (art. 860)
- owners of the goods saved shall not be liable for the indemnification of
those jettisoned, lost or damaged
- hence when the sacrifice was not successful in saving the ship, there will be
no general contribution
Compliance with Legal Steps
- Procedure for recovery: (Art. 813-814)
1.
There must be a resolution of the captain, adopted after a deliberation
with the other officers of the vessel and after hearing all persons
interested in the cargoes. If the latter disagree, the decision of the
captain should prevail but they shall register their objections.
2.
The resolution must be entered in the logbook, stating the reasons and
motives for the dissent, and the irresistible and urgent causes if he
acted in his own accord. It must be signed, in the first case, by all
persons present in the hearing. In the second case, by the captain and

29

Examples of General Average

Read Art 811 of the Code of Commerce
By Whom Borne
- shall be borne by those who benefited from the sacrifice; the shipowner and
the owner of the cargoes that were saved
Contribution may be imposed to;
a. insurers ( Insurance Code of the Philippines)
- they are obliged to pay for the indemnification of the gross average
provided that the liability shall be limited to the proportion of contribution
attaching to his policy value where this is less than the contributing value of
the thing insured
b. lenders of bottomry and respondentia (Code of Commerce)
-obliged to pay in proportion to their respective interest, the general average
which may take place in the goods which the loan is made
Who is entitled to indemnity?
Owner of the goods which were sacrificed is entitled to receive the general
contribution
Except;
1.
goods carried on desk unless the rule special law or
customs of the place allow the same
2.
goods that are not recorded in the books or records of
the vessel
3.
fuel of the vessel if there is more than sufficient fuel for
the voyage
American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do not exceed 5% of
the interest which the claimant may have in the vessels or cargo if it is
general average, and 1% of the goods damaged if particular average
deducting in both cases the expenses of appraisal, unless there is an
agreement to the contrary.
It is clear that the damage of the cargo is particular average since the loss is
less than 1% to the value of the cargo and there appears to be no allegations
as to any agreement defendants and consignee of the goods to the contrary,
by express provision of law, plaintiff is barred from suing for recovery.
Law on averages does not apply if the CC is negligent.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR CONTRIBUTION
ON AVERAGES

Under the rule, deck cargo is permitted in coastwise shipping but prohibited
in overseas shipping.
1.
If deck cargo is located with the consent of the shipper on overseas
trade, it must always contribute to general average, but should the
same be jettisoned, it would not be entitled to reimbursement because
there is violation of the Y-A Rules.

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2.

If deck cargo is loaded with the consent of the shipper on coastwise

shipping, it must always contribute to general average and if
jettisoned would be entitled to reimbursement.
-

may also be used to solve controversies where no provision of

the code of commerce is in point because the said rules embody
the custom of maritime states

AVERAGES
- the same concept that was existing in medieval times can be applied at
present
Relevance of averages (take note these ex. Connected to expenses under
806)
under 806 --- averages are:
o
Extraordinary expenses ex. If machine does not work,
you have to ask help of a tugboat the expenses on
the use of tugboat is a question of averages. This is
extraordinary because it is not foreseen. --- assuming
the engine of the vessel was defective, can that be
considered an average? YES. (question now if it is
particular or general)
o
Damages or deterioration suffered refer to the
physical feature or attribute of the goods.
- these two are different
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES
Hernandez averages are losses. If there is a loss incurred, the loss will be
shouldered on where it falls. (ex. If you have goods transported from origin
to destination but in process it was damaged by sea water. The shipper or
owner will shoulder the loss. What will shipper do to recover loss? If insured
go after insurance. Insurance then files action against common carrier due to
negligence) --- if general average, there is special circumstance, the loss will
not be shouldered on where it falls but wil be shouldered proportionately by
persons who have benefited the circumstance
4 reqs for general averages (see above notes) MEMORIZE; MAGSAYSAY VS.
AGAN
1. common danger TO Both vessel and cargo
2. deliberate sacrifice
3. successful saving
4. compliance with the proper steps
If no special circumstance, it is a particular or simple average --- the owner of
the vessel will be the one who will shoulder the loss. The negligence of
captain, the owner of the vessel will shoulder. But if there is special
circumstance, the loss will be shouldered proportionately by those who
benefited
Standard oil case the ship captain will not release goods to the shipper
unless the shipper will contribute their share. The issue was the duty of the
captain to liquidate he did not file for the appropriate proceeding, you
should result to legal liquidation. Captain here failed TO INITIATE proper
proceeding thus shipowner is liable for actions of captain
Q: is the duty of captain to initiate a condition precedent?
A: no. even if ship captain does not initiate, the shipowner can still file the
appropriate proceeding in court.
COMMON DANGER both to vessel and cargo. If one invokes general
average then that person must prove what he allege. In standard oil since
ship captain invoked gen aver they should be the one to prove. Failure to
prove, they cannot ask for contribution from owners of the goods.
It is also possible that there are no goods involved. Only extraordinary
expense Phil. Home assurance case --- discussed also in chapter 3 --- when it
exploded, vessel got burned, another vessel came to the rescue to extinguish

30

the fire and towed the vessel to the nearest destination. Goods were saved
from the subject vessel. The shipowner asked for contribution to the owner
of the goods which were saved. SC said, shipowner did not comply legal
steps 813-815 thus you cannot allege general averages.
If the averages are not general, it is particular. the shipowner will be solely
liable in the case of Magsaysay, there was no deliberate sacrifice.
SUCCESSFUL SAVING
Both vessel and goods must be saved
If vessel not saved, no general averages. Even if goods were saved
You have to start with resolution, placing of reso in the log book,
accounting of goods thrown away starting those on deck and to
follow from those not on deck (read 83-815)
American Home insurance (take note this case--- bar)
Transportation of tv sets, the shipcapatain was uprised of the
typhoon. Still captain continued with the journey. Then na abot
ang typhoon captain directed that the tv sets should be jettison.
Saved vessel. Reklamo owner. Is there general average? No. if the
shipowner is negligent, the law on general averages does not
apply.
Note that examples of the two types of averages are not exclusive. There is a
word especially thus there may be other example that may fall under this
two type of averages.
YORK AND TURP RULES
THIS CAN be stipulated in a contract that this rule will apply in
respect to averages
In the absence of stipulation in the contract in applying this rule,
such rule is inapplicable
Q: ordinary expenses are not averages bec. They are foreseeable, are there
instance that they can be considered to be extraordinary ave
A; if the parties agree that the averages will cover ordinary expenses. The
code of commerce does not prohibit the inclusion of other expenses under
averages.
G. COLLISIONS
Collisions - impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary one.
3 Zones of Time in the Collision of vessels:
1.
First zone all time up to the moment when risk of collision begins;
2.
Second zone time between moment when risk of collision begins and
moment it becomes a practical certainty;
3. Third zone time when collision is certain and time of impact.
Error in Extremis - sudden movement made by a faultless vessel during
the 3rd zone of collision with another vessel which is at fault during the 2nd
zone. Even if such sudden movement is wrong, no responsibility will fall on
said faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL
632).
Rules on Collision of Vessels under Code of Commerce:
1.
The collision may be due to the fault, negligence or lack of skill of the
captain, sailing mate, or any other member of the complement of the
vessel. The owner of the vessel at fault be liable for losses or damage.
(Art. 826)
2.
The collision may be due to the fault of both vessels. Each vessel shall
suffer its own losses, but as regards the owner of cargoes both vessels
shall be jointly and severally liable. (Art. 827)
3. If it cannot be determined which vessel is at fault. Each vessel shall also
suffer its own losses and both shall be solidarily liable for losses o
damages on the cargoes. (Art. 828)
4. The vessels may collide with each other through fortuitous event or
force majeure. In this case each shall bear its own damage. (Art. 830)

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5.

6.

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)
A vessel which is properly anchored and moored may collide with those
nearby reasons of storm or other cause of force majeure. The vessel run
into shall suffer its own damage and expense. (Art. 832)

Cases covered by collision and allision:

1.

2.

3.
4.
5.

One vessel at fault such vessel is liable for damage caused to innocent
vessel as well as damages suffered by the owners of cargo of both
vessels.
Both vessels at fault each vessel must bear its own loss, but the
shippers of both vessels may go against the ship owners who will be
solidarily liable.
Vessel at fault not known same as rule as (2). (Doctrine of Inscrutable
Fault)
Third vessel at fault same rule as (1).
Fortuitous event no liability. Each bears its own loss.

Prerequisite to recovery:
Protest should be made within 24 hours before the competent authority
at the point of collision or at the first port of arrival, if in the Philippines and
to the Philippine consul, if the collision took place abroad. (Art. 835)
Injuries to persons and damage to cargo of owners not on board on
collision time need not be protested. (Art. 836)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT
APPLICABLE.
DOCTRINE OF INSCRUTABLE FAULT
In case of collision where it cannot be determined which between the two
vessels was at fault, both vessels bear their respective damage, but both
should be solidarily liable for damage to the cargo of both vessels.
NOTE: The Doctrine of Limited Liability applies in case of collisions, but it
shall be limited only to the value of the vessel with all its appurtenances and
freightage earned during the voyage. When the latter is not sufficient to
cover all the liabilities, the indemnity due by reason of the death or injury of
persons shall have preference. (Arts. 837 and 838)
H. ARRIVAL UNDER STRESS
* ARRIVAL UNDER STRESS arrival of a vessel at a port of destination on
account of lack of provision, well founded fear of seizure, privateers, pirates,
or accidents of sea disabling navigation. (Art. 819)
NOTE: Captain must make a protest
Steps to be taken in the determination of the propriety of arrival under
stress
1. captain should determine during the voyage if there is a well founded
fear of seizure, privateers of other valid grounds
2. captain shall then assemble the officers
3. captain shall summon the persons interested in the cargo who may be
present and who may attend but without right to vote
4. the officers shall determine and agree if there is well founded reason
after examining the circumstances; Captain shall have the deciding
vote
5. agreement shall be drafter and the proper minutes shall be signed and
entered into the log book
6. objections and protests shall likewise be entered in the minutes
- Absence of one of the steps, can still be considered arrival under stress.
When not lawful:
1.
lack of provisions due to negligence to carry according to usage and
customs;
2.
risk of enemy not well known or manifest
3. defect of vessel due to improper repair; and

31

4.

malice, negligence, want of foresight or lack of skill of captain. (Art.

820)

Who bears expenses:

if arrival under stress is proper shipowner or ship agent will only
be liable for the expenses of the arrival
if arrival under stress is improper shipowner and ship agent will
be liable for the same expenses and, in addition, they shall be
solidarily liable for damages caused to the cargoes by such arrival
under stress
(Art. 821)
NOTE:
- After cessation of the cause of the arrival under stress, captain should
continue voyage or else he shall be liable.
Unloading of cargoes to make repairs:
in order to make repairs to the vessel or because there is danger
that cargo may suffer damage necessary to unload; captain
must request authorization from competent judge or court for
removal, and carry it out w/ knowledge of the person interested in
the cargo
in a foreign port Philippine Consul
in case of the vessel expenses shall be for the account of the
ship owner or agent
in case of the cargo chargeable against the owners of the
merchandise for whose benefit the act was performed
if both expenses to be divided proportionately between the
value of the vessel and cargo
(Art. 822)

Custody of cargo:
intrusted to the captain (except in cases of force majeure)
(Art. 823)
if entire cargo or part thereof should appear to be damaged, or
there should be imminent danger of its being damaged
captain may request judge of competent court / consul, the sale
of all or part of the cargo
person taking cognizance shall authorize it (after examination
and declaration)
captain shall justify the legality of his conduct, answering to the
shipper for the price of the merchandise would have brought if
they had arrived in good condition
(Art. 824)
Liability of captain:
captain responsible for the damages caused by his delay
if cause of arrival under stress ceases he should not continue
the voyage
if cause of arrival should have been the fear of enemies
deliberation and resolution (in a meeting of officers of the vessel
and persons interested in the cargo) shall precede the departure
(Art. 825)
* Shipwreck the demolition or shattering of a vessel caused by her driving
ashore or on rocks and shoals in the midseas, or by the violence of winds or
waves in tempests
- loss of the vessel at sea as a consequence of its grounding, or running
against an object in sea or on the coast
Loss or deteriorations of vessel or cargo caused by shipwreck or stranding
individually account of the owners; part which may be saved belonging to
them, same proportion. (Art. 840)
If the wreck was due to malice, negligence or lack of skill of the captain,
the owner of the vessel may demand indemnity from said captain. (Art. 841)
The goods saved from the wreck to be specially bound for the payment of
the expenses of the respective salvage. (Art. 842)

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 If several vessels sail under convoy, and any of them should be wrecked,
the cargo saved will be distributed among the rest in proportion to the
amount which each one is able to take. If any captain should refuse,
without sufficient cause, to receive what may correspond to him, the captain
of the wrecked vessel to enter a marine protest against him. If it is not
possible to transfer to the other vessels the entire cargo of the vessel
wrecked, the goods of the highest value and smallest volume to be saved
first. Designation to be made by the captain with concurrence of his officers.
(Art. 843)
The captain taking on-board the goods saved from the wreck to continue
his course to the port of destination and upon arrival he should deposit the
goods for disposal to their owners. In case the captain changes his course,
and if he can unload them at the port of which they were consigned, he may
make said port if the shippers or supercargoes present and the officers and
passengers of the vessel consent thereto. But he is not required to do so
even if he has the consent during time of war or when the port is difficult and
dangerous to make. The owners of the cargo to defray all the expenses of
this arrival and the payment of the freightage. (Art. 844)
If cannot be, proceed to judicial sale complying with the formalities and on
publicity. (Art. 845)
I. SALVAGE LAW (Act No. 2616)
* SALVAGE services one person renders to the owner of a ship or goods, by
his own labor, preserving the goods or the ship which the owner or those
entrusted with the care of them have either abandoned in distress at sea, or
are unable to protect or secure.
Kinds of Salvage:
Voluntary compensation is dependent on the success.
Under contract for a per diem or per horam wage payable at all
events.
Under contract for compensation payable only in case of
success.

Claim for valid salvage:

Provides for a reward for voluntary salvage
Other persons who assist in saving the vessel or its cargo from
shipwreck shall be entitled to a similar award

* Derelict a ship or cargo which is abandoned and deserted at sea by those

who were in charge of it, without any hope of recovering it or without any
intention of returning to it
- determined by ascertaining what was the intention and expectation of
those in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on the sea without
hope or intention of recovery or return by the master or the crew, whether
resulting from wreck, accident, necessity, or voluntary abandonment
JETSAM, FLOTSAM, LIGAN:

Jetsam goods that were thrown off a ship which was in danger

Flotsam goods that floated off the ship while ship was in danger
or when it sank

Ligan goods left as sea on the wreck or tied to a buoy so that

they can be recovered later
Basis of entitlement to salvage reward (Circumstances to consider):
1.
The labor expended by the salvors in rendering the salvage service
2.
The promptitude, skill and energy displayed in rendering the
service and saving the property
3. The value of the property employed by the salvors in rendering the
service, and danger to which such property was exposed
4. The risk incurred by the salvors in rescuing the property from the
impending peril
5. The value of the property salved
6. The degree of danger which the property was rescued
Rights and obligations of salvors and owners:
Salvor is entitled to compensation for services rendered. He has,
under the Salvage Law, a lien upon the property salvaged.
On the other hand, the owner does not denounce his right to the
property. There is no presumption of an intention to abandon such
property rights.
Maritime Lien
A salvor, in maritime law, has an interest in the property; called a lien, but
it never goes, in the absence of a contract expressly made, upon the idea of
debt due from the owner to the salvor but upon the principle that the service
creates a property in the thing saved.

Persons not entitled to salvage compensation:

1.
Crew of the vessel shipwrecked or which was in danger of
shipwreck
2.
He who shall have commenced the salvage in spite of opposition
of the captain or of his representatives
3.
He who shall have failed to comply with the provisions of Section 3
(Section 3. Tthe salvor who saves or picks up a vessel or merchandise
at sea, in the absence of the ship captain, ship owner or a
representative of either of them, they being unknown, shall convey
and deliver the vessel or merchandise ASAP to the collector of
customs if the port has a collector and otherwise to the provincial
treasurer or municipal mayor.)

Rule on salvage reward:

1.
The reward is fixed by the RTC judge in the absence of agreement or
where the latter is excessive (Sec. 9).
2.
If sold (no claim being made within 3 months from publication), the
proceeds, after deducting expenses and the salvage claim, shall go to
the owner; if the latter does not claim it within 3 years, 50% of the said
proceeds shall go to the salvors, who shall divide it equitably, and the
other half to the government (Secs. 11-12).
3. If a vessel is the salvor, the reward shall be distributed as follows:
a. 50% to the shipowner;
b. 25% to the captain; and
c.
25% to the officers and crew in proportion to their salaries

Requisites of compensation or salvage reward:

1.
Object must have been exposed to marine peril (fire, acts of
pirate, thieves)
2.
Salvage services rendered voluntarily and is not required as an
existing duty or a form of contract (See Sec. 8)
* Pilots are not entitled to a reward (Atty. Capanas)
3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of the crew
or shall have been abandoned (not necessary)
* Courts will not interfere in the agreement of the parties except but where
there is no agreement or it is excessive the reward is fixed by the RTC judge.

SALVAGE LAW
SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR ITS CARGO
SHALL BE BEYOND THE CONTROL OF THE CREW, OR SHALL HAVE BEEN
ABANDONED BY THEM, AND PICKED UP AND CONVEYED TO A SAFE PLACE
BY OTHER PERSONS, THE LATTER SHALL BE ENTITLED TO A REWARD FOR
THE SALVAGE.
THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH, ASSIST IN
SAVING A VESSEL OR ITS CARGO FROM SHIPWRECK, SHALL BE ENTITLED TO
A LIKE REWARD.
SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON ACTING IN HIS
STEAD, IS PRESENT, NO ONE SHALL TAKE FROM THE SEA, OR FROM THE

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SHORES OR COAST MERCHANDISE OR EFFECTS PROCEEDING FROM A

SHIPWRECK OR PROCEED TO THE SALVAGE OF THE VESSEL, WITHOUT THE
CONSENT OF SUCH CAPTAIN OR PERSON ACTING IN HIS STEAD.

ASSISTANCE, ITS VALIDITY MAY BE IMPUGNED BECAUSE IT IS EXCESSIVE,

AND IT MAY BE REQUIRED TO BE REDUCED TO AN AMOUNT
PROPORTIONATE TO THE CIRCUMSTANCES.

SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR MERCHANDISE AT

SEA, IN THE ABSENCE OF THE CAPTAIN OF THE VESSEL, OWNER, OR A
REPRESENTATIVE OF EITHER OF THEM, THEY BEING UNKNOWN, SHALL
CONVEY AND DELIVER SUCH VESSEL OR MERCHANDISE, AS SOON AS
POSSIBLE, TO THE COLLECTOR OF CUSTOMS, IF THE PORT HAS A
COLLECTOR, AND OTHERWISE TO THE PROVINCIAL TREASURER OR
MUNICIPAL MAYOR.

SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING SECTION, AS WELL
AS IN THE ABSENCE OF AN AGREEMENT, THE REWARD FOR SALVAGE OR
ASSISTANCE SHALL BE FIXED BY THE COURT OF FIRST INSTANCE OF THE
PROVINCE WHERE THE THINGS SALVAGED ARE FOUND, TAKING INTO
ACCOUNT PRINCIPALLY THE EXPENDITURES MADE TO RECOVER OR SAVE
THE VESSEL OR THE CARGO OR BOTH, THE ZEAL DEMONSTRATED, THE TIME
EMPLOYED, THE SERVICES RENDERED, THE EXCESSIVE EXPRESS
OCCASIONED THE NUMBER OF PERSONS WHO AIDED, THE DANGER TO
WHICH THEY AND THEIR VESSELS WERE EXPOSED AS WELL AS THAT WHICH
MENACED THE THINGS RECOVERED OR SALVAGED, AND THE VALUE OF
SUCH THINGS AFTER DEDUCTING THE EXPENSES.

SEC. 4. AFTER THE SALVAGE IS ACCOMPLISHED, THE OWNER OR HIS

REPRESENTATIVE SHALL HAVE A RIGHT TO THE DELIVERY OF THE VESSEL OR
THINGS SAVED, PROVIDED THAT HE PAYS, OR GIVES A BOND TO SECURE,
THE EXPENSES AND THE PROPER REWARD.
THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE OF
AGREEMENT, SHALL BE DETERMINED BY THE COLLECTOR OF CUSTOMS OR
BY THE JUDGE OF THE COURT OF FIRST INSTANCE OF THE PROVINCE IN
WHICH THE THINGS SAVED MAY BE FOUND.
SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL TREASURER, OR
MUNICIPAL MAYOR, TO WHOM A SALVAGE IS REPORTED, SHALL ORDER:
A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.
B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN
DANGER OF IMMEDIATE LOSS OR OF THOSE WHOSE CONSERVATION
IS EVIDENTLY PREJUDICIAL TO THE INTERESTS OF THE OWNER, WHEN
NO OBJECTION IS MADE TO SUCH SALE.
C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE
SALVAGE, IN ONE OF THE LOCAL NEWSPAPERS OR IN THE NEAREST
NEWS-PAPER PUBLISHED, OF ALL THE DETAILS OF THE DISASTER,
WITH A STATEMENT OF THE MARK AND NUMBER OF THE EFFECTS
REQUESTING ALL INTERESTED PERSONS TO MAKE THEIR CLAIMS.
SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION
OF THE AUTHORITIES, THE OWNER OR HIS REPRESENTATIVE SHALL CLAIM
THEM, SUCH AUTHORITIES SHALL ORDER THEIR DELIVERY TO SUCH OWNER
OR HIS REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY
OVER THEIR VALUE, AND A BOND IS GIVEN BY THE OWNER OR HIS
REPRESENTATIVE TO SECURE THE PAYMENT OF THE EXPENSES AND THE
PROPER REWARD. OTHERWISE, THE DELIVERY SHALL NOR BE MADE UNTIL
THE MATTER IS DECIDED BY THE COURT OF FIRST INSTANCE OF THE
PROVINCE.
SEC. 7. NO CLAIM BEING PRESENTED IN THE THREE MONTHS SUBSEQUENT
TO THE PUBLICATION OF THE ADVERTISEMENT PRESCRIBED IN SUBSECTION (C) OF SECTION FIVE, THE THINGS SAVE SHALL BE SOLD AT PUBLIC
AUCTION, AND THEIR PROCEEDS, AFTER DEDUCTING THE EXPENSES AND
THE PROPER REWARD SHALL BE DEPOSITED IN THE INSULAR TREASURY. IF
THREE YEARS SHALL PASS WITHOUT ANYONE CLAIMING IT, ONE-HALF OF
THE DEPOSIT SHALL BE ADJUDGED TO HIM WHO SAVED THE THINGS, AND
THE OTHER HALF TO THE INSULAR GOVERNMENT.
SEC. 8. THE FOLLOWING SHALL HAVE NO RIGHT TO A REWARD FOR
SALVAGE OR ASSISTANCE:
A. THE CREW OF THE VESSEL SHIPWRECKED OR WHICH WAS IS DANGER OF
SHIPWRECK;
B. HE WHO SHALL HAVE COMMENCED THE SALVAGE IN SPITE OF
OPPOSITION OF THE CAPTAIN OR HIS REPRESENTATIVE; AND
C. HE WHO SHALL HAVE FAILED TO COMPLY WITH THE PROVISIONS OF
SECTION THREE.
SEC. 9. IF, DURING THE DANGER, AN AGREEMENT IS ENTERED INTO
CONCERNING THE AMOUNT OF THE REWARD FOR SALVAGE OR

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SEC. 11. FROM THE PROCEEDS OF THE SALE OF THE THINGS SAVED SHALL BE
DEDUCTED, FIRST, THE EXPENSES OF THEIR CUSTODY, CONSERVATION,
ADVERTISEMENT, AND AUCTION, AS WELL AS WHATEVER TAXES OR DUTIES
THEY SHOULD PAY FOR THEIR ENTRANCE; THEN THERE SHALL BE
DEDUCTED THE EXPENSES OF SALVAGE; AND FROM THE NET AMOUNT
REMAINING SHALL BE TAKEN THE REWARD FOR THE SALVAGE OR
ASSISTANCE WHICH SHALL NOT EXCEED FIFTY PER CENT OF SUCH AMOUNT
REMAINING.
SEC. 12. IF IN THE SALVAGE OR IN THE RENDERING OF ASSISTANCE
DIFFERENT PERSONS SHALL HAVE INTERVENED THE REWARD SHALL BE
DIVIDED BETWEEN THEM IN PROPORTION TO THE SERVICES WHICH EACH
ONE MAY HAVE RENDERED, AND, IN CASE OF DOUBT, IN EQUAL PARTS.
THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE BEEN EXPOSED TO
THE SAME DANGERS SHALL ALSO HAVE A RIGHT TO PARTICIPATION IN THE
REWARD.
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED,
ENTIRELY OR PARTIALLY, BY ANOTHER VESSEL, THE REWARD FOR SALVAGE
OR FOR ASSISTANCE SHALL BE DIVIDED BETWEEN THE OWNER, THE
CAPTAIN, AND THE REMAINDER OF THE CREW OF THE LATTER VESSEL, SO
AS TO GIVE THE OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE
REMAINDER OF THE CREW THE OTHER FOURTH OF THE REWARD, IN
PROPORTION TO THEIR RESPECTIVE SALARIES, IN THE ABSENCE OF AN
AGREEMENT TO THE CONTRARY. THE EXPRESS OF SALVAGE, AS WELL AS
THE REWARD FOR SALVAGE OR ASSISTANCE, SHALL BE A CHARGE ON THE
THINGS SALVAGED ON THEIR VALUE.
COGSA (CARRIAGE OF GOODS BY SEA ACT)
Adopted by the Philippines on October 22, 1936 through
Commonwealth Act No. 65
New Civil Code primary law on goods that are being
transported from a foreign port to the Philippines
COGSA remains to be a suppletory law for such type of
transportation international shipping
ART. 1753, NCC: THE LAW OF THE COUNTRY TO WHICH THE GOODS ARE TO
BE TRANSPORTED SHALL GOVERN THE LIABILITY OF THE COMMON
CARRIER FOR THEIR LOSS, DESTRUCTION OR DETERIORATION.
* Goods includes goods, wares, merchandise, and articles of every kinds
whatsoever
- does not include live animals and cargo which by the contract of
carriage is stated as being carried on deck and is so carried
Parties:

Carrier, and

Shipper
- They are given their respective rights and obligations under COGSA.
- Carrier (covered by COGSA) not limited to the shipowner; includes
charterer who enters into a contract of carriage with the shipper

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- Charterer charters a vessel and conducts his own business for his own
account
after chartering the vessel, he uses the vessel to conduct a
business of transportation obtaining goods from 3rd persons to transport the
latters goods
Duties of the carrier:
Civil Code requires international carriers to exercise extraordinary
diligence in the performance of their contractual obligations
Section 2 of COGSA carriers obligation and liabilities in relation
to the loading, handling, stowage, carriage, custody, care and
discharge of such goods
Section 3 of COGSA responsibilities of the carrier under COGSA
Document of title required
- evidenced by the Bill of Lading
- BOL serves as prima facie evidence of the receipt by the carrier of the goods
Notice of claim and prescriptive period
* Notice of claim must be made within 3 days from delivery if the damage
is not apparent; not mandatory
* Prescriptive period 1 year from delivery for the filing of the case is a
condition precedent or mandatory; does not apply to cases of misdelivery or
conversion
Defenses and immunities
- provided for by Section 4 of COGSA
- Section 49(1) of COGSA carrier shall not be liable for loss or damages
arising from unseaworthiness
- New Civil Code carrier will not be liable only if it can present proof that the
unseaworthiness was caused exclusively by any of the circumstances
specified in Art. 1734 of the NCC
Waiver
- The shipowner and the ship agent may waive the benefit of any of the
defenses in its favor provided not only under COGSA but also under other
laws
Limiting provision
- COGSA contains a provision that allows the shipper to recover only US$500
per package unless there is a special declaration unless there the real value of
the goods is declared
- declaration made by the shipper stating an amount bigger than $500 per
package will make the carrier liable for such bigger amount but only if the
amount so declared is the real value of the goods
Right to discharge dangerous cargo
- COGSA allows the carrier to discharge the good of the carrier discovers that
the goods are dangerous, inflammable or are explosives

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