NOVEMBER 21, 2014 o HIGH CONTRACTING PARTIES – countries that

participated and adhered to the warsaw convention

PRIMARY LAW: CIVIL CODE o INTERNATIONAL FLIGHT – Flight from one HCP to
SECONDARY LAW/SUPPLEMENTARY: CODE OF COMMERCE & another HCP
SPECIAL LAWS o In case of breach of contract, where do you file?
1. Place of principal domicile of the carrier
CIVIL CODE 2. Place of principal business place of the carrier
 34 provisions 3. Place where you purchased ticket
 1732 – Definition of common carriers 4. Place of destination
X residence of plaintiff
COMMON CARRIER
 Association of persons, corporations.. offering services to the EXAMPLES OF COMMON CARRIER
PUBLIC for a COMPENSATION 1. Bus
 There is a CONTRACT  If violated = file breach of contract of 2. Jeep
carriage 3. Trains
 PARTIES:
1. Shipper/consignor COMMON CARRIER PRIVATE CARRIER
2. Common carrier itself – person who obligates himself to Offering public their service X public
transport Riding as a matter of right
3. Consignee – person who receives the gooods
ART. 1733 – EXTRAORDINARY DILIGENCE
 Degree of diligence of common carrier = extraordinary diligence
GOVERNING LAWS
 1766 – In all matters not covered in this code, the: ART. 1736 – 1738 – DURATION OF EXTRAORDINARY RESPONSIBILITY
1. Code of Commerce OF CC
2. Special Laws
 1753 – The law of the country to which the goods are delivered 1736 – Possession  delivery (actual or constructive)
shall govern the liability of the common carrier in case of LDD  Actual delivery
 Constructive Delivery
1. Notice was already given to the consignee regarding arrival of
SEA SHIPMENT COASTWISE the cargoes and
 Governing law: 2. The consignee was given reasonable time to release it even
1. Civil Code though there is no actual release (1738)
2. Code of Commerce & SPL
 Governing if from Phil to another country  law of the COUNTRY 1737 – Continuing liability even when they are temporarily unloaded or
OF DESTINATION stored in transit
 GR: Law of the country of destination  E: Right of stoppage in Transitu
o E: If parties stipulate that COGSA governs = COGSA o Diligence required: Diligence of a good father of a family
governs o Why is the diligence reduced?
 Because when the shopped availed of RSIT, the
LAND TRANSPORTATION transpo contract no longer exists
 NCC + CC + SPL  X acting as common carried
 Acting as bailee or warehouse manager
AIR TRANSPORATION
 DOMESTIC – NCC + CC + SPL 1734 – DEFENSES OF A COMMON CARRIER (MEMORIZE!) – instances
 INTERNATIONAL when CC is NOT presumed to be at fault
o Warsaw Convention Governs (primary law) 1. Flood, storm, earthquake, lighting or other natural disaster or
o Why? – Philippines participated in the convention and calamity
agreed = bound 2. Act of the public enemy in war, whether international or civil
Michelle Duguil – PALABRICA NOTES
1
 3. Act or omission of the shipper or owner of the goods 2. Distance
4. The character of the goods or defects in the packing or in the o Any delay in the delivery will make the CC liable
container  Basis:
5. Order or act of competent public authority 1. 1740 – if there is delay, CC will be
liable despite natural disaster
1735 – PRESUMPTION OF FAULT IN CASE OF LDD UNLESS PROVED 2. 1747 – If the common carrier delays
THAT CC EXERCISED EO DILIGENCE or deviates from route  common
 Example: Plaintiff’s hand goods damaged which were loaded in the carrier cannot avail of contract
common carrier  only evidence is that he boarded CC + damage limiting carrier’s liability
 CC liable because of presumption of fault/negligence of CC o DEVIATION – MARINA has already pre-
determined route from one place to another
1734 – CALAMITY (FLEC) REQUISITES o TRANSSHIPMENT
1. Natural, must be the only and proximate cause  Cargo is transferred from one carrier to
2. Before, during and after the calamity, the CC must prevent or another
minimize LDD  GR: X allowed regardless of better
durability or state (new) of other CC or
1741 – CONTRIBUTORY NEGLIGENCE OF SHIPPER OR OWNER even if the 2 vessels are owned by the
EQUITABLY REDUCES LIABILITY same company
 If there is CN by shipper  CC is still liable but it will be equitably  E: Unless the transshipment is
reduced allowed under stipulation
 Note: ONLY APPLIES TO CARGOES 3. Observe extraordinary diligence
 When do you know that there is EO?
1. It must prove that vessel is SEAWORTHY:
PUBLIC ENEMY REQUISITES 1. If the vessel is FIT, engineering is well done, very
1. During War good materials, vessel can meet the normal
2. Country of common carrier should be involved in the war hazards of the sea
3. Pirates 2. CARGO WORTHY
4. Local or International War  It has the ability to transport cargo
 Case: Shipper has no obligation to check the
DEFECT OR CHARACTER OF GOODS vessel if cargo worthy
1. Proximate cause 3. Must have all the EQUIPMENT
2. CC is obliged to observe EO diligence to lessen or forestall further 4. Complete, capable, licensed, trained
damage MANPOWER
2. Person themselves must transport cargoes with utmost diligence
OBLIGATIONS OF COMMON CARRIER IN TRANSPO OF PASSENGERS observing the care that an ordinary prudent man would observe
1. Accept the cargo or passengers w/o discrimination
 EXCEPTIONS: OBLIGATIONS OF THE SHIPPER
1.If the cargo is dangerous or hazardous 1. DUE DILIGENCE IN AVOIDING DAMAGE
2. If the cargo arrives later than time stipulated  1741 – If the proximate cause of the LDE is because of the
2. Obligation to deliver negligence of the CC, the CC will be liable but if there is CN of
 Where? – place where stipulated in the bill of lading the passenger, it will be equitably reduced
 What time? o E: It will not be reduced the moment there is damage
o Time is important because late delivery will cause or injury to the passenger
monetary loss 2. PAY THE FREIGHT
o At the time stipulated  CARRIER’S LIEN – the moment the shipper fails to pay the
o If no time stipulated  reasonable time freight, the CC has a right or lien on the cargoes of the shipper
 How to determine reasonable time:  CC has right to sell or auction the property
1. Character of the goods (ex. o That is why it cannot be released by the shipper
perishable) because
Michelle Duguil – PALABRICA NOTES
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3. PAY DEMORAGE
 DEMORAGE – compensation or damages paid for detaining
the CC or vessel for a certain beyond stipulated period 
shouldered by the shipper
OBLIGATIONS OF COMMON CARRIER IN TRANSPO OF PASSENGERS
1. ACCEPT PASSENGER WITHOUT DISCRIMINATION
2. TRANSPORT PASSENGER SAFELY
 1755 – Mandate of the law for CC to exercise ED in
transporting passengers
 The exercise of ED would depend on the circumstances
presented to you
3. EXERCISE EXTRAORDINARY DILIGENCE
 1733 – “safety of the passengers”
 1755 – specifically for passengers
DUTY OF PASSENGER/SHIPPER
1. To deliver
2. To pay freight
3. To pay other costs
1744 – Can you stipulate to bring down EO to less:
 GR: YES! But it should not be lower than DOGFOA provided
that it is:
1. In Writing and signed
2. Valuable consideration other than the services rendered
by common carrier
3. Reasonable, just and not contrary to law
1745 – Stipulations that are contrary to law (memorize!) – RLD –GETD
1. That the goods are transported at the risk of the owner or shipper
2. That the common carrier will not be liable for any loss, destruction
or deterioration of the goods
3. That the common carrier need not observe any diligence in the
custody of goods
4. That the common carrier shall exercise a degree of diligence less
than that of a good father of a family or of a man of ordinary
prudence in the vigilance over the movables transported
5. That the common carrier shall not be responsible for the acts or
omissions of his or its employees
6. That the common carrier’s liability for acts committed by thieves or
of robbers, who do not act with grave or irresistible threat, violence
or force, is dispensed with or diminished
7. That the common carrier is not responsible for the LDD of goods on
account of defective condition of the car, vehicle, ship, airplane or
other equipment used in the contract of carriage
December 5, 2014
Michelle Duguil – PALABRICA NOTES
PRESUMPTION IN CASE OF LED THAT CC WAS NEGLIGENT/AT
FAULT
 1735
PRESUMPTION IN CASE OF PASSENGER’S DEATH OR INJURY THAT
CC WAS NEGLIGENT/AT FAULT
 1756
Legal Issues to Address:
1. Is he a passenger?
o PASSENGER – those who have entered into a contract,
implied or express, to be transported from one place to
another
o Instances:
1. Without intention to pay – X passenger
2. Entered surreptitiously – X passenger
3. Enter who has not paid but with intention to pay –
Passenger
4. If person boarded the bus in an unusual place of the
bus (ex. roof) – passenger
5. If person boarded the wrong bus – passenger
E: if he has already been informed that he
entered the wrong bus and he has an opportunity
to leave the bus – X passenger
6. If the person was asleep and was not able to get off
destination and was informed and awaken that he has
missed his destination + opportunity to get off + X get off –
X passenger
7. Newsboy, concessionaire on train abroad – passenger
8. Driver/bus conductor – X passenger
o But they should still exercise ED
o However there is no breach of contract of
carriage between him and his employer since
they are not passengers
o If something happens to them  bus will be liable
under workmen’s compensation law, X breach of
contract of carriage
2. Did the CC exercise ED in transporting the passenger?
3. When will this ED of CC start and end?
 Land Transportation
A. BUS
START:
o From the time the bus has stopped to take in
passengers and the passenger attempted to board
the bus
 If there was an offer and the offer was
accepted  there is already an implied
contract
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  The moment the bus stops and something
has happened to the passenger, the
common carrier is liable even if the
passenger has not yet boarded the bus
 WHY? The law wants to protect the safety of
the passenger and wants to impose an
obligation to the bus company that when he
offers, the passenger is in a safe place 
stop and offer your services at a safe place
(ex. don’t do it in the middle of the road
cause you will be liable)
END:
o From the time the passenger has alighted from the
CC and has reasonably put himself in a safe place
o The mere fact that the passenger has already alighted
the bus  it does not cut the ED responsibility of the
bus  the passenger should be at a reasonably safe
place  only time when the CC’s ED is over
o WHY? For the CC to stay in a place where the
passenger can alight safely (x in the middle of the
road)
B. TRAIN/LRT
START:
o From the time the passenger has purchased a ticket
o Even if the passenger has not boarded the train yet
o 1763 – injury caused by a stranger or fellow
passenger
END:
o From the time the person has alighted the LRT unit
and has gone to a safe place
 AIR TRANSPORATION
START:
o From the time the passenger checks in and is in the
pre-departure area (submitted yourself to the custody
of the CC)
o Airplane ticket purchase only – X make the CC liable
at once
END:
o From the time you alighted the plane and has gone in
a safe place or outside the custody of the CC
LIABILITY OF COMMON CARRIER
 1759 - Liable for acts of employee even if the employee has acted
beyond its authority or violated the orders of the CC
o CC cannot use a defense that the CC exercised DGFOAF
in selecting and supervising his employee in a case of
breach of contract
Michelle Duguil – PALABRICA NOTES
 1763 - Liable for the acts of a stranger and co-passenger
o Stranger - Somebody who just entered the bus and hurt
somebody there
o IMPT: In order for the CC to be free from liability in cases
of hold-ups and injuries cause by stranger, there must be
IRRESISTABLE FORCE OR THREAT  without this, CC
will be liable
o Example:
 If hold up lang na walang kwenta  CC liable
because they could have prevented it
 If hold up na may arms, etc  CC x liable
o Hypo:
 Security agent rode the bus to which he is an
employee to go to his office in Cubao, saw his GF
with another man and shot them  liable under
1763 (co-passenger) and not under 1759
(employee)
CASES FILED:
1. CULPA-CONTRACTUAL
 Filed against: the common carrier
 Breach of contract
 Preponderance of evidence
2. QUASI-DELICT
 Example: Vessel was moving to the wharf loaded with
cargoes and when it was about to dock, it lost control and
hit the tier and destroyed the cargoes  owner of tier and
cargoes filed case against the carrier
o Owner of the tier can file case for – Quasi-delict
o Owner of the cargo can file case for – Culpa-
contractual
 Based on Torts
3. CULPA-CRIMINAL
 Filed against the driver
 CC subsidiarily liable for civil liability of the driver
DAMAGES
1. MORAL DAMAGES
 Anxiety, mental anguish, hurt feelings, sleepless nights
 GR: X awarded in culpa-contractual
o E: 1) Death
2) Gross negligence
2. EXEMPLARY DAMAGES
 Awarded to set an example to the public
 If there is one or more aggravating circumstance
3. NOMINAL DAMAGES
 To vindicate right of the person
4. ACTUAL DAMAGES
 Life expectancy = (2/3 x 80 – age) x (income – expenses)
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 because the sea transportation business is very
risky
NEXT HW:  Example 2:
1. CODE OF COMMERCE  Ship cargo from HK to Philippines 
 Real and hypothecary liability of CC Cargo (200M);  Cargoes totally lost,
 Meaning of Vessel but vessel PARTIAL LOSS only 
CARGO OWNER CAN RECOVER
JANUARY 9, 2015 because partial loss only
 Example 3:
CODE OF COMMERCE/MARITIME LAW  Partial loss of ship.
o Can you recover for your cargo
MARITIME LAW AND NCC that was lost? YES
 Complementary (1766) o E: Is there a possibility that the
 X conflict with NCC ship owner will be free from
liability? YES, IF HE
MARITIME LAW ABANDONS THE SHIP
 System of law which deals with affairs, business, vessels, crew of because the ship will now go to
the sea and conveyance of property and persons the creditors and they can
 Transportation by the sea auction it
 Transpo by sea is usually used when it involves big shipments o In sum:
 Transportation = life blood of the economy  GR: Yes, liability
 JURSDICTION:  E: Abandoned ship
 Example 4:
o Metro Manila – Amount is more than 400k = RTC
 Less than = MTC  Vessel totally lost when it reached
o Provinces – Amount involved is more than 300k = RTC Hawaii; shipments are also totally lost
 Less than = City Court Cargo owners filed case to recover
 NATURE OF MARITIME LIABILITY value of their lost cargoes
o REAL AND HYPOTHECARY IN NATURE (LIMITED o Can they recover? NO
LIABILITY RULE) o If partial loss of vessel, cargo
 Depends on the happening of something totally lost + notice of
abandonment? X recover
 The owner/ ship agent of the vessel will not be
liable for the value of the cargoes that are lost if o If vessel totally lost + no
the vessel is totally lost abandonment? X recover
 In sum: o PRINCIPLE: ABANDONMENT
IS ONLY A CONDITION
 NO OR TOTAL LOSS OF VESSEL =
PRECEDENT WHEN THE
NO LIABILITY
VESSEL IS TOTALLY LOST
 PARTIAL LOSS = LIABLE
 EXCEPTIONS TO LIMITED LIABILITY:
 Example 1:
(CARGO OWNER CAN STILL RECOVER
 Shipment from HK to Philippines  DESPITE TOTAL LOSS)
Value of vessel (150M); Cargo (200M) 1. Workmen’s Compensation
 Vessel sank because of negligence 2. Injury or damage due to ship owner or to the
of captain  Although the TOTAL concurring negligence of the ship owner or
LOSS of the vessel is due to the to the concurring negligence of the ship
negligence of the captain, the owner and the captain
owner/ship agent will no longer be liable
 E: If negligence was only due to ship
= x recover anything from the shipowner
captain = limited liability applies
 Reason behind law: To encourage the shipping
3. The vessel is insured
business from freeing ship owners from liability

Michelle Duguil – PALABRICA NOTES

5
 4. Expenses for repair on vessel completed o If coast wise
before loss – cost of repair has already been o If Phil to somewhere…
made and due but not yet paid by ship owner o If foreign to Philippines…
5. In case there no total loss and the vessel is  If Air Transportation
not abandonment o If Domestic…
6. Collision between 2 negligent vessels o If International…
 If Water Transportation…
Examples: 2. Concepts
1. Workmen’s Compensation  Demurrage
2. If the negligence is caused by ship agent/owner or concurrent  Extraordinary Diligence
negligence of ship agent and ship captain o If air transpo… (air worthy)
a. Vessel from Manila to Iloilo  ship was overloaded  ship was o Sea transpo… (sea worthy)
totally lost  heirs filed breach of contract  owner shall be o Land… (road worthy)
liable o 1753
b. Despite knowing that there was advice of typhoon, common o When will it start and end? – 1738
carrier still travelled  liable  Seaoworthy legal meaning
 When is inspection mandatory or not?
*SHIP AGENT – Acts as the owner in the port where the ship enters  Land transportation – X mandatory
o E: If the danger is visible or obvious
VESSEL
 If X inspect = X exercise EOD = liable
 X cover small boats, hospital boats  Air transportation – mandatory
 Why do we need to distinguish between maritime vessel and 3. Memorize 1734
vessel? 4. Can you reduce from EOD to Ordinary Diligence?
o Because if we are referring to a maritime vessel, there  Depends:
must first be a protest filed… o CARGO – YES
o Case:
 Requirements:
 The small boat went near the big vessel and the
1. Writing
small vessel was sucked by the big vessel and
2. Valuable consideration
one of the passengers was hit by a propeller
3. Should be reasonable and fair
 Contention of vessel: should be done within 24
o Passenger – No
hours therefore, cannot file claim
 PASSENGER = X reduced
 SC:
 E: 1758 – Fortuitous or non paying/ gratuitous
 No need for protest because the small passenger
boat is not a maritime boat
 E to E: Willful act or gross negligence of
 Also, the person who should make the the carrier
protest could not do it because of his o If there is contributory negligence – it may reduce only
situation (injured brought to hospital) the liability of the common carrier, but it will not exempt CC
 Summary: from liability
 Maritime vessel: Protest is needed 5. What are the stipulations that are not valid?
 Not maritime vessel: No protest needed 6. Will the common carrier be liable for acts of co-passenger or
stranger? – Yes
MIDTERM EXAM:  In case of stranger – irresistible force dapat so that the common
1. Basic Concepts Explanation carrier will not be liable – 1763
2. Multiple Choice  In case of employees - Liable – 1759
3. Problem solving (Discuss all the issues) 7. When will he become a passenger? End?
 Land transpo…
PRE-MIDTERM REVIEW
 Air transpo…
1. What are the governing laws?
 Sea transpo…
 If land Transportation
Michelle Duguil – PALABRICA NOTES
6
EXTRA NOTES  E: Vehicle stolen from a garage without the owner’s
knowledge and consent
 PASSENGER – One who travels in a public conveyance by virtue of a  PRIMARY OBLIGATIONS OF A COMMON CARRIER IN THE
contract, express or implied, with the carrier as to the payment of fare or CARRIAGE OF GOODS (PASTE)
that which is accepted as an equivalent thereof 1. Duty to deliver the goods to the proper PERSON
 PARTIES TO CARRIAGE OF PASSENGERS 2. Duty to ACCEPT the goods
1. Common Carrier 3. Duty to SEASONABLY deliver the goods to the destination
2. Passenger 4. Duty to TRANSPORT the goods safely at the agreed destination
 PARTIES TO CARRIAGE OF GOODS 5. Duty to exercise EXTRAORDINARY diligence
1. Shipper  EFFECTS OF INEXCUSABLE DELAY:
2. Carrier 1. Carrier still has duty to exercise EOD
3. Consignee 2. Natural disaster X free carrier from responsibility
 PERFECTION OF CONTRACT OF TRANSPORTATION 3. Delay is without just cause = CC X limit its liability for LDD
1. Contract to Carry – perfected by mere consent 4. Liable for damages caused by delay
2. Contract of Carriage or of Common Carrier – real contract 5. Consignee may exercise his right to abandon
because facilities have to be used before contract is perfected  DUTY TO ACCEPT GOODS:
 PRIVATE CARRIER – One which, without being engaged in the o GR: CC duty bound to accept passengers and cargo without
business of carrying as a public employment, undertakes to deliver discrimination (DDUO-CITES)
goods or passenger for compensation (single transaction)  E:
1. Goods are DANGEROUS
COMMON CARRIER PRIVATE CARRIER 2. Goods will be exposed to untoward DANGER
GOVERNING LAW Law on Common Carrier Oblicon such as flood, capture by enemies
STATE Yes X 3. Goods are UNFIT for transportation
REGULATION 4. Acceptance would result to OVERLOADING
AVAILABILITY People indiscriminately Particular individuals or 5. Goods = CONTRABANDS or illegal
groups only 6. INJURIOUS to health
7. Failure to tender goods on TIME
DILEGENCE EOD Ordinary Diligence
8. Goods like livestock will be EXPOSED to
PRESUMPTION OF Yes No
diseases
NEGLIGENCE
9. STRIKE
EXEMPTING Prove EOD and Art 1734 Caso Fortuito under
 DURATION OF LIABILITY – 1736, 1738, 1737
CIRCUMSTANCES 1174
 REQUISITES OF FORCE MAJEURE: (PDD)
STIPULATION GR: X agree on limiting Parties may limit carrier’s
1. Natural disaster must be the PROXIMATE AND ONLY CAUSE of
LIMITING carrier’s liability liability provided X
the loss
LIABILITY E: Provided by law contrary to public policy,
2. Common carrier excised DUE DILIGENCE to prevent or minimize
law…
the loss before, during or after occurrence of the disaster
X stipulate that it is
3. CC has not negligently incurred DELAY in transporting
exempt from liability for Can stipulate that it is
 REQUISITES OF ACT OF PUBLIC ENEMY (PDW)
negligence of employees exempt from liability for
1. PROXIMATE AND ONLY CAUSE of the loss
or agents negligence of employees
2. Common carrier excised DUE DILIGENCE to prevent or minimize
or agents
the loss before, during or after occurrence of the disaster
3. Existence of actual state of WAR
 CHARTER PARTY – A contract by which an entire ship or some
** includes PIRACY
principal part thereof, is let by the owner to another person for a
 NEGLIGENCE OF SHIP OWNER
specified time or use  transforms CC to PC
1. When it is the SOLE AND PROXIMAYTE cause = absolute defense
 REGISTERED OWNER RULE
2. When it is CONTRIBUTORY = partial defense
o GR: Registered owner of the vehicle is liable for any damage
 BAGGAGE
caused by the negligent operation of the vehicle although the
o Hand carried = Ordinary diligence
same was already sold or conveyed to another at the time of
o Checked –in = EOD
the incident
Michelle Duguil – PALABRICA NOTES
7
 PRIMARY OBLIGATIONS OF A COMMON CARRIER IN THE
CARRIAGE OF PASSENGERS (U-STAB)
1. Duty to observe UTMOST diligence to passenger
2. Duty to SEASONABLY bring the passenger to designation
3. Duty to TRANSPORT the passenger safely to the agreed
destination
4. Duty to ACCEPT passengers without discrimination
5. Duty to take care of the passenger’s BAGGAGE
 DILIGENCE IN THE SELECTION OF AND SUPERVISION OF
EMPLOYEE
o GR: Based on contractual obligation = X exempt from liability
 E: Based on quasi-delict = available as defense
LIABILITY OF COMMON CARRIER FOR DEATH OR INJURIES TO
PASSENGERS CAUSED BY:
ACTS OF EMPLOYEES ACTS OF STRANGERS
OR PASSENGER
DILEGENCE EOD Ordinary Diligence
REQUIRED
NATURE OF TORT (QUASI-DELICT) GR: X liable
LIABILITY E: If common carrier’s
However, employee must employee could have
be on duty at the time of prevented or stopped the
the act act or omission through
DGOAF
 DOCTRINE OF LAST CLEAR CHANCE – Where both parties are
negligent but the negligent act of one is appreciably later than that of the
other, or where it is impossible to determine whose fault or negligence
caused the loss, the one who had the last clear opportunity to avoid the
loss but failed to do so, is chargeable with the loss  only available
between 2 colliding vehicles because it is an action based on tort or
quasi-delict
 OBLIGATIONS OF SHIPPER OR CONSIGNEE AND PASSENGER
1. Due diligence to avoid damage or injury
2. Bound to pay the consideration in the form of freight or fare
 MEANING OF EXTRAORDINARY DILEGENCE
o IN CARRIAGE OF GOODS – The EOD in the vigilance over
the goods tendered for shipment requires the common carrier
to know and to follow the required precaution for avoiding
damage to or destruction of the goods entrusted to it for sale,
carriage and delivery. It requires the common carrier to render
service with the greatest skill and foresight and to use all
reasonable means to ascertain the nature and characteristics
of the goods tendered for shipment and to exercise due care in
the handling and stowage, including such methods as their
nature requires
o IN CARRIAGE OF PASSENGERS – A CC is bound to carry
passengers safely as far as human care and foresight can
Michelle Duguil – PALABRICA NOTES
provide, using the utmost diligence of a very cautious person
with due regard for all circumstances
 STIPULATION LIMITING/REDUCING CC’S LIABILITY
GOODS PASSENGERS
Allowed less than EOD provided X lessened or dispensed with
WSVR through stipulations or posting
notices
o GRATUTIOUS PASSENGERS -  limit liability but not for
willful acts or gross negligence
o ACCOMODATION PASSENGERS – only Ordinary Diligence
required
 STIPULATION LIMITING/REDUCING CC’S LIABILITY
 SEAWORTHINESS: (RASEM)
1. Fitness of the vessel itself to withstand the rigors of the voyage
2. Fitness of the vessel to store the cargoes and accommodate
passengers to be transported
3. Vessel is adequately equipped and properly manned with
sufficient number of competent officers and crew
 CARGOWORTHINESS
1. The ship must be sufficiently strong and equipped to carry the
particular kind of cargo which she has contracted to carry and
2. Her cargo must be so loaded that it is safe for her to proceed on
voyage
 TRANSSHIPMENT
o The act taking cargo out of one ship and loading it in another
or the transfer for further transportation from one ship or
conveyance to another
 EOD IN CARRIAGE BY LAND- (CT)
1. Condition of vehicle – not defective, good order and condition
2. X breach of traffic rules
 AIRWORTHINESS (REC)
1. The aircraft must be in such condition that it must be able to
withstand the rigors of flight
2. The aircraft, its engines, propellers and other components and
accessories are of proper design and construction and are safe for
air navigation purposes, such design and construction being
consistent with accepted engineering practice and in accordance
with aerodynamics laws and aircraft science (EQUIPMENT)
3. Vessel has a competent captain and crew who exercised EOD in
operating the aircraft
 BILL OF LADING – A written acknowledgement of the receipt of goods
and an agreement to transport and to deliver them at a specified place
to a person named or on his order
 MARITIME COMMERCE
o 573 – 869 of CODE OF COMMERCE
o That system of laws which particularly relates to the affairs
and business of the sea, to ships, their crews and
8
 navigation and to maritime conveyance of persons and
property
 CHARACTERISTICS OF MARITIME TRANSACTION
1. REAL – real contract, registration required
2. HYPOTHECARY – the liability of the carrier in connection with
losses related to maritime contracts is confined to the vessel, which
stands as the guaranty for their settlement
 MERCHANT VESSEL – engaged in maritime commerce, whether
foreign or otherwise
 VESSEL – Any barge, lighter, bulk, carrier, passenger ship, freighter,
tanker, container, ship, fishing boats or other artificial contrivances
utilizing any source of motive power, designed, used or capable of being
used as a means of water transportation operating either as a common
carrier, including fishing vessels covered under PD 43
o E:
1. Those owned or operated by the AFP and by foreign
government for military purpose
2. Bancas, sailboats and other waterborne contrivances
less than 3 gross tons capacity and not motorized
 MARITIME LIEN – constitutes a present right of property in the ship, a
jus in re, to be afterward enforced in admiralty by process in rem
 DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE)
o The exclusively real and hypothecary nature of maritime law
operates to limit the liability of the shipowner to the value
of the vessel, earned freightage and proceeds of the
insurance, if any.
o GR: No vessel, no liability (Total loss)
 E: (WORK-AIIR)
1. Workmen’s compensation
2. X total loss and X abandoned
3. Injury or damage due to ship owner or to the
concurring negligence of shipowner and
captain
4. Vessel is insured
5. Expenses for repair and provisioning of the
ship
o Ship owner is the party who may invoke the limited liability
rule
o Cases where applicable:
1. Civil liability for indemnities to 3rd persons
2. Indemnities for negligent act of the captain
3. Collision
4. Liability for unpaid wages of captain and crew and for
advances made by the ship agent if the vessel is lost
by shipwreck

Michelle Duguil – PALABRICA NOTES

9

January 30,2015 (From Mikee)
MT essay answers:
1. A stipulation transferring the risk to the shipper is not valid. Would
limited liability rule apply if the ship were lost due to the negligence
of the ship captain? Yes. There are only 4 exceptions to the limited
liability rule. One is the concurrent negligence of the ship captain
together with the ship owner. So that if the loss was due to the fault
of the ship captain only, then the limited liability rule will still apply.
2. Robert is already a passenger since he was in the premises and
under the control of the common carrier. Extraordinary diligence is
now required of the common carrier. Art. 1762 provides for the
liability of the common carrier for acts of passengers or strangers.
There is a presumption that a common carrier is always liable
unless proven otherwise under Art. 1735.
3. Right of inspection is mandatory in airplanes because of the anti-
hijacking law but it is not mandatory in busses or other land
transportation unless there is something suspicious which is
obvious to the naked eye
4. Betty the accountant while on her way to work is a passenger and
the common carrier is liable for her death because a common
carrier is always presumed liable. On the other hand, the driver is
not a passenger since there is no contract of carriage. However, he
may claim compensation from other sources of law
Special Contracts under Maritime Commerce
What is a CHARTER PARTY?
 It is a document in itself and it does not refer to a party in a
controversy.
 Simply put, it is in the nature of a contract of lease, having for its
object the whole or part of a vessel.
DEFINITION OF TERMS:
1. The lay days – the number of days given to unload/load (this is
free)
2. The extra lay days – an extension (it is not for free).
3. Demurrage – the penalty or fee for the excess time spent in
unloading and loading.
4. Primage – compensation or fee given to the captain or crew which
is due to the special care of captain and crew
5. Embargo – legal restriction of departure of vessels
6. Contract of towage – contract for a barge to be towed by a ship
What are the REQUISITES of a Charter party?
1. The Charter Party must be in writing, signed, and with the consent
of the parties
Michelle Duguil – PALABRICA NOTES
2. Existence of the vessel at the disposal of the charterer
3. Stipulation as to the freightage
4. It must comply with the appropriate formalities:
a. Must specify the kind, name, tonnage, flag raised, port,
registry, the names, surnames, & domiciles of the ship
captain, ship agent, and ship owner, capacity, dates of
loading and unloading, the lay days, extra lay days,
demurrage, primage
Must the Charter Party always be in writing and signed to be valid?
 GR: Yes, according to Art. 652.
o E: Art. 653 provides that when cargo is already delivered
or received without the Charter Party being signed, the
stipulation should be interpreted to be that contained in a
bill of lading.
Q: The parties agreed to deliver cargo from point A to point B. The
Charter Party stipulated that there will be a demurrage. But when the
cargo loaded and the vessel was in voyage, there was a deviation to
point C, with a bill of lading to that effect. Shall there be a payment of
demurrage?
 NO!
 The SC held: since the goods were received although the Charter
Party was not signed it is still valid, but the provision in the bill of
lading will apply. Since the bill of lading did not contain a stipulation
as to demurrage, then there is no demurrage
What are the 2 KINDS of Charter Party?
1. DEMISE or BAREBOAT
 the vessel is chartered in itself as a whole (hence, “bare”) and need
not provide that the crew is included because of the principle that
the control of the crew is given to charterer, along with the
navigation etc.
 He is deemed the OWNER of the vessel and the EMPLOYER of
the crew.
 Q: A was part of the crew of a vessel. After 3 months, the
vessel was chartered. A was terminated by the charter. A is
now claiming that he was terminated unlawfully. Against who
do you file the case?
 The charterer. He has now the burden to prove that it is not a
bareboat charter party. (SC Case)
 PRESUMPTION OF BAREBOAT:in case of doubt, the charter
party is always presumed to be a BAREBOAT charter party, and
not affreightment.
What is the difference between the 2?
BAREBOAT AFFREIGHTMENT
Charter of whole vessel Charter of part of the vessel
10
Converted to private carrier X converted
 In case of expiration of lay days, the cargo is not yet ready for loading,
then the vessel can leave without them
What is the significance of the conversion?
 There could be a stipulation limiting liability in case of negligence of 2. AFFREIGHTMENT
the ship owner and it will be valid in the case of bareboat but not in 2 kinds:
affreightment. 1. Time period
2. Voyage
Can a ship captain enter into a charter party over the vessel of the ship
owner? Grounds for rescission and at whose instance
 Yes, a ship captain who entered into a charter party even against ????
will of the owner who will be civilly liable for damages to the owner. ___________________________________________________________
 Still, the contract is VALID.
What are the loans on BOTTOMRY & RESPONDENTIA?
If the vessel is no longer seaworthy, the captain shall:  These are SPECIAL kinds of loans involving vessel (bottomry) and
1. Look for another vessel within the parameter of 150KM for the cargo (respondentia).
purpose of transferring the cargo and continue with the voyage.   Because the vessel and consequently its cargo is left at the mercy
If he is indolent in searching for another vessel then he is liable for of the sea these objects are made collaterals.
whatever damages that may occur.  The cargo owners will now  That is why the parties can stipulate a higher interest since it is not
have the right to look for another vessel at the expense of the covered by the usury law unlike in simple loan.
captain or the ship owner  There can never be oral but only written form in a public document
2. If he cannot find another vessel, he may deposit the vessel which is (notarized).
not seaworthy
LOAN ON BOTTOMRY LOAN ON
Can the captain sell cargo? RESPONDENTIA
 Yes, if under special circumstances such as for necessity, DEFINITION Loan made by the Loan taken on security of
provision, food, and repair of the vessel, the captain can sell  but shipowner or ship agent the cargo laden on vessel
must pay the owner: guaranteed by vessel and repayable upon safe
o If preserving the cargo is more expensive than the value itself and repayable arrival of cargo at
cargo itself upon arrival of vessel at destination
o If the consignee cannot be found and there is refusal to destination
sell or release the cargo.
Note: No LOB may be
Instances where the cargo made liable for freight, duties, taxes, duties, made in any case on the
other expenses advanced and ought to be reimbursed by the shipper: salaries of the crew, nor
 Cargo is NOT liable to pay freight in the event of: the profits which may be
o A shipwreck or the stranding or the loss of the vessel expected
 E: unless the vessel is ultimately repaired and WHO MAY Shipowner or ship agent Only the owner of the
brought to its destination, in which case the cargo CONTRACT cargo
salvaged during shipwreck, will be liable in Outside the residence of
proportion to the distance travelled the owners – the captain
o In case of confiscation because of piracy; COMMON 1. Exposure of security to marine peril
ELEMENTS 2. Obligation of the debtor conditions only upon
 A charterer is deemed the owner of the vessel as a whole and should safe arrival of the security at the point of
not accept cargo more than it can handle. destination
FORMS 1. Public instrument
 Owner must respect the capacity of the vessel.  Owner once he 2. Policy signed by contracting parties and the
notices that cargoes were clandestinely loaded, he may remove it. broker taking part therein
 If not dangerous, he can still opt to deliver but at a higher freight. 3. Private instrument
Michelle Duguil – PALABRICA NOTES
11
 Ex. Cargo worth 1M, loan on respondentia is 500k, the GA is 100k. How
What is the difference between simple loan and these loans? much should the lender pay?
- In bottomry the collateral is the vessel and if it is lost the obligation to pay is  ½
extinguished. In respondentia the collateral is the cargo. If collateral is lost in  Pay 50k
a simple loan, the principal will still exist.
Ex. In case of shipwreck and the vessel is stranded but some of the goods
BOTTOMRY/ RESPONDENTIA SIMPLE LOAN were salvaged or recovered, there is salvaging expenses in doing the same.
Collateral = vessel (bottomry) If collateral is lost = What is the basis of determining the payment of the borrower?
principal will still exist  X original value of the loan
If lost = obligation to pay is  Formula: Value of the goods – expenses for salvaging
extinguished
Collateral = cargo Ex. Cargo is worth 1M, salvaged cargo is worth 500k, salvaging expenses of
(respondentia) 100k.
 400k = basis of loan
If lost = obligation still exists  500k – 100k = 400k
MARINE RISK Marine risk is necessary X necessary
FORM AND Form and manner prescribed by Formal requisites of WHERE THE GOODS OR VESSEL IS COVERED BY INSURANCE
MANNER the code of commerce ordinary contract  GR: If it is 100% covered by loan, it cannot be covered by
REGISTRY OF Must be recorded in the registry X need insurance because there is no more insurable interest on the part of
VESSELS of vessels to be binding to third the owner
persons o E: Insurance and LOB/LOR may co-exist but there should
PREFERENCE Last lender First lender be a determination of insurable interest
o Ex. How to determine? – if the value of the goods or
vessel is 1M and subject to LOB/LOR for 700k. 
If it is not stated specifically that the voyage is from point A to point B insurable interest of insurance company is  1M – 700k =
or one way 300k
 The presumption is that it is two way (round trip).  Is the insurance company also liable in case of damage?
 In order to limit coverage, it must be specifically stated to be one o YES! Because it has interest in the subject matter
way  So that the borrower is not obligated to pay the loan if it is  Once insurance and loan co-exist, both shall be liable for damages
not stated in proportion to their interest

When is the obligation extinguished if the collateral is lost INSURANCE LOB/LOR
 There must always be the existence of a maritime peril In case of loss, may be paid at There should be the
any time in all events even presence of marine risk;
GR: Presumed that LOR or LOB covers roundtrip without marine risk in case of loss, loan is
 E: When it is expressly stipulated that a particular trip is covered by extinguished
loan INDEMNITY Indemnity is paid AFTER loss Paid in advance by way
has occurred of a loan
GR: When a vessel or cargo is lost, then the LOR or LOB is extinguished. EFFECTS In case of loss of the vessel due In case of loss of the
The borrower will no longer pay the lender because the subject matter is lost OF LOSS to a risk insured against, the vessel due to marine
 E: OF VESSEL obligation of the insurer peril, the obligation to
1. If the loss is caused by inherent defects of the cargo becomes absolute pay is extinguished
2. Fault of the borrower himself KIND OF Consensual Real
3. Barratry or malice on the part of the captain of the vessel CONTRACT
4. If the damage was caused because the borrower was
engaging in contraband goods Q: Before the vessel reached its destination in Iloilo, the vessel sunk.
5. If the goods loaded were different from that designated in the  There is no more obligation to pay if it is a loan on bottomry.
contract  If respondentia, obligation still exists.
 If the cargo was saved, then the borrower will pay lesser expenses.
Michelle Duguil – PALABRICA NOTES
12
  Vice-versa: If the cargo was lost and vessel was saved, the
obligation of the borrower to pay in respondentia is extinguished (if
bottomry, it still exists)
WHEN LOAN ON BOTTOMRY OR RESPONDENTIA IS REGARDED AS
SIMPLE LOAN
1. Lender loaned an amount larger than the value of the object due to
fraudulent means employed by the borrower
2. Full amount of the loan is not used for the cargo or given on the
goods if all of them could not have been loaded, the balance will be
considered a simple loan
3. If the effects on which the money is taken is no subjected to any
risk
Order of preference (if there are many creditors)
 Rule 1: Contracts or loans during voyage have preference over
loans contracted before the clearing of the port for voyage
 Rule 2: The order of preference shall be in the inverted order based
on the dates. Because if it were not for the latest loan, the vessel
would have sunk and will be liable.  There is presumption that the
last loan saved the vessel. Last loan has preference over the
earlier loans.
 Rule 3: If several loans were taken in the same port, then they
have to be paid proportionately
 Example: For instance, in several loans on bottomry were
contracted. Before the voyage, a loan in Manila for 20,000 was
contracted. During the voyage, a loan in Iloilo was contracted. Due
to the necessity of major repairs, a loan was contracted in Cebu for
100,000. Upon arrival in the place of destination in Cagayan de
Oro, it was discovered that the vessel was no longer seaworthy.
The vessel was then sold for 110,000. The creditors are now asking
for them to be paid.
o Manila – loan for 20,000 before voyage
o Iloilo – loan for 10,000 during the voyage
o Cebu – loan due to need of major repairs for 100,000
o CDO – discovered that vessel is no longer seaworthy, so it
was sold for 110,000.
What is the order of preference?
 The loan contracted in Iloilo has preference over loan in
Manila because it was contracted during the voyage
 The loan contracted in Cebu was latest, them it has
preference over the loan in Iloilo. So 100,000 will be paid
to the creditor in Cebu. The remaining 10,000 will be paid
to the creditor in Iloilo
Assuming that in the same port in Cebu, there were 3 loans
were contracted with 3 different creditors, what is the order of
preference?
 It must be paid proportionately to the amount of the loan.
Michelle Duguil – PALABRICA NOTES
 The rule that when the collateral is lost, the obligation of the borrower
to pay is extinguished only applies to risks due to MARINE PERILS
not NATURAL DEFECT, MALICE, NEGLIGENCE, BARRATRY, then
the obligation still subsists.
 What is the effect if thru fraud the borrower was able to get a loan
more than the value of the vessel is loan on bottomry considered
valid? For instance, the vessel is worth 50M. but because of fraud,
you were able to get a loan for 70M. how will we treat the loan?
o The loan on bottomry will be valid up to the extent
of 50. The remaining 20M will be treated as a
simple loan
 (Bar question) Does the ship captain have a right to enter into a
loan on bottomry?
o Yes, provided that the ship captain is within the residence of
the ship agent or the ship owner and that he is authorized to do
so.
o Residence here does mean its literal sense (place of abode)
but may be interpreted to mean the office of the ship owner.
 What if ship captain is outside the residence of the ship owner or
ship agent?
o Yes he can still can enter into a loan of bottomry:
1. if it is connected to his inherent duty in a contract for
voyage, such as in the case of the provision of the vessel,
for repair of the vessel, OR
2. if the ship captain is a co-owner, in which case the loan
will be valid up to the extent of his co-ownership.
 Can the ship captain enter into a loan on respondentia?
 No, because he is NOT a representative or agent of the owner of
the cargo, unlike in loan on bottomry wherein the ship the agent of
the owner of the vessel
February 6, 2015
AVERAGE AND COLLISION
AVERAGE
 Technical maritime term
 Simple meaning
o Extraordinary or accidental expense
o Damage or injury
 Should be distinguished from a simple damage and expense so
that we will be able to know who will bear the damage/expense
 Art 806
13
 o It is an extraordinary or accidental expense incurred during caused the expense or suffered cargo therein at the time of
the voyage for the preservation of the cargo, the vessel or the damage shall bear the occurrence of the average shall
both expense contribute to satisfy the
o Any damage or deteriorations which the vessel may suffer  X reimbursement average
from the time the vessel starts its voyage until the time it   Reimbursement
reaches its point of destination or damage/deterioration Example (808):
suffered by the cargo from the time it is loaded on the vessel 1. Inherent defect of cargo
until the time it is unloaded in the port of consignment  Ex.: Guimaras mangoes
exported to HK (owner
knows that lifespan of
mango 5 days) + voyage
ORDINARY AND NECESSARY AVERAGE for 10 days = mangoes
EXPENSE deteriorated
Art 807 Art 806 2. Force majeure
To determine who bears the loss 3. Damage to the haul, vessel,
Loss/ injury is borne by the ship Depends on what type of average is equipment
owner involved: 4. Wages, victuals of the crew of
1. General Average – borne the vessel
by all persons having  If fixed voyage =
interest in the vessel and particular average
the cargo should contribute  If monthly basis =
to satisfy the average general average
2. Particular/ Simple Example:
Average – borne by  Ship owned by Germany
respective owners agricultural machinery owned by
Petty expense which must be America to be delivered to
shouldered by the ship owner Russia  War between Russia
Examples: and Germany  If vessel
1. Pilotage (pilot fees) continues voyage to Germany,
2. Anchorage – terminal fee, vessel will be captured 
etc. vessel went to Philippines
3. Lighterage fee – small instead. Who will pay for the
barge where cargoes are salary of the crew?
unloaded and the lighterage o Particular Average –
brings the cargoes to the Ship owner will pay
port o The reason for
4. Quarantine Fee deviating is not
5. Health and Sanitation Fee because the machinery
6. Inspection Fee is a contraband, but to
save the ship because
of war between Russia
Particular Average General Average and Germany
 Expense or damage which does  Expense or damage deliberately
not inure to the common interest done to save the V/C/Both REQUISITES OF GENERAL AVERAGE (MEMORIZE)
 Particular only to the person  Inures to the common benefit of 1. Common danger or risk
who owns the thing the ship owner and cargo owner  Clear, certain and imminent
 Ex.: Captain was sailing vessel and then the daughter told the
 Only the particular person (ship  Borne by all persons having an captain that she dreamt that a storm was coming and that he
owner/ cargo owner) who interest in the vessel and the
Michelle Duguil – PALABRICA NOTES
14
 should throw away some stuff in the vessel. Is this a valid
general average?
 NO! Risk is based on speculation; not imminent or
certain.
2. Deliberate Sacrifice
 Purpose is to save the vessel and cargo
 Ex.: Logs were moving from left to right on the vessel because
of a storm. Because of the movement, the logs fell  boat
stabilized and the rest of the cargoes saved.  Owner of the
logs claimed that he should be paid by the ship captain
because it is a general average. Correct?
o NO! Although it saved the rest of the cargoes, jettison
was not deliberate. It was inevitable to happen
because of the storm.
3. Sacrifice must be successful
 Supposing the cargo was jettisoned and it saved the rest of the
cargo and vessel itself. Amount of cargo jettisoned (50M).  Then
vessel continued to its journey and vessel and cargoes were lost.
Some of the cargoes were salvaged/saved. Are owners of the
cargoes that were saved liable to pay the owner of the cargoes
that were earlier sacrificed or jettisoned (50M)?
o Sacrifice was successful that is why the vessel was able
to continue its voyage and the cause of the loss of the
cargoes and sinking of the vessel was due to other
reasons, not the original one. The cargoes that were
subsequently lost were salvaged
o Owner of the salvaged cargo should pay to the owner of the
cargoes jettisoned: Salvage value – expenses for
salvage
4. Proper Judicial Formalities (MEMORIZE)
1. Procedure for recovery
2. Assembly and deliberation
o Captain will assemble the people who have interest and then
deliberation
3. Resolution of the captain
4. Entry of the resolution in the logbook
o Those who voted for and against it must be recorded
o Majority rule prevails
o BUT the captain has the last say even if it is against the
decision of the majority and such decision should be
recorded in the logbook
5. Detailed minutes
6. Delivery of the minutes to the maritime judicial authority of the
first port, within 24 hours from arrival
7. Ratification by the captain under oath
JETTISON
 Act of throwing cargo overboard in order to lighten the vessel
 Under the control of the captain
Michelle Duguil – PALABRICA NOTES
 X res nullius; X object of occupation
 Cargoes must be covered by the bill of lading so that it can be
proved
 Order of goods to be cast overboard:
1. Those on deck first – heaviest one with the least utility and
value
2. Those on the lower deck second - heaviest one with the least
utility and value
Goods not covered by General Average even if sacrificed
1. Goods carried on deck
2. Goods not recorded in the books or records of the vessel
3. Fuel for the vessel if there is more than sufficient fuel for the voyage
 GR: Average should happen during the course of the voyage (?)
o E:
1. In the course of a storm, the cargoes are transferred to
barges to lighten the vessel
2. Vessels are already anchored in the pier and there was a
fire on one of the vessels. They intentionally sinked the
vessels beside the vessel on fire to save the other vessels
anchored. = GENERAL AVERAGE even if X on voyage.
The other vessels saved should contribute.
WHO ARE THE PEOPLE WHO ARE LIABLE TO CONTRIBUTE TO THE
GENERAL AVERAGE?
 Ship owner
 Cargo owners in proportion to their interest
 Lenders on bottomry and respondentia
 Insurance company
COLLISION (Art 826 of Code of Commerce)
 Contract of 2 moving vessels or one moving, the other is stationary
 If one is moving and the other is stationary = allision
RULES IN CASE OF COLLISION
Who at fault Who is liable
If one vessel if at Vessel at fault is liable for damages
fault
Both are at fault  Vessel – Each will bear their own loss
 Cargo – solidary liability (one solidary debtor
can pay for the whole obligation subject to
reimbursement from the other solidary debtors)
 Example:
o Vessel A = 2M (damage)
o Vessel B = 2M
o Cargo:
X – 3M (damage)
15
 Y – 2M  The following instances need protest before the aggrieved may file
W – 15M a case:
Z – 20M 1. Collision
If it cannot be DOCTRINE OF INSCRUTABLE FAULT 2. Arrival in distress
determined who is  Vessel – Each will bear their own loss 3. Shipwreck
liable  Cargo – solidary liability 4. Hurricane
Proximate Cause and  X APPLY IN MARITIME LAW = both  Exceptions to protest:
Contributory Cause considered at fault 1. If the owner of the cargo is not on board the ship at the time of
 Vessel – Each will bear their own loss collision
 Cargo – solidary liability 2. If the person is not capable of expressing his wishes because
 Example: of the injury that he sustained
o A = Proximate cause 3. If the other vessel is not a maritime vessel
o B = Contributory cause Feb 20, 2015
Last Clear Chance  X APPLY IN MARITIME LAW = both
ARRIVAL UNDER STRESS
considered at fault
 The vessel will anchor in the nearest and most convenient port
 Vessel – Each will bear their own loss
because of well founded fear of seizure, privateer, piracy, accident
 Cargo – solidary liability
which will disable to common carrier to navigate
Force Majeure  Vessel – Each will bear their own loss  Well founded fear – should not be based on speculation; there
 Cargo – Each will bear their own loss must be a thorough deliberation and such should give you a
If due to act of third  Third person will be liable reasonable conclusion that indeed there is a well founded fear
person
WHEN LAWFUL WHEN UNLAWFUL
ZONES OF TIME IN THE COLLISION OF VESSELS When the inability to continue is due The inability to continue voyage is
1. Zone 1 – All the time up to the moment when the risk of collision begins to: due to:
2. Zone 2 – Risk of collision begins until risk is certain 1. Lack of provisions 1. Lack of provisions due to
o One who committed error is liable 2. Well founded fear of negligence to carry
3. Zone 3 – Risk is certain until collision happens seizure, privateers, pirates according to usage and
o If there is collision in the 3rd zone, the one who caused the 3. Accidents of the sea customs
privileged vessel to cause the error or swerving is liable disabling it to navigate 2. Risk of enemy not well
(ERROR IN EXTREMIS) known or manifest
3. Defect of vessel due to
LIMITED LIABILITY RULE improper repair
 Also applies in collision 4. Malice, negligence, lack of
 Example: foresight or skill of captain
o A collided with B. Fault of A. Who will be liable?
 Based on rule on collision:
 A is liable ADVANTAGE OF NOTICE THAT IT IS VALID AUS
 If limited liability rule is applied:  The CC will not be liable for damages
 B was partially damaged but A that  But the cost and expenses caused by AUS will always be borne by
is at fault sank and totally damaged the ship owner or CC
 A is not liable and need not pay
because liability is extinguished LEGAL STEPS
because the vessel was totally lost 1. Captain should determine during the voyage that there is a well founded
fear of seizure, privateers and other valid grounds
PROTEST 2. Captain shall assemble the officers and summon the persons interested
 There must be protest within 24 hours otherwise the action will not in the cargo who may attend the meeting but without right to vote
prosper 3. The offices shall determine and agree if there is a well-founded reason
after examining the circumstances
Michelle Duguil – PALABRICA NOTES
16

GR: CC X liable for damages
E: X VALID ARRIVAL UNDER STRESS (OPENS CASE FOR DAMAGES
AGAINST CC)
1. If the AUS is unlawful
 Example: If the ship does not have enough food or was not
properly kept  Gutom members  Went to Cebu to get
more food  X valid AUS
2. Risk of enemy not well known or manifest
 Example: No well founded fear of pirates
3. Defect of vessel due to improper repair
 Because vessel must be seaworthy
4. Malice, negligence, lack of foresight or skill of captain
EXPENSES FOR UNLOADING CARGO
 If for repair of the vessel = shouldered by the shipowner
 If for saving the cargo = cargo owner
 If for both vessel and cargo = proportional
AFTER CARGO IS UNLOADED
 GR: ????
o E: If caused by force majeure
 E: Malice, lack of foresight
and skill by the captain 
CC will shoulder the
expenses
WHY? – Grounds is caused by FM
SALVAGE
 Saving a vessel
 Service one person renders to the owner of a goods or ship, by him
own labor, preserving the goods or the ship which the owner or
those entrusted with care of them have either abandoned in
distress at sea or are unable to protect or secure
 Compensation allowed to persons by whose voluntary assistance a
ship at sea or her cargo or both have been saved in whole or in part
from impending sea peril or such property recovered from actual
peril or loss, as in cases of shipwreck, derelict of recapture
BARRIOS VS GOTHONG CASE
 X salvage because no marine peril (weather was good)
 Act of towing only, not act of salvage
 QUASI-DERELICT -

 If there is imminent danger of was already damaged, the captain CIRCUMSTANCES WHEN TOWING CAN BE AN ACT OF SALVAGE
has to apply in the proper judicial authority for the sale of the cargo.  When the towing happens during very bad weather
In order to effect the sale, captain must comply with certain
formalities such as publishing, acquiring consent from persons who
have interests over the cargoes TOWING SALVAGE
Towing fee – will go to the owner of Salvage reward – distributed among
If the reasons/causes for arrival under stress are gone, he must assemble the togboat owner owner of the vessel (50%), captain
again his men and decide that the reason no longer exists and then proceed (25%) and crew (25% in proportion
again with the voyage (Legal advice!) to their salaries

SHIPWRECK WHEN CAN A VESSEL OR CARGO BE CONSIDERED AS AN OBJECT

 Injuries or loss suffered by the vessel because of the swallowing by OF SALVAGE?
the waves, or grounding or stranding or running against an object in  When the vessel or cargo is considered a DERELICT
the sea rendering the vessel incapable to navigate  DERELICT – when the vessel or cargo is already abandoned; a
ship or her cargo which is abandoned and deserted at sea by those
SHIPWRECK AUS who are in charge of it without any hope of recovering it or without
Vessel is completely incapable of Vessel can still move because it can any intention of returning to it
moving still go to the nearest port  QUASI- DERELICT – if the cargo or vessel is although not
Swallowing by the waves, or Grounds: well founded fear of abandoned is left at the mercy of the waves and the persons who
grounding or stranding or running seizure, privateer, piracy, accident are entrusted to save the same cannot do anything anymore
against an object in the sea which will disable to common carrier o Example: Vessel during a very strong typhoon and at the
rendering the vessel incapable to to navigate mercy of the waves but the captain and everyone are still
navigate inside the ship  X abandoned by still subject of salvage
because of concept QD  one who salvages the same is
Shouldered individually by the ship Shouldered by the ship owner/CC still entitled to salvage reward
owner and cargo owner
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WHAT IS THE RIGHT GAINED BY THE SALVAGOR OVER THE OBJECT  If salvage was done by the crew of the vessel
SALVAGED?  If the salvage was done despite opposition of the captain
 Right of possession – the salvor cannot say that say that he owns it  If the salvager did not comply with the requirement to report the
(abandonment of possession only by the abandoner, not matter to the collector of customs
ownership)
 Could the salvor refuse to surrender the vessel or cargo to the BASIS OF SALVAGE AMOUNT TO BE GIVEN
owner? 1. Labor
o Yes, if the owner does not want to pay the salvage reward – 2. Competence and skill
SALVAGE LIEN 3. Value of the materials being used to salvage
4. Risk being assumed
OBJECTS OF SALVAGE 5. Value of the goods being salvaged
1. Ship ** Salvage reward must not exceed 50% of the value of the goods salvaged
2. Jetsam – goods which were thrown off a ship which was in danger
3. Floatsam – goods which float upon the sea when cast overboard THINGS THAT HAVE TO BE PAID BY THE OWNER
4. Ligan/Lagan – goods cast into the sea tied to a buoy, so that they 1. Expenses for custody
may be found again by the owners 2. Advertisement
3. Auction sale
REQUISITES 4. Taxes over the goods when it was brought to the country
1. Valid object of salvage 5. Expenses for salvage
2. Marine peril 6. Salvage reward
3. Service voluntary
 Example: Vessel was in danger  crew saved the ship  X
voluntary because crew is under obligation to save ship
4. Successful, total or partial

WHEN SHOULD INTENTION SHOULD BE RECKONED

 Intention of abandonment starts from the time the captain and crew
left the ship  Salvaged by others  Change of mind will not change
the state of the vessel
 If no intention to abandon and goes back to the vessel after getting
the necessary equipment  X valid salvage by others

OBLIGATION OF COLLECTOR OF CUSTOM

 Safeguard and inventory of goods
 Subject the goods to public auction if the conservation is prejudicial
to the owner and when no objection was made
 If no claim within 3 months:
o Sold
o Proceeds go to owner
 If 3 years no claimant:
o 50% - national government
o 50% - salvor
 If there are claimants:
o Owner of vessel – 50%
o Captain – 25%
o Crew – 25% in proportion to their salaries
o Exclude expenses for advertising, taxes, duties, salvaging

NO SALVAGER REWARD WHEN

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