Transportation

TRANSPORTATION LAW
PRELIMINARY CONSIDERATIONS:
A. Governing Laws
1. New Civil Code Primary law
2. Warsaw
Convention
for
international transportation by air
3. Code of Commerce governs
suppletorily; it governs maritime
transaction
4. Carriage of Goods by Sea Act for
transportation by sea; governs
suppletorily
5. Salvage Law
6. Public Service Act
7. Article XII Sec 11 on operation of
public convenience of the 1987
Philippine Constitution
B. Concept of Public Utility & public

service
Sec. 13 (b) of the Public Service
Act provides that: The term 'public
service' includes every person that
now or hereafter may own, operate,
manage, or control in the Philippines,
for hire or compensation, with general
or
limited
clientele,
whether
permanent, occasional or accidental,
and done for general business
purposes,
any
common
carrier,
railroad,
street
railway,
traction
railway, sub-way motor vehicle, either
for freight or passenger, or both with
or without fixed route and whatever
may be its classification, freight or
carrier service of any class, express
service, steamboat, or steamship line,
pontines, ferries, and water craft,
engaged in the transportation of
passengers or freight or both, shipyard,
marine railway, marine repair shop,
wharf or dock, ice plant, icerefrigeration plant, canal, irrigation
system, gas electric light, heat and
power, water supply and power,
petroleum, sewerage system, wire or
wireless communications system, wire
or wireless broadcasting stations and
other similar public services: Provided,
Manol R. Sala
SWU School of Law
however, That a person engaged in

agriculture, not otherwise a public
service, who owns a motor vehicle and
uses it personally and/or enters into a
special contract whereby said motor
vehicle
is
offered
for
hire
or
compensation to a third party or third
engaged in agriculture, not itself or
themselves a public service, for
operation by the latter for a limited
time and for a specific purpose directly
connected with the cultivation of his or
their
farm,
the
transportation,
processing,
and
marketing
of
agricultural products of such third
party or third parties shall not be
considered as operating a public
service for the purposes of this Act.
Public utilities are privately owned
and operated business whose services
are essential to the general public.
Case:
National
Company v CA
Development
C. Constitutional
limitations
operation of public utilities
on
Sec. 11 of Article XII of the 1987

Constitution
states
that:
No
franchise, certificate, or any other form
of authorization for the operation of a
public utility shall be granted except to
citizens of the Philippines or to
corporations or associations organized
under the laws of the Philippines, at
least sixty per centum of whose capital
is owned by such citizens; nor shall
such
franchise,
certificate,
or
authorization be exclusive in character
or for a longer period than fifty years.
Neither shall any such franchise or
right be granted except under the
condition that it shall be subject to
amendment, alteration, or repeal by
the Congress when the common good
so requires. The State shall encourage
equity participation in public utilities by
the general public. The participation of
foreign investors in the governing body
of any public utility enterprise shall be
limited to their proportionate share in
its capital, and all the executive and
managing officers of such corporation
1
or association must be citizens of the

Philippines.
*The corporation must be a domestic
corporation and that 60% of the capital
must be owned by Filipino citizens.
Sec. 18 of Article XII of the 1987
Constitution provides that: The
State may, in the interest of national
welfare or defense, establish and
operate vital industries and, upon
payment of just compensation, transfer
to public ownership utilities and other
private enterprises to be operated by
the Government.
Q: What are the bases/reasons for
regulation of public utilities?
A: Basis: Police Power

Justification: Common good
D. Regulatory agencies
1. Land Transportation Franchising
Regulatory Board (LTFRB) land
transportation
2. Land Transportation Office issue
license to drivers
3. Maritime
Industry
Authority
(MARINA) water transportation
4. National
Telecommunications
Commission
communication
utilities
and
services,
radio
communications systems, wire or
wireless telephone and telegraph
systems,
radio
and
television
broadcasting systems and other
similar public utilities
5. Energy Regulatory Board electric
or power companies
6. National Water Resources Council
water resources
7. Civil Aeronautics Board air
transportation
Q: What conditions must concur in the
grant
of
certificate
of
public
convenience and necessity?
Manol R. Sala
SWU School of Law
A: 1. The grantee must be a citizen of

the Philippines or a corporation or
entity 60% of which is owned by such
citizens; 2. The grantee must have
sufficient
financial
capability
to
undertake the service; and 3. The
service will promote public interest and
convenience in a proper and suitable
manner.
*In Tatad v Garcia, the SC held that
the controlling factor is the citizenship
of the person operating a common
carrier.
Guiding Principles:
1. Prior or Old Operator Rule the first
licensee will be protected in his
investment
and
will
not
be
subjected to ruinous competition.
*No
certificate
of
public
convenience and necessity will be
issued to other operator as long as
the prior operator still in operation
and can satisfy the public and that
it still has the capacity to do so.
2. Protection
Investment
Rule
protects from unfair competition

3. Prior Applicant Rule protects the
first applicant. Principle: all things
being equal
*Public interest is the first and
paramount consideration.
E. Concept
of
franchise
and
certificate of public convenience
Franchise is a grant or privilege from
the sovereign power.
Certificate of Public Convenience is
a form of regulation through an
administrative agency.
Q: Is a legislative franchise necessary
before a public utility can be allowed to
secure
a
certificate
of
public
convenience?
A: General Rule: NO.
Exception: If a pertinent law requires
such legislative franchise.
Factors:
1. Public interest
2. Public convenience
3. Public necessity
GENERAL CONCEPTS:
A. Contract
general
2
of
transportation
in
Transportation is a contract whereby

a person, natural or juridical, obligates
to transport persons, goods, or both,
from one place to another, by land, air,
or water, for a price or commission.
*Importance: For liability purposes
indiscrimin
ately
As
to
required
diligence
:
As
to
regulatio
n:
Extraordina
ry diligence
is required
Stipulati
on
limiting
liability:
Parties may
not agree
on limiting
the
carriers
liability
except
when
provided
by law
Subject to
state
regulation
B. Perfection
There is a perfected contract when
there was a meeting of the minds as to
the subject matter and consideration.
C. Common Carrier
1. Statutory definition
Article 1732 of the New Civil
Code provides that: Common
carriers are persons, corporations,
firms or associations engaged in the
business of carrying or transporting
passengers or goods or both, by
land,
water,
or
air,
for
compensation,
offering
their
services to the public.
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.
Implications being a common
carrier:
a. extraordinary diligence must be
exercised
b. in case of damage, presumption
of negligence on the part of the
common carrier
*It is the activity of the carrier that
is controlling.
Cases: A.F. Sanchez Brokerage,
Inc v CA; Asia Lighterage v CA;
De Guzman v CA
*The fact that there is no license at
the time of the incident happen is
of no moment for liability purposes.
2. Distinguished
from
private
carrier
Common Private
Carrier
Carrier
As
to holds
Contracts
availabili himself out with
ty:
for
all particular
people
individual
Exemptin
g
circumst
ance:
Prove
extraordina
ry diligence
and Article
1734 NCC
Presump There is a
tion
of presumptio
Negligen n of fault or
ce:
negligence
Manol R. Sala
SWU School of Law
Governin
g law:
Law
on
common
carriers
s
or
groups
only
Ordinary
diligence
is
required
Not
subject
to state
regulatio
n
Parties
may limit
the
carriers
liability,
provided
it is not
contrary
to
law,
morals or
good
customs
Caso
fortuito,
Article
1174
NCC
No
presumpt
ion
of
fault
or
negligen
ce
Law
on
obligatio
ns
and
contracts
3. Distinguished
from
towage,
arrastre and stevedoring
Distinctions:
Towage
Arrastre
Stevedo
ring
One
vessel is
hired
to
bring
another
vessel to
another
place;
refers to a
service
rendered
to
a
vessel by
towing for
the mere
purpose of
3
The
functions of
an arrastre
operator
has nothing
to do with
the
trade
and
business of
navigation,
nor to the
use
or
operation
of vessels.
He is no
different
The
function
of
stevedor
es
involves
the
loading
and
unloadin
g
of
coastwis
e vessels
calling at
the port.
expediting from that of

her
a
voyage
depositary
without
or
reference
warehouse
to
any man.
circumsta
nces
of
danger.
*The SC held that the following services are
not considered a common carrier:
1) purely arrastre services;
*comparable to that as warehouseman and
depositor
2) purely stevedoring services; and
3) purely towage services.
*In Crisostomo v CA, the SC held that the
respondent being a travel agency is not a
common carrier because the services offered
is not one that carries passenger from one
place to another.
4. Tests to determine common
carrier
Tests:
a. He must 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
person generally as a business
and not as a casual occupation;
b. He must undertake to carry
goods of the kind to which his
business is confined;
c. He must undertake to carry by
the method by which his
business is conducted and over
his established roads;
d. The transportation must be for
hire
Case: First Philippine Industrial
Corporation v CA
*Under Sec. 22 of the Electric
Power Distribution Reform Act,
the
company
like
MERALCO
distributing electricity is a common
carrier.
5. Parties to the contract of
carriage
a. Carriage of passengers:
1. Common carrier
2. Passengers
b. Carriage of goods:
1. Shipper
2. Carrier
Manol R. Sala
SWU School of Law
D. Registered owner rule and Kabit

system
General Rule: Registered owner rule
is applicable in this jurisdiction.
Registered owner rule states that
the person who is the registered owner
of a vehicle is liable for any damages
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.
Purpose
of
this
rule:
easy
identification of the owner to be sued
for liability.
Recourse: Registered owner may
bring the case to the court to sue the
buyer or operator of the vehicle at
fault.
Exception: in case of stolen vehicle
registered owner is not liable.
*In the case of Duavit v CA, the SC
held that the registered owner is not
liable if the vehicle was taken from his
garage without his knowledge or
consent. To hold the registered owner
liable would be absurd as it would be
holding liable the owner of a stolen
vehicle for an accident caused by the
person who stole such vehicle.
Kabit System is an 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.
*Kabit system is invariably recognized
as being contrary to public policy and
therefore void and inexistent under
Article 1409 of the New Civil Code.
*If the registered owner and the buyer
entered into this transaction they are
In pari delicto thus, in case something
happen the court will not aid them. The
court will leave them as they were.
*This arrangement is a circumvention
of the requirement for license.
OBLIGATIONS OF THE COMMON CARRIER
IN A CONTRACT OF CARRIAGE OF
GOODS:
A. Vigilance over the goods
4
1. Duty to exercise extraordinary

diligence Article 1733 of the
New Civil Code states that:
Common carriers, from the nature
of their business and for reasons of
public policy, are bound to observe
extraordinary diligence in the
vigilance over the goods and for the
safety
of
the
passengers
transported by them, according to
all the circumstances of each case.
Such extraordinary diligence in the
vigilance over the goods is further
expressed in Articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while
the extraordinary diligence for the
safety of the passengers is further
set forth in Articles 1755 and
1756.
Reason: The nature of the business
is imbued with public interest and
public policy; because of the
exigencies of the business. The
public has no choice but to trust on
the skills of the employees of the
common carrier. The goods and the
life of the passenger are placed in
the hands of the common carrier.
Article 363 of the Code of
Commerce provides that: Outside
of the cases mentioned in the
second paragraph of Article 361,
the carrier shall be obliged to
deliver the goods shipped in the
same condition in which, according
to the bill of lading, they were found
at the time they were received,
without any damage or impairment,
and failing to do so, to pay the
value which those not delivered
may have at the point and at the
time at which their delivery should
have been made. If those not
delivered form part of the goods
transported, the consignee may
refuse to receive the latter, when
he proves that he cannot make use
of them independently of the
others.
Commerce provides that: If the
effect of the damage referred to in
Article 361 is merely a diminution in
the value of the gods, the obligation
Manol R. Sala
SWU School of Law
of the carrier shall be reduced to

the payment of the amount which,
in the judgment of experts,
constitutes such difference in
value.
Commerce provides that: If, in
consequence of the damage, the
goods are rendered useless for sale
and consumption for the purposes
for which they are properly
destined, the consignee shall not be
bound to receive them, and he may
have them in the hands of the
carrier, demanding of the latter
their value at the current price on
that day. If among the damaged
goods there should be some pieces
in good condition and without any
defect, the foregoing provision shall
be applicable with respect to those
damaged and the consignee shall
receive those which are sound, this
segregation to be made by distinct
and separate pieces and without
dividing a single object, unless the
consignee proves that impossibility
of conveniently making use of them
in this form. The same rule shall be
applied to merchandise in bales or
packages, separating those parcels
which appear sound.
Presumption of negligence
Code provides that: In all cases
other than those mentioned in Nos.
1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost,
destroyed or deteriorated, common
carriers are presumed to have been
at
fault
or
to
have
acted
negligently, unless they prove that
they
observed
extraordinary
diligence as required in Article
1733.
2. Duration of liability
Code
states
that:
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
5
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, without
prejudice to the provisions of Article
1738.
*The enumeration is exclusive or a

closed list.

Code states that: The common
carrier's
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.
Exceptions:

Code
provides
that:
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 of
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.
3. Defenses of common carriers
carriers are responsible for the loss,
destruction, or deterioration of the
goods, unless the same is due to
any of the following causes only:
(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 of 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.
Manol R. Sala
SWU School of Law
General Rule: Common carriers

are responsible for the loss,
destruction or deterioration of the
goods.
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 of omission of the shipper
or owner of the goods;
4. The character of the goods or
defects in the packaging or in
the containers; and
5. Order
or
act
of
the
competent public authority
Code states that: If the common
carrier negligently incurs in delay in
transporting the goods, a natural
disaster shall not free such carrier
from responsibility.
a. Fortuitous event
Code provides that: In order
that the common carrier may be
exempted from responsibility,
the natural disaster must have
been the proximate and only
cause of the loss. However, the
common carrier must exercise
due diligence to prevent or
minimize loss before, during and
after the occurrence of flood,
storm or other natural disaster
in order that the common carrier
may be exempted from liability
for the loss, destruction, or
deterioration of the goods. The
same duty is incumbent upon
the common carrier in case of an
act of the public enemy referred
to in Article 1734, No. 2.
*Fire is not within the ambit of
natural disaster or calamity.
6
*Calamity
thunderstorm.
includes
*mechanical defect is not within

the ambit of the natural
disaster; it is within the control
of the common carrier.
Requisites:
1. Proximate
cause
natural calamity
is
the
2. Absence of negligence on the

part of the common carrier
3. The common carrier must
exercise due diligence to
prevent loss before, during
and after the occurrence of
the disaster
4. Free from unreasonable delay
by the common carrier or
unreasonable deviation
b. Public enemy
Code states that: In order that
the common carrier may be
exempted from responsibility,
the natural disaster must have
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
deterioration of the goods. The
same duty is incumbent upon
the common carrier in case of
an act of the public enemy
referred to in Article 1734, No.
2.
*Public enemy includes pirates
however it does not include
robbery and thief.
*Pirates are enemies
civilized nation.
of
all
General Rule: rebels and

insurreccion is not included.
Manol R. Sala
SWU School of Law
Exception: If it they are cast of

and took allegiance a hostile
manner territory
*Existence of
imperative.
actual
war
is
c. Act of omission on the part

of the shipper or owner of
the goods
*There must be no fault or
contributory negligence on the
part of the carrier.
*In Compania Maritima v CA,
the SC held that the common
carrier is also at fault; the
common carrier should have
exercise extraordinary diligence
by not relying solely on the
statement of the shipper; it
should have conducted its own
weighing. In this case the
common carrier is not totally
absolved from its liability.
d. Improper packing
Code states that: 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 of
the containers, the common
carrier
must
exercise
due
diligence to forestall or lessen
the loss.
*If the defect is apparent, the
carrier may refuse to accept the
goods for carriage; if the shipper
insists, the remedy is to make a
protestation; make a foul bill of
lading.
*In Iron Bulk v CA (Dec. 8,
2003), carrier issued pro forma
bill of lading stated where in that
it accepted goods in good
condition. The goods arrived
defective. The SC held that the
carrier is not exempt from
liability because it accepted the
goods without protestation.
*Foul Bill of Lading preserves the

right of the carrier to use the
excuse provided in 1734.
e. Order of public authority
Code states that: 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 the
order.
*The important requisite is that
the public authority has the
power to issue an order.
Case: Ganzon v CA
4. Contributory negligence of the
shipper
Code states that: 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.
5. Stipulation limiting liability of
carrier
Code states that: A stipulation
between the common carrier and
the shipper or owner limiting the
liability of the former for the loss,
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
contrary to public policy.
not
*This is for the benefit of the carrier.

Consideration: Reduction of fare
Manol R. Sala
SWU School of Law
*The stipulation must be in writing

for the purpose of preventing abuse
from the carrier.
Code provides that: An agreement
limiting the common carrier's
liability for delay on account of
strikes or riots is valid.
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.
Code provides that: A contract
fixing the sum that may be
recovered by the owner or shipper
deterioration of the goods is valid, if
it is reasonable and just under the
circumstances, and has been fairly
and freely agreed upon.
a. Requisites
between the common carrier
and the shipper or owner
limiting the liability of the former
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;
consideration other than the
service
rendered
by
the
common carrier; and
(3) Reasonable, just and not
Code provides that: 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
8
question of whether or not a

stipulation limiting the common
carrier's liability is reasonable,
just and in consonance with
public policy.
*Liability can be limited but
cannot be totally exempted.
*Stipulations reducing diligence
or limiting liability must be in
writing to be enforceable.
b. Invalid stipulations
Code states that: 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,
goods on account of the
defective condition of the car,
vehicle, ship, airplane or other
Manol R. Sala
SWU School of Law
equipment used in the contract

of carriage.
*Even if they agreed with regard
to numbers 1,2 and 3, the
stipulation is void because it is
contrary
to
public
policy
because all these stipulations
exempt the carrier from liability.
General Rule: The degree of
diligence may be lowered
Exception: Not lower than that
of a good father of a family.
General
Rule:
stipulations
exempting from liability acts
committed by robbers and
thieves who do not act with
grave
threat
or irresistible
threats are not valid.
Exception: In case the robbers
or thieves used grave threat or
irresistible threats.
*In this case, the presumption of
negligence is still applicable,
the stipulation only affects the
outcome of the case.
c. Effect of delay
Code states that: 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,
the goods.
*Delay will prevent the carrier
from raising natural disaster as a
defense and that the agreement
limiting its liability cannot be
raised as a defense.
d. Rule on presumption of
negligence
despite
stipulation
Code states that: Even when
there is an agreement limiting
the liability of the common
9
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.
B. Other obligations
1. Duty to accept goods
a. Grounds for valid refusal to
accept goods
i.
General Rule: Goods sought

to
be
transported
are
dangerous
objects
or
substances
including
dynamite
and
other
explosives;
Exception: Carriers that are
permitted or allowed to
transport dangerous objects
or substances for the reason
that it is their function to do
so or it is their operation.
ii. Goods
are
transportation;
unfit
for
*This can be found under

Commerce
iii. Acceptance would result in
overloading;
iv. Contrabands or illegal goods;
v. Goods are 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 disease;
viii.
Strike; and
ix. Failure to tender goods on

time
2. Duty to deliver goods
a. Time of delivery
General
Rule:
stipulation
Manol R. Sala
SWU School of Law
It
is
by
Exception: In the absence of

stipulation Code of Commerce
governs.
Commerce provides that: If
there is no period fixed for the
delivery of the goods the carrier
shall be bound to forward them
in the first shipment of the same
or similar goods which he may
make to the point where he
must deliver them; and should
he not do so, the damages
caused by the delay should be
for his account.
*When
a
common
carrier
undertakes to convey goods, the
law implies a contract that they
shall be delivered at destination
within a reasonable time, in the
absence of any agreement as to
the time of delivery.
*Mercantile usage or practice
With
Without
stipulation
stipulation
Carrier
is
1. Within
a
bound
to
reasonable
fulfil
the
time.
contract and
2. Carrier is
is liable for
bound to
any
delay;
forward
no
matter
them
in
from
what
the
first
cause it may
shipment
have arisen
of
the
same
or
similar
goods
which he
may make
to
the
point
of
delivery
b. Consequences of delay
Code provides that: If the
common
carrier
negligently
incurs in delay in transporting
the goods, a natural disaster
shall not free such carrier from
responsibility.
Code provides that: If the
10
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,
the goods.
Commerce provides that: If a
period has been fixed for the
delivery of the goods, it must be
made within such time, and, for
failure to do so, the carrier shall
pay the indemnity stipulated in
the bill of lading, neither the
shipper nor the consignee being
entitled to anything else. If no
indemnity has been stipulated
and the delay exceeds the time
fixed in the bill of lading, the
carrier shall be liable for the
damages which the delay may
have caused.
Commerce provides that: In
case of delay through the fault
of the carrier, referred to in the
preceding
articles,
the
consignee may leave the goods
transported in the hands of the
former, advising him thereof in
writing before their arrival at the
point of destination. When this
abandonment takes place, the
carrier shall pay the full value of
the goods as if they had been
lost
or
mislaid.
If
the
abandonment is not made, the
indemnification for losses and
damages by reason of the delay
cannot exceed the current price
which the goods transported
would have had on the day and
at the place in which they
should have been delivered; this
same rule is to be observed in
all other cases in which this
indemnity may be due.
Commerce states that: The
value of the goods which the
carrier must pay in cases of loss
or
misplacement
shall
be
Manol R. Sala
SWU School of Law
determined in accordance with

that declared in the bill of
lading, the shipper not being
allowed to present proof that
among the goods declared
therein there were articles of
greater
value
and
money.
Horses,
vehicles,
vessels,
equipment
and
all
other
principal and accessory means
of
transportation
shall
be
especially bound in favour of the
shipper, although with respect to
railroads said liability shall be
subordinated to the provisions of
the laws of concession with
respect to the property, and to
what this Code established as to
the manner and form of
effecting
seizures
and
attachments
against
said
companies.
carrier who makes the delivery
of the merchandise to the
consignee by virtue of combined
agreements or services with
other carriers shall assume the
obligations
of
those
who
preceded
him
in
the
conveyance, reserving his right
to proceed against the latter if
he was not the party directly
responsible for the fault which
gave rise to the claim of the
shipper or consignee. The carrier
who makes the delivery shall
likewise acquire all the actins
and
rights
of
those
who
preceded
him
in
the
conveyance. The shipper and
the consignee shall have an
immediate
right
of
action
against the carrier who executed
the transportation contract, or
against the other carriers who
may have received the goods
transported without reservation.
However, the reservation made
by the latter shall not relieve
them from the responsibilities
which they may have incurred
by their own acts.
11

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 24
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.
Effects of delay:
1. Excusable delay in carriage
merely
suspends
and
generally does not terminate
the contract of carriage.
When the cause is removed,
the master must proceed
with the voyage and make
delivery;
2. Carrier remains duty bound
to
exercise
extraordinary
diligence;
3. Natural disaster shall not free
the
carrier
from
responsibility;
4. If delay is without just cause,
the contract limiting the
common carriers liability
cannot be availed of in case
of loss or deterioration of the
goods.
c. Place of Delivery
Commerce provides that: The
shipper, without changing the
place where the delivery is to be
made,
may
change
the
consignment of the goods which
he delivered to the carrier,
provided that at the time of
ordering
the
change
of
consignee the bill of lading
signed by the carrier, if one has
been issued, be returned to him,
in exchange for another wherein
the novation of the contract
Manol R. Sala
SWU School of Law
appears. The expenses which

this change of consignment
occasions shall be for the
account of the shipper.
d. To whom delivery shall be
made
carrier must deliver to the
consignee, without any delay or
obstruction, the goods which he
may have received, by the mere
fact of being named in the bill of
lading to receive them; and if he
does not do so, he shall be liable
for the damages which may be
caused thereby.
the consignee cannot be found
at the residence indicated in the
bill of lading, or if he refuses to
pay the transportation charges
and expenses, or if he refuses to
receive the goods, the municipal
judge, where there is none of
the first instance, shall provides
for their deposit at the disposal
of the shipper, this deposit
producing all the effects of
delivery without prejudice to
third parties with a better right.
OBLIGATIONS OF THE COMMON CARRIER
IN A CONTRACT OF CARRIAGE OF
PASSENGERS:
A. Safety of Passengers
1. Duty
to
diligence
observe
utmost

Code provides that: 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.
*There are claims not really focused
on death, injuries, loss or damage
of goods but concentrates on moral
damages; and the SC said that
these claims can still prosper in
12
because there is still a breach of

contract of carriage.
*Behavior
of
the
employees
towards to passengers is also a
factor considered by the court to
rule against a common carrier.
*In CAL v PAL, the SC held that
hijacking
of
the
airplane
is
considered to be a force majeure
thus cannot held the carrier liable.
Case:
Singapore
Andion Fernandez
Airline
*In Japan Airlines v Asuncion

(January 28, 2005), the SC held that
the
things
invoked
by
the
respondent do not fall within the
ambit of extraordinary diligence.
Though it is the duty of the carrier
to check that travel documents are
with the passengers but it is not
under the obligation of the carrier
to check the veracity of the
information in the travel document;
it also held that the obligation of
the carrier is limited to endorsing
and not to influence. The issue of
whether or not an alien be admitted
entrance to a country is a sovereign
act and such cannot be interfered
by the petitioner.
2. Duration of liability
*The carrier is bound to exercise
utmost diligence with respect to
passengers the moment the person
who purchases the ticket or token
from the carrier presents himself at
the proper place and in a proper
manner to be transported. Such
person must have a bona fide
intention to use the facilities of the
carrier, possess sufficient fare with
which to pay for his passage, and
present himself to the carrier for
transportation in the place and
manner provided.
*In LRTA v Navidad, the SC held
the petitioner carrier liable for
breach of contract. The SC held that
Nicanor Navidad was a passenger
when he died after he fell on the
LRT tracks and was struck by a
moving train. He was considered a
Manol R. Sala
SWU School of Law
passenger because he entered the

LRT station after having purchased
a token and he fell while he was on
the platform waiting for a train.
Thus, he was where he was
supposed to be with the intention of
boarding a train.
*Once created, the relationship will
not ordinarily terminate until the
passenger has, after reaching his
destination, safely alighted from the
carriers conveyance or has had a
reasonable opportunity to leave the
carriers premises. All persons who
remain on the premises within a
reasonable time after leaving the
conveyance are to be deemed
passengers,
and
what
is
a
reasonable time or a reasonable
delay within this rule is to be
determined
from
all
the
circumstances,
and
includes
reasonable time to look after his
baggage and prepare for his
departure.
*In La Mallorca v CA, the SC held
that there was a breach of duty to
exercise extraordinary diligence
with respect to the 4 year old child
and the carrier is liable as a
consequence. The presence of
passengers near the bus was not
unreasonable
and
they
were,
therefore, to be considered still as
passengers of the carrier, entitled
to the protection under their
contract.
*In Aboitiz Shipping Corporation
v
CA,
the
SC
held
that
extraordinary diligence was still
owed to AV at the time of the
accident. It was ruled that AVs
presence in the premises was not
without cause. The victim had to
claim his baggage which was
possible only one hour after the
vessel arrived since it was the
standard procedure in the case of
petitioners
vessels
that
the
unloading operation shall start only
after that time.
*The differences between the La
Mallorca case and Aboitiz Shipping
Corporation are: 1. The business is
13
different from that of La Mallorca

case; and 2. The capacity of
passengers and baggages are
different
3. Presumption of negligence
Code states that: In case of
death of or injuries to passengers,
common carriers are presumed to
have been at fault or to have acted
negligently, unless they prove that
they
observed
extraordinary
diligence as prescribed in Articles
1733 and 1755.
4. Liability for acts of employees
carriers are liable for the death of or
injuries to passengers through the
negligence or wilful acts of the
former's employees, although such
employees may have acted beyond
the scope of their authority or in
violation of the orders of the
common carriers.
This liability of the common carriers
does not cease upon proof that they
exercised all the diligence of a good
father of a family in the selection
and
supervision
of
their
employees.
Case: Maranan v Perez
5. Liability for acts of strangers
Code provides that: A common
carrier is responsible for injuries
suffered by a passenger on account
of the wilful acts or negligence of
other passengers or of strangers, if
the common carrier's employees
through the exercise of the
diligence of a good father of a
family could have prevented or
stopped the act or omission.
Case: Bachelor Express v CA
6. Effect of stipulation on liability
Code
provides
that:
The
responsibility of a common carrier
Manol R. Sala
SWU School of Law
for the safety of passengers as

required in Articles 1733 and 1755
cannot be dispensed with or
lessened by stipulation, by the
posting of notices, by statements
on tickets, or otherwise.
Code provides that: When a
passenger is carried gratuitously, a
carrier's liability for negligence is
valid, but not for wilful acts or gross
negligence.
The reduction of fare does not
justify any limitation of the common
carrier's liability.
carrier's responsibility prescribed in
the preceding article cannot be
eliminated or limited by stipulation,
by the posting of notices, by
statements on the tickets or
otherwise.
B. Passengers Baggages
Article 1754 of the New Civil Code
provides that: 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 hotelkeepers shall be applicable.
states that: 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.
states that: The responsibility referred
to in the two preceding articles shall
14
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.
provides that: 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.
provides that: 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.
provides
that:
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.
*The baggage in the personal custody
of the passenger or his employee in
that the baggage in transit will be
considered as necessary deposits. The
common carrier shall be responsible
for the baggage as depositaries,
provided that notice was given to them
or its employees, and the passenger
took the necessary precaution, which
the carrier has advised them relative to
the care and vigilance of their
baggage. In case of loss due to the
fault of the passenger the carrier will
not be liable.
*They are not absolutely responsible as
depository because the law requires
notice.
Manol R. Sala
SWU School of Law
*It is also required to declare the value

of the baggage.
*The carrier who has in his custody the
baggage of the passenger to be carried
like any other goods is required to
observe extraordinary diligence. In
case of loss or damage the carrier is
presumed negligent.
OBLIGATIONS
OF
THE
CONSIGNEE AND PASSENGER:
SHIPPER,
A. Effect of negligence of shipper or

passenger Article 1741 of the New
Civil Code states that: 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.
provides that: The passenger must
observe the diligence of a good father
of a family to avoid injury to himself.
states
that:
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.
*The shipper is also obliged to exercise
due diligence in avoiding damage or
injury.
*With
respect
to
carriage
of
passengers, the said passengers are
likewise bound to observe due
diligence to avoid injury.
*The contributory negligence on the
part of the passenger is not a defense
that will excuse the carrier from
liability. It will only mitigate such
liability.
*The carrier may be able to prove that
the only cause of the loss of the goods
is any of the following acts of the
shipper:
1. failure of the shipper to disclose the
nature of the goods;
15
2. improper marking or direction as to

destination; and
3. improper loading when he assumed
such responsibility.
*The shipper must likewise see to it
that the goods are properly packed;
otherwise, liability of the carrier may
be mitigated or barred depending on
the circumstances.
B. Payment of freight
Who will pay:
Shipper - before or at the time he
delivers the goods to the carrier for
shipment.
Consignee - if agreed upon by the
parties at the point of destination is
bound by such stipulation the moment
he accepts the goods.
Passengers - they are contractually
bound to pay the fare within such time
as prescribed by regulations or by the
carrier.
Time to pay:
directly responsible for the fault which

gave rise to the claim of the shipper or
consignee. The carrier who makes the
delivery shall likewise acquire all the
actions and rights of those who
preceded him in the conveyance. The
shipper and the consignee shall have
an immediate right of action against
the
carrier
who
executed
the
transportation contract, or against the
other carriers who may have received
the
goods
transported
without
reservation. However, the reservation
made by the latter shall not relieve
them from the responsibilities which
they may have incurred by their own
acts.
Commerce provides that: 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 8 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.
Tickets are purchased in advance from

ticket outlets.
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 24 hours following their
delivery.
*In case of delay in 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.
Commerce provides that: The carrier
who makes the delivery of the
merchandise to the consignee by
virtue of combined agreements or
services with other carriers shall
assume the obligations of those who
preceded him in the conveyance,
reserving his right to proceed against
the latter if he was not the party
Manol R. Sala
SWU School of Law
C. Liability for demurrage

Demurrage is the compensation
provided for in the contract of
affreightment for the detention of the
vessel beyond the time agreed on for
loading and unloading. It is a claim for
damages for failure to accept delivery.
*Liability for demurrage exists only
when expressly stipulated in the
contract.
EXTRAORDINARY DILIGENCE:
A. Underlying reason
Reasons:
1. From the nature of the business
and for reasons of public policy;
2. Relationship of trust;
3. Business is impressed with a
special public duty;
16
4. Possession of the goods;
C. Extraordinary
carriage by sea
5. Preciousness of human life
diligence
in
1. Seaworthiness of the vessel

B. Effect of Stipulation
between the common carrier and
the shipper or owner limiting the
liability of the former for the loss,
goods to a degree less than
extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the shipper
or owner;
consideration other than the service
rendered by the common carrier;
and
(3) Reasonable, just and
not

Code
states
that:
The
responsibility of a common carrier
for the safety of passengers as
required in Articles 1733 and 1755
cannot be dispensed with or
lessened by stipulation, by the
posting of notices, by statements
on tickets, or otherwise.
Code
states
that: When
a
passenger is carried gratuitously, a
carrier's liability for negligence is
valid, but not for wilful acts or gross
negligence.
The reduction of fare does not
justify any limitation of the common
carrier's liability.
carrier's responsibility prescribed in
the preceding article cannot be
eliminated or limited by stipulation,
by the posting of notices, by
statements on the tickets or
otherwise.
Manol R. Sala
SWU School of Law
Sec. 3 [1] of the COGSA

provides that: The carrier shall
be bound before and at the
beginning of the voyage to
exercise due diligence to
(a) Make the ship seaworthy;
(b) Properly man,equip,
supply the ship;
and
(c) Make the holds, refrigerating

and cooling chambers, and all
other parts of the ship in which
goods are carried, fit and safe
for their reception, carriage, and
preservation.
Sec. 3 [2] of the COGSA
provides that: The carrier shall
properly and carefully load,
handle, stow, carry, keep, care
for, and discharge the goods
carried.
Sec. 116 of the IC
Sec. 119 of the IC
Commerce
states
that:
Captains, masters or patrons of
vessels must be Filipinos, have
legal capacity to contract in
accordance with this code, and
prove the skill, capacity, and
qualifications
necessary
to
command and direct the vessel,
as established by marine or
navigation laws, ordinances, or
regulations, and must not be
disqualified according to the
same for the discharge of the
duties of the position. If the
owner of a vessel desires to be
the captain thereof, without
having the legal qualifications
therefor, he shall limit himself to
the financial administration of
the vessel, and shall intrust the
navigation
to
a
person
possessing the qualifications
required by said ordinances and
regulations.
17
*Extraordinary diligence requires

that the ship which will transport
the passengers and goods is
seaworthy.
*The carriers are deemed to
warrant
impliedly
the
seaworthiness of the ship. The
failure of a common carrier to
maintain in seaworthy condition
the vessel involved in its
contract of carriage is a clear
breach of its duty prescribed in
Article 1755 of the NCC.
*Shippers of goods are not
expected to inquire into the
vessels
seaworthiness
and
compliance with all maritime
laws.
*The unseaworthiness can be
established by the fact that it
did not withstand the natural
and inevitable action of the sea.
2. Overloading
*Duty to exercise due diligence
includes the duty to take
passengers or cargoes that are
within the carrying capacity of
the vessel.
3. Proper storage
*The ship must not be only
seaworthy but it must also be
cargoworthy. The ship must be
an efficient storehouse for her
cargo.
*The vessel must be adequately
equipped and properly manned.
4. Obligation
crew
of
captain
and
*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 ship owner may be
deemed negligent.
5. Rule
on
deviation
transhipment Deviation
cant change unless due to force

majeure.
*Carrier shall be liable for all
losses suffered from any other
cause, beside the sum stipulated
for such case.
*If due to said force majeure he
took another route and incurred
expenses by reason thereof, he
shall be reimbursed for such
increase upon formal proof
thereof (Art. 359, Code of
Commerce).
Transshipment is the act of
taking cargo out of one ship and
loading it in another.
*When
done
without
legal
excuse, however competent and
safe the vessel into which the
transfer is made, is a violation of
the
contract
and
an
infringement of the right of the
shipper and subjects the carrier
to liability if the freight is lost
even by a cause otherwise
excepted
(Magellan
Manufacturing Corp. v. CA).
there is an agreement between
the shipper and the carrier as to
the road over which the
conveyance is to be made, the
carrier may not change the
route, unless it be by reason of
force majeure; and should he do
so without this cause, he shall
be liable for all the losses which
the goods he transports may
suffer from any other cause,
beside paying the sum which
may have been stipulated for
such case. When on account of
said cause of force majeure, the
carrier had to take another route
which produced an increase in
transportation charges, he shall
be reimbursed for such increase
upon formal proof thereof.
and
*If route is stipulated upon by

the shipper and carrier, carrier
Manol R. Sala
SWU School of Law
D. Extraordinary
diligence
carriage by land
18
in
1. Vehicles condition
*Owners are required to make
sure that the vehicles they are
using are in good order and
condition.
2. Traffic rules (RA 4136)
*In cases involving breach of
contract of carriage, proof of
violation of traffic rules confirms
that the carrier failed to exercise
extraordinary diligence.
3. Obligation to Inspect
*in
overland
transportation,
common carrier is not bound nor
empowered
to
make
an
examination of the contents of
packages or bags particularly
those hand carried.
Airline
companies are required to
inspect each and every cargo
brought into the aircraft (RA
6235).
E. Extraordinary
carriage by air
diligence
in
1. 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 (RA 779).
2. Competent
crew
and
3. To take the
prescribed route
well
b. to seize or usurp control of the

aircraft while in flight.
ACTIONS IN CASE OF
CONTRACT OF CARRIAGE:
BREACH
OF
A. Causes
of
action
and
nature/extent of liability (culpa
contractual, culpa aquiliana and
culpa delictual)
Culpa contractual only the carrier
is primarily liable and not the driver.
Reason: There is no privity
between the driver and the
passenger.
*The party to be impleaded is the
carrier itself.
Basis: Article 1759 of the New Civil
Code
Culpa
delictual/criminal
the
driver is primarily liable. The carrier
is subsidiarily liable only if the
driver is convicted and declared
insolvent.
Basis: Article 100 of the Revised
Penal Code
Culpa aquiliana the carrier and
the driver are solidarily liable as
joint tortfeasor.
Basis: Article 2180 of the New Civil
Code
trained
required
and
4. Adverse weather conditions or

extreme climatic changes are some
of the perils involved in air travel
consequence
of
which
the
passenger must assume or expect.
5. RA 6235 (An Act Prohibiting
Certain Acts Inimical to Civil
Aviation and for Other Purposes) acts punishable:
Manol R. Sala
SWU School of Law
a. to compel a change in the

course or destination of an aircraft
of Philippine registry; or
B. Prescriptive
period
conditions precedent
and
1. Overland transportation of
goods
and
coastwise
shipping (Domestic)
Commerce
provides
that:
Within the 24 hours following
the receipt of the merchandise,
the claim against the carrier for
damage or average which may
be found therein upon opening
the packages, may be made,
19
provided that the indications of

the damage or average which
gives rise to the claim cannot be
ascertained from the outside
part of such packages, in which
case the claim shall be admitted
only at the time of receipt. After
the periods mentioned have
elapsed, or the transportation
charges have been paid, no
claim shall be admitted against
the carrier with regard to the
condition in which the goods
transported were delivered.
*Prior notice of claim does not
apply to misdelivery of goods.
Purpose of notice: To inform
the carrier that the shipment
has been damaged and that it is
charged with liability therefor,
and to give it an opportunity to
make an investigation and fix
responsibility while the matter is
fresh.
*The filing of notice of claim is a
condition precedent for recovery
in case of damage condition of
the goods.
*Not provided by Article 366 of
the Code of Commerce. Thus, in
such absence, the New Civil
Code rules on prescription apply.
Prescriptive period:
General Rule: If written, 10
years, if not written, 6 years
Exceptions:
1. COGSA 1 year
2. Warsaw Convention 2 years
Example: Q: In case of pending
extrajudicial claim, does it
suspend the one year period?
A: NO
*One year period applies to
shipper,
assignee,
insurer,
subrogees, and successor in
interest.
*One year period does not apply
in cases of delay or misdelivery.
Manol R. Sala
SWU School of Law
International
Carriage
of
Goods by Sea Sec. 3 [6] of
the
COGSA substantially
provides that in case of patent
damage, the shipper should file
a
claim
with
the
carrier
immediately upon delivery. In
case of latent damage, the
shipper should file a claim with
the carrier within 3 days from
delivery. Action for loss or
damage to the cargo should be
brought within one year after:
delivery of the goods (delivered
but damaged goods); or the
date when the goods should
have been delivered (loss).
*The filing of a notice of claim is
not a condition precedent.
Recoverable Damages
The court may award the following
damages:
1. Actual/Compensatory Damages
2. Temperate Damages
3. Liquidated Damages
4. Exemplary Damages
5. Moral Damages
6. Nominal Damages
Actual/Compensatory damages are
those awarded to the aggrieved party
as adequate compensation only for
such pecuniary loss suffered by him as
he has alleged and duly proved.
Article 2199 of the Civil Code states
that: Except as provided by law or by
stipulation, one is entitled to an
adequate compensation only for such
pecuniary loss suffered by him as he
has duly proved. Such compensation is
referred to as actual or compensatory
damages.
*To claim this award, proving the
amount is necessary.
*Procedures
or
plastic
surgeries
performed to restore the part of the
body injured are included as a
component of actual damages.
Temperate damages or moderate
damages these are damages the
amount of which is left to the sound
discretion of the court, but it is
necessary that there be some injury or
pecuniary loss established, the exact
amount of which, could not be
20
determined by the plaintiff by reason

of the nature of the case.
provides that: Temperate or moderate
damages, which are more than
nominal but less than compensatory
damages, may be recovered when the
court finds that some pecuniary loss
has been suffered but its amount can
not, from the nature of the case, be
provided with certainty.
*The court is convinced that there is
pecuniary loss.
*There is no actual certainty of the
actual amount loss. The court is
allowed to calculate the amount.
*This is in the form of actual damages
Liquidated
damages
are
fixed
damages previously agreed by the
parties to the contract and payable to
the innocent party in case of breach by
the other.
provides that: Liquidated damages
are those agreed upon by the parties
to a contract, to be paid in case of
breach thereof.
*This is in the form of actual damages
but a stipulated one.
*Proving the amount is not necessary.
*In this kind of damages, estoppel
applies.
General Rule: The
change the amount.
court
cannot
Exception: If the amount stipulated is

excessive the court may disregard said
amount and may compute the actual
damages.
*The only thing to be proved is the fact
of loss.
Exemplary
damages
are
mere
accessories to other forms of damages
except nominal damages. They are
mere additions to actual, moral,
temperate and liquidated damages
which may or may not be granted at all
depending upon the necessity of
setting an example for the public good
Manol R. Sala
SWU School of Law
as a form of deterrent to the repetition

of the same act by any one.
provides that: Exemplary or corrective
damages are imposed, by way of
example or correction for the public
good, in addition to the moral,
temperate, liquidated or compensatory
damages.
*Awarded because of the wanton,
fraudulent,
malevolent,
oppressive
acts of the carrier.
*This is awarded to prevent other
carrier to commit oppressive acts.
*This cannot be awarded unless the
plaintiff is entitled to moral at the
same time actual or temperate
damages.
states
that:
In
quasi-delicts,
exemplary damages may be granted if
the defendant acted with gross
negligence.
states that: In contracts and quasicontracts, the court may award
exemplary damages if the defendant
acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.
states that: Exemplary damages
cannot be recovered as a matter of
right; the court will decide whether or
not they should be adjudicated.
states that: While the amount of the
exemplary damages need not be
proved, the plaintiff must show that he
is entitled to moral, temperate or
compensatory damages before the
court may consider the question of
whether or not exemplary damages
should be awarded In case liquidated
damages have been agreed upon,
although no proof of loss is necessary
in order that such liquidated damages
may be recovered, nevertheless,
before the court may consider the
question of granting exemplary in
addition to the liquidated damages, the
plaintiff must show that he would be
21
entitled to moral, temperate or

compensatory damages were it not for
the
stipulation
for
liquidated
damages.
states that: A stipulation whereby
exemplary damages are renounced in
advance shall be null and void.
Nominal damages are not
indemnification
of
loss
but
vindication of a right violated.
for
for

provides that: Nominal damages are
adjudicated in order that a right of the
plaintiff, which has been violated or
invaded by the defendant, may be
vindicated or recognized, and not for
the purpose of indemnifying the
plaintiff for any loss suffered by him.
states that: The court may award
nominal damages in every obligation
arising from any source enumerated in
Article 1157, or in every case where
any property right has been invaded.
states that: The adjudication of
nominal
damages
shall
preclude
further contest upon the right involved
and all accessory questions, as
between the parties to the suit, or their
respective heirs and assigns.
*In Japan Airlines v CA, JAL failed to
give the plaintiff the priority for the
first available flight. The SC awarded
nominal damages.
Moral damages are in the category of
an award designed to compensate the
claimant for actual injury suffered and
not to impose a penalty on the
wrongdoer.
provides that: Moral damages include
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 are the proximate
Manol R. Sala
SWU School of Law
result of the defendant's wrongful act

for omission.
Q: When moral damages may be
awarded?
A: 1. Death of a passenger; 2. Carrier
is guilty of fraud, malice, bad faith
even if there is no death of a
passenger (Case: Lopez v PanAmerican); 3. In Air France case
MARITIME LAW:
Source: Code of Commerce
A. Concept of Maritime Law
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 maritime
conveyance of persons and property.
*Apply only to maritime trade and sea
voyages.
B. Limited Liability Rule

1. Concept
The
exclusively
real
and
hypothecary nature of maritime law
operates to limit the liability of the
shipowner to the value of the
vessel, earned freightage and
proceeds of the insurance, if any.
NO VESSEL NO LIABILITY
expresses in a nutshell the limited
liability rule. The total destruction
of the vessel extinguishes maritime
lien as there is no longer any res to
which it can attach.
Q: Is this rule applies in
handling of the passengers?
the
A: YES
Q: Whose liability is this?
A: Shipowner or Agents.
Article 586 2nd paragraph states
that: By ship agent is understood
the
person
entrusted
with
provisioning or representing the
vessel in the port in which it may be
found.
22
*Ship agent is the only person that

can be sued directly.
Reason: Article 618 of the Code of
Commerce provides so.
Article 618 1st paragraph states
that: The ship captain shall be
civilly liable to the ship agent, and
the latter to the third persons who
may have made contracts with the
former; x x x.
Q: What kind?
A: Maritime in nature; marine
transactions
connected
with
maritime law; maritime trade and
commerce
Purpose:
shipbuilding
transactions
To
and
encourage
maritime

ship agent shall also be civilly liable
for the indemnities in favor of third
persons which may arise from the
conduct of the captain in the care
of the goods which he loaded on
the vessel; but he may exempt
himself therefrom by abandoning
the vessel with all her equipments
and the freight it may have earned
during the voyage.
Commerce provides that: The coowners of a vessel shall be civilly
liable in the proportion of their
interests in the common fund, for
the results of the acts of the
captain, referred to in Article 587.
Each co-owner may exempt himself
from
this
liability
by
the
abandonment, before a notary, of
the part of the vessel belonging to
him.
civil liability incurred by the
shipowners in the case prescribed
in this section, shall be understood
as limited to the value of the vessel
with all its appurtenances and
freightage
earned
during
the
voyage.
Manol R. Sala
SWU School of Law
When applicable:
The Code of Commerce sanctions
the application of the doctrine in
the following cases: 1. Civil liability
for indemnities in favor of third
persons which arise from the
conduct of the captain in the case
of the goods which the vessel
carried; 2. Civil liability arising from
collisions; 3. Unpaid wages of the
captain and the crew if the vessel
and its cargo are totally lost by
reason of capture of shipwreck.
2. Exceptions to the rule
Exceptions:
1. When the injury to or death of a
passenger is due either to the
fault of the shipowner, or to the
concurring negligence of the
shipowner and the captain;
2. When the vessel is insured to
the extent of the insurance
proceeds; and
*Freightage collectible
Q: How come insurance is an
exception?
A: Because there is no loss. The
loss was compensated by the
insurance company
3. In Workmens
claims
Compensation
Q: Why is an exception?
A: Because not
nature
maritime in
*In Yangco v Laserna case,

the SC held that it covers
anything that is connected with
maritime transactions
3. Abandonment
Q: If theres partial loss can the
shipowner/agent be exempted from
liability?
A: YES. If there is abandonment.
Q: If there is total loss, is it
necessary to abandon?
A: NO.
abandon.
23
There
is
nothing
to
Case: Luzon Stevedoring

Commerce states that: The ship
agent shall also be civilly liable for
the indemnities in favor of third
himself therefrom by abandoning
during the voyage.
Q: How claims are satisfied under
the Limited Liability Rule?
A: All claims should be collated
before they can be satisfied from
what remains of the insurance
proceeds and freightage at the time
of the loss. No claimant should be
given preference over the others by
the simple expedience of having
filed or completed its action earlier
than the rest. Thus, the execution
of judgment in earlier completed
cases, even those already final and
executory, must be stayed pending
completion of all cases occasioned
by the subject sinking. Then and
only then can all such claims be
simultaneously
settled,
either
completely or pro-rata should the
insurance proceeds and freightage
be not enough to satisfy the claim.
Case: Aboitiz Shipping Co. v
General Accident Fire and Life
Insurance Corporation
C. Vessels
-
Those engaged in navigation,

whether coastwise or on the
high seas, including floating
docks, pontoons, dredges, scows
and any other floating apparatus
destined for the services of the
industry or maritime commerce.
Excluded are local and foreign
military vessels, bancas and
other watercrafts of less than 3
tons gross capacity and small
watercrafts engaged in river and
bay traffic.
Manol R. Sala
SWU School of Law
1. Acquisition
a. By prescription
Commerce
states
that:
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.
Requisites:
1. Acquisition must appear in a
written instrument
2. Such shall not produce any
effect to third persons if not
inscribed in the registry of
vessels
3. Shall
be
acquired
by
possession in good faith,
continued for 3 years
4. With a just title duly recorded
5. In the absence of any of
there, continuous possession
for 10 years
shall be
necessary
to
acquire
ownership
Q: Can the ship captain acquire
vessel by prescription?
A: NO. The character of
possession he has is not those
for acquisitive possession. The
requisite
for
acquisitive
possession is that possession as
an owner.
24

Commerce states that: Coowners of vessels shall have the
right
of
repurchase
and
redemption in sales made to
strangers, but they may exercise
the same only within the 9 days
following the inscription of the
sale in the registry, and by
depositing the price at the same
time.
b. By sale
Commerce states that: In the
sale of a vessel it shall always
be understood as included the
rigging, masts,
stores
and
engine
of
a
steamer
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 sale.
Commerce states that: If the
alienation of the vessel should
be made while it is on 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.
*If made while it is on voyage,
the freightage which it earns
from the time it receives its last
cargo shall pertain entirely to
the purchaser, and the payment
Manol R. Sala
SWU School of Law
of the crew and other persons

who make up its complement
shall be for his account.
*If made after vessel arrived at
port of its destination, 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.
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 in a voyage, shall
be
rendered
useless
for
navigation, the captain shall
apply to the competent judge or
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
25
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.
c. Registration
Section 810 of the Tariff and
Customs Code provides that:
The Bureau of Customs is
vested with exclusive authority
over
the
registration
and
documentation
of
Philippine
vessels. By it shall be kept and
preserved
the
records
of
registration and of transfers and
encumbrances of vessels; and
by it shall be issued all
certificates, licenses or other
documents
incident
to
registration and documentation,
or
otherwise
requisite
for
Philippine vessels.
*Through the MARINA
d. Ships manifest
Sec. 906 of the Tariff and
Customs Code provides that:
Manifests shall be required for
cargo
and
passengers
transported from one place or
port in the Philippines to another
only when one or both of such
places is a port of entry.
*Declaration of the entire cargo.
The object is to furnish customs
officers with a list to check
against, to inform the revenue
officers what goods are brought
into a port of the country on a
vessel. Hence, 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
Manol R. Sala
SWU School of Law
rather than the entire cargo. It is

issued
as
a
matter
of
convenience by virtue of a
contract.
D. Persons who take part in Maritime

Commerce
1. Shipowners and shipagents
shipowner and the ship agent shall
be civilly liable for the acts of the
captain and for the obligations
contracted by the latter to repair,
equip, and provision the vessel,
provided the creditor proves that
the amount claimed was invested
for the benefit of the same. By ship
agent is understood the person
entrusted with provisioning or
representing the vessel in the port
in which it may be found.
ship agent shall also be civilly liable
for the indemnities in favor of third
himself thereform by abandoning
during the voyage.
Commerce provides that: Neither
the shipowner nor the ship agent
shall be liable for the obligations
contracted by the captain, if the
latter exceeds the powers and
privileges pertaining to him by
reason of his position or conferred
upon
him
by
the
former.
Nevertheless,
if
the
amounts
claimed were invested for the
benefit
of
the
vessel,
the
responsibility therefor shall devolve
upon its owner or agent.
a. Rules in case of part-owners
26
two or more persons should be

part owners of a merchant
vessel, a partnership shall be
presumes as estrablished by the
co-owners. This partnership shall
be governed by the resolution of
the majority of the members. If
the part-owners should not be
more
than
two,
the
disagreement of views, if any,
shall be decided by the vote of
the member having the largest
interest. If the interests are
equal, it should be decided by
lot. The person having the
smallest share in the ownership
shall have one vote; and
proportionately the other part
owners as many votes as they
have parts equal to the smallest
one. A vessel may not be
detained, attached or levied
upon in execution in its entirety,
for the private debts of a part
owner, but the proceedings shall
be limited to the interest which
the debtor may have in the
vessel, without interfering with
the navigation.
co-owners of a vessel shall be
civilly liable in the proportion of
their interests in the common
fund, for the results of the acts
of the captain, referred to in
Article 587.
Commerce provides that: All
the part owners shall be liable,
in proportion to their respective
ownership, for the expenses for
repairing the vessel, and for
other
expenses
which
are
incurred by virtue of a resolution
of the majority. They shall
likewise be liable in the same
proportion for the expenses for
the maintenance, equipment,
and provisioning of the vessel,
necessary for navigation.
resolution of the majority with
regard to the repair, equipment,
Manol R. Sala
SWU School of Law
and provisioning of the vessel in

the port of departure shall bind
the minority, unless the minority
members
renounce
their
interests,
which
must
be
acquired by the other coowners,
after
a
judicial
appraisement of the value of the
portion or portions assigned. The
resolutions of the majority
relating to the dissolution of the
partnership and sale of the
vessel shall also be binding on
the minority. The sale of the
vessel must be made at public
auction,
subject
to
the
provisions of the law of civil
procedure, unless the co-owners
unanimously agree otherwise,
saving always the right of
repurchase
and
redemption
provided for in Article 575.
owners of a vessel shall have
preference in her charter over
other persons, under the same
conditions and price. If two or
more of them should claim this
right, the one having the greater
interest shall be preferred; and
should
they
have
equal
interests, the matter shall be
decided by lot.
Commerce states that: The coowners shall elect the manager
who is to represent them in the
capacity of ship agent. The
appointment of director or ship
agent shall be revocable at the
will of the members.
b. Rules in case of shipagents
ship agent, whether he is at the
same time the owner of the
vessel, or a manager for an
owner or for an association of
co-owners, must
have
the
capacity to trade and must be
recorded in the merchants
registry of the province. The ship
agent
shall
represent
the
27
ownership of the vessel, and

may, in his own name and in
such capacity, take judicial and
extrajudicial steps in matters
relating to commerce.
ship agent may discharge the
duties of captain of the vessel,
subject in every case to the
provision of Article 609. If two or
more co-owners apply for the
position
of
captain,
the
disagreement shall be decided
by a vote of the members; and if
the vote should result in a tie, it
shall be decided in favor of the
co-owner having the larger
interest in the vessel. If the
interests
of
the
applicants
should be equal, and there
should be a tie, the matter shall
be decided by lot.
ship agent shall designate and
come to terms with the captain,
and shall contract in the name
of the owners, who shall be
bound in all that refer to repairs,
details equipment, armament,
provisions of food and fuel, and
freight of the vessel, and, in
general, in all that relate to the
requirements of navigation.
ship agent may not order a new
voyage, or make contracts for a
new charter, or insure the
vessel, without the authorization
of its owner or resolution of the
majority of the co-owners,
unless
these
powers
were
granted him in the certificate of
his appointment. If he insures
the vessel without authorization
therefore, he is subsidiarily
liable for the solvency of the
insurer.
ship agent managing for an
association shall render to his
Manol R. Sala
SWU School of Law
associates an account of the

results of each voyage of the
vessel, without prejudice to
always having the books and
correspondence relating to the
vessel and to its voyages at
their disposal.
Commerce states that: After
the account of the managing
agent has been approved by a
relative majority, the co-owners
shall pay the expenses in
proportion to their interest,
without prejudice to the civil or
criminal actions which the
minority may deem fit to
institute afterwards. In order to
enforce
the
payment,
the
managing agent shall be entitled
to an executor action (accion
ejecutiva),
which
shall
be
instituted
by
virtue
of
a
resolution of the majority, and
without further proceedings than
the acknowledgment of the
signatures of the persons who
voted for the resolution.
Commerce states that: Should
there be any profits, the coowners may demand of the
managing agent the amount
corresponding to their interests
by means of an executor action
(accion ejecutiva), without any
other
requisite
than
the
acknowledgment
of
the
signatures on the instrument
approving the account.
ship agent shall indemnify the
captain for all the expenses he
may have incurred with funds of
his own or of others, for the
benefit of the vessel.
*The ship agent is entrusted
with
the
provisioning
and
representing the vessel in the
port in which it may be found.
His liability to passengers and
cargo owners for loss or injury is
the same as the shipowner.
28
*He is solidarily liable with the

owner for such loss or damage
subject to his right to claim
reimbursement
from
the
shipowner.
*Only agent that can be sued
directly.
2. Captains
vessels
and
masters
of
a. Qualifications
Commerce
states
that:
Captains, masters or patrons of
vessels must be Filipinos, have
legal capacity to contract in
accordance with this code, and
prove the skill, capacity, and
qualifications
necessary
to
command and direct the vessel,
as established by marine or
navigation laws, ordinances, or
regulations, and must not be
disqualified according to the
same for the discharge of the
duties of the position. If the
owner of a vessel desired to be
the captain thereof, without
having the legal qualifications
therefor, he shall limit himself to
the financial administration of
the vessel, and shall intrust the
navigation
to
a
person
possessing the qualifications
required by said ordinances and
regulations.
b. Powers and functions
following
powers
shall
be
inherent in the position of
captain, master or patron of a
vessel: 1. To appoint or make
contracts with the crew in the
absence of the ship agent, and
to propose said crew, should
said agent be present; but the
ship agent may not employ any
member against the captains
express refusal; 2. To command
the crew and direct the vessel to
the port of its destination, in
accordance with the instructions
he may have received from the
Manol R. Sala
SWU School of Law
ship agent; 3. To impose, in

accordance with the contracts
and
with
the
laws
and
regulations of the merchant
marine, and when on board the
vessel, correctional punishment
upon those who fail to comply
with his orders or are wanting in
discipline, holding a preliminary
hearing
on
the
crimes
committed on board the vessel
on the seas, which crimes shall
be turned over to the authorities
having jurisdiction over the
same at the first port touched;
4. To make contracts for the
charter of the vessel in the
absence of the ship agent or of
its
consignee,
acting
in
accordance with the instructions
received and protecting the
interests of the owner with
utmost care; 5. To adopt all
proper measures to keep the
vessel
well
supplied
and
equipped, purchasing all that
may be necessary for the
purpose, provided there is no
time to request instruction from
the ship agent; and 6. To order,
in similar urgent cases while on
a voyage, the repairs on the hull
and engines of the vessel and in
its rigging and equipment, which
are absolutely necessary to
enable it to continue and finish
its voyage; but if he should
arrive at a point where there is a
consignee of the vessel, he shall
act in concurrence with the
latter.
Commerce states that: In
order to comply with the
obligations mentioned in the
preceding article, the captain,
when he has no funds and does
not expect to receive any from
the ship agent, shall obtain the
same in the successive order
stated below: 1. By requesting
said funds from the consignee of
the vessel or correspondents of
the ship agent; 2. By applying to
the consignees of the cargo or to
those interested therein; 3. By
29
drawing on the ship agent; 4. By

borrowing the amount required
by means of a loan on bottomry;
and 5. By selling a sufficient
amount of the cargo to cover
the
sum
absolutely
indispensable for the repair of
the vessel and to enable it to
continue its voyage. In these
two last cases he must apply to
the judicial authority of the port,
if in the Philippines, and to the
consul of the Republic of the
Philippines if in a foreign
country, and where there is
none, to the local authority,
proceeding in accordance with
the provisions of Article 583, and
with the provisions of the law of
civil procedure.
following obligations shall be
inherent in the office of the
captain:
1. To have on board before
starting on a voyage a detailed
inventory of the hull, engines,
rigging, spare-masts, tackle, and
other equipment of the vessel;
the royal or the navigation
certificate; the roll of the
persons who make up the crew
of the vessel, and the contracts
entered into with them; the lists
of passengers; the bill of health;
the certificate of the registry
proving the ownership of the
vessel and all the obligations
which encumber the same up to
that date; the charter parties or
authenticated copies thereof;
the invoices or manifests of the
cargo, and the memorandum of
the visit or inspection by
experts, should it have been
made at the port of departure;
2. To have a copy of this code on
board; 3. To have thee folioed
and stamped books, placing at
the beginning of each one a
memorandum of the number of
folios it contains, signed by the
maritime authority, and in his
absence by the competent
Manol R. Sala
SWU School of Law
authority. In the first book, which

shall be called log book, he
shall enter day by day the
condition of the atmosphere, the
prevailing winds, the courses
taken, the rigging carried, the
power of the engines used in
navigation,
the
distances
covered,
the
maneuvers
executed, and other incidents of
navigation; he shall also enter
the damage suffered by the
vessel in her hull, engines,
rigging, and tackle, no matter
what its cause may be, as well
as the impairment and damage
suffered by cargo, and the effect
and importance of the jettison,
should there be any; and in
cases of serious decisions which
require the advice or a meeting
of the officers of the vessel, or
even
of
the
crew
and
passengers, he shall record the
decisions adopted. For the
information indicated he shall
make use of the binnacle book
and of the steam of engine book
kept by the engineer. In the
second
book
called
the
accounting book, he shall
record all the amounts collected
and paid for the account of the
vessel, entering specifically the
article by article, the source of
the collection and the amounts
spent for provisions, repairs,
acquisitions of equipment or
goods, fuel, food, outfits, wages,
and other expenses of whatever
nature they may be. He shall
furthermore enter therein a list
of all the members of the crew,
stating their domiciles, their
wages and salaries, and the
amounts
they
may
have
received on account, directly or
by delivery to their families. In
the third book, called freight
book, he shall record the
loading and discharge of all the
gods, stating their marks and
packages, names of the shippers
and of the consignees, ports of
loading and unloading, and the
freightage they give. In this
same book he shall record the
30
names and places of sailing of

the passengers, the number of
packages in their baggage, and
the price of passage;
4. Before receiving cargo, to
make with the officers of the
crew and two experts, if required
by the shippers and passengers,
an examination of the vessel, in
order to ascertain whether it is
water-tight, with the rigging and
engines in good condition, and
with the equipment required for
good
navigation,
preserving
under
his
responsibility
a
certificate of the memorandum
of his inspection, signed by all
those who may have taken part
therein. The experts shall be
appointed, one by the captain of
the vessel and another by those
who request its examination,
and in case of disagreement a
third shall be appointed by the
marine authority of the port or
by the authority exercising his
functions;
5. To remain constantly on board
the vessel with the crew while
the cargo is being taken on
board and to carefully watch the
stowage thereof; not to consent
to
the
loading
of
any
merchandise or matter of a
dangerous character, such as
inflammable
or
explosive
substances,
without
the
precautions
which
are
recommended for their packing,
handling and isolation; not to
permit the carriage on deck of
any cargo which by reason of its
arrangement, volume, or weight
makes the work of the sailors
difficult,
and
which
might
endanger the safety of the
vessel; and if, on account of the
nature of the merchandise, the
special
character
of
the
shipment, and principally the
favorable season in which it is
undertaken, merchandise may
be carried on deck, he must
hear the opinion of the officers
of the vessel and have the
Manol R. Sala
SWU School of Law
consent of the shippers and of

the ship agent;
6. To demand a pilot at the
expense of the vessel whenever
required by the navigation, and
principally when he has to enter
a port, canal, or river, or has to
take a roadstead or anchoring
place with which neither he nor
the officers and crew are
acquainted;
7. To be on deck on reaching
land and to take command on
entering and leaving ports,
canals, roadsteads, and rivers,
unless there is a pilot on board
discharging his duties. He shall
not spend the night away from
the vessel except for serious
causes or by reason of official
business;
8. To present himself, when
making a port in distress, to the
maritime authority if in the
Philippines and to the consul of
the Republic of the Philippines if
in a foreign country, before 24
hours have elapsed, and to
make a statement of the name
registry, and port of departure of
the vessel, of its cargo, and the
cause
of
arrival
which
declaration shall be visaed by
the authority or the consul, if
after examining the same it is
found to be acceptable, giving
the
captain
the
proper
certificate proving his arrival in
distress
and
the
reasons
therefor. In the absence of the
maritime authority or of the
consul, the declaration must be
made before the local authority;
9. To take the necessary steps
before the competent authority
in order to record in the
certificate of the vessel in the
registry
of
vessels
the
obligations
which
he
may
contract in accordance with
Article 583;
10. To place under good care
and custody all the papers and
31
belongings of any members of

the crew who might die on the
vessel, drawing up a detailed
inventory, in the presence of
passengers, or, in their absence,
of members of the crew as
witnesses;
11. To conduct himself according
to the rules and precepts
contained in the instructions of
the ship agent, being liable for
all that which he may do in
violation thereof;
12. To inform the ship agent
from the port at which the
vessel arrives, of the reason of
his arrival, taking advantage of
the semaphore, telegraph, mail,
etc., as the case may be; to
notify him of the cargo he may
have received, stating the
names and domiciles of the
shippers, freightage earned, and
amounts borrowed on bottomry
loan; to advise him of his
departure, and of any operation
and date which may be of
interest to him;
13. To observe the rules with
respect to situation, lights and
maneuvers in order to avoid
collisions;
14. To remain on board, in case
the vessel is in danger, until all
hope to save it is lost, and
before abandoning it, to hear
the officers of the crew, abiding
by the decision of the majority;
and if the boats are to be taken
to, he shall take with him, before
anything else, the books and
papers, and then the articles of
most value, being obliged to
prove, in case of the loss of the
books and papers, that he did all
he could to save them;
15. In case of wreck, to make
the proper protest in due form at
the first port of arrival, before
the competent authority or the
Philippine consul, within 24
hours, specifying therein all the
incidents of the wreck, in
Manol R. Sala
SWU School of Law
accordance with subdivision 8 of

this article;
16.
To
comply
with
the
obligations imposed by the laws
and regulations on navigation,
customs, health, and others.
c. Discretion powers
*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.
Case:Inter-Orient
Maritime
Enterprises Inc. v CA
3. Pilot
a. Concept
Pilot is a person duly qualified
and licensed to conduct a vessel
into or out of ports or in certain
waters.
*Generally connotes 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.
*If he is in command, he
becomes the Master pro hac
vice.
*While exercising his functions a
pilot is in sole command of the
ship and supersedes the master
for the time being in the
command and navigation of the
ship; the master does not
surrender his vessel to the pilot
and the pilot is not the master.
There are occasions when the
master may and should interfere
and even displace the pilot, as
when the pilot is obviously
incompetent or intoxicated.
Case: Far Eastern Shipping v
CA
b. Relationship to master and
shipowner
32
4. Officers and crew of the vessel

i.
Sailing mate/First mate
ii. Second mate

iii. Engineers marine engineers
iv. Crew cabin boy; paramedics;
watchkeeper; radio officers
5. Supercargoes
person
who
discharges administrative duties
assigned to him by ship agent or
shippers, keeping an account and
record of transaction as required in
the accounting book of the captain.
E. Charter parties
1. Concept
Commerce states that: Charter
parties executed by the captain in
the absence of the ship agent shall
be valid and effective, even though
in executing them he should have
acted in violation of the orders and
instructions of the ship agent or
shipowner; but the latter shall have
a right of action against the captain
for indemnification of damages.
Charter party is a lease contract
by which with the entire ship or
some principal part thereof is let by
the owner to another person for a
specified period of time or use.
2. Kinds; bareboat and contract of
affreightment
Kinds:
1. Bareboat or demise means
the whole vessel is lend to the
charterer which transfers to him
its
entire
command
and
possession
and
consequent
control over its navigation,
including the master and crew
who are his servants. The
charterer is treated as owner pro
hac vice of the vessel. In such
case,
a
common
carrier
becomes a private carrier.
Manol R. Sala
SWU School of Law
*Charterer means the vessel

assumes all responsibilities of
navigation and provides his own
people.
*Shipowner is not liable to third
person; it is the charterer who is
liable to them.
General Rule: The charterer is
liable to the third person.
Exception: Shipowner may still
be held liable if the injury was
caused by unseaworthiness or
negligence of the shipowner
beyond before the demise or
bareboat took over.
2. Contract of affreightment
involves that use of shipping
space leased by the owner in
part or as a whole, to carry
goods for others.
*The shipowner retains the
possession,
command
and
navigation of the ship, the
charterer merely having use of
the space in the vessel in return
for his payment of the charter
hired.
*The shipowner is liable to third
person.
3. Persons
charter
qualified
to
make
Q: Can the captain enter into a

charter contract?
A: YES provided
authorized.
that
he
is
Q: Can the charterer enter into a

sub-charter contract?
A: YES provided it is not prohibited.
This is just like the rule in lease.
4. Requisites of a valid charter
Commerce states that: A charter
party must be drawn in duplicate
and signed by the contracting
parties, and when either does not
know how or is not able to do so, by
two witnesses at his request. The
charter party shall contain, besides
the conditions freely stipulated, the
33
following circumstances: 1. The

kind, name, and tonnage of the
vessel; 2. Its flag and port of
registry; 3. The name, surname,
and domicile of the captain; 4. The
name, surname, and domicile of the
ship agent, if the latter should make
the charter party; 5. 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; 6. The port of loading
and unloading; 7. The capacity,
number of tons or the weight or
measurement
which
they
respectively bind themselves to
load and to transport, or whether
the charter party is total; 8. The
freightage to be paid, stating
whether it is to be a fixed amount
for the voyage or so much per
month, or for the space to be
occupied, or for the weight or
measure of the goods of which the
cargo consists, or in any other
manner whatsoever agreed upon;
9. The amount of primage to be
paid to the captain; 10. The days
agreed upon for loading and
unloading; 11. The lay days and
extra lay days to be allowed and
the demurrage to be paid for each
of them.
Requisites:
1. Consent of the contracting
parties
2. Existing vessel which should be
placed at the disposition of the
shipper
3. Freight
4. Compliance with Article 652 of
the Code of Commerce
5. Concept of and liability for
demurrage
Demurrage is the sum due, by
express contract, for the detention
of the vessel, in loading and
unloading, beyond the time allowed
in the contract of affreightment,
and
to
any
other
improper
detention or delay beyond the time
set for loading.
6. Rights
and
obligations
charter parties
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SWU School of Law
of
Shipowner or
Ship agent
If the vessel is
chartered
wholly, not to
accept
cargo
from others
To
observe
represented
capacity
To unload cargo
clandestinely
placed
Charterer
To
pay
the
agreed charter
price
To
pay
freightage
on
unboarded cargo
To pay losses to
others
for
loading
uncontracted
cargo or illicit
cargo
To
substitute To wait if the
another vessel if vessel
needs
load is less than repair
3/5 of capacity
To leave the port To pay expenses
if the charterer for deviation
does not bring
the cargo within
the lay days and
extra lay days
allowed
To place in a
vessel
in
a
condition
to
navigate;
to
bring cargo to
nearest neutral
port in case of
war or blockade
F. Loans
on
Respondentia
1. Definition
Bottomry
and

Commerce states that: A loan in
which
under
any
condition
whatever, the repayment of the
sum loaned and of the premium
stipulated depends upon the safe
arrival in port of the goods on which
it is made, or of the price they may
receive in case of accident, shall be
considered a loan on bottomry or
respondentia.
Bottomry is a loan secured by the
shipowner or ship agent guaranteed
by the vessel itself and payable
only upon arrival of vessel at
destination.
*Captain may enter into bottomry
loan provided there is justification,
example of which is, for immediate
repairs.
34
Respondentia is a loan secured by

the owner of the cargo payable
upon safe arrival of cargo at
destination.
Barratry is an act of the captain or
crew for fraudulent purposes.
2. Distinguished
loan
Ordinary
Loan
With
or
without
collateral
Any property
may be used
as collateral
Absolutely
payable
Obligation to
pay
still
exists in the
event
the
collateral
was lost
First lender
is the first
priority
Need not be
in writing to
be
enforceable
from
ordinary
Bottomry/Respon
dentia
Always
with
collateral
Property is limited
to vessel/cargo
Conditionally
payable
Loan is extinguished
in the event that the
vessel/cargo
was
lost
Last lender is the
first priority
Need
to
be
writing
to
enforceable
in
be
3. Parties to the loan

Parties:
1. Ship owner or ship agent
2. Owner of the cargo
3. Lender
4. Formalities needed
Commerce states that: Loans on
bottomry or respondentia may be
executed:
1. By means of a public instrument;
2. By means of a policy signed by
the contracting parties and the
broker taking part therein;
3.
By
means
instrument.
of
private
Under whichever of these forms the

contract is executed, it shall be
Manol R. Sala
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entered in the certificate of the

registry of the vessel and shall be
recorded in the registry of vessels,
without which requisites the credits
of this kind shall not have, with
regard
to other credits, the
preference which, according to their
nature, they should have, although
the obligation shall be valid
between the contracting parties.
Formal Requirements: a. By
means of public instrument; b.
Policy signed by the contracting
parties and the broker taking part
therein; and c. by means of private
instrument.
Reason: Must be in writing to be
enforceable.
5. Effect of loss of on loan
Commerce
states that: The
actions pertaining to the lender
shall be extinguished by the
absolute loss of the goods on which
the loan was made, if it arose from
an accident of the sea at the time
and during the voyage designated
in the contract, and it is proven that
the cargo was on board; but this
shall not take place if the loss was
caused by the inherent defect of
the thing, or through the fault or
malice, of the borrower, or barratry
on the part of the captain, or if it
was caused by damages suffered
by the vessel as a consequence of
being engaged in contraband, or if
it arose from having loaded the
merchandise on a vessel different
from that designated in the
contract, unless this change should
have been made by reason of force
majeure. Proof of the loss as well as
of the existence of the vessel of the
goods declared to the lender as the
object of the loan is incumbent
upon him who received the loan.
General Rule: If the property that
was collateral was loss, the loan is
extinguished.
Exceptions: 1. Perished due to
inherent defects; 2. Brought about
by malicious conduct of the
35
shipowner; 3. Barratry of the

captain; 4. Engaged in unlawful
transaction; and 5. The cargo
loaded on the vessel be different in
from that agreed upon.
*Commonality of all the exceptions
is that the borrower is at fault.
6. Cases where loan is regarded
as simple loan
a. The loan must be made in
connection with the maritime
transaction otherwise the loan
becomes a simple loan.
b. If the loan is bigger than the
value of the collateral, the loan
becomes a simple loan.
c. If the property is not exposed to
maritime peril.
Reason: To prevent abuse by the
borrower of the benefits of this
loan.
lender should prove that he loaned
as amount larger than the value of
the object liable for the bottomry
loan, on account of fraudulent
measures
employed
by
the
borrower, the loan shall be valid
only for the amount at which said
object is appraised by experts. The
surplus principal shall be returned
with legal interests for the entire
time required for repayment.
Commerce states that: If the full
amount of the loan contracted in
order to load the vessel should not
be used for the cargo, the balance
shall be returned before clearing.
The same procedure shall be
observed with regard to the goods
taken as loan, if they were not
loaded.
Commerce states that: The loan
which the captain takes at the point
of residence of the owners of the
vessel shall only affect that part
thereof which belongs to the
captain, if the other owners or their
agents should not have given their
express authorization therefor or
Manol R. Sala
SWU School of Law
should not have taken part in the

transaction. If one or more of the
owners should be requested to
furnish the amount necessary to
repair or provision the vessel, and
they should not do so within 24
hours, the interest which the parties
in default may have in the vessel
shall be liable for the loan in the
proper proportion. Outside of the
residence of the owners the captain
may contract loans in accordance
with the provisions of Articles 583
and 611.
Commerce provides that: Should
the goods on which money is taken
not be subjected to risk, the
contract shall be considered a
simple loan, with the obligation on
the part of the borrower to return
the principal and interest at the
legal rate, if that agreed upon
should not be lower.
G. Averages
1. Concept
Commerce provides that: For the
purposes of this code the following
shall be considered averages: 1. All
extraordinary
or
accidental
expenses which may be incurred
during the voyage in order to
preserve the vessel, the cargo, or
both;
2.
Any
damages
or
deteriorations which the vessel may
suffer from the time it puts to sea
from the port of departure until it
casts anchor in the port of
destination, and those suffered by
the merchandise from the time they
are loaded in the port of shipment
until they are unloaded in the port
of their consignment.
2. Classes of average
persons liable
and
the
a. Simple average
Commerce provides that: As a
general rule, simple or particular
36
averages shall include all the

expenses and damages caused
to the vessel or to her cargo
which have not inured to the
common benefit and profit of all
the persons interested in the
vessel and her cargo, and
especially the following:
1. The losses suffered by the
cargo from the time of its
embarkation
until
it
is
unloaded, either on account
of inherent defect of the
goods or by reason of an
accident of the sea or force
majeure, and the expenses
incurred to avoid and repair
the same;
2. The losses and expenses
suffered by the vessel in its
hull, rigging, arms, and
equipment, for the same
causes and reasons, from the
time it puts to sea from the
port of departure until it
anchors and lands in the port
of destination;
3. The losses suffered by the
merchandise loaded on deck,
except
in
coastwise
navigation, if the marine
ordinances allow it;
4. The wages and victuals of
the crew when the vessel is
detained or embargoed by
legitimate order or force
majeure, if the charter has
been contracted for a fixed
sum for the voyage;
5. The necessary expenses on
arrival at a port, in order to
make repairs or secure
provisions;
6. The lowest value of the
goods sold by the captain in
arrivals under stress for the
payment of provisions and in
order to save the crew, or to
meet any other need of the
vessel, against which the
proper amount shall be
charged;
Manol R. Sala
SWU School of Law
7. The victuals and wages of

the crew while the vessel is
in quarantine;
8. The loss inflicted upon the
vessel or cargo by reason of
an impact or collision with
another, if it is accidental and
unavoidable. If the accident
should occur through the
fault or negligence of the
captain, the latter shall be
liable for all the losses
caused;
9. Any loss suffered by the
cargo through the fault,
negligence, or barratry of the
captain or of the crew,
without prejudice to the right
of the owner to recover the
corresponding
indemnity
from the captain, the vessel,
and the freightage.
General
Rule:
reimbursement
No
Principle: Loss will lie where it

falls
Reason: There was no common
benefit
Exception: if there is insurance
Exception to the Exception:
Stipulated in the insurance
policy stating no liability on the
part of the insurer regarding
particular average.
owner of the goods which gave
rise to the expense or suffered
the damage shall bear the
simple or particular averages.
Q: Who is liable?
A: Owner of the goods
b. General average
Commerce provides that: As a
general rule, general or gross
averages shall include all the
damages and expenses which
are deliberately caused in order
37
to save the vessel, its cargo, or

both at the same time, from a
real and known risk, and
particularly the following:
1. The goods or cash invested
in the redemption of the
vessel or of the cargo
captured
by
enemies,
privateers, or pirates, and
the provisions, wages, and
expenses of
the
vessel
detained during the time the
settlement or redemption is
being made;
2. The goods jettisoned to
lighten the vessel, whether
they belong to the cargo, to
the vessel, or to the crew,
and the damage suffered
through said act by the
goods which are kept on
board;
3. The cables and masts which
are cut or rendered useless,
the anchors and the chains
which are abandoned, in
order to save the cargo, the
vessel, or both;
4. The expenses of removing or
transferring a portion of the
cargo in order to lighten the
vessel and place it in
condition to enter a port or
roadstead, and the damage
resulting therefrom to the
goods
removed
or
transferred;
5. The damage suffered by the
goods of the cargo by the
opening made in the vessel
in order to drain it and
prevent its sinking;
6. The expenses caused in
order to float a vessel
intentionally stranded for the
purpose of saving it;
7. The damage caused to the
vessel which had to be
opened, scuttled or broken in
order to save the cargo;
Manol R. Sala
SWU School of Law
8. The
expenses
for
the
treatment and subsistence of
the members of the crew
who
may
have
been
wounded or crippled in
defending or saving the
vessel;
9. The wages of any member of
the crew held as hostage by
enemies,
privateers,
or
pirates, and the necessary
expenses which he may incur
in his imprisonment, until he
is returned to the vessel or to
his domicile, should he prefer
it;
10.The wages and victuals of
the
crew
of
a
vessel
chartered by the month,
during the time that it is
embargoed or detained by
force majeure or by order of
the government, or in order
to repair the damage caused
for the common benefit;
11.The depreciation resulting in
the value of the goods sold at
arrival under stress in order
to repair the vessel by reason
of gross average;
12.The
expenses
of
the
liquidation of the average.
order to satisfy the amount of
the gross or general averages,
all the persons having an
interest in the vessel and cargo
therein at the time of the
occurrence of the average shall
contribute.
order to incur the expenses and
cause
the
damages
corresponding to gross average,
there must be a resolution of the
captain,
adopted
after
deliberation with the sailing
mate and other officers of the
vessel, and after hearing the
persons interested in the cargo
who may be present. If the latter
38
shall object, and the captain and

officers or a majority of them, or
the captain, if opposed to the
majority, should consider certain
measures necessary, they may
be
executed
under
his
responsibility, without prejudice
to the right of the shippers to
proceed against the captain
before the competent judge or
court, if they can prove that he
acted with malice, lack of skill,
or negligence. If the persons
interested in the cargo, being on
board the vessel, have not been
heard, they shall not contribute
to the gross average, their share
being chargeable against the
captain, unless the urgency of
the case should be such that the
time necessary for previous
deliberations was wanting.
Commerce states that: In
order that the goods jettisoned
may be included in the gross
average and the owners thereof
be entitled to indemnity, it shall
be necessary insofar as the
cargo is concerned that their
existence on board be proven by
means of the bill of lading; and
with regard to those belonging
to the vessel, by means of the
inventory prepared before the
departure in accordance with
the first paragraph of Article
812.
Commerce states that: if in
lightning a vessel on account of
a storm, in order to facilitate its
entry into a port or roadstead,
part of the cargo should be
transferred to lighters or barges
and be lost, the owner of said
part
shall
be
entitled
to
indemnity, as if the loss had
originated from a gross average,
the
amount
thereof
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
Manol R. Sala
SWU School of Law
be lost, no liability may be

demanded of the salvage.
Commerce states that: If, as a
necessary measure to extinguish
a fire in 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 shall
contribute.
Commerce
provides
that:
Lenders
on
bottomry
or
respondentia shall suffer, in
proportion to their respective
interest, the general average
which may take place in the
goods on which the loan is
made. In particular averages, in
the absence of an express
agreement
between
the
contracting parties, the lender
on bottomry or respondentia
shall
also
contribute
in
proportion to his respective
interest, should it not belong to
the kind of risks excepted in the
foregoing article.
insurers of the vessel of the
freightage, and of the cargo
shall be obliged to pay for the
indemnification of the gross
average, insofar as is required of
each one of these objects
respectively.
Commerce provides that: If,
notwithstanding the jettison of
merchandise,
breakage
of
masts, ropes, and equipment,
the vessel should be lost running
the same risk, no contribution
whatsoever by reason of gross
average shall be proper. The
owners of the goods saved shall
not
be
liable
for
the
indemnification
of
those
jettisoned, lost, or damaged.
Commerce provides that: If,
39
after the vessel has been saved

from the risk which gave rise to
the jettison, it should be lost
through another accident taking
place during the voyage, the
goods saved and existing from
the first risk shall continue liable
to contribution by reason of the
gross average according to their
value in the condition in which
they may be found, deducting
the expenses incurred in saving
them.
Remedy: Reimbursement
General Rule: The sacrifice
made must be in the course of
the voyage.
Exceptions: General average
exists even if there is no voyage
yet: 1. Article 817 of the Code of
Commerce which covers fire in
the port; and 2. Article 818 of
the Code of Commerce which
covers transfer of cargo to
another vessel for the necessity
to enter another port.
Requisites:
1. Exposure to common danger
to ship and the cargo after it
has been loaded whether
during voyage or port of
loading and unloading;
2. That for the common safety
part of the vessel or the
cargo or both is sacrificed
deliberately;
3. That from the expenses or
damages caused follows the
successful saving of the
vessel and cargo;
4. That
the
expenses
or
damages should have been
incurred or inflicted after
taking
legal
steps
and
authority
Formalities:
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
Manol R. Sala
SWU School of Law
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 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.
H. Collisions
1. Definition
Collision is an impact of two
vessels both of which are moving.
Allision is an impact between a
moving vessel and a stationary one.
Possible damage:
a. Damage to vessel
b. Loss/damage to cargo
c. Injury or death of passenger
Example:
Q: A and B collided, A was found to
be negligent, who bears the
consequential damages?
A: A shall be liable for the
consequential damages for she is at
fault.
Q: What if A and B were found to be
negligent,
who
bears
the
consequential damages?
A: With regard to the vessel, each
vessel shall be liable for their own
losses. With regard to the cargoes
and passengers, they are solidarily
liable.
2. Zones in collision (Doctrine of
error in extremis)
*Knowing
these
zones
are
important for liability purposes.
40
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.
*It is in this period where
conduct of the vessels is
primordial. It is in this zone that
vessels must strictly observe
nautical rules unless a departure
therefrom becomes necessary to
avoid imminent danger.
3. Third zone time when collision
is certain and time of impact.
*An error in this zone would no
longer be legally consequential.
Doctrine of Error in Extremis is
a sudden movement made by a
faultless vessel during the third
zone of collision with another vessel
which is at fault during the second
zone.
Even
if
such
sudden
movement
is
wrong,
no
responsibility will fall on said
faultless vessel.
Doctrine of Last Clear Chance
provides that a negligent defendant
is held liable to a negligent plaintiff
or even to a plaintiff who has been
grossly negligent where he should
have been aware of it in the
reasonable exercise of due care,
had in fact an opportunity later
than that of the plaintiff to avoid an
accident.
*In this doctrine, both parties are at
fault but only one party is liable.
Only the party who has the last
clear opportunity to avoid the
impact is held liable.
*This doctrine is inapplicable in the
following instances:
1. If the suit is between a parties of
contract of carriage; and
2. In case of collision of vessels
3. Rule on liability
vessel should collide with another,
through the fault, negligence, or
lack of skill of the captain, sailing
Manol R. Sala
SWU School of Law
mate, or any other member of the

complement, the owner of the
vessel at fault shall indemnify the
losses and damages suffered, after
an expert appraisal.
Commerce provides that: If the
collision is imputable to both
vessels, each one shall suffer its
own damages, and both shall be
solidarily responsible for the losses
and damages occasioned to their
cargoes.
*This is known as the Doctrine of
Inscrutable Fault.
Doctrine of Inscrutable Fault
provides that 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.
Commerce
states that: The
provisions of the preceding article
are applicable to the use in which it
cannot be determined which of the
two vessels has caused the
collision.
Commerce states that: In the
cases above mentioned the civil
action of the owner against the
person causing the injury as well as
the criminal liabilities, which may
be proper, are reserved.
Commerce states that: If a vessel
should collide with another, through
fortuitous event or force majeure,
each vessel and its cargo shall bear
its own damages.
Requisites:
1. The natural disaster must have
cause of the loss;
2. The common carrier must have
exercised due diligence to
prevent or minimize loss before,
during and after the occurrence
of the natural disaster;
3. The common carrier must not
have been guilty of delay; and
4. The captain must have made a
protest before the competent
authority at the first port he
41
touched within the 24 hours

following his arrival, and should
have ratified it within the same
period when he arrived at the
port of destination, proceeding
immediately with the proof of
the facts, without opening the
hatches until after this has been
done.
vessel should be forced by a third
vessel to collide with another, the
owner of the third vessel shall
indemnify the losses and damages
caused, the captain thereof being
civilly liable to said owner.
*This is known as the Doctrine of
Proximate Cause
Commerce states that: If by
reason of a storm or other cause of
force majeure, a vessel which is
properly anchored and moored
should collide with those nearby,
causing them damages, the injury
occasioned shall be considered as
particular average of the vessel run
into.
4. Limited liability rule
*There must be no fault on the part
of the shipowner.
*The fault falls only with his crew.
Commerce states that: The civil
liability incurred by the shipowners
in the case prescribed in this
section, shall be understood as
limited to the value of the vessel
with all its appurtenances and
freightage.
I. Arrival under stress

1. Concept
The arrival of a vessel at the
nearest and most convenient port
instead of the port of destination, if
during the voyage the vessel
cannot continue the trip to the port
of destination.
Manol R. Sala
SWU School of Law

Commerce
provides that: If
during the voyage the captain
should believe that the vessel can
not continue the trip to the port of
destination on account of the lack
provisions, well founded fear of
seizure, privateers, or pirates, or by
reason of any accident of the sea
disabling it to navigate, he shall
assemble the officers and shall
summon the persons interested in
the cargo who may be present, and
who may attend the meeting
without the right to vote; and if,
after examining the circumstances
of the case, the reason should be
considered well-founded, the arrival
at the nearest and most convenient
port shall be agreed upon, drafting
and entering the proper minutes,
which shall be signed by all, in the
log book. The captain shall have the
deciding vote, and the persons
interested in the cargo, may make
the objections and protests they
may deem proper, which shall be
entered in the minutes in order that
they may make use thereof in the
manner
they
may
consider
advisable.
2. When improper
Commerce provides that: An
arrival shall not be considered
lawful in the following cases:
1. If the lack of provisions should
arise from the failure to take the
necessary provisions for the
voyage according to usage and
customs, or if they should have
been rendered useless or lost
through
bad
stowage
or
negligence in their care;
2. If
the
risk
of
enemies,
privateers, or pirates should not
have been well known, manifest,
and based on positive and
provable facts;
3. If the defect of the vessel should
have arisen from the fact that it
was
not
repaired,
rigged,
equipped, and prepared in a
42
manner suitable for the voyage,

or from some erroneous order of
the captain;
4. When malice, negligence, want
of foresight, or lack of skill on
the part of the captain exists in
the act causing the damage.
3. Expenses
expenses of an arrival under stress
shall always be for the account of
the shipowner or agent, but they
shall not be liable for the damages
which may be caused the shippers
by reason of the arrival, provided
the latter is legitimate. Otherwise,
the ship agent and the captain shall
be jointly liable.
Commerce provides that: If in
order to make repairs to the vessel
or because there is danger that the
cargo may suffer, it should be
necessary to unload, the captain
must request the authorization from
the competent judge or court for
the removal, and carry it out with
the knowledge of the person
interested in the cargo, or his
representative, should there be any.
In a foreign port, it shall be the duty
of the Philippine Consul, where
there
is
one,
to
give
the
authorization. In the first case, the
expenses shall be for the account of
the ship agent or owner, and in the
second, they shall be chargeable
against
the
owners
of
the
merchandise for whose benefit the
act was performed. If the unloading
should take place for both reasons,
the expenses shall be divided
proportionately between the value
of the vessel and that of the cargo.
4. Custody of Cargo
custody and preservation of the
cargo which has been unloaded
shall be intrusted to the captain,
who shall be responsible for the
Manol R. Sala
SWU School of Law
same, except in cases of force

majeure.
entire cargo or part thereof should
appear to be damaged, or there
should be imminent danger of its
being damaged, the captain may
request of the competent judge or
court, or of the consul in a proper
case, the sale of all or of part of the
former, and the person taking
cognizance of the matter shall
authorize it, after an examination
and
declaration
of
experts,
advertisements,
and
other
formalities required by the case,
and an entry in the book, in
accordance with the provisions of
Article 624. The captain shall, in
proper case, justify the legality of
his conduct, under the penalty of
answering to the shipper for the
price the merchandise would have
brought if they had arrived in good
condition
at
the
port
of
destination.
5. Captains liability
Commerce
states that: The
captain shall be responsible for the
damages caused by his delay, if
after the cause of the arrival under
stress has ceased, he should not
continue the voyage. If the cause of
arrival should have been the fear of
enemies, privateers, or pirates, a
deliberation and resolution in a
meeting of the officers of the vessel
and persons interested in the cargo
who may be present, in accordance
with the provisions contained in
Article 819, shall precede the
departure.
6. Rules in case of shipwreck
Shipwreck denotes all types of
loss/ wreck of a vessel at sea either
by being swallowed up by the
waves, by running against another
vessel or thing at sea or on coast
where the vessel is rendered
incapable of navigation.
43

losses and deteriorations by a
vessel and her cargo by reason of
shipwreck or stranding shall be
individually for the account of the
owners, the part which may be
saved belonging to them in the
same proportion.
wreck or stranding should be
caused by the malice, negligence,
or lack of skill of the captain, or
because the vessel put to sea was
insufficiently
repaired
and
equipped, the ship agent or the
shippers may demand indemnity of
the captain for the damages caused
to the vessel or to the cargo by the
accident, in accordance with the
provisions contained in Articles 610,
612, 614, and 621.
Commerce states that: The goods
saved from the wreck shall be
specially bound for the payment of
the expenses of the respective
salvage, and the amount thereof
must be paid by the owners of the
former before they are delivered to
them, and with preference over any
other obligation if the merchandise
should be sold.
Commerce states that: If several
vessels sail under convoy, and any
of them should be wrecked, the
cargo saved shall be distributed
among the rest in proportion to the
amount which each one is able to
take. If any captain should refuse,
without sufficient cause, to receive
what may correspond to him, the
captain of the wrecked vessel shall
enter a protest against him, before
two sea officials, of the losses and
damages
resulting
therefrom,
ratifying the protest within 24 hours
after arrival at the first port, and
including it in the proceedings he
must institute in accordance with
the provisions contained in Article
612. If it is not possible to transfer
to the other vessels the entire
Manol R. Sala
SWU School of Law
cargo of the vessel wrecked, the

goods of the highest value and
smallest volume shall be saved
first, the designation thereof to be
made by the captain with the
concurrence of the officers of his
vessel.
Commerce
provides
that:
A
captain who may have taken on
board the goods saved from the
wreck shall continue his course to
the port of destination, and on
arrival shall deposit the same, with
judicial intervention, at the disposal
of their legitimate owners. In case
he changes his course, if he can
unload them at the port of which
they were consigned, the captain
may make said port if the shippers
or supercargoes present and the
officers and passengers of the
vessel consent thereto; but he may
not do so, even with said consent,
in time of war or when the port is
difficult and dangerous to make.
The owners of the cargo shall
defray all the expenses of this
arrival as well as the payment of
the freightage which, after taking
into
consideration
the
circumstances of the case, may be
fixed by agreement or by a judicial
decision.
Commerce provides that: If on the
vessel there should be no person
interested in the cargo who can pay
the
expenses
and
freightage
corresponding to the salvage, the
competent judge or court may
order the sale of the part necessary
to cover the same. This shall also
be done when its preservation is
dangerous, or when in a period of
one year it should not have been
possible to ascertain who are its
legitimate owners. In both cases
the proceedings shall be with the
publicity and formalities prescribed
in Article 579, and the net proceeds
of the sale shall be safely
deposited, in the discretion of the
judge or court, so that they may be
44
delivered to the legitimate owner

thereof.
*It is the loss of the vessel at sea as
a consequence of its grounding, or
running against an object in sea or
on the coast. It occurs when the
vessel sustains injuries due to a
marine
peril
rendering
her
incapable of navigation.
*The rules on collision or allusion,
as may be pertinent, can equally
apply to shipwrecks.
J. Salvage
1. Definition
Salvage - Compensation allowed
to persons by whose voluntary
assistance a ship at sea or her
cargo or both have been saved in
whole or in part from an impending
or actual peril, shipwrecks, derelicts
or recapture
- Services one person render 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.
2. Rights
salvors
Law)
and
obligations
of
and owners (Salvage
Salvors
Entitled
to
compensation
for
services
rendered
Acquires a lien
upon
the
property
salvaged
until
he
is
compensated
To all intents
and
purposes,
he is a joint
owner and if the
property is lost
he must bear his
share
Acquires
Manol R. Sala
SWU School of Law
the
Owners
He
does
not
renounce
his
right
to
the
derelict
Has a right to
the delivery of
the vessel or
things
saved
after the salvage
is accomplished,
provided
he
pays or gives a
bond
Should make a
claim within 3
months after the
publication of a
salvage report,
otherwise
the
thing saved shall
be sold
Entitled to the
right
of
possession
of
derelict
for
purposes of a
salvage claim
Entitled to half
of the deposit of
the derelict sold,
if after the lapse
of 3 years no
claim was made
salvage reward
for the use of his
vessel
in
rendering
salvage services
WARSAW CONVENTION:
Warsaw Convention is an agreement
among sovereign countries concerning the
regulation in a uniform manner of the
conditions of international transportation by
air in respect of the documents used for such
transportation and of the liability of the
carrier.
Signed on October 12, 1929 in Warsaw,
Poland.
Purpose: To protect the emerging air
transportation industry and to secure the
uniformity of recovery by the passengers.
Applicability: The transportation must be:
1. International transportation
2. Air transportation
3. Carriage of passengers, baggage or
goods
*The Warsaw Convention shall also apply to
fortuitous events affecting transportation by
aircraft performed by an air transportation
enterprise.
*The Convention is likewise applicable to air
transportation by legal entities constituted
under public law of the High Contracting
Parties.
*The Convention does not apply to
transportation performed under the terms of
any international postal convention.
International
Transportation
is
any
transportation in which the place of departure
and the place of destination are situated
either:
1. Within the territories of two High
Contracting Parties regardless of
whether or not there be a break in the
transportation or transhipment; or
Controlling: Two territories must be
High Contracting Parties
*Also called as one way ticket
2. Within the territory of a single High
Contracting Parties, if there is an
45
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.
Controlling: There must be a stopping
place in another territory.
*Also called as round trip ticket.
High Contracting Party is one of the
original parties to the convention.
When inapplicable:
1. When public policy is contradicted;
2. If
the
requirement
under
the
Convention are not complied with
Transportation Documents:
a. Passenger passenger ticket
b. Checked-in baggage baggage check
c. Goods to be shipped airway bill
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
of
embarking
or
disembarking;
2. Destruction, loss or damage to any
baggage or goods, if it took place
during the transportation by air; and
3. Delay
in
the
transportation
of
passengers, baggage or goods.
Limit of Liability:
1. Passenger:
In case of death or injury, general
rule: 100,000 STR per passenger
*1.51 US Dollar
Exception: Agreement to a higher
limit
In case of delay, 4150 STR per
passenger
2. Checked in baggage:
General Rule: 20 STR per kilogram
Exception:
In
case
of
special
declaration of value and payment of a
supplementary sum by consignor,
carrier is liable to not more than the
declared sum unless it proves the sum
is greater than actual value.
3. Hand carried baggage: 1000 STR per
passenger
4. Goods to be shipped:
General Rule: 17 STR per kilogram
Exception:
In
case
of
special
declaration of value and payment of a
supplementary sum by consignor,
carrier is liable to not more than the
declared sum unless it proves the sum
is greater than actual value.
Action for damages:
Manol R. Sala
SWU School of Law
1. Notice of claim
*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.
*The complaint is a condition
precedent. Without the complaint,
the action is barred except in case
of fraud on the part of the carrier.
2. Prescriptive period
*Action must be filed within 2 years
from:
a. The date of arrival at the
destination
*An
intermediate
place
where carriage may be
broken is not a place of
destination.
b. The date of expected arrival
c. The date on which
transportation stopped
the
Venue:
At the option of the plaintiff, the action for
damages may be filed in the:
1. Court of domicile of the carrier;
2. Court of its principal place of business;
3. Court where it has a place of business
through which the contract has been
made; or
4. Court of the place of destination.
*In Santos III v Northwest Airline, the SC
held that the forum of action is a matter of
jurisdiction rather than of venue.
46

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TRANSPORTATION LAW

B. Concept of Public Utility & public

however, That a person engaged in

Sec. 11 of Article XII of the 1987

or association must be citizens of the

A: Basis: Police Power

A: 1. The grantee must be a citizen of

protects from unfair competition

Transportation is a contract whereby

expediting from that of

D. Registered owner rule and Kabit

1. Duty to exercise extraordinary

of the carrier shall be reduced to

transportation until the same are

*The enumeration is exclusive or a

Article 1737 of the New Civil

Article 1738 of the New Civil

General Rule: Common carriers

1. Flood, storm, earthquake,

*mechanical defect is not within

2. Absence of negligence on the

General Rule: rebels and

Exception: If it they are cast of

c. Act of omission on the part

*Foul Bill of Lading preserves the

*This is for the benefit of the carrier.

*The stipulation must be in writing

question of whether or not a

equipment used in the contract

carrier in the vigilance over the

General Rule: Goods sought

*This can be found under

ix. Failure to tender goods on

Exception: In the absence of

common carrier, without just

determined in accordance with

Article 374 of the Code of

appears. The expenses which

Article 1755 of the New Civil

because there is still a breach of

*In Japan Airlines v Asuncion

passenger because he entered the

different from that of La Mallorca

for the safety of passengers as

include the loss of, or injury to the

*It is also required to declare the value

A. Effect of negligence of shipper or

2. improper marking or direction as to

directly responsible for the fault which

Tickets are purchased in advance from

C. Liability for demurrage

4. Possession of the goods;

5. Preciousness of human life

1. Seaworthiness of the vessel

Article 1757 of the New Civil

Sec. 3 [1] of the COGSA

(c) Make the holds, refrigerating

*Extraordinary diligence requires

*If the negligence of the captain

cant change unless due to force

*If route is stipulated upon by

1. Airworthiness - an aircraft, its

b. to seize or usurp control of the

4. Adverse weather conditions or