RE: TRANSPORTATION LAW: FINALS 2019
ARELLANO UNIVERSITY SCHOOL OF LAW
FINALS REVIEWER
I DO NOT CLAIM TO OWN ANY OF THE FOLLOWING.
NO OTHER MATERIAL CAN REPLACE THE BIBLES OF LAW
WHICH HAVE BEEN TESTED AND PRESCRIBED BY THE
PROFESSOR. THE READER HAS BEEN WARNED AND MAY
PROCEED ACCORDINGLY. GOOD LUCK.
CHAPTER 9
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
- Applies to all international transportation of person,
baggage or goods performed by aircraft for hire.
- “International transportation” means any
transportation in which the place of departure and
the place of destination are situated either:
o Within the territories of two High Contracting
Parties regardless of whether or not there be a
break in the transportation or transshipment, or
o 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 that
power is not a party to the Convention.
Transportation to be performed by several successive air
carriers shall be deemed to be one undivided
transportation, if it has been regarded by the parties as a
single operation, whether it has been agreed upon under
the form of a single contract or of a series of contracts, and
it shall not lose its international character merely because
one contract or a series of contracts is to be performed
entirely within a territory subject to the sovereignty,
suzerainty, mandate, or authority of the same High
Contracting Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of
Court and all laws in the Philippines since an
international law prevails over general law.
WHEN NOT APPLICABLE:
1. If there is willful misconduct on the part of the
carrier’s employees. The Convention does not
regulate, much less exempt, carrier from liability for
damages for violating the rights of its passengers
under the contract of carriage (PAL v. CA, 257 SCRA
33). --- if the damage is similarly caused by any
agent of the carrier acting within the scope of his
employment.
2. When it contradicts public policy;
3. If the requirements under the Convention are not
complied with.
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LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident
causing it took place on board the aircraft or in the
course of its operations; (Art. 17)
2. Destruction, loss or damage to any luggage or
goods, if it took place during the carriage; (Art. 18)
and
3. Delay in the transportation of passengers, luggage
or goods. (Art. 19)
NOTE: 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 (Art. 20(1)). (Alitalia v. IAC, 192
SCRA 9)
REMEMBER: The said provisions merely declare the carrier
liable for damages in the enumerated cases if the conditions
therein specified are present. Neither said provisions nor
others in the aforementioned Convention regulate or
exclude liability for OTHER BREACHES of contract of carrier.
The Convention does not thus operate as an exclusive
enumeration of the instances of an airline’s liability, or as
an absolute limit of the extent of that liability.
PERIOD COVERED BY INTERNATIONAL TRANSPORTATION
International transportation by air under the Warsaw
Convention means the period during which the baggage or
goods are in charge of the carrier, whether in an airport or
on board an aircraft, or, in the case of a landing outside an
airport, in any place whatsoever. It does not cover any
transportation by land, by sea, or by river performed
outside an airport.
WHEN INTERNATIONAL CARRIER IS LIABLE: 1. On board the
aircraft, 2. In the course of any of the operations of
embarking, 3. In the course of disembarking and 4. When
there was or because of delay
LIMIT OF LIABILITY
1. passengers - limited to 250,000 francs;
EXCEPT: Agreement to a higher limit
2. Goods and checked-in baggage - 250 francs/kg
EXCEPT: Consigner declared its value and paid a
supplementary sum, carrier liable to not more than
the declared sum unless it proves the sum is greater
than its actual value.
3. Hand-carry baggage - limited to 5,000
francs/passenger
An agreement relieving the carrier from liability or fixing a
lower limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is
caused by willful misconduct or default on its part. (Art. 25)
Case: China Airlines vs. Daniel Chiok
- The ticket-issuing airline acts as principal in a
contract of carriage and is thus liable for the acts
and the omissions of any errant carrier to which it
may have endorsed any sector of the entire,
continuous trip.
PLACE OF DESTINATION – within the meaning of the
Warsaw Convention, is determined by the terms of the
contract of carriage, or specifically the ticket between the
passenger and the carrier.
It is the destination and not an agreed stopping place that
controls for the purpose of ascertaining jurisdiction under
the Convention. (Case: Santos III vs. Northwest Orient
Airlines and CA)
DEFENSES AGAINST LIMIT OF LIABILITY
1. Willful misconduct – Elements: a. an international
act or omission done with conscious awareness that
such an act or omission was wrongful. b. an
awareness of probable consequences of an act or
omission c. causal relationship between act or
omission and the injury sustained.
2. Gross Negligence
3. Absence of Baggage Check
4. Waiver
5. Estoppel
ACTION FOR DAMAGES
1. Condition precedent
A written complaint must be made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- In case of delay, 14 days from receipt of
baggage/goods
F otherwise the action is barred except in case of fraud on
the part of the carrier. (Art. 26)
2. Jurisdiction – governed by domestic law
3. Venue – at the option of the plaintiff:
a. Court of domicile of the carrier;
b. Court of its principal place of business;
c. Court where it has a place of business through
which the contract has been made;
d. Court of the place of destination. (Art. 28)
4. Prescriptive period – 2 years from:
a. Date of arrival at the destination
b. Date of expected arrival
c. Date on which the transportation stopped. (Art.
29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers – the action
is filed only against the carrier in which the accident
or delay occurred unless there is an agreement
whereby the first carrier assumed liability for the
whole journey.
b. In case of transportation of baggage or goods
I. The consignor can file an action against the first
carrier and the carrier in which the damage
occurred
II. The consignee can file an action against the last
carrier and the carrier in which the damage
occurred. These carriers are jointly and
severally liable. (art. 30)
NOTA BENE: COGSA/WARSAW applies to foreign vessels or
airplane or international travel. Code of Commerce applies
to inter-island or domestic travel.
SUCCESSIVE CARRIERS
An airline ticket providing that carriage of successive air
carriers is to be regarded as “single operation” is to make
the issuer-carrier liable for tortious conduct of the other
carrier.
A printed provision in the ticket limiting liability only its own
conduct is not enough to rebut that liability. (KLM Dutch
Airlines v. CA)
CHAPTER 10
MARITIME LAW (GENERAL CONCEPTS)
Maritime Law – Is the 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
Governing Laws:
1. New Civil Code – primary law on maritime commerce
2. Book III Code of Commerce – applied suppletorily
3. Special Laws
a. Salvage Law (Act No. 2616)
b. Carriage of Goods by Sea Act (CA No. 65)
c. Ship Mortgage Decree of 1978 (PD 1521)
REAL AND HYPOTHECARY NATURE OF MARITIME LAW
Case: Philippine Shipping Company, et al. vs. Francisco
Garcia Vergara
 That which distinguishes the maritime from the civil
law and even from the mercantile law in general is
the real and hypothecary nature of the former
 Evidence of this “real “ nature of maritime law:
o The limitation of the liability of the agents to
the actual value of the vessel and the freight
money
o 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 against the debtor or
person liable
 This repeals the civil law to such extent that, in
certain cases where the mortgaged property is lost
no personal action lies against the owner or agent of
the vessel
 Two reasons why it is impossible to do away with
these privileges:
o The risk to which the thing is exposed
o The real nature of maritime law, exclusively
real, according to which the liability of the
parties is limited to a thing to which is at mercy
of the waves.
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Case: Aboitiz Shipping Corporation vs. General Accident
Fire and Life Assurance Corporation, Ltd.
 The real and hypothecary nature of maritime law
simply means that 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
 PURPOSE: It was designed to offset such adverse
conditions and to encourage people and entities to
venture into maritime commerce despite the risks
and prohibitive cost of shipbuilding
 Thus, the liability of the vessel owner and agent
arising from the operation of such vessel were
confined to the:
o Vessel itself;
o Its equipment;
o Freight; and
o Insurance if any, which limitation served to
induce capitalists into effectively wagering
their resources against the consideration of the
large profits attainable in trade
Real – similar to transactions over real property where to
effect against third persons, registration is necessary
Hypothecary – the liability of the owner of the value of the
vessel is limited to the vessel itself
Limited liability rule – means that the liability of a ship
owner for damages in case of loss is limited to the value of
his vessel.
 No vessel, no liability.
 The civil liability for collision is merely co-existent
with the interest in the vessel; if there was total loss,
liability is also extinguished.
GR: If the ship is totally lost, liability is extinguished. If the
ship or part thereof still exists, he can escape liability by
abandoning the vessel, its appurtenances and its freight.
Art. 643: Vessel and cargo lost by reason of capture or
wreck: all rights shall be extinguished, both as regards the
crew to demand any wages whatsoever, and as regards the
ship agent to recover the advances made
If a portion of the vessel or of the cargo, or both, should be
saved, the crew engaged on wages, including the captain,
shall retain their rights on the salvage, so far as they go, on
the remainder of the vessel as well on the amount of the
freightage of the cargo saved; but sailors who are engaged
on shares shall not have any right whatsoever on the
salvage of the hull, but only the portion of the freightage
saved.
If they should have worded to recover the remainder of the
shipwrecked vessel they shall be given from the amount of
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RE: TRANSPORTATION LAW: FINALS 2019
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the salvage an award in proportion of the efforts made and
to the risks encountered in order to accomplish the salvage
Case: Monarch Insurance Co., Inc. vs. Court of Appeals
 The total destruction of the vessel extinguishes
maritime liens because there are no longer any res to
which it can attach. This doctrine is based on the real
and hypothecary nature of maritime law.
Note: Since the Civil Code contains no provision regulating
liability of shipowners or agents in the event of total loss or
destruction of the vessel, Article 587 of the Code of
Commerce governs.
Article 837, 587 and 590 of Code of Commerce cover only:
1. Liability to third persons
2. Acts of the captain
3. Collisions
EXCEPTIONS TO THE LIMITED LIABILITY RULE
1. Where the injury or death to a passenger is due
either to the fault of the shipowner, or to the
concurring negligence of the shipowner and the
captain (NEGLIGENCE)
GR: Shipowner is liable for the negligence of the captain in
collision cases --- Liability is limited to value of the vessel.
 Limited liability rule applies if the captain or the
crew caused the damage or injury as when
unseaworthiness of the vessel was caused by the
negligence of the captain or crew during the voyage
 However, if the failure to maintain the
seaworthiness of the vessel can be ascribed to the
shipowner alone or the shipowner concurrently
with the captain, then the limited liability principle
cannot be invoked --- LIABILITY FOR THE DAMAGES
IS TO THE FULL EXTENT (ex. Overloading,
unseaworthiness even at the time of departure)
2. Where the vessel is insured (INSURANCE)
 Limited liability rule does not apply to insurance
claims
Case: Vasquez vs. CA
 The total loss of the vessel did not extinguish the
liability of the carrier’s insured.
 Despite the loss of the vessel, therefore, its
insurance answers for the damages that a
shipowner or agent, may be held liable for by reason
of the death of its passengers.
3. In the workmen’s compensation claims (WORKER’S
COMPENSATION)
 The provisions of the Code of Commerce have no
room in the application of the Workmen’s
Compensation Act which seeks to improve, and
aims at the amelioration of, the condition of
laborers and employees
 If an accident is compensable under the Workmen’s
Compensation Act, it must be compensated even
when the workman’s right is not recognized by or is  Section 19 (3) of BP 129 as amended by RA 7691: (3)
in conflict with other provisions of the Civil Code or In all actions in admiralty and maritime jurisdiction
of the Code of Commerce where the demand or claim exceeds 300, 000 or in
 Liability under the Workmen’s compensation Act, Metro manila, where such demand or claim exceeds
even if the vessel was lost, is still enforceable 400,000.
against the employer or ship owner.  If less; MTC
4. Expenses for repairs and provisioning of the ship FORFEITURE DUE TO SMUGGLING; REQUISITES:
prior to the departure thereof 1. The vessel is “used unlawfully in the importation or
exportation of articles into or from” the Philippines;
5. The vessel is not abandoned (ABANDONMENT) 2. The articles are imported to or exported from “any
 Abandonment of the vessel, its appurtenances and Philippine port or place, except a port of entry”; or
the freightage is an indispensable requirement 3. If the vessel has a capacity of less than 30 tons and
before the ship owner or ship agent can enjoy the is “used in the importation of articles into any
benefits of the limited liability rule. If the carrier Philippine port or place other than a port of the Sulu
does not want to abandon the vessel, he is still liable Sea, where the importation in such vessel may be
even beyond the value of the vessel authorized by the Commissioner, with the approval
 The only instance where abandonment is dispensed of the department head.”
with is when the vessel was entirely lost. In such
case, the obligation is extinguished. MARINE POLLUTION
 Only ship owner and ship agent can make an The Marine Pollution Decree 1976 provides that it is hereby
abandonment declared a national policy to prevent and control the
pollution of seas by the dumping of wastes and other
PROCEDURE FOR ENFORCEMENT matter which create hazards to human health, harm living
Case: Aboitiz Shipping Corporation vs. General Accident resources and maritime life, damage amnesties, or
Fire and Life Assurance Corporation, Ltd. interfere with the legitimate uses of the sea within
 Rights of the parties to claim against an agent or territorial jurisdiction of the Philippines. XPN: Emergency
owner of vessel may be compared to those of imperiling life or property.
creditors against an insolvent corporation whose
assets are not enough to satisfy the totality of claims MARINE INSURANCE
as against it. PERSONS AMOUNT RISK INSURED
 Creditors must limit their recovery to what is left in COVERED OF AGAINST/NATURE
the name of the corporation. COVERAGE OF COMPENSATION
 In the sinking of a vessel, the claimants or creditors Php
are limited in their recovery to the remaining value Passengers 200,000 per Death
of accessible assets. In the case of lost vessel, these passenger
assets are the insurance proceeds and pending Php
Unmanifested
freightage for the particular voyage 200,000 per Death
Passengers
passenger
PROTESTS Survivorship
Is the written statement by the master of a vessel or any Survivors Php 50,000 Coverage/Monetary
authorized officer, attested by proper officer or a notary, to Assisstance
the effect that damages has been suffered by the ship. Survivorship
Surviving
Required under the following cases: (MASH) Php 50,000 Coverage/Monetary
Passengers
1. When the vessel makes an arrival under stress; Assisstance*
2. Where the vessel is shipwrecked;
3. Where the vessel has gone through a hurricane or *Medical and hospitalization expenses and reasonable
the captain believe that the cargo has suffered incidental expenses for burial, travel, transfer, food,
damages or averages; or clothing, board and lodging expenses covered by receipts
4. Maritime collisions are not included in the Php 50,000 for both Survivorship
Coverage/Monetary Assistance
Q: when is it not required?
A: CHAPTER 11
1. When it does not fall under the four cases VESSELS
mentioned above; and 1. General Concepts
2. When what is not involve is not a vessel  A vessel or watercraft is defined under PD No. 474 as
any barge, lighter, bulk carrier, passenger ship
ADMIRALTY JURISDICTION (RTC) freighter, tanker, container ship, fishing boats, or
other artificial contrivance utilizing any source of
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motive power, designed use or capable of being used
as a means of transportation operating either as a
common carrier, including fishing vessels covered
under PD No. 43.
EXCEPT:
1. Those owned and/or operated by the Armed Forces
of the Philippines and by the Foreign Government
for its Military Purpose.
2. Bancas, sailboat and other waterbone contrivance
of less than three tons capacity and not motorized.
KINDS OF VESSELS: a. Passenger ship (carries >12
passengers), b. Cargo ship, c. Tanker (cargoes in bulk of
liquid of an inflammable nature), d. Fishing vessel, e.
Nuclear ship, f. New ship (laid or constructed on or after
effectivity of SOLAS 1974) and g. Existing ship
Case: Yu Con vs. Ipil
 The word vessel serves to designate every kind of
craft by whatever particular or technical name it
may not be known or which nautical advancements
may give it in the future.
The court held that a small vessel used for the
transportation of merchandise by sea and for the
making of voyages from one port to another of
these Islands, equipped and victualed for this
purpose by its owner, is a vessel, within the purview
of the Code of Commerce, for the determination of
the character and effect of the relations created
between the owners of the merchandise laden on it
and its owner.
 When the mercantile code speaks of vessels, they
refer solely and exclusively to mercantile ships, as
they do not include warships, and furthermore, they
almost always refer to craft which are not accessory
to another as in the case of launches, lifeboats and
etc.
 Further, they refer exclusively to those which are
engaged in the transportation of passengers and
freight from one port to another or from one place
to another
 They refer to merchant vessels and in NO WAY can
they or should they be understood as referring to
pleasure craft, yachts, pontoons, health service and
harbor police vessels, etc.
 Ships ought to be understood in the sense of vessel
serving the purpose of maritime navigation or
seagoing vessel, and not in the sense of vessel
devoted to the navigation of rivers
 The third book of the code of commerce, dealing
with maritime commerce, was evidently intended to
define laws relative to merchant vessels and
maritime shipping; and as appears from said code,
the vessel intended in that book are such run by
masters having special training with elaborate
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apparatus of crew and equipment indicated in the
code.
 Only vessels engaged in what is ordinarily known as
maritime commerce are within the provision of law
conferring limited liability on the owner in case of
maritime disaster.
 Other vessel of minor nature not engaged in
maritime commerce, such as river boats and those
carrying passengers from ship to shore, must be
governed, as to their liability to passenger, by the
provision of the civil code or other appropriate
special provisions of law.
Case: Augusto Lopez vs. Juan Duruelo, et. al
 The code of commerce is not applicable to small craft
which are only subject to administrative (customs)
regulations in the matter of port service and in the
fishing industry.
Only vessels engaged in what is ordinarily known as
maritime commerce are within the provisions of law
conferring limited liability on the owner in case of
maritime disaster.
It is therefore clear that a passenger on a boat like
the Jison, in the case before use, is not required to
make protest as a condition precedent to his right of
action for the injury suffered by him in the collision
described in the complaint – article 835 of the Code
of Commerce does not apply.
CONSTRUCTION, EQUIPMENT AND MANNING
The Construction, equipment and manning of vessel are
subject to the rules issued by the Maritime Industry
Authority (MARINA) and consistent with Article 574 of the
Code of Commerce
Article 574. Builders of vessels may employ the materials
and follow, with respect to their construction and rigging,
the systems most suitable to their interests. Ship owners
and seamen shall be subject to what the laws and
regulations of the public administration on navigation,
customs, health, safety of vessels, and other similar
matters.
PERSONAL PROPERTY
Vessels are considered personal property under the Civil
Law. The Code of Commerce likewise expressly
acknowledges the special nature of a vessel as personal
property.
Case: Philippine Refining Company vs. Jargue
 Vessels are personal property although occasionally
referred to as a peculiar kind of personal property.
They are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law.
The only difference between a chattel mortgage of
a vessel and a chattel mortgage of other personality
is that it is not now necessary for a chattel mortgage
of a vessel to be noted in the registry of the register
of deeds, but it is essential that a record of
documents affecting the title to a vessel be entered
in the record of the Collector of Customs at the port
of entry.
Case: Rubiso and Calixto vs. Rivera
 Ships or vessels, whether moved by steam or by sail,
partake, to a certain extent, of the nature and
conditions of real property, on account of their
value and importance in the world of commerce.
Transfer of vessels should be in writing and must be
recorded in the appropriate registry.
2. OWNERSHIP
ACQUISITION
 Vessel may be acquired or transferred by any means
recognized by laws. Thus, vessel may be sold,
donated and may even be acquired through
prescription.
 Under the present laws, vessels that are under the
jurisdiction of MARINA can be transferred only with
notice to said administrative agency.
A. PRESCRIPTION (CODE OF COMMERCE)
Article 573. Merchant vessels constitute property which
may be acquired and transferred by any of the means
recognized by law. The acquisition of a vessel must appear
in a written instrument, which shall not produce any effect
with respect to third persons if not inscribed in the registry
of vessels.
The ownership of a vessel shall likewise be acquired by
possession in good faith, continued for three years, with a
just title duly recorded.
In the absence of any of these requisites, continuous
possession for ten years shall be necessary in order to
acquire ownership.
A captain may not acquire by prescription the vessel of
which he is in command.
ARTICLE 575. Co-owners of vessels shall have the right of
repurchase and redemption in sales made to strangers, but
they may exercise the same only within the nine days
following the inscription of the sale in the registry, and by
depositing the price at the same time.
B. SALE (CODE OF COMMERCE)
Article 576. In the sale of a vessel it shall always be
understood as included the rigging, masts, stores and
engine of a streamer appurtenant thereto, which at the
time belongs to the vendor.
The arms, munitions of war, provisions and fuel shall not be
considered as included in the sale.
The vendor shall be under the obligation to deliver to the
purchaser a certified copy of the record sheet of the vessel
in the registry up to the date of the sale.
Article 577. If the alienation of the vessel should be made
while it is on a voyage, the freightage which it earns from
the time it receives its last cargo shall pertain entirely to the
purchaser, and the payment of the crew and other persons
who make up its complement for the same voyage shall be
for his account.
If the sale is made after the vessel has arrived at the port of
its destination, the freightage shall pertain to the vendor,
and the payment of the crew and other individuals who
make up its complement shall be for his account, unless the
contrary is stipulated in either case.
Article 578. If the vessel being on a voyage or in a foreign
port, its owner or owners should voluntarily alienate it,
either to Filipinos or to foreigners domiciled in the capital
or in a port of another country, the bill of sale shall be
executed before the consul of the Republic of the
Philippines at the port where it terminates its voyage and
said instrument shall produce no effect with respect to third
persons if it is not inscribed in the registry of the consulate.
The consul shall immediately forward a true copy of the
instrument of purchase and sale of the vessel to the registry
of vessels of the port where said vessel is inscribed and
registered.
In every case the alienation of the vessel must be made to
appear with a statement of whether the vendor receives its
price in whole or in part, or whether he preserves in whole
or in part any claim on said vessel. In case the sale is made
to a Filipino, this fact shall be stated in the certificate of
navigation.
When a vessel, being on a voyage, shall be rendered useless
for navigation, the captain shall apply to the competent
judge on court of the port of arrival, should it be in the
Philippines; and should it be in a foreign country, to the
consul of the Republic of the Philippines, should there be
one, or, where there is none, to the judge or court or to the
local authority; and the consul, or the judge or court, shall
order an examination of the vessel to be made.
If the consignee or the insurer should reside at said port, or
should have representatives there, they must be cited in
order that they may take part in the proceedings on behalf
of whoever may be concerned.
CO-OWNER’S RIGHTS
ARTICLE 575. Co-owners of vessels shall have the right of
repurchase and redemption in sales made to strangers, but
they may exercise the same only within the nine days
following the inscription of the sale in the registry, and by
depositing the price at the same time.
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3. NATIONALITY
Vessels that are duly registered in the Philippines are
considered Philippines Flag vessels. Article 92 of the
UNCLOS provides that there must be a genuine link
between the State and the ship in order to confer
nationality over the ship.
FLAGS OF CONVINIENCE
There are instances when countries may allow registration
of vessels belonging to nationals of other countries. There
is no genuine link between the State and the ship and the
registration is just a matter of convenience.
The absence of genuine link is reflected in either the
absence or minimal regulation of the registered vessels by
the country where the vessels are registered. The
Philippines does not recognize.
REGISTRATION
 Vessels are now registered through MARINA. It is a
long standing rule that the person who is the
registered owner of the vessel is presumed to be the
owner of the vessel.
 It is a settled rule that the sale or transfer of the
vessel is not binding on the third person unless the
same is registered.
 EXCEPTION:
◦ Warships and naval ships;
◦ Ships of Philippine Coastal Guards;
◦ Ship registered in foreign countries
temporarily here in the Philippines;
◦ Inflatable boats used in rescue operations.
SHIP'S MANIFEST
 Vessels are required to carry manifest coast-wise
trade.
 A manifest is a declaration of the entire cargo. The
object of a manifest is to furnish custom officers with
list of check against, to inform the revenue officers
what goods are being brought into a port of the
country on a vessel.
 The requirement that a vessel must carry a manifest
is not complied with even if a bill of lading can be
presented. A bill of lading is just a declaration of a
specific cargo rather than the entire cargo.
 Sec 906 of the Tariff and Custom Code provides that
“manifest shall be required for cargo and passengers
transported from one place to another only when
one or both of such place is a port of entry.”
SAFETY REGULATIONS
 On February 23, 2000, the Maritime Industry
Authority directed all domestic ship owners and
operators under Memorandum Circular No. 154 to
strictly comply with existing Safety-Related Policies,
Guidelines, Rules and Regulations
 Rules include: (read book page 488-489)
 Monitoring of compliances shall be undertaken by
the Authority and its Maritime Regional Offices,
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together with the needed coordination with the
Philippine Coast Guard
The MARINA shall have the power to inspect vessels and all
equipment on board to ensure compliance with safety
standards
CABOTAGE- the right of foreign vessels to engage in a
coastwise shipping, that is, to provide service from one
place within the Philippines and another place also within
the Philippines
REPAIRS OF VESSELS – ship repairers are liable to the ship
owner for any damage that was cause to the vessel while
the same is undergoing repairs. However, both the ship
repairer and the ship owner will shoulder the loss if they are
equally negligent.
CHAPTER 12
SHIP MORTGAGE AND MARITIME LIENS
MORTGAGE
 Since the term personal property includes vessel,
they are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law.
 Mortgage and other encumbrances over vessels are
governed by the provisions of presidential decree
1521 (Ship Mortgage Decree of 1978).
OTHER CODE OF COMMERCE PROVISIONS
 The provisions of the Code of Commerce
reproduced hereunder are deemed modified not
only by the Civil Code but also by special laws.
PREFERRED MORTGAGE
Sec. 10 of P.D. 1521 provides that a “preferred mortgage
shall constitute a lien upon the mortgaged vessel in the
amount of the outstanding mortgage indebtedness secured
by such vessel. Upon default of any term or condition of the
mortgagee by suit in remaining admiralty wherein the
vessel itself may be made a party defendant and be
arrested”
REQUIREMENTS FOR PREFERRED MORTGAGE
1. The mortgage is recorded;
2. An affidavit is filed with the record of such mortgage
to the effect that the mortgage is made in good faith
and without any design to hinder, delay, or defraud
any existing or future creditor of the mortgagor or
any lien or of the mortgaged vessel;
3. The mortgage does not stipulate the mortgagee
waives the preferred status;
4. The mortgage should cover the whole of the vessel;
and
5. The vessel must be of domestic ownership.
MARITIME LIEN is a privileged claim on a vessel for some
service rendered to it to facilitate its use in navigation. It is
a special property right in a ship given to a creditor by law
as security for a debt or claim subsisting from the moment
the debt arises with right to have the ship sold and debt
paid out of the proceeds.
ORDER OF PREFERRED CLAIMS
1. Expenses and fees allowed and costs taxed by the
court and taxes due to the government
2. Crew’ wages
3. General average
4. Salvage; including contract salvage
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.
 A lien does not attach for breach of an executory
contract even though the contract is the type which
normally gives rise to a lien.
 Maritime Lien must be brought within ten years
from the time the right of accrues. Laches may also
lie if there was unreasonable delay on the part of
claimant in asserting its rights.
MARITIME TORTS are defined as civil wrongs committed on
navigable waters. Any conduct ship which is tortuous under
general law and which is connected with the ship or its uses
creates a maritime lien. It includes collision claims and
personal injury claims.
SUBROGATION is that a third person who satisfies the
obligation to an original maritime lienor may claim from the
debtor because the third person is subrogated to the rights
of the maritime lienor over the vessel
If the proceeds of the sale should not be sufficient to pay all
creditors included in one number or grade, the residue shall
be divided among them pro rata. All credit not paid,
whether fully or partially, shall be subsist as ordinary credits
enforceable by personal action against the debtor. (See
Article 2207 of the Civil Code.)
WHO MAY CONSTITUTE PREFERRED SHIP MORTGAGE?
Any citizen of the Philippines, or any associations or
corporation organized under the laws of the Philippines, at
least sixty percent (60%) of the capital of which is owned by
citizens of the Philippines may freely constitute a mortgage
or any other lien or encumbrance on his or its vessels and
its equipment with any bank or other financial institutions,
domestic or foreign.
MORTGAGE WITH NON-MARITIME PROPERTY
In the 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 such property by the payment of a specified
portion of the mortgage indebtedness. The property whose
separate discharge must be provided for is the non-
maritime property.
FLEET MORTGAGE
There may be mortgage on two or more vessels. The
mortgage may provide for separate discharge of each vessel
by the payment of a portion of mortgage indebtedness. The
amount of such portion of such payment shall be endorsed
upon the documents of the vessel.
ARREST AND FORECLOSURE
Upon default of the obligor, the preferred ship mortgaged
may be foreclosed in a suit in admiralty. Upon filing of a
position for foreclosure, the Court may order the arrest of
the vessel upon ex parte application duly supported by an
affidavit of a person who knows the facts and upon filing of
a bond.
Foreclosure is only an alternative remedy. The mortgages
may likewise avail of the alternative remedy of specific
performance in a suit in personam in admiralty.
CHAPTER 13
PERSONS WHO TAKE PART IN MARITIME COMMERCE
In sum, the following are persons who take part in
Maritime Commerce:
 SHIPOWNERS and SHIP AGENTS;
 CAPTAINS and MASTERS OF VESSELS;
 OFFICERS and CREW OF VESSELS
SHIPOWNER V. SHIP AGENT
SHIPOWNER – the person who is primarily liable for
damages sustained in the operation of vessel.
Code of Commerce places the primary responsibility on the
owner of the vessel. (Uses the term naviero which has been
construed to include ship owner, ship agent and even the
charterer who is considered as owner pro hac vice.)
SHIP AGENT (Code of Commerce) – the person entrusted
with provisioning of the vessel, or who represents her in the
port in which she happens to be. There is also the intention
under the Code of Commerce to make the ship agent
solitarily liable with the owner. The solidary liability applies
both for breach of contract and extra-contractual
obligations such as tort.
The ship agent, even though he is not the owner, is liable in
every way to the creditor for losses and damages without
prejudice to his right against the owner, the vessel and its
equipment and freight. But his liability, however is subject
to the LIMITED LIABILITY RULE (Chapter 6 of the Aquino
book).
CAPTAINS V. MASTERS OF VESSELS
For purposes of Maritime Commerce:
The words “captain” and “master” have the same meaning;
both being chiefs or commanders of ships. Thus, the terms
“captain” and “master” are used synonymously in the Code
of Commerce.
Page 4

MARINA REGULATIONS:
MASTER – the person having command of the ship. The
same term is being used both for domestic trade and
international trade.
BOAT CAPTAIN – a person authorized by the MARINA to act
as officer and/or in command of a boat/ship or has the
qualification/license to act as such.
3 DISTINCT ROLES A CAPTAIN COMMONLY PERFORMS:
(Inter-Orient Maritime case)
1. He is a GENERAL AGENT OF THE SHIPOWNER;
2. He is a COMMANDER and TECHNICAL DIRECTOR of
the vessel (most important role for this has
something to do with the operation and
preservation of the vessel during its voyage and the
protection of the passengers, if any, and crew and
cargo);
3. He is a REPRESENTATIVE OF THE COUNTRY under
whose flag he navigates.
Based on the first aforementioned role, the captain is
regarded as the GENERAL AGENT of the shipowner and as
such, he:
a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the
freight earned;
c. Agree upon rates and decide whether
to take cargo;
d. Has legal authority to enter into
contracts with respect to the vessel and
the trading of the vessel, subject to
applicable limitations established by
statute, contract or instructions and
regulations of the shipowner.
All aforementioned functions verily commits to the captain
the governance, care, and management of the vessel.
Clearly then, the captain is vested with both MANAGEMENT
and FIDUCIARY functions.
POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN
AND THE MASTER: (See Arts. 610-612 of the Code of
Commerce)
DISCRETION OF CAPTAIN AND MASTER
A ship’s captain must be accorded a REASONABLE
MEASURE OF DISCRETIONARY AUTHORITY to decide what
the safety of the ship and of its crew and cargo specifically
requires on a stipulated ocean voyage.
Presumption: A captain is knowledgeable as to the specific
requirements of seaworthiness and the particular risks and
perils of the voyage he is to embark upon.
Applicable Principle: The captain has control of ALL
departments of service in the vessel, and reasonable
discretion as to its navigation.
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Basic Principle in Admiralty Law: In navigating the vessel,
the master must be left free to exercise his own best
judgment.
Requirements of Safe Navigation: The judgment and
discretion of the captain of a vessel may be confined within
a straitjacket, even in this age of electronic
communications.
PILOTAGE: WHO IS A PILOT?
Maritime Law: a person duly qualified, and licensed, to
conduct a vessel into or out of ports, or in certain waters.
Broad sense: includes both:
(1) Those whose duty it is to guide vessels into or out of
ports, or in particular waters; and
(2) Those entrusted with the navigation of vessels on
the high seas.
General understanding: a person taken on board at a
particular place for the purpose of conducting a ship
through a river, road or channel, or from a port.
COMPULSORY PILOTAGE In compulsory pilotage, states
possessing harbors enacted laws or promulgated rules
requiring vessels approaching their ports to take on board
pilots licensed under local law. In the Philippines,
compulsory pilotage is being implemented in the Port of
Manila, the latter being within the Manila Pilotage District.
a. Master and Pilot (See Far Eastern Shipping case on
page 520 of the Aquino book for the SC discussion
on the duties of a pilot)
b. Shipowner and Pilot
GENERAL RULE: the pilot is PERSONALLY LIABLE for
damages caused by his own negligence or default to the
OWNERS of the vessel, and to THIRD PARTIES for damages
sustained in a collision. Such negligence of the pilot in the
performance of duty constitutes a MARITIME TORT.
IN CASES OF COLLISION: the COLLIDING VESSEL is prima
facie responsible; hence, the burden of proof is upon the
party claiming benefit of the exemption from liability.
Thus, it must be shown affirmatively that the pilot was at
fault, and that there was no fault on the part of the officers
or crew, which might have been conducive to the damage.
The fact that the law compelled the master to take the pilot
does not exonerate the vessel from liability. The injured
party shall seek redress from the vessel. The owners of the
vessel are responsible to the injured party for the acts of
the pilot, and they must be left to recover the amount as
well as they can against him.
c. Pilot and his Association
The fact that the pilot is a member of an association does
not make the association jointly and severally liable. Article
2180 of the Civil Code does not apply because there is NO
EMPLOYER-EMPLOYEE Relationship.
Well-established is the rule that pilot associations are
immune to vicarious liability for the tort of their members.
They are not the employer of their members and exercise
no control over them once they take the helm of the vessel.
They are also not partnerships because the members do not
function as agents for the association or for each other.
Pilots’ associations are also not liable for negligently
assuring the competence of their members because as
PROFESSIONAL ASSOCIATIONS, they made no guarantee of
the professional conduct of their members to the general
public.
CODE OF COMMERCE PROVISIONS ON CAPTAINS (See
page 528 of the Aquino book)
OFFICERS AND CREW OF VESSELS
COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
- All the persons on board from the captain to the cabin boy,
necessary for the management, maneuvers, and service,
and therefore, it includes the CREW, the SAILING MATES,
ENGINEERS, STOKERS, and OTHER EMPLOYEES ON BOARD
not having specific designations; but it SHALL NOT INCLUDE
the passengers or the persons whom the vessel is
transporting.
REGULATION OF MERCHANT MARINE PROFESSION
The practice of marine profession is now governed by
special laws and pertinent rules issued by the:
 MARINA;
 BOARD OF MARINE DECK OFFICERS;
 BOARD OF MARINE ENGINEER OFFICERS
MINIMUM SAFE MANNING
It is not enough that the officers manning the merchant
vessel have all the qualifications imposed by the Philippine
Merchant Marine Officers Act and other special laws or
regulations.
It is also required that there is sufficient number of officers
and crew that are serving in the vessel. (Quality and
Quantity)
SECURITY OF TENURE
The Labor Code provisions apply to OFFICERS and CREW of
merchant vessels in DOMESTIC Trade or COASTWISE
Shipping. Hence, matters concerning their dismissal or
disciplinary action must be in accordance with provisions of
the Labor Code.
For officers and crew who are working in foreign vessels
who are involved in overseas shipping, there must be
compliance with the applicable laws on overseas
employment as well as regulations issued by the Philippine
Overseas Employment Administration (POEA).
CODE OF COMMERCE PROVISIONS on Sailing Mates,
Second Mate and Marine Engineer, Crew, and Captain (See
pages 552-560 of the Aquino book).
Parties - those provided above plus seamen, other
members of the complement including the stokers (in
charge of boilers) and supercargo (agent of the shippers
who has authority to sell goods while on voyage)
4 maritime contracts
1. Charter parties
2. Bottomry
3. Repondentia
4. Marine insurance (incorporated in the subject
insurance)
ON PERSONS
SHIP OWNER
 He has the privilege to invoke limited liability rule
 What if with a charter party with charterer, who can
invoke the LLR? No jurisprudence. Personal opinion
of sir: distinguish on the type of charter party. If
affreightment, ship owner retains possession,
command and navigation of the vessel. If bareboat
it is vested upon the charterer.
 Jurisprudence: except for registration, the charterer
is the temporary owner of the vessel. With this, the
charterer can invoke LLR (this part no juris)
NOTE: there is not distinction of liability of ship owner and
ship agent. They are civilly liable. There is a situation in
maritime law that ship ower and agent they are held liable
for the act or omission of a third person which is the ship
captain or master.
ACTS of CAPTAIN
YUCON CASE AND SWEETLINES CASE
In Yucon, money was entrusted to the captain and the
money was lost. SC concluded that ship owner was liable for
the lost because the captain failed to put up measures while
in custody of the money. It may not technically to an act but
may refer to admission but would fall under the term acts
In sweetlines, bound for catbalogan but the captain chose
to allow the passengers to disembark in tacloban. This time,
this is the act of captain. The SC concluded that the
damages sustained by passengers bound for catbalogan are
to shouldered by the ship onwer
INDEMNITIES IN FAVOR OF 3RD PERSON: OTTA DEV. CASE
CITED IN WALTER SMITH CASE:
In OTTA the owner of the pier was at the same time the
owner of the goods. SC, because there was a relationship of
owner of vessel and goods, then there is presumption of
negligence new civil code prevails
Page 5

WALTER SMITH CASE
There was no relationship. Owner of port and owner of
goods are different. What was applied by court was the law
on torts. No presumption of negligence. There should be
proof of negligence.
The owner of vessel proved that he exercised ordinary
diligence (required in ports). What was presented was the
competence of ship captain. The ship owner proved
ordinary diligence in choosing the ship captain
CONTRACTS ENTERED INTO BY SHIP CAPTAIN OR MASTER
Inter orient case: one role is they are the general agent of
the ship owner. But if the obligation contracted by the
captain does not endure to the benefit of the vessel, then
the ship owner has no liability.
There is no conflict because 586 obligations contracted by
the shipper while 1759 death or injury of passenger as
result of contract of carriage.
The case in point with the contracts entered into was the
case Wing Kee. There were supplies delivered. Ship agent
was said to be liable. SC said at the time you were still an
agent you were liable but at the time agency was
terminated you are no longer liable.
If both SO and SA are sued, being solidarily liable, the SA has
right of recourse over SO.
SHIP CAPTAIN OR MASTER
The difference is with regard to the tonnage of the vessel
(higher: captain; lower: master; major patron and minor
patron)
The question on the ship captain or master is the exercise
of discretion
INTER ORIENT CASE: captain tayong did not want to
proceed with the voyage from Singapore to Africa bec. Of
lack of oxygen and acetylene. But because of order of
management he proceeded. He was then ordered to
repatriate and then another captain took his place. He filed
for illegal dismissal.
The issue was the discretion exercised by the captain. WON
he has the discretion not to precede because of lack of
supply. SC said you should emphasize reasonable
discretion--- it is the captain’s duty
INTER ORIENT: TRIPLE ROLES OF THE CAPTAIN – general
agent, commander and technical manager, representative
of country.
SHIP CAPTAIN AND HARBOR PILOT
Harbor pilot: distinguish if voluntary or compulsory
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Case cited by SC on proper relationship of captain and pilot.
In far eastern shipping case 521 3rd par --- there are occasion
when the master may and should interfere and even
displace the pilot when he is obviously incapacitate and
intoxicated. (look at the book)
In this case, there is relevance on when the captain should
interfere. If it is voluntary (pilot engaged by ship owner) ---
damages caused by pilot, ship owner is liable. If compulsory,
ship owner can escape liability
If compulsory distinguish whether there were
circumstances that would require the ship captain to
interfere with the ship pilot. If there are circumstances but
captain did not interfere then ship owner is liable. If there
are circumstances and captain interferes but still there is
damage, the ship owner will not be liable.
CEBU PORT AUTHORITY – covered by compulsory pilotage
CHIEF MATE OR SAILING MATE (THEN THERE ARE
ENGINEERS)
2008 case, citing the article the code of commerce
specifying the functions of chief mate being second in
command of the vessel. Chief mate is a managerial
employee (as provided in labor code --- loss of trust and
confidence.
SEAMAN
On security of tenure: distinguish DOMESTIN (labor code)
abroad (POEA). There is a standard contract (POEA
prepared and drafted it and every seaman shall comply with
this --- this is to protect Filipino seaman working abroad)
that will be signed by every seaman stipulating the security
of tenure, repatriation, benefits, etc.
Difference for abroad: bigger income but contractual (after
contract go home). Domestic, you can be a regular
employee in accordance with the labor code
JUMP SHIP SCENARIO: It is a valid ground to terminate a
seaman.
Ship captain should conduct preliminary investigation for
crimes conducted on board.
CHAPTER 14
CHARTER PARTIES
CHARTER PARTIES
A contract whereby the entire ship, or some of the principal
part, is let by the owner to a merchant or other person for
a specified time or use for the conveyance of goods,
consideration of payment of freight
It is a contract, hence, parties are free to stipulate upon
such terms and conditions that would suit their purposes
subject to the caveat that these should not be contrary to
law or public policy
Parties
1. Charterer- merchant or a person who desires to
lease ship or vessel owned by another by transport
of his or her goods for commercial purposes or
persons from one port to another
2. Ship owner (SO)
KINDS:
1. BAREBOAT OR DEMISE CHARTERER – ship owner leases
to the charterer the whole vessel, transferring to the
charterer the entire command, possession and consequent
control over the vessel’s navigation, including the master
and the crew, who becomes the charterer’s “servants”
- Charterer becomes an owner “pro hac vice”
2. CONTRACT OF AFFREIGHTMENT – charterer hires the
vessel only, either for a determinate period of time or for a
single or consecutive voyage, with the SO providing for the
provision of the ship, wages of the master and crew, and
expenses for maintenance of the vessel
a. Time charter – vessel is leased to a charterer for a
fixed period of time
b. Voyage charter – vessel is leased for a single or
particular voyage
REQUISITES OF A VALID CHARTER PARTY
1. Consent of the contracting parties
2. An existing vessel which should be placed at the
disposition of the shipper
3. The freight
4. Compliance with requirements of art 652 of code of
commerce
(Aticle 652 of the Code of Commerce provides that the
charter party shall contain, among others, the name,
surname, and domicile of the charterer, and if he states that
he is acting by commission, that of the person for whose
account he makes the contract.)
Caltex v. Sulpicio Lines
There was a voyage charter; collision between MT Vector
(tanker) and Doña Paz (owned by Sulpicio); breach of
contract filed by the passengers’ heirs against Sulpicio; 3d
party complaint against registered owner of the tanker
including Caltex (that they were negligent and in bad faith
by not seeing to it that the tanker was seaworthy)
ISSUE: WON CHARTERER SHALL BE LIABLE UNDER
MARITIME LAW?
HELD: Liability cannot be attached to Caltex; the charter did
not affect the business of Sulpicio as a common carrier ;
rights and responsibilities of ownership still rested on the
owner
Planters Product v CA
Time charter; Planters purchased fertilizers from the US;
voyage to the Philippines; upon arrival, shortage in the
cargo was discovered; filed actions against carrier fro
damages (breach of Contract); RTC ruled in favor of the
Planters; Ca reversed & absolved carrier as it was converted
from common carrier to private;
HELD: It cannot become a private carrier; bareboat charter
can become a private carrier but in contract of
affreightment remains as common carrier (action based on
contract of carriage; presumption of negligence); carrier
was able to rebut the presumption of negligence (result the
inherent character of the fertilizers)
Coastwise Lighterage v. CA
WON private carrier would convert to a common carrier;
contract of affreightment
HELD: Reiterated Planters ruling; but was not able to rebut
presumption of negligence; did not exercise EO diligence
(hired unlicensed patron)
Home Insurance v. American Steamship
Case mostly used by the common carrier as defense; Home
Insurance is subrogee (paid SMC of loss cargo shipped thru
American Steamship; no reference as to what contract but
there was a mention that it was in affreightment.
HELD: Common Carrier undertaking to carry special cargo
(chartered to special person only) become a private carrier
and stipulation exempting owner from liability for loss due
to the negligence of its agents is valid;
Ship owner can appoint senior officers for the vessel even if
bareboat contract. But technically it is an affreightment.
Most conflicts will occur if these various principles will have
to be mixed.
The whereabouts of the vessel is important to know the
time for loading and unloading…
POLICY – Marina
IMPLEMENTING OR ENFORCEMENT - Coastguard
2 conditions implied in charter party
 Seaworthiness (Caltex Phil Case) --- it need not be
written in the charter party
 - look at book (ala kaapas)
JURISDICTION OF ADMIRALTY CASES
- Depends on the jurisdictional amount
- Important element of the contract = the subject
matter of the contract (nature and character)
International Harvester v Aragon
- Involves loss of cargo shipped from LA to Manila;
cargo owner filed an action against common carrier
- SC said liability of petitioner was predicated upon
the contract of carriage; admiralty would involve all
maritime contract in whatever form and wherever
made
Page 6
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Macondry v Delgado Brothers
- Delgado was an operator of a pier service ; WON
operator exercised its duty in loading and unloading
of cargos ; no contract of carriage ; obligation was
only to load the to the ship ; no application of
admiralty
FRIEGHT OR FREIGHTAGE
- Price of carriage
- Shall accrue according to what is stipulated in the
contract
- Should there be no stipulation or if it is ambiguous ,
rules shall be:
a. Freight shall begin to run from the day of loading on
the vessel
b. In charters with fixed period, the freight shall begin
to run upon that very day
c. If freight is charged according o weight , payment
shall be made according to gross weight , including
the weight of the containers
LAST DAYS- period of time stipulated fro loading and
unloading (provided for in charter party) ; if no lay days
provided for in the charter party, it is understood that the
charterer will unload and discharge cargoes within a
reasonable time or with reasonable diligence
DEMURRAGE – a sum of money due by express contract for
detention of the vessel in loading, beyond time allowed for
that purpose in that charter party; sum of which is usually
fixed by the parties in the charter party; liability for this
exists only when expressly stipulated
DEAD FREIGHT – where the charterer failed to occupy the
leased portion of the vessel, he may thereby be liable by the
ship owner for the dead freight that occurred
STIPULATION IN CHARTER PARTIES
GR: parties are free to stipulate subject to art 1744 to 1754
0f NCC
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.
Art. 1745. Any of the following or similar stipulations shall
be considered unreasonable, unjust and contrary to public
policy:
(1) That the goods are transported at the risk of the
owner or shipper;
(2) That the common carrier will not be liable for any
loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any
diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family,
or of a man of ordinary prudence in the vigilance
over the movables transported;
(5) That the common carrier shall not be responsible for
the acts or omission of his or its employees;
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished;
(7) That the common carrier is not responsible for the
loss, destruction, or deterioration of goods on
account of the defective condition of the car,
vehicle, ship, airplane or other equipment used in
the contract of carriage.
Art. 1746. An agreement limiting the common carrier's
liability may be annulled by the shipper or owner if the
common carrier refused to carry the goods unless the
former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays
the transportation of the goods or changes the stipulated
or usual route, the contract limiting the common carrier's
liability cannot be availed of in case of the loss, destruction,
or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's
liability for delay on account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's liability is
limited to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value,
is binding.
Art. 1750. A contract fixing the sum that may be recovered.
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been fairly and freely
agreed upon.
Art. 1751. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration
on the question of whether or not a stipulation limiting the
common carrier's liability is reasonable, just and in
consonance with public policy.
Art. 1752. Even when there is an agreement limiting the
liability of the common carrier in the vigilance over the
goods, the common carrier is disputably presumed to have
been negligent in case of their loss, destruction or
deterioration.
Art. 1753. The law of the country to which the goods are to 1. Public instrument
be transported shall govern the liability of the common 2. Policy signed by the contracting parties and the
carrier for their loss, destruction or deterioration. broker taking part therein
3. Private instrument (art. 720)
Art. 1754. The provisions of Articles 1733 to 1753 shall
apply to the passenger's baggage which is not in his GR: The captain cannot contract loans on respondentia
personal custody or in that of his employee. secured by the cargo, and should he do so, the contract
shall be void. Neither can he borrow money or Bottomry for
As to other baggage, the rules in Articles 1998 and 2000 to his own transactions.
2003 concerning the responsibility of hotel-keepers shall be
applicable. EXCEPTIONS:
1. On the portion of the vessel he owns, provided no
ART. 653. If the cargo should be received without the money has been previously borrowed on the whole
charter party having been signed, the contract shall be vessel, nor exists any other kind of lien or obligation
understood as executed In accordance with what appears chargeable against her.
in the bill of lading, the sole evidence of title with regard to 2. When he is permitted to do so, he must necessarily
the cargo for determining the rights and obligations of the state what interest he has in the vessel.
ship agent, captain and charterer.
CONTENTS OF THE LOAN CONTRACT:
IF THERE IS CHARTER PARTY OR BILL OF LADING (BOL) – no 1. Kind, name and registry of the vessel;
contract at all; but according to Blanco, if there is delivery 2. Name, surname and domicile of the captain;
and receipt of cargo combined with the GF and mutual 3. Names, surnames and domiciles of the borrower
consent = contract present, better than BOL.. and the lender;
4. Amount of the loan and the premium stipulated;
CHAPTER 15 5. Time for repayment;
LOANS ON BOTTOMRY AND RESPONDETIA 6. Goods pledged to secure repayment;
7. Voyage during which the risk is run (art.721)
LOAN ON BOTTOMRY – loan made by ship owner or ship
agent guaranteed by vessel itself and repayable upon WHO MAY CONTRACT?
arrival of vessel at destination; vessel/portion 1. Bottomry – by the ship owner or ship agent; outside
of the residence of the owners, the captain.
LOAN ON RESPONDENTIA – loan, taken on security of the 2. Respondentia – only the owner of the cargo
cargo laden on a vessel, and repayable upon safe arrival of
cargo at destination; cargo/goods DISTINCTIONS:
Common Elements of Loans on Bottomry and BOTTOMRY/
ORDINARY LOAN
Respondents: RESPONDENTIA
1. Exposure of security to marine peril;
Not subject to Usury Law Subject to Usury Law
2. Obligation of the debtor conditioned only upon safe
arrival of the security at the point of destination. Liability of the borrower is
contingent on the safe Not subject to any
Requisites of a Loan on Bottomry/Respondentia: arrival of the vessel or contingency
1. Ship owner borrows money for use, equipment or cargo at destination
repair of vessel The first lender is a
The last lender is a
2. For a definite term and with extraordinary interest preferred creditor
preferred creditor
called premium
3. Secured by pledged of vessel or portion thereof in May or may not have
the case on loan on Bottomry; or pledge of goods in Must have a collateral
collateral
case of Respondentia Collateral is the vessel or
4. Loan repayment depends or conditioned on the safe Maybe property, real or
cargo subject to maritime
arrival of goods for respondentia and obligation to personal
risk
repay is extinguished if pledged goods are lost Need not be in writing
(Respondentia) but interest shall not be
5. Obligation to repay is extinguished if vessel is lost Must be in writing
due unless expressly
due to specified marine perils in the course of stipulated in writing
voyage or within limited time (Bottomry) To be binding on third
person must be recorded Need not be registered
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA: in the registry of vessels
 May be executed by means of:

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of port of registry of the
vessel
Does not extinguished if
Loss of collateral
there is a loss of the
extinguishes the same
collateral (if any)
CONSEQUENCES OF LOSS OF EFFECTS OF THE LOANS
I. Effects of loans be lost due to accident of the sea during
the time, and on the occasion of the voyage which has been
designated in the contract and proven that the cargo was
on board.
Lender losses the right to institute the action which would
pertain to him. EXCEPT: when the loss was
1. Caused by inherent defect of the thing
2. Through fault or malice of the borrower
3. Through barratry on the part of the captain
4. Caused by damages suffered by the vessel as a
consequence of being engaged in a contraband
5. Loaded the goods on a vessel different from that
designated in the contract unless the change was
caused by force majeure
II. The lenders on bottomry or respondentia shall suffer in
proportion to their respective interest, the general average
which may take place in the things upon which the loans
were made.
III. In case of shipwreck, the amount for payment of the loan
shall be deduced to the proceeds of the effects which have
been saved but only after deducting the costs of the
salvage.
IV. If the loan should be on the vessel or any of her parts,
the freight earned during the voyage for which the loan was
contracted shall also be liable for its payment, as far as it
may reach.
V. If the same vessel or cargo should be the object of the
loan of Bottomry or respondentia and maritime insurance,
the value of what may be saved in case of shipwreck shall
be divided between the lender and the insurer, in
proportion to the legitimate interest of each one, taking in
consideration, for this purpose only, the principal with
respect to the
Charter parties and loans on bottomry and respondentia
are considered maritime contracts.
Q: WHY DO WE HAVE TO STUDY THIS TOPIC? ARE THESE
RELEVANT?
A: They are hardly used at present. However, we have to
study this just in case this will be asked in the bar. Especially
in the unique terms used in this topic.
General provisions in contracts will govern.
BASIC PROVISION YOU SHOULD NOT FORGET:
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1. There should be a marine risk;
2. The condition that the vessel or the goods has
perished then the right of the lender to collect
everything as well as stipulated interest is
extinguished.
BOTTOMRY
 It may refer to the vessel
 The bottom or the hull or the kill of the vessel can
be pledged in this case
 The whole vessel can be a subject of a security or
collateral
 PD. 1521: (is this different) – loan is the principal,
mortgage is the accessory.
 The contract of bottomry is principal, the mortgage
under pd 1521 is merely a security
 In PD 1521 under section 4 it is a requirement that
the whole of the vessel must be mortgaged (no
jurisprudence on this matter whether a part of the
vessel can be mortgaged)
 In bottomry the whole or the part of the vessel can
be the subject
 IF the part of the vessel can be pledged, is it
necessary that there should be goods? No. no need
for goods.
RESPONDENTIA
 The vessel should have goods. The goods must be
laden in the vessel
 Is it necessary that the boat is on voyage? The vessel
must be in the actual course of voyage because this
is the objective of the law.
Because if the vessel is docked in the port the owner
can simply obtain loans. And besides there is no risk
when the vessel is docked (but no jurisprudence)
DISTINCTION OF THIS TWO TYPES OF LOAN VS. SIMPLE
LOAN (FOR PURPOSES OF THE BAR); With respect to form
- can you validly execute a bottomry or respondentia
verbally? You cannot because under the code of commerce
no judicial action can arise when the contract is not reduced
in writing.
But this is not the case in simple loan. But in simple loan you
take note the statute of frauds, if not in writing B and R, you
can dismiss case due to failure to state cause of action.
Q: WHY HARDLY USED AT PRESENT?
A: because of sophistication. Captains can just call up any
agent the ship owner to deliver anything for the use of the
vessel to deliver. This contract was recognized in medieval
times.
CHAPTER 16
AVERAGES
ACCIDENTS IN MARITIME COMMERCE:
1. Averages
2. Arrival Under Stress
3. Collision
4. Shipwreck
AVERAGES – an extra-ordinary or accidental expense
incurred during the voyage in order to preserve the cargo,
vessel or both; and all damages or deterioration suffered
by the vessel from departure to the port of destination, and
to the cargo from the port of loading to the port
consignment. (Art. 806)
Classes of Averages:
A. Particular or Simple Average
B. Gross or General Average
A. Particular or Simple Average
 Damage or expenses caused to the vessel or cargo
that did not inure to common benefit, and borne by
respective owners. (809)
 The owner of the goods which gave rise to the
expense or suffered the damage shall bear this
average. (Art. 810)
 res perit domino applies
 If the vessel or goods are hypothecated by loan on
bottomry and respondentia, the lender shall bear
the loss in proportion to his interest. Examples: see
article 809 of the code of commerce
Rules on Averages:
1. Averages is defined as damage deliberately caused
or an expense deliberately incurred due to a marine
peril and which has resulted in saving both vessel
and cargo or only the vessel or cargo.
2. Where both vessel and cargo are saved, it is general
average; where only the vessel or only the cargo is
saved, it is particular average.
3. The person whose property has been saved must
contribute to reimburse the damage caused or
expense incurred if the situation constitutes general
average.
B. Gross or General Average
 Damage or expenses deliberately caused in order to save
the vessel, its cargo or both from real and known risk. (Art.
811)
 All the persons having an interest in the vessel and the
cargo therein at the time of the occurrence of the average
shall contribute to satisfy this average. (Art. 812)
REQUISITES:
1. Common danger present
2. Arising from accidents of sea, disposition of
authority
3. Peril imminent and ascertained
4. Part of vessel or cargo deliberately sacrificed
5. Intended to save vessel or cargo
6. Proper legal steps and authority taken
COMMON DANGER
Means both the 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 the accidents of the sea, disposition of authority, or
faults of men, provided that circumstances producing the
peril should be ascertained and imminent or may rationally
be said to be certain and imminent.
When the measure of precaution adopted solely and
exclusively for the preservation of the vessel from the
danger of seizure or capture and not for the common safety
is not considered as common danger.
DELIBERATE SACRIFICE
Voluntary sacrifice of a part for the benefit of the whole in
order to justify the average contribution
* Voluntary jettison- The casting away of some portion of
the associated interests for the purpose of avoiding the
common peril from the whole to a particular portion of
those interests.
the goods on board refer to in jettison should be proven by
means of bill of lading and with regards to those belonging
to vessel by means of inventory prepared before the
departure.
2 CASES WHERE THERE CAN ALSO BE GENERAL AVERAGES
EVEN IF THE SACRIFICE WAS NOT MADE DURING THE
VOYAGE:
a. where the sinking of the vessel is necessary to extinguish
a fire in a port, roadstead, creek or bay
b. where cargo is transferred to lighten the ship on account
of a storm to facilitate entry into a port
Art. 816: in order that the goods jettisoned may be included
in the gross average and the owners entitled to indemnity
– it is necessary that the cargo’s existence on board be
proven by a bill of lading; and with regard to those
belonging to the vessel, by means of an inventory prepared
before departure.
Art. 817: if in lightening of a vessel on account of a storm to
facilitate its entry to a port or roadstead, part of the cargo
should be transferred to barges or lighters and be lost, the
owner of the said part is entitled to indemnity as if the loss
originated from a gross average, the amount being
distributed between the vessel and cargo from which it
came.
If on the contrary the merchandise transferred should be
saved and the vessel should be lost, no liability may be
demanded of the salvage.
Art. 818: if, as a necessary measure to extinguish a fire in a
port, roadstead, creek, or bay, it should be decided to sink
Page 8

any vessel, this loss shall be considered gross average, to
which the vessels saved should contribute.
Note: the loss or damage sustained by cutting away wreck
or parts of the ship which have been previously carried
away or effectively lost by accident shall not be made good
as general average
Sacrifice must be Successful
No general contribution can be demanded if the vessel and
other cargo that are sought to be saved were in fact not
saved (art. 860)
Owners of the goods saved shall not be liable for the
indemnification of those jettisoned, lost or damaged.
Hence, when the sacrifice was not successful in saving the
ship, there will be no general contribution
Compliance with Legal Steps
- Procedure for recovery: (Art. 813-814)
1. There must be a resolution of the captain, adopted
after a deliberation with the other officers of the
vessel and after hearing all persons interested in the
cargoes. If the latter disagree, the decision of the
captain should prevail but they shall register their
objections.
2. The resolution must be entered in the logbook,
stating the reasons and motives for the dissent, and
the irresistible and urgent causes if he acted in his
own accord. It must be signed, in the first case, by
all persons present in the hearing. In the second
case, by the captain and all the officers of the vessel.
3. The minutes must also contain a detail of all the
goods jettisoned and those injuries caused to those
on board.
4. The captain shall deliver it to the maritime judicial
authority of the first port he may make, within 24
hours after his arrival, and to ratify it immediately
under oath.
ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF
JETTISON:
1. Those which are on the deck, preferring the heaviest
one with the least utility and value;
2. Those which are below the upper deck, beginning
with the one with greatest weight and smallest value.
(Art. 815)
EXAMPLES OF GENERAL AVERAGE
Read Art 811 of the Code of Commerce
BY WHOM BORNE
- shall be borne by those who benefited from the sacrifice;
the ship owner and the owner of the cargoes that were
saved
CONTRIBUTION MAY BE IMPOSED TO;
a. Insurers ( Insurance Code of the Philippines)
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They are obliged to pay for the indemnification of
the gross average provided that the liability shall be
limited to the proportion of contribution attaching
to his policy value where this is less than the
contributing value of the thing insured
b. Lenders of bottomry and respondentia (Code of
Commerce)
Obliged to pay in proportion to their respective
interest, the general average which may take place
in the goods which the loan is made.
WHO IS ENTITLED TO INDEMNITY?
Owner of the goods which were sacrificed is entitled to
receive the general contribution. EXCEPT;
1. Goods carried on desk unless the rule special law or
customs of the place allow the same
2. Goods that are not recorded in the books or records
of the vessel
3. Fuel of the vessel if there is more than sufficient fuel
for the voyage
American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do
not exceed 5% of the interest which the claimant may have
in the vessels or cargo if it is general 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.
It is clear that the damage of the cargo is particular average
since the loss is less than 1% to the value of the cargo and
there appears to be no allegations as to any agreement
defendants and consignee of the goods to the contrary, by
express provision of law, plaintiff is barred from suing for
recovery.
LAW ON AVERAGES DOES NOT APPLY IF THE CC IS
NEGLIGENT.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR
CONTRIBUTION ON AVERAGES
 Under the rule, deck cargo is permitted in coastwise
shipping but prohibited in overseas shipping.
1. If deck cargo is located with the consent of the
shipper on overseas trade, it must always contribute
to general average, but should the same be
jettisoned, it would not be entitled to reimbursement
because there is violation of the Y-A Rules.
2. If deck cargo is loaded with the consent of the shipper
on coastwise shipping, it must always contribute to
general average and if jettisoned would be entitled
to reimbursement.
May also be used to solve controversies where no
provision of the code of commerce is in point
because the said rules embody the custom of
maritime states
AVERAGES
- The same concept that was existing in medieval times can
be applied at present
Relevance of averages (take note these ex. Connected to
expenses under 806) under 806 --- averages are:
 EXTRAORDINARY EXPENSES – Ex. If machine does
not work, you have to ask help of a tugboat. The
expenses on the use of tugboat is a question of
averages.
This is extraordinary because it is not foreseen. ---
assuming the engine of the vessel was defective, can
that be considered an average? YES. (question now
if it is particular or general)
 DAMAGES OR DETERIORATION SUFFERED – Refer
to the physical feature or attribute of the goods.
These two are different
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES
HERNANDEZ – averages are losses. If there is a loss
incurred, the loss will be shouldered on where it falls. (ex. If
you have goods transported from origin to destination but
in process it was damaged by sea water.
The shipper or owner will shoulder the loss. What will
shipper do to recover loss? If insured go after insurance.
Insurance then files action against common carrier due to
negligence) – if general average, there is special
circumstance, the loss will not be shouldered on where it
falls but will be shouldered proportionately by persons who
have benefited the circumstance
4 REQS. FOR GENERAL AVERAGES (SEE ABOVE NOTES) –
MEMORIZE; MAGSAYSAY VS. AGAN
1. Common danger TO Both vessel and cargo
2. Deliberate sacrifice
3. Successful saving
4. Compliance with the proper steps
If no special circumstance, it is a particular or simple
average – the owner of the vessel will be the one who will
shoulder the loss.
The negligence of captain, the owner of the vessel will
shoulder. But if there is special circumstance, the loss will
be shouldered proportionately by those who benefited
STANDARD OIL CASE – the ship captain will not release
goods to the shipper unless the shipper will contribute their
share. The issue was the duty of the captain to liquidate –
he did not file for the appropriate proceeding, you should
result to legal liquidation.
Captain here failed TO INITIATE proper proceeding thus
shipowner is liable for actions of captain
Q: IS THE DUTY OF CAPTAIN TO INITIATE A CONDITION
PRECEDENT?
A: No. even if ship captain does not initiate, the shipowner
can still file the appropriate proceeding in court.
COMMON DANGER – both to vessel and cargo. If one
invokes general average then that person must prove what
he allege. In standard oil since ship captain invoked general
averages. They should be the one to prove. Failure to prove,
they cannot ask for contribution from owners of the goods.
It is also possible that there are no goods involved. Only
extraordinary expense Phil. Home assurance case –
discussed also in chapter 3 – when it exploded, vessel got
burned, another vessel came to the rescue to extinguish the
fire and towed the vessel to the nearest destination.
Goods were saved from the subject vessel. The ship owner
asked for contribution to the owner of the goods which
were saved. SC said ship owner did not complied legal steps
813-815 thus you cannot allege general averages.
If the averages are not general, it is particular. The ship
owner will be solely liable… in the case of Magsaysay, there
was no deliberate sacrifice.
SUCCESSFUL SAVING
 Both vessel and goods must be saved
 If vessel not saved, no general averages. Even if
goods were saved
 You have to start with resolution, placing of reso in
the log book, accounting of goods thrown away
starting those on deck and to follow from those not
on deck (read 83-815)
American Home insurance (take note this case - bar)
Transportation of tv sets, the ship captain was
upraised of the typhoon. Still captain continued
with the journey.
Then because of the typhoon captain directed that
the tv sets should be jettison. Saved vessel. Is there
general average? No. if the ship owner is negligent,
the law on general averages does not apply.
NOTE: Examples of the two types of averages are not
exclusive. There is a word “especially” thus there may be
other example that may fall under these two types of
averages.
YORK AND TURP RULES
- THIS CAN be stipulated in a contract that this rule will
apply in respect to averages
- In the absence of stipulation in the contract in
applying this rule, such rule is inapplicable
Q: ORDINARY EXPENSES ARE NOT AVERAGES BECAUSE
THEY ARE FORESEEABLE, ARE THERE INSTANCE THAT THEY
CAN BE CONSIDERED TO BE EXTRAORDINARY AVERAGE.
Page 9

A: if the parties agree that the averages will cover ordinary
expenses.
The code of commerce does not prohibit the inclusion of
other expenses under averages.
CHAPTER 17
COLLISIONS
COLLISIONS - Impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary
one.
 3 ZONES OF TIME IN THE COLLISION OF VESSELS:
1. FIRST ZONE – all time up to the moment when risk of
collision begins;
2. SECOND ZONE – time between moment when risk of
collision begins and moment it becomes a practical
certainty;
3. THIRD ZONE – time when collision is certain and time
of impact.
 ERROR IN EXTREMIS - Sudden movement made by a
faultless vessel during the 3rd zone of collision with another
vessel which is at fault during the 2nd zone.
Even if such sudden movement is wrong, no responsibility
will fall on said faultless vessel. (Urrutia and Co. v. Baco
River Plantation Co., 26 PHIL 632).
 RULES ON COLLISION OF VESSELS UNDER CODE OF
COMMERCE:
The collision may be due to the fault, negligence or lack of
skill of the captain, sailing mate, or any other member of
the complement of the vessel. The owner of the vessel at
fault be liable for losses or damage. (Art. 826)
The collision may be due to the fault of both vessels. Each
vessel shall suffer its own losses, but as regards the owner
of cargoes both vessels shall be jointly and severally liable.
(Art. 827)
If it cannot be determined which vessel is at fault. Each
vessel shall also suffer its own losses and both shall be
solidarily liable for losses o damages on the cargoes. (Art.
828)
The vessels may collide with each other through fortuitous
event or force majeure. In this case each shall bear its own
damage. (Art. 830)
Two vessels may collide with each other without their fault
by reason of a third vessel. The third vessel will be liable for
losses and damages. (Art. 831)
A vessel which is properly anchored and moored may
collide with those nearby reasons of storm or other cause
of force majeure. The vessel run into shall suffer its own
damage and expense. (Art. 832)
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 CASES COVERED BY COLLISION AND ALLISION:
1. One vessel at fault – such vessel is liable for damage
caused to innocent vessel as well as damages
suffered by the owners of cargo of both vessels.
2. Both vessels at fault – each vessel must bear its own
loss, but the shippers of both vessels may go against
the ship owners who will be solidarily liable.
3. Vessel at fault not known – same as rule as (2).
(Doctrine of Inscrutable Fault)
4. Third vessel at fault – same rule as (1).
5. Fortuitous event – no liability. Each bears its own
loss.
PREREQUISITE TO RECOVERY:
 Protest should be made within 24 hours before the
competent authority at the point of collision or at the first
port of arrival, if in the Philippines and to the Philippine
consul, if the collision took place abroad. (Art. 835)
 Injuries to persons and damage to cargo of owners not
on board on collision time need not be protested. (Art. 836)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY
NEGLIGENCE NOT APPLICABLE.
DOCTRINE OF “INSCRUTABLE FAULT”
 In case of collision where it cannot be determined which
between the two vessels was at fault, both vessels bear
their respective damage, but both should be solidarily liable
for damage to the cargo of both vessels.
NOTE: The Doctrine of Limited Liability applies in case of
collisions, but it shall be limited only to the value of the
vessel with all its appurtenances and freightage earned
during the voyage.
When the latter is not sufficient to cover all the liabilities,
the indemnity due by reason of the death or injury of
persons shall have preference. (Arts. 837 and 838)
CHAPTER 18
ARRIVAL UNDER STRESS AND SHIPWRECKS
* ARRIVAL UNDER STRESS – arrival of a vessel at a port of
destination on account of lack of provision, well-founded
fear of seizure, privateers, pirates, or accidents of sea
disabling navigation.(Art. 819)
NOTE: Captain must make a protest.
STEPS TO BE TAKEN IN THE DETERMINATION OF THE
PROPRIETY OF ARRIVAL UNDER STRESS
1. Captain should determine during the voyage if there
is a well-founded fear of seizure, privateers of other
valid grounds
2. Captain shall then assemble the officers
3. Captain shall summon the persons interested in the
cargo who may be present and who may attend but
without right to vote
4. The officers shall determine and agree if there is
well founded reason after examining the
circumstances; captain shall have the deciding vote
5. Agreement shall be drafter and the proper minutes
shall be signed and entered into the log book
6. Objections and protests shall likewise be entered in
the minutes
Absence of one of the steps, can still be considered arrival
under stress.
WHEN NOT LAWFUL (ART. 820):
1. Lack of provisions due to negligence to carry
according to usage and customs;
2. Risk of enemy not well known or manifest
3. Defect of vessel due to improper repair; and
4. Malice, negligence, want of foresight or lack of skill
of captain.
WHO BEARS EXPENSES?
 If arrival under stress is proper  Ship owner or ship
agent will only be liable for the expenses of the
arrival
 If arrival under stress is improper  Ship owner and
ship agent will be liable for the same expenses and,
in addition, they shall be solidarily liable for
damages caused to the cargoes by such arrival
under stress (Art. 821)
NOTE: After cessation of the cause of the arrival under
stress, captain should continue voyage or else he shall be
liable.
UNLOADING OF CARGOES TO MAKE REPAIRS (ART. 822):
- In order to make repairs to the vessel or because
there is danger that cargo may suffer damage 
necessary to unload; captain must request
authorization from competent judge or court for
removal, and carry it out w/ knowledge of the
person interested in the cargo
- In a foreign port  philippine consul
- In case of the vessel  expenses shall be for the
account of the ship owner or agent
- In case of the cargo  chargeable against the
owners of the merchandise for whose benefit the
act was performed
- If both  expenses to be divided proportionately
between the value of the vessel and cargo.
CUSTODY OF CARGO (ART. 823):
 Entrusted to the captain (except in cases of force
majeure)
 If entire cargo or part thereof should appear to be
damaged, or there should be imminent danger of its
being damaged.
(Art. 824)
 Captain may request judge of competent court /
consul, the sale of all or part of the cargo
 Person taking cognizance shall authorize it (after
examination and declaration)
 Captain shall justify the legality of his conduct,
answering to the shipper for the price of the
merchandise would have brought if they had arrived
in good condition
LIABILITY OF CAPTAIN (ART. 825):
 Captain responsible for the damages caused by his
delay
 If cause of arrival under stress ceases  he should
not continue the voyage
 If cause of arrival should have been the fear of
enemies  deliberation and resolution (in a
meeting of officers of the vessel and persons
interested in the cargo) shall precede the departure.
* Shipwreck – the demolition or shattering of a vessel
caused by her driving ashore or on rocks and shoals in the
midseas, or by the violence of winds or waves in tempests.
- loss of the vessel at sea as a consequence of its grounding,
or running against an object in sea or on the coast.
 Loss or deteriorations of vessel or cargo caused by
shipwreck or stranding  individually account of the
owners; part which may be saved belonging to them, same
proportion. (Art. 840)
 If the wreck was due to malice, negligence or lack of skill
of the captain, the owner of the vessel may demand
indemnity from said captain. (Art. 841)
 The goods saved from the wreck to be specially bound
for the payment of the expenses of the respective salvage.
(Art. 842)
 If several vessels sail under convoy, and any of them
should be wrecked, the cargo saved will be distributed
among the rest in proportion to the amount which each one
is able to take.
If any captain should refuse, without sufficient cause, to
receive what may correspond to him, the captain of the
wrecked vessel to enter a marine protest against him.
If it is not possible to transfer to the other vessels the entire
cargo of the vessel wrecked, the goods of the highest value
and smallest volume to be saved first. Designation to be
made by the captain with concurrence of his officers. (Art.
843)
 The captain taking on-board the goods saved from the
wreck to continue his course to the port of destination and
upon arrival he should deposit the goods for disposal to
their owners.
In case the captain changes his course, and if he can unload
them at the port of which they were consigned, he may
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make said port if the shippers or supercargoes present and
the officers and passengers of the vessel consent thereto.
But he is not required to do so even if he has the consent
during time of war or when the port is difficult and
dangerous to make. The owners of the cargo to defray all
the expenses of this arrival and the payment of the
freightage. (Art. 844)
 If cannot be, proceed to judicial sale complying with the
formalities and on publicity. (Art. 845)
CHAPTER 19
SALVAGE
SALVAGE – services one person renders to the owner of a
ship or goods, by his own labor, preserving the goods or the
ship which the owner or those entrusted with the care of
them have either abandoned in distress at sea, or are
unable to protect or secure.
KINDS OF SALVAGE:
 Voluntary – compensation is dependent on the
Success.
 Under contract for a per diem or per horam wage –
Payable at all events.
 Under contract for compensation – Payable only in
case of success.
CLAIM FOR VALID SALVAGE:
Provides for a reward for voluntary salvage. Other persons
who assist in saving the vessel or its cargo from shipwreck
shall be entitled to a similar award.
PERSONS NOT ENTITLED TO SALVAGE COMPENSATION:
1. Crew of the vessel shipwrecked or which was in
danger of shipwreck
2. He who shall have commenced the salvage in spite
of opposition of the captain or of his representatives
3. He who shall have failed to comply with the
provisions of Section 3 (Section 3. The salvor who
saves or picks up a vessel or merchandise at sea, in
the absence of the ship captain, ship owner or a
representative of either of them, they being
unknown, shall convey and deliver the vessel or
merchandise ASAP to the collector of customs if the
port has a collector and otherwise to the provincial
treasurer or municipal mayor.)
Requisites of compensation or salvage reward:
1. Object must have been exposed to marine peril
(fire, acts of pirate, thieves)
2. Salvage services rendered voluntarily and is not
required as an existing duty or a form of contract
(See Sec. 8)
* Pilots are not entitled to a reward – (Atty. Capanas)
3. Salvage services are successful in whole or in part
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4. Valid vessel which is shipwrecked beyond the
control of the crew or shall have been abandoned
(not necessary)
* Courts will not interfere in the agreement of the parties
except but where there is no agreement or it is excessive
the reward is fixed by the RTC judge.
* Derelict – a ship or 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.
Determined by ascertaining what was the intention and
expectation of those in charge of it when they quitted it.
A boat or vessel found entirely deserted or abandoned on
the sea without hope or intention of recovery or return by
the master or the crew, whether resulting from wreck,
accident, necessity, or voluntary abandonment
JETSAM, FLOTSAM, LIGAN:
 JETSAM – Goods that were thrown off a ship which
was in danger
 FLOTSAM – Goods that floated off the ship while
ship was in danger or when it sank
 LIGAN – Goods left as sea on the wreck or tied to a
buoy so that they can be recovered later.
BASIS OF ENTITLEMENT TO SALVAGE REWARD
(CIRCUMSTANCES TO CONSIDER):
1. The labor expended by the salvors in rendering the
salvage service
2. The promptitude, skill and energy displayed in
rendering the service and saving the property
3. The value of the property employed by the salvors
in rendering the service, and danger to which such
property was exposed
4. The risk incurred by the salvors in rescuing the
property from the impending peril
5. The value of the property salved
6. The degree of danger which the property was
rescued.
Rights and obligations of salvors and owners:
 Salvor is entitled to compensation for services
rendered. He has, under the Salvage Law, a lien
upon the property salvaged.
 On the other hand, the owner does not denounce
his right to the property. There is no presumption
of an intention to abandon such property rights.
Maritime Lien
 A salvor, in maritime law, has an interest in the property;
called a lien, but it never goes, in the absence of a contract
expressly made, upon the idea of debt due from the owner
to the salvor but upon the principle that the service creates
a property in the thing saved.
Rule on salvage reward:
1. The reward is fixed by the RTC judge in the absence
of agreement or where the latter is excessive (Sec.
9).
2. If sold (no claim being made within 3 months from
publication), the proceeds, after deducting
expenses and the salvage claim, shall go to the
owner; if the latter does not claim it within 3 years,
50% of the said proceeds shall go to the salvors, who
shall divide it equitably, and the other half to the
government (Secs. 11-12).
3. If a vessel is the salvor, the reward shall be
distributed as follows:
a. 50% to the ship owner;
b. 25% to the captain; and
c. 25% to the officers and crew in proportion to
their salaries
SALVAGE LAW
Sec. 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 a like reward.
Sec. 2. If the captain of the vessel, or the person acting in
his stead, is present, no one shall take from the sea, or from
the shores or coast merchandise or effects proceeding from
a shipwreck or proceed to the salvage of the vessel, without
the consent of such captain or person acting in his stead.
Sec. 3. He who shall save or pick up a vessel or merchandise
at sea, in the absence of the captain of the vessel, owner,
or a representative of either of them, they being unknown,
shall convey and deliver such vessel or merchandise, as
soon as possible, to the Collector of Customs, if the port has
a collector, and otherwise to the provincial treasurer or
municipal mayor.
Sec. 4. After the salvage is accomplished, the owner or his
representative shall have a right to the delivery of the vessel
or things saved, provided that he pays, or gives a bond to
secure, the expenses and the proper reward.
The amount and sufficiency of the bond, in the absence of
agreement, shall be determined by the Collector of
Customs or by the Judge of the Court of First Instance of the
province in which the things saved may be found.
SEC. 5. The collector of customs, provincial treasurer, or
municipal mayor, to whom a salvage is reported, shall
order:
a. That the things saved be safeguard and inventoried.
b. The sale at public option of the things saved which
may be in danger of immediate loss or of those
whose conservation is evidently prejudicial to the
interests of the owner, when no objection is made
to such sale.
c. The advertisement within the thirty days
subsequent to the salvage, in one of the local
newspapers or in the nearest news-paper
published, of all the details of the disaster, with a
statement of the mark and number of the effects
requesting all interested persons to make their
claims.
Sec. 6. If, while the vessel or things saved are at the
disposition of the authorities, the owner or his
representative shall claim them, such authorities shall order
their delivery to such owner or his representative, provided
that there is no controversy over their value, and a bond is
given by the owner or his representative to secure the
payment of the expenses and the proper reward.
Otherwise, the delivery shall nor be made until the matter
is decided by the Court of First Instance of the province.
Sec. 7. No claim being presented in the three months
subsequent to the publication of the advertisement
prescribed in sub-section (c) of Section five, the things save
shall be sold at public auction, and their proceeds, after
deducting the expenses and the proper reward shall be
deposited in the insular treasury.
If three years shall pass without anyone claiming it, one-half
of the deposit shall be adjudged to him who saved the
things, and the other half to the insular government.
Sec. 8. The following shall have no right to a reward for
salvage or assistance:
a. The crew of the vessel shipwrecked or which was is
danger of shipwreck;
b. He who shall have commenced the salvage in spite
of opposition of the captain or his representative;
and
c. He who shall have failed to comply with the
provisions of Section three.
Sec. 9. If, during the danger, an agreement is entered into
concerning the amount of the reward for salvage or
assistance, its validity may be impugned because it is
excessive, and it may be required to be reduced to an
amount proportionate to the circumstances.
Sec. 10. In a case coming under the last preceding section,
as well as in the absence of an agreement, the reward for
salvage or assistance shall be fixed by the Court of First
Instance of the province where the things salvaged are
found, taking into account principally the expenditures
made to recover or save the vessel or the cargo or both, the
zeal demonstrated, the time employed, the services
rendered, the excessive express occasioned the number of
persons who aided, the danger to which they and their
vessels were exposed as well as that which menaced the
Page 11

things recovered or salvaged, and the value of such things
after deducting the expenses.
Sec. 11. From the proceeds of the sale of the things saved
shall be deducted, first, the expenses of their custody,
conservation, advertisement, and auction, as well as
whatever taxes or duties they should pay for their entrance;
then there shall be deducted the expenses of salvage; and
from the net amount remaining shall be taken the reward
for the salvage or assistance which shall not exceed fifty per
cent of such amount remaining.
Sec. 12. If in the salvage or in the rendering of assistance
different persons shall have intervened the reward shall be
divided between them in proportion to the services which
each one may have rendered, and, in case of doubt, in equal
parts. Those who, in order to save persons, shall have been
exposed to the same dangers shall also have a right to
participation in the reward.
Sec. 13. If a vessel or its cargo shall have been assisted or
saved, entirely or partially, by another vessel, the reward
for salvage or for assistance shall be divided between the
owner, the captain, and the remainder of the crew of the
latter vessel, so as to give the owner a half, the captain a
fourth, and all the remainder of the crew the other fourth
of the reward, in proportion to their respective salaries, in
the absence of an agreement to the contrary. The express
of salvage, as well as the reward for salvage or assistance,
shall be a charge on the things salvaged on their value.
CHAPTER 20
CARRIAGE OF GOODS BY SEA
CARRIAGE OF GOODS BY SEA ACT
- Adopted by the Philippines on October 22, 1936
through Commonwealth Act No. 65
- New Civil Code  primary law on goods that are
being transported from a foreign port to the
Philippines
- COGSA  remains to be a suppletory law for such
type of transportation – international shipping.
Art. 1753, NCC: The law of the country to which the goods
are to be transported shall govern the liability of the
common carrier for their loss, destruction or deterioration.
GOODS – Includes goods, wares, merchandise, and articles
of every kinds whatsoever. Does not include live animals
and cargo which by the contract of carriage is stated as
being carried on deck and is so carried.
PARTIES: Carrier, and Shipper. They are given their
respective rights and obligations under COGSA.
CARRIER (COVERED BY COGSA)
 Not limited to the ship owner; includes charterer
who enters into a contract of carriage with the
shipper
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CHARTERER
 Charters a vessel and conducts his own business for
his own account.
 After chartering the vessel, he uses the vessel to
conduct a business of transportation obtaining
goods from 3rd persons to transport the latter’s
goods.
DUTIES OF THE CARRIER:
 Civil Code requires international carriers to
exercise extraordinary diligence in the
performance of their contractual obligations.
 Section 2 of COGSA – carrier’s obligation and
liabilities in relation to the loading, handling,
stowage, carriage, custody, care and discharge of
such goods.
 Section 3 of COGSA – responsibilities of the carrier
under COGSA.
Document of title required
- Evidenced by the Bill of Lading.
- BOL serves as prima facie evidence of the receipt by
the carrier of the goods.
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD
NOTICE OF CLAIM  must be made within 3 days from
delivery if the damage is not apparent; not mandatory
PRESCRIPTIVE PERIOD  1 year from delivery for the filing
of the case is a condition precedent or mandatory; does not
apply to cases of misdelivery or conversion
DEFENSES AND IMMUNITIES
 Provided for by Section 4 of COGSA
 Section 49(1) of COGSA – carrier shall not be liable
for loss or damages arising from unseaworthiness
 New Civil Code – carrier will not be liable only if it
can present proof that the unseaworthiness was
caused exclusively by any of the circumstances
specified in Art. 1734 of the NCC
WAIVER
The ship owner and the ship agent may waive the benefit of
any of the defenses in its favor provided not only under
COGSA but also under other laws
LIMITING PROVISION
COGSA contains a provision that allows the shipper to
recover only US$500 per package unless there is a special
declaration unless there the real value of the goods is
declared. Declaration made by the shipper stating an
amount bigger than $500 per package will make the carrier
liable for such bigger amount but only if the amount so
declared is the real value of the goods
RIGHT TO DISCHARGE DANGEROUS CARGO
COGSA allows the carrier to discharge the good of the
carrier discovers that the goods are dangerous,
inflammable or are explosives
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