Transportation Law – Atty Palabrica (FINAL REVIEWER)
TRANSPORTATION LAW- Dec. 3, 2010
I. Air Transportation
Lhuiller v. British Airways case:
 says that the governing law is the Warsaw Convention
 issue is jurisdiction
 “high contacting parties” – countries which are signatories in the Warsaw
convention; countries who abide with the provisions of the agreement in the WC
 “international flight” – flight between two high contracting parties (according to
WC)
 importance to determine if international flight – to know the applicability of WC
(if international flight, then WC applies)
 in this case, international flight (London-Italy) therefore, WC applies
 Held: case shall be filed in the:
(a) place of the main office of the airline (London)
(b) place where you bought the ticket (Italy)
(c) place where the incident happened
 Therefore: Philippine court has no jurisdiction over the case, case dismissed for
lack of jurisdiction
IN ONE CASE:
 One guy from Iloilo or Bacolod who joined a golf tournament in Bangkok
 He needed to pass Singapore and so he bought ticket from PAL going to
Singapore
 since PAL has no direct flight from Singapore to Bangkok he got a British
Airways ticket going to Thailand from Singapore
 He arrived using PAL’s plane but British Airways would not accept them
because the ticket was not indorsed by PAL
 BA: if we accept this ticket, there is a possibility that PAL will not pay us
 He was not able to use the questioned ticket and Garuda Airways going to
Bangkok
 Some of them got sick because of the hassle and so was not able to play golf
 When they got back in the Phils, they filed a case for damages for breach of1738. CC has to continue to operate with extraordinary diligence even if the goods are
contact against PAL placed in the warehouse at the place of destination.
 PAL filed motion to dismiss
 ISSUES
1. Should the case be filed against BA?
2. Do the Philippine courts have jurisdiction over the case
given it is a flight from Singapore to Thailand?
3. Does the WC apply?
 HELD
1. No. When he purchased ticket from PAL, PAL only used
BA as their agent by virtue of an agreement between
Dugie & Mela (2011) , Diato & Cagampan (updates)
airlines and the main carrier is PAL and so PAL should be
the one sued.
2. Yes. The cause of contract here is not a breach of contact
of carriage but the negligence of PAL in communicating
the ticket to the British Embassy as far as the connection
is concerned. Note that the negligence happened before
contact of carriage was effected.
3. No. The cause of action is not the contract of carriage but
PAL’s negligence making the WC not applicable.
 NOTE: Compare the Lhuiller case and this case
II. OBLIGATIONS OF THE PARTIES
A. Vigilance over the Cargo
1733. Extraordinary diligence is required
1735. Presumption of negligence in case of loss, damage or deterioration
 GR: as long as it is shown that there is damage then the common carrier (CC)
could be made liable
 EXP: CC could prove that it has exercised extraordinary diligence over the
goods
1736. Coverage of extraordinary diligence  lasts from the time the cargoes are
conditionally placed in the position of and received/accepted for transportation by the
carrier to be delivered to the consignee, without prejudice to 1738
1737. Even if the cargoes are temporarily unloaded, CC is still obligated to exercise
extraordinary diligence UNLESS the shipper/owner avails of the right to stoppage in
transitu
 “stoppage in transitu” – right of an unpaid vendor to stop the shipment or
transportation of the cargo to the consignee because the consignee is not capable
of paying him, and so the vessel becomes a warehouse, therefore shall exercise
the diligence of the good father of a family and not extraordinary diligence
 Fact that it has reached the destination and place of the warehouse it doesn’t
follow that the extraordinary diligence has already ceased to exist.
 It would only cease to exist if CC has given a reasonable time and given notice
to the consignee to release the same
 If there is actual or constructive delivery, extraordinary diligence ceases to exist
 Actual delivery – cargoes were given to the consignee and the consignee
receives the cargoes.
 Constructive delivery – notice was already given to the consignee regarding the
arrival of the cargoes and the consignee was already given a reasonable time to
release it even if there is no actual release
Transportation Law – Atty Palabrica (FINAL REVIEWER)
 In cargoes, if there is delay, then one of the options of the shipper is to abandon the
cargo once in transit and ask for the full price of the cargo. But to be able to do so,
Requisites:
1. there should be a demand in writing addressed to the CC stating your
intention to abandon the goods
2. it shall be done before the cargo reaches the destination
B. TRANSPORTATION OF PASSENGERS (CC)
1. Obligation to accept the passengers without discrimination
2. Obligation to transport them safely
3. Obligation to transport without delay
When will CC be liable in transporting passengers?
a. When there is delay (1740)
b. When there is deviation (1747)
III. DEFENSES OF THE COMMON CARRIER
1734. GR: CCs are responsible for the loss, destruction and deterioration of the goods
EXP: if the same is due to any of the following causes ONLY: memorize!!!
1. floods, storm, lightning, earthquake or other natural disasters and calamities
2. in case of an act of a public enemy during war, international or civil
3. act or omission of the owner of the cargo (shipper)
4. character of the goods or defects in the packing or container
5. order or act of competent public authority
REQUISITES:
Natural Disaster
1. this is the only cause of loss, destruction and deterioration of the goods
2. that the CC has exercised the due diligence in preventing or minimizing the loss
before, during and after the occurrence of the natural disaster (1739)
 CC incurs delay (1740) or deviation – change of route (1742 or 1741)
 “Delay” – delay in the departure and/or arrival
 If there is delay, CC is still liable although the goods suffered deterioration, loss
or destruction caused by natural calamity, which is an absolute defense.
Act of Public Enemy
1. there should be actual war between the place of destination and place where the
carrier belongs, international or civil
 “public enemy” – pirates are public enemy, thieves, robbers, rioters and
hijackers are not public enemies
 Public enemy in war, whether civil or international , as a valid defense of
common carrier
Dugie & Mela (2011) , Diato & Cagampan (updates)
o There must be an actual war between the country where the common
carrier comes from and the country that confiscated the goods.
(hijackers, thieves, robbers are not considered as public enemy; but a
pirates are considered as such.)
Character of the goods or defect in the packing of the container
o Common carrier will not be liable if there are already defects in the
goods or in the packing of the goods.
o But If the defect is apparent and the common carrier still accepts it,
then the fact that there was prior defect could no longer be raised as a
defense against the shipper. If the common carrier does not know of the
defect then it can be raised as a defense. Provided, that it had exercised
the diligence to forestall or minimize damage (Art. 1742).
Order of a Public Authority may be used as a defense when:
o It is a valid order
o There is a force that could compel the common carrier to abide by the
order of the competent authority.
LIABILITIES OF COMMON CARRIER:
 Act of an employee that caused injury to the passenger would still make the
common carrier liable, whether or not the employee is acting in accordance with
his duty; or even if the act of the employee that caused the injury is in violation
of the instruction of the common carrier.
 It shall also be noted that, by express provision of the law, an act of a stranger or
co-passenger of the common carrier that caused injury to another passenger
would still make the common carrier liable.
 If a passenger was injured and he has not yet paid his fare, then he is not
considered a passenger and the common carrier will not be liable to him; but if
he has an intention to pay even if he has not yet paid, then he can still be
considered as a passenger.
 If the passenger was not aware that he rode the wrong bus, he is still considered
as a passenger.
 If the passenger pretended to be the owner of a plane ticket and boarded the
plane, he cannot be considered as passenger because there was fraud on his part.
 In the case of gratuitous passenger, the common carrier is still liable; but the
liability may be limited depending upon the stipulation of the passenger and the
common carrier. However in the case of an ordinary passenger, the liability of
the common carrier cannot be lessened or diminished by stipulation.
Transportation Law – Atty Palabrica (FINAL REVIEWER) Dugie & Mela (2011) , Diato & Cagampan (updates)
Note that the stipulated limitation of liability in the case of gratuitous passengers shall • Limited liability only applies to maritime transaction/ business...
only be valid in ordinary negligence. It is not valid if the cause of injury is willful act of • Elements of real and hypothetical in nature:
gross negligence. • The vessel is totally or partially loss
Cause of action if the passenger is injured: • Done through negligence or fault of the captain and not the owner
1. Culpa Contractual (breach of contract) • E.g. the real and hypo in nature will not apply: Negros navigation v Miranda
- Case against the common carrier only. Cannot be filed against the driver During the voyage, there was a collision of negros navigation and an oil tanker
because he is only an agent. Preponderance of evidence is needed to because of the negligence of the captain... but the cause is that the boat is not sea worthy
establish liability. because it sunk within 5-10 minutes where in many people died. And allowing the boat to
2. Quasi-delict be overloaded with people, that is why there was negligence on the part of the owner and
- Case against the driver and the common carrier; based on torts. not only to the negligence of the captain... That is why the limited liability rule will no
longer apply in this case.
3. Culpa Criminal • Limited liability rule: Vessel, appearance, freight and insurance
- Case against the driver. Common carrier is subsidiarily liable if the driver is • It does not violate the civil code.
insolvent. • In order to avail limited liability in partial loss there must be a written notice of
Possible damages: abandonment. That the owner is turning over to the predator possessor of the
 Actual damages thing or abandoning the vessel.
o (life expectancy=2/3 x 80 – age) x income and expenses • Principle of Limited liability rule (LLR): no vessel, no liability...
 Moral damages • Is there a need of abandonment? No there is no need because there is nothing to
o Hurt feelings, sleepless nights, mental anguish abandon.
o In culpa contractual, moral damage is not awarded except in the case of Exception of LLR:
• If there is a concurrence of owner or agent of the vessel
death or bad faith.
• In case if the vessel is insured
 Exemplary damages
• The nature of the claim is in special law that the workers who died in the
o Awarded if there is one or more aggravating circumstances
performance of their duties. It is Workmen’s compensation claim.
 Nominal damages • When all the expenses for repair incurred prior to the voyage, because there was
o Awarded to vindicate the right of the plaintiff. obligation already arise.
• The freight that was paid will not be included in the LLR. It is only the value of
the vessel will be extinguished.
Transportation Laws – Dec. 10, 2010 Protests:
Code of commerce/ Maritime Law: Within 24hrs
Corporation A - has bus1, bus 2, and bldg. Or to the first point of entry in the Philippines
The owners of corporation A are: It is not applicable to all case... Only if the vessel was shipwreck, hurricane, arrival under
B – who has a house and lot stress, in case of maritime collision (take note of this, because it involves maritime
C- who has a car vessels and it should be both maritime vessel)
D – who has a car
• Corporation has a distinct and separate personality. So the liability of A cannot Where to file? In 1981, the jurisdiction is regarding to the amount involved
be transfer to B, C ,D... In Metro Manila: RTC – exceeds 400k
Nature of liability under maritime law: it is real and hypothetical in nature... Outside MM: RTC- exceeds 300k
Below this amount above stated: will in Metropolitan Trial Court.
What does real and hypothetical in nature mean? It is limited liability. Maritime Collision- there is a need to protest
Vessel – any barge, lighter, bulk vessel, freighter, passenger freighter, tanker, fishing
Limited liability- in case the vessel is totally loss through the fault or negligence of the boats, contrabands... design and capable of transporting person or cargo from one coast
captain, the liability of ship owner is extinguished. to another.
• Authority: Art. 837 under code of commerce: the owner shall be civilly liable
for the acts of the captain up to the actual value of the ship, freight...
Transportation Law – Atty Palabrica (FINAL REVIEWER)
Not vessel: If the vessel is operated under Arm forces of the Philippines, all foreign ,
Bangka, sailing boats, less than 3 gross tons, boats that are accessory, yachts, health
service, floating store houses
Requisites of maritime vessel:
1 Not accessory
2 Has a license to engage in the transportation
3 Using to transport crates or people by sea
Under code of commerce Art.835 regarding the person capability to protest and that it one place to another for a certain price.
should be both maritime vessels.
• Registration and extraordinary diligence
Vessel – is personal property. It is registered with conveyance and customs
MARINA RULES IN REGISTRATION- it is the one who set the rules
How to acquire? Good faith with valid title: 3yrs
GF without valid title with adverse possession: 10 yrs
Through sale
Can you sell a vessel while in voyage? Yes
Who will pay the payment of wages? Purchaser
Who will collect the freight earn? Pertains to purchaser
Can you sell a vessel when you reach in the San Francisco or destination? Yes
Who will collect? The Seller because he already finished the transaction
Who will pay the wages? Seller
Who will abandon the ship? The ship owner or agent but not the chartered.. Co-owner
can abandon it only in proportion of his share.
All vessels must be registered.
What are the vessels need to be registered?
Owned by the Philippine citizen or Phil. Companies that atleast 60% owned by
Phil. Citizen
More 15 gross tons in capacity
Optional registration: 15 tons or less
Not required: war vessels, boats of private 3 tons or less, non-motorize boats,
Temporary certificate:
May be given incase of charter or Marina
Charter must not be less than 1yr.. operation entirely by Filipino citizens and man by
Filipino citizens
When can you delete/cancel the registration?
Phil.; incase of bare boat chartered by a foreign
Pre-termination of chartered agreement
Sale of the vessel to a foreigner
Dugie & Mela (2011) , Diato & Cagampan (updates)
Scrapping or decommission of the vessel (no longer to be used)
Constructive or total loss
Transpo Lecture- Jan 7
Charter Party - a special contract in maritime commerce. It is not the contracting parties
but the contract itself. It is a contract by which the owner or agent of the vessel leases the
whole or part of the vessel to another for transportation of the cargo or passengers from
Governing laws:
Common Carrier- civil code
Private Carrier- Code of Commerce
The moment CC becomes a private carrier- Code of Commerce
Importance of determining whether common carrier is considered a private carrier:
1. To know which law will govern
2. Stipulation that limits liability is valid in a private carrier but not in a common
carrier.
When is a common carrier considered as private carrier? BARE BOAT CHARTER
BARE BOAT CHARTER
It is when a vessel is hired (including the crew and everything). The control,
management, and possession is with the charterer.
Article 652 of the code of commerce: Contents and formalities of the chartered parties
1. The charter parties has to be drawn in duplicates, signed by the parties.
2. Charter parties should also specify:
* the kind, the name, and the tonnage of the vessel.
* the origin of registry of the vessel.
* The name of the shipper, the owner, and the charterer.
* Port of loading and unloading.
* Capacity and the carriage agreed upon by the parties to be loaded.
* The freightage
* the primage
* lay days.
 Freight-fare or kind of cargo to be loaded
 Primage- fee given for the special care given to the cargo or by using the
equipment
 Lay days- allowable number of days that a charterer may load or unload the
cargo
Why is this important to know?
- Because we are dealing with cargoes and vessels, and they are always in transit
and delay would cause a lot of money for additional charge for demorage
- Demorage- fee charged in excess of the number of days allowed to load and
unload
Requisites for a valid charter party:
1. Consent of the contracting parties
2. Existence of the vessel at the disposal of the charterer
Transportation Law – Atty Palabrica (FINAL REVIEWER)
3. Stipulation as to the freightage
4. Compliance with Art. 652 o the Code of Commerce
What is the indication of Art 652- the charter party has to be in writing as general rule
EXP: Art 653, if the cargoes be received and the charter party has not yet been
signed then it is understood that it has been executed and the one that will govern the
obligation of the parties are the stipulations in the bill of lading
Kinds of Charter Party:
1. Bare Boat Charter Party or Demise Charter Party
- a person hires the vessel and the crew, and so the charterer would be the one
who would take charge in paying the wages of the crew and in control of
provisioning everything in the vessel, in effect, the crew became the employees
of the charterer
- charterer party would be liable to third persons
- charterer has command, possession and navigation of the vessel; he acts as
owner who handles everything
- only instance where common carrier would be a private carrier
2. Contract of Afreightment – charterer hires the vessel either for a deteminate
period of time or per voyage or successive voyages
a. Voyage Charter – per voyage or successive voyages
b. Time Voyage – fixed time
Contract of Towage  contract of service where the barge is towed by a vessel
Can a ship captain enter a charter party?
- Art. 655, the ship captain can enter a charter party provided, in the absence of a
ship agent, even if it is in contravention or against the instruction of the ship If you cannot pay the liabilities, then under…
agent or owner – still valid
- But the owner may go against the ship captain for damages
Art. 656 as to determine when demorage shall be given
- if there is no time stipulated in the charter party then the usage of the port shall
be used
What if during the chartering, the vessel was found later on not seaworthy anymore?
- Art 657, the captain is obligated to look for a vessel and continue the voyage
within 150 kilometers from port
- If the captain cant find vessel to deliver – he may apply for deposit of the cargo
Art 658, the freight shall accrue as stipulated in the contract. But if the stipulation is not
clear, the rule will be, if on the charter there is a month or a date, then the freight will
accrue during the time of the loading. If there is a fixed period, then the fright accrues on When not required to pay a freight?
that very date.
Dugie & Mela (2011) , Diato & Cagampan (updates)
Art 659-if the cargoes are placed on the vessel, the captain may sell the cargos subject to
the following conditions:
1. if the money from the sale will be needed for the repair of the problem of
the vessel.
2. Unavoidable and urgent expenses
Effect- if after the repair, the cargo was able to reach the point of destination, then the
captain will pay the owner based on the price in the place of destination. Same goes with
if the vessel did not reach the destination.
Will the cargo be liable for the freight? If the vessel was not able to reach the destination,
its liability shall be proportionate to the distance. If it reaches the destination, it will be
liable for the whole value.
Art. 659- partial freight
 if the vessel was lost or did not reach the destination.
Art. 662- shipwreck but cargo was recovered= liable only up to the extent of the damage
(partial freight)
Art. 665 the moment the cargo is placed in the vessel, the common carrier is already
liable. There is already a lien created in the cargo.
 What are the liabilities?
o Freight
o Expenses
o Average (expense that inure to the benefit of cargo holders) accorded to
him. Ex: Jettison.
Art 668 the cargos be sold in the auction. Cargos to be sold in auction by the captain:
 cargos under 665 and 666
 if the cargo is at the risk of deteriorating
 consignee cannot be found or refuses to claim the cargo
 if it is very expensive to preserve the cargo.
Instances where cargo is liable for full freight: art 659
 The cargo was sold for the repair, and the vessel reached the destination.
 Under 662, when the vessel was repaired but after the repair the cargo was not
sold and the vessel reached the destination.
 Under 663, deterioration due to packing
 Fortuitous event
Transportation Law – Atty Palabrica (FINAL REVIEWER) Dugie & Mela (2011) , Diato & Cagampan (updates)
 Under 661, when for reasons of shipwreck or stranding, or when the goods were Contents
confiscated by enemies or pirates. Kind, name and registry of vessel
 Under 660, when the cargo was thrown overboard and was never recovered. Name, surname and domicile of the captain
(jettison) Names, surnames and domiciles of the borrower and lender
Amount of the loan and the premium stipulated
Time for repayment
Transpo Lecture – Loan on Respondentia and Bottomry (January 28, 2011 / Goods pledged to secure repayment
January 2015) Voyage during which the risk is run

LOAN ON RESPONDENTIA AND BOTTOMRY LOB/LOR vs Simple Loan

- it is a contract of loan in the nature of mortgage LOR/LOB Simple Loan
- subject matter in RESPONDENTIA: Cargo || BOTTOMRY: Vessel Rate of interest is not subject to the Rate of interest must not exceed the
- there should be marine risk usury law – extraordinary risks ceiling fixed by the usury law
- unlike other loans, may assume higher interest and not covered by any involved
regulation or usury law because of the risk the lender is taking the moment the
Marine risk is necessary and be duly No need of such risk
vessel goes on voyage
established
- obligation is paid only if the subject matter is lost (respondentia), or
extinguishment of obligation to pay when lost (bottomry), so when payment Executed in accordance with the Formal requisites regarding
should be made at all costs, then it is an ordinary loan form and manner required in the contracts in general would apply
code of commerce
Loan on Bottomry Loan on Respondentia Recorded in the registry of vessels in No registration is required
Definition Loan made by ship owner or Loan taken on security of order to bind third persons
ship agent guaranteed by the cargo laden on a vessel, Preference is extended to the last First lender enjoys preference
vessel itself and repayable and repayable upon safe lender – theory that if not for the last (general rule)
upon arrival of the vessel at arrival of cargo at lender, then the prior lenders would
destination destination not have benefited from the
Who may Ship owner Owner of the cargo preservation of the security.
contract? Ship agent
Outside of the residence of Who has authority to constitute LOR / LOB
the owners - captain
Loan on Bottomry Loan on Respondentia
Elements
Ship owner - may secure a lon Cargo owner – have the right to
Common Exposure of security to marine peril
upon his ship enter into a LOR
Elements Obligation of the debtor conditioned only upon safe arrival of
Part Owner – may secure a Captain - NOT owner of cargo
the security at the point of destination
contract only up to the extent of thus they cannot contract a LOR.
Forms his interest in the vessel If he does such then he shall be
Public instrument Ship Captain & Part Owner – may chargeable solely for the LOR.
Policy signed by the contracting parties and the broker taking obtain a loan only to the extent of
part therein his interest
Private instrument Ship Captain (NOT Owner)
1. Extreme necessity – may
borrow by means of LOB in
order to comply with the
obligations
2. No loans may be made on the
Transportation Law – Atty Palabrica (FINAL REVIEWER)
salaries of the crew nor of the
profits which may be
expected
WHAT DOES LOR/LOB COVER?
- GR: it is presumed that LOR or LOB covers round trip
 EXP: when it is expressly stipulated that a particular trip is covered by loan
REQUIRED TO REGISTER VESSEL TO AFFECT LOR/LOB?
- Should be recorded in the registry of vessel, but failure to register the same does Charges to Cargo? (Art 665)
not invalidate the contract
- Effect of the non-recording  it will not bind third parties and you will lose as a
lender, your preference of credit (note: LOB or LOR has preference of credit
over ordinary loans)
Loan of Respondentia: (for MARINE PERILS ONLY)
- GR: When cargo is lost, then the LOR is extinguished  the borrower will no
longer pay the lender because the subject matter is lost
- What if:
1. If cargo lost, vessel saved? Still liable? – NOT liable, the security
was saved
2. If cargo was saved, vessel lost? Still liable? – LIABLE, security
still exists
Loan on Bottomry (for MARINE PERILS ONLY)
- GR: When vessel is lost, then the LOB is extinguished  the borrower will no
longer pay the lender because the subject matter is lost
- What if
1. If cargo lost, vessel saved? Still liable? – LIABLE, security still
exists
2. If cargo was saved, vessel lost? Still liable? - NOT liable, the
security was saved
EXCEPTION TO THE GENERAL RULE ON EXTINGUISHMENT UPON LOSS
OF THE CARGO/VESSEL
1. if the loss is caused by the inherent defect of the cargo
2. fault of borrower himself
3. Barratry or malice on the part of the captain of the vessel
4. If the damage was caused because the borrower was engaging in contraband
goods
5. If the goods loaded were different from that designated in the contract
RULE ON OBLIGATION: GENERAL AVERAGE
- RULE in obligation when it comes to General Average (expense on
deterioration): incurred to save cargo or vessel by jettisoning  owners and
lender benefited from such
LENDER : GENERAL AVERAGE
- Lender shall suffer or share in proportion to their respective interest in General
Average which may take place in the goods in which the loan is made (Art. 732)
Dugie & Mela (2011) , Diato & Cagampan (updates)
Instances when the charterer will not pay freight anymore?
If goods were lost on account of:
1. Shipwreck or stranding
2. Due to seizure by pirates or enemies
If paid in advance – then it shall be returned UNLESS there is an agreement to
the contrary
What if the captain sees that the ship is not seaworthy anymore?
The captain has the responsibility to look for another ship within 150km. (Art
657)
Freightage
Expenses and duties arising therefrom
Part of the general average
EXAMPLE (GENERAL AVERAGE)
1. Cargo worth 1M, loan on respondentia is 500k, General Average is 100k, How
much should the lender pay? – his interest is one half. Then he should pay 50k
2. in the case of shipwreck, and the vessel is stranded but some of the goods were
salvaged or recovered, there is salvaging expenses in doing the same, What is
the basis of determining the payment of the borrower? – Not the original value
of the loan. Law states that in shipwreck it is based on the value of the goods
saved minus the expensed for salvaging or saving the same
3. Cargo is worth 1M, salvaged cargo is worth 500k, salvaging expenses of 100k
then 400k would be the basis of loan on respondentia and not 1M
Where goods or vessel is covered by insurance:
- General Rule: if it is 100% covered by loan it cannot be covered by insurance
because there is no more insurable interest on the part of the owner
- EXception: Insurance and LOB/LOR may co-exist but there should be a
determination of the insurable interest. How to determine? – if the value of the
goods or vessel is 1M and subject to LOB/LOR for 700k, How much is
insurable interest of insurance company? 300k only
Is insurance company also liable in case of damage?
– Yes. Because it has interest in the subject matter
Insurance and loan Co exist
- Once insurance and loan co-exist, both shall be liable for damages in proportion
to their interest
Difference of Insurance and LOB/LOR:
Insurance LOR/LOB
in case of loss, may be paid anytime in LOB/LOR: there should be the presence
all events even without marine risk of marine risk; in case of loss, loan is
extinguished
Preference of Credit
Ex. Series of loans were made = Manila  Iloilo  Cebu (100k)  CDO; vessel
not longer worthy to travel and so was sold for 110k
Transportation Law – Atty Palabrica (FINAL REVIEWER) Dugie & Mela (2011) , Diato & Cagampan (updates)
- first to be paid in the loan made in Cebu (100k) then pay Iloilo (10k) don’t suffered by the cargo from the time it is loaded to the vessel until it arrives
proportionate anymore, pay everything that is left if the loan is bigger than the in the place of destination for unloading
difference Art. 807
- last one has preference, because of the principle that the last loan incurred saved - Petty and ordinary expenses or expenses incidental to navigation (pilotage,
the cargo or vessel and so preference must be given since first loan also lighterage, inspection, health, maritime fee) should be borne by the owner of the
benefited ship because these are expenses in order to travel or have a voyage
- Inverted Order - Important thing to determine is the kind of average because if it is an average
1. Loan contracted during voyage has preference over those contracted before then the next thing you should think of is “who will bear the loss?”
the voyage
2. Loan contracted during last voyage take preference over earlier voyage 2 KINDS OF AVERAGE
3. Different loans made on the same port shall be paid on a pro rate basis I. Simple or Particular Average –
- Example: - expenses or damages to the vessel or her cargo which do not inure the common
LOAN benefit of those who are interested; loss borne by the owner of the cargo or
MANILA – Php 20,000 vessel itself;
ILOILO - Php 10,000 a. Art. 809: losses suffered by the cargo from the time of its embarkation
CEBU - Php 100,000 until it is unloaded either by the inherent defect of the cargo or through
force majeure
VESSEL SOLD IN AN AUCTION: b. wages and victuals or provisions of the workers  depends whether
CDO - Php 110,000 the vessel is chartered on a fixed voyage or a monthly charter
- During quarantine, wages and victuals are only Particular Averages
APPLYING RULE: CEBU  ILOILO MANILA a. Damages inflicted upon the vessel or cargo by reason of
impact or collision with another if it is accidental and inevitable
b. Damages suffered by the cargo through the fault or
Loan Php 70M negligence of the captain of the vessel, the owner of cargo bears loss
Actual Value Php 50M without prejudice in filing a case against the owner of the vessel
Then Php 50M shall be a valid loan but the Php20M will be converted into a simple loan EXAMPLE:
Ex: American corporation loaded equipment and agricultural machineries on a German
vessel for Russia but during the voyage, a war brought out in Russia and Germany, so the
Due to Fraud acquired a high loan than the actual amount of the goods secured vessel decided to go to Philippine port to seek refuge. Who would bear the expenses
while in the Phils? General or Particular?
- Particular only, the risk is not common (because of war, and so safety to the
vessel only and not the cargo because the latter is a legal material, therefore,
Transpo Lecture - Average and Collision (February 4, 2011)
owner of vessel shall incur loss)
AVERAGE
II. General or Gross Average- Art 811: expenses or losses deliberately incurred
- Expenses and damages of the vessel or to the cargo (ex. Extraordinary,
for the purpose of saving the vessel or cargo or both from real marine risk;
accidental expenses, loss or deterioration)
not accidental
- Who will shoulder loss in damages and expenses? Identify what kind of average
NOTES ON GENERAL & PARTICULAR
first!
- if monthly then wages and victuals of the crew for the reason that the vessel
- GR: nothing more than expenses and damages
was detained, then General Average
- EXP: Art. 806  technical meanings:
- if fixed voyage charter, only Particular Average
1. Average is all extraordinary and accidental expenses incurred during the
Magsaysay case: SC gave requisites of General Average (TAKE NOTE AND
voyage for the preservation of the vessel, cargo or both
MEMORIZE)
2. Average refers to damages and deterioration suffered by the vessel from the
a. There must be a common risk which is certain and imminent
time it is put in sea until it arrives at the port of destination and also those
b. Part of the vessel or cargo or both is sacrificed deliberately
Transportation Law – Atty Palabrica (FINAL REVIEWER)
c. The sacrifice was successful
d. The expenses or damages should be incurred or inflicted after taking
proper judicial steps; captain cannot do it discriminately
i. There must be an assembly of saving made with the captain
ii. Coming out with a resolution
iii. Resolution and minutes be entered in a log book stating
reasons or basis of action or vote; although majority would
not vote for the jettisoning of the cargoes, the captain has the
last say or decision, but he would be accountable to the cargo
owners
iv. Objects to be jettisoned should be identified in the log book
and the injuries if kept on board
v. Within 24 hours upon arrival at the first port, the captain
shall deliver a copy of the minutes to the judicial authority
- The captains vote still prevail over the others
NO DELIBERATE INTENT TO THROW = Not General Average
 if the cargo accidentally fell, vessel benefited because of weight loss which
stabilized the same during the storm (incidental only), still no General Average
because no deliberate sacrifice to save V or C or both
 despite the cargo being jettisoned, the rest of the cargo still was destroyed, no
General Average because sacrifice was not successful
 If vessel was saved because the cargos were jettisoned, voyage continued and
another accident happened, saved cargoes were exposed again to marine risk
and was also destroyed, but those destroyed cargoes were salvaged or saved
because of previous jettisoning, owner of jettisoned cargo asked for contribution
which is proper. How much is the basis of contribution? – the cost of the cargo
after it was salvaged less the salvage expenses
JETTISON – throwing out of cargoes
 you cannot jettison a cargo because of hearsay or speculative, there should be
clear and imminent risk
 Who directs the jettison? Captain
 Hierarchy of Jettisoning Cargoes (first to last)
a. heavy, less valued cargoes which impels the maneuvering of the vessel
b. cargoes which deloads the upper deck, always beginning with the biggest
weight and smallest value
Ex. On a fair weather, vessel was stranded, crew needed to do something to keep it afloat,
incurred expenses or averages to keep afloat. Is it a General Average? –No. Particular
Average only because there was no common peril  the weather was good. It only
benefits the vessel and not the cargo. Only personal obligation on the part of the owner to
continue the voyage.
Dugie & Mela (2011) , Diato & Cagampan (updates)
 Usually, General Average happens during the voyage but it also happens in the
port.
Art. 817 or 818: when there are lots of vessels and a vessel caught fire then it was made
to sink in order to save the others and it did together with her cargoes, is it considered
General Average? –Yes. Because it was deliberately made to save the other vessels and
their cargoes
 When the vessel was close to the port, and because it is shallow, some of the
cargoes need to be unloaded to barges in preparation of a coming storm, in
doing that there are expenses and there is a risk that those you unloaded would
suffer from loss or deterioration. General Average? –Yes. It is for the benefit of
everybody. Vessel was saved, and so cargoes were saved because of jettisoning
the same
COLLISION
- an impact or sudden contact between the moving vessels, or one moving
and another in stationary
 applies only to maritime vessels  fishing boats are not maritime vessels, not
covered here
 RULE: if in collision, a vessel is at fault and the other is not, and it is due to the
negligence or want of skill of the captain, who will be liable for damages?
-Owner of the vessel at fault
 If both vessels are at fault  each one will bear its own loss but as far as the
cargoes are concerned, they are solidarily liable (plaintiff may file another for
the whole amount of loss, and such person may ask for reimbursment)  owner
of cargoes may claim from any of the vessels
 If the liability is not clear as to who is negligent  same rule as when both are
at fault
 Vessel A has proximate negligence and Vessel B has contributory negligence
only, who is liable? – same rule when both are at fault because the proximate
principle does not apply to maritime collision, it only applies in ordinary
collision
 What if Vessel A has the last clear chance to avoid the accident but it did not
avail the same, liable? – No. The principle of last clear chance is not applicable
in maritime collision, considered as though both vessels are at fault
 If it is caused by force majeure  each owner of the vessels will bear its own
loss, same rule as to the owners of cargoes
 Zone of Time Collision (law governing)
a. Zone 1- all the time up to the time when the risk starts
b. Zone 2- when the risk starts up to the time the risk is particularly certain to
happen
c. Zone 3- when collision is certain up to the time the collision happened
Transportation Law – Atty Palabrica (FINAL REVIEWER)
- Only in Zone 3, the vessel was about to collide and it is inevitable that they
have to collide, the privileged vessel swerved to the right but there was
another vessel on its right and so it also swerved. Who is liable? – the one
who caused the privileged vessel to cause such error or swerving (“error in
extremis”)
- In Zone 1 and 2, the one who made an error should be the one liable
 In Manila, the vessel arrives to port, captain would delegate the anchoring and
positioning to a pilot because he is more eligible in maneuvering big vessels
 If accident happens during the maneuvering of the pilot, is captain still liable? –
Yes. But captain has recourse against the pilot. Because the captain is still there
to ensure that maneuvering is done properly
 GR: Protest is always needed in maritime collision. No damages without protest.
Given within 24 hours at the place of collision or at the port of destination.
(condition precedent)
 Other instances wherein Protests are needed before filing for reconveyance:
needed only in maritime vessels
a. arrival and distress
b. shipwreck
c. collision
d. when the vessel has gone through a hurricane
 contributory negligence – NOT APPLICABLE – both are still at fault
 EXP: Case: Ferry carrying passengers to Iloilo. There is a small vessel carrying
passengers to the Ferry. Due to the fault of the one handling the small vessel, it
went near the propeller of the ferry and so it sunk and one of the passengers was
severely injured. They filed a case against the vessel but the latter argued that
case would not prosper because there was no protest.  SC ruled that protest is
not needed when there is injuries to persons or passengers and what was
involved is not a maritime vessel since it is only a small vessel
- Other EXPs:
a. the one involved (cargo) is not on board the vessel
b. the person involved is not in the capacity to make the protest (applicable
also in the said case because the victim was in the hospital for 6 months)
c. the means used is not a maritime vessel
TRANSPO LECTURE: February 18
Arrival under stress and Shipwreck
If the common carrier (cc) is bound to travel, the route stipulated shall not be
violated. Otherwise, there will be deviation. If there is deviation, cc will be liable even if must comply
loss or damage was due to a fortuitous event. It is the same thing with delay.
In arrival under stress, vessel does not reach its destination. It anchors to the
nearest port or most convenient port. This is not considered deviation.
Dugie & Mela (2011) , Diato & Cagampan (updates)
Valid reasons for Arrival under stress
1. Well founded fear of seizure by priviteer or pirates
2. Accident at sea disabling the vessel to continue voyage
If it is an arrival under stress, CC will not be liable for the damages suffered by
the cargo/ vessel. If it is not a legitimate arrival under stress, ship owner will suffer the
damage as to the vessel; and cargo owner as to the cargo.
Even the presence of valid reasons will not automatically mean an arrival under
stress because there are formalities that must be observed.
Steps to be taken to determine the propriety of arrival under stress: (MEMORIZE)
1. Determination must be made by the Captain
2. Summon all officers and those who have interest over the vessel; but the latter
have no voting rights
3. Deliberation and objections
4. In case there will be disagreements, decision of the captain will still prevail
Instances when arrival under stress is not valid:
1. If the lack of provision is caused by failure of the captain to
observe the usage and the customs of the particular place, and the distance of the
voyage.
2. No well-founded fear of seizure by pirates and priviteer
3. Vessel is defective caused by the fact that it was not maintained
nor repaired prior to the voyage.
Article 822: The scenario is that there is a need to repair the vessel but the cargo is
already loaded. The cargo should be unloaded from the vessel. Who will shoulder the
expenses?
 The owner of the vessel if the purpose is to preserve the vessel.
 If the purpose is to protect the cargo=the owner of the cargo.
 If the reason is for both= both of them proportionally
Article 823: Custody of the cargo after temporarily unloaded is still under the captain,
which makes him liable in case of damages or loss. (EXCEPTION: if due to force
majeure)
If the cargo was already damaged (partly or wholly), the captain has to apply in
the proper judicial authority for the sale of the cargo. In order to effect the sale, captain
with certain formalities such as publishing, acquiring consent from persons
who have interests over the cargoes.
The captain shall be responsible for delay. If the cause of arrival under stress has
ceased, he shall continue with the voyage. If he does not continue, then there is delay.
Transportation Law – Atty Palabrica (FINAL REVIEWER)
What should the captain do after the “reasons” for AUS ceases to exists
- After the fear already ceases the captain shall decide after following the
steps (steps…determine the propriety…)
- Then he shall continue the voyage. Upon delay the captain shall be liable
(823)
Shipwreck
Injuries or loss suffered by the vessel because of the swallowing by the waves,
or grounding or running an object in the sea, rendering it incapable for navigation.
Who will shoulder the damages?
1. Ship owner as to the vessel;
2. Cargo owner as to the cargo
- assuming that there was no malice, negligence, lack of foresight, or lack of
skill on the part of the captain. Otherwise, indemnity may be demanded
from him.
Captain will be personally liable if:
1. there is malice, negligence, lack of foresight, lack of skill
the vessel that was put to sea was insufficiently repaired.
Dugie & Mela (2011) , Diato & Cagampan (updates)
- Contract or service which one person renders to the owner of the ship or
goods, that by his own labor it preserves the goods or ship, which the owner
or those entrusted with the care of them either abandon, or during distress at
sea, were not able to protect them.
- Exception to DEVIATION
When is salvage necessary? If there is a derelict-- cargo or vessel has been abandoned
by the captain and the crew, without intention of recovering the same or when safety is
already beyond their control. If there is till intention to recover, it is not considered a
derelict.
- It can be a subject to salvage if it is a derelict
- Derelict: abandonment + no intent to recover
- NOTE: intention to recover must be from the beginning
- Example: If the crew abandoned the ship and had originally not intent to
recover but later on when they arrive on the shore they saw useful items to
help in salvaging. Thus they decided to return, upon returning they saw
salvager. In this case the ship was already considered derelict since intent
must be from the time the ship circumstance for abandonment happened.
Salvage in this case is valid.
- QUASI DERELICT – vessel is not valid but it is already beyond the power
of the crew to save (ex: vessel is already at the mercy of the sea)

Shipwreck Arrival Under Stress What are the subjects of salvage?

Grounds 1. swallowing of waves 1. Well founded fear of 1. Vessel itself
2. grounding or running an seizure by privateer or 2. Jettisoned
object in the sea (marine pirates 3. Goods floating at the sea
perils) 2. Accident at sea disabling 4. Laigon- goods attached to the buoy
the vessel to continue
voyage Jetsam and Flotsam – unless abandoned still the property of their original owners
Circumstance – Ship is stranded thus not Ship is navigable but due 1. Jetsam – goods that were thrown off a ship which was in danger
vessel navigable to circumstances it 2. Flotsam – are goods that floated off the ship while the ship was in danger or
limits the movement of when it sank
the ship 3. Ligan – goods left at sea on the wreck or tied to a buoy so that they can be
Liability Shouldered by the GR: Shouldered by recovered later
individual owners owner/agent (expenses
for arrival NOT for What is the nature of the possession of the finder of derelict?
damages) - The finder has possession but not ownership. Even the owner may take
back the derelict without paying the expenses of salvage.
- Finder has the right to keep the derelict until the owner posts a bond.
(salvage lien)
TRANSPO LECTURE: February 25 SALVAGE LAW and COGSA
Elements of valid salvage:
1. marine peril
Salvage Law
2. service is voluntary
3. successful in whole or in part
Salvage- Saving the vessel and saving the cargo
Transportation Law – Atty Palabrica (FINAL REVIEWER) Dugie & Mela (2011) , Diato & Cagampan (updates)
4. vessel is abandoned Obligation of collector of custom
1. safeguard and inventory of goods
Liability: Valid and Invalid Salvage 2. subject the goods to public auction if the conservation is prejudicial to the owner
Valid Salvage Invalid Salvage and when no objection was made.
Common Carrier – not liable for Liability of damages a. advertisement (30 days after salvage)
damages (if they followed the formalities 3. vessel – shipowner
stated in the law) 4. cargo - cargo owner People who cannot validly conduct salvage
Expenses for the Salvage – shipowner / Sued for damages (captain/agent) 1. Crew of the vessel shipwrecked or salvaged. (he has a duty to take care and
shipagent – receive compensation by save the cargo)
way of reward 2. If there was an objection by the captain, the person still insists.
3. If the person who salvaged did not deposit it to the collector of customs.
Examples:
 Vessel is floating in distress, beyond the control of the crew, then one swimmer How much salvaged to be given will be based on:
a member of the crew, was able to save cargoes. Is he entitled to reward? No, 1. Labor
2. Competence and Skill
because it has to be done voluntarily. He is a crew, and it is part of his duty to
save the cargo. 3. Value of the materials being used to salvaged
4. Risk being assumed
5. Value of the goods being salvaged
 Actual case: M/V Alfonso owned by William Lines was giving distress signals.
The engine stopped causing the vessel to drift away. The weather was perfectly
fine. Capt. Barios, captain of another vessel M/V Henry, responded to the  Salvage reward must not exceed 50% of the value of the goods salvaged.
signals and towed the vessel to a safer place and the vessel was saved. William
Lines waived renumeration. Capt. Barios filed a case for a salvage reward. Is he Things that have to be paid by the owner:
entitled to a reward? Court said that there is no marine peril. (Barrios vs Go  Expenses for custody
Thong)  Advertisement
 auction sale
 He, who shall save merchandise at sea, has the obligation to deliver it to the  taxes over the goods when it was brought to the country
collector of custom or treasurer or mayor. Otherwise, he can be held criminally  expenses for salvage
liable or will not be rewarded salvage fee.  salvage reward
Contract of towage vs. salvage
Salvage Towage If the one who salvaged sought for the help of another vessel but the shipowner was
Towing in order to that it may be Towing may be an act of salvaging not there, then 50% of the salvage fee will go to the owner, 25% will go to the captain,
considered salvage unless all requisites another 25% will go to the crew of the vessel. (Sec 13 Act No 2616 Salvage Law)
of salvage concur
No claim 3 months after publication by the authorities of salvage report
all the crew of the vessel who undertook In towage, they will not a receive a
- the things saved shall be sold at a public auction, proceeds of which shall be
the salvage will receive a reward reward, only their salaries (fees belong to
deposited in the National Treasury after deducting the expenses and the
the owner of the tugboat)
proper reward to which the salvor is entitled.
Requires success, otherwise no payment Success is not required
Vessel must be involved in an accident Vessel need not be involved in an
No claim after 3 years of the deposit
accident
- 50/50 - half of the proceeds will go to the finder and half will go to the
government.
How to determine the bond to be posted?
Customs or the judge of the RTC where the goods where recovered will be the
one to determine the amount of bond.
COGSA Carriage of Goods by Sea Act (enacted by US Govt. Act. 521, 1936)
Transportation Law – Atty Palabrica (FINAL REVIEWER)
Primary Law that will govern transportation by sea is the Civil Code. Why Civil
Code? Latest law will be the governing law.
COGSA is suppletory. In international shipment, COGSA could be the primary
law, if it was stipulated by the parties. Note that it does not apply to coastwise shipment
even if it was stipulated.
Responsibilities and liabilities of parties
Dugie & Mela (2011) , Diato & Cagampan (updates)
 A case has been filed in December 18, 1972. Claim
for damages was filed in May 4, 1973. Does the
action prescribe if there was a filing of extrajudicial
demand in May 4, 1972? No. The moment
extrajudicial demand was filed, it interrupts the
prescriptive period. Prescriptive period will then
again start on May 4, 1972 and not December 18,
1972.

 Implied warranty of the ship’s seaworthiness
o When the cargo was loaded to the vessel, it is presumed that it is
seaworthy. The owner of cargo does not have the obligation to check or
validate its seaworthiness.
 Recovery of loss or damage
o There should be notice of damage. Common carrier has to file the
notice of damage immediately upon the receipt of goods if the damage
is apparent. If it is not apparent, it should be filed within 3 days.
 Effect if there is no notice of damage: presumption (ONLY)
that the goods delivered are in the same condition as it
appeared in the bill of lading. Thus, a case of recovery of loss
or recovery filed beyond three days will still prosper.
 Supposing A insured his cargo to B insurance
company. Cargo arrived in 2009 in the Philippines
and there were damages. A filed a demand letter to B,
but the latter did not respond to the demand. So three
years after, he filed for a case against B. B invokes
prescription of action. Is B correct? NO, B is not
correct because A’s claim is against an insurance
company and not the vessel. According to the
Insurance Code, the prescriptive period for money
claims is 10 years.

 Supposing in the bill of lading it was stated that

primary law is COGSA, and it was stipulated that no
case will prosper unless the notice is filed within 30
days. Is it valid? No… because under COGSA,
notice shall only be filed within 3 days.

 What if it was stipulated that before the case must

prosper notice within 3 days must be filed. Is it
valid? No… because notice is not a prerequisite to be
able to file a case.

 Case for recovery of loss or damage AGAINST THE

VESSEL shall be filed within one year from delivery. Except
in cases of loss or damage because of misdelivery and
conversion, which under 1144 of the Civil Code, the
prescriptive period is 10 years.

 Filing within one year period may be extended if

there is agreement between the parties.
Transportation Law – Atty Palabrica (FINAL REVIEWER)
TRANSPO: March 11 FINAL REVIEW
Parties:
 Shipper vs Passenger
 Common Carrier vs Consignee
Laws governing conduct of transportation:
1. In coastwise shipping: Civil Law, Code of Commerce, Special Laws
2. International Shipping: Law of the particular country where the goods are to be
delivered
COGSA: Carriage of Goods by Sea Act
From abroad to the Phil- civil code; code of commerce; COGSA (primary if
stipulated)
COGSA- General Rule: Only for international shipment (not for coastwise)
Exception: when there is a stipulated transshipment
Ex: from San Francisco-Cebu (There was a stipulation that COGSA will apply)-
then the vessel ducted in Manila. Then COGSA will still apply.
Note: transshipment is not valid unless stipulated.
3. Land transportation: Civil Code and code of commerce
Dugie & Mela (2011) , Diato & Cagampan (updates)
4. Air transportation: Civil Code and Code of commerce (local); or Warsaw Convention
(international) especially when the parties are highly contracting parties. If the flight is
from a country that the parties are not highly contracting…Warsaw convention will not
apply.
Obligations of common carrier
A. General rule: accept goods and passenger without discrimination
Exception: 1. If the goods are contraband.
2.livestock exposed to diseases
3.subject to capture, accepting the passenger or goods will result to
overloading. (pls refer to the civil code)
B. Deliver the goods/ Transport the passengers
Where? in the place stipulated in the bill of lading. When? Reasonable time. To whom?
Authorized person, consignee. How? Delivery must be done without delay.
C. Exercise extraordinary diligence
Sea transportation- the vessel must be seaworthy (fit, properly manned,
adequately equipped) cargo-worthy.
In transportation of passengers, common carrier must observe safety as far as
human care and foresight can provide.
Coverage of observance of extraordinary diligence:
It starts from the time the goods are unconditionally placed in the possession of
the common carrier and accepted by the same; and delivered actually or constructively to
the consignee or authorized person. (Notice of delivery is important)
General Rule: Even if the goods are temporarily unloaded, extraordinary
diligence must still be observed. Exception: stoppage in transitu (right of the creditor to
stop the transportation).
Defenses of the common carrier:
1. Article 1734 of the Civil Code
For Force Majeure to be considered to be a valid defense it must be the
proximate cause. Common carrier must have exercised due diligence before, during, and
after. Also, that common carrier did not incur delay and overloading.
2.Defective packing of cargo
The moment the common carrier accepts the defective packing of the cargo, it
already assumes liability. Except when it has done something to prevent or forestall
damages.
Transportation Law – Atty Palabrica (FINAL REVIEWER) Dugie & Mela (2011) , Diato & Cagampan (updates)

Special Contracts Shipwreck

Charter party - Without malice of the cc, expenses shall be borne by the ship owner. There
should be a protest.
1.Bare boat/ demise -Vessel, common carrier, cargo owner shall bear the loss. Captain shall be liable
-provide for the crew, including their salaries if there is malice, negligence, and the vessel was insufficiently repaired.
-responsible to pay damages
Salvage - saving the cargo
2. Contract of Afreightment Requisites:
time charter and voyage charter 1. Marine risk
2. Voluntary
3. Successful
4. Abandoned or beyond the control
Liabilities of common carrier
When? If the shipment is derilict OR If the vessel is already abandoned (totally).
1. Transportation of cargoes
Stipulation as to the liability is valid: must be in writing, must be reasonable, Average
must be for a consideration other than the freight.
General- inures to the benefit of everyone. All who benefited must share to pay the
2. Transportation of passengers expenses.
Generally, limiting the liability is void except for gratuitous passenger. Special/Particular- expense inures only to the benefit of a particular person.
Exception to the exception: if there is negligence but not for gross negligence or willful
act.
COGSA
*If the person is not a passenger…then CC is not liable. Basis: contract of carriage. -Applies to International voyage.
-Applies to local if there is stipulated transshipment.
Obligation to conduct inspection -Implied Warranty

1. Land: visible only to the naked eye unless there is imminent danger or strong suspicion * If the damage is apparent, notice of damage must be filed. Not apparent=notice of
2. Airline: it is a must damage must be filed within 3 days.

Law on bottomry (vessel) and respondentia (cargo) * Failure to file within 3 days does not bar one to file a case. The purpose of the notice is
-A loan, payment of which is subject to marine risk to show that there was damage. If it was not filed, then there is a presumption that the
-If the cargo or vessel is safe then the debtor is obligated to pay. cargo was received in the same condition as it was loaded.
-If there is no stipulation then it is presumed that it is a roundtrip risk.
* Loan more than the value of the cargo or vessel through fraud is still valid but only up * Must be filed within 1 year even without notice of damage in case of Common Carrier.
to the amount of the cargo or vessel. If filing for recovery for damage against insurance company, the prescription period is 10
years.
Order of payment
-Those transactions made during the voyage has preference than those made
before the boat was put into voyage.
-Inverse preference.
-Those loans taken in the same place and time during the shipwreck, the debtors
will share payment pro rata.