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He must undertake to carry good of the kind to which his business is

Contract of Transportation person obligates himself to transport persons or 3. He must undertake to carry by the method by which his business is
property from one place to another for a consideration. conducted and over his established roads.
4. Transportation must be for hire.
1. CARRIAGE OF PASSENGERS Characteristics of Common carriers (CC):
no distinction between one whose principal business is the
Parties: common carrier & passenger (carried gratuitously or not) transportation of persons/goods and one who does such as an
Passenger one who travels in a public conveyance by virtue of contract, ancillary business (sideline)
express or implied, with the carrier as to the payment of fare or that which is no distinction between regular or scheduled basis and one offering
accepted as an equivalent thereof such service on an occasional, episodic or unscheduled business
still a CC even if services offered to a limited clientele (between the
Perfection: general public and a narrow segment of the general population)
Still considered a CC even if he did not secure a Certificate of Public
2 types of contracts of carriage of PASSENGERS: Convenience
>contract to carry (agreement to carry the passenger at some future date) No distinction as to the means of transporting, as long as it is by
consensual contract and perfected by mere consent land, water or air
The Civil Code does not provide that the transportation should be by
* AIRCRAFT perfected even without issuance of ticket as long as there was motor vehicle
already meeting of minds with respect to the subject matter and consideration Still a CC even if he has no fixed and publicly know route, maintains
no terminals, and issues no tickets
>Contract of Carriage pipeline operators are CCs not necessarily motor vehicles (Case:
real contract; not until the facilities of the carrier are actually used can the First Philippine Industrial Corp. vs. CA)
carrier be said to have assumed the obligation of the carrier; perfected by
actual use. Case: Jose Mendoza vs. Philippine Airlines Inc
- The test of whether one is a common carrier by air is whether he
* AIRCRAFT perfected if it was established that the passenger had checked in holds out that he will carry for hire, so long as he has room, goods of
at the departure counter, passed through customs and immigration, boarded everyone bringing goods to him for carriage, not whether he is
the shuttle bus and proceeded to the ramp of the aircraft and baggage already carrying as a public employment or whether he carries to a fixed
loaded to the aircraft. place

* Public Utility Bus or Jeepneys or Street Cars once it stops it is in effect CHARTER PARTY:
making a continuous offer to riders; perfected when passenger is already - Contract by which an entire ship or some principal part thereof is let
attempting to board the vehicle by the owner to another person for a specified time or use.

* TRAINS perfected when a person: Q: What is the effect of charter party?

a. purchased a ticket/ possess sufficient fare with which to pay for A: It may transform a common carrier into a private carrier. However, it must be
his passage a bareboat or demise charter where the charterer mans the vessel with his own
b. presented himself at the proper place and in a proper manner to people and becomes, in effect, the owner for the voyage or service stipulated
be transported
c. has a bona fide intention to use facilities of the carrier 2 types:

2. CARRIAGE OF GOODS 1. Contract of Affreightment

Parties: shipper & carrier - involves the use of shipping space on vessels leased by
the owner in part or as a whole, to carry goods for
Shipper the person who delivers the goods to the carrier for transportation; another
pays the consideration or on whose behalf payment is made - CC = observe extraordinary diligence; in case of loss,
deterioration or destruction of goods of goods, CCs are
Consignee person to whom the goods are to be delivered. May be the shipper presumed to be at fault or have acted negligently
himself or a third person who is not actually a party to the contract - 2 types
i. Time charter: vessel is leased to the charterer
Perfection: for a fixed period of time
> contract to carry goods consensual ii. Voyage charter: ship is leased for a single
> contract of carriage - act of delivery of goods ( goods are unconditionally voyage
placed in the possession and control of the carrier and upon their receipt by the
carrier for transportation) 2. Charter by demise/ Bareboat Charter
- whole vessel is let to the charterer with a transfer to him
CARRIER: of its entire command and possession and consequent
Common carriers (CC) (1732) control over its navigation including the master and the
persons, corporations, firms or associations engaged in the business crew who are his servants.
of carrying or transporting passengers or goods or both, by land, - charter includes both vessel and crewCC becomes
water, or air, for compensation, offering their services to the public. private carrier (PC) insofar as that particular voyage is
(NOT the means of transportation) concerned
one that holds itself out as ready to engage in the transportation of - if it is already a PC- ordinary diligence in the carriage of
goods for hire as a public employment and not as a casual goods will suffice
occupation. - PC = undertaking is a single transaction, not a part of the
general business or occupation, although involving the
Tests for determining WON a party is a common carrier of goods: carriage of goods for a fee; NO presumption of negligence
1. He must be engaged in the business of carrying goods for others as a applies whosoever alleges damage to or deterioration
public employment, and must hold himself out as ready to engage in of the goods carried has the burden of proving that the
the transportation of goods for persons generally as a business and cause was the negligence of the carrier.
not as a casual occupation.
Distinction between Common Carriers and Private Carriers o Furnish light, and water services and other incidental
COMMON CARRIER PRIVATE CARRIER service in order to undertake its arrastre service
Extraordinary diligence in the Ordinary diligence in the carriage of - Such service is in face, no different from those of a depositary or
vigilance over the goods they carry goods will suffice warehouseman
In case of loss, destruction, or No such presumption applies to
deterioration of goods, they are private carriers, for whosoever alleges Stevedoring
presumed to have been at fault or to damage to or deterioration n of the - involves the loading and unloading of coastwise vessels calling at the
have acted negligently; burden of goods carried has the onus of proving port.
proving otherwise rests on them that the cause was the negligence of >>> Common carriers are public utilities, impressed with public interest and
the carrier concern subject to regulation by the state.
Cannot stipulate that it is exempt May validly enter into such stipulation
from liability for the negligence of its GOVERNING LAWS
agents or employees - read summary of rules on page 40 of book

Factors to be considered whether a carrier is common/private: Article 1766 (Civil Code). In all matters not regulated by this Code, the
Law applicable rights and obligations of common carriers shall be governed by the Code
o Common Civil Code of Commerce and by special laws.
o Private contract
Diligence required NATURE OF BUSINESS
o Common extraordinary diligence - Common Carriers exercise a sort of public office
o Private diligence of a good father of a family - Consequently, common carriers are subject to regulation by the
Burden of proof in relation to negligence State
o Common the carrier
o Private on the party having a claim against the carrier REGISTERED OWNER RULE/REGISTRATION LAWS
- Governed by the Land Transportation and Traffic Code and
Case: Planters Products, Inc. vs. CA administered by the Land Transportation Office
- It is therefore imperative that a public carrier shall remain as such, - The registered owner of a vehicle is liable fro any damage caused by
notwithstanding the charter of the whole or portion of a vessel by the negligent operation of the vehicle although the same was
one or more persons, provided the charter is limited to the ship only, already sold or conveyed to another person at the time of the
as in the case of a time-charter or voyage-charter. It is only when the accident.
charter includes both the vessel and its crew that a common carrier - The registered owner is liable to the injured party subject to his right
becomes private of recourse against the transferee or the buyer
- Applicable in case of lease
True Test of Common Carrier Is the carriage of passengers or goods, provided it - Registered owner not liable if vehicle was taken form him without
has space, for all who opt to avail themselves of its transportation service for a his knowledge and consent.
Q: what is the purpose of such law?
Generally, private carriage is undertaken by spcial agreement and the carrier A: The main aim of motor vehicle registration is to identify the owner so that if
does not hold hiself out to carry goods for the general public any accident happens, or that any damage or injury is caused by the vehicle on
the public highways, responsibility therefor can be fixed on a definite individual
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International the registered owner.
- By definition, a contract of carriage is one whereby a certain person
or association of persons obligate themselves to transport person, KABIT SYSTEM
thing or new from one place to another for a fixed price - The registered owner rule is applicable to people involved on a kabit
- It is obvious from the above definition that respondent is not an system
entity engaged in the business of transporting either passengers or - arrangement whereby a person who has been granted a certificate of
goods and is therefore, neither a private nor a common carrier. Its public convenience allows other persons who own motor vehicles to
covenant with its customers is simply to make travel arrangements operate them under his license, sometimes for a fee or percentage of the
in their behalf. earnings --- contrary to public policy (thus VOID and INEXISTENT)
- It is in this sense that the contract between the parties in this case - parties to the kabit system cannot invoke the same as against each
was an ordinary one for services and not one of carriage; it is thus other either to enforce their illegal agreement or to invoke the same to
not bound under the law to observe extraordinary diligence in the escape liability --- pari delicto rule
performance of its obligation. - having entered into an illegal contract, neither can seek relief from the
courts and each must bear the consequences of his acts
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING - also applicable to aircrafts and vessels basic rule that no person can
operate a common carrier without securing a certificate of public
Towage convenience and necessity.
- A vessel is hired to bring another vessel to another place Case: Dizon vs. Octavio
- e.g. a tugboat may be hired by CC to bring the vessel to a port - the primary factors considered in the granting of a certificate of
(operator of tugboat not CC) public convenience for the business of public transportation is the
- in maritime law: towing for the mere purpose of expediting her financial capacity of the holder of the license, so that liabilities
voyage without reference to any circumstances of danger arising from accidents may be duly compensated
Arrastre - Thus, for the safety of passengers and the public who may have been
- Arrastre operators functions has nothing to do with the trade and wronged and deceived through the baneful kabit system, the
business of navigation nor to the use or operation of vessels registered owner of the vehicle is not allowed to prove that another
- Services are not maritime person has become the owner so that he may be thereby relived of
- Functions of arrastre operator: responsibility
o Receive, handle, care for, and deliver all merchandise
imported and exported, upon or passing over CHAPTER 2
Government-owned wharves and piers in the port OBLIGATIONS OF THE PARTIES
o Record or check all merchandise which may be delivered
to said port ant shipside I. Obligations of the carrier
A. DUTY TO ACCEPT - Where a carrier has made an express contract, the goods must be
- A common carrier granted a certificate of public convenience is duty delivered within a specified time otherwise he is liable for any delay
bound to accept passengers or cargo without any discrimination. (indemnity for damages).
- It is illegal for domestic ship operators to refuse to accept or carry - In the absence of any agreement, goods must be delivered at its
passengers or cargo without just cause. (Section 16, RA 9295) destination within a reasonable time (depending on the attending
circumstances, nature of the goods; expected date of arrival in the BOL
Note: In air transportation, passengers with confirmed tickets who were not may be considered).
allowed to board are provided with denied boarding compensation and priority - In the absence of a special contract, a carrier is NOT an insurer against
boarding rules. delay in transportation of goods
No compensation for refusal if it is because of:
1. government requisition of the space Consequences/Effects of Delay
2. substitution of equipment of lesser capacity when required by - Excusable delays in carriage suspend, but do not generally terminate, the
operational and or safety and/or other causes beyond the control of contract of carriage; when the cause is removed, the master must proceed
the carrier, and with the voyage and make delivery.
3. if arrangements have been made for the passenger to take another - During the detention or delay, vessel continues to be liable as a common
flight in a comparable air transportation which will arrive not later carrier, not a warehouseman, and remains duty bound to exercise
than three hours after the time of flight on which the confirmed extraordinary diligence.
space is held is supposed to arrive. (Civil Aeronautics Board
Economic Regulation) Article 1740 (NCC).If common carrier negligently delays in transporting the
goods, a natural disaster shall not free it from responsibility.
Grounds for Valid Refusal to Accept Goods
- GR: common carriers cannot lawfully decline to accept a particular class Article 1747 (NCC). If common carrier delays , without just cause, in
of goods transporting the goods or changes the stipulated or usual route, the contract
- EXC: it appears that for some sufficient reason the discrimination limiting its liability cannot be availed of in case of the loss, destruction, or
against the traffic in such goods is reasonable and necessary: deterioration of the goods.
i. dangerous objects or substances including dynamites and
other explosives Note: read page 72 of book for other provisions.
ii. goods are unfit for transportation
iii. acceptance would result in overloading (1) Abandonment
iv. contrabands or illegal goods - In case of delay through the fault of the carrier, the consignee may
v. goods injurious to health refuse to accept the goods or may leave the goods in the hands of
vi. goods will be exposed to untoward danger like flood, the carrier. It must be communicated to the carrier in writing.
capture by enemies and the like - This right must be exercised between the time of delay and before
vii. goods like livestock will be exposed to diseases the arrival of the goods at its destination.
viii. strike - The carrier must pay the full value of the goods as if they had been
ix. failure to tender goods on time lost or mislaid.

Case: Fisher v. Yangco Note: If abandonment is not made, indemnification for the losses and damages
- factors in determining reasonable discrimination include: by reason of the delay cannot exceed the current price which the goods would
i. suitability to the vessel for the transportation of such products; have on the day and at the place they are to be delivered.
ii. reasonable possibility of danger or disaster resulting from their
transportation in the form and under the conditions in which they The value of the goods which the carrier must pay in case of loss or
are offered for carriage; and misplacement shall be that what is declared in the bill of lading.
iii. the general nature of the business done by the carrier.
Consignee must not defer the payment of the expenses and transportation
(1) Hazardous and Dangerous Substances charges of the goods otherwise carrier may demand the judicial sale of the
- Carrier not properly equipped to transport dangerous chemicals or goods.
explosives may validly refuse to accept the same for transport.
- Those which are not authorized by the Maritime Industry Authority
to carry such goods may also validly refuse the same for transport.
- There must be a Special Permit to Carry from the MARINA. (accept Case: Magellan Mfg. Marketing Corp. vs. CA
only if the said cargoes are covered by the necessary clearance from - Abandonment may also be made by virtue of stipulation or
appropriate government agencies) agreement between parties

(2) Unfit for Transport (2) Rights of Passengers in Case of Delay

- Carriers may refuse to accept goods that are unfit for transportation - As to the rights and duties of the parties strictly arising out of delay,
- These goods may by nature be unfit for transportation or are unfit the Civil Code is silent. However, the Code of Commerce provides for
because of improper packaging or defect in their containers. such a situation:
- However, carriers may accept the goods and limit its liability by
stipulation. ARTICLE 698. In case a voyage already begun should be interrupted, the
passengers shall be obliged to pay the fare in proportion to the distance
If by reason of well-founded suspicion of falsity in the declaration as to the covered, without right to recover for losses and damages if the interruption is
contents of the package carrier should decide to examine and investigate it in due to fortuitous event of force majeure, but with a right to indemnity if the
the presence of witnesses, with the shipper and consignee in attendance. If interruption should have been caused by the captain exclusively. If the
declaration of shipper is true, expenses occasioned by the examination and of interruption should be caused by the disability of the vessel and a passenger
repacking the packages shall be for the account of the carrier should agree to await the repairs, he may not be required to pay any increased
Even if the cause of the loss, destruction or deterioration of the goods should price of passage, but his living expenses during the stay shall be for his own
be caused by the character of the goods, or the faulty nature of the packing or account.
of the containers, the common carrier must exercise due diligence to forestall Note: the carrier is liable for any loss or damage, including any pecuniary loss or
or lessen the loss. loss of profit, which the passenger may have suffered by reason thereof.


Time of Delivery
In case the vessel is not able to depart on time and the delay is unreasonable, custody and control of the carrier for the purpose of their
the passenger may opt to have his/her ticket immediately refunded without any immediate transportation and the carrier has accepted them
refund service fee from the authorized issuing/ticketing office.
ARTICLE 1736. The extraordinary responsibility of the common carrier lasts
Where and to Whom Delivered from the time the goods are unconditionally placed in the possession of, and
a. Place Goods should be delivered to the consignee in the place received by the carrier for transportation until the same are delivered, actually
agreed upon by the parties. or constructively, by the carrier to the consignee or to the person who has a
right to receive them
The shipper may change the consignment of the goods provided that at the
time of ordering the change of the consignee the bill of lading signed by the ARTICLE 1737. The common carriers duty to observe extraordinary diligence
carrier be returned to him, in exchange for another wherein the novation of the over the goods remains in full force and effect even when they are temporarily
contract appears. The expenses occasioned by the change shall be for the unloaded or stored in transit, unless the shipper or owner has made use of the
account of the shipper. right of stoppage in transitu. (common carrier becomes a warehouseman
ordinary diligence)
b. Consignee Delivery must generally be made to the owner or
consignee or to someone lawfully authorized by him to receive the ARTICLE 1738. The extraordinary liability of the common carrier continues to be
goods for his account or to the holder of the negotiable instrument. operative even during the time the goods are stored in a warehouse of the
carrier at the place if destination, until the consignee has been advised of the
c. Delay to Transport Passengers A carrier is duty bound to transport arrival of the goods and has had reasonable opportunity thereafter to remove
the passenger with reasonable dispatch them or otherwise dispose of them.

Effects of delayed and unfinished voyage in inter-island vessels: (2) Carriage of Passengers
vessel cannot continue or complete her voyage for any cause
carrier is under obligation to transport the passenger to his/her By trains the extraordinary responsibility of common carrier commences the
destination at the expense of the carrier including free meals and moment the person who purchases the ticket (or a token or card) from the
lodging before the passenger is transported to his/her destination; carrier presents himself at the proper place and in a proper manner to be
the passenger may opt to have his/her ticket refunded in full if the transported with a bona fide intent to ride the coach.
cause of the unfinished voyage is due to the negligence of the carrier
or to an amount that will suffice to defray transportation cost at the * Mere purchase of a ticket does not of itself create the relation of carrier and
shortest possible route if the cause of the unfinished voyage is passenger but it is an element in the inception of the relation.
fortuitous event.
vessel is delayed in arrival at the port of destination free meals * A proper person who enters upon the carriers premises (station, ticketing
during mealtime office, or waiting room) with the intention of becoming a passenger will
delay in departure at the point of origin due to carriers negligence; ordinarily be viewed as assuming the status of a passenger.
fortuitous event - free meals during mealtime; carrier not obliged to
serve free meals * One who goes to the railroad station to inquire as to the possibility of securing
carrier is not obliged to inform passengers of sailing schedule of the passage on a freight train, which he knows, by the rules of the company, is not
vessel allowed to carry passengers, and to secure passage thereon if possible, is not
entitled to the rights of a passenger but is a mere trespasser.
- Goods should be delivered in the same condition that they were * One who rides upon any part of the vehicle or conveyance which is unsuitable
received and to transport the passengers without encountering any or dangerous, or which he knows is not intended for passengers, is not
harm or loss. presumed to be a passenger.
- Read page 79-80 for provisions
* One who secures free passage by fraud or stealth is precluded from recovery
ARTICLE 1755. A common carrier is bound to carry the passengers safely as far for injuries sustained through the negligence of the carrier, for he has not
as human care and foresight can provide, using the utmost diligence of very assumed the status of a passenger.
cautious persons, with a due regard for all the circumstances. (Civil Code)
* A person riding on a freight train, on a drivers pass or similar arrangement, to
- Presumption of Negligence look after livestock being transported and as incident to such transportation is,
- Two conditions for the birth of the presumption of negligence: generally regarded as a passenger for hire.
1. there exists a contract between the passenger or the shipper and the
common carrier Motor vehicles like jeepneys and buses are duty bound to stop their
2. the loss, deterioration, injury or death took place during the conveyances for a reasonable length of time in order to afford passengers an
existence of the contract opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up or jerking of their
Doctrine of Proximate Cause there is presumption of negligence conveyances while they do so. Once a public utility bus or jeepney stops, it is
If the goods are lost, destroyed or deteriorated, common carriers are presumed making a continuous offer to bus riders.
to have acted negligently, unless they prove that they observed extraordinary
diligence. In case of death of or injuries to passengers, common carriers are Case: Dangwa Transportation Company vs. CA
presumed to have been at fault or to have acted negligently, unless they prove - When the bus is not in motion there is no necessity for a person who
that they observed extraordinary diligence. wants to ride the same to signal his intention to board. A public utility
bus, once it stops, is in effect making a continuous offer to bus riders
- The premature acceleration of the bus in this case was a breach of such

- Duration of Duty: Case: La Mallorca vs. CA

- Duty to exercise utmost diligence with respect to passengers will not
(1) Carriage of Goods ordinarily terminate until the passenger has, after reaching his
- Due diligence should be exercised the moment the goods are destination, safely alighted from the carriers conveyance or had a
delivered to the carrier. reasonable opportunity to leave the carriers premises. And what is
- Goods are deemed delivered to the carrier when the goods are reasonable time or a reasonable delay within this rule is to be
ready for and have been placed in the exclusive possession, determined from all the circumstances.
Case: Aboitiz Shipping Corporation vs. CA - The explosion could have been caused by too much air pressure injected
- Same ruling with La Mallorca vs. CA into the tires and the fact that the jeepney was overloaded and speeding
- That reasonableness of time should be made to depend on the at the time of the accident.
attending circumstances of the case, such as the kind of common
carrier, the nature of its business, the customs of the place, and so OTHER INVALID DEFENSES
forth, and therefore precludes a consideration of the time element per 1. Damage to cargo due to EXPLOSION of another cargo not
se without taking into account such other factors attributable to peril of the seas or accidents of navigation.
- The primary factor to be considered is the existence of a reasonable 2. Damage by WORMS and RATS resulting to damage to cargoes
cause as will justify the presence of the victim on or near the cant be cited as an excuse by the carrier.
petitioners vessel. We believe there exists such a justifiable cause 3. Damage by WATER through a port which had been left open or
(baggage were left) insufficiently fastened on sailing.
4. Carrier cannot escape liabilities to third persons if damage was
DEFENSES OF COMMON CARRIERS caused by BARRATRY where the master or crew of the ship
committed unlawful acts contrary to their duties includes theft and
Article 1734 (No other defense may be raised: exclusive or closed list) fraudulently running the ship ashore.
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity
2. Act of the public enemy in war, whether international or civil Cases:
3. Act or omission of the shipper or owner of the goods 1. Problem: A carrier bus on its way to its destination encountered an
4. The character of the goods or defects in the packing or in the containers engine failure, thus, it has to be repaired for 2 days. And while in the
5. Order or act of competent public authority repair shop, a typhoon came resulting to the spoilage of cargoes.
6. Exercise of extraordinary diligence Answer: A typhoon although a natural disaster, is not a valid defense
if it is shown that it was not the only cause of the loss. Especially
Fortuitous Event to be a valid defense must be established to be the when the facts indicate that the typhoon was foreseeable and could
proximate cause of the loss have been detected through the exercise of reasonable care.
Cargoes should have been secured while the bus was being repaired
Note: Since common carrier is presumed is to be negligent, it has been for 2 days.
contract of carriage. The injured passenger or owner of goods need not prove 2. Problem: A passenger told the driver that he has valuable items in
causation to establish his case. his bag which was placed under his feet and he asked the driver (to
which he is seated near) to watch for the bag while he is asleep.
The absence of causal connection is only a matter of defense.
(a) There have been incidents of throwing of stones at passing
Requisites of Fortuitous Event: vehicles in the North Express Way. While the bus was
1. The cause of the unforeseen and the unexpected occurrence, or of the traversing the super highway, a stone hurled from the overpass
failure of the debtor to comply with his obligation, must be and hit the passenger resulting to injuries. Can the passenger
independent of the human will hold the bus liable for damages?
2. It must be impossible to foresee the event which constitutes the caso Answer: Yes. The incident was foreseeable due the prior
fortuito, or if it can be foreseen, it must be impossible to avoid incidents of stone hurling. The bus should have exercised
3. The occurrence must be such as to render it impossible for the debtor utmost diligence and employed adequate precautionary
to fulfill his obligation in a normal manner measures to secure safety of passengers since the incident was
4. The obligor (debtor) must be free from any participation in or the foreseeable. .
aggravation of the injury resulting to the creditor HOWEVER, if the stone throwing was entirely unforeseeable
and the carrier exercised the utmost diligence, then, the bus
In order for the common carrier to be exempted from responsibility, the natural cant be held liable.
disaster must have been the proximate and only cause of the loss. However, the Nonetheless, the burden of proof is on the carrier to prove
common carrier must exercise due diligence to prevent or minimize loss such exercise of diligence. It is up to the carrier to overthrow
before, during and after the occurrence of flood, storm or other natural disaster the presumption of negligence.
in order that the common carrier may be exempted from liability for the loss, If the passenger decides to file a case, al the passenger has to
destruction, or deterioration of the goods. do is to prove that she was a passenger of the bus and that she
suffered injuries while on board the bus.
Fire not considered as a natural calamity or disaster
(b) Supposing that there were armed men who staged a hold-up
Fire caused by lightning a natural calamity while the bus was speeding along the highway. One of them
stole the passengers bag and wallet while pointing a gun him.
Hijacking does not fall under the categories of exempting causes; the common Is the bus liable?
carrier is presumed to be at fault or to have acted negligently unless there is a Answer: No. Hand-carried luggages are governed by necessary
proof of extraordinary diligence on its part deposit. Besides, theft with use of arms or through irresistible
force is a force majeure which exempts carriers from liability.
Mechanical defects damage or injury resulting from mechanical defects is not
a damage or injury that was caused by fortuitous event; carrier is liable to its 3. Hi-jacking cannot exculpate the carrier from liability if it is shown
passengers for damages caused by mechanical defects of the conveyance that the employees of the carrier were not overwhelmed by the
(breakage of a faulty drag-link spring, fracture of the vehicles right steering hijackers and that there was no showing of irresistible force. Since,
knuckle, defective breaks) there were 4 employers while there were only 2 hijackers and only
- One of the reason why carrier is made liable despite the presence one of them was armed with bladed weapon.
of mechanical defect is the absence of privity between the ON THE OTHER HAND, a hijacking by 3 armed men is an event which
passenger and the manufacturer is considered to be beyond the control of the carrier. Thus, the
carrier may be adjudged from liability if it can be proven that the
Case: Juntilla v. Fontanar hijacking was unforeseeable.
- Tire-blowouts was not considered as fortuitous event although it was
alleged that the tires were in good condition; no evidence was presented Case: Philippine American General Insurance Co. vs. MCG
to show that the evidence were due to adverse road conditions the - Even in cases where a natural disaster is the proximate and only
carrier must prove all angles. cause of the loss, a common carrier is still required to exercise due
diligence to prevent or minimize loss before, during and after the
occurrence of the natural disaster, for it to be exempt from liability Thus, if the carrier accepted the goods knowing the fact of improper packing or
under the law for the loss of the goods even if the carrier does not know but the defect was nonetheless apparent
upon ordinary observation, it is not relived from liability for loss or injury to
Case: Pilapil vs. CA goods resulting therefrom.
- Facts: a bystander alongside national highway hurled a stone at the
left side of the bus, hitting petition above his left eye which resulted Cases:
to partial loss of the left eyes vision 1. Problem: A carrier knowing that some of a cargo of sacks of rice had
- SC: A common carrier does not give its consent to become an insurer big holes and others had openings just loosely tied with strings
of any and all risks to passengers and goods. It merely undertakes to resulting to the spillage of rice during the trip. Thus, there was
perform certain duties to the public as the law imposes, and holds shortage in the delivery of the cargoes. When sued due to the
itself liable for any breach thereof. shortage, the carrier interposed a defense that it was not liable since
- The law does not make the carrier an insurer of the absolute safety the shortage was due to the defective condition of the sacks. Decide.
of its passengers Answer: Carrier must still exercise extraordinary diligence if the fact
- Article 1763: A common carrier is responsible for injuries suffered by of improper packing is known to the carrier or its servants, or
a passenger on account of the willful acts or negligence of other apparent upon ordinary observation. If the carrier accepted the
passengers or of strangers, if the common carriers employees cargo without protests or exception notwithstanding such condition,
through the exercise of the diligence of a good father of a family he is not relived of liability for damage resulting therefrom.Apply
could have prevented or stopped the act or omission Article 1742.
o Clearly, a tort committed by a stranger which causes
injury to a passenger does not accord the latter a cause of ORDER OF PUBLIC AUTHORITY
action against the carrier. The negligence for which a
common carrier is held responsible is the negligent Art. 1743. If through the order of public authority the goods are
omission by the carriers employees to prevent the tort seized or destroyed, the common carrier is not responsible, provided said
from being committed when the same could have been public authority had power to issue order.
foreseen and prevented by them
Case: Franklin Gacal vs. PAL 1. Carrier was not excused from liability since the order of an acting
- It is therefore not enough that the event should not have been mayor was not considered as a valid order of a public authority. It is
foreseen or anticipated, as is commonly believed, but it must be one required that public authority who issued the order must be duly
impossible to foresee or to avoid. authorized to issue the order.
- The mere difficulty to foresee the happening is not the impossibility 2. Carriage of Goods by Sea Act provides that carrier shall not
to foresee the same responsible for loss or damage resulting from arrest or restraint of
princes, rulers, or people, or seizure under legal process and from
PUBLIC ENEMY quarantine restrictions.

- Presupposes a state of war and refers to the government of a foreign DEFENSES IN CARRIAGE OF PASSENGERS
nation at war with the country to which the carrier belongs, though not
necessarily with that to which the owner of the gods owes allegiance. - Primary defense of carrier is exercise of extraordinary diligence in
- Thieves, rioter, and insurrectionists are not included. They are merely transporting passengers. Even if there is a fortuitous event, the carriers must
private depredators for whose acts a carrier is answerable. also present proof of exercise of extraordinary diligence.
- Rebels in insurrection against their own government are generally not
embraced in the definition of public enemy. However, if the rebels hold a Art. 1759. Common carriers are liable for the death of or injuries to
portion of territory, they have declared their impendence, cast off their passengers through the negligence or willful acts of the carriers employees,
allegiance and has organized armed hostility to the government, and the although such employees may have acted beyond the scope of their authority
authority of the latter is at the time overthrown, such an uprising may or in violation of the orders of the common carriers.
take on the dignity of a civil war, and so matured and magnified, the The liability does not cease even upon proof that they exercised diligence in
parties are belligerent and are entitled to belligerent rights. the selection and supervision of their employees.
- Depredation by pirates (which are enemy of all civilized nation) excuses
the carrier from liability. Art. 1763. Carrier is responsible for injuries suffered by a passenger on
- Common carriers may be exempted from responsibility only if the act of account of the willful acts or negligence of other passengers or of strangers, if
the public enemy has been the proximate and only cause of the loss. the common carriers employees through the exercise of the diligence of a
Moreover, due diligence must be exercised to prevent or at least minimize good father of a family could have prevented or stopped the act or omission.
the loss before, during and after the performance of the act of the public
enemy in order that the carrier may be exempted from liability for the a. Employees
loss, destruction, or deterioration of the goods. - Carrier is liable for the acts of its employees. It cant escape liability
by claiming that it exercised due diligence in supervision and
IMPROPER PACKING selection of its employees (unlike in quasi-delicts).

Character of the goods and defects in the packaging or in the containers are
defenses available to the common carrier. Similarly, the Carriage of Good by Sea
Act provides that carrier shall not liable for:
1. Wastage in bulk or weight or any damages arising form the inherent
defect, quality or vice of goods;
2. Insufficiency of packing;
3. Insufficiency or inadequacy of the marks, or
4. Latent defects no discoverable by due diligence.

However, NCC likewise provides:

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
caused by the character of the goods, or the faulty nature of the packing or
the containers, the common carrier must exercise due diligence to forestall or
lessen the loss.
Reasons for the rule: hotels or inns shall be considered in determining the degree of care required
1. Undertaking of the carrier requires that its passenger that full of him. (1784a)
measure of protection afforded by the exercise of high degree of
care prescribed by law, inter alia from violence and insults at the
Art. 2001. The act of a thief or robber, who has entered the hotel is not
hands of strangers and other passengers, but above all, from the acts
deemed force majeure, unless it is done with the use of arms or through an
of the carriers own servants.
irresistible force. (n)
2. The liability of the carrier for the servants violation of duty to
performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to
utmost care prescribed by law. the acts of the guest, his family, servants or visitors, or if the loss arises from
3. As between the carrier and the passenger, the former must bear the the character of the things brought into the hotel. (n)
risk of wrongful acts or negligence of the carriers employees against
passenger, since it, and not the passenger, has the power to select Art. 2003. The hotel-keeper cannot free himself from responsibility by posting
and remove them. notices to the effect that he is not liable for the articles brought by the guest.
Any stipulation between the hotel-keeper and the guest whereby the
Rationale: On the other hand, if the ship owner derives profits from responsibility of the former as set forth in articles 1998 to 2001 is suppressed
the results of the choice of the captain and the crew, when the choice or diminished shall be void. (n)
turns out successful, it is also just that he should suffer the
consequences of an unsuccessful appointment, by application of the
rule of natural law contained in the partidas --- that he who enjoys Cases:
the benefits derived from a thing must likewise suffer the losses that 1. Despite the fact that the carrier gave notice that it shall not be liable
ensue therefrom for baggage brought in by passengers, the carrier is still liable for lost
hand-carried luggage since it is governed by rules on necessary
- Note: Willful acts of the employees include theft deposits. Under Art. 20000, the responsibility of the depositary
includes the loss of property of the guest caused by strangers but
b. Other Passengers and Third Persons not that which may proceed from force majeure. Moreover, article
2001 considers theft as force majeure if it is done with use of arms
- With respect to acts of strangers and other passengers resulting in or through irresistible force.
injury to apassenger, the availability of such defense is also subject 2. Even if the passenger did not declare his baggage nor pay its charges
to the exercise of a carrier of due diligence to prevent or stop the act contrary to the regulations of the bus company, the carrier is still
or omission. liable in case of loss of the baggage. Since, it has the duty to exercise
- Negligence of the carrier need not be the sole cause of the damage extraordinary diligence over the baggage that was turned over to the
or injury to the passenger or the goods. The carrier would still be carrier or placed in the baggage compartment of the bus. The non-
liable even if the contractual breach concurs with the negligent act payment of the charges is immaterial as long as the baggage was
or omission of another person. received by the carrier for transportation.

Remember: the negligence of the other river in a collision is NOT a II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER
prejudicial question to an action against the carriers company.
Article 1759. Common carriers are liable for the death of or injuries to
passenger through the negligence or willful acts of the formers employees, - The obligation to exercise due diligence is not limited to the carrier.
although such employees may have acted beyond the scope of their authority The shipper is obliged to exercise due diligence in avoiding damage
or in violation of the orders of the common carriers. or injury.
- Nevertheless, contributory negligence on the part of the shipper/
passenger would only mitigate the carriers liability; it is not a total
- However, if the negligence of the shipper/ passenger is the
PASSENGERS BAGGAGES proximate and only cause of the loss, then, the carrier shall not be
- The term baggage has been defined to include whatever articles a liable. The carrier may overcome the presumption of negligence
passenger usually takes with him for his own personal use, comfort and and may be able to prove that it exercised extraordinary diligence in
convenience handling the goods or in transporting the passenger.
- Rules that are applicable to goods that are being shipped are also
applicable to baggage delivered to the custody of the carrier. Arts. The carrier may be able to prove that the only cause of the loss of the
1733. 1734 and 1736 of Civil Code are applicable. goods is any of the following:
- However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall 1. Failure of the shipper to disclose the nature of the goods;
apply. 2. Improper marking or direction as to the destination;
3. Improper loading when he assumes such responsibility.
Distinction: W/N the baggage is in the personal custody of the passenger.
if yes, hand carried baggage The shipper must likewise see to it that the goods are properly
if no, checked-in baggage packed; otherwise, liability of the carrier may either be mitigated or
barred depending on the circumstances.
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be Art. 1741. If the shipper or owner merely contributed to the loss,
responsible for them as depositaries, provided that notice was given to them, destruction or deterioration of the goods, the proximate cause thereof
or to their employees, of the effects brought by the guests and that, on the being the negligence of the common carrier, the latter shall be liable in
part of the latter, they take the precautions which said hotel-keepers or their damages, which however, shall be equitably reduced.
substitutes advised relative to the care and vigilance of their effects. (1783)
Art. 1761. The passenger must observe the diligence of a good father of a
Art. 2000. The responsibility referred to in the two preceding articles shall family to avoid injury to himself.
include the loss of, or injury to the personal property of the guests caused by
the servants or employees of the keepers of hotels or inns as well as Art. 1762. The contributory negligence of the passenger does not bar recovery
strangers; but not that which may proceed from any force majeure. The fact of damages for his death or injuries, if the proximate cause thereof is the
that travellers are constrained to rely on the vigilance of the keeper of the
negligence of the common carrier, but the amount of damages shall be
equitably reduced. B. FREIGHT

a. Amount to be Paid
a. Last Clear Chance
The regulation of rates is founded upon the valid exercise of the Police Power of
A negligent carrier is liable to a negligent passenger in placing himself in peril, if the state in order to protect the public from arbitrary and excessive rates while
the carrier was aware of the passengers peril, or should have been aware of it maintaining the efficiency and quality of services rendered. The fixing of just
in the reasonable exercise of due care, had in fact an opportunity later than that and reasonable rates involves a balancing of investor and the consumer
of the passenger to avoid an accident. interest.

Last clear chance applies in a suit between the owners and drivers of colliding Although the consideration that should be paid to the carrier is still subject to
vehicles. It does notarise where a passenger demands responsibility from the the agreement between parties, what can be agreed upon should not be
carrier to enforce its contractual obligations. For it would be inequitable to beyond the maximum amount fixed by appropriate government agency.
exempt the negligent driver of the carrier and its owner on the ground that the
other driver was likewise guilty of negligence. b. Who will pay

Although either of the shipper or the consignor may pay the freight before or at
b. Assumption of Risk time the goods are delivered to the carrier for shipment, nonetheless, it is the
consignor (whom the contract of carriage is made) who is primarily liable for the
Passengers must take such risks incident to the mode of travel. Carriers are not payment of freight whether or not he is the owner of the goods. The obligation
insurers of the lives of their passengers. Thus, in air travel, adverse weather to pay is implied from the mere fact that the consignor has placed the goods
conditions or extreme climatic changes are some of the perils involved in air with the carrier for the purpose of transportation.
travel, the consequence of which the passenger must assume or expect.
c. Time to pay
However, there is no assumption of risk in a case wherein a passenger boarded
Code of Commerce provides that in the absence of any agreement, the
a carrier that was filled to capacity. The act of the passenger in taking the consignee who is supposed to pay must do so within 24-hours from the time of
extension chair does not amount to implied assumption of risk. delivery.
Note: there is also no assumption of risk by the mere fact that the carrier
Article 374. The consignees to whom the shipment was made may not defer
posted notices against such liability
the payment of the expenses and transportation charges of the goods they
receive after the lapse of twenty-four hours following their delivery; and in case
Problem: Although, there is a sign in the bus that says: do not talk to the driver of delay in this payment, the carrier may demand the judicial sale of the goods
while the bus is in motion, otherwise, the company would not assume transported in an amount necessary to cover the cost of transportation and the
responsibility for any accident:. Nonetheless, the passengers dared the driver to expenses incurred.
race with another bus, as the bus speeds up in the attempt to overtake the
other bus, it failed to slow down. As a result, the bus turns turtle causing the (1) Carriage of Passengers by Sea
death and injuries to passengers. Is the bus company liable?
Answer: Yes. The bus company is obligated to exercise utmost diligence in With respect to carriage of goods by sea, the tickets are purchased in advance.
carrying passengers. This liability cannot be eliminated or limited by simply Carriers are not supposed to allow passengers without tickets --- the carrier is
posting notices. The passenger cannot be said to have assumed the risk of being bound to observe a No Ticket, No Boarding Policy. The carrier shall collect/
injured when he urged the driver to accept the dare. At most, the passengers inspect the passengers ticket within one hour from vessels departure as not to
can only be said to be guilty of contributory negligence which would mitigate disrupt resting or sleeping passengers.
the liability of the driver, since the proximate cause of the accident was the
drivers willful and reckless act in running the race with the other bus. If the vessel is not able to depart on time and the delay is unreasonable, the
passenger may opt to have his/ her ticket refunded without refund service fee.
Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc. Delayed voyage means late departure of the vessel from its port of origin and/
- Where a carriers employee is confronted with a sudden emergency, or late arrival of the vessel to its port of destination. Unreasonable delay
the fact that he is obliged to act quickly and without a chance for means the period of time that has lapsed without just cause and is solely
deliberation must be taken into account, and he is not led to the attributable to the carrier which has prejudiced the transportation of the
same degree of care that he would otherwise be required to exercise passenger and/ or cargoes to their port of destination.
in the absence of such emergency but must exercise only such care
as any ordinary prudent person would exercise under like A passenger who failed to board the vessel can refund or revalidate the ticket
circumstances and conditions, and the failure on his part to exercise subject to surcharges. Revalidation means the accreditation of the ticket that
the best judgment the case renders possible does no establish lack
is not used and intended to be used for another voyage.
of care and skill on his part which renders the company liable.
(2) Carriers Lien
Case: Compania Maritima vs. CA and Vicente Concepcion
- While the act of private respondent in furnishing petitioner with an If consignor or the consignee fails to pay the consideration for the
inaccurate with of the payloader cannot successfully be used as an transportation of goods, the carrier may exercise his lien in accordance with Art.
excuse by petitioner to avoid liability to the damage thus caused, 375 of Code of Commerce:
said act constitutes a CONTRIBUTORY CIRCUMSTANCE to the
damage caused on the payloader, which mitigates the liability for ARTICLE 375. The goods transported shall be especially bound to answer for
damages of petitioner in accordance with Article 1741. the cost of transportation and for the expenses and fees incurred for them
during their conveyance and until the moment of their delivery.
Case: Philippine National Railways vs. CA This special right shall prescribe eight days after the delivery has been made,
- While petitioner failed to exercise extraordinary diligence as and once prescribed, the carrier shall have no other action than that
required by law, it appears that the deceased was chargeable with corresponding to him as an ordinary creditor.
contributory negligence.
- Since he opted to sit on the open platform between the coaches of DEMURRAGE
the train, he should have held tightly and tenaciously on the upright
metal bar found at the side of said platform to avoid falling off from
the speeding train
Demurrage is the compensation provided for the contract of affreightment for with or lessened by stipulation, by the posting of notices, by
the detention of the vessel beyond the time agreed on for loading and statements on tickets, or otherwise. (Note: Absolute; extraordinary at
unloading. It is the claim for damages for failure to accept delivery. In broad all times.)
sense, very improper detention of a vessel may be considered a demurrage.
Technically, liability for demurrage exists only when expressly stipulated in the Gratuitous passenger A stipulation limiting the common carriers liability for
contract. negligence is valid, but not for willful acts of gross negligence. The reduction of
fare does not justify any limitation.
Using the term in broader sense, damages in the nature of demurrage are
recoverable for a breach of the implied obligation to load or unload the cargo Case: Lara vs. Valencia
with reasonable dispatch, but only by the party to whom the duty is owed and - Diligence owed to accommodation passengers is only ordinary
only against on who is a party to the shipping contract. Notice of arrival of diligence
vessels or conveyances, or their placement for purposes of unloading is often a - However, this case is not controlling with respect to common
condition precedent to the right to collect demurrage charges. carriers because the defendant in the said case was not a common

A common carrier is bound to carry the passengers safely as far a
human care and foresight provide, using the utmost diligence of very cautious a. Warranty of Seaworthiness of Ship
persons, with due regard for all circumstances. - This is the first step that should be undertaken
- Extraordinary diligence requires that the ship which will
Extraordinary diligence: Calculated to protect the passengers from transport the passengers and goods is seaworthy.
the tragic mishaps that frequently occur in connection with rapid modern - Seaworthiness of the vessel is impliedly warranted.
transportation. - The carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to make the ship seaworthy.
- There is no hard and fast rule in the exercise of extraordinary
diligence b. No duty to inquire
- Common carrier binds itself to carry the passengers safely as far as - Because of the implied warranty of seaworthiness, shippers of
human care and foresight can provide, using the utmost diligence of goods, when transacting with common carriers, are not
a very cautious person, with due regard for all the circumstances. expected to inquire into the vessels seaworthiness,
- The duty even extends to the members of the crew or complement genuineness of its licenses and compliance with all maritime
operating the carrier laws. Passengers cannot be expected to inquire everytime they
board a common carrier, whether the carrier possesses the
Case: Kapalaran Bus Lines vs. Coronado necessary papers or that all the carriers employees are
- If common carriers carefully observed the statutory standard of qualified.
extraordinary diligence in respect of their own passengers, they - It is the carrier that carries such burden of proving that the ship
cannot help but simultaneously benefit pedestrians and the owners is seaworthy.
and passengers of other vehicles who are equally entitled to the safe - Sufficient evidence must be submitted and the presentation of
and convenient use of our roads and highways certificates of seaworthiness is not sufficient to overcome the
presumption of negligence.
A reasonable man or a good father of a family in the position of the carrier must
exercise extraordinary diligence in the performance of his contractual c. Meaning of Seaworthiness
obligation. - A vessel must have such degree of fitness which an owner who
- Generally, what should be determines is whether or not a is exercising extraordinary diligence would require his vessel to
reasonable man, exercising extraordinary diligence, could have have at the commencement of the voyage, having regard to all
foreseen and prevented the damage or loss that occurred. the probable circumstances of it. This includes fitness of the
vessel itself to withstand the rigors of voyage, fitness of the
III. EFFECT OF STIPULATION vessel to store the cargoes and accommodate passengers to be
transported and that it is adequately equipped and properly
A. GOODS manned.
- The parties cannot stipulate that the carrier will NOT exercise ANY - Seaworthiness is that strength, durability and engineering skill
diligence in the custody of goods made a part of a ships construction and continued
- The law allows a stipulation whereby the carrier will exercise a maintenance, together with a competent and sufficient crew,
degree of diligence which is less than extraordinary with respect to which would withstand the vicissitudes and dangers of the
goods. elements which might reasonably be expected or encountered
during her voyage without loss or damage to her particular
Art. 1744. A stipulation between the common carrier and the shipper cargo
owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary Example: The carrier was able to establish that the ship itself was seaworthy
diligence shall be valid, provided it be: because the records reveal that the vessel was dry-docked and inspected by the
Phil. Coast Guard before its first destination.
1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration other than the service A warranty of seaworthiness requires that it be properly laden, and provided
rendered by the common carrier (Note: Typically fare/freight); and with a competent master, a sufficient number of competent officers and
3. Reasonable, just and contrary to public policy. seamen, and the requisite appurtenances and equipment.
B. PASSENGERS The carrier shall be bound before and at the beginning of the voyage to exercise
- There can be no stipulation lessening the utmost diligence that is due diligence to:
owed to passengers. 1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship;
Art. 1757. The responsibility of a common carrier for the safety of 3. Make all parts of the ship in which goods are carried, fit and safe
passengers as required in Arts. 1733 and 1755 cannot be dispensed for their reception, carriage, and preservation.
- Memorandum Circular No. 112 : passengers do not merely contract
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, for transportation because they have the right to be treated by the
and discharge the goods carried. carrier and its employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal
Note: Seaworthiness is relative it its construction and its application depends on conduct, injurious language, indignities and abuses from the said
the facts of a particular case (ex. Length and nature of the voyage) carrier and its employees
- Read Memorandum Circular No. 114: p. 204
Fitness of the Vessel Itself
- It is necessary that the vessel can be expected to meet the normal Case: Planters Products Inc. vs. CA
hazards of the journey - The period during which private respondent was to observe the
- General Test of Seaworthiness: Whether the ship and its degree of diligence required of it as a public carrier began from the
appurtenances are reasonably fit to perform the service undertaken. time the cargo was unconditionally placed in its charge after the
vessels holds were duly inspected and passed scrutiny by the
The ship must be cargoworthy shipper, up to and until the vessel reached its destination and its hull
- Even if the vessel was properly maintained and is free from defect, was re-examined by the consignee, but prior to unloading
the carrier must not accept the goods that cannot properly be - A ship owner is liable for damage to the cargo resulting from
transported in the ship improper stowage ONLY when the stowing si done by stevedores
- The ship must be efficiently strong and equipped to carry the employed by him, and therefore under his control and supervision,
particular kind of cargo which she has contracted to carry and her not when the same is done by the consignee or stevedores under
cargo must be so loaded that it is safe for her to proceed on her the employ of the latter


1. Deviation
The vessel must be adequately equipped and properly manned. - If there is an agreement between the shipper and the carrier as to
- On top of regular maintenance and inspection, Captains, masters or the road over which the conveyance is to be made (subject to the
patrons of vessels must prove the skill, capacity, and qualifications approval by the Maritime Industry Authority), the carrier may not
necessary to command and direct the vessel. change the route, unless it be by reason of force majeure. Without
- If the owner of a vessel desires to be the captain without having the this cause, he shall be liable for all the losses which the goods may
legal qualifications, he shall limit himself to the financial suffer, aside from paying the sum stipulated for that case.
administration of the vessel and shall entrust the navigation to a - When on account of the force majeure, the carrier had to take
qualified person. another route which resulted to an increase in transportation
charges, he shall be reimbursed upon formal proof.
Note: It is not an excuse that the carrier cannot afford the salaries of competent
and licensed crew or that latter is unavailable. Note: With respect to carriers by sea, the routes are subject to approval by
MARINA and the same cannot generally be changed without the authorization
Adequate Equipment from said administrative agency
- With respect to vessels that carries passengers, the Maritime
Industry Authority prescribes rules which provide for indispensable 2. Transshipment
equipment and facilities - The act of taking cargo out of one ship and loading it into another; to
- ex. Exit doors, life boats, live vests transfer goods from the vessel stipulated in the contract of
affreightment to another vessel before the place of destination
B. OVERLOADING named in the contract has been reached.
- Transshipment of freight without legal excuse is a violation of the
- Duty to exercise due diligence likewise includes the duty to take contract and subjects the carrier to liability if the freight is lost even
passengers or cargoes that are within the carrying capacity of the by a cause otherwise excepted.
Note: there is transshipment whether or not the same person, firm or entity
C. PROPER STORAGE owns the vessels (what matters is the actual physical transfer of cargo from one
vessel to another)
- The vessel itself may be suitable for the cargo but this is not enough
because the cargo must also be properly stored. V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND

Cargo must generally not be placed on deck. The carrying of deck cargo raises A. CONDITION OF VEHICLE
the presumption of unseaworthiness unless it can be shown that the deck cargo - Common carriers that offer transportation by land are similarly
will not interfere with the proper management of the ship. required to make sure that the vehicles that they are using are in
good order and condition.
Rule on Mechanical Defects If the carriers will replace certain parts of the
- Failure on the part of the carrier to provide competent captain and motor vehicle, they are duty bound to make sure that the parts that they are
crew should be distinguished from the negligence of the said captain purchasing are not defective. Hence, it is a long-standing rule that a carrier
and crew, because the latter is covered by the Limited Liability Rule cannot escape liability by claiming that the accident that resulted because of a
(liability of the shipowner may be limited to the value of the vessel). defective break or tire is due to a fortuitous event. This is true even if it can be
- If the negligence of the captain and crew can be traced to the fact established that the tire that was subject of a blow-out is brand new. The duty
that they are really incompetent, the Limited Liability Rule cannot be to exercise extraordinary diligence requires the carrier to purchase and use
invoked because the shipowner may be deemed negligent. vehicle parts that are not defective.

Rules on passenger safety B. TRAFFIC RULES

- Negligence on the part of the captain and crew as well as the - The carrier fails to exercise extraordinary diligence if it will not
operator includes failure to comply with the regulation issued by the comply with basic traffic rules. The Civil Code provides for a
Maritime Industry Authority (MARINA) on the safety of the presumption of negligence in case the accident occurs while the
passengers operator of the motor vehicle is violating traffic rules.
goods. To be subjected to unusual search, other than the routinary inspection
In cases involving breach of contract of carriage, proof of violation of traffic procedure customarily undertaken, there must exist proof that would justify
rules confirms that the carrier failed to exercise extraordinary diligence. cause for apprehension that the baggage is dangerous as to warrant exhaustive
inspection, or even refusal to accept carriage of the same.
Case: Mallari Sr and Jr vs. CA
- The rule is settled that a driver abandoning his proper lane for the Case: Northwest Airlines vs. Laya
purpose of overtaking another vehicle in an ordinary situation has - The fact that the plaintiff was greatly inconvenienced by the fact that
the duty to see to it that the road is clear and not to proceed if he his attach case was subjected to further inspection does not
cannot do so in safety warrant imposition of liability because he was not singled out and
discriminated by the employees of the carrier
C. DUTY TO INSPECT - Protection of passengers must take precedence over convenience
- There is no unbending duty to inspect each and every package or - Nevertheless, the implementation of security measures must be
baggage that is being brought inside the bus or jeepney. The carrier attended by basic courtesies
is duty bound to conduct such inspection depending on the
circumstances. CHAPTER 4
Case: Nocum vs. Laguna Tayabas Bus Company
- While it is true the passengers of appellants bus should not be made I. CONCEPTS, DEFINITION AND KINDS
to suffer for something over which they had no control, fairness
demands that in measuring a common carriers duty towards its Bill of Lading (BOL)
passengers, allowance must be given to the reliance that should be - a written acknowledgement, signed by the master of a vessel or
reposed on the sense of responsibility of all the passengers in regard other authorized agent of the carrier, that he has received the
to their common safety. described goods from the shipper, to be transported on the
- It is to be presumed that a passenger will not take with him anything expressed terms to be described the place of destination, and to be
dangerous to the lives and limbs of his co-passengers not to speak of delivered to the designated consignees of the parties.
his own. - It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT
- Not to be lightly considered is the right to privacy to which each OF TITLE.
passenger is entitled
- In other words, inquiry may be verbally made as to the nature of a A BOL is not necessary for the perfection of a contract of carriage. Thus, the
passengers baggage when such is not outwardly perceptible, but obligation to exercise extraordinary diligence by the carrier is still required even
beyond this, constitutional boundaries are already in danger of being if there is no bill of lading.
- SC held that carrier has succeeded in rebutting the presumption of In the absence of the bill of lading, disputes shall be determined on the basis of
negligence by showing that it has exercised extraordinary diligence the provisions in the New Civil Code and suppletory by the Code of Commerce.
for the safety of its passenger, according to the circumstances of
each case KINDS of BILL of LADING:

Note: although overland transportation are not bound nor empowered to make 1. Clean Bill of Does not contain any notation indicating any defect in
an examination on the contents of packages or bags particularly those hand Lading the goods.
carried by passengers, such is different with regards to an airline company. 2. Foul Bill of One that contains the abovementioned notation.
VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR 3. Spent Bill of The goods are already delivered but the bill of lading
- The aircraft must be in such a condition that it must be able to Lading was not yet returned (upon delivery, the carrier is
withstand the rigors of flight. supposed to retrieve the covering bill of the goods)

Airworthiness An aircraft, its engines propellers, and other components and

4. Through Bill Issued by a carrier who is obliged to use the facilities of
accessories, are of proper design and construction, and are safe for air
of Lading other carriers as well as his own facilities for the
navigation purposes, such design and construction being consistent with
purpose of transporting the goods from the city of the
accepted engineering practice and in accordance with aerodynamic laws and
seller to the city of the buyer, which BOL is honored by
aircraft science.
the second and other interested carriers who dont
issue their own BOL.
Proof of airworthiness is not by itself sufficient to prove exercise of
extraordinary diligence. 5. On Board Bill -states that the goods have been received on board
the vessel which is to carry the goods.
Case: Japan Airlines vs. CA -apparently guarantees the certainty of shipping as
- The fact that the flight was cancelled due to fortuitous event does well as the seaworthiness of the vessel to carry the
not mean that the carriers duty already ended. The carrier is still goods.
obligated to look after the convenience and comfort of the -basically means that the goods are already inside the
passenger vessel
- Thus the carrier was obligated to make the necessary arrangements 6. Received for -states that the goods have been received for shipment
to transport the passenger on the first available flight. Shipment Bill with or without specifying the vessel by which the
goods are to be shipped.
A. INSPECTION -issued when conditions are not normal and there is
- It is the duty of the carrier to make inquiry as to the general nature insufficiency of shipping space.
of the articles shipped and of their value before it consents to carry
them; and its failure to do so cannot defeat the shippers right to 7. Custody Bill The goods are already receied by the carrier but the
recovery of full value of the package if lost, in the absence of of Lading vessel indicated therein has not yet arrived in the port.
showing of fraud or deceit on the part of the shipper.
8. Port Bill of The vessel indicated in the BOL that will transport the
Where a common carrier has reasonable ground to suspect that the offered Lading goods is already in the port.
goods are of a dangerous character, the carrier has the right to know the
character of such goods and to insist inspection, if reasonable and practical
under the circumstances, as a condition of receiving and transporting such
Note: A party to a maritime contract would require an on board bill of lading lading must be properly pleaded either as causes of action or
because of its apparent guaranty of certainty of shipping as well as the defenses
seaworthiness of the vessel which is to carry the goods. - ART 1507 (NCC). A document of title in which it is stated that the
goods referred to therein will be delivered to the bearer or to the
Effectivity of BOL order of any person named in such document is a negotiable
- upon its delivery to and acceptance by the shipper. document of title.
- The acceptance of the bill without dissent raises the presumption
that all the terms therein were brought to the knowledge of the - If the document of title contains the required words of negotiability
shipper and agreed to by him, and in the absence of fraud or to make the instrument negotiable under Article 1507 of the NCC,
mistake, he is stopped thereafter from denying that he assented to the document remains to be negotiable even if the words not
such claims (whether he reads the bill or not) negotiable or non negotiable are places thereon

THE 3-FOLD NATURE OF THE BILL OF LADING o a. Bearer document- negotiated by delivery
- The three fold nature of a bill of lading is obviously applicable only to o b. Order document- negotiated by indorsement of the
carriage of goods specified person so named
- As receipt and document of title: issued for goods
- As contract: applies to tickets issued to passengers - Effects of negotiation. Negotiation of the document has the effect of
manual delivery so as to constitute the transferee the owner of the
I. RECEIPT goods.
- As comprehending all methods of transportation, a BOL may be
defined as a written acknowledgement of the receipt of goods and BASIC STIPULATIONS
an agreement to transport and to deliver them at a specified place to - Provided for in the Code of Commerce
a person named or on his order. - (for overland transportation, maritime commerce and electronic
- Other terms, shipping receipts, forwarders receipts, and documents, please refer to the textbook for the codal pp. 203-210)
receipts for transportation.
- (SC) the designation however is not material, and neither is the form PROHIBITED AND LIMITING STIPULATION
of the instrument. If it contains an acknowledgement by the carrier
of the receipt of goods for transportation it is, in legal effect a BOL. 1. Exempting the carrier from any and all liability for loss or damage
- The issuance of a bill of lading carries the presumption that the occasioned by its own negligence - INVALID as it is contrary to public
goods were delivered to the carrier issuing the bill, for immediate policy.
shipment, and it is nowhere questioned that a bill of lading is prima 2. Parties may stipulate that the diligence to be exercised by the carrier
facie evidence of the receipt of the goods by the carrier for the carriage of goods be less than extraordinary diligence if it is:
a. in writing and signed by both parties
II. CONTRACT b. supported by a valuable consideration other than the
- It expresses the terms and conditions of the agreement between the service rendered by the common carrier
parties; names the parties; includes consignees etc. It is the law c. the stipulation is just, reasonable and not contrary to
between the parties bound by its terms and conditions. law.
3. Providing an unqualified limitation of such liability to an agreed
Contracts of Adhesion valuation - INVALID
- It is to be construed liberally in favor of the shipper who adhered to 4. Limiting the liability of the carrier to an agreed valuation unless the
such bill as it is a contract of adhesion. The only participation of the shipper declares a higher value and pays a higher rate of freight-
party is the signing of his signature or his adhesion thereto. VALID and ENFORCEABLE.
- The shipper or passenger is bound by the terms and conditions if
there is no occasion to speak of ambiguities or obscurities Note: the purpose of limiting stipulations in the bill of lading is to protect th
- If the words appear to be contrary to the evident intention of the common carrier. Such stipulation obliges the shipper/consignee to notify the
parties, the latter shall prevail over the former common carrier of the amount that the latter may be liable for in case of loss of
the goods
ART. 24 (NCC). In all contractual property or other relations, when one of the
parties is at a disadvanatge on account of his moral dependence, ignorance Remember:
indigence, mental weakness, tender age and other handicap, the court must be 1. The parties cannot stipulate so as to totally exempt the carrier from
vigilant for his protection. exercising any degree of diligence whatsoever
2. The parties cannot stipulate that the common carrier shall exercise
Parole Evidence Rule diligence less than the diligence of a good father of a family
- BOL is covered by the parol evidence rule, that the terms of the
contract are conclusive upon the parties and evidence aliunde is not RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS:
admissible to vary or contradict a complete enforceable agreement, 1. Inter-island - if goods arrived in damaged condition (Art. 366):
subject to well defined exceptions a. If damage is apparent, the shipper must file a claim immediately (it may be
- The mistake contemplated as an exception to the parol evidence rule oral or written);
is one which is a mistake of fact mutual to the parties. b. If damage is not apparent, he should file a claim within 24 hours from
- Note that if such is not raised inceptively in the complaint or in the delivery.
answer, a party cannot later on be permitted to introduce parol The filing of claim under either (1) or (2) is a condition precedent for recovery.
evidence thereon If the claim is filed, but the carrier refuses to pay: enforce carriers liability in
court by filing a case:
Bill of Lading as Evidence a. within 6 year, if no bill of lading has been issued; or
- The BOL is the legal evidence of the contract and the entries thereof b. within 10 years, if a bill of lading has been issued.
constitutes prima facie evidence of the contract.
- All the essential elements of a valid contract (cause, consent, object) 2. Overseas where goods arrived in a damaged condition from a foreign port
are present when such bill are issued. to a Philippine port of entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim should be filled
- In a contractual obligation, the bill of lading can be categorized as an b. if damage is not apparent, claim should be filled within 3 days from delivery.
actionable document under the Rules of Court. Hence, the bill of
Filing of claim is not a condition precedent, but an action must be filed against d. The proximate and only cause of the loss is the order or
the carrier within a period of 1 year from discharge; if there is no delivery, the act of competent public authority
one-year period starts to run from the day the vessel left port (in case of Note: to limit its liability or at least mitigate the same, the carrier can
undelivered or lost cargo), or from delivery to the arrastre (in case of damaged cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the DOCTIRNE
Where there was delivery to the wrong person, the prescriptive period is 10
years because there is a violation of contract, and the carriage of goods by sea Case: Sea-Land Service Inc. vs. IAC
act does not apply to misdelivery. (Ang v. American SS Agencies (19 SCRA 631) - Liability of a common carrier for loss of or damage to goods
transported by it under a contract of carriage is governed by the laws
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65) of the country of destination
- COGSA is applicable up to the final port of destination and that the
- Applies suppletorily to the Civil Code if the goods are to be shipped fact that transshipment was made on an interisland vessel did not
form a foreign port to the Philippines remove the contract of carriage of goods from the operation of said
- COGSA is applicable in international maritime commerce. It can be Act.
applied in domestic sea transportation if agreed upon by the parties.
(paramount clause) Case: Citadel Lines Inc. vs. CA
- Under the Sec. 4 (5), the liability limit is set at $500 per package - The duty of the consignee is to prove merely that the goods were
unless the nature and value of such goods is declared by the shipper. lost. Thereafter, the burden is shifted to the carrier to prove that it
This is deemed incorporated in the bill of lading even if not has exercised the extraordinary diligence required by law. And, its
mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463). extraordinary responsibility lasts from the times that goods are
- If by agreement, another maximum amount than that mentioned unconditionally placed in the possession of, and received by the
may be fixed provided that such maximum shall not be less than carrier for transportation until the same are delivered, actually or
$500 and in no event shall the carrier be liable for more than the constructively, by the carrier to the consignee or to the person who
amount of damage actually sustained has the right to receive them

Note that Art. 1749 of the NCC applies to inter-island trade. Case: Everett Steamship Corporation vs. CA
- Considering that the shipper did not declare a higher valuation it had
Meaning of Package itself to blame for not complying with the situations
- If the goods are shipped in cartons, each carton is considered a - The trial courts ratiocination that private respondent could not have
package even if they are stored in container vans fairly and freely agreed to the limited liability clause in the bill of
- When what ordinarily be considered packages are shipped in a lading because the said conditions were printed in small letters does
container supplied by the carrier and the number of such units is not make the bill of lading invalid
disclosed in the shipping documents, each of those units and not the
container constitutes the package. WARSAW CONVENTION of 1929

Prescriptive periods WHEN APPLICABLE:

- Suit for loss or damage to the cargo should be brought within one - Applies to all international transportation of person, baggage or
year after: goods performed by aircraft for hire.
a. delivery of the goods; or - International transportation means any transportation in which
b. the date when the goods should be delivered. (Sec. 3[6]) the place of departure and the place of destination are situated
The one-year prescriptive period is suspended by: o within the territories of two High Contracting Parties
1. express agreement of the parties (Universal Shipping Lines, Inc. v. regardless of whether or not there be a break in the
IAC, 188 SCRA 170) transportation or transshipment, or
2. when an action is filed in court until it is dismissed. (Stevens & Co. v. o within the territory of a single High Contracting Party, if
Nordeutscher Lloyd, 6 SCRA 180) there is an agreed stopping place within a territory
subject to the sovereignty, mandate or authority of
Things to Remember: another power, even though that power is not a party to
1. Article 1757 provides that the responsibility of a common carrier to the Convention.
exercise utmost diligence for the safety of PASSENGERS CANNOT be
dispensed with or lessened by stipulation or statement on tickets or Transportation to be performed by several successive air carriers shall be
otherwise deemed to be one undivided transportation, if it has been regarded by the
2. Article 1750 of the Civil Code provides that a contract fixing the sum parties as a single operation, whether it has been agreed upon under the form
that may be recovered by the owner or shipper for the loss, of a single contract or of a series of contracts, and it shall not lose its
destruction, or deterioration of the GOODS is VALID, if it is international character merely because one contract or a series of contracts is
REASONABLE and JUST under the circumstances, and has been to be performed entirely within a territory subject to the sovereignty,
FAIRLY AND FREELY AGREED UPON suzerainty, mandate, or authority of the same High Contracting Party. (Art. 1)
3. It is unfair to deny the shipper the right to declare the actual value of
his cargos and to recover such true value in case of loss or damage NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in
Note: it has been suggested that the signature of the shipper in the the Philippines since an international law prevails over general law.
bill of lading with regards to the limitation applies only to reduction
of diligence and not tothe stipulated amount to be paid. WHEN NOT APPLICABLE:
4. It is unjust and contrary to public policy if the common carriers 1. If there is willful misconduct on the part of the carriers employees.
liability for acts committed by thieves, or of robbers who do not act The Convention does not regulate, much less exempt, carrier from
with grave or irresistible threat, violence or force, is dispensed with liability for damages for violating the rights of its passengers under
or diminished the contract of carriage (PAL v. CA, 257 SCRA 33). --- if the damage is
5. The common carrier may EXEMPT itself from liability if he can prove similarly caused by any agent of the carrier acting within the scope
that: of his employment
a. He observed extraordinary diligence 2. when it contradicts public policy;
b. The proximate and only cause of the incident is a 3. if the requirements under the Convention are not complied with.
fortuitous event or force majeure LIABILITY OF CARRIER FOR DAMAGES:
c. The proximate and only cause of the loss is the character 1. Death or injury of a passenger if the accident causing it took place on
of the goods or defects in the packing or in the containers board the aircraft or in the course of its operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if it took place ii. the consignee can file an action against the last carrier and the carrier
during the carriage; (Art. 18) and in which the damage occurred. These carriers are jointly and
3. Delay in the transportation of passengers, luggage or goods. (Art. 19) severally liable. (Art. 30)

NOTE: The Hague Protocol amended the Warsaw Convention by removing the Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or
provision that if the airline took all necessary steps to avoid the damage, it international travel
could exculpate itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9) Code of Commerce applies to inter-island or domestic travel.

Remember: The said provisions merely declare the carrier liable for damages in Bill of Lading as Document of Title
the enumerated cases if the conditions therein specified are present. Neither
said provisions nor others in the aforementioned Convention regulate or Bill of lading is a document of title under the Civil Code. It can be a
exclude liability for OTHER BREACHES of contract of carrier. negotiable document of title.

The Convention does not thus operate as an exclusive enumeration of the A. Negotiability
instances of an airlines liability, or as an absolute limit of the extent of that - It is negotiable if it is deliverable to the bearer, or to the order of any person
liability. named in such document. (Art. 1507, Civil Code)

LIMIT OF LIABILITY a) Effect of Stamp or Notation Non-Negotiable

1. passengers- limited to 250,000 francs; the document remains to be negotiable even if the words not-
except: agreement to a higher limit negotiable or non-negotiable are placed thereon. - Art. 1510 (Civil
2. goods and checked-in baggage- 250 francs/kg Code)
except: consigner declared its value and paid a
supplementary sum, carrier liable to not more than the B. How Negotiated
declared sum unless it proves the sum is greater than its a) Bearer document (Art. 1508 and 1511)
actual value. - may be negotiated be delivery
3. hand-carry baggage - limited to 5,000 francs/passenger
b) Order document (Sec. 38, NIL and Art. 1509, NCC)
An agreement relieving the carrier from liability or fixing a lower limit is null and - can only be negotiated through the indorsement of the specified person so
void. (Art. 23) named.
Carrier not entitled to the foregoing limit if the damage is caused by willful - such indorsement may be in blank, to bearer or to a specified person.
misconduct or default on its part. (Art. 25)
Where a negotiable document of title is transferred for value by
Case: China Airlines vs. Daniel Chiok delivery, and the endorsement of the transferor is essential for
- The ticket-issuing airline acts as principal in a contract of carriage negotiation, the transferee acquires a right against the transferor to
and is thus liable for the acts and the omissions of any errant carrier compel him to endorse the document. xxx (Art. 1515, Civil Code)
to which it may have endorsed any sector of the entire, continuous
trip. C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the transferee the owner
Place of Destination- within the meaning of the Warsaw Convention, is of the goods
determined by the terms of the contract of carriage, or specifically the ticket - results in the transfer of ownership because transfer of document likewise
between the passenger and the carrier. It is the destination and not an agreed transfers control over the goods
stopping place that controls for the purpose of ascertaining jurisdiction under - refer to Art. 1513
the Convention. (Case: Santos III vs. Northwest Orient Airlines and CA)
Chapter 5
ACTION FOR DAMAGES Actions and Damages in Case of Breach
1. Condition precedent
A written complaint must be made within: Cause of action of a passenger and shipper:
- 3 days from receipt of baggage a) against common carrier based on culpa contractual or culpa aquiliana
- 7 days from receipt of goods b) on the part of the driver based on either culpa delictual or culpa aquiliana
- in case of delay, 14 days from receipt of baggage/goods
F otherwise the action is barred except in case of fraud on the part of the Note: The source of obligation based on culpa contractual is separate and
carrier. (Art. 26) distinct from quasi-delict.
2. Jurisdiction governedby domestic law
3. Venue at the option of the plaintiff: Article 1903 (last paragraph) 2 things are apparent:
a. court of domicile of the carrier; 1. That when an injury is caused by the negligence of a servant or
b. court of its principal place of business; employee there instantly arises a presumption of law that there was
c. court where it has a place of business through which the contract has negligence on the part of the master or the employer either in the
been made; selection of the servant or employee, or in supervision over him
d. court of the place of destination. (Art. 28) after the selection, or both.
4. Prescriptive period 2 years from: 2. That presumption is juris tantum and not juris et de jure(of law and
a. date of arrival at the destination of right), and consequently may be rebutted
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29) Note however: that Article 1903 of the Civil Code is not applicable to acts of
5. Rule in case of various successive carriers, negligence which constitute the breach of contract. It is applicable only to culpa
a. In case of transportation of passengers the action is filed only against contractual.
the carrier in which the accident or delay occurred unless there is an The fundamental distinction between obligation of extra-contractual and
agreement whereby the first carrier assumed liability for the whole those which arise from contract, rests upon the fact that in cases of non-
journey. contractual obligation it is the wrongful or negligent act or omission itself
b. In case of transportation of baggage or goods which creates the vinculum juris, whereas in contractual relations the
i. the consignor can file an action against the first carrier and the vinculum (bond) exists independently of the breach of the voluntary duty
carrier in which the damage occurred assumed by the parties when entering into the contractual relation.


- There is one action but several causes of action 1. if the damage is apparent, the claim should be filed immediately
- The same act that breaches the contract may also be tort upon discharge of the goods; or
2. within 3 days from delivery, if damage is not apparent.
Note: The cause of action of a passenger or shipper against the common carrier
can be culpa contractual or culpa aquiliana while the basis of liability on the Filing of claim is not condition precedent. Thus, regardless of whether
part of the driver is either culpa delictual or culpa aquiliana. The driver of the the notice of loss or damage has been given, the shipper can still bring
carrier is not liable based on contract because there is NO PRIVITY of contract an action to recover said loss or damage within one year after the
between him and the passenger or shipper. delivery of the goods or the date when the goods should have been
If the negligence of third persons concurs with the breach, the liability of the
third person who was driving the vehicle and/or his employer may be based on a) Prescription
quasi delict. The driver alone may be held criminally liable and civil liability may Action for damages must be filed within a period of one (1) year from
be imposed upon him based on delict. In the latter case, the employer is discharge of the goods.
subsidiarily liable. The period is not suspended by an extra-judicial demand. (Why?
Transportation of goods by sea should be decided in as short a time as
Remember: It does not make any difference that the liability of one springs possible)
from the contract while that of the other arises from quasi-delict. If the owner o Case: Dole Philippines Inc. vs. Maritime Company of the
and driver of the other vehicle are not impleaded, the carrier may implead them Philippines - the prescriptive period is not tolled or
by filing a third party complaint. interrupted by a written extra-judicial demand. Article
1155 is NOT applicable.
Solidary liability The period does not apply to conversion or misdelivery.
- In case the negligence of the carriers driver and a third person The one (1) year period refers to loss of goods and not to misdelivery.
concurs, the liability of the parties carrier and his driver, third
person is joint and several. - Damages arising from delay or late delivery are not the damage or
loss contemplated under the COGSA. The goods are not actually lost
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD or damaged. The applicable period is ten (10) years.
- Case: Domingo Ang vs. American Steamship Agencies
A. Overland Transportation of Goods and Coastwise Shipping What is to be resolved in order to determine the
a) When to file a claim with carrier applicability of the prescriptive period of one year is
- Art. 366 constitutes a condition precedent to the accrual of a whether or not there was loss of the goods subject
right of action against a carrier for damage caused to the matter of the complaint.
merchandise. Loss contemplates merely a situation where no delivery
at all was made by the shipper of the goods because the
Under Art. 366 of the Code of Commerce, an action for damages is same had perished, gone out of commerce, or
barred if the goods arrived in damaged condition and no claim is filed disappeared in such a way that their existence is
by the shipper within the following period: unknown or they cannot be recovered. (Note: It is not
1. Immediately if damage is apparent; loss due to misdelivery or delivery to the wrong person.)
2. within twenty four (24) hours from delivery if damage is not
apparent. This rule applies in collision cases. The one (1) year period starts not
from the date of the collision but when the goods should have been
- The period does not begin to run until the consignee has received delivered, had the cargoes been saved.
possession of the merchandise that he may exercise over it the
ordinary control pertinent to ownership. Case: Maritime Agencies and Services Inc. vs. CA
- This provision applies even to transportation by sea within the Phils. - When there is two destination of delivery, the one year period
or coastwise shipping. should commence when the last item was delivered to the
- Does NOT apply to misdelivery of goods. consignee.

Q: Why does it not apply to misdelivery of goods? Insurance

A: In such cases (misdelivery), there can be no question of claim for damages The insurer who is exercising its right of subrogation is also bound by
suffered by the goods while in transport, since the claim for damages arises the one (1) year prescriptive period.
exclusively out of the failure to make delivery. However, it does not apply to the claim against the insurer for the
insurance proceeds. The claim against the insurer is based on contract
Case: Monica Roldan vs. Lim Ponzo and Co. that expires in ten (10) years.
- Article 366 of the Commercial Code is limited to cases of claims for
damage to goods actually turned over by the carrier and received by II. Recoverable Damages
the consignee. Damages is the pecuniary compensation, recompense or
satisfaction for an injury sustained, or as otherwise expressed, the
But the period prescribed in Art. 366 may be subject to modification by pecuniary consequences which the law imposes for the breach of
agreement of the parties. some duty or violation of some rights.
The validity of a contractual limitation of time for filing the suit itself
against a carrier shorter than the statutory period thereof has generally A. Extent of Recovery (Contractual Breach: Art. 220, NCC)
been upheld as such stipulation merely affects the shippers remedy Carrier in good faith is liable only to pay for the damages that are
and does not affect the liability of the carrier. the natural and probable consequences of the breach of the
obligation and which the parties have foreseen or could have
b) Extinctive Prescription reasonably foreseen at the time the obligation was constituted.
- six (6) years if there is no written contract (bill of lading) Carrier in bad faith or guilty of gross negligence liable for all
- ten (10) years if there is written contract damages, whether the same can be foreseen or not. Those which may
be reasonably attributed to the non-performance of the obligation.
This rule likewise applies to carriage of passengers for domestic
transportation. Note: The carrier who may be compelled to pay has the right of recourse
against the employee who committed the negligent, willful or fraudulent act.
B. International Carriage of Goods by Sea
A claim must be filed with the carrier within the following period: B. Kinds of Damages
- 2 kinds: ordinary (compensation to the lawyer); extraordinary
Article 2216 provides that no proof of pecuniary loss is necessary in order that (indemnity as a form of damages suffered due to the breach of
moral, nominal, temperate, liquidated or exemplary damages may be contract)
adjudicated. The assessment of such damages, except liquidated ones, is left to - You can be awarded if you show that you were forced to litigate and
the discretion of the court, according to the circumstances of each case. when you are entitled to exemplary damage.
However, proof of pecuniary loss is necessary if actual or compensatory - But this award is subject to the discretion of the court (you cannot
damages are being claimed. dictate usually 10%-15%)

a) Actual or Compensatory Damages 3) Interests

- only for the pecuniary loss suffered by him as he has duly proved 12% per annum if it constitutes a loan or forbearance of money
- not only the value of the loss suffered, but also that of the profits 6% per annum if it does not constitute loan or forbearance of
which the obligee failed to obtain money
12% - for final judgment
- 2 Kinds:
1. the loss of what a person already possesses (dao emergente); Note: No interest, however, shall be adjudged on unliquidated claims for
2. the failure to receive as a benefit that would have pertained to him damages except when or until the demand can be established with reasonably
(lucro cesante). certainty, the interest shall begin to run form the time the claim is made
- It should be proven: cannot be decided based on the consideration judicially or extrajudicially.
of the judge; not to be based on the perception, observation and
consideration of the judge b) Moral Damages
- With respect to restorative medical procedure: to be entitled to - Includes physical suffering, mental anguish, fright, serious anxiety,
actual damage, you need to have an EXPERT TESTIMONY. Without besmirched reputation, wounded feelings, moral shock, social humiliation
such, you cannot recover. and similar injury.
- Though incapable of pecuniary computation, moral damages may be
Damages may be recovered: Art. 2205 (Civil Code) recovered if they were the proximate result of the defendants wrongful
1) For loss or impairment of earning capacity in cases of temporary or act or omission.
permanent personal injury; - Moral damages are not awarded to punish the defendant but to
2) For injury to the plaintiffs business standing or commercial credit. compensate the victim
- May be recovered when there is death or there is malice or bad faith.(in
Damages cannot be presumed. The burden of proof rests on the transportation of passengers)
plaintiff who is claiming actual damages against the carrier. - Refer to Art. 2219 and 2220 (enumerates cases when moral damages may
be awarded)
In case of goods the plaintiff is entitled to their value at the time of - Generally, no moral damages may be awarded where the breach of
destruction. The award is the sum of money which plaintiff would have contract is not malicious.
to pay in the market for identical or essentially similar goods - Moral damages may be awarded if the contractual negligence is
For personal injury and even death the claimant is entitled to all considered gross negligence.
medical expenses as well as other reasonable expenses that he incurred - Subject to three conditions in transportation law:
to treat his or her relatives injuries. o Death
In case of death the plaintiff is entitled to the amount that he spent o Malice or bad faith (must be done in the performance of
during the wake and funeral of the deceased. But, expenses after the the contract of carriage)
burial are not compensable. o Physical Injuries
Read Art. 2206 (Civil Code): - Requisites:
death caused by a crime or quasi-delict shall be at least o There must be an injury, whether physical, mental or
P3,000; [The amount of fixed damages is now P50,000.00] psychological, clearly sustained by the claimant
the defendant shall be liable for the loss of the earning o There must be a culpable act or omission factually
capacity of the deceased; established
If deceased is obliged to give support, recipient may o The wrongful act or omission of the defendant is the
demand support from the person causing the death for a proximate cause of the injury sustained by the claimant
period not exceeding five years o The award of damages is predicated on any of the cases
Spouse, legitimate and illegitimate descendant and stated in Art. 2219.
descendants may demand moral damages for mental
anguish by reason of the death of the deceased - Factors to consider that could affect the amount to be recovered:
o The extent of humiliation may also determine the amount
of moral damages that can be awarded
1) Loss of earning capacity o The extent of pain and suffering likewise determines the
Net Earning Capacity = Life Expectancy x [Gross Annual Income less Necessary o Official, political, social and financial standing of the
Living Expenses] offended party and the business and financial position of
the offender affect the amount of damages
Life expectancy (2/3 x 80 age at death) o The age of the claimant.
Net earnings based on the gross income of the victim minus the
necessary incidental living expenses which the victim would have c) Nominal Damages
incurred if he were alive. - Refer to Art. 2221-2223 (Civil Code)
Amount of living expenses must be established. In the absence of - It is adjudicated in order that the right of plaintiff may be vindicated or
proof, it is fixed at fifty (50%) of the gross income. recognized, and not for the purpose of indemnifying the plaintiff for any
Rules on loss of earning apply when the breach of the carrier resulted loss suffered by him.
in the plaintiffs permanent incapacity. - The assessment of nominal damages is left to the discretion of the court
according to the circumstances of the case.
2) Attorneys fees - The award of nominal damages is also justified in the absence of
- refer to Art. 2208 of the Civil Code competent proof of the specific amounts of actual damages suffered.
- attorneys fees may be awarded in an action for breach of contract - Cannot co-exist with actual damages.
of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.
- If awarded exemplary, one is entitled to attorneys fees
- There is no loss in nominal damages, unlike in actual and temperate Governing Laws:
damages, loss is present which is proven and not proven but rather 1. New Civil Code primary law on maritime commerce
ascertained by the court, respectively. 2. Book III Code of Commerce applied suppletorily
3. Special Laws
Case: Japan Airlines vs. CA a. Salvage Law (Act No. 2616)
- The award of moral damages was justified because JAL failed to b. Carriage of Goods by Sea Act (CA No. 65)
make necessary arrangement to transport the plaintiffs on the first c. Ship Mortgage Decree of 1978 (PD 1521)
available connecting flight to Manila.
- Only Nominal damages were awarded in the absence of proof of REAL AND HYPOTHECARY NATURE OF MARITIME LAW
actual damages
Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara
d) Temperate or Moderate Damages That which distinguishes the maritime from the civil law and even
- More than nominal but less than compensatory damages. from the mercantile law in general is the real and hypothecary
- Art. 2224 provides: nature of the former
may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be Evidence of this real nature of maritime law:
provided with certainty. o The limitation of the liability of the agents to the actual
- cannot co-exist with actual damages value of the vessel and the freight money
- Definite proof of pecuniary loss cannot be offered, although the court is o The right to retain the cargo and the embargo and
convinced that there has been such loss. detention of the vessel even cases where the ordinary
civil law would not allow more than a personal action
e) Liquidated Damages against the debtor or person liable
- Those agreed by the parties to a contract, to be paid in case of
breach thereof. This repeals the civil law to such extent that, in certain cases where
- Ordinarily, the court cannot change the amount of liquidated the mortgaged property is lost no personal action lies against the
damages agreed upon by the parties. However, Art. 2227 of the Civil owner or agent of the vessel
Code provides that liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably reduced if they were Two reasons why it is impossible to do away with these privileges:
iniquitous or unconscionable. o The risk to which the thing is exposed
o The real nature of maritime law, exclusively real,
f) Exemplary or Corrective Damages according to which the liability of the parties is limited to
- Requisites for the award of exemplary damages: a thing to which is at mercy of the waves
1. They may be imposed by way of example in addition to
compensatory damages, and only after the claimants right to them Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
has been established. Corporation, Ltd.
2. They cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may be The real and hypothecary nature of maritime law simply means that
awarded to the claimant. the liability of the carrier in connection with losses related to
3. The act must be accompanied by bad faith or done in wanton, maritime contracts is confined to the vessel, which is hypothecated
fraudulent, oppressive or malevolent manner. for such obligations or which stands as the guaranty for their
Note: If gross negligence warrants the award of exemplary damages, with more Purpose: It was designed to offset such adverse conditions and to
reason is its imposition justified when the act performed is deliberate, malicious encourage people and entities to venture into maritime commerce
and tainted with bad faith. The rationale behind exemplary or corrective despite the risks and prohibitive cost of shipbuilding
damage is to provide an example or correction from public good. Thus, the liability of the vessel owner and agent arising from the
operation of such vessel were confined to the (1) vessel itself, (2) its
The award of exemplary damages in breach of contract of carriage is equipment, (3) freight, (4) and insurance if any, which limitation
subject to the provisions under Art. 2232-2235 of the Civil Code. served to induce capitalists into effectively wagering their resources
against the consideration of the large profits attainable in trade

Case: Air France vs. Rafael Carrascoso and CA Real similar to transactions over real property where to effect against third
- The inference of bad faith is there; it may be drawn from the facts persons, registration is necessary
and circumstances set forth therein. The contract was averred to
establish the relation between the parties. Hypothecary the liability of the owner of the value of the vessel is limited to
- Deficiency in the complaint in stating that there was bad faith, if any, the vessel itself
was cured by the evidence.
Case: Philippine Airlines Inc. vs. CA
- Moral damages are recoverable in a breach of contract of carriage Article 837, 587, 590 and 643 provides for limited liability of shipowner.
where the air carrier thought its agents acted fraudulently or in bad (read full provision)
- The contract of air carriage generates a relation attended with a Art. 837: civil liability incurred by the ship owner: liability limited to value of the
public duty. Neglect or malfeasance of the carriers employees vessel + appurtenances + freightage earned during voyage
naturally could give ground for an action for damages.
Art. 643: vessel and cargo lost by reason of capture or wreck: all rights shall be
MARITIME LAW extinguished, both as regards the crew to demand any wages whatsoever, and
as regards the ship agent to recover the advances made
A. CONCEPTS (Chapter 6) If a portion of the vessel or of the cargo, or both, should be saved,
the crew engaged on wages, including the captain, shall retain their rights on
Maritime Law is the system of laws which particularly relates to the affairs the salvage, so far as they go, on the remainder of the vessel as well on the
and business of the sea, to ships, their crews and navigation and to marine amount of the freightage of the cargo saved; but sailors who are engaged on
conveyance of persons and property shares shall not have any right whatsoever on the salvage of the hull, but only
the portion of the freightage saved. If they should have worded to recover the
remainder of the shipwrecked vessel they shall be given from the amount of the If an accident is compensable under the Workmens Compensation
salvage an award in proportion of the efforts made and to the risks Act, it must be compensated even when the workmans right is not
encountered in order to accomplish the salvage recognized by or is in conflict with other provisions of the Civil Code
or of the Code of Commerce
Art. 587: ship agent may exempt himself of the civil liabilities for the Liability under the Workmens compensation Act, even if the vessel
indemnities in favor of third persons by abandoning vessel with all equipments was lost, is still enforceable against the employer or shipowner.
and freight it earned during voyage
4. Expenses for repairs and provisioning of the ship prior to the
Art. 590: co-owners civilly liable in proportion to their interest and may exempt departure thereof
liability by abandonment of the part of the vessel belonging to him
5. The vessel is not abandoned (ABANDONMENT)
Limited liability rule means that the liability of a shipowner for damages in Abandonment of the vessel, its appurtenances and the freightage is
case of loss is limited to the value of his vessel. an indispensable requirement before the shipowner or shipagent
No vessel, no liability. can enjoy the benefits of the limited liability rule. If the carrier does
The civil liability for collision is merely co-existent with the interest in not want to abandon the vessel, he is still liable even beyond the
the vessel; if there was total loss, liability is also extinguished. value of the vessel
The only instance where abandonment is dispensed with is when the
GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof vessel was entirely lost. In such case, the obligation is extinguished.
still exists, he can escape liability by abandoning the vessel, its appurtenances Only shipowner and ship agent can make an abandonment
and its freight.
Case: Monarch Insurance Co., Inc. vs. Court of Appeals
The total destruction of the vessel extinguishes maritime liens Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
because there are no longer any res to which it can attach. This Corporation, Ltd.
doctrine is based on the real and hypothecary nature of maritime - Rights of the parties to claim against an agent or owner of vessel
law. may be compared to those of creditors against an insolvent
corporation whose assets are not enough to satisfy the totality of
Note: Since the Civil Code contains no provision regulating liability of claims as against it.
shipowners or agents in the event of total loss or destruction of the vessel, - Creditors must limit their recovery to what is left in the name of the
Article 587 of the Code of Commerce governs. corporation
- In the sinking of a vessel, the claimants or creditors are limited in
Article 837, 587 and 590 of Code of Commerce cover only: their recovery to the remaining value of accessible assets. In the case
1. Liability to third persons of lost vessel, these assets are the insurance proceeds and pending
2. Acts of the captain freightage for the particular voyage
3. Collisions
EXCEPTIONS TO THE LIMITED LIABILITY RULE - is the written statement by the master of a vessel or any authorized
1. Where the injury or death to a passenger is due either to the fault of officer, attested by proper officer or a notary, to the effect that
the shipowner, or to the concurring negligence of the shipowner and damages has been suffered by the ship
the captain (NEGLIGENCE)

GR: Shipowner is liable for the negligence of the captain in collision

---- liability is limited to value of the vessel
Limited liability rule applies if the captain or the crew caused the
damage or injury as when unseaworthiness of the vessel was caused
by the negligence of the captain or crew during the voyage
However, if the failure to maintain the seaworthiness of the vessel
can be ascribed to the shipowner alone or the shipowner
concurrently with the captain, then the limited liability principle
EXTENT (ex. Overloading, unseaworthiness even at the time of

2. Where the vessel is insured (INSURANCE)

Limited liability rule does not apply to insurance claims

Case: Vasquez vs. CA

- The total loss of the vessel did not extinguish the liability of the
carriers insrured
- Despite the loss of the vessel, therefore, its insurance answers
for the damages that a shipowner or agent, may be held liable
for by reason of the death of its passengers.

3. In the workmens compensation claims (WORKERS


The provisions of the Code of Commerce have no room in the

application of the Workmens Compensation Act which seeks to
improve, and aims at the amelioration of, the condition of laborers
and employees
Required under the following cases: Q: when does insurance argument come in?
1. When the vessel makes an arrival under stress A: only when the shipowner will bring the insurance company to the case filed
2. Where the vessel is shipwrecked by the plaintiffby way of third party complaint. Once insurance company is
3. Where the vessel has gone through a hurricane or the captain impleaded then this can be used: that the owner cannot avail of limited liability.
believe that the cargo has suffered damages or averages
4. Maritime collisions But no shipowner will ever implead the insurance. Because they will be the one
who will claim the insurance without telling the plaintiffs. In the case, there is
Q: when is it not required? no proof that the vessel is insured. Even if we know outside court, it is insured
A: because in the court, there is no proof that the vessel is insured. Court will not
1. when it does not fall under the four cases mentioned above identify evidence not properly identified and recoded in court.
2. when what is not involve is not a vessel
Q: is it really an exception in its strict sense?
ADMIRALTY JURISDICTION (RTC) A: Not really (CAPANAS). What is the implication if you properly invoke the
- Section 19 (3) of BP 129 as amended by RA 7691 LLRule the plaintiff cannot avail beyond the value of the vessel.
(3) In all actions in admiralty and maritime jurisdiction If not apply plaintiff will recover more than the value of vessel subject to rules
where the demand or claim exceeds 300, 000 or in Metro on claiming of damages.
manila, where such demand or claim exceeds 400,000.
- if less MTC But question, if vessel if covered with insurance, does this mean that plaintiff
can recover to the amount applied? No, they can only recover until the
3 concepts: (they are the same) coverage of the insurance proceeds.

1. real and hypothecary --- the supreme court did not explain the literal 3. Negligence
meaning of it. - common carrier is presumed negligent if common carrier. However, this does
- real: refers to the risk in maritime thats why there are privileges for the not apply when there is an invocation on limited liability. (in all cases except
shipowner. Risks are certain to happen MONARCH vs. CA) --- the rest of the case, the court has found negligence based
- hypothecary: remember guaranty and collateral which is the vessel. For the on the facts presented. You cannot invoke presumption of negligence so that
particular voyage, the guaranty is the vessel wherein if the vessel is lost, the limited liability rule will not apply.
shipowner no longer has the liability
Monarch _-- SC: since there is a presumption of negligence then LLR will not
2. limited liabililty rule --- no literal explanation apply. But SC also said that if LLR is invoked, the initial burden to invoke
- limited: it means that the liability is limited to the value of the vessel negligence shifts to the shipowner. They should prove that there is no privity or
-liability: assumption that the shipowner is liable for the losses. There are no knowledge on the negligence of the ship captain.
valid defenses that shipowner can invoke to escape liability. Same concept with
1479. Difference is that there is a fixed amount and there is qualification Q: what is the relationship of Civil Code and LLR?
-under the limited liability no fixed amount but amount is confined on the A: There is none. Under 1766 in all matters not provided by Civil Code, Code of
vessel Commerce or Special law will apply. There is no rule in Civil Code in limited
liability rule thus Code of Commerce will apply. (but in monarch, this was not
The question here: is this a right to limit the liability? applied--- all the negligence was related to the absence of exercising
A: admittedly it is a right that only shipowner can exercise extraordinary diligence)

Q; how to exercise? Note: that in the subsequent cases, Consolidated of Aboitiz case: there were
A: by way of pleading. But do not follow the way it was filed in yangco. Here it findings of facts of the negligence of Aboitiz. The point is when it comes to LLR,
was after judgment that the shipowner sought to abandon the ship to abandon the Code of Commerce apply. You cannot invoke presumption of negligence. In
liability order to refute, petitioner should prove negligence.
But right now, it is a matter of procedure. To limit liability by abandoning the REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not presumption.
vessel; IF it is a matter of procedure, you check the rules of civil procedure
Loadstar case
Q: so when does shipowner inform the court the right to limit liability? - the shipowner is aware of the typhoon
A: in a pleading and normally in an answer. IT will be raised as a defense. If - insufficient manning negligent
shipownver cannot allege, then that defense is deemed waiver. Therefore you - Captain playing mahjong there was negligence. But SC said that it was
cannot seek abandonment after judgment was been rendered. negligent because the shipowner did not prove that it was the first. Supposedly
facts are established in court proceedings and not on presumption.
3. no vessel, no liability
Yangco vs. Lacerna
- even captain was aware of the typhoon and the vessel capsized, SC upheld - they all mean one and the same such that the liability of the shipowner for the
limited liability losses is confined to the value of the vessel and the freight, if any.

- there being no exceptions, the court upheld limited liability and above notes)

The more critical issue is on the EXCEPTIONS in the LLRule: INSTANCES WHEN IT DOES NOT APPLY:
1. workmens compensation (Abueg case: the repairs constitue maritime lient) 1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN NOT
2. insurance coverage--- if the vessel is lost in the course of voyage and it is MARITIME PROTEST
insured, is it automatic that the limited liability rule does not apply? 2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor boat is
A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned very little not a vessel under maritime law, it is only engaged in bay traffic. A vessel in
about insurance: if the vessel is insured, the insurance proceeds shall answer maritime law, should be engaged in transporting goods, persons, or both from
the credit) one port to another)

If the plaintiff was injured or heirs will file action from insurance company, and (But to be sure: you file maritime and allege such bahala dili kelangan coz
since shipowner cannot avail of limited liability, this is not advisable to the otherwise dismiss ang case)
plaintiff because it has no privity of contract with the insurance company
Since a vessel is a personal property, it can be mortgaged
Same concept with mortgage but different rule created between the owners of the merchandise laden on it and its
- PD 1521: owner

Q: what about process of extra judicial foreclosure of vessel? When the mercantile code speaks of vessels, they refer solely and
A: chattel mortgage law should govern exclusively to mercantile ships, as they do not include warships, and
furthermore, they almost always refer to craft which are not accessory to
Q: what to remember under PD 1521? another as in the case of launches, lifeboats and etc.
A: Section 4
registration, non waiver Further, they refer exclusively to those which are engaged in the
Section17: priority of claims transportation of passengers and freight from one port to another or
from one place to another
Q: are there claims in maritime law over and above preferred mortgage?
A: yes. Look at section 17. They refer to merchant vessels and in NO WAY can they or should they be
understood as referring to pleasure craft, yachts, pontoons, health service
Case: Poliand Industrial and harbor police vessels, etc.
- facts shows that the proceeds debted from hardwood was for the modification
of the vessel (extended for vessels benefit), for crews wage Ships ought to be understood in the sense of vessel serving the purpose
of maritime navigation or seagoing vessel, and not in the sense of vessel
Characteristics of maritime lien: devoted to the navigation of rivers
1. maritime property
2. travels with the property--- it cannot be extinguished The third book of the code of commerce, dealing with maritime
3. enforceable in an action in rem--- action directed to the property (crescent commerce, was evidently intended to define laws relative to merchant
case: ang gi kiha ang vessel) vessels and maritime shipping; and as appears from said code, the vessel
intended in that book are such run by masters having special training with
Under section 22: persons authorize to procure repairs (presumed): elaborate apparatus of crew and equipment indicated in the code.
1. managing agent
2. ships husband --- agent of the vessel Only vessels engaged in what is ordinarily known as maritime commerce
are within the provision of law conferring limited liability on the owner in
If mortgagor does not pay: case of maritime disaster.
1. judicial foreclosure file actual case and implead the vessel as party
defendant (served to captain or authorized person); you can ask the court order Other vessel of minor nature not engaged in maritime commerce, such as
to arrest the vessel. river boats and those carrying passengers from ship to shore, must be
2. extrajudicial governed, as to their liability to passenger, by the provision of the civil
- the problem with vessel, mortgagee is not in possession of the vessel. It is with code or other appropriate special provisions of law.
the mortgagor, you cannot sell the property not in your possession.
Case: Augusto Lopez vs. Juan Duruelo, et. al
In PD 1521the order of arrest can be asked - The code of commerce are not applicable to small craft which are
Grounds to discharge only subject to administrative (customs) regulations in the matter of
1. irregularly issued (mortgagee na ilad. Wala pa diay due obligation port service and in the fishing industry
2. posting of a bond to discharge..the bond to be posted is double the value of - Only vessels engaged in what is ordinarily known as maritime
the claim. commerce are within the provisions of law conferring limited liability
on the owner in case of maritime disaster
Maritime lien on necessaries (5 requisites) brief yourself cresent petroleum - It is therefore clear that a passenger on a boat like the Jison, in the
case(look at book for requisites) case before use, is not required to make protest as a condition
precedent to his right of action for the injury suffered by him in the
collision described in the complaint article 835 of the Code of
B. VESSELS (Chapter 7) Commerce does not apply
1. General Concepts
The Construction, equipment and manning of vessel are subject to the rules
A vessel or watercraft is defined under PD No. 447 as any barge, lighter, issued by the Maritime Industry Authority (MARINA) and consistent with Article
bulk carrier, passenger ship freighter, tanker, container ship, fishing 574 of the Code of Commerce
boats, or other artificial contrivance utilizing any source of motive power,
designed use or capable of being used as a means of transportation Article 574. Builders of vessels may employ the materials and follow, with
operating either as a common carrier, including fishing vessels covered respect to their construction and rigging, the systems most suitable to their
under PD No. 43, interests. Ship owners and seamen shall be subject to what the laws and
regulations of the public administration on navigation, customs, health, safety
Except: of vessels, and other similar matters.
1. Those owned and/or operated by the Armed Forces of the Philippines
and by the Foreign Government for its Military Purpose. PERSONAL PROPERTY
2. Bancas, sailboat and other waterbone contrivance of less than three
tons capacity and not motorized. Vessels are considered personal property under the Civil Law. The Code of
Commerce likewise expressly acknowledges the special nature of a vessel as
personal property.
Case: Yu Con vs. Ipil
- The word vessel serves to designate every kind of craft by whatever Case: Philippine Refining Company vs. Jargue
particular or technical name it may not be known or which nautical - Vessels are personal property although occasionally referred to as a
advancements may give it in the future peculiar kind of personal property
- The court held that a small vessel used for the transportation of - They are subject to mortgage agreeably to the provisions of the
merchandise by sea and for the making of voyages from one port to Chattel Mortgage Law
another of these Islands, equipped and victualed for this purpose by - The only difference between a chattel mortgage of a vessel and a
its owner, is a vessel, within the purview of the Code of Commerce, chattel mortgage of other personality is that it is not now necessary
for the determination of the character and effect of the relations for a chattel mortgage of a vessel to be noted in the registry of the
register of deeds, but it is essential that a record of documents statement of whether the vendor receives its price in whole or in part, or
affecting the title to a vessel be entered in the record of the whether he preserves in whole or in part any claim on said vessel. In case the
Collector of Customs at the port of entry sale is made to a Filipino, this fact shall be stated in the certificate of navigation.

Case: Rubiso and Calixto vs. Rivera When a vessel, being on a voyage, shall be rendered useless for navigation, the
- Ships or vessels, whether moved by steam or by sail, partake, to a captain shall apply to the competent judge on court of the port of arrival,
certain extent, of the nature and conditions of real property, on should it be in the Philippines; and should it be in a foreign country, to the
account of their value and importance in the world of commerce consul of the Republic of the Philippines, should there be one, or, where there
- Transfer of vessels should be in writing and must be recorded in the is none, to the judge or court or to the local authority; and the consul, or the
appropriate registry judge or court, shall order an examination of the vessel to be made.

2. OWNERSHIP If the consignee or the insurer should reside at said port, or should have
representatives there, they must be cited in order that they may take part in
ACQUISITION the proceedings on behalf of whoever may be concerned.

Vessel may be acquired or transferred by any means recognized by laws. REGISTRATION

Thus, vessel may be sold, donated and may even be acquired through Vessels are now registered through MARINA. It is a long standing rule that
prescription. the person who is the registered owner of the vessel is presumed to be
Under the present laws, vessels that are under the jurisdiction of MARINA the owner of the vessel.
can be transferred only with notice to said administrative agency. It is a settled rule that the sale or transfer of the vessel is not binding on
the third person unless the same is registered.
A. Prescription (Code of Commerce)
Article 573. Merchant vessels constitute property which may be acquired and Vessels are required to carry manifest coast-wise trade.
transferred by any of the means recognized by law. The acquisition of a vessel A manifest is a declaration of the entire cargo. The object of a manifest is
must appear in a written instrument, which shall not produce any effect with to furnish custom officers with list of check against, to inform the revenue
respect to third persons if not inscribed in the registry of vessels. officers what goods are being brought into a port of the country on a
The ownership of a vessel shall likewise be acquired by possession in good faith, The requirement that a vessel must carry a manifest is not complied with
continued forthree years, with a just title duly recorded. even if a bill of lading can be presented. A bill of lading is just a
declaration of a specific cargo rather than the entire cargo
In the absence of any of these requisites, continuous possession for ten years Sec 906 of the Tariff and Custom Code provides that manifest shall be
shall be necessary in order to acquire ownership. required for cargo and passengers transported from one place to another
only when one or both of such place is a port of entry.
A captain may not acquire by prescription the vessel of which he is in command.
ARTICLE 575. Co-owners of vessels shall have the right of repurchase and Since the term personal property includes vessel, they are subject to
redemption in sales made to strangers, but they may exercise the same only mortgage agreeably to the provisions of the Chattel Mortgage Law.
within the nine days following the inscription of the sale in the registry, and by Mortgage and other encumbrances over vessels are governed by the
depositing the price at the same time. provisions of presidential decree 1521 (Ship Mortgage Decree of 1978)


The provisions of the Code of Commerce reproduced hereunder are
Article 576. In the sale of a vessel it shall always be understood as included the deemed modified not only by the Civil Code but also by special laws
rigging, masts, stores and engine of a streamer appurtenant thereto, which at
the time belongs to the vendor.
The arms, munitions of war, provisions and fuel shall not be considered as On February 23, 2000, the Maritime Industry Authority directed all
included in the sale. domestic shipowners and operators under Memorandum Circular No.
154 to strictly comply with existing Safety-Related Policies, Guidelines,
The vendor shall be under the obligation to deliver to the purchaser a certified Rules and Regulations
copy of the record sheet of the vessel in the registry up to the date of the sale.
Rules include: (read book page 488-489)
Monitoring of compliances shall be undertaken by the Authority and its
Article 577. If the alienation of the vessel should be made while it is on a
Maritime Regional Offices, together with the needed coordination with
voyage, the freightage which it earns from the time it receives its last cargo
the Philippine Coast Guard
shall pertain entirely to the purchaser, and the payment of the crew and other
The MARINA shall have the power to inspect vessels and all equipment on
persons who make up its complement for the same voyage shall be for his
board to ensure compliance with safety standards
If the sale is made after the vessel has arrived at the port of its destination, the
freightage shall pertain to the vendor, and the payment of the crew and other
individuals who make up its complement shall be for his account, unless the
In sum, the following are persons who take part in Maritime Commerce:
contrary is stipulated in either case.
Article 578. If the vessel being on a voyage or in a foreign port, its owner or
owners should voluntarily alienate it, either to Filipinos or to foreigners
domiciled in the capital or in a port of another country, the bill of sale shall be
executed before the consul of the Republic of the Philippines at the port where
it terminates its voyage and said instrument shall produce no effect with
respect to third persons if it is not inscribed in the registry of the consulate. The
SHIPOWNER the person who is primarily liable for damages sustained in the
consul shall immediately forward a true copy of the instrument of purchase and
operation of vessel.
sale of the vessel to the registry of vessels of the port where said vessel is
inscribed and registered.
Code of Commerce places the primary responsibility on the owner of the
In every case the alienation of the vessel must be made to appear with a
(Uses the term naviero which has been construed to include shipowner, ship
agent and even the charterer who is considered as owner pro hac vice.) Maritime Law: a person duly qualified, and licensed, to conduct a vessel into or
out of ports, or in certain waters.
SHIP AGENT (Code of Commerce) the person entrusted with provisioning of
the vessel, or who represents her in the port in which she happens to be. Broad sense: includes both (1) those whose duty it is to guide vessels into or out
There is also the intention under the Code of Commerce to make the ship of ports, or in particular waters; and (2) those entrusted with the navigation of
agent solidarily liable with the owner. The solidary liability applies both for vessels on the high seas.
breach of contract and extra-contractual obligations such as tort. The ship
agent, even though he is not the owner, is liable in every way to the General understanding: a person taken on board at a particular place for the
creditor for losses and damages without prejudice to his right against the purpose of conducting a ship through a river, road or channel, or from a port.
owner, the vessel and its equipment and freight. But his liability, however
is subject to the LIMITED LIABILITY RULE (Chapter 6 of the Aquino book). COMPULSORY PILOTAGE. In compulsory pilotage, states possessing harbors
enacted laws or promulgated rules requiring vessels approaching their ports to
CAPTAINS V. MASTERS OF VESSELS take on board pilots licensed under local law. In the Philippines, compulsory
pilotage is being implemented in the Port of Manila, the latter being within the
For purposes of Maritime Commerce: Manila Pilotage District.
The words captain and master have the same meaning; both being
chiefs or commanders of ships. Thus, the terms captain and master a. Master and Pilot (See Far Eastern Shipping case on page 520 of the
are used synonymously in the Code of Commerce. Aquino book for the SC discussion on the duties of a pilot)

MARINA regulations: b. Shipowner and Pilot

MASTER the person having command of the ship. The same term is being used
both for domestic trade and international trade. GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused by
his own negligence or default to the OWNERS of the vessel, and to THIRD
BOAT CAPTAIN a person authorized by the MARINA to act as officer and/or in PARTIES for damages sustained in a collision. Such negligence of the pilot
command of a boat/ship or has the qualification/license to act as such. in the performance of duty constitutes a MARITIME TORT.

3 Distinct Roles a captain commonly performs: In cases of COLLISION: the COLLIDING VESSEL is prima facie responsible,
(Inter-Orient Maritime case) hence, the burden of proof is upon the party claiming benefit of the
1. He is a GENERAL AGENT OF THE SHIPOWNER; exemption from liability. Thus, it must be shown affirmatively that the
2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel(most pilot was at fault, and that there was no fault on the part of the officers or
important role for this has something to do with the operation and crew, which might have been conducive to the damage. The fact that the
preservation of the vessel during its voyage and the protection of the law compelled the master to take the pilot does not exonerate the vessel
passengers, if any, and crew and cargo); from liability. The injured party shall seek redress from the vessel. The
3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he owners of the vessel are responsible to the injured party for the acts of
navigates. the pilot, and they must be left to recover the amount as well as they can
against him.
Based on the first aforementioned role, the captain is regarded as the GENERAL
AGENT of the shipowner and as such, he: c. Pilot and his Association

a. Has authority to sign bills of lading; The fact that the pilot is a member of an association does not make the
b. Carry goods aboard and deal with the freight earned; association jointly and severally liable. Article 2180 of the Civil Code does
c. Agree upon rates and decide whether to take cargo; not apply because there is NO EMPLOYER-EMPLOYEE Relationship.
d. Has legal authority to enter into contracts with respect to the vessel and
the trading of the vessel, subject to applicable limitations established by Well-established is the rule that pilot associations are immune to
statute, contract or instructions and regulations of the shipowner. vicarious liability for the tort of their members. They are not the
All aforementioned functions verily commits to the captain the governance, employer of their members and exercise no control over them once they
care, and management of the vessel. Clearly then, the captain is vested with take the helm of the vessel. They are also not partnerships because the
both MANAGEMENT and FIDUCIARY functions. members do not function as agents for the association or for each other.
Pilots associations are also not liable for negligently assuring the
Arts. 610-612 of the Code of Commerce) they made no guarantee of the professional conduct of their members to
the general public.
A ships captain must be accorded a REASONABLE MEASURE OF CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino
DISCRETIONARY AUTHORITY to decide what the safety of the ship and of its book)
crew and cargo specifically requires on a stipulated ocean voyage.
Presumption: A captain is knowledgeable as to the specific requirements of
seaworthiness and the particular risks and perils of the voyage he is to embark COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
upon. -- all the persons on board from the captain to the cabin boy, necessary for the
management, maneuvers, and service, and therefore, it includes the CREW, the
Applicable Principle: The captain has control of ALL departments of service in SAILING MATES, ENGINEERS, STOKERS, and OTHER EMPLOYEES ON BOARD not
the vessel, and reasonable discretion as to its navigation. having specific designations; but it SHALL NOT INCLUDE the passengers or the
persons whom the vessel is transporting.
Basic Principle in Admiralty Law: In navigating the vessel, the master must be
left free to exercise his own best judgment. REGULATION OF MERCHANT MARINE PROFESSION
The practice of marine profession is now governed by special laws and pertinent
Requirements of Safe Navigation: The judgment and discretion of the captain rules issued by the:
of a vessel may be confined within a straitjacket, even in this age of electronic - MARINA;
PILOTAGE: Who is a pilot?
It is not enough that the officers manning the merchant vessel have all the Contracts entered into by shipcaptain or master
qualifications imposed by the Philippine Merchant Marine Officers Act and
other special laws or regulations. It is also required that there is sufficient Inter orient case: one role is they are the general agent of the shipowener. But
number of officers and crew that are serving in the vessel. (Quality and if the obligation contracted by the captain does not enure to the benefit of the
Quantity) vessel, then the shipowner has no liability. There is no conflict bec. 586
obligations contracted by the shipper while 1759 death or injury of passenger as
SECURITY OF TENURE result of contract of carriage.
The Labor Code provisions apply to OFFICERS and CREW of merchant
vessels in DOMESTIC Trade or COASTWISE Shipping. Hence, matters The case in point with the contracts entered into was the case Wing Kee. There
concerning their dismissal or disciplinary action must be in accordance were supplies delivered. Shipagent was said to be liable. SC said at the time you
with provisions of the Labor Code. For officers and crew who are working were still an agent you were liable but at the time agency was terminated you
in foreign vessels who are involved in overseas shipping, there must be are no longer liable.
compliance with the applicable laws on overseas employment as well as
regulations issued by the Philippine Overseas Employment Administration If both SO and SA are sued, being solidarily liable, the SA has right of recourse
(POEA). over SO.

CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and Marine Shipcaptain or master
Engineer, Crew, and Captain (See pages 552-560 of the Aquino book). - The difference is with regard to the tonnage of the vessel (higher:
captain; lower: master; major patron and minor patron)
Parties --- those provided above plus seamen, other members of the - The question on the shipcaptain or master is the exercise of
complement including the stokers (incharge of boilers) and supercargo (agent of discretion
the shippers who has authority to sell goods while on voyage) - Inter orient case: captain tayong did not want to proceed with the
voyage from Singapore to Africa bec. Of lack of oxygen and
4 maritime contracts acetylene. But because of order of management he proceeded. He
1. charter parties was then ordered to repatriated and then another captain took his
2. Botomry place. He filed for illegal dismissal. The issue was the discretion
3. Repondentia exercised by the captain. WON he has the discretion not to proceed
4. Marine insurance (incorporated in the subject insurance) bec. Of lack of supply. SC said you should emphasize reasonable
discretion--- it is the captains duty
ON PERSONS - Inter Orient: triple roles of the captain --- general agent, commander
and technical manager, representative of country
- he has the privilege to invoke limited liability rule Shipcaptain and harbor pilot
- what if with a charter party with charterer, who can invoke the LLR? - Harbor pilot: distinguish if voluntary or compulsory
No jurisprudence. Personal opinion of sir: distinguish on the type of - Case cited by SC on proper relationship of captain and pilot. In far
charter party. If affreightment, shipowner retains possession, eastern shipping case 521 3rd par --- ther are occasion when the
command and navigation of the vessel. If bareboat it is vested upon master may and should interfere and even displace the pilot when
the charterer. he is obviously incapacitate and intoxicated. (look at the book)
- Jurisprudence: except for registration, the charterer is the temporary - In this case, there is relevance on when the captain should interfere.
owner of the vessel. With this, the charterer can invoke LLR (this part If it is voluntary (pilot engaged by shipowner) --- damages caused by
no juris) pilot, shipowner is liable. If compulsory, shipowner can escape
Note: there is not distinction of liability of shipowner and ship agent. They are - If compulsory distinguish whether there was circumstances that
civilly liable would require the shipcaptain to interfere with the ship pilot. If
there are circumstances but captain did not interfere then
There is a situation in maritime law that shipower and agent they are held liable shipowner is liable. If there are circumstances and captain interfere
for the act or omission of a third person which is the ship captain or master. but still there is damage, the shipowner will not be liable.
- Cebu Port Authority --- covered by compulsory pilotage
Case: Yucon case and Sweetlines case Chiefmate or sailing mate (then there are engineers)
- In Yucon, money was entrusted to the captain and the money was - 2008 case, citing the article the code of commerce specifying the
lost. SC concluded that shipowner was liable for the lost because the functions of chiefmate being second in command of the vessel
captain failed to put up measures while in custody of the money. It Chiefmate is a managerial employee (as provided in labor code ---
may not technically to an act but may refer to admission but would loss of trust and confidence
fall under the term acts -
- In sweetlines, bound for catbalogan but the captain chose to allow Seaman
the passengers to disembark in tacloban. This time, this is the act of - On security of tenure: distinguish DOMESTIN (labor code) abroad
captain. The SC concluded that the damages sustained by passengers (POEA).. there is a standard contract (poea prepared and drafted it
bound for catbalogan are to shouldered by the shiponwer and every seaman shall comply with this --- this is to protect filipino
seaman working abroad) that will be signed by every seaman
Indemnities in Favor of 3rd person: OTTA devt case sited in walter smith case stipulating the security of tenure, repatriation, benefits, etc.
- In OTTA the owner of the pier was at the same time the owner of the - Difference for abroad: bigger income but contractual (after contract
goods. SC, because there was a relationship of owner of vessel and go home).. DOMEstic, you can be a regular employee in accordance
goods, then there is presumption of negligence new civil code with the labor code
prevails - JumpShip scenario: it is a valid ground to terminate a seaman
- Walter smith case: There was no relationship. Owner of port and
owner of goods are different. What was applied by court was the law Shipcaptain should conduct preliminary investigation for crimes conducted on
on torts. No presumption of negligence. There should be proof of board
negligence. The owner of vessel proved that he exercised ordinary
diligence (required in ports). What was presented was the D. CHARTER PARTIES
competence of shipcaptain. The shipowner proved ordinary diligence
in choosing the ship captain Charter Parties
- a contract whereby the entire ship, or some of the principal part, is let by - case mostly used by the common carrier as defense ; Home
the owner to a merchant or other person for a specified time or use for Insurance is subrogee (paid SMC of loss cargo shipped thru
the conveyance of goods, consideration of payment of freight American Steamship ; no reference as to what contract but there
- it is a contract, hence, parties are free to stipulate upon such terms and was a mention that it was in affreightment
conditions that would suit their purposes subject to the caveat that these - Ruling : Common Carrier undertaking to carry special cargo
should not be contrary to law or public policy (chartered to special person only ) become a private carrier and
stipulation exempting owner from liability for loss due to the
Parties negligence of its agents is valid;
1. Charterer- merchant or a person who desire s to lease ship or vessel owned
by another by transport of his or her goods for commercial purposes or persons Shipowner can appoint senior officers for the vessel even if bareboat contract.
from one port to another But technically it is an affreightment. Most conflicts will occur if these various
2. Shipowner (SO) principles will have to be mixed.

KINDS: The whereabouts of the vessel is important to know the time for loading and
1. bareboat or demise charterer shipowner leases to the charterer the whole unloading
vessel, transferring to the charterer the entire command, possession and
consequent control over the vessels navigation, including the master and the Policy marina
crew, who becomes the charterers servants Implementing or enforcement --- Coastguard
- charterer becomes an owner pro hac vice
2 conditions implied in charter party
2. Contract of affreightment charterer hires the vessel only, either for a 1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter party
determinate period of time or for a single or consecutive voyage, with the SO 2. --- look at book (ala kaapas)
providing for the provision of the ship, wages of the master and crew, and
expenses for maintenance of the vessel JURISDICTION OF ADMIRALTY CASES
a. time charter vessel is leased to a charterer for a fixed period of - depends on the jurisdictional amount
time - important element of the contract =the subject matter of the
b. voyage charter vessel is leased for a single or particular voyage contract (nature and character)

REQUISITES OF A VALID CHARTER PARTY International Harvester v Aragon

1. consent of the contracting parties -involves loss of cargo shipped from LA to Manila; cargo owner filed an action
2. an existing vessel which should be placed at the disposition of the against common carrier
shipper -SC said liability of petitioner was predicated upon the contract of carriage ;
3. the freight admiralty would involve all maritime contract in whatever form and wherever
4. compliance with requirements of art 652 of Code of commerce made
(Aticle 652 of the Code of Commerce provides that the charter party Macondry v Delgado Brothers
shall contain, among others, the name, surname, and domicile of the - Delgado was an operator of a pier service ; WON operator exercised
charterer, and if he states that he is acting by commission, that of the its duty in loading and unloading of cargos ; no contract of carriage ;
person for whose account he makes the contract.) obligation was only to load the to the ship ; no application of
Caltex v. Sulpicio Lines
There was a voyage charter; collision between MT Vector (tanker) and Doa Paz FRIEGHT OR FREIGHTAGE
(owned by Sulpicio) ; breach of contract filed by the passengerss heirs against - price of carriage
Sulpicio ; 3d party complaint against registered owner of the tanker including - shall accrue according to what is stipulated in the contract
Caltex ( that they were negligent and in bad faith by not seeing to it that the - should there be no stipulation or if it is ambiguous , rules shall be
tanker was seaworthy) a. freight shall begin to run from the day of loading on the vessel
b. in charters with fixed period, the freight shall begin to run
Issue: WON charterer shall be liable under Maritime Law? upon that very day
c. If freight is charged according o weight , payment shall be
Ruling: Liability cannot be attached to Caltex; the charter did not affect the made according to gross weight , including the weight of the
business of Sulpicio as a common carrier ; rights and responsibilities of containers
ownership still rested on the owner
LAST DAYS- period of time stipulated fro loading and unloading ( provided for in
Planters Product v CA charter party ) ; if no lay days provided for in the charter party, it is understood
- time charter; Planters purchased fertilizers from the US; voyage to that the charterer will unload and discharge cargoes within a reasonable time or
the Philippines ; upon arrival, shortage in the cargo was discovered ; with reasonable diligence
filed actions against carrier fro damages ( breach of Contract) ; RTC
ruled in favor of the Planters; Ca reversed & absolved carrier as it Demurrage a sum of money due by express contract for detention of the
was converted from common carrier to private ; vessel in loading , beyond time allowed for that purpose in that charter party ;
- Ruling : It cannot become a private carrier ; bareboat charter can sum of which is usually fixed by the parties in the charter party ; liability for this
become a private carrier but in contract of affreightment remains as exists only when expressly stipulated
common carrier ( action based on contract of carriage ; presumption
of negligence ) ; carrier was able to rebut the presumption of Deadfreight where the charterer failed to occupy the leased portion of the
negligence ( result the inherent character of the fertilizers) vessel, he may thereby be liable by the shipowner for the deadfreight that
Coastwise Lighterage v. CA
- WON private carrier would convert to a common carrier; contract of STIPULATION IN CHARTER PARTIES
- Ruling : reiterated Planters ruling ; but was not able to rebut GR: parties are free to stipulate subject to art 1744 t01754 0f NCC
presumption of negligence ; did not exercise EO diligence ( hired
unlicensed patron) Art. 1744. A stipulation between the common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or
Home Insurance v. American Steamship deterioration of the goods to a degree less than extraordinary diligence shall
be valid, provided it be:
(1) In writing, signed by the shipper or owner; - If there is charter party or bill of lading (BOL) = no contract at all; but according
(2) Supported by a valuable consideration other than the service to Blanco, if there is delivery and receipt of cargo combined with the GF and
rendered by the common carrier; and mutual consent = contract present , better than BOL
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy: LOAN ON BOTTOMRY loan made by shipowner or shipagent guaranteed by
(1) That the goods are transported at the risk of the owner or vessel itself and repayable upon arrival of vessel at destination; vessel/portion
(2) That the common carrier will not be liable for any loss, LOAN ON RESPONDENTIA loan, taken on security of the cargo laden on a
destruction, or deterioration of the goods; vessel, and repayable upon safe arrival of cargo at destination; cargo/goods
(3) That the common carrier need not observe any diligence in the
(4) That the common carrier shall exercise a degree of diligence less 1. Exposure of security to marine peril;
than that of a good father of a family, or of a man of ordinary 2. Obligation of the debtor conditioned only upon safe arrival of the security
prudence in the vigilance over the movables transported; at the point of destination.
(5) That the common carrier shall not be responsible for the acts or
omission of his or its employees; Requisites of a Loan on Bottomry/Respondentia:
(6) That the common carrier's liability for acts committed by 1. Shipowner borrows money for use, equipment or repair of vessel
thieves, or of robbers who do not act with grave or irresistible 2. For a definite term and with extraordinary interest called premium
threat, violence or force, is dispensed with or diminished; 3. Secured by pledged of vessel or portion thereof in the case on loan on
(7) That the common carrier is not responsible for the loss, Bottomry; or pledge of goods in case of Respondentia
destruction, or deterioration of goods on account of the defective 4. Loan repayment depends or conditioned on the safe arrival of goods for
condition of the car, vehicle, ship, airplane or other equipment respondentia and obligation to repay is extinguished if pledged goods
used in the contract of carriage. are lost (Respondentia)
5. Obligation to repay is extinguished if vessel is lost due to specified
Art. 1746. An agreement limiting the common carrier's liability may be marine perils in the course of voyage or within limited time (Bottomry)
annulled by the shipper or owner if the common carrier refused to carry the FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
goods unless the former agreed to such stipulation. May be executed by means of:
1. public instrument
Art. 1747. If the common carrier, without just cause, delays the transportation 2. policy signed by the contracting parties and the broker taking part therein
of the goods or changes the stipulated or usual route, the contract limiting the 3. private instrument (Art. 720)
common carrier's liability cannot be availed of in case of the loss, destruction,
or deterioration of the goods. GR: The captain cannot contract loans on respondentia secured by the cargo,
and should he do so, the contract shall be void. Neither can he borrow money
Art. 1748. An agreement limiting the common carrier's liability for delay on or Bottomry for his own transactions.
account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's liability is limited to the 1. On the portion of the vessel he owns, provided no money has been
value of the goods appearing in the bill of lading, unless the shipper or owner previously borrowed on the whole vessel, nor exists any other kind of lien or
declares a greater value, is binding. obligation chargeable against her.
2. When he is permitted to do so, he must necessarily state what interest he
Art. 1750. A contract fixing the sum that may be recovered. by the owner or has in the vessel.
shipper for the loss, destruction, or deterioration of the goods is valid, if it is CONTENTS OF THE LOAN CONTRACT:
reasonable and just under the circumstances, and has been fairly and freely 1. kind, name and registry of the vessel;
agreed upon. 2. name, surname and domicile of the captain;
3. names, surnames and domiciles of the borrower and the lender;
Art. 1751. The fact that the common carrier has no competitor along the line 4. amount of the loan and the premium stipulated;
or route, or a part thereof, to which the contract refers shall be taken into 5. time for repayment;
consideration on the question of whether or not a stipulation limiting the 6. goods pledged to secure repayment;
common carrier's liability is reasonable, just and in consonance with public 7. voyage during which the risk is run (Art.721)
Art. 1752. Even when there is an agreement limiting the liability of the
common carrier in the vigilance over the goods, the common carrier is 1. Bottomry by the ship owner or ship agent; outside of the residence of
disputably presumed to have been negligent in case of their loss, destruction the owners, the captain.
or deterioration. 2. Respondentia only the owner of the cargo

Art. 1753. The law of the country to which the goods are to be transported DISTINCTIONS:
shall govern the liability of the common carrier for their loss, destruction or BOTTOMRY/ RESPONDENTIA ORDINARY LOAN
deterioration. 1. Not subject to Usury Law 1. Subject to Usury Law
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the 2. Liability of the borrower is 2. Not subject to any contingency
passenger's baggage which is not in his personal custody or in that of his contingent on the safe arrival of the
employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 vessel or cargo at destination
concerning the responsibility of hotel-keepers shall be applicable. 3. The last lender is a preferred 3. The first lender is a preferred
creditor creditor
ART. 653. if the cargo should be received without the charter party having been
signed, the contract shall be understood as executed In accordance with what 4. Must have a collateral 4. May or may not have collateral
appears in the bill of lading, the sole evidence of title with regard to the cargo
for determining the rights and obligations of the ship agent, captain and 5. Collateral is the vessel or cargo 5. Maybe property, real or
charterer subject to maritime risk personal
6. Must be in writing 6. Need not be in writing but
interest shall not be due unless - The vessel should have goods. The goods must be laden in the vessel
expressly stipulated in writing - Is it necessary that the boat is on voyage? The vessel must be in the
7. To be binding on third person must 7. Need not be registered actual course of voyage because this is the objective of the law.
be recorded in the registry of vessels Because if the vessel is docked in the port the owner can simply
of port of registry of the vessel obtain loans. And besides there is no risk when the vessel is docked
8. Loss of collateral extinguishes the 8. Does not extinguished if there is (but no jurisprudence)
same a loss of the collateral(if any)
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the bar) --
Consequences of loss of effects of the loans - 5 differences
1. with respect to form --- can you validly execute a bottomry or respondentia
1. Effects of loans be lost due to accident of the sea during the time, and on the verbally? You cannot. Bec under the code of commerce no judicial action can
occasion of the voyage which has been designated in the contract and proven arise when the contract is not reduced in writing. But this is not the case in
that the cargo was on board simple loan. But in simple loan you take note the statute of frauds if not in
- lender losses the right to institute the action which would pertain to him writing B and R, you can dismiss case due to failure to state cause of action.

Except: when the loss was Q: why hardly used at present?

1. caused by inherent defect of the thing A: because of sophistication. Captains can just call up any agent the shipowner
2. through fault or malice of the borrower to deliver anything for the use of the vessel to deliver. This contract was
3. through barratry on the part of the captain recognized in medieval times.
4. caused by damages suffered by the vessel as a consequence of
being engaged in a contraband
5. loaded the goods on a vessel different from that designated in the F. AVERAGES AND COLLISIONS
contract unless the change was caused by force majeure
2. The lenders on bottomry or respondentia shall suffer in proportion to their 1. Averages
respective interest, the general average which may take place in the things 2. Arrival Under Stress
upon which the loans were made. 3. Collision
4. Shipwreck
3. In case of shipwreck, the amount for payment of the loan shall be deduced to
the proceeds of the effects which have been saved but only after deducting the *Averages an extra-ordinary or accidental expense incurred during the voyage
costs of the salvage. in order to preserve the cargo, vessel or both; and all damages or deterioration
suffered by the vessel from departure to the port of destination, and to the
4. If the loan should be on the vessel or any of her parts, the freight earned cargo from the port of loading to the port consignment. (Art. 806)
during the voyage for which the loan was contracted shall also be liable for its
payment, as far as it may reach. CLASSES OF AVERAGES:
A. Particular or Simple Average
5. If the same vessel or cargo should be the object of the loan of Bottomry or B. Gross or General Average
respondentia and maritime insurance, the value of what may be saved in case
of shipwreck shall be divided between the lender and the insurer, in proportion A. Particular or Simple Average
to the legitimate interest of each one, taking in consideration, for this purpose
only, the principal with respect to the Damage or expenses caused to the vessel or cargo that did not inure to
common benefit, and borne by respective owners. (809)
Maritime contracts include charter parties and loans on bottomry and The owner of the goods which gave rise to the expense or suffered the
respondentia are considered maritime contracts damage shall bear this average. (Art. 810)
Q: why do we have to study this topic? Are these relevant? res perit domino applies
A: they are hardly used at present. However, we have to study this just in case if the vessel or goods are hypothecated by loan on bottomry and
this will be asked in the bar. Especially in the unique terms used in this topic.. respondentia, the lender shall bear the loss in proportion to his interest

General provisions in contracts will govern Examples: see article 809 of the code of commerce

Basic provision you should not forget: RULES ON AVERAGES:

1. there should be a marine risk 1. Averages is defined as damage deliberately caused or an expense
2. the condition that the vessel or the goods has perished then the right of the deliberately incurred due to a marine peril and which has resulted in
lender to collect everything as well as stipulated interest is extinguished saving both vessel and cargo or only the vessel or cargo.
(not sure if there are other more.. basin ala ko kaapas) 2. Where both vessel and cargo are saved, it is general average; where only
the vessel or only the cargo is saved, it is particular average.
BOTTOMRY 3. The person whose property has been saved must contribute to reimburse
- It may refer to the vessel the damage caused or expense incurred if the situation constitutes
- The bottom or the hull or the kill of the vessel can be pledged in this general average.
- The whole vessel can be a subject of a security or collateral B. Gross or General Average
- PD. 1521: (is this different) --- loan is the principal, mortgage is the Damage or expenses deliberately caused in order to save the vessel, its cargo
accessory. or both from real and known risk. (Art. 811)
- The contract of bottomry is principal, the mortgage under pd 1521 is All the persons having an interest in the vessel and the cargo therein at the
merely a security time of the occurrence of the average shall contribute to satisfy this average.
- In pd 1521 under section 4 it is a requirement that the whole of the (Art. 812)
vessel must be mortgaged (no jurisprudence on this matter whether
a part of the vessel can be mortgaged) REQUISITES:
- In bottomry the whole or the part of the vessel can be the subject 1. common danger present
- IF the part of the vessel can be pledged, is it necessary that there 2. arising from accidents of sea, disposition of authority
should be goods? No. no need for goods. 3. peril imminent and ascertained
4. part of vessel or cargo deliberately sacrificed
RESPONDENTIA 5. intended to save vessel or cargo
6. proper legal steps and authority taken officers of the vessel.
3. The minutes must also contain a detail of all the goods jettisoned and
Common danger those injuries caused to those on board.
- means both the ship and the cargo, after has been loaded, are subject to the 4. The captain shall deliver it to the maritime judicial authority of the first
same danger, whether during the voyage, or in the port of loading or unloading, port he may make, within 24 hours after his arrival, and to ratify it
that the danger arises from the accidents of the sea, disposition of authority, or immediately under oath.
faults of men, provided that circumstances producing the peril should be
ascertained and imminent or may rationally be said to be certain and imminent -ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON:
1. those which are on the deck, preferring the heaviest one with the least
- When the measure of precaution adopted solely and exclusively for the utility and value;
preservation of the vessel from the danger of seizure or capture and not for the 2. those which are below the upper deck, beginning with the one with
common safety is not considered as common danger greatest weight and smallest value. (Art. 815)

Deliberate Sacrifice
- voluntary sacrifice of a part for the benefit of the whole in order to justify the Examples of General Average
average contribution Read Art 811 of the Code of Commerce

*voluntary jettison- the casting away of some portion of the associated By Whom Borne
interests for the purpose of avoiding the common peril from the whole to a - shall be borne by those who benefited from the sacrifice; the shipowner and
particular portion of those interests the owner of the cargoes that were saved

-the goods on board refer to in jettison should be proven by means of bill of Contribution may be imposed to;
lading and with regards to those belonging to vessel by means of inventory a. insurers ( Insurance Code of the Philippines)
prepared before the departure - they are obliged to pay for the indemnification of the gross average provided
that the liability shall be limited to the proportion of contribution attaching to
2 cases where there can also be general averages even if the sacrifice was not his policy value where this is less than the contributing value of the thing
made during the voyage: insured
a. where the sinking of the vessel is necessary to extinguish a fire in a
port, roadstead, creek or bay b. lenders of bottomry and respondentia (Code of Commerce)
b. where cargo is transferred to lighten the ship on account of a -obliged to pay in proportion to their respective interest, the general average
storm to facilitate entry into a port which may take place in the goods which the loan is made

Art. 816: in order that the goods jettisoned may be included in the gross Who is entitled to indemnity?
average and the owners entitled to indemnity it is necessary that the cargos Owner of the goods which were sacrificed is entitled to receive the general
existence on board be proven by a bill of lading; and with regard to those contribution
belonging to the vessel, by means of an inventory prepared before departure. Except;
1. goods carried on desk unless the rule special law or
Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry customs of the place allow the same
to a port or roadstead, part of the cargo should be transferred to barges or 2. goods that are not recorded in the books or records of the
lighters and be lost, the owner of the said part is entitled to indemnity as if the vessel
loss originated from a gross average, the amount being distributed between the 3. fuel of the vessel if there is more than sufficient fuel for
vessel and cargo from which it came. the voyage
If on the contrary the merchandise transferred should be saved and the vessel
should be lost, no liability may be demanded of the salvage. American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do not exceed 5% of the
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, interest which the claimant may have in the vessels or cargo if it is general
creek, or bay, it should be decided to sink any vessel, this loss shall be average, and 1% of the goods damaged if particular average deducting in both
considered gross average, to which the vessels saved should contribute. cases the expenses of appraisal, unless there is an agreement to the contrary.

Note: the loss or damage sustained by cutting away wreck or parts of the ship It is clear that the damage of the cargo is particular average since the loss is less
which have been previously carried away or effectively lost by accident shall not than 1% to the value of the cargo and there appears to be no allegations as to
be made good as general average any agreement defendants and consignee of the goods to the contrary, by
express provision of law, plaintiff is barred from suing for recovery.
Sacrifice must be Successful
- no general contribution can be demanded if the vessel and other cargo that Law on averages does not apply if the CC is negligent.
are sought to be saved were in fact not saved (art. 860)
- owners of the goods saved shall not be liable for the indemnification of those AVERAGES
jettisoned, lost or damaged
-hence when the sacrifice was not successful in saving the ship, there will be no Under the rule, deck cargo is permitted in coastwise shipping but prohibited in
general contribution overseas shipping.
1. If deck cargo is located with the consent of the shipper on overseas
Compliance with Legal Steps trade, it must always contribute to general average, but should the same
be jettisoned, it would not be entitled to reimbursement because there
- Procedure for recovery: (Art. 813-814) is violation of the Y-A Rules.
1. There must be a resolution of the captain, adopted after a deliberation 2. If deck cargo is loaded with the consent of the shipper on coastwise
with the other officers of the vessel and after hearing all persons shipping, it must always contribute to general average and if jettisoned
interested in the cargoes. If the latter disagree, the decision of the captain would be entitled to reimbursement.
should prevail but they shall register their objections.
2. The resolution must be entered in the logbook, stating the reasons and - may also be used to solve controversies where no provision of the
motives for the dissent, and the irresistible and urgent causes if he acted code of commerce is in point because the said rules embody the
in his own accord. It must be signed, in the first case, by all persons custom of maritime states
present in the hearing. In the second case, by the captain and all the
AVERAGES American Home insurance (take note this case--- bar)
- the same concept that was existing in medieval times can be applied at - Transportation of tv sets, the shipcapatain was uprised of the
present typhoon. Still captain continued with the journey. Then na abot ang
typhoon captain directed that the tv sets should be jettison. Saved
Relevance of averages (take note these ex. Connected to expenses under 806) vessel. Reklamo owner. Is there general average? No. if the
under 806 --- averages are: shipowner is negligent, the law on general averages does not apply.
o Extraordinary expenses ex. If machine does not work, Note that examples of the two types of averages are not exclusive. There is a
you have to ask help of a tugboat the expenses on the word especially thus there may be other example that may fall under this two
use of tugboat is a question of averages. This is type of averages.
extraordinary because it is not foreseen. --- assuming the
engine of the vessel was defective, can that be YORK AND TURP RULES
considered an average? YES. (question now if it is - THIS CAN be stipulated in a contract that this rule will apply in
particular or general) respect to averages
o Damages or deterioration suffered refer to the physical - In the absence of stipulation in the contract in applying this rule,
feature or attribute of the goods. such rule is inapplicable
- these two are different
Q: ordinary expenses are not averages bec. They are foreseeable, are there
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES instance that they can be considered to be extraordinary ave
A; if the parties agree that the averages will cover ordinary expenses. The code
Hernandez averages are losses. If there is a loss incurred, the loss will be of commerce does not prohibit the inclusion of other expenses under averages.
shouldered on where it falls. (ex. If you have goods transported from origin to
destination but in process it was damaged by sea water. The shipper or owner G. COLLISIONS
will shoulder the loss. What will shipper do to recover loss? If insured go after
insurance. Insurance then files action against common carrier due to Collisions - impact of 2 vessels both of which are moving.
negligence) --- if general average, there is special circumstance, the loss will not Allision - impact between a moving vessel and a stationary one.
be shouldered on where it falls but wil be shouldered proportionately by
persons who have benefited the circumstance 3 Zones of Time in the Collision of vessels:
1. First zone all time up to the moment when risk of collision begins;
4 reqs for general averages (see above notes) MEMORIZE; MAGSAYSAY VS. 2. Second zone time between moment when risk of collision begins and
AGAN moment it becomes a practical certainty;
1. common danger TO Both vessel and cargo 3. Third zone time when collision is certain and time of impact.
2. deliberate sacrifice
3. successful saving Error in Extremis - sudden movement made by a faultless vessel during the
4. compliance with the proper steps 3rd zone of collision with another vessel which is at fault during the 2nd zone.
Even if such sudden movement is wrong, no responsibility will fall on said
If no special circumstance, it is a particular or simple average --- the owner of faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632).
the vessel will be the one who will shoulder the loss. The negligence of captain,
the owner of the vessel will shoulder. But if there is special circumstance, the Rules on Collision of Vessels under Code of Commerce:
loss will be shouldered proportionately by those who benefited 1. The collision may be due to the fault, negligence or lack of skill of the
captain, sailing mate, or any other member of the complement of the
Standard oil case the ship captain will not release goods to the shipper unless vessel. The owner of the vessel at fault be liable for losses or damage.
the shipper will contribute their share. The issue was the duty of the captain to (Art. 826)
liquidate he did not file for the appropriate proceeding, you should result to 2. The collision may be due to the fault of both vessels. Each vessel shall
legal liquidation. Captain here failed TO INITIATE proper proceeding thus suffer its own losses, but as regards the owner of cargoes both vessels
shipowner is liable for actions of captain shall be jointly and severally liable. (Art. 827)
3. If it cannot be determined which vessel is at fault. Each vessel shall also
Q: is the duty of captain to initiate a condition precedent? suffer its own losses and both shall be solidarily liable for losses o
A: no. even if shipcaptain does not initiate, the shipowner can still file the damages on the cargoes. (Art. 828)
appropriate proceeding in court. 4. The vessels may collide with each other through fortuitous event or force
majeure. In this case each shall bear its own damage. (Art. 830)
COMMON DANGER both to vessel and cargo. If one invokes general average 5. Two vessels may collide with each other without their fault by reason of a
then that person must prove what he allege. In standard oil since shipcaptain third vessel. The third vessel will be liable for losses and damages. (Art.
invoked gen aver they should be the one to prove. Failure to prove, they 831)
cannot ask for contribution from owners of the goods. 6. A vessel which is properly anchored and moored may collide with those
nearby reasons of storm or other cause of force majeure. The vessel run
It is also possible that there are no goods involved. Only extraordinary expense into shall suffer its own damage and expense. (Art. 832)
Phil. Home assurance case --- discussed also in chapter 3 --- when it exploded,
vessel got burned, another vessel came to the rescue to extinguish the fire and Cases covered by collision and allision:
towed the vessel to the nearest destination. Goods were saved from the subject 1. One vessel at fault such vessel is liable for damage caused to innocent
vessel. The shipowner asked for contribution to the owner of the goods which vessel as well as damages suffered by the owners of cargo of both vessels.
were saved. SC said, shipowner did not comply legal steps 813-815 thus you 2. Both vessels at fault each vessel must bear its own loss, but the shippers
cannot allege general averages. of both vessels may go against the ship owners who will be solidarily
If the averages are not general, it is particular. the shipowner will be solely 3. Vessel at fault not known same as rule as (2). (Doctrine of Inscrutable
liable in the case of Magsaysay, there was no deliberate sacrifice. Fault)
4. Third vessel at fault same rule as (1).
SUCCESSFUL SAVING 5. Fortuitous event no liability. Each bears its own loss.
- Both vessel and goods must be saved
- If vessel not saved, no general averages. Even if goods were saved Prerequisite to recovery:
- You have to start with resolution, placing of reso in the log book, Protest should be made within 24 hours before the competent authority at
accounting of goods thrown away starting those on deck and to the point of collision or at the first port of arrival, if in the Philippines and to the
follow from those not on deck (read 83-815) Philippine consul, if the collision took place abroad. (Art. 835)
Injuries to persons and damage to cargo of owners not on board on collision Custody of cargo:
time need not be protested. (Art. 836) intrusted to the captain (except in cases of force majeure)
(Art. 823)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT if entire cargo or part thereof should appear to be damaged, or there
APPLICABLE. should be imminent danger of its being damaged
captain may request judge of competent court / consul, the sale of
DOCTRINE OF INSCRUTABLE FAULT all or part of the cargo
In case of collision where it cannot be determined which between the two person taking cognizance shall authorize it (after examination and
vessels was at fault, both vessels bear their respective damage, but both should declaration)
be solidarily liable for damage to the cargo of both vessels. captain shall justify the legality of his conduct, answering to the
shipper for the price of the merchandise would have brought if they
NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall had arrived in good condition
be limited only to the value of the vessel with all its appurtenances and (Art. 824)
freightage earned during the voyage. When the latter is not sufficient to cover
all the liabilities, the indemnity due by reason of the death or injury of persons Liability of captain:
shall have preference. (Arts. 837 and 838) captain responsible for the damages caused by his delay
if cause of arrival under stress ceases he should not continue the
if cause of arrival should have been the fear of enemies
* ARRIVAL UNDER STRESS arrival of a vessel at a port of destination on deliberation and resolution (in a meeting of officers of the vessel and
account of lack of provision, well founded fear of seizure, privateers, pirates, or persons interested in the cargo) shall precede the departure
accidents of sea disabling navigation. (Art. 819) (Art. 825)
NOTE: Captain must make a protest
* Shipwreck the demolition or shattering of a vessel caused by her driving
Steps to be taken in the determination of the propriety of arrival under stress ashore or on rocks and shoals in the midseas, or by the violence of winds or
1. captain should determine during the voyage if there is a well founded fear waves in tempests
of seizure, privateers of other valid grounds - loss of the vessel at sea as a consequence of its grounding, or running against
2. captain shall then assemble the officers an object in sea or on the coast
3. captain shall summon the persons interested in the cargo who may be
present and who may attend but without right to vote Loss or deteriorations of vessel or cargo caused by shipwreck or stranding
4. the officers shall determine and agree if there is well founded reason individually account of the owners; part which may be saved belonging to them,
after examining the circumstances; Captain shall have the deciding vote same proportion. (Art. 840)
5. agreement shall be drafter and the proper minutes shall be signed and If the wreck was due to malice, negligence or lack of skill of the captain, the
entered into the log book owner of the vessel may demand indemnity from said captain.(Art. 841)
6. objections and protests shall likewise be entered in the minutes The goods saved from the wreck to be specially bound for the payment of the
expenses of the respective salvage. (Art. 842)
- Absence of one of the steps, can still be considered arrival under stress. If several vessels sail under convoy, and any of them should be wrecked, the
cargo saved will be distributed among the rest in proportion to the amount
When not lawful: which each one is able to take. If any captain should refuse, without sufficient
1. lack of provisions due to negligence to carry according to usage and cause, to receive what may correspond to him, the captain of the wrecked
customs; vessel to enter a marine protest against him. If it is not possible to transfer to
2. risk of enemy not well known or manifest the other vessels the entire cargo of the vessel wrecked, the goods of the
3. defect of vessel due to improper repair; and highest value and smallest volume to be saved first. Designation to be made by
4. malice, negligence, want of foresight or lack of skill of captain. (Art. 820) the captain with concurrence of his officers. (Art. 843)
The captain taking on-board the goods saved from the wreck to continue his
Who bears expenses: course to the port of destination and upon arrival he should deposit the goods
if arrival under stress is proper shipowner or ship agent will only for disposal to their owners. In case the captain changes his course, and if he
be liable for the expenses of the arrival can unload them at the port of which they were consigned, he may make said
if arrival under stress is improper shipowner and ship agent will port if the shippers or supercargoes present and the officers and passengers of
be liable for the same expenses and, in addition, they shall be the vessel consent thereto. But he is not required to do so even if he has the
solidarily liable for damages caused to the cargoes by such arrival consent during time of war or when the port is difficult and dangerous to make.
under stress The owners of the cargo to defray all the expenses of this arrival and the
(Art. 821) payment of the freightage.(Art. 844)
If cannot be, proceed to judicial sale complying with the formalities and on
NOTE: publicity.(Art. 845)
- After cessation of the cause of the arrival under stress, captain should
continue voyage or else he shall be liable. I. SALVAGE LAW (Act No. 2616)

Unloading of cargoes to make repairs: * SALVAGE services one person renders to the owner of a ship or goods, by his
- in order to make repairs to the vessel or because there is danger that own labor, preserving the goods or the ship which the owner or those entrusted
cargo may suffer damage necessary to unload; captain must with the care of them have either abandoned in distress at sea, or are unable to
request authorization from competent judge or court for removal, protect or secure.
and carry it out w/ knowledge of the person interested in the cargo
- in a foreign port Philippine Consul Kinds of Salvage:
- in case of the vessel expenses shall be for the account of the ship Voluntary compensation is dependent on the success.
owner or agent Under contract for a per diem or per horam wage payableat all
- in case of the cargo chargeable against the owners of the events.
merchandise for whose benefit the act was performed Under contract for compensation payable only in case of success.
- if both expenses to be divided proportionately between the value
of the vessel and cargo
(Art. 822) Claim for valid salvage:
- Provides for a reward for voluntary salvage
- Other persons who assist in saving the vessel or its cargo from owner; if the latter does not claim it within 3 years, 50% of the said
shipwreck shall be entitled to a similar award proceeds shall go to the salvors, who shall divide it equitably, and the
other half to the government (Secs. 11-12).
Persons not entitled to salvage compensation: 3. If a vessel is the salvor, the reward shall be distributed as follows:
1. Crew of the vessel shipwrecked or which was in danger of shipwreck a. 50% to the shipowner;
2. He who shall have commenced the salvage in spite of opposition of b. 25% to the captain; and
the captain or of his representatives c. 25% to the officers and crew in proportion to their salaries
3. He who shall have failed to comply with the provisions of Section 3
(Section 3. Tthe salvor who saves or picks up a vessel or merchandise SALVAGE LAW
at sea, in the absence of the ship captain, ship owner or a
representative of either of them, they being unknown, shall convey SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR ITS CARGO SHALL
and deliver the vessel or merchandise ASAP to the collector of BE BEYOND THE CONTROL OF THE CREW, OR SHALL HAVE BEEN ABANDONED
customs if the port has a collector and otherwise to the provincial BY THEM, AND PICKED UP AND CONVEYED TO A SAFE PLACE BY OTHER

Requisites of compensation or salvage reward: THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH, ASSIST IN
1. Object must have been exposed to marine peril (fire, acts of pirate, SAVING A VESSEL OR ITS CARGO FROM SHIPWRECK, SHALL BE ENTITLED TO A
thieves) LIKE REWARD.
2. Salvage services rendered voluntarily and is not required as an
existing duty or a form of contract (See Sec. 8) SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON ACTING IN HIS STEAD,
* Pilots are not entitled to a reward (Atty. Capanas) IS PRESENT, NO ONE SHALL TAKE FROM THE SEA, OR FROM THE SHORES OR
3. Salvage services are successful in whole or in part COAST MERCHANDISE OR EFFECTS PROCEEDING FROM A SHIPWRECK OR
4. Valid vessel which is shipwrecked beyond the control of the crew or PROCEED TO THE SALVAGE OF THE VESSEL, WITHOUT THE CONSENT OF SUCH
shall have been abandoned (not necessary) CAPTAIN OR PERSON ACTING IN HIS STEAD.
* Courts will not interfere in the agreement of the parties except but where
there is no agreement or it is excessive the reward is fixed by the RTC judge. SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR MERCHANDISE AT SEA, IN
* Derelict a ship or cargo which is abandoned and deserted at sea by those OF EITHER OF THEM, THEY BEING UNKNOWN, SHALL CONVEY AND DELIVER
who were in charge of it, without any hope of recovering it or without any SUCH VESSEL OR MERCHANDISE, AS SOON AS POSSIBLE, TO THE COLLECTOR OF
- determined by ascertaining what was the intention and expectation of those PROVINCIAL TREASURER OR MUNICIPAL MAYOR.
in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on the sea without hope SEC. 4. AFTER THE SALVAGE IS ACCOMPLISHED, THE OWNER OR HIS
or intention of recovery or return by the master or the crew, whether resulting REPRESENTATIVE SHALL HAVE A RIGHT TO THE DELIVERY OF THE VESSEL OR
from wreck, accident, necessity, or voluntary abandonment THINGS SAVED, PROVIDED THAT HE PAYS, OR GIVES A BOND TO SECURE, THE
Jetsam goods that were thrown off a ship which was in danger THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE OF
Flotsam goods that floated off the ship while ship was in danger or AGREEMENT, SHALL BE DETERMINED BY THE COLLECTOR OF CUSTOMS OR BY
Ligan goods left as sea on the wreck or tied to a buoy so that they THINGS SAVED MAY BE FOUND.
can be recovered later
Basis of entitlement to salvage reward (Circumstances to consider): MAYOR, TO WHOM A SALVAGE IS REPORTED, SHALL ORDER:
1. The labor expended by the salvors in rendering the salvage service A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.
2. The promptitude, skill and energy displayed in rendering the service B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN
3. The value of the property employed by the salvors in rendering the EVIDENTLY PREJUDICIAL TO THE INTERESTS OF THE OWNER, WHEN NO
service, and danger to which such property was exposed OBJECTION IS MADE TO SUCH SALE.
4. The risk incurred by the salvors in rescuing the property from the C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE
6. The degree of danger which the property was rescued STATEMENT OF THE MARK AND NUMBER OF THE EFFECTS REQUESTING
Rights and obligations of salvors and owners:
Salvor is entitled to compensation for services rendered. He has, SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION OF
under the Salvage Law, a lien upon the property salvaged. THE AUTHORITIES, THE OWNER OR HIS REPRESENTATIVE SHALL CLAIM THEM,
On the other hand, the owner does not denounce his right to the SUCH AUTHORITIES SHALL ORDER THEIR DELIVERY TO SUCH OWNER OR HIS
property. There is no presumption of an intention to abandon such REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY OVER THEIR
A salvor, in maritime law, has an interest in the property; called a lien, but it DECIDED BY THE COURT OF FIRST INSTANCE OF THE PROVINCE.
never goes, in the absence of a contract expressly made, upon the idea of debt
due from the owner to the salvor but upon the principle that the service creates SEC. 7. NO CLAIM BEING PRESENTED IN THE THREE MONTHS SUBSEQUENT TO
1. The reward is fixed by the RTC judge in the absence of agreement or WITHOUT ANYONE CLAIMING IT, ONE-HALF OF THE DEPOSIT SHALL BE
where the latter is excessive (Sec. 9). ADJUDGED TO HIM WHO SAVED THE THINGS, AND THE OTHER HALF TO THE
2. If sold (no claim being made within 3 months from publication), the INSULAR GOVERNMENT.
proceeds, after deducting expenses and the salvage claim, shall go to the
OR ASSISTANCE: Carrier, and
A. THE CREW OF THE VESSEL SHIPWRECKED OR WHICH WAS IS DANGER OF - They are given their respective rights and obligations under COGSA.
SHIPWRECK; - Carrier (covered by COGSA) not limited to the shipowner; includes
charterer who enters into a contract of carriage with the shipper
B. HE WHO SHALL HAVE COMMENCED THE SALVAGE IN SPITE OF OPPOSITION - Charterer charters a vessel and conducts his own business for his own
after chartering the vessel, he uses the vessel to conduct a
C. HE WHO SHALL HAVE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION business of transportation obtaining goods from 3rd persons to transport the
THREE. latters goods

CONCERNING THE AMOUNT OF THE REWARD FOR SALVAGE OR ASSISTANCE, Civil Code requires international carriers to exercise extraordinary
ITS VALIDITY MAY BE IMPUGNED BECAUSE IT IS EXCESSIVE, AND IT MAY BE diligence in the performance of their contractual obligations
REQUIRED TO BE REDUCED TO AN AMOUNT PROPORTIONATE TO THE Section 2 of COGSA carriers obligation and liabilities in relation to
CIRCUMSTANCES. the loading, handling, stowage, carriage, custody, care and discharge
of such goods
SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING SECTION, AS WELL AS Section 3 of COGSA responsibilities of the carrier under COGSA
PRINCIPALLY THE EXPENDITURES MADE TO RECOVER OR SAVE THE VESSEL OR - BOL serves as prima facie evidence of the receipt by the carrier of the goods
PERSONS WHO AIDED, THE DANGER TO WHICH THEY AND THEIR VESSELS WERE * Notice of claim must be made within 3 days from delivery if the damage is
SALVAGED, AND THE VALUE OF SUCH THINGS AFTER DEDUCTING THE * Prescriptive period1 year from delivery for the filing of the case is a
EXPENSES. condition precedent or mandatory; does not apply to cases of misdelivery or
THEY SHOULD PAY FOR THEIR ENTRANCE; THEN THERE SHALL BE DEDUCTED - Section 49(1) of COGSA carrier shall not be liable for loss or damages arising
BE TAKEN THE REWARD FOR THE SALVAGE OR ASSISTANCE WHICH SHALL NOT - New Civil Code carrier will not be liable only if it can present proof that the
EXCEED FIFTY PER CENT OF SUCH AMOUNT REMAINING. unseaworthiness was caused exclusively by any of the circumstances specified
in Art. 1734 of the NCC
- The shipowner and the ship agent may waive the benefit of any of the
THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE BEEN EXPOSED TO THE defenses in its favor provided not only under COGSA but also under other laws
REWARD. Limiting provision
- COGSA contains a provision that allows the shipper to recover only US$500 per
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED, package unless there is a special declaration unless there the real value of the
FOR ASSISTANCE SHALL BE DIVIDED BETWEEN THE OWNER, THE CAPTAIN, AND - declaration made by the shipper stating an amount bigger than $500 per
THE REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO GIVE THE package will make the carrier liable for such bigger amount but only if the
OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE REMAINDER OF THE amount so declared is the real value of the goods
THE EXPRESS OF SALVAGE, AS WELL AS THE REWARD FOR SALVAGE OR - COGSA allows the carrier to discharge the good of the carrier discovers that
ASSISTANCE, SHALL BE A CHARGE ON THE THINGS SALVAGED ON THEIR VALUE. the goods are dangerous, inflammable or are explosives


- Adopted by the Philippines on October 22, 1936 through
Commonwealth Act No. 65
- New Civil Code primary law on goods that are being transported
from a foreign port to the Philippines
- COGSA remains to be a suppletory law for such type of
transportation international shipping


* Goods includes goods, wares, merchandise, and articles of every kinds

- does not include live animals and cargo which by the contract of
carriage is stated as being carried on deck and is so carried