Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

TRANSPORTATION LAW- Dec. 3, 2010

airlines and the main carrier is PAL and so PAL should be
I. Air Transportation
the one sued.
Lhuiller v. British Airways case:
2. Yes. The cause of contract here is not a breach of contact
of carriage but the negligence of PAL in communicating
says that the governing law is the Warsaw Convention
the ticket to the British Embassy as far as the connection
issue is jurisdiction
is concerned. Note that the negligence happened before
high contacting parties countries which are signatories in the Warsaw
contact of carriage was effected.
convention; countries who abide with the provisions of the agreement in the WC
3. No. The cause of action is not the contract of carriage but
international flight flight between two high contracting parties (according to
PALs negligence making the WC not applicable.
WC)
NOTE: Compare the Lhuiller case and this case
importance to determine if international flight to know the applicability of WC
(if international flight, then WC applies)
II. OBLIGATIONS OF THE PARTIES
in this case, international flight (London-Italy) therefore, WC applies
A. Vigilance over the Cargo
Held: case shall be filed in the:
(a) place of the main office of the airline (London)
1733. Extraordinary diligence is required
(b) place where you bought the ticket (Italy)
1735. Presumption of negligence in case of loss, damage or deterioration
(c) place where the incident happened
GR: as long as it is shown that there is damage then the common carrier (CC)
Therefore: Philippine court has no jurisdiction over the case, case dismissed for
could be made liable
lack of jurisdiction
EXP: CC could prove that it has exercised extraordinary diligence over the
goods
IN ONE CASE:
One guy from Iloilo or Bacolod who joined a golf tournament in Bangkok
1736. Coverage of extraordinary diligence lasts from the time the cargoes are
He needed to pass Singapore and so he bought ticket from PAL going to
conditionally placed in the position of and received/accepted for transportation by the
Singapore
carrier to be delivered to the consignee, without prejudice to 1738
since PAL has no direct flight from Singapore to Bangkok he got a British
1737. Even if the cargoes are temporarily unloaded, CC is still obligated to exercise
Airways ticket going to Thailand from Singapore
extraordinary diligence UNLESS the shipper/owner avails of the right to stoppage in
transitu
He arrived using PALs plane but British Airways would not accept them
stoppage in transitu right of an unpaid vendor to stop the shipment or
because the ticket was not indorsed by PAL
transportation of the cargo to the consignee because the consignee is not capable
BA: if we accept this ticket, there is a possibility that PAL will not pay us
of paying him, and so the vessel becomes a warehouse, therefore shall exercise
He was not able to use the questioned ticket and Garuda Airways going to
the diligence of the good father of a family and not extraordinary diligence
Bangkok
Some of them got sick because of the hassle and so was not able to play golf
1738. CC has to continue to operate with extraordinary diligence even if the goods are
When they got back in the Phils, they filed a case for damages for breach of
placed in the warehouse at the place of destination.
contact against PAL
Fact that it has reached the destination and place of the warehouse it doesnt
PAL filed motion to dismiss
follow that the extraordinary diligence has already ceased to exist.
ISSUES
It would only cease to exist if CC has given a reasonable time and given notice
1. Should the case be filed against BA?
to the consignee to release the same
2. Do the Philippine courts have jurisdiction over the case
If there is actual or constructive delivery, extraordinary diligence ceases to exist
given it is a flight from Singapore to Thailand?
Actual delivery cargoes were given to the consignee and the consignee
3. Does the WC apply?
receives the cargoes.

Constructive delivery notice was already given to the consignee regarding the
HELD
arrival of the cargoes and the consignee was already given a reasonable time to
1. No. When he purchased ticket from PAL, PAL only used
release it even if there is no actual release
BA as their agent by virtue of an agreement between

Transportation Law Atty Palabrica (FINAL REVIEWER)

In cargoes, if there is delay, then one of the options of the shipper is to abandon the
cargo once in transit and ask for the full price of the cargo. But to be able to do so,
Requisites:
1. there should be a demand in writing addressed to the CC stating your
intention to abandon the goods
2. it shall be done before the cargo reaches the destination
B. TRANSPORTATION OF PASSENGERS (CC)
1.
2.
3.

Obligation to accept the passengers without discrimination

Obligation to transport them safely
Obligation to transport without delay

When will CC be liable in transporting passengers?

a. When there is delay (1740)
b. When there is deviation (1747)
III. DEFENSES OF THE COMMON CARRIER
1734. GR: CCs are responsible for the loss, destruction and deterioration of the goods
EXP: if the same is due to any of the following causes ONLY: memorize!!!
1. floods, storm, lightning, earthquake or other natural disasters and calamities
2. in case of an act of a public enemy during war, international or civil
3. act or omission of the owner of the cargo (shipper)
4. character of the goods or defects in the packing or container
5. order or act of competent public authority
REQUISITES:
Natural Disaster
1. this is the only cause of loss, destruction and deterioration of the goods
2. that the CC has exercised the due diligence in preventing or minimizing the loss
before, during and after the occurrence of the natural disaster (1739)
CC incurs delay (1740) or deviation change of route (1742 or 1741)
Delay delay in the departure and/or arrival
If there is delay, CC is still liable although the goods suffered deterioration, loss
or destruction caused by natural calamity, which is an absolute defense.
Act of Public Enemy
1. there should be actual war between the place of destination and place where the
carrier belongs, international or civil
public enemy pirates are public enemy, thieves, robbers, rioters and
hijackers are not public enemies

Public enemy in war, whether civil or international , as a valid defense of

common carrier

Dugie & Mela (2011) , Diato & Cagampan (updates)

o

There must be an actual war between the country where the common
carrier comes from and the country that confiscated the goods.
(hijackers, thieves, robbers are not considered as public enemy; but a
pirates are considered as such.)

Character of the goods or defect in the packing of the container

o Common carrier will not be liable if there are already defects in the
goods or in the packing of the goods.
o But If the defect is apparent and the common carrier still accepts it,
then the fact that there was prior defect could no longer be raised as a
defense against the shipper. If the common carrier does not know of the
defect then it can be raised as a defense. Provided, that it had exercised
the diligence to forestall or minimize damage (Art. 1742).
Order of a Public Authority may be used as a defense when:
o It is a valid order
o There is a force that could compel the common carrier to abide by the
order of the competent authority.
LIABILITIES OF COMMON CARRIER:

Act of an employee that caused injury to the passenger would still make the
common carrier liable, whether or not the employee is acting in accordance with
his duty; or even if the act of the employee that caused the injury is in violation
of the instruction of the common carrier.

It shall also be noted that, by express provision of the law, an act of a stranger or
co-passenger of the common carrier that caused injury to another passenger
would still make the common carrier liable.

If a passenger was injured and he has not yet paid his fare, then he is not
considered a passenger and the common carrier will not be liable to him; but if
he has an intention to pay even if he has not yet paid, then he can still be
considered as a passenger.

If the passenger was not aware that he rode the wrong bus, he is still considered
as a passenger.

If the passenger pretended to be the owner of a plane ticket and boarded the
plane, he cannot be considered as passenger because there was fraud on his part.

In the case of gratuitous passenger, the common carrier is still liable; but the
liability may be limited depending upon the stipulation of the passenger and the
common carrier. However in the case of an ordinary passenger, the liability of
the common carrier cannot be lessened or diminished by stipulation.

Transportation Law Atty Palabrica (FINAL REVIEWER)

Note that the stipulated limitation of liability in the case of gratuitous passengers shall
only be valid in ordinary negligence. It is not valid if the cause of injury is willful act of
gross negligence.
Cause of action if the passenger is injured:
1. Culpa Contractual (breach of contract)
- Case against the common carrier only. Cannot be filed against the driver
because he is only an agent. Preponderance of evidence is needed to
establish liability.
2. Quasi-delict
- Case against the driver and the common carrier; based on torts.

Dugie & Mela (2011) , Diato & Cagampan (updates)

Limited liability only applies to maritime transaction/ business...

Elements of real and hypothetical in nature:
The vessel is totally or partially loss
Done through negligence or fault of the captain and not the owner
E.g. the real and hypo in nature will not apply: Negros navigation v Miranda
During the voyage, there was a collision of negros navigation and an oil tanker
because of the negligence of the captain... but the cause is that the boat is not sea worthy
because it sunk within 5-10 minutes where in many people died. And allowing the boat to
be overloaded with people, that is why there was negligence on the part of the owner and
not only to the negligence of the captain... That is why the limited liability rule will no
longer apply in this case.

Limited liability rule: Vessel, appearance, freight and insurance

3. Culpa Criminal
It does not violate the civil code.
- Case against the driver. Common carrier is subsidiarily liable if the driver is

In order to avail limited liability in partial loss there must be a written notice of
insolvent.
abandonment. That the owner is turning over to the predator possessor of the
Possible damages:
thing or abandoning the vessel.
Actual damages

Principle of Limited liability rule (LLR): no vessel, no liability...

o (life expectancy=2/3 x 80 age) x income and expenses

Is there a need of abandonment? No there is no need because there is nothing to

Moral damages
abandon.
o Hurt feelings, sleepless nights, mental anguish
Exception of LLR:
o In culpa contractual, moral damage is not awarded except in the case of

If there is a concurrence of owner or agent of the vessel

death or bad faith.

In case if the vessel is insured

Exemplary damages

The nature of the claim is in special law that the workers who died in the
o Awarded if there is one or more aggravating circumstances
performance of their duties. It is Workmens compensation claim.
Nominal damages

When all the expenses for repair incurred prior to the voyage, because there was
o Awarded to vindicate the right of the plaintiff.
obligation already arise.

The freight that was paid will not be included in the LLR. It is only the value of
the vessel will be extinguished.
Protests:
Transportation Laws Dec. 10, 2010
Within 24hrs
Code of commerce/ Maritime Law:
Or to the first point of entry in the Philippines
Corporation A - has bus1, bus 2, and bldg.
It is not applicable to all case... Only if the vessel was shipwreck, hurricane, arrival under
The owners of corporation A are:
stress, in case of maritime collision (take note of this, because it involves maritime
B who has a house and lot
vessels and it should be both maritime vessel)
C- who has a car
D who has a car

Corporation has a distinct and separate personality. So the liability of A cannot Where to file? In 1981, the jurisdiction is regarding to the amount involved
In Metro Manila: RTC exceeds 400k
be transfer to B, C ,D...
Outside MM: RTC- exceeds 300k
Nature of liability under maritime law: it is real and hypothetical in nature...
Below this amount above stated: will in Metropolitan Trial Court.
Maritime Collision- there is a need to protest
What does real and hypothetical in nature mean? It is limited liability.
Vessel any barge, lighter, bulk vessel, freighter, passenger freighter, tanker, fishing
Limited liability- in case the vessel is totally loss through the fault or negligence of the boats, contrabands... design and capable of transporting person or cargo from one coast
to another.
captain, the liability of ship owner is extinguished.

Authority: Art. 837 under code of commerce: the owner shall be civilly liable
for the acts of the captain up to the actual value of the ship, freight...

Transportation Law Atty Palabrica (FINAL REVIEWER)

Not vessel: If the vessel is operated under Arm forces of the Philippines, all foreign ,
Bangka, sailing boats, less than 3 gross tons, boats that are accessory, yachts, health
service, floating store houses
Requisites of maritime vessel:
1 Not accessory
2 Has a license to engage in the transportation
3 Using to transport crates or people by sea

Dugie & Mela (2011) , Diato & Cagampan (updates)

Scrapping or decommission of the vessel (no longer to be used)
Constructive or total loss

Transpo Lecture- Jan 7

Charter Party - a special contract in maritime commerce. It is not the contracting parties
but the contract itself. It is a contract by which the owner or agent of the vessel leases the
whole or part of the vessel to another for transportation of the cargo or passengers from
Under code of commerce Art.835 regarding the person capability to protest and that it
one place to another for a certain price.
should be both maritime vessels.
Governing laws:

Registration and extraordinary diligence

Common Carrier- civil code
Private Carrier- Code of Commerce
Vessel is personal property. It is registered with conveyance and customs
The moment CC becomes a private carrier- Code of Commerce
Importance of determining whether common carrier is considered a private carrier:
MARINA RULES IN REGISTRATION- it is the one who set the rules
1. To know which law will govern
2. Stipulation that limits liability is valid in a private carrier but not in a common
How to acquire? Good faith with valid title: 3yrs
carrier.
When is a common carrier considered as private carrier? BARE BOAT CHARTER
GF without valid title with adverse possession: 10 yrs
BARE BOAT CHARTER
It is when a vessel is hired (including the crew and everything). The control,
Through sale
management, and possession is with the charterer.
Can you sell a vessel while in voyage? Yes
Article 652 of the code of commerce: Contents and formalities of the chartered parties
Who will pay the payment of wages? Purchaser
1. The charter parties has to be drawn in duplicates, signed by the parties.
Who will collect the freight earn? Pertains to purchaser
2. Charter parties should also specify:
Can you sell a vessel when you reach in the San Francisco or destination? Yes
* the kind, the name, and the tonnage of the vessel.
Who will collect? The Seller because he already finished the transaction
* the origin of registry of the vessel.
Who will pay the wages? Seller
* The name of the shipper, the owner, and the charterer.
Who will abandon the ship? The ship owner or agent but not the chartered.. Co-owner
* Port of loading and unloading.
can abandon it only in proportion of his share.
* Capacity and the carriage agreed upon by the parties to be loaded.
* The freightage
All vessels must be registered.
* the primage
What are the vessels need to be registered?
* lay days.
Owned by the Philippine citizen or Phil. Companies that atleast 60% owned by
Freight-fare or kind of cargo to be loaded
Phil. Citizen
Primage- fee given for the special care given to the cargo or by using the
More 15 gross tons in capacity
equipment
Optional registration: 15 tons or less
Lay days- allowable number of days that a charterer may load or unload the
Not required: war vessels, boats of private 3 tons or less, non-motorize boats,
cargo
Temporary certificate:
Why is this important to know?
May be given incase of charter or Marina
- Because we are dealing with cargoes and vessels, and they are always in transit
Charter must not be less than 1yr.. operation entirely by Filipino citizens and man by
and delay would cause a lot of money for additional charge for demorage
Filipino citizens
- Demorage- fee charged in excess of the number of days allowed to load and
When can you delete/cancel the registration?
unload
Phil.; incase of bare boat chartered by a foreign
Requisites for a valid charter party:
Pre-termination of chartered agreement
1. Consent of the contracting parties
Sale of the vessel to a foreigner
2. Existence of the vessel at the disposal of the charterer

Transportation Law Atty Palabrica (FINAL REVIEWER)

3.
4.

Stipulation as to the freightage

Compliance with Art. 652 o the Code of Commerce

What is the indication of Art 652- the charter party has to be in writing as general rule
EXP: Art 653, if the cargoes be received and the charter party has not yet been
signed then it is understood that it has been executed and the one that will govern the
obligation of the parties are the stipulations in the bill of lading
Kinds of Charter Party:
1. Bare Boat Charter Party or Demise Charter Party
- a person hires the vessel and the crew, and so the charterer would be the one
who would take charge in paying the wages of the crew and in control of
provisioning everything in the vessel, in effect, the crew became the employees
of the charterer
- charterer party would be liable to third persons
- charterer has command, possession and navigation of the vessel; he acts as
owner who handles everything
- only instance where common carrier would be a private carrier
2. Contract of Afreightment charterer hires the vessel either for a deteminate
period of time or per voyage or successive voyages
a. Voyage Charter per voyage or successive voyages
b. Time Voyage fixed time

Dugie & Mela (2011) , Diato & Cagampan (updates)

Art 659-if the cargoes are placed on the vessel, the captain may sell the cargos subject to
the following conditions:
1. if the money from the sale will be needed for the repair of the problem of
the vessel.
2. Unavoidable and urgent expenses
Effect- if after the repair, the cargo was able to reach the point of destination, then the
captain will pay the owner based on the price in the place of destination. Same goes with
if the vessel did not reach the destination.
Will the cargo be liable for the freight? If the vessel was not able to reach the destination,
its liability shall be proportionate to the distance. If it reaches the destination, it will be
liable for the whole value.
Art. 659- partial freight
if the vessel was lost or did not reach the destination.
Art. 662- shipwreck but cargo was recovered= liable only up to the extent of the damage
(partial freight)
Art. 665 the moment the cargo is placed in the vessel, the common carrier is already
liable. There is already a lien created in the cargo.

What are the liabilities?

o Freight
o Expenses
Can a ship captain enter a charter party?
o Average (expense that inure to the benefit of cargo holders) accorded to
- Art. 655, the ship captain can enter a charter party provided, in the absence of a
him. Ex: Jettison.
ship agent, even if it is in contravention or against the instruction of the ship
If you cannot pay the liabilities, then under
agent or owner still valid
- But the owner may go against the ship captain for damages
Art 668 the cargos be sold in the auction. Cargos to be sold in auction by the captain:
Contract of Towage contract of service where the barge is towed by a vessel

Art. 656 as to determine when demorage shall be given

- if there is no time stipulated in the charter party then the usage of the port shall
be used

cargos under 665 and 666

if the cargo is at the risk of deteriorating
consignee cannot be found or refuses to claim the cargo
if it is very expensive to preserve the cargo.

What if during the chartering, the vessel was found later on not seaworthy anymore?
Instances where cargo is liable for full freight: art 659
- Art 657, the captain is obligated to look for a vessel and continue the voyage
The cargo was sold for the repair, and the vessel reached the destination.
within 150 kilometers from port
- If the captain cant find vessel to deliver he may apply for deposit of the cargo
Under 662, when the vessel was repaired but after the repair the cargo was not
sold and the vessel reached the destination.
Art 658, the freight shall accrue as stipulated in the contract. But if the stipulation is not
Under 663, deterioration due to packing
clear, the rule will be, if on the charter there is a month or a date, then the freight will
Fortuitous event
accrue during the time of the loading. If there is a fixed period, then the fright accrues on
that very date.
When not required to pay a freight?

Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

Goods pledged to secure repayment

Under 661, when for reasons of shipwreck or stranding, or when the goods were
Voyage during which the risk is run
confiscated by enemies or pirates.
Under 660, when the cargo was thrown overboard and was never recovered.
(jettison)
LOB/LOR vs Simple Loan
LOR/LOB
Simple Loan
Rate of interest is not subject to the
Rate of interest must not exceed the
Transpo Lecture Loan on Respondentia and Bottomry (January 28, 2011 /
usury law extraordinary risks
ceiling fixed by the usury law
January 2015)
involved
LOAN ON RESPONDENTIA AND BOTTOMRY
- it is a contract of loan in the nature of mortgage
- subject matter in RESPONDENTIA: Cargo || BOTTOMRY: Vessel
- there should be marine risk
- unlike other loans, may assume higher interest and not covered by any
regulation or usury law because of the risk the lender is taking the moment the
vessel goes on voyage
- obligation is paid only if the subject matter is lost (respondentia), or
extinguishment of obligation to pay when lost (bottomry), so when payment
should be made at all costs, then it is an ordinary loan
Definition

Who may
contract?

Common
Elements

Loan on Bottomry
Loan on Respondentia
Loan made by ship owner or
Loan taken on security of
ship agent guaranteed by
the cargo laden on a vessel,
vessel itself and repayable
and repayable upon safe
upon arrival of the vessel at
arrival of cargo at
destination
destination
Ship owner
Owner of the cargo
Ship agent
Outside of the residence of
the owners - captain
Elements
Exposure of security to marine peril
Obligation of the debtor conditioned only upon safe arrival of
the security at the point of destination
Forms
Public instrument
Policy signed by the contracting parties and the broker taking
part therein
Private instrument
Contents
Kind, name and registry of vessel
Name, surname and domicile of the captain
Names, surnames and domiciles of the borrower and lender
Amount of the loan and the premium stipulated
Time for repayment

Marine risk is necessary and be duly

established
Executed in accordance with the
form and manner required in the
code of commerce
Recorded in the registry of vessels in
order to bind third persons
Preference is extended to the last
lender theory that if not for the last
lender, then the prior lenders would
not have benefited from the
preservation of the security.
Who has authority to constitute LOR / LOB
Loan on Bottomry
Ship owner - may secure a lon
upon his ship
Part Owner may secure a
contract only up to the extent of
his interest in the vessel
Ship Captain & Part Owner may
obtain a loan only to the extent of
his interest
Ship Captain (NOT Owner)
1. Extreme necessity may
borrow by means of LOB in
order to comply with the
obligations
2. No loans may be made on the
salaries of the crew nor of the
profits which may be
expected

WHAT DOES LOR/LOB COVER?

No need of such risk

Formal requisites regarding
contracts in general would apply
No registration is required
First lender enjoys preference
(general rule)

Loan on Respondentia
Cargo owner have the right to
enter into a LOR
Captain - NOT owner of cargo
thus they cannot contract a LOR.
If he does such then he shall be
chargeable solely for the LOR.

Transportation Law Atty Palabrica (FINAL REVIEWER)

-

Dugie & Mela (2011) , Diato & Cagampan (updates)

GR: it is presumed that LOR or LOB covers round trip

What if the captain sees that the ship is not seaworthy anymore?
The captain has the responsibility to look for another ship within 150km. (Art
EXP: when it is expressly stipulated that a particular trip is covered by loan
657)
REQUIRED TO REGISTER VESSEL TO AFFECT LOR/LOB?
- Should be recorded in the registry of vessel, but failure to register the same does Charges to Cargo? (Art 665)
Freightage
not invalidate the contract
Expenses and duties arising therefrom
- Effect of the non-recording it will not bind third parties and you will lose as a
Part of the general average
lender, your preference of credit (note: LOB or LOR has preference of credit
EXAMPLE
(GENERAL AVERAGE)
over ordinary loans)
1.
Cargo
worth 1M, loan on respondentia is 500k, General Average is 100k, How
Loan of Respondentia: (for MARINE PERILS ONLY)
much should the lender pay? his interest is one half. Then he should pay 50k
- GR: When cargo is lost, then the LOR is extinguished the borrower will no
2. in the case of shipwreck, and the vessel is stranded but some of the goods were
longer pay the lender because the subject matter is lost
salvaged or recovered, there is salvaging expenses in doing the same, What is
- What if:
the basis of determining the payment of the borrower? Not the original value
1. If cargo lost, vessel saved? Still liable? NOT liable, the security
of the loan. Law states that in shipwreck it is based on the value of the goods
was saved
saved minus the expensed for salvaging or saving the same
2. If cargo was saved, vessel lost? Still liable? LIABLE, security
3.
Cargo is worth 1M, salvaged cargo is worth 500k, salvaging expenses of 100k
still exists
then 400k would be the basis of loan on respondentia and not 1M
Loan on Bottomry (for MARINE PERILS ONLY)
- GR: When vessel is lost, then the LOB is extinguished the borrower will no
Where goods or vessel is covered by insurance:
longer pay the lender because the subject matter is lost
- General Rule: if it is 100% covered by loan it cannot be covered by insurance
- What if
because there is no more insurable interest on the part of the owner
1. If cargo lost, vessel saved? Still liable? LIABLE, security still
EXception: Insurance and LOB/LOR may co-exist but there should be a
exists
determination of the insurable interest. How to determine? if the value of the
2. If cargo was saved, vessel lost? Still liable? - NOT liable, the
goods or vessel is 1M and subject to LOB/LOR for 700k, How much is
security was saved
insurable interest of insurance company? 300k only
EXCEPTION TO THE GENERAL RULE ON EXTINGUISHMENT UPON LOSS
Is
insurance
company also liable in case of damage?
OF THE CARGO/VESSEL

Yes.
Because it has interest in the subject matter
1. if the loss is caused by the inherent defect of the cargo
Insurance
and
loan Co exist
2. fault of borrower himself
Once
insurance
and loan co-exist, both shall be liable for damages in proportion
3. Barratry or malice on the part of the captain of the vessel
to
their
interest
4. If the damage was caused because the borrower was engaging in contraband
Difference of Insurance and LOB/LOR:
goods
Insurance
LOR/LOB
5. If the goods loaded were different from that designated in the contract
in
case
of
loss,
may
be
paid
anytime
in
LOB/LOR: there should be the presence
RULE ON OBLIGATION: GENERAL AVERAGE
all
events
even
without
marine
risk
of marine risk; in case of loss, loan is
- RULE in obligation when it comes to General Average (expense on
extinguished
deterioration): incurred to save cargo or vessel by jettisoning owners and
lender benefited from such
Preference of Credit
LENDER : GENERAL AVERAGE
Ex. Series of loans were made = Manila Iloilo Cebu (100k) CDO; vessel
- Lender shall suffer or share in proportion to their respective interest in General
not longer worthy to travel and so was sold for 110k
Average which may take place in the goods in which the loan is made (Art. 732)
- first to be paid in the loan made in Cebu (100k) then pay Iloilo (10k) dont
Instances when the charterer will not pay freight anymore?
proportionate anymore, pay everything that is left if the loan is bigger than the
If goods were lost on account of:
difference
1. Shipwreck or stranding
- last one has preference, because of the principle that the last loan incurred saved
2. Due to seizure by pirates or enemies
the cargo or vessel and so preference must be given since first loan also
If paid in advance then it shall be returned UNLESS there is an agreement to
benefited
the contrary

Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

Inverted Order
- Important thing to determine is the kind of average because if it is an average
1. Loan contracted during voyage has preference over those contracted before
then the next thing you should think of is who will bear the loss?
the voyage
2. Loan contracted during last voyage take preference over earlier voyage
2 KINDS OF AVERAGE
3. Different loans made on the same port shall be paid on a pro rate basis
I.
Simple or Particular Average
- Example:
expenses or damages to the vessel or her cargo which do not inure the common
benefit of those who are interested; loss borne by the owner of the cargo or
LOAN
vessel itself;
MANILA
Php 20,000
a. Art. 809: losses suffered by the cargo from the time of its embarkation
ILOILO Php 10,000
until it is unloaded either by the inherent defect of the cargo or through
CEBU Php 100,000
force majeure
VESSEL SOLD IN AN AUCTION:
b. wages and victuals or provisions of the workers depends whether
CDO
- Php 110,000
the vessel is chartered on a fixed voyage or a monthly charter
- During quarantine, wages and victuals are only Particular Averages
APPLYING RULE: CEBU ILOILO MANILA
a.
Damages inflicted upon the vessel or cargo by reason of
impact or collision with another if it is accidental and inevitable
b.
Damages suffered by the cargo through the fault or
negligence
of the captain of the vessel, the owner of cargo bears loss
Loan Php 70M
without
prejudice
in filing a case against the owner of the vessel
Actual Value Php 50M
EXAMPLE:
Then Php 50M shall be a valid loan but the Php20M will be converted
into a simple loan
Ex: American corporation loaded equipment and agricultural machineries on a German
vessel for Russia but during the voyage, a war brought out in Russia and Germany, so the
vessel decided to go to Philippine port to seek refuge. Who would bear the expenses
Due to Fraud acquired a high loan than the actual amount of the goods secured
while in the Phils? General or Particular?
- Particular only, the risk is not common (because of war, and so safety to the
vessel only and not the cargo because the latter is a legal material, therefore,
Transpo Lecture - Average and Collision (February 4, 2011)
owner of vessel shall incur loss)
AVERAGE
II.
General or Gross Average- Art 811: expenses or losses deliberately incurred
- Expenses and damages of the vessel or to the cargo (ex. Extraordinary,
for the purpose of saving the vessel or cargo or both from real marine risk;
accidental expenses, loss or deterioration)
not accidental
- Who will shoulder loss in damages and expenses? Identify what kind of average
NOTES ON GENERAL & PARTICULAR
first!
- if monthly then wages and victuals of the crew for the reason that the vessel
- GR: nothing more than expenses and damages
was detained, then General Average
- EXP: Art. 806 technical meanings:
- if fixed voyage charter, only Particular Average
1. Average is all extraordinary and accidental expenses incurred during the
Magsaysay case: SC gave requisites of General Average (TAKE NOTE AND
voyage for the preservation of the vessel, cargo or both
MEMORIZE)
2. Average refers to damages and deterioration suffered by the vessel from the
a. There must be a common risk which is certain and imminent
time it is put in sea until it arrives at the port of destination and also those
b. Part of the vessel or cargo or both is sacrificed deliberately
suffered by the cargo from the time it is loaded to the vessel until it arrives
c. The sacrifice was successful
in the place of destination for unloading
d. The expenses or damages should be incurred or inflicted after taking
Art. 807
proper judicial steps; captain cannot do it discriminately
- Petty and ordinary expenses or expenses incidental to navigation (pilotage,
i. There must be an assembly of saving made with the captain
lighterage, inspection, health, maritime fee) should be borne by the owner of the
ii. Coming out with a resolution
ship because these are expenses in order to travel or have a voyage

Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

iii. Resolution and minutes be entered in a log book stating

General Average? Yes. Because it was deliberately made to save the other vessels and
reasons or basis of action or vote; although majority would their cargoes
not vote for the jettisoning of the cargoes, the captain has the
last say or decision, but he would be accountable to the cargo
When the vessel was close to the port, and because it is shallow, some of the
owners
cargoes need to be unloaded to barges in preparation of a coming storm, in
iv. Objects to be jettisoned should be identified in the log book
doing that there are expenses and there is a risk that those you unloaded would
and the injuries if kept on board
suffer from loss or deterioration. General Average? Yes. It is for the benefit of
v. Within 24 hours upon arrival at the first port, the captain
everybody. Vessel was saved, and so cargoes were saved because of jettisoning
shall deliver a copy of the minutes to the judicial authority
the same
- The captains vote still prevail over the others
COLLISION
NO DELIBERATE INTENT TO THROW = Not General Average
- an impact or sudden contact between the moving vessels, or one moving
if the cargo accidentally fell, vessel benefited because of weight loss which
and another in stationary
stabilized the same during the storm (incidental only), still no General Average
because no deliberate sacrifice to save V or C or both
applies only to maritime vessels fishing boats are not maritime vessels, not
despite the cargo being jettisoned, the rest of the cargo still was destroyed, no
covered here
General Average because sacrifice was not successful
RULE: if in collision, a vessel is at fault and the other is not, and it is due to the
If vessel was saved because the cargos were jettisoned, voyage continued and
negligence or want of skill of the captain, who will be liable for damages?
another accident happened, saved cargoes were exposed again to marine risk
-Owner of the vessel at fault
and was also destroyed, but those destroyed cargoes were salvaged or saved
If both vessels are at fault each one will bear its own loss but as far as the
because of previous jettisoning, owner of jettisoned cargo asked for contribution
cargoes are concerned, they are solidarily liable (plaintiff may file another for
which is proper. How much is the basis of contribution? the cost of the cargo
the whole amount of loss, and such person may ask for reimbursment) owner
after it was salvaged less the salvage expenses
of cargoes may claim from any of the vessels
If the liability is not clear as to who is negligent same rule as when both are
JETTISON throwing out of cargoes
at fault
you cannot jettison a cargo because of hearsay or speculative, there should be
Vessel A has proximate negligence and Vessel B has contributory negligence
clear and imminent risk
only, who is liable? same rule when both are at fault because the proximate
Who directs the jettison? Captain
principle does not apply to maritime collision, it only applies in ordinary
Hierarchy of Jettisoning Cargoes (first to last)
collision
a. heavy, less valued cargoes which impels the maneuvering of the vessel
What if Vessel A has the last clear chance to avoid the accident but it did not
b. cargoes which deloads the upper deck, always beginning with the biggest
avail the same, liable? No. The principle of last clear chance is not applicable
weight and smallest value
in maritime collision, considered as though both vessels are at fault
If it is caused by force majeure each owner of the vessels will bear its own
Ex. On a fair weather, vessel was stranded, crew needed to do something to keep it afloat,
loss, same rule as to the owners of cargoes
incurred expenses or averages to keep afloat. Is it a General Average? No. Particular
Zone of Time Collision (law governing)
Average only because there was no common peril the weather was good. It only
a. Zone 1- all the time up to the time when the risk starts
benefits the vessel and not the cargo. Only personal obligation on the part of the owner to
b. Zone 2- when the risk starts up to the time the risk is particularly certain to
continue the voyage.
happen
c. Zone 3- when collision is certain up to the time the collision happened
Usually, General Average happens during the voyage but it also happens in the
- Only in Zone 3, the vessel was about to collide and it is inevitable that they
port.
have to collide, the privileged vessel swerved to the right but there was
another vessel on its right and so it also swerved. Who is liable? the one
Art. 817 or 818: when there are lots of vessels and a vessel caught fire then it was made
who caused the privileged vessel to cause such error or swerving (error in
to sink in order to save the others and it did together with her cargoes, is it considered
extremis)

Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

- In Zone 1 and 2, the one who made an error should be the one liable
If it is an arrival under stress, CC will not be liable for the damages suffered by
In Manila, the vessel arrives to port, captain would delegate the anchoring and
the cargo/ vessel. If it is not a legitimate arrival under stress, ship owner will suffer the
positioning to a pilot because he is more eligible in maneuvering big vessels
If accident happens during the maneuvering of the pilot, is captain still liable? damage as to the vessel; and cargo owner as to the cargo.
Yes. But captain has recourse against the pilot. Because the captain is still there
Even the presence of valid reasons will not automatically mean an arrival under
to ensure that maneuvering is done properly
stress
because
there are formalities that must be observed.
GR: Protest is always needed in maritime collision. No damages without protest.
Given within 24 hours at the place of collision or at the port of destination.
Steps to be taken to determine the propriety of arrival under stress: (MEMORIZE)
(condition precedent)
1. Determination must be made by the Captain
Other instances wherein Protests are needed before filing for reconveyance:
2. Summon all officers and those who have interest over the vessel; but the latter
needed only in maritime vessels
have no voting rights
a. arrival and distress
3. Deliberation and objections
b. shipwreck
4. In case there will be disagreements, decision of the captain will still prevail
c. collision
d. when the vessel has gone through a hurricane
Instances when arrival under stress is not valid:
contributory negligence NOT APPLICABLE both are still at fault
1.
If the lack of provision is caused by failure of the captain to
EXP: Case: Ferry carrying passengers to Iloilo. There is a small vessel carrying
observe the usage and the customs of the particular place, and the distance of the
passengers to the Ferry. Due to the fault of the one handling the small vessel, it
voyage.
went near the propeller of the ferry and so it sunk and one of the passengers was
2.
No well-founded fear of seizure by pirates and priviteer
severely injured. They filed a case against the vessel but the latter argued that
3.
Vessel is defective caused by the fact that it was not maintained
case would not prosper because there was no protest. SC ruled that protest is
nor repaired prior to the voyage.
not needed when there is injuries to persons or passengers and what was
involved is not a maritime vessel since it is only a small vessel
Article 822: The scenario is that there is a need to repair the vessel but the cargo is
- Other EXPs:
already loaded. The cargo should be unloaded from the vessel. Who will shoulder the
a. the one involved (cargo) is not on board the vessel
expenses?
b. the person involved is not in the capacity to make the protest (applicable
The owner of the vessel if the purpose is to preserve the vessel.
also in the said case because the victim was in the hospital for 6 months)
If the purpose is to protect the cargo=the owner of the cargo.
c. the means used is not a maritime vessel
If the reason is for both= both of them proportionally

TRANSPO LECTURE: February 18

Arrival under stress and Shipwreck

Article 823: Custody of the cargo after temporarily unloaded is still under the captain,
which makes him liable in case of damages or loss. (EXCEPTION: if due to force
majeure)

If the cargo was already damaged (partly or wholly), the captain has to apply in
If the common carrier (cc) is bound to travel, the route stipulated shall not be
the proper judicial authority for the sale of the cargo. In order to effect the sale, captain
violated. Otherwise, there will be deviation. If there is deviation, cc will be liable even if must comply with certain formalities such as publishing, acquiring consent from persons
loss or damage was due to a fortuitous event. It is the same thing with delay.
who have interests over the cargoes.
In arrival under stress, vessel does not reach its destination. It anchors to the
nearest port or most convenient port. This is not considered deviation.

The captain shall be responsible for delay. If the cause of arrival under stress has
ceased, he shall continue with the voyage. If he does not continue, then there is delay.

Valid reasons for Arrival under stress

1. Well founded fear of seizure by priviteer or pirates
2. Accident at sea disabling the vessel to continue voyage

What should the captain do after the reasons for AUS ceases to exists
- After the fear already ceases the captain shall decide after following the
steps (stepsdetermine the propriety)

Transportation Law Atty Palabrica (FINAL REVIEWER)

-

Then he shall continue the voyage. Upon delay the captain shall be liable
(823)

Dugie & Mela (2011) , Diato & Cagampan (updates)

-

Exception to DEVIATION

When is salvage necessary? If there is a derelict-- cargo or vessel has been abandoned
by the captain and the crew, without intention of recovering the same or when safety is
already beyond their control. If there is till intention to recover, it is not considered a
derelict.
- It can be a subject to salvage if it is a derelict
Who will shoulder the damages?
- Derelict: abandonment + no intent to recover
1. Ship owner as to the vessel;
- NOTE: intention to recover must be from the beginning
2. Cargo owner as to the cargo
- Example: If the crew abandoned the ship and had originally not intent to
assuming that there was no malice, negligence, lack of foresight, or lack of
recover but later on when they arrive on the shore they saw useful items to
skill on the part of the captain. Otherwise, indemnity may be demanded
help in salvaging. Thus they decided to return, upon returning they saw
from him.
salvager. In this case the ship was already considered derelict since intent
must be from the time the ship circumstance for abandonment happened.
Captain will be personally liable if:
Salvage in this case is valid.
1. there is malice, negligence, lack of foresight, lack of skill
- QUASI DERELICT vessel is not valid but it is already beyond the power
the vessel that was put to sea was insufficiently repaired.
of the crew to save (ex: vessel is already at the mercy of the sea)
Shipwreck
Injuries or loss suffered by the vessel because of the swallowing by the waves,
or grounding or running an object in the sea, rendering it incapable for navigation.

Grounds

Shipwreck
1. swallowing of waves
2. grounding or running an
object in the sea (marine
perils)

Circumstance
vessel

Ship is stranded thus not

navigable

Liability

Shouldered by the
individual owners

Arrival Under Stress

1. Well founded fear of
seizure by privateer or
pirates
2. Accident at sea disabling
the vessel to continue
voyage
Ship is navigable but due
to circumstances it
limits the movement of
the ship
GR: Shouldered by
owner/agent (expenses
for arrival NOT for
damages)

TRANSPO LECTURE: February 25 SALVAGE LAW and COGSA

Salvage Law

What are the subjects of salvage?

1. Vessel itself
2. Jettisoned
3. Goods floating at the sea
4. Laigon- goods attached to the buoy
Jetsam and Flotsam unless abandoned still the property of their original owners
1. Jetsam goods that were thrown off a ship which was in danger
2. Flotsam are goods that floated off the ship while the ship was in danger or
when it sank
3. Ligan goods left at sea on the wreck or tied to a buoy so that they can be
recovered later
What is the nature of the possession of the finder of derelict?
- The finder has possession but not ownership. Even the owner may take
back the derelict without paying the expenses of salvage.
- Finder has the right to keep the derelict until the owner posts a bond.
(salvage lien)
Elements of valid salvage:
1. marine peril
2. service is voluntary
3. successful in whole or in part
4. vessel is abandoned

Salvage- Saving the vessel and saving the cargo

- Contract or service which one person renders to the owner of the ship or
goods, that by his own labor it preserves the goods or ship, which the owner
Liability: Valid and Invalid Salvage
or those entrusted with the care of them either abandon, or during distress at
Valid
Salvage
sea, were not able to protect them.

Invalid Salvage

Transportation Law Atty Palabrica (FINAL REVIEWER)

Common Carrier not liable for
damages (if they followed the formalities
stated in the law)
Expenses for the Salvage shipowner /
shipagent receive compensation by
way of reward

Liability of damages
3. vessel shipowner
4. cargo - cargo owner
Sued for damages (captain/agent)

Dugie & Mela (2011) , Diato & Cagampan (updates)

People who cannot validly conduct salvage
1. Crew of the vessel shipwrecked or salvaged. (he has a duty to take care and
save the cargo)
2. If there was an objection by the captain, the person still insists.
3. If the person who salvaged did not deposit it to the collector of customs.

How much salvaged to be given will be based on:

Examples:
1. Labor
Vessel is floating in distress, beyond the control of the crew, then one swimmer
2. Competence and Skill
a member of the crew, was able to save cargoes. Is he entitled to reward? No,
3. Value of the materials being used to salvaged
because it has to be done voluntarily. He is a crew, and it is part of his duty to
4. Risk being assumed
save the cargo.
5. Value of the goods being salvaged

Actual case: M/V Alfonso owned by William Lines was giving distress signals.
Salvage reward must not exceed 50% of the value of the goods salvaged.
The engine stopped causing the vessel to drift away. The weather was perfectly
fine. Capt. Barios, captain of another vessel M/V Henry, responded to the
signals and towed the vessel to a safer place and the vessel was saved. William Things that have to be paid by the owner:
Expenses for custody
Lines waived renumeration. Capt. Barios filed a case for a salvage reward. Is he
Advertisement
entitled to a reward? Court said that there is no marine peril. (Barrios vs Go
Thong)

auction sale
taxes over the goods when it was brought to the country
He, who shall save merchandise at sea, has the obligation to deliver it to the
expenses for salvage
collector of custom or treasurer or mayor. Otherwise, he can be held criminally
salvage reward
liable or will not be rewarded salvage fee.
Contract of towage vs. salvage
If the one who salvaged sought for the help of another vessel but the shipowner was
Salvage
Towage
not there, then 50% of the salvage fee will go to the owner, 25% will go to the captain,
Towing in order to that it may be
Towing may be an act of salvaging
another 25% will go to the crew of the vessel. (Sec 13 Act No 2616 Salvage Law)
considered salvage unless all requisites
of salvage concur
No claim 3 months after publication by the authorities of salvage report
all the crew of the vessel who undertook In towage, they will not a receive a
- the things saved shall be sold at a public auction, proceeds of which shall be
the salvage will receive a reward
reward, only their salaries (fees belong to
deposited in the National Treasury after deducting the expenses and the
the owner of the tugboat)
proper reward to which the salvor is entitled.
Requires success, otherwise no payment
Success is not required
Vessel must be involved in an accident
Vessel need not be involved in an
No claim after 3 years of the deposit
accident
- 50/50 - half of the proceeds will go to the finder and half will go to the
government.
How to determine the bond to be posted?
Customs or the judge of the RTC where the goods where recovered will be the
one to determine the amount of bond.
COGSA Carriage of Goods by Sea Act (enacted by US Govt. Act. 521, 1936)
Obligation of collector of custom
Primary Law that will govern transportation by sea is the Civil Code. Why Civil
1. safeguard and inventory of goods
Code? Latest law will be the governing law.
2. subject the goods to public auction if the conservation is prejudicial to the owner
and when no objection was made.
a. advertisement (30 days after salvage)

Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

COGSA is suppletory. In international shipment, COGSA could be the primary

law, if it was stipulated by the parties. Note that it does not apply to coastwise shipment
even if it was stipulated.

demand in May 4, 1972? No. The moment

extrajudicial demand was filed, it interrupts the
prescriptive period. Prescriptive period will then
again start on May 4, 1972 and not December 18,
1972.

Responsibilities and liabilities of parties

Implied warranty of the ships seaworthiness

o When the cargo was loaded to the vessel, it is presumed that it is
seaworthy. The owner of cargo does not have the obligation to check or
validate its seaworthiness.

Recovery of loss or damage

o There should be notice of damage. Common carrier has to file the
notice of damage immediately upon the receipt of goods if the damage
is apparent. If it is not apparent, it should be filed within 3 days.

Effect if there is no notice of damage: presumption (ONLY)

that the goods delivered are in the same condition as it
appeared in the bill of lading. Thus, a case of recovery of loss
or recovery filed beyond three days will still prosper.

Supposing in the bill of lading it was stated that

primary law is COGSA, and it was stipulated that no
case will prosper unless the notice is filed within 30
days. Is it valid? No because under COGSA,
notice shall only be filed within 3 days.

What if it was stipulated that before the case must

prosper notice within 3 days must be filed. Is it
valid? No because notice is not a prerequisite to be
able to file a case.

Case for recovery of loss or damage AGAINST THE

VESSEL shall be filed within one year from delivery. Except
in cases of loss or damage because of misdelivery and
conversion, which under 1144 of the Civil Code, the
prescriptive period is 10 years.

Filing within one year period may be extended if

there is agreement between the parties.

A case has been filed in December 18, 1972. Claim

for damages was filed in May 4, 1973. Does the
action prescribe if there was a filing of extrajudicial

Supposing A insured his cargo to B insurance

company. Cargo arrived in 2009 in the Philippines
and there were damages. A filed a demand letter to B,
but the latter did not respond to the demand. So three
years after, he filed for a case against B. B invokes
prescription of action. Is B correct? NO, B is not
correct because As claim is against an insurance
company and not the vessel. According to the
Insurance Code, the prescriptive period for money
claims is 10 years.

Transportation Law Atty Palabrica (FINAL REVIEWER)

Dugie & Mela (2011) , Diato & Cagampan (updates)

Obligations of common carrier
A. General rule: accept goods and passenger without discrimination
Exception:
1. If the goods are contraband.
2.livestock exposed to diseases
3.subject to capture, accepting the passenger or goods will result to
overloading. (pls refer to the civil code)
B. Deliver the goods/ Transport the passengers
Where? in the place stipulated in the bill of lading. When? Reasonable time. To whom?
Authorized person, consignee. How? Delivery must be done without delay.

TRANSPO: March 11 FINAL REVIEW

Parties:
Shipper vs Passenger
Common Carrier vs Consignee
Laws governing conduct of transportation:
1. In coastwise shipping: Civil Law, Code of Commerce, Special Laws
2. International Shipping: Law of the particular country where the goods are to be
delivered
COGSA: Carriage of Goods by Sea Act
From abroad to the Phil- civil code; code of commerce; COGSA (primary if
stipulated)

C. Exercise extraordinary diligence

Sea transportation- the vessel must be seaworthy (fit, properly manned,
adequately equipped) cargo-worthy.
In transportation of passengers, common carrier must observe safety as far as
human care and foresight can provide.
Coverage of observance of extraordinary diligence:
It starts from the time the goods are unconditionally placed in the possession of
the common carrier and accepted by the same; and delivered actually or constructively to
the consignee or authorized person. (Notice of delivery is important)
General Rule: Even if the goods are temporarily unloaded, extraordinary
diligence must still be observed. Exception: stoppage in transitu (right of the creditor to
stop the transportation).
Defenses of the common carrier:

COGSA- General Rule: Only for international shipment (not for coastwise)
Exception: when there is a stipulated transshipment

1. Article 1734 of the Civil Code

Note: transshipment is not valid unless stipulated.

2.Defective packing of cargo

The moment the common carrier accepts the defective packing of the cargo, it
already assumes liability. Except when it has done something to prevent or forestall
damages.

For Force Majeure to be considered to be a valid defense it must be the

proximate
cause. Common carrier must have exercised due diligence before, during, and
Ex: from San Francisco-Cebu (There was a stipulation that COGSA will apply)after. Also, that common carrier did not incur delay and overloading.
then the vessel ducted in Manila. Then COGSA will still apply.

3. Land transportation: Civil Code and code of commerce

4. Air transportation: Civil Code and Code of commerce (local); or Warsaw Convention
(international) especially when the parties are highly contracting parties. If the flight is Special Contracts
from a country that the parties are not highly contractingWarsaw convention will not
Charter party
apply.

Transportation Law Atty Palabrica (FINAL REVIEWER)

1.Bare boat/ demise
-provide for the crew, including their salaries
-responsible to pay damages
2. Contract of Afreightment
time charter and voyage charter

Liabilities of common carrier

Dugie & Mela (2011) , Diato & Cagampan (updates)

- Without malice of the cc, expenses shall be borne by the ship owner. There
should be a protest.
-Vessel, common carrier, cargo owner shall bear the loss. Captain shall be liable
if there is malice, negligence, and the vessel was insufficiently repaired.
Salvage - saving the cargo
Requisites:
1. Marine risk
2. Voluntary
3. Successful
4. Abandoned or beyond the control

1. Transportation of cargoes
Stipulation as to the liability is valid: must be in writing, must be reasonable,
must be for a consideration other than the freight.

When? If the shipment is derilict OR If the vessel is already abandoned (totally).

2. Transportation of passengers
Generally, limiting the liability is void except for gratuitous passenger.
Exception to the exception: if there is negligence but not for gross negligence or willful
act.

General- inures to the benefit of everyone. All who benefited must share to pay the
expenses.
Special/Particular- expense inures only to the benefit of a particular person.

*If the person is not a passengerthen CC is not liable. Basis: contract of carriage.

COGSA

Obligation to conduct inspection

Average

-Applies to International voyage.

-Applies to local if there is stipulated transshipment.
-Implied Warranty

1. Land: visible only to the naked eye unless there is imminent danger or strong suspicion
2. Airline: it is a must
* If the damage is apparent, notice of damage must be filed. Not apparent=notice of
damage must be filed within 3 days.
Law on bottomry (vessel) and respondentia (cargo)
-A loan, payment of which is subject to marine risk
* Failure to file within 3 days does not bar one to file a case. The purpose of the notice is
-If the cargo or vessel is safe then the debtor is obligated to pay.
to show that there was damage. If it was not filed, then there is a presumption that the
-If there is no stipulation then it is presumed that it is a roundtrip risk.
cargo was received in the same condition as it was loaded.
* Loan more than the value of the cargo or vessel through fraud is still valid but only up
to the amount of the cargo or vessel.
* Must be filed within 1 year even without notice of damage in case of Common Carrier.
If filing for recovery for damage against insurance company, the prescription period is 10
Order of payment
years.
-Those transactions made during the voyage has preference than those made
before the boat was put into voyage.
-Inverse preference.
-Those loans taken in the same place and time during the shipwreck, the debtors
will share payment pro rata.
Shipwreck