WARSAW CONVENTION

KLM Royal Dutch Airlines v. CA

Article 30 of the Warsaw Convention which provides that the passenger, in successive carriage, can only take action
against the carrier who performed the carriage during which the accident or delay occurred, applies only when there
is an accident or delay.

Here, the damage consists of the refusal to transport despite confirmed tickets. Further, under the contract of
carriage, it is expressly provided that the carriage is to be regarded as a single operation. Therefore, KLM, which
issued the tickets, is liable for the failure of Aer Lingus to transport the passengers, which KLM had in effect
guaranteed.

Pan American World Airways v. IAC

The passenger is bound by the stipulations limiting liability for lost baggage at the back of the ticket, which
provided for $20/kilo, unless the passenger declares a higher value and pays an additional charge.

Warsaw Convention limiting liability of carriers for loss of baggage are valid.

PanAm v. Rapadas

Where the ticket provides that a Notice that the Warsaw convention applies in case of death or injury to passengers
and/or loss or damage to baggage or cargo, then the liability limitations under Warsaw apply.
o

The Baggage check maybe incorporated into the Passenger Ticket.

In either case, there must be notice that Warsaw applies otherwise, the liability limitations under Warsaw do
not apply.

Warsaw Convention applies to international Carriage:

o

Place of departure and destination are within the territories of two State Parties (one-way tickets); or

Place of departure and destination within territory of one State party but with an agreed stopping place at
another State [w/not a State party] (round-trip tickets)

Lack of time to declare higher value and pay additional charges will not exclude the application of liability
limitations.

Northwest v. Cuenca

Warsaw covers the liability of a carrier for death/injury to passengers, loss/damage to luggage or delay in the
transportation of persons/baggage.

Warsaw however does not regulate or exclude the carriers liability for other breaches of contract by the carrier. In
this case, carrier liable for rudely compelling Cuenca to transfer from his confirmed and paid first class seat to
tourist.

Warsaw does not apply in case of bad faith attributable to the employees.

Alitalia v. IAC

Where a passenger suffers a special specie of injury as a result of the breach of the contract of carriage, the
compensation for the injury cannot be restricted to that prescribed by Warsaw for delay in the transport of baggage.
o

Injury here was the failure to attend the conference to deliver her speech which was a great honor to the
passenger.

Warsaw liability limits do not apply where it is shown that the damage was done with willful misconduct, bad faith,
recklessness or otherwise improper conduct on the part of any official or employee acting within the scope of his
employment.

PAL v. CA

NOTE: Weird Case

This case, which cited a marine case, said that if the destination of transport is the Philippines, then the Warsaw
liability limitations do not apply. In such case, the NCC on common carriers applies to regulate the liability of the
carrier for lost luggage.

Lufthansa v. IAC

The carrier waived the applicability of the Warsaw convention when it offered to pay a higher amount than that
provided by Warsaw and by failing to object to the presentation of evidence on the actual amount of the lost
luggage.

Luna v. CA

The RTC dismissed the case because the passengers failed to file a prior claim within the prescribed period under
Warsaw.

In reinstating the case, the SC said that Warsaw does not exclusively enumerate the instances where a carrier may be
held liable. Thus, the prior claim would apply only to claims covered by Warsaw and the carrier may still be held
liable for a special specie of injury.

Failure to deliver the luggage at the designated time and place does not automatically amount to willful misconduct,
which requires a showing that the acts complained of were done with intent to evade the law or were in persistent

disregard of ones rights.

Santos v. Northwest Orient Airlines

Article 28(1) of Warsaw refers to Jurisdiction where an action for damages may be brought:
o

Residence/domicile of Carrier [place of incorporation]

Carriers Principal Place of Business

Establishment where the contract was made

Place of Destination

Where a matter is governed by Warsaw, jurisdiction takes on a dual concept.

Jurisdiction in the international sense, Warsaw, must be established in accordance with the four choices. Thereafter,
the jurisdiction of a particular court must be established according to domestic law.

Only after jurisdiction is established will the question of venue arise, which is controlled by domestic law.

The place of destination is determined by the terms of the contract of carriage, as represented by the ticket.

Where the ticket is round-trip, the place of departure and the place of destination is the same place, and any
intermediate place where the carriage is broken is merely considered as a stopping place.

An allegation of willful misconduct will not exclude operation of Warsaw, the only provision that does not apply is
the provision of liability limitation.

Mapa v. CA

There is no international carriage where the place of departure and the place of destination are all within the territory
of the US, a single State party and where there is no agreed stopping place in the territory of another state.

PAL v. CA

Liability limitations in Warsaw do not apply where carrier accepts baggage w/out baggage checks having been
delivered or no notice of Warsaw application.

Cathay Pacific Airways v. CA

Here, there was gross negligence and discourtesy where despite the baggages being late, the carriers representative
were discourteous, indifferent, impatient, rude and insulting.

Here, the passenger suffered a special specie of injury entitling him to an award of moral and exemplary damages.

The liability limitations in Warsaw do not apply where the damage/injury caused to the passenger was a result of
willful misconduct on the part of the carriers employees.

Sabena Belgian World Airlines v. CA

Liability limitations in Warsaw do not apply here because the baggage was lost twice which underscores the wanton
negligence and lack of care on the part of the carrier which amounts to fraud or bad faith.

Case of default equivalent to willful misconduct.

United Airlines v. Uy

Under the first cause of action, which is based on Tort for the humiliating treatment the passenger received from the
carriers employees, such cause of action prescribes in Four (4) years.

The travaux preparatories of the Warsaw Convention reveal that the delegates thereto intended the two (2)-year
limitation incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the various tolling
provisions of the laws of the forum. This therefore forecloses the application of our own rules on interruption of
prescriptive periods. Article 29, par. (2), was intended only to let local laws determine whether an action had been
commenced within the two (2)-year period, and within our jurisdiction an action shall be deemed commenced upon
the filing of a complaint. Since it is indisputable that respondent filed the present action beyond the two (2)-year
time frame his second cause of action must be barred.

An extrajudicial demand will not toll the running of the prescriptive period.

Nonetheless, it cannot be doubted that respondent exerted efforts to immediately convey his loss to petitioner, even
employed the services of two (2) lawyers to follow up his claims, and that the filing of the action itself was delayed
because of petitioner's evasion. Court said that the passenger pursued his claim zealously.

Air France v. CA

The carrier is not in breach, nor guilty of bad faith, where it refuses to shorten the itinerary of the passenger and
change his flight schedule where the tickets are stamped non-endorsable.

Lufthansa v. CA

Article 30 of Warsaw which provides that in successive carriage, an action may be brought only against the carrier
which performed the carriage causing the injury, applies only when there is an accident or delay.

Here, the injury was caused by the bumping-off of the passenger with a confirmed ticket. This is not delay but bad
faith. Bumping-off forecloses the right of the passenger to be transported while delay is a mere suspension or
postponement of the transport.

The carriage in this case should be regarded as a continuous carriage and not independent contracts with several
carriers. The ticket issued by Lufthansa provides that the carriage to be performed should be regarded as a single
operation.

British Airways v. CA

Liability limitations in Warsaw and ticket are subject to waiver. Here, such application was waived when the carrier
allowed the passenger, without objection, to testify on the contents of the baggage and even cross-examined the
passenger.

In an action based on breach of contract of carriage for loss of baggage, the passenger may only sue the principal
carrier and not the carrier who actually undertook the carriage and caused the loss.

However, the principal carrier may file a third party claim against the intermediate carrier to determine who is
ultimately liable for the loss.

American Airlines v. CA

The contract of carriage between the private respondent and Singapore Airlines although performed by different
carriers under a series of airline tickets, including that issued by the petitioner, constitutes a single operation.
Members of the IATA are under a general pool partnership agreement wherein they act as agent of each other in the
issuance of tickets to contracted passengers to boost ticket sales worldwide and at the same time provide passengers
easy access to airlines which are otherwise inaccessible in some parts of the world. Booking and reservation among
airline members are allowed even by telephone and it has become an accepted practice among them. A member
airline which enters into a contract of carriage consisting of a series of trips to be performed by different carriers is
authorized to receive the fare for the whole trip and through the required process of interline settlement of accounts
by way of the IATA clearing house an airline is duly compensated for the segment of the trip serviced.

Thus, when the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing
house and undertook to transport the private respondent over the route covered by the unused portion of the
conjunction tickets, i.e., Geneva to New York, the petitioner tacitly recognized its commitment under the IATA pool
arrangement to act as agent of the principal contracting airline, Singapore Airlines, as to the segment of the trip the
petitioner agreed to undertake. As such, the petitioner thereby assumed the obligation to take the place of the carrier
originally designated in the original conjunction ticket. The petitioner's argument that it is not a designated carrier in
the original conjunction tickets and that it issued its own ticket is not decisive of its liability. The new ticket was
simply a replacement for the unused portion of the conjunction ticket, both tickets being for the same amount of
US$2,760 and having the same points of departure and destination. By constituting itself as an agent of the principal
carrier the petitioner's undertaking should be taken as part of a single operation under the contract of carriage
executed by the private respondent and Singapore Airlines in Manila.

China Airlines v. Chiok

It is significant to note that the contract of air transportation was between petitioner and respondent, with the former
endorsing to PAL the Hong Kong-to-Manila segment of the journey. Such contract of carriage has always been
treated in this jurisdiction as a single operation.

Article 15 of IATA-Recommended Practice similarly provides: "Carriage to be performed by several successive

carriers under one ticket, or under a ticket and any conjunction ticket issued therewith, is regarded as a single
operation."

In American Airlines v. Court of Appeals, we have noted that under a general pool partnership agreement, the ticketissuing airline is the principal in a contract of carriage, while the endorsee-airline is the agent.

Likewise, as the principal in the contract of carriage, the petitioner in British Airways v. Court of Appeals was held
liable, even when the breach of contract had occurred, not on its own flight, but on that of another airline. The
Decision followed our ruling in Lufthansa German Airlines v. Court of Appeals, in which we had held that the
obligation of the ticket-issuing airline remained and did not cease, regardless of the fact that another airline had
undertaken to carry the passengers to one of their destinations.

Savellano v. Northwest Airlines

A claim for alleged lost items from the baggage cannot prosper because of the failure to give timely notice of the
loss.

Federal Express Corporation v. American Home Assurance

In this jurisdiction, the filing of a claim with the carrier within the time limitation therefor actually constitutes a
condition precedent to the accrual of a right of action against a carrier for loss of or damage to the goods. The
shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action
against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable condition
precedent; it does not constitute a limitation of action.

The requirement of giving notice of loss of or injury to the goods is not an empty formalism. The fundamental
reasons for such a stipulation are (1) to inform the carrier that the cargo has been damaged, and that it is being
charged with liability therefor; and (2) to give it an opportunity to examine the nature and extent of the injury. This
protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and
easily investigated so as to safeguard itself from false and fraudulent claims.

When an airway bill -- or any contract of carriage for that matter -- has a stipulation that requires a notice of claim
for loss of or damage to goods shipped and the stipulation is not complied with, its enforcement can be prevented
and the liability cannot be imposed on the carrier. To stress, notice is a condition precedent, and the carrier is not
liable if notice is not given in accordance with the stipulation. Failure to comply with such a stipulation bars
recovery for the loss or damage suffered.

Philippine Airlines v. Savillo

Article 19 of the Warsaw Convention provides for liability on the part of a carrier for damages occasioned by delay
in the transportation by air of passengers, baggage or goods. Article 24 excludes other remedies by further
providing that (1) in the cases covered by articles 18 and 19, any action for damages, however founded, can only be
brought subject to the conditions and limits set out in this convention. Therefore, a claim covered by the Warsaw
Convention can no longer be recovered under local law, if the statute of limitations of two years has already lapsed.

Nevertheless, this Court notes that jurisprudence in the Philippines and the United States also recognizes that the
Warsaw Convention does not exclusively regulate the relationship between passenger and carrier on an

international flight. This Court finds that the present case is substantially similar to cases in which the damages
sought were considered to be outside the coverage of the Warsaw Convention. Examples of causes not covered are:

humiliation suffered at the hands of the airlines employees.

bumping off itself, rather than the incidental damages due to the delay, fall outside the Warsaw
Convention and do not prescribe in two years.

In the Petition at bar, private respondents Complaint alleged that both PAL and Singapore Airlines were guilty of
gross negligence, which resulted in his being subjected to humiliation, embarrassment, mental anguish, serious
anxiety, fear and distress. The emotional harm suffered by the private respondent as a result of having been
unreasonably and unjustly prevented from boarding the plane should be distinguished from the actual damages
which resulted from the same incident. Under the Civil Code provisions on tort, such emotional harm gives rise to
compensation where gross negligence or malice is proven.

Lhuiller v. British Airways

The allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the realm of the
Warsaw Convention.

In Bloom v. Alaska Airlines, the passenger brought nine causes of action against the airline in the state court, arising
from a confrontation with the flight attendant during an international flight to Mexico. The United States Court of
th

Appeals (9 Circuit) held that the Warsaw Convention governs actions arising from international air travel and
provides the exclusive remedy for conduct which falls within its provisions. It further held that the said
Convention created no exception for an injury suffered as a result of intentional conduct which in that case
involved a claim for intentional infliction of emotional distress.

It is thus settled that allegations of tortious conduct committed against an airline passenger during the course of the
international carriage do not bring the case outside the ambit of the Warsaw Convention.

Warsaw rules on jurisdiction apply. Philippine Courts have no jurisdiction here.

CODE OF COMMERCE
REGISTRATION
Lita Enterprises v. IAC

the parties herein operated under an arrangement, commonly known as the "kabit system", whereby a person who
has been granted a certificate of convenience allows another person who owns motors vehicles to operate under such
franchise for a fee. A certificate of public convenience is a special privilege conferred by the government . Abuse of
this privilege by the grantees thereof cannot be countenanced. The "kabit system" has been identified as one of the
root causes of the prevalence of graft and corruption in the government transportation offices.

Although not outrightly penalized as a criminal offense, the "kabit system" is invariably recognized as being
contrary to public policy and, therefore, void and inexistent under Article 1409 of the Civil Code, It is a fundamental
principle that the court will not aid either party to enforce an illegal contract, but will leave them both where it finds
them. Where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other.

Lim v. CA

One of the primary factors considered in the granting of a certificate of public convenience for the business of public
transportation is the financial capacity of the holder of the license, so that liabilities arising from accidents may be
duly compensated. The kabit system renders illusory such purpose and, worse, may still be availed of by the grantee
to escape civil liability caused by a negligent use of a vehicle owned by another and operated under his license.

It would seem then that the thrust of the law in enjoining the kabit system is not so much as to penalize the parties
but to identify the person upon whom responsibility may be fixed in case of an accident with the end view of
protecting the riding public.

Kabit does not apply here. The Case is for damages against a truck owner which bumped the jeep operating under a
kabit. The kabit owner can recover against the truck owner even if the jeep is operating under a kabit.

Tamayo v. Aquino

The action instituted in this case is for breach of contract against the registered owner who in turn filed a third-party
complaint against the unregistered transferee.

In such instance, the liability of the registered owner and the transferee is not solidary liability, as in the case of tort
against both.

Under such facts, the registered owners liability is direct but the transferee as the operator and the person
responsible for the death should be made responsible to the registered owner.

In operating the truck without transfer thereof having been approved by the Public Service Commission, the
transferee acted merely as agent of the registered owner and should be responsible to him (the registered owner), for
any damages that he may cause the latter by his negligence.

The procedure to make the transferee responsible is through another action or in this case through a third-party
complaint. If both were impleaded, through a cross-claim.

Perez v. Gutierrez

A franchise is personal in nature any transfer or lease thereof should be submitted for approval of the Public Service
Commission, so that the latter may take proper safeguards to protect the interest of the public. It follows that if the
property covered by the franchise is transferred or leased to another without obtaining the requisite approval, the
transfer is not binding on the Public Service Commission and, in contemplation of law, the grantee continues to be
responsible under the franchise in relation to the Commission and to the public for the consequences incident to the
operation of the vehicle, one of them being the collision under consideration.

Juaniza v. Jose

Rosalia Arroyo [common-law wife], who is not the registered owner of the jeepney can neither be liable for
damages caused by its operation. It is settled in our jurisprudence that only the registered owner of a public service
vehicle is responsible for damages that may arise from consequences incident to its operation, or maybe caused to
any of the passengers therein.

MYC-Agro-Industrial Corporation v. Caldo

Regardless of who the actual owner of a vehicle is, the operator of record continues to be the operator of the vehicles
as regards the public and third persons, and as such is directly and primarily responsible for the consequences
incident to its operation, so that, in contemplation of law, such owner/operator of record is the employer of the
driver, the actual operator and employer being considered merely as his agent.

Jereos v. CA

The registered owner or operator has the right to be indemnified by the real or actual owner of the amount that he
may be required to pay as damage for the injury caused.

The right to be indemnified being recognized, recovery by the registered owner or operator may be made in any
form-either by a cross-claim, third-party complaint, or an independent action. The result is the same.

MARITIME COMMERCE
Yu Con v. Ipil

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 coastwise trade. For the purposes of maritime commerce, the words "captain" and
"master" have the same meaning; both being the chiefs or commanders of ships.

The shipowner is liable civilly for the loss suffered by those who contracted with the captain, in consequence of the
misdemeanors and crimes committed by the latter or by the members of the crew.

It is therefore evident that, in accordance with the provisions of the Code of Commerce in force, which are
applicable to the instance case, the defendant Narciso Lauron, as the proprietor and owner of the craft of which
Glicerio Ipil was the master and in which, through the fault and negligence of the latter and of the supercago Justo
Solamo, there occurred the loss, theft, or robbery of the P450 that belonged to the plaintiff and were delivered to
said master and supercargo, a theft which, on the other hand, as shown by the evidence, does not appear to have
been committed by a person not belonging to the craft, should, for said loss or theft, be held civilly liable to the
plaintiff, who executed with said defendant Lauron the contract for the transportation of the merchandise and money
aforementioned between the port of Cebu and the town of Catmon, by means of the said craft.

Lopez v. Duruelo

When the mercantile codes speak of vessels, they refer solely and exclusively to merchant ships, as they do not
include war ships furthermore, they almost always refer to craft which are not accessory to another as is the case of
launches, lifeboats, etc.

Moreover, the mercantile laws, in making use of the words ship, vessels, boat, embarkation, etc., refer exclusively to
those which are engaged in the transportation of passengers and freight from one port to another or from one place
to another; in a word, they refer to merchant vessels and in no way can they or should they be understood as
referring to pleasure craft, yachts, pontoons, health service and harbor police vessels, floating storehouses, warships
or patrol vessels, coast guard vessels, fishing vessels, towboats, and other craft destined to other uses, such as for
instance coast and geodetic survey, those engaged in scientific research and exploration, craft engaged in the loading
and discharge of vessels from same to shore or docks, or in transhipment and those small craft which in harbors,
along shore, bays, inlets, coves and anchorages are engaged in transporting passengers and baggage.

Standard Vacuum Oil.

It therefore appears that whenever merchandise is transported on the sea by virtue of a contract entered into between
the shipper and the carrier, the merchandise is deemed transported at the risk and venture of the shipper, if the
contrary is not stipulated, and all damages suffered by the merchandise during the transportation by reason of
accident or force majeure shall be for the account and risk of the shipper, but the proof of these accidents is
incumbent on the carrier.
o

Thus, same rule in NCC, where carrier is liable for loss unless it is able to prove loss through any of the
exempting circumstances.

Here, the defense of fortuitous event is unavailing since it was held that the tugboat was unseaworthy.
o

Second-hand without being dry-docked; Incomplete equipment; Incompetent crew; No spare parts.

Yu Biao v. Ossorio

It is proven that the agents and employees, through whose negligence the explosion and fire in question occurred,
were agents, employees, and mandatories of the defendant. Where the vessel is one of freight, a public concern or
public utility, its owner or agent is liable for the tortious acts of his agents.

Rubiso v. Rivera

Art 573 of Code of Commerce provides that Merchant vessels constitute property which may be acquired and
transferred by any of the means recognized by law. The acquisition of a vessel must be included in a written
instrument, which shall not produce any effect with regard to third persons if not recorded in the commercial
registry.

So that, pursuant to the above-quoted article, inscription in the commercial registry was indispensable, in order that
said acquisition might affect, and produce consequences with respect to third persons.

Thus, if the transfer was not registered, the rights of the transferee may be defeated by a subsequent purchaser who
is able to register his sale first.

NO VESSEL, NO LIABILITY - LIMITED LIABILITY

Luzon Stevedoring v. CA

It is clear that in case of collision of vessels, in order to avail of the benefits of Article 837 of the Code of Commerce
the shipowner or agent must abandon the vessel. In such case the civil liability shall be limited to the value of the
vessel with all the appurtenances and freight earned during the voyage. However, where the injury or average is due
to the ship-owner's fault as in said case, the shipowner may not avail of his right to limited liability by abandoning
the vessel.

We reiterate what We said in previous decisions that the real and hypothecary nature of the liability of the shipowner
or agent is embodied in the provisions of the Maritime Law, Book III, Code of Commerce. 21 Articles 587, 590 and
837 of the same code are precisely intended to limit the liability of the shipowner or agent to the value of the vessel,
its appurtenances and freightage earned in the voyage, provided that owner or agent abandons the vessel. Although it
is not specifically provided for in Article 837 of the same code that in case of collision there should be such
abandonment to enjoy such limited liability, said article on collision of vessels is a mere amplification of the
provisions of Articles 587 and 590 of same code where abandonment of the vessel is a pre-condition. Even without
said article, the parties may avail of the provisions of Articles 587 and 590 of same code in case of collision. This is
the reason why Article 837 of the same code is considered a superfluity.

Hence the rule is that in case of collision there should be abandonment of the vessel by the shipowner or agent in
order to enjoy the limited liability provided for under said Article 837. The exception to this rule is when the vessel
is totally lost in which case there is no vessel to abandon so abandonment is not required. Because of such total loss
the liability of the shipowner or agent for damages is extinguished. Nevertheless, the shipowner or agent is
personally liable for claims under the Workmen's Compensation Act and for repairs of the vessel before its loss.

In case of illegal or tortious acts of the captain the liability of the shipowner and agent is subsidiary. In such instance
the shipowner or agent may avail of the provisions of Article 837 of the Code by abandoning the vessel.

However, if the injury or damage is caused by the shipowner's fault as where he engages the services of an
inexperienced and unlicensed captain or engineer [or where the vessel is unseaworthy], he cannot avail of the
provisions of Article 837 of the Code by abandoning the vessel. He is personally liable for the damages arising
thereby.

Chua Yek Hong v. IAC

The direct liability of the shipagent and shipowner is limited by their right of abandonment of the vessel and earned
freight. This expresses the universal principle of limited liability under maritime law. The most fundamental effect
of abandonment is the cessation of the responsibility of the ship agent/owner.

The real and hypothecary nature of the liability of the ship owner or agent embodied in the provisions of the
Maritime Law, Book III, Code of Commerce, had its origin in the prevailing conditions of the maritime trade and
sea voyages during the medieval ages, attended by innumerable hazards and perils. To offset against these adverse
conditions and to encourage ship building and maritime commerce, it was deemed necessary to confine the liability
of the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or insurance, if any,
so that if the ship owner or agent abandoned the ship, equipment, and freight, his liability was extinguished.

The limited liability rule, however, is not without exceptions, namely: (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; and (3) in workmen's compensation claims. In this case, there is nothing in the records to show
that the loss of the cargo was due to the fault of the private respondent as shipowners, or to their concurrent
negligence with the captain of the vessel.

Monarch Insurance v. CA

"No vessel, no liability," expresses in a nutshell the limited liability rule. The shipowners or agents liability is
merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. The total
destruction of the vessel extinguishes maritime liens because there is no longer any res to which it can attach. This
doctrine is based on the real and hypothecary nature of maritime law which has its origin in the prevailing conditions
of the maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and perils. To
offset against these adverse conditions and to encourage shipbuilding and maritime commerce it was deemed
necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment,
and freight, or insurance, if any.

Contrary to the petitioners theory that the limited liability rule has been rendered obsolete by the advances in
modern technology which considerably lessen the risks involved in maritime trade, this Court continues to apply the
said rule in appropriate cases. This is not to say, however, that the limited liability rule is without exceptions,
namely: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring
negligence of the shipowner and the captain; (2) where the vessel is insured; and (3) in workmens compensation
claims.

We have categorically stated that Article 587 speaks only of situations where the fault or negligence is committed
solely by the captain. In cases where the ship owner is likewise to be blamed, Article 587 does not apply. Such a
situation will be covered by the provisions of the Civil Code on common carriers.

However, in the subsequent case of Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance
Corporation, Ltd., this Court exculpated Aboitiz from fault and/or negligence while holding that the
unseaworthiness of the M/V P. Aboitiz was only attributable to the negligence of its captain and crew. Thus,
o

"On this point, it should be stressed that unseaworthiness is not a fault that can be laid squarely on
petitioners lap, absent a factual basis for such conclusion. The unseaworthiness found in some cases where
the same has been ruled to exist is directly attributable to the vessels crew and captain, more so on the part
of the latter since Article 612 of the Code of Commerce provides that among the inherent duties of a
captain is to examine a vessel before sailing and to comply with the laws of navigation.

On the matter of Aboitiz negligence, we adhere to our ruling in Aboitiz Shipping Corporation v. Court of Appeals,
that found Aboitiz, and the captain and crew of the M/V P. Aboitiz to have been concurrently negligent.

NOTE: this case ruled consistent with the NCC which provides that the carrier is presumed to be at fault and has the
burden of proving that it exercised extraordinary diligence. In this case, such finding of fortuitous event cannot be
made since the sinking occurred during seasonal weather which supports a finding of unseaworthiness.

PHILAMGEN v. CA

Limited liability rule did not apply in this case where it was found that the ship was unseaworthy which caused the
accident. The vessel was top-heavy.

Vazquez v. CA

Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet, having been kept posted on
the course of the typhoon by weather bulletins at intervals of six hours, the captain and crew were well aware of the
risk they were taking as they hopped from island to island from Romblon up to Tanguingui. They held frequent
conferences, and oblivious of the utmost diligence required of very cautious persons, 9 they decided to take a
calculated risk. In so doing, they failed to observe that extraordinary diligence required of them explicitly by law for
the safety of the passengers transported by them with due regard for an circumstances 10 and unnecessarily exposed
the vessel and passengers to the tragic mishap. They failed to overcome that presumption of fault or negligence that
arises in cases of death or injuries to passengers.

With respect to private respondent's submission that the total loss of the vessel extinguished its liability pursuant to
Article 587, the liability of a shipowner is limited to the value of the vessel or to the insurance thereon. Despite the
total loss of the vessel therefore, its insurance answers for the damages that a shipowner or agent may be held liable
for by reason of the death of its passengers.

Negros Navigation v. CA

The Limited liability of the shipowner does not apply in this case, despite the total loss of the ship because it is
equally negligent in (1) allowing or tolerating the ship captain and crew members in playing mahjong during the
voyage, (2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry more passengers than it
was allowed to carry. Petitioner is, therefore, clearly liable for damages to the full extent.

Abotiz v. New India; Aboitiz v. CA

The exception to the limited liability doctrine applies when the damage is due to the fault of the shipowner or to the
concurrent negligence of the shipowner and the captain. Where the shipowner fails to overcome the presumption of
negligence, the doctrine of limited liability cannot be applied.

In New India, the Court declared that Aboitiz failed to discharge its burden of showing that it exercised
extraordinary diligence in the transport of the goods it had on board in order to invoke the limited liability doctrine.
Thus, the Court rejected Aboitizs argument that the award of damages to respondent therein should be limited to its
pro rata share in the insurance proceeds from the sinking of M/V P. Aboitiz.

PERSONS in MARITIME LAW

Far Eastern Shipping v. CA

In the absence of sufficient proof in rebuttal, the presumption of fault attaches to a moving vessel which collides
with a fixed object and makes a prima facie case of fault against the vessel. [This is allusion where a moving
vessel collides with a fixed object]

A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or out of ports, or in certain
waters. In a broad sense, the term "pilot" includes both (1) those whose duty it is to guide vessels into or out of
ports, or in particular waters and (2) those entrusted with the navigation of vessels on the high seas. However, the
term "pilot" is more generally understood as a person taken on board at a particular place for the purpose of
conducting a ship through a river, road or channel, or from a port.

Customs Administrative Order No. 15-65 prescribes the rules for compulsory pilotage in the covered pilotage
districts

The negligence on the part of Capt. Gavino [pilot] is evident; but Capt. Kabancov is no less responsible for the
allision. His unconcerned lethargy as master of the ship in the face of troublous exigence constitutes negligence.

Where a compulsory pilot is in charge of a ship, the master being required to permit him to navigate it, if the master
observes that the pilot is incompetent or physically incapable, then it is the duty of the master to refuse to permit the
pilot to act. But if no such reasons are present, then the master is justified in relying upon the pilot, but not blindly.
Under the circumstances of this case, if a situation arose where the master, exercising that reasonable vigilance
which the master of a ship should exercise, observed, or should have observed, that the pilot was so navigating the
vessel that she was going, or was likely to go, into danger, and there was in the exercise of reasonable care and
vigilance an opportunity for the master to intervene so as to save the ship from danger, the master should have acted
accordingly. The master of a vessel must exercise a degree of vigilance commensurate with the circumstances.

Since the colliding vessel is prima facie responsible, 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. The parties who suffer are entitled to have their
remedy against the vessel that occasioned the damage, and 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 of
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 of a vessel is not a compulsory one in the sense that the owner or master of the vessel are
bound to accept him, but is employed voluntarily, the owners of the vessel are, all the more, liable for his negligent
act.

National Steel Corporation v. CA

Because the MV Vlasons I was a private carrier, the shipowner's obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil Code which, as a general rule, places the prima facie
presumption of negligence on a common carrier. In an action against a private carrier for loss of, or injury to, cargo,
the burden is on the plaintiff to prove that the carrier was negligent or unseaworthy, and the fact that the goods were
lost or damaged while in the carrier's custody does not put the burden of proof on the carrier.

A stevedore company engaged in discharging cargo has the duty to load the cargo in a prudent manner, and it is
liable for injury to, or loss of, cargo caused by its negligence and where the officers and members and crew of the
vessel do nothing and have no responsibility in the discharge of cargo by stevedores the vessel is not liable for loss
of, or damage to, the cargo caused by the negligence of the stevedores

The Court defined demurrage in its strict sense as the compensation provided for in the contract of affreightment for
the detention of the vessel beyond the laytime or that period of time agreed on for loading and unloading of cargo. It
is given to compensate the shipowner for the nonuse of the vessel.

Switzerland General Insurance Company v. Ramirez

Considering the relationship of the parties, respondent Citadel Lines, Inc. cannot be considered as a "mere agent"
under the civil law on agency as distinguished from a ship agent, within the context of the Code of Commerce.

A ship agent, according to Article 586 of the Code of Commerce, is the person
o

entrusted with the provisioning of a vessel or

who represents her in the port in which she happens to be.

The Code of Commerce provides, among others, that the ship agent shall also be liable for the indemnities in favor
of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he
may exempt himself therefrom by abandoning the vessel with all her equipments and the freightage he may have
earned during the voyage.

The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability of Citadel Lines, Inc. is
concerned. The law does does not make the liability of the ship agent dependent upon the solvency or insolvency of
the ship owner.

Sweet Lines v. CA

ART. 698. In case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in
proportion to the distance covered, without right to recover damages if the interruption is due to fortuitous event or
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 the passenger should agree to wait for her
repairs, he may not be required to pay any increased fare of passage, but his living expenses during the delay shall
be for his own account.

There was no fortuitous event or force majeure which prevented the vessel from fulfilling its undertaking of taking
private respondents to Catbalogan. In the first place, mechanical defects in the carrier are not considered a caso
fortuito that exempts the carrier from responsibility.

The voyage to Catbalogan was "interrupted" by the captain upon instruction of management. The "interruption" was
not due to fortuitous event or for majeure nor to disability of the vessel. Having been caused by the captain upon
instruction of management, the passengers' right to indemnity is evident. The owner of a vessel and the ship agent
shall be civilly liable for the acts of the captain.

Inter-Orient Martime Enterprises v. NLRC

The captain of a vessel is a confidential and managerial employee within the meaning of the above doctrine. A
master or captain, for purposes of maritime commerce, is one who has command of a vessel. A captain commonly
performs three (3) distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical
director of the vessel; and (3) he is a representative of the country under whose flag he navigates.

To the captain is committed the governance, care and management of the vessel. Clearly, the captain is vested with
both management and fiduciary functions.

More importantly, a ship's captain must be accorded a reasonable measure of discretionary authority to decide what
the safety of the ship and of its crew and cargo specifically requires on a stipulated ocean voyage. The captain is
held responsible, and properly so, for such safety. He is right there on the vessel, in command of it and (it must be
presumed) knowledgeable as to the specific requirements of seaworthiness and the particular risks and perils of the
voyage he is to embark upon. The applicable principle is that the captain has control of all departments of service in
the vessel, and reasonable discretion as to its navigation. 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, whether
those be of the shipowners, charterers, cargo owners or of underwriters.

It is a basic principle of admiralty law that in navigating a merchantman, the master must be left free to exercise his
own best judgment. The requirements of safe navigation compel us to reject any suggestion that the judgment and
discretion of the captain of a vessel may be confined within a straitjacket, even in this age of electronic
communications. Indeed, if the ship captain is convinced, as a reasonably prudent and competent mariner acting in
good faith that the shipowner's or ship agent's instructions (insisted upon by radio or telefax from their offices
thousands of miles away) will result, in the very specific circumstances facing him, in imposing unacceptable risks
of loss or serious danger to ship or crew, he cannot casually seek absolution from his responsibility, if a marine
casualty occurs, in such instructions.

Tabacalera Insurance v. North Front Shipping Services

A "charter-party" is defined as a 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; a contract of affreightment by which the owner of a ship or other vessel
lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in

consideration of the payment of freight . . . Contract of affreightment may either be time charter, wherein the vessel
is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage.
In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for
a single or consecutive voyage, the ship owner to supply the ship's store, pay for the wages of the master of the crew,
and defray the expenses for the maintenance of the ship.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The definition
extends to carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or
transporting passengers or both for compensation as a public employment and not as a casual occupation.

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or
portion of a vessel by one or more persons, provided the charter is limited to the shin only, as in the case of a timecharter or voyage-charter.

GENERAL AVERAGE
A. Magsaysay v. Agan

Averages are classified into simple or particular and general or gross.

Generally speaking, simple or particular averages include all expenses and damages caused to the vessel or cargo
which have not inured to the common benefit, and are, therefore, to be borne only by the owner of the property gave
rise to same.

General or gross averages 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 a real and known risk. Being for the common benefit, gross
averages are to be borne by the owners of the articles saved.

Requisites for general average:

o

First, there must be a common danger.

This means, that both the ship and the cargo, after has been loaded, are subject to the same danger,
whether during the voyage, or in the port of loading or unloading;

That the danger arises from the accidents of the sea, dispositions of the authority, or faults of men,

provided that the circumstances producing the peril should be ascertained and imminent or may
rationally be said to be certain and imminent. This last requirement exclude measures undertaken
against a distant peril.

Second, that for the common safety part of the vessel or of the cargo or both is sacrificed deliberately.

Third, that from the expenses or damages caused follows the successful saving of the vessel and cargo.

Fourth, that the expenses or damages should have been incurred or inflicted after taking proper legal steps
and authority.

Standard Oil Co. of New York v. Lopez Castelo

The owner of the vessel is civilly liable for the acts of the captain; and he can only escape from this civil liability by
abandoning his property in the ship and any freight that he may have earned on the voyage.

In a general average, the shipper whose cargo was sacrificed in order to save the ship and cargo may recover from
the shipowner. The Shipowner is directly liable for the general average but may recover from the other individuals
liable to contribute to the general average.

Philippine Home Assurance v. CA

As a rule, general or gross averages include all damages and expenses which are deliberately caused in order to save
the vessel, its cargo, or both at the same time, from a real and known risk.

While the instant case may technically fall within the purview of the said provision, the formalities prescribed under
Articles 813 and 814 of the Code of Commerce in order to incur the expenses and cause the damage corresponding
to gross average were not complied with.

Formalities:
o

Resolution of the Captain after deliberation with the sailing mate and other officers of the vessel, and after
hearing the persons interested in the cargo who may be present.

The shippers have may object and if overruled by the captain, they may proceed against the captain if they
can prove malice, lack of skill or negligence.

If the situation is urgent, the deliberation may be dispensed with.

Resolution must be entered in the logbook stating:

Reasons for the Dissent

Causes which impelled captain to act

Minutes must be signed all persons present. If urgent, by the captain and officers.

Minutes shall state the goods jettisoned.

Copy of the minutes must be delivered to the maritime judicial authority within 24 hours from arrival and
must be ratified under oath.

COLLISSIONS
Mecenas v. CA

The grossness of the negligence of the "Don Juan" is underscored when one considers the foregoing circumstances
in the context of the following facts: Firstly, the "Don Juan" was more than twice as fast as the "Tacloban City;" it
carried the full complement of officers and crew members specified for a passenger vessel of her class; it was
equipped with radar; the "Don Juan's officer on-watch had sighted the "Tacloban City" on his radar screen while the
latter was still four (4) nautical miles away.

It is true that the "Tacloban City" failed to follow Rule 18 of the International Rules of the Road which requires two
(2) power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each
vessel may pass on the port side (left) of the other. The "Tacloban City," when the two (2) vessels were only threetenths (0.3) of a mile apart, turned (for the second time) 15 to port side while the "Don Juan" veered hard to
starboard. . . . [But] "route observance" of the International Rules of the Road will not relieve a vessel from
responsibility if the collision could have been avoided by proper care and skill on her part or even by a departure
from the rules.

In the petition at bar, the "Don Juan" having sighted the "Tacloban City" when it was still a long way off was
negligent in failing to take early preventive action and in allowing the two (2) vessels to come to such close quarters
as to render the collision inevitable when there was no necessity for passing so near to the "Tacloban City" as to
create that hazard or inevitability, for the "Don Juan" could choose its own distance. It is noteworthy that the
"Tacloban City," upon turning hard to port shortly before the moment of collision, signalled its intention to do so by
giving two (2) short blasts with its horn. The "Don Juan" gave no answering horn blast to signal its own intention
and proceeded to turn hard to starboard

Smith Bell and Company v. CA

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."

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.

The Second mate shall take command of the vessel in case of the inability or disqualification of the captain and
sailing mate, assuming, in such case, their powers and liability.

Manila Steamship v. Insa Abdulhaman

In case of collision between two vessels imputable to both of them, each vessel shall suffer her own damage and
both shall be solidarily liable to the damages caused to their cargoes. In making both vessels solidarily liable, their
responsibility is direct.

Despite the total loss of one of the vessels, the ship owner of said vessel is not absolved by the limited liability rule
due to his concurrent negligence in knowingly hiring an unlicensed captain and engineer, thereby increasing the risk
of passengers.

Moreover, the said shipowner in obtaining his permit to operate, assumed all risks and thereby waived the
application of the limited liability rule.

Caltex Philippines v. Sulpicio Lines

A charter party is a 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; a contract of affreightment is one by which the owner of a ship or other vessel lets
the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight.

A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed
period of time, or voyage charter , wherein the ship is leased for a single voyage. In both cases, the charter-party
provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage,
the ship owner to supply the ship's store, pay for the wages of the master of the crew, and defray the expenses for the
maintenance of the ship.

Under a demise or bareboat charter on the other hand, the charterer mans the vessel with his own people and
becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages caused by
negligence.

If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for
the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to
third persons in respect of the ship.

In this case, the charter party agreement did not convert the common carrier into a private carrier. The parties
entered into a voyage charter, which retains the character of the vessel as a common carrier.

Under the COGSA, the carrier impliedly warrants the seaworthiness of the ship. For a vessel to be seaworthy, it
must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew.
The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a
clear breach of its duty prescribed in Article 1755 of the Civil Code.

The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered
complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in "public
service." Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common
carriers, are not expected to inquire into the vessel's seaworthiness, genuineness of its licenses and compliance with
all maritime laws.

National Development Company v. CA

Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the
owner of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. 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.

Significantly, 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.

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.

Kramer v. CA

In an action for damages arising from the collision of two (2) vessels the four (4) year prescriptive period must be
counted from the day of the collision. The aggrieved party need not wait for a determination by an administrative
body like a Board of Marine Inquiry, that the collision was caused by the fault or negligence of the other party
before he can file an action for damages.

Note: Case is shipowner against shipowner.

SPECIAL CONTRACTS OF MARITIME COMMERCE

Guerrero v. Madrigal Shipping

Contract of Carriage. Consent manifested by the fact that the passenger boards the ship and the carrier consents or
accepts him in the ship for transportation. Cause which is the fare paid by the passenger. Object which is the
transportation of the passenger from the place of departure to the place of destination.

Planters Products v. CA

A "charter-party" is defined as a 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; a contract of affreightment by which the owner of a ship or other vessel
lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight; Charter parties are of two types: (a) contract of affreightment which
involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others;
and, (b) charter by demise or bareboat charter, by the terms of which the 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. Contract of affreightment may either be time charter, wherein the vessel
is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage.
In both cases, the charter-party provides for the hire of vessel only, either for a determinate period of time or for a
single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and the crew,
and defray the expenses for the maintenance of the ship.

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or
portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a timecharter or voyage-charter. 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, at least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although
her holds may, for the moment, be the property of the charterer.

Coastwise Lighterage Corporation v CA

Under the demise or bareboat charter of the vessel, the charterer will generally be regarded as the owner for the
voyage or service stipulated. The charterer mans the vessel with his own people and becomes the owner pro hac vice
, subject to liability to others for damages caused by negligence. To create a demise, the owner of a vessel must
completely and exclusively relinquish possession, command and navigation thereof to the charterer, anything short
of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all

On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of its space to
haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under such
contract the general owner retains the possession, command and navigation of the ship, the charterer or freighter
merely having use of the space in the vessel in return for his payment of the charter hire

An owner who retains possession of the ship though the hold is the property of the charterer, remains liable as
carrier and must answer for any breach of duty as to the care, loading and unloading of the cargo

Maritime Agencies v. CA

In this case, the charterer was liable for the unloading of the cargo because of a contract. However, the charterers
agent, which cannot be considered a shipagent is not answerable for injury caused by the principal. It is a wellsettled principle in agency that the agent shall be liable for the act or omission of the principal only if the latter is
undisclosed.

In a previous case however, the charterers agent was made liable because the charterer represented itself on the bill
of lading. As the charterer itself was the carrier it was liable for the loss and damage to the cargo. As for the
charterers agent, it was considered as shipagent because it took charge of the unloading and issued cargo receipts in
its own name and claims against the charterer-carrier were received and processed by it.

Here, the charterer did not represent itself as carrier. It only assumed responsibility for unloading. Consequently, the
charterers agent cannot be considered a ship agent and is not liable to third parties.

Litonjua v. National Seamen Board

It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the

charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons
who have dealt with him or with the vessel. In such case, the Master of the vessel is the agent of the charterer and
not of the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for
the expenses of the voyage including the wages of the seamen.

Treating Fairwind [charterer] as owner pro hac vice, petitioner Litonjua having failed to show that it [fairwind] was
not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on
the contract of employment between the ship captain and the private respondent.

Puromines v. CA

Responsibility to third persons for goods shipped on board a vessel follows the vessel's possession and employment;
and if possession is transferred to the charterer by virtue of a demise, the charterer, and not the owner, is liable as
carrier on the contract of affreightment made by himself or by the master with third persons, and is answerable for
loss, damage or nondelivery of goods received for transportation. An owner who retains possession of the ship,
though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as
to the care, loading or unloading of the cargo.

Ouano v. CA

The act of the charterer in sub-chartering the vessel, in spite of a categorical prohibition may be a violation of the
contract, but the owner's right of recourse is against the original charterer, either for rescission or fulfillment, with
the payment of damages in either case.

In a demise or bareboat, not only the entire capacity of the ship is let but the ship itself, and the possession is passed
to the charterer. The entire control and management of it is given up to him. The general owner loses his lien for
freight, but the lien itself is not destroyed; the charterer is substituted in his place, in whose favor the lien continues
to exist when goods are taken on freight. The general owner, however, has no remedy for the charter of his vessel
but his personal action on the covenants of the charter party. It is a contract in which he trusts in the personal credit
of the charterer.

Therefore, where the charter constitutes a demise of the ship and the charterer is the owner for the voyage, and that
is the kind of charter party involved in the instant case, the general owner has no lien on the cargo for the hire of the
vessel, in the absence of an express provision therefor

Loadstar Shipping v. Pioneer Asia

Petitioner remains a common carrier notwithstanding the existence of the charter agreement with the Northern
Mindanao Transport Company, Inc. since the said charter is limited to the ship only and does not involve both the
vessel and its crew. As elucidated in Planters Products, its charter is only a voyage-charter, not a bareboat charter.

Mindanao Bus Company v. CIR

Bills of Lading, in modern jurisprudence, are not those issued by masters of vessels alone; they now comprehend all
forms of transportation, whether by sea or land, and includes the receipts for cargo transported.

A bill of lading may be defined as a written acknowledgment of the receipt of goods and an agreement to transport
and to deliver them at a specified place to a person named or on his order. Such instruments are sometimes called
'shipping receipts,' 'forwarders' receipts,' and 'receipts for transportation." The designation, however, is not material,
and neither is the form of the instrument. If it contains an acknowledgment by the carrier of the receipt of goods for
transportation, it is, in legal effect, a bill of lading.

Macondray and Company v. Acting Commissioner of Customs

The inclusion of the unmanifested cargoes in the Bill of Lading does not satisfy the requirement of the aforequoted
sections of the Tariff and Customs Code. It is to be noted that nowhere in the said section is the presentation of a Bill
of Lading required, but only the presentation of a Manifest containing a true and accurate description of the cargoes.

This is for the simple reason that while a manifest is a declaration of the entire cargo, a bill of lading is but a
declaration of a specific part of the cargo and is a matter of business convenience based exclusively on a contract.
The object of a manifest is to furnish the customs officers with a list to check against, to inform our revenue officers
what goods are being brought into the country, and to provide a safeguard against goods being brought into this
country on a vessel and then smuggled ashore. In short, while a bill of lading is ordinarily merely a convenient
commercial instrument designed to protect the importer or consignee, a manifest of the cargo is absolutely essential
to the exportation or importation of property in all vessels.

The evident intent and object of which is to impose upon the owners and officers of such vessel an imperative
obligation to submit lists of the entire loading of the ship in the prescribed form, to facilitate the labors of the
customs and immigration officers and to defeat any attempt to make use of such vessels to secure the unlawful entry
of persons or things into the country. Since therefore, the purpose served by the manifest is far different from that of
the bill of lading, We cannot acceptor place an imprimatur on the contention of petitioner that the entries in the bill
of lading adequately supplied the deficiency of the manifest and cured it of its infirmity. The mandate of the law is
clear and We cannot settle for less. The law imposes the absolute obligation, under penalty for failure, upon every
vessel from a foreign port to have "on board complete written or typewritten manifests of all her cargo, signed by the
master". Where the law requires a manifest to be kept or delivered, it is not complied with unless the manifest is true
and accurate.

Magellan v. CA

An on board bill of lading is one in which it is stated that the goods have been received on board the vessel which is
to carry the goods, whereas a received for shipment bill of lading is one in which it is stated that the goods have
been received for shipment with or without specifying the vessel by which the goods are to be shipped. An on board
bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable expectation
that the shipment is as good as on its way.

Received for shipment bills of lading are issued whenever conditions are not normal and there is insufficiency of
shipping space.

It is, therefore, understandable that a party to a maritime contract would require an on board bill of lading because of
its apparent guaranty of certainty of shipping as well as the seaworthiness of the vessel which is to carry the goods.

Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the detention of
the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for damages for
failure to accept delivery. In a broad sense, every improper detention of a vessel may be considered a demurrage.
Liability for demurrage, using the word in its strictly technical sense, exists only when expressly stipulated in the
contract. Using the term in its 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 one who is a party to the shipping contract. Notice of arrival of vessels or conveyances, or of
their placement for purposes of unloading is often a condition precedent to the right to collect demurrage charges.

Telengtan Brothers v. CA

A bill of lading is both a receipt and a contract.

Liability for demurrage only starts after the free time and at the time when the consignee may claim the cargo.

Sweet Lines v. Teves

Condition No. 14, under the passenger ticket provides that the venue of actions arising out of the conditions and
provisions of the ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.

Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious
cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over
said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared
void and unenforceable, as contrary to public policy to make the courts accessible to all who may have need of
their services.

Reyma Brokerage v. Phil Home Assurance

Evidently, the carrier, by signifying in the bill of lading that "it is a receipt ... for the number of packages shown
above," had explicitly admitted that the containerized shipments had actually the number of packages declared by
the shipper in the bill of lading. And this conclusion is bolstered by the stipulation printed in the bill of lading,
"unless expressly acknowledged and agreed to." Therefore, the phrase "said to contain" also appearing in the bill of
lading must give way to this reality.

The bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described.

The situation is different however where the carrier of the containerized cargo simply admits the information
furnished by the shipper with regard to the goods it shipped as reflected in the bill of lading ("said to contain").

As the carrier prima facie received all the shipments in the sealed containers, it has the burden to rebut the
conclusion that it received the same without shortage.

Keng Hua Paper Products v. CA

A bill of lading serves two functions. First , it is a receipt for the goods shipped. Second , it is a contract by which
three parties, namely, the shipper, the carrier, and the consignee undertake specific responsibilities and assume
stipulated obligations. A "bill of lading delivered and accepted constitutes the contract of carriage even though not
signed," because the "(a)cceptance of a paper containing the terms of a proposed contract generally constitutes an
acceptance of the contract and of all of its terms and conditions of which the acceptor has actual or constructive
notice." In a nutshell, the acceptance of a bill of lading by the shipper and the consignee, with full knowledge of its
contents, gives rise to the presumption that the same was a perfected and binding contract.

Hence, the contract of carriage, as stipulated in the bill of lading in the present case, must be treated independently
of the contract of sale between the seller and the buyer, and the contract for the issuance of a letter of credit between
the buyer and the issuing bank. Any discrepancy between the amount of the goods described in the commercial
invoice in the contract of sale and the amount allowed in the letter of credit will not affect the validity and
enforceability of the contract of carriage as embodied in the bill of lading. As the bank cannot be expected to look
beyond the documents presented to it by the seller pursuant to the letter of credit, neither can the carrier be expected
to go beyond the representations of the shipper in the bill of lading and to verify their accuracy vis-a-viz the
commercial invoice and the letter of a credit.

Market Developers v. IAC

The charter party may be oral, in which case the terms thereof, not having been reduced to writing, shall be those
embodied in the bill of lading.

We see no reason why the second agreement of the parties to deliver the petitioner's cargo to Roxas City instead of
Kalibo, Aklan, should not be recognized simply because it was not in writing. Law and jurisprudence support the
validity of such a contract. And there is no justification either to incorporate in such contract the stipulation for
demurrage in the original written contract which provided for a different port of destination than that later agreed
upon by the parties. It was precisely this vital change in the second contract that rendered that first contract
ineffectual.

If the rate provided for in the old written contract was maintained in the new oral contract, it was simply because, as
the private respondent himself declared, the rates for Kalibo, Aklan and Culasi, Roxas City, where the same. But the
demurrage charges cannot be deemed stipulated also in the verbal contract because the conditions in the ports of
Aklan and Roxas City were, unlike the rates, not the same.

Regarding the bill of lading, an examination thereof will reveal that there is no condition or requirement therein for
the payment of demurrage charges. Under the afore-quoted Article 653 of the Code of Commerce, therefore, there
was no reason to read any stipulation for demurrage into the second contract.

COGSA
Eastern Shipping Lines v. IAC

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. As the cargoes in question were transported from Japan to the Philippines,
the liability of Petitioner Carrier is governed primarily by the Civil Code. However, in all matters not regulated by

said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special
laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code.

It is to be noted that the Civil Code does not of itself limit the liability of the common carrier to a fixed amount per
package although the Code expressly permits a stipulation limiting such liability. Thus, the COGSA which is
suppletory to the provisions of the Civil Code, steps in and supplements the Code by establishing a statutory
provision limiting the carrier's liability in the absence of a declaration of a higher value of the goods by the shipper
in the bill of lading. The provisions of the Carriage of Goods by.Sea Act on limited liability are as much a part of a
bill of lading as though physically in it and as much a part thereof as though placed therein by agreement of the
parties.

In determining amount payable under the COGSA rule on $500 per package limit, determine the actual amount of
damage sustained. If this is less than $500/package, then pay actual amount. If the amount is more than
$500/package then pay $500/package.
o

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount exceeding $500 per package

When what would ordinarily be considered packages are shipped in a container supplied by the carrier and the
number of such units is disclosed in the shipping documents, each of those units and not the container constitutes the
"package" referred to in liability limitation provision of COGSA.

The individual crates or cartons prepared by the shipper and containing his goods can rightly be considered
"packages" standing by themselves, they do not suddenly lose that character upon being stowed in a carrier's
container. I would liken these containers to detachable stowage compartments of the ship.

A container is a permanent reusable article of transport equipment not packaging of goods durably made of metal,
and equipped with doors for easy access to the goods and for repeated use. It is designed to facilitate the handling,
loading, stowage aboard ship, carriage, discharge from ship, movement, and transfer of large numbers of packages
simultaneously by mechanical means to minimize the cost and risks of manually processing each package
individually, It functions primarily as ship's gear for cargo handling, and is usually provided by the carrier.

Aboitiz v. CA

While it is true that in the bill of lading there is such stipulation that the liability of the carrier is US$500.00 per
package/container/customary freight, there is an exception, that is, when the nature and value of such goods have
been declared by the shipper before shipment and inserted in the bill of lading.

It is absurd to interpret "container," as provided in the bill of lading to be valued at US$500.00 each, to refer to the
container which is the modern substitute for the hold of the vessel. The package/container contemplated by the law
to limit the liability of the carrier should be sensibly related to the unit in which the shipper packed the goods and
described them, not a large metal object, functionally a part of the ship, in which the carrier used them to be
contained. Such "container" must be given the same meaning and classification as a "package" and "customary
freight unit."

Eastern & Australian Steamship v. Great American Insurance

By providing that $500.00 is the maximum liability, the law does not disallow an agreement for liability at a lesser
amount.

Significantly, Article 1749 of the New Civil Code expressly allow the limitation of the carrier's liability.
o

Art. 1749 A stipulation that the common carrier's liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is binding.

F.H. Stevens & Co. v. Norddeuscher Lloyd

If, in an action commenced, in due time, a judgment for the plaintiff be reversed, or if the plaintiff fail otherwise
than upon the merits, and the time limited for the commencement of such action has, at the date of such reversal or
failure, expired, the plaintiff, or, if he die and the cause of action survive, his representatives may commence a new
action within one year after such date, and this provision shall apply to any claim asserted in any pleading by a
defendant.

The action commenced by the plaintiff in the Municipal Court of Manila, on April 27, 1960, was dismissed June 13,
1960, or over twenty (20) days after the expiration of the period of one (1) year, beginning from May 21, 1959,
within which plaintiff's action could be brought pursuant to Commonwealth Act No. 65, in relation to the Carriage
of Goods by Sea Act. Under said section of Act No. 190, the period within which plaintiff could initiate the present
case was renewed, therefore, for another year, beginning from June 14, 1960. The case at bar was commenced on
June 24, 1960, or within the period last mentioned.

Dole Philippines v. Maritime Co.

In cases governed by the Carriage of Goods by Sea Act, the general provisions of the Code of Civil Procedure on
prescription should not be made to apply.

Similarly, we now hold that in such a case the general provisions of the new Civil Code (Art. 1155) cannot be made
to apply, as such application would have the effect of extending the one-year period of prescription fixed in the law.
It is desirable that matters affecting transportation of goods by sea be decided in as short a time as possible; the
application of the provisions of Article 1155 of the new Civil Code would unnecessarily extend the period and
permit delays in the settlement of questions affecting transportation, contrary to the clear intent and purpose of the
law.

American Insurance Co. v. Compania Maritima

Filing a case against the intermediate carrier who transported the goods during the transshipment is not the same as
impleading the Principal Carrier. The prescriptive period continues to run for the Principal carrier until he is brought
into court.

Universal Shipping Lines v. IAC

Prescriptive period of One year under COGSA may be suspended by express agreement of the parties.

Union Carbide Phil. v. Manila Railroad

One year period is counted from the time the goods are delivered to the arrastre.

In action against the arrastre operator to enforce liability for loss of the cargo or damage thereto should be filed
within one year from the date of the discharge of the goods or from the date when the claim for the value of such
goods has been rejected or denied by the arrastre operator.
o

However, before such action can be filed a condition precedent should be complied with and that is, that a
claim (provisional or final) shall have been previously filed with the arrastre operator within fifteen days
from the date of the discharge of the last package from the carrying vessel.

Having complied with the condition precedent for the filing of a claim within the fifteen- day period, Union
Carbide could file the court action within one year, either from December 19, 1961 or from December 19,
1962 . This second date is regarded as the expiration of the period within which the Manila Port Service
should have acted on the claim.

In other words, the claimant or consignee has a two-year prescriptive period, counted from the date of the
discharge of the goods, within which to file the action in the event that the arrastre contractor, as in this
case, has not rejected nor admitted liability.

Ang v. American Steamship Agencies

In order for the 1 year period under the COGSA to apply, there must be loss or damage to the cargo.

As defined in the Civil Code and as applied to Section 3 (6) paragraph 4 of the Carriage of Goods by Sea Act, "loss"
contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared that their existence is unknown or they cannot be recovered. It does
not include a situation where there was indeed delivery but delivery to the wrong person, or a misdelivery, as
alleged in the complaint in this case.

It follows that for suits predicated not upon loss or damage but on alleged misdelivery (or conversion) of the goods,
the applicable rule on prescription is that found in the Civil Code, namely, either ten years for breach of a written
contract or four years for quasi-delict.

Mitsui O.S.K v. CA

The Loss or deterioration covered by the one-year prescriptive period in the COGSA refers to physical damage to
the goods.

As to loss or deterioration in the value of the goods because of the decline in market value, the prescriptive period
for the recovery of the lost value is 10 years for breach of contract.

Filipino Merchants Insurance Co. v. Aviles

The one-year prescriptive period to file a case against the Carrier for loss or deterioration to the goods applies not
only to the shipper but also the consignee and the subrogee-insurer.

Note: Had the shippers in the civil cases below filed an action against the insurer after the one-year prescriptive
period, then the latter could have successfully denied liability on the ground that by their own doing, the shippers
had prevented the insurer from being subrogated to their respective rights against the carrier by filing a suit after the
one-year prescriptive period. The situation, however, does not obtain in the present case.

Mayer Steel Pipe v. CA

Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and the ship shall be discharged from all
liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date
when they should have been delivered. Under this provision, only the carrier's liability is extinguished if no suit is
brought within one year. But the liability of the insurer is not extinguished because the insurer's liability is based not
on the contract of carriage but on the contract of insurance. A close reading of the law reveals that the Carriage of
Goods by Sea Act governs the relationship between the carrier on the one hand and the shipper, the consignee and/or
the insurer on the other hand. It defines the obligations of the carrier under the contract of carriage. It does not,
however, affect the relationship between the shipper and the insurer. The latter case is governed by the Insurance
Code.

The ruling in Filipino Merchants should apply only to suits against the carrier filed either by the shipper, the
consignee or the insurer. When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by
Sea Act applies to the insurer, it meant that the insurer, like the shipper, may no longer file a claim against the carrier
beyond the one-year period provided in the law. But it does not mean that the shipper may no longer file a claim
against the insurer because the basis of the insurer's liability is the insurance contract.

Belgian Overseas v. Philippine First Insurance

Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order at their destination
constitutes prima facie fault or negligence on the part of the carrier. If no adequate explanation is given as to how the
loss, the destruction or the deterioration of the goods happened, the carrier shall be held liable therefor.

Notice of Claim. First, the above-cited provision of COGSA provides that the notice of claim need not be given if
the state of the goods, at the time of their receipt, has been the subject of a joint inspection or survey. As stated
earlier, prior to unloading the cargo, an Inspection Report as to the condition of the goods was prepared and signed
by representatives of both parties.

Second, as stated in the same provision, a failure to file a notice of claim within three days will not bar recovery if it
is nonetheless filed within one year. This one-year prescriptive period also applies to the shipper, the consignee, the
insurer of the goods or any legal holder of the bill of lading.

In Loadstar Shipping Co., Inc, v. Court of Appeals, we ruled that a claim is not barred by prescription as long as the
one-year period has not lapsed.

Liability Limitation. Thus, the COGSA, which is suppletory to the provisions of the Civil Code, supplements the
latter by establishing a statutory provision limiting the carrier's liability in the absence of a shipper's declaration of a

higher value in the bill of lading. The provisions on limited liability are as much a part of the bill of lading as though
physically in it and as though placed there by agreement of the parties.

In the case before us, there was no stipulation in the Bill of Lading limiting the carrier's liability. Neither did the
shipper declare a higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words
"L/C No. 90/02447 cannot be the basis for petitioners' liability.
o

A notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper
for the importation of steel sheets did not effect a declaration of the value of the goods as required by the
bill. That notation was made only for the convenience of the shipper and the bank processing the Letter of
Credit.

A bill of lading was separate from the Other Letter of Credit arrangements.

In Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, we explained the meaning of packages: "When
what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of
such units is disclosed in the shipping documents, each of those units and not the container constitutes the 'package'
referred to in the liability limitation provision of Carriage of Goods by Sea Act."

Philippine First Insurance v. Wallem Shipping

For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from
the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on
the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New
York v. Lopez Castelo, the Court interpreted the ship captains liability as ultimately that of the shipowner by
regarding the captain as the representative of the ship owner.

Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the
loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then
states that among the carriers responsibilities are to properly and carefully load, handle, stow, carry, keep, care for,
and discharge the goods carried.

The responsibility of the carrier shall commence from the time when the goods are loaded on board the vessel and
shall cease when they are discharged from the vessel.

The aforementioned Section 3(2) of the COGSA states that among the carriers responsibilities are to properly and
carefully load, care for and discharge the goods carried. The bill of lading covering the subject shipment likewise
stipulates that the carriers liability for loss or damage to the goods ceases after its discharge from the vessel. Article
619 of the Code of Commerce holds a ship captain liable for the cargo from the time it is turned over to him until its
delivery at the port of unloading.

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of
the carrier. In the instant case, the damage or losses were incurred during the discharge of the shipment while under
the supervision of the carrier.

SALVAGE LAW
Erlanger & Galinger v. Swedish East Asiatic

Three elements are necessary to a valid salvage claim: (1) A marine peril. (2) Service voluntarily rendered when not
required as an existing duty or from a special contract. (3) Success, in whole or in part, or that the service rendered
contributed to such success.

A derelict is defined as "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).

Prima facie a vessel found at sea in a situation of peril, with no one aboard of her, is a derelict; but where the master
and crew leave such vessel temporarily, without any intention of final abandonment, for the purpose of obtaining
assistance, and with the intent to return and resume possession, she is not technically a derelict. It is not of
substantial importance to decide that question. She was what may be called a quasi-derelict; abandoned, helpless,
her sails gone, entirely without power in herself to save herself from a situation not of imminent, but of considerable
peril; lying about midway between the Gulf Stream and the shore, and about 30 miles from either.

An east wind would have driven her upon one, and a west wind into the other, where she should have become a total
loss. Lying in the pathway of commence, with nothing aboard to indicate an intention to return and resume
possession, it was a highly meritorious act upon the part of the Shawmut to take possession of her, and the award
must be governed by the rules which govern in case of derelicts; the amount of it to be modified in some degree in
the interest of the owners in consideration of their prompt, intelligent, and praiseworthy efforts to resume possession
of her, wherein they incurred considerable expense.

Barrios v. Carlos A. Go Thong

In accordance with the Salvage Law, a ship which is lost or abandoned at sea is considered a derelict and, therefore,
proper subject of salvage. A ship in a desperate condition, where persons on board are incapable, by reason of their
mental and physical condition, of doing anything for their own safety, is a quasi-derelict and may, likewise, be the
proper subject of salvage.

"Salvage" has been defined as "the compensation allowed to persons by whose assistance a ship or her cargo has
been saved, in whole or in part, from impending peril on the sea, or in recovering such property from actual loss, as
in case of shipwreck, derelict, or recapture."

Here, the ship was not a derelict or quasi-derelict. It was not in any danger.

In a towage, only the owner of the towing vessel, to the exclusion of the crew of the said vessel, may be entitled to
remuneration.

The distinction between salvage and towage is of importance to the crew of the salvaging ship, for the following
reasons: If the contract for towage is in fact towage, then the crew does not have any interest or rights in the

remuneration pursuant to the contract. But if the owners of the respective vessels are of a salvage nature, the crew of
the salvaging ship is entitled to salvage, and can look to the salvaged vessel for its share.
Alhambra Cigar v. La Granja

A vessel although not abandoned may be subject of salvage if at the time the services were rendered there was
probable, threatening danger of the vessel or of the cargo to be damaged.

In the case at bar, there is no question that at the time the contract was entered into there was an imminent danger to
Nieva and to its cargoes.

Towing a vessel may or may not be a salvage service. If the vessel towed is by this means aided in escaping from a
present or prospective danger, the service will be regarded as one of salvage, and the towage as merely an incident.

If however, the vessel thus assisted is not encompassed by any actual or probable danger, and the employment is
simply for the purpose of expediting the voyage, such service is towage.

Limpangco Sons v. Yongco Steamship

A vessel which undertakes a towage service is liable for reasonable care of the tow, and that reasonable care is
measured by the dangers and hazards to which the tow is or may be exposed, which it is the duty of the master of the
tug to know and to guard against not only by giving proper instructions for the management of the tow, but by
watching her when in a dangerous locality, to see that his directions are obeyed. The duty of the tug to a tow is a
continuous one from the time service commences until it is completed.

Its responsibility includes not only the proper and safe navigation of the tug on the journey, but to furnish safe,
sound and reasonable appliances and instrumentalities for the service to be performed, as well as the giving of
proper instructions as to the management of the tow; and if the locality in which the two finds itself at any given
time is more than ordinarily dangerous, the tug is held to a proportionately higher degree of care and skill.

PRIOR OPERATOR RULE and CPC/CPCN

Martires Ereno v. PSC

In the granting of certificates of public convenience, the principle that overrides all others is that public interest,
necessity and convenience should be the first and paramount consideration. The number of persons to be benefited
by the proposed service is immaterial.

The "prior operator" and "protection of investment" rules cannot prevail over the convenience of the public. Said
"protection of investment" rule is not absolute, for nobody has exclusive right to secure a franchise or a certificate of
public convenience. Nor could an unfair or ruinous competition result from the authorization of the ice plant applied
for. In order that the opposition based on ruinous competition may prosper, it must be shown that the oppositor
would be deprived of fair profits on the capital invested in its business. The mere possibility of reduction in the
earnings of a business is not sufficient to prove ruinous competition. It must be shown that the business would not
have sufficient gains to pay a fair rate of interest on its capital.

San Pablo v. Pantranco South Express

A ferry service, in law, is treated as a continuation of the highway from one side of the water over which passes to
the other side for transportation of passengers or of travellers with their teams vehicles and such other property as,
they may carry or have with them.

The term "ferry" implied the continuation by means of boats, barges, or rafts, of a highway or the connection of
highways located on the opposite banks of a stream or other body of water. The term necessarily implies
transportation for a short distance, almost invariably between two points, which is unrelated to other transportation.

Coastwide Trade. A steamboat or motorboat service between the different islands, involving more or less great
distance and over more or less turbulent and dangerous waters of the open sea, to be coastwise or inter-island
service.

As the San Bernardino Strait which separates Matnog and Allen leads to the ocean it must at times be choppy and
rough so that it will not be safe to navigate the same by small boats or barges but only by such steamboats or vessels
as the MV "Black Double.

While a ferry boat service has been considered as a continuation of the highway when crossing rivers or even lakes,
which are small body of waters - separating the land, however, when as in this case the two terminals, Matnog and
Allen are separated by an open sea it can not be considered as a continuation of the highway. Respondent
PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping service in
accordance with the provisions of law. Its CPC as a bus transportation cannot be merely amended to include this
water service under the guise that it is a mere private ferry service.