TRANSPO.

NOTES
COMMON CARRIER 12

Rules in Granting the CPC

2
12

Vigilance of Goods Unlawful arrangements

2
13

Safety of Passengers WARSAW CONVENTION

5
14

Duty of the CC: History

5
14

In Case of Death or Injury Not Covered by Warsaw Convention

5
16

Is the responsibility of the CC subject to stipulation? Nature of Air Carrier

6
16

Effect of Allowing Passenger to Ride Gratuitously & Effect Liability of Air Carrier
of Discount or Reduced Fare
16

6
Defenses of Air Carrier
Responsibility of CC for injury/death caused by the acts of their employees
17

7
Monetary Cap [Art. 22, WC]
• When does the relationship of a CC and a passenger terminate?
17

Duty of the Passenger CODE OF COMMERCE

8
17

Contributory Negligence of the Passenger A. Overland Transportation

8
18

Acts of Co-passengers or Strangers Maritime Commerce

9
23

DAMAGES A. Shipowner and Ship Agent

26

9
B. Captains and Masters of Vessels
Public Service Act
28

10
C. Officers and Crew of the Vessel
History
31

10
Special Contracts of Maritime Commerce
Offices/Agencies/Businesses Connected with Public Interest/for the Operation of Public Utility (out
of the Philippine Public Commission) 33

A. Charter Parties
10

Purpose of Public Service Act 33

D. Loan on Bottomry
11

Reason for Creating the PSC 37

E. Loan on Respondentia
11

Public Utility & Public Service 37

Risks, Damages and Accidents of Maritime Commerce

11

CPC & CPCN 38

COGSA
12

Requisites for the Issuance of Public Convenience 43

1 of 43
 TRANSPO.NOTES
✓ Establish that common carrier committed willful negligence before the act of
COMMON CARRIER God.

✓ Shipper did not contribute to the loss, destruction, deterioration

o No intervention by the shipper

Vigilance of Goods Is fire a fortuitous event?

- No. Arises by act of man

Reason for exercising extra – ordinary diligence

➢ The business of common carriers is impressed with public duty and invested public Lightning which caused fire, fortuitous event?

interest.
- Yes, because lightning is the proximate cause.

➢ The public must of necessity rely on the care, competence, and skill of common carriers
in the vigilance of goods and transport of passengers
Mechanical defects?

➢ The development of transportation technology today is emerging, complicated, - Not fortuitous

hazardous.

Acts of Public enemy

Presumption of negligence (art 1735)

2. Public enemy

▪ That carrier is always at fault and that he acted negligently

▪ How to rebut: that common carrier observed extra-ordinary diligence

Is a pirate considered a public enemy?

- Yes. Because they are enemies of all mankind.

• Ordinarily, shipper has burden to prove that the goods were lost, deteriorated, or destroyed
during the course of the transport. If shipper proved the same, the presumption of negligence
Terrorists?

comes in automatically. The burden is now shifted to the common carrier that he observed - Yes. Pwedeng civil pwedeng international

extraordinarily diligence.

• Requisites..

Coastwise Corp vs CA, GR No. 114167 12 July 1995

A. Act of public enemy is the proximate cause

➢ Mere proof of delivery of goods in good order to a carrier and the subsequent arrival
B. Common carrier exercised extraordinary diligence to minimize loss before during
of the same in bad order to the consignee makes a prima facie case against the carrier.

after acts of public enemy

• In the transportation of goods, a common carrier has the duty to properly handle, keep, and
exercise due care for the goods. Ascertain nature of goods placed for shipment, common 3. Acts / omissions of shipper

carrier may ask for value of goods.

May a common carrier be exempted by reason of the contributory negligence of the
shipper?

- No. If merely contributory….Art 1741- There shall be equitable reduction of

• The appearance of the goods when received by the common carrier shall be the same when
delivered to the consignee.
liability

• If the fact of improper packing is known to the carrier, he can refuse to accept the same. 4. Character of goods

Otherwise, he will not be relieved from liability for loss or injury during the transportation.
• To exempt common carrier, damage was due to inherent nature of the goods

Art 1742

• Because of the presumption, there is no need for the express finding of negligence.
Saludo vs Ca gr no 95536

(Regional Container Lines of Singapore and Edsa Shipping Agency vs the Netherlands insurance - The carrier is entitled to fair representation of the nature and value of the goods.
co. Gr no168151 4 sept 2009)
Common carrier should no longer go beyond such representation. With the concomitant
right to rely thereon and he need not ask further as to the correctness of the
Ways for common carrier to be exempted from liability (art 1734)
representation.

1. Elements of force majeure or fortuitous event (art 1174)

When does the duty to conduct inspection arise?

• No person shall be made responsible for events which cannot be foreseen.

✓ Only when there is reason to doubt the veracity of the representation.

• Loss, destruction, deterioration- independent of human will.

✓ There must be a proof to cause apprehension

• In order to be exempt from liability due to fortuitous events- requisites (art1739)

• Proximate Cause- it is the cause of the loss, destruction, deterioration independent of 5. Order of competent public authority (art 1743)

- Destruction or seizure of goods—may be prohibited goods, dangerous to life/

other causes.

property, infected with disease.public authority may recall such goods so common
carrier will no longer transfer the goods.

• Effect of delay in transporting goods if the loss is due to a natural disaster but
common carrier is negligent- not exempted (Art 1740)

2 of 43
 TRANSPO.NOTES
• Public authority must have the right to issue order.
*If there is temporary unloading, the carrier is still liable until delivered to the consignee
• Over and above contractual stipulations, police power shall prevail.
unless the shipper exercises his right of stoppage in transit

is Hijacking/ acts of thieves, robbers a valid cause to exonerate a common carrier from * if the stoppage in transit occurs, the extraordinary diligence that must be exercised ceases;
liability
but, the carrier has the responsibility to take care of the goods with the diligence of a good
- No…. Art 1735…. Presumption of negligence.. Exercised extraordinary diligence to be father of the family; the carrier becomes a depository

exempted.

* if the goods are in the warehouse, the carrier must still exercise extraordinary diligence

Contract: liability of the common carrier shall be diminished by reason of the acts of *Art. 1738- The extraordinary liability of the common carrier continues to be
Thieves, robbers…. (Art 1745 par 6) liability cannot be allowed to be diminished…except operative even during the time the goods are stored in a warehouse of the carrier at
when act of robbers / thieves --- grave, there is irresistible threat, violence, force…
the place of destination, until the consignee has been advised of the arrival of the
goods and has had reasonable opportunity thereafter to remove them or otherwise
• Art 1734--- closed list… Exclusive,..
dispose of them.

• If there are other causes --- art 1735. Prove extraordinary diligence.

When does responsibility terminate if the goods are in the warehouse?

When does the carrier’s responsibility begin?

- When there is constructive delivery and that the consignee must be given the
Carriage of Goods
reasonable opportunity to remove the goods or dispose them.

Article 1736- the goods are unconditionally placed in the possession of, and received by
the carrier for transportation until the same are delivered, actually or constructively, by • if the goods are stored in the warehouse of the BoC,

the carrier to the consignee, or to the person who has a right to receive them
- Common carrier will not be held liable since there is already notice of arrival. Some of
*The carrier must receive the goods
the goods are also removed by the consignee

- the carrier has no more control if the goods are held by the BoC. This may amount to an
• Test to determine if there is delivery
act of public authority or by law

• Whenever the control and possession of the goods passes to the carrier and nothing - if there was no notice, the common carrier will be liable but limited only.

remains to be done by the shipper

- if the goods has already arrived but not placed in a warehouse, the carrier need not to
*if the shipper does not still pay, the responsibility does not yet attach
exercise extraordinary diligence. The shipper has no more cause of active since there is
notice and the shipper has been given reasonable opportunity. But, the CC has the cause
When does the responsibility terminate?
of action from the shipper in the form of demurrage-

• When the goods are delivered to the consignee and or the person who has a right to
receive them
• Demurrage

- a charge which is permitted and recognized not only because it may afford compensation
How delivery is made?
to the carrier for an additional service nut because of the usefulness and importance of
• Either actually or constructively by the carrier to the consignee
its main object which to obtain prompt release of the goods and thus prevent interference
from the general traffic of the carrier

How is constructive delivery made?

- When notice is given to the consignee that the package or goods has already arrived Time for the delivery of the goods

at the destination
- If there is contract, reasonable time

- Once there is notice, the shipper can get possession of the goods.
- If there is the contract, the time stipulated in the contract

• Effect of constructive delivery

Why reasonable time only?

- The carrier is released from the responsibility of exercising extraordinary diligence in the - because a carrier is not an insurer against delay in the transport

possession of the cargo

Stipulation as regards the limitation of the liability of the CC

What if there is misdelivery?

Art. 1744- A stipulation between the common carrier and the shipper or owner limiting
- The responsibility of the carrier continues or still attaches- 
 the liability of the former for the loss, destruction, or deterioration of the goods to a
Art. 1736- “until the same are delivered, actually or constructively, by the carrier to degree less than extraordinary diligence shall be valid, provided it be:

the consignee, or to the person who has a right to receive them”

(1) In writing, signed by the shipper or owner;

- If the consignee is the one who went to the place where the package was (2) Supported by a valuable consideration other than the service rendered by the
misdelivered, the responsibility still attaches, thus, the carrier is always liable.
common carrier; and

Cause of action: breach of contract, damages

(3) Reasonable, just and not contrary to public policy.

Prescription:
• all the requisites must be present especially if you are a common carrier

• based on contract: 10 years

• Based on quasi- delict: 4 years

• Valuable consideration: other than the services of the CC

- If there is loss of cargo: 1 year from the time of the cause of action happened

3 of 43
 TRANSPO.NOTES
When there is a stipulation as to the limitation of liability, what is the presumption?

- The presumption is that the CC is negligent. Art. 1752. Even when there is an
Bill of Lading:
agreement limiting the liability of the common carrier in the vigilance over the goods,
- Three stipulations which will limit the liability of the CC:
the common carrier is disputably presumed to have been negligent in case of their loss,
1. Exempting the carrier from any and all liability for loss or damage occasioned by its destruction or deterioration.

own negligence

2. An unqualified limitation of such liability to an agreed valuation

Is the presumption rebuttable?

3. Limiting the liability of the carrier to an agreed valuation unless the shipper declares a - Yes, by presenting evidence that the CC exercised extraordinary diligence.

higher value

• 1 and 2 are void while the 3rd stipulation is valid

How to construe stipulations limiting the CC’s liability which is couched in general terms?

- An exemption in general words not expressly relating to negligence even though the
Is art 1744 applicable to private carriers?
words are wide enough to include loss by negligence or default of the carrier’s servant
- Yes except the 3rd requisite.
must be construes as limiting the liability of the CC as an assurer. But it does not
relieve him from the duty of exercising reasonable skill and care (extraordinary
What are the other stipulations limiting the liability of CC: Art. 1748- 1750
diligence).

• Art. 1748. An agreement limiting the common carrier's liability for delay on
account of strikes or riots is valid. What are the void stipulations?

Strikes or riots, whether legal or illegal is immaterial. CC can no longer proceed. The - Art. 1745. Any of the following or similar stipulations shall be considered unreasonable,
happening is out of its control

•
unjust and contrary to public policy:

Art. 1749. A stipulation that the common carrier's liability is limited to

the value of the goods appearing in the bill of lading, unless the shipper or (1) That the goods are transported at the risk of the owner or shipper;

owner declares a greater value, is binding. Except: fortuitous events, any exempting events

• Art. 1750. A contract fixing the sum that may be recovered by the owner or (2) That the common carrier will not be liable for any loss, destruction, or
shipper for the loss, destruction, or deterioration of the goods is valid, if deterioration of the goods;

it is reasonable and just under the circumstances, and has been fairly and
freely agreed upon. (3) That the common carrier need not observe any diligence in the custody of the
goods;

Conditions that must be present in order that the provisions of Art. 1749- 1750 will be (4) That the common carrier shall exercise a degree of diligence less than that of a
available:
good father of a family, or of a man of ordinary prudence in the vigilance over the
1. That the contract is reasonable and just under the circumstances;
movables transported;

2. It has been freely agreed upon by the parties

(5) That the common carrier shall not be responsible for the acts or omission of his or
its employees;

What is the effect on the stipulation if consent is obtained because of refusal to carry (6) That the common carrier's liability for acts committed by thieves, or of robbers
goods?
who do not act with grave or irresistible threat, violence or force, is dispensed with
- The contract is voidable. Art. 1746. An agreement limiting the common carrier's liability or diminished;

may be annulled by the shipper or owner if the common carrier refused to carry the (7) That the common carrier is not responsible for the loss, destruction, or
goods unless the former agreed to such stipulation.
deterioration of goods on account of the defective condition of the car, vehicle,
- The reason behind it is that there might be force or undue influence exerted against ship, airplane or other equipment used in the contract of carriage.

the shipper.

Even acts of the employees are attributable to the shipper since the employees are the
What is the effect of the limited liability by a common carrier by reason of delay in extension of the shipper.

transportation or change in the route?

Even stipulations limiting the liability of the owner as a result of acts of thieves and
- In this case, Art. 1747 is applicable. Art. 1747. If the common carrier, without just robbers who did not apply grave abuse, coercion, etc, are void

cause, delays the transportation of the goods or changes the stipulated or usual route,
the contract limiting the common carrier's liability cannot be availed of in case of the What law should be followed if the goods are bound internationally?

loss, destruction, or deterioration of the goods.

- Art. 1753. The law of the country to which the goods are to be transported
shall govern the liability of the common carrier for their loss, destruction or
deterioration.
What is the effect of lack of completion to a CC?
- The Civil code will be the primary law, suppletorily will be the Code of Commerce and
- Art. 1751. The fact that the common carrier has no competitor along the
line or route, or a part thereof, to which the contract refers shall be other special laws.

taken into consideration on the question of whether or not a stipulation

limiting the common carrier's liability is reasonable, just and in Does the law of destination also applies even if the goods were never transported?

consonance with public policy. - No, the goods were not successfully transported to the other country.

It depends upon the circumstances present. Even if there is lack of competition along
the line or route to which the contract refers, it shall be taken only in consideration However, if during transit, there was loss, destruction, and deterioration, will the Law of
on the question whether or not a stipulation limiting the liability is reasonable, just destination apply?

and in consonance with public policy.

4 of 43
 TRANSPO.NOTES
- Yes. Even if the goods are in the high seas and that they did not yet reach the Is the CC liable for undeclared goods? Yes, if accepted by the CC. Thus extraordinary
destination, still the Law of destination still applies in cases where there is loss, diligence is still required.

destruction, or deterioration.
- Failure to deliver the package will make the CC liable

- However, if the seller exercises his right of stoppage in transit, the law of the seller
will apply because the goods will go back to the seller

Safety of Passengers
Baggage of passengers

• Classes of Baggage

1. Baggage in custody of the passenger or their employees

Arts. 1998, 2002 to 2003 will apply or the law on necessary deposits.

Duty of the CC:

In this instance, the duty of the CC is to observe ordinary diligence since he is merely
Article 1755. A common carrier is bound to carry the passengers safely as
a depositary.

- Art. 1998. The deposit of effects made by the travellers in hotels or inns far as human care and foresight can provide, using the utmost diligence
shall also be regarded as necessary. The keepers of hotels or inns shall be of very cautious persons, with a due regard for all the circumstances.
responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that, • utmost diligence of very cautious persons = higher than EOD of a good father of a family

on the part of the latter, they take the precautions which said hotel-
keepers or their substitutes advised relative to the care and vigilance of
their effects. • When should this obligation of the CC exist?

- it should exist not only during the course of the trip but for as long as the passengers
When the CC does becomes liable for the loss, destruction or deterioration of the baggage are within its premises and where they ought to be in pursuance to the contract of
which is in the custody of the passenger?
carriage

- Art. 2000. The responsibility referred to in the two preceding articles

shall include the loss of, or injury to the personal property of the guests Example/Illustration:

caused by the servants or employees of the keepers of hotels or inns as well

as strangers; but not that which may proceed from any force majeure. The * a person who alighted a bus and got his baggage, but still within the premises

fact that travellers are constrained to rely on the vigilance of the keeper
- the obligation still exist

of the hotels or inns shall be considered in determining the degree of care

-
required of him.  * a person carrying his bag, after alighting, went to the waiting area of chance passenger and
Art. 2001. The act of a thief or robber, who has entered the hotel is not
about to go out of the premises, however, something happened which cause death or injury
deemed force majeure, unless it is done with the use of arms or through an
irresistible force.  upon him inside the premises of the CC

Exception:
- opinion of judge C — CC has NO obligation

Art. 2002. The hotel-keeper is not liable for compensation if the - Reason: although “within the premises”, there are circumtances where the passenger has
loss is due to the acts of the guest, his family, servants or severed already the contract of carriage; the only thing the person is doing is going out
visitors, or if the loss arises from the character of the things
of the premises

brought into the hotel. 

- Thus, it will still depend upon the circumstances

Is there a possibility that there will be a stipulation limiting the liability of the CC in this
instance?

- NO
In Case of Death or Injury
- Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices
to the effect that he is not liable for the articles brought by the guest. Any stipulation Article 1756. In case of death of or injuries to passengers, common
between the hotel-keeper and the guest whereby the responsibility of the former as carriers are presumed to have been at fault or to have acted negligently,
set forth in articles 1998 to 2001 is suppressed or diminished shall be void.
unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755.
2. Baggage not in the custody of the passenger

- Arts. 1733 to 1753 will apply since it is considered that the baggage is in custody • CC presumed to be negligent in case of death or injury of passengers

of the CC. Thus, extraordinary diligence must still be observed. The presumption of - the plaintiff-passenger has the burden of proof to establish such presumption of
negligence will apply if there is loss, destruction or deterioration.
negligence

- Extraordinary diligence is needed because it is as if the passenger is sending goods. - kind of evidence needed: simple proof of injury will suffice

The moment the goods of the passenger are unconditionally placed in the - the plaintiff need only simple proof of injury and then he is relieved from
possession of the CC for conveyance, the law immediately imposes upon the CC establishing fault or negligence

extraordinary responsibility for the loss thereof until there is delivery.

- Reason: because of the presumption that if he incurs injury or dies by reason of
the fault or negligence of CC, the CC is at fault (that is always the presumption)

Is the CC liable if the passenger did not pay baggage fee?

- Thus in case the passenger was injured or died, the only things he need to prove are:

- Yes, even if the passenger did not pay baggage fee. That is still considered as deposit.
1. a contract of carriage which he entered into with the common carrier; and

5 of 43
 TRANSPO.NOTES
2. that the CC failed to perform its duty to carry him safely to his destination as far (2) Supported by a valuable consideration other than the service
as human care can foresee
rendered by the common carrier; and
- Once this things are proved, the burden now shift to the CC to prove that he should (3) Reasonable, just and not contrary to public policy.

be exonerated because he exercise EOD

- Reasons:

• To overcome the presumption, CC must prove:

1. value of life is very precious

1. that it observed EOD;

2. the nature of the business of common carrier

2. that the injury was due to unforeseen event or fortuitous event

3. a CC with respect to transport of passenger is imbued of public interest

Reason why only this two circumstances must go together before the CC can be - thus, even if the passenger has signed a contract of adhesion (written in the ticket) as
exonerated from his liability
asked by the CC, such stipulation is considered void and will not bind him

- one must remember that the duty of the CC is to exercise utmost diligence

- therefore, it is presumed that once a CC will go travel:

• CC & passengers cannot enter into an agreement absolutely exempting from liability for
1. its vessel/vehicle is in good condition
passenger’s death or injury or entering into agreement lessening the EOD required by law

2. its operator or driver is fit to manipulate or to handle said vehicle

- thus, if a CC who was able to see an incident before occuring, was able to avoid it • What is the contract between the CC and the passenger?

and did avoid it, it can be said that it is exercising utmost diligence
- the ticket represents the contract

- But for an unforeseen event, CC will not be able to foresee such, therefore, no - not only implied, it is a contract by itself because it has all of the elements — consent,
matter how much care or diligence it exercises, the incident will inevitably occur.
object, cause/consideration

• Consent:

• In case of injury or death of the passenger in the course of transportation, the only question - on the part of the CC, is when it accepts the passenger to the vehicle/vessel

that has to be asked is not to determine whether the parties seeking the damages has - on the part of the passenger, when he enters the common carrier

adduced sufficient evidence to show the negligence or fault of the CC because of the • Object

presumption (which is automatic) but whether the CC has presented the required quantum of - transportation of the passenger from place of departure to the place of destination

proof to overcome the presumption that it has been at fault or that it acted negligently in • Cause/consideration

the performance of its duty.

- the payment or fare

• Does the rule on Last Clear Chance apply to CC? — No

Last Clear Chance — def.

Effect of Allowing Passenger to Ride Gratuitously
- it does not apply to CC because it applies to colliding vehicles

- the claim of a passenger involved in the accident where two vehicles collide is based on
& Effect of Discount or Reduced Fare
the contract of carriage

- Thus, if a CC was exonerated from the accident using this defense, the passanger can still Article 1758. When a passenger is carried gratuitously, a stipulation
run after the CC based on the contract of carriage
limiting the common carrier's liability for negligence is valid, but not
for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common
Is the responsibility of the CC subject to stipulation? carrier's liability.

• NO! Responsibility of the CC subject to stipulation!

Allowing passenger to ride gratuitously Discounted or reduced fare
Article 1757. The responsibility of a common carrier for the safety
of passengers as required in articles 1733 and 1755 cannot be CC still has the obligation or liability to CC has still the obligation or liability to
dispensed with or lessened by observe diligence
observe diligence

1) stipulation BUT it can be subject of stipulation AND not subject to stipulation

2) by the posting of notices,
• Who are those allowed to ride gratuitously?

3) by statements on tickets, - those who are sitting on the lap of another

4) or otherwise.
Example/Illustration:

- Article 1744 does not apply to safety of passengers, it only applies to carriage of goods

• A mother and her child rode a bus. The mother paid her fare and the CC allowed the child to
Article 1744. A stipulation between the common carrier and the shipper ride gratuitiously. Finding that the bus had few passengers, the mother let her child sit on a
or owner limiting the liability of the former for the loss, vacant seat beside her. The bus met an accident and the child was injured. Can the CC
destruction, or deterioration of the goods to a degree less than contended that it was not liable since the child rode the bus gratuitously?

extraordinary diligence shall be valid, provided it be: - NO. because they did enter into stipulation.

(1) In writing, signed by the shipper or owner;

6 of 43
 TRANSPO.NOTES
• A father asked the CC to allow his child to sit beside him since there were few passengers. - unitlateral change in the costs of the ticket
The CC allowed but asked the father to sign a agreement limiting the its liability. In case
- rude attitude of employee
injury or death befall upon the child, can the CC claim that it has no liability?

- yes, because there is a stipulation

RULING:
- Passengers have the right to be treated by a carrier’s employees with kindness, respect, courtesy and due
• Accommodation or Invited Guest
consideration. T
- “ung mga umaangkas”

- Rule: the obligation of the carrier with respect to accommodation or invited guest or - hey are entitled to be protected against personal misconduct, injurious language, indignities and abuses
passenger is that the CC will only exercise reasonable care or the diligence of the a good from such employees. So it is that any discourteous conduct on the part of these employees toward a
father of a family
passenger gives the latter an action for damages against the carrier.
- Any discourteous conduct on the part of the employee toward the passenger gives the latter an action for
• Reason of the difference of the liability between gratuitous passenger and that of an
accommodation or invited guest
damages against the carrier
- that is because the an invited guest or accommodation passenger ASKED for the privilege
to be there; that person insited to ride on the vehilce;
• Basis of the ruling:

- on the other hand the passenger who was allowed to ride gratuitious passenger, while yes
he did not pay, had the intention still to enter into a contract of carriage with he common
carrier
former's employees, although such employees may have acted beyond
LARA v. VALENCIANA [GR No. L-9907, 30 June 1958]
RULING:
It therefore appears that the deceased, as well his companions who rode in the pick-up of defendant, were
merely accommodation passengers who paid nothing for the service and so they can be considered as invited
guests within the meaning of the law. As accommodation passengers or invited guests, defendant as owner
Article 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or wilful acts of the
the scope of their authority or in violation of the orders of the
common carriers.
This liability of the common carriers does not cease upon proof
that they exercised all the diligence of a good father of a family
in the selection and supervision of their employees.
• If the CC proved that it exercised diligence of a good father of a family in selecting and
supervising their employees, can this be a defense?

and driver of the pick-up owes to them merely the duty to exercise reasonable care so that they may be - NO

transported safely to their destination. Thus, "The rule is established by the weight of authority that the
owner or operator of an automobile owes the duty to an invited guest to exercise reasonable care in its
operation, and not unreasonably to expose him to danger and injury by increasing the hazard of travel. This
rule, as frequently stated by the courts, is that an owner of an automobile owes a guest the duty to exercise
ordinary or reasonable care to avoid injuring him. Since one riding in an automobile is no less a guest
because he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as in
the case of one expressly invited to ride" (5 Am. Jur., 626-627). Defendant, therefore, is only required to
observe ordinary care, and is not in duty bound to exercise extraordinary diligence as required of a common
carrier by our law (Articles 1755 and 1756, new Civil Code).
Responsibility of CC for injury/death caused by the acts of
their employees
NORTHWEST AIRLINES v. CATAPANG [GR No. 174364, 30 July 2009]
FACTS:
Catapang had a business trip to Paris. Then he visited his siblings to US, hence, has to rebook his flight to
MARANAN v. PEREZ [GR No. L-22272, 26 July 1967]
FACTS:
Maranan was passenger of taxi owned by Perez when he was stabbed and killed by the driver, Simeon
Valenzuela (who was held guilty). Then Maranan’s mother filed an action for damages against Perez
Perez countered that it is a fortuitous event.
RULING:
- Common carriers are liable for intentional assaults committed by its employees on passengers
- special undertaking of carrier requires that it furnish its passengers that full measure of protection afforded
by the exercise of high degree of care prescrived by law
- as b/w the carrier and the passenger the former must bear the risk of wrongful acts of former’s employee
against passengers since the carrier, not the passengers, has the power to remove them
- breach of contract of carriage, hence, carrier is liable
- driver’s liability covered by judgment of criminal case
• the liability of CC for the acts of its employees cannot be subject to stipulation

Article 1760. The common carrier's responsibility prescribed in the

US after going to Paris ($50.00 payment). Upon arrival in N.Y. he was treated in a rude manner by the
preceding article cannot be eliminated or limited by stipulation, by
employee of the petitioner “that his ticket is not rebookable, hence, must pay US $644 because it is the posting of notices, by statements on the tickets or otherwise.
restricted type.
He filed in RTC for damages:
Reason:

7 of 43
 TRANSPO.NOTES
- the employees or servants are clothe with a delegated authority;
FACTS
- they are charged with the duty by the CC to execute its undertaking to carry the
- Viana boarded M/V vessel going to Manila. Upon reaching Manila, passengers disembarked a gang-plank
passenger safely

- they are agents of the CC

provided connecting the side of the vessel to the pier.
REAL V. BELO [GR No. 146224, 26 January 2007]
FACTS:
- Real owns Wasabe Fastfood while Belo also owns BS Master Fastfood Stall
- fire in Wasabe that include all nearby stalls so belo demanded compensation from petitioner, which Real
declined
- Belo filed for damages alleging that Real filed to exercise due diligence to up keep his cooking equipments
as well as selection and supervision of employees and that petitioner’s negligence was the proximate cause
of fire
- Real denied alleging fortuitious event
RULING:
- Whenever an employee's negligence causes damage or injury to another, there instantly arises a
presumption juris tantum that the employer failed to exercise diligence of a good father of a family in the
selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. To avoid liability for a quasi-
delict committed by his employee, an employer must overcome the presumption by presenting convincing
- the crane owned by 3rd party defendant was place alongside the vessel and after 1 hr, it started its
operation by unloading cargoes
- while the crane was being operated, Viana who already disembarked went back to the vessel as he
remembered that some of his cargoes are in the vessel; then the crane hit him, causing his death
RULING
- Carrier-passenger relationship continues until the passenger has been landed at the port of destination and
has left the vessel-owner’s premises
- all persons who remain on the premises a reasonable time after leaving the conveyance are deemed
passengers
Duty of the Passenger
Article 1761. The passenger must observe the diligence of a good father
of a family to avoid injury to himself.
- very applicable to accommodation passengers or invited guests

proof that he exercised the care and diligence of a good father of a family in the selection and supervision - while the law imposes a heavy responsibility upon the CC, the law is not one-sided as it does
of his employee. not also protect the negligence of the passenger tot he extent of doing harm or damage upon
- elements of fortuitous events; there must be an entire exclusion of human agency from the cause of injury the public utility

- the conductor much less the driver cannot at all time attend to careless passenger

or loss
- evidence is established that the fire originated from LPG and her employees failed to prevent fire from
LARA v. VALENCIANA [GR No. L-9907, 30 June 1958]
spreading. Such circumstances do not support Real’s theory.
Example/Illustration

- because of the disputable presumption, the CC can rebut that it exercise due diligence of a good father of a • a passenger in a bus extended rest his arm on the window of the bus as such it extended
outside. The bus met an accident and the passenger’s arm was injured.

family in selecting its employees. - the passenger was held to be responsible for his own injury because he was negligent; he
did not see to it that he took care of himself so such that he will not be injures

- the CC was not made liable

• When does the relationship of a CC and a passenger

terminate?
Contributory Negligence of the Passenger
• law is silent

- however, it has been recognized as a rule that the relation of the CC and the passenger
Article 1762. The contributory negligence of the passenger does not bar
does not cease at the moment the passenger alight from the carrier’s vehicle at the place recovery of damages for his death or injuries, if the proximate cause
directed by the carrier at the place of destination but continues until the passenger had thereof is the negligence of the common carrier, but the amount of
reasonable time or reasonable opportunity to leave the premises.
damages shall be equitably reduced.

• Reasonable time
- if there is contributory negligence on the part of the passenger, the
- depends upon the circumstances

CC will still be liable but the liability will be equitably reduced

- therefore, the duration of the liability of the CC in transporting passengers depends upon - if however the death or injury was really the fault of the passenger
the circumstances
then the CC will not be made liable

ABOITIZ SHIPPING CORPORATION V. CA [GR No. 84458, 6 November 1989] • How to determine the extent of the contributory negligence on the part of the passenger?

CANGCO V. MANILA RAILROAD CO. [GR No. 12191, 14 October 1918]

8 of 43
 TRANSPO.NOTES
RULING:
In determining the question of contributory negligence in performing such act — that is to say, whether the
DAMAGES
passenger acted prudently or recklessly — the age, sex, and physical condition of the passenger are
Article 1764. Damages in cases comprised in this Section shall be awarded
circumstances necessarily affecting the safety of the passenger, and should be considered. Women, it has in accordance with Title XVIII of this Book, concerning Damages. Article
been observed, as a general rule are less capable than men of alighting with safety under such conditions, as 2206 shall also apply to the death of a passenger caused by the breach of
the nature of their wearing apparel obstructs the free movement of the limbs. contract by a common carrier.

• in the event there is loss, destruction, deterioration of goods or injury or death of passenger,
what are the sources of obligation to which a common carrier may be held liable:

• Doctrine of Comparative Negligence

1. Culpa contractual

RAKES V. THE ATLANTIC GULF, AND PACIFIC COMPANY [71 Phil 359, 23 January 1907] 2. Culpa acquiliana

RULING: 3. Culpa criminal

The doctrine of comparative negligence:

- if the accident was caused by plaintiff’s own negligence no liability is imposed upon defendant. • Damages that the court may grant to a PASSENGER who was injured or has died

- the law applicable is Article 2206

however, if the accident was caused by the defendant’s negligence and plaintiff’s negligence merely
contributed to his injury, the damages should be apportioned
- it is therefore important to ascertain that defendant was in fact guilty of negligence
- it actually refers to 1762
Acts of Co-passengers or Strangers
Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other passengers
or of strangers, if the common carrier's employees through the exercise
of the diligence of a good father of a family could have prevented or
stopped the act or omission.
- covers only injuries
Article 2206. The amount of damages for death caused by a crime or quasi-
delict shall be at least three thousand pesos, even though there may have
been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such
indemnity shall in every case be assessed and awarded by the court, unless
the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions
of article 291, the recipient who is not an heir called to the decedent's
inheritance by the law of testate or intestate succession, may demand support
from the person causing the death, for a period not exceeding five years, the
exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the death
of the deceased.

- does not cover death

• Damages for death

1. Indemnity for death - P50,000

• in case of death, the CC will not be held liable

2. Loss of Earning Capacity

Net Earning Capacity = Life expectancy x [Gross Annual Income – Living Expenses]

Example/Illustration
Life Expectancy = 2/3 (80-age at death)

• a security guard, employed by an agency being contracted by the CC, is considered as 3. Moral damages

employees. He is not yet on duty, thus considered as stranger, but he was waiting for his duty. - applies only if there is death

A passenger entered who turned out to be a person who the security guard has a grudge on. - does not apply for injury only, except if the CC acted in bad faith or through fraud

The security guard shot the passenger.

4. Exemplary Damages

- the CC is not liable because at the time the security guard was there he had not 5. Atty’s Fees, expenses of litigation

obligation yet to take care of the passengers.

- filing fee, TSN

- however, looking at the situation, the security guard was not on duty, so he is a stranger
- cost of suit

6. Interest

7. Actual Damages

- only be granted if with proof

• Damages for GOODS

- law applicable is Article 2176 on damages

Article 2197. Damages may be:

(1) Actual or compensatory;
(2) Moral;
(3) Nominal;

9 of 43
 TRANSPO.NOTES
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective. Public Service Act
Example/Illustration

• A pregnant woman ride the vehicle of the CC. The CC met an accident and by reason of the History
accident, the fetus was aborted. Can there be recovery of damages on account of the death
of the fetus?

a. if the parents file a claim damages against the CC for and in behalf of the fetus, it will
not be granted
1972 PD No. 1 was issued by Marcos which made a major revamp on the executive
- because based on Article 40 of the Civil Code, a dead fetus has not obtained Sep 24: department.

juridical personality
PD No. 1, Art. 3. Part X: it abolished the Public Service Commission and it was
b. if the parents themselves, they can claim for moral damages
replaced by 3 specialized regulatory boards:

- because as far as they are concerned the abortion of the fetus caused them 1. board of transportation

mental anxiety….
2. board of communitcation

- Because the parents can not expect either help, support or services from an unborn 3. board of power and water works
child, they would normally be limited to moral damages for the illegal arrest of the
1985 Before Cory took over.

normal development of the spes hominis that was the foetus, i.e., on account of
Mar 20 The Board of Transportation was abolished and the Bureau of Land Transportation
distress and anguish attendant to its loss, and the disappointment of their parental
was created.

expectations as well as to exemplary damages, if the circumstances should warrant

The powers and functions of the Bureau of Transporation as well as the Bureau of
them (Geluz v. CA)

Land Transportation were later on merged into the Land Transportation Commission

• Quantum of Evidence to prove civil liability arising from neglicgence:

1987 Cory was the president.

- mere preponderance of evidence

The Land Transportation Commission was abolished by EO No. 125 dated January 30,
- unlike in criminal cases, proof beyond reasonable doubt
1987 and EO No. 125-A dated April 13, 1987 which reorganized the Department of
Transportation and Communication (DOTC)
Example/Illustration:

• A passenger met an accident and then filed a case against the driver. He did not institute a 1987 LTFRB was created under EO 202 which is now the existing franchansing
separate civil action but when the accused was convicted it so happen that he was merely a June 19 regulatory body for over land transportation.

co-driver, he cannot pay for the civil liability. How do you run for the civil liability?

- File a motion for the subsidiary liability of the CC

• What evidence must be established in order to claim subsidiary liability from the CC? —
REQUISITES:

1) the existence of an employer-employee relationship;

Offices/Agencies/Businesses Connected with Public Interest/
- however, if a driver is only being called now and then, he cannot be considered an for the Operation of Public Utility (out of the Philippine
employee
Public Commission)
2) that the employer is engaged in some kind of industry;

3) that the employee is a employee committed the offense in the discharge of his duties; A. Department of Transportation and Communication (DOTC)

and
• Offices (existing)

4) that the execution agains the employee is unsatisfied (he is insolvent or has not 1. Land Transportation Franchising and Regulatory Board (LTFRB)

properties to meet the civil liability)

2. Land Transportation Office (LTO)

3. Philippine Coast Guard (PCG)

• Attached Offices

1. Office for Transportation Security (OTS)

2. Civil Aviation Authority of the Philippines (CAAP)

3. Civil Aeronautics Board (CAB)

4. International Airports:

a. Manila International Airport Authority (MIAA)

b. Clark International Airport Corporation (CIAC)

c. Mactan-Cebu International Airport Authority (MCIAA)

5. Philippine Aerospace Development Corporation (PADC)

6. Toll Regulatory Board (TRB)

7. Light Rail Transit Authority (LRTA)

10 of 43
 TRANSPO.NOTES
8. North Luzon Railways Corporation (NLRC)
- therefore, the state has the right to regulate the public utility which is based on the
9. Philippine Ports Authority (PPA)
police police power of the state

10. Marine Industry Authority (MARINA)

11. Cebu Ports Authority

• Limitation on the power to regulate?

12. Philippine Merchant Marine Academy (PMMA)

- the limitation however of the power to regulate must not have the effect of:

1. depriving the owner of his property without due process of law,

B. National Telecommunication Commission (NTC)

2. confiscating or appropriating private property without just compensation or

C. National Water Resources Board (NWRB)

3. limiting or prescribing irrevocable rights or privileges lawfully acquired under a
D. Energy Regulatory Board (ERB)
charter or a franchise

- the government has the right to regulate, but if there are already rights
vested on the owner of that franchise, the government cannot limit those
Purpose of Public Service Act vested rights

- public utility also is considered a property.

- the ordinary purpose is to subject public services to state control and regulation
- the right to regulate by the government does not extend beyond

- the primary purposes:

1. the right to regulate rate and charges

1. to secure adequate sustained service for the public at the least possible cost and protect - the public utility granted the franchise or CPC may set its rates and charges

the public against unreasonable charges and poor inefficient service

2. the right to prevent discrimination upon the part of the public utility against those
- because of the regulatory power of the different agencies, the private co. who are now who employe it

granted franchise to operate a public utility or are given Certificate of Public Convenience - it depends on the situation

are going to be regulated so that the service they are going to offer must undergo or - if it thinks that it will cause damage to the CC or to their passengers or to the
must follow strict regulation
goods, then it has the right to discriminate

- otherwise, if they do not follow, then the Certification of Public Convenience (CPC) or 3. the right to make order governing the conduct of the public utility to the end
franchise will be easily or could be cancelled
that its efficiency may be build up and maintained and the public and its
2. to protect and conserve investments which have already been made for public service and employees afforded desirable safeguards and conveniences

prevent ruinous competition

- the public utility has the discretion on how to operate

- ruinous competition because, since it is regulated, it is not outrightly given

- keeping in mind the rules that have to be applied especially if it is a CC

- once an operator is given franchise or CPC, they have to maintain their business such that
they can meet the needs of the public

- thus, if they can meet the needs of the public, there is no need to add additional Public Utility & Public Service
franchises or CPC that will operate similarly to that which have already been granted.

- this second purpose is actually for purposes of those who are already granted franchises Public Utility

or CPC
-business or service is a business or service engaged in regularly supplying the public with some
commodity or service of public consequence such as electricity, gas, water, transportation,
telephone or telegraph service.

Reason for Creating the PSC - it implies a public use or service

- because public utilities are privately-owned-and-operated business but they cater to the CA No. 146 or Public Service Act states that “Public Service” and “Public Utility” disappeared

general public; therefore, they are affected with public concern and interest

Public Service [CA No. 146 as amended by RA 2677]

Case
- includes every person that now or hereafter may own, operate, manage, or control in the
- once private property is affected by public interest, it cease to be juris privati
Philippines, for hire or compensation, with general or limited clientele, whether permanent,
- therefore, once it ceases to be juris privati, it grants to the public an interest to use the occasional or accidental, and done for general business purposes, any common carrier,
business itself and therefore must submit to the public for the common good to the railroad, street railway, traction railway, sub-way motor vehicle, either for freight or
extent of the interest he has created
passenger, or both with or without fixed route and whether may be its classification, freight
or carrier service of any class, express service, steamboat or steamship line, pontines, ferries,
• How to withdraw?
and water craft, engaged in the transportation of passengers or freight or both, shipyard,
- this grant to the public to use his business is easily be withdrawn by him by discontinuing marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration
the operation
plant, canal, irrigation system, gas, electric light, heat and power water supply and power,
- but as long as he maintains this use, he maintains the business, and allows the public to petroleum, sewerage system, wire or wireless communications system, wire or wireless
use his business, he must submit himself to control
broadcasting stations and other similar public services: Provided, however, That a person
engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it
• Basis of the power to regulate?
personally and/or enters into a special contract whereby said motor vehicle is offered for hire
or compensation to a third party or third parties engaged in agriculture, not itself or

11 of 43
 TRANSPO.NOTES
themselves a public service, for operation by the latter for a limited time and for a specific - therefore, it is a property right, the owner of such CPC has a right to file an action against
purpose directly connected with the cultivation of his or their farm, the transportation, this other grantee/holder of CPC

processing, and marketing of agricultural products of such third party or third parties shall - so, while it does not confer property rights, it is considered a property right because rights
not be considered as operating a public service for the purposes of this Act.
were already vested and there is a right to protect those right which have been granted

- likewise, it is considered as property because they have considerable material value and
Public Service v. Public Utility
valuable assets, thus, may be subject of attachment or seizure by legal process and may be
- public service encompasses everything concerning water, light, electricity, transportation, even acquired by purchase

ice plants

- public utility is the business itself

- thus, the difference is if in public service there is no need for a franchise, but if it is a public Requisites for the Issuance of Public Convenience
utility it requires franchise aside from CPNC

- all public utility are public service but not vice versa
1. citizenship

- thus, if one is engaged in the transportation of passengers or goods or is a cooperative - must be a Filipino, whether natural or juridical

engaged in a distribution of electricity, then it is a public public service at the same time a - if natural, must be Filipino citizen

public utility
- if juridical, 60% of the share must belong to Filipino citizens

- not all public service are considered as public utility because there are some who is not 2. prove financially capable of undertaking the proposed service

engaged in business
- Reason: because this is a guarantee at all times that the applicant will be in position to
cope with the obligations and responsibilities of the service, maintenance of the complete
number of units

CPC & CPCN - that is why corporation are the ones usually given CPC

3. prove that the operation and authorization will promote the public interest in a proper and
suitable manner

Certificate of Public Convenience (CPC)

- an authorization granted by the LTFRB for the operation of land transportation services for
public use as required by law. [Kilusang Mayo Uno Labor Center, GR No. 115381, 23 December
1994]
Rules in Granting the CPC
- there is no need for franchise

1. Prior Operator Rule

Certificate of Public Convenience and Necessity (CPCN)

- states that before allowing new operator to operate in the territory of another operator
- is issued upon approval of any franchise or privilege granted by any political subdivision of or the first licensee who was already granted a CPC, the first licensee or prior operator
the Philippines when in the judgment of the Commission (PSC) such franchise or privilege will must be given the opportunity to hold out and continue service in order to meet public
properly conserve the public interest
needs

- there is a need for a grant of franchise

example/illustration

Case: Philippines airlines

- the Genesis was still granted franchise, although the Victory Liner has many units,
- the difference between CPC and CPCN is done away with
because based from the circumstances (demand of the public especially during peak
- the words “convenience” and “necessity” merely modified the character of the season), the available units of Victory are still inadequate

certificate
- prior operator rule applies

- these are words that have to go together

- Victory was given the opportunity to hold out and continue its service in order to
- Public convenience and necessity exist when the proposed facility will meet a meet public needs

reasonable want of the public and supply a need which the existing facility does not
adequately afford
- attached to the prior operator rule, first operator rule is actually a condition to the first
- therefore, a CPC and a CPCN are similar; the purpose is similar which is to grant franchisee

authority to a business to operate through that public certificate of convenience - in order to be granted or to see to it that there will be no additional franchisees granted
because of the need to meet the needs of the public
or CPC granted for the same line or area that they are operating, the prior operator must
establish, operate and provide adequate, efficient satisfactory service for the benefit and
convenience of the public by enhancing and expanding his equipment and services before a
Nature of the CPC

- a CPC is not a franchise or a contract

new operator may be allowed to serve the territory

- it confers no property rights

- the PRIOR OPERATOR RULE is one where in order to help the prior operator, he is given
- it is a mere license or a privilege
the opportunity to continue the service in order to meet the public needs

- however, a CPC represents property rights to the extent that if the rights which any public - the purpose for giving the prior operator rule is to prevent ruinous and wasteful
utility exercising pursuant to lawful orders has been invaded such that there is another competition

franchise granted or another CPC that was granted for a line or area covered by the an - if the operator is able to meet the needs of the riding public, there is no need to
existing franchise and it impedes on the rule on protection on investment
grant additional franchise or CPC, it will be a wasteful competition

12 of 43
 TRANSPO.NOTES
- but in order to maintain this prior operator rule such that no other franchisees
or applicants will be granted CPCs, they should have to comply with the first • Registered Owner Rule

operator rule, such that, this prior operator must enhance and expand his - the registered owner of the a CPC is liable to the public for the damages suffered by
equipment or service; if he was able to enhance and expand his equipment or passengers or third persons caused by the operation of said vehicle even though the
service, then the board who will issue the CPC and franchise will not see the same had been transferred to another person

need to grant another franchise

- Reason: is to avoid the failure to run after the responsible persons by the passengers
who were injured or suffered or died by reason of the accident

Exceptions:
- However, the registered owner the right to run after the transferee; he is not totally
1. there is great demand for public utility
devoid of any action

2. it would better serve the public interest

- EXC: if however, the vehicle is stolen or used without authority and it met an accident,
3. the operator is of not of good standing
the registered owner is not liable against the injured party [Duavit v. CA, GR No.
- even if it has prior operator rule
82318, 18 May 1989]

4. failure to increase the service

5. CPC is a maiden franchise (new franchise)

• May a holder of a CPC transfer such?

- for example, Trancoville public utility will still be granted franchise even if it passes the - Yes

same route as that of Aurora Hill public utility; prior operator rule will not apply
- provided with approval of the LTFRB

6. it is reasonable or not harmful or obnoxious to public service or it will lead to monopoly

- what is prohibited is transferring it for a fee without the authority and approval of
7. corporate existence of prior operator has expired
the LTFRB

- the corporation died

- but when one was granted by the LTFRB to transfer the franchise or CPC, should there
8. it will encourage free competition
be an accident, he will not anymore be liable; the one liable is the transferee

- prevent monopoly
- approval and authorization is given only after:

9. the line passes a subdivisions whose owners granted permit to another

a. a notice to the public and hearing and

- because it is a private property

b. the one who asked for the transfer must prove that there is just and reasonable
ground for the transfer and it is not detrimental to public interest

2. Protection of Investment Rule

- states that as long as the operator under a prior license complies with the terms and 2. Boundary System

condition of his license and the reasonable rules and regulations for its operations and - an arrangement in which the drivers of jeepneys and buses, for the use thereof, within a
meets the reasonable needs of the public, it is the duty of the Commission (the agencies) specified number of hours, with the gasoline burned for their account, give to the owner-
to protect rather than destroy the investment of the holder of the CPC by granting the operator a fixed amount of the daily earnings derived from their operation, their day’s
second license to another for the same thing over the same route of travel
earnings being the excess over the amount paid for the gasoline and use of the vehicles.
- this is one of the main purposes of the Agencies
[National Labor Union v. Dinglasan, 98 Phil 649, 3 March 1956]

- not an absolute rule!

- if one does not follow the rules and regulations that were implemented by the Agencies, VILLAMARIA, JR. V. CA (GR No. 165881, 19 April, 2006)
its franchise can be withdrawn from him
- The boundary system is a scheme by an owner/operator engaged in transporting passengers as a
- thus, one can forego this rule

common carrier to primarily govern the compensation of the driver, that is, the latter’s daily earnings
Life of CPC: definite period of time
are remitted to the owner/operator less the excess of the boundary which represents the driver’s
- the agencies, who will grant the CPC to a corporation or one who will engage in a public compensation.
utility, can specify the number of years
- the jeepney owner/operator-driver relationship under the boundary system is that of employer-
employee because the owner/operator exercises control and supervision over the driver.
Maximum years: 50 years

- for taxis and ice and refrigeration plants — 15 yrs

Unlawful arrangements
1. Kabit System

- where a person who is granted a CPC allows another person who owns motor vehicles to
operate such franchise for a fee

- thought not criminally penalized, it is considered contrary to public policy, therefore, it is

a void arrangement

- thus, if the vehicle is under a kabit system and it met an accident where the passenger
was injured or died, the passenger can run after the registered owner

13 of 43
 TRANSPO.NOTES
WARSAW CONVENTION
B. HAGUE PROTOCOL OF 1955

There were calls to amend the Warsaw Convention. The next convention is the Hague
Protocol 1955. After extensive study by International Civil Aviation Organization (ICAO), they had to
History come up with another convention which was held on September 6-28, 1955 at the Hague (that is why
it was called Hague Protocol). With respect to Hague Protocol, the amendment was merely to double
Why was there a need to adopt a private air law — international carriage by air? When is its starting point? the 125,000 francs liability to 250,000. With respect to cargo or baggage, however, the liability
During World War I, planes were very important but these were used for dropping bombs. remained the same. The Hague Protocol expressly provided that if a state becomes a contracting state
After the WWI, they found importance for the airplanes because they can use it to transport mail, to the Hague Protocol but is not a contracting state to the Warsaw Convention, it shall have the effect
passengers as well as freight.
of ADHERENCE. Therefore, those states who are not signatories to Warsaw Convention but they are

signatories of Hague Protocol, considering that Hague is an amendment to the Warsaw Convention,
The Government of France, in 1923, first thought of the need to adopt a certain law — they adhered already to the Warsaw Convention. The Hague Protocol entered into force on August 1,
international law that will be binding upon all countries. Realizing that they are going to be involving 1963.

other countries, they must have a unification of all these laws on a wide international level so that

there will be prevention of any conflicts of laws and conflict of jurisdiction.

C. GUADALAJARA CONVENTION OF 1961

In 1961, there was the Guadalajara Convention of 1961. There are instances where the carrier cannot
From October 27 to November 6, 1925, the first international conference on air law was or is not able to continue with the performance of delivering package and it will transfer or will
held in Paris. Here, because this is a French country, they created a committee (which i cannot substitute his performance to another air carrier. The first carrier to whom one has contracted with is
pronounce) “Comité International Technique d'Experts Juridiques Aériens” (CITEJA). This committee is
the performing carrier. The one with whom the performing carrier transfers/substitutes the
composed of legal experts who will study and make a draft convention that will be presented before a
joining of all of these countries. That was the first convention.
performance is called the actual carrier. For example, you’re going to send a package from States to
Philippines. Unfortunately, your carrier cannot enter the Philippines or is not authorized to do business
in the Philippines. Therefore, it will find another carrier which will carry your package to the
A. WARSAW CONVENTION OF 1929

Philippines. Unfortunately, once they do that, the actual carrier does not have any contract of carriage
There was a second convention held on October 4-12, 1929. This is the second international
with the consignor. This arrangement between the performing carrier and actual carrier is called
conference on private air law. This was held in Royal Castle, in Warsaw, Polland. It was here that the
first convention was signed on October 12, 1929. That is why it was referred to as the Warsaw CODESHARE AGREEMENT. The problem is: when your parcel becomes lost or damaged during the
Convention of 1929. This was the very first convention and has evolved into the most important transportation by this actual carrier, since there is not contract of carriage between the consignor
instrument with respect to private international law. This is now the basis for most of the conventions and the actual carrier, you cannot run after the carrier. Therefore, comes in the Guadalajara
that were subsequently signed.
Convention of 1961 wherein it provides that in order to extend the contracting carrier's right and the
liabilities under the Warsaw Convention to a non-contracting actual carrier, there was this
Guadalajara Convention which came to effect. Therefore, if there is an actual Codeshare Agreement
Important Features of Warsaw

between the contracting carrier and actual carrier, their obligations and responsibilities were
Applicability

extended to the actual carrier which is a non-contracting carrier with the consignor.

The applicability of the Warsaw Convention regulates the liability in the event of accident
for:

1. international carriage of persons, luggage or goods performed by aircraft for reward

w/o just cause with just cause
2. it applies equally to gratuitous carriage by aircraft performed by an air transport
undertaking [Art. 1]
1. NO fixed period
Monetary Cap

Another important milestone is that it provides for a monetary cap limiting the carrier’s a. BEFORE voyage entitled to salaries earned
liability in relation to both passengers, their luggage and cargo.

Presumption of Fault
b. AFTER voyage entitled to their salary entitled to salaries
Similarly to our Civil Law, the Warsaw Convention also creates a presumption of fault on the until their return to the earned as of the time of
part of the carrier. The claimant does not need to adduce evidence to proved that the carrier port where the contract their discharge
was at fault. Therefore, the burden is for the carrier to prove that he was not at fault by was made
availing of certain defenses; but under the Warsaw Convention, they are limited defenses only.

Exclusive and Mandatory Provisions

2. WITH fixed period cannot be discharge until can be discarged when

The provisions of the Warsaw Convention is exclusive and mandatory.

after the fulfillment of 1. in subo r din at io n in
• Exclusive
their contract serious matters

- meaning, in circumstances where the Warsaw Convention will apply, the claimant can only 2. robbery

rely on the Warsaw Convention — the liabilities that are provided on the WARSAW 3. theft

Convention
4. habitual drunkenness

- on the part of the carrier, they cannot seek to be excluded or to limit their liability 5. damage cause d to
provided under the Warsaw convention
the vessel or to its
cargo by malice or
manifest or proven
What is the monetary cap?
negligence
Monetary Cap

• Passengers — 125,000 gold Francs (equivalent to $5,000 in 1929)

D. MONTREAL AGREEMENT OF 1966

• Registered luggage — 250 gold Francs/kg (equivalent to $10 in 1929)

• Hand-carry/unregistered luggage — 5,000 gold Francs/passenger (equivalent $200 in 1929)

14 of 43
 TRANSPO.NOTES
In the 1960’s, the Americans were saying that the monetary cap as provided by the Warsaw • Guadalajara of 1961

Convention is very low. By October 18, 1965, they are already saying that they are going to withdraw • Montreal Convention of 1999 was ratified in August 10, 2015 (a signatory but not yet in effect
as a contracting state to the Warsaw Convention. By May 15, 1966, their withdrawal of their because no yet presentation to the ICAO)

membership to the Warsaw Convention became effective. At that time when the Americans were
powerful, they said that if the US is not going to be a member of the Warsaw Convention, this was What happens if one contracting state files an action against a non-contracting state of the same convention?
noticed as a serious crisis of the unification of private air law. They have to find now a blanket - the convention cannot be enforced against the other

solution -- they had to make the Montreal Agreement of 1966. This is not a convention but merely an - the applicable law is either:

agreement between the UN and carriers where the point of origin and point of destination and a a. the domestic/national law or

stopping place will in the US. Therein contains the basis under the Passenger Bill of Rights. In the b. the terms of the contract

event of bodily injury or death where the point of origin, destination or the stopping place is in the
USA, $75,000 with legal cost if the claim was filed in a state where all award consists of all cost
including legal fees; but $58,000 if without legal cost if you going to file your claim in a state where What happens if they are signatories to one and the same and one is a signatory to some different from that which the
there is a separate reward for legal cost. As soon as the Montreal Agreement 1966 was concluded, other is a signatory?
they withdrew their membership from the Warsaw Convention.
- Principle of Determination of the Lowest Common Denominator

- the latest convention to which they are both a party is the one to be applied

GUATAMALA PROTOCOL OF 1971

In 1971, there was Guatemala Protocol of 1971. This is not really important because this is Steps when a different states are contracting states of different conventions:

where they tried to increase further the monetary cap but this never took effect.
1. Determine if the contract of carriage falls under the international carriage first:

• International carriage [Art.1, WC]

a. any carriage in which, according to the contract made by the parties, the place of departure
E. MONTREAL ADDITIONAL PROTOCOLS (MAP) OF 1975)

and the place of destination are situated within the territories of two High Contracting
Since there was still a problem with respect to cargo, they had to make further
Parties, whether or not there be a break in the carriage or a transhipment; or

amendments or protocols which is the Montreal Additional Protocols (MAP) in 1975. Another reason is
b. any carriage in which, according to the contract made by the parties, the place of departure
that there were developments in the International Monetary Fund (IMF) demonitizing gold Francs. This
and the place of destination are situated within the territory of a single High Contracting
protocols used the monetary unit SDR (Special Drawing Rate1) which is a currency value determined by
Party, whether or not there be a break in the carriage or a transhipment,, if there is an
summing the values in dollars; the values being the different exchange rates of very stable currencies
agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or
“basket of currencies” or “major currencies”,eg.: US dollar, Euro, Japanese yen, Pounds sterling. As of
authority of another Power, even though that Power is not a party to this Convention.

the present, the 1US$ = 0.709657 SDR.

- determined in the airway bill

WARSAW SYSTEM CONVENTION

All of these agreements are referred to the Warsaw System Convention.

2. Determine the applicable convention

a. b/w a contracting state & non-contracting state

MONTREAL CONVENTION OF 1999

- domestic law or terms of the contract

The last convention and the most recent is the Montreal Convention of 1999. Here, they b. b/w states who are signatories of different conventions but both signatories to some same
wanted to make a single convention where everything (monetary cap, codeshare agreement, SDR) convention

should be placed therein. So the tried to unify the fragmented liability regime in the Warsaw System - latest common convention

Convention. The Montreal Convention of 1999 reflects the changes of Warsaw-Hague Convention of c. b/w states who are signatories to more than one same conventions

1955, the Montreal Additional Protocols, and the Codeshare agreement embodied under the - the latest convention

Guadalajara Convention. The changes with respect to the monetary cap under the Montreal Convention
of 1999 is that for damages in excess of 100,000 SDR arising from death or injury of passengers, the Illustration:

monetary cap limiting the carrier’s liability is removed. The carrier may be partly or fully exonerated if • Manila to Davao

it proves that it was not negligent or that there was contributory negligence on the part of the - no convention applicable because it is a domestic flight not covered by international law

passenger. With respect to injury or death of passengers, there is strict liability for proven damages • Manila to Davao via Vietnam (contracting state of Warsaw)

as up to 100,000 SDR. The liability for loss, delay to the package is limited now to 1,000 SDR per - Warsaw convention is applicable

passenger and an action for damages with respect to injury or death of passenger may also be • Geneva, Switzerland to Thailand; Switzerland is a contracting state to the Montreal Convention;
brought before the court of contracting states in which at the time of accident, the passenger has his Thailand is not a contracting state to the Warsaw System Conventions and Montreal Convention 1999

principal and permanent residence, unlike in the Warsaw Convention.

- what will apply is the national law or the terms of the contract of carriage

• Kilimanjaro, United Republic of Tanzania to Jakarta, Indonesia; United Republic of Tanzania is a

To which convention is the Philippines a signatory? contracting state of Montreal Convention of 1999; Jakarta is not a contracting state of Montreal
• Warsaw Convention of 1929
Convention of 1999; both are contracting states to the Warsaw convention

- concurred by the Senate through Resolution no. 19 on May 16, 1950

- the one applicable is the Warsaw convention

- The Philippine Instrument of Accession was signed by Pres. Elpidio Quirino on October 13, • Mexico to Sydney, Australia; Mexico is a contracting state to the Montreal Convention of 1999,
1950 and was deposited to the Polish Government on November 9, 1950.
Australia is not but is a contracting state to the Warsaw, Hague, Guadalajara, and Montreal; Mexico
- This became applicable to the Philippines on February 9, 1951
is a contracting state of Warsaw, Hague, and Guadalajara.

- On September 23, 1955, Pres. Ramon Magsaysay issued a Proclamation No. 201 declaring - apply only Warsaw, Hague, and Guadalajara.

the Philippine’s formal adherence to the Warsaw Convention.

• Beijing, China to Albania; China is a contracting party to the Warsaw, Hague but Albania is not. Both
• Hague Protocol of 1955
are contracting state of Montreal Convention of 1999

1 Special Drawing Right (SDR) sabi sa net

15 of 43
 TRANSPO.NOTES
- applicable law is the Montreal Convention of 1999
2. damage sustained in the event of the destruction or loss of, or of damage to, any registered
luggage or any goods,

Lhuillier vs. British Airways Gr No. 171092, March 15, 2010

- if the occurrence which caused the damage so sustained took place during the carriage
- the courts have to apply the principles of international law and are bound by treaty stipulations
by air [Art. 18 (1), WC]

entered into by the Philippines which form part of the law of the land, one of which is the
Warsaw Convention.

- • Transportation/Carriage by air [Art. 18 (2), WC]

Being a signatory therefore, the Philippines adheres to its stipulations and is bound by the - comprises the period during which the luggage or goods are in charge of the carrier,
provisions including the place where the actions involving damages is to be instituted.

whether:

- the court therefore cannot deviate from the indicated limitations

a. in an aerodrome (airport) or on board an aircraft, or,

- adherence is in consonance with the comity of nations and deviation from it can only be effected
b. in the case of a landing outside an aerodrome, in any place whatsoever.

through proper denounciation

• GR: period of the carriage by air does NOT extend to any carriage by land, by sea or by river
performed outside an aerodrome

EXC: if such a carriage takes place in the performance of a contract for carriage by air, for
Not Covered by Warsaw Convention
the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to
the contrary, to have been the result of an event which took place during the carriage by air.

1. Carriage of mail and postal packages [Art.2 (2)]

- the claimant need not prove that the carrier was at fault. Once there is loss or damage
2. Carriage by air performed by way of experimental trial by air navigation undertakings with the
to the goods, whether or not it was the carrier’s fault, claim for damages can be filed.

view to the establishment of a regular line of air navigation [Art. 34]

- no need to prove where did the damage occurred as long as it the goods were received
3. Carriage performed in extraordinary circumstances outside the normal scope of an air carrier's
in such condition

business. [Art. 34]

- e.g., carriage of cargo to territories affected by hostilities

4. Reservation with respect to carriage for a state’s military authorities on aircrafts registered in 3. damage occasioned by delay in the carriage by air of passengers, luggage or goods. [Art. 19, WC]

that state, the capacity of which is reserved by or on behalf of such authority

- e.g., where the state charters aircraft to transport military goods to a warzone in another Venue and Jurisdiction of Claims [Art. 28, WC]

state; if they make a reservation, it means that Warsaw Convention can be applied with respect - in the territory of one of the High Contracting Parties

to carriage for the state’s military authority

- at the option of the plaintiff, (4 options), either:

5. When the contracting state also makes a reservation so that the relevant international air 1. before the Court having jurisdiction where the carrier:

convention will not apply in relation to carriage performed directly by the state
a. is ordinarily resident, or

- e.g., if a state holds shares in an air carriage company, the air carrier is not entitled to avoid b. has his principal place of business, or

the application of the international air convention by invoking the state reservation
c. has an establishment by which the contract has been made

- to come within state reservation exception, the carriage has be performed directly by the state 2. before the Court having jurisdiction at the place of destination.

for the state and not as part of the commercial operations

Lhuillier vs. British Airways Gr No. 171092, March 15, 2010

- the Philippine Courts are divested of jurisdiction where Philippines is not the place of domicile of
the defendant (British Airways) nor is the principal place of business (Europe). Neither was the
Nature of Air Carrier
plaintiff’s ticket issued in this country or the destination Manila but Rome, Italy.

Air Carrier

- a person who undertakes, whether directly or indirectly, or by lease or any other arrangements Prescription of Actions to be Filed [Art. 29, WC]

to engage in air transportation or air commerce. [RA 776, the created the CAB (Civil Aeronautics - w/in 2 years from:

Board)]
• the date of arrival at the destination, or

• Domestic transportation
• the date on which the aircraft ought to have arrived, or

- transportation within the Philippines

• the date on which the carriage stopped.

• Foreign Air Transportation

- between the Philippine and any place outside it

For the Prescriptive Period to Start [Art. 26(2)]

- a written notice must be filed within the following period:

Nature of Airlines Contract of Carriage

• damage to baggage — within 3 days from receipt

- contract to transport passengers and to deliver cargo or merchandise to their destination

• damage to goods — within 7 days from receipt

• in case of delay — within 21 (new, before 14) days from date on which the luggage or goods
have been placed at his disposal.

Liability of Air Carrier

Condition for Filing a Case

- complaint in writing to the carrier

1. damage sustained in the event of the death or wounding of a passenger or any other bodily
injury suffered by a passenger,
Phil. Airlines, Inc. v. CA, 254 SCRA 48

- if the accident which caused the damage so sustained took place on board the aircraft or in - the respondent filed an action for damages against the petitioner PAL for the breakage
the course of any of the operations of embarking or disembarking [Art. 17, WC]
of the glass of a microwave oven, which he had shipped through PAL. The defense of the
PAL is while the action was filed w/in 7 months from arrival, she failed to make a
complaint in writing which is provided under the airway bill

16 of 43
 TRANSPO.NOTES
- SC: although she did not comply with the complaint in writing, when she submitted a - determine if the carrier or his agent acted within the scope of their employment and
formal complaint to the petitioner, the PAL transferred from one employee to another are guilty of relevant misconduct of the law of the court before which the case is
the complaint until it was delayed, thus, she was not able to make the complaint. She was brought

deemed to have substantially complied with the requirements of a complaint in writing. It - under Hague Protocol, it refers to act or omission done with intent to cause damage
was the carrier’s fault.
or recklessly and with knowledge that damage would probably result

1. accepting a passenger without a ticket [Art. 3 (2)]

Will carriers be liable for actions by their servants, employees or agents? 2. accepting a luggage without a luggage ticket [Art. 4(4)]

- Yes. Generally, carriers are accountable

3. accepting goods without airway bill [Art. 9]

United Airlines v. Uy, GR NO. 127768, November 19, 1999

Monetary Unit

- the respondent filed a case. There are two cause of action: first, the humiliating - French franc consisting of 65 ½ milligrams gold of millesimal fineness 900. These sums may
treatment he received from the petitioner’s employees at San Francisco Airport which be converted into any national currency in round figures. [Art. 22 (4)]

caused him extreme embarrassment and social humiliation; second, the slashing of his - the applicable rate is during 1929 thus

baggage and the loss of his personal effects amounting to $5,310.

• 125,000 Francs = $5,000

- SC: the action for damages arising from theft or damage of the property is covered by • 250 francs = $10

the Warsaw Convention; however, the action for damage arising from the misconduct of • 5,000 francs = $200

the airline employees and the violation of respondent’s rights as a passenger is not
covered by the Warsaw Convention. Nevertheless, the Civil Code will apply, such that, the
prescription for the first cause of action is 4 years [Art. 1146] and the prescription for CODE OF COMMERCE
the slashing of baggage has lapsed.

The primary law governing common carrier in transportation is the Civil Code, suppletory is the Code of Commerce.
There are provisions in the Code of Commerce with respect to overland transportation. This is still in effect because initially
Defenses of Air Carrier the laws in transportation are covered by the Code of Commerce. Upon effectivity of the Civil Code, it overturned the Code of
Commerce. Thus, the primary law is the Civil Code. But this did not repeal the provisions under the Code of Commerce. Any
1. Defense of Contributory Negligence [Art. 21, WC]

- may wholly or partially relieved the liability if he proves that the negligence on the part of the provisions not present in the Civil Code, the Code of Commerce is then applicable.
claimant caused or contributed to the loss or damage or delay in question

Coverage of Code of Commerce

2. Defense on Necessary Measures [Art. 20(1), WC]

Overland Transportation

- he proves:
Maritime Admiralty

a. that he and his agents have taken all necessary measures to avoid the damage or
Commercial Contracts

b. that it was impossible for him or them to take such measures.

Transportation of persons or news fall under the Commercial Contracts?

- no, generally, it only involves transportation of merchandise (strictly speaking) and
3. Defense of Negligent Pilotage

- he proves:
persons and news are not considered merchandise

- the transportation of persons or news is considered to be commercial contract, if:

a. that the damage was occasioned by negligent pilotage or negligence in the handling of the
1. the carrier must be a merchant and

aircraft or in navigation and

2. he is habitually engaged in transportation for the public.

b. that, in all other respects, he and his agents have taken all necessary measures to avoid the
- however, the Civil Code removed the distinction between tranportation of goods,
damage.

person and news.

Air transportation

not covered because at the Code of Commerce was enunciated the idea of transportation
Monetary Cap [Art. 22, WC] by air was not considered as commercial, in fact, in States, it is not commercial, it is still
common carrier.

• Passenger — 125,000 Francs

so, you never refer to the Code of Commerce for air transportation ALTHOUGH it can be
- doubled by the Hague Protocol to 250,000 francs
applied because, now, with the provisions of Civil Code, air transportation is now covered
• Registered Luggage — 250 francs per kg
under commercial

• Unregistered Luggage — 5,000 francs per passenger

How do you apply the law? or Which law do you apply? Do you always apply the Civil Code or are there instances
May the carrier be removed from the this limitation on monetary cap, such that higher amount can be claimed?
when the Code of Commerce will be initially applied before the Civil Code?
- Yes,

Instances when the carrier cannot avail the monetary cap:

1. when the carrier committed wilful misconduct or recklessness [Art. 25, WC]

• Wilful Misconduct

- no definition under the Warsaw Convention

- entail that the act of the carrier will require a degree of intention or subjective
recklessness

17 of 43
 TRANSPO.NOTES
the contract for carriage, and agreeing or directing that the freight to be delivered to
Summary of Application of Laws
the order or assigns of a specified person at a specified place.

Subject Matter Applicable Law Other Names

- it is sometimes called:

If it involve commercial contract involving Primary Law: Civil Code

a. Shipping Receipt

common carriers: Suppletory: Code of Commerce b. Forwarder’s Receipt

c. Receipt for Transportation

Private carriers involved in commercial contract: Primary Law: Code of Commerce

Suppletory: Civil Code, excluding the Function/Nature

provisions on common carriers 1. it is also a symbol of the goods covered by it

- because it recites the date and place of shipment, describes the goods as to quantity,
Carriage of goods as an accessory to another Civil Code
weight, dimensions, identification marks and condition, quality, and value. [Ace
industry
- because it is not a commercial contract Navigation]

- example transportation services from the airport to the hotel since it is an accessory only
2. bill of lading is also a receipt of goods

provided by the hotel - it is not really their main business

- proof that the goods are delivered

- thus, if there is injury or damage, Civil 3. each bill is a contract in itself and the parties are bound by its terms

Code will apply - because (1) there are parties to the contract, (2) there is obligation stipulated, (3)
there is consent of the parties

Air Transportation Civil Code;and

- it names the contracting parties, which include the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations
Warsaw Convention
assumed by the parties. [Ace Navigation]

Unsworth Transport Int’l (Phils), Inc. v. CA GR 166250, 26 July 2010

- a bill of lading is a contract in itself between the parties where they are
A. Overland Transportation
bound by the terms thereof or where they undertake specific responsibilities
and assume stipulated obligations. It is a document of title.

Scope:

transportation on land

transportation on small bodies of water

4. it is also a legal evidence of a contract between the shipper and the carrier

• examples: rivers, provided it is not very large

- such that in the event that there will be dispute that will arise with regard to the
execution and fulfillment of that bill of contract, the only evidence, therefore, that
you need to show is the bill of lading [Article 353]

What is the nature of overland transportation? When do you consider it commercial?

Is the bill of lading always needed in proving the contract of transportation?

Article 349. A contract of transportation by land or waterways of any
- under Article 350, the shipper and the carrier may mutually agree that a bill of
kind shall be considered commerical: lading be issued, however, it is NOT obligatory

1. when it involves merchandise or any object of commerce - there can be a bill of lading or none

2. when, no matter what its object may be, the carrier is a merchant - the fact that a bill of lading is not issued does not preclude the existence of a
or is customarily (habitually) engaged in transportation for the contract of transportation

public
How, therefore, are disputes going to be decided if there is no bill of lading? What is now the evidence?
What is your proof that you have entered into a contract of transportation when you will transport goods or you yourself - under Article 354, the respective claims shall be decided by legal proofs:

will be transported? Article 354. In the absence of a bill of lading, dispute the
• with respect to goods, baggage, or merchandise — BILL OF LADING
respective claim shall be decided by legal proofs which the
• with respect to persons — TICKET
parties may present in support of their respective claims,
according to the general provisions in this Code for commercial
What is important to be contained under that BILL OF LADING or TICKET
contracts.
What is a bill of lading?

- there is still need to present proof — other proofs, legal proofs

BILL OF LADING

Defintion:
Saludo v. CA, GR No. 95536, 23 March 1992

- written acknowledgment of the receipt of goods and an agreement to transport and to - acceptance of a bill of lading without dissent raises a presumption that all
deliver them at a specified place to a person named or on his order.
terms therein were brought to the knowledge of the shipper and agreed to by
him,

Ace Navigation Co, Inc. v. FGU Insurance Corp., GR No. 171591, 25 June 2012
- in the absence of fraud or mistake on the part of the carrier, the shipper is
- A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent, estopped from thereafter denying that he assented to such terms

describing the freight so as to identify it, stating the name of the consignor, the terms of

18 of 43
 TRANSPO.NOTES
- In order that any presumption of assent to a stipulation in a bill of lading possession or custody of the document has been entrusted, or if
limiting the liability of a carrier may arise, it must appear that the clause at the time of such entrusting the document is in such form
containing this exemption from liability plainly formed a part of the contract that it may be negotiated by delivery.
contained in the bill of lading.

Kinds of Bill of Lading

How is a negotiable B/L be negotiated?
1. negotiable B/L - where it is stated that the goods will be delivered to the bearer, or to NCC Article 1508. A negotiable document of title may be negotiated
the order of any person named in such document
by delivery:
2. non-negotiable B/L - where the goods are to be delivered to a specified person

- it also known as a STRENGTH or FLAT B/L (1)Where by the terms of the document the carrier issuing the same
undertakes to deliver the goods to the bearer; or
3. clean B/L - does not indicate any defect in the goods

4. foul B/L - indicates that the goods covered by it are in bad condition
(2)Where by the terms of the document the carrier issuing the same
5. spent B/L - covers goods that have already been delivered by the CC without a surrender undertakes to deliver the goods to the order of a specified
of a signed copy of the B/L; the subsequent delivery of the spent B/L cannot give to the person, and such person or a subsequent indorsee of the
buyer of it any actual control of the goods, or anything which can fairly be called delivery

document has indorsed it in blank or to the bearer.

- the goods were already delivered but there was no surrender of the signed copy of lading
- when goods are delivered, the consignee has the duty to surrender the bill of lading (3)Where by the terms of a negotiable B/L the goods are
- when the bill of lading was surrendered, all the obligations and rights as a carrier or shipper will be cancelled deliverable to bearer or where a negotiable B/L has been
6. through B/L - issued by the CC who is obliged to use the facilities of other carriers as indorsed in blank or to bearer, any holder may indorse the same
well as his own facilities for the purpose of transporting the goods from the city of the to himself or to any specified person, and in such case the
seller to the city of the buyer, which B/L is honored by the subsequent interested carriers document shall thereafter be negotiated only by the indorsement
who do not issue their own ladings
of such indorsee.
- entails 2 or more carriers
- because the subsequent carriers do not issue anymore a bill of lading but the obligations carry over to the How is a negotiable B/L be indorsed?
other carriers under the contract of transportation NCC Article 1509. A negotiable B/L may be negotiated by the
indorsement of the person to whose order the goods are by the terms
7. on board B/L - states that the goods have been received on board the vessels which is to
carry the goods
of the document deliverable. Such indorsement may be in blank, to
- under the COGSA, this is called also a SHIPPED BILL OF LADING wherein once goods are loaded a bill of bearer or to a specified person.

lading is then issued

What must be contained in a bill of lading?
- generally, the issuance of the bill of lading will come first but in ON BOARD B/L, what comes first is the Contents of a Bill of Lading

boarding of goods on the vessel then the bill of lading will be later on be issued Art. 350. The shipper as well as the carrier of merchandise and goods
8. received for shipment B/L - states that the goods have been received for shipment with or may mutually demand of each other the issuance of a bill of lading in
w/o specifying the vessel by which the goods are to be shipped; issued when conditions are which there shall be stated:
not normal and there is an insufficiency of shipping space
1. The name, surname, and domicile of the shipper.

9. custody B/L - issued by the CC to whom the goods have been delivered for shipment but 2. The name, surname, and domicile of the carrier.

the steamer indicated in the B/L which is to carry the goods has not yet reached the port 3. The name, surname, and domicile of the person to whom or to
where the goods are held for shipment
whose order the goods are addressed, or whether they are to be
10.port B/L - issued by the CC to whom the goods have been delivered and the steamer delivered to the bearer of the said bill.
indicated in the B/L by which the goods are to be shipped is already in the port where the 4. A description of the goods, stating their generic character, their
goods are held for shipment
weight, and the external marks or signs of the packages containing the
same.
If a B/L contains an undertaking that the carrier will deliver goods to the bearer, to a specified person but it is 5. The cost of the transportation.

stated there “non-negotiable”, is it considered non-negotiable bill of lading? 6. The date of which the shipment is made.

- NO. It is still considered a negotiable B/L [Article 1510, NCC]
7. The place of the delivery to the carrier.

8. The place and time at which the delivery is to be made to
Who may negotiate, therefore, a negotiable B/L? the consignee.

NCC Article 1512. A negotiable document of title may be negotiated: 9. The damages to be paid by the carrier in case of delay, if
(1)By the owner thereof; or any agreement is made on this point.
(2)By any person to whom the possession or custody of the document
has been entrusted by the owner, if, by the terms of the Is it imperative that all of these be included in a bill of lading?
document the bailee (carrier) issuing the document undertakes
to deliver the goods to the order of the person to whom the

19 of 43
 TRANSPO.NOTES
- NO. It is not important that all of these be included because as long as it contains an there is an agreement — the agreed route

acknowledgement by the carrier of the receipt of these goods for transportation and the there is NO agreement — the carrier may select the route as long as it is

shipper or the consignee will receive such document, it is in legal effect a bill of lading
a. the shortest

- while yes these 9 items generally be included, it is not important that all of it must be b. least expensive

included, as long as the carrier indicates that this is the shipper, this is the goods to be c. practically passable

shipped and this the character of this goods, and it will be delivered at this time, at this
place, to this person, then in effect it will be considered a bill of lading

When can the carrier change the route?

- he will be obliged to change the route because of ONLY under FORCE MAJEURE

Bills of Lading are CONTRACT OF ADHESION. Why? - if the did go and change the route because of force majeure and there is an
- under the law on contracts, contracts of adhesionare generally made voidable.
increase of expenses, it will be reimbursed after presentment of formal proof that
- A bill of lading can be considered as not totally prohibited because otherwise, at anytime, indeed there were additional expenses

the shipper may just back out from the contract of transportation

if there is no justifiable reason to change the route, but the carrier change the route and then there will be
Saludo v. CA, GR No. 95536, 23 March 1992

- If the shipper follows, adheres or gives his consent to the bill of lading, therefore, later on damage that will be incurred, what now will be paid by the common carrier?
despite being a contract of adhesion, it will be still be binding between the parties
- damage/loss of the goods + agreed indemnity stipulated in the B/L

- if in the bill of lading there was an agreement that in case of change of route
Magellan Mftg. Mktg, Corp, v. CA, 201 SCRA 102
for no reason, such an amount will be paid by the carrier, then, on top of the
- quoted the case of Lime v. CA, GR No. 94761, 17 May 1993;
damage suffered by the goods, the agreed indemnity must be paid by the carrier

It is presumed that the stipulations of the bill were, in the absence of fraud,
concealment or improper conduct, known to the shipper, and he is generally 3. CARE OF THE GOODS

bound by his acceptance whether he reads the bill or not.

Article 361. The merchandise shall be transported at the risk and
venture of the shipper, if the contrary was not expressly stipulated.
Who are the parties to a bill of lading? Therefore, all damages and impairment suffered by the goods
Parties to a Bill of Lading
during the transportation, by reason of accident, force majeure, or by
1. shipper
virtue of the nature or defect of the articles, shall be for the
2. carrier

account and risk of the shipper.

3. consignee

- but generally, only the shipper and carrier

The proof of these accidents is incumbent on the carrier.

there is NO agreement — at the risk of the shipper

What are the responsibilities and obligation of a carrier under a bill of lading?
Obligations of the Carrier
when does the common carrier liable?
When does the responsibility of the carrier commence? Art. 362. The carrier, however, shall be liable for the losses and
1. WHEN IT COMMENCES
damages arising from the causes mentioned in the foregoing article
- when delivery is made to the carrier, that is, the goods are left to the custody of the if it is proved that they occurred on account of his negligence or
carrier and nothing else is left to be done by the shipper and the carrier has the control
because he did not take the precautions usually adopted by careful
and possesion over the goods:

persons, unless the shipper committed fraud in the bill of lading,

Article 355. The liability of the carrier shall begin from the moment
he receives the merchandise, in person or through a person entrusted
therewith in the place indicated for their reception.
What about the route? Can the carrier determine its own route to take the transportation of goods?
2. ROUTE
there being no time for the owners to dispose of the same, the
Art. 359. If there should be an agreement between the shipper and the
carrier with regard to the road over which the transportation is to be
made, the carrier may not change the route, unless obliged to do so by
force majeure; and should he do so without such cause, he shall be
liable for any damage which may be suffered by the goods transported
making him believe that the goods were of a class or quality
different from what they really were.
If, notwithstanding the precaution referred to in this
article, the goods transported run the risk of being lost on
account of the nature or by reason of an unavoidable accident,
carrier shall proceed to their sale, placing them for this purpose
at the disposal of the judicial authority or of the officials
determined by special provisions.
carrier is liable when:

for any other cause whatsoever, besides paying the amount which may 1. he was negligent

have been stipulated for such a case. 2. he did not take the precuations usually adopted by careful persons

When on account of said force majeure the carrier is obliged EXCeption:

to take another route, causing an increase in the transportation the shipper committed fraud in the bill of lading, making him believe that the
goods were of a class or quality different from what they really were.

charges, he shall be reimbursed for said increase after formal proof

thereof.

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 TRANSPO.NOTES
NCC, Article 1734. Common carriers are responsible for the - Art. 357. x x x expenses x x x for the account of the
loss, destruction, or deterioration of the goods, unless shipper.
the same is due to any of the ff. causes only:
(1) Flood, storm, earthquake, lightning, or other natural 4. DELIVERY

disaster or calamity; How should goods be delivered?

(2) Act of the public enemy in war, whether international a. Condition of Goods

or civil; (3) Act or omission of the shipper or owner of

Art. 363. With the exception of the cases prescribed in the second
the goods;

paragraph of Article 361, the carrier shall be obliged to deliver
(4) The character of the goods or defects in the packing
the goods transported in the same condition in which, according to
or in the
the bill of lading, they were at the time of their receipt,
containers;

without any damage or impairment, x x x
(5) Order or act of competent public authority.

Remedy of the CC
What is the liability when the goods were delivered in a different condition as when it was given to the
- to sell the goods by placing them for the purpose at the disposal of the carrier?
judicial authority of the officials determined by special provisions
Art. 363. x x xand should he not do so, he shall be obliged to pay
- provided, the owners had no time to dispose of the same
the value of the goods not delivered at the point where they
should have been and at the time the delivery should have taken
place. If part of the goods transported should be delivered the
When can the carrier refuse to accept? consignee may refuse to receive them, when he proves that he
Rule on Acceptance of the transportation of goods
cannot make use thereof without the others.
GR: A carrier cannot refuse

EXCEPTIONS:

1. Article 356:Carriers may refuse packages which appear unfit for When should delivery be made?
transportation x x x - within the period fixed in the bill of lading
Is this rule absolute? b. When delivery be made

- it depends. If the mode of transportation is other than railway, it is there is a period fixed

absolute. If railway, NO.

Article 370. If a period has been fixed for the delivery of
Article 356 x x x if the carriage is to be made by
railway, and the shipment is insisted upon, the
company shall transport them, being exempt from all
responsibility of its objections, is made to appear
in the bill of lading.
2. Article 357. If by reason of well-founded suspicion of falsity
in the declaration as to the contents of a package the carrier
should decide to examine it, x x x
How does he examine it?
Article 357. x x x he shall proceed with his investigation
in the presence of witnesses, with the shipper or
consignee in attendance.
What if the shipper does not attend?
- Art. 357. x x x the examination shall be made before a
the goods, it must be made within the same, x x x
If not delivered within the period fixed, what is the liability of the carrier?
Articel 370. x x x otherwise the carrier shall pay the
indemnity agreed upon in the bill of lading, neither the
shipper nor consignee being entitled to anything else. x x
x
Should there be no agreement as to the indemnity?
Articel 370. x x x Should no indemnity have been agreed
upon and the delay exceeds the time fixed in the bill of
lading, the carrier shall be liable for the damages which
may have been caused by the delay.
there is no fixed period

notary, who shall prepare a memorandum of the result of Art. 358. Should no period within which goods are to be
the investigation, for such purposes as may be. delivered be previously fixed, the carrier shall be under the
- the notary public will issue a report stating the findings as to the obligation to forward them in the first shipment of the same
examination
or similar merchandise which he may make to the point of
delivery; x x x
If the declaration is CORRECT

- Art. 357. x x x the expense occasioned by the

examination and that of carefully repacking the What is the liability of the carrier if there is delay?
packages shall be for the account of the carrier
Art. 358. x x x and should he not do so, the damages
If the declaration is INCORRECT

occasioned by the delay shall be suffered by him.

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 TRANSPO.NOTES
What is the valuation? How do you determine the amount/cost of the delay? investigated. They might be instances that the chance will not longer be available if
- if there is no period fixed and there would be delay, the damages would be for longer period of time

computed on this wise, the difference between the market value of the goods
at the time it should have been delivered and the price at the time that they • under Civil Code,

were delivered to which may be added reasonable expenses caused by delay.

- if contract — 10 years

- Cost = Market value @ time it should have been delivered - Price @ the time - if quasi-delict - 4 years

they are delivered + reasonable expenses caused by delay

- if oral — 4 years

What are the rights of the consignee? To whom shall delivery be made?
1. The consignee may refuse to receive the goods delivered, if he can prove that he cannot
- to the consignee, without any delay or obstruction [Art. 368]

make use of them independently of those not delivered:

- the carrier must exert efforts to look for the consignee

Art. 363 x x x If part of the goods transported should be

delivered the consignee may refuse to receive them, when he What does it mean when the bill of lading is issued “to the order of the shipper”?
proves that he cannot make use thereof without the others.
- means that the carrier has the duty NOT to deliver the merchandise EXCEPT upon
presentation of Bill of Lading duly endorsed by the shipper.

- If there is delivery w/o asking for the presentation of the Bill of Lading endorsed by the
2. If the goods delivered were rendered useless for sale or consumption:

shipper, there will be a MISDELIVERY; the carrier will be liable for the damage

Art. 365. If, on account of the damage, the goods are rendered
useless for sale or consumption for the use for which they are
What should the carrier do, when despite his efforts, he cannot find the consignee?
properly destined the consignee shall not be bound to receive - there will be a judicial deposit such that:

them, and may leave them in the hands of the carrier,

Art. 369. x x x the municipal judge, where there is none of the
demanding payment of their value at the current market price
first instance, shall provide (an order) for their deposit at
that day. x x x
the disposal of the shipper, x x x
- the effect of which is:

3. If the goods delivered are damaged to such an extent that their value is diminished the
carrier must pay the difference in value as judged by experts:
Art. 369. x x x this deposit producing all the effects of
delivery without prejudice to third parties with a better
Art. 364. If the effect of the damage referred to in Article
right.
361 should be only a reduction in the value of the goods, the - the causes when a carrier can make a judicial deposit are:

obligation of the carrier shall be reduced to the payment of

Art. 369. If
the amount of said reduction in value, after appraisal by
(a)the consignee cannot be found at the residence indicated in
experts.
the bill of lading
Who are these experts? — appraisers (b)he refuses to pay the transportation charges and expenses
(c)he refuses to receive the goods x x x
Right of Abandonment

- With respect to the first two, the consignee may exercise the right of abandonment

- if there is an abandonment, the shipper/consignee will be entitled to the full value of the 2 or more carriers

goods.
When can there be two or more carriers?
- when there is an agreement or there are combined services with other carriers

If there is damage to the goods, when should claim be made? • Effects:

1. if it is very apparent that there is damage to the goods, then, as soon as the damage is 1. they assume the rights and obligations of the preceding carriers

seen or discovered
2. may reserve his right against the carrier at fault:

- the consignee must immediately state his the objection or claim from the carrier
Art. 373. The carrier who makes the delivery of the merchandise
2. but if the damage was only discovered upon opening of the goods
to the consignee by virtue of combined agreements or services
- from receipt of the goods, the consignee has 24 hours to raise his objection or with other carriers shall assume the obligations of those who
claim
preceded him in the conveyance, reserving his right to proceed
3. if the consignee forgo or did not immediately raised his objection or claim upon looking against the latter if he was not the party directly responsible
at the exterior or upon opening, he failed to raise his objections within 24 hours

- the consignee can no longer run after carrier

for the fault which gave rise to the claim of the shipper or
- no claim shall be admitted against the carrier
consignee. x x x
claim is a condition precedent to the filing an action in court
• Rights of shipper

Art. 373. x x x The shipper or consignee shall have an immediate

right of action against the carrier who executed the transportation
What is the period for filing a claim?
Period for Filing a Claim
contract or against the other carriers who may have receive the
• under Code of Commerce — 1 year
goods transported without reservation.
- a shorter period may be stipulated in the bill of lading

- Reason: the common carrier cannot just accept the claim, it needs to investigate. The Damage

chance to discover or investigate the reason for the loss must be immediately be - The shipper has the right to receive the amount of damage

22 of 43
 TRANSPO.NOTES
How do you fix the amount of damages?
• Amount of damage
Under the Code of Commerce, what are vessels?
- determined by what is delcared in the bill of lading, the shipper cannot present proof:
Vessels

Art. 372. The value of the goods which the carrier must pay in cases - in its broadest sense extends to anything floating in and on the water build in a form of
if loss or misplacement shall be determined in accordance with that vessel and use for navigation, regardless of form, right or power

declared in the bill of lading, the shipper not being allowed to - refers solely to merchant ships

present proof that among the goods declared therein there were • Excluded:

articles of greater value or money. military ships or warships

- parties may also agree that the amount be determined by appraisal of experts
yacht

pleasure ships

health service and harbor police vessels

• Shipper’s lien

- security for the payment of the value of the goods which the carrier must pay in cases of fishing vessels

loss or misplacement
towboats and other craft destined to other uses such as coast and geodetic survey, scientific
research and exploration,

Art. 372. Horses, vehicles, vessels, equipment and all other

crafts engaged in the loading and discharge of vessels

principal and accessory means of transportation shall be bound in transhipments from one vessel to another

favor of the shipper, x x x. tug boats

those crafts which in harbors, along shore, bays, inlet, coves and anchorages are engaged in
transporting passengers and baggage

Rights of Consignee in case of delay

Lopez v. Duruelo, 52 Phil 229

1. Right to abandon

- FACTS: a person want to board a ship but the ship was far away from the port. He
boarded a boat, the purposes of which is to transport goods and passengers to the ship.
Art. 371. In case of delay through the fault of the carrier,
Unfortunately, the boat was so near the propeller which hit the boat. The boat sunk and
referred to in the preceding articles, the consignee may leave the the passengers were injured.

goods transported in the hands of the former, x x x - RULING: Vessels of a minor nature not engaged in maritime commerce (like river boats)
• How made?
and those carrying passengers from ship to shore are governed as to their liability to
Art. 371. x x x [by] advising him thereof in writing before their passengers by the Civil Code

arrival at the point of destination. x x x - Thus, the boat was not considered a vessel such as to fall under the Code of Commerce.
• Liability of Carrier
Thus, run after the carrier under the Civil Code

Art. 371. x x x When this abandonment takes place, the carrier shall
pay full value of the goods as if they had been lost or misplaced x Nature of a Vessel

x x Art. 585. For all purposes of law not modified or restricted by the
provisions of the Code, vessels shall continue to be considered
2. Right to the amount of delay, if no abandonment made
personal property.
• Amount:
- considered as personal or movable property

Art. 371. x x x If the abandonment is not made, the indemnification - whether the vessel is moved by steam, by sail, or by engine, they partake of certain extent
for losses and damages by reason of the delay cannot exceed the of the nature and conditions of a real property

current price which the goods transported would have had on the day - to certain extent, it is considered a real property because of the value and importance in the
and at the place in which they should have been delivered; this same world of commerce

rule is to be observed in all other cases in which this indemnity

- being a property it may be a subject of acquisition

may be due.
Modes of Acquisition

Art. 573. Merchant vessels constitute property which may be acquired and
transferred by any of the means recognized by law. x x x
Maritime Commerce
1. purchase and sale — most common mode

VESSELS, scope
2. prescription

3. construction

• Under the Civil Code

- if you are a vessel engage in a business of carrying and transportation of passengers or goods 4. capture

for compensation offering your services to the public, then you are considered as a common 5. donation

carrier
6. succession

- anything that pertains to transportation of vessels plying the sea or bodies of water
7. other means, such as barter

• Under the Code of Commerce

Requisites for Acquisition

- vessels are those which are licensed to engage in maritime commerce or commerce by sea
whether in foreign or coastwise trade

- vessels refers solely to merchant ships

23 of 43
 TRANSPO.NOTES
Art. 537. x x x The acquisition of a vessel must be included in a written A vessel may have more than 1 owner. If one of the owners is going to sell the vessel and the other co-owners are not
instrument, which shall not produce any effect with regard to third willing to sell, can the latter object?
persons if not recorded in the registry of vessels. - yes, the co-owners who are not willing to sell are not obligated to sell

If one of the owner decides to sell his share on the vessel and his co-owners would not want the purchaser to be his co-
1. In a written instrument

2. Registration to the Philippine Coast Guard (PCG)

owner, can he object to sale?
- shall be effected:
- yes, the co-owner who is not willing to sell can now exercise his right of preemption

a. at its home port or

Art. 575. Part owners of the vessels shall enjoy the right of preemption
b. when the home port does not have Coast Guard, at the nearest Coast Guard and redemption in sales made to strangers; but they can only exercise it
district or station
within the nine days following the registration of the sale in the
- Purpose: to bind third persons
registry and by delivering the price at once.

Why in the PCG? • Right of Preemption

- because under PD 1064, the Tariff and Customs Code, the PCG is vested with the - the co-owner before the sale can buy the share of his co-owner who is going to sell the
exclusive authority over the registration and documentation of Philippine vessels as vessel

well as the insurance of the certificates, licenses, and other documents necessary or - against the co-owner who plans to sell

incident to such registration.

• Right of Redemption

Before the PCG, where registered? - the co-owner will buy the share from the purchaser

- to be registered to the Maritime Industry Authority

- against the third person purchaser

• Period to exercise the right:

- w/in 9 days from inscription in the registry

• Vessels Required to be Registered

• Duty of the co-owner who exercise his right

all vessels used in Philippine waters, not being a transients of foreign registry
- to deposit the price

thus, vessels registered in foreign registry sailing on Philippine waters are nor
required to be registered;

What is deemed included in the sale?

but if the owner is here in the Philippines and deploys the Philippine waters,
it needs to be registered in the Philippines
Art. 576. The rigging, tackle, stores, and engine of a vessel, if it is
vessels of 3 tons gross or less shall NOT be registered, unless the owner shall so a steamer, shall always be understood as included in the sale thereof
desire [Marina Rules and Regulations]
if, at the time of sale, they are owned by the vendor. x x x
vessels of more than 3 tons gross, there is a need for registration
What cannot be included in the sale?
Art. 576. x x x The arms, munitions of war, provisions, and fuel shall
• Certificates of Philippine Register with PCG [Tariff and Customs Trade]
not be considered as included in the sale. x x x
upon registration of a vessel of domestic ownership and of more than 15 tons, a
certificate of Philippine registry shall be issued

vessels of domestic ownership and of 15 tons or less, the taking of the There are also instances where a vessel can be sold even when it is on its voyage. Who shall be entitled to freightage and
certificate of Philippine registry shall be optional with the owner
obliged to pay the crew and other persons

- Purpose of certificate of Philippine Registry of vessels:

Rules Sold During Voyage Sold After the Arrival of the
1. to declare the nationality of a vessel engaged in trade with foreign nations to Vessel at the port of her
enable her to assert that nationality wherever found

2. it confers upon the vessel the right to engage, consistently with law, in the
Destination
Philippines coastwise trade and entitles it to the protection of the authorities
and the flag of the Philippines in all ports and on the high seas, and at the provision Art. 575. If the sale of the Art. 575. x x x If the sale
vessel should take place while should take place after the
same time secures to it the same privileges and subjects it to the same she is on a voyage, all the arrival of the vessel at the
disabilities as, under the laws of the Philippines, pertain to foreign built freightage she earns from the port of her destination, the
vessels transferred abroad to citizens of the Philippines
time she received her last cargo freightage shall belong to the
shall belong to the buyer, and seller and the latter shall pay
the latter shall pay the crew the crew and other person who go
• Certificate of Ownership
and other person who go to make to make up her complement,
upon registration of a vessel of more than 5 tons gross, a certificate of ownership up her complement for the said unless there is an agreement to
shall be issued
voyage.x x x the contrary in either case
vessel of 5 tons gross or less, a certificate of ownership shall be optional

who is entitled
Kinds of Sale of Vessels
to the
- can either be:
freightage purchaser

1. voluntary sale
seller
2. judicial sale
who shall pay
Voluntary Sale
the crew

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To whom can a Philippine registered vessel be sold?
Art. 578. If, the vessel while on a voyage or in a foreign port, her
owner or owners should voluntarily sell her either to Filipinos or to
foreigners domiciled in the capital or in a port of another country, x x
x
1. Filipinos citizens
2. American Citizens
May a Philippine registered vessel be registered in a foreign registry?
- yes, provided there is approval of the President
What are now the formalities if sale is made outside of the country?
Formalities of Sale
Art. 578. x x x the bill of sale shall be executed before the consul of
the Philippines of the port where she terminates her voyage; and said
instrument shall have no effect with regard to third persons if it is not
registered in the registry of the consulate. The consul shall immediately
forward a true copy of the bill of purchase of the vessel to the registry
of vessels of the port where said vessel is entered and registered.
In every case the sale of the vessel must be made to appear with a
statement whether the seller receives the full price or part thereof, or
whether he retains any interest in said vessel in full or in part. In
case the sale is made to a Filipino, this fact shall be stated in the
certificate of navigation. x x x
1. Execution — bill of sale shall be executed before the consul
where she terminates her voyage.
2. Inscription — the consul shall record in the registry the bill of
2. The judicial costs of the proceedings, according to an appraisement
3. Forwarding — the consul shall forward a true copy of the
registration, the PCG
4. There must be statement
a. whether the seller receives the price
b. whether he reserves in whole or in part any claim on the
4. The salaries of the depositaries and keepers of the vessel and any
Should there be NO inscription in the consulate registry, is that fatal to the sale?
- the sale is valid, but it will not produce an effect to third persons
virtue of an account verified and approved by the judge or court
What does it mean when the vessel is rendered useless?
Vessel Rendered Useless
- beyond repair
- it may be sold
Formalities of Selling a Useless Vessel
Art. 578. If the vessel while on a voyage, should become useless for
navigation, the captain shall report the matter to the judge or court of
competent jurisdiction of the port of arrival, should she be in the
Philippines; and should she be in foreign port, to the Filipino consul
should there be one; or to the judge, or court, or local authority in the
absence of the former; and the consul, or judge, or court, or, in their
absence, the local authority, shall order an examination of the vessel to
be made.
If the consignee or the insurer should reside at said port, or should
have representatives there, they must be cited in order to take part in
the proceedings for the account of whom it may concern.
TRANSPO.NOTES
Art. 579. After the damage of the vessel and the impossibility of being
repaired, in order to continue the voyage, having been proven, her sale
at public auction shall be ordered. x x x
1. Reporting — The captain shall report the matter to:
a. if vessel in the Phil — RTC at the port of arrival
b. if vessel in foreign port:
(1) to the consul
(2) if no consul — judge or court
(3) if no judge or court — local authority
2. Examination — apply for vessel to be examined to determine if it is indeed useless
3. Consignee or insurer must be cited in order to take part in the proceedings
- if consignee or insurer is in another place, call the representatives
4. Proof of damage and impossibility of repair must be proven
5. Order of sale and publication
6. Public Auction [Art. 579]
When can there be judicial sale?
Judicial Sale
- needed because there are creditors that are present. Since these creditors are not paid, they
are going to file a case for the vessel to be sued so that the proceeds of that sale will be
distributed to these creditors.
- Order of preference
Art. 580. In all judicial sales of vessels for the payment of creditors,
the following shall be preferred in the order named;
1. The credits in favor of the public treasury proven by means of an
of the Philippines of the port
official certificate of the competent authority.
sale
bill of purchase to the port approved by the judge or court
3. The pilotage charge, tonnage dues, and the other sea or port
charges, proven by means of proper certificates of the officers
intrusted with the collection thereof.
vessel
other expenses for its preservation from the time of arrival at the
port until the sale, which appear to have been paid or be due by
5. The rent of the warehouse where the rigging and stores of the
vessel have been taken care of, according to contract.
6. The salaries due the captain and crew during its last voyage, which
shall be verified by means of the liquidation to be made in view of
the lists and of the books of account of the vessel, approved by
the chief of the Bureau of Merchant Marine, where there is one, and
is in his absence by the consul or judge or court
7. The reimbursement for the goods of the freight which the captain
may have sold in order to repair the vessel, provided that the sale
has been ordered through a judicial proceedings held with the
formalities required in such cases, and recorded in the certificate
of registry of the vessel.
8. The part of the price which has not been pad to the said vendor,
the unpaid credits for materials and labor in the construction of
the vessel, when it has not navigated, and those arising from the
repair. In order that the credits provided for in this subdivision
may enjoy this preference, they must appear by contracts recorded
in the registry of vessels, or if they were contracted for the
25 of 43
 TRANSPO.NOTES
vessel while on a voyage and said vessel has not returned to the - the any vessel, whether foreign or domestic as long as found in the Philippines, may be
port where it is registered, they must be made with the attached and judicially sold [Art. 584]

authorization required for such cases and annotated in the

certification of registration of the vessel. How do you acquire prescription over a vessel
9. The amount borrowed on bottomry on the hull, keel, tackle, and Prescription

stores of the vessel before its departure, proven by means of the
contract executed according to law and recorded in the registry of
vessels; those borrowed during the voyage with the authorization
mentioned in the preceding subdivision, satisfying the same
requisites; and the insurance premium, proven by the insurance
policy or a certificate taken from the books of the broker.
10.The indemnity due the shipper for the value of the goods shipped
which were not delivered to the consignees or for averages suffered
for which the vessel is liable, provided that either appear in a
Art. 573. x x x The ownership of a vessel shall also be acquired by
possession thereof in good faith for three years, with a good title duly
recorded
In the absence of any of these requisites, continuous possession for
10 years shall be necessary in order to acquire ownership.
A captain cannot acquire by prescription of the ship of which he is in
command.
• Possession in good faith — 3 years (under CC, 4 yrs)

judicial or arbitration decision. • Possession in bad faith — 10 years (under CC 8 yrs)

If the judge declares to the creditors that they are entitled to the proceeds of the sale, what is created? • Prescription will never lie on the part of the Captain

- because the nature of the possession of the captain is such that he is only an agent of the
- what is created is a LIEN on the vessel

owner; he is also a depositary of the vessel and a depositary can never acquire the thing
deposited by prescription

Hypothecary Right

• as to the owner
Construction

- limited liability of the shipowner or ship agent such that the liability is limited to the value of
the vessel
Art. 574. The builders of vessels may employ materials and, with regard
to the construction and rigging the systems most suitable to their
Creditors have hypothecary right over the vessel. What do you mean by that?
interest. Ship owners and seamen shall be subject to the provisions of
• on the part of the creditors

- constitutes as a guarantee for the satisfaction of their claims insofar as may be covered by the the laws and regulations of the public administration on navigation,
proceeds of the sale whether the sale may be voluntary or judicial in the order
customs, health, safety of vessels, and other similar matters.

Legal Liens
Who are the people who take part in Marine Commerce?
- liens on the part of the creditor
Persons who take part in Marine Commerce

- whoever buys a vessel or loans money with vessel as security on a chattel mortgage, makes the A. Shipowners and Ship agents

vessel subject to such lien

B. Captains and Masters of the Vessel

- the purpose of the lien is that it gives the lienor (the creditor) a right to arrest the vessel for C. Officers and Crew of the Vessel

the payment for his claim;

1. Sailing Mate or First Mate

- the arrest is with a proprietary interest and it is a kind of limited ownership only because the 2. Second Mate

ownership is only to the extent of his claim against the vessel

3. Engineers

4. Crew

What is the effect of sale on prior liens? D. Supercargoes

- (if the chattel mortgage is foreclose,) it will not affect the prior lein
E. Pilot

McMicking v. El Banco Espanol-Filipino, 13 Phil 429

- Sanchez and Cue Suan are owners of steamship, known as Hock-Tay. They mortgage it to Banco A. Shipowner and Ship Agent
Espanol Filipino. They used that vessel as security for the loan. The loan was duly registered and
later on, they were not able to pay. So, the El Banco Espanol-Filipino filed an action to foreclose Ship agent

the mortgage over the vessel. On the day of the auction, Ayala claimed that the sheriff gave
Art. 586. By ship agent is understood the person intrusted with the
him an amount of about P4,000+ from the proceeds of the sale for payment of the salaries of
the crew and supplies
provisioning of a vessel, or who represents her in the port in which she
- SC: the wages due and the expenses incurred constitute a lien under the law and take may be found.
preference over the lien by giving the ship as security for money borrowed.
Art. 595. x x x The ship agent shall represent the ownership of the
- So, the sale of the ship under the mortgage in no way divested the lien which the law vessel, and may in his own name and in such capacity take judicial and
created in favor of Ayala. Thus, it will still be satisfied.
extrajudicial steps in matters relating to commerce.
- But the remedy of the Ayala is not against the money which was received under the sale
but against the ship by foreclosing the lien on the same.
Maritime Corporation of the Philippines v. CA 171 SCRA 61

- one appointed to manage and operate the vessels of the ship owner and are bound to
What is the procedure in enforcing a lien? render reports on the operations of the vessel; they are authorized to appoint sub-
Procedure in Enforcing a Lien
agents; remaining responsible to a shipowner is the ship agent

26 of 43
 TRANSPO.NOTES
4. the law makes the owner responsible for the acts of the captain without
What are the liability of the Shipowner and Ship agent? distinguishing whether the captain was appointed by him or another

Nature of liability of shipowner and ship agent

- solidarily liable, meaning claim may be demanded from anyone of them

NO Vessel NO Liability

- expresses the limited liability rule

Liabilities:
- liability is merely co-extensive with the interest of the shipowner and the ship agent in the
1. Art. 586. The shipowner and the ship agent shall be civilly liable for vessel such that if there is total loss, this will extinguish the maritime liens or any obligation
the acts of the captain x x x because there is no longer any res to which the lien will attach

2. Art. 586. x x x and for the obligations contracted by the latter to Abandonment (with respect to maritime commerce)

repair, equip and provision the vessel, provided that the amount - relinquishment by the shipowner or captain of the vessel, with all her equipment and the
claimed was invested therein. freight it may have earned during the voyage in favor of the creditors

- even if the captain incurred liabilities or entered into contracts for as long as it was for • Effect:

the benefit of the vessel, the shipowner or ship agent will be liable
- amounts to an offer of the value of the vessel, of her equipment, and freight money earned;
- results in the cessation of the responsibility of the owner/agent

3. Art. 587. The ship agent shall also be civilly liable for the - the cargoes and the vessel are transferred to the creditors; the creditors have the right as
indemnities in favor of third persons which arise from the conduct of they will (for example sell) with the cargo and vessel in satisfaction of their claim

the captain in the vigilance over the goods which the vessel carried Can the creditor refuse to accept the subjects of abandonment?
(as well as safety of passengers); but he may exempt himself therefrom - No. If right of abandonment is exercised, the creditors have no choice but to accept the
by abandoning the vessel with all her equipment and the freight he may vessel or the equipment

have earned during the voyage.

What are the exceptions to limited liability or when it is not applicable ?
4. for the damages to third person for tort or quasi-delit committed by EXCEPTIONS to Limited Liability

the captain, except collision with another vessel [Art. 1780, NCC] 1. by reason of fault or negligence on the part of the shipowner

- they cannot raise the defense of limited liability

5. Art. 826. If a vessel should collide with another, through the fault, - therefore, there is loss of cargo or vessel, they cannot set up “by reason of the default or
negligence, or lack of skill of the captain, sailing mate, or any other negligence of the ship owner or the captain because acts of the captain will make the shipowner
liable

member of the complement, the owner of the vessel at fault shall

2. with respect to employer-employee relationship

indemnify the losses and damages suffered, after an expert appraisal. - limited liability cannot be set up because this is a separate claim from the workmen’s
compensation

• Ship agent shall be liable to the shippers and owners of the cargo transported by it, for losses 3. with respect to repairs contracted before the loss

and damages occasioned to such cargo without prejudice to his rights against the owner of the - because this for purposes of the vessel

ship, to the extent of the value of the vessel, its equipment and the freight
4. when the vessel is insured

- because the insurance will pay off for the credits

If for example damages were incurred, is it necessary to proceed to the ship agent first before proceeding to the ship 5. when the injury or death to a passenger is due to the fault of the shipowner or concurring
negligence of the shipowner or the captian

owner?
- no, generally, the injured party may immediately look for reimbursement to the owner of the
ship
Husbanding Agent

- it is universally recognized that the ship master or captain is primarily the representative of the - general agent of the owner in relation to the ship with powers among others to engage the
owner
vessel for general freight and usual conditions and settle for freight and adjust averages for
- reason is to place the primarily liability upon the person who has actual control over the the same

contract of the voyage and has most capital embark at the venture

- shipowner usually ask for investors since ships are expensive; that is why you go directly to the What is the extent of the authority of a ship agent?
ship owner because he is now capable of looking for other sources or asking for other sources Powers of the ship agent

of those who can pay for the indemnity

1. Art. 595. x x x The ship agent shall represent the ownership of the
vessel, and may in his own name and in such capacity take judicial and
A shipowner will lease a vessel to a third person. It is that person (lessee) now who will appoint the captain. Who will be extrajudicial steps in matters relating to commerce.
liable for the acts of the captain?
- there are 2 opinions:
2. order a new voyage, make contracts for a new charter, insure the vessel

a. the lessee is liable

Art. 598. The agent cannot order a new voyage, nor make contracts
b. the shipowner or captain is liable — majority opinion
for a new charter, nor insure the vessel, without the authority of
- reasons:

her owner or by virtue of a resolution of the majority of the co-

1. it is the owner who still has control over the person

owners, unless these powers were granted him in the certificate of

2. it is the owner who is registered under the certificate of registration

3. it is would be easy for the ship owner to circumvent the law if he will not be his appointment.
liable

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 TRANSPO.NOTES
- if there is no general or no specific power, pwede xa actually kasi nga agent xa… (hnd ko 3. represents the government of the country under whose flag he navigates

gets)

Which acts of the captain will make the both the shipowner and ship agent liable and which will make him personally
3. render an account to the shipowner

liable?
Art. 599. The managing agent of an association, shall give his co-
Captain’s acts which will make the shipowner and ship agent liable:

owners an account of the results of each voyage of the vessel, - same with “liability of shipowner and ship agent”

without prejudice to always having the books and correspondence

relating to the vessel and to its voyages at their disposal.
4. Art. 602. The agent shall indemnify the captain for all the expenses he
may have made from his own funds or from those of other persons, for
the benefit of the vessel.
- it entails the captain using funds of his own but for purposes of repairs for the vessel,
by provisions of the vessel, therefore, anything that is in connection or for the benefit of
the vessel including the crew; the ship agent has to refund kung ano ung mga ginastos
ng ship captain
3. for the damages to third person for tort or quasi-delit committed
5. to discharge or remove from employment the captain or the members of the crew
NCC]
Art. 603.Before a vessel goes out to sea the agent may at his
discretion, discharge the captain and members of the crew whose
contract did not state a definite period nor a definite voyage,
paying them the salaries earned according to their contracts, and
without any indemnity whatsoever, unless there is an expressed and
specific agreement in respect thereto.
Art. 604. If the captain or any other member of the crew should be
discharged during the voyage, they shall receive their salary until
1. Art. 586. The shipowner and the ship agent shall be civilly liable
for the acts of the captain and for the obligations contracted by
the latter to repair, equip and provision the vessel, provided that
the amount claimed was invested therein.
2. Art. 587. The ship agent shall also be civilly liable for the
indemnities in favor of third persons which arise from the conduct
of the captain in the vigilance over the goods which the vessel
carried (as well as safety of passengers) x x x
by the captain, except collision with another vessel [Art. 1780,
4. Art. 826. If a vessel should collide with another, through the
fault, negligence, or lack of skill of the captain, sailing mate,
or any other member of the complement, the owner of the vessel at
fault shall indemnify the losses and damages suffered, after an
expert appraisal.
Captain’s acts which will make him personally liable:

their return to the place where the contract was made, unless there 1. making any separate transactions for his own account and losses where incurred
are good reasons for the discharge, all in accordance with Art. 636 thereby

et seq. of this Code.
Art. 605. If the contracts of the captain and members of the crew
with the agent should be for a definite period or voyage, they
cannot be discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the vessel or to
its cargo by malice or manifest or proven negligence
• Conditions or Rules on Discharge of Captain and Crew
- NO. It does not include:
Art. 613. A captain who navigates for freight in common or on
shares may not make any separate transaction for his own
account, and should he do so the profits shall belong to the
other persons interested, and the losses shall be borne by him
alone.
Does this include transactions/contracts for merchandise separate from the cargo supposed to be
brought to the port of destination — different cargoes?

a. transactions which has nothing to do with the voyage.

b. transactions for different merchandise or freight completely distinct

from that for the port of destination

B. Captains and Masters of Vessels

2. failing to perform an undertaking to make a voyage except if caused by force majeure;
- the name “captain” or “master of abvessel” is given according to the kind of vessel, therefore, he is also subject to criminal penalities

captain and master of a vessel are different

Art. 614. A captain who, having made an agreement to make a
- for purposes of code of commerce, they are considered as one and similar
voyage, fails to performs his undertaking, without prevented by
- there is a marked difference between a captain and master of a vessel:
fortuitous accident or force majeure, shall indemnify for all
• Captain
the losses which me may cause without prejudice to the criminal
- one who governs vessels that navigate the high seas or ships of large dimensions and penalties which may be proper.
importance, although they may be engaged in coastwise trade

Can a captain always refuse to fulfill his obligations given the right to deny or not to fulfill his
• Master of a Vessel

- one who commands smaller ships engaged exclusively in coastwise trade

obligations?
- Yes. He can refuse. He has the choice but he will be liable under 614.

Nature/Role of the Captain’s Position

Can a captain be force to fulfill his obligations through an action for specific performance?
1. general agent of the shipowner
- No. The shipowner cannot force him though specific performance but the
2. technical director of the vessel
captain will be liable under 614.

28 of 43
 TRANSPO.NOTES
3. substituting himself by another person w/o consent of ship agent
4. For the losses and damages caused by mutinies on board the
Art. 615. Without the consent of the ship agent, the captain
may not have himself substituted by another person; and should
he do so, besides being liable for all the acts of the
substitute and bound to pay the indemnities mentioned in the
foregoing article, the substitute as well as the captain may be
discharged by the ship agent.
What is the reason why he needs to ask for permission before he can substitute himself?
- the duties of a captain is essentially personnal due to the confidence given to
him arising from the fact that he possess the required technical ability and
that he is the man worthy of trust by the shipowner
sufficient cause. No exception whatsoever shall exempt him from
4. Art. 616. If the provisions and fuel of the vessel should be
consumed before arriving at the port of destination, the captain
shall order, with the consent of the officers of the same, the
arrival at the nearest port to get a supply of either; but if there
are persons on board who have provisions of their own, he may force
them to deliver said provision for the common consumption of all
those who may be on board, paying the price thereof at the same
time, or at the latest, at the first port reached.
5. contracting loans on respondentia over the cargo and loans on bottomry on the vessel
2. Thefts and robberies of the crew;
• EXCEPTION: when he owns a portion of the vessel and there has been no loan
entered into over the whole vessel
4. Damages due to mutinies;
Art. 617. The captain may not contract loans on respondentia
secured by the cargo, and should he do so the contract shall be
void.
Neither may he borrow money on bottomry for his own
transactions, except on the portion of the vessel he owns,
provided no money has been previously borrowed on the whole
vessel, and provided there does not exist any other kind of
lien or obligation chargeable against the vessel. When he is
permitted to do so, he must necessarily state what interest he
has in the vessel.
In case of violation of this article the principal, interest,
and costs shall be charged to the private account of the
captain, and the ship agent may furthermore discharge him.
Instances where the Captain is civilly liable to the ship agent not third person; and
the ship agent liable to third person
say that the owner made careful investigation as to the background and capability of the
Art. 618. The captain shall be civilly liable to the ship agent
and the latter to the third persons who may have made contracts
with the former
1. For all the damages suffered by the vessel and its cargo by
reason of want of skill or negligence on his part. If a
misdemeanor or crime has been committed he shall be liable in
accordance with the Penal Code.
2. For all the thefts and robberies committed by the crew,
reserving his right of action against the guilty parties.
3. For the losses, fines, and confiscations imposed on account of
violation of the laws and regulations of customs, police,
health, and navigation.
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vessel, or by reason of faults committed by the crew in the
service and defense of the same, if he does not prove that he
made full use of his authority to prevent or avoid them.
5. For those arising by reason of a misuse of powers and
nonfulfillment of the duties which pertain to him in accordance
with Articles 610 and 612.
6. For those arising by reason of his going out of his course or
taking a course which, in the opinion of the officers of the
vessel, at a meeting attended by the shippers or supercargoes
who may be on board, he should not have taken without
his obligation.
7. For those arising by reason of his voluntarily entering a port
other than his destination, with the exception of the cases or
without the formalities referred to in Article 612.
8. For those arising by reason of the nonobservance of the
provisions contained in the regulations for lights and
maneuvers for the purpose of preventing collisions.
• Summary
1. Damages to vessel and to cargo due to lack of skill and negligence;
3. Losses and fines for violation of laws;
5. Damages due to misuse of power;
6. For deviations;
7. For arrivals under stress;
8. Damages due to non-observance of marine regulations.
• Reason for imposition of liability on owner for damages suffered by third persons occasioned by
the acts of the captain:
- To place the primary liability upon the person who has actual control over the conduct
of the voyage and who has the most capital embarked in the venture, namely, the
owner of the ship, leaving him to obtain recourse, from other individuals who have been
drawn into the venture as shippers
- The shippers and passengers in making contracts with the captain do so through the
confidence they have in the shipowner who appointed him — they presume that the
owner made a most careful investigation before appointing him
- a third person will rely mainly on the representation being made by the ship agent saying
that the captain is capable therefore he can enter contract with whom. They rely or can
captain.
Liability of captain extends to acts of person in the complement
- the responsibility of the captain extends to every fraudulent or negligent act of any person in
the complement, in the execution of his employment
For example, they docked on a port and the crew unboarded. Because they were drunk, they entered into a brawl
with people. Will the captain be liable for the acts of the crew who entered into a brawl?
- NO. he will only be liable for those in execution of his employment. Thus, if he has
unboarded the ship, he is no longer in the exercise of employment.
- if the incident happen inside the ship, still, the captain will not be liable
- he will only be liable for acts of his crew which is in the execution of his employment
When does the liability of the captain start and when does it terminate?
 TRANSPO.NOTES
Liability of Captain; when
1. to make the nearest neutral port

Art. 619. The captain shall be liable for the cargo from the time it is 2. inform the ship agent or shippers

3. await:

delivered to him at the dock or afloat alongside the ship at the port of
a. an occasion to sail under convoy or

loading, until he delivers it on the shore or on the discharging wharf at b. until the danger is over or

the port of unloading, unless the contrary has been expressly stipulated. c. to receive final orders from ship agent or shippers.

What is the evidence in order to claim liability?

- usually, the bill of lading; but it is not enough that you show that the goods were lost in What if there was no available convoy or the danger is continuous or the ship agent did not contact you yet on what
transit. You must show that the lost or impairment occurred while the goods were in
possession of the carrier [Saludo v. CA]
should you do?
- In the case of SALUDO, it involves an air carrier with respect to the transport of cadaver of - “pray” -Orallo; “magiging liable ka pa din hindi ka isesave ni Lord!” - J. Cualing

the cadaver of Saludo. Somewhere along the way, the cadaver was misplaced. The body was
- If transshipment is not available, you just WAIT until the danger cease or there is
supposed to be loaded from Chicago to San Francisco and then San Francisco to Manila, then further orders

Manila to Cebu. Supposed to be Saludo will accompany the body. When he arrived in San What if the goods are perishable?
Francisco, he confirmed whether the body has also arrived. Apparently, the body was sent to - the captain may sell or make such other advantageous disposition of the property of
Mexico. Unfortunately, the SC stated that the carrier was not liable because while the the absent shipper as circumstances will permit

shipper was in possession of the bill of lading, it is not enough to prove that the loss occured - the captain must:

while in the possession of the carrier.

(1) first see to it if he can transship

- the provision on wind turbulence or mechanical defect is part of the bill of lading thus, it is
not for everybody. It was stated in the bill of lading that in case of wind turbulence, the
carrier may change its root. Thus, in the exam, wind turbulence is not a fortuitous event
transship, probably there will be greater damages, the captain is allowed to SELL
(2) But if it is not possible to transship such that no carrier would ship or the
condition of the cargo cannot be transshiped or there is a belief that if it will be
the goods

When will a captain be not liable for the vessel or the cargo? Within what time frame should the ship captain decide on these things?
Captain not Liable
- he was decide upon entering the port of refuge within a reasonable time depending
1. only for force majeure; no fortuitous event
on the nature of the cargo or goods shipped

Art. 620. The captain shall not be liable for the damages caused to
the vessel or to the cargo by force majeure; but he shall always be What if while sailing from Manila to China, China declared a war against the Philippines? What is now the duty of the
so for those arising from his own fault, no agreement to the captain?
contrary being valid. x x x Duty of Captain in case of declaration of war

- The captain will now be justified to “biglang-liko” to turn around and not to continue to the
• Condition to claim exception by reason of force majeure:
port of destination because there is a possibility that China will fire at you.

a) that the vessel was SEAWORTHY

- the captain is justified to flee such enemy port and go to a nearest neutral port

• Seaworthy:
• Condition:

- means that:
- as long as there is an absence of any assurance that he will be allowed to sail the port of
a. the vessel is adequately equip for the voyage
destination with a safe conduct or “laissez-passer”

b. vessel is manned with competent and sufficient officers and crew

b) he is not negligent unless he can prove that he exercise extraordinary diligence

What is the effect if he fled or did proceed to the port of destination and while sailing to the nearest neutral port, the
2. for repairs, equipment, and provisioning of the vessel
ship sank and therefore there was loss? Will the ship captain and owner be liable?
• EXCEPTIONS:

- NO. For reason of deviation occasioned by the outbreak of war, the ship captain and the
a. he has expressly bound himself personally
shipowner will be relieved from liability.

b. signed a bill of exchange or promissory note

Is this an absolute rule such that anytime that there is deviation because of that outbreak of war, they will be
relieved from liability?
Art. 620. x x x Neither shall he be personally liable for the - NO. If however, full freightage has been received at the commencement of the voyage,
obligations he may have contracted for the repair, equipment, and the shipowner and the ship captain will not be relieved from obligation.

provisioning of the vessel, which shall devolve upon the ship agent, How will he fulfill his obligation to unload the cargo to the port of destination?
unless the former has expressly bound himself personally or has - since full freightage was paid at the start of the voyage, he has to fulfill his obligation
signed a bill of exchange or promissory note in his name. by going to the neutral port and look for another carrier which can enter the port of
destination to transship the cargoes to the port of destination

What is the duty of the captain in case privateers (pirates) or enemy appear?
Duty of Captain in case privateers/pirates or enemy appear
What if the vessel went through a hurricane?
Art. 622. If when on a voyage the captain should receive news of the Duty of Captain in case of hurricane

appearance of privateers or men of war against his flag, he shall be Art. 624. A captain whose vessel has gone through a hurricane or who
obliged to make the nearest neutral port, inform his agents or shippers, believes that the cargo has suffered damages or averages, shall make a
and await an occasion to sail under convoy or until the danger is over or protest thereon before the competent authority at the first port he
to receive final orders from the ship agent or shippers. touches within the twenty-four hours following his arrival, and shall

30 of 43
 TRANSPO.NOTES
ratify it within the same period when he arrives at the place of his • In cases of differences in opinions and decisions by the captain and the sailing mate, it is
destination, immediately proceeding with the proof of the facts, it always the captain who will prevail.

not being permitted to open the hatches until after this has been What happens if the captain insisted, what will he do?
done. x x x - in case of conflict, the sailing mate will, in presence of other officers, raise his protest,
after which the protest will be recorded in the logbook where he will sign together
with an officer.

• Procedure

1. upon entering the nearest port, the captain must make protest before a competent authority - But he still has to follow the captain

(eg: coast guard) within 24 hours

6. Second Mate

- since there is no certainty whether the vessel is still seaworthy because of the ravages Art. 633. The second mate shall take command of the vessel in case of the
of the storm or probably water entered has entered the cargo-hold damaging the cargo
inability or disqualification of the captain and the sailing mate,
2. when he arrives at his destination, the captain shall ratify the protest within the 24 hours
assuming in such case their powers and responsibility.
3. he must proof the facts — that indeed they met a hurricane at the area where they passed

7. Engineers

• Failure to comply with the procedure

- he cannot open the hatch to see if there was indeed damage to the cargo
Are engineers always considered officers of the vessel?
- Yes, only with respect to the engines/motor apparatus

Duty of the Captain in case of Shipwreck

- whatever happens with the fight between the captain and the sailing mate, he has no
Art. 624. x x x The captain shall proceed in the same manner if, the authority to intervene

vessel having been wrecked, he is saved alone or with part of his crew, in
which case he shall appear before the nearest authority, and make a sworn 8. Supercargo

- An agent of the owner of the goods shipped as cargo on a vessel, who has charge of the
statement of the facts.
cargo on board, sells the same to the best advantage in the foreign markets, buys cargo to
The authority or the consul abroad shall verify the said facts, be brought back on the return voyage of the ship, and comes home with it

receiving sworn statements of the members of the crew and passengers who - this provision on supercargoes has been superseded by the provisions on Agency as provided
may have been saved, and taking such other steps as may help in arriving in the Civil Code

at the facts, he shall make a statement of the result of the proceedings

in the log book and in that of the sailing mate, and shall deliver the 9. Crew or Complement of the Vessel

original records of the proceedings to the captain, stamped and folioed, • Complement

with a memorandum of the folios, which he must rubricate, for their - those people who are needed to manage, maneuver and service the vessel

presentation to the judge or court of the port of destination. - consists of the captain to the cabin crew

The statement of the captain shall be believed if it is in accordance • Crew

with those of the crew and passengers; if they disagreed, the latter shall - aggregate of seamen who man a ship or vessel

be accepted, unless there is proof to the contrary. - they include the master and the officer

- it may also mean the ship’s company, exclusive of the master or exclusive of the all the
• Procedure
officers (hindi ko to gets kasi sbi nya nung una including tapos biglang exclusive)

1. captain must appear before the nearest authority and make a sworn statement of facts in the
same manner required in case of hurricane
May the captain discharge the crew or the seamen?
2. authority or consul shall verify the facts
- it depends. because a seaman in order to enter into his duties, he must enter into a contract.

3. authority or consul shall make a statement of the result of the proceedings in his and the
Captain’s Right to Discharge Crew of a Vessel

sailing mate’s log book

4. authority or consul shall deliver the original records of the proceedings to the captain
w/o just cause with just cause
- stamped and folioed with a memorandum of the folios which he must rubricate

• Rubricate — to make a short commentary or explanation covering a broad subject; 1. NO fixed period Art. 636. If there is no may be discharged
summarize
fixed period for which a
seaman has been contracted he
may not be discharged until
the end of the return voyage
C. Officers and Crew of the Vessel to the port where he enlisted

1. Sailing Mate or First Mate

• effect on salary If discharge, whether or not the the seamen will only be entitled to
- second-in-command who will take the place of the captain only in cases of absence, sickness, voyage has commenced, the seamen the wages earned as of the time
or death of the captain
is entitled to his wages until the of his discharge
return voyage
Art. 627. The sailing mate, as the second chief of the vessel,
and unless the agent orders otherwise, shall take the place of 2. WITH fixed period entitled to the wages as if he has entitled to the wages for the
the captain in cases of absence, sickness, or death, and shall rendered services for the period period he has rendered service
then assume all his powers, duties, and responsibilities. fixed; received the salary as a
whole

31 of 43
 TRANSPO.NOTES
A. will of owner w/o contract w/ fixed monthly contract w/ fixed amount for the
Revocation

just cause compensation whole voyage

Art. 638. If, after the crew has been engaged, the voyage is revoked by
the will of the ship agent or of the charterers, before or after the 1. Before voyage wages earned + indemnity of 1 wages earned + 1 months salary
vessel has put to sea, or if the vessel is for the same reason given a month salary computed in proportion to the
different destination from that fixed in the agreement with the crew, the approximate number of days the
latter shall be indemnified on account of the rescission of the contract, voyage should have lasted
according to the following cases:
2. At sea/ during amount earned had the vessel entire salary of voyage + passage
1. If the revocation of the voyage should be decided before departure of
voyage pro ce e d e d to t h e p o r t o f to the port of destination or port
the vessel from the port, each sailor engaged shall be given one destination + passage to said port of sailing
month's salary, besides what may be due him, in accordance with his or the port of sailing
contract, for the services rendered to the vessel up to the date of the
revocation. if the crew will agree with the if the crew does not agree with
2. If the agreement should have been for a fixed amount for the whole change the change
voyage, what may be due for said month and days shall be determined in
proportion to the approximate duration of the voyage, in the judgment
of the experts, in the manner established by the law of civil wages shall be reduced, if the wages earned + half month salary
B. change of
procedure; and if the proposed voyage should be of such short duration voyage is shortened; or increase if
destination w/ just
that it is calculated at approximately one month, the indemnity shall the voyage has been lengthen
be fixed at fifteen days, discounting in all cases the sums advanced. cause
3. If the revocation should take place after the vessel has put to sea,
the sailors engaged for a fixed amount for the voyage shall receive the Revocation with Just Cause

entire salary which may have been offered them if the voyage had
terminated; and those engaged by the month shall receive the amount
corresponding to the time they might have been on board and to the time
they may require to arrive at the port of destination, the captain
being obliged, furthermore, to pay said sailors in both cases the
passage to the said port or to the port of sailing of the vessel, as
may be convenient for them.
4. If the ship agent or the charterers of the vessel should give it a
destination different from that fixed in the agreement, and the members
of the crew should not agree thereto, they shall be given by way of
indemnity half the amount fixed in the first case, in addition to what
may be due them for the part of the monthly wages corresponding to the
days which may have elapsed from the date of their agreements.
If they accept the change, and the voyage, on account of
greater distance or of other reasons, should give rise to an increase
of wages, the latter shall be adjusted privately, or through friendly
adjusters in case of disagreement. Even if the voyage should be
shortened to a nearer point, this shall not give rise to a reduction
in the wages agreed upon.
Should the revocation or change of the voyage originate from
the shippers or charterers, the ship agent shall have a right to
demand of them the indemnity which may be justly due.
Rules on Revocation
be paid half wages, if the agreement is by month; but if the detention
• Instances when Revocation will happen
should exceed three months, the contract shall be rescinded and the crew
1. where voyage has been revoked by will of the ship agent or the charterers, without cause
Art. 639. Should the revocation of the voyage arise from a just cause
independent of the will of the ship agent and the charterers, and the
vessel should not have left the port, the members of the crew shall no
other right than to collect the wages earned up to the day the revocation
was made.
Art. 640. The following shall be just causes for the revocation of the
voyage:
1. A declaration of war or interdiction of commerce with the power to
whose territory the vessel was bound.
2. The blockade of the port of its destination or the breaking out of an
epidemic after the agreement.
3. The prohibition to receive in said port the goods which make up the
cargo of the vessel.
4. The detention or embargo of the same by order of the government, or for
any other reason independent of the will of the agent.
5. The inability of the vessel to navigate.
Art. 641. If, after a voyage has been begun, and any of the first three
causes mentioned in the foregoing article should occur, the sailors shall
be paid at the port which the captain may deem advisable to make for the
benefit of the vessel and cargo, according to the time they may have
served thereon; but if the vessel is to continue its voyage, the captain
and the crew may mutually demand the enforcement of the contract.
In case of the occurrence of the fourth cause, the crew shall continue to

shall be paid what they should have earned according to the contact, as if
2. where the destination is changed by will of the ship agent or the charterers, with just cause

the voyage had been made. And if the agreement.

• Effects
should be for a fixed sum for the voyage, the contract must be complied
with in the terms agreed upon.

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 TRANSPO.NOTES
In the fifth case, the crew shall have no other right than to collect the - contract by which an entire ship or some principal part thereof is leased by one party to
wages earned; but if the disability of the vessel should have been caused another person for a specified time or use

by the negligence or lack of skill of the captain, engineer, or sailing

- it is a contract of affreightment by which an owner of a ship or other vessel lets the whole or
part of her to a merchant or other person for the conveyance of goods on a particular voyage
mate, they shall indemnify the crew for the damages suffered, always
in consideration of freight

without prejudice to the criminal liability which may be proper.

Types

• Just causes:

1. Contract of Affreightment

1. declaration of war or interdiction of commerce with the power to whose territory the vessel was
- involves only the use of the shipping space on the vessel by the owner in part or as a whole

bound

- rent of either a space, a space on the vessel, or a portion of the vessel where the charter will
• interdiction of commerce

- also refer to as interdiction of commercial intercourse

load the goods to be transported

- means governmental prohibition of commercial intercourse intended to bring about entire - contract for special services to be rendered by the owner of the vessel and under such contract
the general owner retains the possession, command navigation of the ship and the charter/
cessation for the time being of all trade whatsoever

freighter merely having the use of the space in the vessel in return for his payment of the
charter

2. blockade of the port of its destination or the breaking of an epidemic after the agreement

- rent of space only; possession and the right to control the vessel is still manned by the owner

• blockade

- a sort of circumvallation (to surround with other defensive barrier) of a place by which Coastwise Case

- by the contract of affreightment, a common carrier is not converted into a private carrier
connection or correspondence is as far as human power can effect it to be cut off

- actual investment by a port or place by hostile forces fully competent under ordinary
circumstances to to cut of all communications thereto so arranged or disposed as to be able
to apply its force to every point of every practicable access or approach to the port or place
but remain a common carrier and still liable as such. Therefore, in case of damage to the
vessel, damage to the goods, the one who you will run after will be the ship owner or
ship agent not the charterer because the captain and crew are under the employ of the
shipowner and he remain as the common carrier

so invested

• Kinds of Contracts of Affreightment

3. prohibition to receive in said port the goods whcih make the cargo of the vessel
a. Time Charter

4. detention or embargo of the same by order of the government or for any other reason - is when the vessel is leased to the charterer for a fixed period of time

independent of the will of agent

b. Voyage Charter

• embargo

- is when a vessel is leased for a single voyage or contract for voyage of goods from one
- when there is proclamation by a state usually issued in times of war or threatened hostilities or more ports of loading to one or more ports of unloading

prohibiting the departure of ships or goods from some or all of the ports of such state until
further ordered
Planters Products Inc. v. CA, Gr NO. 101503 September 15, 1993

- In both cases, the charter-party provides for the hire of vessel only, either for a
5. inability of the vessel to navigate
determinate period of time or for a single or consecutive voyage, the shipowner to supply
the ship's stores, pay for the wages of the master and the crew, and defray the
expenses for the maintenance of the ship.

Special Contracts of Maritime Commerce 2. Bareboat or Demise Charter

- is when the whole vessel is leased to the charterer with the transfer to him of its entire
When do you say that a contract is maritime in nature? command and possession and consequent control over his navigation.

- depends not on the place where the contract is made and is to be executed making the locality
the test but on the subject matter of the contract making the true criterion maritime service Puromines, Inc. vs. CA, GR No. 91228, March 22, 1993

or maritime transaction
- Under the demise or bareboat charter of the vessel, the charterer will generally be
- as long as the subject matter of the contract pertains to maritime commerce then it will be a considered as owner for the voyage or service stipulated. The charterer mans the vessel
contract which is maritime in nature
with his own people and becomes, in effect, the owner pro hac vice, subject to liability to

others for damages caused by negligence.

What are the special contracts of maritime commerce?

- To create a demise the owner of a vessel must completely and exclusively relinquish
A. Charter Parties
possession, anything short of such a complete transfer is a contract of affreightment
B. Bills of Lading (B/L issued over Overland Transportation will also apply)
(time or voyage charter party) or not a charter party at all.

C. Contracts of Transportation of Passengers on Sea Voyages (only minor differences; rely mainly - Responsibility to third persons for goods shipped on board a vessel follows the vessel's
on the Civil Code provisions on common carriers)
possession and employment

D. Loans on Bottomry

E. Loans on Respondentia
May a charterer abandon a vessel?
F. Marine Insurance (topic under Insurance)
- No. A charterer cannot abandon a vessel because only a shipowner or a ship agent may make
an abandonment. Who is a charterer to abandon a vessel which he does not own (hiniram
lang nya yan)

A. Charter Parties
Art. 653. If the freight should be received without the charter party having
been signed, the contract shall be understood as executed in accordance with
Charter party, defined

what appears in the bill of lading, which shall be the only instrument with

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 TRANSPO.NOTES
regard to the freight to determine the rights and obligations of the ship 2. must be drawn in duplicate

agent, of the captain, and of the charterer. 3. must be signed by the parties

- should the shipowner & charterer enter into a charter party, they must executed an instrument
4. must contain the conditions stipulated

What if cargo is received w/o a charter party, what will now be considered as the contract of the parties? There are stipulations that must be agreed upon by the parties:

- it will be the bill of lading

• Primage

- it is an amount stipulated in the charter party to be paid by the charterer or shipper as

Suppose neither the charter party or a bill of lading was issued, would there be now considered a contract entered into compensation to the captain or master for his particular care on the goods

between a shipowner or charterer? - formerly, it was a small allowance or compensation payable to the master and marines of the
- taking into account the fact that delivery of the cargo does not constitute the making of a vessel;

contract rather the partial performance thereof, the mere fact of delivery and receipt of such a. to the master, primage is paid for the use of his cables and ropes to discharge the
cargo, the good faith and mutual consent with which they have been made should be a better goods of merchants

substitute of the charter party than it is for the bill of lading

b. for the marines of the ship, primage is paid for the loading and unloading in any port or
haven

Charter party v. Bill of Lading

- at present, it is no longer a gratuity to the master unless especially stipulated

- the primage belongs to the owners of freighters and is nothing but an increase of the
Charter Party Bill of Lading freight rate as of now

- the charters will give additional payment “primage” to the owners or freighters and it is
considered an increase of the freight rate

1 an entire or complete contract more likely a private receipt which a

captain gives to a credit that such and
• Demurrage

such goods belong to such and such person - compensation provided for in the contract of affreightment for the detention of the vessel
beyond the time agreed on for loading and unloading

2 it is shown that a consensual contract is shows the existence of a real contract for - this is claim for damages for failure to accept delivery

entered into which can be dissolved by the reason that its effect exist sonly after - it is a sum which is fixed by the contract of carriage or which is allowed as remuneration to
means of indemnity for losses and damage t h e d e li v e r y o f t h e g o o d s b e i n g the owner of the shipped for the detention of his vessel beyond the number of days allowed
transported is made by the charter party for loading and unloading or sale

- it is only an extended freight or reward to the vessel in compensation of the earnings she is
improperly caused to lose

Formalities of Charter Party

Art. 652. A charter party must be drawn in duplicate and signed by the • in order for it to be collected, there must be condition precedent:

contracting parties, and when either does not know how or is not able to - there must be notice of arrival of the vessel or conveyances or for their placement
do so, by two witnesses at his request. for purposes of unloading

The charter party shall include, besides the condition stipulated, the
following circumstances: • Laytime

1. The kind, name, and tonnage of the vessel. layday — are the days allowed for the charter parties for the loading and unloading of
cargo

2. Her flag and port or registry.

3. The name, surname, and domicile of the captain.
extra-laydays — are days which follow

4. The name, surname, and domicile of the agent, if the latter should make
the charter party. lay time — if it is expressed in running days, these are the days when the ship would be
5. The name, surname, and domicile of the charterer, and if he states that run continuously and holidays are not expected; a qualification of whether permitting
he is acting by commission, that of the person for whose account he excepts only those days where bad weather reasonably prevents the work contemplated

makes the contract.

6. The port of loading and unloading. ”Layday: Customary Quick Despatch” (CDQD)

7. The capacity, number of tons or weight, or measure which they

- it should be stated that the loading and unloading of the cargo should be made
within a reasonable period of time. Due diligence should be exercised according to the
respectively bind themselves to load and transport, or whether it is
customs and usages of the port or ports of call

the total cargo.

8. The freightage to be paid, stating whether it is to be a fixed amount NFA v. CA, GR No. 96453, August 4, 1999

for the voyage or so much per month, or for the space to be occupied, - What is a reasonable time depends on the existing as opposed to normal
or for the weight or measure of the goods of which the cargo consists, circumstances, at the port of loading and the custom of the port.

or in any other manner whatsoever agreed upon.

9. The amount of primage to be paid the captain. WWDSHINC — Weather Working Days, Sundays and Holidays Included

10.The days agreed upon for loading and unloading. - the running of the laytime may be subject to WWDHINC and would cease to run in the
11.The lay days and extra lay days to be allowed and the rate of event that unfavorable weather interfered with the unloading of cargo

demurrage.
Is a charterer given the right to fix the date of departure? Can he decide when should the vessel depart?
1. must be in writing

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 TRANSPO.NOTES
- NO. When a charter party is only partial (affreightment), the charterer, as a rule, does not shippers, to whom he shall communicate the facts on the first
acquire the right to fix the date when the vessel should depart unless such right is opportunity, the freight being adjusted in such cases by the distance
expressly granted in the contract
covered by the vessel, with no right to any indemnification whatsoever.

What is the period of loading and unloading cargo? • What must be done?

- the period of loading and unloading may or may not be stipulated in the charter party
1. the captain should charter another vessel at his own expense should his vessel be
if stipulated — the fixed period shall govern
rendered unseaworthy during the voyage

if no stipulation — usages of the port where these acts will be performed shall be 2. the captain must be given time to charter the vessel

observed
3. the new charter party must be approved by judicial authority

if the usages of that port were not followed — captain shall be entitled to demand 4. if the captain fails to do so due to indolence or malice, the shippers may themselves
demurrage for the delay for the loading and unloading
charter another vessel

thus, the captain may perform transshipment

Art. 656. If in the charter party the time in which the loading and • Transshipment

unloading are to take place is not stated, the usages of the port - the act of taking cargo out of one ship and loading it in another

where these acts take place shall be observed. After the stipulated or - the transfer of goods from the vessel stipulated in the contract of affreightment to another
customary period has passed, and should there not be in the freight vessel before the place of destination named in the contract has been reached

- the transfer for further transportation from one ship or conveyance to another

contract an express provision fixing the indemnification for the

delay, the captain shall be entitled to demand demurrage for the lay
• Effect of failure to tranship by the captain

days and extra lay days which may have elapsed in loading and - where the master relinquishes the attempt to either carry on the goods on its own ship or to
unloading. send them to their destination in another ship, either by wholly abandons any claim for freight
in respect to them

• Freight In and Out including Stevedoring and Trading (FOIST)

- he can no longer claim for freight

- means that the handling and loading of cargoes are the responsibilities of the charterer
- EXC: unless it has been made payable in advance or irrespective of delivery

- Where freight is payable only on delivery, no part is earned until it is delivered

• Freightage

May a captain execute a charter party? - compensation for the transportation of the cargo/goods

- Yes, Article 655 authorized the capatain to execute a charter party in the absence of a ship
agent
• Rules on freightage

- but if he violates the order and instructions of the ship agent, the consequences will be that:
GR: charter party may or may not specify the date when the freightage shall begin to be
a. the ship agent will be bound to said charter party and
earned

b. the ship agent shall have the right of action against the captain for damages
a. If the charter party fixes the date — the freightage shall accrue from that date

b. If the charter party does not contain an indication as to when freightage shall accrue —
Art. 655. Charter parties executed by the captain in the absence of observed Art. 658.

the ship agent shall be valid and effective, even though in executing
them he should have acted in violation of the orders and instructions
of the agent or shipowner; but the latter shall have a right of action
against the captain to recover damages.
When the vessel, during voyage, rendered unseaworthy
Art. 658. The freightage shall accrue according to the conditions
stipulated in the contract and should they not be expressed, or should
they be ambiguous, the following rules shall be observed:
1. If the vessel has been chartered by months or days

- the freightage shall begin to run from the day the loading of the
Art. 657. If during the voyage the vessel should be rendered unseaworthy vessel is begun
the captain shall be obliged to charter at his expense another one in 2. In charters made for a fixed period
- the freightage shall begin to run from that very day
good condition, to carry the cargo to its destination, for which purpose
he shall be obliged to look for a vessel not only at the port of arrival 3. If the freightage is charged according to weight
- the payment shall be made according to gross weight, including the
but also in the neighboring ports within a distance of 150 kilometers.
If the captain, through indolence or malice, should not furnish a containers, such as barrels or any other objects in which the
vessel to take the cargo to its destination, the shippers, after cargo is contained
requesting the captain to charter a vessel within an unextendible period,
may charter one and apply to the judicial authority for the summary When should goods required to pay freightage?
approval of the charter party which they may have made. Instances where the goods are required to pay freightage:

The same authority shall judicially compel the captain to carry out 1. Art. 659. The merchandise is sold by the captain to pay for the
for his account and under his responsibility the charter made by the necessary repairs to the hull, machinery or equipment, or for
shippers. unavoidable and urgent needs, shall pay freightage.
If the captain, notwithstanding his diligence, should not find a 2. Art. 663. Merchandise which suffer deterioration and diminutions on
vessel to charter, he shall deposit the cargo at the disposal of the account of inherent defects or bad quality and condition of the

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 TRANSPO.NOTES
packing, or because of fortuitous event, shall pay freightage in full 3. Art. 674 - to refuse and unload at the expense of the owner excess cargo that cannot be
and stipulated in the charter party properly stowed

3. Art. 664. The natural increase in weight or size of the merchandise 4. Art. 674 - to unload merchandise clandestinely placed on board, or to transport them if he
loaded on the vessel shall accrue to the benefit of the owner, and can do so, demanding the highest freightage

shall pay the proper freightage fixed in the contract for the same 5. Art. 675- to find freight to take place of freight not received, if the vessel has been
chartered to receive cargo in another port, after he receives no cargo from the consignee
Instances where the shipper is excused from paying freightage
and after he receives no answer from the charterer

1. Art. 660. Merchandise jettisoned for the common safety shall not pay 6. Art. 675 - to receive freight in full, discounting that which may have been earned on the
freightage; but the amount of the latter shall be considered as general merchandise carried as substitute

average computing the same in proportion to the distance covered when 7. Art. 677 - to have the charter party subsist notwithstanding the declaration of war or a
they were jettisoned. blockade during the voyage, and to receive in such cases, the freightage in full where the
2. Art. 661. Neither merchandise lost by reason of shipwreck or stranding shipper orders that the cargo should be discharged at the port of arrival

nor those seized by the pirates or enemies, shall pay freightage. If

freightage should have been paid in advance, it shall be returned, Obligations of the charterer

unless there is an agreement to the contrary 1. Art. 680 - to pay the freight in full even if the charterer does not complete the full cargo
he bound himself to ship

IF vessel or goods are redeemed/salvaged — freightage must be paid:

2. Art. 681- to answer with the value of his shipment and other property for the losses
Art. 662. If the vessel or the merchandise should be redeemed, or suffered by the shipowner, captain or other shippers arising from confiscation, embargo,
the effects of the shipwreck be salvaged, the freightage detention, or other causes, where the charterer loads goods different from those stated at
the time of the execution of the charter party

corresponding to the distance covered by the vessel transporting the

cargo shall be paid; x x x 3. Art. 682 - to be jointly liable with the captain for losses which may be caused to the other
IF vessel salvaged and used again — full freightage
shippers where the charterer ships goods for illicit commerce with the knowledge of the
shipowner or captain

Art. 662. and should the vessel, after being repaired, transport
said merchandise to the port of destination, the full freightage
shall be paid, without prejudice to what may be due by reason of the
4. Art. 682 - in case of making a port to repair the hull, machinery or equipment of the vessel,
to wait until the vessel is repaired or to pay for the expenses of unloading should the
charterer choose to unload

average.
5. Art. 684 - where the charterer unloads goods before arriving at port of destination without
any force majeure occurring, to pay (1) expenses of arrival, (2) full freight and (3) for the
Obligations of the Shipowner

damages and losses caused to other shippers, if any

1. Art. 669 - to observe in the charter parties, the capacity of the vessel, and to indemnify
6. Art. 685 - where the charterer unloads before the beginning of the voyage, (1) to pay 1/2 of
the shippers whose contracts are not fulfilled for the losses they may have suffered by the
the freight, (2) to pay for the expenses of stowing and restowing the cargo, (3) to pay any
failure of the shipowner to observe the capacity of the vessel

other damage which he may have caused other shippers

2. Art. 670 - to undertake a voyage at the time agreed upon or within 15 days from loading if
7. Art. 686 - to pay for freight, other expenses and the primage after the vessel has been
no time is stipulated, even if the shipowner should not find cargo sufficient to make up at
unloaded and the cargo placed at the disposal of the consignee

least 3/5 of the amount which the vessel may hold, where he fails to exercise his right to
change vessel
8. Art. 687 - not to abandon merchandise damaged on account of inherent defect or fortuitous
event, for the payment of the freight and other expenses

3. Art. 670 - where the shipowner should not find cargo sufficient to make up at least 3/5 of
the amount which the vessel may hold, to accept other cargo procured by the owner of the
freight already loaded under the same price and conditions
Rescission

4. Art. 671- not to change the vessel after 3/5 of the vessel has been loaded, without the A. at the instance of the charterer

consent of the charterers or shippers

Art. 688. A charter party may be annulled at the request of the charterer:
5. Art. 672 - if the vessel has been chartered in whole, not to accept cargo from any other 1. If before loading the vessel he should abandon the charter, paying half
person without the consent of the charterer
the freightage agreed upon.
6. Art. 673 - to answer for losses arising from delay in putting to sea
2. If the capacity of the vessel should not agree with that stated in the
7. Art. 676 - to have the vessel in a condition to navigate at the time of receiving the cargo
certificate of tonnage, or if there be an error in the statement of the
8. Art. 677 - in case of declaration of war or blockade during the voyage, where the captain flag under which she sails.
has not received any instructions from the charterer, for the captain to proceed to the 3. If the vessel should not be placed at the disposal of the charterer
nearest safe and neutral port, requesting and awaiting orders from the shippers
within the period and in the manner agreed upon.
4. If, after the vessel has put to sea, she should return to the port of
Rights of a Shipowner
departure, on account of risk from pirates, enemies, or bad weather,
1. Art. 670 - where the cargo is not sufficient to make up at least 3/5 of the amount which and the shippers should agree to unload her.
the vessel may hold, he may substitute another vessel inspected and declared suitable for the In the second and third cases the person from whom the vessel
voyage --> expenses of transfer and increase in price of the charter shall be paid by him
was chartered shall indemnify the charterer for the losses he may
2. Art. 674 - to collect the freight in accordance with the price stipulated for cargo in excess suffer.
of that agreed upon is such excess can be properly stowed

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 TRANSPO.NOTES
In the fourth case the person from whom the vessel was D. Loan on Bottomry
chartered shall have a right to the freightage in full for the voyage
out. • Definition

If the charter should have been made by the month, the - a contract by which a shipowner pledges the whole ship, as security for a loan to finance a
charterers shall pay the full freightage for one month, if the voyage voyage

is for a port in the same waters; and two months, if for a port in - basically, it is putting the ship up for collateral

- the lender will lose the money if the ship is lost during the voyage

different waters.
- A contract in the nature of a mortgage, by which the owner of the ship borrows money for the
(From one port to another of the Peninsula (Philippines) and
use, equipment and repair of the vessel and for a definite term, and pledges the ship (or the
adjacent islands, the freightage for one month only shall be paid.) keel or bottom of the ship) as a security for its repayment, with maritime or extraordinary
interest on account of the maritime risks to be borne by the lender, it being stipulated that if
5. If a vessel should make a port during the voyage in order to make the ship be lost in the course of the specific voyage or during the limited time, by any of the
urgent repairs and the charterers should prefer to dispose of the perils enumerated in the contract, the lender shall also lose his money.

merchandise.
When the delay does not exceed thirty days, the shippers shall
pay the full freightage for the voyage out. E. Loan on Respondentia
Should the delay exceed thirty days, they shall pay the
freight in proportion to the distance covered by the vessel. • Definition

- One made on the goods laden on board the ship, and which are to be sold or exchanged in the
course of the voyage, the borrower's personal responsibility being deemed the principal security
B. at the instance of the shipowner

for the performance of the contract, which is therefore called respondentia. The lender must be
Art. 689. At the request of the person from whom the vessel is chartered
paid his principal and interest, thought the ship perishes, provided that the goods are saved.

the charter party may be rescinded:

1. If the charterer at the termination of the extra lay days does not
Nature of the Loan on Bottomry and Loan on Respondentia

place the cargo alongside the vessel. - real, unilateral, aleatory contract by virtue which one person lends to another a certain
In such case the charterer must pay half of the freightage amount of money or goods on things exposed to maritime risks, which amount with its
stipulated besides the demurrage due for the lay days and extra lay earnings is to be returned if the things are safely transported, and which is loss if the
days. latter are lost

2. If the person from whom the vessel was chartered should sell it before
the charterer has begun to load it and the purchaser should load it for 1. delivery of the amount loaned is necessary for the perfection of the contract

his own account. 2. although there are reciprocal benefits, the contract produces obligations only for one party,
the borrower who must return the amount borrowed plus premium

In such case the vendor shall indemnify the charterer for the
3. lender really runs known risks

losses he may suffer.

If the new owner of the vessel should not load it for his own
How Loans Executed:

account the charter party shall be respected, and the vendor shall
Art. 720. Loans on bottomry or respondentia may be executed:
indemnify the purchaser if the former did not inform him of the
1. By means of a public instrument.
charter pending at the time of making the sale.
2. By means of a policy signed by the contracting parties and the broker
taking part therein.
C. by reason of causes independent of the will of the parties
- x x x In order that the policy of the contracts executed in
• BEFORE voyage
accordance with No.2 may have binding force, they must conform to
Art. 690. The charter party shall be rescinded and all action arising the registry of the broker who took part therein. x x x
therefrom shall be extinguished if, before the vessel puts to sea from the 3. By means of a private instrument. x x x
port of departure, any of the following cases should occur: - x x x With respect to those executed in accordance with No. 3 the
1. A declaration of war or interdiction of commerce with the power to acknowledgment of the signature shall be required. x x x
whose ports the vessel was to make its voyage.
2. A condition of blockage of the port of destination of said vessel, or • in all three cases,

the breaking out of an epidemic after the contract was executed. 1. they must be in writing

3. The prohibition to receive at the said port the merchandise x x x Contracts which are not reduced in writing shall not give
constituting the cargo of the vessel. rise to judicial action. x x x
4. An indefinite detention, by reason of an embargo of the vessel by order 2. they must be registered

of the government, or for any other reason independent of the will of x x x it shall be entered in the certificate of the registry of the
the ship agent. vessel and shall be recorded in the registry of vessels x x x
5. The inability of the vessel to navigate, without fault of the captain
or ship agent. • Effect of registration:

The unloading shall be made for the account of the charterer.

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 TRANSPO.NOTES
a. the loan shall have, with regard to other credits, the preference which, according to its
nature, it should have (Art. 580 - 8th in the order of preference)
A. Averages

b. shall be effective with regard to third persons from the date of - consists of expenses or damages or deterioration to a vessel

their execution, if they should be recorded in the registry of
vessels of the port of registry of the vessel before the lapse of
eight days following its arrival.
If said eight days should elapse without the record having been
made in the registry of vessels, the contracts made during the
voyage of a vessel shall produce no effect with regard to third
persons, except from the day and date of their inscription.
May a captain obtain a loan on bottomry or respondentia?
- GR: the captain has no authority to obtain a loan on bottomry or respondentia at the point of
the residence of the ship owner
• to constitute an average as an EXPENSE:
Art. 806. For the purposes of this Code the following shall be
considered averages:
1. All extraordinary or accidental expenses which may be incurred
during the voyage for the preservation of the vessel or cargo, or
both.
2. All damages or deterioration which the vessel may suffer from the
time it puts to sea at the port of departure until it casts anchor at
the port of destination, and those suffered by the merchandise from
the time they are loaded in the port of shipment until they are
unloaded in the port of their consignment.

- EXC:
1. they must be extraordinary or accidental

a. if it is with the express authorization of the shipowner

2. they were incurred during the voyage

b. outside of the residence of the owners, provided he follows the procedure as laid down in 3. they were incurred in order to preserve the vessel, cargo or both

Articles 583 and 611:

(1) application by the captain to:

• to constitute an average as DAMAGE or DETERIORATION

(a) the judge or court if he is in the Philippines;

1. they must have been suffered at the time the vessel puts to sea at the port of departure
(b) the consul of the Philippines if he is in a foreign country; in the absence of the until it casts anchor at the port of destination; or

consul, to the judge or court or proper local authority of that foregin country
2. they have been suffered by the merchandise from the time they are loaded in the port of
(2) presentation by the captain of the certificate of registration sheet and the instruments shipment until they are unloaded in the port of consignment

proving the obligations contracted

(3) making by the judge or authority of a temporary memorandum of their result of the • NOT considered as average are:

proceedings in the certificate;

- petty or ordinary expenses which are incident of navigation because they will be defrayed
- if no temporary memorandum, the captain will be personally liable
by the shipowner

Art. 807. The petty and ordinary expenses incident to navigation, such
Effect of Loss of goods on the Loan
as those of pilotage of coasts and ports, lighterage and towage,
- the obligation of the borrower is extinguished, if:
anchorage, inspection, health, quarantine lazaretto, and other so-
1. the goods given as security are absolutely lost by reason of an accident of the sea called port expenses, costs of barges, and unloading, until the
during the voyage designated and
merchandise is placed on the wharf, and other usual expenses of
2. it is proven that the goods were on board
navigation shall be considered ordinary expenses to be defrayed by the
shipowner, unless there is an express agreement to the contrary.
• Instances where the loss does NOT extinguish the loan: [Art. 730]

1. when the loss is caused by the inherent defect of the thing

2. where the loss is caused by the fault or malice of the borrower

• When the law on averages NOT applicable

- when there is negligence on the part of the captain during the collision of the vessel which
3. where the loss is caused by the barratry on the part of the captain

is the caused of the collision and the cargoes were not jettisoned to save some of the
Barratry — unlawful breach of duty on the part of the ship’s master or crew resulting
cargos in the vessel

to injury to the ship’s owner

4. where loss is caused by damage to the vessel as a consequence of its engaging in

contraband
• Kinds of Averages:

5. where loss arose from having loaded the merchandise on a vessel different from that Art. 808. Averages shall be:
designated in the contract (transshipment), except if change is due to force majeure
1. Simple or particular.
Art. 809. As a general rule, simple or particular averages include all
the expenses and damages caused to the vessel or to her cargo which
Risks, Damages and Accidents of Maritime Commerce have not inured to the common benefit and profit of all the persons
interested in the vessel and her cargo, especially the following:
A. Averages
1. The losses suffered by the cargo from the time of its embarkation
1. General
until it is unloaded, either on account of the inherent defect of
the goods or by reason of a marine accident or force majeure, and
2. Particular

the expenses incurred to avoid and repair the same.

B. Arrival Under Stress

2. The losses and expenses suffered by the vessel in its hull,

C. Collisions

rigging, arms, and equipments, for the same causes and reasons,
D. Shipwrecks
from the time it puts to sea from the port of departure until it
anchors in the port of destination.

38 of 43
 TRANSPO.NOTES
3. The losses suffered by the merchandise loaded on deck, except in
coastwise navigation, if the marine ordinances allow it.
4. The wages and victuals of the crew when the vessel is detained or
embargoed by a legitimate order or force majeure, if the charter
has been contracted for a fixed sum for the voyage.
5. The necessary expenses on arrival at port, in order to make repairs
or secure provisions.
6. The lowest value of the goods sold by the captain in arrivals under
stress for the payment of provisions and to save the crew, to meet
any other need of the vessel against which the proper amount shall
be charged.
7. The victuals and wages of the crew while the vessel is in
quarantine.
8. The loss inflicted upon the vessel or cargo by reason of an impact
or collision with another, if it is accidental and unavoidable. If
the accident should occur through the fault or negligence of the
captain, the latter shall be liable for all the damage caused.
9. Any loss suffered by the cargo through the faults, negligence, or
barratry of the captain or of the crew, without prejudice to the
right of the owner to recover the corresponding indemnity from the
captain, the vessel, and the freight.
Example: Bananas worth P100,000 were transported through ship. During the voyage,
bananas worth P20,000 were overripe. The P20,000 are considered particular averages
4. the expenses or damages should have been incurred or inflicted after taking legal steps
Effect:
Art. 810. The owner of the goods which gave rise to the expense or
suffered the damage shall bear the simple or particular averages.
2. General or gross.
Art. 811. As a general rule, general or gross averages shall include
all the damages and expenses which are deliberately caused in order to
save the vessel, its cargo, or both at the same time, from a real and
known risk, and particularly the following:
1. The goods or cash invested in the redemption of the vessel or of
the cargo captured by enemies, privateers, or pirates, and the
provisions, wages, and expenses of the vessel detained during the
time the settlement or redemption is being made.
2. The goods jettisoned to lighten the vessel, whether they belong to
the cargo, to the vessel, or to the crew, and the damage suffered
through said act by the goods which are kept on board.
3. The cables and masts which are cut or rendered useless, the anchors
and the chains which are abandoned, in order to save the cargo, the
vessel, or both.
4. The expenses of removing or transferring a portion of the cargo in
order to lighten the vessel and place it in condition to enter a
port or roadstead, and the damage resulting therefrom to the goods
removed or transferred.
5. The damage suffered by the goods of the cargo by the opening made
in the vessel in order to drain it and prevent its sinking.
6. The expenses caused in order to float a vessel intentionally
stranded for the purpose of saving it.
7. The damage caused to the vessel which had to be opened, scuttled or
broken in order to save the cargo.
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8. The expenses for the treatment and subsistence of the members of
the crew who may have been wounded or crippled in defending or
saving the vessel.
9. The wages of any member of the crew held as hostage by enemies,
privateers, or pirates, and the necessary expenses which he may
incur in his imprisonment, until he is returned to the vessel or to
his domicile, should he prefer it.
10.The wages and victuals of the crew of a vessel chartered by the
month, during the time that it is embargoed or detained by force
majeure or by order of the Government, or in order to repair the
damage caused for the common benefit. The depreciation resulting in
the value of the goods sold at arrivals under stress in order to
repair the vessel by reason of gross average.
11.The expenses of the liquidation of the average.
Requisites: [Magsaysay Inc. vs Agan 96 Phil. 504]
1. there must be a common danger --> the ship and cargo are subject to the same danger
and that the danger arises from accidents of the sea, dispositions of the authorities or
faults of men, provided that the circumstances producing the peril should be
ascertained and imminent
2. for the common safety, part of the vessel or the cargo or both is sacrificed deliberately
(eg. jettisoning)
3. from the expenses or damages caused follows the successful saving of the vessel and
cargo
and authority
Effects:
Art. 812. In order to satisfy the amount of the gross or general
averages, all the persons having an interest in the vessel and cargo
therein at the time of the occurrence of the average shall contribute.
(in proportion to their interest)
Formalities [Arts. 813-814]
1. there must be an assembly of the sailing mate and other officers with the captain
including those with interests in the cargo
2. there must be a resolution of the captain
3. the resolution shall be entered in the log book, with the reasons and motives and the
votes for and against the resolution
4. the minutes shall be signed by the parties
5. within 24 hours upon arrival at the first port the captain makes, he shall deliver one
copy of these minutes to the maritime judicial authority thereat
Rules on Jettison
Art. 815. The captain shall direct the jettison, and shall order the goods
cast overboard in the following order:
1. Those which are on deck, beginning with those which embarrass (cause
imbalance) the maneuver or damage the vessel, preferring, if possible,
the heaviest ones with the least utility and value.
2. Those which are below the upper deck, always beginning with those of
the greatest weight and smallest value, to the amount and number
absolutely indispensable.
Art. 816. In order that the goods jettisoned may be included in the
gross average and the owners thereof be entitled to indemnity, it shall
be necessary in so far as the cargo is concerned that their existence on
 TRANSPO.NOTES
board be proven by means of the bill of lading; and with regard to those 1. the entire cargo or party thereof should appear to be damaged or there should
belonging to the vessel, by means of the inventory prepared before the be imminent danger of its being damage

departure, in accordance with the first paragraph of Article 612. 2. there must be an authorization of the sale by the competent court or consul

3. the formalities under Art. 624 (when the vessel has gone through a hurricane)
must be followed

B. Arrival Under Stress

- arrival of a vessel at the most convenient port if during the voyage…

C. Collisions

Art. 819. If during the voyage the captain should believe that the vessel - the crashing together of two vessels which are moving

cannot continue the trip to the port of destination on account of:

(1)the lack of provisions,
• Allision

(2)well-founded fear of seizure, privateers, or pirates, or - striking of a moving vessel against one that is stationary and perhaps, other species of
(3)by reason of any accident of the sea disabling it to navigate, x x encounters between vessels or a vessel and other floating though non-navigable
objects (eg. structures on water are subject of allision not collision)

Effect:

Art. 821. The expenses of an arrival under stress shall always be for
*the Civil Code, however, does not provide for any provisions on collision; that is why, go
the account of the shipowner or agent, but they shall not be liable
directly to the provisions of the Code of Commerce

for the damages which may be caused the shippers by reason of the
arrival, provided the latter is legitimate.
Otherwise, the ship agent and the captain shall be jointly liable. Rules on Collision

1. if 1 vessel is at fault, the owner thereof shall be liable for the damages

Art. 826. If a vessel should collide with another, through the fault,
1. if the arrival is legitimate

negligence, or lack of skill of the captain, sailing mate, or any other member
- expenses shall be borne by the shipowner or agent
of the complement, the owner of the vessel at fault shall indemnify the losses
2. if the arrival is not legitimate
and damages suffered, after an expert appraisal.
- the ship agent and the captain shall be jointly liable for the damages which may be
caused the shippers
2. if 2 vessels are involved:

a. if both vessels are blamed for the collision, each one shall suffer its own damage and be
• when is an arrival under stress considered NOT LEGAL
solidarily liable for the losses suffered by their cargo

1. if lack of provisions should arise from failure to take the necessary provisions for Art. 827. If the collision is imputable to both vessels, each one shall
the voyage according to usage or customs or if they should have been rendered suffer its own damages, and both shall be solidarily responsible for the
useless or lost through bad stowage or negligence in their care
losses and damages occasioned to their cargoes.
2. if the risk of enemies, privateers or pirates should not have been well-known,
manifest, and based on positive or justifiable facts
b. if it is not determinable which between the vessel is at fault, also apply the rule in (a) —
3. if the defects of the vessel should have been caused of her not being repaired, each one shall suffer its own damage and be solidarily liable for the losses suffered by their
rigged, equipped and arranged in a convenient manner for the voyage or by reason cargo

of some erroneous order of the captain

Art. 828. The provisions of the preceding article are applicable to the
case in which it cannot be determined which of the two vessels has
4. whenever malice, negligence, want of foresight or lack of skill on the part of the
caused the collision.
captain exist in the act causing damage

*this is also referred to as the DOCTRINE OF INSCRUTABLE FAULT

IF there is an Arrival Under Stress, the captain is given the authority to unload the goods,
provided the following conditions are met:
In these cases, owner will reserve the right to run after (civilly/criminally) after the person
1. the unloading must be necessary to make repairs or there must be danger that the who caused the damage. (right of recourse)

cargo may suffer damage

Art. 829. In the cases above mentioned the civil action of the owner
2. the captain must be authorized by either a competent court or the Phil. consul, against the person causing the injury as well as the criminal liabilities,
which may be proper, are reserved.
depending on the port of arrival

• IF the cargo is unloaded:

International Rules of the Road

Art. 823. The custody and preservation of the cargo which has been Rule 18. (a) provides: where 2 power driven vessels are meeting head-on or nearly head-on, so
unloaded shall be entrusted to the captain, who shall be responsible as to involve risk of collision, each shall alter their course to starboard (to the right) so that
for the same, except in cases of force majeure. each may pass to the port side of each other

(There is this episode of Mr. Bean na he boarded a vessel/ship, sinusundan nya ung sun actually)
• IF there is loss or destruction of the goods, the captain will be liable
- in a vessel the direction is not right left right left; it is starboard or port

• EXCEPT caused by force majeure

• starboard — means go to the RIGHT

• port — means go to the LEFT

May a captain sell his cargo which is subject of the vessel which arrived under stress?
- Yes, but under the following conditions:
NOT applicable

40 of 43
 TRANSPO.NOTES
- this rule does NOT apply to vessels which, if they keep their respective courses, will pass
each other
• In case a vessel properly anchored and moored collied with others by reason of force
APPLICABLE
majeure — damages = particular average

- this apply to cases

Art. 832. If, by reasons of a storm or other cause of force majeure, a
1. by which, by day, each vessel sees the mast of the other in align or nearly in align with vessel which is properly anchored and moored should collide with those
the other
nearby, causing them damages, the injury occasioned shall be considered as
2. By night, if each vessel is in such a position to see both the sidelight of the other [Smith particular average of the vessel run into.
Bell and Co., Inc. vs. CA, GR NO. L-56294, May 20, 1991]

Nautical Rules to Determine Negligence:

Mecenas v. CA, GR No. 88052, December 14, 1989]

- rules which were established by usage over time to determine whether there was fortuitous
- FACTS: there is a collision between Don Carlos and Tai Maru
event or negligence

- SC: there were certain factors that where present showing the negligence of the 1. When 2 vessels are about to enter a port, the farther one must allow the nearer to
second mate which made Don Carlos liable. These factors of negligence are:
enter first; if they collide, the fault is presumed to be imputable to the one who
(1) Don Carlos failed to comply with Rule 18 of the International Rules of Rome; arrived later, unless it can be proved that there was no fault on its part.

instead of going to starboard it went port, thus, the collision.Moreover, it did 2. When 2 vessels meet, the smaller should give the right of way to the larger one.

not give a signal indicating that it was going to port, glaring two horn ___
3. A vessel leaving port should leave the way clear for another which may be entering
(2) Don Carlos failed to have on board that night a proper lookout

the same port.

(ano ung cause ni… sinking of Titanic according to the movie? — dba hindi nag-lumilingon 4. The vessel which leaves later is presumed to have collided against one who has left
ung lookout. At the last minute, sabi nya “iceberg ahead!” kaya lang nanjan na pala. So, it earlier.

was too late for the titanic to turn, natamaan nya ngayon ung iceberg, ang laki nung gash 5. There is also a presumption against the vessel which sets sail at night.

sa side. So that was the story of Titanic, hindi naten alam kung anong ngyari sa totoo 6. The presumption also works against the vessel with spread sails which collides with
cause we were not there? anyway…) another which is at anchor, and cannot move, even when the crew of the latter has
What is a proper lookout? received word to lift anchor, when there was not sufficient time to do so or there was
- a proper lookout is one who has been trained as such and who is fear of a greater damage or other legitimate reason.

7. The vessel which is not properly moored or does not observe the proper distances, has
given no other duty save to act as a lookout and who is stationed
the presumption against itself.

where he can see and hear best and maintain good communication
8. The vessel which is moored at a place not used for the purpose, or which is improperly
with the other officers in charge of the vessel.

(3) it was the second mate who was navigating the ship and there was no moored or does not have sufficient cables, or which has been left without watch, has
showing that the captain was incapacitated
also against itself the presumption.

9. The same rule applies to those vessels which do not have buoys to indicate the location
G. Urrutia & Co. & Baco River Plantation Corp, Gr No L-77675, March 25, 1930
of its anchors to prevent damage to these vessels which may approach it.

- there are 3 divisions or time zones in the course of a collision:

- this introduce the DOCTRINE OF TERROR IN EXTREMES (changing course at the 3rd 4. When there is a 3rd vessel at fault:

zone)
Art. 831. If a vessel should be forced by a third vessel to collide with
1. First zone
another, the owner of the third vessel shall indemnify the losses and damages
- covers all the time up to the moment when the risk of collision may be caused, the captain thereof being civilly liable to said owner.
said to have begun

- but, in this first zone, no rule is applicable. Each vessel is free to direct its Loss by Reason of Collision

course as it deems best with reference to the movements of the other Art. 833. A vessel which, upon being run into, sinks immediately, as well as
vessel.
that which, having been obliged to make a port to repair the damages caused by
the collision, is lost during the voyage or is obliged to be stranded in order
2. Second zone
to be saved, shall be presumed as lost by reason of collision.
- covers the time between the moment when the risk of collision begins and
the moment when it has become a practical necessity.
Action for Recovery of Losses Damages

3. Third zone
- can only be admitted if protest has been made w/in 24 hours before a competent
- the time between the moment when collision has become a practical
authority of the point where the collision took place

certainty and the moment of actual contact

- a condition precedent before any action for the recovery of damages arising from
- in this case, it was during the third zone when the vessel was passing through that it collisions may be admitted --> presentation of a protest

changed its course to port (left) in order to avoid collision. This act may be said to
have been been done in extremis.
Art. 835. The action for the recovery of losses and damages arising from
- the ___ vessel is not responsible for the loss
collisions cannot be admitted if a protest or declaration is not presented
within twenty-four hours before the competent authority of the point where
- it is in the second zone where the vessels must exercise the provisions on the the collision took place, or that of the first port of arrival of the
International Rule of Rome
vessel, if in Philippine territory and to the consul of the Philippines, if
it occurred in a foreign country.
3. In case of for fortuitous event or force majeure:

Art. 830. If a vessel should collide with another through fortuitous event • Protest

or force majeure, each vessel and its cargo shall bear its own damages. - reporting of what happened

41 of 43
 TRANSPO.NOTES
• Instances where protest is required:
Art. 841. If the wreck or standing should be caused by the malice,e
1. under 612, when the vessel makes an arrival under stress
negligence, or lack of skill of the captain, or because the vessel put to sea
insufficiently repaired and equipped, the ship agent or the shippers may
2. under 612, 624 and 843, where the vessel is shipwrecked
demand indemnity of the captain for the damages caused to the vessel or to the
3. under 624, where the vessel has gone through a hurricane or when the captain cargo by the accident, in accordance with the provisions contained in Articles
believes that the cargo has suffered damages or averages
610, 612, 614, and 621.
4. under 835, in case of maritime collisions

Salvage Law (Act No. 2616)

• Excuses of the failure of protest w/in 24 hours

• Salvage

Art. 836. With respect to damages caused to persons or to the cargo, the - “hindi to ung pagpatay ng tao. Iba un!” - J. Cualing

absence of a protest may not prejudice the persons interested who were not
on board or were not in a condition to make known their wishes.
Limited Liability Rule
- compensation allowed to persons by whose voluntary assistance has sink at sea or her
cargo or boat have been saved, in whole or in part, from a pending sea peril or such
property recovered from actual peril or loss as in case of shipwreck or derelict or

Art. 837. The civil liability incurred by the shipowners in the cases recapture

prescribed in this section, shall be understood as limited to the value of the - also known as a service by which one person renders to the owner of a ship or goods by
vessel with all its appurtenances and freightage earned during the voyage. his own labor reserving the goods or ship of owner or those entrusted with the care of
them either abandoned in stress at sea or unable to protect the same

- the liability of the shipowner is limited to the value of or interest over the vessel such that
if the vessel is lost, their liability is likewise lost
thus under the salvage law, those who assist in saving a vessel or cargo in case of
shipwreck shall be entitled to a reward or salvage

Luzon Stevedoring Corp. vs. CA, GR NO. L-38897, December 3, 1987

- abandonment of the vessel is necessary in order to limit the liability of the ship owner or
the agent to the value of the vessel
• Derelict

- the only instance that where there can be no abandonment or abandonment is dispensed - a ship or cargo which is abandoned and left at sea by those in charged of it without any
with is when the vessel is entirely lost
hope of recovery or any intention to return to it

the one who will rescue this derelict has also rights — right of possession which he
Why is there a need of a declaration of abandonment? can maintain against the true owner

- because if there is abandonment, you are giving up the whole vessel in favor of - finder has a right of possession; but does NOT acquire ownership over the derelict
the creditors and these creditors are now the one who will be liable to because the owner does not intentionally renounce his right of possession over that
foreclose the liens they have over the vessel
vessel such that at anytime, owner has the right to recover his vessel

- this means that the owner temporarily abandons his right of possession which is
transferred to the finder who becomes:

Collision on Foreign Waters

1. bound to preserve the property with good faith and

Art. 839. If the collision should take place

(1)between Philippine vessels in foreign waters, or 2. brings it to a place of safety for the owner’s use;

(2)if having taken place in the open seas, and the vessels should make a in return therefore, he acquires a right to be paid for his service a reasonable
foreign port, and proper compensation out of the property itself

- the finder may not released immediately the vessel until he is paid properly for
the Filipino consul in said port shall
(1)hold a summary investigation of the accident, the safekeeping of the vessel

(2)forwarding the proceedings to the Secretary of the Department of Foreign Erlanger Gallinger v. Swedish, 34 Phil 178; Barrios v. Go Thong & Company, GR No.
Affairs for continuation and conclusion. L-17192, March 30, 1983

- these are the ELEMENTS necessary to a SALVAGE CLAIM:

1. it must be a marine peril

D. Shipwreck
- the damage must be by reason of a marine peril

- ship which has received injuries rendering him incapable of navigations

2. the service voluntarily rendered when not required as an existing duty or
- Loss of a vessel at sea, either by being swallowed up by the waves, by running against from a special contract

another vessel or thing at sea, or on coast --> renders the ship incapable of navigation
3. success in whole or in part or that the service rendered contributed to such
success

Person Liable
Salvage v. Towage

a. Caused by Force Majeure — damages shall be suffered by the shipowner

• Towage — the crew does not have any interest or rights with the renumeration because
Art. 840. The losses and deteriorations suffered by a vessel and her cargo by pursuant to the contract

reason of shipwreck or stranding shall be individually for the account of the - what is paid is the fee for towing the vessel to a port

owners, the part which may be saved belonging to them in the same proportion.
• Salvage — the crew of a vessel and the other participants of the services may be given
b. Caused by the Malice, Lack of Negligence or Skill of the Captain or Vessel put to sea was compensation

insufficiently repaired or equipped — Captain liable

- the persons paid are those who help (not only the captain but also the crew) in
salvaging the vessel

42 of 43
 TRANSPO.NOTES
- it must be filed within 1 year after delivery of the goods or the day when the goods
should have been delivered [Section 3 (6)]

COGSA - if the action is not filed within 1 year, the carrier will be discharged from liability

Carriage of Goods by Sea Act (COGSA)

Is notice of damage or loss of goods required such that by filing such notice, the 1 year period will start running?
Why is there a need for this COGSA?
Lonestar Shipping Corp., Inc., v. CA, 373 Phil 976 (1999); Wallem Phil. Shipping, Inc. v. S.R.
Eastern Shipping Lines v. IAC, GR NO. 69044, May 29, 1987

Farms, GR No. 161849, July 9, 2010; Asean Terminals, Inc. vs. Philam Insurance, Inc., GR No.
- the law of the country to which the goods are to be transported governs the
1811163, July 24, 2013

liability of the common carrier in cases of loss, destruction, or deterioration

- Notice is not required because Section 3 of the COGSA:

- this provision can also be found under Article 1766 (Law of the Destination)
if a notice of loss or damage, either apparent or concealed, is not given
- if however, there are matters in that contract which is not formulated by the Civil as provided for in this section, that fact shall not affect or prejudice
Code, the Code of Commerce and Special Laws shall be applies suppletory
the right of the shipper to bring suit within one year after the delivery
- COGSA is a special law which provides particularly for goods that are transported of the goods or the date when the goods should have been delivered.
- but notice may be filed w/in 3 days of the delivery or receipt from the carrier

from a foreign country which will come inside the Philippines; thus it is suppletory
to the provisions of Civil Code

When is the period of 1 year not applicable ?

Belgian Overseas Chartering and Shipping N.V. v. Jardine Davies Tranport Services, Inc., - in cases of misdelivery or conversions

GR No. 143133, June 5, 2002

- the Civil Code does not limit the liability of the common carrier to a fixed amount the COGSA however did not define what a “LOSS” means

per package. In all matters not regulated by the Civil Code, the right and the - thus, refer to the Civil Code:

obligations of common carriers shall be governed by the Code of Commerce and Loss or damage to cargo is understood to mean that the thing is loss:

special laws. Thus, the COGSA, which is suppletory to the provisions of the Civil 1. when it perishes

Code, supplements the latter by establishing a statutory provision limiting the 2. goes out of commerce

carrier's liability in the absence of a shipper's declaration of a higher value in the 3. disappears in such a ways that its existence is unknown; or

bill of lading. The provisions on limited liability are as much a part of the bill of 4. cannot be recovered therefore no delivery that could be made

lading as though physically in it and as though placed there by agreement of the - thus, if no delivery could be made, that is the time that there is loss or damage

parties.

- what will prevail as to the determination of the liability of the carrier will be the IF there is delivery but was delivered to another person who should not have received such
nature and the value of the goods as declared and reflected in the bill of lading
cargo, then there is a MISDELIVERY

- thus, the 1 year prescription in COGSA will not apply

Under Section 4 (5) of the COGSA provides:

- the person who was supposed to received the cargo must file under the provisions of
- the maximum limit of the damages is only $500 per package:
the Civil Code which provides the following prescriptive period:

Neither the carrier nor the ship shall in any event be or become • breach of written contract — 10 years [Art. 1144]

liable for any loss or damage to or in connection with the transportation

• oral contract - 6 years [Art. 1145]

of goods in an amount exceeding $500 per package of lawful money of the

United States, or in case of goods not shipped in packages, per customary • based on quasi-delict — 4 years [Art. 1146]

freight unit, or the equivalent of that sum in other currency, unless the - demands under these cases will not toll the running of the period, thus, upon
nature and value of such goods have been declared by the shipper before misdelivery, the prescription period will start running

shipment and inserted in the bill of lading. This declaration, if

embodied in the bill of lading, shall be prima facie evidence, but shall
not be conclusive on the carrier. To whom is prescription applicable?
- shipper or consignee against the carrier

- but according to the SC, it is absurd to say that $500 is the maximum because what Philippines Insurance Corp., Inc. vs. Alejandro, GR No. L-54140, October 14, 1986

will prevail as the basis of the liability of a carrier will be the value declared in the - citing Chua Kuy v. Everett Steamship Corporation (93 Phil 207, 213-214) and The Yek
bill of lading. So that if the valued declared in the bill of lading is greater and there is Tong Fire and Marine Insurance Co., Ltd., v. American President Lines, Inc., 103 Phil.
a loss, destruction and deterioration of goods coming to the Philippines, the $500/ 1125-1126:

packages will not be followed but that stated in the bill of lading.
insurers must also file w/in the 1 year prescriptive period against the carrier

- however under Section 4(5) of COGSA, the parites may also agree that the amount of Mayer Steel Pipe Corp. v. Hongkong Government Supplies Department, GR No. 124050,
liability may be less than $500/package
June 19, 1997

By agreement between the carrier, master or agent of the carrier, however, the claim of the shipper/consignee against the insurer is not covered by
and the shipper another maximum amount than that mentioned in this
the 1 year prescriptive period of COGSA; the Marine Insurance shall apply (10yrs)

paragraph may be fixed: Provided, that such maximum shall not be less
than the figure above named. In no event shall the carrier be liable for thus, 1 yr prescriptive period applies only to person running after the carrier

more than the amount of damage actually sustained. May the COGSA be applied in Domestic Trade?
- Yes, only when the parties agreed that the provisions of the COGSA will apply to their
Period of Prescription
contract

—————-———-“so that’s it for transportation law”———————

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