NOVEMBER 21, 2014 AIR TRANSPORATION

 DOMESTIC – NCC + CC + SPL

PRIMARY LAW: CIVIL CODE  INTERNATIONAL
SECONDARY LAW/SUPPLEMENTARY: CODE OF COMMERCE & SPECIAL o Warsaw Convention Governs (primary law)
LAWS o Why? – Philippines participated in the convention and agreed =
bound
CIVIL CODE o HIGH CONTRACTING PARTIES – countries that participated
 34 provisions and adhered to the warsaw convention
 1732 – Definition of common carriers o INTERNATIONAL FLIGHT – Flight from one HCP to another
HCP
COMMON CARRIER o In case of breach of contract, where do you file?
 Association of persons, corporations.. offering services to the PUBLIC for 1. Place of principal domicile of the carrier
a COMPENSATION 2. Place of principal business place of the carrier
 There is a CONTRACT  If violated = file breach of contract of carriage 3. Place where you purchased ticket
 PARTIES: 4. Place of destination
1. Shipper/consignor X residence of plaintiff
2. Common carrier itself – person who obligates himself to transport
3. Consignee – person who receives the goods EXAMPLES OF COMMON CARRIER
1. Bus
2. Jeep
GOVERNING LAWS 3. Trains
 1766 – In all matters not covered in this code, the:
1. Code of Commerce COMMON CARRIER PRIVATE CARRIER
2. Special Laws Offering public their service X public
 1753 – The law of the country to which the goods are delivered shall Riding as a matter of right
govern the liability of the common carrier in case of LDD
ART. 1733 – EXTRAORDINARY DILIGENCE
 Degree of diligence of common carrier = extraordinary diligence
SEA SHIPMENT COASTWISE
 Governing law: ART. 1736 – 1738 – DURATION OF EXTRAORDINARY RESPONSIBILITY OF
1. Civil Code CC
2. Code of Commerce & SPL
 Governing if from Phil to another country  law of the COUNTRY OF 1736 – Possession  delivery (actual or constructive)
DESTINATION  Actual delivery
 GR: Law of the country of destination  Constructive Delivery
o E: If parties stipulate that COGSA governs = COGSA governs 1. Notice was already given to the consignee regarding arrival of the
cargoes and
LAND TRANSPORTATION 2. The consignee was given reasonable time to release it even though
 NCC + CC + SPL there is no actual release (1738)

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1737 – Continuing liability even when they are temporarily unloaded or stored in DEFECT OR CHARACTER OF GOODS
transit 1. Proximate cause
 E: Right of stoppage in Transitu 2. CC is obliged to observe EO diligence to lessen or forestall further
o Diligence required: Diligence of a good father of a family damage
o Why is the diligence reduced?
 Because when the shopped availed of RSIT, the OBLIGATIONS OF COMMON CARRIER IN TRANSPO OF PASSENGERS
transpo contract no longer exists 1. Accept the cargo or passengers w/o discrimination
 X acting as common carried  EXCEPTIONS:
 Acting as bailee or warehouse manager 1.If the cargo is dangerous or hazardous
2. If the cargo arrives later than time stipulated
1734 – DEFENSES OF A COMMON CARRIER (MEMORIZE!) – instances when 2. Obligation to deliver
CC is NOT presumed to be at fault  Where? – place where stipulated in the bill of lading
1. Flood, storm, earthquake, lighting or other natural disaster or calamity  What time?
2. Act of the public enemy in war, whether international or civil o Time is important because late delivery will cause
3. Act or omission of the shipper or owner of the goods monetary loss
4. The character of the goods or defects in the packing or in the container o At the time stipulated
5. Order or act of competent public authority o If no time stipulated  reasonable time
 How to determine reasonable time:
1735 – PRESUMPTION OF FAULT IN CASE OF LDD UNLESS PROVED THAT 1. Character of the goods (ex. perishable)
CC EXERCISED EO DILIGENCE 2. Distance
 Example: Plaintiff’s hand goods damaged which were loaded in the o Any delay in the delivery will make the CC liable
common carrier  only evidence is that he boarded CC + damage  CC  Basis:
liable because of presumption of fault/negligence of CC 1. 1740 – if there is delay, CC will be liable
despite natural disaster
1734 – CALAMITY (FLEC) REQUISITES 2. 1747 – If the common carrier delays or
1. Natural, must be the only and proximate cause deviates from route  common carrier
2. Before, during and after the calamity, the CC must prevent or minimize cannot avail of contract limiting carrier’s
LDD liability
o DEVIATION – MARINA has already pre-determined
1741 – CONTRIBUTORY NEGLIGENCE OF SHIPPER OR OWNER EQUITABLY route from one place to another
REDUCES LIABILITY o TRANSSHIPMENT
 If there is CN by shipper  CC is still liable but it will be equitably reduced  Cargo is transferred from one carrier to
 Note: ONLY APPLIES TO CARGOES another
 GR: X allowed regardless of better durability or
state (new) of other CC or even if the 2
PUBLIC ENEMY REQUISITES vessels are owned by the same company
1. During War  E: Unless the transshipment is
2. Country of common carrier should be involved in the war allowed under stipulation
3. Pirates
4. Local or International War

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 3. Observe extraordinary diligence
 When do you know that there is EO?
1. It must prove that vessel is SEAWORTHY:
1. If the vessel is FIT, engineering is well done, very good
materials, vessel can meet the normal hazards of the
sea
2. CARGO WORTHY
 It has the ability to transport cargo
 Case: Shipper has no obligation to check the
vessel if cargo worthy
3. Must have all the EQUIPMENT
4. Complete, capable, licensed, trained MANPOWER
2. Person themselves must transport cargoes with utmost diligence
observing the care that an ordinary prudent man would observe
OBLIGATIONS OF THE SHIPPER
1. DUE DILIGENCE IN AVOIDING DAMAGE
 1741 – If the proximate cause of the LDE is because of the
negligence of the CC, the CC will be liable but if there is CN of the
passenger, it will be equitably reduced
o E: It will not be reduced the moment there is damage or
injury to the passenger
2. PAY THE FREIGHT
 CARRIER’S LIEN – the moment the shipper fails to pay the freight,
the CC has a right or lien on the cargoes of the shipper  CC has
right to sell or auction the property
o That is why it cannot be released by the shipper because
3. PAY DEMORAGE
 DEMORAGE – compensation or damages paid for detaining the CC
or vessel for a certain beyond stipulated period  shouldered by the
shipper
OBLIGATIONS OF COMMON CARRIER IN TRANSPO OF PASSENGERS
1. ACCEPT PASSENGER WITHOUT DISCRIMINATION
2. TRANSPORT PASSENGER SAFELY
 1755 – Mandate of the law for CC to exercise ED in transporting
passengers
 The exercise of ED would depend on the circumstances presented to
you
3. EXERCISE EXTRAORDINARY DILIGENCE
 1733 – “safety of the passengers”
 1755 – specifically for passengers
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DUTY OF PASSENGER/SHIPPER
1. To deliver
2. To pay freight
3. To pay other costs
1744 – Can you stipulate to bring down EO to less:
 GR: YES! But it should not be lower than DOGFOA provided that it is:
1. In Writing and signed
2. Valuable consideration other than the services rendered by
common carrier
3. Reasonable, just and not contrary to law
1745 – Stipulations that are contrary to law (memorize!) – RLD –GETD
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
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 omissions
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 LDD of goods on
account of defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage
December 5, 2014
PRESUMPTION IN CASE OF LED THAT CC WAS NEGLIGENT/AT FAULT
 1735
PRESUMPTION IN CASE OF PASSENGER’S DEATH OR INJURY THAT CC
WAS NEGLIGENT/AT FAULT
 1756
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Legal Issues to Address:
1. Is he a passenger?
o PASSENGER – those who have entered into a contract, implied
or express, to be transported from one place to another
o Instances:
1. Without intention to pay – X passenger
2. Entered surreptitiously – X passenger
3. Enter who has not paid but with intention to pay – Passenger
4. If person boarded the bus in an unusual place of the bus (ex.
roof) – passenger
5. If person boarded the wrong bus – passenger
E: if he has already been informed that he entered the
wrong bus and he has an opportunity to leave the bus –
X passenger
6. If the person was asleep and was not able to get off
destination and was informed and awaken that he has missed
his destination + opportunity to get off + X get off – X passenger
7. Newsboy, concessionaire on train abroad – passenger
8. Driver/bus conductor – X passenger
o But they should still exercise ED
o However there is no breach of contract of carriage
between him and his employer since they are not
passengers
o If something happens to them  bus will be liable
under workmen’s compensation law, X breach of
contract of carriage
2. Did the CC exercise ED in transporting the passenger?
3. When will this ED of CC start and end?
 Land Transportation
A. BUS
START:
o From the time the bus has stopped to take in passengers
and the passenger attempted to board the bus
 If there was an offer and the offer was accepted 
there is already an implied contract
 The moment the bus stops and something has
happened to the passenger, the common carrier is
liable even if the passenger has not yet boarded
the bus
 WHY? The law wants to protect the safety of the
passenger and wants to impose an obligation to
the bus company that when he offers, the
passenger is in a safe place  stop and offer your
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services at a safe place (ex. don’t do it in the
middle of the road cause you will be liable)
END:
o From the time the passenger has alighted from the CC and
has reasonably put himself in a safe place
o The mere fact that the passenger has already alighted the
bus  it does not cut the ED responsibility of the bus  the
passenger should be at a reasonably safe place  only
time when the CC’s ED is over
o WHY? For the CC to stay in a place where the passenger
can alight safely (x in the middle of the road)
B. TRAIN/LRT
START:
o From the time the passenger has purchased a ticket
o Even if the passenger has not boarded the train yet
o 1763 – injury caused by a stranger or fellow passenger
END:
o From the time the person has alighted the LRT unit and has
gone to a safe place
 AIR TRANSPORATION
START:
o From the time the passenger checks in and is in the pre-
departure area (submitted yourself to the custody of the CC)
o Airplane ticket purchase only – X make the CC liable at
once
END:
o From the time you alighted the plane and has gone in a safe
place or outside the custody of the CC
LIABILITY OF COMMON CARRIER
 1759 - Liable for acts of employee even if the employee has acted beyond
its authority or violated the orders of the CC
o CC cannot use a defense that the CC exercised DGFOAF in
selecting and supervising his employee in a case of breach of
contract
 1763 - Liable for the acts of a stranger and co-passenger
o Stranger - Somebody who just entered the bus and hurt
somebody there
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 o IMPT: In order for the CC to be free from liability in cases of 4.ACTUAL DAMAGES
hold-ups and injuries cause by stranger, there must be  Life expectancy = (2/3 x 80 – age) x (income – expenses)
IRRESISTABLE FORCE OR THREAT  without this, CC will be NEXT HW:
liable 1. CODE OF COMMERCE
o Example:  Real and hypothecary liability of CC
 If hold up lang na walang kwenta  CC liable because  Meaning of Vessel
they could have prevented it
 If hold up na may arms, etc  CC x liable JANUARY 9, 2015
o Hypo:
 Security agent rode the bus to which he is an employee CODE OF COMMERCE/MARITIME LAW
to go to his office in Cubao, saw his GF with another
man and shot them  liable under 1763 (co-passenger) MARITIME LAW AND NCC
and not under 1759 (employee)  Complementary (1766)
 X conflict with NCC
CASES FILED:
1. CULPA-CONTRACTUAL MARITIME LAW
 Filed against: the common carrier  System of law which deals with affairs, business, vessels, crew of the sea
 Breach of contract and conveyance of property and persons
 Preponderance of evidence  Transportation by the sea
2. QUASI-DELICT  Transpo by sea is usually used when it involves big shipments
 Example: Vessel was moving to the wharf loaded with cargoes  Transportation = life blood of the economy
and when it was about to dock, it lost control and hit the tier and  JURSDICTION:
destroyed the cargoes  owner of tier and cargoes filed case o Metro Manila – Amount is more than 400k = RTC
against the carrier  Less than = MTC
o Owner of the tier can file case for – Quasi-delict o Provinces – Amount involved is more than 300k = RTC
o Owner of the cargo can file case for – Culpa-contractual  Less than = City Court
 Based on Torts  NATURE OF MARITIME LIABILITY
3. CULPA-CRIMINAL o REAL AND HYPOTHECARY IN NATURE (LIMITED LIABILITY
 Filed against the driver RULE)
 CC subsidiarily liable for civil liability of the driver  Depends on the happening of something
 The owner/ ship agent of the vessel will not be liable for
DAMAGES the value of the cargoes that are lost if the vessel is
1. MORAL DAMAGES totally lost
 Anxiety, mental anguish, hurt feelings, sleepless nights  In sum:
 GR: X awarded in culpa-contractual  NO OR TOTAL LOSS OF VESSEL = NO
o E: 1) Death LIABILITY
2) Gross negligence  PARTIAL LOSS = LIABLE
2. EXEMPLARY DAMAGES  Example 1:
 Awarded to set an example to the public  Shipment from HK to Philippines  Value of
 If there is one or more aggravating circumstance vessel (150M); Cargo (200M)  Vessel sank
3. NOMINAL DAMAGES because of negligence of captain  Although
 To vindicate right of the person the TOTAL LOSS of the vessel is due to the

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 negligence of the captain, the owner/ship
agent will no longer be liable = x recover
anything from the shipowner
 Reason behind law: To encourage the shipping
business from freeing ship owners from liability because
the sea transportation business is very risky
 Example 2:
 Ship cargo from HK to Philippines  Cargo
(200M);  Cargoes totally lost, but vessel
PARTIAL LOSS only  CARGO OWNER
CAN RECOVER because partial loss only
 Example 3:
 Partial loss of ship.
o Can you recover for your cargo that
was lost? YES
o E: Is there a possibility that the ship
owner will be free from liability? YES,
IF HE ABANDONS THE SHIP
because the ship will now go to the
creditors and they can auction it
o In sum:
 GR: Yes, liability
 E: Abandoned ship
 Example 4:
 Vessel totally lost when it reached Hawaii;
shipments are also totally lost Cargo owners
filed case to recover value of their lost cargoes
o Can they recover? NO
o If partial loss of vessel, cargo totally
lost + notice of abandonment? X
recover
o If vessel totally lost + no
abandonment? X recover
o PRINCIPLE: ABANDONMENT IS
ONLY A CONDITION PRECEDENT
WHEN THE VESSEL IS TOTALLY
LOST
 EXCEPTIONS TO LIMITED LIABILITY: (CARGO
OWNER CAN STILL RECOVER DESPITE TOTAL
LOSS)
1. Workmen’s Compensation
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2. Injury or damage due to ship owner or to the
concurring negligence of the ship owner or to the
concurring negligence of the ship owner and the
captain
 E: If negligence was only due to ship captain =
limited liability applies
3. The vessel is insured
4. Expenses for repair on vessel completed before
loss – cost of repair has already been made and
due but not yet paid by ship owner
5. In case there no total loss and the vessel is not
abandonment
6. Collision between 2 negligent vessels
Examples:
1. Workmen’s Compensation
2. If the negligence is caused by ship agent/owner or concurrent negligence of
ship agent and ship captain
a. Vessel from Manila to Iloilo  ship was overloaded  ship was
totally lost  heirs filed breach of contract  owner shall be liable
b. Despite knowing that there was advice of typhoon, common carrier
still travelled  liable
*SHIP AGENT – Acts as the owner in the port where the ship enters
VESSEL
 X cover small boats, hospital boats
 Why do we need to distinguish between maritime vessel and vessel?
o Because if we are referring to a maritime vessel, there must first
be a protest filed…
o Case:
 The small boat went near the big vessel and the small
vessel was sucked by the big vessel and one of the
passengers was hit by a propeller
 Contention of vessel: should be done within 24 hours
therefore, cannot file claim
 SC:
 No need for protest because the small boat is
not a maritime boat
 Also, the person who should make the protest
could not do it because of his situation (injured
brought to hospital)
 Summary:
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  Maritime vessel: Protest is needed  PASSENGER = X reduced
 Not maritime vessel: No protest needed  E: 1758 – Fortuitous or non paying/ gratuitous
passenger
MIDTERM EXAM:  E to E: Willful act or gross negligence of the
1. Basic Concepts Explanation carrier
2. Multiple Choice o If there is contributory negligence – it may reduce only the
3. Problem solving (Discuss all the issues) liability of the common carrier, but it will not exempt CC from
liability
PRE-MIDTERM REVIEW 5. What are the stipulations that are not valid?
1. What are the governing laws? 6. Will the common carrier be liable for acts of co-passenger or stranger? –
 If land Transportation Yes
o If coast wise  In case of stranger – irresistible force dapat so that the common carrier
o If Phil to somewhere… will not be liable – 1763
o If foreign to Philippines…  In case of employees - Liable – 1759
 If Air Transportation 7. When will he become a passenger? End?
o If Domestic…  Land transpo…
o If International…  Air transpo…
 If Water Transportation…  Sea transpo…
2. Concepts
 Demurrage EXTRA NOTES
 Extraordinary Diligence
o If air transpo… (air worthy)  PASSENGER – One who travels in a public conveyance by virtue of a
o Sea transpo… (sea worthy) contract, express or implied, with the carrier as to the payment of fare or that
which is accepted as an equivalent thereof
o Land… (road worthy)
 PARTIES TO CARRIAGE OF PASSENGERS
o 1753
1. Common Carrier
o When will it start and end? – 1738
2. Passenger
 Seaoworthy legal meaning  PARTIES TO CARRIAGE OF GOODS
 When is inspection mandatory or not? 1. Shipper
 Land transportation – X mandatory 2. Carrier
o E: If the danger is visible or obvious 3. Consignee
 If X inspect = X exercise EOD = liable  PERFECTION OF CONTRACT OF TRANSPORTATION
 Air transportation – mandatory 1. Contract to Carry – perfected by mere consent
3. Memorize 1734 2. Contract of Carriage or of Common Carrier – real contract because
4. Can you reduce from EOD to Ordinary Diligence? facilities have to be used before contract is perfected
 Depends:  PRIVATE CARRIER – One which, without being engaged in the business of
o CARGO – YES carrying as a public employment, undertakes to deliver goods or passenger for
 Requirements: compensation (single transaction)
1. Writing
2. Valuable consideration COMMON CARRIER PRIVATE CARRIER
3. Should be reasonable and fair GOVERNING LAW Law on Common Carrier Oblicon
o Passenger – No STATE Yes X

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REGULATION o GR: CC duty bound to accept passengers and cargo without
AVAILABILITY People indiscriminately Particular individuals or discrimination (DDUO-CITES)
groups only  E:
DILEGENCE EOD Ordinary Diligence 1. Goods are DANGEROUS
PRESUMPTION OF Yes No 2. Goods will be exposed to untoward DANGER such as
NEGLIGENCE flood, capture by enemies
EXEMPTING Prove EOD and Art 1734 Caso Fortuito under 3. Goods are UNFIT for transportation
CIRCUMSTANCES 1174 4. Acceptance would result to OVERLOADING
STIPULATION GR: X agree on limiting Parties may limit carrier’s 5. Goods = CONTRABANDS or illegal
LIMITING carrier’s liability liability provided X 6. INJURIOUS to health
LIABILITY E: Provided by law contrary to public policy, 7. Failure to tender goods on TIME
law… 8. Goods like livestock will be EXPOSED to diseases
X stipulate that it is 9. STRIKE
exempt from liability for Can stipulate that it is  DURATION OF LIABILITY – 1736, 1738, 1737
negligence of employees exempt from liability for  REQUISITES OF FORCE MAJEURE: (PDD)
or agents negligence of employees 1. Natural disaster must be the PROXIMATE AND ONLY CAUSE of the loss
or agents 2. Common carrier excised DUE DILIGENCE to prevent or minimize the loss
before, during or after occurrence of the disaster
 CHARTER PARTY – A contract by which an entire ship or some principal part 3. CC has not negligently incurred DELAY in transporting
thereof, is let by the owner to another person for a specified time or use   REQUISITES OF ACT OF PUBLIC ENEMY (PDW)
transforms CC to PC 1. PROXIMATE AND ONLY CAUSE of the loss
 REGISTERED OWNER RULE 2. Common carrier excised DUE DILIGENCE to prevent or minimize the loss
o GR: Registered owner of the vehicle is liable for any damage caused before, during or after occurrence of the disaster
by the negligent operation of the vehicle although the same was 3. Existence of actual state of WAR
already sold or conveyed to another at the time of the incident ** includes PIRACY
 E: Vehicle stolen from a garage without the owner’s  NEGLIGENCE OF SHIP OWNER
knowledge and consent 1. When it is the SOLE AND PROXIMAYTE cause = absolute defense
 PRIMARY OBLIGATIONS OF A COMMON CARRIER IN THE CARRIAGE 2. When it is CONTRIBUTORY = partial defense
OF GOODS (PASTE)  BAGGAGE
1. Duty to deliver the goods to the proper PERSON o Hand carried = Ordinary diligence
2. Duty to ACCEPT the goods o Checked –in = EOD
3. Duty to SEASONABLY deliver the goods to the destination  PRIMARY OBLIGATIONS OF A COMMON CARRIER IN THE CARRIAGE
4. Duty to TRANSPORT the goods safely at the agreed destination OF PASSENGERS (U-STAB)
5. Duty to exercise EXTRAORDINARY diligence 1. Duty to observe UTMOST diligence to passenger
 EFFECTS OF INEXCUSABLE DELAY: 2. Duty to SEASONABLY bring the passenger to designation
1. Carrier still has duty to exercise EOD 3. Duty to TRANSPORT the passenger safely to the agreed destination
2. Natural disaster X free carrier from responsibility 4. Duty to ACCEPT passengers without discrimination
3. Delay is without just cause = CC X limit its liability for LDD 5. Duty to take care of the passenger’s BAGGAGE
4. Liable for damages caused by delay  DILIGENCE IN THE SELECTION OF AND SUPERVISION OF EMPLOYEE
5. Consignee may exercise his right to abandon o GR: Based on contractual obligation = X exempt from liability
 DUTY TO ACCEPT GOODS:  E: Based on quasi-delict = available as defense

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LIABILITY OF COMMON CARRIER FOR DEATH OR INJURIES TO
PASSENGERS CAUSED BY: o GRATUTIOUS PASSENGERS - ✓ limit liability but not for willful acts
ACTS OF EMPLOYEES ACTS OF STRANGERS or gross negligence
OR PASSENGER o ACCOMODATION PASSENGERS – only Ordinary Diligence
DILEGENCE EOD Ordinary Diligence required
REQUIRED  STIPULATION LIMITING/REDUCING CC’S LIABILITY
NATURE OF TORT (QUASI-DELICT) GR: X liable  SEAWORTHINESS: (RASEM)
LIABILITY E: If common carrier’s 1. Fitness of the vessel itself to withstand the rigors of the voyage
However, employee must employee could have 2. Fitness of the vessel to store the cargoes and accommodate
be on duty at the time of prevented or stopped the passengers to be transported
the act act or omission through 3. Vessel is adequately equipped and properly manned with sufficient
DGOAF number of competent officers and crew
 CARGOWORTHINESS
 DOCTRINE OF LAST CLEAR CHANCE – Where both parties are negligent 1. The ship must be sufficiently strong and equipped to carry the
but the negligent act of one is appreciably later than that of the other, or where particular kind of cargo which she has contracted to carry and
it is impossible to determine whose fault or negligence caused the loss, the 2. Her cargo must be so loaded that it is safe for her to proceed on voyage
one who had the last clear opportunity to avoid the loss but failed to do so, is  TRANSSHIPMENT
chargeable with the loss  only available between 2 colliding vehicles o The act taking cargo out of one ship and loading it in another or the
because it is an action based on tort or quasi-delict transfer for further transportation from one ship or conveyance to
 OBLIGATIONS OF SHIPPER OR CONSIGNEE AND PASSENGER another
1. Due diligence to avoid damage or injury  EOD IN CARRIAGE BY LAND- (CT)
2. Bound to pay the consideration in the form of freight or fare 1. Condition of vehicle – not defective, good order and condition
 MEANING OF EXTRAORDINARY DILEGENCE 2. X breach of traffic rules
o IN CARRIAGE OF GOODS – The EOD in the vigilance over the  AIRWORTHINESS (REC)
goods tendered for shipment requires the common carrier to know 1. The aircraft must be in such condition that it must be able to withstand the
and to follow the required precaution for avoiding damage to or rigors of flight
destruction of the goods entrusted to it for sale, carriage and delivery. 2. The aircraft, its engines, propellers and other components and
It requires the common carrier to render service with the greatest skill accessories are of proper design and construction and are safe for air
and foresight and to use all reasonable means to ascertain the nature navigation purposes, such design and construction being consistent with
and characteristics of the goods tendered for shipment and to accepted engineering practice and in accordance with aerodynamics laws
exercise due care in the handling and stowage, including such and aircraft science (EQUIPMENT)
methods as their nature requires 3. Vessel has a competent captain and crew who exercised EOD in
o IN CARRIAGE OF PASSENGERS – A CC is bound to carry operating the aircraft
passengers safely as far as human care and foresight can provide,  BILL OF LADING – A written acknowledgement of the receipt of goods and
using the utmost diligence of a very cautious person with due regard an agreement to transport and to deliver them at a specified place to a person
for all circumstances named or on his order
 STIPULATION LIMITING/REDUCING CC’S LIABILITY  MARITIME COMMERCE
o 573 – 869 of CODE OF COMMERCE
GOODS PASSENGERS o That system of laws which particularly relates to the affairs and
Allowed less than EOD provided X lessened or dispensed with business of the sea, to ships, their crews and navigation and to
WSVR through stipulations or posting maritime conveyance of persons and property
notices  CHARACTERISTICS OF MARITIME TRANSACTION

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 1. REAL – real contract, registration required
2. HYPOTHECARY – the liability of the carrier in connection with losses
related to maritime contracts is confined to the vessel, which stands as
the guaranty for their settlement
 MERCHANT VESSEL – engaged in maritime commerce, whether foreign or
otherwise
 VESSEL – Any barge, lighter, bulk, carrier, passenger ship, freighter, tanker,
container, ship, fishing boats or other artificial contrivances utilizing any source
of motive power, designed, used or capable of being used as a means of
water transportation operating either as a common carrier, including fishing
vessels covered under PD 43
o E:
1. Those owned or operated by the AFP and by foreign
government for military purpose
2. Bancas, sailboats and other waterborne contrivances less
than 3 gross tons capacity and not motorized
 MARITIME LIEN – constitutes a present right of property in the ship, a jus in
re, to be afterward enforced in admiralty by process in rem
 DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE)
o The exclusively real and hypothecary nature of maritime law
operates to limit the liability of the shipowner to the value of the
vessel, earned freightage and proceeds of the insurance, if any.
o GR: No vessel, no liability (Total loss)
 E: (WORK-AIIR)
1. Workmen’s compensation
2. X total loss and X abandoned
3. Injury or damage due to ship owner or to the
concurring negligence of shipowner and captain
4. Vessel is insured
5. Expenses for repair and provisioning of the ship
o Ship owner is the party who may invoke the limited liability rule
o Cases where applicable:
1. Civil liability for indemnities to 3rd persons
2. Indemnities for negligent act of the captain
3. Collision
4. Liability for unpaid wages of captain and crew and for
advances made by the ship agent if the vessel is lost by
shipwreck

Michelle Duguil – PALABRICA NOTES

11
January 30,2015 (From Mikee)
MT essay answers:
1. A stipulation transferring the risk to the shipper is not valid. Would limited
liability rule apply if the ship were lost due to the negligence of the ship
captain? Yes. There are only 4 exceptions to the limited liability rule. One
is the concurrent negligence of the ship captain together with the ship
owner. So that if the loss was due to the fault of the ship captain only,
then the limited liability rule will still apply.
2. Robert is already a passenger since he was in the premises and under
the control of the common carrier. Extraordinary diligence is now required
of the common carrier. Art. 1762 provides for the liability of the common
carrier for acts of passengers or strangers. There is a presumption that a
common carrier is always liable unless proven otherwise under Art. 1735.
3. Right of inspection is mandatory in airplanes because of the anti-hijacking
law but it is not mandatory in busses or other land transportation unless
there is something suspicious which is obvious to the naked eye
4. Betty the accountant while on her way to work is a passenger and the
common carrier is liable for her death because a common carrier is
always presumed liable. On the other hand, the driver is not a passenger
since there is no contract of carriage. However, he may claim
compensation from other sources of law
Special Contracts under Maritime Commerce
What is a CHARTER PARTY?
 It is a document in itself and it does not refer to a party in a controversy.
 Simply put, it is in the nature of a contract of lease, having for its object
the whole or part of a vessel.
DEFINITION OF TERMS:
1. The lay days – the number of days given to unload/load (this is free)
2. The extra lay days – an extension (it is not for free).
3. Demurrage – the penalty or fee for the excess time spent in unloading
and loading.
4. Primage – compensation or fee given to the captain or crew which is due
to the special care of captain and crew
5. Embargo – legal restriction of departure of vessels
6. Contract of towage – contract for a barge to be towed by a ship
Michelle Duguil – PALABRICA NOTES
What are the REQUISITES of a Charter party?
1. The Charter Party must be in writing, signed, and with the consent of the
parties
2. Existence of the vessel at the disposal of the charterer
3. Stipulation as to the freightage
4. It must comply with the appropriate formalities:
a. Must specify the kind, name, tonnage, flag raised, port, registry,
the names, surnames, & domiciles of the ship captain, ship
agent, and ship owner, capacity, dates of loading and unloading,
the lay days, extra lay days, demurrage, primage
Must the Charter Party always be in writing and signed to be valid?
 GR: Yes, according to Art. 652.
o E: Art. 653 provides that when cargo is already delivered or
received without the Charter Party being signed, the stipulation
should be interpreted to be that contained in a bill of lading.
Q: The parties agreed to deliver cargo from point A to point B. The Charter
Party stipulated that there will be a demurrage. But when the cargo loaded
and the vessel was in voyage, there was a deviation to point C, with a bill of
lading to that effect. Shall there be a payment of demurrage?
 NO!
 The SC held: since the goods were received although the Charter Party
was not signed it is still valid, but the provision in the bill of lading will
apply. Since the bill of lading did not contain a stipulation as to
demurrage, then there is no demurrage
What are the 2 KINDS of Charter Party?
1. DEMISE or BAREBOAT
 the vessel is chartered in itself as a whole (hence, “bare”) and need not
provide that the crew is included because of the principle that the control
of the crew is given to charterer, along with the navigation etc.
 He is deemed the OWNER of the vessel and the EMPLOYER of the crew.
 Q: A was part of the crew of a vessel. After 3 months, the vessel was
chartered. A was terminated by the charter. A is now claiming that
he was terminated unlawfully. Against who do you file the case?
 The charterer. He has now the burden to prove that it is not a
bareboat charter party. (SC Case)
12
  PRESUMPTION OF BAREBOAT:in case of doubt, the charter party is  Cargo is NOT liable to pay freight in the event of:
always presumed to be a BAREBOAT charter party, and not o A shipwreck or the stranding or the loss of the vessel
affreightment.  E: unless the vessel is ultimately repaired and brought
to its destination, in which case the cargo salvaged
during shipwreck, will be liable in proportion to the
What is the difference between the 2? distance travelled
o In case of confiscation because of piracy;
BAREBOAT AFFREIGHTMENT
Charter of whole vessel Charter of part of the vessel  A charterer is deemed the owner of the vessel as a whole and should not
Converted to private carrier X converted accept cargo more than it can handle.

 Owner must respect the capacity of the vessel.  Owner once he notices that
What is the significance of the conversion? cargoes were clandestinely loaded, he may remove it.
 There could be a stipulation limiting liability in case of negligence of the  If not dangerous, he can still opt to deliver but at a higher freight.
ship owner and it will be valid in the case of bareboat but not in
affreightment.  In case of expiration of lay days, the cargo is not yet ready for loading, then
the vessel can leave without them
Can a ship captain enter into a charter party over the vessel of the ship
owner? 2. AFFREIGHTMENT
 Yes, a ship captain who entered into a charter party even against will of 2 kinds:
the owner who will be civilly liable for damages to the owner. 1. Time period
 Still, the contract is VALID. 2. Voyage

If the vessel is no longer seaworthy, the captain shall: Grounds for rescission and at whose instance
1. Look for another vessel within the parameter of 150KM for the purpose of ????
transferring the cargo and continue with the voyage.  If he is indolent in ___________________________________________________________
searching for another vessel then he is liable for whatever damages that
may occur.  The cargo owners will now have the right to look for
another vessel at the expense of the captain or the ship owner
2. If he cannot find another vessel, he may deposit the vessel which is not
seaworthy

Can the captain sell cargo?

 Yes, if under special circumstances such as for necessity, provision, food,
and repair of the vessel, the captain can sell  but must pay the owner:
o If preserving the cargo is more expensive than the value cargo
itself
o If the consignee cannot be found and there is refusal to sell or
release the cargo.

Instances where the cargo made liable for freight, duties, taxes, duties, other
expenses advanced and ought to be reimbursed by the shipper:

Michelle Duguil – PALABRICA NOTES

13
What are the loans on BOTTOMRY & RESPONDENTIA? BOTTOMRY/ RESPONDENTIA SIMPLE LOAN
 These are SPECIAL kinds of loans involving vessel (bottomry) and cargo Collateral = vessel (bottomry) If collateral is lost =
(respondentia). principal will still exist
 Because the vessel and consequently its cargo is left at the mercy of the If lost = obligation to pay is
sea these objects are made collaterals. extinguished
 That is why the parties can stipulate a higher interest since it is not Collateral = cargo (respondentia)
covered by the usury law unlike in simple loan.
 There can never be oral but only written form in a public document If lost = obligation still exists
(notarized). MARINE RISK Marine risk is necessary X necessary
FORM AND Form and manner prescribed by Formal requisites of
LOAN ON BOTTOMRY LOAN ON MANNER the code of commerce ordinary contract
RESPONDENTIA REGISTRY OF Must be recorded in the registry of X need
DEFINITION Loan made by the Loan taken on security of VESSELS vessels to be binding to third
shipowner or ship agent the cargo laden on vessel persons
guaranteed by vessel and repayable upon safe PREFERENCE Last lender First lender
itself and repayable arrival of cargo at
upon arrival of vessel at destination
destination If it is not stated specifically that the voyage is from point A to point B or one
way
Note: No LOB may be  The presumption is that it is two way (round trip).
made in any case on the  In order to limit coverage, it must be specifically stated to be one way 
salaries of the crew, nor So that the borrower is not obligated to pay the loan if it is not stated
the profits which may be
expected When is the obligation extinguished if the collateral is lost
WHO MAY Shipowner or ship agent Only the owner of the  There must always be the existence of a maritime peril
CONTRACT cargo
Outside the residence of GR: Presumed that LOR or LOB covers roundtrip
the owners – the captain  E: When it is expressly stipulated that a particular trip is covered by loan
COMMON 1. Exposure of security to marine peril
ELEMENTS 2. Obligation of the debtor conditions only upon GR: When a vessel or cargo is lost, then the LOR or LOB is extinguished. The
safe arrival of the security at the point of borrower will no longer pay the lender because the subject matter is lost
destination  E:
FORMS 1. Public instrument 1. If the loss is caused by inherent defects of the cargo
2. Policy signed by contracting parties and the 2. Fault of the borrower himself
broker taking part therein 3. Barratry or malice on the part of the captain of the vessel
3. Private instrument 4. If the damage was caused because the borrower was engaging in
contraband goods
What is the difference between simple loan and these loans? 5. If the goods loaded were different from that designated in the
- In bottomry the collateral is the vessel and if it is lost the obligation to pay is contract
extinguished. In respondentia the collateral is the cargo. If collateral is lost in a
simple loan, the principal will still exist.

Michelle Duguil – PALABRICA NOTES

14
Ex. Cargo worth 1M, loan on respondentia is 500k, the GA is 100k. How much Q: Before the vessel reached its destination in Iloilo, the vessel sunk.
should the lender pay?  There is no more obligation to pay if it is a loan on bottomry.
 ½  If respondentia, obligation still exists.
 Pay 50k  If the cargo was saved, then the borrower will pay lesser expenses.
 Vice-versa: If the cargo was lost and vessel was saved, the obligation of
Ex. In case of shipwreck and the vessel is stranded but some of the goods were the borrower to pay in respondentia is extinguished (if bottomry, it still
salvaged or recovered, there is salvaging expenses in doing the same. What is the exists)
basis of determining the payment of the borrower?
 X original value of the loan WHEN LOAN ON BOTTOMRY OR RESPONDENTIA IS REGARDED AS
 Formula: Value of the goods – expenses for salvaging SIMPLE LOAN
1. Lender loaned an amount larger than the value of the object due to
Ex. Cargo is worth 1M, salvaged cargo is worth 500k, salvaging expenses of 100k. fraudulent means employed by the borrower
 400k = basis of loan 2. Full amount of the loan is not used for the cargo or given on the goods if
 500k – 100k = 400k all of them could not have been loaded, the balance will be considered a
simple loan
WHERE THE GOODS OR VESSEL IS COVERED BY INSURANCE 3. If the effects on which the money is taken is no subjected to any risk
 GR: If it is 100% covered by loan, it cannot be covered by insurance
because there is no more insurable interest on the part of the owner Order of preference (if there are many creditors)
o E: Insurance and LOB/LOR may co-exist but there should be a  Rule 1: Contracts or loans during voyage have preference over loans
determination of insurable interest contracted before the clearing of the port for voyage
o Ex. How to determine? – if the value of the goods or vessel is  Rule 2: The order of preference shall be in the inverted order based on
1M and subject to LOB/LOR for 700k.  insurable interest of the dates. Because if it were not for the latest loan, the vessel would have
insurance company is  1M – 700k = 300k sunk and will be liable.  There is presumption that the last loan saved
 Is the insurance company also liable in case of damage? the vessel. Last loan has preference over the earlier loans.
o YES! Because it has interest in the subject matter  Rule 3: If several loans were taken in the same port, then they have to
 Once insurance and loan co-exist, both shall be liable for damages in be paid proportionately
proportion to their interest  Example: For instance, in several loans on bottomry were contracted.
 Before the voyage, a loan in Manila for 20,000 was contracted. During the
INSURANCE LOB/LOR voyage, a loan in Iloilo was contracted. Due to the necessity of major
repairs, a loan was contracted in Cebu for 100,000. Upon arrival in the
In case of loss, may be paid at There should be the
place of destination in Cagayan de Oro, it was discovered that the vessel
any time in all events even presence of marine risk;
was no longer seaworthy. The vessel was then sold for 110,000. The
without marine risk in case of loss, loan is
creditors are now asking for them to be paid.
extinguished
o Manila – loan for 20,000 before voyage
INDEMNITY Indemnity is paid AFTER loss Paid in advance by way
o Iloilo – loan for 10,000 during the voyage
has occurred of a loan
EFFECTS In case of loss of the vessel due In case of loss of the o Cebu – loan due to need of major repairs for 100,000
OF LOSS to a risk insured against, the vessel due to marine o CDO – discovered that vessel is no longer seaworthy, so it was
OF VESSEL obligation of the insurer peril, the obligation to sold for 110,000.
becomes absolute pay is extinguished
KIND OF Consensual Real
CONTRACT

Michelle Duguil – PALABRICA NOTES

15
 What is the order of preference?
 The loan contracted in Iloilo has preference over loan in Manila  Can the ship captain enter into a loan on respondentia?
because it was contracted during the voyage  No, because he is NOT a representative or agent of the owner of the
 The loan contracted in Cebu was latest, them it has preference cargo, unlike in loan on bottomry wherein the ship the agent of the owner
over the loan in Iloilo. So 100,000 will be paid to the creditor in of the vessel
Cebu. The remaining 10,000 will be paid to the creditor in Iloilo
Assuming that in the same port in Cebu, there were 3 loans were
contracted with 3 different creditors, what is the order of February 6, 2015
preference? AVERAGE AND COLLISION
 It must be paid proportionately to the amount of the loan.
AVERAGE
 The rule that when the collateral is lost, the obligation of the borrower to pay  Technical maritime term
is extinguished only applies to risks due to MARINE PERILS not NATURAL  Simple meaning
DEFECT, MALICE, NEGLIGENCE, BARRATRY, then the obligation still o Extraordinary or accidental expense
subsists. o Damage or injury
 Should be distinguished from a simple damage and expense so that we
 What is the effect if thru fraud the borrower was able to get a loan more will be able to know who will bear the damage/expense
than the value of the vessel is loan on bottomry considered valid? For  Art 806
instance, the vessel is worth 50M. but because of fraud, you were able to o It is an extraordinary or accidental expense incurred during the
get a loan for 70M. how will we treat the loan? voyage for the preservation of the cargo, the vessel or both
o Any damage or deteriorations which the vessel may suffer from the
o The loan on bottomry will be valid up to the extent of 50. time the vessel starts its voyage until the time it reaches its point of
The remaining 20M will be treated as a simple loan destination or damage/deterioration suffered by the cargo from the
time it is loaded on the vessel until the time it is unloaded in the
 (Bar question) Does the ship captain have a right to enter into a loan on port of consignment
bottomry?
o Yes, provided that the ship captain is within the residence of the ship
agent or the ship owner and that he is authorized to do so.
o Residence here does mean its literal sense (place of abode) but may ORDINARY AND NECESSARY AVERAGE
be interpreted to mean the office of the ship owner. EXPENSE
Art 807 Art 806
 What if ship captain is outside the residence of the ship owner or ship To determine who bears the loss
agent? Loss/ injury is borne by the ship Depends on what type of average is
o Yes he can still can enter into a loan of bottomry: owner involved:
1. if it is connected to his inherent duty in a contract for voyage, 1. General Average – borne
such as in the case of the provision of the vessel, for repair of by all persons having
the vessel, OR interest in the vessel and
2. if the ship captain is a co-owner, in which case the loan will be the cargo should contribute
valid up to the extent of his co-ownership. to satisfy the average
2. Particular/ Simple
Average – borne by
respective owners

Michelle Duguil – PALABRICA NOTES

16
Petty expense which must be
shouldered by the ship owner
Examples:
1. Pilotage (pilot fees)
2. Anchorage – terminal fee,
etc.
3. Lighterage fee – small
barge where cargoes are
unloaded and the lighterage
brings the cargoes to the
port
4. Quarantine Fee
5. Health and Sanitation Fee
6. Inspection Fee
Particular Average
 Expense or damage which does
not inure to the common interest
 Particular only to the person
who owns the thing
 Only the particular person (ship
owner/ cargo owner) who
caused the expense or suffered
the damage shall bear the
expense
 X reimbursement
Example (808):
1. Inherent defect of cargo
 Ex.: Guimaras mangoes
exported to HK (owner
knows that lifespan of
mango 5 days) + voyage
for 10 days = mangoes
deteriorated
2. Force majeure
3. Damage to the haul, vessel,
equipment
4. Wages, victuals of the crew of
the vessel
Michelle Duguil – PALABRICA NOTES
General Average
 Expense or damage deliberately
done to save the V/C/Both
 Inures to the common benefit of
the ship owner and cargo owner
 Borne by all persons having an
interest in the vessel and the
cargo therein at the time of
occurrence of the average shall
contribute to satisfy the average
 ✓ Reimbursement
 If fixed voyage =
particular average
 If monthly basis =
general average
Example:
 Ship owned by Germany
agricultural machinery owned by
America to be delivered to
Russia  War between Russia
and Germany  If vessel
continues voyage to Germany,
vessel will be captured 
vessel went to Philippines
instead. Who will pay for the
salary of the crew?
o Particular Average –
Ship owner will pay
o The reason for
deviating is not
because the machinery
is a contraband, but to
save the ship because
of war between Russia
and Germany
REQUISITES OF GENERAL AVERAGE (MEMORIZE)
1. Common danger or risk
 Clear, certain and imminent
 Ex.: Captain was sailing vessel and then the daughter told the
captain that she dreamt that a storm was coming and that he should
throw away some stuff in the vessel. Is this a valid general
average?
 NO! Risk is based on speculation; not imminent or certain.
2. Deliberate Sacrifice
 Purpose is to save the vessel and cargo
 Ex.: Logs were moving from left to right on the vessel because of a
storm. Because of the movement, the logs fell  boat stabilized and
the rest of the cargoes saved.  Owner of the logs claimed that he
should be paid by the ship captain because it is a general average.
Correct?
17
 o NO! Although it saved the rest of the cargoes, jettison was
not deliberate. It was inevitable to happen because of the Goods not covered by General Average even if sacrificed
storm. 1. Goods carried on deck
3. Sacrifice must be successful 2. Goods not recorded in the books or records of the vessel
 Supposing the cargo was jettisoned and it saved the rest of the cargo and 3. Fuel for the vessel if there is more than sufficient fuel for the voyage
vessel itself. Amount of cargo jettisoned (50M).  Then vessel continued
to its journey and vessel and cargoes were lost. Some of the cargoes  GR: Average should happen during the course of the voyage (?)
were salvaged/saved. Are owners of the cargoes that were saved o E:
liable to pay the owner of the cargoes that were earlier sacrificed or 1. In the course of a storm, the cargoes are transferred to barges to
jettisoned (50M)? lighten the vessel
o Sacrifice was successful that is why the vessel was able to 2. Vessels are already anchored in the pier and there was a fire on
continue its voyage and the cause of the loss of the cargoes one of the vessels. They intentionally sinked the vessels beside
and sinking of the vessel was due to other reasons, not the the vessel on fire to save the other vessels anchored. =
original one. The cargoes that were subsequently lost were GENERAL AVERAGE even if X on voyage. The other vessels
salvaged saved should contribute.
o Owner of the salvaged cargo should pay to the owner of the
cargoes jettisoned: Salvage value – expenses for salvage
4. Proper Judicial Formalities (MEMORIZE) WHO ARE THE PEOPLE WHO ARE LIABLE TO CONTRIBUTE TO THE
1. Procedure for recovery GENERAL AVERAGE?
2. Assembly and deliberation  Ship owner
o Captain will assemble the people who have interest and then  Cargo owners in proportion to their interest
deliberation  Lenders on bottomry and respondentia
3. Resolution of the captain  Insurance company
4. Entry of the resolution in the logbook
o Those who voted for and against it must be recorded COLLISION (Art 826 of Code of Commerce)
o Majority rule prevails  Contract of 2 moving vessels or one moving, the other is stationary
o BUT the captain has the last say even if it is against the decision of  If one is moving and the other is stationary = allision
the majority and such decision should be recorded in the logbook
5. Detailed minutes RULES IN CASE OF COLLISION
6. Delivery of the minutes to the maritime judicial authority of the first Who at fault Who is liable
port, within 24 hours from arrival If one vessel if at Vessel at fault is liable for damages
7. Ratification by the captain under oath fault
Both are at fault  Vessel – Each will bear their own loss
JETTISON  Cargo – solidary liability (one solidary debtor
 Act of throwing cargo overboard in order to lighten the vessel can pay for the whole obligation subject to
 Under the control of the captain reimbursement from the other solidary debtors)
 X res nullius; X object of occupation  Example:
 Cargoes must be covered by the bill of lading so that it can be proved o Vessel A = 2M (damage)
 Order of goods to be cast overboard: o Vessel B = 2M
1. Those on deck first – heaviest one with the least utility and value o Cargo:
2. Those on the lower deck second - heaviest one with the least utility X – 3M (damage)
and value Y – 2M

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18
 W – 15M  A is not liable and need not pay because
Z – 20M liability is extinguished because the vessel
If it cannot be DOCTRINE OF INSCRUTABLE FAULT was totally lost
determined who is  Vessel – Each will bear their own loss
liable  Cargo – solidary liability PROTEST
Proximate Cause and  X APPLY IN MARITIME LAW = both  There must be protest within 24 hours otherwise the action will not
Contributory Cause considered at fault prosper
 Vessel – Each will bear their own loss  The following instances need protest before the aggrieved may file a
 Cargo – solidary liability case:
 Example: 1. Collision
o A = Proximate cause 2. Arrival in distress
o B = Contributory cause 3. Shipwreck
4. Hurricane
Last Clear Chance  X APPLY IN MARITIME LAW = both
 Exceptions to protest:
considered at fault
1. If the owner of the cargo is not on board the ship at the time of
 Vessel – Each will bear their own loss collision
 Cargo – solidary liability 2. If the person is not capable of expressing his wishes because of the
Force Majeure  Vessel – Each will bear their own loss injury that he sustained
 Cargo – Each will bear their own loss 3. If the other vessel is not a maritime vessel
If due to act of third  Third person will be liable Feb 20, 2015
person
ARRIVAL UNDER STRESS
ZONES OF TIME IN THE COLLISION OF VESSELS  The vessel will anchor in the nearest and most convenient port because
1. Zone 1 – All the time up to the moment when the risk of collision begins of well founded fear of seizure, privateer, piracy, accident which will
2. Zone 2 – Risk of collision begins until risk is certain disable to common carrier to navigate
o One who committed error is liable  Well founded fear – should not be based on speculation; there must be a
3. Zone 3 – Risk is certain until collision happens thorough deliberation and such should give you a reasonable conclusion
o If there is collision in the 3rd zone, the one who caused the privileged that indeed there is a well founded fear
vessel to cause the error or swerving is liable (ERROR IN
EXTREMIS) WHEN LAWFUL WHEN UNLAWFUL
When the inability to continue is due The inability to continue voyage is
LIMITED LIABILITY RULE to: due to:
 Also applies in collision 1. Lack of provisions 1. Lack of provisions due to
 Example: 2. Well founded fear of negligence to carry
o A collided with B. Fault of A. Who will be liable? seizure, privateers, pirates according to usage and
 Based on rule on collision: 3. Accidents of the sea customs
 A is liable disabling it to navigate 2. Risk of enemy not well
 If limited liability rule is applied: known or manifest
 B was partially damaged but A that is at 3. Defect of vessel due to
fault sank and totally damaged improper repair
4. Malice, negligence, lack of
foresight or skill of captain

Michelle Duguil – PALABRICA NOTES

19
ADVANTAGE OF NOTICE THAT IT IS VALID AUS If the reasons/causes for arrival under stress are gone, he must assemble again
 The CC will not be liable for damages his men and decide that the reason no longer exists and then proceed again with
 But the cost and expenses caused by AUS will always be borne by the the voyage (Legal advice!)
ship owner or CC

LEGAL STEPS
1. Captain should determine during the voyage that there is a well founded fear SHIPWRECK
of seizure, privateers and other valid grounds  Injuries or loss suffered by the vessel because of the swallowing by the
2. Captain shall assemble the officers and summon the persons interested in the waves, or grounding or stranding or running against an object in the sea
cargo who may attend the meeting but without right to vote rendering the vessel incapable to navigate
3. The offices shall determine and agree if there is a well-founded reason after
examining the circumstances SHIPWRECK AUS
Vessel is completely incapable of Vessel can still move because it can
GR: CC X liable for damages moving still go to the nearest port
E: X VALID ARRIVAL UNDER STRESS (OPENS CASE FOR DAMAGES Swallowing by the waves, or Grounds: well founded fear of
AGAINST CC) grounding or stranding or running seizure, privateer, piracy, accident
1. If the AUS is unlawful against an object in the sea which will disable to common carrier
 Example: If the ship does not have enough food or was not rendering the vessel incapable to to navigate
properly kept  Gutom members  Went to Cebu to get more navigate
food  X valid AUS
2. Risk of enemy not well known or manifest Shouldered individually by the ship Shouldered by the ship owner/CC
 Example: No well founded fear of pirates owner and cargo owner
3. Defect of vessel due to improper repair  E: Malice, lack of foresight
 Because vessel must be seaworthy and skill by the captain 
4. Malice, negligence, lack of foresight or skill of captain CC will shoulder the
expenses
EXPENSES FOR UNLOADING CARGO
 If for repair of the vessel = shouldered by the shipowner WHY? – Grounds is caused by FM
 If for saving the cargo = cargo owner
 If for both vessel and cargo = proportional SALVAGE
 Saving a vessel
AFTER CARGO IS UNLOADED  Service one person renders to the owner of a goods or ship, by him own
 GR: ???? labor, preserving the goods or the ship which the owner or those
o E: If caused by force majeure entrusted with care of them have either abandoned in distress at sea or
are unable to protect or secure
 If there is imminent danger of was already damaged, the captain has to  Compensation allowed to persons by whose voluntary assistance a ship
apply in the proper judicial authority for the sale of the cargo. In order to at sea or her cargo or both have been saved in whole or in part from
effect the sale, captain must comply with certain formalities such as impending sea peril or such property recovered from actual peril or loss,
publishing, acquiring consent from persons who have interests over the as in cases of shipwreck, derelict of recapture
cargoes
BARRIOS VS GOTHONG CASE

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  X salvage because no marine peril (weather was good)
 Act of towing only, not act of salvage REQUISITES
 QUASI-DERELICT - 1. Valid object of salvage
2. Marine peril
CIRCUMSTANCES WHEN TOWING CAN BE AN ACT OF SALVAGE 3. Service voluntary
 When the towing happens during very bad weather  Example: Vessel was in danger  crew saved the ship  X
voluntary because crew is under obligation to save ship
TOWING SALVAGE 4. Successful, total or partial
Towing fee – will go to the owner of Salvage reward – distributed among WHEN SHOULD INTENTION SHOULD BE RECKONED
the togboat owner owner of the vessel (50%), captain  Intention of abandonment starts from the time the captain and crew left the
(25%) and crew (25% in proportion ship  Salvaged by others  Change of mind will not change the state of
to their salaries the vessel
 If no intention to abandon and goes back to the vessel after getting the
WHEN CAN A VESSEL OR CARGO BE CONSIDERED AS AN OBJECT OF necessary equipment  X valid salvage by others
SALVAGE? OBLIGATION OF COLLECTOR OF CUSTOM
 When the vessel or cargo is considered a DERELICT  Safeguard and inventory of goods
 DERELICT – when the vessel or cargo is already abandoned; a ship or  Subject the goods to public auction if the conservation is prejudicial to the
her cargo which is abandoned and deserted at sea by those who are in owner and when no objection was made
charge of it without any hope of recovering it orwithout any intention of  If no claim within 3 months:
returning to it o Sold
 QUASI- DERELICT – if the cargo or vessel is although not abandoned is o Proceeds go to owner
left at the mercy of the waves and the persons who are entrusted to save  If 3 years no claimant:
the same cannot do anything anymore o 50% - national government
o Example: Vessel during a very strong typhoon and at the mercy of o 50% - salvor
the waves but the captain and everyone are still inside the ship  If there are claimants:
 X abandoned by still subject of salvage because of concept o Owner of vessel – 50%
QD  one who salvages the same is still entitled to salvage o Captain – 25%
reward o Crew – 25% in proportion to their salaries
o Exclude expenses for advertising, taxes, duties, salvaging
WHAT IS THE RIGHT GAINED BY THE SALVAGOR OVER THE OBJECT
SALVAGED?
NO SALVAGER REWARD WHEN
 Right of possession – the salvor cannot say that say that he owns it
 If salvage was done by the crew of the vessel
(abandonment of possession only by the abandoner, not ownership)
 If the salvage was done despite opposition of the captain
 Could the salvor refuse to surrender the vessel or cargo to the owner?
 If the salvager did not comply with the requirement to report the matter to
o Yes, if the owner does not want to pay the salvage reward –
the collector of customs
SALVAGE LIEN
OBJECTS OF SALVAGE
BASIS OF SALVAGE AMOUNT TO BE GIVEN
1. Ship
1. Labor
2. Jetsam – goods which were thrown off a ship which was in danger
2. Competence and skill
3. Floatsam – goods which float upon the sea when cast overboard
3. Value of the materials being used to salvage
4. Ligan/Lagan – goods cast into the sea tied to a buoy, so that they may
4. Risk being assumed
be found again by the owners
5. Value of the goods being salvaged

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** Salvage reward must not exceed 50% of the value of the goods salvaged

THINGS THAT HAVE TO BE PAID BY THE OWNER

1. Expenses for custody
2. Advertisement
3. Auction sale
4. Taxes over the goods when it was brought to the country
5. Expenses for salvage
6. Salvage reward

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