• Not essential but may be obligatory by reason of the regulations of Railroad

Company or as a condition imposed in the contract by the agreement of the

CHAPTER I – GENERAL PROVISIONS
parties.

DEFINITION OF CONTRACT OF TRANSPORTATION GR: not required

• There is a contract of transportation when a person obligates himself to transport XPT: gives right to the carrier and shipper to mutually demand of each other
persons or property from one place to another for a consideration.
• Contract of carriage of passengers or carriage of goods
• Common carrier or private carrier COMPANIA MARITAMA v. INSURANCE COMPANY OF NORTH AMERICA
12 SCRA 213, October 30, 1964
PARTIES
1. CARRIAGE OF PASSENGERS SUMMARY: Bales of hemp were transferred to a lighter prior to the M/V vessel but the bales of
a. Common Carrier hemp were damaged when it was still in the lighter. It was at first a contract to carry which
b. Passenger – one who travels in public conveyance by virtue of contract, later became a contract of carriage
express or implied, with the carrier subject to payment of fare or an
equivalent thereof. (Note: still a passenger even if reduced fare) DOCTRINE:
When contract completed?
2. CARRIAGE OF GOODS Where the shipper delivered the cargo to the carrier and the latter took possession thereof by
a. Common Carrier placing it on a lighter or barge manned by its authorized employees, it is held that there
b. Shipper – a person who pays the consideration or on whose behalf existed a complete contract of carriage the consummation of which had already begun.
payment is made. Person who delivers the goods to carrier for
transportation When does the liability or responsibility of a carrier commence?
• The liability of the carrier as common carrier begins with the actual delivery of the
Consignee goods for transportation, and not merely with the formal execution of a receipt or
• Maybe the Shipper or a 3rd person. bill of lading;
• A consignee is the person to whom goods are to be delivered • The issuance of a bill of lading is not necessary to complete delivery and
• Can be bound by the contract or bound by the terns and conditions of the bill of acceptance.
lading if he accepted and trying to enforce the agreement o Even where it is provided by statute that liability commences with the
a. Relationship to agency issuance of the bill of lading, actual delivery and acceptance, or receipt
b. Unequivocal acceptance of bill of lading by, the carrier or an authorized agent are sufficient to bind the carrier
c. Stipulation pour autrui • Whenever the control and possession of goods passes to the carrier and nothing
remains to be done by the shipper, then it can be said with certainty that the
PERFECTION relation of shipper and carrier has been established.

2 TYPES OF CONTRACT OF CARRIAGE OF PASSENGERS
1. CONTRACT TO CARRY
• Consensual contract and perfected my mere consent
• An agreement to carry the passenger at some future date
2. CONTRACT OF CARRIAGE / COMMON CARRIAGE
• Real contract
• For not until the facilities of the carrier are actually used can the carrier be said
to have already assumed the obligation of the carrier
CONTRACT OF CARRIAGE OF GOODS
• Consensual contract to carry goods whereby carrier agrees to accept and
transport goods at some future date
• Perfection: Act of delivery of the goods that is, when the goods are unconditionally
placed in the possession and control of the carrier and upon their receipt by the
carriage for transportation, the contract of carriage is perfected.
Written Contract Not Essential
• Presence of bill of lading not necessary for the perfection of contract
Delivery to a lighter vessel also commences the contract of carriage
• Delivery to a lighter in charge of a vessel for shipment on the vessel, where it is the
custom to deliver in that way, is a good delivery and binds the vessel receiving the
freight, the liability commencing at the time of delivery to the lighter
• Where there is a contract to carry goods from one port to another, and they cannot
be loaded directly on the vessel and lighters are sent by the vessel to bring the
goods to it, the lighters are for the time its substitutes, so that the bill of landing is
applicable to the goods as soon as they are placed on the lighters.
Bill of Lading not indispensiable in the creation of contact of carraige
GR: Code does not demand the bill of lading, as necessary requisite in the contract of
transportation, the delivery of the bill of lading to the shipper
XPT: the shipper to mutually demand of each other the delivery of said bill (Article 350 of the
Code of Commerce)
BRITISH AIRWAYS, INC. v. COURT OF APPEALS
218 SCRA 699, February 09, 1993

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 1

SUMMARY: British repeated on failing to transport FIT’s workers in its flight despite confirmed
booking of said workers clearly constitutes breach of contract and bad faith on its part.
2 Aspects of Contract of Common Carriage
1. Contract to Carry (at some future time)
o consensual contract
o perfected by mere consent (See Article 1356, Civil Code of the
Philippines),
2. Contract of Carriage or “of Common Carriage”
o real contract
o perfected until the carrier is actually used or when the carrier be said to
have already assumed the obligation of a carrier.
AIRCRAFT
• Perfected even if no tickets have been issued to passengers so long as there was
meeting of minds with respect to the subject matter and the consideration.
• Perfected between passenger and airline – if established that the passenger had
checked in at the departure counter, passed through customs and immigration,
boarded the shuttle bus and proceeded to the ramp of the aircraft and baggage
already been loaded to the ramp of the aircraft.
BUSES, JEEPNEYS AND STREET CARS
Continuing Offer Rule
It is the duty of the drivers to stop their conveyances for a reasonable length of time in order to
afford passengers an opportunity to board and enter, and they are liable for injuries suffered
by boarding passengers resulting from the sudden contract
DANGWA TRANSPORTATIO CO., INC. v. COURT OF APPEALS
202 SCRA 574, October 07, 1991
SUMMARY: Bus was at full stop when the victim Cudiamat boarded it. Driver prematurely
stepped on the accelerator without waiting for passenger to first secure seat. Victim fell from
the platform of the bus and was run over by the rear right tires of the vehicle. The premature
acceleration of the bus in this case was a breach of such duty.
Duty of a bus driver and conductor
• It is the duty of the driver and the conductor, every time the bus stops, to do no act
that would have the effect of increasing the peril to a passenger while he was
attempting to board the same.
• Required to exhibit extraordinary diligence when at full stop
• When the bus is not in motion there is no necessity for a person who wants to ride
the same to signal his intention to board.
• A public utility bus, once it stops, is in effect making a continuous offer to bus riders
• Duty which the carrier passengers owes to its patrons extends to persons boarding
cars as well as to those alighting therefrom.
Duty of common carriers
• It is the duty of common carriers of passengers, including common carriers by
railroad train, streetcar, or motorbus, to stop their conveyances a reasonable length
of time in order to afford passengers an opportunity to board and enter,
• Failure to observe duty - liable for injuries suffered by boarding passengers resulting
from the sudden starting up or jerking of their conveyances while they are doing so
Duty of a passenger
• It is not negligence per se, or as a matter of law, for one attempt to board a train or
street car which is moving slowly. An ordinarily prudent person would have made
the attempt board the moving conveyance under the same or similar
circumstances
Such duty extends to those passengers who board and alight slow moving CC’s
• It is not negligence per se, or as a matter of law, for one attempt to board a train or
streetcar which is moving slowly. An ordinarily prudent person would have made the
attempt board the moving conveyance under the same or similar circumstances.
The fact that passengers board and alight from slowly moving vehicle is a matter of
common experience
• Pedrito herein, by stepping and standing on the platform of the bus, is already
considered a passenger and is entitled all the rights and protection pertaining to
such a contractual relation. Hence, it has been held that the
Presumption of Negligence to the Common Carrier
• In an action based on a contract of carriage, the court need not make an express
finding of fault or negligence on the part of the carrier in order to hold it responsible
to pay the damages sought by the passenger.
• By contract of carriage, the carrier assumes the express obligation to transport the
passenger to his destination safely and observe extraordinary diligence with a due
regard for all the circumstances, and any injury that might be suffered by the
passenger is right away attributable to the fault or negligence of the carrier.
• Burden of Proof: Common Carrier
Cites Civil Code
Art. 1733 of NCC - Common carriers, from the nature of their business and reasons of public
policy, are bound to observe extraordinary diligence for the safety of the passengers
transported by the according to all the circumstances of each case.
Art. 1755 of NCC - A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence very cautious persons, with a due
regard for all the circumstances.
TRAINS
• Must purchase ticket and present himself in the proper place and in a proper
manner for transportation
• Bonafide intention to use facilities, possess sufficient fare, present himself in the
place and manner provided
LIGHT RAIL TRANSIT AUTHORITY v. NAVIDAD
397 SCRA 75, February 06, 2003
SUMMARY: Drunk Nicanor was on the platform when there was altercation and fistfight
between Nicanor and Escartin the guard of LRT. The former fell on the rails and died because
train came driven by Roman. There is likewise and absence of satisfactory explanation by the
carrier on how the accident occurred, which LRTA, according to the CA, have failed to show,
the presumption would be that it has been at fault an exception from the general rule that
negligence must be proved
Obligation of a common carrier in case of negligence
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 2
 • Obligation to indemnify the victim arises from the breach of that contract by reason
of its failure to exercise the high diligence required of the common carrier
When does the duty to transfer safely and with utmost diligence of the common carrier
commence?
• Not only during the course of the trip but for so long as the passengers are within its
premises and where they ought to be in pursuance to the contract of carriage.
When can a common carrier become liable for death of or injury to passengers?
1. Negligence or willful acts of its employees
2. Negligence or willful acts or negligence of other passengers or of strangers if the
common carrier’s employees through the exercise of due diligence could have
prevented or stopped the act or omission.
Presumption of Negligence: Carrier is presumed to have been at fault or been negligent by a
simple proof of injury only
Burden of Proof: carrier to prove that the injury is due to an unforeseen event or to force
majeure.
The Civil Code, governing the liability of a common carrier for death of or injury to its
passengers, provides:
“Article 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances.
“Article 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.”
“Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the former’s employees, although such employees may have
acted beyond 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.”
“Article 1763. A common carrier is responsible for injuries suffered by a passenger on account
of the willful 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.”
COMMON CARRIER
Article 1732 of the Civil Code
"common carrier" as "any person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public."
PUBLIC SERVICE
Public Service Act in which Section 13, paragraph (b) states
'every person that now or hereafter may own, operate, manage, or control in the Philippines,
for hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system gas, electric light
heat and power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar public
services.'
TEST
FIRST PHILIPPINE INDUSTRIAL CORPORATION v. COURT OF APPEALS
300 SCRA 661, December 29, 1998
SUMMARY: Pipeline concession is a common carrier - It is engaged in the business of
transporting petroleum products via pipeline. Payment of local tax not required because
transporting petroleum via Pipeline is considered as a common carrier. Art. 1732 of NCC
makes no distinction. Court has considered as common carriers pipeline operators, custom
brokers and warehousemen, and barge operators even if they had limited clientèle..
What is a common carrier?
Article 1732 of the Civil Code
"common carrier" as "any person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public."
• no distinction as to the means of transporting, as long as it is by land, water or air. It
does not provide that the transportation of the passengers or goods should be by
motor vehicle
Reason why the transportation business is being excluded from the taxing powers of the local
government units?
We do not want a duplication of this tax
TEST FOR DETERMINING WHETHER A PARTY IS C OMMON CARRIER OF GOODS
1. He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and
over his established roads; and
4. The transportation must be for hire.
NATIONAL STEEL CORPORATION v. COURT OF APPEALS
283 SCRA 45, December 12, 1997
SUMMARY: Skids of tinplates and hot rolled sheets rusted while on transit. The records reveal
that it was the stevedores of NSC who were negligent in unloading the cargo from the ship.
The stevedores employed only a tent-like material to cover the hatches when strong rains
occasioned by a passing typhoon disrupted the unloading of the cargo. This tent-like
covering, however, was clearly inadequate for keeping rain. self-rusting of tin plates by its
own CHARACTER (?)
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 3
 public as ready to act for all who or goods or both, by land, water, or
Demurrage may desire his or its services, air, for compensation, offering such
• It is given to compensate the shipowner for the nonuse of the vessel undertakes, by special agreement in services to the public.
• The compensation provided for in the contract of affreightment for the detention a particular instance only, to
of the vessel beyond the laytime or that period of time agreed on for loading and transport goods or persons from one
unloading of cargo. place to another either gratuitously
or for hire. It does not involve the
If laytime is expressed in “running days” general public.
• When the ship would be run continuously, and holidays are not excepted. Governing Ordinary contracts of the Civil Code • Common Carriers of
• A qualification of ‘weather permitting’ excepts only those days when bad weather Law the Civil Code,
reasonably prevents the work contemplated.” • Public Service Act
• Special laws relating to
Test of a common carrier transportation
• It has been held that the true test of a common carrier is the carriage of passengers Diligence Ordinary diligence (diligence of a Extraordinary diligence
or goods, provided it has space, for all who opt to avail themselves of its good father of the family)
transportation service for a fee. Presumption No presumption of negligence on Presumed to be at fault or to have
o A carrier which does not qualify under the above test is deemed a private the part of carrier acted negligently in case of the loss
carrier. of the effects of passengers, or the
death or injuries to passengers
How can a common carrier transform to a private carrier? Burden of Passenger to prove that carrier is Carrier to prove that it is not negligent
• Undertaken by special agreement to not hold himse;f out to carry goods for the Proof negligent
general public. Provisions parties may freely stipulate their public policy embodied therein is not
• Example of private carrier: the charter party, a maritime contract by which the duties and obligations which contravened by stipulations in a
charterer, a party other than the shipowner, obtains the use and service of all or perforce would be binding on them charter party that lessen or remove
some part of a ship for a period of time or a voyage or voyages.” the protection given by law in
contracts involving common carriers
This view finds further support in the Code of Commerce, which pertinently provides:
“Art. 361. Merchandise shall be transported at the risk and venture of the shipper, if the “Public use” is the same as “use by the public”.
contrary has not been expressly stipulated. Therefore, the damage and impairment suffered • The essential feature of the public use is not confined to privileged individuals, but is
by the goods during the transportation, due to fortuitous event, force majeure, or the nature open to the indefinite public.
and inherent defect of the things, shall be for the account and risk of the shipper. The burden • Look at the proposed mode of doing and only to the character of the business to be
of proof of these accidents is on the carrier.” done,
“Art. 362. The carrier, however, shall be liable for damages arising from the cause mentioned If the use is merely optional with the owners, or the public benefit is merely incidental, it is not
in the preceding article if proofs against him show that they occurred on account of his a public use, authorizing the exercise of the jurisdiction of the public utility commission.
negligence or his omission to take the precautions usually adopted by careful persons, unless • Public use is not synonymous with public interest.
the shipper committed fraud in the bill of lading, making him to believe that the goods were • The true criterion by which to judge the character of the use is whether the public
of a class or quality different from what they really were.” may enjoy it by right or only by permission.

True test for a common carrier:

PERENA v. ZARATE • Whether the undertaking is a part of the activity engaged in by the carrier that he
679 SCRA 208, August 29, 2012 has held out to the general public as his business or occupation.
• If single transaction - not a part of the general business or occupation engaged in,
SUMMARY: PNR and collided with the van. Being a common carrier or a student bus, the as advertised and held out to the general public - the individual or the entity
Pereñas are bound to observe extraordinary diligence, and as such, they are presumed to be rendering such service is a private, not a common, carrier.
negligent because of the death of their passenger and or failure to transport students to Don
Bosco. They failed to overturn the presumption of their negligence. Despite catering to a Not absolute: The operator of a school bus service has been usually regarded as a private
limited clientèle, the Pereñas operated as a common carrier because they held themselves carrier primarily because he only caters to some specific or privileged individuals, and his
out as a ready transportation indiscriminately to the students of a particular school living within operation is neither open to the indefinite public nor for public use, the exact nature of the
or near where they operated the service and for a fee. operation of a school bus service has not been finally settled. This is the occasion to lay the
matter to rest.
Private Carrier Common Carrier
Definition One who, without making the a person, corporation, firm or
activity a vocation, or without association engaged in the business CHARACTERISTICS
holding himself or itself out to the of carrying or transporting passengers

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 4

The Civil Code defines "common carriers" under Art. 1732.
1. Principal / ancillary - No distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local Idiom as "a sideline")
2. Regular / scheduled - Carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis.
3. General / limited - offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a
narrow segment of the general population
4. A person or entity is a common carrier and has the obligation of a common carrier
under NCC even if not issued with Certificate of Public Convenience
5. Does not provide that it should be by motor vehicle
6. No distinction on the means of transporting as long as it is by land, water or air
7. A person or entity is a common carrier even if no fixed and publicly known route,
maintains terminals and issues no tckets
8. Need not to be engaged in the business of public transportation for the provision of
NCC to apply
9. Carrier can also be a common carrier even if the operator dos not own a vehichle
BROADER CONCEPT
LUZON STEVEDORING CO., INC. v. PUBLIC SERVICE COMMUNICATION
93 Phil. 735, September 16, 1953
Philippine Shipowners Association: corporations duly organized and existing under the laws of
the Philippines,
• mainly engaged in the stevedoring or lighterage and harbor towage business
• interisland service nsists of hauling cargoes such as sugar, oil, fertilizer and other
commercial commodities which are loaded in their barges and towed by their
tugboats
Route: Manila to various points in the Visayan Islands, particularly in the Provinces of Negros
Occidental and Capiz, and from said places to Manila. 1/2 per bag or picul of sugar
Whether a Firm or Company is a Pubilc Utility.
• Public Utility - even where the term is not defined by statute, is not determined by
the number of people actually served. Nor does the mere fact that service is
rendered only under contract prevent a company from being a public utility.
• Causal or incidental service - devoid of public character and interest is not brought
within the category of public utility. The demarkation line is not susceptible of exact
description or definition, each being governed by its circumstance.
The transportation service which was the subject of complaint was not casual or incidental. It
had been carried on regularly for years at almost uniform rates of charges.
The Public Service Law
• Was enacted not only to protect the public against unreasonable charges and
poor, inefficient service, but also to prevent ruinous competiton.
ANCILLARY BUSINESS (“sideline”)
Article 1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity
DE GUZMAN v. COURT OF APPEALS
168 SCRA 612, December 22, 1988
SUMMARY: Cendana, a junk dealer, brings junk for resale to Manila and on a special basis,
from Makati to Pangasisan he is to transport 750 cartons of filled milk. But only 150 were
transported because his truck was hi-jacked. Art 1745 NCC par 5, the limits of the duty of the
extraordinary diligence in the vigilance over the goods carried are reached where the goods
are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or
force.
Article 1734 establishes the general rule that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, "unless the same is due to any of
the following causes only
1. Flood, storm, earthquake, lightning or other natural disaster or calamity
2. Act of the public enemy in war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character-of the goods or defects in the packing or-in the containers; and
5. Order or act of competent public authority.
GR: Article 1745 (6) above, a common carrier is held responsible and will not be allowed to
divest or to diminish such responsibility — even for acts of strangers like thieves or robbers,
XPT: where such thieves or robbers in fact acted "with grave or irresistible threat, violence or
force"
The occurrence of the loss must reasonably be regarded as quite beyond the control of the
common carrier and properly regarded as a fortuitous event
The Civil Code defines "common carriers" under Art. 1732.
1. Principal / ancillary - No distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local Idiom as "a sideline")
2. Regular / scheduled - Carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis.
3. General / lmited - offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a
narrow segment of the general population.
Section 13, paragraph (b) of the Public Service Act, "public service" includes:
a. ... every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, xxx.
A certificate of public convenience is NOT a requisite for the incurring of liability under the
Civil Code provisions governing common carriers.
LIMITED CLIENTELE
Although the clientele is limited, the regularity of the activities of a carrier may indiciate that
the same carrier is a common carrier.
Example:
• brokerage
• bus service to schoolchildren
• customs broker
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 5
 • shipping company,
• Asia Lighterage v. CA – carrying goods through its barges even it no fixed and
publicly known route, maintains no terminals and no tickets.
• Shuttle trains without fee in the airport (but in NCC no)
MEANS OF TRANSPORTATION
FPIC v. CA – thru pipelines
EFFECT OF CHARTER PARTY
How to transport a common carrier to a private carrier?
It must be a bareboat or demise charter where the charterer mans the vessel with his own
people and becomes in effect the owner for the voyage or service stipulated.
PLANTERS PRODUCTS, INC. v. COURT OF APPEALS
226 SCRA 476, September 15, 1993
SUMMARY: Misubishi chartered KKK. Goods contaminated -- short of 94.839 M/T and about 23
M/T were rendered unfit for commerce. KKKK remained a public/common carrier
notwithstanding the charter party because the agreement was a time-charter, which did not
divest the shipowner of control over the ship and its crew. Court absolved KKKK of liability
because it was able to prove that it was not negligent in transporting the cargo because
damage occurred during the unloading and transferring to the warehouse of PPI agent hired
by consignee.
A charter-party between a shipowner and a charterer does not necessarily transform a
common carrier into a private one as to negate the civil law presumption of negligence in
case of loss or damage to its cargo
The distinction between a "common or public carrier" and a "private or special carrier" lies in
the character of the business, such that if the undertaking is a single transaction, not a part of
the general business or occupation, although involving the carriage of goods for a fee, the
person or corporation offering such service is a private carrier.
• It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned..
A "charter-party" is defined as a contract by which an entire ship, or some principal part
thereof, is let by the owner to another person for a specified time or use
Charter parties are of two types:
1. Contract of Affreightment which the owner of a ship or other vessel lets the whole or
a part of her to a merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight
a. Time charter - vessel is leased to the charterer for a fixed period of time
b. Voyage charter - ship is leased for a single voyage
Note: In both cases, the charter-party provides for the hire of vessel only, either for a
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
2. Charter by demise or bareboat charter, by the terms of which the whole vessel is let
to the charterer with a transfer to him of its entire command and possession and
consequent control over its navigation, including the master and the crew, who are
his servants.
Article 1734 of the New Civil Code provides that common carriers are not responsible for the
loss, destruction or deterioration of the goods if caused by the charterer of the goods or
defects in the packaging or in the containers.
The Code of Commerce also provides that all losses and deterioration which the goods may
suffer during the transportation by reason of fortuitous event, force majeure, or the inherent
defect of the goods, shall be for the account and risk of the shipper, and that proof of these
accidents is incumbent upon the carrier
COMMON CARRIER DISTIGNUIED FROM PRIVATE CARRIER
• Lies in the character of the business,
• Even if the undertaking is a single transaction and not a part of a general business or
occupation, although involving the carriage of goods for a fee, the person or
corporation offering is a private carrier
What is a private carrier?
A private carrier is one who, without making the activity a vocation, or without holding himself
or itself out to the public as ready to act for all who may desire his or its services, undertakes,
by special agreement in a particular instance only, to transport goods or persons from once
place to another either gratuitously or for hire.
• Civil Code
• Ordinary diligence or diligence of a good father of a family
What is a common carrier?
A "common carrier" as "any person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public."
• Civil Code and Public service Act
• Extraordinary dilivencee
COMMON CARRIER DISTINGUISHED FROM OTHER CONTRACTS
Distinguished from Towage
• One vessel is hired to bring another vessel to another place (ex. Tugboat)
• Diligence of a good father of the family
Distinguished from Arrastre
• Hauling of cargo, comprehends the handling of cargo on the wharf or between the
establishment of the consignee or shipper and the ship’s tackle
• Start of responsibility – from the time they are placed upon the wharves or piers or
delivered along sides of ships
Functions of Arrastre
1. To receive, handle, care for, and deliver all merchandise imported and exported,
upon or passing over government-owned wharves and piers in the port
2. To record or check all merchandise which maybe delivered to said port at shipside
and in general
3. To furnish light, and water services and other incidental services in order to
undertake its arrastre service.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 6
SUMMA INSURANCE CORPORATION v. COURT OF APPEALS
253 SCRA 175, February 05, 1996
SUMMARY: Cargo was lost while it was in the possession and control of defendant Metro Port
(arrastre) but Semirara still did in fact accept delivery of the cargo from the arrastre operator.
Fees not mentioned when prior to landing.
In the performance of its obligations, an arrastre operator should observe the same degree of
diligence as that required of a common carrier and a warehouseman as enunciated under
Article 1733 of the Civil Code and Section 3(b) of the Warehouse Receipts Law, respectively.
GR: An arrastre operator is bound by the management contract it had executed with the
Bureau of Customs.
XPT: BUT consignee who does not avail of the services of the arrastre operator is not bound by
the management contract.
Distinguished from Stevedoring
Stevedore
• “Stipare” or “to stuff” or “escribador” “a man who loads ships”
• handling of the cargo in the holds of the vessel or between the ship’s tackle and the
holds of the vessel
• Responsibility ends: upon loading and stowing the cargo in the vessel
• Not a common carrier
• Not akin to a warehouseman
• Diligence of a good father of a family
Distinguished from Travel Agency
Travel Agency
• Service of only arranging and facilitating the booking, ticketing, and
accommodation in a package tour
• Diligence of a good father of a family
CRISOSTOMO v. COURT OF APPEALS
409 SCRA 528, August 25, 2003
SUMMARY: Lawyer not reading the departure date and time and missed its Jewels of Europe
tour offered by Caravan Travel and Tours. The latter is not a common carrier. Atty. remised its
duty to take necessary precaution.
Travel agency is NOT in the nature of a common carrier, which by law does not require the
exercise of extraordinary diligence in the fulfillment of its obligations
• Caravan's services as a travel agency include procuring tickets and facilitating
travel permits or visas as well as booking customers for tours and not an entity
engaged in the business of transporting either passengers or goods.
The test to determine whether negligence attended the performance of an obligation:
Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If not, then he is
guilty of negligence.
CATHAY PACIFIC AIRWAYS v. REYES
699 SCRA 725, June 26, 2013
SUMMARY: Was issued Adelaide to HK tickets but was not allowed to board since the travel
agency allegedly cancelled the flight. Cathay Pacific breached its contract of carriage with
respondents when it disallowed them to board the plane in Hong Kong going to Manila on
the date reflected on their tickets
Travel Agency
• The object of the contract is arranging and facilitating the latter’s booking and
ticketing. It was even Sampaguita Travel which issued the tickets.
• Standard of care required is that of a good father of a family under Article 1173 of
the Civil Code.
Contract of Carriage - one whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one place to another for a fixed price
Effect of issued ticket to a passenger:
Contract of carriage arises, and the passenger has every right to expect that he would fly on
that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carriage
Article 1370 of the Civil Code
"[i]f the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control."
Section 9, Rule 130 of the Rules of Court
Once the terms of an agreement have been reduced to writing, it is deemed to contain all
the terms agreed upon by the parties and no evidence of such terms other than the contents
of the written agreement shall be admissible
TRAMP SERVICE AND LINE SERVICE (RA9515)
2 GARGO OPERATIONS:
Line Service
• Operation of a common carrier which publicly offers services without discrimination
to any user, has regular ports of call/destination, fixed sailing schedules and
frequencies and published freight rates and attendant charges and usually carries
multiple consignments
• General cargoes – whatever is offered is accepted for shipment
Tramp Service
• Operation of a contract carrier which has no regular and fixed routes and
schedules but accepts cargo wherever and whenever the shipper desires, is hired
on a contractual basis, or chartered by anyone or few shippers under mutually
agreed terms and usually carries bulk or break bulk cargoes
• Each voyage is a matter of special arrangement between the ship-owner and
shipper
GOVERNING LAWS
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 7
Art. 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws. FILCAR TRANSPORT SERVICES v. ESPINAS
674 SCRA 117, June 20, 2012
Art. 1753. The law of the country to which the goods are to be transported shall govern the
SUMMARY: Hit and run / collision. Filcar Company responsible as it is the owner
liability of the common carrier for their loss, destruction or deterioration.
GR: One is only responsible for his own act or omission or person will generally be held liable
• Law of the destination – cases involving loss, destruction, or deterioration of goods
only for the torts committed by himself and not by another
• Code of Commerce and Special Laws – those not regulated by NCC
Article 2176. Whoever by act or omission causes damage to another, there being fault or
• Carriage of Goods by Sea Act (COGSA) – special law / suppletory to NCC
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
• Warsaw Convention – air transportation
pre-existing contractual relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
SUMMARY OF RULES
XPT: An employer who is made vicariously liable for the tort committed by his employee.
a) Coastwise Shipping
Article 2180. The obligation imposed by Article 2176 is demandable not only for one’s own
i. NCC – primary
acts or omissions, but also for those of persons for whom one is responsible.
ii. Code of Commerce – suppletory
Rationale for holding the registered owner vicariously liable
b) Carriage from Foreign Ports to Philippine Ports
To identify the owner so that if any accident happens, or that any damage or injury is caused
i. NCC
by the vehicle on the public highways, responsibility therefor can be fixed on a definite
ii. Code of Commerce – all not regulated by NCC
individual, the registered owner
• Where there is an employer-employee relationship between the registered owner
c) Carriage from Philippine Ports to Foreign Ports
and the driver is irrelevant in determining the liability of the registered owner who the
i. Law of destination
law holds primarily and directly responsible for any accident, injury or death caused
by the operation of the vehicle in the streets and highways.
d) Overland Transportation
• The registered owner of the motor vehicle has a right to be indemnified by the
i. NCC – primary
actual employer of the driver of the amount that he may be required to pay as
ii. Code of Commerce – suppletory
damages for the injury caused to another
e) Air Transportation
The public interest involved must not be underestimated.
i. NCC – primary
• Road safety is one of the most common problems that must be addressed in this
ii. Code of Commerce – suppletory
country. We are not unaware of news of road accidents involving reckless drivers
iii. For International Carriage – Convention for the Unification of Certain Rules
victimizing our citizens
Relating to the International Carriage by Air or “Warsaw Convention”

DUAVIT v. COURT OF APPEALS

NATURE OF BUSINESS
173 SCRA 490, May 18, 1989
• Exercise a sort of public office and have duties to perform in which the public is
interested
SUMMARY: collision. Driver not employee and drove jeep without consent. Owner not liable
• Public Utilities which are enterprises that specially cater to the needs of the public
and conduce to their comfort and convenience
GR: Registered Owner Rule
XPT: Drove without consent
REGISTERED OWNER RULE AND KABIT SYSTEM
Duquillo v. Bayot - an owner of a vehicle cannot be held liable for an accident involving the
said vehicle if the same was driven without his consent or knowledge and by a person not
Registration Laws
• R.A. 4136 – “The Land Transportation and Traffic Code” employed by him.

Vargas Case – sold to 3rd party but was still liable because since she failed to surrender to the
Registered Owner Rule
Motor Vehicles Office the corresponding AC plates in violation of the Revised Motor Vehicle
• A person who is the registered owner of a vehicle is liable for any damage caused
Law and Commonwealth Act No. 146.
by the negligent operation of the vehicle although the same was already sold or
conveyed to another person at the time of the accident.
Erezo Case – Jepte misrepresented himself as the owner of the truck that collided with the
• Public interest
taxicab which resulted to the death of Erezo.
• Owner liable to the injured party subject to his right of recourse tagainst the
Even if Jepte were not the owner of the truck at the time of the accident, he was still held
transferee of the buyer
liable for the death of Erezo. Significantly, the driver of the truck was fully authorized to drive it.

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 8


PCI LEASING AND FINANCE, INC. v. UCPB GENERAL INSURANCE CO., INC.
557 SCRA 141, July 04, 2008
SUMMARY: Collision on the car owned by PCI and riven by another. The vehicles involved in
the case at bar are not common carriers, which makes the Public Service Act inapplicable.
However, the registered owner of the vehicle driven by a negligent driver may still be held
liable under applicable jurisprudence involving laws on compulsory motor vehicle registration
and the liabilities of employers for quasi-delicts under the Civil Code. In this case, there is not
even a sale of the vehicle involved, but a mere lease, which remained unregistered up to the
time of the occurrence of the quasi-delict that gave rise to the case.
A sale, lease, or financial lease, for that matter, that is not registered with the Land
Transportation Office, still does not bind third persons who are aggrieved in tortious incidents,
for the latter need only to rely on the public registration of a motor vehicle as conclusive
evidence of ownership
For damage or injuries arising out of negligence in the operation of a motor vehicle, the
registered owner may be held civilly liable with the negligent driver either
1. subsidiarily, if the aggrieved party seeks relief based on a delict or crime under
Articles 100 and 103 of the Revised Penal Code
2. solidarily, if the complainant seeks relief based on a quasi-delict under Articles 2176
and 2180 of the Civil Code
Registration
• Reason: to identify the owner so that if any accident happens, or that any damage
or injury is caused by the vehicle on the public highways, responsibility therefor can
be fixed on a definite individual, the registered owner.
• Cancellation or foreclosure: shall likewise be recorded, and in the absence of such
cancellation, no certificate of registration shall be issued without the corresponding
notation of mortgage, attachment and/or other encumbrances.
The registered owner of a motor vehicle is primarily and directly responsible for the
consequences of its operation, including the negligence of the driver, with respect to the
public and all third persons
• The registered owner of a motor vehicle is the employer of its driver, with the actual
operator and employer, such as a lessee, being considered as merely the
owner's agent
• This being the case, even if a sale has been executed before a tortious incident, the
sale, if unregistered, has no effect as to the right of the public and third persons to
recover from the registered owner.
• The public has the right to conclusively presume that the registered owner is the real
owner, and may sue accordingly
KABIT SYSTEM
LIM v. COURT OF APPEALS
373 SCRA 394, January 16, 2002
SUMMARY: mutli-car collision. Gunnaban 10 wheeler -> Feroza -> Gunnaban jeep. In the
present case it is at once apparent that the evil sought to be prevented in enjoining
the kabit system does not exist.
What is kabit system?
The kabit system is an arrangement whereby a person who has been granted a certificate of
public convenience allows other persons who own motor vehicles to operate them under his
license, sometimes for a fee or percentage of the earnings
• Although the parties to such an agreement are not outrightly penalized by law,
the kabit system is invariably recognized as being contrary to public policy and
therefore void and inexistent under Art. 1409 of the Civil Code.
Dizon v. Octavio
The Court explained that one of the primary factors considered in the granting of a certificate
of public convenience for the business of public transportation is the financial capacity of the
holder of the license, so that liabilities arising from accidents may be duly compensated.
• Escaping civil liability - The kabit system renders illusory such purpose and, worse,
may still be availed of by the grantee to escape civil liability caused by a negligent
use of a vehicle owned by another and operated under his license.
• If a registered owner is allowed to escape liability by proving who the supposed
owner of the vehicle is, it would be easy for him to transfer the subject vehicle to
another who possesses no property with which to respond financially for the
damage done.
• Kabit system is not so much as to penalize the parties but to identify the person
upon whom responsibility may be fixed in case of an accident with the end view of
protecting the riding public
How to be liable in kabit system?
1. One of the parties liable for damages
2. The case arose from the negligence of another vehicle in using the public road to
whom no representation, or misrepresentation, as regards the ownership and
operation of the passenger jeepney was made and to whom no such
representation, or misrepresentation, was necessary.
3. The riding public was bothered or inconvenienced at the very least by the illegal
arrangement.
BALIWAG TRANSIT, INC. v. COURT OF APPEALS
147 SCRA 82, January 07, 1987
SUMMARY: Baliwag was composed of two companies before. SSS remittance claim. No Kabit
system here
It is the possession of a franchise to operate which negates the existence of the "Kabit System"
and not the issuance of one SSS ID Number for both bus lines from which the existence of said
system was inferred
PARI DELICTO RULE
• Persons who are parties to the “kabit system” cannot invoke the same as against
each other iether to enforce their illegal agreement or to invoke the same to
escape liability.
• “No action arises out of an illicit bargaint
TEJA MARKETING v. INTERMEDIATE APPELLATE COURT
148 SCRA 347, March 09, 1987
SUMMARY: Sold a tricyle which was mortgaged and buyer failed to pay.
A certificate of public convenience is a special privilege conferred by the government.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 9
 • Abuse of this privilege by the grantees thereof cannot be countenanced.
• The "kabit system" has been Identified as one of the root causes of the prevalence
of graft and corruption in the government transportation offices.
Although not outrightly penalized as a criminal offense, the kabit system is invariably
recognized as being contrary to public policy and, therefore, void and in existent under
Article 1409 of the Civil Code.
• It is a fundamental principle that the court will not aid either party to enforce an
illegal contract, but will leave both where it finds then. Upon this premise it would be
error to accord the parties relief from their predicament.
Article 1412 of the Civil Code denies them such aid. It provides:
If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, the following rules shall be observed:
1. When the fault is on the part of both contracting parties, neither may recover that
he has given by virtue of the contract, or demand, the performance of the other's
undertaking.
The defect of in existence of a contract is permanent and cannot be cured by ratification or
by prescription. The mere lapse of time cannot give efficacy to contracts that are null and
void.
LAND TRANSPORTATION RULES
Aircrafts and Vessels
• Policy that prohibits the “kabit system” may also be applied to vessels and aircrafts
that are covered by certificates of public convenience and necessity.
• CAA – certificate or registration of an aircraft is conclusive of evidence of ownership
except when ownership itself is at issue
BOUNDARY SYSTEM
• The carrier cannot escape liability by claiming that the driver is a lessee
• The carrier cannot exempt himself on the ground that he is a lessor because to
tolerate such position would not only abet flagrant violations of the Public Service
Law but also to place the riding public at the mercy of reckless and irresponsible
drivers.
HERNANDEZ v. DOLOR
435 SCRA 668, July 30, 2004
SUMMARY: Collision. Sps. Hernandez should be liable though not inside the car. Zigzag
DOCTRINE:
To exempt from liability the owner of a public vehicle who operates it under the “boundary
system” on the ground that he is a mere lessor would be not only to abet flagrant violations of
the Public Service Law, but also to place the riding public at the mercy of reckless and
irresponsible drivers reckless because the measure of their earnings depends largely upon the
number of trips they make and, hence, the speed at which they drive; and irresponsible
because most if not all of them are in no position to pay the damages they might cause.
Liability
Article 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former,
who was in the vehicle, could have, by the use of the due diligence, prevented the
misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty of
reckless driving or violating traffic regulations at least twice within the next preceding two
months.
If the owner was not in the motor vehicle, the provisions of article 2180 are applicable.
Article 2180 of the Civil Code, which does not provide for solidary liability between employers
and employees
Article 2180. The obligation imposed by article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible.
• Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though the
former are not engaged in any business or industry
• Under Article 2180 of the Civil Code, an employer may be held solidarily liable for
the negligent act of his employee.
CHAPTER II – OBLIGATION OF THE COMMON CARRIER
BASIC OBLIGATIONS OF THE CARRIER (COMMON)
1. To accept passengers and goods without discrimination
2. To seasonably deliver the goods or bring the passenger to the destination
3. To deliver the goods or bring the passenger to the proper place or destination
4. To deliver the goods to the proper person
5. To exercise extraordinary diligence in the performance of its duties
DUTY TO ACCEPT GOODS FOR TRANSPORT
• Common Carrier is granted a certificate of public convenience is duty bound to
accept passengers or cargo without any discrimination
• Now: Forbid failures or refusals to receive persons or property for carriage that have
the effect of giving an unreasonable or unnecessary preference or advantage to
any person, locality or particular kind of traffic, or of subjecting any person, locality
or particular kind of traffic to any undue or unreasonable prejudice or discrimination
F. C. FISHER vs. YANGCO STEAMSHIP COMPANY
G.R. No. 8095 | November 5, 1914 & March 31, 1915.
SUMMARY: The board of Yangco Steamship Co. adopted a resolution which was ratified by
the stockholders declaring classes of merchandise which are not to be carried by the vessels
of the company and prohibiting the employees to carry dynamite, powder or other
explosives. The Collector of Customs suspended the issuance of clearances for the vessels
unless they carry the explosives. Fisher, a stockholder of YSC, filed a petition for prohibition.
DOCTRINE:
Common carriers in this jurisdiction cannot lawfully decline to accept a particular class of
goods for carriage to the prejudice of the traffic in those goods unless it appears that for some
sufficient reason the discrimination against the traffic in such goods is reasonable and
necessary. Mere prejudice or whim will not suffice. The grounds of the discrimination must be
substantial ones, such as will justify the courts in holding the discrimination to have been
reasonable and necessary under all the circumstances of the case.
VALID GROUNDS FOR NON-ACCEPTANCE (DUO-CHELS-O)
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 10
 1. When the goods to be transported are dangerous objects, or substances including commence there must in fact have been delivery of the cargo subject of the
dynamites and other explosives contract of carriage.
2. The goods are unfit for transportation • This responsibility remains in full force and effect even when they are temporarily
3. Acceptance would result in overloading unloaded or stored in transit, unless the shipper or owner exercises the right of
4. The goods are considered contrabands or illegal goods stoppage in transitu, and terminates only after the lapse of a reasonable time for
5. Goods are injurious to health the acceptance of the goods by the consignee or such other person entitled to
6. Goods will be exposed to untoward danger like flood, capture by enemies and the receive them
like
7. Goods like livestock will be exposed to diseases Duty to make timely Delivery of Goods
8. Strike GR: Carriers are not obligated by law to carry and to deliver merchandise, and persons are
9. Failure to render goods on time not vested with the right to prompt delivery

XPT: Express contract to transport and deliver property within a specified time, it is bound to
DUTIES TO SPECIAL CLASSES OF PASSENGERS fulfill its contract and is liable for any delay, no matter from what cause it may have arisen.
• PWD
• Senior Citizens • When a common carrier undertakes to convey goods, the law implies a contract
that they shall be delivered at destination within a reasonable time, in the absence,
DUTY TO MAKE TIMELY DELIVERY OF THE GOODS of any agreement as to the time of delivery.
• Goods must be delivered within the stipulated time agreed upon to the designated • Delay must be reasonable. A common carrier undertaking to transport property has
consignee the implicit duty to carry and deliver it within reasonable time, absent any particular
• When a law undertake to covey goods, The implies a contract they shall be stipulation regarding time of delivery, and to guard against delay.
delivered at destination within a reasonable time: o In case of any unreasonable delay, the carrier shall be liable for damages
o Consider bill of lading immediately and proximately resulting from such neglect of duty.
o Nature of goods
• Delay in the absence of a special contract – a carrier is not an insurer against delay What is a bill of lading?
in the transportation of goods. A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to
transport and deliver them at a specified place to a person named or on his order. Such
instrument may be called a shipping receipt, forwarder's receipt and receipt for
SALUDO JR. v. CA transportation.
G.R. No. 95536 | March 23, 1992

SUMMARY: Casket containing the remains of Crispina Saludo was misshiped to Mexico instead
to San Francisco (resulting to delay in shipment to Manila and Cebu). Court held that it was
CMAS who is negligent and not TWA since TWA relied on the representation/ information
provided in the casket by CMAS. Morevoer, shipment of TWA in an earlier flight did not violate
the contract of carriage since it is expressly stated in the conditions that they can change the
carrier/flight time and ship the remains within a reasonable time
Duty to Accept Goods
• It the duty of the carrier to make inquiry as to the general nature of the articles
shipped and of their value before it consents to carry them; and its failure to do so
cannot defeat the shipper's right to recovery of the full value of the package if lost,
in the absence of showing of fraud or deceit on the part of the shipper
• In the absence of more definite information, the carrier has a the right to accept
shipper's marks as to the contents of the package offered for transportation and is
not bound to inquire particularly about them in order to take advantage of a false
classification and where a shipper expressly represents the contents of a package
to be of a designated character, it is not the duty of the carrier to ask for a
repetition of the statement nor disbelieve it and open the box and see for itself.
• When can they open it? Where a common carrier has reasonable ground to
suspect that the offered goods are of a dangerous or illegal character
Duration of duty in the Carriage of Goods
• Extraordinary diligence statutorily required to be observed by the carrier
instantaneously commences upon delivery of the goods thereto, for such duty to
CONSEQUENCES OF DELAY
• Excusable delays in carriage suspend but not generally terminate the contract of
carriage.
Consequences of Inexcusable delay: (NIDA)
1. Carrier is still liable even if natural disaster caused the damage
2. Stipulation limiting the carrier is inoperative
3. Carrier liable for damages
4. Consignee may exercise his right to abandon (Art. 371 of CoC)
MAGELLAN MANUFACTURING MKTG CORPORATION v. CA, ORIENT OVERSEAS CONTAINER LINES
AND FE ZUELLIG, INC.
G.R. No. 95529 | August 22, 1991
VOCABULARY
Demurrage → the compensation provided for in the contract of affreightment for the
detention of the vessel beyond the time agreed on for loading and unloading. Essentially,
demurrage is the claim for damages for failure to accept delivery. In a broad sense, every
improper detention of a vessel may be considered a demurrage.
Transshipment → The act of taking cargo out of one ship and loading it into another; to
transfer goods from the vessel stipulated in the contract of affreightment to another vessel

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 11

before the place of destination named in the contract has been reached. (actual physical
transfer is what matters, not the ownership of vessels)
On-board bill of lading → states that the goods have been received on board the vessel
which is to carry the goods. It apparently guarantees the certainty of shipping as well as the
seaworthiness of the vessel to carry the goods. It basically means that the goods are already
inside the vessel.
SUMMARY: MMMC entered into a contract with Choju for the export of anahaw fans. Through
its president, MMMC contracted the services of FE Zuellig as the shipping agent specifying that
he needed an on-board bill of lading and that transshipment shall not be allowed. The
consignee (Choju) refused to accept/pay the goods as the terms of the agreement was not
followed. MMMC filed a complaint for damages against FE Zuellig to which FE Zuellig filed a
counterclaim alleging that it is MMMC that should be liable to them for freightage. RTC and
CA both ruled in favor of FE Zuellig. SC reversed such rulings and absolved MMMC from any
liability since there was already and abandonment of cargo on its part. Manila – Japan
(transshipment → Manila – HK – Japan)
Liability for demurrage, using the word in its strictly technical sense, exists only when expressly
stipulated in the contract. Using the term in its broader sense, damages in the nature of
demurrage are recoverable for a breach of the implied obligation to load or unload the
cargo with reasonable dispatch, but only by the party to whom the duty is owed and only
against one who is a party to the shipping contract.
PLACE OF DELIVERY
• Deliver to the place agreed upon by the parties
• Bill of lading states a warehouse, it must be delivered there even if it is not the usual
place of delivery in the place of destination
• Shipper may change the cosngiment of goods delivered provided that at the time
of ordering the change of consignee the bill of lading signed by the carrier must be
returned to him, in exchange for another wherein novation of the contract appears.
TO WHOM DELIVERED
• Must be delivered to the consignee or any other person to whom the bill of lading
was validly transferred or negotiated
Conflict between the consignee and shipper
• Said right of the shipper to countermand the shipment terminates when the
consignee or legitimate holder of the bill of lading appears with such bill of lading
before the carrier and makes himself a party to the contract. Prior to that time, he is
stranger to the contract.
JOSE MENDOZA v. PAL
G.R. No. L-3678 | February 29, 1952

Bill of Lading SUMMARY:

• operates both as a receipt and as a contract. It is a receipt for the goods shipped
and a contract to transport and deliver the same as therein stipulated.
• When does it become effective? Upon its delivery to and acceptance by the
shipper.
• Presumption: in the absence of fraud, concealment or improper conduct, known to
the shipper, and he is generally bound by his acceptance whether he reads the bill
or not.
The acceptance of the bill without dissent raises the presumption that all the terms therein
were brought to the knowledge of the shipper and agreed to by him and in the absence of
fraud or mistake, he is estopped from thereafter denying that he assented to such terms.
• The holding in most jurisdictions has been that a shipper who receives a bill of lading
without objection after an opportunity to inspect -it, and permits the carrier to act
on it by proceeding with the shipment is presumed to have accepted it as correctly
stating the contract and to have assented to its terms.
• This rule applies with particular force where a shipper accepts a bill of lading with full
knowledge of its contents and acceptance under such circumstances makes it a
binding contract.
Jose Mendoza, the owner of Cita Theater in Naga, wanted to take advantage to generate
income by showing the movie Himala ng Birhen while vistors were in the town to celebrate the
fiesta. A PAL flight carried the can of films consigned to Cita Theater, however, through the
negligence of the PAL employees, the film was never brought down from the flight. Jose
Mendoza was not able to take advantage to earn extra by showing the movie during the
fiesta and filed for damages against PAL. Can of films was not unloaded off flight, returned
back to Manila and caused Mendoza NOT to take advantage of showing Himala ng Birhen
during the town fiesta
DOCTRINE:
Common carriers are not obligated by law to carry and to deliver merchandise, and persons
are not vested with the right to prompt delivery, unless such common carriers previously
assume the obligation.
Article 2 of the Code of Commerce provides that commercial transactions are to be
governed by the provisions of the Code of Commerce, but in the absence of applicable
provisions, they will be governed by the usages of commerce generally observed in each
place; and in default of both, by those of the Civil Law

On board bill of lading
one in which it is stated that the goods
have been received on board the vessel
which is to carry the goods
issued when the goods have been
actually placed aboard the ship with
every reasonable expectation that the
shipment is as good as on its way.
received for shipment bill of lading
a received for shipment bill of lading is one
in which it is stated that the goods have
been received for shipment with or
without specifying the vessel by which the
goods are to be shipped.
issued whenever conditions are not
normal and there is insufficiency of
shipping space.
When consignee becomes a party ot the contract?
The right of the shipper to countermand the shipment terminates when the consignee or
legitimate holder of the bill of lading appears with such bill of lading before the carrier and
makes himself a party to the contract. Prior to that time, the consignee is stranger to the
contract.
DELAY TO TRANSPORT PASSENGERS
• Carrier must commence its trip within reasonable time and maybe held liable if
unreasonably delayed.

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 12

TRANS-ASIA v. CA • Faithfully comply with the obligation to deliver the goods and to ferry the passenger
G.R. No. 118126 | March 4, 1996 to the point of destination
• Same condition received and delivered

SUMMARY: TransAsia allowed its M/V Asia Thailand vessel to leave for voyage from Cebu to Code of Commerce Provisions and Rationale
CDO despite having an engine problem with 1 engine only is functioning. They knowingly let
the vessel leave without completing the repair and continuously made the repairs while it is on Article 1755. A common carrier is bound to carry the passengers safely as far as human care
boarded resulting to the engine being conked out and stoppage of the vessel at the middle and foresight can provide, using the utmost diligence of very cautious persons, with a due
of the sea. Passengers got scared and the vessel was forced to go back to Cebu and regard for all the circumstances.
disembark the scared passengers. TransAsia’s vessel was not seaworthy and did not exercise
extraordinary diligence making it liable to moral and exemplary damage to respondent Meaning of Extraordinary Diligence
Arroyo, who is one of the passenger in this case. • To prove exercise of extraordinary diligence, the carrier must do more than merely
show the possibility that some other party could be responsible for the damages
ART. 1755. A common carrier is bound to carry the passengers safely as far as human care • Must prove that it used all reasonable means to ascertain the nature and
and foresight can provide, using the utmost diligence of very cautious persons, with a due characteristics of goods
regard for all the circumstances. • Take necessary precaution
Xxx
The failure of a common carrier to maintain in seaworthy condition its vessel involved in a
contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. Non-delegable duty
• Duty of seaworthiness, the duty of care of the cargo is non-delegable, and the
Damages carrier is accordingly responsible for the acts of the master, the crew, the stevedore
In contracts or quasi-contracts, the obligor is liable for all the damages which may be and his other agents.
reasonably attributed to the non-performance of the obligation if he is guilty of fraud, bad • Implied obligation to transfer it with sound machinery, competent hands, and in
faith, malice, or wanton attitude such a manner that no unnecessary injury shall be done thereto.
Xxx
Where the delay in a contracted voyage is incurred after the commencement of such
voyage, Article 698 of the Code of Commerce, not Article 1169 of the Civil Code, applies. WESTWIND SHIPPING CORPORATION v. UCPB GENERAL INSURANCE CO.
Xxx G.R. No. 200289 | November 25, 2013
Where the common carrier fails to observe extraordinary diligence resulting in delay or
interruption of the voyage, it shall be liable for any pecuniary loss or loss of profits which the SUMMARY:
passengers may suffer by reason thereof Kinsho-Mataichi Corporation shipped from Japan 197 metal containers/skids of tin-free steel
for delivery to the consignee, San Miguel Corporation through the vessel owned by Westwind
Definition When to recover and was insured by UCPB. During the unloading in Manila, 6 containers/skids sustained dents
Moral Damage moral suffering, mental anguish, recoverable in a damage suit and punctures from the forklift used by the stevedores. 2 Bad Order Cargo Receipt were
fright, serious anxiety, besmirched predicated upon a breach of issued. Subsequently, when it arrived in the warehouse, it was discovered upon discharge that
reputation, wounded feelings, contract of carriage where it is additional nine containers/skids were also damaged due to the forklift operations; thus,
moral shock, social humiliation, or proved that the carrier was guilty making the total number of 15 containers/skids in bad order. Almost a year after, SMC filed a
similar injury of fraud or bad faith even if claim against UCPB, Westwind, ATI, and OFII to recover the amount corresponding to the
death does not result. damaged 15 containers/skids. The RTC dismissed UCPB’s complaint and the counterclaims of
Exemplary imposed by way of example or In contracts and quasi-contracts, Westwind, ATI, and OFII. On appeal, the CA ruled in favor of UCPB, ordering Westwind and
damages correction for the public good, in exemplary damages may be OFII to pay UCPB. SC held that Westwind is responsible for the 6 and ATI for the 9.
addition to moral, temperate, awarded if the defendant acted
liquidated or compensatory in a wanton fraudulent, reckless, DOCTRINE:
damages oppressive or malevolent manner Cargoes, while being unloaded, generally remain under the custody of the carrier.
The extraordinary responsibility of the common carrier lasts until the time the goods are
represent the adequate In contracts or quasi-contracts, actually or constructively delivered by the carrier to the consignee or to the person who has a
compensation for pecuniary loss the obligor is liable for all the right to receive them. There is actual delivery in contracts for the transport of goods when
suffered and for profits the damages which may be possession has been turned over to the consignee or to his duly authorized agent and a
obligee failed to obtain reasonably attributed to the non- reasonable time is given him to remove the goods.
performance of the obligation if
he is guilty of fraud, bad faith, Arrastre
malice, or wanton attitude Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or
employees should observe the standards and measures necessary to prevent losses and
damage to shipments under its custody
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 13

In Fireman’s Fund Insurance Co. v. Metro Port Service, Inc.,
• The legal relationship between the consignee and the arrastre operator is akin to
that of a depositor and warehouseman.
• The relationship between the consignee and the common carrier is similar to that of
the consignee and the arrastre operator
• Both the ARRASTRE and the CARRIER are therefore charged with and obligated to
deliver the goods in good condition to the consignee
In a case decided by a U.S. Circuit Court, Nichimen Company v. M/V Farland,
It was ruled that like the duty of seaworthiness, the duty of care of the cargo is non-delegable,
and the carrier is accordingly responsible for the acts of the master, the crew, the stevedore,
and his other agents. It has also been held that it is ordinarily the duty of the master of a vessel
to unload the cargo and place it in readiness for delivery to the consignee, and there is an
implied obligation that this shall be accomplished with sound machinery, competent hands,
and in such manner that no unnecessary injury shall be done thereto. And the fact that a
consignee is required to furnish persons to assist in unloading a shipment may not relieve the
carrier of its duty as to such unloading.
Presumption of Negligence
• In case of loss of effects or cargo or passengers or death or injuries to passengers,
the common carrier is presumed to be at fault or have acted negligently unless he
had observed extraordinary diligence in the vigilance thereof.
No need to make express finding of fault or negligence, the law imposes liability upon
common carriers as long as it is shown that:
1. Existence of contract between the passenger or the shipper and the common
carrier
2. That loss, deterioration, injury or death took place upon existence of the contract.
AIR FRANCE v. GILLEGO
G.R. No.165266 | December 15, 2010
SUMMARY: Air France lost Gillego’s luggage and only returned it after 2 years
Sorsogon Congressman Bonifacio Gillego booked a flight with Air France from Manila to
attend a symposium to be held in Paris where he was invited to participate as a keynote
speaker. However, upon arrival in Paris, Air France could not locate his luggage and Gillego
was forced to buy new clothes and prepare a new speech. Gillego filed a case for damages
upon breach of contract against Air France with the RTC. Both the RTC and the CA decided
in his favor, holding Air France grossly negligent and guilty of bad faith, awarding Gillego with
moral and exemplary damages. The S.C. sustained the decisions of the lower courts finding
that Air France acted in bad faith. However, the S.C. modified the damages awarded.
DOCTRINE:
Article 1735 of the Civil Code provides that in case of lost or damaged goods, common
carriers are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required by Article 1733.
Thus, in an action based on a breach of contract of carriage, the aggrieved party does not
have to prove that the common carrier was at fault or was negligent. All that he has to prove
is the existence of the contract and the fact of its non-performance by the carrier
Effect of Acquittal
• Effect of acquittal of employee of the common carrier in the criminal case is
immaterial to the case for breach of contract
• The ruling on the culpability of the offender will have no bearing on said
independent civil action based on an entirely different cause of action i.e. culpa
contractual
Duration of Duty in Carriage of Goods
• Due diligence must be exercised the moment the goods are delivered to the carrier
and up to delivery
• Temporary unloading or storage
• Stoppage in transit
o Extraordinary diligence need NOT to be exercised over the goods that are
unloaded temporarily if the shipper or owner has made use of the right of
stoppage in transit.
o Right of unpaid seller to resume the goods at any time while the goods is
in transit. Rights available if:
§ Buyer becomes insolvent
§ Unpaid seller has parted with the possession of the goods
§ The goods are still in transit
• Delivery to Customs Authorities – goods are still with the Government and the owner
cannot exercise dominion over them
o XPT: parties may agree to limit the liability of the carrier considering that
the goods have still to go through the inspection of the customs
authorities.
Art. 1736. The extraordinary responsibility of the common carrier lasts from the time 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 the carrier to the consignee, or to
the person who has a right to receive them, without prejudice to the provisions of Article 1738.
Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored in transit,
unless the shipper or owner has made use of the right of stoppage in transitu.
Art. 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at 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 dispose of them.
LU DO & LU YM CORP. v. I. V. BINAMIRA
G.R. No. l-9840 | April 22, 1958
SUMMARY: Customs. Deltra shipped 6 cases of films/photographic supplies to Binamira. It was
damaged when it was delivered to the customs authority. Court held that although the
responsibility of the carrier to exercise extraordinary diligence occurs extends when it is still
Government or customs authority, parties could stipulate in the Bill of Lading, such as in this
case, the limitation of duty of the common carrier such as what happened in this case. In this
case, common carrier was not liable for the pilferage of the goods.
DOCTRINE:
A customs broker has been regarded as a common carrier because transportation of goods is
an integral part of its business.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 14

GR: Presumption of negligence of the carrier attach until the goods are delivered actually or
constructively, to the consignee, or to the person who has a right to receive them and we
believe delivery to the customs authorities is NOT the delivery contemplated
XPT: the parties may agree to limit the liability of the carrier considering that the goods have
still to through the inspection of the customs authorities before they are actually turned over to
the consignee.
Commencement of Duty in Carriage of Passengers
• Commences the moment the person who purchases the ticket from the carrier
presents himself at the proper place and in a proper manner to be transported with
a bona fide intent to ride the coach.
• Provide safety to its passengers so obligates it not only during the course of the trip
but so long as the passengers are within its premises and where they ought to be in
pursuance to the contract of carriage.
• Awaiting at the area as long as there is intention to ride
• Land Transportation – all persons who remain on the premises within a reasonable
time after leaving the conveyance are to be deemed passengers and what is a
reasonable time or a reasonable delay within the rule is to be determined from all
the circumstances, and includes reasonable time to see after his baggage and
prepare for his departure.
How Duty is complied With
• The source of a common carrier ‘s legal liability is the contract of carriage, and by
entering into the said contract, it binds itself to carry the passengers safely as far as
human and foresignt can provide.
Duty of Third Persons
• Duty to exercise extraordinary diligence is primarily owed to the passenger and the
goods being transported.
• HOWEVER, this duty extends to the members of the crew or complement operating
the carrier
KAPALARAN BUS LINE v. CORONADO
G.R. No. 85331 | August 25, 1989
SUMMARY: Head-on collision. A KBL bus and a jeepney collided in an intersection in Laguna.
The evidence presented showed that the jeepney had already traversed the intersection
when it met the bus head-on. The bus company filed a complaint for damage to property
and physical injuries through reckless imprudence against the owner and the driver of the
jeep plus a third party complaint against Shinyo, a mere passenger of the jeep.
DOCTRINE:
Extraordinary diligence not owed only to passengers or shippers but also to third persons as
well.
• The carrier fails to exercise extraordinary diligence if it will not comply with basic
traffic rules.
• For if common carriers carefully observed the statutory standard of extraordinary
diligence in respect of their own passengers, they cannot help but simultaneously
benefit pedestrians and the owners and passengers of other vehicles who are
equally entitled to the safe and convenient use of our roads and highways.
• While the immediate beneficiaries of the standard of extraordinary diligence are, of
course, the passengers and owners of cargo carried by a common carrier, they are
not only persons that the law seeks to benefit.
Effect of Stipulation on Extraordinary Diligence
Goods – parties cannot stipulate that the carrier will not exercise any diligence in the custody
of goods but law allows to exercise a lower diligence
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the
liability of the former for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence shall be valid, provided it be:
1. In writing, signed by the shipper or owner;
2. Supported by a valuable consideration other than the service rendered by the
common carrier; and
3. Reasonable, just and not contrary to public policy.
Passenger – NO stipulation lessening the utmost diligence owed to passengers
Gratuitous Passenger – Still extraordinary diligence.
Art. 1758. When a passenger is carried gratuitously, a stipulation 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 carrier's liability.
EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
• Requires extraordinary diligence owed its conception to the nature of the business
of carriers
Seaworthiness
• Ship that will transport must be seaworthy
• A passenger or shipper of goods is under no obligation to conduct an inspection of
the ship and its crew. The carrier is obliged by law to timpliedly warrant its
seaworthiness
• Burden of Proof: Passenger or shipper is not required to prove inceptively in a case
that he filed that the ship was not seaworthy.
Meaning of Seaworthiness
• That strength, durability and engineering skill made a part of a ship’s construction
and continued maintenance with a competent and sufficient crew, which would
withstand the dangers of the elements which might be reasonably be expected or
encountered during her voyage without loss or damage to her particular cargo.
COGSA, Section 3.
1. The carrier shall be bound, before and at the beginning of the voyage, to exercise
due diligence to —
a. Make the ship seaworthy;
b. Properly man, equip, and supply the ship;
c. Make the holds, refrigerating and cooling chambers, and all other parts of
the ship in which goods are carried, fit and safe for their reception
carriage and preservation.
2. The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 15
 discharge the goods carried.
Cargoworthiness
• Even if the vessel was properly maintained and is free from defect, the carrier must
not accept goods that it cannot properly be transported in the ship.
• The ship must be fit to carry the contemplated cargo as a carrying receptacle
Proper Manning
• Must be properly equipped for voyage and manned with a sufficient number of
competent officers and crew
• Captain, masters or patrons of vessels must be competent
CALTEX (PHILIPPINES) INC. v. SUPLICO LINES
G.R. No. 131166 | September 30, 1999
SUMMARY: MT Vector carrying Caltex Petroleum Products collided with the passenger ship MT
Dona Paz at open sea, killing almost all the passengers and crew members of both ships. The
collision resulted in one of the country's worst maritime disasters. Suplico lines, the owner and
operator of the MT Dona Paz filed a 3rd Party Complaint against Caltex with the RTC, arguing
that it had the responsibility to ensure that the MT Vector was seaworthy. While the RTC
dismissed the complaint, the CA modified it holding Caltex guilty. The S.C. reversed the CA
decision and ruled that it was not the duty of Caltex to ensure the seaworthiness of MT Vector,
therefore finding that Caltex should not be liable for damages.
DOCTRINE:
A passenger or a shipper of goods is under no obligation to conduct an inspection of the ship
and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness.
The public must of necessity rely on the care and skill of common carriers in the vigilance over
the goods and safety of the passengers, especially because with the modern development of
science and invention, transportation has become more rapid, more complicated and
somehow more hazardous
The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to –
a. Make the ship seaworthy
b. Properly man, equip, and supply the ship;
Carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a sufficient
number of competent officers and crew.
Considering the nature of transportation business, passengers and shippers alike customarily
presume that common carriers possess all the legal requisites in its operation
DAMAGES
Articles 20 and 2176 of the Civil Code, which provide:
“Article 20. - Every person who contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
“Article 2176. - Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is called a quasi-delict and is governed
by the provisions of this Chapter.”
And what is negligence?
The Civil Code provides:
“Article 1173. The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of
the persons, of the time and of the place. When negligence shows bad faith, the provisions of
Article 1171 and 2201 paragraph 2, shall apply.
Adequate Equipment
• Maritime Industry Authority prescribes rules that provide for indispensable equipment
and facilities
• Adequate exit doors, lifeboats, life vessels and other similar items.
Overloading
• Duty to take passengers or cargoes that are within the carrying capacity of the
vessel
NEGROS NAVIGATION v CA
G.R. No. 110398 | November 7, 1197
RECIT READY DIGEST: Mahjong, collision – vessel sank . Negros’ M/V Don Juan was negligent in
allowing to board 1,004 passenger which is 140 more than its max capacity. Moreover, the
captain was playing mahjong and did not exercise extraordinary diligence thus the collision
between M/V Don Juana and M/T Tacloban resulting to death of passengers and the family
of Miranda in this case.
DOCTRINE:
The common carrier and its officers should exercise extraordinary diligence in transporting its
passengers and making the vessel seaworthy
Proper Storage
• Vessel itself may be suitable for the cargo but this is not enough because the cargo
must also be properly stored.
• Deck Cargo: presumption of unseaworthiness
PHILIPPINE HOME ASSURANCE CORP. v. COURT OF APPEALS
G.R. No. L-8095 | March 31, 1915
SUMMARY: Put inside the This ship is on fayah! PHAC nasusunog! The cargoes are insured by
PHAC. While the ship was off Okinawa Japan, a small flame was detected on the acetylene
cylinder located in the accommodation area near the engine room.
DOCTRINE:
The vessel itself may be suitable for the cargo but this is not enough because the cargo must
also be properly stored.
• Cargo must generally not be placed on deck. The carrying of deck cargo raises the
presumption of unseaworthiness unless it can be shown that the deck cargo will not
interfere with the proper management of the ship.
FIRE
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 16
In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost
always arises from some act of man or by human means. It cannot be an act of God unless
caused by lightning or a natural disaster or casualty not attributable to human agency.
Salvage Law:
"Section 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of
the crew, or shall have been abandoned by them, and picked up and conveyed to a safe
place by other persons, the latter shall be entitled to a reward for the salvage.
Those who, not being included in the above paragraph, assist in saving a vessel or its cargo
from shipwreck, shall be entitled to like reward."
That the 3 elements for a valid salvage claim are present, namely
a) a marine peril;
b) service voluntarily rendered
c) success in whole or in part
Section 13 of the Salvage Law, "The expenses of salvage, as well as the reward for salvage or
assistance, shall be a charge on the things salvaged or their value."
Manila Railroad Co. v. Macondray Co., 37 Phil. 583, it was also held that "when a ship and its
cargo are saved together, the salvage allowance should be charged against the ship and
cargo in the proportion of their respective values, the same as in a case of general average . .
." Thus, the "compensation to be paid by the owner of the cargo is in proportion to the value
of the vessel and the value of the cargo saved."
As provided by the Civil Code:
"Article 1174. Except in cases expressly specified by law, or when it is otherwise declared by
stipulation, or when the nature of the obligation require the assumption or risk, no person shall
be responsible for those events which could not be foreseen, or which though foreseen, were
inevitable."
"Article 1266. The debtor in obligations to do shall also be released when the prestation
becomes legally or physically impossible without the fault of the obligor."
"Article 844. A captain who may have taken on board the goods saved from the wreck shall
continue his course to the port of destination; and on arrival should deposit the same, with
judicial intervention at the disposal of their legitimate owners. x x x
The owners of the cargo shall defray all the expenses of this arrival as well as the payment of
the freight which, after taking into consideration the circumstances of the case, may be fixed
by agreement or by a judicial decision."
BELGIAN OVERSEAS CHARTERING AND SHIPPING v. PHILIPPINE FIRST INSURANCE
G.R. No. 143133 | June 5, 2002
SUMMARY: Deterioration of 4 coils. Four Metal Coils were transported by Belgians at bar from
Germany to Manila. However, upon survey, the 4 coils were deemed to be damaged and
unfit to serve its purpose. Belgians refused to pay damages representing the value of the 4
coils arguing that the damage was considered pre-shipment damage. However, the S.C. held
them to be liable since it accepted the goods for shipment notwithstanding its packaging and
defect.
DOCTRINE:
PACKAGING LIMITATION
Even if the fact of improper packing was known to the carrier or its crew or was apparent
upon ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once
it accepts the goods notwithstanding such condition.
However, there is an exception under Article 1734(4) of the Civil Code that they would not be
liable in cases when goods are lost or damaged while in transit as a result of the natural decay
of perishable goods or the fermentation or evaporation of substances liable therefor, the
necessary and natural wear of goods in transport, defects in packages in which they are
shipped, or the natural propensities of animals.
The presumption of fault or negligence will not arise if the loss is due to any of the following
causes:
1. flood, storm, earthquake, lightning, or other natural disaster or calamity
2. an act of the public enemy in war, whether international or civil;
3. an act or omission of the shipper or owner of the goods;
4. the character of the goods or defects in the packing or the container;
5. an order or act of competent public authority.[22] This is a closed list
Bill of lading serves two functions
1. it is a receipt for the goods shipped
2. it is a contract by which three parties -- namely, the shipper, the carrier, and the
consignee -- undertake specific responsibilities and assume stipulated obligations.[
In a nutshell, the acceptance of the bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption that it constituted a perfected and
binding contract
Further, a stipulation in the bill of lading limiting to a certain sum the common carrier’s liability
for loss or destruction of a cargo -- unless the shipper or owner declares a greater value -- is
sanctioned by law
There are, however, two conditions to be satisfied:
1. the contract is reasonable and just under the circumstances,
2. it has been fairly and freely agreed upon by the parties
NEGLIGENCE OF CAPTAIN AND CREW
Negligence of the captain or crew can be traced to the fact that they are really
incompetent. LLR cannot be applied.
Limited Liability Rule
Covers only situation involving the negligence of the captain or crew. Liability of the
shipowner may be limited to the value of the vessel
Rules on Passenger Safety
• Includes failure to comply with the regulations issued by MARINA
Duty to Take Proper Route
• Follow usual reasonable commercial or customary route.
• If there’s no evidence of usual route, the route is presumed to be the direct
geographical route. However it can be modified.
• Improper Deviation: Negligence – taking of short-cut route instead of usual route
that exposed the voyage to unexpected hazard
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 17
Transshipment
• The act of taking cargo out of one ship and loading it in another
• Transfer of goods from the vessel stipulated in the contract of affreightment to
another vessel before the place of destination named in the contract has been
reached.
Duty to Inspect in Carriage by Sea
• Duty of the carrier to make inquiry as to the general nature of the articles shipped
and of their values before it consents to carry them.
• Failure to do so cannot defeat the shipper’s right to recover of the full value if the
package is lost, in the absence of showing of fraud or deceit on the part of the
shipper.
Insurance
• Imposed by Domestic Shipping Development Act of 2004 - requiring compulsory
coverage for passengers and cargoes
• Marina Rules
EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
Roadworthiness
• Common carries that offer transportation by land are similarly required to make sure
that the vehicles that they are using are in good order and condition
• Carrier not excused in case of tire blowout – no considered as fortuitous event but
due to mechanical defects
Traffic Rules
• Proof of violation of traffic rules confirms that the carrier failed to exercise
extraordinary diligence.
• Usually made liable and not overcome presumption of negligence because
extraordinary diligence on the part of the common carrier requires compliance with
traffic rules and regulations
Diligence in the Selection and Supervision
• Quasi-delict cases (Article 2176 in relation to Article 2180) – employer can invoke
the defense of due diligence in the selection and supervision in order to escape
liability
• Culpa Contractual - not available
Art. 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful acts of the former's employees, although such employees may have
acted beyond 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.
Duty to Inspect
• Duty of the carrier to inspect each and every package or baggage that is being
brought inside the bus or jeepney. The duty of a carrier to conduct an inspection
depends on circumstances
NOCUM v. LAGUNA TAYABAS BUS COMPANY
G.R. No. L-23733 | October 31, 1969
SUMMARY:. firecracker explosion hid in a 12kg box. A passenger was injured as a
consequence of the explosion of firecrackers, contained in a box, loaded in the passenger
bus and declared to its conductor as containing clothes and miscellaneous items by a co-
passenger. CC was not held liable since there’s absence of evidence that the conductors
have knowledge that there are explosives inside.
DOCTRINE:
Explosive or Dangerous Contents
• A carrier is ordinarily not liable for injuries to passengers from fires or explosions
caused by articles brought into its conveyances by other passengers, in the
absence of any evidence that the carrier, through its employees, was aware of the
nature of the article or had any reason to anticipate danger therefrom.
ART. 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the circumstances of each
case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles
1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and 1756.
ART. 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances.
ART 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.
Insurance
Insurance Code quires all motor vehicles to be covered by compulsory motor vehicle liability
insurance that compensates passengers who died or who suffered bodily injuries as a result of
the cooperation of the motor vehicle.
Carriage by Train
The carrier must keep the train coaches, the platform and other facilities and equipment in
good order and safe condition.
Competent Employees
Must hire competent engineers and employees. They should also be properly trained in the
operation
The Platform must be Safe
CANGCO v. MANILA RAILROAD COMPANY
G.R. No. L-12191 | October 14, 1918
SUMMARY: CANGCO tripped over watermelons, eventually causing his arm to be amputated.
CANGCO one night alighted from the train onto the platform but stepped on some
watermelons placed there which caused him to trip. He rolled across the platform and was
eventually run over by a moving car. His arm was crushed and was amputated higher up rear
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 18
shoulder. He now sues MANILA RAILROAD for its negligence in allowing its employees to leave 1. an indemnity for the death of the victim;
the watermelons there thus causing his accident. MANILA RAILROAD claims that CANGCO 2. an indemnity for loss of earning capacity of the deceased;
was also negligent in alighting from the train and thus should not be allowed to claim based 3. moral damages;
on the doctrine of contributory negligence. Manila Railroad uses as a defense the exercise of 4. exemplary damages;
due diligence in the supervision of its employees. 5. attorney's fees and expenses of litigation,
6. interest in proper cases.
DOCTRINE: The diligence in the supervision of Manila Railroad over its employees is NOT a
defense in a breach of contract. This is different from torts. An employer can exempt itself from
liability if it is able to prove that it exercise the diligence required in the supervision of its Negligence in the Operation of the Train
employees. Railroad Company may be held liable of the accident occurred because the train was
running at an excessive speed.
The test by which to determine whether the passenger has been guilty of negligence in
attempting to alight from a moving railway train is that of ordinary or reasonable care. Passengers who fell from the train
It is to be considered whether an ordinarily prudent person, of the age, sex and condition of
the passenger, would have acted as the passenger acted under the circumstances disclosed Passengers and properties ran over by the train
by the evidence. This care has been defined to be, not the care which may or should be used The duty must also be observed by person walking on the tracks that they must exercise due
by the prudent man generally, but the care which a man of ordinary prudence would use care in avoiding his own death or injury because they have the right to assume that a prudent
under similar circumstances, to avoid injury." man can anticipate the possibilities of danger

In quasi-contracts in concerning contract of carriage, the carrier is principally liable whether Damage to Properties and Persons near Railroad Tracks
or not their employee acted beyond their jurisdiction. Railroad company must exercise due care in preventing damage to the properties hear the
The SC ruled that it cannot be doubted that the employees of the railroad company were tracks.
guilty of negligence in piling these sacks on the platform in the manner above stated; that
their presence caused the plaintiff to fall as he alighted from the train; and that they therefore
constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily RAILROAD CROSSING CASES
follows that the defendant company is liable for the damage thereby occasioned unless the Due diligence on the part of the train operator includes due diligence in traversing railroad
plaintiff’s bars recovery own contributory negligence. crossing and in maintaining the same

Absence of Safety Devices and Signs

Maintenance of Train and Tracks Train Operator liable if it did not ensure the safety of others through placing of crossbars, signal
lights, warning signs and other permanent safety barriers to prevent vehicles or pedestrians
Embarking and Disembarking Passengers from crossing there.
• Exercise of Extraordinary diligence is required in the transportation of passengers
while in the train and also in giving intended passengers reasonable opportunity to
enter or disembark from it. PHIL. NATIONAL RAILWAYS v. IAC
G.R. No. 70547 | January 22, 1993

CLEMENTE BRIÑAS v. PEOPLE
G.R. No. L-30309 | November 25, 1983
SUMMARY: Passengers died alighting from the train because Briñas, the conductor
announced the stop earlier than he should have, and led to the passengers falling to the
tracks when the train suddenly accelerated.
DOCTRINE:
“It is a matter of common knowledge and experience about common carriers like trains and
buses that before reaching a station or flag stop they slow down and the conductor
announces the name of the place. It is also a matter of common experience that as the train
or bus slackens its speed, some passengers usually stand and proceed to the nearest exit,
ready to disembark as the train or bus comes to a full stop. This is especially true of a train
because passengers feel that if the train resumes its run before they are able to disembark,
there is no way to stop it as a bus may be stopped. It was negligence on the conductor's part
to announce the next flag stop when said stop was still a full three minutes ahead.”
When death occurs as a result of the commission of a crime, the following items of damages
may be recovered:
SUMMARY: There was a collision between the Baliuag Bus and PNR train since there was no
any safety signs or warning device in the railroad. PNR and its driver engineer is liable for
negligence for not effecting safety signs, choosing its driver (who only learned from
experience and not from training) and not exercising extraordinary diligence in operating the
train and running it for more than the normal speed
DOCTRINE: When it is apparent, or when in the exercise of reasonable diligence
commensurate with the surroundings it should be apparent, to the company that a person on
its track or to get on its track is unaware of his danger or cannot get out of the way, it
becomes the duty of the company to use such precautions, by warnings, applying brakes, or
otherwise, as may be reasonably necessary to avoid injury to him
Requirements of a Railroad
A railroad is not required to have a gate (crossing bar) or a flagman, or to maintain signals at
every intersection; only at such places reasonably necessary; what is considered reasonably
necessary will depend on the amount of travel upon the road, the frequency with which trains
pass over it and the view which could be obtained of trains as they approach the crossing,
and other conditions
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 19
Lilius vs. MRR - A railroad company has been adjudged guilty of negligence and civilly liable
for damages when it failed to install semaphores, or where it does not see to it that its flagman
or switchman comply with their duties faithfully, to motorist injured by a crossing train as long
as he had crossed without negligence on his part
Speeding
Obligations of Third Persons Approaching Crossing
GR: the rights and obligations between the public and railroad company at a public crossing
are mutual and reciprocal. They are in natural obligation to avoid injury. Thye must exercise
necessary precaution.
No imputed contributory negligence
No imputed negligence to the passengers as regards to the negligence of the driver of a car
and negligence of engineer of the train.
JUNIO v. MANILA RAILROAD COMPANY
G.R. No. 37044 | March 29, 1933
SUMMARY: Collision in the outskirts of a railroad with a LOCOMOTIVE of Manila Railroad. Soloria
and Junio were in a hired car when it collided with a train by defendant company along their
railroad crossing. TC absolved defendant citing contributory negligence on the part of the
driver. SC said they couldn’t be liable for the negligence of the driver since it was they who
brought the suit for damages and not the driver. They were in no way negligent and
responsible for what happened.
DOCTRINE:
The negligence of a driver, who, in turn, is guilty of contributory negligence, cannot be
imputed to a passenger who has no control over him in the management of the vehicle and
with whom he sustains no relation of master and servant
• From the simple fact of hiring the carriage or riding in it no such liability can arise.
The party hiring or riding must in some way have cooperated in producing the injury
complained of before he incurs any liability for it.
It has been said that the gates constitute an invitation to the public to pass without fear of
danger, and failure to operate them conveniently constitutes negligence on the part of the
company
• From the evidence, it is obvious that the defendant as well as the driver of the car in
which the plaintiffs were passengers were negligent, the former because, by
installing the gates at the place or crossing where the accident occurred, it had
voluntarily imposed upon itself the obligation to operate them even at night and to
close them every time a train passed in order to avoid causing injury to the public.
PASSENGER’S BAGGAGE
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which
is not in his personal custody or in that of his employee. As to other baggage, the rules in
Articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be
applicable.
Baggage Defined
• Whatever articles a passenger usually takes with him for his own personal use,
comfort and convenience according to the habits or wants of the particular class to
which he belongs, either with reference to his immediate necessities or to the
ultimate purpose of journey,
• LTFRB Rules – free 10kg
Checked-in Baggage
• Same as above. Delivered to the carrier
Hand Carried Luggage
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded
as necessary. The keepers of hotels or inns shall be 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, 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. (1783)
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 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 fact that travellers are constrained to rely on the vigilance of the keeper of the
hotels or inns shall be considered in determining the degree of care required of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force
majeure, unless it is done with the use of arms or through an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the
guest, his family, servants or visitors, or if the loss arises from the character of the things brought
into the hotel. (n)
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 between the
hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998
to 2001 is suppressed or diminished shall be void.
The passengers are duty bound to:
1. Give notice to the Common Carrier or its employees of the effects
2. Take precautions which the common carrier or their substitutes advised relative to
the care and vigilance of their effects
CHAPTER III – OBLIGATIONS OF THE PASSENGER AND SHIPPER
DUTY TO EXERCISE DUE DILIGENCE
Shipper or the carrier is bound to pay the consideration in the form of freight or fare
Negligence of the Shipper or Passenger
• Obligation to exercise due diligence not limited to the carrier.
• The shipper is obliged to exercise due diligence in avoiding damage to the goods
that are being shipped or injury to his person
• Carrier cannot impute negligence to its own employee
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 20
DUTY TO DISCLOSE
• Shipper must give proper information if there is a need to store cargoes in separate DUTIES OF PASSENGER
place • Pay the proper fare for the transportation of the said passengers
• Must also make proper markings • Maybe maid in advance, in the course of transportation or before disembarking
depending on the circumstances
Damage Caused by Cargoes • Present himself in proper time
Duty to disclose nature of cargo is important in order that the carrier can exercise due • Not to bring luggage that is in excess of the weight and size prescribed by
diligence in preventing damage to cargoes to be transported. regulations

PAYMENT OF FREIGHT Travel Document

Common carrier’s subject of freight is regulated by the government under its police power. Obligation of passenger to secure the appropriate travel documents.

Time to Pay the Freight Air Transportation of Passengers

• The shipper may pay for the necessary freight before or at the time he delivers the
goods to the carrier for shipment
• Parties may also stipulate that the consignee will pay the freight at the point of
destination
• Consignee bound the moment he accepts the goods
• Passengers – bound to pay care within such time as prescribed by the regulations or
by the carrier. Some before some on board,
Carrier’s Lien
Article 375. The goods transported shall be especially bound to answer for the cost of
transportation and for the expenses and fees incurred for them during their conveyance and
until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and once
prescribed, the carrier shall have no other action than that corresponding to him as an
ordinary creditor.
1. No person on board may interfere with a crew member in the performance of his or
her duties
2. Each passenger shall fasten his or her seat belt and keep it fastened while the seat
belt sign is lighted
3. No person on board an aircraft shall recklessly or negligently act or omit to act in
such a manner as to endanger the aircraft or persons and property herein
4. No person may secrete himself or herself nor secrete cargo on board an aircraft
5. No person may smoke whole the no-smoking sign is lighted
6. No person may smoke in any airplane lavatory
7. No person may tamper with, disable or destroy any smoke detector installed in any
airplane lavatory.
CHAPTER IV – DEFENSES OF THE COMMON CARRIER

• Article 2241(9) of NCC – modified 8 days to 30 days thereafter KINDS OF DEFENSES

May not bar but only mitigate and/or limit its liability.
Examples:
TIME LOADING AND UNLOADING • Contributory Negligence
• Shipper must make sure that the goods are delivered to the carrier on the date, • Avoidable Consequence Rule
time and place agreed upon • Stipulated Limitation
• Shipper cannot insist on tendering goods that are in excess of the number, weight
and quantity of stipulated in the contract. PROXIMATE CAUSATION
• Common Carrier presumed negligent the moment he fails to deliver the goods to its
Demurrage destination or the moment the passenger did not reach its destination while riding
• Compensation provided for in the contract of affreightment for the detention of the the carrier.
vessel beyond the time agreed on for loading and unloading • Doctrine of Proximate Cause - not applicable to contract of carriage
• “lay days” - parties may stipulate the period within which to load and unload the
cargoes Absence of Causation as a Defense
• must be expressly stipulated in the contract Absence of causal connection is only a matter of defense. The passenger or the shipper has
no burden of proving that his injury was caused by the negligent or intentional act or omission
of the carrier or his agents.
PERMITS
Required in certain goods.
DEFENSES IN THE CARRIAGE OF GOODS
SHIPPER’S LOAD AND COUNT Article 1733 provides that common carriers are exempt from liability for loss, destruction, or
• Maybe stipulated in the Bill of Lading that the shipper has the sole responsibility for deterioration of the goods due to any of the following causes:
the quantity, description and condition of the cargoes shipped in container vans. 1. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
• Carrier cannot be held responsible for any discrepancy 2. Act of the public enemy in war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 21

 4. The character of the goods or defects in the packing or in the containers; and Not considered as a force majeure generally applies to a natural accident, such as caused
5. Order or act of competent public authority. by a lightining, an earthquake, a tempest or a public enemy.
6. Exercise of extraordinary diligence
Storm
Presence of strong wind does not justify that there is a storm. But there may be cases when
Exclusivity of Defenses strong winds may be unforeseeable. Storm according to PAGASA have wind force of 48 to 55
No other defense may be raised by the common carrier in the carriage of goods knots or 55 to 63 miles.

Defenses in Carriage of Passengers Hijacking

Same except no. 4 Does not fall under the 4 categories of exempting circumstance.
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity; However if it is with grave irresistible threat, violence or force, common carrier is not liable. (De
2. Act of the public enemy in war, whether international or civil; Guzman v. CA)
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the containers; Mechanical Defects
5. Order or act of competent public authority.
6. Exercise of extraordinary diligence SON v. CEBU AUTOBUS
G.R. No. L-6155 | April 30, 1954

FORTUITOUS EVENT SUMMARY: Hogs died. Son rode in Cebu’s TPU truck on its return trip to Cebu City. The CC fell
into the canal because the drag-link spring of the truck in question was defective and it did
Requisites of a Fortuitous Event not inspect the bus prior to its return trip. Court held that CC is liable as defect in automobile is
Fortuitous Event must be the Proximate Cause to constitute a defense not a “caso fortuito” which would avoid carrier’s liability for damages.
1. The cause of the unforeseen and unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be independent of the human will. DOCTRINE: Defect in automobile is NOT a “caso fortuito” which would avoid carrier’s liability
2. It must be impossible to foresee the event that constitutes the caso fortuito or if for damages
foreseen, it must be impossible to avoid
3. The occurrence must be such as to render it impossible to fulfill his obligation in a
normal manner Tire Blowouts – not fortuitous event
4. The obligor (debtor) must be free from any participation in or the aggravation of the
injury resulting to the creditor. Other Invalid Defenses
1. Explosion
2. Worms and Rats
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY vs. PKS SHIPPING COMPANY 3. Water Damage
G.R. No. 149038 | April 9, 2003 4. Barratry
o It is an act committed by the master or crew of the ship for some unlawful
SUMMARY: 75,000 bags of cement carried on PKS Shipping’s Dumb Barge sank off the coast of or fraudulent purpose, contrary to their duty to the owner
Dumagasa Point due to strong waves and winds – Typhoon Apiang o Intentional fraud or breach of trust is necessary
o Ship-owner cannot escape liability to third persons if the cause of
DOCTRINE: damage is barratry.
“In case of loss, destruction or deterioration of goods, common carriers are presumed to have
been at fault or to have acted negligently, and the burden of proving otherwise rests on
them. PUBLIC ENEMY
• Defense available to the carrier not only under NCC but also COGSA
The provisions of Article 1733, notwithstanding, common carriers are exempt from liability for • Piracy
loss, destruction, or deterioration of the goods due to any of the following causes:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; NATURE OF GOODS AND IMPROPER PACKING
(2) Act of the public enemy in war, whether international or civil; COGSA provides that the common carrier may not be liable for:
(3) Act or omission of the shipper or owner of the goods; 1. Wastage in bulk or weight or any other loss or damage arising from inherent defect,
(4) The character of the goods or defects in the packing or in the containers; and quality or vice of goods
(5) Order or act of competent public authority 2. Insufficiency of packing
3. Insufficiency or inadequacy of the marks
4. Latent defects not discoverable by due diligence
Effect of Carrier’s Participation
Carrier must be free from any participation in causing the damage or injury

Fire
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 22

ASIAN TERMINALS, INC. v. SIMON ENTERPRISES, INC.
G.R. No. 177116 | February 27, 2013
SUMMARY: Soy-bean compound evaporates. Simon entered into a contract with
Contquincybubnge as its consignee of Soybean Meal. 2 shipments were made. Both had
shortages. Thus, Simon filed an action for damages against the unknown owner of the vessels.
The unknown owner of the vessels allege that the damage or loss was due to the inherent vice
or defect of the goods or the insufficiency of the packing thereof plus the bill of lading did not
even specify the quantiy or quality of the goods
DOCTRINE:
The weight of the shipment as indicated in the bill of lading is not conclusive as to the actual
weight of the goods. Consequently, what must be proven is the actual weight of the subject
shipment at the time it was loaded at the port of origin so that a conclusion may be made as
to whether there was indeed a shortage for which one must be liable.
“Said to weigh” clause - the shipper is solely responsible for the loading while the carrier is
oblivious of the contents of the shipment.
International Container Terminal Services, Inc. v. Prudential Guarantee & Assurance Co.,
Inc.,explains the meaning of clauses analogous to “Shipper’s weight, quantity and quality
unknown” in this manner:
This means that the shipper was solely responsible for the loading of the container, while the
carrier was oblivious to the contents of the shipment x x x. The arrastre operator was, like any
ordinary depositary, duty-bound to take good care of the goods received from the vessel
and to turn the same over to the party entitled to their possession, subject to such
qualifications as may have validly been imposed in the contract between the parties. The
arrastre operator was not required to verify the contents of the container received and to
compare them with those declared by the shipper because, as earlier stated, the cargo was
at the shipper’s load and count x x x.
The presumption that the bill of lading, which petitioner relies upon to support its claim for
restitution, constitutes prima facie evidence of the goods therein described was correctly
deemed by the appellate court to have been rebutted in light of abundant evidence casting
doubts on its veracity
The bill of lading carried an added clause – the shipment’s weight, measure, quantity, quality,
condition, contents and value unknown. Evidently, the weight of the cargo could not be
gauged from the bill of lading.
ORDER OF PUBLIC AUTHORITY
1. Public Authority has no authority to issue the subject order
2. If the public authority exceeded his authority.
DEFENSESS IN CARRIAGE OF PASSENGERS
Carrier liable in case of injury of passengers or of strangers
ACTS OF EMPLOYEES
Passenger has no duty to inquire
Riding public is not expected to inquire from time to time before they board the carrier
whether or not the driver o r any of the employees is authorized to drive the vehicle or that
said driver is acting within the scope of his authority and observing the existing rules and
regulations required of him by management.
MARCHAN and PHILIPPINE RABBIT BUS v. MENDOZA
G.R. No. L-2447 | August 30, 1968
SUMMARY: Bus fell into a ditch. The passenger bus of Philippine Rabbit Bus Lines was driving in
high speed, driven by Silverio Marchan, fell into a ditch while traversing on the highway from
Bulacan to Manila. This led to the passengers suffering multiple injuries, and Arsenio Mendoza
being paralyzed downa and not be able to walk anymore.
DOCTRINE:
“The riding public is not expected to inquire from time to time before they board the
passenger bus whether or not the driver who is at the steering wheel of said bus was
authorized to drive said vehicle or that said driver is acting within the scope of his authority
and observing the existing rules and regulations required of him by the management.
Scope of liability:
Art. 1759 - common carriers cannot escape liability "for the death of or injuries to passengers
through the negligence and willful acts of the former's employees, although such employees
may have acted beyond the scope of their authority or in violation of the orders . . ."
Theft by Employees
Article 618 of Code of Commerce:
The captain shall be civilly liable to the 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 committed by the crew, reserving his right of action against the
guilty parties.
Article 587 of the Code of Commerce in force provides:
The agent shall be civilly liable for the indemnities in favor of third persons which arise from the
conduct of the captain in the care of the goods which the vessel carried; but he may exempt
himself therefrom by abandoning the vessel with all her equipments and the freight he may
have earned during the trip.
YU CON v. APIL
G.R. No. L-10195 | December 29, 1916
SUMMARY: Theft by Employees. Yu Con chatered Lauron’s banca to transport his
merchandise and P450. The Php450, which was kept inside Yu Con’s trunk in the stateroom of
banca was lost. It was alleged that it was robbed but no one can tell how or who stole it since
the master of the ship, supercargo, cabin crews were all asleep and did not exrcise necessary
precaution to guard it.
DOCTRINE:
Liability of Shipowner
The owner of a minor craft who has equipped and victualed it for the purpose of using it in the
transportation of merchandise from one port to another of these Islands is under the law a
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 23
shipowner, and the master of the craft is to be considered as its captain in the legal
acceptation of this word, and the former must 'be held civilly liable for indemnities in favor of
third parties to which the conduct of the latter of them may give rise in the custody of the
effects laden on the craft, and for all losses which, through his fault or negligence, may occur
to the merchandise or effects delivered to him for their transportation, as well as for the
damages suffered by those who contracted with him, in consequence of misdemeanors and
crimes committed by him or by the members of the crew of the craft.
Vessel (Mercantile Code, in treating of maritime commerce)
The word vessel serves to designate every kind of craft by whatever particular or technical
name it may now be known or which nautical advancements may give it in the future
Captain
Those who govern vessels that navigate the high seas or ships of large dimensions and
importance, although they are engaged in the coastwise trade
Masters
those who command smaller ships engaged exclusively in the coastwise trade
For the purposes of maritime commerce, the words "captain" and "master" have the same
meaning; both being the chiefs or commanders of ships
Nautral Law: that he who enjoys the benefits derived from a thing must likewise suffer the
losses that ensue therefrom.
ACTS OF THER PASSENGERS AND THIRD PERSONS
Negligence of the carrier need not be the sole cause of the damage or inquiry to passenger
or goods. The carrier would still be liable even if the contractual breach concurs with the
negligent act or omission of another person/
Art. 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.
ROSITO BACARRO v. CASTAÑO
G.R. No. L-34597 | November 5, 1982
SUMMARY: Fell into the ditch.Collision by passenger jeep and cargo truck. Cargo truck blew its
horn to overtake the jeepney; that the jeepney gave way but did not reduce its speed; that
for a distance of 20 meters, the truck and the jeepney ran side by side; and that the jeepney
was sideswiped when the truck was in the process of overtaking the said jeepney.
DOCTRINE:
A common carrier is vested with public interest. Under the new Civil Code, instead of being
required to exercise mere ordinary diligence a common carrier is exhorted to carry the
passengers safely as far as human care and foresight can provide “using the utmost diligence
of very cautious persons.” (Article 1755). Once a passenger in the course of travel is injured, or
does not reach his destination safely, the carrier and driver are presumed to be at fault.
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the circumstances of each
case.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard
for all the circumstances.
Art. 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.
JAL v. CA
G.R. No.118664 | August 7, 1998
SUMMARY: Mt. Pinatubo Explosion Private respondents had a stop over flight from San
Francisco to Narita with the final destination being Manila needed to stop in Narita due to Mt.
Pinatubo eruption. The expenses from their unintended prolonged stay in Japan were not
shouldered by JAL and upon returning to Manila they filed an action for damages.
DOCTRINE:
“It has been held that airline passengers must take such risks incident to the mode of travel. In
this regard, adverse weather conditions or extreme climatic changes are some of the perils
involved in air travel, the consequences of which the passengers must assume or expect. After
all, common carriers are not the insurer of all risks.”
Common carriers are not absolutely responsible for all injuries or damages even if the same
were caused by a fortuitous event.
• There is no question that when a party is unable to fulfill his obligation because of
“force majeure,” the general rule is that he cannot be held liable for damages for
non-performance
• If the fortuitous event was accompanied by neglect and malfeasance by the
carrier’s employees, an action for damages against the carrier is permissible.
ACTS OF SHIPPER OR THE PASSENGER
If the acts or omission of the shipper or owner of the goods or the passenger is the proximate
and only cause of damage, the common carrier is not liable
Contributory Negligence of the Shipper
Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being the negligence of the common carrier, the
latter shall be liable in damages, which however, shall be equitably reduced,
Contributory Negligence of the Passenger
Article 1761. The passenger must observe the diligence of a good father of a family to avoid
injury to himself.
Article 1762. The contributory negligence of the passenger does not bar recovery of damages
for his death or injuries, if the proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably reduced.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 24
 defendant, by exercising reasonable care and prudence, might have avoided injurious
Causation consequences to the plaintiff notwithstanding the plaintiff’s negligence.

If the negligence of the shipper or the passenger may be the proximate and only cause of the
loss, in which case, the carrier should not be made liable. BUSTAMANTE v. CA
G.R. No. 89880 | February 6, 1991

Doctrine Avoidable Consequences

SUMMARY: Tire shaking. A truck and a passenger bus sideswept each other, causing the
Even if the carrier is responsible for the loss or injury, the passenger is also required to lessen the deaths of the passengers of the bus. The heirs of the victims filed for damages.
damage or injury.
DOCTRINE:
In other words, the doctrine of last clear chance means that even though a person's own acts
Assumption of Risk
may have placed him in a position of peril, and an injury results, the injured person is entitled
Passengers must take risks incident to the mode of travel. Carriers are not insurers of the lives of
to recovery. As the doctrine is usually stated, a person who has the last clear chance or
their passenger.
opportunity of avoiding an accident, notwithstanding the negligent acts of his opponent or
that of a third person imputed to the opponent is considered in law solely responsible for the
consequences of the accident.
CALALAS v. CA
G.R. No. 122039 | May 31, 2000
NOTICE OF CLAIM
SUMMARY: Extension seat. Sunga was put to sit in the extension wooden chair at the rear of In action for breach of contract it is essential that the claimant will establish the following
the jeep. An Isuzu truck bumped it when it was about to unload passenger that resulted to requirement:
Sunga being injured and not be able to continue her Physical Education course. 1. Existence of a perfected contract
2. Breach of the other contracting party
DOCTRINE: 3. Damages which he sustained
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, Statute of Limitations must be complied and filed within the period
are bound to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the circumstances of each
case. Notice of Claim in Notice of Claim in
Overland Transportation and International Carriage of Goods
Such extraordinary diligence in the vigilance over the goods is further expressed in articles Coastwise Shipping by Sea
1734, 1735, and 1746, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
When to filed 1. Apparent – immediately 1. Apparent – immediately
passengers is further set forth in articles 1755 and 1756.
2. Not apparent – within 24 upon discharge
hours from receipt of 2. Not apparent – within 3 days
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and
merchandise from delivery
foresight can provide, using the utmost diligence of very cautious persons, with due regard for
all the circumstances.
Notice Mandatory NOT mandatory
Waivable yes ?
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed by articles 1733 and 1755
PRESCRIPTION IN OVERLAND TRANSPORTATION AND COASTWISE SHIPPING
• 6 years – no written contract
quasi-delict breach of contract
• 10 years – there’s a written contract
the negligence or fault should be clearly the action can be prosecuted merely by
• 6 years – action for damages for breach of contract of carriage if no bill of lading or
established because it is the basis of the proving the existence of the contract and
any written contract has been issued
action the fact that the obligor
• 10 years – action for damages if there’s a bill of lading or any written contract
The doctrine of proximate cause is applicable only in actions for quasi-delict, NOT in actions
Prescription in International Carriage of Goods (COGSA)
involving breach of contract • 1 year - from discharge of goods (extendible)
• 1year – Collision if saved and day when it should’ve been delivered
• Can be invoked by carrier or ship
DOCTRINE OF LAST CLEAR CHANCE
• Not suspended by extrajudicial demand
The doctrine of last clear chance, stated broadly, is that the negligence of the plaintiff does
• Not applicable to conversion or misdelivery or delay (10 years)
not preclude a recovery for the negligence of the defendant where it appears that the

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 25

Prescription and Subrogation 4. Through bill of lading – issued by a carrier who is obliged to use the facilities other
Same as the principal carriers as well as his own for the purpose of transporting goods from city of seller to
the city of buyer, which bill is honored by 2nd or 3rd who don’t issue their own lading.

NOTICE OF CLAIM AND PRESCRIPTION IN AIR TRANSPORTATION 5. On Board Bill v. Received for Shipment Bill
No specific requirement a. On board - Goods have been received on board the vessel
b. Received for shipment – goods received with or without specifying the
vessel by which the goods are to be shipped.
Rules under Warsaw Convention
Complaint must be filed within the following (notice mandatory): 6. Custody Bill of Lading – goods are received by carrier but vessel indicated has not
3 days – from receipt of baggage yet arrived in the port
7 days – from receipt of goods
14 days – after baggage was placed at the disposal of the passenger 7. Port Bill of Lading – vessel that will transport is already in the port
2 years – prescriptive period from date of arrival or date when the aircraft ought to have
arrived
NATURE
3 fold nature (applicable only to carriage of goods):
Limiting Stipulation 1. Receipt
Parties may sitpulate to limit the amount 2. Contact
• Reasonable and just 3. Document of title that makes it a symbol of the goods
• Fairly and freely agreed upon
WHEN EFFECTIVE
• Effective upon delivery to and acceptance by the shipper.
• Presumed that stipulations are in absence of fraud, concealment or improrer
CHAPTER IV – BILL OF LADING AND OTHER FORMALITIES
conduct, known to the shipper and he is generally bound by his acceptance
whether he reads the bill or not.
CONCEPTS
• A bill of lading or a ticket is not necessary for the perfection of the contract of
carriage BILL OF LADING AS A CONTRACT
• Contract of carriage not a formal contract • 3 fold applicable only to carriage of goods
• Electronic document allowed • Not applicable to passenger tickets

Article 354. In the absence of a bill of lading the respective claims of the parties shall be Parties
decided by the legal proofs that each one may submit in support of his claims, in accordance 1. Shipper
with the general provisions established in this Code for commercial contracts 2. Carrier
3. Consignee
a. Relationship of agency between the consignee and the
DEFINITION shipper/consignor
A bill of lading is a written acknowledgment signed by the master of a vessel or other b. Unequivocal acceptance of the bill with full knowledge of contents
authorized agent of the carrier, that he has received the described goods from the shipper to c. Stipulation pour aurtui
be transported on the expressed terms, to the described place of destination and to be
delivered there to the designated consignee or aprties.
Contract of Adhesion
Normally construed liberally in favor of the passenger or shipper who adhered to such bill of
KINDS OF BILL OF LADING lading or ticket. Take it or leave it.
1. Negotiable or non-negotiable
2. Clean Bill of Lading and Foul Bill of Lading Parol Evidence Rule
a. Clean – no notation of defect Terms of a contract are conclusive upon the parties and evidence aliunde is not admissible to
b. Foul – contains notation vary or contradict a complete and enforceable agreement embodied in a document,
subject to well-defined exceptions.
3. Spent Bill of Lading - Delivered goods but the bill was not returned
Spent Carrier already delivers the goods and carrier supposed to have retrieved the Bill of Lading as Evidence
covering bill of lading Expresses the terms and conditions between the parties, names the parties, includes the
consignee, fixes the route, destination, and freight or charges and stipulates the rights and
obligations assumed by the parties.
• No erasures
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 26

 • Prima facie proof 4. That the common carrier shall exercise a degree of diligence less than that of a
good father of a family, or of a man of ordinary prudence in the vigilance over the
Bill of Lading as Actionable Document movables transported;
When a shipper enforces a contractual obligation under the contract of carriage as stated in 5. That the common carrier shall not be responsible for the acts or omission of his or its
the bill of lading, such bill of lading can be categorized as an actionable document. Must be employees;
pleaded, genuineness and due execution are deemed admitted unless specifically denied 6. That the common carrier's liability for acts committed by thieves, or of robbers who
under oath, do not act with grave or irresistible threat, violence or force, is dispensed with or
diminished;
Shipment of Terms 7. That the common carrier is not responsible for the loss, destruction, or deterioration
Purpose: of goods on account of the defective condition of the car, vehicle, ship, airplane
1. To determine the point at which the risk of loss passes from the seller to buyer or other equipment used in the contract of carriage.
2. To determine what performance by the seller amounts to a tender which will put the
buyer, if he thereafter refuses to accept delivery, in breach
3. Quoting the price Limiting Stipulations

Kinds: Purpose of Limiting Stipulations - to protect common carriers

1. FOB (Free on Board) – risk passes at destination point
2. FAS (Free Alongside) – seller relinquishes the risk the moment the goods are Presumption of Negligence - common carrier
delivered alongside the vessel
3. FAS Vessel and FOB Vessel Stipulations Reducing Negligence
a. FAS Vessel – seller no obligation to see to loading and all required is • Cannot stipulate that common carrier shall exercise diligence less than the
delivery to the wharf diligence of a good father of a family
b. FOB Vessel – seller must make sure the goods are loaded and his • MAY stipulate that the diligence to be exercised is less than the extraoridnary
responsibility does not cease until the loading is complete diligence as long as:
4. CIF (Cost, Insurance, Freight) – prices quoted by the seller includes the invoice price o Stipulation in writing signed by the parties
plus insurance and freight o Stipulation supported by a vluable consdieration toher than service
rendered by the common carrier
Incoterms – ICC rules which means that the seller has goods available for pick-up by the o Stipulation be reasonable, just and not contrary to law
buyer in the seller’s premises like factory • Not allowed to passenger

Stipulations of Fixing the Limit of Recover

BASIC STIPULATIONS 1. Reasonable and just under the circumstances (depends on circumstances)
The Code of Commerce provides the basic contents of the bill of lading both land and 2. Fairly and freely agreed upon
maritime commerce. Summary action.
Riots and Strikes
Overland Transportation • Common carrier still liable even if delay is caused by strike and riots
• Does not provide from escape from liability but merely allowes limitation of liability
Maritime Commerce • But stipulations limiting is valid
• Must be signed within 24hours after the cargo was received on board
• 4 copies of bill – signed by the captain and shipper, shipper (1), consignee (1), Carriage of Goods by Sea Act
captain (2) for himself and ship agent Package in COGSA
• If goods are shipped in cartons, each carton is considered a package even if they
Electronic Document are stored in container vans (Belgian v. PFIC)
• When what would ordinarily be considered packages are shipped in a container
supplied by the carrier and the number of such units is disclosed in the shipping
PROHIBITED AND LIMITING STIPULATIONS documents, each of those units and not the container consitute “package” in
COGSA
Prohibited Stipulations

Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust When limting Sitpulation cannot be invoked
and contrary to public policy: 1. When agreement is annulled by the shipper or owner if the common carrier refused
1. That the goods are transported at the risk of the owner or shipper to carry the goods unless the former agreed to such stipulation
2. That the common carrier will not be liable for any loss, destruction, or deterioration 2. If the carrier delays the transportation
of the goods; 3. If the carrier changes the stipulated or usual route.
3. That the common carrier need not observe any diligence in the custody of the
goods;
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 27

BILL OF LADING AS RECEIPT • If third person concurs with the breach, the liability of the thrid person who was
The issuance of a bill of lading carries the presumption that the goods were delivered to the driving another vehicle and/or his employer may be based on quasi-delict
carrier issuing the bill, for immediate shipment, and it is nowhere questioned that a bill of o Employer subsidiarily liable
lading is a prima facie evidence of receipt of the goods by the carrier o Driver criminally and civilly liable
o Joint and severally liable to passenger if bot
Said Weight Clause
• Shipper is solely responsible for loading while the carrier is oblivious of the contents of Elements of Cause of Action Against the Carrier
the shipment. 1. Right in favor of the plaintiff by whatever means and whatever law it arises
• Nobody knows the actual weight of the cargo, the weight written on the bill and on 2. Correlative onligation of the defendant to respect such right
the manifest is based only on the declaration of the shipper 3. Act or omission of the defendant violation the right of the plaintiff

BILL OF LADING AS DOCUMENT TITLE RECOVERABLE DAMAGES

Pecuniary ecompensation that the law imposes for the breach of some duty or violation of
Negotiability some right
Shall be delivered to the bearer or order of any person named in such document
Extent of Recovery
How Negotiated • Carrier in good faith is liable only to pay for the damages that are ntural and
• Bearer document probable consequences of the breach of the obligation
• Order document • Carrier’s right of recourse against the negligenct employee

Effects of Negotiation
• Bill of lading is also a symbol of the goods covered by it Kinds of Damages
• Negotiability merely indicates that the transfer of a document of title through 1. Actual or compensatory
negotiation has the effect of transferring possession of the goods 2. Moral
3. Nominal
4. Temperate or Morderate
5. Liquidated
6. Exemplary or Corrective
CHAPTER Vi – ACTIONS AND DAMAGES IN CASE OF BREACH
ACTUAL OR COMPENSATORY DAMAGES
DISCTINCTION
Kinds of Actual Damages
Distinction Between Culpa Contractual and Culpa Aquiliana 1. Loss of what a person already possessed
2. Fiailure to receive as a benefit that would have pertained to him
CULPA CONTRACTUAL CULPA-AQUILIANA
Source of Contract Quasi-Delict Proof - not presumed, must point out specific facts
Obligation
Liability of No liability there being no privity of Solidarily liable with employer Damages in case of Death
Employee contract 1. Fixed damages
Availability of Due diligence in the selection and Due diligence in the selection and 2. Loss of earning capacity
Defense supervision of the employee is NOT supervision of the employee is A 3. Funeral expense
a defense defense
In What Liable as contracting party Liable as an employer
Capacity Liable ATTORNEY’S FEES
• Must be proven, it’s only an exception and not the general rule.
• See Art. 2208 – legal support, actions for recovery of wages of helpers, erparate
Concurrent Causes of Action action to recover civil liability arising from crime, malicious prosecution, exemplary
• Negligent Act that breaches the contract may give rise to a liability based on damages, any othe just and equitable, etc.
contract as well as quasi delict (Art. 2176) • Breach of contract of carriage
• Direct and primary liabiliaty of drivers based on queasi delict and delict – equally
applies to the captain, officers, crew, etc.
o Shipowner, as employer, may be held primarily liable (Art. 2180) INTERESTS
§ Vicarious liability because the negligence of the employee is • Loan of forebearance of money – 6% from such finality until its satisfaction
imputed to the employer-operator

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 28

MORAL DAMAGES LIQUIDATED DAMAGES
• Includes physical suffering, mental anguish, fright, serious anxiety, besmirched • Agreed upon by the parties to a contract in case of breach
reputation, wounded feelings, moral shock, social humiliation and similar injury. • Can be reduced if iniquitious or unconscionable
• Recoverable if proximate result of defendant’s wrongul act
• Not to punish defendant but to compensate the victime
EXEMPLARY OR CORRECTIVE DAMAGES
Breach of Contract of Air Carriage: 1. May be imposed by way of example in addition to compensatory damages, and
1. Mishap results in death of passenger only after the claimant’s right has been established
2. Carrier is guilty of fraud or bad faith 2. Cannot be recovered as a matter of right, their determination depending upon the
3. Negligence of carrier is so gross and reckless as to virtually amount to bad fatih claimint’s right to them has been established
3. The act mus tbe accompanied by bad faith
Requisites
No moral damages may be awarded where the breach of contract is not malicious

When Moral Damages Were Awarded

Gross negligence of the carrier
PART II – AVIATION LAW
Bad faith insecuring the contract and in the execution
CHAPTER VII – THE AIRCRAFT AND THE CIVIL AVIATION
Cases when there is No Awarded Moral Damages
If carrier extended all possible accommodations to the passengers whose did not have
confirmed bookings APPLICABLE LAWS
• Civil Aviation Authority Act of 2008 (RA 9497)
Specific Cases When Recoverable • Civil Aviation Regulations (issued by Civil Aviation Authority of the philippines)
• Warsaw Convention
Art. 2219. Moral damages may be recovered in the following and analogous cases • Chicago Convention
1. A criminal offense resulting in physical injuries;
2. Quasi-delicts causing physical injuries; Regulatory Perspectives
3. Seduction, abduction, rape, or other lascivious acts;
4. Adultery or concubinage; CIVIL AVIATION
5. Illegal or arbitrary detention or arrest;
6. Illegal search; Civil Aviation
7. Libel, slander or any other form of defamation; Refers to the operation of any civil aircraft for the purpose of general aviation operations,
8. Malicious prosecution; aerial work or commercial air transport operation
9. Acts mentioned in Article 309;
10. Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35 Aircraft
Any machine that can derive support in the atmosphere from the reactions of the air other
than the reactions of the air against the earth’s surface.
Factors to Consider
1. Extent of humiliation
2. Extent of pain or suffering REGISTRATION OF AIRCRAFT
3. Official, political, oscial and financial standing • Aircraft have the nationality of the State in which they are registered and must be in
4. Age of the claimant accordance with the provisions of Civil Aviation Authority Act of 2008.
• Certificate of Registration is conclusive of ownership
• XPT: Foreign-owned or registered aircraft may be resigstered if utilized by members
NOMINAL DAMAGES of aero clubs organized for recreation, sport development of flying skills as a
• Absence of competent proof of the specific amounts of actual damages suffered prerequisites to any aeronautical activities of such clubs within the Philippines.
• When the vindication or recognition of the plaintiff’s right is of utmost importat to
him. RECORDING OF CONVEYANCES
Shall be registered with CAAP

TEMPERATE OR MODERATE DAMAGES

• More than nominal but less than compensatory MARINE INSURANCE
• Court finds there’s pecuniary loss suffered but its amount cannot, from the nature of Inusrance over aircrafts fall under Marine Insurance
the case, be provided with certainty.

AIR TRANSPORTATION IN GENERAL

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 29

Air commerce or commercial air transport operation
Refers to and include scheduled or non-scheduled air transport services for pay or hire, the
navigation of aircraft in furtherance of a business, the navigation from one place to another
for operation in the conduct of business, or an aircraft operation involving the transport of
passengers, cargo or mail for renumeration or hire
• This also basic right allows airlines from Country A to land in Country B for purposes of
refueling, maintenance, etc as long it doesn’t involve deplaning or enplaning of
passengers
• Example: A South African Airways flight from the US to South Africa could stop in the
Cape Verde Islands to refuel but no passengers could get on or off (this isn’t true, it’s
just for demonstration purposes)

PERSONS INVOLVED IN AIR TRANSPORATION Third Freedom of the Air

1. Air carrier or operator – oerson who undertakes directly or indirectly or by a lease or The right or privelege, in respect to scheduled international air services, granted by one State
any other arrangements to engage in air transportation services or commerce to another State or States to put down, in the terriorty of the first State, trafic coming from the
2. Philippine air carrier – air carrier who is a citizen of the Philippines home State of the carrier.
3. Foreign air carrier or foreigh air operator – any operator, not being a Philippine air • This allows airlines from Country A to bring passengers originating in Country A to
operator, with operations within the borders or airspace of the Philippines whether Country B
on a scheduled or chartered basis. • Example: A United Airlines flight from the US to Australia could bring passengers
4. Airman – indicidual who engages as a person as a pilot, mechanic, aeronotical, originating in the US down to Australia
engineer, etc.
Fourth Freedom of the Air
CAB regulates persons and entitites that are involved in the economic aspects of air The right or privelege, in respect to scheduled international air services, granted by one State
transportation to another State or States to take on, in the territory of the first State traffic destined for the
1. General Sales Agent home State of the carrier of the first State, traffic destined for the home State of the carrier.
2. Cargo Sales Agent • This allows airlines from Country A to bring passengers originating in Country B to
3. Air Freight Forwarders Country A
4. Off-line Carrier • Example: Using the same United Airlines flight, they could bring passengers
5. Air Taxi Operator originating in Australia up to the US

Fifth Freedom of the Air

CHARTER OF AIRCRAFT
1. By a person for his own use
2. By a representative of a group for the use of such group
3. By an airfreight forwarded holding a currently effective permit
SOVEREIGNTY AND AIR FREEDOMS
1. On Router Charter – service performed by an air carrier between points the carrier is
authorized to provide service
2. Pro-rata Charter – cost of which divieded among the passengers
3. Single Entity Charter – charter the cost of which is borne by the charterer and not by
individual passengers, directly or indirectly
4. Mixed Charter – charter the cost of which is born partly by the charterer and
participants.
FREEDOMS OF AIR
First Freedom of the Air
The right or privelege, in respect to scheduled intternational air services, granted by one State
to another State or States to fly across its territory without landing
• This most basic right allows airlines from Country A to fly through Country B’s airspace
without landing.
• Example: An American Airlines flight from the US to somewhere in South America
would be permitted to fly through Mexico’s airspace to get there
Second Freedom of the Air
The right or privelege, in respect to scheduled intternational air services, granted by one State
to another State or States to land on its terrioty for non-traffic purposes
The right or privelege, in respect to scheduled international air services, granted by one State
to another State or States to put down, take on, in the territory of the first State, traffic destined
for home State of the carrier
• This allows airlines from Country A to bring passengers between Country B and
Country C as long as the flight originates in Country A
• Example: Air New Zealand, based in New Zealand, is allowed to fly passengers
between Los Angeles (US) and London (UK) because the flight originates in
Auckland (New Zealand)
The rest of the freedoms are unofficial:
Sixth Freedom of the Air
• This allows airlines from Country A to carry passengers between Countries B and C
via Country A
• Example: British Airways would be allowed to carry passengers between India and
the US via its UK home
Seventh Freedom of the Air
• This is similar to the Fifth Freedom, but it allows an airline from Country A to carry
passengers between Countries B and C without having it be an extension of a flight
from Country A
• Example: If Air New Zealand started flights between Vancouver and Rio de Janeiro
with no ongoing service to New Zealand, that would use Seventh Freedom rights.
Eighth Freedom of the Air
• This is called “consecutive cabotage,” and it allows an airline from Country A to
carry passengers between two points in Country B as long as the flight originates in
Country A or a third Country C
• Example: Air Canada could fly between Chicago and Los Angeles, both in the US, if
the flight started in Toronto or any other place outside of the United States
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 30

Ninth Freedom of the Air
• This one is usually referred to as “cabotage,” and it allows an airline from Country A
to carry passengers within Country B without restriction
• Example: The EU has been pushing the US to allow cabotage. This would allow EU
airlines, like Lufthansa for example, the fly regular domestic routes in the US. As you
can imagine, this won’t be happening soon.
KUWAIT AIRWAYS CORPORATION v. PHILIPPINE AIRLINES, INC.
G.R. No. 156087 | May 8, 2009
SUMMARY: Kuwait Airways and PAL entered into a Commercial Agreement to assist each
other to develop traffic on the route Kuwait-Bangkok-Manila and vice-versa. Under the said
agreement, Kuwait Airways obligated itself to share with PAL revenue earned from the uplift of
passengers between Kuwait and Manila and vice-versa. Sometime later, delegations from
Philippines and Kuwait met and agreed that effective upon the signing of the CMU, the
exercise of the third and fourth freedom traffic rights shall not be subject to any royalty
payment or commercial agreement. Must still be compensated
DOCTRINE:
GR: Civil Aeronautic Board has the power to regulate the airline companies/air transportation
industry BUT this case is an exception.
XPT: Airline companies in the Philippines are subject to different regulatory perspectives. There
is no doubt that Philippine Airlines forebears under several regulatory perspectives.
1. its authority to operate air services in the Philippines derives from its legislative
franchise and is accordingly bound by whatever limitations that are presently in
place or may be subsequently incorporated in its franchise
2. PAL is subject to the other laws of the Philippines, including RA No. 776, which grants
regulatory power of CAB over the economic aspect of air transportation.
3. there is a very significant public interest in state regulation of air travel in view of
considerations of public safety, domestic and international commerce, as well as
the fact that air travel necessitates steady traversal of international boundaries, the
amity between nations.
CABOTAGE
• Right to operate via sea, air, other trasport services within a particular territory
• Philippines not granted the right of cabotage
1. Consecutive Cabotage - The right or privelege, in respect to scheduled international
air services, of transporting cabotage traffic between two points in the territory of
the granting State on a service which originates or terminates in the home country
of the foreign carrier.
2. Stand Alone Cabotage - The right or privelege of transporting cabotage traffic of
the granting State on a service performed entirely within the territory of the granting
state.
CHAPTER VIII – OBLIGATIONS OF CARRIER IN ARI TRANSPORTATION
EXTRAORDINARY FILIGENCE IN AIR TRANSPORTATION
1. Provide competent and well trained crew
2. Exercised extraordinary diligence in operating the aircraft
Airworthiness
An aircraft, its engines, properllers, and other components and accessories, are of proper
design and construction, and are safe for air navigation purposes, such deisgn and
construction being consistent with accepted engineering practice and in accordance with
the aerodynamic laws and aircraft science.
Tariff System
• A tariff rule or conditions of air travel that regulates and binds the airline and
passengers.
• With approval of Civil Aeronautics Board
• Provided in the tickets
Care of Baggage
1. Baggage were either damaged or their contents were lost or stolen
2. Baggage were transported or diverted to another place
3. In case of off-loading of baggage
4. When there was delay in the delivery of baggage
5. If the baggage is lost altogether
PAL v. CA
G.R. No. 119706 | March 14, 1996
SUMMARY: Broken Microwave. Mejia shipped her Microwave through PAL from SanFo to MNL.
PAL officers in SanFo said she need not declare a higher value for the microwave, so she did
not declare it on the Air Way Bill. Unfortunately, when Mejia’s sister came to pick up the
microwave in customs, she found it broken and immediately filed a claim. PAL cannot limit
liability.
Moral and exemplary damage - PAL acted in bad faith in breaching the contract and in
denying Mejia’ valid claim for damages,
DOCTRINE:
There is no absolute obligation on the part of a carrier to accept a cargo
• Where a common carrier accepts a cargo for shipment for valuable consideration,
it takes the risk of delivering it in good condition as when it was loaded.
• And if the fact of improper packing is known to the carrier or its personnel, or
apparent upon observation but it accepts the goods notwithstanding such
condition, it is not relieved of liability for loss or injury resulting therefrom.
While the Warsaw Convention has the force and effect of law in the Philippines, the same
does not operate as an exclusive enumeration of the instances when a carrier shall be liable
for breach of contract or as an absolute limit of the extent of liability, nor does it preclude the
operation of the Civil Code or other pertinent laws
UNITED AIRLINES v. UY
G.R. No. 127768, November 19, 1999
SUMMARY:. Overweight (max 70kg) and humiliation William Uy is a passenger on United Airlines
flight from San Francisco bound for Manila whose luggage was beyond 70kg limit. He was
asked to fix his luggage weight but still was overweight. As a result, he was humiliated and
shouted by the UA crew. When he arrived in Manila he saw that his bag was slashed and
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 31
some items were stolen. He filed a case against UA but UA contens that it is already beyong
the 2year limit as provided in Art. 29 of Warsaw Convention. But it is not applicable in this case
because as an exception to its application – the airline used delaying tactics.
Uy has 2 cause of action
a) the shabby and humiliating treatment he received from the employees at the San
Francisco Airport which caused him extreme embarrassment and social humiliation;
and,
o an action for damages arising from the misconduct of the airline employees
and the violation of respondent's rights as passenger – NOT COVERED BY
WARSAW
b) the slashing of his luggage and the loss of his personal effects amounting to US
$5,310.00.
o an action for damages arising from theft or damage to property or goods –
COVERED BY WARSAW
Consequently, insofar as the first cause of action is concerned, Uy's failure to file his complaint
within the two (2)-year limitation of the Warsaw Convention does not bar his action since
petitioner airline may still be held liable for breach of other provisions of the Civil Code which
prescribe a different period or procedure for instituting the action, specifically, Art. 1146
thereof which prescribes four (4) years for filing an action based on torts.
DOCTRINE:
Despite the express mandate of Article 29 of the Warsaw Convention that an action for
damages should be filed within two (2) years from the arrival at the place of destination, such
rule shall not be applied where the airline employed delaying tactics.
Art. 29 of Warsaw Convention
1. The right to damages shall be extinguished if an action is not brought within two (2)
years, reckoned from the date of arrival at the destination, or from the date on
which the aircraft ought to have arrived, or from the date on which the
transportation stopped.
2. The method of calculating the period of limitation shall be determined by the law of
the court to which the case is submitted.
AND
Within our jurisdiction, the Warsaw Convention can be applied or ignored, depending on the
peculiar facts presented by each case.
Warsaw Convention reveal that the delegates thereto intended the two (2)- year limitation
incorporated in ART. 29 AS AN ABSOLUTE BAR TO SUIT AND NOT TO BE MADE SUBJECT TO THE
VARIOUS TOLLING PROVISIONS OF THE LAWS OF THE FORUM.
BRITISH AIRWAYS v. COURT OF APPEALS
G.R. No. 121824 | January 29, 1998
SUMMARY: No declared value but failed to object.Mahtani decided to visit his relatives in
Bombay so he hired Mr. Gumar to prepare his travel plant. Mr. Gumar bought a ticket from
British Airways (BA) with a MNL-HK-BOM-HKG-MNL route;. Upon arrival in Bombay, he
discovered that his luggage was missing and was directed to London. BA in its answer said
that Mahtani does not have a cause of action and it filed a 3rd party complaint against PAL.
BA now questions the amount awarded for the loss luggage, since Mahtani failed to declare
a higher valuation of his luggage, a condition provided in the ticket, and the dismissal of the
3rd party complaint.
DOCTRINE:
In a contract of air carriage, a declaration by the passenger of a higher value is needed to
recover a greater amount. BUT the benefits of limited liability are subject to waiver such as
when the air carrier failed to raise timely objections during the trial when questions and
answers regarding the actual claims and damages sustained by the passenger were asked
Member airlines of the International Air Transport Association (IATA) are regarded as agents of
each other in the issuance of tickets and other matters pertaining to their relationship.
The nature of an airline’s contract of carriage partakes of two types, namely
1. contract to deliver a cargo or merchandise to its destination
2. contract to transport passengers to their destination.
PAL v. CA
G.R. No. 119641 | May 17, 1996
SUMMARY: Super malas. Discrimination in baggage offloadeding. Accommodation was full
but NOT. Sps. Miranda were on the return trip back from San Francisco with Surigao as the
point of final destination. However, PAL employees told the Sps. that their baggages were off
loaded in Honolulu for being overweight. Consequentially, the Sps. missed all their connecting
flights for needing to wait for their luggage. While in Cebu on the supposed final connecting
flight to Surigao, the pilot announced that it had to return to Mactan. The Sps. asked PAL to
help with their accommodations to which PAL begrudgingly did. Unfortunately, while in Cebu,
the Sps. found out that their luggage had already gone straight to Surigao. Upon returning to
Surigao they filed the present action for damages. The S.C. ruled that the Warsaw convention
doesn’t apply in this case because of the discriminatory off-loading.
DOCTRINE: The Warsaw Convention declares the carrier liable in the enumerated cases and
under certain limitations. However, it must not be construed to preclude the operation of the
Civil Code and pertinent laws. It does not regulate, much less exempt, the carrier from liability
for damages for violating the rights of its passengers under the contract of carriage, especially
if willful misconduct on the part of the carrier's employees is found or established, which is the
case before Us.
A contract of air carriage generates a relation attended with a public duty and any
discourteous conduct on the part of a carrier’s employee toward a passenger gives the latter
an action for damages and, more so, where there is bad faith
• An airline’s unilateral and voluntary act of providing cash assistance is deemed part
of its obligations as an air carrier, and is hardly anything to rave about
DUTY TO PASSENGERS
Duty to treat the passengers with kindness, respect, courtesy and consideration as well as
comfort and convenience
How can moral damages be awarded?
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 32
Inattention to and lack of care for the interests of its passengers who are entitled to its utmost 3. the cause of the obligation which is established.
consideration, particularly as to their convenience, amount to bad faith which entitles the
passenger to an award of moral damages. Breach of contract is defined as the “failure without legal reason to comply with the terms of a
• Moral damages are recoverable in suits predicated on breach of a contract of contract”. It is also defined as the “failure, without legal excuse, to perform any promise which
carriage forms the whole or part of the contract.”
o where it is proved that the carrier was guilty of fraud or bad faith
o bad faith in securing the contract and in the execution thereof, as well as Fraud has been defined to include an inducement through insidious machination. Insidious
in the enforcement of its terms, or any other kind of deceit. machination refers to a deceitful scheme or plot with an evil or devious purpose. Deceit exists
o Inattention to and lack of care for the interests of its passengers who are where the party, with intent to deceive, conceals or omits to state material facts and, by
entitled to its utmost consideration reason of such omission or concealment, the other party was induced to give consent that
• Moral damages are not awarded to penalize the defendant but to compensate the would not otherwise have been given.
plaintiff for the injuries he may have suffered
o Bad faith does not simply connote bad judgment or negligence; it imports a dishonest
• In a contractual or quasi-contractual relationship, purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty
o Exemplary damages - awarded only if the defendant had acted in a through some motive or interest or ill will that partakes of the nature of fraud.
wanton, fraudulent, reckless, oppressive or malevolent manner.
o Attorney’s fees - there is a finding of bad faith. Section 3 of the Economic Regulation No. 7 of the Civil Aeronautics Board, as amended,
provides:
Sec 3. Scope. – This regulation shall apply to every Philippine and foreign air carrier with
Instances when moral damages may be paid respect to its operation of flights or portions of flights originating from or terminating at, or
1. Lack of care of interest serving a point within the territory of the Republic of the Philippines insofar as it denies
2. Rude and discourteous treatment boarding to a passenger on a flight, or portion of a flight inside or outside the Philippines, for
3. Failure to provide accommodation which he holds confirmed reserved space.
4. Cancellation of confirmed reservation
5. Forcibly ejecting a passenger from a seat Provided, however, that overbooking not exceeding 10% of the seating capacity of the
6. Off-loading aircraft shall not be considered as a deliberate and willful act of non-accommodation.
7. Bumping-off
8. Cancellation of flights due to typhoon Alitalia Airways vs. CA (187 SCRA 763 [1990],
passengers must not prey on international airlines for damage awards, like “trophies in a
Others safari.” After all neither the social standing nor prestige of the passenger should determine the
1. Physical injuries to passengers extent to which he would suffer because of a wrong done, since the dignity affronted in the
2. Downgrading or upgrading of passengers individual is a quality inherent in him and not conferred by these social indicators
3. Delay and diversion
4. Rude treatment
5. Over-booking Cancellation due to engine malfunction NORTHWEST AIRLINES v. DELFIN S. CATAPANG
G.R. No. 174364 | July 30, 2009
CATHAY PACIFIC AIRWAYS LTD. v. VAZQUEZ
G.R. No. 150843 | March 14, 2003 SUMMARY: Rude behavior. Proceeded to Northwest‘s nearest ticketing office where he was
treated in a rude manner by an employee who informed him that his ticket was not
SUMMARY: Upgrade. Vazquezes were upgraded from business class to first class seats of rebookable or reroutable. He was further informed that his ticket was of a ―restricted type,ǁ
Cathay Pacific. They refused the upgrade because it is impolite for them to be transferred and he could not rebook unless he pays US644.00. Catapang paid that amount for rebooking
when they are hosts to their companions, and the latter are not transferred.. Court held that
there was breach of contract since Vazqeuzes gave no consent or even refused the upgrade DOCTRINE:
but there was no bad faith on the part of Cathay. Any discourteous conduct on the part of the carrier’s employees toward a passenger gives
the latter an action for damages against the carrier.
DOCTRINE: Airline passengers have every right to decline an upgrade and insist on the • Passengers have the right to be treated by a carrier‘s employees with kindness,
accommodation they had booked, and if an airline insists on the upgrade, it breaches its respect, courtesy and due consideration. They are entitled to be protected against
contract of carriage with the passengers. personal misconduct, injurious language, indignities and abuses from such
employees. So it is that any discourteous conduct on the part of these employees
There was a breach of contract of carriage as Vazquezes did not give their consent on the toward a passenger gives the latter an action for damages against the carrier.
upgrade
A contract is a meeting of minds between two persons whereby one agrees to give
something or render some service to another for a consideration. There is no contract unless NORTHWEST AIRLINES v. HENSHAN
the following requisites concur: G.R. No. 179117 | February 3, 2010.
1. consent of the contracting parties;
2. an object certain which is the subject of the contract;
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 33

SUMMARY: Folding seat. Henshan family were bumped off the flight despite being early and 4. Honest Mistake
having prior reservation 5. Overbooking
6. Priority Rules
DOCTRINE: a. Passengers over Originating Passengers
When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain b. Connecting Confirmed Passengers
date, a contract of carriage arises. The passenger then has every right to expect that he be c. Originating Confirmed Passengers
transported on that flight and on that date. If he does not, then the carrier opens itself to a suit d. Passengers with Conditional Reservation Tickets
for a breach of contract of carriage. e. Chance Passengers

Economic Regulations no. 7 (Applies to every Philippine and foreign air carrier)
1. Flights within the territory of the Philippines
2. Flights or portion of flights from territory of the Philippines operated by a domestic or
When a passenger has confirmed reservations for a flight, they are entitled as of right under foreign carrier
contract to be accommodated in the flight, regardless of whether they had selected their 3. Denied boarding for reasons other than no-show or other cancellations of booking
seats in advance or not. voluntarily made by passenger
4. Delayed flights
5. Cancelled flights
SAVELLANO v. NORTHWEST AIRLINES
G.R. No. 151783 | July 08, 2003 Compensation for denied boarding and cancellation
1. Passengers of domestic flight – 100% of value of the sector not flow + 3,000php
SUMMARY: Fire in engine, distressed flight. Savellanos were originally booked to SFo-Tokyo- 2. Passengers of international flight - 100% of value of the sector not flow + 5,000php or
Manila flight but due to fire in the plane, they were forced to land in Seattle. NW booked equivalent currency
them a flight to Manila via Seoul WITHOUT THEIR CONSENT. Court held there is breach of 3. Airline provides higher compensation
contract because as expressly stated Condition 9 in the tickent containts a stipulation that
UNILATERAL change is not permitted. Substituting aircrafts or carriers without notice is entirely • No passenger shall be denied from boarding for 2 consecutive times
different from changing stopping places or connecting cities without notice • Delay for more than 2 hours
o Refreshments or meals
DOCTRINE: A contract is the law between the parties. Thus, in determining whether petitioners' o Free communication
rights were violated, we must look into its provisions, which are printed on the airline ticket. o First aid medicine
• Delayed until the next day
"Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or o Refreshments or meals
delay and those who in any manner contravene the tenor thereof are liable for damages." o Hotel accommodation
o Free communication
"Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in o Reimbursement if passenger opts not to fly
good faith is liable shall be those that are the natural and probable consequences of the
breach of the obligation, and which the parties have foreseen or could have reasonably Carrier shall be exempt from delay and cancellation under the following instances:
foreseen at the time the obligation was constituted." 1. Cancelled due to operational, safety and /or security reasons, force majeure,
weather, strikes and other causes beyond control of air carrier
"In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all 2. Fault is attributable to passenger
damages which may be reasonably attributed to the non-performance of the obligation." Must issue written reports

Other cases:
Lopez sufficient time -- one month -- to inform the passengers of what had PHILIPPINE AIRLINES, INC. v. COURT OF APPEALS
happened to their booking, the airline agent intentionally withheld that G.R. No. 123238 | September 22, 2008
information from them
Zulueta the passenger was deliberately off-loaded after being gravely insulted SUMMARY: Indemnity bond. Sps. Buncio purchased from PAL 2 tickets to LA for their 2 minor
during an altercation children who will travel unaccompanied. However, the 2 minors were not allowed to board in
Ortigas was intentionally downgraded in favor of a European. their connecting flight from Sanfo to LA because they were lacking the required indemnity
bond which was said to have been lost due to the negligence of the employees of PAL. RTC
ruled in favor of spouses and made PAL liable for damages. SC ruled the same since there
DENIED BOARDING OF PASSENGERS was clear negligence on the part of PAL in not making sure that the minors would be
Under Civil Aviation Regulations - Operator may deny transportation if a passenger: transported to their destination safely without any distress.
1. Refuses to comply with the instructions regarding exit seating
2. Has handicap that can be physically accommodated by an exit row DOCTRINE:
3. Failed to present himself on time in the airport counter When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain
date, a contract of carriage arises. The passenger has every right to expect that he be
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 34

transported on that flight and on that date, and it becomes the airline’s obligation to carry • Violation – imprisonment of 12-2years
him and his luggage safely to the agreed destination without delay. If the passenger is not so
transported or if in the process of transporting, he dies or is injured, the carrier may be held
liable for a breach of contract of carriage.
CHAPTER IX – WARSAW CONVENTION
In breach of contract of air carriage, moral damages may be recovered where:
1. the mishap results in the death of a passenger; BINDING EFFECT
2. where the carrier is guilty of fraud or bad faith; • The Convention for the unification of Certain Rules Relating to International
3. where the negligence of the carrier is so gross and reckless as to virtually amount to Transportation by air
bad faith. • Ratified by PH on - November 9, 1950
• Took effect on – February 7, 1951
• Amended by Hague Protocol and PH acceded
UNITED AIRLINES v. CA • Amended by Guatamela and Montreal Protocl but PH NOT acceded
G.R. NO. 124110 | April 20, 2001
PURPOSES
• To protect and promote the international airline industry
SUMMARY: Failed to check in. The Fontanillas were denied boarding by the ground crew of • To provide uniformity of rules governing claims arising from international air travel.
United Airlines on the ground that they failed to check-in prior embarkation. The Fontanillas • It precludes passenger from maintaining an action for personal injury damages
argued that they suffered racism and derogatory remarks from United Airlines Staff and filed a under local laws when his or her claim does not satisfy the conditions of liability
complain for damages. The S.C. held that the failure of the Fontanilla’s to check in justified the under the Convention
refusal to board. Aside from this, the Fintanillas failed to prove the racism.

DOCTRINE: Code of Federal Regulation Part on Oversales, which states: 250.6 Exceptions to
eligibility for denied boarding compensation.
A passenger denied board involuntarily from an oversold flight shall not be eligible for denied
board compensation if:
(a) The passenger does not comply with the carrier's contract of carriage or tariff provisions
regarding ticketing, reconfirmation, check-in, and acceptability for transformation
Economic Regulations No. 7 as amended, of the Civil Aeronautics Board: provides that the
check-in requirement be complied with before a passenger may claim against a carrier for
being denied boarding.
PHILIPPINE AIRLINES v. SAVILLO
G.R. No. 149547 | July 04, 2008
SUMMARY: Golf. Passengers not allowed to ride Singapore Airlines from Singapore to Jakarta
because allegedly “they were not endorsed by PAL”. PAL alleges that Warsaw Convention
already barred the complaint since it was filed beyond 2 years. Court held the jurisprudence
in the Philippines and the United States recognizes that the Warsaw Convention does not
“exclusively regulate” the relationship between passenger and carrier on an international
flight.
DOCTRINE: A claim covered by the Warsaw Convention can no longer be recovered under
local law, if the statute of limitations of two years has already lapsed

Bill of Rights for Air Passengers

1. Notified WHAT IS WARSAW CONVENTION?
2. Hotel or accommodation • The Warsaw Convention applies to “all international transportation of persons,
3. Reimbursed baggage or goods performed by any aircraft for hire.”
4. Endorsed • It seeks to accommodate or balance the interests of passengers seeking recovery
5. Rebooked for personal injuries and the interests of air carriers seeking to limit potential liability.
• It employs a scheme of strict liability favoring passengers and imposing damage
caps to benefit air carriers.
INSPECTION OF AIRCRAFT AND CARGO
1. Authorized to open and investigate suspicious packages and cargoes in the A claim covered by the Warsaw Convention can no longer be recovered under local law, if
presence of the owner or shipper, or his authorized representatives the statute of limitations of two years has already lapsed
2. Hand-carried luggage are subject to search for and seizure of prohibited materials Article 19 of the Warsaw Convention
and substance. Refusal – not allowed to board. Provides for liability on the part of a carrier for “damages occasioned by delay in the
transportation by air of passengers, baggage or goods.”
Director General of CAAP authorized to have access to all civil aircraft for their inspection
1. Aircraft may not be airworthy Article 24 of the Warsaw Convention
2. Ariman not qualified or physically or mentally capable for the flight Excludes other remedies by further providing that “(1) in the cases covered by articles 18 and
3. The operation would be imminent danger to people on the ground 19, any action for damages, however founded, can only be brought subject to the conditions
and limits set out in this convention.” Therefore, a claim covered by the Warsaw Convention
Applicable Law can no longer be recovered under local law, if the statute of limitations of two years has
already lapsed.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 35


Mahaney v. Air France
A passenger was denied access to an airline flight between New York and Mexico, despite
the fact that she held a confirmed reservation.
• IF the plaintiff were to claim damages based solely on the delay she experienced -
for instance, the costs of renting a van, which she had to arrange on her own as a
consequence of the delay - the complaint would be barred by the 2-year statute of
limitations or NCC
• IF plaintiff alleged that the airlines subjected her to unjust discrimination or undue or
unreasonable preference or disadvantage, an act punishable under the United
States laws, then the plaintiff may claim purely nominal compensatory damages for
humiliation and hurt feelings, which are not provided for by the Warsaw Convention
Wolgel v. Mexicana Airlines
Damages for the “bumping off” itself, rather than the incidental damages due to the delay -
outside the Warsaw Convention and do not prescribe in 2 years
CONSTITUTIONALITY
COVERAGE
Article 22
1. In the carriage of passengers the liability of the carrier for each passenger is limited
to the sum of 125,000 francs. Where, in accordance with the law of the Court seised
of the case, damages may be awarded in the form of periodical payments, the
equivalent capital value of the said payments shall not exceed 125,000 francs.
Nevertheless, by special contract, the carrier and the passenger may agree to a
higher limit of liability.
2. In the carriage of registered luggage and of goods, the liability of the carrier is
limited to a sum of 250 francs per kilogram, unless the consignor has made, at the
time when the package was handed over to the carrier, a special declaration of
the value at delivery and has paid a supplementary sum if the case so requires. In
that case the carrier will be liable to pay a sum not exceeding the declared sum,
unless he proves that that sum is greater than the actual value to the consignor at
delivery
3. As regards objects of which the passenger takes charge himself the liability of the
carrier is limited to 5,000 francs per passenger.
4. The sums mentioned above shall be deemed to refer to the French franc consisting
of 65 ½ milligrams gold of millesimal fineness 900. These sums may be converted into
any national currency in round figures.
• Carriage of passenger – 125,000 francs
• Carriage of registered luggage and of goods – 250 francs / kg
o XPT: special declaration of the value at delivery and has paid a
supplementary sum if the case so requires.
• Hand-carry lugaggage – 5,000 francs / passenger
MEANING OF INTERNATIONAL TRANSPORTATION
1. that where the place of departure and the place of destination are situated within
the territories of two High Contracting Parties regardless of whether or not there be a
break in the transportation or a transshipment; and
2. that where the place of departure and the place of destination are within the
territory of a single High Contracting Party if there is an agreed stopping place within
a territory subject to the sovereignty, mandate, or authority of another power, even
though the power is not a party to the Convention.
MAPA v. COURT OF APPEALS
G.R. No. 122308 | July 8, 1997
SUMMARY: Mapa’s checked-in 7 pieces of luggage at the TWA counter at JFK Airport but
failed to board the plane because they went to the wrong gate. When finally able to board, 4
out of 7 pieces of luggage were lost upon arrival at Boston. Thereafter MAPAs filed a case
against TWA in the Philippines. TWA moved to dismiss for lack of jurisdiction based on section
28(1) warsaw contending that the complaint should have been brought either in Bangkok
where the contract was entered into, or in Boston which was the place of destination or in
Kansas City which was the carriers domicile and principal place of business. MAPAs claimed
that the WARSAW convention was not applicable because the contract was not a contract
of “International Transportation” as contemplated under the provision of the WARSAW
convention, the RTC as affirmed by the CA dismiss the case for lack of jurisdiction.
DOCTRINE: See meaning of international tranporation
Under Art. 28(1) of the Warsaw Convention, a complaint for damages against an air carrier
can be instituted only in any of the following places/courts:
1. The court of the domicile of the carrier;
2. The court of its principal place of business;
3. The court where it has a place of business through which the contract had been
made;
4. The court of the place of destination.
PERIOD COVERED BY ITERNATIONAL TRANSPORTATION
• Period during which the baggage or goods are in charge of the carrier, whether in
an airport or on board an aircraft, o in the case of landing outside an airport, in any
place whatsoever
• Not cover transportation by sea or by river performed outside the airport
WHEN INTERNATIONAL CARRIER IS LIABLE
1. On board an aircraft
2. Course of any operations of embarking
3. In the course of disembarking
4. Because of delay
LIMIT OF LIABILITY
Warsaw Convention rule on Application of Limited Liability:
1. In the carriage of passengers the liability of the carrier for each passenger is limited
to the sum of 250,000 francs
a. Unless by special contract, the carrier and the passenger may agree to a
higher limit of liability.
2. In the carriage of registered baggage and of cargo, the liability of the carrier is
limited to a sum of 250 francs per kilogramme,
a. Unless the passenger or consignor has made, at the time when the
package was handed over to the carrier, a special declaration of interest
in delivery at destination and has paid a supplementary sum if the case so
requires.
i. In that case the carrier will be liable to pay a sum not exceeding
the declared sum,
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 36
 1. Unless he proves that sum is greater than the actual
value to the consignor at delivery.
3. In the case of loss, damage or delay of part of registered baggage or cargo, or of
any object contained therein, the weight to be taken into consideration in
determining the amount to which the carrier's liability is limited shall be only the total
weight of the package or packages concerned.
a. Nevertheless, when the loss, damage or delay of a part of the registered
baggage or cargo, or of an object contained therein, affects the value of
other packages covered by the same baggage check or the same air
way bill, the total weight of such package or packages shall also be
taken into consideration in determining the limit of liability.
4. As regards objects of which the passenger takes charge himself the liability of the
carrier is limited to 5,000 francs per passenger.
5. The limits prescribed shall not prevent the court from awarding, in accordance with
its own law, in addition, the whole or part of the court costs and of the other
expenses of litigation incurred by the plaintiff.
The foregoing provision shall not apply if the amount of the damages awarded,
excluding court costs and other expenses of the litigation, does not exceed the sum
which the carrier has offered in writing to the plaintiff within a period of six months
from the date of the occurrence causing the damage, or before the
commencement of the action, if that is later.
Under the Warsaw Convention, an air carrier is made liable for damages for:
1. the death, wounding or other bodily injury of a passenger if the accident causing it
took place on board the aircraft or in the course of its operations of embarking or
disembarking;
2. the destruction or loss of, or damage to, any registered luggage or goods, if the
occurrence causing it took place during the carriage by air;" and
3. delay in the transportation by air of passengers, luggage or goods.
ALITALIA v. IAC
G.R. No. 71929 | December 4, 1990
SUMMARY: Dr. Pablo’s luggage was not delivered on time, ALITALIA wants its liability limited.
Dr. Pablo was a UP professor who was invited to read her research paper in Italy. She booked
a flight with ALITALIA from Manila to Milan. Unfortunately, ALITALIS lost her luggage containing
her research and slides, which led to Dr. Pablo deciding just to go back to manila without
being able to give her talk. Dr. Pedro later filed for damages however, ALITALIA invoked the
Warsaw Conventions stipulations on limited liability. THE CFI and IAC ruled in favor of Dr. Pablo.
The S.C. found that the limited liability stipulations in the Warsaw Convention is not absolute
and decided that it was not applicable in the case at bar despite there being no bad faith on
the part of ALITALIA. The Court reasoned that due to the special species of injury caused to Dr.
Pablo, ALITALIA is liable for damages.
DOCTRINE:
The Warsaw Convention does not operate as an absolute limit of the extent of an airline's
liability; it does not regulate or exclude liability for other breaches of contract by the carrier, or
misconduct of its employees, or for some particular or exceptional type of damage
The Hague Protocol amended the Warsaw Convention by removing the provision that if the
airline took all necessary steps to avoid the damage, it could exculpate itself completely, and
(by) declaring the stated limits of liability not applicable "if it is proved that the damage
resulted from an act or omission of the carrier, its servants or agents, done with intent to cause
damage or recklessly and with knowledge that damage would probably result."
Montreal Agreement and CAB Rules on Limit of Liability
Passenger Injury – US$75,000
Tariff Limitation
Air carrier is not liable for the loss of baggage in an amount in excess of the limits specified in
the tariff, which was filed with the proper authorities, such tariff being binding on the
passenger regardless of the passenger’s lack of knowledge thereof, or assent thereto.
Defenses Against Limit of Liability
1. Willful misconduct
2. Gross negligence
3. Absence of baggage check
4. Waiver on the part of the carrier
5. Carrier is estopped from invoking the provision on limit of liability
CATHAY PACIFIC AIRWAYS LTD. v. CA
G.R. No. 60501 | March 5, 1993
SUMMARY:. Luggage misplaced by Cathay in HK. Alcantara, representative of the Cement
Industry Authority and the Philippine Cement Corporation, went to Jakarta as a first class
passenger of Cathay Pacific. His flight itinerary was MNL-HK and thereafter HK-Jakarta. Upon
arrival in Jakarta his luggage, contained clothing and materials for his meeting with the
Director of Trade of Indonesi, was left by Cathay in HK was left in HK. Cathay granted him a
$20 as “inconvenience money” which is really insufficient. Court held that Cathay breached
its contract of carriage and is negligent. The Convention does not operate as an exclusive
enumeration of the instances for declaring a carrier liable for breach of contract of carriage
or as an absolute limit of the extent of that liability. It must not be construed to preclude the
operation of the Civil Code and other pertinent laws. Moreover, Art. 25 of the Convention,
states that the Carrier may not avail of it when the damage is caused (1) by willful misconduct
on his part and (2) any agent acting within his authority.
DOCTRINE: Recognition of Warsaw Convention does not preclude the operation of the Civil
Code and other pertinent laws in the determination of extent of liability of common carriers in
cases of breach of contract of carriage, particularly for willful misconduct of their employees.
Where in breaching the contract of carriage Cathay is not shown to have acted fraudulently
or in bad faith, liability for damages is limited to the natural and probable consequences of
the breach of obligation which the parties had foreseen or could have reasonably foreseen.
Warsaw Convention itself provides in Art. 25 that —
1. The carrier shall not be entitled to avail himself of the provisions of this convention
which exclude or limit his liability, if the damage is caused by his wilfull misconduct or
by such default on his part as, in accordance with the law of the court to which the
case is submitted, is considered to be equivalent to wilfull misconduct."
2. Similarly the carrier shall not be entitled to avail himself of the said provisions, if the
damage is caused under the same circumstances by any agent of the carrier
acting within the scope of his employment
Although the Warsaw Convention has the force and effect of law in this country, being a
treaty commitment assumed by the Philippine government, said convention does not operate
as an exclusive enumeration of the instances for declaring a carrier liable for breach of
contract of carriage or as an absolute limit of the extent of that liability.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 37

SABENA BELGIAN WORLD AIRLINES v. COURT OF APPEALS
G.R. No. 104685 | March 14, 1996
SUMMARY: Lost luggage 2x. The TC and CA ruled in favor of San Agustin. SC eventually found
her to be entitled to such damages finding gross negligence on the part of the common
carrier.
DOCTRINE:
The rules with respect to the extraordinary diligence of common carriers remain basically
unchanged even when the contract is breached by tort although non-contradictory principles
on quasi-delict may then be assimilated as also forming part of the governing law.
And Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they had observed extraordinary diligence as required in Article 1733.
"The only exceptions to the foregoing extraordinary responsibility of the common carrier is
when the loss, destruction, or deterioration of the goods is due to any of the following causes:
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
2. Act of the public enemy in war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the containers;
5. Order or act of competent public authority.
PAL v. CA
G.R. No. L-44936 | September 25, 1992
SUMMARY: HK man loses Films. Chua Min, an HK national on a PAL flight from HK to MNL, lost
his luggage containing films upon landing in Manila. He filed a case to recover the lost items.
PAL invoked the limited liability under the Warsaw Convention. The S.C. ruled that since PAL
failed to give luggage checks to Chua Min, it cannot avail of the limited liability.
DOCTRINE:
Article 22 (2) of the Warsaw Convention because of the unequivocal condition set forth under
the second sentence of Article 4, paragraph 4 that:LibLex
". . . if the carrier accepts baggage without a baggage check having been delivered, or if
the baggage check does not contain the particulars set out at (d), (f), and (h) above, the
carrier shall not be entitled to avail himself of those provisions of the Convention which
exclude or limit his liability."
Article 22 (2) of the Warsaw Convention because of the unequivocal condition set forth under
the second sentence of Article 4, paragraph 4
Article 4 (1)
"For the transportation of baggage, other than small personal objects of which the passenger
takes charge himself, the carrier must deliver a baggage check."cralaw
Article 4 (2):chanrobles.com.ph
"The baggage check shall be made out in duplicate, one part for the passenger and the
other part for the carrier." library 1aw library
Article 4 (4)chanrobles.com.ph
"The absence, irregularity, or loss of the baggage checks shall not affect the existence or the
validity of the contract of transportation which shall nonetheless be subject to the rules of this
Convention. Nevertheless, if the carrier accepts baggage without a baggage check having
been delivered, or if the baggage check does not contain the particulars set out at (d), (f),
and (h) above, the carrier shall not be entitled to avail himself of those provisions of the
Convention which exclude or limit his liability."cralaw virt
Bag Tags: Bag tags, also known as baggage tags, baggage checks or luggage tickets, have
traditionally been used by bus, train and airline companies to route passenger luggage that is
checked on to the final destination.
The passenger stub is typically handed to the passenger or attached to the ticket envelope:
1. to aid the passenger in identifying their bag among similar bags at the destination
baggage carousel
2. as proof—still requested at a few airports—that the passenger is not removing
someone else's bag from the baggage reclaim hall;
3. as a means for the passenger and carrier to identify and trace a specific bag that
has gone astray and was not delivered at the destination.
TORT LIABILITY
Warsaw does not provide for exclusive enumeration of instance when the carrier is liable. It
does not preclude the application of the Civil Code and other pertinent local laws.
VENUE OF ACTION
1. Court where the carrier is domicile
2. Court where the carrier has its principal place of business
3. Court where the carrier has an establishment by which the contract has been
made
4. The court of the place of destination
NOTICE OF CLAIM OR COMPLAINT
• 3 days from date of receipt of baggage
• 7 days from date of receipt –goods
• 14 days, in case of delay, counted from the time the baggage was placed at the
disposal of the passenger
PRESCRIPTION
Article 29 of Warsaw Convention
The right to damages shall be extinguished if an action is not brought within two years,
reckoned from the date of arrival at the destination, or from the date on which the Art. 30 (1).
In the case of transportation to be performed by various successive carriers and falling within
the definition set out in the third paragraph of Article I, each carrier who accepts passengers,
baggage, or goods shall be subject to the rules set out in the convention, and shall be
deemed to be one of the contracting parties to the contract of transportation insofar as the
contract deals with that part of the transportation which is performed under his supervision.
1. to have arrived, or from the date on which the carriage stopped.
2. The method of calculating the period of limitation shall be determined by the law of
the Court seised of the case.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 38
2 years from
1. Date of arrival in destination
2. Date which aircraft ought to have arrived
3. Date on which the carriage stopped
Nature of Prescriptive Period
1. (1) 2 year limitation is an absolute bar to suit and not to be made subject to the
various tolling provisions of the law of the forum
2. (2) only let local laws to determine whether and action had been commenced
within the 2 year period and within our jurisdiction an action shall be deemed
commenced upon filing of a complaint
Not Applicable to Other Cause of Action
1. Warsaw convention does not regulate, much less exempt, the carrier from liability
for damages for violating the rights of its passengers under the contract of carriage,
especially if willful misconduct on the part of the carrier’s employees is found or
established.
2. 2 year prescriptive period not applicable if the cause of action is based on quasi-
delict
SUCCESSIVE CARRIERS
Art. 30 (1) of Warsaw Convention
In the case of transportation to be performed by various successive carriers and falling within
the definition set out in the third paragraph of Article I, each carrier who accepts passengers,
baggage, or goods shall be subject to the rules set out in the convention, and shall be
deemed to be one of the contracting parties to the contract of transportation insofar as the
contract deals with that part of the transportation which is performed under his supervision.
• If member of International Air Transport Association (IATA)
LUFTHANSA GERMAN AIRLINES v. CA
G.R. No. 83612 | November 24, 1994
SUMMARY: Seat in Air Flight Kenya was given to its Manager. Lufthansa issued a confirmed
ticket to Tirso Antiporda covering five-leg trip aboard different airlines. Unfortunately, Air
Kenya, one of the airlines which was to carry Antiporda to Nairboi“bumped” him off and gave
the seat to Lufthansa’s Sales Manager. An action for damages was filed against Lufthansa
which, however, denied any liability, contending that its responsibility towards its passenger is
limited to the occurrence of a mishap on its own line. Court held that when Antiporda
transferred to Air Kenya, Lufthansa’s obligation as a principal in the contract of carriage still
continues until the last leg.
DOCTRINE:
Contract of carriage dealt with one airline but containing several successive carriers is
regarded as a single operation.
“Bumping-off” is not included under the term “delay” to be covered by Warsaw Convention
LIABILITY OF AGENT
The fact that a successive carrier is considered an agent does not necessarily excuse the
agent from liability. The agent is liable for its own negligenct acts or omission in ther
performance of tis duties.
FORMALITIES
Effect of Non-compliance – non-applicatio of the limit of iability. (ex. Absence of a baggage
check)
PART III – MARITIME LAW
CHAPTER 10 - GENERAL CONCEPTS
MARITIME LAW: DEFINED
• System of laws which particularly relates to the affairs and business of the sea, to
ships, their crews and navigation, and to marine conveyance of persons and
property
• Corpus of rules, concepts, and legal practices governing certain centrally important
concerns of the business of carrying goods and passengers by water
• Marine commerce and navigation
• Primary law: NCC
• Special Laws: Salvage Law and COGSA
• Treaties and Convention: International Maritime Organization and UNCLOS
REAL AND HYPOTHECARY NATURE
The liability of the carrier in connection with losses related to maritime contracts is confined to
the vessel, which is hypothecated for such obligation or which stands as the guaranty for their
settlement
“Real”
1. The limitation of the liability of the agents to the actual value of the vessel and
freight money
2. The right to retain the cargo and the embargo and detention of the vessel even in
case where the ordinary civil
THE PHILIPPINE SHIPPING COMPANY vs. FRANCISCO GARCIA VERGARA
G.R. No. 1600 | June 1, 1906.
SUMMARY: Collision. Steamship Navarra collided with the Lourdes. PSC the owner of Navarra
filed a claim against Nuestra but the obligation is deemed extinguished due to loss of the
thing due, which in this case is the all the equipment and the freight money earned during the
voyage which would have amounted to an offer of the value of the vessel
DOCTRINE:
What distinguishes the maritime from the civil law and even from the mercantile law in general
is the real and hypothecary nature of the former, and the many securities of a real nature that
maritime customs from time immemorial, the laws, the codes, and the later jurisprudence,
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 39
have provided for the protection of the various and conflicting interest which are ventured
and risked in maritime expeditions, such as the interests of the vessel and of the agent, those
of the owners of the cargo and consignees, those who salvage the ship, those who make
loans upon the cargo, those of the sailors and members of the crew as to their wages, and Limited Liability Rule: No Vessel, No Liability
those of a constructor as to repairs made to the vessel. • The shipowner’s or agent’s liability is merely co-extensive with the interest in the
vessel such that a total loss thereof results in the extinction
As evidence of this "real" nature of the maritime law we have: • Total destruction of the vessel extinguishes maritime lien because there is no longer
1. the limitation of the liability of the agents to the actual value of the vessel and the any res to which it can attach
freight money
2. the right to retain the cargo and the embargo and detention of the vessel even
cases where the ordinary civil law would not allow more than a personal action Statutory Provisions
against the debtor or person liable. • Agent liable for indemnities issued in favor of 3rd persons are regards to the conduct
of custody of the captain over the goods
It will be observed that these rights are correlative, and naturally so, because if the agent can • Total loss, extinguished; partly loss. Salvage
exempt himself from liability by abandoning the vessel and freight money, thus avoiding the • Civil liability incurred by ship owners limited to appurtenance and freight
possibility of risking his whole fortune in the business, it is also just that his maritime creditor may
for any reason attach the vessel itself to secure his claim without waiting for a settlement of his Coverage of Limited Liability
rights by a final judgment, even to the prejudice of a third person. 1. Liability to 3rd persons
2. Acts of the captain
3. Collision
MONARCH INSURANCE CO. v. CA
G.R. No. 115286 | August 11, 1994 If a person interested wants to exempt himself from liability – before a notary public

SUMMARY: Vessel sank. Multiple claims against Aboitiz for the value of the goods lost. Court Shipowner Entitled to Limited Liability
held that Aboitiz IS negligent but still in the interest of justice since the value of claims is more • Shipowner is the very person for whom the limited liability has been received to
than x3 of the vessel, court applied the limited liability rule. The claimants must be treated as protect
creditors in an insolvent corporation whose assets are not enough to satisfy the totality of the • Charterer and sub-charterer cannot invoke limited liability against the shipowner
claims against it. even if it is a bareboat charter

DOCTRINE: Exceptions of Limited Liability

Exceptions of limited liability rule: 3. Injury or death of a passenger is either due to the fault of the shipowner or to the
1. Where the injury or death to a passenger is due either to the fault of the shipowner, concurring negligence of the shipowner and the captain
or to the concurring negligence of the shipowner and the captain 4. Where the vessel is insured
2. where the vessel is insured 5. Workmen Compensation Claims
3. in workmen's compensation claims 6. Total destruction (Government of the Philippines v. Maritime)

Negligence of Shipowner and Agent

COMPANIA MARITAMA v. INSURANCE COMPANY OF NORTH AMERICA
12 SCRA 213 | October 30, 1964
SUMMARY: Vessel sank. Aboitiz was NOT negligent and the veseel and its cargo lost due to
fortuitous event or force majeure. Lilimted liability rule was was still applied.
DOCTRINE:
Real and Hypothecary nature of maritime law
The liability of the carrier in connection with losses related to maritime contracts is confined to
the vessel, which is hypothecated for such obligations or which stands as the guaranty for
their settlement.
The liability of the vessel owner and agent arising from the operation of such vessel were
confined to the vessel itself, its equipment, freight and insurance, if any, which limitation
served to induce capitalist into effectively wagering their resources against consideration of
the large attainable in the trade
• Limited Liability Rule applies if the captain or the crew caused the damage or injury
• Captain and Crew’s negligence - Limited liability rule APPLIES to the liability of the
SO and agent as to the value of the vessel if the damage was caused by the
unseaworthiness of the vessel
• Shipowner and Captain’s negligence – Limited liability rule DOES NOT APPLY failure
to maintain seaworthiness due because of them alone
o Allowing to play mahjong
o Unseaworthiness at the time of departure, top heavy cargo
• Diligence of a good father of a family not applicable as defense
Burden of Proof: The carrier or ship owner has the burden of showing that it exercised
extraordinary diligence in the transport of the goods it had on board in order to invoke the
limited liability doctrine.
Not Applicable to Insurance Claim
Total loss of the vessel did not extinguish the liability of the carrier’s insurer
Despite the loss of vessel, its insurance answers for the damages that a ship owner or agent,
may be held liable for by reason of the death of its passengers.
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 40

Applicable to Action of Insurer in Subrogation
• Limited liability rule applies to the paying insurer when it exercises its right of
subrogation against the shipowner.
• Insurer is subject to the defenses available to the shipowner as if it were the shipper
who directly sued the same insurer
Workmen’s Compensation
Even when the vessel was lost, the liability is still enforceable
Abandonment
Abandonment of the vessel, its appurtenance and freightage is an indispensable requirement
before the ship-owner or ship agent can enjoy the benefits of the limited liability principle.
Procedure for Enforcement
• Rights of a vessel owner or agent under the Limited Liability Rule are akin to those of
the rights of shareholders to limited liability under our corporation law.
• Both in insolvency and sinking of a vessel, the claimants or creditors are limited to
their recovery to the remaining value of the accessible assets
o Insolvent corporation – residual assets
o Lost vessel – insurance proceeds and pending freightage for the particular
voyage
• The total proceeds of the insurance and pending freightage should be deposited in
trust.
• Claimant should institute necessary limitation and distribution before the proper
admiralty court and thereafter deposit with it the proceeds from the insurance
company and pending freightage in order to safeguard the same pending final
resolution of all incidents, for final pro-rating and settlement thereof.
• Civil liability for collision is merely co-existent with his interest in the vessel, since there
was total loss, and his liability is also extinguished.
PROTESTS
Written statement by the master of a vessel or any authorized officer, attested by proper
officer or a notary, to the effect that damages has been suffered by the ship
Protest is required under the Code of Commerce in the following cases:
1. When the vessel makes an arrival under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the captain believes that the
cargo has suffered damages or averages.
4. Maritime collisions
Admiralty Jurisdiction
Sec. 19(3) of BP 129 or Judiciary Reorganization Act of 1980
(3) In all actions in admiralty and maritime jurisdiction where he demand or claim exceeds
Three hundred thousand pesos (P300,000.00) or , in Metro Manila, where such demand or
claim exceeds Four hundred thousand pesos (P400,000.00)
Two tests have been used to determine whether a case involving a contract comes within the
admiralty and maritime jurisdiction of a court
1. Locational test – Maritime and admiralty jurisdiction, with a few exceptions, is
exercised only on contracts made upon the sea and to be executed thereon.
(Followed by English rule)
2. Subject Matter test – Whether a contract is maritime depends on the nature and
subject matter of the contract, having reference to maritime service and
transportation. (Followed by American rule)
Contract of furnishing supplies maybe considered maritime and within the jurisdiction of
admiralty.
CRESCENT PETROLEUM, LTD. vs. M/V "LOK MAHESHWARI," THE SHIPPING CORPORATION OF
INDIA, and PORTSERV LIMITED and/or TRANSMAR SHIPPING, INC.
G.R. No.155014 | November 11, 2005
SUMMARY: M/V Lok, an Indian vessel, was chartered and sub-chartered by Canadian
Companies. Crescent supplied bunker fuels to the vessel as requested by Portserve however
Crescent received no payment. While the ship was docked in Cebu, Crescent filed an action
to collect a sum of Money. Court held that while the court had admiralty jurisdiction, it still did
not apply it because of the 7 Multi Contact Test. Only 1/7 in PH.
DOCTRINE:
Two tests have been used to determine whether a case involving a contract comes within the
admiralty and maritime jurisdiction of a court :
1. Locational Test - wherein maritime and admiralty jurisdiction, with a few exceptions,
is exercised only on contracts made upon the sea and to be executed thereon.
2. Subject Matter Test - Whether or not a contract is maritime 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 a maritime
service or a maritime transaction
FORFEITURE DUE TO SMUGGLING
Penalty for forfeiture is imposed on any vessel engaged in smuggling under Sec. 2530 of the
Tariff and Custom Code
1. The vessel “used unlawfully in the importation or exportation of articles into or from”
the Philippines
2. The articles are imported to or exported from “any Philippine Port or place, except a
port of entry
3. If the vessel has a capacity of less than 30 tons and is “used in the importation of
articles into any Philippine port or place other than a port of the Sulu Sea, where in
importation in such vessel may be authorized by the Commissioner, with the
approval of the department head”.
MARINE POLLUTION
The Marine Pollution Decree of 1976 – national policy to prevent and control the pollution of
seas by the dumping of wastes and other matter which create hazard to human health, harm
living resources and marine life, damage amenities, or interfere with the legitimate uses of the
sea.
Prohibited Acts
1. Discharge or oil, noxious gaseous and liquid substance into the territorial and inland
navigable waters of the Philippines
2. Liquid state into tributary of any navigable water from which the same shall float or
be washed into the navigable water
3. Deposit or cause suffer or procure to be deposited material of any kind in any place
on the bank of any navigable water
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 41
XPT: In cases of emergency imperiling life or property, or unavoidable accident, collision or 2. Bancas, sailboats and other waterborne contrivance of less than 3 gross tons
stranding or in any cases which constitute danger to human life or property or a real threat to capacity and not motorized
vessel.
Art. 835 cannot be applied to small boats engaged in river and bay traffic
Definitions Pollution Insurance
1. Discharge – any spilling leaking, pumping, pouring, emitting, emptying or dumping
but does not include discharge of effluent from industrial or manufacturing LOPEZ v. DURUELO
establishments, or mill of any kind. G.R. No. L-29166 | October 22, 1928
2. Dumping – deliberate disposal at sea and into navigable waters of wastes or other
matter from vessels, aircraft, platforms or other man-made structures at sea, SUMMARY: Not a vessel. The motorboat and Steamer collided resulting to the sinking of
including the disposal of wastes or other matter directly arising rom or related motorboat and injuries of Lopez. Jison’s owner and patron contend that he has no right of
exploration, exploitation, etc. action since he failed to protest within 24 hours. Court held that motorboat Jison is not a vessel
3. Oil – any kind or in any form including but not limited to petroleum, fuel oil, sludge, contemplated under Art. 835 of Code Commerce and no protest within 24 hours are needed
oil refuse, etc. for it to claim damages.
4. Vessel – watercraft or other artificial contrivance used, capable of being used, as a
means for transportation on water DOCTRINE:
5. Refuse – garbage, waste, wood, residues, sand, lime and cinder ashes, etc. Any floating apparatus which serves directly for transportation of things or persons or which
indirectly is related to the industry is NOT a kind of vessel related in the Code of Commerce.

MARINE INSURANCE The protest required by article 835 of the Code of Commerce in case of collision between
MARINA Memorandum Circular Nos. 09-18 vessels is not necessary to preserve the rights of a person aboard a motor boat engaged in
conveying passengers between ship and shore who is injured in a collision between the motor
Persons Covered Amount of Coverage Risk Insured Against / Nature boat and the larger vessel.
of Compensation
Passengers P200,000.00/passenger Death
Unmanifested Passengers P200,000.00/passenger Death Other Vessels
Survivors P50,000.00/passenger Survivorship Coverage / Although small watercrafts are not contemplated under certain provisions of Code of
Monetary Assistance Commerce and special laws. MARINA and other government agencies regulate them.
Surviving Passengers P50,000.00/passenger Monetary Assistance
Kinds of Vessels
Passenger – includes any person while embarking on, on board, or disembarking from the 1. Passenger ship – carriers more than 12 passengers
ship. 2. Cargo ship – not a passenger ship
• Includes: ticketed, unticketed, manifested, unmanifested, paying, non-paying, 3. Tanker – carries liquid cargo of an inflammable nature
minor, discounted, complimentary, accompanying cargo or animals or vehicles. 4. Fishing vessel – used in catching fish, whales, seals, walrus
5. Nuclear Ship – nuclear power plant
Wreck Recovery and Pollution Liability Insurance 6. New Ship – a ship the keel of which is laid or which is at a similar stage of
MARINA Memorandum Circular No. 1, 2009 construction on or after the date of coming into forces of SOLAS 1974
Mandate to secure insurance coverage for pollution liability and liabilities arising from wreck 7. Existing Ship – not a new ship
removal.

CONSTRUCTIONS, EQUIPMENT AND MANNING

Gross tonnage – measure of overall size of a ship
Net tonnage – measure of useful capacity of a ship

CHAPTER 11 - VESSEL
VESSEL AS PERSONAL PROPERTY
DEFINITION • Considered as personal property under the civil law
Any barge, lighter, bulk carrier, passenger ship, freighter, tanker, container ship, fishing boats • Chattel mortgage must be entered in the record of Collector of Customs
or other artificial contrivance utilizing any source of motive power, designed, used or capable
of being used as a means of transportation operating under a common carrier.
ACQUISITION
XPT: Vessel can be transferred only with approval of the sale or transfer, it is required that the buyer
1. Owned and/or operated by the Armed Forces of the Philippines and by foreign shall within 15 days from approval of the MARINA secure a new Certificate of Philippine
governments for military purposes Registry and Certificate of Ownership

Prescription
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 42

2 Types of Prescription 2. Ships of Philippine Coast Guard
1. Ordinary Prescription 3. All ships of foreign registry temporarily used in the Philippine Waters
a. Person must be in continuous possession 4. Inflatable Boats used for the rescue made either a single or more tubing
b. Possession must be for a period of 3 years
c. Possession must be in good faith
SHIP’S MANIFEST
2. Extraordinary Prescription – 10 years • Manifests shall be required for cargo and passengers transported from one place or
port in the Philippines to another only when one or both of such places is a port of
Sale entry.
Must be registered with MARINA to affect 3rd persons • Declaration of the entire cargo
• A vessel must carry a manifest is not complied with even if a bill of lading can be
Co-owner’s Rights presented
If a vessel is sold to a 3rd person, the co-owner is given the right of redemption within 9 days • A bill of lading is JUST A DECLARATION of the SPECIFIC cargo not the general cargo.
following the inscription of the sale in the registry and by depositing the price at the same
time. LOGBOOK
• Ship’s log/logbook is the official record of a ship’s voyage which its captain is
obligated by law to keep wherein he records the decisions he has adopted, as
NATIONALITIY OF VESSELS summary of the performance of the vessel, and other daily events.
Vessels duly registered in the Philippines are considered Philippine Flag vessels. • Respectable record that can be relied upon when the entries therein are presented
in evidence
Rights Under the Tariff and Customs Code
• Certificate of Philippine registry confers upon the vessel the right to engage in
overseas shipping SAFETY REGULATIONS
• Can only be deleted in the Philippine registry if MARINA shall have the power to inspect vessels and all equipment on board to ensure
o No other Philippine shipping enterprise is interested in acquitting the vessel compliance with safety standards.
o The vessel has to be scrapped

Flags of Convenience CABOTAGE

UNCLOS provides that there must be a genuine link between the State and the ship in order to Foreign Ships Co-Loading Act
confer nationality over the ship Right of foreign vessels to engage in coastwise shipping, that is, to provide service from one
place within the Philippines to another place in the Philippines.

REGISTRATION OF VESSELS
Vessels are now registered through Maritime industry Authority. Registered owner is presumed REPAIR OF VESSELS
to the owner of the vessel. If not registered, it is not binding to others • Ship repairers are liable to the ship owner for any damage that was cause to the
vessel while the same is undergoing repairs.
• Repairer may be held liable for the loss of the vessel.
FAUSTO RUBISO & BONIFACIO GELITO v. FLORENTINO RIVERA • May agree to limit
G.R. No. L-11407 | October 30. 1917

SUMMARY: Did not register. Rivera acquired pilot boat Valentina on January 4, 1915, from its
original owner the Chinaman Sy Qui, but did not inscribe his title in the mercantile registry
according to article 573 of the Code of Commerce in relation to article 2 of Act No. 1900, until CHAPTER 12 – SHIP MORTGAGE AND MARITIME LIENS
much later on. Subsequently Fubiso bought said pilot boat in a sale at public auction for the
sum of P55.45 and inscribed his title in the mercantile registry immediately.

DOCTRINE: APPLICABLE LAWS AND RULES

The requisite of registration in the registry of the purchase of a vessel is necessary and • Primary Law: The Ship Mortgage Decree of 1978
indispensable in order that the purchaser's rights are maintained against a claim by third • Secondary Law: Code of Commerce
persons.
History of Ship Mortgage Decree
1. To accelerate the growth and development of the shipping industry
Register of the Philippine Vessels 2. To extend the benefits accorded to overseas shipping under PD 214 to domestic
GR: All vessels should be registered even if under shipping
XPT:
1. Warships and naval ships MEANING OF PREFERRED MORTGAGE
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 43

A preferred mortgage shall constitute a lien upon the mortgaged vessel in the amount of the Any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other
outstanding mortgage vessel in the amount of the outstanding mortgage indebtedness necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such
secured by such vessel. vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which
may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was
given to the vessel.
REQUIREMENTS FOR PREFERRED MORTGAGE
A valid mortgage, which at the time it is made includes the whole of any vessel or domestic
ownership and shall have, in respect to such vessel and as of the date of recordation shall PREFERRED CLAIMS
have the preferred status GR: Preferred Mortgage lien should have priority over all claims against the vessel.
1. Mortgage is recorded XPT:
2. Affidavit is filed with the record of such mortgage to the effect that the mortgage is 1. Expenses and fees allowed and costs taxed by the court and taxes due to the
made in good faith and without any design to hinder, delay, or defraud any existing Government
or future creditor of the mortgagor or any lien or the mortgaged vessel 2. Crew’s wages
3. Does not stipulate that the mortgage waives the preferred status 3. General average
4. Mortgage shall cover the whole vessel 4. Salvage; including contract salvage
5. Vessel must be of domestic ownership 5. Maritime liens arising prior in time to the recording of the preferred mortgage
6. Damages arising out of tort
7. Preferred mortgage registered prior in time
MARITIME LIEN
• A privileged claim on a vessel for some service rendered to it to facilitate its use in Executory Contract Doctrine
navigation. • A lien does not attach for breach of an executor contract even though the
• Akin to mortgage lien, in that in spite of the transfer of ownership, the lien is not contract is the type, which normally gives rise to a lien
extinguished • Liability arises in admiralty for breach of contract but if the parties have performed
• Inseparable from the vessel and until discharged, it follows the vessel his obligation, his remedy against the other is only for breach in an action in
personam
• Ex. There is no lien in favor of a person who has not yet delivered the supplies to the
POILAND INDUSTRIAL LIMITED vs. NATIONAL DEVELOPMENT COMPANY, DEVELOPMENT BANK OF vessel even if there is already a valid contract.
THE PHILIPPINES
G.R. No. 143866 | August 22, 2005 Waiver of Lien
Furnishers of repairs, supplies, towage, use of dry dock or marine railway, or other necessaries,
SUMMARY: or the mortgagee, are not prevented from waiving their right to a lien, or in the case of a
• Asian Hardwood lends money to Galleon. preferred mortgage lien, to the preferred status of such lien, at an time by agreement or
• Galleon & DBP had MOU to secure the payment of Galleon on some of he vessels otherwise.
purchased from Japanese lenders.
• Galleon mortgaged the vessel to DBP Prescription and Laches
• Galleon & NDC had a merger and assumed management and operations of Action created by law must be brought within 10 years from the time the right of action
Galleon accrues.
• NDC paid Asian Hardwood
• Galleon failed to pay NDC Maritime Liens for Necessaries
• BUT BEFORE ALL OF THAT: Asian Hardwood assigned its rights to World Universal and Maritime Lien that are superior to the preferred mortgage includes maritime lien for
to Poliand necessaries.
1. The necessaries must have been furnished to and for the benefit of the vessel
Poliand v. DBP on who will have the maritime lien over the properties. Court held it is Poliand 2. The necessaries must have been necessary for the continuation of the voyage of the
because advances were used to cover for the payment of bunker oil/fuel, unused stores and vessel
oil, bonded stores, provisions, and repair and docking of GALLEON vessels. 3. The credit must have been extended to the vessel
4. There must be necessity for the extension of the credit
DOCTRINE: 5. Necessaries must be ordered by persons authorized to contract on behalf of the
Maritime Lien vessel.
• Akin to a mortgage lien in that in spite of the transfer of ownership, the lien is not
extinguished. The following shall be presumed to have authority from the owner to procure repairs, supplies,
• The maritime lien is inseparable from the vessel and until discharged, it follows the towage, use of dry dock or marine railway and other necessaries:
vessel. Hence, the enforcement of a maritime lien is in the nature and character of 1. Managing Owner
a proceeding quasi in rem. 2. Ship’s husband
3. Master
Maritime Lien for Necessaries (persons entitled to such lien) 4. Any person to whom the management of the vessel the port of is entrusted.

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 44

Examples of maritime liens for necessaries: expenses for payment of bunker oil/fuel, unused WHO MAY CONSTITUTE PREFERRED SHIP MORTGAGE
stores and oil, bonded stores, provisions and repair and docking of the vessel are preferred Any citizen of the Philippines, or any association or corporation organized under the laws of
claims because they are necessaries. PH, at least citizens of the Philippines own 60% of the capital of which

Maritime Tort Purpose

Civil wrongs committed on navigable waters. Or any conduct which is tortuous under general Loan secured by the ship mortgage must be for the purpose of financing the construction,
law and which is connected with the ship or its uses creates a maritime lien. acquisition, and purchase of vessels or initial operation of vessels

Salvage Lien Formal Requirements

One of arising ex contractu and given preference because of the benefit conferred in 1. Mortgage is recorded
preserving the value of the vessel and the cargo. 2. Affidavit is filed with the record of such mortgage
3. Mortgage does not stipulate that the mortgagee waives the preferred status thereof
Subrogation
That a third person who satisfies the obligation to an original maritime lienor may claim from MARINA Rules
the debtor because the third person is subrogated to the rights of the maritime lienor over the Administers the annotation and/or cancellation of any mortgage over vessels.
vessel.
Ex. The persons who advanced the wages of the crew of the vessel is subrogated to the rights
of crew for their claim for wages. MORTGAGE OF VESSEL WITH OTHER PROPERTIES
The Ship Mortgage Decree provides for rules that govern cases when the vessel is mortgaged
When Proceeds Not Sufficient with another vessel or a non-maritime property
If proceeds of sale should not be sufficient to pay all creditors included, the residue shall be
divided among them pro rata. Mortgage with Non-Maritime Property
In case of a mortgage, which includes property other than, a vessel, the mortgage shall not
be held a preferred mortgage unless the mortgage provides for the separate discharge of
CRESCENT PETROLEUM, LTD. vs. M/V "LOK MAHESHWARI," THE SHIPPING CORPORATION OF such property by the payment of a specified portion of the mortgage indebtedness.
INDIA, and PORTSERV LIMITED and/or TRANSMAR SHIPPING, INC.
G.R. No.155014 | November 11, 2005 Fleet Mortgage
Mortgage of 2 or more vessels. Mortgage may provide separate discharge of each vessel by
SUMMARY: M/V Lok, an Indian vessel, was chartered and sub-chartered by Canadian the payment of a portion of mortgage indebtedness.
Companies. Crescent supplied bunker fuels to the vessel as requested by Portserve however
Crescent received no payment. While the ship was docked in Cebu, Crescent filed an action ARREST AND FORECLOSURE
to collect a sum of Money. Court held that while the court had admiralty jurisdiction, it still did Upon default of the obligor, the preferred ship mortgaged may be foreclosed in a suit in
not apply it because of the 7 Multi Contact Test. Only 1/7 in PH. admiralty.

DOCTRINE
Tests to Determine the Presence of Lien
1. Law of the Country where supplies were furnished CHAPTER 13 – PERSONS WHO TAKE PART IN MARITIME COMMERCE
2. The Lauritzen-Romero-Rhoditis trilogy of cases (Lauritzen v. Larsen)
1. Place of wrongful act
2. Law of the flag LIABILITY OF SHIP OWNERS AND SHIP AGENTS
3. Allegiance or domicile of the injured • The Shipowner is the person primarily liable for damages sustained in the operation
4. Allegiance of the defendant shipowner of vessel.
5. Place of contract • Naviero – construed to include the shipowner, ship agent and even the charter who
6. Inaccessibility of foreign forum is considered as owner pro hac vice.
7. Law of the forum

3. Factors provided in Restatement (Second) of Conflicts of Law STANDARD OIL COMPANY OF NEW YORK v. LOPEZ CASTELO
1. Place of contracting G.R. No. L-13695 | October 18, 1921
2. The place of negotiation of contract
3. Place of performance SUMMARY: Petroleum cargoes were jettisoned due to storm. Standard Oil shipped petroleum
4. Place of location of the subject matter of the contract via Steamer Batangueno, a chartered vessel of Chumbuque. A storm came and the
5. Domicile, residence, nationality, place of incorporation of business of petroleum cargoes on the deck were jettisoned. Standard Oil filed a claim for the value of
parties these jettisoned cargoes. Court the shipowner and charterer civilly liable despite the failure of
the captain to institute liquidation proceedings and making of liquidation is not a condition

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 45

precedent to the liability of shipwoner. The deck cargoes are also included in the general
weight average of the ship. Bill of lading did not state how the petroleum needs to be stored.
DOCTRINE:
The owner of the vessel is civilly liable for the acts of the captain; and he can only escape
from this civil liability by abandoning his property in the ship and any freight that he may have
earned on the voyage
Jettisoned goods carried on deck, according to the custom of trade, by steam vessels
navigating coastwise and in land waters are entitled to contribution as general average loss.
Ship Agent Defined
A person entrusted with the provisioning of the vessel, or who represents her in the port in
which she happens to be.
Extent of Liability
Joint and several liability applies both for breach of contract and extra-contractual obligation
as a tort.
VICENTE VERZOSA and RUIZ, REMENTERIA CIA.S. in C., v. SILVINO LIM and SIY CONG BIENG &
COMPANY, INC.
G.R. No. 20145 | November 15, 1923
SUMMARY: Collision. Perla and Ban Yek collided because Ban Yek did not heed to the signal
of Perla. Court held Ban Yek, its owner and agent is liable to Perla for the damages and also
because Perla was in the right of way.
DOCTRINE:
In Art. 826 of the Code of Commerce, it is declared that the owner of any vessel shall be liable
for the indemnity due to any other vessel injured by the fault, negligence, or lack of skill of the
captain of the first.
WING KEE COMPRADORING CO. v. BARK "MONONGAHELA"
G.R. No. 19540 | January 29, 1923
SUMMARY: Non-payment of amount due in furnishing the bark. Wee Kee sold goods, wares,
and merchandise to the defendants for the use of the crew of the Bark Monongahela. It was
seeking payment from Admiral Lines as the agent as stipulated in the documents and bills
presented. However, Admiral argues that its agency ceased and action cannot be filed
against it. Court found Admiral liable ONLY for the time it was still the agent.
DOCTRINE:
Article 586 of the Code of Commerce - the owner of a vessel and agent 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 the creditor proves that the amount claimed was invested
therein.
YU BIAO SONTUA & CO v. MIGUEL OSSORIO
G.R. No. L-17690 | June 14, 1922
SUMMARY: Fire extended to the other ship. Fire broke out in the motoroboat Alfonso which
extended to Yu Biao’s Steamer Y. Sontua. Fire broke out because of the improper loading of
petroleum and gasoline. Court held that the fire breakage was due to the negligence of
Ossorio’s crew and he as well as the owner of the motorboat
DOCTRINE:
Vessel owner's liability in general. — The general liability of a vessel owner extends to losses by
fire arising from other than a natural or other excepted cause, whether occurring on the ship
accidentally, or communicated from another vessel, or from the shore; and the fact that fire
produces the motive power of a boat does not affect the case. Such losses are not within the
exceptions either of act of God, or peril of the sea, except by local custom, unless proximately
caused by one of these events. In jurisdictions where the civil law obtains, however, it has
been held that if property on a steamboat is destroyed by fire, the owners of the boat are not
responsible, if it was being navigated with proper diligence, although the accident occurred
at night. The common law liability extends even to loss by fires caused entirely by spontaneous
combustion of the cargo, without any negligence on the part of master or crew.
Responsibility of the master to 3rd persons
Although the duties enumerated in article 612 of the Code of Commerce are inherent in the
master, the civil liability arising from the nonfulfilment thereof is not limited to the latter, since
while the master is responsible to the ship agent, he is, in turn, liable to third persons, as is
clearly provided in article 618 of the said Code, which in its subsections 5 and 7 expressly
mentions such duties enumerated in the aforesaid article 612.
When Captain Acts in Excess of Authority
The shipowner and the ship agent are liable in certain cases even if the captain has
exceeded his authority if the proceeds of an obligation redounded to the benefit of the
vessel.
Liability for Extra-Contractual Obligations
• The owner and his agent are liable for the tortuous acts of his agent
• The shipowner and the ship agent, in turn, can make the captain liable for his
negligence
• Art. 2176 – action in quasi delict
• Art. 2180 – direct and primary and solidary with the employee
o There is presumption on negligence in the selection and supervision but
can escape liability if he can prove that he exercised due diligence
PART OWNERS
• Maybe civilly liable in proportion
• Resolution of the majority relating to dissolution shall also be binding in the minority
• Owners of vessel shall have preference in her charter over other persons
POWERS AND FUNCTIONS OF SHIP AGENT
Whether acting as agent of the owner of the vessel or as agent of the charterer, a person
shall still be considered as ship agent and may be held liable, as long as the latter is the one
that provisions or represents the vessels.
• Not agent – IF only function is to inform the consignee of the arrival of the vessel
MACONDRAY AND CO., INC. v. PROVIDENT INSURANCE CORPORATION
G.R. No. 15405 | December 9, 2004
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 46
SUMMARY: Losses/shortage of Potash. Canpotex shipped potash, in favor of Atlas to be
delivered in Cebu which were insured by Provident. Upon arrival, it was discovered that the Qualifications
shipment sustained losses. Provident paid for and thereby subrogated of the right to go after • Filipino
Macondray but the latter refused to pay so Provident filed a case. Macondary is considered a • Legal capacity to contract
ship agent, he is still liable for such. Macondray was appointed as local agent of the vessel • skill
which and duty includes arrangement for the entrance and clearance of the vessel and
Notice and Custom’s Clearance as well. Powers and Functions
The captain of a vessel is confidential and managerial employee
DOCTRINE: A master of captain is one who has the command of a vessel
Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with 1. General agent of the shipowner
provisioning or representing the vessel in the port in which it may be found." 2. Commander and technical director of the vessel
3. Representative of the country under whose flag navigate
Hence, whether acting as agent of the owner of the vessel or as agent of the charterer,
petitioner will be considered as the ship agent and may be held liable as such, as long as the
Other powers and obligations from Code of Commerce
latter is the one that provisions or represents the vessel.
1. Make contracts
2. Direct the vessel to the port of destination
3. Regulation of merchant
ACE NAVIGATION CO., INC. v. FGU 4. Make contracts for charter party
G.R. No. 171591 | June 25, 2012 5. Adopt all proper measures to keep the vessel supplied and equipped
6. Make repairs
SUMMARY: Damaged Grey Portland Cement. Cardia shipped cement to its consignee
Hendrich in Manila but it was damaged. Hendrich filed a case against Ace Navigation. Ace Discretion of Captain or Master
Nav said it is not an agent. Court rule that AceNav cannot be held liable for the damage • A ship captain must be accorded a reasonable measure of discretionary authority
caused by Cardia as its obligation is only limited to inform the consignee of the arrival of the to decide what the safety of the ship and of its crew and cargo specifically requires
vessel in order for Hendrich to take possession of the property. on a stipulated ocean voyage.
• Captain has control of all the departments of service in the vessel and reasonable
DOCTRINE: discretion in its navigation
Under Article 586, a ship agent is defined as the person entrusted with the provisioning of a
vessel, or who represents her in the port in which she may be found.
INTER-ORIENT MARITIME ENTERPRISES v. NLRC
Note: Important Point regarding the purpose of a Bill of Lading as a contract in this case. “As a G.R. No. 115286 | August 11, 1994
contract, it names the contracting parties, which include the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations assumed by SUMMARY: Captain chose not to sail due to non-arrival of supplies. Capt. Tayong sailed M/V
the parties. As such, it shall only be binding upon the parties who make them, their assigns and Oceanice from HK -> SG -> South Africa. He took necessary precautions such as when there
heirs.” was a storm and on not deciding to sail to from SG -> Africa since the vessel is unseaworthy
and really needed to await for the supplies to be delivered in SG before sailing to Africa.
Petitioners illegally dismissed him because they suffered delay due to Capt. Tayong’s call to
Powers of Ship Agent wait for the supplies and said that it was not really necessary.
• Can enter into contracts to provision the ship
• He can purchase necessary supplies and fuel that are necessary for a particular DOCTRINE:
voyage The applicable principle is that the captain has control of all departments of service in the
• Right to represent the vessel in any action in a court or tribunal vessel, and reasonable discretion as to its navigation

Discharge of Captain and Crew Compagnie de Commerce vs. Hamburg is instructive and wherein the Court recognized the
Captain and crew is subject to the provisions of discretionary authority of the master of a vessel and his right to exercise his best judgment,
• Labor Code - for those employed for domestic with respect to navigating the vessel he commands
• POEA – seamen who are hired for overseas employment
Liability of Captains and Master
Captain shall be civilly liable to the ship agent and the later to the third persons that may
CAPTAINS AND MASTERS OF VESSELS have made contracts with the former:
• Captain – those who govern vessels that navigate the high seas or ships of large 1. Damage due to negligence
dimensions and importance, although they are engaged in the coastwise trade 2. Theft committed by crew
• Masters – those who command smaller ships engaged exclusively in the coastwise 3. Losses, fines and confiscations on violation of customs, police, health.
trade 4. Losses or damage caused by mutinies on board the vessel
But for the purpose of maritime commerce, both have the same meaning 5. Misuse of powers and non-fulfillment of obligation
6. By reason of going out of his course without sufficient cause
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 47

 7. Enterting a port other than the destination f) a pilot shall be held responsible for the direction of a vessel from the time he assumes his
8. Non-observance of regulations work as a pilot thereof until he leaves it anchored or berthed safely; Provided, however, that
his responsibility shall cease at the moment the Master neglects or refuses to carry out his
order.
PILOTAGE
Pilot – a person duly qualified and licensed to conduct a vessel into or out of ports, or in
certain waters. Pilot and His Association
It includes both: The fact that a pilot is a member of an association does not make the association jointly and
1. Those whose duty is to guide vessels into or out of ports in particular waters severally liable
2. Those entrusted with the navigation of the vessels on the high seas
OTHER CODE OF COMMERCE PROVISIONS ON CAPTAINS
Master and Pilot • Captain cannot be substituted without consent of agent
• The pilot supersedes the master for the time being in the command and navigation • Captains may not contract loans on respondentia
of the ship and his orders must be obeyed in all matters connected with her • If there is a privateer, captain must inform his agent or shipper and sail under
navigation. convoy
• The pilot does not take entire charge of the vessel but is deemed merely the adviser • A captain must make a protest within 24 hours after occurrence of hurricane and
of the master,who retains command and control of the navigation even in localities caused damage to vessel
where pilotage is compulsary

Shipowner and Pilot OFFICERS AND CREW OF VESSELS

• A pilot is personally liable for damages caused by his own negligence or default to MARINA in International Trade
the owners of the vessel and to third parties for damage sustained in a collision. 1. Master
• Such negligence is a marine tort 2. Deck Offcer
• Shipowner is liable to negligent act of pilot if not compulsory hired 3. Chief Engineer
4. Engineer Officer
5. Radio Officers
FAR EASTERN SHIPPING v. COURT OF APPEALS 6. Ratings
G.R. No. 130068 | October 1, 1998
MARINA in Domestic Trade
SUMMARY: Both Pilot and Master Liable. Pilot Gavino ordered the anchored to be dropped 1. Officer
but the crew and master failed to immediately dropped immediately and take necessary 2. Master
precaution. 3. Chief Mate
4. Deck Officer
DOCTRINE: 5. Chief Engineer Officer
In case of compulsory pilotage, the respective duties and responsibilities of the compulsory 6. Second Engineer Officer
pilot and the master have been specified by the same regulation: 7. Engineer Officer
8. Medical Practitioner
SEC. 11. Control of vessels and liability for damage. — On compulsory pilotage grounds, the 9. Radio Operator
Harbor Pilot providing the service to a vessel shall be responsible for the damage caused to a 10. Paramedics
vessel or to life and property at ports due to his negligence or fault. He can only be absolved 11. Major Patron
from liability if the accident is caused by force majeure or natural calamities provided he has 12. Minor Patron
exercised prudence and extra diligence to prevent or minimize damage. 13. Boat Captain
14. Marine Diesel Mechanic
The Master shall retain overall command of the vessel even on pilotage grounds whereby he 15. Electrician
can countermand or overrule the order or command of the Harbor Pilot on board. In such 16. Rating
event, any damage caused to a vessel or to life and property at ports by reason of the fault
or negligence of the Master shall be the responsibility and liability of the registered owner of Regulation of Merchant Marine Profession
the vessel concerned without prejudice to recourse against said Master Policy of the State to promote and insure the safety of life and property at sea, protect and
serve the marine environment and ecology and prevent marines from accident.
Such liability of the owner or Master of the vessel or its pilots shall be determined by
competent authority in appropriate proceedings in the light of the facts and circumstances of MINIMUM SAFE MANNING
each particular case. There should be a sufficient number of officers and crew that are serving tin the vessel

SEC. 32. Duties and responsibilities of the Pilot or Pilots' Association. — The duties and The following are issued by MARINA:
responsibilities of the Harbor Pilot shall be as follows: 1. Certificate of Competency
2. Certificate of Endorsement
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 48

 3. Certificate of Proficiency • It involves a charterer who is most often a merchant himself or herself who desires to
lease a ship or vessel owned by another for the transport of his or her goods for
SECURITY OF TENURE commercial purposes
• An employee cannot be dismissed without just or lawful cause and without
affording the employee due process
• Employees working on foreign vessel – POEA DIFFERENT KINDS OF CHARTER
o POEA Standard Employment Contract for Seamen – for protection 1. Bareboat or Demise Charter
• Shipowner leases to the charterer the whole vessel, transferring tot the
OTHER OFFICERS AND CREW UNDER THE CODE OF COMMERCE latter the entire command, possession and consequent control over the
Under the Code of Commerce vessel’s navigation, including the master and the cew, who become the
1. Captain charterer’s servants
2. Sailing Mate or Chief Mate • Charterer takes over the ship, lock, stock and barrel
3. Second Mate • Charterer becomes the owner “pro hac vice”
4. Marine Engineer • Master of the vessel is the agent of the charterer and not of the shipowner
5. Crew
6. Supercargoes 2. Contract of Affreightment
a. Time Charter – Vessel leased to the charterer for a fixed period of time
Sailing Mate b. Voyage Charter - Vessel leased to the charterer for a particular voyage
He is the 2nd chief of the vessel and next only to captain of the vessel

COASTWISE LIGHTERAGE CORPORATION vs. COURT OF APPEALS and the PHILIPPINE GENERAL
INSURANCE COMPANY
Second Mate and Marine Engineer G.R. No. 114167 | July 12, 1995
To watch over the preservation of the body of the vessel, take carge that cargo is well –
arranged, discipline employees, assign works, take charge of inventory of riggings. SUMMARY: Contract of Affreightment. One of the barges, "Coastwise 9," struck an unknown
sunken object. Shipper Pag-asa denies liability to the consignee and insurer because it alleges
Just causes in dismissal of seaman that contract of affreightment transforms the common carrier into a private one. Court ruled
1. Crime that disturbs the order on vessel that a contract of affreightment does not transform a CC into a private one and therefore, for
2. Repeated insubordination failure of Coastwise to exercise extraordinary diligence, it was liable to pay PhilGen.
3. Repeated incapacity
4. Habitual drunkenness DOCTRINE:
5. Incapacity of man to perform work entrusted to him "Under the demise or bareboat charter of the vessel, the charterer will generally be regarded
6. Desertion as the owner for the voyage or service stipulated. The charterer mans the vessel with his own
people and becomes the owner pro hac vice, subject to liability to others for damages
Supercargoes caused by negligence. To create a demise, the owner of a vessel must completely and
In charge of administrative duties which the ship agent or shippers may have assigned to exclusively relinquish possession, command and navigation thereof to the charterer, anything
them short of such a complete transfer is a contract of affreightment (time or voyage charter party)
or not a charter party at all.
Sailing Mate or Chief Mate Binnacle Book
Marine Engineer Engine Book
Supercargo Accounting Book LITONJUA SHIPPING COMPANY v. NATIONAL SEAMEN BOARD & CADONGO
G.R. No. L-51910 | August 10, 1989

SUMMARY: Bareboat charter. Litonjua was appointed as crew-managing agent of the

charterer Fairwind. Litonjua illegally dismissed his hired engineer. Litonjua denies liability and
said that it is the shipowner who is liable and not the charterer Fairwind and Litonjua. In short
he denies that it is a bareboat charter BUT he failed to attach the charter contract, which
CHAPTER 14 – CHARTER PARTIES
resulted for the court to assume that it is indeed a bareboat charter.

CHARTER PARTY DOCTRINE:

• A contract whereby an entire ship, or some principal part of the said ship, is let by
the owner to a merchant or other person for a specified time or use for the
conveyance of goods, in consideration of the payment of freight.
• A form of “mercantile lease”
What is a "bareboat" or "demise" charter?
• A bareboat or demise charter is a demise of a vessel, much as a lease of an
unfurnished house is a demise of real property.
• It is well settled that in a demise or bare boat charter, the charterer is treated as
owner pro hac vice of the vessel, the charterer assuming in large measure the

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 49

 customary rights and liabilities of the shipowner in relation to third persons who have XPT: properly authorized by owner or by resolution of majority of co-owners provided that he
dealt with him or with the vessel have his certificate of appointment
• Possesion : charterer who then undertakes to provide a crew and victuals and
supplies and fuel for her during the term of the charter. 4. Captain or Master
• Crew: charterer (see exception below) • Inherent power of Captain or Master but ONLY in
GR: crew to be provided by the charterer. The shipowner is not normally required by the terms o event of absence of ship agent or consignee
of a demise charter to provide a crew, and so the charterer gets the "bare boat", i.e., without o if he acts in accordance with the instructions of the agent or owner and
a crew. protects the latter’s interests

XPT: Sometimes, of course, the demise charter might provide that the shipowner is to furnish a
master and crew to man the vessel under the charterer's direction, such that the master and REQUISITES OF A VALID CHARTER PARTY
crew provided by the shipowner become the agents and servants or employees of the 1. Consent of Contracting Parties
charterer, and the charterer (and not the owner) through the agency of the master, has 2. Existing vessel which should be placed at the disposition of the shipper
possession and control of the vessel during the charter period 3. Freight
• In such case, the Master of the vessel is the agent of the charterer and not of the 4. Compliance with the formal requirements prescribed under Art. 652 of the Code of
shipowner. Commerce which include that the charter party must be:
a. Writing
KINDS OF CHARTER b. Drawn in duplicate
In modern maritime law and usage, there are three (3) distinguishable types of charter parties: c. Signed by the parties
1. the "bareboat" or "demise" charter (explained earlier)
Formal Requirements of Charter Party
2. the "time" charter
o like a demise charter, is a contract for the use of a vessel for a specified period Article 652. A charter party must be drawn in duplicate and signed by the contracting parties,
of time or for the duration of one or more specified voyages. and when either does not know how or can not do so, by two witnesses at their request.
o Possesion & crew: shipowner, it retains possession and control through the The charter party shall include, besides the conditions unrestrictedly stipulated, the following
master and crew who remain his employees statements:
o What the time charterer acquires is the right to utilize the carrying capacity 1. The kind, name, and tonnage of the vessel.
and facilities of the vessel and to designate her destinations during the term of 2. Her flag and port of registry.
the charter. 3. The name, surname, and domicile of the captain.
4. The name, surname, and domicile of the agent, if the latter should make the charter
3. the "voyage" or "trip" charter party.
o a contract of affreightment, that is, a contract for the carriage of goods, from 5. The name, surname, and domicile of the charterer, and if he states that he is acting
one or more ports of loading to one or more ports of unloading, on one or on by commission, that of the person for whose account he makes the contract.
a series of voyages. 6. The port of loading and unloading.
o Possesion & crew: shipowner 7. The capacity, number of tons or weight, or measure which they respectively bind
themselves to load and transport, or whether it is the total cargo.
8. The freightage to be paid, stating whether it is to be a fixed amount for the voyage
or so much per month, or for the space to be occupied, or for the weight or
PERSONS WHO MAY MAKE CHARTER measure of the goods of which the cargo consists, or in any other manner
• Owner or owners of the vessel – either whole or majority part who have legal control whatsoever agreed upon.
and possession 9. The amount of primage to be paid to the captain.
• Broker – may intervene in the execution of charter between principals 10. The days agreed upon for loading and unloading.
11. The lay days and extra lay days to be allowed and the rate of demurrage.
1. Charterer
• Charterer may sub-charter the entire vessel to a 3rd person in the event that there’s
no prohibition in the 1st charter Primage – payment for the use of the equipment belonging to the captain
• 2nd charterer’s cargo may not be refused be generally refused by the captain
• Sub-charterer and 2nd charterer – independent contract • Discrepancy of contract: broker’s copy prevails
• Intervention of broker to the authenticity of signature, if no broker, it can still be
2. Part Owners admitted if the parties duly acknowledged the signatures
• Part owners can charter also
• Part owners have preference in the charter of the vessel over other persons who
offer equal conditions and freight FREIGHT
• Parties may fix the form in which the charter price or money shall be satisfied
3. Ship Agent • If it involves a contract of affreightment, charter price or money would be governed
GR: not allowed to make contracts for a new charter by the principles relative to freight
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 50

 Where charterer failed to occupy the leased portion of the vessel, he is still liable for the
Accrual or Freightage deadfreight
GR: shall accrue according to the conditions stipulated in the contract
XPT: No stipulation or if it is ambiguous;
1. Freight has begin to run from the day of loading on the vessel RIGHTS AND OBLIGATION OF THE CHARTER PARTIES
2. Charters with fixed period – freight will start on the very day • Parties are bound to comply with their respective obligation imposed by law
3. Freight charged according to weight – payment shall be made according to the • Their statutory rights and obligation of the charters are to be found in Code of
gross weight including the weight of containers Commerce

Cases with freightage NOT due Primary Rights of Shipowner or Captain

1. Jettisoned goods that are not considered general average loss 1. Evident failure or refusal of the shipowner or agents to receive cargo
2. Merchandise that are lost because of shipwreck or standing 2. Shipowner is bound to observe that a margin greater than 2% of actual capacity is
3. Goods lost due to seizure by priates or enemies not allowed
Note: freight should be returned unless there’s an agreement to the contrary 3. Refusal to accept the shipper’s cargo because of receipt of a greater amount of
• If captain failed to carry goods on his ship or to send it to point of destination, in cargo belonging to other persons shall be for the account of shipowner in the form
another vessel resulted in the abandonment upon any claim for freight of indemnity
• If there is one shipper, and there was apparent fraud or error in vessel’s
When payment not excused capacity, charterer may opt to have the freight reduced if he does not choose
Payment of freightage need in the following: to rescind with a further right to be indemnified
• Merchandise sold for the necessary repairs to the hull, machinery or equipment or 4. Several charter parties and due to lack of space not all can be accommodated
for unavoidable and urgent needs and no one wants to rescind. Order of preference
• Deterioration or diminutions on account of inherent defects or bad quality and a. First in loading the cargo
condition of the packing b. others: order of date of charter
• Fortuitous event c. Absence of priority: load in proportion
5. Shipowner in certain condition may substitute the vessel provided that such vessel
Increase in Weight was seaworthy
• Natural increase in weight -> still proper freightage fixed in the contract 6. If 3/5s is loaded, shipowner may not substitute unless there is consent
7. Charter may not accept other cargo if the whole vessel is chartered in whole unless
with consent of charterer
PORT OF UNLOADING • Otherwise, may be compelled by the charterer to unload
• Port of destination where the cargoes will be unloaded must be stipulated in the 8. Shipowner may be generally liable to damages incurred by the charterer due to
Charter Party voluntary delay of the captain in putting to sea, provided he was requested by way
• Parties may say that charterer is given option of discharge at one or more ports of a notarial or judicial notice, to put sea at the proper time.
within the geographic rage
o Ok for sound commercial reason Rights and Obligation of Charterer
1. Article 679 - The charterer of an entire vessel may subcharter the whole or part
Safe port clause – shipowner has the right to decline to risk his vessel in an unsafe port thereof for the amounts he may consider most convenient, without the captain
being allowed to refuse to receive on board the freight delivered by the second
charterers, provided the conditions of the first charter are not changed, and that
DEMURRAGE the person from whom the vessel is chartered be paid the full price agreed upon
Sum of money due by express contract for the detention of the vessel in loading or unloading, even though the full cargo is not embarked, with the limitation established in the
beyond the time allowed for that purpose in the charter party. next article.
• If time is not stated in the charter party – the usage of the port where these acts 2. Article 681 - If the charterer should ship goods different from those indicated at the
take place shall be observed time of executing the charter party, without the knowledge of the person from
whom the vessel was chartered or of the captain, and should thereby give rise to
Lay days - time for loading and unloading losses, by reason of confiscation, embargo, detention, or other causes, to the
person from whom the vessel was chartered or to the shippers, the person giving rise
thereto shall be liable with the value of his shipment and furthermore with his
Computation of Lay Days property, for the full indemnity to all those injured through his fault.
Unless contrary intention appears in the charter party, the stipulated lay days do not begin to 3. Article 682 - If the merchandise shipped should have been for the purpose of illicit
run against the consignee until the vessel has arrived at berth or other customary place for commerce, and was taken on board with the knowledge of the person from whom
loading and unloading and is in actual readiness to discharge its cargo in accordance with its the vessel was chartered or of the captain, the latter, jointly with the owner of the
legal obligation same, shall be liable for all the losses which may be caused the other shippers, and
even though it may have been agreed, they can not demand any indemnity
Deadfreight whatsoever of the charterer for the damage caused the vessel.

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 51

 4. Article 687 - The charters and freighters can not abandon merchandise damaged
on account of the inherent vice of the goods or by reason of an accidental case,
for the payment of the freight and other expenses.
The abandonment shall be proper, however, if the cargo should consist of liquids
and should they have leaked out, there not remaining in the containers more than
one-quarter of their contents
Lien on Cargoes
Cargo shall be made especially liable for the payment of:
1. Freightage
2. Expenses and duties arising therefrom which must be reimbursed by the shipper
3. Fort part of the general average which may correspond to it

Liability of Charterer to Shipowner in case of Bareboat Charter
• Code of Commerce provisions on statutory rights will not always apply to the case
against Charterer
• Liable to the deterioration or loss of cargo. This extends to the sub-charterer
• Persons entrusted when it was dry-docked for repairs
AGUSTIN P. DELA TORRE v. COURT OF APPEALS
G.R. No. 160088 | July 13, 2011
• Freight included in the purchase price paid by it did not free the cargo from the
carrier’s lien if the freight has not yet been fully paid by the charterer
• Sale of cargo under certain conditions of the Code of Commerce. Right to sell the
cargo is subject to the right of 3rd persons who received the goods without malice
and for a valuable consideration
• Court may order the deposit of goods at the instance of the Captain. If there’s
reason for distrust:
a. Consignee refuses to receive the goods
b. Consignee cannot be found

SUMMARY: Improper lowering or positioning of the ramp which was well within the
responsibility of captain and crew. Crisostomo entered to a Preliminary Agreement with De La
Torre for dry docking and repairs. It was sub-chartered afterwards. Concepcion demanded CHAPTER 15 – LOANS ON BOTTOMRY AND RESPONDENTIA
that PTSC/ Roland refloat LCT-Josephine. The latter assured Concepcion that negotiations
were underway. Unfortunately, this did not materialize. Thus, the RTC declared that the
“efficient cause of the sinking of the LCT-JOSEPHINE was the improper lowering or positioning
of the ramp,” which was well within the charge or responsibility of the captain and crew of the DEFINITIONS AND CONCEPT
vessel.
Bottomry
DOCTRINE: In maritime law, is a contract whereby the owner of a ship borrows for the use, equipment or
With the complete and exclusive relinquishment of possession, command and navigation of repair of the vessel, for a definite term, and pledges the ship) or the keel or bottom of the ship)
the vessel, the charterer and later the sub-charterer became the vessel’s owner pro hac vice. as security, with the stipulation that if the ship is lost during the voyage or during the limited
time on account of the perils enumerated, the lender shall lose his money.
In the absence of any showing that the vessel or any part thereof was commercially offered
for use to the public, the above agreements/charter parties are that of a private carriage Loan on Respondentia
where the rights of the contracting parties are primarily defined and governed by the Where the goods or some part thereof, are hypothecated as security for a loan, the
stipulations in their contract repayment of which is dependent upon maritime risks
• Usual form – bond
• It is the borrower’s personal responsibility which is deemed to be the principal
REPLACEMENT OF VESSEL security for the performance of a contract
1. If after receipt of the goods, it does not reach 3/5s, the shipowner may substitute the • There must be marine risk upon which the loan is predicated such that if the vessel
vessel more suitable for voyage at its own account or the cargo is lost by virtue of that risk, the lender loses the capital or money lent
2. Substitution with consent of theshippers • There is NEITHER bottomry or respondtia if the money borrowed is subject to
repayment in any event
• Upon termination of the safe journey, he is entitled to receive a greater return on his
EFFECT OF BILL OF LADING principal that would ordinarily be received by a lender in an ordinary or simple loan
• If bill of lading was issued by the shipowner to the charterer, the charter party still o If goods are saved in case of marine peril – still going
governs the rights and the bill of lading may be used as proof of receipt of goods o If no goods or ship saved – not anymore
• Receipt of goods but terms and conditions of the contract are in the charter party
• Not operate as a new contract
• Negotiable instrument binding in favor of subsequent holder DISTINGUISHED FROM SIMPLE LOAN
• CoC- if cargo is received without the charter party being signed, contract shall be
understood to be executed in accordance to the bill of lading BOTTOMRY SIMPLE LOAN
Rate NOT Subject to Usury Law Subject to Usury Law
FREIGHT Marine risk Should exist No need
• Charterer must pay the shipowner the amount agreed upon and shall be liable in Formal Code of Commerce Formal requisites regarding a contract
the first place for the freight and expenses thereof during 30days to be counted requisites
from date of their delivery or deposit. Registry Must be recorded in the registry of No registration required

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 52

 vessels in order to bind 3rd persons In order that the bonds of the contracts celebrated in accordance with No. 2 may have legal
Preference Extended to the last lender if there be 1st lender as a general rule enjoys force, they must conform to the registry of the broker who took part therein. In those
several lenders preference over subsequent ones celebrated in accordance with No. 3 the acknowledgment of the signature must precede.

Contracts which are not reduced to writing shall not be the basis for a judicial action
When Simple Loan Applies
• When full amount of the loan to load the vessel is not used for the cargo, or given
on the goods if all of them could not have been loaded -> simple loan (should be • Contract must contain statement of kind, name and registry of the vessel, name
returned prior commencement of a voyage) and surname and domicile of the captain, receiving the loan, amount of loan and
• If lender proves that the amount loaned is larger than the value of the object liable premium and for repayment, objects to secure such and voyage risk to run
for the bottomry loan due to fraudulent means employed by the borrower -> loan
valid only on appraised by experts. Surplus -> repaid as if it were a simple loan +
interest CONSEQUENCES OF LOSS OF EFFECTS OF THE LOANS
• Lost - Accident of the sea and the cargo on board was lost
• Retains – inherent defects of the thing, through fault or malice of the borrower,
AUTHORITY TO CONSTITUTE A LOAN ON BOTTOMRY through barratry on the part of the captain, contraband, wrong loading (unless the
• Shipowner - may secure a loan on bottomry in proportion only to his interest in the change was due to force majeure)
ship • Lenders suffer in proportion to their respective interest, the general average which
• Captain - may secure on account of extreme necessity in order to comply with the may take place in the things
obligations o Particular average – if there is no agreement between the parties, the
• No loan is allowed for salaries of crew lender on bottomry or respondentia sis obligated to contribute in
proportion to his respective interest, should it not belong to the kind of
Authority to Constitute Loan on Respondentia risks.
• Cargo owner – right to enter into a loan on respondentia involving his cargo • Shipwreck – payment of loan reduced to the proceeds of goods that have been
• Capatain (mere agent of owner and not of cargo owner) – may not contract a saved – salvage cost
loan on respondentia. If he does -> void • Vessel or any part – loan is on this, the freight earned during voyage shall be liable
o Principal, interest and costs of contract chargeable to his private account for its payment
and may be discharged as acaptain • Vessel or cargo – loan on this, value of what may be saved in case of shipwreck
shall be divided between the lender and the insurer, in proportion to the legitimate
interest without prejudice to the preference of other creditors
FORMS OF THE LOANS

PREFERENCE
Article 720
Loans on bottomry or respondentia may be executed: Article 730
1. By means of a public instrument. Loans made during the voyage shall have preference over those made before the clearing of
2. By means of a bond signed by the contracting parties and the broker who took part the vessel, and they shall be graduated by the inverse order to that of their dates.
therein.
3. By means of a private instrument. The loans for the last voyage shall have preference over prior ones.

Under whichever of these forms the contract is executed, it shall be entered in the certificate
of the registry of the vessel and shall be recorded in the commercial registry, without which
requisites the credits originating from the same shall not have, with regard to other credits, the
preference which, according to their nature, they should have, although the obligation shall
be valid between the contracting parties.
The contracts made during a voyage shall be governed by the provisions of Articles 583 and
611, and shall be effective with regard to third persons from the date of their execution, if they
should be recorded in the commercial registry of the port of registry of the vessel before eight
days have elapsed from the date of her arrival.
Should several loans have been made at a port made under stress and for the same purpose,
all of them shall be paid pro rata.
• Preference is given to the loans for the last voyage on the theory that were it not for
the last lender, the prior lenders would not have benefitted from the preservation of
the security.
• The loan for the last voyage was used to preserve the vessel or the cargoes.
CODE OF COMMERCE PROVISIONS

If said eight days should elapse without the record having been made in the commercial
registry, the contracts made during the voyage of a vessel shall not have any effect with
regard to third persons, except from the day and date of their entry.
CHAPTER 16 - AVERAGES

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 53

 5. The necessary expenses on arrival at a port, in order to make repairs or secure
provisions.
AVERAGES IN GENERAL 6. The lowest value of the goods sold by the captain in arrivals under stress for the
payment of provisions and in order to save the crew, or to cover any other
Averages are included in the risks, damages and accidents that are governed in Title 4 Book 3 requirement of the vessel against which the proper amount shall be charged.
of Code of Commerce that includes 7. The victuals and wages of the crew during the time the vessel is in quarantine.
1. Average 8. The damage suffered by the vessel or cargo by reason of an impact or collision with
2. Arrival under stress another, if it were accidental and unavoidable. If the accident should occur
3. Collisions through the fault or negligence of the captain, the latter shall be liable for all the
4. Shipwrecks damage caused.
9. Any damage suffered by the cargo through the faults, negligence, or barratry of
Note: Not applicable in collisions where the same was caused by the negligence of the the captain or of the crew, without prejudice to the right of the owner to recover
captains of the colliding vessels and the cargoes were not jettisoned to save some of the the corresponding indemnity from the captain, the vessel, and the freight.
cargoes and the vessel.

Article 806 GENERAL AVERAGE

For the purposes of this Code the following shall be considered averages: Includes all damages and expenses, which are deliberately caused in order to save the
1. All extraordinary or accidental expenses which may be incurred during the vessel, its cargo, or both at the same time, from real and known risk.
navigation for the preservation of the vessel or cargo, or both.
2. All damages or deterioration the vessel may suffer from the time she puts to sea
from the port of departure until she casts anchor in the port of destination, and REQUISITES OF GENERAL AVERAGE
those suffered by the merchandise from the time it is loaded in the port of shipment 1. Common danger (must be imminent)
until it is unloaded in the port of consignment. 2. That for the common safety part of the vessel or of the cargo or both is sacrificed
deliberately
3. That from the expenses or damages caused follows the successful saving of the
SIMPLE AVERAGE (Particular Average) vessel and cargo
Includes all the expenses and damages caused to the vessel or cargo which HAVE NOT 4. That the expenses or damages should have been incurred or inflicted after taking
inured to the common benefit and profit of all the persons interested in the vessel and her proper legal steps and authority
cargo

By Whom Borne
• Owner of the goods - do no inure to the common benefit MAGSAYSAY, INC vs. AGAN
G.R. No. L-6393 | January 31, 1955
Article 810
The owner of the goods which gave rise to the expense or suffered the damage shall bear the SUMMARY: The boat incurred damages after it ran aground. Not general average.
simple or particular averages. Magsaysay’s vessel carrying several cargoes, including Agan’s ran aground on the way to
Basco Batanes. it asked help from the Luzon Stevedoring Company and incurred expenses
Examples of Simple Averages which it claimed as a general average, to which the owners of the cargo paid the amount.
Agan refused claiming that it was not a general average. Court ruled that it is not general
Article 809 average. But as the sacrifice was for the benefit of the vessel — to enable it to proceed to
Simple or particular averages shall be, as a general rule, all the expenses and damages destination — and not for the purpose of saving the cargo, the cargo owners are not in law
caused to the vessel or to her cargo which have not redounded to the benefit and common bound to contribute to the expenses.
profit of all the persons interested in the vessel and her cargo, and especially the following:
1. The damages suffered by the cargo from the time of its embarkation until it is DOCTRINE:
unloaded, either on account of the nature of the goods or by reason of an The following are the requisites for general average:
accident at sea or force majeure, and the expenses incurred to avoid and repair 1. there must be a common danger;
the same. 2. for the common safety part of the vessel or of the cargo or both is sacrificed
2. The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the deliberately;
same causes and reasons, from the time she puts to sea from the port of departure 3. from the expenses or damages caused follows the successful saving of the vessel
until she anchored in the port of destination. and cargo; and
3. The damages suffered by the merchandise loaded on deck, except in coastwise 4. the expenses or damages should have been incurred or inflicted after taking proper
navigation, if the marine ordinances allow it. legal steps and authority.
4. The wages and victuals of the crew when the vessel should be detained or
embargoed by a legitimate order or force majeure, if the charter should have been It is the deliverance from an immediate, impending peril, by a common sacrifice, that
for a fixed sum for the voyage. constitutes the essence of general average

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 54


Common Danger
• Both ship and the cargo, after has been loaded, are subject to the same danger,
whether during the voyage, or in the port of loading or unloading
• That the danger arises from accidents of the sea, dispositions of the authority or
faults of men, provided that the circumstances producing the peril should be
ascertained and imminent or may rationally be said to be imminent
• No general average if no danger at all
Deliberate Sacrifice
• Voluntary sacrifice of a part for the benefit of the whole in order to justify the
general average contribution
• Cannot involve a damage which resulted beyond the control of the captain and
crew or without any intention on their part
• CoC prescribes a procedure
Jettison can also be made even if sacrifice was NOT DURING voyage:
1. Sinking of a vessel is necessary to extinguish fire in a port, roadstead, creek or bay
2. Where cargo is transferred to lighten the ship on account of a storm to facilitate
entry into a port.
Article 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 board be proven by means of the bill of lading; and with regard to those
belonging to the vessel, by means of the inventory made up before the departure, in
accordance with the first paragraph of Article 612.
Article 817
If in lightening a vessel on account of a storm, in order to facilitate her entry into a port or
roadstead, part of her cargo should be transferred to lighters or barges and be lost, the owner
of said part shall be entitled to indemnity, as if the loss has originated from a gross average,
the amount thereof being distributed between the entire vessel and cargo which caused the
same.
If, on the contrary, the merchandise transferred should be saved and the vessel should be lost,
no liability can be demanded of the salvage.
Article 818
If, as a necessary measure to extinguish a fire in a port; roadstead; creek, or bay, it should be
decided to sink any vessel, this loss shall be considered gross average, to which the vessels
saved shall contribute.
Successful Sacrifice
No general contribution can be demanded if the vessel and other cargo that are sought to
be saved were not saved
• Ex. Goods sacrificed for saving of ship due to typhoon then ship still sank because of
the same typhoon – NO
• Ship saved – YES, even if the vessel was subsequently lost for some another reason
Article 861
If, after the vessel having been saved from the risk which gave rise to the jettison, she should
be lost through another accident taking place during the voyage, the goods saved and
existing from the first risk shall continue liable to contribution by reason of the gross average
according to their value in their condition at the time, deducting the expenses incurred in
saving them.
Compliance with Legal Steps
Article 813
In order to incur the expenses and cause the damages corresponding to gross average, a
previous resolution of the captain, adopted after deliberation with the sailing mate and other
officers of the vessel, and with a hearing of the persons interested in the cargo who may be
present, shall be required.
If the latter shall object, and the captain and officers, or a majority, or the captain, if opposed
to the majority, should consider certain measures necessary, they may be executed under his
liability, without prejudice to the freighters exercising their rights against the captain before the
judge or court of competent jurisdiction, if they can prove that he acted with malice, lack of
skill, or negligence.
If the persons interested in the cargo, being on the vessel, should not be heard, they shall not
contribute to the gross average, which contribution shall be paid by the captain, unless the
urgency of the case should be such that the time necessary for previous deliberation was
lacking
Article 814
The resolution adopted to cause the damages which constitute a general average must
necessarily be entered in the log book, stating the motives and reasons therefor, the votes
against it, and the reasons for the disagreement should there be any, and the irresistible and
urgent causes which moved the captain if he acted of his own accord.
In the first case the minutes shall be signed by all the persons present who could do so before
taking action if possible, and if not at the first opportunity; in the second case by the captain
and by the officers of the vessel.
In the minutes and after the resolution there shall be stated in detail all the goods cast away,
and mention shall be made of the injuries caused to those kept on board. The captain shall
be obliged to deliver one copy of these minutes to the maritime judicial authority of the first
port he may make within twenty-four hours after his arrival, and to ratify it immediately by an
oath.
Order of Jettison
Captain shall direct the jettison and order the goods cast overboard in the following order
1. Those which are on deck, beginning with those which embarrass the maneuver or
damage of the vessel, preferring, if possible, the heaviest one 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 indispendsable.
Examples of General Average
Article 811
General or gross averages shall be, as a general rule, all the damages and expenses which
are deliberately caused in order to save the vessel, her 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 cargo captured by
enemies, privateers, or pirates, and the provisions, wages, and expenses of the
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 55
 vessel detained during the time the arrangement or redemption is taking place.
2. The goods jettisoned to lighten the vessel, whether they belong to the vessel, to the
cargo, or to the crew, and the damage suffered through said act by the goods
kept.
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 her 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 through the opening made in the
vessel in order to drain her and prevent her sinking.
6. The expenses caused through floating a vessel intentionally stranded for the
purpose of saving her.
7. The damage caused to the vessel which it is necessary to break open, scuttle, or
smash in order to save the cargo.
8. The expenses of curing and maintaining 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 detained 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 it should be embargoed or detained by force majeure or by order of the
Government, or in order to repair the damage caused for the common good.
11. The loss suffered in the value of the goods sold at arrivals under stress in order to
repair the vessel because of gross average.
12. The expenses of the liquidation of the average.
WHO BEARS GENERAL AVERAGE
Code of Commerce provides that gross or general average shall be borne by those who
benefitted from the sacrifice:
• Shipowners
• Owners of cargoes that were saved
Contribution may also be imposed on the insurers of the vessel or cargoes that were saved as
well as lenders on bottomry or respondentia (all persons who have interest shall contribute)
Insurers
• Insurers of the vessel of the freightage and of the cargo shall be obliged to pay for
the indemnification of the gross average, in so far as us required if each one of the
objects respectively
• Insurance Code – insurer liable for any general average in proportion to the
contribution attaching to his policy value where the said value is less than the
contributing value of the thing insured.
Lender on Bottomry and Respondentia
Lenders on bottomry or respondentia shall suffer, in proportion to their respective interest, the
geveral average which may take place in the goods on which loan is made.
Who is Entitled to Indemnity
The owner of the goods, which were sacrificed, is entitled to receive the general average
contribution.
Following are NOT covered:
1. Goods carried on deck, unless the rule, special law or customs of the place allow
the same
2. Goods are not recorded in the books or records of the vessel
3. Fuel for the vessel if there is more than sufficient fuel for voyage
Deck Cargo
Rule is no longer absolute – sacrifice of deck cargo is not considered general average
EFFECT OF NEGLIGENCE
Claims for averages shall not be admitted IF they do not exceed 5% of the interest which the
claimant ay have in the vessel or in the cargo if it be gross average and 1% of the goods
damaged if particular average, deducting in both cases the expenses of appraisal, unless
there is an agreement to the contrary.
AMERICAN HOME ASSURANCE v. CA
G.R. No. 94149 | May 5, 1992
SUMMARY: Negligent carrier and law on average not applicable NCC applies port of
destination. Bales of bleached Krafts shipped by Chengwa arrived damaged/lost with straps
cut or loose so AHA indemnified the consignee Mayleen. AHA is seeking for reimbursement
from shipper but NMC said the damage were less than 5% of general average or 1% of
particular average since it is only .18%. Court held that Civil Code was applied since it is the
law of the destination and the code provides that observance of extraordinary diligence is fist
required and that the issue of negligence must first be addressed before the proper provisions
of the Code of Commerce on the extent of liability may be applied. So in short NMC is
negligence so law on average will not apply.
DOCTRINE:
Common Carriers cannot limit their liability for injury or loss of goods where such injury or loss
was caused by its own negligence. Otherwise stated, the law on averages under the Code of
Commerce cannot be applied in determining liability where there is negligence. Check the
port of destination
APPORTIONMENT
• Gross average shall be distributed pro rata among the goods which are to cover
the same
• Mechanics: the value of each of the contributing interest x fraction which has as its
numerator the sum of the general average expense and has as its denominator the
sum of contributing values
PROOF OF LIQUIDATION OF AVERAGE: CODE OF COMMERCE
No general average if the procedure under Code of Commerce is not complied with
(see Code of Commerce Art 846 – 860)
YOK-ANTWERP RULES
Although Code of Commerce provisions on averages are still in force, the parties may, by
stipulation in the charter party or any written agreement, agree that Yok-Antwerp Rules shall
apply.
CHAPTER 17 - COLLISIONS
COLLISION
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 56
 • Impact or sudden contact of a moving body with an obstruction in its line of motion,
whether both bodies are in motion or one stationary and the other, no matter SUMMARY: Collision. The Dona Nati operated by MCP as agent to NDC (owner), met a
which, in motion collision with a Japanese Vessel. As a result, the cargoes were lost and destroyed. The
• Maritime Commerce - Impact or sudden contact of vessel with another whether Development Insurance and Surety Corporation as insurer paid those who were holders of the
both are in motion or one stationary bill of lading the amount insured. DISC then went after NDC and MCP. The S.C. ruled that the
lower courts properly used the Code of Commerce to rule on the case, holding NDC and
Allision – if one vessel is moving while the other is stationary MCP solidarily liable to DISC.
Collision - contact of two moving vessels
Note: 3rd person may be liable if it forced a vessel to hit another DOCTRINE:
Article 826 of the Code of Commerce provides that where collision is imputable to the
personnel of a vessel, the owner of the vessel at fault, shall indemnify the losses and damages
ZONES IN COLLISION incurred after an expert appraisal. But more in point to the instant case is Article 827 of the
same Code, which provides that if the collision is imputable to both vessels, each one shall
Zones Definition Rule suffer its own damages and both shall be solidarily responsible for the losses and damages
1st division All the time up to the moment No rules apply suffered by their cargoes.
when the risk of collision may be
said to have begun.
2nd division Risk of collision begins and the The burden is on the vessel required to COLREGS (International Regulations for Preventing Collisions at Sea)
moment when it has become a keep away and avoid the danger • Existing international agreement with respect to collisions in high seas and waters
practical certainty connected to high seas
3rd division covers period in which errors in The rule is that the vessel, which has • Formulated by International Maritime Organizations (IMO)
extremis occur. forced the privileged vessel, has • PH not yet acceded to COGLREGS but it is being used in our trade
committed an error within that zone.
Rule 7 and Rule 8 provides for rules dealing with risks of collision and action to avoid collision
Rule 7 – every vessel shall use all available means appropriate to the prevailing circumstances
Error in Extremis and conditions to determine if risk of collision exists
In Extremis – the act when during the time the sail vessel was passing through the third zone
that it changes its course to port in order to avoid, if possible, the collision. Rule 8 – action taken to avoid collision shall, if the circumstances of case admit, be positive,
made in ample time and with due regard of the observance of good seamanship.
1. Alteration of the course or speed to avoid collision be large enough to be readily
M A URRUTIA AND CO. v. BACO RIVER AND COMPANY PLANTATION apparent to another vessel observing visually
G.R. No. 7675 | March 25, 1913 2. If there is sufficient sea room - alteration of course most effective to avoid a close-
quarter situation in a good time
SUMMARY: Collision between steamship Nuesta Señora del Pilar and the schooner Mangyan. 3. Action to avoid collision must pass through a safe distance
Steamship Del Pilar collided with Schooner Mangyan. Although aware of the approaching 4. If necessary, slacken speed or to take all way of by stopping or reversion
steamship, Mangyan kept its course steady up until the last minute before actual contact. The
steamer sank and 8 died. SC ruled that Mangyan was not liable in continuing its course even
though it was in extremis. In an instance of a collision between a steamship and a sailing ship, RULES ON LIABILITY
the steamship is liable. • Although rules on collision is not governed by quasi-delict, liability in collision cases is
still negligence based
DOCTRINE: • Court shall determine the negligence of the person
In case of collision between a steamship and a sailing ship the steamship is prima facie in fault o Test of reasonable man
under Article 20 and Article 21 of the International Rules for the Prevention of Collision at Sea.

CONTRIBUTORY NEGLIGENCE AND LAST CLEAR CHANCE NOT APPLICABLE

APPLICABLE LAW • If both vessels were negligently operated, it does not matter if the other has last
• Liability for negligence – Article 2176 of NCC (provision on quasi-delict clear chance
• Liability for shipowner and ship agents and crew – Code of Commerce on Collision • If the other also is negligent – will bar recovery even if negligence is classified as
• Maritime Tort – special rules under Code of Commerce will govern liabilities of merely contributory
persons
• Collision is not specifically regulated by Civil Code
WILLIAMS v. YANGCO
G.R. No. L-8325 | March 10, 1914
NDC v. CA
G.R. No. L-49407 | August 19, 1988 SUMMARY: Contributory Negligence and Last Clear Chance NOT APPLICABLE in collision

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 57

The steamer Subic collided with the launch Euclid in the Bay of Manila, as a result of which
the Euclid went to the bottom. The findings of record disclosed that the officers on both boats
were negligent in the performance of their duties at the time of the accident, and that both
vessels were to blame for the disaster. Held,That the owner of the launch Euclid has no cause
of action against the owner of the steamer Subic.
DOCTRINE:
Where the previous act of negligence of one vessel has created a position of danger, the
other vessel is not necessarily liable for the mere failure to recognize the perilous situation; and
it is only when in fact it does discover it in time to avoid the casualty by the use of ordinary
care, that it becomes liable for the failure to make use of this last clear opportunity to avoid
the accident.
GOV’T OF THE PHILIPPINE ISLANDS v. PHILIPPINE STEAMSHIP COMPANY
G.R. No. 18957 | January 16. 1923
SUMMARY: collision and Isabel sank. There was a collision involving 2 vessels. One carried
sacks of rice belonging to the Philippine Islands, and the said vessel immediately sank losing its
cargo. The Philippine Islands now sue Phil. Steamship Co., the owner of the other vessel, for the
value of the sacks of rice. The Court ruled that both parties were at fault and must therefore
be solidarily liable. But since the other vessel (the one which sank) was at a total loss and
cannot sustain any part of its liability, the burden of responding to the Phil. Islands must fall
wholly on Phil. Steamship Co.
DOCTRINE:
Where both vessels are to blame for the collision, both shall be solidarily liable for the damage
occasioned to the loss of their cargo.
DE SARASOLA vs. YU BIAO SONTUA
G.R. No. 22630. January 31, 1925
SUMMARY: Collision. The Mercedes was entering Manila Bay and was struck by the Y. Sontua
thats was leaving Manila Bay. As a result the Mercedes sank. The S.C. held that while the Y.
Sontua’s failure to remain on its course is the primary cause of the collision, the Mercedes is
also contributorily liable because it should have also remained on its course since the physical
facts show that both vessels can easily see each other and could have avoided the incident.
DOCTRINE:
Article 827 of the Code of Commerce: "If both vessels may be blamed for the collision, each
one shall be liable for his own damages, and both shall be jointly responsible for the losses and
damages suffered by their cargoes."
SPECIFIC RULES UNDER CODE OF COMMERCE
Liability rules would depend on the following:
1. One Vessel at Fault – If through negligence of the crew, the owner of the vessel at
fault shall indemnify the losses and damages suffered after an expert appraisal
2. Both Vessel at Fault – bear his own damage if collision attributable to both vessel
and solidarily responsible to the damages in their cargoes (subject to doctrine of
limited liability)
3. Party at Fault Cannot be Determined - bear his own damage and solidarily liable
4. Cause is Fortuitous Event – bear his own damage even a vessel should collide with
another, through fortuitous event or force majerure
5. Third Person at Fault – third person shall infemnify the losses and damage caused
and captain civilly liable to owner.
SMITH BELL AND COMPANY v. CA
G.R. No. L-56294 | May 20, 1991
SUMMARY: There was a collision between the M/V Don Carlos owned by Go Thong and a
Japanese ship Yotai Maru. Cargo on the Yotai Maru were destroyed. Insurance companies
paid for the damage of the goods and filed 2 separate cases vs. Go Thong in the CFI of
Manila. CFI held in both cases the Go Thong was liable. On appeal of the first case (J
Fernandez decision), CA and SC affirmed that M/V Don Carlos officers were liable. 2 years
later, appeal of the second case (J Cuevas decision) reversed the ruling of the CFI Manila
and said that Yotai Maru officers were negligent. But the Court held that Don Carlos was
negligent for not comply with the requirements of Rule 18 (a) of the International Rules of the
Road and for not having a “proper look-out” as required by the rules.
RTC: Don Carlos Crew negligent in both cases
CA: Yotai Maru crew negligent
DOCTRINE:
Nautical rules require that where a steamship and sailing vessel are approaching each other
from opposite directions, or on intersecting lines, the steamship, from the moment the sailing
vessel is seen, shall watch with the highest diligence her course and movements so as to
enable it to adopt such timely means of precaution as will necessarily prevent the two boats
from coming in contact.
SINKING ON THE WAY TO PORT – considered as lost by reason of collision
PRESENCE OF PILOTS
In case a pilot navigates the vessel at the time of collision, the captains cannot escape the
liability but the pilot can indemnify them without prejudice to criminal liability.
EXTENT OF LIABILITY
Indemnity by reason of death should be preferred f the value of the vessel and its
appurtenance is not sufficient to cover the liabilities
COLLISION IN FOREIGN WATERS
If collision is between PH vessels in foreign waters or open seas, vessel should make a foreign
port and the Consul of PH in that port should hold a summary investigation of the accident
then -> Sec. of DFA for continuation and conclusion.
PROTEST
• Necessary ONLY to ships and sea-going vessels
• Must be presented within 24 hours
• IF in PH - before competent authority of the point where the collision took place or
1st port of arrival
• IF in Foreign Country – consul of PH
Protest not applicable to:
Small boats engaged in river and bay traffic and inland navigation.
Non-filing of Protest is excused:
TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 58
 1. Persons interested who were not on board • Proper – shipowner and ship agent liable for the expense of arrival
2. Persons interested were not in a condition to make known to their wishes • Improper – same expenses + solidarily liable for damages caused to cargoes. When
malice, negligence, want of foresight or lack of skill of the captain and when it is
Protest Mandatory unseaworthy (Art. 820)
Applies to all persons engaged in traffic upon the waters of the Philippines and that the
defendant has as much as right to insist upon compliance Unloading of Cargoes to Make Repairs
In order to make repairs to vessel or danger in cargo– necessary to unload
• Captain must request authorization to competent judge or court and with
LIMITED LIABILITY RULE interested persons
Civil liability incurred by ship-owners shall be limited to the value of the vessel with all its • If foreign court – PH Consul
appurtenances and freightage. o Repair in vessel - expenses with the ship agent or owner
o Danger in cargo - expenses with owners who benefitted
o Both - proportion

Custody of Cargo
• Cargo to be entrusted to captain except force majeure
CHAPTER 18 – ARRIVAL UNDER STRESS AND SHIPWRECK
• Imminent danger of being damage
o Captain request the judge or court for its sale
§ Must justify the legality of his conduct
ARRIVAL UNDER STRESS o After examination and declaration of experts – entry in the books
Arrival of a vessel at the nearest and most convenient port, which has decided upon after
determining that there is a well-founded fear of seizure, privateers or pirates or by reason of Liability of Captain
any accident of the sea disabling it to navigate. Liable for cause of arrival under stress if after such he did not continue with the voyage

Determination of Propriety SHIPWRECKS

Steps to be taken in determination of the propriety of an arrival under stress Demolition or shattering of a vessel caused by her driving ashore or on rocks and shoals in the
1. Determination of the captain if there is a well-founded fear of seizure, privateers and midseas or by violence of winds and waves in tempests
other grounds
2. Captain to assemble the officers Code of Commerce Provisions
3. Captain summon the person interested in the cargo who may be present and • Losses and deterioration of cargo and vessel by reason of shipwreck – individually
attend but no right to vote account (Art. 840)
4. Officers to determine and agree if there’s well-founded fear. Captain shall have • If caused by negligence or lack of skill of captain – shippers and ship agent may
deciding vote demand indemnity (Art. 841)
5. Agreement drafted and minutes entered in the log book • Goods saved must be paid for the salvage amount by the owners before they are
6. Objections and protests should be entered in the minutes delivered to them
• Several vessel under convoy and one wreck – other should get in proportion
Protest • If captain refused
• CAPTAIN to present himself to the Maritime Authority or Consul of PH o Captain of vessel may protest before 2 sea officials
o Absence of MA - > local authority o Ratifying the protest within 24hours after arrival at 1st port
• Within 24 hours and make statements with regard to the vessel and cargo and • If not possible to save all – highest value and smallest volume
cause of arrival • Captain who save shall continue to port of destination and deposit the same with
• If found acceptable – Proper Certificate proving his arrival in distress and reasons judicial intervention
shall be given • If changes his course – must consent
• Owners of cargo must defray all expenses of arrival
When Arrival Under Stress is Improper • If no person interested – judge may order sale
1. Failure to take necessary provisions for the voyage according to usage and customs
or when it is rendered useless or lost through bad stowage Protest
2. Not well-known risk of enemies, privateers or privates in • Necessary in case of shipwreck at the first port of arrival within 24 hours to a
3. Defect of the vessel arisen from the fact that it was not repaired, rigged or competent authority or consul
equipped for voyage
4. Malice, negligence and want of foresight or skill of captain resulted to damage Other Provisions on Shipwreck
• If total lost – extinguished obligation as regards also to the wages of the crew
Unlawful – shouldered by shipowner and ship agent • If portion saved – retain rights but sailors who are engaged on shares shall not have
rights on salvage of hull
Expenses
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 The following persons shall have no right to reward:
CHARTER PARTIES 1. Crew of the vessel shipwrecked or which was in danger of shipwreck
• Not pay freightage in cases of shipwreck, standing or seized by pirates 2. He who shall commenced the salvage in spite of opposition of the captain or of his
o If paid in advance - return representatives
3. He who shall have failed to comply with the provisions of Sec. 3
Loans
• Shipwreck – amount liable to payment of loan shall be reduced to the goods saved Requisites of Compensation
less salvage cost Salvage is the compensation allowed to persons by whose assistance a ship or her cargo has
• If subject of loan on bottomry or respondentia and marine insurance- value of what been saved, in whole or in part, from impending peril on the sea, or in recovering such
maybe saved maybe divided between the interested parties. property from actual loss, as in case of shipwreck, derelict or recapture.

Derelict Required
• A derelict is defined as “a ship or her cargo which is abandoned and deserted at
sea by those who were in charge of it, without any hope of recovering it or without
any intention of returning to it
• Change in intention will not change its nature
• Towage of a vessel which has lost the use of its engine by accident through it is
CHAPTER 19 - SALVAGE
complete in its hull and masts is a service of salvage

GOVERNING LAW JETSAM AND FLOTSAM

Salvage Law 1. Jetsam – goods that were thrown off a ship which was in danger
2. Flotsam – goods that are floated off the ship while the ship was in gander or when it
DEFINITION sank
Salvage may be defined as a service which one person renders to the owner of a ship or 3. Ligan – goods left at sea on the wreck or tied to a buoy that they can be recovered
goods, by his own labor, preserving the goods or the ship which the owner or those entrusted later.
with the care of them have either abandoned in distress at sea or unable to protect and
secure. BASIS OF ENTITLEMENT TO SALVAGE REWARD
• A salvage reward should neither be too liberal nor too stingy.
• It should constitute a sufficient compensation for the outlay and effort of the salvors
RATIONALE • Liberal enough to offer an inducement to others
Founded on the equity of remunerating private and individual services performed in saving, in
whole or in part, a ship or its cargo from impending peril, or recovering them after actual loss. Limit of Salvage Fee
• RTC will fix the reward for salvage
• Limit of reward is 50% of the net mount of the proceeds of the sale of things saved
KINDS OF SALVAGE SERVICES • Deduct the following expenses in the auction sale
1. Voluntary, wherein the compensation is dependent upon success o Custody
2. Rendered under a contract for a per diem or per horam wage o Conservation
3. Under a contract for a compensation payable only in case of success o Advertisement
o Auction
o Taxes or duties
CLAIM FOR VALID SALVAGE o Expenses of salvage
When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew or
shall have been abandoned by them, and picked up and conveyed to a safe place by other Quantum Meruit is not applicable
persons, the latter shall be entitle to a similar reward. It should be a reward given for perilous services, voluntarily rendered, and as an inducement
to mariners to embark in such dangerous enterprises to save life and property.
3 Elements for a Salvage Claim to be valid:
1. There must be a marine peril Circumstance to consider
2. Service is voluntarily rendered and is not required as an existing duty or from a 1. Expenses to recover or save the vessel
special contract 2. Zeal demonstrated, the time employed and services rendered
3. There must be success in whole or in part of the service rendered contributed to 3. Excessive express occasioned the number of persons who aided
such success 4. Sanger to which they and their vessels were exposed and menaced the things
4. Vessel is shipwrecked beyond the control of the crew or shall have been recovered or salvaged
abandoned (additional) 5. Value of such things after deducting

Persons not entitled to Salvage Compensation

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RIGHTS AND OBLIGATIONS OF SALVORS AND OWNERS The carrier shall be bound before and at the beginning of the voyage to exercise due
• Salvor is of course entitled to compensation for services offered and in the diligence to:
enforcement of that right, a lien upon the property salvaged whereby he is not a) Make the ship seaworthy
bound to part with the possession of the vessel salvaged or of the cargo until he is b) Properly man, equip, and supply the ship
paid his due compensation. c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship
• If both ship and cargo were saved, salvage allowance shall be charged against the in which goods are carried, fit and sage for their reception, carriage and
ship and cargo preservation
• What the owner of the vessel abandons temporarily is his right of possession
2 Overriding Obligations of Carrier
Procedure 1. Obligation to use due care with respect to the cargo
1. Salvor shall convey or deliver the vessel or merchandise to the collector of customs 2. Obligation to provide a seaworthy vessel at the beginning of the voyage
2. Owner or representative shall have a right to the delivery of the vessel or things
saved after the salvage is accomplished, provided he pays or gives a bond to DOCUMENT OF TITLE REQUIRED
secure expenses and proper reward • Contracts of carriage of goods covered by COGSA applies only to contracts of
3. Bond amount to be determined by RTC carriage by seacovered by bill of lading or any similar document of title in so far as
4. In owner does not make any claim within 3 months after publication, it will be said in related to goods by sea
public auction • Bill of lading is prima facie evidence of the receipt by the carrier of the goods as
5. If 3 years has lapsed without any claim, the salvor shall be entitled to 50% of deposit therein described.
and the other 50% to the government
a. It should be divided to the owner of the vessel, captain and crew
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD
• Damage Apparent - Notice of Claim must be made within 3 days from delivery
MARITIME LIEN • Damage Not Apparent - Notice of Claim must be made within 1 year from delivery
A salvor, in maritime law, has an interest in the property is called a lien even if there is no or when the goods should have been delivered
contract expressly made. • 1 year prescription does not apply to cases of misdelivery or conversion
• Loss contemplated in COGSA means when there is no delivery at all

DEFENSES AND IMMUNITIES

CHAPTER 20 – CARRIAGE OF GOODS BY SEA
COGSA NCC
Liability for Carrier shall NOT be liable for loss or Carrier will not be liable ONLY if it
unseaworthiness damage arising from can present proof that the
APPLICABLE TO INTERNATIONAL SHIPPING IN THE PHILIPPINES unseaworthiness unseaworthiness was caused
exclusively by any of the
Primary Law: Civil Code (goods to be transported to PH) circumstances specified in Art. 1734
Secondary Law: Carriage of Goods by Sea Liability for Excuses the carrier from liability Shipowner and the ship agent liable
negligence of arising from act, neglect, or default for the negligent acts or omission of
• Nothing in the COGSA shall be construed as repealing any existing provision of the captain or crew of the master, mariner, pilot, or the the captain
Code of Commerce servants of the carrier in the
• The law of the country to which the goods are to be transported govern the liability navigation or in the management
of the common carrier for their loss, destruction or deterioration of the ship.
Burden of Proof CC claiming benefit should prove CC to prove not negligent
Goods that the crew is not negligent
Includes goods, wares, merchandise, and articles of ever kind Deviation GR: breach of contract of carriage
• Does not include live animals and cargo which by the contract of carriage Is stated XPT: it is done to save life or
as being carried on deck and is so carried. property or reasonable deviation

PARTIES However, there is presumption that unseaworthiness is due to negligence of the carrier and its
1. Shipper agent.
2. Carrier (includes charterer)

WAIVER
DUTIES OF CARRIER Defenses may be waived for the benefit of any of the defenses in its favor provided not only
Section 3 (1) of COGSA under COGSA but also under other laws

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 61

LIMITING PROVISION
• Allows a shipper to recover only US$500 per package
o UNLESS there is a special declaration
§ UNLESS there real value of the goods is declared
• Declaration in bill of lading shall be prima facie evidence of the value of the goods,
the carrier may be allowed to prove the real value which may be less than the
declared amount

RIGHT TO DISHCARGE DANGEROUS CARGO

COGSA allows the carrier to discharge the good if the carrier covers that the goods are
dangerous, inflammable or are explosives

PUBLIC UTILITIES

TRANSPORTATION LAW – ATTY. MARCELO | A.B. MARTINEZ 62