Transpo Notes

otes on Transportation Law
LAW O TRASPORTATIO AD PUBLIC UTILITIES

CHAPTER 1
Contract of Transportation person obligates
himself to transport persons or property from one
place to another for a consideration.
c. has a bona fide intention to use facilities

of the carrier
2. CARRIAGE OF GOODS
Parties: shipper & carrier
2 KIDS:
1. CARRIAGE OF PASSEGERS
Parties: common carrier & passenger (carried
gratuitously or not)
Perfection:
> contract to carry goods consensual
> contract of carriage - act of delivery of goods
(goods are unconditionally placed in the
possession and control of the carrier and upon
their receipt by the carrier for transportation)
Perfection:
> contract to carry (agreement to carry the
passenger at some future date) consensual
contract and perfected by mere consent
* AIRCRAFT perfected even without issuance
of ticket as long as there was already meeting of
minds with respect to the subject matter and
consideration
> contract of carriage
real contract; not until the facilities of the carrier
are actually used can the carrier be said to have
assumed the obligation of the carrier; perfected by
actual use.
* AIRCRAFT perfected if it was established that
the passenger had checked in at the departure
counter, passed through customs and immigration,
boarded the shuttle bus and proceeded to the ramp
of the aircraft and baggage already loaded to the
aircraft.
* Public Utility Bus or Jeepneys once it stops it
is in effect making a continuous offer to riders;
perfected when passenger is already attempting to
board the vehicle
* TRAINS perfected when a person:
a. purchased a ticket/ possess sufficient
fare with which to pay for his passage
b. presented himself at the proper place
and in a proper manner to be transported
San Beda College of Law
CARRIER:
Common carriers (CC) (1732)
persons,
corporations,
firms
or
associations engaged in the business of
carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to
the public. (NOT the means of
transportation)
one that holds itself out as ready to engage
in the transportation of goods for hire as a
public employment and not as a casual
occupation.
Tests for determining WON a party is a common
carrier of goods:
1. He must be engaged in the business of
carrying goods for others as a public
employment, and must hold himself out as
ready to engage in the transportation of
goods for persons generally as a business
and not as a casual occupation.
2. He must undertake to carry good of the
kind to which his business is confined.
3. he must undertake to carry by the method
by which his business is conducted and
over his established roads
4. transportation must be for hire.
Characteristics of Common carriers (CC):
no distinction between one whose
principal business is the transportation of
A. D. AVILA | H. MORAA

persons/goods and one who does such as
an ancillary business
still a CC even if services offered to a
limited clientele
pipeline operators are CCs not
necessarily motor vehicles
CHARTER PARTY:
- contract by which an entire ship or some
principal part thereof is let by the owner to another
person for a specified time or use.
2 types:
1. Contract of affreightment
involves the use of shipping space on vessels
leased by the owner in part or as a whole, to carry
goods for another
- CC = observe extraordinary diligence; in case of
loss, deterioration or destruction of goods of
goods, CCs are presumed to be at fault or have
acted negligently
2. Charter by demise/ Bareboat Charter
whole vessel is let to the charterer with a transfer
to him of its entire command and possession and
consequent control over its navigation including
the master and the crew who are his servants.
- charter includes both vessel and crewCC
becomes private carrier (PC) insofar as that
particular voyage is concerned
- if PC- ordinary diligence in the carriage of goods
will suffice
- PC = undertaking is a single transaction, not a
part of the general business or occupation,
although involving the carriage of goods for a fee;
NO presumption of negligence applies
whosoever alleges damage to or deterioration of
the goods carried has the burden of proving that
the cause was the negligence of the carrier.
CCs v. Towage, Arrastre and Stevedoring
Towage- a vessel is hired to bring another vessel
to another place
e.g. a tugboat may be hired by CC to bring the
vessel to a port (operator of tugboat not CC)
the use or operation of vessels. Services are not

maritime.
Stevedoring- involves the loading and unloading
of coastwise vessels calling at the port.
>>> Common carriers are public utilities,
impressed with public interest and concern subject
to regulation by the state.
REGISTERED OWER RULE
- the registered owner of a vehicle is liable from
any damage caused by the negligent operation
of the vehicle although the same was already
sold or conveyed to another person at the time
of the accident.
The registered owner is liable to the injured
party subject to his right of recourse against
the transferee or the buyer
- Applicable in case of lease
- Registered owner not liable if vehicle was
taken from him without his knowledge and
consent.
-
Applicable to people involved on a kabit

system (arrangement whereby a person who
has been granted a certificate of public
convenience allows other persons who own
motor vehicles to operate them under his
license, sometimes for a fee or percentage of
the earnings --- contrary to public policy)
parties to the kabit system cannot
invoke the same as against each other
either to enforce their illegal agreement or
to invoke the same to escape liability --pari delicto rule
having entered into an illegal contract,
neither can seek relief from the courts and
each must bear the consequences of his
acts
also applicable to aircrafts and vessels
basic rule that no person can operate a
common carrier without securing a
certificate of public convenience and
necessity.
Arrastre operators functions has nothing to do

with the trade and business of navigation nor to

CHAPTER 2
OBLIGATIOS OF THE PARTIES
carriage; and 3) the general nature of the business

done by the carrier.
I. Obligations of the carrier

A. DUTY TO ACCEPT
A common carrier granted a certificate
of public convenience is duty bound to accept
passengers or cargo without any discrimination.
(1) Hazardous and Dangerous Substances

Carrier not properly equipped to transport
dangerous chemicals or explosives may validly
refuse to accept the same for transport. Those
which are not authorized by the Maritime Industry
Authority to carry such goods may also validly
refuse the same for transport. There must be a
Special Permit to Carry from the MARINA.
It is illegal for domestic ship operators to

refuse to accept or carry passengers or cargo
without just cause. (Section 16, RA 9295)
In air transportation, passengers with
confirmed tickets who were not allowed to
board are provided with denied boarding
compensation and priority boarding rules. No
compensation for refusal if it is because of 1)
government requisition of the space, 2)
substitution of equipment of lesser capacity
when required by operational and or safety
and/or other causes beyond the control of the
carrier, and 3) if arrangements have been
made for the passenger to take another flight
in a comparable air transportation which will
arrive not later than three hours after the time
of flight on which the confirmed space is held
is supposed to arrive. (Civil Aeronautics
Board Economic Regulation)
a. Grounds for valid refusal to accept goods
1.
dangerous objects or substances
including dynamites and other explosives
2. goods are unfit for transportation
3. acceptance would result in overloading
4. contrabands or illegal goods
5. goods injurious to health
6. goods will be exposed to untoward
danger like flood, capture by enemies and
the like
7. goods like livestock will be exposed to
diseases
8. strike
9. failure to tender goods on time
In Fisher v. Yangco, factors in determining
reasonable discrimination include, 1) suitability to
the vessel for the transportation of such products;
2) reasonable possibility of danger or disaster
resulting from their transportation in the form and
under the conditions in which they are offered for
(2) Unfit for Transport

Carriers may refuse to accept goods that are unfit
for transportation (by nature be unfit for
transportation or are unfit because of improper
packaging or defect in their containers). However,
carriers may accept the goods and limit its liability
by stipulation.
If by reason of well-founded suspicion of falsity in
the declaration as to the contents of the package
carrier should decide to examine and investigate it
in the presence of witnesses, with the shipper and
consignee in attendance. If declaration of shipper
is true, expenses occasioned by the examination
and of repacking the packages shall be for the
account of the carrier
Even if the cause of the loss, destruction or
deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the
packing or of the containers, the common carrier
must exercise due diligence to forestall or lessen
the loss.
B. DUTY TO DELIVER THE GOODS
a. Time of Delivery
Where a carrier has made an express contract, the
goods must be delivered within a specified time
otherwise he is liable for any delay (indemnity for
damages). In the absence of any agreement, goods
must be delivered at its destination within a
reasonable time (depending on the attending
circumstances, nature of the goods).
b. Consequences/Effects of Delay
Excusable delays in carriage suspend, but do not
generally terminate, the contract of carriage; when
the cause is removed, the master must proceed

with the voyage and make delivery. During the
detention or delay, vessel continues to be liable as
a common carrier, not a warehouseman, and
remains duty bound to exercise extraordinary
diligence.
If common carrier negligently delays in
transporting the goods, a natural disaster shall not
free it from responsibility.
losses and damages if the interruption is due to

fortuitous event of force majeure, but with a right
to indemnity if the interruption should have been
caused by the captain exclusively. If the
interruption should be caused by the disability of
the vessel and a passenger should agree to await
the repairs, he may not be required to pay any
increased price of passage, but his living expenses
during the stay shall be for his own account.
If common carrier delays , without just cause, in

transporting the goods or changes the stipulated or
usual route, the contract limiting its liability
cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
In case the vessel is not able to depart on time and

the delay is unreasonable, the passenger may opt
to have his/her ticket immediately refunded
without any refund service fee from the authorized
issuing/ticketing office.
(1) Abandonment
In case of delay through the fault of the carrier, the
consignee may refuse to accept the goods or may
leave the goods in the hands of the carrier. It must
be communicated to the carrier in writing. This
right must be exercised between the time of delay
and before the arrival of the goods at its
destination. The carrier must pay the full value of
the goods as if they had been lost or mislaid.
C. WHERE AND TO WHOM DELIVERED

a. Place
Goods should be delivered to the consignee in the
place agreed upon by the parties.
If abandonment is not made, indemnification for

the losses and damages by reason of the delay
cannot exceed the current price which the goods
would have on the day and at the place they are to
be delivered.
The value of the goods which the carrier must pay
in case of loss or misplacement shall be that what
is declared in the bill of lading.
Consignee must not defer the payment of the
expenses and transportation charges of the goods
otherwise carrier may demand the judicial sale of
the goods.
(2) Rights of Passengers in Case of Delay
As to the rights and duties of the parties strictly
arising out of delay, the Civil Code is silent.
However, the Code of Commerce provides for
such a situation:
ARTICLE 698. In case a voyage already begun
should be interrupted, the passengers shall be
obliged to pay the fare in proportion to the
distance covered, without Right to recover for
The shipper may change the consignment of the

goods provided that at the time of ordering the
change of the consignee the bill of lading signed
by the carrier be returned to him, in exchange for
another wherein the novation of the contract
appears. The expenses occasioned by the change
shall be for the account of the shipper.
b. Consignee
Delivery must generally be made to the owner or
consignee or to someone lawfully authorized by
him to receive the goods for his account or to the
holder of the negotiable instrument.
c. Delay to Transport Passengers
Effects of delayed and unfinished voyage in
inter-island vessels:
vessel can not continue or complete her
voyage for any cause carrier is under
obligation to transport the passenger to
his/her destination at the expense of the
carrier including free meals and lodging
before the passenger is transported to
his/her destination; the passenger may opt
to have his/her ticket refunded in full if the
cause of the unfinished voyage is due to
the negligence of the carrier or to an
amount that will suffice to defray
transportation cost at the shortest possible
route if the cause of the unfinished voyage

is fortuitous event.
vessel is delayed in arrival at the port of
destination free meals during mealtime
delay in departure at the point of origin
due to carriers negligence; fortuitous
event - free meals during mealtime;
carrier not obliged to serve free meals
carrier is not obliged to inform passengers
of sailing schedule of the vessel
B.DUTY TO EXERCISE EXTRAORDINARY

DELIGENCE
Goods should be delivered in the same
condition that they were received and to transport
the passengers without encountering any harm or
loss.
ARTICLE 1755. A common carrier is bound to
carry the passengers safely as far as human care
and foresight can provide, using the utmost
diligence of very cautious persons, with a due
regard for all the circumstances. (Civil Code)
a. Presumption of Negligence
Two conditions for the birth of the presumption of
negligence:
1. there exists a contract between the
passenger or the shipper and the common
carrier
2. the loss, deterioration, injury or death took
place during the existence of the contract
Doctrine of Proximate Cause there is
presumption of negligence
If the goods are lost, destroyed or deteriorated,
common carriers are presumed to have acted
negligently, unless they prove that they observed
extraordinary diligence. In case of death of or
injuries to passengers, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence.
b. Duration of Duty
(1) Carriage of Goods
ARTICLE 1736. The extraordinary responsibility
of the common carrier lasts from the time the
goods
are unconditionally placed in the
possession of, and received by the carrier for
transportation until the same are delivered,
actually or constructively, by the carrier to the

consignee or to the person who has a right to
receive them
ARTICLE 1737. The common carriers duty to
observe extraordinary diligence over the goods
remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless
the shipper or owner has made use of the right of
stoppage in transitu. (common carrier becomes a
warehouseman ordinary diligence)
ARTICLE 1738. The extraordinary liability of the
common carrier continues to be operative even
during the time the goods are stored in a
warehouse of the carrier at the place if destination,
until the consignee has been advised of the arrival
of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of
them.
(2) Carriage of Passengers
By trains the extraordinary responsibility of
common carrier commences the moment the
person who purchases the ticket (or a token or
card) from the carrier presents himself at the
proper place and in a proper manner to be
transported with a bona fide intent to ride the
coach.
* Mere purchase of a ticket does not of itself
create the relation of carrier and passenger but it is
an element in the inception of the relation.
* A proper person who enters upon the carriers
premises (station, ticketing office, or waiting
room) with the intention of becoming a passenger
will ordinarily be viewed as assuming the status of
a passenger.
* One who goes to the railroad station to inquire as
to the possibility of securing passage on a freight
train, which he knows, by the rules of the
company, is not allowed to carry passengers, and
to secure passage thereon if possible, is not
entitled to the rights of a passenger but is a mere
trespasser.
* One who rides upon any part of the vehicle or
conveyance which is unsuitable or dangerous, or

which he knows is not intended for passengers, is
not presumed to be a passenger.
* One who secures free passage by fraud or stealth
is precluded from recovery for injuries sustained
through the negligence of the carrier, for he has
not assumed the status of a passenger.
* A person riding on a freight train, on a drivers
pass or similar arrangement, to look after livestock
being transported and as incident to such
transportation is, generally regarded as a passenger
for hire.
* Motor vehicles like jeepneys and buses are duty
bound to stop their conveyances for a reasonable
length of time in order to afford passengers an
opportunity to board and enter, and they are liable
for injuries suffered by boarding passengers
resulting from the sudden starting up or jerking of
their conveyances while they do so. Once a public
utility bus or jeepney stops, it is making a
continuous offer to bus riders.
Duty to exercise utmost diligence with respect to
passengers will not ordinarily terminate until the
passenger has, after reaching his destination,
safely alighted from the carriers conveyance or
had a reasonable opportunity to leave the carriers
premises.
E. DEFENSES OF COMMON CARRIERS
1. Flood, storm, earthquake, lightning, or other
natural disaster or calamity
2. Act of the public enemy in war, whether
international or civil
3. Act or omission of the shipper or owner of the
goods
4. The character of the goods or defects in the
packing or in the containers
5. Order or act of competent public authority
6. Exercise of extraordinary diligence
Fortuitous Event to be a valid defense must be
established to be the proximate cause of the loss
Requisites:
1. The cause of the unforeseen and the unexpected
occurrence, or of the failure of the debtor to
comply with his obligation,
must be independent of the human will
2. It must be impossible to foresee the event which

constitutes the caso fortuito, or if it can be
foreseen, it must be impossible
to avoid
3. The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in
a normal manner
4. The obligor (debtor) must be free from any
participation in or the aggravation of the injury
resulting to the creditor
In order for the common carrier to be exempted
from responsibility, the natural disaster must have
been the proximate and only cause of the loss.
However, the common carrier must exercise due
diligence to prevent or minimize loss before,
during and after the occurrence of flood, storm or
other natural disaster in order that the common
carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods.
Fire not considered as a natural calamity or
disaster
Fire caused by lightning a natural calamity
Hijacking does not fall under the categories of
exempting causes; the common carrier is
presumed to be at fault or to have acted
negligently unless there is a proof of extraordinary
diligence on its part
Mechanical defects damage or injury resulting
from mechanical defects is not a damage or injury
that was caused by fortuitous event; carrier is
liable to its passengers for damages caused by
mechanical defects of the conveyance (breakage of
a faulty drag-link spring, fracture of the vehicles
right steering knuckle, defective breaks)
Pages 123-190
Juntilla v. Fontanar
Tire-blowouts was not considered as fortuitous
event although it was alleged that the tires were in
good condition; no evidence was presented to
show that the evidence were due to adverse road
conditions the carrier must prove all angles.
The explosion could have been caused by too
much air pressure injected into the tires and the
fact that the jeepney was overloaded and speeding
at the time of the accident.
b. OTHER INVALID DEFENSES

1. Damage to cargo due to EXPLOSION of
another cargo not attributable to peril of the seas
or accidents of navigation.
2. Damage by WORMS and RATS resulting to
damage to cargoes cant be cited as an excuse by
the carrier.
3. Damage by WATER through a port which had
been left open or insufficiently fastened on sailing.
4. Carrier cannot escape liabilities to third persons
if damage was caused by BARRATRY where
the master or crew of the ship committed unlawful
acts contrary to their duties includes theft and
fraudulently running the ship ashore.
Cases:
1. Problem: A carrier bus on its way to its
destination encountered an engine failure,
thus, it has to be repaired for 2 days. And
while in the repair shop, a typhoon came
resulting to the spoilage of cargoes.
Answer: A typhoon although a natural
disaster, is not a valid defense if it is
shown that it was not the only cause of the
loss. Especially when the facts indicate
that the typhoon was foreseeable and
could have been detected through the
exercise of reasonable care. Cargoes
should have been secured while the bus
was being repaired for 2 days.
2. Problem: A passenger told the driver that
he has valuable items in his bag which
was placed under his feet and he asked the
driver (to which he is seated near) to
watch for the bag while he is asleep.
(a) There have been incidents of throwing
of stones at passing vehicles in the
North Express Way. While the bus
was traversing the super highway, a
stone hurled from the overpass and hit
the passenger resulting to injuries.
Can the passenger hold the bus liable
for damages?
Answer: Yes. The incident was
foreseeable due the prior incidents of
stone hurling. The bus should have
exercised utmost diligence and
employed adequate precautionary
measures to secure safety of

passengers since the incident was
foreseeable. .
HOWEVER, if the stone throwing
was entirely unforeseeable and the
carrier exercised the utmost diligence,
then, the bus cant be held liable.
Nonetheless, the burden of proof Is on
the carrier to prove such exercise of
diligence. It is up to the carrier to
overthrow the presumption of
negligence.
If the passenger decides to file a case,
al the passenger has to do is to prove
that she was a passenger of the bus
and that she suffered injuries while on
board the bus.
(b) Supposing that there were armed men
who staged a hold-up while the bus
was speeding along the highway. One
of them stole the passengers bag and
wallet while pointing a gun him. Is the
bus liable?
Answer: No. Hand-carried luggages
are governed by necessary deposit.
Besides, theft with use of arms or
through irresistible force is a force
majeure which exempts carriers from
liability.
3. Hi-jacking cannot exculpate the carrier
from liability if it is shown that the
employees of the carrier were not
overwhelmed by the hijackers and that
there was no showing of irresistible force.
Since, there were 4 employers while there
were only 2 hijackers and only one of
them was armed with bladed weapon.
ON THE OTHER HAND, a hijacking by
3 armed men is an event which is
considered to be beyond the control of the
carrier. Thus, the carrier may be adjudged
from liability if it can be proven that the
hijacking was unforeseeable.
c. PUBLIC ENEMY
- presupposes a state of war and refers to the
government of a foreign nation at war with the
country to which the carrier belongs, though not

necessarily with that to which the owner of the
gods owes allegiance.
- Thieves, rioter, and insurrectionists are not
included. They are merely private depredators for
whose acts a carrier is answerable.
- Rebels in insurrection against their own
government are generally not embraced in the
definition of public enemy. However, if the rebels
hold a portion of territory, they have declared their
impendence, cast off their allegiance and has
organized armed hostility to the government, and
the authority of the latter is at the time overthrown,
such an uprising may take on the dignity of a civil
war, and so matured and magnified, the parties are
belligerent and are entitled to belligerent rights.
- Depredation by pirates (which are enemy of all
civilized nation) excuses the carrier from liability.
- Common carriers may be exempted from
responsibility only if the act of the public enemy
has been the proximate and only cause of the loss.
Moreover, due diligence must be exercised to
prevent or at least minimize the loss before, during
and after the performance of the act of the public
enemy in order that the carrier may be exempted
from liability for the loss, destruction, or
deterioration of the goods.
d. IMPROPER PACKING
Character of the goods and defects in the
packaging or in the containers are defenses
available to the common carrier. Similarly, the
Carriage of Good b Sea Act provides that carrier
shall not liable for: (1) wastage in bulk or weight
or any damages arising form the inherent defect,
quality or vice of goods; (2) insufficiency of
packing; (3) insufficiency or inadequacy of the
marks, or (4) latent defects no discoverable by due
diligence.
However, NCC likewise provides:
Art. 1742. Even if the loss, destruction, or
deterioration of the goods should be caused by
the character of the goods, or the faulty nature
of the packing or the containers, the common
carrier must exercise due diligence to forestall
or lessen the loss.
Thus, if the carrier accepted the goods knowing
the fact of improper packing or even if the
carrier does not know but the defect was

nonetheless
apparent
upon
ordinary
observation, it is not relived form liability for loss
or injury to goods resulting therefrom.
Cases:
1. Problem: A carrier knowing that some of a
cargo of sacks of rice had big holes and
others had openings just loosely tied with
strings resulting to the spillage of rice
during the trip. Thus, there was shortage
in the delivery of the cargoes. When sued
due to the shortage, the carrier interposed
a defense that it was not liable since the
shortage was due to the defective
condition of the sacks. Decide.
Answer: Carrier must still exercise
extraordinary diligence if the fact of
improper packing is known to the carrier
or its servants, or apparent upon ordinary
observation. If the carrier accepted the
cargo despite such defects, the carriers
becomes liable for the damage resulting
therefrom. Apply Article 1742.
e. ORDER OF PUBLIC AUTHORITY
Art. 1743. If through the order of public authority
the goods are seized or destroyed, the common
carrier is not responsible, provided said public
authority had power to issue order.
Cases:
1. Carrier was not excused from liability
since the order of an acting mayor was not
considered as a valid order of a public
authority. It is required that public
authority who issued the order must be
duly authorized to issue the order.
2. Carriage of Goods by Sea Act provides
that carrier shall not responsible for loss or
damage resulting from arrest or restraint
of princes, rulers, or people, or seizure
under legal process and from quarantine
restrictions.
F.
DEFESES
PASSEGERS
I
CARRIAGE
OF
- Primary defense of carrier is exercise of

extraordinary
diligence
in
transporting
passengers. Even if there is a fortuitous event, the

carriers must also present proof of exercise of
extraordinary diligence.
Art. 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or willful acts of the carriers
employees, although such employees may have
acted beyond the scope of their authority or in
violation of the orders of the common carriers.
The liability does not cease even upon proof
that they exercised diligence in the selection
and supervision of their employees.
Art. 1763. Carrier is responsible for injuries
suffered by a passenger on account of the
willful acts or negligence of other passengers or
of strangers, if the common carriers employees
through the exercise of the diligence of a good
father of a family could have prevented or
stopped the act or omission.
a. Employees
- Carrier is liable for the acts of its
employees. It cant escape liability by
claiming that it exercised due diligence in
supervision and selection of its employees
(unlike in quasi-delicts).
Reasons for the rule:
1. Undertaking of the carrier requires that its
passenger that full measure of protection
afforded by the exercise of high degree of
care prescribed by law, inter alia from
violence and insults at the hands of
strangers and other passengers, but above
all, from the acts of the carriers own
servants.
2. The liability of the carrier for the servants
violation of duty to performance of his
contract to safely transport the passenger,
delegating therewith the duty of protecting
the passenger with utmost care prescribed
by law.
3. As between the carrier and the passenger,
the former must bear the risk of wrongful
acts or negligence of the carriers
employees against passenger, since it, and
not the passenger, has the power to select
and remove them.
b. Other Passengers and Third Persons
With respect to acts of strangers and other

passengers resulting in injury to apassenger,
the availability of such defense is also subject
to the exercise of a carrier of due diligence to
prevent or stop the act or omission.
Negligence of the carrier need not be the sole
cause of the damage or injury to the passenger
or the goods. The carrier would still be liable
even if the contractual breach concurs with the
negligent act or omission of another person.
G. PASSEGERS BAGGAGES
Rules that are applicable to goods that are being
shipped are also applicable to baggage delivered to
the custody of the carrier. Arts. 1733. 1734 and
1736 of Civil Code are applicable.
However, if the luggage was hand-carried, Arts.
1998, 2000-2003 shall apply.
Art. 1998. The deposit of effects made by the
travellers in hotels or inns shall also be
regarded as necessary. The keepers of hotels or
inns shall be responsible for them as
depositaries, provided that notice was given to
them, or to their employees, of the effects
brought by the guests and that, on the part of
the latter, they take the precautions which said
hotel-keepers or their substitutes advised
relative to the care and vigilance of their
effects. (1783)
Art. 2000. The responsibility referred to in the
two preceding articles shall include the loss of,
or injury to the personal property of the guests
caused by the servants or employees of the
keepers of hotels or inns as well as strangers;
but not that which may proceed from any force
majeure. The fact that travellers are
constrained to rely on the vigilance of the
keeper of the hotels or inns shall be considered
in determining the degree of care required of
him. (1784a)
Art. 2001. The act of a thief or robber, who has
entered the hotel is not deemed force majeure,
unless it is done with the use of arms or through
an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for
compensation if the loss is due to the acts of the

guest, his family, servants or visitors, or if the
loss arises from the character of the things
brought into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself
from responsibility by posting notices to the
effect that he is not liable for the articles
brought by the guest. Any stipulation between
the hotel-keeper and the guest whereby the
responsibility of the former as set forth in
articles 1998 to 2001 is suppressed or
diminished shall be void. (n)
Cases:
1. Despite the fact that the carrier gave
notice that it shall not be liable for
baggage brought in by passengers, the
carrier is still liable for lost hand-carried
luggage since it is governed by rules on
necessary deposits. Under Art. 20000, the
responsibility of the depositary includes
the loss of property of the guest caused by
strangers but not that which may proceed
from force majeure. Moreover, article
2001 considers theft as force majeure if it
is done with use of arms or through
irresistible force.
2. Even if the passenger did not declare his
baggage nor pay its charges contrary to
the regulations of the bus company, the
carrier is still liable in case of loss of the
baggage. Since, it has the duty to exercise
extraordinary diligence over the baggage
that was turned over to the carrier or
placed in the baggage compartment of the
bus. The non-payment of the charges is
immaterial as long as the baggage was
received by the carrier for transportation.
II. OBLIGATIONS OF SHIPPER, CONSIGNEE
and PASSENGER.
A. Negligence of Shipper or Passenger
The obligation to exercise due diligence is not
limited to the carrier. The shipper is obliged to
exercise due diligence in avoiding damage or
injury. Nevertheless, contributory negligence
on the part of the shipper/ passenger would
only mitigate the carriers liability; it is not a
total excuse.
However, if the negligence of the shipper/

passenger is the proximate and only cause of
the loss, then, the carrier shall not be liable.
The carrier may overcome the presumption of
negligence and any be able to prove that it
exercised extraordinary diligence in handling
the goods or in transporting the passenger.
The carrier may be able to prove that the only
cause of the loss of the goods is any of the
following:
1. Failure of the shipper to disclose the
nature of the goods;
2. Improper marking or direction as to the
destination;
3. Improper loading when he assumes such
responsibility.
The shipper must likewise see to it that the
goods are properly packed; otherwise, liability
of the carrier may either be mitigated or barred
depending on the circumstances.
Art. 1741. If the shipper or owner merely
contributed to the loss, destruction or
deterioration of the goods, the proximate
cause thereof being the negligence of the
common carrier, the latter shall be liable in
damages, which however, shall be equitably
reduced.
Art. 1761. The passenger must observe the
diligence of a good father of a family to avoid
injury to himself.
Art. 1762. The contributory negligence of the
passenger does not bar recovery of damages for
his death or injuries, if the proximate cause
thereof is the negligence of the common carrier,
but the amount of damages shall be equitably
reduced.
a. Last Clear Chance
A negligent carrier is liable to a negligent
passenger in placing himself in peril, if the carrier
was aware of the passengers peril, or should have
been aware of it in the reasonable exercise of due
care, had in fact an opportunity later than that of
the passenger to avoid an accident.
10

Last clear chance applies in a suit between the
owners and drivers of colliding vehicles. It does
no tarise where a passenger demands
responsibility from the carrier to enforce its
contractual obligations. For it would be
inequitable to exempt the negligent driver of the
carrier and its owner on the ground that the other
driver was likewise guilty of negligence.
b. Assumption of Risk
Carriers are not insurers of the lives of their
passengers. Thus, in air travel, adverse weather
conditions or extreme climatic changes are some
of the perils involved in air travel, the
consequence of which the passenger must assume
or expect.
However, there is no assumption of risk in a case
wherein a passenger boarded a carrier that was
filled to capacity. The act of the passenger in
taking the extension chair does not amount to
implied assumption of risk.
Case:
Although, there is a sign in the bus that says: do
not talk to the driver while the bus is in motion,
otherwise, the company would not assume
responsibility for any accident:. Nonetheless, the
passengers dared the driver to race with another
bus, as the bus speeds up in the attempt to
overtake the other bus, it failed to slow down. As a
result, the bus turns turtle causing the death and
injuries to passengers. Is the bus company liable?
Answer: Yes. The bus company is obligated to
exercise utmost diligence in carrying passengers.
This liability cannot be eliminated or limited by
simply posting notices. The passenger cannot be
said to have assumed the risk of being injured
when he urged the driver to accept the dare. At
most, the passengers can only be said to be guilty
of contributory negligence which would mitigate
the liability of the driver, since the proximate
cause of the accident was the drivers willful and
reckless act in running the race with the other bus.
B. FREIGHT
a. Amount to be Paid
Common carriers are subject to heavy regulations
with respect to rates that they are charging to the
public. The regulation of rates is founded upon the
valid exercise of the Police Power of the state in

order to protect the public from arbitrary and
excessive rates while maintaining the efficiency
and quality of services rendered. The fixing of just
and reasonable rates involves a balancing of
investor and the consumer interest.
Although the consideration that should be paid to
the carrier is still subject to the agreement between
parties, what can be agreed upon should not be
beyond the maximum amount fixed by appropriate
government agency.
b. Who will pay.
Although either of the shipper or the consignor
may pay the freight before or at time the goods are
delivered to the carrier for shipment, nonetheless,
it is the consignor (whom the contract of carriage
is made) who is primarily liable for the payment of
freight whether or not he is the owner of the
goods. The obligation to pay is implied from the
mere fact that the consignor has placed the goods
with the carrier for the purpose of transportation.
c. Time to pay.
Code of Commerce provides that payment should
be made within 24-hours from the time of delivery
in the absence of any agreement between the
parties.
ARTICLE 374. The consignees to whom the
shipment was made may not defer the payment of
the expenses and transportation charges of the
goods they receive after the lapse of twenty-four
hours following their delivery; and in case of delay
in this payment, the carrier may demand the
judicial sale of the goods transported in an amount
necessary to cover the cost of transportation and
the expenses incurred.
(1) Carriage of Passengers by Sea
With respect to carriage of goods by sea, the
tickets are purchased in advance. Carriers are not
supposed to allow passengers without tickets. The
carrier shall collect/ inspect the passengers ticket
within one hour from vessels departure as not to
disrupt resting or sleeping passengers.
If the vessel is not able to depart on time and the
delay is unreasonable, the passenger may opt to
have his/ her ticket refunded without refund
service fee.
Delayed voyage means late departure of the
vessel from its port of origin and/ or late arrival of
the vessel to its port of destination. Unreasonable
11

delay means the period of time that has lapsed
without just cause and is solely attributable to the
carrier which has prejudiced the transportation of
the passenger and/ or cargoes to their port of
destination.
A passenger who failed ot board the vessel can
refund or revalidate the ticket subject to
surcharges. Revalidation means the accreditation
of the ticket that is not used and intended to be
used for another voyage.
(2) Carriers Lien
If consignor or the consignee fails to pay the
consideration for the transportation of goods, the
carrier may exercise his lien in accordance with
Art. 375 of Code of Commerce:
ARTICLE 375. The goods transported shall be
especially bound to answer for the cost of
transportation and for the expenses and fees
incurred for them during their conveyance and
until
the
moment
of
their
delivery.
This special right shall prescribe eight days after
the delivery has been made, and once prescribed,
the carrier shall have no other action than that
corresponding to him as an ordinary creditor.
C. DEMURRAGE
Demurrage is the compensation provided for the
contract of affreightment for the detention of the
vessel beyond the time agreed on for loading and
unloading. It is the claim for damages for failure to
accept delivery. In broad sense, very improper
detention of a vessel may be considered a
demurrage. Technically, liability for demurrage
exists only when expressly stipulated in the
contract.
Using the term in broader sense, damages in the
nature of demurrage are recoverable for a breach
of the implied obligation to load or unload the
cargo with reasonable dispatch, but only by the
party to whom the duty is owed and only against
on who is a party to the shipping contract. Notice
of arrival of vessels or conveyances, or their
placement for purposes of unloading is often a
condition precedent to the right to collect
demurrage charges.
12

CHAPTER 3
EXTRAORDIARY DILIGECE
I. RATIONALE
A common carrier is bound to carry the passengers
safely as far a human care and foresight provide,
using the utmost diligence of very cautious
persons, with due regard for all circumstances.
Extraordinary diligence: Calculated to protect the
passengers from the tragic mishaps that frequently
occur in connection with rapid modern
transportation.
II. HOW DUTY IS COMPLIED WITH

Common carrier binds itself to carry the
passengers safely as far as human care and
foresight can provide, using the utmost diligence
of a very cautious person, with due regard for all
the circumstances.
- The duty even extends to the members
of the crew or complement operating
the carrier.
A reasonable man or a good father of a family in
the position of the carrier must exercise
extraordinary diligence in the performance of his
contractual obligation.
- Whether or not a reasonable man,
exercising extraordinary diligence,
could have foreseen and prevented the
damage or loss that occurred.
III. EFFECT OF STIPULATION
A. GOODS
The law allows a stipulation whereby the carrier
will exercise a degree of diligence which is less
than extraordinary with respect to goods.
Art. 1744. A stipulation between the
common carrier and the shipper owner
limiting the liability of the former for the
loss, destruction, or deterioration of the
goods to a degree less than extraordinary
diligence shall be valid, provided it be:
1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration
other than the service rendered by the
common
carrier
(-ote:
Typically
fare/freight); and
3. Reasonable, just and contrary to public
policy.
B. PASSENGERS
There can be no stipulation lessening the utmost
diligence that is owed to passengers.
Art. 1757. The responsibility of a common
carrier for the safety of passengers as
required in Arts. 1733 and 1755 cannot be
dispensed with or lessened by stipulation,
by the posting of notices, by statements on
tickets, or otherwise. (-ote: Absolute;
extraordinary at all times.)
Gratuitous passenger A stipulation limiting the
common carriers liability for negligence is valid,
but not for willful acts of gross negligence. The
reduction of fare does not justify any limitation.
IV. EXTRAORDINARY
CARRIAGE BY SEA
A. SEAWORTHINESS
DILIGENCE
IN
a.) Warranty of Seaworthiness of Ship

Extraordinary diligence requires that the
ship which will transport the passengers
and goods is seaworthy. Seaworthiness of
the vessel is impliedly warranted.
The carrier shall be bound before and at
the beginning of the voyage to exercise
due diligence to make the ship seaworthy.
b.) No duty to inquire Because of the
implied warranty of seaworthiness,
shippers of goods, when transacting with
common carriers, are not expected to
inquire into the vessels seaworthiness,
genuineness of its licenses and compliance
with all maritime laws. Passengers cannot
be expected to inquire everytime they
board a common carrier, whether the
carrier possesses the necessary papers or
that all the carriers employees are
qualified.
13

It is the carrier that carries such burden of
proving that the ship is seaworthy.
Presentation
of
certificates
of
seaworthiness is not sufficient to
overcome the presumption of negligence.
c.) Meaning of Seaworthiness A vessel
must have such degree of fitness which an
owner who is exercising extraordinary
diligence would require his vessel to have
at the commencement of the voyage,
having regard to all the probable
circumstances of it. This includes fitness
of the vessel itself to withstand the rigors
of voyage, fitness of the vessel to store the
cargoes and accommodate passengers to
be transported and that it is adequately
equipped and properly manned.
General Test of Seaworthiness: Whether
the ship and its appurtenances are
reasonably fit to perform the service
undertaken.
Example: The carrier was able to
establish that the ship itself was
seaworthy because the records
reveal that the vessel was
drydocked and inspected by the
Phil. Coast Guard before its first
destination.
A warranty of seaworthiness requires that
it be properly laden, and provided with a
competent master, a sufficient number of
competent officers and seamen, and the
requisite appurtenances and equipment.
The carrier shall be bound before and at
the beginning of the voyage to exercise
due diligence to:
1. Make the ship seaworthy;
2. Properly man, equip, and
supply the ship;
3. Make all parts of the ship in
which goods are carried, fit and
safe for their reception, carriage,
and preservation.
The carrier shall properly and carefully

load, handle, stow, carry, keep, care for,
and discharge the goods carried.
The ship must be cargoworthy. The ship
must be efficiently strong and equipped to
carry the particular kind of cargo which
she has contracted to carry and her cargo
must be so loaded that it is safe for her to
proceed on her voyage.
The vessel must be adequately equipped
and properly manned. On top of regular
maintenance and inspection, Captains,
masters or patrons of vessels must prove
the skill, capacity, and qualifications
necessary to command and direct the
vessel. If the owner of a vessel desires to
be the captain without having the legal
qualifications, he shall limit himself to the
financial administration of the vessel and
shall entrust the navigation to a qualified
person.
It is not an excuse that the carrier cannot
afford the salaries of competent and
licensed crew or that latter is unavailable.
B. OVERLOADING
Duty to exercise due diligence likewise includes
the duty to take passengers or cargoes that are
within the carrying capacity of the vessel.
C. PROPER STORAGE
The vessel itself may be suitable for the cargo but
this is not enough because the cargo must also be
properly stored.
Cargo must generally not be placed on deck. The
carrying of deck cargo raises the presumption of
unseaworthiness unless it can be shown that the
deck cargo will not interfere with the proper
management of the ship.
D. NEGLIGENCE OF CAPTAIN AND CREW
Failure on the part of the carrier to provide
competent captain and crew should be
distinguished from the negligence of the said
captain and crew, because the latter is covered by
the Limited Liability Rule (liability of the
shipowner may be limited to the value of the
14

vessel). If the negligence of the captain and crew
can be traced to the fact that they are really
incompetent, the Limited Liability Rule cannot be
invoked because the shipowner may be deemed
negligent.
a.) Rules on passenger safety (Read
Memorandum Circular No. 114: p. 204)
E. DEVIATION AND TRANSSHIPMENT
a.) Deviation If there is an agreement
between the shipper and the carrier as to
the road over which the conveyance is to
be made (subject to the approval by the
Maritime Industry Authority), the carrier
may not change the route, unless it be by
reason of force majeure. Without this
cause, he shall be liable for all the losses
which the goods may suffer, aside from
paying the sum stipulated for that case.
When on account of the force majeure, the
carrier had to take another route which
resulted to an increase in transportation
charges, he shall be reimbursed upon
formal proof.
b.) Transshipment The act of taking
cargo out of one ship and loading it into
another; to transfer goods from the vessel
stipulated in the contract of affreightment
to another vessel before the place of
destination named in the contract has been
reached.
Transshipment of freight without legal
excuse is a violation of the contract and
subjects the carrier to liability if the
freight is lost even by a cause otherwise
excepted.
V. EXTRAORDINARY
CARRIAGE BY LAND
DILIGENCE
IN
A. CONDITION OF VEHICLE
Common carriers that offer transportation by land
are similarly required to make sure that the
vehicles that they are using are in good order and
condition.
Rule on Mechanical Defects If the carriers will
replace certain parts of the motor vehicle, they are
duty bound to make sure that the parts that they

are purchasing are not defective. Hence, it is a
long-standing rule that a carrier cannot escape
liability by claiming that the accident that resulted
because of a defective break or tire is due to a
fortuitous event. This is true even if it can be
established that the tire that was subject of a blowout is brand new. The duty to exercise
extraordinary diligence requires the carrier to
purchase and use vehicle parts that are not
defective.
B. TRAFFIC RULES
The carrier fails to exercise extraordinary
diligence if it will not comply with basic traffic
rules. The Civil Code provides for a presumption
of negligence in case the accident occurs while the
operator of the motor vehicle is violating traffic
rules.
In cases involving breach of contract of carriage,
proof of violation of traffic rules confirms that the
carrier failed to exercise extraordinary diligence.
C. DUTY TO INSPECT
There is no unbending duty to inspect each and
every package or baggage that is being brought
inside the bus or jeepney. The carrier is duty
bound to conduct such inspection depending on
the circumstances.
VI. EXTRAORDINARY DILIGENCE IN

CARRIAGE BY AIR
The aircraft must be in such a condition that it
must be able to withstand the rigors of flight.
Airworthiness An aircraft, its engines propellers,
and other components and accessories, are of
proper design and construction, and are safe for air
navigation purposes, such design and construction
being consistent with accepted engineering
practice and in accordance with aerodynamic laws
and aircraft science.
Proof of airworthiness is not by itself sufficient to
prove exercise of extraordinary diligence.
The fact that the flight was cancelled due to
fortuitous event does not mean that the carriers
duty already ended. The carrier is still obligated to
15

look after the convenience and comfort of the
passenger.
A. INSPECTION
Is the duty of the carrier to make inquiry as to the
general nature of the articles shipped and of their
value before it consents to carry them; and its
failure to do so cannot defeat the shippers right to
recovery of full value of the package if lost, in the
absence of showing of fraud or deceit on the part
of the shipper.
Where a common carrier has reasonable ground to
suspect that the offered goods are of a dangerous
character, the carrier has the right to know the
character of such goods and to insist inspection, if
reasonable and practical under the circumstances,
as a condition of receiving and transporting such
goods. To be subjected to unusual search, other
than the routinary inspection procedure
customarily undertaken, there must exist proof that
would justify cause for apprehension that the
baggage is dangerous as to warrant exhaustive
inspection, or even refusal to accept carriage of the
same.
16

CHAPTER 4
BILL OF LADIG
I. COCEPTS, DEFIITIO AD KIDS
Bill
of
Lading
(BOL)a
written
acknowledgement, signed by the master of a
vessel or other authorized agent of the carrier, that
he has received the described goods from the
shipper, to be transported on the expressed terms
to be described the place of destination, and to be
delivered to the designated consignees of the
parties. It operates as a (1) RECEIPT (2) as a
CONTRACT (3) as a DOCUMENT OF TITLE.
A BOL is not necessary for the perfection of a
contract of carriage. Thus, the obligation to
exercise extraordinary diligence by the carrier is
still required even if there is no bill of lading. In
the absence of the bill of lading, disputes shall be
determined on the basis of the provisions in the
New Civil Code and suppletorily by the Code of
Commerce.
KINDS of BILL of LADING
1. Clean Bill
of Lading
2. Foul Bill of
Lading
3. Spent Bill
of Lading
4.
Through
Bill of Lading
5. On Board
Bill
6.
Received
for Shipment
Bill
Does not contain any notation indicating

any defect in the goods.
One that contains the abovementioned
notation.
The goods are already delivered but the
bill of lading was not yet returned (upon
delivery, the carrier is supposed to
retrieve the covering bill of the goods)
Issued by a carrier who is obliged to use
the facilities of other carriers as well as
his own facilities for the purpose of
transporting the goods from the city of
the seller to the city of the buyer, which
BOL is honored by the second and other
interested carriers who dont issue their
own BOL.
-states that the goods have been received
on board the vessel which is to carry the
goods.
-apparently guarantees the certainty of
shipping as well as the seaworthiness of
the vessel to carry the goods.
-states that the goods have been received
for shipment with or without specifying
the vessel by which the goods are to be
shipped.
-issued when conditions are not normal
and there is insufficiency of shipping
space.
7. Custody Bill
of Lading
8. Port Bill of
Lading
The goods are already receied by the

carrier but the vessel indicated therein has
not yet arrived in the port.
The vessel indicated in the BOL that will
transport the goods is already in the port.
EFFECTIVITY of BOL- upon its delivery to and

acceptance by the shipper. The acceptance of the
bill without dissent raises the presumption that all
the terms therein were brought to the knowledge
of the shipper and agreed to by him, and in the
absence of fraud or mistake, he is stopped
thereafter from denying that he assented to such
claims.
THE 3-FOLD ATURE OF THE BILL OF
LADIG
I. RECEIPT- as comprehending all methods
of transportation, a BOL may be defined
as a written acknowledgement of the receipt of
goods and an agreement to transport an to deliver
them at a specified place to a person named or on
his order. Other terms, shipping receipts,
forwarders receipts, and receipts for
transportation. (SC) the designation however is
not material, and neither is the form of the
instrument. If it contains an acknowledgement by
the carrier of the receipt of goods for
transportation it is, in legal effect a BOL.
II. CONTRACT - it expresses the terms and
conditions of the agreement between the parties;
names the parties; includes consignees etc. It is
the law between the parties bound by its terms and
conditions.
It is to be construed liberally in favor of the
shipper who adhered to such bill as it is a contract
of adhesion. The only participation of the party is
the signing of his signature or his adhesion thereto.
ART. 24 (NCC). In all contractual property or
other relations, when one of the parties is at a
disadvanatge on account of his moral dependence,
ignorance indigence, mental weakness, tender age
and other handicap, the court must be vigilant for
his protection.
17

It is covered by the parol evidence rule, that the
terms of the contract are conclusive upon the
parties and evidence aliunde is not admissible to
vary or contradict a complete enforceable
agreement. If mistake was alleged, it must be
timely raised in the pleadings and it must be a
mistake of fact mutual to the parties.
document remains to be negotiable even if the

words not negotiable or non negotiable are
places thereon
The BOL is the legal evidence of the contract and

the entries thereof
constitutes prima facie
evidence of the contract.
All the essential
elements of a valid contract (cause, consent,
object) are present when such bill are issued.
Effects of negotiation. Negotiation of the

document has the effect of manual delivery so as
to constitute the transferee the owner of the goods.
BASIC STIPULATIONS (for overland transpo,

maritime commerce and airline transpo of
passengers, please refer to the textbook for the
codal pp. 267-275)
PROHIBITED AND LIMITING STIPULATION
1. Exempting the carrier from any and all liability
for loss or damage occasioned by its own
negligence - INVALID as it is contrary to public
policy.
2. Parties may stipulate that the diligence to be
exercised by the carrier for the carriage of goods
be less than extraordinary diligence if it is (a) in
writing and signed by both parties (b) supported
by a valuable consideration other than the service
rendered by the common carrier ( c ) the
stipulation is just, reasonable and not contrary to
law.
3. Providing an unqualified limitation of such
liability to an agreed valuation - INVALID
4. Limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher
value and pays a higher rate of freight- VALID
and ENFORCEABLE.
III. AS A DOCUMENT OF TITLE
ART 1507 (-CC). A document of title in which it is
stated that the goods referred to therein will be
delivered to the bearer or to the order of any
person named in such document is a negotiable
document of title.
If the document of title contains the required
words of negotiability to make the instrument
negotiable under Article 1507 of the NCC, the
a. Bearer document- negotiated by delivery

b. Order document- negotiated by indorsement of
the specified person so named
RECOVERY
OF
DAMAGES
FROM
CARRIER FOR CARRIAGE OF GOODS:
1. Inter-island - if goods arrived in damaged
condition (Art. 366):
a. If damage is apparent, the shipper must file a
claim immediately (it may be oral or written);
b. If damage is not apparent, he should file a claim
within 24 hours from delivery.
The filing of claim under either (1) or (2) is a
condition precedent for recovery.
If the claim is filed, but the carrier refuses to
pay: enforce carriers liability in court by filing a
case:
a. within 6 year, if no bill of lading has been
issued; or
b. within 10 years, if a bill of lading has been
issued.
2. Overseas where goods arrived in a damaged
condition from a foreign port to a Philippine port
of entry: (COGSA)
a. upon discharge of goods, if the damage is
apparent, claim should be filled immediately;
b. if damage is not apparent, claim should be filled
within 3 days from delivery.
Filing of claim is not a condition precedent, but an
action must be filed against the carrier within a
period of 1 year from discharge; if there is no
delivery, the one-year period starts to run from the
day the vessel left port (in case of undelivered or
lost cargo), or from delivery to the arrastre (in
case of damaged cargo).
Where there was delivery to the wrong person, the
prescriptive period is 10 years because there is a
violation of contract, and the carriage of goods by
sea act does not apply to misdelivery. (Ang v.
American SS Agencies (19 SCRA 631)
18

CARRIAGE OF GOODS BY SEA ACT (C.A.
o. 65)
F COGSA is applicable in international maritime
commerce. It can be applied in domestic sea
transportation if agreed upon by the parties.
(paramount clause)
F COGSA is suppletory to the Civil Code and the
Code of Commerce in the Carriage of goods from
foreign ports to the Philippines.
F Under the Sec. 4 (5), the liability limit is set at
$500 per package unless the nature and value of
such goods is declared by the shipper. This is
deemed incorporated in the bill of lading even if
not mentioned in it (Eastern Shipping v. IAC,
150 SCRA 463).
Note that Art. 1749 of the NCC applies to interisland trade.
Prescriptive periods
F Suit for loss or damage to the cargo should be
brought within one year after:
a. delivery of the goods; or
b. the date when the goods should be delivered.
(Sec. 3[6])
Transportation to be performed by several

successive air carriers shall be deemed to be one
undivided transportation, if it has been regarded by
the parties as a single operation, whether it has
been agreed upon under the form of a single
contract or of a series of contracts, and it shall not
lose its international character merely because one
contract or a series of contracts is to be performed
entirely within a territory subject to the
sovereignty, suzerainty, mandate, or authority of
the same High Contracting Party. (Art. 1)
OTE: Warsaw prevails over the Civil Code,
Rules of Court and all laws in the Philippines
since an international law prevails over
general law.
WHE OT APPLICABLE:
1. If there is willful misconduct on the part of the
carriers employees. The Convention does not
regulate, much less exempt, carrier from liability
for damages for violating the rights of its
passengers under the contract of carriage (PAL v.
CA, 257 SCRA 33).
2. when it contradicts public policy;
The one-year prescriptive period is suspended by:

1. express agreement of the parties (Universal
Shipping Lines, Inc. v. IAC, 188 SCRA 170)
2. when an action is filed in court until it is
dismissed. (Stevens & Co. v. ordeutscher
Lloyd, 6 SCRA 180)
WARSAW COVETIO of 1929
WHE APPLICABLE:
Applies to all international transportation of
person, baggage or goods performed by aircraft for
hire. International transportation means any
transportation in which the place of departure and
the place of destination are situated either:
1. within the territories of two High Contracting
Parties regardless of whether or not there be a
break in the transportation or transshipment, or
2. within the territory of a single High Contracting
Party, if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or
authority of another power, even though that
power is not a party to the Convention.
3. if the requirements under the Convention are

not complied with.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident
causing it took place on board the aircraft or in the
course of its operations; (Art. 17)
2. Destruction, loss or damage to any luggage or
goods, if it took place during the carriage; (Art.
18) and
3. Delay in the transportation of passengers,
luggage or goods. (Art. 19)
OTE: The Hague Protocol amended the Warsaw
Convention by removing the provision that if the
airline took all necessary steps to avoid the
damage, it could exculpate itself completely (Art.
20(1)). (Alitalia v. IAC, 192 SCRA 9)
LIMIT OF LIABILITY
1. passengers - limited to 250,000 francs
except: agreement to a higher limit
2. Goods and checked-in baggage - 250 francs/kg
19

except: consigner declared its value and paid a
supplementary sum, carrier liable to not more
than the declared sum unless it proves the sum
is greater than its actual value.
Nota Bene: COGSA/WARSAW applies to foreign

vessels or airplane or international travel
Code of Commerce applies to interisland or domestic travel.
3. hand-carry baggage - limited to 5,000

francs/passenger
Bill of Lading as Document of Title (page 341)
An agreement relieving the carrier from liability or
fixing a lower limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the
damage is caused by willful misconduct or default
on its part. (Art. 25)
ACTIO FOR DAMAGES
1. Condition precedent
A written complaint must me made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of
baggage/goods
F otherwise the action is barred except in case of
fraud on the part of the carrier. (Art. 26)
2. Jurisdiction - governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business through
which the contract has been made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped.
(Art. 29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers the
action is filed only against the carrier in
which the accident or delay occurred unless
there is an agreement whereby the first
carrier assumed liability for the whole
journey.
b. In case of transportation of baggage or goods
i. the consignor can file an action against
the first carrier and the carrier in which
the damage occurred
ii. the consignee can file an action against
the last carrier and the carrier in which
the damage occurred. These carriers are
jointly and severally liable. (Art. 30)
Bill of lading is a document of title under

the Civil Code. It can be a negotiable
document of title.
A. -egotiability
- It is negotiable if it is deliverable to the bearer,
or to the order of any person named in such
document. (Art. 1507, Civil Code)
a) Effect of Stamp or -otation -on--egotiable

the document remains to be negotiable
even if the words not-negotiable or
non-negotiable are placed thereon. - Art.
1510 (Civil Code)
B. How -egotiated
a) Bearer document (Art. 1508 and 1511)
- may be negotiated be delivery
b) Order document (Sec. 38, NIL and Art. 1509,
NCC)
- can only be negotiated through the indorsement
of the specified person so named.
- such indorsement may be in blank, to bearer or to
a specified person.
Where a negotiable document of title is

transferred for value by delivery, and the
endorsement of the transferor is essential
for negotiation, the transferee acquires a
right against the transferor to compel him
to endorse the document. xxx (Art. 1515,
Civil Code)
C. Effects of -egotiation
- has the effect of manual delivery so as to
constitute the transferee the owner of the goods
- results in the transfer of ownership because
transfer of document likewise transfers control
over the goods
- refer to Art. 1513
20

CHAPTER 5
ACTIOS AD DAMAGES I CASE OF
BREACH
Cause of action of a passenger and

shipper:
a) against common carrier based on culpa
contractual or culpa aquiliana
b) on the part of the driver based on either culpa
delictual or culpa aquiliana
If the negligence of third persons concurs
with the breach, the liability of the third
person who was driving the vehicle and/or his
employer may be based on quasi delict.
Solidary liability
- In case the negligence of the carriers
driver and a third person concurs, the
liability of the parties carrier and his
driver, third person is joint and several.
I. Notice of Claim and Prescriptive Period
A. Overland Transportation of Goods and
Coastwise Shipping
a) When to file a claim with carrier
- Art. 366 constitutes a condition precedent to the
accrual of a right of action against a carrier for
damage caused to the merchandise.
Under Art. 366 of the Code of Commerce,

an action for damages is barred if the goods
arrived in damaged condition and no claim
is filed by the shipper within the following
period:
1) immediately if damage is apparent;
2) within twenty four (24) hours from delivery if
damage is not apparent
-
the period does not begin to run until the

consignee has received possession of the
merchandise that he may exercise over it
the ordinary control pertinent to
ownership.
This
provision
applies
even
to
transportation by sea within the Phils. or
coastwise shipping.
does not apply to misdelivery of goods.
But the period prescribed in Art. 366 may be

subject to modification by agreement of the
parties.
b) Extinctive Prescription
- six (6) years if there is no written contract
- ten (10) years if there is written contract
This rule likewise applies to carriage of

passengers for domestic transportation.
B. International Carriage of Goods by Sea

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

Thus, regardless of whether the notice of loss
or damage has been given, the shipper can
still bring an action to recover said loss or
damage within one year after the delivery of
the goods.
a) Prescription
Action for damages must be filed within a
period of one (1) year from discharge of the
goods.
The period is not suspended by an extrajudicial demand.
Does not apply to conversion or
misdelivery.
The one (1) year period refers to loss of
goods and not to misdelivery.
-
Damages arising from delay or late

delivery id not the damage or loss
contemplated under the COGSA. The
goods are not actually lost or damaged.
The applicable period is ten (10) years.
This rule applies in collision cases. The one
(1) year period starts not from the date of the
collision but when the goods should have
been delivered, had the cargoes been saved.
21

Insurance
The insurer who is exercising its right of
subrogation is also bound by the one (1) year
prescriptive period.
However, it does not apply to the claim
against the insurer for the insurance
proceeds. The claim against the insurer is
based on contract that expires in ten (10)
years.
II. Recoverable Damages
Damages is the pecuniary compensation,
recompense or satisfaction for an injury
sustained, or as otherwise expressed, the
pecuniary consequences which the law
imposes for the breach of some duty or
violation of some rights.
A. Extent of Recovery (Art. 220, CC)
Carrier in good faith is liable only to pay
for the damages that are the natural and
probable consequences of the breach of the
obligation and which the parties have
foreseen or could have reasonably foreseen
at the time the obligation was constituted.
Carrier in bad faith or guilty of gross
negligence liable for all damages,
whether the same can be foreseen or not.
-
The carrier who may be compelled to pay

has the right of recourse against the
employee who committed the negligent,
willful or fraudulent act.
B. Kinds of Damages
a) Actual or Compensatory Damages
only for the pecuniary loss suffered by him as he
has duly proved
2 Kinds:
1. the loss of what a person already possesses
(dao emrgente);
2. the failure to receive as a benefit that would
have pertained to him (lucro cesante).
Damages may be recovered: Art. 2205

(Civil Code)
1) For loss or impairment of earning capacity in
cases of temporary or permanent personal injury;
2) For injury to the plaintiffs business standing
or commercial credit.
Damages cannot be presumed.
In case of goods the plaintiff is entitled to

their value at the time of destruction.
For personal injury and even death the
claimant is entitled to all medical expenses
as well as other reasonable expenses that he
incurred to treat his or her relatives injuries.
In case of death the plaintiff is entitled to
the amount that he spent during the wake
and funeral of the deceased. But, expenses
after the burial are not compensable.
Read Art. 2206 (Civil Code)

The amount of fixed damages is now
P50,000.00
1) Loss of earning capacity

Net Earning Capacity = Life Expectancy x
[Gross Annual Income less Necessary Living
Expenses]
Life expectancy (2/3 x 80 age at death)
Net earnings based on the gross income of
the victim minus the necessary incidental
living expenses which the victim would have
incurred if he were alive.
Amount of living expenses must be
established. In the absence of proof, it is
fixed at fifty (50%) of the gross income.
Rules on loss of earning applies when the

breach of the carrier resulted in the
plaintiffs permanent incapacity.
2) Attorneys fees
- refer to Art. 2208 of the Civil Code
- attorneys fees may be awarded in an action for
breach of contract of carriage under par.
1,2,4,5,10 and 11 of Art. 2208.
3) Interests
12% per annum if it constitutes a loan or
forbearance of money
6% per annum if it does not constitute
loan or forbearance of money
12% - for final judgment
b) Moral Damages
22

- Includes physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation
and similar injury.
- Though incapable of pecuniary computation,
moral damages may be recovered if they were the
proximate result of the defendants wrongful act or
omission.
- may be recovered when there is death or there is
malice or bad faith. (in transportation of
passengers)
- Refer to Art. 2219 and 2220
- Generally, no moral damages may be awarded
where the breach of contract is not malicious.
compensatory damages that may be awarded to the

claimant.
3. The act must be accompanied by bad faith or
done in wanton, fraudulent, oppressive or
malevolent manner.
The award of exemplary damages in breach

of contract of carriage is subject to the
provisions under Art. 2232-2235 of the Civil
Code.
c) ominal Damages
- Refer to Art. 2221-2223 (Civil Code)
- the assessment of nominal damages is left to the
discretion of the court
- the award of nominal damages is also justified in
the absence of competent proof of the specific
amounts of actual damages suffered.
- cannot co-exist with actual damages
d) Temperate or Moderate Damages
- Art. 2224 provides:
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.
- cannot co-exist with actual damages
e) Liquidated Damages
those agreed by the parties to a contract, to
be paid in case of breach thereof.
Ordinarily, the court cannot change the
amount of liquidated damages agreed upon
by the parties. However, Art. 2227 of the
Civil Code provides that liquidated damages,
whether intended as an indemnity or a
penalty, shall be equitable reduced if they
were iniquitous or unconscionable.
f) Exemplary or Corrective Damages
Requisites for the award of exemplary damages:
1. They may be imposed by way of example in
addition to compensatory damages, and only after
the claimants right to them has been established.
2. They cannot be recovered as a matter of right,
their determination depending upon the amount of
23

CHAPTER 6
MARITIME LAW
General Concepts
The real and hypothecary nature of
maritime law simply means that the
liability of the carrier in connection with
losses related to maritime contracts is
confined to the vessel
Articles 837, 587, and 590 cover only: (1)
liability to third persons, (2) acts of the
captain, (3) collisions
Limited Liability Rule

- No vessel, no liability
- The total destruction of the vessel
extinguishes maritime liens because there is
no longer any res to which it can attach
- The civil liability for collision is merely coexistent with the ship owners interest in the
vessel
- EXCEPTIONS:
1. Where the injury or death to a
passenger is due either to the fault
of the ship owner, or to the
concurring negligence of the ship
owner and the captain
2. Where the vessel is insured
3. In workmens compensation claims
4. Expenses
for
repairs
and
provisioning of the ship prior to the
departure thereof
a. Negligence the LLR applies if the
captain or the crew caused the damage or
injury. However, if the failure to maintain
the seaworthiness of the vessel can be
ascribed to the ship owner alone or the
ship owner concurrently with the captain,
then the LLR cannot be invoked
- The carrier is liable for the damages
to the full extent and not up to the
value of the vessel if it was
established that the carrier was guilty
of negligence in allowing the captain
and crew to do negligent acts during
the voyage, in failing to maintain the
ship as seaworthy and in allowing the
ship to carry more passengers than it
was allowed to carry
LLR cannot be invoked in failure to

maintain the seaworthiness of the
vessel
Authorizing
the
voyage
notwithstanding its knowledge of a
typhoon is tantamount to negligence
exempts the case from the operation
of LLR
b. Insurance claims
- Total loss of the vessel did not
extinguish the liability of the carriers
insurer; despite the loss of the vessel,
its insurance answers for the damages
that a ship owner or agent, may be
held liable for by reason of the death
of its passengers
c. Workmens compensation
- Even if the vessel was lost, the
liability thereunder is still enforceable
against the employer or ship owner
Abandonment
- Vessel, its appurtenances and the
freightage
- An indispensable requirement before the
ship owner or ship agent can enjoy the
benefits of the LLR
- If the carrier does not want to abandon the
vessel, then he is still liable even beyond
the value of the vessel
Procedure for Enforcement
- In sinking of a vessel, the claimants or
creditors are limited in their recovery to
the remaining value of accessible assets
- In case of a lost vessel, there are the
insurance
proceeds
and
pending
freightage for the particular voyage
- No claimant can be given precedence over
the others by the simple expedience of
having filed or completed its action
earlier than the rest
Protests
- The written statement by the master of a
vessel or any authorized officer, attested
by proper officer or a notary, to the effect
that damages has been suffered by the
ship
24

-
Protest is required in the following cases:

1. When the vessel makes an arrival
under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone
through a hurricane or the captain
believes that the cargo has
suffered damages or averages
4. Maritime collisions
Philippine Shipping Company v. Vergara (1600)

Heirs of Delos Santos v. CA (51165)
25

CHAPTER 7
VESSELS
Definitions
P.D. 474 a watercraft; any barge, lighter, bulk
carrier, passenger ship freighter, tanker container
ship, fishing boats, or other artificial contrivance
utilizing any source of motive power, designed,
used or capable of being used as means of
transportation operating other as common contract
carrier, including fishing vessels covered under
P.D. 43
Except:
(i) Those owned and/or operated by the AFP
and by foreign governments for
military purposes
(ii) Bancas, sailboats and other waterbone
contrivance of less than three gross
tons capacity and not motorized
Lopez vs. Duruelo (29166, Oct. 22, 1928)
Construction, Equipment and Manning
- Subject to the rules issued by the
MARINA
- Article 574, Code of Commerce
Personal Property
- Under Article 416, Civil Code
- Under Art 585, Code of Commerce: for all
purposes not modified or restricted;
hence, there are rules that apply to real
estate
- Ships or vessels, whether moved by steam
or by sail, partake, to a certain extent, of
the nature and condition of real property,
on account of their value and importance
in the world of commerce
- Art 573, Code of Commerce: transfer of
vessels should be in writing and must be
recorded in the appropriate registry
OWNERSHIP
Acquisition
- Vessels may be acquired or transferred by
any means recognized by law; may be
sold, donated and may even be acquired
through prescription
Vessels that are under the jurisdiction of

the MARINA can be transferred only
with notice to said administrative agency
a. Prescription
- Acquisition of a vessel must appear in a
written instrument, which shall not
produce any effect with respect to third
persons (Art. 573, Code of Commerce)
- Ownership shall be acquired by
possession in good faith, continued for
three (3) years, with a just title duly
recorded
- In the absence of the aforementioned
requisites, continuous possession for ten
(10) years shall be necessary in order to
acquire ownership.
- A captain may not acquire by prescription
the vessel which he is in command
- Co-owners shall have the right of
repurchase and redemption in sales made
to strangers, but only within nine (9) days
following the inscription of the sale in the
registry, and by depositing the price at the
same time
b. Sale
- Includes the rigging, masts, stores and
engine of a steamer appurtenant thereto,
which at the time belongs to the vendor
- Arms, munitions of war, provisions and
fuel shall not be considered as included in
the sale
- Obligation of the vendor to deliver to the
purchaser a certified copy of the record
sheet of the vessel in the registry up to the
date of the sale
- If alienation of the vessel should be made
while it is on a voyage, the freightage
which it earns from the time it receives its
last cargo shall pertain entirely to the
purchaser, and the payment of the crew
and other persons 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
persons shall be for his account, unless
contrary is stipulated
REGISTRATION
26

-
Registered through MARINA

The person who is the registered owner of
the vessel is presumed to be the owner of
the vessel
The sale or transfer of the vessel is not
binding on third persons unless the same
is registered
Tariff and Customs Code: A certificate of
Philippine registry confers upon the
vessel the right to engage in the
Philippine coastwise trade and entitles it
to the protection of the authorities and the
flag of the Philippines in all ports and on
the high seas
SHIPS MANIFEST
- Vessels are required to carry manifests in
coastwise trade
- Tariff and Customs Code: 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
Manifest
- a declaration of the entire cargo
- object is to furnish customs officers with a
list to check against, to inform the
revenue officers what goods are being
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.
- Bill of lading is just a declaration of a
specific cargo, rather than the entire cargo
- It is issued as a matter of convenience by
virtue of a contract
27

CHAPTER 8
PERSOS WHO TAKE PART I
MARITIME COMMERCE
SHIPOWNERS AND SHIP AGENTS
Shipowner
- the person who is primarily liable for
damages sustained in the operation of
vessel
- evident intent to place the primary
responsibility on the owner of the vessel
- naviero construed to include the
shipowner, ship agent and even the
character who is considered as owner pro
hac vice
Ship agent
- the person entrusted with provisioning of
the vessel, or who represents her in the
port in which she happens to be
- ship agent is jointly and severally liable
with the owner, applies both for breach of
contract and extra-contractual obligation
such as tort
- even though not the owner, is liable in
every way to the creditor for losses and
damages, without prejudice to his right
against the owner, the vessel and its
equipment and freight, subject to the LLR
the shipowner and ship agent shall be civilly

liable for the acts of the captain and for
obligations contracted by the latter to repair,
equip, and provision the vessel
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 through
abandonment
neither the shipowner or the ship agent shall
be liable for the obligations contracted by the
captain, if the latter exceeds the powers and
privileges pertaining to him
if the amounts claimed were invested for the
benefit of the vessel, the responsibility
therefor shll devolve upon its owner or agent
Part Owners
- a partnership shall be presumed as
established by the co-owners
- if not more than two, decision of the
member having controlling interest
- more than two, proportionately
- a vessel may not be detained, attached or
levied upon in execution in its entirety for
the private debts of a part owner
- the co-owners of a vessel shall be civilly
liable in the proportion of their interest in
the common fund, for the results of the
acts of the captain
- each co-owner may exempt himself from
liability by abandonment
- all part owners shall be liable, in
proportion to their respective ownership,
for the expenses for repairing the vessel
- the sale of the vessel must be made at
public auction, unless the co-owners
stipulate
SHIP AGENT
- whether the owner 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
- shall represent the ownership of the vessel
- may, in his own name, and in such
capacity, take judicial and extrajudicial
steps in matters relating to commerce
A. Powers
- May discharge the duties of the captain of
the
vessel,
subject
to
Art.
609(qualifications)
- Shall designate and come to terms with
the captain
- shall contract in the name of the owners,
who shall be bound in all that refer to
repairs, details of equipment, armament,
provisions of food and fuel, and freight of
the vessel, and in general, in all that
relates to the requirements of navigation
B. Limitation on Power
- May not order a new voyage, or make
contracts for a new charter, or insure the
vessel, without the authorization of its
28
owner or resolution of the majority of the

co-owners, unless powers are granted in
the certificate of appointment
If he insures the vessel without
authorization, he shall be subsidiarily
liable for the solvency of the insurer
C. Duty to Account
- If managing for an association, he shall
render an account of the results of each
voyage of the vessel
D. Reimbursement and Liabilities
- Co-owners shall pay the expenses in
proportion to their interest
- In order to enforce the payment, the
managing agent shall be entitled to an
executor action (accion ejecutiva)
- 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
E. Discharge of Captain and Crew
- Subject to the provisions of the Labor
Code and rules promulgated by POEA
- Before the vessel sets out to sea, the ship
agent may, at his discretion, discharge the
captain and members of the crew whose
contracts are not for a definite period or
voyage
- In case of voluntary sale of the vessel, all
contracts between the ship agent and the
captain shall terminate, reserving to the
latter his right to the indemnity which
may pertain to him
CAPTAINS AND MASTERS OF VESSELS
- The name of captain or master is given,
according to the kind of vessel, to the
person in charge of it
- The first denomination is applied to those
who govern vessels that navigate the high
seas or ships of large dimensions and
importance, although they be engaged in
the coastwise trade
- Masters are those who command smaller
ships engaged exclusively in the coast
wise trade
- For the purpose of maritime commerce,
captain and master have the same
meaning, both being the chiefs and

commanders of ships
MARINA: master is the person having
command of the ship, used for both
domestic trade and international trade
MARINA: boat captain is a person
authorized by the MARINA to act as
officer and/or in command of a boat/ship
or has the qualification or license to act as
such
Qualifications (Captains, masters or patrons of

vessel)
1. Must be Filipinos
2. Have legal capacity to contract
3. Prove the skill, capacity and qualifications
necessary to command and direct the
vessel
4. Must not be disqualified for the discharge
of the duties of the position
5. if the owner of the vessel desires to be the
captain,
without
having
the
legal
qualifications, he shall limit himself to the
financial administration of the vessel, and
intrust navigation to a person possessing the
qualifications
Powers and Functions
- A master or captain is one who has
command of a vessel
- A captain commonly performs three
distinct roles:
1. He is a general agent of the
shipowner
(operation
and
preservation of the vessel during
its voyage and the protection of
the passengers, crew and cargo)
2. He is also commander and
technical director of the vessel
(authority to sign bills of lading,
carry goods aboard and deal with
the freight earned, agree upon
rates and decide whether to take
the cargo; authority to enter into
contracts with respect to the
vessel and the trading of the
vessel)
3. He is a representative of the
country under whose flag he
navigates
29

The captain is vested with both
management and fiduciary functions
- Code of Commerce: (for captain and
masters)
1. To appoint or make contracts with
the crew in the absence of the
ship agent
2. To command the crew and direct
the vessel to the port of
destination
3. To
impose
correctional
punishment upon those who fail
to comply with his orders or are
wanting in discipline
4. To make contracts for the charter
of the vessel in the absence of the
ship agent or of its consignee
5. To adopt all proper measures to
keep the vessel well supplied and
equipped
6. To order the repairs on the hull
and engines of the vessel
7. To obtain funds
Discretion of Captain and Master
- 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
- It is presumed that he is knowledgeable as
to the specific requirements of
seaworthiness and the particular risks and
perils of the voyage he is to embark upon
- It is the right and duty of the captain, in
the exercise of sound discretion and in
good faith, to do all things with respect to
the vessel and its equipment and conduct
of the voyage which are reasonably
necessary for the protection and
preservation of the interests under his
charge
-
PILOTAGE
Pilot a person duly qualified and licensed to
conduct a vessel into or out of ports, or in certain
waters
- A person taken on board at a particular
place for the purpose of conducting a ship
through a river, road, channel, or from
port
It includes:
1. Those whose duty it is to guide vessels

into or out of ports, or in particular waters
2. Those entrusted with the navigation of
vessels on high seas
Compulsory Pilotage
- States possessing harbors have enacted
laws or promulgated rules requiring
vessels approaching their ports to take on
board pilots licensed under the local law
- Being implemented in the Port of Manila
- Duties and Responsibilites:
1. Harbor pilot shall be responsible
for the damage caused to a vessel
or to life and property at ports
due to his negligence or fault;
absolved if force majeure or
natural calamities provided he
exercised extra diligence to
prevent or minimize damage
2. The master shall retain overall
command of the vessel even or
pilotage grounds whereby he can
countermand or overrule the
order or command of the Harbor
Pilot on board; hence, any
damage shall be liability or
registered owner
3. Pilot shall be held responsible for
the direction of the vessel from
the time he assumes his work as
pilot until he leaves it anchored;
provided, his responsibility shall
cease at the moment the Master
neglects or refuses to carry out
his order
Master and Pilot
- While the pilot is in sole command of the
ship and supersedes the master for the
time being in the command and
navigation of a ship and that he becomes
master pro hac vice of a vessel piloted by
him, there is authority to the effect that
the master does not surrender his vessel
to the pilot and the pilot is not the master;
the master is still in command of the
vessel notwithstanding the presence of a
pilot
- There are occasions when the master may
and should interfere and even displace the
30
pilot, as when the pilot is obviously

incompetent or intoxicated and the
circumstances may require the master to
displace a compulsory pilot because of
incompetency or physical incapacity
Master is not wholly absolved from his
duties while a pilot is on board his vessel,
and may advise with or offer suggestions
Master is still in command of the vessel,
except so far as her navigation is
concerned, and must cause the ordinary
work of the vessel to be properly carried
on and the usual precaution taken
Shipowner and Pilot

- Pilot is personally liable for damages
caused by his own negligence or default
to the owners of the vessel, and to third
parties for damages sustained in a
collision; constitutes maritime tort
- In case of collision, the colliding vessel is
prima facie responsible, hence, the
burden of proof is upon the party
claiming benefit of the exemption from
liability.
- It must be shown affirmatively that the
pilot was at fault and that there was no
fault on the part of the officers or crew,
which might have been conducive to the
damage
- The fact that the law compelled the master
to take the pilot does not exonerate the
vessel from liability
- Parties injured are not under necessity to
look to the pilot from whom redress is not
always had for compensation
- The owners of the vessel are responsible
to the injured party for the acts of the
pilot, and they must be left to recover the
amount as well as they can against him
- It cannot be maintained that the
circumstance of having a pilot on board,
and acting in conformity to his directions
operate as a discharge or responsibility of
the owners
- Except insofar as their liability is limited
or exempted by statute, the vessel or her
owner are liable for all damages caused
by the negligence or other wrongs of the
owners or those in charge of the vessel
Where the pilot is not a compulsory one

but is employed voluntarily, the owners
of the vessel are, all the more, liable for
his negligent act
Pilot and his Association

- The fact that the pilot is a member of an
association does not make the association
jointly and severally liable.
- Art 2180 of the NCC does not apply
because there is no employee-employer
relationship
OFFICERS AND CREW OF VESSELS
Art. 648, Code of Commerce: the complement of a
vessel shall be understood all the persons on
board, from the captain to the cabin boy, necessary
for the management, maneuvers, and service
- therefore, the complement shall include
the crew, the sailing mates, engineers,
stokers and other employees on board not
having specific designations
- it shall not include the passengers or the
persons whom the vessel is transporting
Minimum Safe Manning
- it is required that there is sufficient
number of officers and crew that are
serving in the vessel
Supercargoes
- shall discharge on board the vessel the
administrative duties which the ship agent
or the shippers may have assigned to
them
- shall keep an account and record of their
transactions in a book
- the powers and responsibilities of the
captain shall cease, when there is a
supercargo
31

- in this case, the master of the vessel is
the agent of the charterer, and not of the
shipowner, and therefore, it is the
charterer who is liable for the expenses of
the voyage including the wages of the
seamen
CHAPTER 9
CHARTER PARTIES
I.
-
II.
DEFINITION AND CONCEPT

a contract whereby an entire ship, or some
principal part of the said ship, is let by the
owner thereof to a merchant or other
person for a specified time or use for the
convenience of goods, in consideration of
the payment of freight
term taken from carta partita, meaning
divided document
Carta partita refers to the ancient practice
of writing out the terms and conditions of
the contract in duplicate on one piece of
parchment and then dividing it down the
middle thus providing each party with a
copy
Charter contract is often referred to as
form of mercantile lease for it often
involves a charterer, who is most often a
merchant himself, who desires to lease a
ship or vessel owned by another for the
transport of his goods for commercial
purposes
Charter
may
also
involve
the
transportation of persons from one port to
another
Parties: charterer, charter party, and
shipowner
DIFFERENT KINDS OF CHARTER
PARTIES
B. Contract of Affreightment the charterer

hires the vessel only, either for a
determinate period of time or for a single
or consecutive voyage, with the shipowner
providing for the provisions of the ship,
the wages of the master and crew, and the
expenses for the maintenance of the vessel
1. Time charter the vessel is leased
to the charterer for a fixed period
of time
2. Voyage charter the vessel is
leased for a single or particular
voyage
III.
EFFECT
OF
CHARTER
ON
CHARACTER OF VESSELS
- Character of the common carrier as such is
not affected by the charter party of the
same is a contract of affreightment
- It is only when the charter includes both
the vessel and its crew, as in a bareboat or
demise that a common carrier becomes
private
IV.
PERSONS
WHO
MAY
MAKE
CHARTER
The owners of the vessel who have legal
control and possession of the vessel may
validly enter into charter parties with a
charterer
A third person called a broker may,
however, intervene in the execution of the
charter between the principals
Charterer may sub-charter the entire
vessel to a third person but only in the
event that there is no prohibition in the
original charter regarding any sub-charter
A sub-charter, when entered into, is an
independent contract by itself involving
only the charterer and the sub-charterer
and therefore does not give rise to any
contractual relation between the general
owner and the sub-charterer.
A. Bareboat or Demise Charter the

shipowner leases to the charterer the
whole vessel, transferring to the latter the
entire
command,
possession
and
consequent control over the vessels
navigation, including the master and the
crew, who thereby become the charterers
servants
- charterer becomes owner pro hac vice
since he mans the vessel with his own set
of master and crew, effectively becoming
the owner for the voyage or service
stipulated, subject however to any
liability for damages arising from
negligence
32

-
V.
Part-owners are not precluded from

chartering the same for their own
commercial purposes; enjoy preference in
the charter of the vessel over other
persons
Ship agent is not allowed to make
contracts for a new charter unless he is
properly or duly authorized by the owner
or the same has been extended to him in
his certificate of appointment
Captains or masters of the vessel have
inherent powers to enter into valid and
binding charter parties, except:
1. In the event of absence of the ship
agent or consignee
2. Only if the said captain or master
acts in accordance with the
instructions of the agent or owner
and protects the latters interests
Validity of the charter is not affected by
the circumstance that the captain or
master who executed the charter violated
the orders or instructions of the agent or
owner; the agent or owner shall have a
right of action to recover damages against
the erring captain or master
h. The amount of the primage to be paid the

captain
i. The days agreed upon for loading and
unloading
j. The lay days and extra days to be allowed
and the demurrage to be paid
Primage payment for the use of the equipment
belonging to the captain
VI.
-
REQUISITES OF A VALID CHARTER

PARTY
- Governed by the general principles on
ordinary contracts
1. Consent of the contracting parties
2. An existing vessel which should
be placed at the disposition of the
shipper
3. The freight
4. Compliance with the requirements
of Art. 562 of the Code of
Commerce
Art. 562, Code of Commerce:

a. Must be drawn in duplicate and signed by
the contracting parties
b. Kind, name, tonnage of vessel
c. Flag and port of registry
d. Name and domicile of the captain and of
the ship agent
e. Port of loading and unloading
f. Capacity, number of tons or weight, or
measurement of the things to load
g. The freight to be paid
VII.
FREIGHT
Parties may fix the manner or form in
which the charter price or money shall be
satisfied
Freight shall accrue according to the
conditions stipulated in the contract
If there is no stipulation, the rules are the
following:
1. The freight shall begin to run from
the day of loading on the vessel
2. In charters with a fixed period, the
freight shall begin upon that very
day
3. If the freight is charged according
to weight, the payment thereof
shall be made according to the
gross weight, including the
weight of the containers
Where the goods were jettisoned for the
common safety, freightage shall not
accrue thereon, although the same will be
regarded as a general average
If goods were lost on account of
shipwreck or stranding, or due to seizure
by pirates or enemies, no freight will
accrue thereby
If the freight should have been paid in
advance, then the same should be
returned unless there is agreement to the
contrary
Failure of the captain or master to carry
the goods in his ship or send them to the
point of destination results in the
abandonment upon any claim for freight
thereon, except when it has been made
payable in advance
DEMURRAGE AND DEADFREIGHT

Lay days: time for loading and unloading;
provided for in the Charter Party
33

5. After 3/5 of the vessel is loaded, the
shipowner may not substitute the
chartered vessel with another one
unless he procures the consent of the
charterers or shippers
6. The captain may not accept the cargo
from any other person unless the
consent of the charterer is obtained
7. The shipowner may be held liable for
damages incurred by the charterer due
to the voluntary delay of the captain
in putting to sea
Demurrage: a sum of money due by

express contract for the detention of the
vessel in loading or unloading, beyond
the time allowed for that purpose in the
charter party
Where the charterer failed to occupy the
leased portion of the vessel, he may
thereby be made liable by the shipowner
for the deadfrieght that occurred
Computation of lay days the stipulated
lay days do not begin to run against the
consignee until the vessel has arrived at
berth or other usual and customary place
for loading or unloading, and is in actual
readiness to discharge its cargo
- if no lay days is provided for in the
charter party, it is understood that the
charterer will unload and discharge the
cargoes within a reasonable time or with
reasonable diligence
VIII.
B. Charterer
1. The charterer shall have the right to
sub-charter the vessel to a third
person only if he is so authorized by
the shipowner; otherwise, he shall be
liable therefor
2. A charterer who loads goods different
from that contracted upon, without
the knowledge of the shipowner or
captain, and which results to damage
due to confiscation, embargo,
detention, and other causes, shall be
liable to indemnify the parties injured
thereby
3. Should illicit cargo be shipped by the
charterer in the chartered vessel with
the knowledge of the shipowner or of
the captain, said charterer shall be
joinly liable with the shipowner for
the damages to the shippers
4. The charterers and shippers may not,
for the payment of freight and other
expenses incurred, abandon the goods
damaged due to inherent defects or by
reason of fortuitous event
RIGHTS AND OBLIGATIONS OF THE

CHARTER PARTY
A. Shipowner or Captain
1. The shipowner is bound to observe a
margin greater than two percent
between that represented and her
actual capacity which is not allowable
2. Any loss incurred by a shipper whose
cargo is refused on account of the
receipts by the shipowner of a greater
amount of cargo belonging to other
persons shall be for account of the
shipowner in the form of indemnity;
freight may be reduced instead of
rescission
3. If there should be several charter
parties and not all could be
accommodated, preference shall be
given to the persons who is first in
loading his cargo, and the others shall
have preference in the order of the
dates of their charter; in the absence
of priority, in proportion to the
amounts of weight or space that they
may have contracted
4. The shipowner may effect a
substitution with respect to the vessel
which had been initially chartered
with that of another
IX.
EFFECT OF BILL OF LADING

- If issued, the charter party still governs
their rights and the BL may be used as
proof of receipt of goods
- BL constitutes a contract between the
vessel and the consignee, and neither he
nor his endorsee is bound by the terms of
the charter party of which he has no
notice or knowledge
Note: Read the pertinent codal provisions (570590)

34

CHAPTER 10
LOAS O BOTTOMRY AD
RESPODETIA
I.
DEFINITIONS AND CONCEPT

Bottomry - a contract whereby the
owner of a ship borrows for the use,
equipment or repair of the vessel, for a
definite term, and pledges the ship (or
the keel or bottom of the ship pars pro
toto) as security, with the stipulation
that if the ship is lost during the voyage
or during the limited time on account
of the perils enumerated, the lender
shall lose his money.
Loan on Respondentia where the
goods or some part thereof are
hypothecated as security for a loan, the
payment of which is dependent upon
maritime risks
- it is the borrowers personal
responsibility which is deemed to be
the principal security for the
performance of the contract, hence the
term respondentia
-
II.
There must be a marine risk upon which

the loan in predicated such that if the
vessel or the cargo is lost by virtue of that
risk, the lender loses the capital or money
lent
There is no bottomry or respondentia if
the money borrowed is subject to
repayment in any event, nor in the case
where a collateral secures the obligation
to repay as when there is an insurance
policy upon the vessel or the cargo
The lender in a loan on respondentia does
not lose his capital should the ship perish
due to marine peril, so long as the goods
subject of the loan survive or are saved
DISTINGUISHED
LOAN
Bottomry or
Respondentia
The rate of interest is not
subject to the Usury Law
on account of the
extraordinary
risks
FROM
SIMPLE
Simple loan
The rate of interest must
not exceed the ceiling
fixed by the Usury Law
involved
There must necessarily
be marine risk, the
existence of which must
be duly established
The loan must be
executed in accordance
with form and manner
required in the Code of
Commerce
Must be recorded in the
registry of vessels in
order to bind third
persons
Preference is extended to
the last lender if there be
several lenders, on the
theory that were it not for
the last lender, then the
prior lenders would not
have benefited from the
preservation of the
There need not be such

risk involved
The formal requisites

regarding contracts in
general would apply
No such registration is
required
The first lender as a

general rule, enjoys
preference
Instance where the loan on bottomry and

respondentia may be regarded as simple
loan only
1. if lender loaned an amount which
is larger than the value of the
object liable for the bottomry
loan due to fraudulent means
employed by the borrower, the
loan shall be valid only for the
amount at which the object is
appraised by experts, and the
surplus principal shall be repaid
as if it were a simple loan, with
legal interest thereon
2. if the full amount of the loan
which is contracted in order to
load the vessel is not used for the
cargo, or given on the goods if all
of them could not have been
loaded, the balance will be
considered as simple loan
to forestall the possibility
of other contracts which
differ in nature from
being included under the
name of the bottomry
loan
35

3. if the effects on which the money
is taken not be subjected to any
risk, the contract will be regarded
as simple loan
III. PARTIES TO THE LOANS
a. Shipowner
- may secure a loan on bottomry upon his
ship
- if part-owner only, he may contract but
shall be limited only to the extent of his
interest in the vessel
b. Ship captain
- if part-owner may also obtain loan up to
the extent of his interest
- in cases of extreme necessity, in order to
comply with the obligations under Art.
583 and 611 of the Code of Commerce
- no loans can be made on the salaries of the
crew nor on the profits which may be
expected
c. Cargo owner
- shall have the right to enter into a loan on
respondentia involving his cargo
d. Captain
- being mere agent of the shipowner, may
not contract on a loan on respondentia;
otherwise, loan is void and costs of the
contract shall be chargeable to his private
account
IV. FORM OF THE LOANS
- Must be executed in accordance with the
form and manner prescribed in Art. 270
of the Code of Commerce
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 of a private instrument
-
shall be entered in the certificate of

registry of the vessel and shall be
recorded in the registry of vessels
contract must contain the following:
a. statement of the kind, name and
registry of the vessel
b. the name and domicile of the
captain
c. the name and domiciles of the

person giving and the person
receiving the loan
d. the amount of the loan and the
premium stipulated
e. the time for repayment
f. the objects pledged to secure
payment
g. the voyage which the risk is to run
V. CONSEQUENCES OF LOSS OF EFFECTS
OF THE LOSS
- if the effects of the loan be lost due to
accident of the sea and it is proven that
the cargo was on board, then the lender
loses the right to institute the action
which would pertain to him as such
- lender retains such right of action if the
loss was caused by the inherent defect of
the thing, or through the fault or malice of
the borrower, or through 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 a
contraband, or if it arose from having
loaded the goods on a vessel different
from that designated in the contract,
unless the change was made due to force
majeure
- lenders shall suffer in proportion to their
respective interest, the general average
which may take place in the things upon
which the loans were made
- in particular average, the lender is
obligated to contribute in proportion to
his respective interest, should it not
belong to the kind of risks excepted in
Art. 731
- in shipwreck, the amount for the payment
of the loan shall be reduced to the
proceeds of the effects which have been
saved but only after deducting the costs
of the salvage
- if loan is on the vessel or its parts, the
freight earned during the voyage shall
also be liable for its payment
- if the same vessel or cargo should be the
object of the loan and marine insurance,
the value of what may be saved in case of
shipwreck shall be divided between the
36

lender and the insurer, in proportion to
their interests
Note: Read the pertinent codal provisions (594597)
37

lender shall also bear the loss in
proportion to his interest
CHAPTER 11
AVERAGES
I.
-
II.
C. Example of Simple Averages

Refer to page 599-600
AVERAGES IN GENERAL
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 deterioration
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.
(Art. 806, Code of Commerce)
Petty and ordinary expenses incident to
navigation shall be considered as ordinary
expenses to be defrayed by the ship
owner, unless there is express agreement
to the contratry
Classified into:
1. General or gross average
2. Simple or particular average
SIMPLE AVERAGE
A. Definition
- shall include all the expenses
damages caused to the vessel or to
cargo which have not inured to
common benefit and profit of all
persons interested in the vessel and
cargo
and
her
the
the
her
B. By Whom Borne
- the owner of the goods that suffered the
damage bears the loss since it does not
inure to the common benefit
- res perit domino
- if the vessel or goods are hypothecated
by a loan on bottomry or respondentia, the
III.
GENERAL AVERAGE
A. Definition and Requisites
- shall include all the damages and
expenses which are deliberately caused in
order to save the vessel, its cargo or both
at the same time, from real and known risk
- Requisites:
1) there must be a common danger
2) that for common safety part of the
vessel or of 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 proper legal
steps and authority
Common Danger
- both the ship and the cargo, after has
been loaded, are subject to the same
danger, whether during the voyage, or in
the port of loading or unloading
- danger arises from the accidents of the
sea, dispositions of the authority, or faults
of men
- circumstances should produce the peril
ascertained and imminent or may
rationally be said to be certain and
imminent
Deliberate Sacrifice
- there must be voluntary sacrifice of a
part for the benefit of the whole in order to
justify general average contribution (ex.
voluntary jettison)
- it cannot involve a damage which
resulted beyond the control of the captain
and crew or without any intention on their
part
- normally, the sacrifice is made through
the jettison of the cargo
38

- there can also be general average even if
the sacrifice was not made during the
voyage:
a. where the sinking of a vessel is
necessary to extinguish a fire in
a port, roadstead, creek or bay
b. where cargo is transferred to
lighten the ship on account of a
storm to facilitate entry into a
port
* loss can no longer be considered a
general average if the thing was inevitably
lost
Sacrifice must be successful
- no general contribution can be demanded
if the vessel and other cargo that are
sought to be save were in fact not saved
- however, if the ship was saved from the
typhoon, there will be liability for general
average contribution even if the vessel will
be subsequently lost for some other reason
during the voyage
- owner of the goods which were

sacrificed is entitled to receive the general
average contribution
- the ff goods are not covered, even if
sacrificed:
a. goods carried on deck unless the
rule, special law or customs of the
place allow the same
b. goods that are not recorded in the
books or records of the vessel
c. fuel for the vessel if there is more
than sufficient fuel for the voyage
IV.
PROOF AND LIQUIDATION

AVERAGE
Refer to page 615
V.
YORK-ANTWERP RULES
Refer to page 624
Compliance with legal steps

- expenses or damages should have been
incurred or inflicted after taking proper
legal steps and authority
B. Examples of General Average
Refer to page 607-608
C. By Whom Borne
- shall be borne by those who benefited
from the sacrifice (shipowner and owner
of the cargoes saved)
- contribution may also be imposed on the
insurers of the vessel or cargoes that were
saved as well as lenders on bottomry or
respondentia
- INSURERS: liable for any general
average in proportion to the contribution
attaching to his policy value where the
said value is less than the contributing
value of the thing insured
- LENDERS: shall suffer, in proportion to
their respective interest, the general
average which may take place in the goods
in which the loan is made
D. Who is entitled to Indemnity
39
OF

CHAPTER 12
COLLISIOS
Definition: an impact or sudden contact of a
moving body with an obstruction in its line of
motion, whether both bodies are in motion or one
stationary and the other, no matter which, in
motion.
> In Maritime Commerce: an impact or sudden
contact of a vessel with another whether both are
in motion or one stationary.
> Strictly speaking, it refers to the contact of 2
moving vehicles.
Allision: one vessel is moving while the other is
stationary.
> But for the purposes of applying the Code of
Commerce (CC), collision includes both collision
per se and allision.
> It is not necessary in order for one vessel to be
liable that his vessel have hit another. A
shipowner/agent may be made liable even if his
vessel did not actually collide with another vessel.
i. This situation is covered by Art. 831,
Code of Commerce, which makes the
owner of a third vessel liable if it forced a
vessel to hit another.
Zones of Collision
1. FIRST ZONE: covers all the time up to the
moment when the risk of collision may be said
to have begun.
i.
Within this zone no rule is applicable
because none is necessary.
ii.
Each vessel is free to direct its course
as it deems best without reference to
the movements of the other vessel.
2. SECOND ZONE: covers the time between the
moment when the risk of collision begins and
the moment when it has become a practical
certainty.
i.
The burden is on the vessel required to
keep away and avoid danger.
3. THIRD ZONE: covers the time between the
moment of actual contact or the occurrence of
the error in extremis.
i.
The vessel which has forced the
privileged vessel into danger is
responsible even if the privileged
ii.
vessel has committed an error within

that zone.
Doctrine of Error in Extremis: If a
vessel having a right of way suddenly
changes its course during the third
zone, in an effort to avoid an
imminent collision due to the fault of
another vessel, such act may be said to
be done in extremis, and even if
wrong, it cannot create responsibility
on the part of said vessel.
Applicable Law in Collision: Liability for

negligence in the absence of contract is governed
by Art. 2176, NCC quasi-delict.
> The liabilities of shipowners/agents as well as
the captain or crew is still governed by the
provision of the Code of Commerce on Collision.
Rules on Liability: Liability in collision cases are
negligence based. Thus, even if liability with
respect to collision is not governed by quasi-delict,
courts are called upon to determine the negligence
of the persons involved in order to impose
liability.
> Liability of the person causing the injury:
criminal and civil
> Test in determining negligence: the test of a
reasonable man in the position of an expert that
applies in quasi-delict should also be applied
although with due consideration to the expertise of
the persons involved including the carrier itself,
the captain, officers and crew of the vessels.
i.
Test: Whether a reasonable man with
same expertise would have done what the
party in question did under the same
circumstances
(forseeable
or
not
forseeable).
ii.
BUT REMEMBER, some rules that apply
to quasi-delict cannot be applied in
collision cases. E.g. doctrine of last clear
chance and the rule on contributory
negligence cannot be applied.
REASON: Art. 827. If 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.
> It does not matter if one vessel has the
last clear chance or that the other
40

contributed to the collision, for as long as
it can be proven that both are at fault or
contributed to the collision both vessels
are liable.
Rules on Collision of Vessels:
a) The collision may be due to the fault,
negligence or lack of skill of the captain,
sailing mate, or any other member of the
complement of the vessel. The owner of the
vessel at fault shall be liable for losses or
damages (Art. 826, CC).
b) The collision may be due to the fault of both
vessels. Each vessel shall suffer its own losses,
but as regards the owner of the cargoes, both
vessels shall be jointly and severally liable
(Art. 827, CC).
c) If it cannot be determined which vessel is at
fault, each vessel shall also suffer its own
losses and both shall be solidarily liable for
losses or damages on the cargoes (Art. 828,
CC).
d) The vessels may collide with each other
through fortuitous event or force majeure. In
this case, each shall bear its own damage (Art.
830, CC).
e) Two vessels may collide with each other
without their fault but by reason of a third
vessel. The third vessel will be liable for
losses and damages (Art. 831, CC).
f) A vessel which is properly anchored and
moored may collide with those nearby by
reason of storm or other cause of force
majeure. The vessel run into shall suffer its
own damage or expense (Art. 832, CC).
g) There is a presumption that a vessel is lost by
reason of collision, if such vessel 1) sinks
immediately upon being run into, or 2) is lost
during the voyage or is obliged to be stranded
in order to be saved after having been obliged
to make a port to repair the damages (Art. 833,
CC).
h) The presence of pilots in both the colliding
vessels, while discharging their duties at the
time of the collision, shall not exempt the
captains of each vessel from liability.
However, the captains shall have the right to
be indemnified by the pilots without prejudice
to the criminal liability which the latter may
incur (Art. 834, CC).
i)
j)
The indemnity due by reason of the death or

injury of persons shall be preferred if the value
of the vessel and her appurtenances is not
sufficient to cover all the liabilities (Art. 838,
CC).
If the collision should take place between
Philippine vessels in foreign waters, or if
having taken place in the open seas, and the
vessels should make a foreign port, the Consul
of the Philippines in said port shall hold a
summary investigation of the accident,
forwarding the proceedings to the Secretary of
Foreign Affairs for continuation and
conclusion (Art. 839, CC).
Doctrine of Inscrutable Fault: Where fault is

established but it cannot be determined which of
the two vessels were at fault, both shall be deemed
to have been at fault.
Requirements for Action to Recover Losses and
Damages arising from Collisions:
1. There must be a protest or declaration;
2. The protest or declaration must be presented
within 24 hours;
3. The protest or declaration must be presented
before a competent authority:
a. If collision occurred in Philippine
territory: competent authority of the i)
point where the collision took place or ii)
that of the first port of arrival of the
vessel;
b. If collision occurred in a foreign country:
consul of the Philippines
PROTEST (Maritime Protest) written statement
by the master of the vessel or any authorized
officer, attested by proper officer or a notary, to
the effect that damages has been suffered by the
ship.
> It is required in the following cases:
a) Arrival under stress
b) Vessel is shipwrecked
c) Vessel has gone through a hurricane or the
captain believes that the cargo has
suffered damages or averages
d) Maritime collisions
> The absence of protest, with respect to damages
caused to persons or to the cargo, may not
prejudice the persons interested who were not on
41

board or were not in a condition to make known
their wishes.
> Limited liability rule applies to collision.
CASES:
ational Development Co. v. CA
FACTS: NDP, first preferred mortgagee of three
vessels including the vessel Dona Nati, appointed
MCP (Maritime Co. of the Phil.) as its agent to
manage and operate said vessel for and its behalf
and account. E. Philipp Corp. of New York loaded
on board Dona Nati 1, 200 bales of American raw
cotton consigned to the order of Manila Banking
Corp. (MBC) and the Peoples Bank and Trust Co.
acting for and in behalf of the Pan Asiatic
Commercial Co. who represents Riverside Mills
Corp. Also loaded on the same vessel were the
cargoes (200 cartons of sodium lauryl sulfate and
10 cases of aluminum foil) of Kyokuto Boekui,
Kaisa, Ltd. consigned to the order of MBC.
En route to Manila the vessel Dona Nati figured in
a collision at Ise Bay, Japan with a Japanese vessel
SS Yasushima Maru. As a result of which 550
bales of the raw cotton were lost and destroyed, of
which 535 bales as damaged were landed and sold
on the authority of the General Average Authority
and 15 bales were not landed and lost. The
Kyokuto cargoes were totally damaged.
ISSUE: 1) The determination of which laws
govern loss or destruction of goods due to
collision of vessels outside Philippine waters.
2) Liabilities.
RULING: 1) The law of the country to which the
goods are to be transported governs the liability of
the common carrier in case of their loss,
destruction or deterioration. In the case at bar, the
goods in question are transported from San
Francisco and Tokyo to the Philippines and they
were lost due to a collision which was found to
have been caused by the negligence or fault of
both captains of the colliding vessels. The laws of
the Philippines will apply, and its is immaterial
that the collision actually occurred in foreign
waters, such as Ise Bay, Japan.
2) But more in point to the instant case is Article
827 of the same Code, which 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
suffered by their cargoes. Under the provisions of
the Code of Commerce, particularly Articles 826
to 839, the shipowner or carrier, is not exempt
from liability for damages arising from collision
due to the fault or negligence of the captain.
Primary liability is imposed on the shipowner or
carrier in recognition of the universally accepted
doctrine that the shipmaster or captain is merely
the representative of the owner who has the actual
or constructive control over the conduct of the
voyage. In case of collision, both the owner and
the agent are civilly responsible for the acts of the
captain. The Court held that both the owner and
agent (-aviero) should be declared jointly and
severally liable, since the obligation which is the
subject of the action had its origin in a tortious act
and did not arise from contract. The agent, even
though he may not be the owner of the vessel, is
liable to the shippers and owners of the cargo
transported by it, for losses and damages
occasioned to such cargo, without prejudice,
however, to his rights against the owner of the
ship, to the extent of the value of the vessel, its
equipment, and the freight.
City of Manila v. Atlantic, Gulf and Pacific Co.
FACTS: The plaintiff's launch Jan, towing six
small scows up the River Pasig at Santa Ana came
into collision with a large lighter, heavily laden,
towed by the launch Oriente of the defendant. She
was run aground with her frame near the port bow
smashed in. It is proved that the Jan carried lights;
that both she and the scows she was towing were
properly manned, and according to the testimony
of the plaintiff's witnesses as soon as they saw the
light ahead of the Oriente their whistle was blown
and on receiving an answering whistle, in order to
avoid a shock, they veered to starboard, leaving
the channel and running into shoal water.
Defendant's witnesses admit that they saw the Jan
and its tow with the lights thereon and blew their
own whistle, but say that they did not hear any
whistle from the other launch, which kept the
middle of the stream; that their boat was also put
to starboard and the launches successfully passed
one another, but, their scow in tow, being slow in
changing direction, struck against the Jan, and
42

they claim that they did all in their power to avoid
a collision in view of the difficulty of controlling
the boat on their course downstream. It appears
that this tow was secured to their launch by a
single cable, forking in the shape of the letter "Y"
so that each end was fastened to one side of the
lighter.
The judge of the court below in rendering
judgment for the plaintiff appears to have relied
upon several incidents; that the captain of the
Oriente had no license but only a permit to
navigate from the surveyor of customs; that it was
easier to control the boat going with the current
than the one going against it; that there was but
one tow rope when there might have been more,
and that there was no helmsman on the lighter.
bridge of the Isabel discerned the light of another

vessel, which proved to be the Antipolo, also a
coastwise vessel, on its way to Manila and coming
towards the Isabel. At about the same time both
the watch and mate on the bridge of the Antipolo
also saw the Isabel, the two vessels being then
about one mile and a half or two miles apart. Each
vessel was going approximately at the speed of 6
miles an hour, and in about ten minutes they had
together traversed the intervening space and were
in close proximity to each other. When the mate of
the Antipolo, who was then at the wheel, awoke to
the danger of the situation and saw the Isabel
"almost on top of him," to use the words of the
committee on marine accidents reporting the
incident, he put his helm hard to the starboard.
RULING: It is indeed of common knowledge, that

a boat going against the current is quicker to mind
her helm than one borne along by it, and the
plaintiff's expert also testified that whereas in
ocean tows several cables were used, on the River
Pasig it was customary to employ but one in order
to leave the vessel under tow greater freedom of
movement and therefore better self-control.
Aboard this lighter there was no light, there was
no crew, and it seems there was no rudder. The
absence of the light may not have contributed to
the accident, but the lack of a rudder and of any
person to direct the boat so clearly deprived it of
control of its own movements that we are satisfied
that when under tow of the forked rope it was not
handily manageable. Therefore, instead of
following approximately in the wake of the
launch, it struck out on a tangent thereto, thus
causing the collision. We attach no importance to
the character of the permit to the Oriente's captain
as a cause of the accident.
ISSUE: Whether both vessels were negligent.
Government v. Phil.
Fernandez Hermanos
Steamship
Co.
&
FACTS: At about 10 o'clock at night, the

coastwise Isabel, equipped with motor and sails,
left the port of Manila with primary destination to
Balayan, Batangas, carrying, among its cargo, 911
sacks of rice belonging to the plaintiff and
consigned to points in the south. After the boat had
been under weigh for about four hours, and has
passed the San Nicolas Light near the entrance
into Manila Bay, the watch and the mate on the
RULING: This maneuver was correct, and if the

helmsman of the Isabel had done likewise, all
would apparently have been well, as in that event
the two vessels should have passed near to each
other on the port side without colliding. As chance
would have it, however, the mate on the Isabel at
this critical juncture lost his wits and, in disregard
of the regulations and of common prudence, at
once placed his own helm hard to port, with the
result that his boat veered around directly in the
path of the other vessel and a collision became
inevitable. Upon this the mate on the Antipolo
fortunately stopped his engines, but the Isabel
continued with full speed ahead, and the two
vessels came together near the bows. The Isabel
immediately sank, with total loss of vessel and
cargo, though the members of her crew were
picked up from the water and saved. The mate of
the Antipolo was clearly negligent in having
permitted that vessel to approach directly towards
the Isabel until the two were in dangerous
proximity. For this there was no excuse whatever,
since the navigable sea at this point is wide and the
incoming steamer could easily have given the
outgoing vessel a wide berth. On the other hand it
is not clear that the Isabel was chargeable with
negligence in keeping on its course; for this boat
had its jib sail hoisted, and may for that reason be
considered to have had the right of way.
Negligence shortly preceding the moment of
collision is, however, undoubtedly chargeable to
the Isabel, for the incorrect and incompetent way
43

in which this vessel was then handled. The
explanation of this may perhaps be found in the
fact that the mate on the Isabel had been on
continuous duty during the whole preceding day
and night; and being almost absolutely exhausted,
he probably was either dozing or inattentive to
duty at the time the other vessel approached. Both
vessels were at fault; and although the negligence
on the part of the mate of the incoming vessel
preceded the negligence on the part of the mate of
the outgoing vessel by an appreciable interval of
time, the first vessel cannot on that account be
absolved from responsibility.
Where both vessels are to blame, both shall be
solidarily responsible for the damage occasioned
to their cargoes. As the Isabel was a total loss and
cannot sustain any part of this liability, the burden
of responding to the Government of the Philippine
Islands, as owner of the rice embarked on the
Isabel, must fall wholly upon the owner of the
other ship, that is, upon the defendant, the
Philippine Steamship Company, Inc.
Lopez v. Duruelo (already discussed under
Chapter 7)
Marine Trading Co. v. Government
FACTS: About 8 o'clock in the morning, in the
Pasig River, below and near the bridge of Spain,
the launch bohol was towing up the river two
rudderless scows or lighters, one behind the other.
The scow nearest the launch was about 5 meters
behind, was empty, and was high in the water. The
second lighter was tied to the rear of the fist one,
with a distance of about 2 meters intervening, was
loaded, and was lower in the water. The second
lighter was tied to the rear of the first one, with a
distance of about 2 meters intervening, was
loaded, and was lower in the water. The Active
was coming down the river from Pandacan toward
Manila Bay. The patron of the Active blew one
blast of his whistle, which indicated that the Active
had a clear way and should pass to starboard.
When under the bridge of Spain, the Active passed
the bohol and the first scow towed by it. But when
the Active was about to pass the second scow, the
latter swerved to the left, and its forward left end
corner struck the Active on the port side between
the cabin and the bow with such force and impact
that the launch sank immediately.
ISSUE: Whether or not the accident occurred

through the negligence of the bohol only, or
whether both launches can be blamed for the
collision.
RULING: Negligence on the part of the bohol is
demonstrated by the following:
1) The patron of the bohol gave the whistle which
indicated that the Active had a clear way and
should pass to the starboard, and did not give four
blasts of the whistle in quick succession in order to
denote danger.
2) The two scows in tow by the bohol were
apparently not properly fastened together, as
required by section 197 of the Philippine Marine
Regulations.
3) The two launches passed each other under the
bridge of Spain, and the bohol, instead of steering
so as to avoid danger of a collision between the
Active and its scows, kept its course and crowded
the Active most against a buoy. While, in
accordance with paragraph 163 of the Philippine
Marine Regulations, steam vessels towing have
the right of way over steam vessels not towing this
does not mean that the vessel with a tow can usurp
the entire river so as to force another vessel into
the bank. In conformity with the doctrine cited by
appellant, that the preferred steamer will not be
held in fault for maintaining her course and speed,
this is only true so long as it is possible for the
other vessel to avoid her by the proper maneuver.
As opposed to the foregoing, we find that the
plaintiff's agent was in no way to blame for the
collision.
Smith Bell & Co. and Tokyo Marine & Fire
Insurance Co. v. CA
FACTS: In the early morning of 3 May 1970-at
exactly 0350 hours, on the approaches to the port
of Manila near Caballo Island, a collision took
place between the M/V "Don Carlos," an interisland vessel owned and operated by private
respondent Carlos A. Go Thong and Company
("Go Thong"), and the M/S "Yotai Maru," a
merchant vessel of Japanese registry. The "Don
Carlos" was then sailing south bound leaving the
port of Manila for Cebu, while the "Yotai Maru"
was approaching the port of Manila, coming in
from Kobe, Japan. The bow of the "Don Carlos"
44

rammed the portside (left side) of the "Yotai
Maru" inflicting a three (3) cm. gaping hole on her
portside near Hatch No. 3, through which seawater
rushed in and flooded that hatch and her bottom
tanks, damaging all the cargo stowed therein.
ISSUE: Whether the "Yotai Maru" had been
negligent and at fault in the collision with the
"Don Carlos."
RULING: The Court believes that there are three
(3) principal factors which are constitutive of
negligence on the part of the "Don Carlos," which
negligence was the proximate cause of the
collision.
1) Failure of the "Don Carlos" to comply with
the requirements of Rule 18 (a) of the
International Rules of the Road ("Rules"),
which provides:
When two power-driven vessels are meeting
end on, or nearly end on, so as to involve risk of
collision, each shall alter her course to
starboard, so that each may pass on the port
side of the other. This Rule only applies to cases
where vessels are meeting end on or nearly end on,
in such a manner as to involve risk of collision,
and does not apply to two vessels which must, if
both keep on their respective course, pass clear of
each other. The only cases to which it does apply
are when each of two vessels is end on, or nearly
end on, to the other; in other words, to cases in
which, by day, each vessel sees the masts of the
other in a line or nearly in a line with her own; and
by night to cases in which each vessel is in such a
position as to see both the sidelights of the other. It
does not apply, by day, to cases in which a vessel
sees another ahead crossing her own course; or, by
night, to cases where the red light of one vessel is
opposed to the red light of the other or where the
green light of one vessel is opposed to the green
light of the other or where a red light without a
green light or a green light without a red light is
seen ahead, or Where both green and red lights are
seen anywhere but ahead.
For her part, the "Yotai Maru" did comply with its
obligations under Rule 18 (a). As the "Yotai Maru"
found herself on an "end-on" or a "nearly end-on"
situation vis-a-vis the "Don Carlos, " and as the
distance between them was rapidly shrinking, the
"Yotai Maru" turned starboard (to its right) and at

the same time gave the required signal consisting
of one short horn blast. The "Don Carlos" turned
to portside (to its left), instead of turning to
starboard as demanded by Rule 18 (a). The "Don
Carlos" also violated Rule 28 (c) for it failed to
give the required signal of two (2) short horn
blasts meaning "I am altering my course to port."
When the "Yotai Maru" saw that the "Don Carlos"
was turning to port, the master of the "Yotai Maru"
ordered the vessel turned "hard starboard" at 3:45
a.m. and stopped her engines; at about 3:46 a.m.
the "Yotai Maru" went "full astern engine." 20 The
collision occurred at exactly 3:50 a.m.
2) Failure to have on board that night a
"proper look-out" as required by Rule I (B)
Under Rule 29 of the same set of Rules, all
consequences arising from the failure of the
"Don Carlos" to keep a "proper look-out" must
be borne by the "Don Carlos."
A "proper look-out" is one who has been trained as
such and who is given no other duty save to act as
a look-out and who is stationed where he can see
and hear best and maintain good communication
with the officer in charge of the vessel, and who
must, of course, be vigilant. In the case at bar, the
failure of the "Don Carlos" to recognize in a
timely manner the risk of collision with the "Yotai
Maru" coming in from the opposite direction, was
at least in part due to the failure of the "Don
Carlos" to maintain a proper look-out.
3) The fact that Second Mate Benito German
was, immediately before and during the
collision, in command of the "Don Carlos."
Second Mate German simply did not have the
level of experience, judgment and skill essential
for recognizing and coping with the risk of
collision as it presented itself that early morning
when the "Don Carlos," running at maximum
speed and having just overtaken the "Don
Francisco" then approximately one mile behind to
the starboard side of the "Don Carlos," found itself
head-on or nearly head on vis-a-vis the "Yotai
Maru. It is essential to point out that this
situation was created by the "Don Carlos" itself.
Tiampo v. Villanueva, et al.
45

FACTS: In the morning of the accident in question
and before the occurrence thereof, the m/s Tai Yin
was anchored in the stream, Iloilo Harbor
(Guimaras Strait) near the mouth of the Iloilo
River. To the north of said motorship's anchorage
was the s/s Diana Dollar and still farther north
was the s/s Silver Sandal, both anchored. The s/s
Takaoka Maru was anchored away to starboard
near Guimaras Island. Sometime after 5 a. m., m/s
Tai Yin hove up anchor and started at slow speed
ahead towards the North Entrance of Guimaras
Strait passing between the s/s Diana Dollar and
the shore under the direction of Port Pilot Ramon
Garriz. The motorship's captain and second
officer, and Captain Rafael Xaudaro, a local
coastwise pilot, were on the bridge with said pilot.
At that juncture, the lorcha or sail vessel Cataluna
was sighted off the motorship's port bow with sails
set apparently southward bound, heading on a
course opposite to but clear off the motorship's.
When they were at a distance of about 500 or 600
feet apart, the Cataluna was taken in tow by
launch Fredy and both tug and tow, without giving
any warning signal, swung to port across the bow
of the m/s Tai Yin towards the s/s Takaoka Maru.
As said maneuver was made when the tug and tow
in question were at such distance from the said
motorship that collision was imminent, the said
motorship gave one blast signifying her course to
starboard. The launch Fredy, however, disregarded
such signal and continued on her course to port
whereupon the m/s Tai Yin promptly reversed her
engines at full speed giving the regulation signal
of three blasts. Notwithstanding said maneuver,
however, the port bow of the m/s Tai Yin struck
the starboard side of lorcha Cataluna causing the
latter to sink.
There is no question that when the m/s Tai Yin and
lorcha Cataluna came in sight of each other when
both were underway, they were following opposite
courses that ran clear off each other. Under the
circumstances both vessels should have
maintained their respective courses until one or the
other or both had passed clear off each other. The
maneuver of launch Fredy to port across the bow
of the oncoming motorship was against all rules of
seamanship and was a gross violation of the Rules
of the Road as it unnecessarily provoked and
thereby caused the present collision. When the
launch Fredy initiated and continued her maneuver
to port, the m/s Tai Yin, with the shore close to her
port side and the steamer Diana Dollar and Silver

Sandal off her starboard side and bow, and in view
of her tonnage and draft, could not have possibly
executed any safe and reasonable maneuver to
avoid collision, or at least minimize the effects
thereof, other than to reverse her engines at full
speed which she did promptly. Such temerary
maneuver of launch Fredy across the bow of the
m/s Tai Yin may be attributed to no cause other
than to the negligence of her patron who either
failed to notice the presence and approach of the
m/s Tai Yin, as may be deduced from his
testimony, or failed to sense the extreme danger of
his act, evidently believing, in his manifest
ignorance of navigation rules, that he had the right
of way and expecting the much larger and more
cumbersome vessel to keep clear.
RULING: Among rules applicable to navigation
none is better founded on reason and experience
than that which requires the navigating officers of
any vessel to assume that an approaching vessel
will observe the regulations prescribed for
navigation. Any other rule would introduce guess
work into the control of ships and produce
uncertainty in the operation of the regulations.
There was no valid reason for the Fredy not to
have kept the original course until both vessels
were clear of one another, and the contention of
plaintiff-appellant that paragraph 163 of the
Philippine Marine Regulations, to the effect that
steam-vessels towing, have the right of way over
steam-vessels not towing, is controlling, is
incorrect. Such a rule is subject to reasonable
limitations and this court has held in the case of
the Marine Trading Co. vs. Government of the
Philippine Islands (39 Phil., 29), that the vessel
with a tow is not, by that fact, authorized to usurp
the entire channel.
US v. Smith Bell & Co.
FACTS: This was an action by the plaintiff against
the defendant, brought in the Court of First
Instance of the city of Manila, to recover the sum
of $1,600, United States currency, for damages
occasioned to the Navy boat Barcelo on the 6th
day of November, 1902, at about 11 o'clock p.m.,
on the said day, near the mouth of the Pasig River,
by a collision with a casco that was then and there
46

being towed by the launch Alexandra. The launch
Alexandra is the property of the defendant. The
inferior court found that the defendant had not
complied with the rules of navigation in Manila
Bay, in that it failed to display lights in accordance
with such regulations, and that, by reason of such
failure, the collision and consequent damages
occurred. The defendant claimed that the plaintiff
could not recover in the action, for the reason that
it had not complied with the provisions of the
Code of Commerce, relying particularly upon
article 835 of the same. Article 835 provides: "The
action for the recovery of loss and damages arising
from collisions can not be admitted if a sworn
statement or declaration is not presented within
twenty-four hours to competent authority of the
point where the collision took place, or that of the
first port of arrival of the vessel." The plaintiff
claimed that this provision of the Commercial
Code did not apply to it.
RULING: The quoted provision of the
Commercial Code applies to all persons engaged
in traffic upon the waters of the Philippine
Archipelago; that the defendant has as much right
to insist upon compliance with this provision of
the code where the damages were done to a boat
operated by the Government as if such boat had
been operated by a private individual or company.
This provision of the Commercial Code, requiring
protest to be made and presented to the proper
authority within twenty-four hours after the
collision, or after the arrival of the injured boat in
port, is a prerequisite to the bringing of an action
for damages. By having failed to comply with this
provision of the Commercial Code it can not
maintain this action for damages.
C.B. Williams v.Yangco
FACTS: The steamer Subic, owned by the
defendant, collided with the lunch Euclid owned
by the plaintiff, in the Bay of Manila at an early
hour on the morning of January 9, 1911, and the
Euclid sank five minutes thereafter. Counsel for
the plaintiff, basing his contention upon the theory
of the facts as contended for by him, insisted that
under he doctrine of "the last clear chance," the
defendant should be held liable because, as he
insists, even if the officers on board the plaintiff's
launch were negligence in failing to exhibit proper

lights and in failing to take the proper steps to
keep out of the path of the defendant's vessel,
nevertheless the officers on defendant's vessel, by
the exercise of due precautions might have
avoided the collision by a very simple manuever.
RULING: But it is sufficient answer to this
contention to point out that the rule of liability in
this jurisdiction for maritime accidents such as that
now under consideration is clearly, definitely, and
unequivocally laid down in the above-cited article
827 of the Code of Commerce; and under that rule,
the evidence disclosing that both vessels were
blameworthy, the owners of either can
successfully maintain an action against the other
for the loss or injury of his vessel.
In cases of a disaster arising from the mutual
negligence of two parties, the party who has a last
clear opportunity of avoiding the accident,
notwithstanding the negligence of his opponent, is
considered wholly responsible for it under the
common-law rule of liability as applied in the
courts of common law of the United States. But
this rule (which is not recognized in the courts of
admiralty in the United States, wherein the loss is
divided in cases of mutual and concurring
negligence, as also where the error of one vessel
has exposed her to danger of collision which was
consummated by he further rule, that where the
previous application by the further rule, that where
the previous act of negligence of one vessel has
created a position of danger, the other vessel is not
necessarily liable for the mere failure to recognize
the perilous situation; and it is only when in fact it
does discover it in time to avoid the casualty by
the use of ordinary care, that it becomes liable for
the failure to make use of this last clear
opportunity to avoid the accident. So, under the
English rule which conforms very nearly to the
common-law rule as applied in the American
courts, it has been held that the fault of the first
vessel in failing to exhibit proper lights or to take
the proper side of the channel will relieve from
liability one who negligently runs into such
vessels before he sees it; although it will not be a
defense to one who, having timely warning of the
danger of collision, fails to use proper care to
avoid it.
In the case at bar, the most that can be said in
support of plaintiff's contention is that there was
47

negligence on the part of the officers on
defendant's vessel in failing to recognize the
perilous situation created by the negligence of
those in charge of plaintiff's launch, and that had
they recognized it in time, they might have
avoided the accident. But since it does not appear
from the evidence that they did, in fact, discover
the perilous situation of the launch in time to avoid
the accident by the exercise of ordinary care, it is
very clear that under the above set out limitation to
the rule, the plaintiff cannot escape the legal
consequences of the contributory negligence of his
launch, even were we to hold that the doctrine is
applicable in the jurisdiction, upon which point we
expressly reserve our decision at this time.
48

CHAPTER 13
ARRIVAL UDER STRESS AD
SHIPWRECKS
13.1 Arrival under stress
13.1.1. Definition: It is the arrival of the vessel at
the nearest and most convenient port, if during the
voyage the vessel cannot continue the trip of the
port of destination due to:
a) Lack of provisions;
b) Well-founded fear of seizure, privateers,
or pirates; and
c) By reason of any accident of the sea
disabling it to navigate.
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 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.
13.1.4. Expenses
13.1.2. Steps in the determination of the

propriety of an arrival under stress
a) The captain should determine during the
voyage if there is well founded fear of
seizure, privateers and other valid
grounds;
b) The captain shall then assemble the
officers;
c) The captain shall summon the persons
interested in the cargo who may be present
and who may attend but without right to
vote;
d) The officers shall determine and agree if
there is well founded reason after
examining the circumstances. The captain
shall have the deciding vote;
e) The agreement shall be drafted and the
proper minutes shall be signed and entered
in the log book;
f) Objections and protests shall likewise be
entered in the minutes.
In a foreign port, it shall be the duty of the

Philippine Consul, where there is one, to give
the authorization.
i.
If in order to make repairs to the
vessel - expenses shall be for the
account of the ship agent/owner.
ii.
If because there is danger that the
cargo may suffer damage expenses
shall be chargeable against the owners
of the merchandise for whose benefit
the act was performed.
iii.
Both reasons expenses shall be
divided proportionately between the
value of the vessel and that of the
cargo. (Art. 822, CC)
13.1.3. When Improper

An arrival shall not be considered lawful in the
following cases (Art. 820, CC):
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.
General Rule: Expenses of an arrival under

stress shall always be for the account of the
shipowner/agent.
Exception: They shall not be liable for the
damages which may be caused the shippers by
reason of the arrival provided the latter is
legitimate. Otherwise, the ship agent and the
captain shall be jointly liable (Art. 821, CC).
If in order to make repairs to the vessel or
because there is danger that the cargo may
suffer damage, it should be necessary to
unload, the captain must request authorization
from the competent judge or court for the
removal, and carry it out with the knowledge
of the person interested in the cargo, or his
representative, should there be any.
13.1.5. Custody of Cargo
The custody and preservation of the cargo

which has been unloaded shall be entrusted to
49
the captain, who shall be responsible for the

same, except in cases of force majeure (Art.
823, CC).
The captain may request a competent judge or
court, or the consul in a proper case, the sale
of all or part of the cargo, if the entire or part
of said cargo should appear to be damaged, or
there should be imminent danger of its being
damaged.
goods are delivered to them. In case

the merchandise should be sold, the
payment for the expenses with respect
to the salvage shall be preferred over
any other obligation (Art. 842, CC).
2. 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 it is not possible to transfer to the
other vessels the entire cargo of the
vessel wrecked, the goods of the
highest value and smallest volume
shall be saved first (Art. 843, CC).
The competent authority (or consul) shall

authorize the sale after an examination and
declaration of experts, advertisements, and
other formalities required by the case, and
entry in the book, in accordance with Art. 624.
The captain shall, in a 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 (Art. 824, CC).
13.1.6. Liability of the Captain
A. If after the cause of the arrival under stress has
ceased and the captain should not continue the
voyage, the latter shall be responsible for
damages caused by his delay.
However, if the cause was 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 (see 13.1.1) shall precede the
departure (Art. 825, CC).
13.2. Shipwreck
13.2.1. Definition: It is the demolition or
shattering of a vessel caused by her driving ashore
or on rocks and shoals in the midseas, or by the
violence of winds and waves in tempests.
13.2.2. Rules in case of salvage
GOODS/CARGOES:
1. It shall be specially bound for the
payment of the expenses of the
respective salvage. The amount shall
be paid by the owners before the
OBLIGATIONS/DUTIES
OF
THE
CAPTAIN:
1. In paragraph [A (ii)] above, the
captain of the wrecked vessel shall
enter a protest against any captain
who refuses to receive what may
correspond to the latter without
sufficient cause, for the losses and
damages resulting therefrom.
The protest shall be presented before 2
sea officials, ratifying the same within
24 hours after arrival at the first port,
and including it in the proceedings the
former must institute in accordance
with Art. 612.
The captain, with the concurrence of
the officers of his vessel, shall also be
the one to designate which cargo has
the highest value and the lowest
volume (Art. 843, CC).
2. 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 the
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
50

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.
NOTE: The owner 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 (Art. 844, CC).
13.2.3. Other Related Provisions
The losses and deteriorations suffered by a

vessel and her cargo by reason of shipwreck or
stranding shall be individually for the account
of the owners, the part which may be saved
belonging to them in the same proportion (Art.
840, CC).
If the 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 or 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 Arts. 610, 612, 614, and 621
(Art. 841, CC).
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 (Art.
845, CC).
51

CHAPTER 14
SALVAGE
14.1. Definition: service which one person renders
to the owner of a ship or goods, by his own labor,
preserving the goods or the ship which the owner
or those entrusted with the care of them have
either abandoned in distress at sea, or are unable to
protect and secure.
There is salvage where a person (or persons) picks
up and conveys to a safe place a vessel or its cargo
which are beyond the control of the crew or shall
have been abandoned by them (Sec. 1, Salvage
Law/SL).
NOTE: There can be also a contract of salvage
that may be voluntarily agreed upon by the parties.
> It is a compensation for actual services rendered
to the property charged with it, and is allowed for
meritorious conduct of the salvor, and in
consideration of a benefit conferred upon the
person whose property he has saved.
> A claim for salvage rests on the principle that,
unless the property be in fact saved by those who
claim the compensation, it cannot be allowed,
however benevolent their intention and however
heroic their conduct.
14.2. Kinds of Salvage Services:
1. Voluntary compensation is dependent upon
success
2. Rendered under a contract for a per diem or
per horam wage, payable at all events
3. Under a contract for a compensation payable
only in case of success
> Where the stipulated compensation is dependent
upon success, and particularly of success within a
limited time, it may be very much larger than a
mere quantum meruit. Such contracts will not be
set aside by Courts unless corruptly entered into,
or made under fraudulent representations, a clear
mistake or suppression of important facts, in
immediate danger to the ship, or under
circumstances amounting to compulsion, or when
their enforcement would be contrary to equity and
good conscience.
14.3. Requirements for Compensation: A

salvage claim may be awarded to the salvor if the
following requirements are present:
1. There must be a marine peril;
2. The vessel is a) shipwrecked beyond the
control of the crew or b) shall have been
abandoned;
3. The service of picking up and conveying the
vessel of cargo to a safe place is voluntarily
rendered and is not required from an existing
duty or from a special contract; and
4. The service must have been successful in
whole or in part or that the service rendered
contributed to such success.
> The salvor must have no relation, contractual or
otherwise, upon the ship in distress. Thus, the
following persons shall have no right to a reward:
1. The crew of the vessel shipwrecked or
which was in danger of shipwreck;
2. He who shall have commenced the
salvage in spite of opposition of the
captain or of his representatives; and
3. He who shall have failed to comply with
the provisions of Sec. 3, SL.
Sec. 3. He who shall save or pick up a
vessel or merchandise at sea, in the
absence of the captain of the vessel,
owner, or a representative of either of
them, they being unknown, shall convey
and deliver such vessel or merchandise,
as soon as possible, to the Collector of
Custom, if the port has a collector, and
otherwise to the provincial treasurer or
municipal mayor.
14.4. Abandonment
> The abandonment mentioned in 14.3 is present
when the vessel is considered a derelict.
14.4.1. Derelict: a ship or her cargo which is
abandoned and deserted at sea by those who were
in charge of it, without any hope of recovering it
(sine spe recuperandi), or without any intention of
returning to it (sine animo revertendi).
> Whether the property is to adjudged derelict is
determined by ascertaining what was the intention
52

and expectation of those in charge of it when they
quitted it.
> If those in charge left with the intention of
returning, or of procuring assistance, the property
is not derelict, but if they quitted the property with
the intention of finally leaving it, it is derelict, and
a change of their intention and an attempt to return
will not change its nature.
> It is a rare case when the master of the ship will
leave without the intention of returning, if there is
the slightest hope of saving his vessel. Thus, if it is
clear that the intention to return is slight, the
salvage which was done thereafter is considered
valid.
> COMME-T: The essence of derelict is that
when a vessel is found at sea, deserted, and has
been abandoned by the master and crew without
the intention of returning and resuming the
possession, x x x the finder who takes the
possession with the intention of saving her,
gains a right of possession, which he can
maintain against the true owner (Aquino &
Hernando, p. 678, citing Erlanger & Galinger v.
Swedish East Asiatic Co., Ltd.). When there is no
derelict, there can be no abandonment, and if there
is the absence of abandonment, the finder or salvor
cannot claim reward.
REMEMBER, the owner does not
renounce his right of property while the
vessel is in the possession of the finder or
salvor. This is not presumed to be his
intention, nor does the finder acquire any
such right. But the owner does abandon
temporarily his right of possession, which
is transferred to the finder, who becomes
bound to preserve the property with good
faith, and bring it to a place of safety for
the owners use; and he acquired a right to
be paid for his services a reasonable and
proper compensation, out of the property
itself.
14.5.1. Principal circumstances to be considered

in fixing the amount of compensation:
1. The labor expended by the salvors in
rendering the salvage service;
2. The promptitude, skill, and energy displayed
in rendering the service and saving the
property;
3. The value of the property employed by the
salvors in rendering the service, and the
danger to which such property was exposed;
4. The risk incurred by the salvors in rescuing
the property from the impending peril;
5. The value of the property salved; and
6. The degree of danger from which the property
was rescued.
14.5.1.2. Principal circumstances to be
considered in fixing the amount of
compensation under Section 10, Salvage Law:
1. The expenditures made to recover or save the
vessel or the cargo or both
2. The zeal demonstrated
3. The time employed, the services rendered
4. The excessive express occasioned the number
of persons who aided
5. The danger to which they and their vessels
were exposed as well as that which menaced
the things recovered or salvaged
6. The value of such things after deducting the
expenses.
14.6. Rights and Obligations of Salvors and
Owners
14.5. Basis for Entitlement to Salvage Reward

> A compensation as salvage should not be viewed
by the admiralty courts as pay on the principle of
quantum meruit or as a remuneration pro opere et
labore, but as a reward given for perilous services,
voluntarily rendered, and as an inducement to
mariners to embark in such dangerous enterprises
to save life and property.
The salvor is entitled to compensation for

services rendered, and the enforcement of that
right, he has a lien upon the property salvaged
whereby he has the right of retention over the
property until he is paid.
o The salvor is to all intents and
purposes, a joint owner and if the
property is lost he must bear his share
like the other joint owners.
If the ship and its cargo are saved together by
the salvor, the salvage allowance should be
charged against the ship and cargo in the
proportion of their respective values, as in the
53
case of general average; and neither is liable

for the salvage due from the other.
o The liability of the owner is limited to
such part of the salvage compensation
due for the entire service as is
proportionate to the value of the ship.
o Not only is the salvage charge a
separate and divisible burden as
between the ship and cargo, but also
as between portions of the cargo
belonging to different owners.
The salvor has a right of possession of a
derelict for purposes of a salvage claim.
While the salvor has the right to retain the
abandoned vessel or cargo until the salvage is
completed without interference from other
persons, it would not be so if the salvor has
inadequate means. In such case, the salvor is
bound to accept additional assistance from
other salvors who may offer their services.
See Section 3 cited in 14.3.
See Comment under 14.4.1
The owner or his representative shall have a
right to the delivery of the vessel or things
saved after the salvage is accomplished,
provided that he pays, or gives a bond to
secure the expenses and the proper reward.
If the owner does not make any claim within 3
MONTHS after the publication by the
authorities of a salvage report, the things
saved shall be sold at a public auction, the
proceeds shall be deposited to the National
Treasury after deducting the expenses and the
proper reward to which the salvor is entitled.
o If 3 YEARS lapses without any claim,
the salvor shall be entitled to half of
the deposit as his reward and the other
half shall pertain to the government.
The owner of the salving vessel is also entitled
to the salvage reward for the use of his vessel
in rendering salvage services even though he
may not have been present at the time the
salvage service was rendered.
o Reward is also due to the captain and
crew of the salving vessel.
o If a vessel or its cargo shall have been
assisted or saved, entirely or partially,
by another vessel, the reward for
salvage or assistance shall be divided
between the owner, the captain, and
the remainder of the crew of the latter

vessel, so as to give the owner , the
captain , and all the remainder of the
crew , in proportion to their
respective salaries, in the absence of
an agreement to the contrary.
If different persons intervened in the salvage
or in rendering assistance, the reward shall be
divided between them in proportion to the
services which each one may have rendered,
and, in case of doubt, in equal parts.
54

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LAW O TRASPORTATIO AD PUBLIC UTILITIES

c. has a bona fide intention to use facilities

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the use or operation of vessels. Services are not

Applicable to people involved on a kabit

Arrastre operators functions has nothing to do

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carriage; and 3) the general nature of the business

I. Obligations of the carrier

(1) Hazardous and Dangerous Substances

It is illegal for domestic ship operators to

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(2) Unfit for Transport

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losses and damages if the interruption is due to

If common carrier delays , without just cause, in

In case the vessel is not able to depart on time and

C. WHERE AND TO WHOM DELIVERED

If abandonment is not made, indemnification for

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The shipper may change the consignment of the

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route if the cause of the unfinished voyage

B.DUTY TO EXERCISE EXTRAORDINARY

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actually or constructively, by the carrier to the

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2. It must be impossible to foresee the event which

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b. OTHER INVALID DEFENSES

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measures to secure safety of

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carrier does not know but the defect was

- Primary defense of carrier is exercise of

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With respect to acts of strangers and other

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However, if the negligence of the shipper/

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valid exercise of the Police Power of the state in

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II. HOW DUTY IS COMPLIED WITH

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a.) Warranty of Seaworthiness of Ship

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The carrier shall properly and carefully

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duty bound to make sure that the parts that they

VI. EXTRAORDINARY DILIGENCE IN

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