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LAW ON TRANSPORTATION AND PUBLIC UTILITIES Consignee person to whom the goods are to be delivered.

May be the shipper himself or a third person who is not

Contract of Transportation person obligates himself to actually a party to the contract
transport persons or property from one place to another for
a consideration. Perfection:
> contract to carry goods consensual
2 KINDS: > contract of carriage - act of delivery of goods ( goods are
1. CARRIAGE OF PASSENGERS unconditionally placed in the possession and control of the
carrier and upon their receipt by the carrier for
Parties: common carrier & passenger (carried gratuitously transportation)
or not)
Passenger one who travels in a public conveyance by virtue CARRIER:
of contract, express or implied, with the carrier as to the Common carriers (CC) (1732)
payment of fare or that which is accepted as an equivalent persons, corporations, firms or associations engaged
thereof in the business of carrying or transporting
passengers or goods or both, by land, water, or air,
Perfection: for compensation, offering their services to the
public. (NOT the means of transportation)
2 types of contracts of carriage of PASSENGERS: one that holds itself out as ready to engage in the
> contract to carry (agreement to carry the passenger at transportation of goods for hire as a public
some future date) consensual contract and perfected by employment and not as a casual occupation.
mere consent
Tests for determining WON a party is a common carrier
* AIRCRAFT perfected even without issuance of ticket as of goods:
long as there was already meeting of minds with respect to 1. He must be engaged in the business of carrying
the subject matter and consideration goods for others as a public employment, and must
hold himself out as ready to engage in the
> Contract of Carriage transportation of goods for persons generally as a
real contract; not until the facilities of the carrier are business and not as a casual occupation.
actually used can the carrier be said to have assumed the 2. He must undertake to carry good of the kind to
obligation of the carrier; perfected by actual use. which his business is confined.
3. He must undertake to carry by the method by which
* AIRCRAFT perfected if it was established that the his business is conducted and over his established
passenger had checked in at the departure counter, passed roads.
through customs and immigration, boarded the shuttle bus 4. Transportation must be for hire.
and proceeded to the ramp of the aircraft and baggage
already loaded to the aircraft. Characteristics of Common carriers (CC):
no distinction between one whose principal
* Public Utility Bus or Jeepneys or Street Cars once it stops business is the transportation of persons/goods and
it is in effect making a continuous offer to riders; perfected one who does such as an ancillary business
when passenger is already attempting to board the vehicle (sideline)
no distinction between regular or scheduled basis
* TRAINS perfected when a person: and one offering such service on an occasional,
a. purchased a ticket/ possess sufficient fare with episodic or unscheduled business
which to pay for his passage still a CC even if services offered to a limited
b. presented himself at the proper place and in a clientele (between the general public and a narrow
proper manner to be transported segment of the general population)
c. has a bona fide intention to use facilities of the Still considered a CC even if he did not secure a
carrier Certificate of Public Convenience
No distinction as to the means of transporting, as
2. CARRIAGE OF GOODS long as it is by land, water or air
Parties: shipper & carrier The Civil Code does not provide that the
transportation should be by motor vehicle
Shipper the person who delivers the goods to the carrier Still a CC even if he has no fixed and publicly know
for transportation; pays the consideration or on whose route, maintains no terminals, and issues no tickets
behalf payment is made pipeline operators are CCs not necessarily motor
vehicles (Case: First Philippine Industrial Corp. vs.


Extraordinary diligence in Ordinary diligence in the
Case: Jose Mendoza vs. Philippine Airlines Inc the vigilance over the goods carriage of goods will suffice
- The test of whether one is a common carrier by air is they carry
whether he holds out that he will carry for hire, so In case of loss, destruction, No such presumption applies
long as he has room, goods of everyone bringing or deterioration of goods, to private carriers, for
goods to him for carriage, not whether he is carrying they are presumed to have whosoever alleges damage
as a public employment or whether he carries to a been at fault or to have acted to or deterioration n of the
fixed place negligently; burden of goods carried has the onus of
proving otherwise rests on proving that the cause was
CHARTER PARTY: them the negligence of the carrier
- Contract by which an entire ship or some principal Cannot stipulate that it is May validly enter into such
part thereof is let by the owner to another person exempt from liability for the stipulation
for a specified time or use. negligence of its agents or
Q: What is the effect of charter party?
A: It may transform a common carrier into a private carrier. Factors to be considered whether a carrier is common/private:
However, it must be a bareboat or demise charter where the Law applicable
charterer mans the vessel with his own people and becomes, o Common Civil Code
in effect, the owner for the voyage or service stipulated o Private contract
Diligence required
2 types: o Common extraordinary diligence
o Private diligence of a good father of a
1. Contract of Affreightment family
- involves the use of shipping space on Burden of proof in relation to negligence
vessels leased by the owner in part or as a o Common the carrier
whole, to carry goods for another o Private on the party having a claim against
- CC = observe extraordinary diligence; in the carrier
case of loss, deterioration or destruction of
goods of goods, CCs are presumed to be at Case: Planters Products, Inc. vs. CA
fault or have acted negligently - It is therefore imperative that a public carrier shall
- 2 types remain as such, notwithstanding the charter of the
i. Time charter: vessel is leased to the whole or portion of a vessel by one or more persons,
charterer for a fixed period of time provided the charter is limited to the ship only, as in
ii. Voyage charter: ship is leased for a the case of a time-charter or voyage-charter. It is
single voyage only when the charter includes both the vessel and
its crew that a common carrier becomes private
2. Charter by demise/ Bareboat Charter
- whole vessel is let to the charterer with a True Test of Common Carrier Is the carriage of passengers
transfer to him of its entire command and or goods, provided it has space, for all who opt to avail
possession and consequent control over its themselves of its transportation service for a fee
navigation including the master and the
crew who are his servants. Generally, private carriage is undertaken by spcial
- charter includes both vessel and crewCC agreement and the carrier does not hold hiself out to carry
becomes private carrier (PC) insofar as that goods for the general public
particular voyage is concerned
- if it is already a PC- ordinary diligence in the Case: Estela Crisostomo vs. CA and Caravan Travel and Tours
carriage of goods will suffice International
- PC = undertaking is a single transaction, not - By definition, a contract of carriage is one whereby
a part of the general business or occupation, a certain person or association of persons obligate
although involving the carriage of goods for themselves to transport person, thing or new from
a fee; NO presumption of negligence applies one place to another for a fixed price
whosoever alleges damage to or - It is obvious from the above definition that
deterioration of the goods carried has the respondent is not an entity engaged in the business
burden of proving that the cause was the of transporting either passengers or goods and is
negligence of the carrier. therefore, neither a private nor a common carrier.
Its covenant with its customers is simply to make
Distinction between Common Carriers and Private Carriers travel arrangements in their behalf.


- It is in this sense that the contract between the - The registered owner of a vehicle is liable for any
parties in this case was an ordinary one for services damage caused by the negligent operation of the
and not one of carriage; it is thus not bound under vehicle although the same was already sold or
the law to observe extraordinary diligence in the conveyed to another person at the time of the
performance of its obligation. accident.
- The registered owner is liable to the injured party
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND subject to his right of recourse against the transferee
STEVEDORING or the buyer.
- Applicable in case of lease
Towage - Registered owner not liable if vehicle was taken
- A vessel is hired to bring another vessel to another from him without his knowledge and consent.
- e.g. a tugboat may be hired by CC to bring the vessel Q: what is the purpose of such law?
to a port (operator of tugboat not CC) A: The main aim of motor vehicle registration is to identify
- in maritime law: towing for the mere purpose of the owner so that if any accident happens, or that any
expediting her voyage without reference to any damage or injury is caused by the vehicle on the public
circumstances of danger highways, responsibility therefor can be fixed on a definite
Arrastre individual the registered owner.
- Arrastre operators functions has nothing to do with
the trade and business of navigation nor to the use KABIT SYSTEM
or operation of vessels - The registered owner rule is applicable to people
- Services are not maritime involved on a kabit system
- Functions of arrastre operator: - arrangement whereby a person who has been granted a
o Receive, handle, care for, and deliver all certificate of public convenience allows other persons
merchandise imported and exported, upon who own motor vehicles to operate them under his
or passing over Government-owned license, sometimes for a fee or percentage of the
wharves and piers in the port earnings --- contrary to public policy (thus VOID and
o Record or check all merchandise which INEXISTENT)
may be delivered to said port ant shipside - parties to the kabit system cannot invoke the same as
o Furnish light, and water services and other against each other either to enforce their illegal
incidental service in order to undertake its agreement or to invoke the same to escape liability ---
arrastre service pari delicto rule
- Such service is in face, no different from those of a - having entered into an illegal contract, neither can seek
depositary or warehouseman relief from the courts and each must bear the
consequences of his acts
Stevedoring - also applicable to aircrafts and vessels basic rule that
- involves the loading and unloading of coastwise no person can operate a common carrier without
vessels calling at the port. securing a certificate of public convenience and
>>> Common carriers are public utilities, impressed with necessity.
public interest and concern subject to regulation by the state.
Case: Dizon vs. Octavio
GOVERNING LAWS - the primary factors considered in the granting of a
- read summary of rules on page 40 of book certificate of public convenience for the business of
public transportation is the financial capacity of the
Article 1766 (Civil Code). In all matters not regulated holder of the license, so that liabilities arising from
by this Code, the rights and obligations of common accidents may be duly compensated
carriers shall be governed by the Code of Commerce and - Thus, for the safety of passengers and the public
by special laws. who may have been wronged and deceived through
the baneful kabit system, the registered owner of the
NATURE OF BUSINESS vehicle is not allowed to prove that another person
- Common Carriers exercise a sort of public office has become the owner so that he may be thereby
- Consequently, common carriers are subject to relived of responsibility.
regulation by the State


- Governed by the Land Transportation and Traffic
Code and administered by the Land Transportation


OBLIGATIONS OF THE PARTIES (1) Hazardous and Dangerous Substances
- Carrier not properly equipped to transport
I. Obligations of the carrier dangerous chemicals or explosives may validly
refuse to accept the same for transport.
A. DUTY TO ACCEPT - Those which are not authorized by the Maritime
- A common carrier granted a certificate of public Industry Authority to carry such goods may also
convenience is duty bound to accept passengers or validly refuse the same for transport.
cargo without any discrimination. - There must be a Special Permit to Carry from the
- It is illegal for domestic ship operators to refuse to MARINA. (accept only if the said cargoes are covered
accept or carry passengers or cargo without just by the necessary clearance from appropriate
cause. (Section 16, RA 9295) government agencies)

Note: In air transportation, passengers with confirmed (2) Unfit for Transport
tickets who were not allowed to board are provided with - Carriers may refuse to accept goods that are unfit
denied boarding compensation and priority boarding rules. for transportation
No compensation for refusal if it is because of: - These goods may by nature be unfit for
1. government requisition of the space transportation or are unfit because of improper
2. substitution of equipment of lesser capacity when packaging or defect in their containers.
required by operational and or safety and/or other - However, carriers may accept the goods and limit its
causes beyond the control of the carrier, and liability by stipulation.
3. if arrangements have been made for the passenger
to take another flight in a comparable air If by reason of well-founded suspicion of falsity in the
transportation which will arrive not later than three declaration as to the contents of the package carrier should
hours after the time of flight on which the confirmed decide to examine and investigate it in the presence of
space is held is supposed to arrive. (Civil witnesses, with the shipper and consignee in attendance. If
Aeronautics Board Economic Regulation) declaration of shipper is true, expenses occasioned by the
examination and of repacking the packages shall be for the
Grounds for Valid Refusal to Accept Goods account of the carrier
- GR: common carriers cannot lawfully decline to accept
a particular class of goods Even if the cause of the loss, destruction or deterioration of
- EXC: it appears that for some sufficient reason the the goods should be caused by the character of the goods, or
discrimination against the traffic in such goods is the faulty nature of the packing or of the containers, the
reasonable and necessary: common carrier must exercise due diligence to forestall or
i. dangerous objects or substances including lessen the loss.
dynamites and other explosives
ii. goods are unfit for transportation B. DUTY TO DELIVER THE GOODS
iii. acceptance would result in overloading Time of Delivery
iv. contrabands or illegal goods - Where a carrier has made an express contract, the goods
v. goods injurious to health must be delivered within a specified time otherwise he is
vi. goods will be exposed to untoward danger liable for any delay (indemnity for damages).
like flood, capture by enemies and the like - In the absence of any agreement, goods must be
vii. goods like livestock will be exposed to delivered at its destination within a reasonable time
diseases (depending on the attending circumstances, nature of
viii. strike the goods; expected date of arrival in the BOL may be
ix. failure to tender goods on time considered).
- In the absence of a special contract, a carrier is NOT an
Case: Fisher v. Yangco insurer against delay in transportation of goods
- factors in determining reasonable discrimination
include: Consequences/Effects of Delay
i. suitability to the vessel for the transportation of - Excusable delays in carriage suspend, but do not
such products; generally terminate, the contract of carriage; when the
ii. reasonable possibility of danger or disaster cause is removed, the master must proceed with the
resulting from their transportation in the form voyage and make delivery.
and under the conditions in which they are offered - During the detention or delay, vessel continues to be
for carriage; and liable as a common carrier, not a warehouseman, and
iii. the general nature of the business done by the remains duty bound to exercise extraordinary diligence.


Article 1740 (NCC). If common carrier negligently delays Note: the carrier is liable for any loss or damage, including
in transporting the goods, a natural disaster shall not free it any pecuniary loss or loss of profit, which the passenger may
from responsibility. have suffered by reason thereof.

Article 1747 (NCC). If common carrier delays , without just In case the vessel is not able to depart on time and the delay
cause, in transporting the goods or changes the stipulated or is unreasonable, the passenger may opt to have his/her
usual route, the contract limiting its liability cannot be ticket immediately refunded without any refund service fee
availed of in case of the loss, destruction, or deterioration of from the authorized issuing/ticketing office.
the goods.
Where and to Whom Delivered
Note: read page 72 of book for other provisions. a. Place Goods should be delivered to the consignee
in the place agreed upon by the parties.
(1) Abandonment
- In case of delay through the fault of the carrier, the The shipper may change the consignment of the goods
consignee may refuse to accept the goods or may provided that at the time of ordering the change of the
leave the goods in the hands of the carrier. It must consignee the bill of lading signed by the carrier be returned
be communicated to the carrier in writing. to him, in exchange for another wherein the novation of the
- This right must be exercised between the time of contract appears. The expenses occasioned by the change
delay and before the arrival of the goods at its shall be for the account of the shipper.
- The carrier must pay the full value of the goods as if b. Consignee Delivery must generally be made to the
they had been lost or mislaid. owner or consignee or to someone lawfully
authorized by him to receive the goods for his
Note: If abandonment is not made, indemnification for the account or to the holder of the negotiable
losses and damages by reason of the delay cannot exceed the instrument.
current price which the goods would have on the day and at
the place they are to be delivered. c. Delay to Transport Passengers A carrier is duty
bound to transport the passenger with reasonable
The value of the goods which the carrier must pay in case of dispatch
loss or misplacement shall be that what is declared in the bill
of lading. Effects of delayed and unfinished voyage in inter-island
Consignee must not defer the payment of the expenses and vessel cannot continue or complete her voyage for
transportation charges of the goods otherwise carrier may any cause carrier is under obligation to transport
demand the judicial sale of the goods. the passenger to his/her destination at the expense
of the carrier including free meals and lodging
before the passenger is transported to his/her
destination; the passenger may opt to have his/her
Case: Magellan Mfg. Marketing Corp. vs. CA ticket refunded in full if the cause of the unfinished
- Abandonment may also be made by virtue of voyage is due to the negligence of the carrier or to
stipulation or agreement between parties an amount that will suffice to defray transportation
cost at the shortest possible route if the cause of the
(2) Rights of Passengers in Case of Delay unfinished voyage is fortuitous event.
- As to the rights and duties of the parties strictly vessel is delayed in arrival at the port of destination
arising out of delay, the Civil Code is silent. However, free meals during mealtime
the Code of Commerce provides for such a situation: delay in departure at the point of origin due to
carriers negligence; fortuitous event - free meals
ARTICLE 698. In case a voyage already begun should be during mealtime; carrier not obliged to serve free
interrupted, the passengers shall be obliged to pay the fare in meals
proportion to the distance covered, without right to recover carrier is not obliged to inform passengers of sailing
for losses and damages if the interruption is due to schedule of the vessel
fortuitous event of force majeure, but with a right to
indemnity if the interruption should have been caused by C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE
the captain exclusively. If the interruption should be - Goods should be delivered in the same condition
caused by the disability of the vessel and a passenger should that they were received and to transport the
agree to await the repairs, he may not be required to pay any passengers without encountering any harm or loss.
increased price of passage, but his living expenses during the - Read page 79-80 for provisions
stay shall be for his own account.


ARTICLE 1755. A common carrier is bound to carry the By trains the extraordinary responsibility of common
passengers safely as far as human care and foresight can carrier commences the moment the person who purchases
provide, using the utmost diligence of very cautious persons, the ticket (or a token or card) from the carrier presents
with a due regard for all the circumstances. (Civil Code) himself at the proper place and in a proper manner to be
transported with a bona fide intent to ride the coach.
- Presumption of Negligence
- Two conditions for the birth of the presumption of * Mere purchase of a ticket does not of itself create the
negligence: relation of carrier and passenger but it is an element in the
1. there exists a contract between the passenger or the inception of the relation.
shipper and the common carrier
2. the loss, deterioration, injury or death took place * A proper person who enters upon the carriers premises
during the existence of the contract (station, ticketing office, or waiting room) with the intention
of becoming a passenger will ordinarily be viewed as
Doctrine of Proximate Cause there is presumption of assuming the status of a passenger.
If the goods are lost, destroyed or deteriorated, common * One who goes to the railroad station to inquire as to the
carriers are presumed to have acted negligently, unless they possibility of securing passage on a freight train, which he
prove that they observed extraordinary diligence. In case of knows, by the rules of the company, is not allowed to carry
death of or injuries to passengers, common carriers are passengers, and to secure passage thereon if possible, is not
presumed to have been at fault or to have acted negligently, entitled to the rights of a passenger but is a mere trespasser.
unless they prove that they observed extraordinary
diligence. * One who rides upon any part of the vehicle or conveyance
which is unsuitable or dangerous, or which he knows is not
- Duration of Duty: intended for passengers, is not presumed to be a passenger.

(1) Carriage of Goods * One who secures free passage by fraud or stealth is
- Due diligence should be exercised the moment precluded from recovery for injuries sustained through the
the goods are delivered to the carrier. negligence of the carrier, for he has not assumed the status of
- Goods are deemed delivered to the carrier when a passenger.
the goods are ready for and have been placed in
the exclusive possession, custody and control of * A person riding on a freight train, on a drivers pass or
the carrier for the purpose of their immediate similar arrangement, to look after livestock being
transportation and the carrier has accepted transported and as incident to such transportation is,
them generally regarded as a passenger for hire.

ARTICLE 1736. The extraordinary responsibility of the Motor vehicles like jeepneys and buses are duty bound
common carrier lasts from the time the goods are to stop their conveyances for a reasonable length of time in
unconditionally placed in the possession of, and received by order to afford passengers an opportunity to board and
the carrier for transportation until the same are delivered, enter, and they are liable for injuries suffered by boarding
actually or constructively, by the carrier to the consignee or passengers resulting from the sudden starting up or jerking
to the person who has a right to receive them of their conveyances while they do so. Once a public utility
bus or jeepney stops, it is making a continuous offer to bus
ARTICLE 1737. The common carriers duty to observe riders.
extraordinary diligence over the goods remains in full force
and effect even when they are temporarily unloaded or Case: Dangwa Transportation Company vs. CA
stored in transit, unless the shipper or owner has made use - When the bus is not in motion there is no necessity for
of the right of stoppage in transitu. (common carrier a person who wants to ride the same to signal his
becomes a warehouseman ordinary diligence) intention to board. A public utility bus, once it stops, is
in effect making a continuous offer to bus riders
ARTICLE 1738. The extraordinary liability of the common - The premature acceleration of the bus in this case was
carrier continues to be operative even during the time the a breach of such duty
goods are stored in a warehouse of the carrier at the place if
destination, until the consignee has been advised of the Case: La Mallorca vs. CA
arrival of the goods and has had reasonable opportunity - Duty to exercise utmost diligence with respect to
thereafter to remove them or otherwise dispose of them. passengers will not ordinarily terminate until the
passenger has, after reaching his destination, safely
(2) Carriage of Passengers alighted from the carriers conveyance or had a
reasonable opportunity to leave the carriers premises.


And what is reasonable time or a reasonable delay In order for the common carrier to be exempted from
within this rule is to be determined from all the responsibility, the natural disaster must have been the
circumstances. proximate and only cause of the loss. However, the common
Case: Aboitiz Shipping Corporation vs. CA carrier must exercise due diligence to prevent or minimize
- Same ruling with La Mallorca vs. CA loss before, during and after the occurrence of flood, storm
- That reasonableness of time should be made to or other natural disaster in order that the common carrier
depend on the attending circumstances of the case, may be exempted from liability for the loss, destruction, or
such as the kind of common carrier, the nature of its deterioration of the goods.
business, the customs of the place, and so forth, and
therefore precludes a consideration of the time Fire not considered as a natural calamity or disaster
element per se without taking into account such other
factors Fire caused by lightning a natural calamity
- The primary factor to be considered is the existence of
a reasonable cause as will justify the presence of the Hijacking does not fall under the categories of exempting
victim on or near the petitioners vessel. We believe causes; the common carrier is presumed to be at fault or to
there exists such a justifiable cause (baggage were have acted negligently unless there is a proof of
left) extraordinary diligence on its part

DEFENSES OF COMMON CARRIERS Mechanical defects damage or injury resulting from

mechanical defects is not a damage or injury that was caused
Article 1734 (No other defense may be raised: exclusive by fortuitous event; carrier is liable to its passengers for
or closed list) damages caused by mechanical defects of the conveyance
1. Flood, storm, earthquake, lightning, or other natural (breakage of a faulty drag-link spring, fracture of the
disaster or calamity vehicles right steering knuckle, defective breaks)
2. Act of the public enemy in war, whether international or - One of the reason why carrier is made liable
civil despite the presence of mechanical defect is the
3. Act or omission of the shipper or owner of the goods absence of privity between the passenger and the
4. The character of the goods or defects in the packing or in manufacturer
the containers
5. Order or act of competent public authority Case: Juntilla v. Fontanar
6. Exercise of extraordinary diligence - Tire-blowouts was not considered as fortuitous event
although it was alleged that the tires were in good
Fortuitous Event to be a valid defense must be established condition; no evidence was presented to show that the
to be the proximate cause of the loss evidence were due to adverse road conditions the
carrier must prove all angles.
Note: Since common carrier is presumed is to be negligent, it - The explosion could have been caused by too much air
has been observed that the DOCTRINE of PROXIMATE pressure injected into the tires and the fact that the
CAUSE is INAPPLICABLE to a contract of carriage. The jeepney was overloaded and speeding at the time of the
injured passenger or owner of goods need not prove accident.
causation to establish his case.
The absence of causal connection is only a matter of defense. 1. Damage to cargo due to EXPLOSION of another
cargo not attributable to peril of the seas or
Requisites of Fortuitous Event: accidents of navigation.
1. The cause of the unforeseen and the unexpected 2. Damage by WORMS and RATS resulting to damage
occurrence, or of the failure of the debtor to comply to cargoes cant be cited as an excuse by the
with his obligation, must be independent of the carrier.
human will 3. Damage by WATER through a port which had been
2. It must be impossible to foresee the event which left open or insufficiently fastened on sailing.
constitutes the caso fortuito, or if it can be foreseen, it 4. Carrier cannot escape liabilities to third persons if
must be impossible to avoid damage was caused by BARRATRY where the
3. The occurrence must be such as to render it master or crew of the ship committed unlawful acts
impossible for the debtor to fulfill his obligation in a contrary to their duties includes theft and
normal manner fraudulently running the ship ashore.
4. The obligor (debtor) must be free from any
participation in or the aggravation of the injury Cases:
resulting to the creditor 1. Problem: A carrier bus on its way to its destination
encountered an engine failure, thus, it has to be


repaired for 2 days. And while in the repair shop, a ON THE OTHER HAND, a hijacking by 3 armed men
typhoon came resulting to the spoilage of cargoes. is an event which is considered to be beyond the
Answer: A typhoon although a natural disaster, is control of the carrier. Thus, the carrier may be
not a valid defense if it is shown that it was not the adjudged from liability if it can be proven that the
only cause of the loss. Especially when the facts hijacking was unforeseeable.
indicate that the typhoon was foreseeable and could
have been detected through the exercise of Case: Philippine American General Insurance Co. vs. MCG
reasonable care. Cargoes should have been secured - Even in cases where a natural disaster is the
while the bus was being repaired for 2 days. proximate and only cause of the loss, a common
carrier is still required to exercise due diligence to
2. Problem: A passenger told the driver that he has prevent or minimize loss before, during and after
valuable items in his bag which was placed under his the occurrence of the natural disaster, for it to be
feet and he asked the driver (to which he is seated exempt from liability under the law for the loss of
near) to watch for the bag while he is asleep. the goods

(a) There have been incidents of throwing of stones Case: Pilapil vs. CA
at passing vehicles in the North Express Way. - Facts: a bystander alongside national highway
While the bus was traversing the super hurled a stone at the left side of the bus, hitting
highway, a stone hurled from the overpass and petition above his left eye which resulted to partial
hit the passenger resulting to injuries. Can the loss of the left eyes vision
passenger hold the bus liable for damages? - SC: A common carrier does not give its consent to
Answer: Yes. The incident was foreseeable due become an insurer of any and all risks to passengers
the prior incidents of stone hurling. The bus and goods. It merely undertakes to perform certain
should have exercised utmost diligence and duties to the public as the law imposes, and holds
employed adequate precautionary measures to itself liable for any breach thereof.
secure safety of passengers since the incident - The law does not make the carrier an insurer of the
was foreseeable. . absolute safety of its passengers
HOWEVER, if the stone throwing was entirely - Article 1763: A common carrier is responsible for
unforeseeable and the carrier exercised the injuries suffered by a passenger on account of the
utmost diligence, then, the bus cant be held willful acts or negligence of other passengers or of
liable. strangers, if the common carriers employees through
Nonetheless, the burden of proof is on the the exercise of the diligence of a good father of a
carrier to prove such exercise of diligence. It is family could have prevented or stopped the act or
up to the carrier to overthrow the presumption omission
of negligence. o Clearly, a tort committed by a stranger
If the passenger decides to file a case, al the which causes injury to a passenger does not
passenger has to do is to prove that she was a accord the latter a cause of action against
passenger of the bus and that she suffered the carrier. The negligence for which a
injuries while on board the bus. common carrier is held responsible is the
negligent omission by the carriers
(b) Supposing that there were armed men who employees to prevent the tort from being
staged a hold-up while the bus was speeding committed when the same could have been
along the highway. One of them stole the foreseen and prevented by them
passengers bag and wallet while pointing a gun
him. Is the bus liable? Case: Franklin Gacal vs. PAL
Answer: No. Hand-carried luggages are - It is therefore not enough that the event should not
governed by necessary deposit. Besides, theft have been foreseen or anticipated, as is commonly
with use of arms or through irresistible force is believed, but it must be one impossible to foresee or
a force majeure which exempts carriers from to avoid.
liability. - The mere difficulty to foresee the happening is not
the impossibility to foresee the same
3. Hi-jacking cannot exculpate the carrier from liability
if it is shown that the employees of the carrier were PUBLIC ENEMY
not overwhelmed by the hijackers and that there
was no showing of irresistible force. Since, there - Presupposes a state of war and refers to the government
were 4 employers while there were only 2 hijackers of a foreign nation at war with the country to which the
and only one of them was armed with bladed carrier belongs, though not necessarily with that to
weapon. which the owner of the gods owes allegiance.


- Thieves, rioter, and insurrectionists are not included. Answer: Carrier must still exercise extraordinary
They are merely private depredators for whose acts a diligence if the fact of improper packing is known to
carrier is answerable. the carrier or its servants, or apparent upon
- Rebels in insurrection against their own government are ordinary observation. If the carrier accepted the
generally not embraced in the definition of public cargo without protests or exception
enemy. However, if the rebels hold a portion of territory, notwithstanding such condition, he is not relived of
they have declared their impendence, cast off their liability for damage resulting therefrom. Apply
allegiance and has organized armed hostility to the Article 1742.
government, and the authority of the latter is at the time
overthrown, such an uprising may take on the dignity of ORDER OF PUBLIC AUTHORITY
a civil war, and so matured and magnified, the parties
are belligerent and are entitled to belligerent rights. Art. 1743. If through the order of public authority
- Depredation by pirates (which are enemy of all civilized the goods are seized or destroyed, the common carrier is not
nation) excuses the carrier from liability. responsible, provided said public authority had power to
- Common carriers may be exempted from responsibility issue order.
only if the act of the public enemy has been the
proximate and only cause of the loss. Moreover, due Cases:
diligence must be exercised to prevent or at least 1. Carrier was not excused from liability since the
minimize the loss before, during and after the order of an acting mayor was not considered as a
performance of the act of the public enemy in order valid order of a public authority. It is required that
that the carrier may be exempted from liability for the public authority who issued the order must be duly
loss, destruction, or deterioration of the goods. authorized to issue the order.
2. Carriage of Goods by Sea Act provides that carrier
IMPROPER PACKING shall not responsible for loss or damage resulting
from arrest or restraint of princes, rulers, or people,
Character of the goods and defects in the packaging or in the or seizure under legal process and from
containers are defenses available to the common carrier. quarantine restrictions.
Similarly, the Carriage of Good by Sea Act provides that
carrier shall not liable for: DEFENSES IN CARRIAGE OF PASSENGERS
1. Wastage in bulk or weight or any damages arising
form the inherent defect, quality or vice of goods; - Primary defense of carrier is exercise of extraordinary
2. Insufficiency of packing; diligence in transporting passengers. Even if there is a
3. Insufficiency or inadequacy of the marks, or fortuitous event, the carriers must also present proof of
4. Latent defects no discoverable by due diligence. exercise of extraordinary diligence.

However, NCC likewise provides: Art. 1759. Common carriers are liable for the death of or
Art. 1742. Even if the loss, destruction, or deterioration injuries to passengers through the negligence or willful
of the goods should be caused by the character of the acts of the carriers employees, although such employees
goods, or the faulty nature of the packing or the may have acted beyond the scope of their authority or in
containers, the common carrier must exercise due violation of the orders of the common carriers.
diligence to forestall or lessen the loss. The liability does not cease even upon proof that they
exercised diligence in the selection and supervision of
Thus, if the carrier accepted the goods knowing the fact of their employees.
improper packing or even if the carrier does not know
but the defect was nonetheless apparent upon ordinary Art. 1763. Carrier is responsible for injuries suffered by
observation, it is not relived from liability for loss or injury a passenger on account of the willful acts or negligence
to goods resulting therefrom. of other passengers or of strangers, if the common
carriers employees through the exercise of the diligence
Cases: of a good father of a family could have prevented or
1. Problem: A carrier knowing that some of a cargo of stopped the act or omission.
sacks of rice had big holes and others had openings
just loosely tied with strings resulting to the spillage a. Employees
of rice during the trip. Thus, there was shortage in - Carrier is liable for the acts of its employees. It cant
the delivery of the cargoes. When sued due to the escape liability by claiming that it exercised due
shortage, the carrier interposed a defense that it was diligence in supervision and selection of its
not liable since the shortage was due to the defective employees (unlike in quasi-delicts).
condition of the sacks. Decide.
Reasons for the rule:


1. Undertaking of the carrier requires that its - The term baggage has been defined to include
passenger that full measure of protection afforded whatever articles a passenger usually takes with him
by the exercise of high degree of care prescribed by for his own personal use, comfort and convenience
law, inter alia from violence and insults at the hands - Rules that are applicable to goods that are being
of strangers and other passengers, but above all, shipped are also applicable to baggage delivered to the
from the acts of the carriers own servants. custody of the carrier. Arts. 1733. 1734 and 1736 of
2. The liability of the carrier for the servants violation Civil Code are applicable.
of duty to performance of his contract to safely - However, if the luggage was hand-carried, Arts. 1998,
transport the passenger, delegating therewith the 2000-2003 shall apply.
duty of protecting the passenger with utmost care
prescribed by law. Distinction: W/N the baggage is in the personal custody of
3. As between the carrier and the passenger, the the passenger.
former must bear the risk of wrongful acts or if yes, hand carried baggage
negligence of the carriers employees against if no, checked-in baggage
passenger, since it, and not the passenger, has the
power to select and remove them. Art. 1998. The deposit of effects made by the travellers
in hotels or inns shall also be regarded as necessary. The
Rationale: On the other hand, if the ship owner keepers of hotels or inns shall be responsible for them
derives profits from the results of the choice of the as depositaries, provided that notice was given to them,
captain and the crew, when the choice turns out or to their employees, of the effects brought by the
successful, it is also just that he should suffer the guests and that, on the part of the latter, they take the
consequences of an unsuccessful appointment, by precautions which said hotel-keepers or their
application of the rule of natural law contained in the substitutes advised relative to the care and vigilance of
partidas --- that he who enjoys the benefits derived their effects. (1783)
from a thing must likewise suffer the losses that ensue
therefrom Art. 2000. The responsibility referred to in the two
preceding articles shall include the loss of, or injury to
- Note: Willful acts of the employees include theft the personal property of the guests caused by the
servants or employees of the keepers of hotels or inns as
b. Other Passengers and Third Persons well as strangers; but not that which may proceed from
any force majeure. The fact that travellers are
- With respect to acts of strangers and other constrained to rely on the vigilance of the keeper of the
passengers resulting in injury to a passenger, the hotels or inns shall be considered in determining the
availability of such defense is also subject to the degree of care required of him. (1784a)
exercise of a carrier of due diligence to prevent or
stop the act or omission. Art. 2001. The act of a thief or robber, who has entered
- Negligence of the carrier need not be the sole cause the hotel is not deemed force majeure, unless it is done
of the damage or injury to the passenger or the with the use of arms or through an irresistible force. (n)
goods. The carrier would still be liable even if the
contractual breach concurs with the negligent act or
omission of another person. Art. 2002. The hotel-keeper is not liable for
compensation if the loss is due to the acts of the guest,
Remember: the negligence of the other river in a his family, servants or visitors, or if the loss arises from
collision is NOT a prejudicial question to an action the character of the things brought into the hotel. (n)
against the carriers company.
Art. 2003. The hotel-keeper cannot free himself from
Article 1759. Common carriers are liable for the death of or responsibility by posting notices to the effect that he is
injuries to passenger through the negligence or willful acts of not liable for the articles brought by the guest. Any
the formers employees, although such employees may have stipulation between the hotel-keeper and the guest
acted beyond the scope of their authority or in violation of whereby the responsibility of the former as set forth in
the orders of the common carriers. articles 1998 to 2001 is suppressed or diminished shall
be void. (n)

1. Despite the fact that the carrier gave notice that it
PASSENGERS BAGGAGES shall not be liable for baggage brought in by
passengers, the carrier is still liable for lost hand-
carried luggage since it is governed by rules on


necessary deposits. Under Art. 20000, the Art. 1762. The contributory negligence of the passenger
responsibility of the depositary includes the loss of does not bar recovery of damages for his death or
property of the guest caused by strangers but not injuries, if the proximate cause thereof is the negligence
that which may proceed from force majeure. of the common carrier, but the amount of damages shall
Moreover, article 2001 considers theft as force be equitably reduced.
majeure if it is done with use of arms or through
irresistible force. a. Last Clear Chance
2. Even if the passenger did not declare his baggage
nor pay its charges contrary to the regulations of the A negligent carrier is liable to a negligent passenger in
bus company, the carrier is still liable in case of loss placing himself in peril, if the carrier was aware of the
of the baggage. Since, it has the duty to exercise passengers peril, or should have been aware of it in the
extraordinary diligence over the baggage that was reasonable exercise of due care, had in fact an opportunity
turned over to the carrier or placed in the baggage later than that of the passenger to avoid an accident.
compartment of the bus. The non-payment of the
charges is immaterial as long as the baggage was
received by the carrier for transportation. Last clear chance applies in a suit between the owners and
drivers of colliding vehicles. It does not arise where a
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and passenger demands responsibility from the carrier to
PASSENGER enforce its contractual obligations. For it would be
inequitable to exempt the negligent driver of the carrier and
A. NEGLIGENCE OF SHIPPER OR PASSENGER its owner on the ground that the other driver was likewise
guilty of negligence.
- The obligation to exercise due diligence is not
limited to the carrier. The shipper is obliged to b. Assumption of Risk
exercise due diligence in avoiding damage or injury.
- Nevertheless, contributory negligence on the part of Passengers must take such risks incident to the mode of
the shipper/ passenger would only mitigate the travel. Carriers are not insurers of the lives of their
carriers liability; it is not a total excuse. passengers. Thus, in air travel, adverse weather conditions
- However, if the negligence of the shipper/ passenger or extreme climatic changes are some of the perils involved
is the proximate and only cause of the loss, then, the in air travel, the consequence of which the passenger must
carrier shall not be liable. The carrier may assume or expect.
overcome the presumption of negligence and
may be able to prove that it exercised extraordinary However, there is no assumption of risk in a case wherein a
diligence in handling the goods or in transporting passenger boarded a carrier that was filled to capacity. The
the passenger. act of the passenger in taking the extension chair does not
amount to implied assumption of risk.
The carrier may be able to prove that the only cause of
the loss of the goods is any of the following: Note: there is also no assumption of risk by the mere fact
1. Failure of the shipper to disclose the nature of the that the carrier posted notices against such liability
2. Improper marking or direction as to the destination; Problem: Although, there is a sign in the bus that says: do
3. Improper loading when he assumes such not talk to the driver while the bus is in motion, otherwise,
responsibility. the company would not assume responsibility for any
accident:. Nonetheless, the passengers dared the driver to
The shipper must likewise see to it that the goods race with another bus, as the bus speeds up in the attempt to
are properly packed; otherwise, liability of the carrier overtake the other bus, it failed to slow down. As a result, the
may either be mitigated or barred depending on the bus turns turtle causing the death and injuries to passengers.
circumstances. Is the bus company liable?
Answer: Yes. The bus company is obligated to exercise
Art. 1741. If the shipper or owner merely utmost diligence in carrying passengers. This liability cannot
contributed to the loss, destruction or deterioration be eliminated or limited by simply posting notices. The
of the goods, the proximate cause thereof being the passenger cannot be said to have assumed the risk of being
negligence of the common carrier, the latter shall be injured when he urged the driver to accept the dare. At most,
liable in damages, which however, shall be equitably the passengers can only be said to be guilty of contributory
reduced. negligence which would mitigate the liability of the driver,
since the proximate cause of the accident was the drivers
Art. 1761. The passenger must observe the diligence of a willful and reckless act in running the race with the other
good father of a family to avoid injury to himself. bus.


the payment of freight whether or not he is the owner of the
Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc. goods. The obligation to pay is implied from the mere fact
- Where a carriers employee is confronted with a that the consignor has placed the goods with the carrier for
sudden emergency, the fact that he is obliged to act the purpose of transportation.
quickly and without a chance for deliberation must
be taken into account, and he is not led to the same c. Time to pay
degree of care that he would otherwise be required
to exercise in the absence of such emergency but Code of Commerce provides that in the absence of any
must exercise only such care as any ordinary agreement, the consignee who is supposed to pay must do so
prudent person would exercise under like within 24-hours from the time of delivery.
circumstances and conditions, and the failure on his
part to exercise the best judgment the case renders Article 374. The consignees to whom the shipment was
possible does no establish lack of care and skill on made may not defer the payment of the expenses and
his part which renders the company liable. transportation charges of the goods they receive after the
lapse of twenty-four hours following their delivery; and in
Case: Compania Maritima vs. CA and Vicente Concepcion case of delay in this payment, the carrier may demand the
- While the act of private respondent in furnishing judicial sale of the goods transported in an amount necessary
petitioner with an inaccurate with of the payloader to cover the cost of transportation and the expenses
cannot successfully be used as an excuse by incurred.
petitioner to avoid liability to the damage thus
caused, said act constitutes a CONTRIBUTORY (1) Carriage of Passengers by Sea
CIRCUMSTANCE to the damage caused on the
payloader, which mitigates the liability for damages With respect to carriage of goods by sea, the tickets are
of petitioner in accordance with Article 1741. purchased in advance. Carriers are not supposed to allow
passengers without tickets --- the carrier is bound to observe
Case: Philippine National Railways vs. CA a No Ticket, No Boarding Policy. The carrier shall collect/
- While petitioner failed to exercise extraordinary inspect the passengers ticket within one hour from vessels
diligence as required by law, it appears that the departure as not to disrupt resting or sleeping passengers.
deceased was chargeable with contributory
negligence. If the vessel is not able to depart on time and the delay is
- Since he opted to sit on the open platform between unreasonable, the passenger may opt to have his/ her ticket
the coaches of the train, he should have held tightly refunded without refund service fee.
and tenaciously on the upright metal bar found at Delayed voyage means late departure of the vessel from its
the side of said platform to avoid falling off from the port of origin and/ or late arrival of the vessel to its port of
speeding train destination. Unreasonable delay means the period of time
that has lapsed without just cause and is solely attributable
B. FREIGHT to the carrier which has prejudiced the transportation of the
passenger and/ or cargoes to their port of destination.
a. Amount to be Paid
A passenger who failed to board the vessel can refund or
The regulation of rates is founded upon the valid exercise of revalidate the ticket subject to surcharges. Revalidation
the Police Power of the state in order to protect the public means the accreditation of the ticket that is not used and
from arbitrary and excessive rates while maintaining the intended to be used for another voyage.
efficiency and quality of services rendered. The fixing of just
and reasonable rates involves a balancing of investor and the (2) Carriers Lien
consumer interest.
If consignor or the consignee fails to pay the consideration
Although the consideration that should be paid to the carrier for the transportation of goods, the carrier may exercise his
is still subject to the agreement between parties, what can be lien in accordance with Art. 375 of Code of Commerce:
agreed upon should not be beyond the maximum amount
fixed by appropriate government agency. ARTICLE 375. The goods transported shall be especially
bound to answer for the cost of transportation and for the
b. Who will pay expenses and fees incurred for them during their conveyance
and until the moment of their delivery.
Although either of the shipper or the consignor may pay the This special right shall prescribe eight days after the delivery
freight before or at time the goods are delivered to the has been made, and once prescribed, the carrier shall have
carrier for shipment, nonetheless, it is the consignor (whom no other action than that corresponding to him as an
the contract of carriage is made) who is primarily liable for ordinary creditor.


diligence, could have foreseen and prevented the
DEMURRAGE damage or loss that occurred.

Demurrage is the compensation provided for the contract of III. EFFECT OF STIPULATION
affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading. It is the claim for A. GOODS
damages for failure to accept delivery. In broad sense, very - The parties cannot stipulate that the carrier will
improper detention of a vessel may be considered a NOT exercise ANY diligence in the custody of goods
demurrage. Technically, liability for demurrage exists only - The law allows a stipulation whereby the carrier will
when expressly stipulated in the contract. exercise a degree of diligence which is less than
extraordinary with respect to goods.
Using the term in broader sense, damages in the nature of
demurrage are recoverable for a breach of the implied Art. 1744. A stipulation between the common carrier
obligation to load or unload the cargo with reasonable and the shipper owner limiting the liability of the
dispatch, but only by the party to whom the duty is owed and former for the loss, destruction, or deterioration of the
only against on who is a party to the shipping contract. goods to a degree less than extraordinary diligence
Notice of arrival of vessels or conveyances, or their shall be valid, provided it be:
placement for purposes of unloading is often a condition
precedent to the right to collect demurrage charges. 1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration other than
CHAPTER 3 the service rendered by the common carrier (Note:
EXTRAORDINARY DILIGENCE Typically fare/freight); and
3. Reasonable, just and contrary to public policy.
A common carrier is bound to carry the passengers B. PASSENGERS
safely as far a human care and foresight provide, using the - There can be no stipulation lessening the utmost
utmost diligence of very cautious persons, with due regard diligence that is owed to passengers.
for all circumstances.
Art. 1757. The responsibility of a common carrier for
Extraordinary diligence: Calculated to protect the the safety of passengers as required in Arts. 1733 and
passengers from the tragic mishaps that frequently occur in 1755 cannot be dispensed with or lessened by
connection with rapid modern transportation. stipulation, by the posting of notices, by statements on
tickets, or otherwise. (Note: Absolute; extraordinary
- There is no hard and fast rule in the exercise of
extraordinary diligence Gratuitous passenger A stipulation limiting the common
- Common carrier binds itself to carry the passengers carriers liability for negligence is valid, but not for willful
safely as far as human care and foresight can acts of gross negligence. The reduction of fare does not
provide, using the utmost diligence of a very justify any limitation.
cautious person, with due regard for all the
circumstances. Case: Lara vs. Valencia
- The duty even extends to the members of the crew - Diligence owed to accommodation passengers is
or complement operating the carrier only ordinary diligence
- However, this case is not controlling with respect to
Case: Kapalaran Bus Lines vs. Coronado common carriers because the defendant in the said
- If common carriers carefully observed the statutory case was not a common carrier
standard of extraordinary diligence in respect of
their own passengers, they cannot help but IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
simultaneously benefit pedestrians and the owners
and passengers of other vehicles who are equally A. SEAWORTHINESS
entitled to the safe and convenient use of our roads
and highways a. Warranty of Seaworthiness of Ship
- This is the first step that should be undertaken
A reasonable man or a good father of a family in the position - Extraordinary diligence requires that the ship
of the carrier must exercise extraordinary diligence in the which will transport the passengers and goods
performance of his contractual obligation. is seaworthy.
- Generally, what should be determines is whether or - Seaworthiness of the vessel is impliedly
not a reasonable man, exercising extraordinary warranted.


- The carrier shall be bound before and at the 3. Make all parts of the ship in which goods are
beginning of the voyage to exercise due carried, fit and safe for their reception, carriage, and
diligence to make the ship seaworthy. preservation.

The carrier shall properly and carefully load, handle, stow,

b. No duty to inquire carry, keep, care for, and discharge the goods carried.
- Because of the implied warranty of
seaworthiness, shippers of goods, when Note: Seaworthiness is relative it its construction and its
transacting with common carriers, are not application depends on the facts of a particular case (ex.
expected to inquire into the vessels Length and nature of the voyage)
seaworthiness, genuineness of its licenses and
compliance with all maritime laws. Passengers Fitness of the Vessel Itself
cannot be expected to inquire everytime they - It is necessary that the vessel can be expected to
board a common carrier, whether the carrier meet the normal hazards of the journey
possesses the necessary papers or that all the - General Test of Seaworthiness: Whether the ship
carriers employees are qualified. and its appurtenances are reasonably fit to perform
- It is the carrier that carries such burden of the service undertaken.
proving that the ship is seaworthy.
- Sufficient evidence must be submitted and the The ship must be cargoworthy
presentation of certificates of seaworthiness is - Even if the vessel was properly maintained and is
not sufficient to overcome the presumption of free from defect, the carrier must not accept the
negligence. goods that cannot properly be transported in the
c. Meaning of Seaworthiness - The ship must be efficiently strong and equipped to
- A vessel must have such degree of fitness which carry the particular kind of cargo which she has
an owner who is exercising extraordinary contracted to carry and her cargo must be so loaded
diligence would require his vessel to have at the that it is safe for her to proceed on her voyage.
commencement of the voyage, having regard to
all the probable circumstances of it. This
includes fitness of the vessel itself to withstand
the rigors of voyage, fitness of the vessel to store
the cargoes and accommodate passengers to be The vessel must be adequately equipped and properly
transported and that it is adequately equipped manned.
and properly manned. - On top of regular maintenance and inspection,
- Seaworthiness is that strength, durability and Captains, masters or patrons of vessels must prove
engineering skill made a part of a ships the skill, capacity, and qualifications necessary to
construction and continued maintenance, command and direct the vessel.
together with a competent and sufficient crew, - If the owner of a vessel desires to be the captain
which would withstand the vicissitudes and without having the legal qualifications, he shall limit
dangers of the elements which might reasonably himself to the financial administration of the vessel
be expected or encountered during her voyage and shall entrust the navigation to a qualified
without loss or damage to her particular cargo person.

Example: The carrier was able to establish that the ship itself Note: It is not an excuse that the carrier cannot afford the
was seaworthy because the records reveal that the vessel salaries of competent and licensed crew or that latter is
was dry-docked and inspected by the Phil. Coast Guard unavailable.
before its first destination.
Adequate Equipment
A warranty of seaworthiness requires that it be properly - With respect to vessels that carries passengers, the
laden, and provided with a competent master, a sufficient Maritime Industry Authority prescribes rules which
number of competent officers and seamen, and the requisite provide for indispensable equipment and facilities
appurtenances and equipment. - ex. Exit doors, life boats, live vests
The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to: B. OVERLOADING
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship; - Duty to exercise due diligence likewise includes the
duty to take passengers or cargoes that are within
the carrying capacity of the vessel.


C. PROPER STORAGE 1. Deviation
- If there is an agreement between the shipper and
- The vessel itself may be suitable for the cargo but the carrier as to the road over which the conveyance
this is not enough because the cargo must also be is to be made (subject to the approval by the
properly stored. Maritime Industry Authority), the carrier may not
change the route, unless it be by reason of force
Cargo must generally not be placed on deck. The carrying of majeure. Without this cause, he shall be liable for all
deck cargo raises the presumption of unseaworthiness the losses which the goods may suffer, aside from
unless it can be shown that the deck cargo will not interfere paying the sum stipulated for that case.
with the proper management of the ship. - When on account of the force majeure, the carrier
had to take another route which resulted to an
D. NEGLIGENCE OF CAPTAIN AND CREW increase in transportation charges, he shall be
reimbursed upon formal proof.
- Failure on the part of the carrier to provide
competent captain and crew should be distinguished Note: With respect to carriers by sea, the routes are subject
from the negligence of the said captain and crew, to approval by MARINA and the same cannot generally be
because the latter is covered by the Limited Liability changed without the authorization from said administrative
Rule (liability of the shipowner may be limited to the agency
value of the vessel).
- If the negligence of the captain and crew can be 2. Transshipment
traced to the fact that they are really incompetent, - The act of taking cargo out of one ship and loading it
the Limited Liability Rule cannot be invoked because into another; to transfer goods from the vessel
the shipowner may be deemed negligent. stipulated in the contract of affreightment to
another vessel before the place of destination
Rules on passenger safety named in the contract has been reached.
- Negligence on the part of the captain and crew as - Transshipment of freight without legal excuse is a
well as the operator includes failure to comply with violation of the contract and subjects the carrier to
the regulation issued by the Maritime Industry liability if the freight is lost even by a cause
Authority (MARINA) on the safety of the passengers otherwise excepted.
- Memorandum Circular No. 112 : passengers do not
merely contract for transportation because they Note: there is transshipment whether or not the same
have the right to be treated by the carrier and its person, firm or entity owns the vessels (what matters is the
employees with kindness, respect, courtesy and due actual physical transfer of cargo from one vessel to another)
consideration. They are entitled to be protected
against personal conduct, injurious language, V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
indignities and abuses from the said carrier and its
- Read Memorandum Circular No. 114: p. 204 - Common carriers that offer transportation by land
are similarly required to make sure that the vehicles
Case: Planters Products Inc. vs. CA that they are using are in good order and condition.
- The period during which private respondent was to
observe the degree of diligence required of it as a Rule on Mechanical Defects If the carriers will replace
public carrier began from the time the cargo was certain parts of the motor vehicle, they are duty bound to
unconditionally placed in its charge after the vessels make sure that the parts that they are purchasing are not
holds were duly inspected and passed scrutiny by defective. Hence, it is a long-standing rule that a carrier
the shipper, up to and until the vessel reached its cannot escape liability by claiming that the accident that
destination and its hull was re-examined by the resulted because of a defective break or tire is due to a
consignee, but prior to unloading fortuitous event. This is true even if it can be established that
- A ship owner is liable for damage to the cargo the tire that was subject of a blow-out is brand new. The duty
resulting from improper stowage ONLY when the to exercise extraordinary diligence requires the carrier to
stowing si done by stevedores employed by him, and purchase and use vehicle parts that are not defective.
therefore under his control and supervision, not
when the same is done by the consignee or B. TRAFFIC RULES
stevedores under the employ of the latter - The carrier fails to exercise extraordinary diligence
if it will not comply with basic traffic rules. The Civil
Code provides for a presumption of negligence in


case the accident occurs while the operator of the construction, and are safe for air navigation purposes, such
motor vehicle is violating traffic rules. design and construction being consistent with accepted
engineering practice and in accordance with aerodynamic
In cases involving breach of contract of carriage, proof of laws and aircraft science.
violation of traffic rules confirms that the carrier failed to
exercise extraordinary diligence. Proof of airworthiness is not by itself sufficient to prove
exercise of extraordinary diligence.
Case: Mallari Sr and Jr vs. CA
- The rule is settled that a driver abandoning his Case: Japan Airlines vs. CA
proper lane for the purpose of overtaking another - The fact that the flight was cancelled due to
vehicle in an ordinary situation has the duty to see fortuitous event does not mean that the carriers
to it that the road is clear and not to proceed if he duty already ended. The carrier is still obligated to
cannot do so in safety look after the convenience and comfort of the
C. DUTY TO INSPECT - Thus the carrier was obligated to make the
- There is no unbending duty to inspect each and necessary arrangements to transport the passenger
every package or baggage that is being brought on the first available flight.
inside the bus or jeepney. The carrier is duty bound
to conduct such inspection depending on the A. INSPECTION
circumstances. - It is the duty of the carrier to make inquiry as to the
general nature of the articles shipped and of their
Case: Nocum vs. Laguna Tayabas Bus Company value before it consents to carry them; and its failure
- While it is true the passengers of appellants bus to do so cannot defeat the shippers right to recovery
should not be made to suffer for something over of full value of the package if lost, in the absence of
which they had no control, fairness demands that in showing of fraud or deceit on the part of the shipper.
measuring a common carriers duty towards its
passengers, allowance must be given to the reliance Where a common carrier has reasonable ground to suspect
that should be reposed on the sense of responsibility that the offered goods are of a dangerous character, the
of all the passengers in regard to their common carrier has the right to know the character of such goods and
safety. to insist inspection, if reasonable and practical under the
- It is to be presumed that a passenger will not take circumstances, as a condition of receiving and transporting
with him anything dangerous to the lives and limbs such goods. To be subjected to unusual search, other than
of his co-passengers not to speak of his own. the routinary inspection procedure customarily undertaken,
- Not to be lightly considered is the right to privacy to there must exist proof that would justify cause for
which each passenger is entitled apprehension that the baggage is dangerous as to warrant
- In other words, inquiry may be verbally made as to exhaustive inspection, or even refusal to accept carriage of
the nature of a passengers baggage when such is not the same.
outwardly perceptible, but beyond this,
constitutional boundaries are already in danger of Case: Northwest Airlines vs. Laya
being transgressed - The fact that the plaintiff was greatly
- SC held that carrier has succeeded in rebutting the inconvenienced by the fact that his attach case was
presumption of negligence by showing that it has subjected to further inspection does not warrant
exercised extraordinary diligence for the safety of its imposition of liability because he was not singled
passenger, according to the circumstances of each out and discriminated by the employees of the
case carrier
- Protection of passengers must take precedence over
Note: although overland transportation are not bound nor convenience
empowered to make an examination on the contents of - Nevertheless, the implementation of security
packages or bags particularly those hand carried by measures must be attended by basic courtesies
passengers, such is different with regards to an airline


- The aircraft must be in such a condition that it must BILL OF LADING
be able to withstand the rigors of flight.
Airworthiness An aircraft, its engines propellers, and other
components and accessories, are of proper design and Bill of Lading (BOL)


- a written acknowledgement, signed by the master of
a vessel or other authorized agent of the carrier, that Note: A party to a maritime contract would require an on
he has received the described goods from the board bill of lading because of its apparent guaranty of
shipper, to be transported on the expressed terms to certainty of shipping as well as the seaworthiness of the
be described the place of destination, and to be vessel which is to carry the goods.
delivered to the designated consignees of the
parties. Effectivity of BOL
- It operates as a (1) RECEIPT (2) as a CONTRACT (3) - upon its delivery to and acceptance by the shipper.
as a DOCUMENT OF TITLE. - The acceptance of the bill without dissent raises the
presumption that all the terms therein were brought
A BOL is not necessary for the perfection of a contract of to the knowledge of the shipper and agreed to by
carriage. Thus, the obligation to exercise extraordinary him, and in the absence of fraud or mistake, he is
diligence by the carrier is still required even if there is no bill stopped thereafter from denying that he assented to
of lading. such claims (whether he reads the bill or not)

In the absence of the bill of lading, disputes shall be THE 3-FOLD NATURE OF THE BILL OF LADING
determined on the basis of the provisions in the New Civil - The three fold nature of a bill of lading is obviously
Code and suppletory by the Code of Commerce. applicable only to carriage of goods
- As receipt and document of title: issued for goods
KINDS of BILL of LADING: - As contract: applies to tickets issued to passengers

1. Clean Bill Does not contain any notation indicating I. RECEIPT

of Lading any defect in the goods. - As comprehending all methods of transportation,
2. Foul Bill One that contains the abovementioned a BOL may be defined as a written
of Lading notation. acknowledgement of the receipt of goods and an
3. Spent Bill The goods are already delivered but the agreement to transport and to deliver them at a
of Lading bill of lading was not yet returned (upon specified place to a person named or on his order.
delivery, the carrier is supposed to - Other terms, shipping receipts, forwarders
retrieve the covering bill of the goods) receipts, and receipts for transportation.
4. Through Issued by a carrier who is obliged to use - (SC) the designation however is not material, and
Bill of the facilities of other carriers as well as neither is the form of the instrument. If it contains
Lading his own facilities for the purpose of an acknowledgement by the carrier of the receipt of
transporting the goods from the city of goods for transportation it is, in legal effect a BOL.
the seller to the city of the buyer, which - The issuance of a bill of lading carries the
BOL is honored by the second and other presumption that the goods were delivered to the
interested carriers who dont issue their carrier issuing the bill, for immediate shipment, and
own BOL. it is nowhere questioned that a bill of lading is prima
5. On Board -states that the goods have been received facie evidence of the receipt of the goods by the
Bill on board the vessel which is to carry the carrier
-apparently guarantees the certainty of II. CONTRACT
shipping as well as the seaworthiness of - It expresses the terms and conditions of the
the vessel to carry the goods. agreement between the parties; names the parties;
-basically means that the goods are includes consignees etc. It is the law between the
already inside the vessel parties bound by its terms and conditions.
6. Received -states that the goods have been received
Contracts of Adhesion
for for shipment with or without specifying
- It is to be construed liberally in favor of the shipper
Shipment the vessel by which the goods are to be
who adhered to such bill as it is a contract of
Bill shipped.
adhesion. The only participation of the party is the
-issued when conditions are not normal
signing of his signature or his adhesion thereto.
and there is insufficiency of shipping
- The shipper or passenger is bound by the terms and
conditions if there is no occasion to speak of
7. Custody The goods are already receied by the ambiguities or obscurities
Bill of carrier but the vessel indicated therein - If the words appear to be contrary to the evident
Lading has not yet arrived in the port. intention of the parties, the latter shall prevail over
8. Port Bill The vessel indicated in the BOL that will the former
of Lading transport the goods is already in the port.


ART. 24 (NCC). In all contractual property or other relations, - (for overland transportation, maritime commerce
when one of the parties is at a disadvanatge on account of his and electronic documents, please refer to the
moral dependence, ignorance indigence, mental weakness, textbook for the codal pp. 203-210)
tender age and other handicap, the court must be vigilant for

Parole Evidence Rule 1. Exempting the carrier from any and all liability for
- BOL is covered by the parol evidence rule, that the loss or damage occasioned by its own negligence -
terms of the contract are conclusive upon the parties INVALID as it is contrary to public policy.
and evidence aliunde is not admissible to vary or 2. Parties may stipulate that the diligence to be
contradict a complete enforceable agreement, exercised by the carrier for the carriage of goods be
subject to well defined exceptions less than extraordinary diligence if it is:
- The mistake contemplated as an exception to the a. in writing and signed by both parties
parol evidence rule is one which is a mistake of fact b. supported by a valuable consideration other
mutual to the parties. than the service rendered by the common
- Note that if such is not raised inceptively in the carrier
complaint or in the answer, a party cannot later on c. the stipulation is just, reasonable and not
be permitted to introduce parol evidence thereon contrary to law.
3. Providing an unqualified limitation of such liability
Bill of Lading as Evidence to an agreed valuation - INVALID
- The BOL is the legal evidence of the contract and the 4. Limiting the liability of the carrier to an agreed
entries thereof constitutes prima facie evidence of valuation unless the shipper declares a higher value
the contract. and pays a higher rate of freight- VALID and
- All the essential elements of a valid contract (cause, ENFORCEABLE.
consent, object) are present when such bill are
issued. Note: the purpose of limiting stipulations in the bill of lading
is to protect th common carrier. Such stipulation obliges the
III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE shipper/consignee to notify the common carrier of the
- In a contractual obligation, the bill of lading can be amount that the latter may be liable for in case of loss of the
categorized as an actionable document under the goods
Rules of Court. Hence, the bill of lading must be
properly pleaded either as causes of action or Remember:
defenses 1. The parties cannot stipulate so as to totally exempt
- ART 1507 (NCC). A document of title in which it is the carrier from exercising any degree of diligence
stated that the goods referred to therein will be whatsoever
delivered to the bearer or to the order of any person 2. The parties cannot stipulate that the common
named in such document is a negotiable document of carrier shall exercise diligence less than the
title. diligence of a good father of a family

- If the document of title contains the required words RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE
of negotiability to make the instrument negotiable OF GOODS:
under Article 1507 of the NCC, the document 1. Inter-island - if goods arrived in damaged condition (Art.
remains to be negotiable even if the words not 366):
negotiable or non negotiable are places thereon a. If damage is apparent, the shipper must file a claim
immediately (it may be oral or written);
o a. Bearer document- negotiated by delivery b. If damage is not apparent, he should file a claim within 24
o b. Order document- negotiated by hours from delivery.
indorsement of the specified person so The filing of claim under either (1) or (2) is a condition
named precedent for recovery.
If the claim is filed, but the carrier refuses to pay: enforce
- Effects of negotiation. Negotiation of the document carriers liability in court by filing a case:
has the effect of manual delivery so as to constitute a. within 6 year, if no bill of lading has been issued; or
the transferee the owner of the goods. b. within 10 years, if a bill of lading has been issued.

BASIC STIPULATIONS 2. Overseas where goods arrived in a damaged condition

- Provided for in the Code of Commerce from a foreign port to a Philippine port of entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim
should be filled immediately;


b. if damage is not apparent, claim should be filled within 3 2. when an action is filed in court until it is dismissed.
days from delivery. (Stevens & Co. v. Nordeutscher Lloyd, 6 SCRA
Filing of claim is not a condition precedent, but an action
must be filed against the carrier within a period of 1 year Things to Remember:
from discharge; if there is no delivery, the one-year period 1. Article 1757 provides that the responsibility of a
starts to run from the day the vessel left port (in case of common carrier to exercise utmost diligence for the
undelivered or lost cargo), or from delivery to the arrastre safety of PASSENGERS CANNOT be dispensed with
(in case of damaged cargo). or lessened by stipulation or statement on tickets or
Where there was delivery to the wrong person, the otherwise
prescriptive period is 10 years because there is a violation of 2. Article 1750 of the Civil Code provides that a
contract, and the carriage of goods by sea act does not apply contract fixing the sum that may be recovered by the
to misdelivery. (Ang v. American SS Agencies (19 SCRA owner or shipper for the loss, destruction, or
631) deterioration of the GOODS is VALID, if it is
REASONABLE and JUST under the circumstances,
3. It is unfair to deny the shipper the right to declare
- Applies suppletorily to the Civil Code if the goods the actual value of his cargos and to recover such
are to be shipped form a foreign port to the true value in case of loss or damage
Philippines Note: it has been suggested that the signature of the
- COGSA is applicable in international maritime shipper in the bill of lading with regards to the
commerce. It can be applied in domestic sea limitation applies only to reduction of diligence and
transportation if agreed upon by the parties. not to the stipulated amount to be paid.
(paramount clause) 4. It is unjust and contrary to public policy if the
- Under the Sec. 4 (5), the liability limit is set at $500 common carriers liability for acts committed by
per package unless the nature and value of such thieves, or of robbers who do not act with grave or
goods is declared by the shipper. This is deemed irresistible threat, violence or force, is dispensed
incorporated in the bill of lading even if not with or diminished
mentioned in it (Eastern Shipping v. IAC, 150 5. The common carrier may EXEMPT itself from
SCRA 463). liability if he can prove that:
- If by agreement, another maximum amount than a. He observed extraordinary diligence
that mentioned may be fixed provided that such b. The proximate and only cause of the
maximum shall not be less than $500 and in no incident is a fortuitous event or force
event shall the carrier be liable for more than the majeure
amount of damage actually sustained c. The proximate and only cause of the loss is
the character of the goods or defects in the
Note that Art. 1749 of the NCC applies to inter-island trade. packing or in the containers
d. The proximate and only cause of the loss is
Meaning of Package the order or act of competent public
- If the goods are shipped in cartons, each carton is authority
considered a package even if they are stored in Note: to limit its liability or at least mitigate the
container vans same, the carrier can cite CONTRIBUTORY
- When what ordinarily be considered packages are NEGLIGENCE of the plaintiff and the DOCTIRNE OF
shipped in a container supplied by the carrier and AVOIDABLE CONSEQUENCES
the number of such units is disclosed in the shipping
documents, each of those units and not the container Case: Sea-Land Service Inc. vs. IAC
constitutes the package. - Liability of a common carrier for loss of or damage
to goods transported by it under a contract of
Prescriptive periods carriage is governed by the laws of the country of
- Suit for loss or damage to the cargo should be destination
brought within one year after: - COGSA is applicable up to the final port of
a. delivery of the goods; or destination and that the fact that transshipment was
b. the date when the goods should be delivered. made on an interisland vessel did not remove the
(Sec. 3[6]) contract of carriage of goods from the operation of
said Act.
The one-year prescriptive period is suspended by:
1. express agreement of the parties (Universal Case: Citadel Lines Inc. vs. CA
Shipping Lines, Inc. v. IAC, 188 SCRA 170)


- The duty of the consignee is to prove merely that the damages for violating the rights of its passengers
goods were lost. Thereafter, the burden is shifted to under the contract of carriage (PAL v. CA, 257 SCRA
the carrier to prove that it has exercised the 33). --- if the damage is similarly caused by any
extraordinary diligence required by law. And, its agent of the carrier acting within the scope of his
extraordinary responsibility lasts from the times employment
that goods are unconditionally placed in the 2. when it contradicts public policy;
possession of, and received by the carrier for 3. if the requirements under the Convention are not
transportation until the same are delivered, actually complied with.
or constructively, by the carrier to the consignee or LIABILITY OF CARRIER FOR DAMAGES:
to the person who has the right to receive them 1. Death or injury of a passenger if the accident causing
it took place on board the aircraft or in the course of
Case: Everett Steamship Corporation vs. CA its operations; (Art. 17)
- Considering that the shipper did not declare a higher 2. Destruction, loss or damage to any luggage or goods,
valuation it had itself to blame for not complying if it took place during the carriage; (Art. 18) and
with the situations 3. Delay in the transportation of passengers, luggage or
- The trial courts ratiocination that private goods. (Art. 19)
respondent could not have fairly and freely agreed
to the limited liability clause in the bill of lading NOTE: The Hague Protocol amended the Warsaw
because the said conditions were printed in small Convention by removing the provision that if the airline took
letters does not make the bill of lading invalid all necessary steps to avoid the damage, it could exculpate
itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)
Remember: The said provisions merely declare the carrier
WHEN APPLICABLE: liable for damages in the enumerated cases if the conditions
- Applies to all international transportation of person, therein specified are present. Neither said provisions nor
baggage or goods performed by aircraft for hire. others in the aforementioned Convention regulate or exclude
- International transportation means any liability for OTHER BREACHES of contract of carrier.
transportation in which the place of departure and
the place of destination are situated either: The Convention does not thus operate as an exclusive
o within the territories of two High enumeration of the instances of an airlines liability, or as an
Contracting Parties regardless of whether absolute limit of the extent of that liability.
or not there be a break in the transportation
or transshipment, or LIMIT OF LIABILITY
o within the territory of a single High 1. passengers - limited to 250,000 francs;
Contracting Party, if there is an agreed except: agreement to a higher limit
stopping place within a territory subject to 2. goods and checked-in baggage - 250 francs/kg
the sovereignty, mandate or authority of except: consigner declared its value and
another power, even though that power is paid a supplementary sum, carrier liable to
not a party to the Convention. not more than the declared sum unless it
proves the sum is greater than its actual
Transportation to be performed by several successive air value.
carriers shall be deemed to be one undivided transportation, 3. hand-carry baggage - limited to 5,000
if it has been regarded by the parties as a single operation, francs/passenger
whether it has been agreed upon under the form of a single
contract or of a series of contracts, and it shall not lose its An agreement relieving the carrier from liability or fixing a
international character merely because one contract or a lower limit is null and void. (Art. 23)
series of contracts is to be performed entirely within a Carrier not entitled to the foregoing limit if the damage is
territory subject to the sovereignty, suzerainty, mandate, or caused by willful misconduct or default on its part. (Art. 25)
authority of the same High Contracting Party. (Art. 1)
Case: China Airlines vs. Daniel Chiok
NOTE: Warsaw prevails over the Civil Code, Rules of - The ticket-issuing airline acts as principal in a
Court and all laws in the Philippines since an contract of carriage and is thus liable for the acts
international law prevails over general law. and the omissions of any errant carrier to which it
may have endorsed any sector of the entire,
WHEN NOT APPLICABLE: continuous trip.
1. If there is willful misconduct on the part of the
carriers employees. The Convention does not Place of Destination- within the meaning of the Warsaw
regulate, much less exempt, carrier from liability for Convention, is determined by the terms of the contract of


carriage, or specifically the ticket between the passenger and the document remains to be negotiable even if the
the carrier. It is the destination and not an agreed stopping words not-negotiable or non-negotiable are
place that controls for the purpose of ascertaining placed thereon. - Art. 1510 (Civil Code)
jurisdiction under the Convention. (Case: Santos III vs.
Northwest Orient Airlines and CA) B. How Negotiated
a) Bearer document (Art. 1508 and 1511)
ACTION FOR DAMAGES - may be negotiated be delivery
1. Condition precedent
A written complaint must be made within: b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- 3 days from receipt of baggage - can only be negotiated through the indorsement of the
- 7 days from receipt of goods specified person so named.
- in case of delay, 14 days from receipt of - such indorsement may be in blank, to bearer or to a
baggage/goods specified person.
F otherwise the action is barred except in case of fraud on
the part of the carrier. (Art. 26) Where a negotiable document of title is transferred
2. Jurisdiction governed by domestic law for value by delivery, and the endorsement of the
3. Venue at the option of the plaintiff: transferor is essential for negotiation, the transferee
a. court of domicile of the carrier; acquires a right against the transferor to compel him
b. court of its principal place of business; to endorse the document. xxx (Art. 1515, Civil Code)
c. court where it has a place of business through which
the contract has been made; C. Effects of Negotiation
d. court of the place of destination. (Art. 28) - has the effect of manual delivery so as to constitute the
4. Prescriptive period 2 years from: transferee the owner of the goods
a. date of arrival at the destination - results in the transfer of ownership because transfer of
b. date of expected arrival document likewise transfers control over the goods
c. date on which the transportation stopped. (Art. 29) - refer to Art. 1513
5. Rule in case of various successive carriers,
a. In case of transportation of passengers the action is Chapter 5
filed only against the carrier in which the accident or Actions and Damages in Case of Breach
delay occurred unless there is an agreement whereby
the first carrier assumed liability for the whole Cause of action of a passenger and shipper:
journey. a) against common carrier based on culpa contractual or
b. In case of transportation of baggage or goods culpa aquiliana
i. the consignor can file an action against the first b) on the part of the driver based on either culpa delictual
carrier and the carrier in which the damage or culpa aquiliana
ii. the consignee can file an action against the last Note: The source of obligation based on culpa contractual is
carrier and the carrier in which the damage separate and distinct from quasi-delict.
occurred. These carriers are jointly and severally
liable. (Art. 30) Article 1903 (last paragraph) 2 things are apparent:
1. That when an injury is caused by the negligence of a
Nota Bene: COGSA/WARSAW applies to foreign vessels or servant or employee there instantly arises a
airplane or international travel presumption of law that there was negligence on the
Code of Commerce applies to inter-island or part of the master or the employer either in the
domestic travel. selection of the servant or employee, or in
supervision over him after the selection, or both.
Bill of Lading as Document of Title 2. That presumption is juris tantum and not juris et de
jure (of law and of right), and consequently may be
Bill of lading is a document of title under the Civil rebutted
Code. It can be a negotiable document of title.
Note however: that Article 1903 of the Civil Code is not
A. Negotiability applicable to acts of negligence which constitute the breach
- It is negotiable if it is deliverable to the bearer, or to the of contract. It is applicable only to culpa contractual.
order of any person named in such document. (Art. 1507, The fundamental distinction between obligation of
Civil Code) extra-contractual and those which arise from contract,
rests upon the fact that in cases of non-contractual
a) Effect of Stamp or Notation Non-Negotiable obligation it is the wrongful or negligent act or omission
itself which creates the vinculum juris, whereas in


contractual relations the vinculum (bond) exists - This provision applies even to transportation by sea
independently of the breach of the voluntary duty within the Phils. or coastwise shipping.
assumed by the parties when entering into the - Does NOT apply to misdelivery of goods.
contractual relation.
Q: Why does it not apply to misdelivery of goods?
CONCURRENT CAUSES OF ACTION A: In such cases (misdelivery), there can be no question of
- There is one action but several causes of action claim for damages suffered by the goods while in transport,
- The same act that breaches the contract may since the claim for damages arises exclusively out of the
also be tort failure to make delivery.

Note: The cause of action of a passenger or shipper against Case: Monica Roldan vs. Lim Ponzo and Co.
the common carrier can be culpa contractual or culpa - Article 366 of the Commercial Code is limited to
aquiliana while the basis of liability on the part of the driver cases of claims for damage to goods actually turned
is either culpa delictual or culpa aquiliana. The driver of the over by the carrier and received by the consignee.
carrier is not liable based on contract because there is NO
PRIVITY of contract between him and the passenger or But the period prescribed in Art. 366 may be subject to
shipper. modification by agreement of the parties.
The validity of a contractual limitation of time for
If the negligence of third persons concurs with the breach, filing the suit itself against a carrier shorter than the
the liability of the third person who was driving the vehicle statutory period thereof has generally been upheld as
and/or his employer may be based on quasi delict. The driver such stipulation merely affects the shippers remedy
alone may be held criminally liable and civil liability may be and does not affect the liability of the carrier.
imposed upon him based on delict. In the latter case, the
employer is subsidiarily liable. b) Extinctive Prescription
- six (6) years if there is no written contract (bill
Remember: It does not make any difference that the liability of lading)
of one springs from the contract while that of the other - ten (10) years if there is written contract
arises from quasi-delict. If the owner and driver of the other
vehicle are not impleaded, the carrier may implead them by This rule likewise applies to carriage of passengers for
filing a third party complaint. domestic transportation.

Solidary liability B. International Carriage of Goods by Sea

- In case the negligence of the carriers driver and a A claim must be filed with the carrier within the
third person concurs, the liability of the parties following period:
carrier and his driver, third person is joint and 1. if the damage is apparent, the claim should be filed
several. immediately upon discharge of the goods; or
2. within 3 days from delivery, if damage is not

A. Overland Transportation of Goods and Coastwise Filing of claim is not condition precedent. Thus,
Shipping regardless of whether the notice of loss or damage has
a) When to file a claim with carrier been given, the shipper can still bring an action to
- Art. 366 constitutes a condition precedent to the recover said loss or damage within one year after the
accrual of a right of action against a carrier for delivery of the goods or the date when the goods
damage caused to the merchandise. should have been delivered

Under Art. 366 of the Code of Commerce, an action for a) Prescription

damages is barred if the goods arrived in damaged Action for damages must be filed within a period of one
condition and no claim is filed by the shipper within (1) year from discharge of the goods.
the following period: The period is not suspended by an extra-judicial
1. Immediately if damage is apparent; demand. (Why? Transportation of goods by sea should
2. within twenty four (24) hours from delivery if be decided in as short a time as possible)
damage is not apparent. o Case: Dole Philippines Inc. vs. Maritime
Company of the Philippines - the prescriptive
- The period does not begin to run until the consignee period is not tolled or interrupted by a
has received possession of the merchandise that he written extra-judicial demand. Article 1155
may exercise over it the ordinary control pertinent is NOT applicable.
to ownership. The period does not apply to conversion or misdelivery.


The one (1) year period refers to loss of goods and not foreseen or not. Those which may be reasonably
to misdelivery. attributed to the non-performance of the obligation.

- Damages arising from delay or late delivery are not Note: The carrier who may be compelled to pay has the right
the damage or loss contemplated under the COGSA. of recourse against the employee who committed the
The goods are not actually lost or damaged. The negligent, willful or fraudulent act.
applicable period is ten (10) years.
- Case: Domingo Ang vs. American Steamship Agencies B. Kinds of Damages
What is to be resolved in order to
determine the applicability of the Article 2216 provides that no proof of pecuniary loss is
prescriptive period of one year is whether necessary in order that moral, nominal, temperate,
or not there was loss of the goods subject liquidated or exemplary damages may be adjudicated. The
matter of the complaint. assessment of such damages, except liquidated ones, is left to
Loss contemplates merely a situation where the discretion of the court, according to the circumstances of
no delivery at all was made by the shipper each case. However, proof of pecuniary loss is necessary if
of the goods because the same had actual or compensatory damages are being claimed.
perished, gone out of commerce, or
disappeared in such a way that their a) Actual or Compensatory Damages
existence is unknown or they cannot be - only for the pecuniary loss suffered by him as he has
recovered. (Note: It is not loss due to duly proved
misdelivery or delivery to the wrong - not only the value of the loss suffered, but also that
person.) of the profits which the obligee failed to obtain

This rule applies in collision cases. The one (1) year - 2 Kinds:
period starts not from the date of the collision but 1. the loss of what a person already possesses (dao
when the goods should have been delivered, had the emergente);
cargoes been saved. 2. the failure to receive as a benefit that would have
pertained to him (lucro cesante).
Case: Maritime Agencies and Services Inc. vs. CA - It should be proven: cannot be decided based on the
- When there is two destination of delivery, the one consideration of the judge; not to be based on the
year period should commence when the last item perception, observation and consideration of the
was delivered to the consignee. judge
- With respect to restorative medical procedure: to be
Insurance entitled to actual damage, you need to have an
The insurer who is exercising its right of subrogation is EXPERT TESTIMONY. Without such, you cannot
also bound by the one (1) year prescriptive period. recover.
However, it does not apply to the claim against the
insurer for the insurance proceeds. The claim against Damages may be recovered: Art. 2205 (Civil Code)
the insurer is based on contract that expires in ten (10) 1) For loss or impairment of earning capacity in cases of
years. temporary or permanent personal injury;
2) For injury to the plaintiffs business standing or
II. Recoverable Damages commercial credit.
Damages is the pecuniary compensation,
recompense or satisfaction for an injury sustained, or Damages cannot be presumed. The burden of proof
as otherwise expressed, the pecuniary consequences rests on the plaintiff who is claiming actual damages
which the law imposes for the breach of some duty or against the carrier.
violation of some rights.
In case of goods the plaintiff is entitled to their
A. Extent of Recovery (Contractual Breach: Art. 220, NCC) value at the time of destruction. The award is the sum
Carrier in good faith is liable only to pay for the of money which plaintiff would have to pay in the
damages that are the natural and probable market for identical or essentially similar goods
consequences of the breach of the obligation and For personal injury and even death the claimant is
which the parties have foreseen or could have entitled to all medical expenses as well as other
reasonably foreseen at the time the obligation was reasonable expenses that he incurred to treat his or
constituted. her relatives injuries.
Carrier in bad faith or guilty of gross negligence In case of death the plaintiff is entitled to the
liable for all damages, whether the same can be amount that he spent during the wake and funeral of


the deceased. But, expenses after the burial are not demand can be established with reasonably certainty, the
compensable. interest shall begin to run form the time the claim is made
Read Art. 2206 (Civil Code): judicially or extrajudicially.
death caused by a crime or quasi-delict shall
be at least P3,000; [The amount of fixed b) Moral Damages
damages is now P50,000.00] - Includes physical suffering, mental anguish, fright,
the defendant shall be liable for the loss of serious anxiety, besmirched reputation, wounded
the earning capacity of the deceased; feelings, moral shock, social humiliation and similar
If deceased is obliged to give support, injury.
recipient may demand support from the - Though incapable of pecuniary computation, moral
person causing the death for a period not damages may be recovered if they were the proximate
exceeding five years result of the defendants wrongful act or omission.
Spouse, legitimate and illegitimate - Moral damages are not awarded to punish the defendant
descendant and descendants may demand but to compensate the victim
moral damages for mental anguish by - May be recovered when there is death or there is malice
reason of the death of the deceased or bad faith. (in transportation of passengers)
- Refer to Art. 2219 and 2220 (enumerates cases when
moral damages may be awarded)
1) Loss of earning capacity - Generally, no moral damages may be awarded where the
breach of contract is not malicious.
Net Earning Capacity = Life Expectancy x [Gross Annual - Moral damages may be awarded if the contractual
Income less Necessary Living Expenses] negligence is considered gross negligence.
- Subject to three conditions in transportation law:
Life expectancy (2/3 x 80 age at death) o Death
Net earnings based on the gross income of the o Malice or bad faith (must be done in the
victim minus the necessary incidental living expenses performance of the contract of carriage)
which the victim would have incurred if he were alive. o Physical Injuries
Amount of living expenses must be established. In the - Requisites:
absence of proof, it is fixed at fifty (50%) of the gross o There must be an injury, whether physical,
income. mental or psychological, clearly sustained
Rules on loss of earning apply when the breach of the by the claimant
carrier resulted in the plaintiffs permanent incapacity. o There must be a culpable act or omission
factually established
2) Attorneys fees o The wrongful act or omission of the
- refer to Art. 2208 of the Civil Code defendant is the proximate cause of the
- attorneys fees may be awarded in an action for injury sustained by the claimant
breach of contract of carriage under par. 1,2,4,5,10 o The award of damages is predicated on any
and 11 of Art. 2208. of the cases stated in Art. 2219.
- If awarded exemplary, one is entitled to attorneys
fees - Factors to consider that could affect the amount to
- 2 kinds: ordinary (compensation to the lawyer); be recovered:
extraordinary (indemnity as a form of damages o The extent of humiliation may also
suffered due to the breach of contract) determine the amount of moral damages
- You can be awarded if you show that you were that can be awarded
forced to litigate and when you are entitled to o The extent of pain and suffering likewise
exemplary damage. determines the award
- But this award is subject to the discretion of the o Official, political, social and financial
court (you cannot dictate usually 10%-15%) standing of the offended party and the
business and financial position of the
3) Interests offender affect the amount of damages
12% per annum if it constitutes a loan or o The age of the claimant.
forbearance of money
6% per annum if it does not constitute loan or c) Nominal Damages
forbearance of money - Refer to Art. 2221-2223 (Civil Code)
12% - for final judgment - It is adjudicated in order that the right of plaintiff may be
vindicated or recognized, and not for the purpose of
Note: No interest, however, shall be adjudged on indemnifying the plaintiff for any loss suffered by him.
unliquidated claims for damages except when or until the


- The assessment of nominal damages is left to the the act performed is deliberate, malicious and tainted with
discretion of the court according to the circumstances of bad faith. The rationale behind exemplary or corrective
the case. damage is to provide an example or correction from public
- The award of nominal damages is also justified in the good.
absence of competent proof of the specific amounts of
actual damages suffered. The award of exemplary damages in breach of contract
- Cannot co-exist with actual damages. of carriage is subject to the provisions under Art. 2232-
- There is no loss in nominal damages, unlike in actual and 2235 of the Civil Code.
temperate damages, loss is present which is proven and
not proven but rather ascertained by the court,
respectively. Case: Air France vs. Rafael Carrascoso and CA
- The inference of bad faith is there; it may be drawn
Case: Japan Airlines vs. CA from the facts and circumstances set forth therein.
- The award of moral damages was justified because The contract was averred to establish the relation
JAL failed to make necessary arrangement to between the parties.
transport the plaintiffs on the first available - Deficiency in the complaint in stating that there was
connecting flight to Manila. bad faith, if any, was cured by the evidence.
- Only Nominal damages were awarded in the
absence of proof of actual damages Case: Philippine Airlines Inc. vs. CA
- Moral damages are recoverable in a breach of
d) Temperate or Moderate Damages contract of carriage where the air carrier thought its
- More than nominal but less than compensatory agents acted fraudulently or in bad faith.
damages. - The contract of air carriage generates a relation
- Art. 2224 provides: attended with a public duty. Neglect or malfeasance
may be recovered when the court finds that some of the carriers employees naturally could give
pecuniary loss has been suffered but its amount ground for an action for damages.
cannot, from the nature of the case, be provided with
certainty. MARITIME LAW
- cannot co-exist with actual damages
- Definite proof of pecuniary loss cannot be offered, A. CONCEPTS (Chapter 6)
although the court is convinced that there has been such
loss. Maritime Law is the system of laws which particularly
relates to the affairs and business of the sea, to ships, their
e) Liquidated Damages crews and navigation and to marine conveyance of persons
- Those agreed by the parties to a contract, to be paid and property
in case of breach thereof.
- Ordinarily, the court cannot change the amount of Governing Laws:
liquidated damages agreed upon by the parties. 1. New Civil Code primary law on maritime
However, Art. 2227 of the Civil Code provides that commerce
liquidated damages, whether intended as an 2. Book III Code of Commerce applied suppletorily
indemnity or a penalty, shall be equitably reduced if 3. Special Laws
they were iniquitous or unconscionable. a. Salvage Law (Act No. 2616)
b. Carriage of Goods by Sea Act (CA No. 65)
f) Exemplary or Corrective Damages c. Ship Mortgage Decree of 1978 (PD 1521)
- Requisites for the award of exemplary damages:
1. They may be imposed by way of example in addition REAL AND HYPOTHECARY NATURE OF MARITIME LAW
to compensatory damages, and only after the
claimants right to them has been established. Case: Philippine Shipping Company, et al. vs. Francisco Garcia
2. They cannot be recovered as a matter of right, their Vergara
determination depending upon the amount of That which distinguishes the maritime from the civil
compensatory damages that may be awarded to the law and even from the mercantile law in general is
claimant. the real and hypothecary nature of the former
3. The act must be accompanied by bad faith or done in
wanton, fraudulent, oppressive or malevolent Evidence of this real nature of maritime law:
manner. o The limitation of the liability of the agents
to the actual value of the vessel and the
Note: If gross negligence warrants the award of exemplary freight money
damages, with more reason is its imposition justified when o The right to retain the cargo and the


embargo and detention of the vessel even If a portion of the vessel or of the cargo, or both,
cases where the ordinary civil law would should be saved, the crew engaged on wages, including the
not allow more than a personal action captain, shall retain their rights on the salvage, so far as they
against the debtor or person liable go, on the remainder of the vessel as well on the amount of
the freightage of the cargo saved; but sailors who are
This repeals the civil law to such extent that, in engaged on shares shall not have any right whatsoever on
certain cases where the mortgaged property is lost the salvage of the hull, but only the portion of the freightage
no personal action lies against the owner or agent of saved. If they should have worded to recover the remainder
the vessel of the shipwrecked vessel they shall be given from the
amount of the salvage an award in proportion of the efforts
Two reasons why it is impossible to do away made and to the risks encountered in order to accomplish
with these privileges: the salvage
o The risk to which the thing is exposed
o The real nature of maritime law, exclusively Art. 587: ship agent may exempt himself of the civil
real, according to which the liability of the liabilities for the indemnities in favor of third persons by
parties is limited to a thing to which is at abandoning vessel with all equipments and freight it earned
mercy of the waves during voyage

Case: Aboitiz Shipping Corporation vs. General Accident Fire Art. 590: co-owners civilly liable in proportion to their
and Life Assurance Corporation, Ltd. interest and may exempt liability by abandonment of the
part of the vessel belonging to him
The real and hypothecary nature of maritime law
simply means that the liability of the carrier in Limited liability rule means that the liability of a
connection with losses related to maritime shipowner for damages in case of loss is limited to the value
contracts is confined to the vessel, which is of his vessel.
hypothecated for such obligations or which stands No vessel, no liability.
as the guaranty for their settlement The civil liability for collision is merely co-existent
Purpose: It was designed to offset such adverse with the interest in the vessel; if there was total loss,
conditions and to encourage people and entities to liability is also extinguished.
venture into maritime commerce despite the risks
and prohibitive cost of shipbuilding GR: If the ship is totally lost, liability is extinguished. If the
Thus, the liability of the vessel owner and agent ship or part thereof still exists, he can escape liability by
arising from the operation of such vessel were abandoning the vessel, its appurtenances and its freight.
confined to the (1) vessel itself, (2) its equipment,
(3) freight, (4) and insurance if any, which Case: Monarch Insurance Co., Inc. vs. Court of Appeals
limitation served to induce capitalists into The total destruction of the vessel extinguishes
effectively wagering their resources against the maritime liens because there are no longer any res
consideration of the large profits attainable in trade to which it can attach. This doctrine is based on the
real and hypothecary nature of maritime law.
Real similar to transactions over real property where to
effect against third persons, registration is necessary Note: Since the Civil Code contains no provision regulating
liability of shipowners or agents in the event of total loss or
Hypothecary the liability of the owner of the value of the destruction of the vessel, Article 587 of the Code of
vessel is limited to the vessel itself Commerce governs.

STATUTORY PROVISIONS Article 837, 587 and 590 of Code of Commerce cover only:
1. Liability to third persons
Article 837, 587, 590 and 643 provides for limited 2. Acts of the captain
liability of shipowner. (read full provision) 3. Collisions

Art. 837: civil liability incurred by the ship owner: liability EXCEPTIONS TO THE LIMITED LIABILITY RULE
limited to value of the vessel + appurtenances + freightage 1. Where the injury or death to a passenger is due
earned during voyage either to the fault of the shipowner, or to the
concurring negligence of the shipowner and the
Art. 643: vessel and cargo lost by reason of capture or captain (NEGLIGENCE)
wreck: all rights shall be extinguished, both as regards the
crew to demand any wages whatsoever, and as regards the GR: Shipowner is liable for the negligence of the
ship agent to recover the advances made captain in collision cases


---- liability is limited to value of the vessel
Limited liability rule applies if the captain or the PROCEDURE FOR ENFORCEMENT
crew caused the damage or injury as when
unseaworthiness of the vessel was caused by the Case: Aboitiz Shipping Corporation vs. General Accident Fire
negligence of the captain or crew during the voyage and Life Assurance Corporation, Ltd.
However, if the failure to maintain the - Rights of the parties to claim against an agent or
seaworthiness of the vessel can be ascribed to the owner of vessel may be compared to those of
shipowner alone or the shipowner concurrently creditors against an insolvent corporation whose
with the captain, then the limited liability principle assets are not enough to satisfy the totality of claims
cannot be invoked --- LIABILITY FOR THE DAMAGES as against it.
IS TO THE FULL EXTENT (ex. Overloading, - Creditors must limit their recovery to what is left in
unseaworthiness even at the time of departure) the name of the corporation
- In the sinking of a vessel, the claimants or creditors
2. Where the vessel is insured (INSURANCE) are limited in their recovery to the remaining value
of accessible assets. In the case of lost vessel, these
Limited liability rule does not apply to insurance assets are the insurance proceeds and pending
claims freightage for the particular voyage
Case: Vasquez vs. CA
- The total loss of the vessel did not extinguish - is the written statement by the master of a vessel or
the liability of the carriers insrured any authorized officer, attested by proper officer or
- Despite the loss of the vessel, therefore, its a notary, to the effect that damages has been
insurance answers for the damages that a suffered by the ship
shipowner or agent, may be held liable for by
reason of the death of its passengers.
Required under the following cases:
3. In the workmens compensation claims (WORKERS 1. When the vessel makes an arrival under stress
COMPENSATION) 2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or
The provisions of the Code of Commerce have no the captain believe that the cargo has suffered
room in the application of the Workmens damages or averages
Compensation Act which seeks to improve, and aims 4. Maritime collisions
at the amelioration of, the condition of laborers and
employees Q: when is it not required?
If an accident is compensable under the Workmens A:
Compensation Act, it must be compensated even 1. when it does not fall under the four cases mentioned
when the workmans right is not recognized by or is above
in conflict with other provisions of the Civil Code or 2. when what is not involve is not a vessel
of the Code of Commerce
Liability under the Workmens compensation Act, ADMIRALTY JURISDICTION (RTC)
even if the vessel was lost, is still enforceable - Section 19 (3) of BP 129 as amended by RA 7691
against the employer or shipowner. (3) In all actions in admiralty and maritime
jurisdiction where the demand or claim
4. Expenses for repairs and provisioning of the ship exceeds 300, 000 or in Metro manila, where
prior to the departure thereof such demand or claim exceeds 400,000.
- if less MTC
5. The vessel is not abandoned (ABANDONMENT)
Abandonment of the vessel, its appurtenances and 3 concepts: (they are the same)
the freightage is an indispensable requirement
before the shipowner or ship agent can enjoy the 1. real and hypothecary --- the supreme court did not
benefits of the limited liability rule. If the carrier explain the literal meaning of it.
does not want to abandon the vessel, he is still liable - real: refers to the risk in maritime thats why there are
even beyond the value of the vessel privileges for the shipowner. Risks are certain to happen
The only instance where abandonment is dispensed - hypothecary: remember guaranty and collateral which is
with is when the vessel was entirely lost. In such the vessel. For the particular voyage, the guaranty is the
case, the obligation is extinguished. vessel wherein if the vessel is lost, the shipowner no longer
Only shipowner and ship agent can make an has the liability


2. limited liabililty rule --- no literal explanation this can be used: that the owner cannot avail of limited
- limited: it means that the liability is limited to the value of liability.
the vessel
-liability: assumption that the shipowner is liable for the But no shipowner will ever implead the insurance. Because
losses. There are no valid defenses that shipowner can they will be the one who will claim the insurance without
invoke to escape liability. Same concept with 1479. telling the plaintiffs. In the case, there is no proof that the
Difference is that there is a fixed amount and there is vessel is insured. Even if we know outside court, it is insured
qualification because in the court, there is no proof that the vessel is
-under the limited liability no fixed amount but amount is insured. Court will not identify evidence not properly
confined on the vessel identified and recoded in court.

The question here: is this a right to limit the liability? Q: is it really an exception in its strict sense?
A: admittedly it is a right that only shipowner can exercise A: Not really (CAPANAS). What is the implication if you
properly invoke the LLRule the plaintiff cannot avail
Q; how to exercise? beyond the value of the vessel.
A: by way of pleading. But do not follow the way it was filed If not apply plaintiff will recover more than the value of
in yangco. Here it was after judgment that the shipowner vessel subject to rules on claiming of damages.
sought to abandon the ship to abandon liability
But right now, it is a matter of procedure. To limit liability by But question, if vessel if covered with insurance, does this
abandoning the vessel; IF it is a matter of procedure, you mean that plaintiff can recover to the amount applied? No,
check the rules of civil procedure they can only recover until the coverage of the insurance
Q: so when does shipowner inform the court the right to
limit liability? 3. Negligence
A: in a pleading and normally in an answer. IT will be raised - common carrier is presumed negligent if common carrier.
as a defense. If shipownver cannot allege, then that defense However, this does not apply when there is an invocation on
is deemed waiver. Therefore you cannot seek abandonment limited liability. (in all cases except MONARCH vs. CA) --- the
after judgment was been rendered. rest of the case, the court has found negligence based on the
facts presented. You cannot invoke presumption of
CASES: negligence so that limited liability rule will not apply.

Yangco vs. Lacerna Monarch _-- SC: since there is a presumption of negligence
- even captain was aware of the typhoon and the vessel then LLR will not apply. But SC also said that if LLR is
capsized, SC upheld limited liability invoked, the initial burden to invoke negligence shifts to the
shipowner. They should prove that there is no privity or
Chua Hek Kong knowledge on the negligence of the ship captain.
- there being no exceptions, the court upheld limited liability
Q: what is the relationship of Civil Code and LLR?
The more critical issue is on the EXCEPTIONS in the LLRule: A: There is none. Under 1766 in all matters not provided by
1. workmens compensation (Abueg case: the repairs Civil Code, Code of Commerce or Special law will apply.
constitue maritime lient) There is no rule in Civil Code in limited liability rule thus
2. insurance coverage--- if the vessel is lost in the course of Code of Commerce will apply. (but in monarch, this was not
voyage and it is insured, is it automatic that the limited applied--- all the negligence was related to the absence of
liability rule does not apply? exercising extraordinary diligence)
A: No. the basis of supreme court (Vasquez vs. CA --- court
mentioned very little about insurance: if the vessel is Note: that in the subsequent cases, Consolidated of Aboitiz
insured, the insurance proceeds shall answer the credit) case: there were findings of facts of the negligence of Aboitiz.
The point is when it comes to LLR, the Code of Commerce
If the plaintiff was injured or heirs will file action from apply. You cannot invoke presumption of negligence. In
insurance company, and since shipowner cannot avail of order to refute, petitioner should prove negligence.
limited liability, this is not advisable to the plaintiff because REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not
it has no privity of contract with the insurance company presumption.

Q: when does insurance argument come in? Loadstar case

A: only when the shipowner will bring the insurance - the shipowner is aware of the typhoon
company to the case filed by the plaintiffby way of third - insufficient manning negligent
party complaint. Once insurance company is impleaded then - Captain playing mahjong there was negligence. But SC
said that it was negligent because the shipowner did not


prove that it was the first. Supposedly facts are established in 1. judicial foreclosure file actual case and implead the
court proceedings and not on presumption. vessel as party defendant (served to captain or authorized
person); you can ask the court order to arrest the vessel.
3. no vessel, no liability 2. extrajudicial
- the problem with vessel, mortgagee is not in possession of
- they all mean one and the same such that the liability of the the vessel. It is with the mortgagor, you cannot sell the
shipowner for the losses is confined to the value of the vessel property not in your possession.
and the freight, if any.
In PD 1521the order of arrest can be asked
CODE OF COMMERCE and above notes) 1. irregularly issued (mortgagee na ilad. Wala pa diay due
INSTANCES WHEN IT DOES NOT APPLY: 2. posting of a bond to discharge..the bond to be posted is
1. NOT based CODE OF COMMERCE AND BASED ON QUASI- double the value of the claim.
2. when what was is involve is not a vessel (Lopez vs. Duruel: Maritime lien on necessaries (5 requisites) brief yourself
the motor boat is not a vessel under maritime law, it is only cresent petroleum case (look at book for requisites)
engaged in bay traffic. A vessel in maritime law, should be
engaged in transporting goods, persons, or both from one B. VESSELS (Chapter 7)
port to another)
1. General Concepts
(But to be sure: you file maritime and allege such bahala dili
kelangan coz otherwise dismiss ang case) A vessel or watercraft is defined under PD No. 447 as
any barge, lighter, bulk carrier, passenger ship freighter,
Since a vessel is a personal property, it can be mortgaged tanker, container ship, fishing boats, or other artificial
Same concept with mortgage but different rule contrivance utilizing any source of motive power,
- PD 1521: designed use or capable of being used as a means of
transportation operating either as a common carrier,
Q: what about process of extra judicial foreclosure of vessel? including fishing vessels covered under PD No. 43,
A: chattel mortgage law should govern
Q: what to remember under PD 1521? 1. Those owned and/or operated by the Armed Forces
A: Section 4 of the Philippines and by the Foreign Government for its
registration, non waiver Military Purpose.
Section17: priority of claims 2. Bancas, sailboat and other waterbone contrivance of
less than three tons capacity and not motorized.
Q: are there claims in maritime law over and above preferred
A: yes. Look at section 17. Case: Yu Con vs. Ipil
- The word vessel serves to designate every kind of
Case: Poliand Industrial craft by whatever particular or technical name it
- facts shows that the proceeds debted from hardwood was may not be known or which nautical advancements
for the modification of the vessel (extended for vessels may give it in the future
benefit), for crews wage - The court held that a small vessel used for the
transportation of merchandise by sea and for the
Characteristics of maritime lien: making of voyages from one port to another of these
1. maritime property Islands, equipped and victualed for this purpose by
2. travels with the property--- it cannot be extinguished its owner, is a vessel, within the purview of the Code
3. enforceable in an action in rem--- action directed to the of Commerce, for the determination of the character
property (crescent case: ang gi kiha ang vessel) and effect of the relations created between the
owners of the merchandise laden on it and its owner
Under section 22: persons authorize to procure repairs
(presumed): When the mercantile code speaks of vessels, they refer
1. managing agent solely and exclusively to mercantile ships, as they do not
2. ships husband --- agent of the vessel include warships, and furthermore, they almost always
refer to craft which are not accessory to another as in
If mortgagor does not pay: the case of launches, lifeboats and etc.


Further, they refer exclusively to those which are seamen shall be subject to what the laws and regulations of
engaged in the transportation of passengers and freight the public administration on navigation, customs, health,
from one port to another or from one place to another safety of vessels, and other similar matters.

They refer to merchant vessels and in NO WAY can they PERSONAL PROPERTY
or should they be understood as referring to pleasure
craft, yachts, pontoons, health service and harbor police Vessels are considered personal property under the Civil
vessels, etc. Law. The Code of Commerce likewise expressly
acknowledges the special nature of a vessel as personal
Ships ought to be understood in the sense of vessel property.
serving the purpose of maritime navigation or seagoing
vessel, and not in the sense of vessel devoted to the Case: Philippine Refining Company vs. Jargue
navigation of rivers - Vessels are personal property although occasionally
referred to as a peculiar kind of personal property
The third book of the code of commerce, dealing with - They are subject to mortgage agreeably to the
maritime commerce, was evidently intended to define provisions of the Chattel Mortgage Law
laws relative to merchant vessels and maritime - The only difference between a chattel mortgage of a
shipping; and as appears from said code, the vessel vessel and a chattel mortgage of other personality is
intended in that book are such run by masters having that it is not now necessary for a chattel mortgage of
special training with elaborate apparatus of crew and a vessel to be noted in the registry of the register of
equipment indicated in the code. deeds, but it is essential that a record of documents
affecting the title to a vessel be entered in the record
Only vessels engaged in what is ordinarily known as of the Collector of Customs at the port of entry
maritime commerce are within the provision of law
conferring limited liability on the owner in case of Case: Rubiso and Calixto vs. Rivera
maritime disaster. - Ships or vessels, whether moved by steam or by sail,
partake, to a certain extent, of the nature and
Other vessel of minor nature not engaged in maritime conditions of real property, on account of their value
commerce, such as river boats and those carrying and importance in the world of commerce
passengers from ship to shore, must be governed, as to - Transfer of vessels should be in writing and must be
their liability to passenger, by the provision of the civil recorded in the appropriate registry
code or other appropriate special provisions of law.
Case: Augusto Lopez vs. Juan Duruelo, et. al
- The code of commerce are not applicable to small ACQUISITION
craft which are only subject to administrative
(customs) regulations in the matter of port service Vessel may be acquired or transferred by any means
and in the fishing industry recognized by laws. Thus, vessel may be sold, donated
- Only vessels engaged in what is ordinarily known as and may even be acquired through prescription.
maritime commerce are within the provisions of law Under the present laws, vessels that are under the
conferring limited liability on the owner in case of jurisdiction of MARINA can be transferred only with
maritime disaster notice to said administrative agency.
- It is therefore clear that a passenger on a boat like
the Jison, in the case before use, is not required to A. Prescription (Code of Commerce)
make protest as a condition precedent to his right of
action for the injury suffered by him in the collision Article 573. Merchant vessels constitute property which
described in the complaint article 835 of the Code may be acquired and transferred by any of the means
of Commerce does not apply recognized by law. The acquisition of a vessel must appear in
CONSTRUCTION, EQUIPMENT AND MANNING a written instrument, which shall not produce any effect with
respect to third persons if not inscribed in the registry of
The Construction, equipment and manning of vessel are vessels.
subject to the rules issued by the Maritime Industry
Authority (MARINA) and consistent with Article 574 of the The ownership of a vessel shall likewise be acquired by
Code of Commerce possession in good faith, continued for three years, with a
just title duly recorded.
Article 574. Builders of vessels may employ the materials
and follow, with respect to their construction and rigging, In the absence of any of these requisites, continuous
the systems most suitable to their interests. Ship owners and possession for ten years shall be necessary in order to


acquire ownership. and should it be in a foreign country, to the consul of the
Republic of the Philippines, should there be one, or, where
A captain may not acquire by prescription the vessel of there is none, to the judge or court or to the local authority;
which he is in command. and the consul, or the judge or court, shall order an
examination of the vessel to be made.
ARTICLE 575. Co-owners of vessels shall have the right of
repurchase and redemption in sales made to strangers, but If the consignee or the insurer should reside at said port, or
they may exercise the same only within the nine days should have representatives there, they must be cited in
following the inscription of the sale in the registry, and by order that they may take part in the proceedings on behalf of
depositing the price at the same time. whoever may be concerned.

B. Sale (Code of Commerce) REGISTRATION

Vessels are now registered through MARINA. It is a long
Article 576. In the sale of a vessel it shall always be standing rule that the person who is the registered
understood as included the rigging, masts, stores and engine owner of the vessel is presumed to be the owner of the
of a streamer appurtenant thereto, which at the time belongs vessel.
to the vendor. It is a settled rule that the sale or transfer of the vessel is
not binding on the third person unless the same is
The arms, munitions of war, provisions and fuel shall not be registered.
considered as included in the sale.
The vendor shall be under the obligation to deliver to the Vessels are required to carry manifest coast-wise trade.
purchaser a certified copy of the record sheet of the vessel in A manifest is a declaration of the entire cargo. The
the registry up to the date of the sale. object of a manifest is to furnish custom officers with list
of check against, to inform the revenue officers what
Article 577. If the alienation of the vessel should be made goods are being brought into a port of the country on a
while it is on a voyage, the freightage which it earns from the vessel.
time it receives its last cargo shall pertain entirely to the The requirement that a vessel must carry a manifest is
purchaser, and the payment of the crew and other persons not complied with even if a bill of lading can be
who make up its complement for the same voyage shall be presented. A bill of lading is just a declaration of a
for his account. specific cargo rather than the entire cargo
If the sale is made after the vessel has arrived at the port of Sec 906 of the Tariff and Custom Code provides that
its destination, the freightage shall pertain to the vendor, and manifest shall be required for cargo and passengers
the payment of the crew and other individuals who make up transported from one place to another only when one or
its complement shall be for his account, unless the contrary both of such place is a port of entry.
is stipulated in either case.
Article 578. If the vessel being on a voyage or in a foreign Since the term personal property includes vessel, they
port, its owner or owners should voluntarily alienate it, are subject to mortgage agreeably to the provisions of
either to Filipinos or to foreigners domiciled in the capital or the Chattel Mortgage Law.
in a port of another country, the bill of sale shall be executed Mortgage and other encumbrances over vessels are
before the consul of the Republic of the Philippines at the governed by the provisions of presidential decree 1521
port where it terminates its voyage and said instrument shall (Ship Mortgage Decree of 1978)
produce no effect with respect to third persons if it is not
inscribed in the registry of the consulate. The consul shall OTHER CODE OF COMMERCE PROVISIONS
immediately forward a true copy of the instrument of
The provisions of the Code of Commerce reproduced
purchase and sale of the vessel to the registry of vessels of hereunder are deemed modified not only by the Civil
the port where said vessel is inscribed and registered. Code but also by special laws
In every case the alienation of the vessel must be made to
appear with a statement of whether the vendor receives its
price in whole or in part, or whether he preserves in whole SAFETY REGULATIONS
or in part any claim on said vessel. In case the sale is made to
On February 23, 2000, the Maritime Industry Authority
a Filipino, this fact shall be stated in the certificate of
directed all domestic shipowners and operators under
Memorandum Circular No. 154 to strictly comply with
existing Safety-Related Policies, Guidelines, Rules and
When a vessel, being on a voyage, shall be rendered useless
for navigation, the captain shall apply to the competent judge
Rules include: (read book page 488-489)
on court of the port of arrival, should it be in the Philippines;
Monitoring of compliances shall be undertaken by the
Authority and its Maritime Regional Offices, together 3 Distinct Roles a captain commonly performs:
with the needed coordination with the Philippine Coast (Inter-Orient Maritime case)
The MARINA shall have the power to inspect vessels and all 2. He is a COMMANDER and TECHNICAL DIRECTOR of
equipment on board to ensure compliance with safety the vessel (most important role for this has something to
standards do with the operation and preservation of the vessel
during its voyage and the protection of the passengers, if
In sum, the following are persons who take part in Maritime whose flag he navigates.
Based on the first aforementioned role, the captain is
SHIPOWNERS and SHIP AGENTS; regarded as the GENERAL AGENT of the shipowner and as
a. Has authority to sign bills of lading;
SHIPOWNER V. SHIP AGENT b. Carry goods aboard and deal with the freight earned;
c. Agree upon rates and decide whether to take cargo;
SHIPOWNER the person who is primarily liable for d. Has legal authority to enter into contracts with respect
damages sustained in the operation of vessel. to the vessel and the trading of the vessel, subject to
applicable limitations established by statute, contract or
Code of Commerce places the primary responsibility on the instructions and regulations of the shipowner.
owner of the vessel. All aforementioned functions verily commits to the captain
(Uses the term naviero which has been construed to include the governance, care, and management of the vessel. Clearly
shipowner, ship agent and even the charterer who is then, the captain is vested with both MANAGEMENT and
considered as owner pro hac vice.) FIDUCIARY functions.

with provisioning of the vessel, or who represents her in AND THE MASTER: (See Arts. 610-612 of the Code of
the port in which she happens to be. There is also the Commerce)
intention under the Code of Commerce to make the ship
agent solidarily liable with the owner. The solidary DISCRETION OF CAPTAIN AND MASTER
liability applies both for breach of contract and extra- A ships captain must be accorded a REASONABLE
contractual obligations such as tort. The ship agent, even MEASURE OF DISCRETIONARY AUTHORITY to decide what
though he is not the owner, is liable in every way to the the safety of the ship and of its crew and cargo specifically
creditor for losses and damages without prejudice to his requires on a stipulated ocean voyage.
right against the owner, the vessel and its equipment
and freight. But his liability, however is subject to the Presumption: A captain is knowledgeable as to the specific
LIMITED LIABILITY RULE (Chapter 6 of the Aquino requirements of seaworthiness and the particular risks and
book). perils of the voyage he is to embark upon.

CAPTAINS V. MASTERS OF VESSELS Applicable Principle: The captain has control of ALL
departments of service in the vessel, and reasonable
For purposes of Maritime Commerce: discretion as to its navigation.
The words captain and master have the same
meaning; both being chiefs or commanders of ships. Basic Principle in Admiralty Law: In navigating the vessel,
Thus, the terms captain and master are used the master must be left free to exercise his own best
synonymously in the Code of Commerce. judgment.

MARINA regulations: Requirements of Safe Navigation: The judgment and

MASTER the person having command of the ship. The same discretion of the captain of a vessel may be confined within a
term is being used both for domestic trade and straitjacket, even in this age of electronic communications.
international trade.
PILOTAGE: Who is a pilot?
BOAT CAPTAIN a person authorized by the MARINA to act
as officer and/or in command of a boat/ship or has the Maritime Law: a person duly qualified, and licensed, to
qualification/license to act as such. conduct a vessel into or out of ports, or in certain waters.


Broad sense: includes both (1) those whose duty it is to guide also not liable for negligently assuring the competence
vessels into or out of ports, or in particular waters; and (2) of their members because as PROFESSIONAL
those entrusted with the navigation of vessels on the high ASSOCIATIONS, they made no guarantee of the
seas. professional conduct of their members to the general
General understanding: a person taken on board at a
particular place for the purpose of conducting a ship through CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page
a river, road or channel, or from a port. 528 of the Aquino book)


possessing harbors enacted laws or promulgated rules
requiring vessels approaching their ports to take on board COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
pilots licensed under local law. In the Philippines, -- all the persons on board from the captain to the cabin boy,
compulsory pilotage is being implemented in the Port of necessary for the management, maneuvers, and service, and
Manila, the latter being within the Manila Pilotage District. therefore, it includes the CREW, the SAILING MATES,
a. Master and Pilot (See Far Eastern Shipping case on page not having specific designations; but it SHALL NOT INCLUDE
520 of the Aquino book for the SC discussion on the duties the passengers or the persons whom the vessel is
of a pilot) transporting.


The practice of marine profession is now governed by special
GENERAL RULE: the pilot is PERSONALLY LIABLE for laws and pertinent rules issued by the:
damages caused by his own negligence or default to the - MARINA;
damages sustained in a collision. Such negligence of the - BOARD OF MARINE ENGINEER OFFICERS
pilot in the performance of duty constitutes a
It is not enough that the officers manning the merchant
In cases of COLLISION: the COLLIDING VESSEL is prima vessel have all the qualifications imposed by the
facie responsible, hence, the burden of proof is upon the Philippine Merchant Marine Officers Act and other
party claiming benefit of the exemption from liability. special laws or regulations. It is also required that there
Thus, it must be shown affirmatively that the pilot was is sufficient number of officers and crew that are serving
at fault, and that there was no fault on the part of the in the vessel. (Quality and Quantity)
officers or crew, which might have been conducive to
the damage. The fact that the law compelled the master SECURITY OF TENURE
to take the pilot does not exonerate the vessel from The Labor Code provisions apply to OFFICERS and
liability. The injured party shall seek redress from the CREW of merchant vessels in DOMESTIC Trade or
vessel. The owners of the vessel are responsible to the COASTWISE Shipping. Hence, matters concerning their
injured party for the acts of the pilot, and they must be dismissal or disciplinary action must be in accordance
left to recover the amount as well as they can against with provisions of the Labor Code. For officers and crew
him. who are working in foreign vessels who are involved in
overseas shipping, there must be compliance with the
c. Pilot and his Association applicable laws on overseas employment as well as
regulations issued by the Philippine Overseas
The fact that the pilot is a member of an association Employment Administration (POEA).
does not make the association jointly and severally
liable. Article 2180 of the Civil Code does not apply CODE OF COMMERCE PROVISIONS on Sailing Mates, Second
because there is NO EMPLOYER-EMPLOYEE Mate and Marine Engineer, Crew, and Captain (See pages
Relationship. 552-560 of the Aquino book).

Well-established is the rule that pilot associations are Parties --- those provided above plus seamen, other
immune to vicarious liability for the tort of their members of the complement including the stokers (incharge
members. They are not the employer of their members of boilers) and supercargo (agent of the shippers who has
and exercise no control over them once they take the authority to sell goods while on voyage)
helm of the vessel. They are also not partnerships
because the members do not function as agents for the 4 maritime contracts
association or for each other. Pilots associations are 1. charter parties


2. Botomry
3. Repondentia Inter orient case: one role is they are the general agent of the
4. Marine insurance (incorporated in the subject insurance) shipowener. But if the obligation contracted by the captain
does not enure to the benefit of the vessel, then the
ON PERSONS shipowner has no liability. There is no conflict bec. 586
obligations contracted by the shipper while 1759 death or
Shipowner injury of passenger as result of contract of carriage.
- he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can The case in point with the contracts entered into was the
invoke the LLR? No jurisprudence. Personal opinion case Wing Kee. There were supplies delivered. Shipagent
of sir: distinguish on the type of charter party. If was said to be liable. SC said at the time you were still an
affreightment, shipowner retains possession, agent you were liable but at the time agency was terminated
command and navigation of the vessel. If bareboat it you are no longer liable.
is vested upon the charterer.
- Jurisprudence: except for registration, the charterer If both SO and SA are sued, being solidarily liable, the SA has
is the temporary owner of the vessel. With this, the right of recourse over SO.
charterer can invoke LLR (this part no juris)
Shipcaptain or master
Note: there is not distinction of liability of shipowner and - The difference is with regard to the tonnage of the
ship agent. They are civilly liable vessel (higher: captain; lower: master; major patron
and minor patron)
There is a situation in maritime law that shipower and agent - The question on the shipcaptain or master is the
they are held liable for the act or omission of a third person exercise of discretion
which is the ship captain or master. - Inter orient case: captain tayong did not want to
proceed with the voyage from Singapore to Africa
ACTS of CAPTAIN bec. Of lack of oxygen and acetylene. But because of
Case: Yucon case and Sweetlines case order of management he proceeded. He was then
- In Yucon, money was entrusted to the captain and ordered to repatriated and then another captain
the money was lost. SC concluded that shipowner took his place. He filed for illegal dismissal. The issue
was liable for the lost because the captain failed to was the discretion exercised by the captain. WON he
put up measures while in custody of the money. It has the discretion not to proceed bec. Of lack of
may not technically to an act but may refer to supply. SC said you should emphasize reasonable
admission but would fall under the term acts discretion--- it is the captains duty
- In sweetlines, bound for catbalogan but the captain - Inter Orient: triple roles of the captain --- general
chose to allow the passengers to disembark in agent, commander and technical manager,
tacloban. This time, this is the act of captain. The SC representative of country
concluded that the damages sustained by
passengers bound for catbalogan are to shouldered Shipcaptain and harbor pilot
by the shiponwer - Harbor pilot: distinguish if voluntary or compulsory
- Case cited by SC on proper relationship of captain
Indemnities in Favor of 3rd person: OTTA devt case sited in and pilot. In far eastern shipping case 521 3 rd par ---
walter smith case ther are occasion when the master may and should
- In OTTA the owner of the pier was at the same time interfere and even displace the pilot when he is
the owner of the goods. SC, because there was a obviously incapacitate and intoxicated. (look at the
relationship of owner of vessel and goods, then book)
there is presumption of negligence new civil code - In this case, there is relevance on when the captain
prevails should interfere. If it is voluntary (pilot engaged by
- Walter smith case: There was no relationship. shipowner) --- damages caused by pilot, shipowner
Owner of port and owner of goods are different. is liable. If compulsory, shipowner can escape
What was applied by court was the law on torts. No liability
presumption of negligence. There should be proof of - If compulsory distinguish whether there was
negligence. The owner of vessel proved that he circumstances that would require the shipcaptain to
exercised ordinary diligence (required in ports). interfere with the ship pilot. If there are
What was presented was the competence of circumstances but captain did not interfere then
shipcaptain. The shipowner proved ordinary shipowner is liable. If there are circumstances and
diligence in choosing the ship captain captain interfere but still there is damage, the
shipowner will not be liable.
Contracts entered into by shipcaptain or master - Cebu Port Authority --- covered by compulsory


pilotage a. time charter vessel is leased to a charterer for a
fixed period of time
Chiefmate or sailing mate (then there are engineers) b. voyage charter vessel is leased for a single or
- 2008 case, citing the article the code of commerce particular voyage
specifying the functions of chiefmate being second in
command of the vessel Chiefmate is a managerial REQUISITES OF A VALID CHARTER PARTY
employee (as provided in labor code --- loss of trust 1. consent of the contracting parties
and confidence 2. an existing vessel which should be placed at the
- disposition of the shipper
Seaman 3. the freight
- On security of tenure: distinguish DOMESTIN (labor 4. compliance with requirements of art 652 of Code of
code) abroad (POEA).. there is a standard contract commerce
(poea prepared and drafted it and every seaman (Aticle 652 of the Code of Commerce provides that the
shall comply with this --- this is to protect filipino charter party shall contain, among others, the name,
seaman working abroad) that will be signed by surname, and domicile of the charterer, and if he
every seaman stipulating the security of tenure, states that he is acting by commission, that of the
repatriation, benefits, etc. person for whose account he makes the contract.)
- Difference for abroad: bigger income but contractual
(after contract go home).. DOMEstic, you can be a Caltex v. Sulpicio Lines
regular employee in accordance with the labor code There was a voyage charter; collision between MT Vector
- JumpShip scenario: it is a valid ground to terminate (tanker) and Doa Paz (owned by Sulpicio) ; breach of
a seaman contract filed by the passengerss heirs against Sulpicio ; 3d
party complaint against registered owner of the tanker
Shipcaptain should conduct preliminary investigation for including Caltex ( that they were negligent and in bad faith
crimes conducted on board by not seeing to it that the tanker was seaworthy)

D. CHARTER PARTIES Issue: WON charterer shall be liable under Maritime Law?

Charter Parties Ruling: Liability cannot be attached to Caltex; the charter did
- a contract whereby the entire ship, or some of the not affect the business of Sulpicio as a common carrier ;
principal part, is let by the owner to a merchant or other rights and responsibilities of ownership still rested on the
person for a specified time or use for the conveyance of owner
goods, consideration of payment of freight
- it is a contract, hence, parties are free to stipulate upon Planters Product v CA
such terms and conditions that would suit their - time charter; Planters purchased fertilizers from the
purposes subject to the caveat that these should not be US; voyage to the Philippines ; upon arrival, shortage
contrary to law or public policy in the cargo was discovered ; filed actions against
carrier fro damages ( breach of Contract) ; RTC
Parties ruled in favor of the Planters; Ca reversed &
1. Charterer- merchant or a person who desire s to lease ship absolved carrier as it was converted from common
or vessel owned by another by transport of his or her goods carrier to private ;
for commercial purposes or persons from one port to - Ruling : It cannot become a private carrier ;
another bareboat charter can become a private carrier but in
2. Shipowner (SO) contract of affreightment remains as common
carrier ( action based on contract of carriage ;
KINDS: presumption of negligence ) ; carrier was able to
1. bareboat or demise charterer shipowner leases to the rebut the presumption of negligence ( result the
charterer the whole vessel, transferring to the charterer the inherent character of the fertilizers)
entire command, possession and consequent control over
the vessels navigation, including the master and the crew, Coastwise Lighterage v. CA
who becomes the charterers servants - WON private carrier would convert to a common
- charterer becomes an owner pro hac vice carrier; contract of affreightment
- Ruling : reiterated Planters ruling ; but was not able
2. Contract of affreightment charterer hires the vessel only, to rebut presumption of negligence ; did not exercise
either for a determinate period of time or for a single or EO diligence ( hired unlicensed patron)
consecutive voyage, with the SO providing for the provision
of the ship, wages of the master and crew, and expenses for Home Insurance v. American Steamship
maintenance of the vessel


- case mostly used by the common carrier as defense ;
Home Insurance is subrogee (paid SMC of loss cargo LAST DAYS- period of time stipulated fro loading and
shipped thru American Steamship ; no reference as unloading ( provided for in charter party ) ; if no lay days
to what contract but there was a mention that it was provided for in the charter party, it is understood that the
in affreightment charterer will unload and discharge cargoes within a
- Ruling : Common Carrier undertaking to carry reasonable time or with reasonable diligence
special cargo (chartered to special person only )
become a private carrier and stipulation exempting Demurrage a sum of money due by express contract for
owner from liability for loss due to the negligence of detention of the vessel in loading , beyond time allowed for
its agents is valid; that purpose in that charter party ; sum of which is usually
fixed by the parties in the charter party ; liability for this
Shipowner can appoint senior officers for the vessel even if exists only when expressly stipulated
bareboat contract. But technically it is an affreightment. Most
conflicts will occur if these various principles will have to be Deadfreight where the charterer failed to occupy the leased
mixed. portion of the vessel, he may thereby be liable by the
shipowner for the deadfreight that occurred
The whereabouts of the vessel is important to know the time
for loading and unloading STIPULATION IN CHARTER PARTIES

Policy marina GR: parties are free to stipulate subject to art 1744
Implementing or enforcement --- Coastguard t01754 0f NCC

2 conditions implied in charter party Art. 1744. A stipulation between the common carrier
1. seaworthiness (Caltex Phil Case) --- it need not be written and the shipper or owner limiting the liability of the
in the charter party former for the loss, destruction, or deterioration of the
2. --- look at book (ala kaapas) goods to a degree less than extraordinary diligence shall
be valid, provided it be:
JURISDICTION OF ADMIRALTY CASES (1) In writing, signed by the shipper or owner;
- depends on the jurisdictional amount (2) Supported by a valuable consideration other
- important element of the contract = the subject than the service rendered by the common
matter of the contract (nature and character) carrier; and
(3) Reasonable, just and not contrary to public
International Harvester v Aragon policy.
-involves loss of cargo shipped from LA to Manila; cargo
owner filed an action against common carrier Art. 1745. Any of the following or similar stipulations
-SC said liability of petitioner was predicated upon the shall be considered unreasonable, unjust and contrary
contract of carriage ; admiralty would involve all maritime to public policy:
contract in whatever form and wherever made (1) That the goods are transported at the risk of
Macondry v Delgado Brothers the owner or shipper;
- Delgado was an operator of a pier service ; WON (2) That the common carrier will not be liable
operator exercised its duty in loading and unloading for any loss, destruction, or deterioration of the
of cargos ; no contract of carriage ; obligation was goods;
only to load the to the ship ; no application of (3) That the common carrier need not observe
admiralty any diligence in the custody of the goods;
(4) That the common carrier shall exercise a
FRIEGHT OR FREIGHTAGE degree of diligence less than that of a good father
- price of carriage of a family, or of a man of ordinary prudence in
- shall accrue according to what is stipulated in the the vigilance over the movables transported;
contract (5) That the common carrier shall not be
- should there be no stipulation or if it is ambiguous , responsible for the acts or omission of his or its
rules shall be employees;
a. freight shall begin to run from the day of loading (6) That the common carrier's liability for acts
on the vessel committed by thieves, or of robbers who do not
b. in charters with fixed period, the freight shall act with grave or irresistible threat, violence or
begin to run upon that very day force, is dispensed with or diminished;
c. If freight is charged according o weight , (7) That the common carrier is not responsible
payment shall be made according to gross for the loss, destruction, or deterioration of
weight , including the weight of the containers goods on account of the defective condition of


the car, vehicle, ship, airplane or other determining the rights and obligations of the ship agent,
equipment used in the contract of carriage. captain and charterer

Art. 1746. An agreement limiting the common carrier's - If there is charter party or bill of lading (BOL) = no contract
liability may be annulled by the shipper or owner if the at all; but according to Blanco, if there is delivery and receipt
common carrier refused to carry the goods unless the of cargo combined with the GF and mutual consent =
former agreed to such stipulation. contract present , better than BOL

Art. 1747. If the common carrier, without just cause, E. LOANS ON BOTTOMRY AND RESPONDENTIA
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the LOAN ON BOTTOMRY loan made by shipowner or ship
common carrier's liability cannot be availed of in case of agent guaranteed by vessel itself and repayable upon arrival
the loss, destruction, or deterioration of the goods. of vessel at destination; vessel/portion

Art. 1748. An agreement limiting the common carrier's LOAN ON RESPONDENTIA loan, taken on security of the
liability for delay on account of strikes or riots is valid. cargo laden on a vessel, and repayable upon safe arrival of
cargo at destination; cargo/goods
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing in COMMON ELEMENTS OF LOANS ON BOTTOMRY AND
the bill of lading, unless the shipper or owner declares a RESPONDENTS:
greater value, is binding. 1. Exposure of security to marine peril;
2. Obligation of the debtor conditioned only upon safe
Art. 1750. A contract fixing the sum that may be arrival of the security at the point of destination.
recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is Requisites of a Loan on Bottomry/Respondentia:
reasonable and just under the circumstances, and has 1. Shipowner borrows money for use, equipment or
been fairly and freely agreed upon. repair of vessel
2. For a definite term and with extraordinary interest
Art. 1751. The fact that the common carrier has no called premium
competitor along the line or route, or a part thereof, to 3. Secured by pledged of vessel or portion thereof in
which the contract refers shall be taken into the case on loan on Bottomry; or pledge of goods in
consideration on the question of whether or not a case of Respondentia
stipulation limiting the common carrier's liability is 4. Loan repayment depends or conditioned on the safe
reasonable, just and in consonance with public policy. arrival of goods for respondentia and obligation to
repay is extinguished if pledged goods are lost
Art. 1752. Even when there is an agreement limiting the (Respondentia)
liability of the common carrier in the vigilance over the 5. Obligation to repay is extinguished if vessel is lost
goods, the common carrier is disputably presumed to due to specified marine perils in the course of
have been negligent in case of their loss, destruction or voyage or within limited time (Bottomry)
May be executed by means of:
Art. 1753. The law of the country to which the goods are 1. public instrument
to be transported shall govern the liability of the 2. policy signed by the contracting parties and the broker
common carrier for their loss, destruction or taking part therein
deterioration. 3. private instrument (Art. 720)

Art. 1754. The provisions of Articles 1733 to 1753 shall GR: The captain cannot contract loans on respondentia
apply to the passenger's baggage which is not in his secured by the cargo, and should he do so, the contract
personal custody or in that of his employee. As to other shall be void. Neither can he borrow money or Bottomry
baggage, the rules in Articles 1998 and 2000 to 2003 for his own transactions.
concerning the responsibility of hotel-keepers shall be
applicable. EXCEPTIONS:
1. On the portion of the vessel he owns, provided no
ART. 653. if the cargo should be received without the charter money has been previously borrowed on the whole
party having been signed, the contract shall be understood as vessel, nor exists any other kind of lien or obligation
executed In accordance with what appears in the bill of chargeable against her.
lading, the sole evidence of title with regard to the cargo for 2. When he is permitted to do so, he must necessarily
state what interest he has in the vessel.


CONTENTS OF THE LOAN CONTRACT: 4. caused by damages suffered by the vessel as a
1. kind, name and registry of the vessel; consequence of being engaged in a contraband
2. name, surname and domicile of the captain; 5. loaded the goods on a vessel different from that
3. names, surnames and domiciles of the borrower and the designated in the contract unless the change was
lender; caused by force majeure
4. amount of the loan and the premium stipulated;
5. time for repayment; 2. The lenders on bottomry or respondentia shall suffer in
6. goods pledged to secure repayment; proportion to their respective interest, the general average
7. voyage during which the risk is run (Art.721) which may take place in the things upon which the loans
were made.
3. In case of shipwreck, the amount for payment of the loan
1. Bottomry by the ship owner or ship agent; outside of
shall be deduced to the proceeds of the effects which have
the residence of the owners, the captain.
been saved but only after deducting the costs of the salvage.
2. Respondentia only the owner of the cargo
4. If the loan should be on the vessel or any of her parts, the
freight earned during the voyage for which the loan was
contracted shall also be liable for its payment, as far as it may
1. Not subject to Usury Law 1. Subject to Usury Law
5. If the same vessel or cargo should be the object of the loan
2. Liability of the borrower is 2. Not subject to any of Bottomry or respondentia and maritime insurance, the
contingent on the safe contingency value of what may be saved in case of shipwreck shall be
arrival of the vessel or cargo divided between the lender and the insurer, in proportion to
at destination the legitimate interest of each one, taking in consideration,
3. The last lender is a 3. The first lender is a for this purpose only, the principal with respect to the
preferred creditor preferred creditor
Maritime contracts include charter parties and loans on
4. Must have a collateral 4. May or may not have bottomry and respondentia are considered maritime
collateral contracts
5. Collateral is the vessel or 5. Maybe property, real or Q: why do we have to study this topic? Are these relevant?
cargo subject to maritime personal A: they are hardly used at present. However, we have to
risk study this just in case this will be asked in the bar. Especially
6. Must be in writing 6. Need not be in writing in the unique terms used in this topic..
but interest shall not be
due unless expressly General provisions in contracts will govern
stipulated in writing
7. To be binding on third 7. Need not be registered Basic provision you should not forget:
person must be recorded in 1. there should be a marine risk
the registry of vessels of port 2. the condition that the vessel or the goods has perished
of registry of the vessel then the right of the lender to collect everything as well as
8. Loss of collateral 8. Does not extinguished if stipulated interest is extinguished
extinguishes the same there is a loss of the (not sure if there are other more.. basin ala ko kaapas)
collateral (if any)
Consequences of loss of effects of the loans - It may refer to the vessel
- The bottom or the hull or the kill of the vessel can be
1. Effects of loans be lost due to accident of the sea during pledged in this case
the time, and on the occasion of the voyage which has been - The whole vessel can be a subject of a security or
designated in the contract and proven that the cargo was on collateral
board - PD. 1521: (is this different) --- loan is the principal,
- lender losses the right to institute the action which mortgage is the accessory.
would pertain to him - The contract of bottomry is principal, the mortgage
under pd 1521 is merely a security
Except: when the loss was - In pd 1521 under section 4 it is a requirement that
1. caused by inherent defect of the thing the whole of the vessel must be mortgaged (no
2. through fault or malice of the borrower jurisprudence on this matter whether a part of the
3. through barratry on the part of the captain vessel can be mortgaged)


- In bottomry the whole or the part of the vessel can The owner of the goods which gave rise to the expense or
be the subject suffered th e damage shall bear this average. (Art. 810)
- IF the part of the vessel can be pledged, is it res perit domino applies
necessary that there should be goods? No. no need if the vessel or goods are hypothecated by loan on
for goods. bottomry and respondentia, the lender shall bear the loss in
proportion to his interest
- The vessel should have goods. The goods must be Examples: see article 809 of the code of commerce
laden in the vessel
- Is it necessary that the boat is on voyage? The vessel RULES ON AVERAGES:
must be in the actual course of voyage because this 1. Averages is defined as damage deliberately caused or an
is the objective of the law. Because if the vessel is expense deliberately incurred due to a marine peril and
docked in the port the owner can simply obtain which has resulted in saving both vessel and cargo or
loans. And besides there is no risk when the vessel is only the vessel or cargo.
docked (but no jurisprudence) 2. Where both vessel and cargo are saved, it is general
average; where only the vessel or only the cargo is
Distinction of this two types of loan vs. SIMPLE LOAN (for saved, it is particular average.
purposes of the bar) --- 5 differences 3. The person whose property has been saved must
1. with respect to form --- can you validly execute a bottomry contribute to reimburse the damage caused or expense
or respondentia verbally? You cannot. Bec under the code of incurred if the situation constitutes general average.
commerce no judicial action can arise when the contract is
not reduced in writing. But this is not the case in simple loan. B. Gross or General Average
But in simple loan you take note the statute of frauds if not Damage or expenses deliberately caused in order to save
in writing B and R, you can dismiss case due to failure to the vessel, its cargo or both from real and known risk. (Art.
state cause of action. 811)
All the persons having an interest in the vessel and the
Q: why hardly used at present? cargo therein at the time of the occurrence of the average
A: because of sophistication. Captains can just call up any shall contribute to satisfy this average. (Art. 812)
agent the shipowner to deliver anything for the use of the
vessel to deliver. This contract was recognized in medieval REQUISITES:
times. 1. common danger present
2. arising from accidents of sea, disposition of
F. AVERAGES AND COLLISIONS 3. peril imminent and ascertained
4. part of vessel or cargo deliberately sacrificed
ACCIDENTS IN MARITIME COMMERCE: 5. intended to save vessel or cargo
1. Averages 6. proper legal steps and authority taken
2. Arrival Under Stress
3. Collision Common danger
4. Shipwreck - means both the ship and the cargo, after has been loaded,
are subject to the same danger, whether during the voyage,
* Averages an extra-ordinary or accidental expense or in the port of loading or unloading, that the danger arises
incurred during the voyage in order to preserve the cargo, from the accidents of the sea, disposition of authority, or
vessel or both; and all damages or deterioration suffered by faults of men, provided that circumstances producing the
the vessel from departure to the port of destination, and to peril should be ascertained and imminent or may rationally
the cargo from the port of loading to the port consignment. be said to be certain and imminent
(Art. 806)
- When the measure of precaution adopted solely and
CLASSES OF AVERAGES: exclusively for the preservation of the vessel from the danger
A. Particular or Simple Average of seizure or capture and not for the common safety is not
B. Gross or General Average considered as common danger

A. Particular or Simple Average Deliberate Sacrifice

- voluntary sacrifice of a part for the benefit of the whole in
Damage or expenses caused to the vessel or cargo that did order to justify the average contribution
not inure to common benefit, and borne by respective
owners. (809) * voluntary jettison- the casting away of some portion of
the associated interests for the purpose of avoiding the


common peril from the whole to a particular portion of prevail but they shall register their objections.
those interests 2. The resolution must be entered in the logbook, stating
the reasons and motives for the dissent, and the
- the goods on board refer to in jettison should be proven by irresistible and urgent causes if he acted in his own
means of bill of lading and with regards to those belonging to accord. It must be signed, in the first case, by all persons
vessel by means of inventory prepared before the departure present in the hearing. In the second case, by the captain
and all the officers of the vessel.
2 cases where there can also be general averages even if 3. The minutes must also contain a detail of all the goods
the sacrifice was not made during the voyage: jettisoned and those injuries caused to those on board.
a. where the sinking of the vessel is necessary to 4. The captain shall deliver it to the maritime judicial
extinguish a fire in a port, roadstead, creek or bay authority of the first port he may make, within 24 hours
b. where cargo is transferred to lighten the ship on after his arrival, and to ratify it immediately under oath.
account of a storm to facilitate entry into a port
Art. 816: in order that the goods jettisoned may be included JETTISON:
in the gross average and the owners entitled to indemnity 1. those which are on the deck, preferring the heaviest one
it is necessary that the cargos existence on board be proven with the least utility and value;
by a bill of lading; and with regard to those belonging to the 2. those which are below the upper deck, beginning with
vessel, by means of an inventory prepared before departure. the one with greatest weight and smallest value. (Art.
Art. 817: if in lightening of a vessel on account of a storm to
facilitate its entry to a port or roadstead, part of the cargo
should be transferred to barges or lighters and be lost, the Examples of General Average
owner of the said part is entitled to indemnity as if the loss Read Art 811 of the Code of Commerce
originated from a gross average, the amount being
distributed between the vessel and cargo from which it By Whom Borne
came. - shall be borne by those who benefited from the sacrifice;
If on the contrary the merchandise transferred should be the shipowner and the owner of the cargoes that were saved
saved and the vessel should be lost, no liability may be
demanded of the salvage. Contribution may be imposed to;
a. insurers ( Insurance Code of the Philippines)
Art. 818: if, as a necessary measure to extinguish a fire in a - they are obliged to pay for the indemnification of the gross
port, roadstead, creek, or bay, it should be decided to sink average provided that the liability shall be limited to the
any vessel, this loss shall be considered gross average, to proportion of contribution attaching to his policy value
which the vessels saved should contribute. where this is less than the contributing value of the thing
Note: the loss or damage sustained by cutting away wreck or
parts of the ship which have been previously carried away or b. lenders of bottomry and respondentia (Code of
effectively lost by accident shall not be made good as general Commerce)
average -obliged to pay in proportion to their respective interest, the
general average which may take place in the goods which the
Sacrifice must be Successful loan is made
- no general contribution can be demanded if the vessel and
other cargo that are sought to be saved were in fact not Who is entitled to indemnity?
saved (art. 860) Owner of the goods which were sacrificed is entitled to
receive the general contribution
- owners of the goods saved shall not be liable for the Except;
indemnification of those jettisoned, lost or damaged 1. goods carried on desk unless the rule
- hence when the sacrifice was not successful in saving the special law or customs of the place allow
ship, there will be no general contribution the same
2. goods that are not recorded in the books
Compliance with Legal Steps or records of the vessel
3. fuel of the vessel if there is more than
- Procedure for recovery: (Art. 813-814) sufficient fuel for the voyage
1. There must be a resolution of the captain, adopted after
a deliberation with the other officers of the vessel and American Home Insurance v. CA
after hearing all persons interested in the cargoes. If the Art 848 states that claims shall not be admitted if they do
latter disagree, the decision of the captain should not exceed 5% of the interest which the claimant may have


in the vessels or cargo if it is general average, and 1% of the Hernandez averages are losses. If there is a loss incurred,
goods damaged if particular average deducting in both the loss will be shouldered on where it falls. (ex. If you have
cases the expenses of appraisal, unless there is an agreement goods transported from origin to destination but in process
to the contrary. it was damaged by sea water. The shipper or owner will
shoulder the loss. What will shipper do to recover loss? If
It is clear that the damage of the cargo is particular average insured go after insurance. Insurance then files action
since the loss is less than 1% to the value of the cargo and against common carrier due to negligence) --- if general
there appears to be no allegations as to any agreement average, there is special circumstance, the loss will not be
defendants and consignee of the goods to the contrary, by shouldered on where it falls but wil be shouldered
express provision of law, plaintiff is barred from suing proportionately by persons who have benefited the
for recovery. circumstance

Law on averages does not apply if the CC is negligent. 4 reqs for general averages (see above notes) MEMORIZE;
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR 1. common danger TO Both vessel and cargo
CONTRIBUTION ON AVERAGES 2. deliberate sacrifice
3. successful saving
Under the rule, deck cargo is permitted in coastwise 4. compliance with the proper steps
shipping but prohibited in overseas shipping.
1. If deck cargo is located with the consent of the If no special circumstance, it is a particular or simple average
shipper on overseas trade, it must always contribute --- the owner of the vessel will be the one who will shoulder
to general average, but should the same be the loss. The negligence of captain, the owner of the vessel
jettisoned, it would not be entitled to will shoulder. But if there is special circumstance, the loss
reimbursement because there is violation of the Y-A will be shouldered proportionately by those who benefited
2. If deck cargo is loaded with the consent of the Standard oil case the ship captain will not release goods to
shipper on coastwise shipping, it must always the shipper unless the shipper will contribute their share.
contribute to general average and if jettisoned The issue was the duty of the captain to liquidate he did not
would be entitled to reimbursement. file for the appropriate proceeding, you should result to legal
liquidation. Captain here failed TO INITIATE proper
- may also be used to solve controversies where proceeding thus shipowner is liable for actions of captain
no provision of the code of commerce is in point
because the said rules embody the custom of Q: is the duty of captain to initiate a condition precedent?
maritime states A: no. even if ship captain does not initiate, the shipowner
can still file the appropriate proceeding in court.
- the same concept that was existing in medieval times can COMMON DANGER both to vessel and cargo. If one invokes
be applied at present general average then that person must prove what he allege.
In standard oil since ship captain invoked gen aver they
Relevance of averages (take note these ex. Connected to should be the one to prove. Failure to prove, they cannot ask
expenses under 806) for contribution from owners of the goods.
under 806 --- averages are:
o Extraordinary expenses ex. If machine It is also possible that there are no goods involved. Only
does not work, you have to ask help of a extraordinary expense Phil. Home assurance case ---
tugboat the expenses on the use of discussed also in chapter 3 --- when it exploded, vessel got
tugboat is a question of averages. This is burned, another vessel came to the rescue to extinguish the
extraordinary because it is not foreseen. --- fire and towed the vessel to the nearest destination. Goods
assuming the engine of the vessel was were saved from the subject vessel. The shipowner asked for
defective, can that be considered an contribution to the owner of the goods which were saved. SC
average? YES. (question now if it is said, shipowner did not comply legal steps 813-815 thus you
particular or general) cannot allege general averages.
o Damages or deterioration suffered refer to
the physical feature or attribute of the If the averages are not general, it is particular. the shipowner
goods. will be solely liable in the case of Magsaysay, there was no
- these two are different deliberate sacrifice.


- Both vessel and goods must be saved


- If vessel not saved, no general averages. Even if at fault be liable for losses or damage. (Art. 826)
goods were saved 2. The collision may be due to the fault of both vessels.
- You have to start with resolution, placing of reso in Each vessel shall suffer its own losses, but as regards the
the log book, accounting of goods thrown away owner of cargoes both vessels shall be jointly and
starting those on deck and to follow from those not severally liable. (Art. 827)
on deck (read 83-815) 3. If it cannot be determined which vessel is at fault. Each
vessel shall also suffer its own losses and both shall be
American Home insurance (take note this case--- bar) solidarily liable for losses o damages on the cargoes.
- Transportation of tv sets, the shipcapatain was (Art. 828)
uprised of the typhoon. Still captain continued with 4. The vessels may collide with each other through
the journey. Then na abot ang typhoon captain fortuitous event or force majeure. In this case each shall
directed that the tv sets should be jettison. Saved bear its own damage. (Art. 830)
vessel. Reklamo owner. Is there general average? 5. Two vessels may collide with each other without their
No. if the shipowner is negligent, the law on general fault by reason of a third vessel. The third vessel will be
averages does not apply. liable for losses and damages. (Art. 831)
Note that examples of the two types of averages are not 6. A vessel which is properly anchored and moored may
exclusive. There is a word especially thus there may be collide with those nearby reasons of storm or other
other example that may fall under this two type of averages. cause of force majeure. The vessel run into shall suffer its
own damage and expense. (Art. 832)
- THIS CAN be stipulated in a contract that this rule Cases covered by collision and allision:
will apply in respect to averages 1. One vessel at fault such vessel is liable for damage
- In the absence of stipulation in the contract in caused to innocent vessel as well as damages suffered by
applying this rule, such rule is inapplicable the owners of cargo of both vessels.
2. Both vessels at fault each vessel must bear its own loss,
Q: ordinary expenses are not averages bec. They are but the shippers of both vessels may go against the ship
foreseeable, are there instance that they can be considered to owners who will be solidarily liable.
be extraordinary ave 3. Vessel at fault not known same as rule as (2). (Doctrine
A; if the parties agree that the averages will cover ordinary of Inscrutable Fault)
expenses. The code of commerce does not prohibit the 4. Third vessel at fault same rule as (1).
inclusion of other expenses under averages. 5. Fortuitous event no liability. Each bears its own loss.

G. COLLISIONS Prerequisite to recovery:

Protest should be made within 24 hours before the
Collisions - impact of 2 vessels both of which are moving. competent authority at the point of collision or at the first
Allision - impact between a moving vessel and a stationary port of arrival, if in the Philippines and to the Philippine
one. consul, if the collision took place abroad. (Art. 835)
Injuries to persons and damage to cargo of owners not on
3 Zones of Time in the Collision of vessels: board on collision time need not be protested. (Art. 836)
1. First zone all time up to the moment when risk of
2. Second zone time between moment when risk of NEGLIGENCE NOT APPLICABLE.
collision begins and moment it becomes a practical
3. Third zone time when collision is certain and time of In case of collision where it cannot be determined which
impact. between the two vessels was at fault, both vessels bear their
respective damage, but both should be solidarily liable for
Error in Extremis - sudden movement made by a damage to the cargo of both vessels.
faultless vessel during the 3rd zone of collision with another
vessel which is at fault during the 2nd zone. Even if such NOTE: The Doctrine of Limited Liability applies in case of
sudden movement is wrong, no responsibility will fall on collisions, but it shall be limited only to the value of the
said faultless vessel. (Urrutia and Co. v. Baco River vessel with all its appurtenances and freightage earned
Plantation Co., 26 PHIL 632). during the voyage. When the latter is not sufficient to cover
all the liabilities, the indemnity due by reason of the death or
Rules on Collision of Vessels under Code of Commerce: injury of persons shall have preference. (Arts. 837 and 838)
1. The collision may be due to the fault, negligence or lack
of skill of the captain, sailing mate, or any other member H. ARRIVAL UNDER STRESS
of the complement of the vessel. The owner of the vessel


* ARRIVAL UNDER STRESS arrival of a vessel at a port of - in case of the vessel expenses shall be for the
destination on account of lack of provision, well founded fear account of the ship owner or agent
of seizure, privateers, pirates, or accidents of sea disabling - in case of the cargo chargeable against the
navigation. (Art. 819) owners of the merchandise for whose benefit the act
NOTE: Captain must make a protest was performed
- if both expenses to be divided proportionately
Steps to be taken in the determination of the propriety between the value of the vessel and cargo
of arrival under stress (Art. 822)
1. captain should determine during the voyage if there is a
well founded fear of seizure, privateers of other valid
grounds Custody of cargo:
2. captain shall then assemble the officers intrusted to the captain (except in cases of force
3. captain shall summon the persons interested in the majeure)
cargo who may be present and who may attend but (Art. 823)
without right to vote if entire cargo or part thereof should appear to be
4. the officers shall determine and agree if there is well damaged, or there should be imminent danger of its
founded reason after examining the circumstances; being damaged
Captain shall have the deciding vote captain may request judge of competent court /
5. agreement shall be drafter and the proper minutes shall consul, the sale of all or part of the cargo
be signed and entered into the log book person taking cognizance shall authorize it (after
6. objections and protests shall likewise be entered in the examination and declaration)
minutes captain shall justify the legality of his conduct,
answering to the shipper for the price of the
- Absence of one of the steps, can still be considered merchandise would have brought if they had arrived
arrival under stress. in good condition
(Art. 824)
When not lawful:
1. lack of provisions due to negligence to carry according to Liability of captain:
usage and customs; captain responsible for the damages caused by his
2. risk of enemy not well known or manifest delay
3. defect of vessel due to improper repair; and if cause of arrival under stress ceases he should
4. malice, negligence, want of foresight or lack of skill of not continue the voyage
captain. (Art. 820) if cause of arrival should have been the fear of
enemies deliberation and resolution (in a meeting
Who bears expenses: of officers of the vessel and persons interested in the
if arrival under stress is proper shipowner or ship cargo) shall precede the departure
agent will only be liable for the expenses of the (Art. 825)
* Shipwreck the demolition or shattering of a vessel
if arrival under stress is improper shipowner and
caused by her driving ashore or on rocks and shoals in the
ship agent will be liable for the same expenses and,
midseas, or by the violence of winds or waves in tempests
in addition, they shall be solidarily liable for
- loss of the vessel at sea as a consequence of its grounding,
damages caused to the cargoes by such arrival under
or running against an object in sea or on the coast
(Art. 821)
Loss or deteriorations of vessel or cargo caused by
shipwreck or stranding individually account of the
owners; part which may be saved belonging to them, same
- After cessation of the cause of the arrival under stress,
proportion. (Art. 840)
captain should continue voyage or else he shall be
If the wreck was due to malice, negligence or lack of skill
of the captain, the owner of the vessel may demand
indemnity from said captain. (Art. 841)
Unloading of cargoes to make repairs:
The goods saved from the wreck to be specially bound for
- in order to make repairs to the vessel or because
the payment of the expenses of the respective salvage. (Art.
there is danger that cargo may suffer damage
necessary to unload; captain must request
If several vessels sail under convoy, and any of them
authorization from competent judge or court for
should be wrecked, the cargo saved will be distributed
removal, and carry it out w/ knowledge of the
among the rest in proportion to the amount which each one
person interested in the cargo
is able to take. If any captain should refuse, without
- in a foreign port Philippine Consul
sufficient cause, to receive what may correspond to him, the
captain of the wrecked vessel to enter a marine protest Requisites of compensation or salvage reward:
against him. If it is not possible to transfer to the other 1. Object must have been exposed to marine peril (fire,
vessels the entire cargo of the vessel wrecked, the goods of acts of pirate, thieves)
the highest value and smallest volume to be saved first. 2. Salvage services rendered voluntarily and is not
Designation to be made by the captain with concurrence of required as an existing duty or a form of contract
his officers. (Art. 843) (See Sec. 8)
The captain taking on-board the goods saved from the * Pilots are not entitled to a reward (Atty.
wreck to continue his course to the port of destination and Capanas)
upon arrival he should deposit the goods for disposal to their 3. Salvage services are successful in whole or in part
owners. In case the captain changes his course, and if he 4. Valid vessel which is shipwrecked beyond the
can unload them at the port of which they were consigned, control of the crew or shall have been abandoned
he may make said port if the shippers or supercargoes (not necessary)
present and the officers and passengers of the vessel consent * Courts will not interfere in the agreement of the parties
thereto. But he is not required to do so even if he has the except but where there is no agreement or it is excessive the
consent during time of war or when the port is difficult and reward is fixed by the RTC judge.
dangerous to make. The owners of the cargo to defray all
the expenses of this arrival and the payment of the * Derelict a ship or cargo which is abandoned and
freightage. (Art. 844) deserted at sea by those who were in charge of it, without
If cannot be, proceed to judicial sale complying with the any hope of recovering it or without any intention of
formalities and on publicity. (Art. 845) returning to it
- determined by ascertaining what was the intention and
I. SALVAGE LAW (Act No. 2616) expectation of those in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on the
* SALVAGE services one person renders to the owner of a sea without hope or intention of recovery or return by the
ship or goods, by his own labor, preserving the goods or the master or the crew, whether resulting from wreck, accident,
ship which the owner or those entrusted with the care of necessity, or voluntary abandonment
them have either abandoned in distress at sea, or are unable
to protect or secure. JETSAM, FLOTSAM, LIGAN:
Jetsam goods that were thrown off a ship which
Kinds of Salvage: was in danger
Voluntary compensation is dependent on the Flotsam goods that floated off the ship while ship
success. was in danger or when it sank
Under contract for a per diem or per horam wage Ligan goods left as sea on the wreck or tied to a
payable at all events. buoy so that they can be recovered later
Under contract for compensation payable only in
case of success. Basis of entitlement to salvage reward (Circumstances to
Claim for valid salvage: 1. The labor expended by the salvors in rendering the
- Provides for a reward for voluntary salvage salvage service
- Other persons who assist in saving the vessel or its 2. The promptitude, skill and energy displayed in
cargo from shipwreck shall be entitled to a similar rendering the service and saving the property
award 3. The value of the property employed by the salvors in
rendering the service, and danger to which such
Persons not entitled to salvage compensation: property was exposed
1. Crew of the vessel shipwrecked or which was in 4. The risk incurred by the salvors in rescuing the
danger of shipwreck property from the impending peril
2. He who shall have commenced the salvage in spite 5. The value of the property salved
of opposition of the captain or of his representatives 6. The degree of danger which the property was
3. He who shall have failed to comply with the rescued
provisions of Section 3 (Section 3. Tthe salvor who
saves or picks up a vessel or merchandise at sea, in the Rights and obligations of salvors and owners:
absence of the ship captain, ship owner or a Salvor is entitled to compensation for services
representative of either of them, they being unknown, rendered. He has, under the Salvage Law, a lien upon
shall convey and deliver the vessel or merchandise the property salvaged.
ASAP to the collector of customs if the port has a On the other hand, the owner does not denounce his
collector and otherwise to the provincial treasurer or right to the property. There is no presumption of an
municipal mayor.) intention to abandon such property rights.


A salvor, in maritime law, has an interest in the property; THE EXPENSES AND THE PROPER REWARD.
called a lien, but it never goes, in the absence of a contract
expressly made, upon the idea of debt due from the owner to THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE
the salvor but upon the principle that the service creates a ABSENCE OF AGREEMENT, SHALL BE DETERMINED BY THE
Rule on salvage reward:
1. The reward is fixed by the RTC judge in the absence of SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL
agreement or where the latter is excessive (Sec. 9). TREASURER, OR MUNICIPAL MAYOR, TO WHOM A SALVAGE
2. If sold (no claim being made within 3 months from IS REPORTED, SHALL ORDER:
publication), the proceeds, after deducting expenses and A. THAT THE THINGS SAVED BE SAFEGUARD AND
the salvage claim, shall go to the owner; if the latter does INVENTORIED.
not claim it within 3 years, 50% of the said proceeds B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED
shall go to the salvors, who shall divide it equitably, and WHICH MAY BE IN DANGER OF IMMEDIATE LOSS OR OF
the other half to the government (Secs. 11-12). THOSE WHOSE CONSERVATION IS EVIDENTLY
3. If a vessel is the salvor, the reward shall be distributed PREJUDICIAL TO THE INTERESTS OF THE OWNER,
c. 25% to the officers and crew in proportion to their NEWSPAPERS OR IN THE NEAREST NEWS-PAPER


REWARD FOR SALVAGE OR ASSISTANCE, ITS VALIDITY MAY - Adopted by the Philippines on October 22, 1936
REQUIRED TO BE REDUCED TO AN AMOUNT - New Civil Code primary law on goods that are
PROPORTIONATE TO THE CIRCUMSTANCES. being transported from a foreign port to the
SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING - COGSA remains to be a suppletory law for such
SECTION, AS WELL AS IN THE ABSENCE OF AN type of transportation international shipping
TIME EMPLOYED, THE SERVICES RENDERED, THE * Goods includes goods, wares, merchandise, and articles
PERSONS WHO AIDED, THE DANGER TO WHICH THEY AND - does not include live animals and cargo which by
THEIR VESSELS WERE EXPOSED AS WELL AS THAT WHICH the contract of carriage is stated as being carried on deck and
EXPENSES. Parties:
Carrier, and
THINGS SAVED SHALL BE DEDUCTED, FIRST, THE - They are given their respective rights and obligations under
ADVERTISEMENT, AND AUCTION, AS WELL AS WHATEVER - Carrier (covered by COGSA) not limited to the
TAXES OR DUTIES THEY SHOULD PAY FOR THEIR shipowner; includes charterer who enters into a contract of
EXPENSES OF SALVAGE; AND FROM THE NET AMOUNT - Charterer charters a vessel and conducts his own
REMAINING SHALL BE TAKEN THE REWARD FOR THE business for his own account
SALVAGE OR ASSISTANCE WHICH SHALL NOT EXCEED after chartering the vessel, he uses the vessel to
FIFTY PER CENT OF SUCH AMOUNT REMAINING. conduct a business of transportation obtaining goods from
3rd persons to transport the latters goods
INTERVENED THE REWARD SHALL BE DIVIDED BETWEEN Civil Code requires international carriers to exercise
THEM IN PROPORTION TO THE SERVICES WHICH EACH extraordinary diligence in the performance of their
ONE MAY HAVE RENDERED, AND, IN CASE OF DOUBT, IN contractual obligations
EQUAL PARTS. Section 2 of COGSA carriers obligation and
liabilities in relation to the loading, handling,
THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE stowage, carriage, custody, care and discharge of
A RIGHT TO PARTICIPATION IN THE REWARD. Section 3 of COGSA responsibilities of the carrier
under COGSA
ANOTHER VESSEL, THE REWARD FOR SALVAGE OR FOR - evidenced by the Bill of Lading
ASSISTANCE SHALL BE DIVIDED BETWEEN THE OWNER, - BOL serves as prima facie evidence of the receipt by the


Notice of claim and prescriptive period
* Notice of claim must be made within 3 days from
delivery if the damage is not apparent; not mandatory
* Prescriptive period 1 year from delivery for the filing
of the case is a condition precedent or mandatory; does not
apply to cases of misdelivery or conversion

Defenses and immunities

- provided for by Section 4 of COGSA
- Section 49(1) of COGSA carrier shall not be liable for loss
or damages arising from unseaworthiness
- New Civil Code carrier will not be liable only if it can
present proof that the unseaworthiness was caused
exclusively by any of the circumstances specified in Art. 1734
of the NCC

- The shipowner and the ship agent may waive the benefit of
any of the defenses in its favor provided not only under
COGSA but also under other laws

Limiting provision
- COGSA contains a provision that allows the shipper to
recover only US$500 per package unless there is a special
declaration unless there the real value of the goods is
- declaration made by the shipper stating an amount bigger
than $500 per package will make the carrier liable for such
bigger amount but only if the amount so declared is the real
value of the goods

Right to discharge dangerous cargo

- COGSA allows the carrier to discharge the good of the
carrier discovers that the goods are dangerous, inflammable
or are explosives