LAW ON TRANSPORTATION AND PUBLIC UTILITIES 1.

He must be engaged in the business of carrying goods for others as a

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

* TRAINS – perfected when a person: CHARTER PARTY:

a. purchased a ticket/ possess sufficient fare with which to pay for - Contract by which an entire ship or some principal part thereof is let
his passage by the owner to another person for a specified time or use.
b. presented himself at the proper place and in a proper manner to
be transported Q: What is the effect of charter party?
c. has a bona fide intention to use facilities of the carrier A: It may transform a common carrier into a private carrier. However, it must be
a bareboat or demise charter where the charterer mans the vessel with his own
2. CARRIAGE OF GOODS people and becomes, in effect, the owner for the voyage or service stipulated
Parties: shipper & carrier
2 types:
Shipper – the person who delivers the goods to the carrier for transportation;
pays the consideration or on whose behalf payment is made 1. Contract of Affreightment
- involves the use of shipping space on vessels leased by
Consignee – person to whom the goods are to be delivered. May be the shipper the owner in part or as a whole, to carry goods for
himself or a third person who is not actually a party to the contract another
- CC = observe extraordinary diligence; in case of loss,
Perfection: deterioration or destruction of goods of goods, CCs are
> contract to carry goods – consensual presumed to be at fault or have acted negligently
> contract of carriage - act of delivery of goods ( goods are unconditionally - 2 types
placed in the possession and control of the carrier and upon their receipt by the i. Time charter: vessel is leased to the charterer
carrier for transportation) for a fixed period of time
ii. Voyage charter: ship is leased for a single
CARRIER: voyage
Common carriers (CC) (1732)
– persons, corporations, firms or associations engaged in the business 2. Charter by demise/ Bareboat Charter
of carrying or transporting passengers or goods or both, by land, - whole vessel is let to the charterer with a transfer to him
water, or air, for compensation, offering their services to the public. of its entire command and possession and consequent
(NOT the means of transportation) control over its navigation including the master and the
– one that holds itself out as ready to engage in the transportation of crew who are his servants.
goods for hire as a public employment and not as a casual - charter includes both vessel and crew—CC becomes
occupation. private carrier (PC) insofar as that particular voyage is
concerned
Tests for determining WON a party is a common carrier of goods: - if it is already a PC- ordinary diligence in the carriage of
goods will suffice

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 - PC = undertaking is a single transaction, not a part of the Arrastre
general business or occupation, although involving the - Arrastre operator’s functions has nothing to do with the trade
carriage of goods for a fee; NO presumption of negligence and business of navigation nor to the use or operation of vessels
applies – whosoever alleges damage to or deterioration - Services are not maritime
of the goods carried has the burden of proving that the - Functions of arrastre operator:
cause was the negligence of the carrier. o Receive, handle, care for, and deliver all merchandise
imported and exported, upon or passing over
Distinction between Common Carriers and Private Carriers Government-owned wharves and piers in the port
COMMON CARRIER PRIVATE CARRIER o Record or check all merchandise which may be delivered
Extraordinary diligence in the Ordinary diligence in the carriage of to said port ant shipside
vigilance over the goods they carry goods will suffice o Furnish light, and water services and other incidental
In case of loss, destruction, or No such presumption applies to service in order to undertake its arrastre service
deterioration of goods, they are private carriers, for whosoever alleges - Such service is in face, no different from those of a depositary or
presumed to have been at fault or to damage to or deterioration n of the warehouseman
have acted negligently; burden of goods carried has the onus of proving
proving otherwise rests on them that the cause was the negligence of Stevedoring
the carrier - involves the loading and unloading of coastwise vessels calling at
Cannot stipulate that it is exempt May validly enter into such stipulation the port.
from liability for the negligence of its >>> Common carriers are public utilities, impressed with public interest and
agents or employees concern subject to regulation by the state.

Factors to be considered whether a carrier is common/private: GOVERNING LAWS

 Law applicable - read summary of rules on page 40 of book
o Common  Civil Code
o Private  contract Article 1766 (Civil Code). In all matters not regulated by this Code, the
 Diligence required rights and obligations of common carriers shall be governed by the
o Common  extraordinary diligence Code of Commerce and by special laws.
o Private  diligence of a good father of a family
 Burden of proof in relation to negligence NATURE OF BUSINESS
o Common – the carrier - Common Carriers exercise a sort of public office
o Private – on the party having a claim against the carrier - Consequently, common carriers are subject to regulation by the
State
Case: Planters Products, Inc. vs. CA
- It is therefore imperative that a public carrier shall remain as such, REGISTERED OWNER RULE/REGISTRATION LAWS
notwithstanding the charter of the whole or portion of a vessel by - Governed by the Land Transportation and Traffic Code and
one or more persons, provided the charter is limited to the ship only, administered by the Land Transportation Office
as in the case of a time-charter or voyage-charter. It is only when the - The registered owner of a vehicle is liable fro any damage caused by
charter includes both the vessel and its crew that a common carrier the negligent operation of the vehicle although the same was
becomes private already sold or conveyed to another person at the time of the
accident.
True Test of Common Carrier Is the carriage of passengers or goods, provided it - The registered owner is liable to the injured party subject to his right
has space, for all who opt to avail themselves of its transportation service for a of recourse against the transferee or the buyer
fee - Applicable in case of lease
- Registered owner not liable if vehicle was taken form him without
Generally, private carriage is undertaken by spcial agreement and the carrier his knowledge and consent.
does not hold hiself out to carry goods for the general public
Q: what is the purpose of such law?
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International A: The main aim of motor vehicle registration is to identify the owner so that if
- By definition, a contract of carriage is one whereby a certain person any accident happens, or that any damage or injury is caused by the vehicle on
or association of persons obligate themselves to transport person, the public highways, responsibility therefor can be fixed on a definite individual
thing or new from one place to another for a fixed price – the registered owner.
- It is obvious from the above definition that respondent is not an
entity engaged in the business of transporting either passengers or KABIT SYSTEM
goods and is therefore, neither a private nor a common carrier. Its - The “registered owner” rule is applicable to people involved on a “kabit
covenant with its customers is simply to make travel arrangements system”
in their behalf. - arrangement whereby a person who has been granted a certificate of
- It is in this sense that the contract between the parties in this case public convenience allows other persons who own motor vehicles to
was an ordinary one for services and not one of carriage; it is thus operate them under his license, sometimes for a fee or percentage of the
not bound under the law to observe extraordinary diligence in the earnings --- contrary to public policy (thus VOID and INEXISTENT)
performance of its obligation. - parties to the “kabit system” cannot invoke the same as against
each other either to enforce their illegal agreement or to invoke the same
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING to escape liability --- pari delicto rule
- having entered into an illegal contract, neither can seek relief from the
Towage courts and each must bear the consequences of his acts
- A vessel is hired to bring another vessel to another place - also applicable to aircrafts and vessels – basic rule that no person can
- e.g. a tugboat may be hired by CC to bring the vessel to a port operate a common carrier without securing a certificate of public
(operator of tugboat not CC) convenience and necessity.
- in maritime law: towing for the mere purpose of expediting her
voyage without reference to any circumstances of danger
Case: Dizon vs. Octavio - the primary factors considered in the granting of a certificate of public

APRIL LYNN L. URSAL Page 2

 convenience for the business of public transportation is the financial (2) Unfit for Transport
capacity of the holder of the license, so that liabilities arising from - Carriers may refuse to accept goods that are unfit for transportation
accidents may be duly compensated - These goods may by nature be unfit for transportation or are unfit
- Thus, for the safety of passengers and the public who may have been because of improper packaging or defect in their containers.
wronged and deceived through the baneful kabit system, the - However, carriers may accept the goods and limit its liability by
registered owner of the vehicle is not allowed to prove that another stipulation.
person has become the owner so that he may be thereby relived of
responsibility If by reason of well-founded suspicion of falsity in the declaration as to the
contents of the package carrier should decide to examine and investigate it in
CHAPTER 2 the presence of witnesses, with the shipper and consignee in attendance. If
OBLIGATIONS OF THE PARTIES declaration of shipper is true, expenses occasioned by the examination and of
repacking the packages shall be for the account of the carrier
I. Obligations of the carrier
Even if the cause of the loss, destruction or deterioration of the goods should be
A. DUTY TO ACCEPT caused by the character of the goods, or the faulty nature of the packing or of
- A common carrier granted a certificate of public convenience is duty the containers, the common carrier must exercise due diligence to forestall or
bound to accept passengers or cargo without any discrimination. lessen the loss.
- It is illegal for domestic ship operators to refuse to accept or carry
passengers or cargo without just cause. (Section 16, RA 9295) B. DUTY TO DELIVER THE GOODS
 Time of Delivery
Note: In air transportation, passengers with confirmed tickets who were not - Where a carrier has made an express contract, the goods must be
allowed to board are provided with denied boarding compensation and priority delivered within a specified time otherwise he is liable for any delay
boarding rules. (indemnity for damages).
No compensation for refusal if it is because of: - In the absence of any agreement, goods must be delivered at its
1. government requisition of the space destination within a reasonable time (depending on the attending
2. substitution of equipment of lesser capacity when required by circumstances, nature of the goods; expected date of arrival in the BOL
operational and or safety and/or other causes beyond the control of may be considered).
the carrier, and - In the absence of a special contract, a carrier is NOT an insurer against
3. if arrangements have been made for the passenger to take another delay in transportation of goods
flight in a comparable air transportation which will arrive not later
than three hours after the time of flight on which the confirmed  Consequences/Effects of Delay
space is held is supposed to arrive. (Civil Aeronautics Board - Excusable delays in carriage suspend, but do not generally terminate, the
Economic Regulation) contract of carriage; when the cause is removed, the master must proceed
with the voyage and make delivery.
Grounds for Valid Refusal to Accept Goods - During the detention or delay, vessel continues to be liable as a common
- GR: common carriers cannot lawfully decline to accept a particular class carrier, not a warehouseman, and remains duty bound to exercise
of goods extraordinary diligence.
- EXC: it appears that for some sufficient reason the discrimination
against the traffic in such goods is reasonable and necessary: Article 1740 (NCC). If common carrier negligently delays in transporting the
i. dangerous objects or substances including dynamites and goods, a natural disaster shall not free it from responsibility.
other explosives
ii. goods are unfit for transportation Article 1747 (NCC). If common carrier delays , without just cause, in
iii. acceptance would result in overloading transporting the goods or changes the stipulated or usual route, the contract
iv. contrabands or illegal goods limiting its liability cannot be availed of in case of the loss, destruction, or
v. goods injurious to health deterioration of the goods.
vi. goods will be exposed to untoward danger like flood,
capture by enemies and the like Note: read page 72 of book for other provisions.
vii. goods like livestock will be exposed to diseases
viii. strike (1) Abandonment
ix. failure to tender goods on time - In case of delay through the fault of the carrier, the consignee may
refuse to accept the goods or may leave the goods in the hands of
Case: Fisher v. Yangco the carrier. It must be communicated to the carrier in writing.
- factors in determining reasonable discrimination include: - This right must be exercised between the time of delay and before
i. suitability to the vessel for the transportation of such products; the arrival of the goods at its destination.
ii. reasonable possibility of danger or disaster resulting from their - The carrier must pay the full value of the goods as if they had been
transportation in the form and under the conditions in which they lost or mislaid.
are offered for carriage; and
iii. the general nature of the business done by the carrier. Note: If abandonment is not made, indemnification for the losses and damages
by reason of the delay cannot exceed the current price which the goods would
(1) Hazardous and Dangerous Substances have on the day and at the place they are to be delivered.
- Carrier not properly equipped to transport dangerous chemicals or
explosives may validly refuse to accept the same for transport. The value of the goods which the carrier must pay in case of loss or
- Those which are not authorized by the Maritime Industry Authority misplacement shall be that what is declared in the bill of lading.
to carry such goods may also validly refuse the same for transport.
- There must be a Special Permit to Carry from the MARINA. (accept Consignee must not defer the payment of the expenses and transportation
only if the said cargoes are covered by the necessary clearance from charges of the goods otherwise carrier may demand the judicial sale of the
appropriate government agencies) goods.
Case: Magellan Mfg. Marketing Corp. vs. CA
- Abandonment may also be made by virtue of stipulation or (2) Rights of Passengers in Case of Delay
agreement between parties - As to the rights and duties of the parties strictly arising out of delay,

APRIL LYNN L. URSAL Page 3

 the Civil Code is silent. However, the Code of Commerce provides for - Presumption of Negligence
such a situation: - Two conditions for the birth of the presumption of negligence:
1. there exists a contract between the passenger or the shipper and the
ARTICLE 698. In case a voyage already begun should be interrupted, the common carrier
passengers shall be obliged to pay the fare in proportion to the distance 2. the loss, deterioration, injury or death took place during the
covered, without right to recover for losses and damages if the interruption is existence of the contract
due to fortuitous event of force majeure, but with a right to indemnity if the
interruption should have been caused by the captain exclusively. If the Doctrine of Proximate Cause – there is presumption of negligence
interruption should be caused by the disability of the vessel and a passenger If the goods are lost, destroyed or deteriorated, common carriers are presumed
should agree to await the repairs, he may not be required to pay any increased to have acted negligently, unless they prove that they observed extraordinary
price of passage, but his living expenses during the stay shall be for his own diligence. In case of death of or injuries to passengers, common carriers are
account. presumed to have been at fault or to have acted negligently, unless they prove
Note: the carrier is liable for any loss or damage, including any pecuniary loss or that they observed extraordinary diligence.
loss of profit, which the passenger may have suffered by reason thereof.
- Duration of Duty:
In case the vessel is not able to depart on time and the delay is unreasonable,
the passenger may opt to have his/her ticket immediately refunded without any (1) Carriage of Goods
refund service fee from the authorized issuing/ticketing office. - Due diligence should be exercised the moment the goods are
delivered to the carrier.
 Where and to Whom Delivered - Goods are deemed delivered to the carrier when the goods are
a. Place – Goods should be delivered to the consignee in the place ready for and have been placed in the exclusive possession,
agreed upon by the parties. custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted them
The shipper may change the consignment of the goods provided that at the
time of ordering the change of the consignee the bill of lading signed by the ARTICLE 1736. The extraordinary responsibility of the common carrier lasts
carrier be returned to him, in exchange for another wherein the novation of the from the time the goods are unconditionally placed in the possession of, and
contract appears. The expenses occasioned by the change shall be for the received by the carrier for transportation until the same are delivered, actually
account of the shipper. or constructively, by the carrier to the consignee or to the person who has a
right to receive them…
b. Consignee – Delivery must generally be made to the owner or
consignee or to someone lawfully authorized by him to receive the ARTICLE 1737. The common carrier’s duty to observe extraordinary diligence
goods for his account or to the holder of the negotiable instrument. over the goods remains in full force and effect even when they are temporarily
unloaded or stored in transit, unless the shipper or owner has made use of the
c. Delay to Transport Passengers – A carrier is duty bound to transport right of stoppage in transitu. (common carrier becomes a warehouseman –
the passenger with reasonable dispatch ordinary diligence)

Effects of ‘delayed and unfinished voyage’ in inter-island vessels: ARTICLE 1738. The extraordinary liability of the common carrier continues to be
 vessel cannot continue or complete her voyage for any cause – operative even during the time the goods are stored in a warehouse of the
carrier is under obligation to transport the passenger to his/her carrier at the place if destination, until the consignee has been advised of the
destination at the expense of the carrier including free meals and arrival of the goods and has had reasonable opportunity thereafter to remove
lodging before the passenger is transported to his/her destination; them or otherwise dispose of them.
the passenger may opt to have his/her ticket refunded in full if the
cause of the unfinished voyage is due to the negligence of the carrier (2) Carriage of Passengers
or to an amount that will suffice to defray transportation cost at the
shortest possible route if the cause of the unfinished voyage is By trains – the extraordinary responsibility of common carrier commences the
fortuitous event. moment the person who purchases the ticket (or a ‘token’ or ‘card’) from
 vessel is delayed in arrival at the port of destination – free meals the carrier presents himself at the proper place and in a proper manner to be
during mealtime transported with a bona fide intent to ride the coach.
 delay in departure at the point of origin due to carrier’s
negligence; fortuitous event - free meals during mealtime; carrier * Mere purchase of a ticket does not of itself create the relation of carrier and
not obliged to serve free meals passenger but it is an element in the inception of the relation.
 carrier is not obliged to inform passengers of sailing schedule of the
vessel * A proper person who enters upon the carrier’s premises (station,
ticketing office, or waiting room) with the intention of becoming a passenger
C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE will ordinarily be viewed as assuming the status of a passenger.
- Goods should be delivered in the same condition that they were
received and to transport the passengers without encountering any * One who goes to the railroad station to inquire as to the possibility of securing
harm or loss. passage on a freight train, which he knows, by the rules of the company, is not
- Read page 79-80 for provisions allowed to carry passengers, and to secure passage thereon if possible, is not
entitled to the rights of a passenger but is a mere trespasser.
ARTICLE 1755. A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of very * One who rides upon any part of the vehicle or conveyance which is unsuitable
cautious persons, with a due regard for all the circumstances. (Civil Code) or dangerous, or which he knows is not intended for passengers, is not
presumed to be a passenger.

* One who secures free passage by fraud or stealth is precluded from recovery
for injuries sustained through the negligence of the carrier, for he has not
assumed the status of a passenger.
* A person riding on a freight train, on a driver’s pass or similar transportation is, generally regarded as a passenger for hire.
arrangement, to look after livestock being transported and as incident to such

APRIL LYNN L. URSAL Page 4

Motor vehicles like jeepneys and buses – are duty bound to stop their common carrier must exercise due diligence to prevent or minimize loss
conveyances for a reasonable length of time in order to afford passengers an before, during and after the occurrence of flood, storm or other natural disaster
opportunity to board and enter, and they are liable for injuries suffered by in order that the common carrier may be exempted from liability for the loss,
boarding passengers resulting from the sudden starting up or jerking of their destruction, or deterioration of the goods.
conveyances while they do so. Once a public utility bus or jeepney stops, it is
making a continuous offer to bus riders. Fire – not considered as a natural calamity or disaster

Case: Dangwa Transportation Company vs. CA Fire caused by lightning – a natural calamity
- When the bus is not in motion there is no necessity for a person who
wants to ride the same to signal his intention to board. A public utility Hijacking – does not fall under the categories of exempting causes; the
bus, once it stops, is in effect making a continuous offer to bus riders common carrier is presumed to be at fault or to have acted negligently unless
- The premature acceleration of the bus in this case was a breach of such there is a proof of extraordinary diligence on its part
duty
Mechanical defects – damage or injury resulting from mechanical defects is not
Case: La Mallorca vs. CA a damage or injury that was caused by fortuitous event; carrier is liable to its
- Duty to exercise utmost diligence with respect to passengers will not passengers for damages caused by mechanical defects of the conveyance
ordinarily terminate until the passenger has, after reaching his (breakage of a faulty drag-link spring, fracture of the vehicle’s right steering
destination, safely alighted from the carrier’s conveyance or had a knuckle, defective breaks)
reasonable opportunity to leave the carriers premises. And what is - One of the reason why carrier is made liable despite the presence
reasonable time or a reasonable delay within this rule is to be of mechanical defect is the absence of privity between the
determined from all the circumstances. passenger and the manufacturer
Case: Aboitiz Shipping Corporation vs. CA
- Same ruling with La Mallorca vs. CA Case: Juntilla v. Fontanar
- That reasonableness of time should be made to depend on the - “Tire-blowouts” was not considered as fortuitous event although it
attending circumstances of the case, such as the kind of common was alleged that the tires were in good condition; no evidence was
carrier, the nature of its business, the customs of the place, and so presented to show that the evidence were due to adverse road conditions
forth, and therefore precludes a consideration of the time element per – the carrier must prove all angles.
se without taking into account such other factors - The explosion could have been caused by too much air pressure injected
- The primary factor to be considered is the existence of a reasonable into the tires and the fact that the jeepney was overloaded and speeding
cause as will justify the presence of the victim on or near the at the time of the accident.
petitioner’s vessel. We believe there exists such a justifiable
cause (baggage were left) OTHER INVALID DEFENSES
1. Damage to cargo due to EXPLOSION of another cargo – not
DEFENSES OF COMMON CARRIERS attributable to peril of the seas or accidents of navigation.
2. Damage by WORMS and RATS resulting to damage to cargoes –
Article 1734 (No other defense may be raised: exclusive or closed list) can’t be cited as an excuse by the carrier.
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity 3. Damage by WATER through a port which had been left open or
2. Act of the public enemy in war, whether international or civil insufficiently fastened on sailing.
3. Act or omission of the shipper or owner of the goods 4. Carrier cannot escape liabilities to third persons if damage was
4. The character of the goods or defects in the packing or in the containers caused by BARRATRY – where the master or crew of the ship
5. Order or act of competent public authority committed unlawful acts contrary to their duties – includes theft and
6. Exercise of extraordinary diligence fraudulently running the ship ashore.

Fortuitous Event – to be a valid defense must be established to be the Cases:

proximate cause of the loss 1. Problem: A carrier bus on its way to its destination encountered an
engine failure, thus, it has to be repaired for 2 days. And while in the
Note: Since common carrier is presumed is to be negligent, it has been repair shop, a typhoon came resulting to the spoilage of cargoes.
observed that the DOCTRINE of PROXIMATE CAUSE is INAPPLICABLE to a Answer: A typhoon although a natural disaster, is not a valid defense
contract of carriage. The injured passenger or owner of goods need not prove if it is shown that it was not the only cause of the loss. Especially
causation to establish his case. when the facts indicate that the typhoon was foreseeable and could
have been detected through the exercise of reasonable care.
The absence of causal connection is only a matter of defense. Cargoes should have been secured while the bus was being repaired
for 2 days.
Requisites of Fortuitous Event:
1. The cause of the unforeseen and the unexpected occurrence, or of the 2. Problem: A passenger told the driver that he has valuable items in
failure of the debtor to comply with his obligation, must be his bag which was placed under his feet and he asked the driver (to
independent of the human will which he is seated near) to watch for the bag while he is asleep.
2. It must be impossible to foresee the event which constitutes the caso
fortuito, or if it can be foreseen, it must be impossible to avoid (a) There have been incidents of throwing of stones at passing
3. The occurrence must be such as to render it impossible for the debtor vehicles in the North Express Way. While the bus was
to fulfill his obligation in a normal manner traversing the super highway, a stone hurled from the overpass
4. The obligor (debtor) must be free from any participation in or the and hit the passenger resulting to injuries. Can the passenger
aggravation of the injury resulting to the creditor hold the bus liable for damages?
Answer: Yes. The incident was foreseeable due the prior
In order for the common carrier to be exempted from responsibility, the natural incidents of stone hurling. The bus should have exercised
disaster must have been the proximate and only cause of the loss. However, the utmost diligence and employed adequate precautionary
measures to secure safety of passengers since the incident was
foreseeable. .
HOWEVER, if the stone throwing was entirely unforeseeable can’t be held liable.
and the carrier exercised the utmost diligence, then, the bus Nonetheless, the burden of proof is on the carrier to prove such

APRIL LYNN L. URSAL Page 5

 exercise of diligence. It is up to the carrier to overthrow the - Thieves, rioter, and insurrectionists are not included. They are merely
presumption of negligence. private depredators for whose acts a carrier is answerable.
If the passenger decides to file a case, al the passenger has to - Rebels in insurrection against their own government are generally not
do is to prove that she was a passenger of the bus and that she embraced in the definition of public enemy. However, if the rebels hold a
suffered injuries while on board the bus. portion of territory, they have declared their impendence, cast off their
allegiance and has organized armed hostility to the government, and the
(b) Supposing that there were armed men who staged a hold-up authority of the latter is at the time overthrown, such an uprising may take
while the bus was speeding along the highway. One of them on the dignity of a civil war, and so matured and magnified, the parties are
stole the passenger’s bag and wallet while pointing a gun belligerent and are entitled to belligerent rights.
him. Is the bus liable? - Depredation by pirates (which are enemy of all civilized nation) excuses
Answer: No. Hand-carried luggages are governed by necessary the carrier from liability.
deposit. Besides, theft with use of arms or through irresistible - Common carriers may be exempted from responsibility only if the act of
force is a force majeure which exempts carriers from liability. the public enemy has been the proximate and only cause of the loss.
Moreover, due diligence must be exercised to prevent or at least minimize
3. Hi-jacking cannot exculpate the carrier from liability if it is shown the loss before, during and after the performance of the act of the public
that the employees of the carrier were not overwhelmed by the enemy in order that the carrier may be exempted from liability for the
hijackers and that there was no showing of irresistible force. Since, loss, destruction, or deterioration of the goods.
there were 4 employers while there were only 2 hijackers and only
one of them was armed with bladed weapon. IMPROPER PACKING
ON THE OTHER HAND, a hijacking by 3 armed men is an event which
is considered to be beyond the control of the carrier. Thus, the Character of the goods and defects in the packaging or in the containers are
carrier may be adjudged from liability if it can be proven that the defenses available to the common carrier. Similarly, the Carriage of Good by Sea
hijacking was unforeseeable. Act provides that carrier shall not liable for:
1. Wastage in bulk or weight or any damages arising form the inherent
Case: Philippine American General Insurance Co. vs. MCG defect, quality or vice of goods;
- Even in cases where a natural disaster is the proximate and only 2. Insufficiency of packing;
cause of the loss, a common carrier is still required to exercise due 3. Insufficiency or inadequacy of the marks, or
diligence to prevent or minimize loss before, during and after the 4. Latent defects no discoverable by due diligence.
occurrence of the natural disaster, for it to be exempt from liability
under the law for the loss of the goods However, NCC likewise provides:
Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
Case: Pilapil vs. CA caused by the character of the goods, or the faulty nature of the packing or
- Facts: a bystander alongside national highway hurled a stone at the the containers, the common carrier must exercise due diligence to forestall or
left side of the bus, hitting petition above his left eye which resulted lessen the loss.
to partial loss of the left eye’s vision
- SC: A common carrier does not give its consent to become an insurer Thus, if the carrier accepted the goods knowing the fact of improper packing or
of any and all risks to passengers and goods. It merely undertakes to even if the carrier does not know but the defect was nonetheless apparent
perform certain duties to the public as the law imposes, and holds upon ordinary observation, it is not relived from liability for loss or injury to
itself liable for any breach thereof. goods resulting therefrom.
- The law does not make the carrier an insurer of the absolute safety
of its passengers Cases:
- Article 1763: A common carrier is responsible for injuries suffered by 1. Problem: A carrier knowing that some of a cargo of sacks of rice had
a passenger on account of the willful acts or negligence of other big holes and others had openings just loosely tied with strings
passengers or of strangers, if the common carrier’s employees resulting to the spillage of rice during the trip. Thus, there was
through the exercise of the diligence of a good father of a family shortage in the delivery of the cargoes. When sued due to the
could have prevented or stopped the act or omission shortage, the carrier interposed a defense that it was not liable since
o Clearly, a tort committed by a stranger which causes the shortage was due to the defective condition of the sacks. Decide.
injury to a passenger does not accord the latter a cause of Answer: Carrier must still exercise extraordinary diligence if the fact
action against the carrier. The negligence for which a of improper packing is known to the carrier or its servants, or
common carrier is held responsible is the negligent apparent upon ordinary observation. If the carrier accepted the
omission by the carrier’s employees to prevent the cargo without protests or exception notwithstanding such condition,
tort from being committed when the same could have he is not relived of liability for damage resulting therefrom. Apply
been foreseen and prevented by them Article 1742.

Case: Franklin Gacal vs. PAL ORDER OF PUBLIC AUTHORITY

- It is therefore not enough that the event should not have been
foreseen or anticipated, as is commonly believed, but it must be one Art. 1743. If through the order of public authority the goods are
impossible to foresee or to avoid. seized or destroyed, the common carrier is not responsible, provided said
- The mere difficulty to foresee the happening is not the impossibility public authority had power to issue order.
to foresee the same
Cases:
PUBLIC ENEMY 1. Carrier was not excused from liability since the order of an acting
mayor was not considered as a valid order of a public authority. It is
- Presupposes a state of war and refers to the government of a foreign required that public authority who issued the order must be duly
nation at war with the country to which the carrier belongs, though not authorized to issue the order.
necessarily with that to which the owner of the gods owes allegiance. 2. Carriage of Goods by Sea Act – provides that carrier shall not
responsible for loss or damage resulting from “arrest or
restraint of princes, rulers, or people, or seizure under legal
process” and from “quarantine restrictions”.
DEFENSES IN CARRIAGE OF PASSENGERS

APRIL LYNN L. URSAL Page 6

- Primary defense of carrier is exercise of extraordinary diligence in PASSENGER’S BAGGAGES
transporting passengers. Even if there is a fortuitous event, the carriers must - The term baggage has been defined to include whatever articles a
also present proof of exercise of extraordinary diligence. passenger usually takes with him for his own personal use, comfort and
convenience
Art. 1759. Common carriers are liable for the death of or injuries to - Rules that are applicable to goods that are being shipped are also
passengers through the negligence or willful acts of the carrier’s employees, applicable to baggage delivered to the custody of the carrier. Arts.
although such employees may have acted beyond the scope of their authority 1733. 1734 and 1736 of Civil Code are applicable.
or in violation of the orders of the common carriers. - However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall
The liability does not cease even upon proof that they exercised diligence in apply.
the selection and supervision of their employees.
Distinction: W/N the baggage is in the personal custody of the passenger.
Art. 1763. Carrier is responsible for injuries suffered by a passenger on  if yes, hand carried baggage
account of the willful acts or negligence of other passengers or of strangers, if  if no, checked-in baggage
the common carrier’s employees through the exercise of the diligence of a
good father of a family could have prevented or stopped the act or omission. Art. 1998. The deposit of effects made by the travellers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be
a. Employees responsible for them as depositaries, provided that notice was given to them,
- Carrier is liable for the acts of its employees. It can’t escape or to their employees, of the effects brought by the guests and that, on the
liability by claiming that it exercised due diligence in supervision and part of the latter, they take the precautions which said hotel-keepers or their
selection of its employees (unlike in quasi-delicts). substitutes advised relative to the care and vigilance of their effects. (1783)

Reasons for the rule:

1. Undertaking of the carrier requires that its passenger that full Art. 2000. The responsibility referred to in the two preceding articles shall
measure of protection afforded by the exercise of high degree of include the loss of, or injury to the personal property of the guests caused by
care prescribed by law, inter alia from violence and insults at the the servants or employees of the keepers of hotels or inns as well as
hands of strangers and other passengers, but above all, from the acts strangers; but not that which may proceed from any force majeure. The fact
of the carrier’s own servants. that travellers are constrained to rely on the vigilance of the keeper of the
2. The liability of the carrier for the servant’s violation of duty to hotels or inns shall be considered in determining the degree of care required
performance of his contract to safely transport the passenger, of him. (1784a)
delegating therewith the duty of protecting the passenger with
utmost care prescribed by law. Art. 2001. The act of a thief or robber, who has entered the hotel is not
3. As between the carrier and the passenger, the former must bear the deemed force majeure, unless it is done with the use of arms or through an
risk of wrongful acts or negligence of the carrier’s employees irresistible force. (n)
against passenger, since it, and not the passenger, has the power to
select and remove them.
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to
the acts of the guest, his family, servants or visitors, or if the loss arises from
Rationale: On the other hand, if the ship owner derives profits from
the character of the things brought into the hotel. (n)
the results of the choice of the captain and the crew, when the choice
turns out successful, it is also just that he should suffer the
consequences of an unsuccessful appointment, by application of the Art. 2003. The hotel-keeper cannot free himself from responsibility by posting
rule of natural law contained in the partidas --- that he who enjoys notices to the effect that he is not liable for the articles brought by the guest.
the benefits derived from a thing must likewise suffer the losses that Any stipulation between the hotel-keeper and the guest whereby the
ensue therefrom responsibility of the former as set forth in articles 1998 to 2001 is suppressed
or diminished shall be void. (n)
- Note: Willful acts of the employees include theft
Cases:
b. Other Passengers and Third Persons
1. Despite the fact that the carrier gave notice that it shall not be liable
for baggage brought in by passengers, the carrier is still liable for lost
- With respect to acts of strangers and other passengers resulting in
hand-carried luggage since it is governed by rules on necessary
injury to a passenger, the availability of such defense is also subject
deposits. Under Art. 20000, the responsibility of the depositary
to the exercise of a carrier of due diligence to prevent or stop the act
includes the loss of property of the guest caused by strangers but
or omission.
not that which may proceed from force majeure. Moreover, article
- Negligence of the carrier need not be the sole cause of the damage
2001 considers theft as force majeure if it is done with use of arms or
or injury to the passenger or the goods. The carrier would still be
through irresistible force.
liable even if the contractual breach concurs with the negligent act
2. Even if the passenger did not declare his baggage nor pay its charges
or omission of another person.
contrary to the regulations of the bus company, the carrier is still
liable in case of loss of the baggage. Since, it has the duty to exercise
Remember: the negligence of the other river in a collision is NOT a
extraordinary diligence over the baggage that was turned over to the
prejudicial question to an action against the carrier’s company.
carrier or placed in the baggage compartment of the bus. The non-
payment of the charges is immaterial as long as the baggage was
Article 1759. Common carriers are liable for the death of or injuries to
received by the carrier for transportation.
passenger through the negligence or willful acts of the former’s
employees, although such employees may have acted beyond the scope of
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER
their authority or in violation of the orders of the common carriers.
A. NEGLIGENCE OF SHIPPER OR PASSENGER

- The obligation to exercise due diligence is not limited to the carrier.

The shipper is obliged to exercise due diligence in avoiding damage
or injury.
- Nevertheless, contributory negligence on the part of the shipper/ passenger would only mitigate the carrier’s liability; it is not a total

APRIL LYNN L. URSAL Page 7

 excuse. Answer: Yes. The bus company is obligated to exercise utmost diligence in
- However, if the negligence of the shipper/ passenger is the carrying passengers. This liability cannot be eliminated or limited by simply
proximate and only cause of the loss, then, the carrier shall not be posting notices. The passenger cannot be said to have assumed the risk of being
liable. The carrier may overcome the presumption of negligence injured when he urged the driver to accept the dare. At most, the passengers
and may be able to prove that it exercised extraordinary diligence in can only be said to be guilty of contributory negligence which would mitigate
handling the goods or in transporting the passenger. the liability of the driver, since the proximate cause of the accident was the
driver’s willful and reckless act in running the race with the other bus.
The carrier may be able to prove that the only cause of the loss of the
goods is any of the following: Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.
1. Failure of the shipper to disclose the nature of the goods; - Where a carrier’s employee is confronted with a sudden
2. Improper marking or direction as to the destination; emergency, the fact that he is obliged to act quickly and without a
3. Improper loading when he assumes such responsibility. chance for deliberation must be taken into account, and he is not led
to the same degree of care that he would otherwise be required to
The shipper must likewise see to it that the goods are properly exercise in the absence of such emergency but must exercise only
packed; otherwise, liability of the carrier may either be mitigated or such care as any ordinary prudent person would exercise under like
barred depending on the circumstances. circumstances and conditions, and the failure on his part to exercise
the best judgment the case renders possible does no establish lack
Art. 1741. If the shipper or owner merely contributed to the loss, of care and skill on his part which renders the company liable.
destruction or deterioration of the goods, the proximate cause thereof
being the negligence of the common carrier, the latter shall be liable in Case: Compania Maritima vs. CA and Vicente Concepcion
damages, which however, shall be equitably reduced. - While the act of private respondent in furnishing petitioner with an
inaccurate with of the payloader cannot successfully be used as an
Art. 1761. The passenger must observe the diligence of a good father of a excuse by petitioner to avoid liability to the damage thus caused,
family to avoid injury to himself. said act constitutes a CONTRIBUTORY CIRCUMSTANCE to the
damage caused on the payloader, which mitigates the liability for
damages of petitioner in accordance with Article 1741.
Art. 1762. The contributory negligence of the passenger does not bar recovery
of damages for his death or injuries, if the proximate cause thereof is the Case: Philippine National Railways vs. CA
negligence of the common carrier, but the amount of damages shall be - While petitioner failed to exercise extraordinary diligence as
equitably reduced. required by law, it appears that the deceased was chargeable with
contributory negligence.
a. Last Clear Chance - Since he opted to sit on the open platform between the coaches of
the train, he should have held tightly and tenaciously on the upright
metal bar found at the side of said platform to avoid falling off from
A negligent carrier is liable to a negligent passenger in placing himself in peril, if
the speeding train
the carrier was aware of the passenger’s peril, or should have been
aware of it in the reasonable exercise of due care, had in fact an opportunity
B. FREIGHT
later than that of the passenger to avoid an accident.
a. Amount to be Paid
Last clear chance applies in a suit between the owners and drivers of colliding
vehicles. It does not arise where a passenger demands responsibility from the The regulation of rates is founded upon the valid exercise of the Police Power of
carrier to enforce its contractual obligations. For it would be inequitable to the state in order to protect the public from arbitrary and excessive rates while
exempt the negligent driver of the carrier and its owner on the ground that the maintaining the efficiency and quality of services rendered. The fixing of just
other driver was likewise guilty of negligence. and reasonable rates involves a balancing of investor and the consumer
interest.
b. Assumption of Risk
Although the consideration that should be paid to the carrier is still subject to
the agreement between parties, what can be agreed upon should not be
Passengers must take such risks incident to the mode of travel. Carriers are not beyond the maximum amount fixed by appropriate government agency.
insurers of the lives of their passengers. Thus, in air travel, adverse weather
conditions or extreme climatic changes are some of the perils involved in air b. Who will pay
travel, the consequence of which the passenger must assume or expect.
Although either of the shipper or the consignor may pay the freight before or at
However, there is no assumption of risk in a case wherein a passenger boarded time the goods are delivered to the carrier for shipment, nonetheless, it is the
a carrier that was filled to capacity. The act of the passenger in taking the consignor (whom the contract of carriage is made) who is primarily liable for the
extension chair does not amount to implied assumption of risk. payment of freight whether or not he is the owner of the goods. The obligation
to pay is implied from the mere fact that the consignor has placed the goods
Note: there is also no assumption of risk by the mere fact that the carrier with the carrier for the purpose of transportation.
posted notices against such liability
c. Time to pay
Problem: Although, there is a sign in the bus that says: “do not talk to the
driver while the bus is in motion, otherwise, the company would not assume Code of Commerce provides that in the absence of any agreement, the
responsibility for any accident:. Nonetheless, the passengers dared the driver to consignee who is supposed to pay must do so within 24-hours from the time of
race with another bus, as the bus speeds up in the attempt to overtake the delivery.
other bus, it failed to slow down. As a result, the bus turns turtle causing the
death and injuries to passengers. Is the bus company liable? Article 374. The consignees to whom the shipment was made may not defer
the payment of the expenses and transportation charges of the goods they
receive after the lapse of twenty-four hours following their delivery; and in case
of delay in this payment, the carrier may demand the judicial sale of the goods
transported in an amount necessary to cover the cost of transportation and the expenses incurred.

APRIL LYNN L. URSAL Page 8

 - The duty even extends to the members of the crew or complement
(1) Carriage of Passengers by Sea operating the carrier

With respect to carriage of goods by sea, the tickets are purchased in advance. Case: Kapalaran Bus Lines vs. Coronado
Carriers are not supposed to allow passengers without tickets --- the carrier is - If common carriers carefully observed the statutory standard of
bound to observe a “No Ticket, No Boarding Policy”. The carrier shall extraordinary diligence in respect of their own passengers, they
collect/ inspect the passenger’s ticket within one hour from vessel’s departure cannot help but simultaneously benefit pedestrians and the owners
as not to disrupt resting or sleeping passengers. and passengers of other vehicles who are equally entitled to the safe
and convenient use of our roads and highways
If the vessel is not able to depart on time and the delay is unreasonable, the
passenger may opt to have his/ her ticket refunded without refund service fee. A reasonable man or a good father of a family in the position of the carrier must
Delayed voyage means “late departure of the vessel from its port of origin exercise extraordinary diligence in the performance of his contractual
and/ or late arrival of the vessel to its port of destination”. Unreasonable obligation.
delay means “the period of time that has lapsed without just cause and is - Generally, what should be determines is whether or not a
solely attributable to the carrier which has prejudiced the transportation of the reasonable man, exercising extraordinary diligence, could have
passenger and/ or cargoes to their port of destination. foreseen and prevented the damage or loss that occurred.

A passenger who failed to board the vessel can refund or revalidate the ticket III. EFFECT OF STIPULATION
subject to surcharges. Revalidation means “the accreditation of the ticket
that is not used and intended to be used for another voyage. A. GOODS
- The parties cannot stipulate that the carrier will NOT exercise ANY
(2) Carrier’s Lien diligence in the custody of goods
- The law allows a stipulation whereby the carrier will exercise a
If consignor or the consignee fails to pay the consideration for the degree of diligence which is less than extraordinary with respect to
transportation of goods, the carrier may exercise his lien in accordance with Art. goods.
375 of Code of Commerce:
Art. 1744. A stipulation between the common carrier and the shipper
ARTICLE 375. The goods transported shall be especially bound to answer for owner limiting the liability of the former for the loss, destruction, or
the cost of transportation and for the expenses and fees incurred for them deterioration of the goods to a degree less than extraordinary
during their conveyance and until the moment of their delivery. diligence shall be valid, provided it be:
This special right shall prescribe eight days after the delivery has been made,
and once prescribed, the carrier shall have no other action than that 1. In writing, signed by the shipper/owner;
corresponding to him as an ordinary creditor. 2. Supported by a valuable consideration other than the service
rendered by the common carrier (Note: Typically fare/freight); and
DEMURRAGE 3. Reasonable, just and contrary to public policy.

Demurrage is the compensation provided for the contract of affreightment for B. PASSENGERS
the detention of the vessel beyond the time agreed on for loading and - There can be no stipulation lessening the utmost diligence that is
unloading. It is the claim for damages for failure to accept delivery. In broad owed to passengers.
sense, very improper detention of a vessel may be considered a demurrage.
Technically, liability for demurrage exists only when expressly stipulated in the Art. 1757. The responsibility of a common carrier for the safety of
contract. passengers as required in Arts. 1733 and 1755 cannot be dispensed
with or lessened by stipulation, by the posting of notices, by
Using the term in broader sense, damages in the nature of demurrage are statements on tickets, or otherwise. (Note: Absolute; extraordinary
recoverable for a breach of the implied obligation to load or unload the cargo at all times.)
with reasonable dispatch, but only by the party to whom the duty is owed and
only against on who is a party to the shipping contract. Notice of arrival of Gratuitous passenger – A stipulation limiting the common carrier’s liability
vessels or conveyances, or their placement for purposes of unloading is often a for negligence is valid, but not for willful acts of gross negligence. The reduction
condition precedent to the right to collect demurrage charges. of fare does not justify any limitation.

CHAPTER 3 Case: Lara vs. Valencia

EXTRAORDINARY DILIGENCE - Diligence owed to accommodation passengers is only ordinary
diligence
I. RATIONALE - However, this case is not controlling with respect to common
A common carrier is bound to carry the passengers safely as far a carriers because the defendant in the said case was not a common
human care and foresight provide, using the utmost diligence of very cautious carrier
persons, with due regard for all circumstances.
IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
Extraordinary diligence: Calculated to protect the passengers from
the tragic mishaps that frequently occur in connection with rapid modern A. SEAWORTHINESS
transportation.
a. Warranty of Seaworthiness of Ship
II. HOW DUTY IS COMPLIED WITH - This is the first step that should be undertaken
- There is no hard and fast rule in the exercise of extraordinary - Extraordinary diligence requires that the ship which will
diligence transport the passengers and goods is seaworthy.
- Common carrier binds itself to carry the passengers safely as far as - Seaworthiness of the vessel is impliedly warranted.
human care and foresight can provide, using the utmost diligence of - The carrier shall be bound before and at the beginning of the
a very cautious person, with due regard for all the circumstances. voyage to exercise due diligence to make the ship seaworthy.
b. No duty to inquire goods, when transacting with common carriers, are not expected
- Because of the implied warranty of seaworthiness, shippers of to inquire into the vessels seaworthiness, genuineness of its

APRIL LYNN L. URSAL Page 9

 licenses and compliance with all maritime laws. Passengers The vessel must be adequately equipped and properly manned.
cannot be expected to inquire everytime they board a common - On top of regular maintenance and inspection, Captains, masters or
carrier, whether the carrier possesses the necessary papers patrons of vessels must prove the skill, capacity, and qualifications
or that all the carrier’s employees are qualified. necessary to command and direct the vessel.
- It is the carrier that carries such burden of proving that the ship - If the owner of a vessel desires to be the captain without having the
is seaworthy. legal qualifications, he shall limit himself to the financial
- Sufficient evidence must be submitted and the presentation of administration of the vessel and shall entrust the navigation to a
certificates of seaworthiness is not sufficient to overcome the qualified person.
presumption of negligence.
Note: It is not an excuse that the carrier cannot afford the salaries of competent
c. Meaning of Seaworthiness and licensed crew or that latter is unavailable.
- A vessel must have such degree of fitness which an owner who
is exercising extraordinary diligence would require his vessel to Adequate Equipment
have at the commencement of the voyage, having regard to all - With respect to vessels that carries passengers, the Maritime
the probable circumstances of it. This includes fitness of the Industry Authority prescribes rules which provide for indispensable
vessel itself to withstand the rigors of voyage, fitness of the equipment and facilities
vessel to store the cargoes and accommodate passengers to be - ex. Exit doors, life boats, live vests
transported and that it is adequately equipped and properly
manned. B. OVERLOADING
- Seaworthiness is that strength, durability and engineering skill
made a part of a ship’s construction and continued - Duty to exercise due diligence likewise includes the duty to take
maintenance, together with a competent and sufficient crew, passengers or cargoes that are within the carrying capacity of the
which would withstand the vicissitudes and dangers of the vessel.
elements which might reasonably be expected or encountered
during her voyage without loss or damage to her particular C. PROPER STORAGE
cargo
- The vessel itself may be suitable for the cargo but this is not enough
Example: The carrier was able to establish that the ship itself was seaworthy because the cargo must also be properly stored.
because the records reveal that the vessel was dry-docked and inspected by the
Phil. Coast Guard before its first destination. Cargo must generally not be placed on deck. The carrying of deck cargo raises
the presumption of unseaworthiness unless it can be shown that the deck cargo
A warranty of seaworthiness requires that it be properly laden, and provided will not interfere with the proper management of the ship.
with a competent master, a sufficient number of competent officers and
seamen, and the requisite appurtenances and equipment. D. NEGLIGENCE OF CAPTAIN AND CREW
The carrier shall be bound before and at the beginning of the voyage to exercise
due diligence to: - Failure on the part of the carrier to provide competent captain and
1. Make the ship seaworthy; crew should be distinguished from the negligence of the said captain
2. Properly man, equip, and supply the ship; and crew, because the latter is covered by the Limited Liability Rule
3. Make all parts of the ship in which goods are carried, fit and safe (liability of the shipowner may be limited to the value of the vessel).
for their reception, carriage, and preservation. - If the negligence of the captain and crew can be traced to the fact
that they are really incompetent, the Limited Liability Rule cannot be
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, invoked because the shipowner may be deemed negligent.
and discharge the goods carried.
Rules on passenger safety
Note: Seaworthiness is relative it its construction and its application depends on - Negligence on the part of the captain and crew as well as the
the facts of a particular case (ex. Length and nature of the voyage) operator includes failure to comply with the regulation issued by the
Maritime Industry Authority (MARINA) on the safety of the
Fitness of the Vessel Itself passengers
- It is necessary that the vessel can be expected to meet the normal - Memorandum Circular No. 112 : passengers do not merely contract
hazards of the journey for transportation because they have the right to be treated by the
- General Test of Seaworthiness: Whether the ship and its carrier and its employees with kindness, respect, courtesy and due
appurtenances are reasonably fit to perform the service undertaken. consideration. They are entitled to be protected against personal
conduct, injurious language, indignities and abuses from the said
The ship must be “cargoworthy” carrier and its employees
- Even if the vessel was properly maintained and is free from defect, - Read Memorandum Circular No. 114: p. 204
the carrier must not accept the goods that cannot properly be
transported in the ship Case: Planters Products Inc. vs. CA
- The ship must be efficiently strong and equipped to carry the - The period during which private respondent was to observe the
particular kind of cargo which she has contracted to carry and her degree of diligence required of it as a public carrier began from the
cargo must be so loaded that it is safe for her to proceed on her time the cargo was unconditionally placed in its charge after the
voyage. vessel’s holds were duly inspected and passed scrutiny by the
shipper, up to and until the vessel reached its destination and its hull
was re-examined by the consignee, but prior to unloading
- A ship owner is liable for damage to the cargo resulting from
improper stowage ONLY when the stowing si done by stevedores
employed by him, and therefore under his control and supervision,
not when the same is done by the consignee or stevedores under
the employ of the latter
E. DEVIATION AND TRANSSHIPMENT 1. Deviation
- If there is an agreement between the shipper and the carrier as to the

APRIL LYNN L. URSAL Page 10

 road over which the conveyance is to be made (subject to the demands that in measuring a common carrier’s duty towards its
approval by the Maritime Industry Authority), the carrier may not passengers, allowance must be given to the reliance that should be
change the route, unless it be by reason of force majeure. Without reposed on the sense of responsibility of all the passengers in regard
this cause, he shall be liable for all the losses which the goods may to their common safety.
suffer, aside from paying the sum stipulated for that case. - It is to be presumed that a passenger will not take with him anything
- When on account of the force majeure, the carrier had to take dangerous to the lives and limbs of his co-passengers not to speak of
another route which resulted to an increase in transportation his own.
charges, he shall be reimbursed upon formal proof. - Not to be lightly considered is the right to privacy to which each
passenger is entitled
Note: With respect to carriers by sea, the routes are subject to approval by - In other words, inquiry may be verbally made as to the nature of a
MARINA and the same cannot generally be changed without the authorization passenger’s baggage when such is not outwardly perceptible,
from said administrative agency but beyond this, constitutional boundaries are already in danger of
being transgressed
2. Transshipment - SC held that carrier has succeeded in rebutting the presumption of
- The act of taking cargo out of one ship and loading it into another; to negligence by showing that it has exercised extraordinary diligence
transfer goods from the vessel stipulated in the contract of for the safety of its passenger, according to the circumstances of
affreightment to another vessel before the place of destination each case
named in the contract has been reached.
- Transshipment of freight without legal excuse is a violation of the Note: although overland transportation are not bound nor empowered to make
contract and subjects the carrier to liability if the freight is lost even an examination on the contents of packages or bags particularly those hand
by a cause otherwise excepted. carried by passengers, such is different with regards to an airline company.

Note: there is transshipment whether or not the same person, firm or entity VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR
owns the vessels (what matters is the actual physical transfer of cargo from one - The aircraft must be in such a condition that it must be able to
vessel to another) withstand the rigors of flight.

V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND Airworthiness – An aircraft, its engines propellers, and other components and
accessories, are of proper design and construction, and are safe for air
A. CONDITION OF VEHICLE navigation purposes, such design and construction being consistent with
- Common carriers that offer transportation by land are similarly accepted engineering practice and in accordance with aerodynamic laws and
required to make sure that the vehicles that they are using are in aircraft science.
good order and condition.
Proof of airworthiness is not by itself sufficient to prove exercise of
Rule on Mechanical Defects – If the carriers will replace certain parts of the extraordinary diligence.
motor vehicle, they are duty bound to make sure that the parts that they are
purchasing are not defective. Hence, it is a long-standing rule that a carrier Case: Japan Airlines vs. CA
cannot escape liability by claiming that the accident that resulted because of a - The fact that the flight was cancelled due to fortuitous event does
defective break or tire is due to a fortuitous event. This is true even if it can be not mean that the carrier’s duty already ended. The carrier is
established that the tire that was subject of a blow-out is brand new. The duty still obligated to look after the convenience and comfort of the
to exercise extraordinary diligence requires the carrier to purchase and use passenger
vehicle parts that are not defective. - Thus the carrier was obligated to make the necessary arrangements
to transport the passenger on the first available flight.
B. TRAFFIC RULES
- The carrier fails to exercise extraordinary diligence if it will not A. INSPECTION
comply with basic traffic rules. The Civil Code provides for a - It is the duty of the carrier to make inquiry as to the general nature
presumption of negligence in case the accident occurs while the of the articles shipped and of their value before it consents to carry
operator of the motor vehicle is violating traffic rules. them; and its failure to do so cannot defeat the shipper’s right to
recovery of full value of the package if lost, in the absence of
In cases involving breach of contract of carriage, proof of violation of traffic showing of fraud or deceit on the part of the shipper.
rules confirms that the carrier failed to exercise extraordinary diligence.
Where a common carrier has reasonable ground to suspect that the offered
Case: Mallari Sr and Jr vs. CA goods are of a dangerous character, the carrier has the right to know the
- The rule is settled that a driver abandoning his proper lane for the character of such goods and to insist inspection, if reasonable and practical
purpose of overtaking another vehicle in an ordinary situation has under the circumstances, as a condition of receiving and transporting such
the duty to see to it that the road is clear and not to proceed if he goods. To be subjected to unusual search, other than the routinary inspection
cannot do so in safety procedure customarily undertaken, there must exist proof that would justify
cause for apprehension that the baggage is dangerous as to warrant exhaustive
C. DUTY TO INSPECT inspection, or even refusal to accept carriage of the same.
- There is no unbending duty to inspect each and every package or
baggage that is being brought inside the bus or jeepney. The carrier Case: Northwest Airlines vs. Laya
is duty bound to conduct such inspection depending on the - The fact that the plaintiff was greatly inconvenienced by the fact that
circumstances. his attaché case was subjected to further inspection does not
warrant imposition of liability because he was not singled out and
Case: Nocum vs. Laguna Tayabas Bus Company discriminated by the employees of the carrier
- While it is true the passengers of appellant’s bus should not be - Protection of passengers must take precedence over convenience
made to suffer for something over which they had no control, - Nevertheless, the implementation of security measures must be
fairness attended by basic courtesies
CHAPTER 4
BILL OF LADING I. CONCEPTS, DEFINITION AND KINDS

APRIL LYNN L. URSAL Page 11

 THE 3-FOLD NATURE OF THE BILL OF LADING
Bill of Lading (BOL) - The three fold nature of a bill of lading is obviously applicable only to
- a written acknowledgement, signed by the master of a vessel or carriage of goods
other authorized agent of the carrier, that he has received the - As receipt and document of title: issued for goods
described goods from the shipper, to be transported on the - As contract: applies to tickets issued to passengers
expressed terms to be described the place of destination, and to be
delivered to the designated consignees of the parties. I. RECEIPT
- It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT - As comprehending all methods of transportation, a BOL may be
OF TITLE. defined as a written acknowledgement of the receipt of goods and
an agreement to transport and to deliver them at a specified place to
A BOL is not necessary for the perfection of a contract of carriage . Thus, the a person named or on his order.
obligation to exercise extraordinary diligence by the carrier is still required even - Other terms, “shipping receipts”, “forwarders receipts”, and
if there is no bill of lading. “receipts for transportation”.
- (SC) the designation however is not material, and neither is the form
In the absence of the bill of lading, disputes shall be determined on the basis of of the instrument. If it contains an acknowledgement by the carrier
the provisions in the New Civil Code and suppletory by the Code of Commerce. of the receipt of goods for transportation it is, in legal effect a BOL.
- The issuance of a bill of lading carries the presumption that the
KINDS of BILL of LADING: goods were delivered to the carrier issuing the bill, for immediate
shipment, and it is nowhere questioned that a bill of lading is prima
1. Clean Bill of Does not contain any notation indicating any defect in facie evidence of the receipt of the goods by the carrier
Lading the goods.
2. Foul Bill of One that contains the abovementioned notation. II. CONTRACT
Lading - It expresses the terms and conditions of the agreement between the
3. Spent Bill of The goods are already delivered but the bill of lading parties; names the parties; includes consignees etc. It is the law
Lading was not yet returned (upon delivery, the carrier is between the parties bound by its terms and conditions.
supposed to retrieve the covering bill of the goods)
Contracts of Adhesion
4. Through Bill Issued by a carrier who is obliged to use the facilities of - It is to be construed liberally in favor of the shipper who adhered to
of Lading other carriers as well as his own facilities for the such bill as it is a contract of adhesion. The only participation of the
purpose of transporting the goods from the city of the party is the signing of his signature or his adhesion thereto.
seller to the city of the buyer, which BOL is honored by - The shipper or passenger is bound by the terms and conditions if
the second and other interested carriers who don’t there is no occasion to speak of ambiguities or obscurities
issue their own BOL. - If the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former
5. On Board Bill -states that the goods have been received on board
the vessel which is to carry the goods.
ART. 24 (NCC). In all contractual property or other relations, when one of the
-apparently guarantees the certainty of shipping as
parties is at a disadvanatge on account of his moral dependence, ignorance
well as the seaworthiness of the vessel to carry the
indigence, mental weakness, tender age and other handicap, the court must be
goods.
vigilant for his protection.
-basically means that the goods are already inside the
vessel
Parole Evidence Rule
6. Received for -states that the goods have been received for shipment
- BOL is covered by the parol evidence rule, that the terms of the
Shipment Bill with or without specifying the vessel by which the
contract are conclusive upon the parties and evidence aliunde is not
goods are to be shipped.
admissible to vary or contradict a complete enforceable agreement,
-issued when conditions are not normal and there is
subject to well defined exceptions
insufficiency of shipping space.
- The mistake contemplated as an exception to the parol evidence rule
7. Custody Bill The goods are already receied by the carrier but the is one which is a mistake of fact mutual to the parties.
of Lading vessel indicated therein has not yet arrived in the port. - Note that if such is not raised inceptively in the complaint or in the
answer, a party cannot later on be permitted to introduce parol
8. Port Bill of The vessel indicated in the BOL that will transport the evidence thereon
Lading goods is already in the port.
Bill of Lading as Evidence
- The BOL is the legal evidence of the contract and the entries thereof
Note: A party to a maritime contract would require an on board bill of lading constitutes prima facie evidence of the contract.
because of its apparent guaranty of certainty of shipping as well as the - All the essential elements of a valid contract (cause, consent, object)
seaworthiness of the vessel which is to carry the goods. are present when such bill are issued.
Effectivity of BOL III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE
- upon its delivery to and acceptance by the shipper. - In a contractual obligation, the bill of lading can be categorized as an
- The acceptance of the bill without dissent raises the presumption actionable document under the Rules of Court. Hence, the bill of
that all the terms therein were brought to the knowledge of the lading must be properly pleaded either as causes of action or
shipper and agreed to by him, and in the absence of fraud or defenses
mistake, he is stopped thereafter from denying that he assented to - ART 1507 (NCC). A document of title in which it is stated that the
such claims (whether he reads the bill or not) goods referred to therein will be delivered to the bearer or to the
order of any person named in such document is a negotiable
document of title.

- If the document of title contains the required words of negotiability

to make the instrument negotiable under Article 1507 of the NCC,
the document remains to be negotiable even if the words “not negotiable” or non negotiable are places thereon

APRIL LYNN L. URSAL Page 12

 Where there was delivery to the wrong person, the prescriptive period is 10
o a. Bearer document- negotiated by delivery years because there is a violation of contract, and the carriage of goods by sea
o b. Order document- negotiated by indorsement of the act does not apply to misdelivery. (Ang v. American SS Agencies (19 SCRA 631)
specified person so named
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
- Effects of negotiation. Negotiation of the document has the effect of
manual delivery so as to constitute the transferee the owner of the - Applies suppletorily to the Civil Code if the goods are to be shipped
goods. form a foreign port to the Philippines
- COGSA is applicable in international maritime commerce. It can be
BASIC STIPULATIONS applied in domestic sea transportation if agreed upon by the parties.
- Provided for in the Code of Commerce (paramount clause)
- (for overland transportation, maritime commerce and electronic - Under the Sec. 4 (5), the liability limit is set at $500 per package
documents, please refer to the textbook for the codal pp. 203-210) unless the nature and value of such goods is declared by the shipper.
This is deemed incorporated in the bill of lading even if not
PROHIBITED AND LIMITING STIPULATION mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463).
- If by agreement, another maximum amount than that mentioned
1. Exempting the carrier from any and all liability for loss or damage may be fixed provided that such maximum shall not be less than
occasioned by its own negligence - INVALID as it is contrary to public $500 and in no event shall the carrier be liable for more than the
policy. amount of damage actually sustained
2. Parties may stipulate that the diligence to be exercised by the carrier
for the carriage of goods be less than extraordinary diligence if it is: Note that Art. 1749 of the NCC applies to inter-island trade.
a. in writing and signed by both parties
b. supported by a valuable consideration other than the Meaning of Package
service rendered by the common carrier - If the goods are shipped in cartons, each carton is considered a
c. the stipulation is just, reasonable and not contrary to law. package even if they are stored in container vans
3. Providing an unqualified limitation of such liability to an agreed - When what ordinarily be considered packages are shipped in a
valuation - INVALID container supplied by the carrier and the number of such units is
4. Limiting the liability of the carrier to an agreed valuation unless the disclosed in the shipping documents, each of those units and not the
shipper declares a higher value and pays a higher rate of freight- container constitutes the package.
VALID and ENFORCEABLE.
Prescriptive periods
Note: the purpose of limiting stipulations in the bill of lading is to protect th - Suit for loss or damage to the cargo should be brought within one
common carrier. Such stipulation obliges the shipper/consignee to notify the year after:
common carrier of the amount that the latter may be liable for in case of loss of a. delivery of the goods; or
the goods b. the date when the goods should be delivered. (Sec. 3[6])

Remember: The one-year prescriptive period is suspended by:

1. The parties cannot stipulate so as to totally exempt the carrier from 1. express agreement of the parties (Universal Shipping Lines, Inc. v.
exercising any degree of diligence whatsoever IAC, 188 SCRA 170)
2. The parties cannot stipulate that the common carrier shall exercise 2. when an action is filed in court until it is dismissed. (Stevens & Co. v.
diligence less than the diligence of a good father of a family Nordeutscher Lloyd, 6 SCRA 180)

RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS: Things to Remember:

1. Inter-island - if goods arrived in damaged condition (Art. 366): 1. Article 1757 provides that the responsibility of a common carrier to
a. If damage is apparent, the shipper must file a claim immediately (it may be exercise utmost diligence for the safety of PASSENGERS CANNOT be
oral or written); dispensed with or lessened by stipulation or statement on tickets or
b. If damage is not apparent, he should file a claim within 24 hours from otherwise
delivery. 2. Article 1750 of the Civil Code provides that a contract fixing the sum
The filing of claim under either (1) or (2) is a condition precedent for recovery. that may be recovered by the owner or shipper for the loss,
If the claim is filed, but the carrier refuses to pay: enforce carrier’s liability in destruction, or deterioration of the GOODS is VALID, if it is
court by filing a case: REASONABLE and JUST under the circumstances, and has been
a. within 6 year, if no bill of lading has been issued; or FAIRLY AND FREELY AGREED UPON
b. within 10 years, if a bill of lading has been issued. 3. It is unfair to deny the shipper the right to declare the actual value of
his cargos and to recover such true value in case of loss or damage
2. Overseas –where goods arrived in a damaged condition from a foreign port Note: it has been suggested that the signature of the shipper in the
to a Philippine port of entry: (COGSA) bill of lading with regards to the limitation applies only to reduction
a. upon discharge of goods, if the damage is apparent, claim should be filled of diligence and not to the stipulated amount to be paid.
immediately; 4. It is unjust and contrary to public policy if the common carrier’s
b. if damage is not apparent, claim should be filled within 3 days from delivery. liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with
Filing of claim is not a condition precedent, but an action must be filed against or diminished
the carrier within a period of 1 year from discharge; if there is no delivery, the 5. The common carrier may EXEMPT itself from liability if he can prove
one-year period starts to run from the day the vessel left port (in case of that:
undelivered or lost cargo), or from delivery to the arrastre (in case of damaged a. He observed extraordinary diligence
cargo). b. The proximate and only cause of the incident is a
fortuitous event or force majeure
c. The proximate and only cause of the loss is the character
of the goods or defects in the packing or in the containers
d. The proximate and only cause of the loss is the order or
act of competent public authority

APRIL LYNN L. URSAL Page 13

 Note: to limit its liability or at least mitigate the same, the carrier can LIABILITY OF CARRIER FOR DAMAGES:
cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the DOCTIRNE 1. Death or injury of a passenger if the accident causing it took place on
OF AVOIDABLE CONSEQUENCES 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
Case: Sea-Land Service Inc. vs. IAC during the carriage; (Art. 18) and
- Liability of a common carrier for loss of or damage to goods 3. Delay in the transportation of passengers, luggage or goods. (Art. 19)
transported by it under a contract of carriage is governed by the
laws of the country of destination NOTE: The Hague Protocol amended the Warsaw Convention by removing the
- COGSA is applicable up to the final port of destination and that the provision that if the airline took all necessary steps to avoid the damage, it
fact that transshipment was made on an interisland vessel did not could exculpate itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)
remove the contract of carriage of goods from the operation of said
Act. Remember: The said provisions merely declare the carrier liable for damages in
the enumerated cases if the conditions therein specified are present. Neither
Case: Citadel Lines Inc. vs. CA said provisions nor others in the aforementioned Convention regulate or
- The duty of the consignee is to prove merely that the goods were exclude liability for OTHER BREACHES of contract of carrier.
lost. Thereafter, the burden is shifted to the carrier to prove that it
has exercised the extraordinary diligence required by law. And, its The Convention does not thus operate as an exclusive enumeration of the
extraordinary responsibility lasts from the times that goods are instances of an airline’s liability, or as an absolute limit of the extent of
unconditionally placed in the possession of, and received by the that liability.
carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person who LIMIT OF LIABILITY
has the right to receive them 1. passengers - limited to 250,000 francs;
 except: agreement to a higher limit
Case: Everett Steamship Corporation vs. CA 2. goods and checked-in baggage - 250 francs/kg
- Considering that the shipper did not declare a higher valuation it had  except: consigner declared its value and paid a
itself to blame for not complying with the situations supplementary sum, carrier liable to not more than the
- The trial court’s ratiocination that private respondent could not declared sum unless it proves the sum is greater than its
have “fairly and freely” agreed to the limited liability clause in actual value.
the bill of lading because the said conditions were printed in small 3. hand-carry baggage - limited to 5,000 francs/passenger
letters does not make the bill of lading invalid
An agreement relieving the carrier from liability or fixing a lower limit is null and
WARSAW CONVENTION of 1929 void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is caused by willful
WHEN APPLICABLE: misconduct or default on its part. (Art. 25)
- Applies to all international transportation of person, baggage or
goods performed by aircraft for hire. Case: China Airlines vs. Daniel Chiok
- “International transportation” means any transportation in which - The ticket-issuing airline acts as principal in a contract of carriage
the place of departure and the place of destination are situated and is thus liable for the acts and the omissions of any errant carrier
either: to which it may have endorsed any sector of the entire, continuous
o within the territories of two High Contracting Parties trip.
regardless of whether or not there be a break in the
transportation or transshipment, or Place of Destination- within the meaning of the Warsaw Convention, is
o within the territory of a single High Contracting Party, if determined by the terms of the contract of carriage, or specifically the ticket
there is an agreed stopping place within a territory between the passenger and the carrier. It is the destination and not an agreed
subject to the sovereignty, mandate or authority of stopping place that controls for the purpose of ascertaining jurisdiction under
another power, even though that power is not a party to the Convention. (Case: Santos III vs. Northwest Orient Airlines and CA)
the Convention.
ACTION FOR DAMAGES
Transportation to be performed by several successive air carriers shall be 1. Condition precedent
deemed to be one undivided transportation, if it has been regarded by the A written complaint must be made within:
parties as a single operation, whether it has been agreed upon under the form - 3 days from receipt of baggage
of a single contract or of a series of contracts, and it shall not lose its - 7 days from receipt of goods
international character merely because one contract or a series of contracts is - in case of delay, 14 days from receipt of baggage/goods
to be performed entirely within a territory subject to the sovereignty, F otherwise the action is barred except in case of fraud on the part of the
suzerainty, mandate, or authority of the same High Contracting Party. (Art. 1) carrier. (Art. 26)
2. Jurisdiction – governed by domestic law
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in 3. Venue – at the option of the plaintiff:
the Philippines since an international law prevails over general law. a. court of domicile of the carrier;
b. court of its principal place of business;
WHEN NOT APPLICABLE: c. court where it has a place of business through which the contract has
1. If there is willful misconduct on the part of the carrier’s been made;
employees. The Convention does not regulate, much less exempt, d. court of the place of destination. (Art. 28)
carrier from liability for damages for violating the rights of its 4. Prescriptive period – 2 years from:
passengers under the contract of carriage (PAL v. CA, 257 SCRA 33). a. date of arrival at the destination
--- if the damage is similarly caused by any agent of the carrier acting b. date of expected arrival
within the scope of his employment
c. date on which the transportation stopped. (Art. 29)
2. when it contradicts public policy; 5. Rule in case of various successive carriers,
3. if the requirements under the Convention are not complied with.
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.

APRIL LYNN L. URSAL Page 14

 b. In case of transportation of baggage or goods
 The fundamental distinction between obligation of extra-contractual and
i. the consignor can file an action against the first carrier and the
those which arise from contract, rests upon the fact that in cases of non-
carrier in which the damage occurred
contractual obligation it is the wrongful or negligent act or omission itself
ii. the consignee can file an action against the last carrier and the carrier
which creates the vinculum juris, whereas in contractual relations the
in which the damage occurred. These carriers are jointly and
vinculum (bond) exists independently of the breach of the voluntary duty
severally liable. (Art. 30)
assumed by the parties when entering into the contractual relation.
Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or
CONCURRENT CAUSES OF ACTION
international travel
- There is one action but several causes of action
Code of Commerce applies to inter-island or domestic travel.
- The same act that breaches the contract may also be tort
Bill of Lading as Document of Title
Note: The cause of action of a passenger or shipper against the common carrier
can be culpa contractual or culpa aquiliana while the basis of liability on the
 Bill of lading is a document of title under the Civil Code. It can be a
part of the driver is either culpa delictual or culpa aquiliana. The driver of the
negotiable document of title.
carrier is not liable based on contract because there is NO PRIVITY of contract
between him and the passenger or shipper.
A. Negotiability
- It is negotiable if it is deliverable to the bearer, or to the order of any person
If the negligence of third persons concurs with the breach, the liability of the
named in such document. (Art. 1507, Civil Code)
third person who was driving the vehicle and/or his employer may be based on
quasi delict. The driver alone may be held criminally liable and civil liability may
a) Effect of Stamp or Notation “Non-Negotiable”
be imposed upon him based on delict. In the latter case, the employer is
 the document remains to be negotiable even if the words “not-
subsidiarily liable.
negotiable” or “non-negotiable” are placed thereon. - Art. 1510
(Civil Code)
Remember: It does not make any difference that the liability of one springs
from the contract while that of the other arises from quasi-delict. If the owner
B. How Negotiated
and driver of the other vehicle are not impleaded, the carrier may implead them
a) Bearer document (Art. 1508 and 1511)
by filing a third party complaint.
- may be negotiated be delivery
 Solidary liability
b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- In case the negligence of the carrier’s driver and a third person
- can only be negotiated through the indorsement of the specified person so
concurs, the liability of the parties – carrier and his driver, third
named.
person – is joint and several.
- such indorsement may be in blank, to bearer or to a specified person.
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD
 Where a negotiable document of title is transferred for value by
delivery, and the endorsement of the transferor is essential for
A. Overland Transportation of Goods and Coastwise Shipping
negotiation, the transferee acquires a right against the transferor to
a) When to file a claim with carrier
compel him to endorse the document. xxx (Art. 1515, Civil Code)
- Art. 366 constitutes a condition precedent to the accrual of a
right of action against a carrier for damage caused to the
C. Effects of Negotiation
merchandise.
- has the effect of manual delivery so as to constitute the transferee the owner
of the goods
 Under Art. 366 of the Code of Commerce, an action for damages is
- results in the transfer of ownership because transfer of document likewise
barred if the goods arrived in damaged condition and no claim is filed
transfers control over the goods
by the shipper within the following period:
- refer to Art. 1513
1. Immediately if damage is apparent;
2. within twenty four (24) hours from delivery if damage is not
Chapter 5
apparent.
Actions and Damages in Case of Breach
- The period does not begin to run until the consignee has received
 Cause of action of a passenger and shipper:
possession of the merchandise that he may exercise over it the
a) against common carrier – based on culpa contractual or culpa aquiliana
ordinary control pertinent to ownership.
b) on the part of the driver – based on either culpa delictual or culpa aquiliana
- This provision applies even to transportation by sea within the Phils.
or coastwise shipping.
Note: The source of obligation based on culpa contractual is separate and
- Does NOT apply to misdelivery of goods.
distinct from quasi-delict.
Q: Why does it not apply to misdelivery of goods?
Article 1903 (last paragraph) – 2 things are apparent:
A: In such cases (misdelivery), there can be no question of claim for damages
1. That when an injury is caused by the negligence of a servant or
suffered by the goods while in transport, since the claim for damages arises
employee there instantly arises a presumption of law that there was
exclusively out of the failure to make delivery.
negligence on the part of the master or the employer either in the
selection of the servant or employee, or in supervision over him
Case: Monica Roldan vs. Lim Ponzo and Co.
after the selection, or both.
- Article 366 of the Commercial Code is limited to cases of claims for
2. That presumption is juris tantum and not juris et de jure (of law and
damage to goods actually turned over by the carrier and received by
of right), and consequently may be rebutted
the consignee.
Note however: that Article 1903 of the Civil Code is not applicable to acts of
 But the period prescribed in Art. 366 may be subject to modification by
negligence which constitute the breach of contract. It is applicable only to culpa
agreement of the parties.
contractual.
 The validity of a contractual limitation of time for filing the suit itself
against a carrier shorter than the statutory period thereof has generally
been upheld as such stipulation merely affects the shipper’s remedy and does not affect the liability of the carrier.

APRIL LYNN L. URSAL Page 15

 pecuniary consequences which the law imposes for the breach of
b) Extinctive Prescription some duty or violation of some rights.
- six (6) years if there is no written contract (bill of lading)
- ten (10) years if there is written contract A. Extent of Recovery (Contractual Breach: Art. 220, NCC)
 Carrier in good faith – is liable only to pay for the damages that are
 This rule likewise applies to carriage of passengers for domestic the natural and probable consequences of the breach of the
transportation. obligation and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
B. International Carriage of Goods by Sea  Carrier in bad faith or guilty of gross negligence – liable for all
 A claim must be filed with the carrier within the following period: damages, whether the same can be foreseen or not. Those which may
1. if the damage is apparent, the claim should be filed immediately be reasonably attributed to the non-performance of the obligation.
upon discharge of the goods; or
2. within 3 days from delivery, if damage is not apparent. Note: The carrier who may be compelled to pay has the right of recourse
against the employee who committed the negligent, willful or fraudulent act.
 Filing of claim is not condition precedent. Thus, regardless of whether
the notice of loss or damage has been given, the shipper can still bring B. Kinds of Damages
an action to recover said loss or damage within one year after the
delivery of the goods or the date when the goods should have been Article 2216 provides that no proof of pecuniary loss is necessary in order that
delivered moral, nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated ones, is left to
a) Prescription the discretion of the court, according to the circumstances of each case.
 Action for damages must be filed within a period of one (1) year from However, proof of pecuniary loss is necessary if actual or compensatory
discharge of the goods. damages are being claimed.
 The period is not suspended by an extra-judicial demand. (Why?
Transportation of goods by sea should be decided in as short a time as a) Actual or Compensatory Damages
possible) - only for the pecuniary loss suffered by him as he has duly proved
o Case: Dole Philippines Inc. vs. Maritime Company of the - not only the value of the loss suffered, but also that of the profits
Philippines - the prescriptive period is not tolled or which the obligee failed to obtain
interrupted by a written extra-judicial demand. Article
1155 is NOT applicable. - 2 Kinds:
 The period does not apply to conversion or misdelivery. 1. the loss of what a person already possesses (daňo emergente);
 The one (1) year period refers to loss of goods and not to misdelivery. 2. the failure to receive as a benefit that would have pertained to him
(lucro cesante).
- Damages arising from delay or late delivery are not the damage or - It should be proven: cannot be decided based on the consideration
loss contemplated under the COGSA. The goods are not actually lost of the judge; not to be based on the perception, observation and
or damaged. The applicable period is ten (10) years. consideration of the judge
- Case: Domingo Ang vs. American Steamship Agencies - With respect to restorative medical procedure: to be entitled to
 What is to be resolved – in order to determine the actual damage, you need to have an EXPERT TESTIMONY. Without
applicability of the prescriptive period of one year – is such, you cannot recover.
whether or not there was loss of the goods subject matter
of the complaint.  Damages may be recovered: Art. 2205 (Civil Code)
 Loss contemplates merely a situation where no delivery 1) For loss or impairment of earning capacity in cases of temporary or
at all was made by the shipper of the goods because the permanent personal injury;
same had perished, gone out of commerce, or 2) For injury to the plaintiff’s business standing or commercial credit.
disappeared in such a way that their existence is
unknown or they cannot be recovered. (Note: It is not  Damages cannot be presumed. The burden of proof rests on the
loss due to misdelivery or delivery to the wrong person.) plaintiff who is claiming actual damages against the carrier.

 This rule applies in collision cases. The one (1) year period starts not  In case of goods – the plaintiff is entitled to their value at the time of
from the date of the collision but when the goods should have been destruction. The award is the sum of money which plaintiff would have
delivered, had the cargoes been saved. to pay in the market for identical or essentially similar goods
 For personal injury and even death – the claimant is entitled to all
Case: Maritime Agencies and Services Inc. vs. CA medical expenses as well as other reasonable expenses that he incurred
- When there is two destination of delivery, the one year period to treat his or her relative’s injuries.
should commence when the last item was delivered to the  In case of death – the plaintiff is entitled to the amount that he spent
consignee. during the wake and funeral of the deceased. But, expenses after the
burial are not compensable.
Insurance  Read Art. 2206 (Civil Code):
 The insurer who is exercising its right of subrogation is also bound by
 death caused by a crime or quasi-delict shall be at least
the one (1) year prescriptive period.
P3,000; [The amount of fixed damages is now P50,000.00]
 However, it does not apply to the claim against the insurer for the
 the defendant shall be liable for the loss of the earning
insurance proceeds. The claim against the insurer is based on contract capacity of the deceased;
that expires in ten (10) years.
 If deceased is obliged to give support, recipient may
demand support from the person causing the death for a
II. Recoverable Damages
period not exceeding five years
 Damages – is the pecuniary compensation, recompense or
 Spouse, legitimate and illegitimate descendant and
satisfaction for an injury sustained, or as otherwise expressed, the
descendants may demand moral damages for mental
anguish by reason of the death of the deceased
1) Loss of earning capacity Net Earning Capacity = Life Expectancy x [Gross Annual Income less Necessary
Living Expenses]

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 - Factors to consider that could affect the amount to be recovered:
 Life expectancy – (2/3 x 80 – age at death) o The extent of humiliation may also determine the amount
 Net earnings – based on the gross income of the victim minus the of moral damages that can be awarded
necessary incidental living expenses which the victim would have o The extent of pain and suffering likewise determines the
incurred if he were alive. award
 Amount of living expenses must be established. In the absence of proof, o Official, political, social and financial standing of the
it is fixed at fifty (50%) of the gross income. offended party and the business and financial position of
 Rules on loss of earning apply when the breach of the carrier resulted in the offender affect the amount of damages
the plaintiff’s permanent incapacity. o The age of the claimant.

2) Attorney’s fees c) Nominal Damages

- refer to Art. 2208 of the Civil Code - Refer to Art. 2221-2223 (Civil Code)
- attorney’s fees may be awarded in an action for breach of - It is adjudicated in order that the right of plaintiff may be vindicated or
contract of carriage under par. 1,2,4,5,10 and 11 of Art. 2208. recognized, and not for the purpose of indemnifying the plaintiff for any
- If awarded exemplary, one is entitled to attorney’s fees loss suffered by him.
- 2 kinds: ordinary (compensation to the lawyer); extraordinary - The assessment of nominal damages is left to the discretion of the court
(indemnity as a form of damages suffered due to the breach of according to the circumstances of the case.
contract) - The award of nominal damages is also justified in the absence of
- You can be awarded if you show that you were forced to litigate competent proof of the specific amounts of actual damages suffered.
and when you are entitled to exemplary damage. - Cannot co-exist with actual damages.
- But this award is subject to the discretion of the court (you cannot - There is no loss in nominal damages, unlike in actual and temperate
dictate – usually 10%-15%) damages, loss is present which is proven and not proven but rather
ascertained by the court, respectively.
3) Interests
 12% per annum – if it constitutes a loan or forbearance of money Case: Japan Airlines vs. CA
 6% per annum – if it does not constitute loan or forbearance of - The award of moral damages was justified because JAL failed to
money make necessary arrangement to transport the plaintiffs on the first
 12% - for final judgment available connecting flight to Manila.
- Only Nominal damages were awarded in the absence of proof of
Note: No interest, however, shall be adjudged on unliquidated claims for actual damages
damages except when or until the demand can be established with reasonably
certainty, the interest shall begin to run form the time the claim is made d) Temperate or Moderate Damages
judicially or extrajudicially. - More than nominal but less than compensatory damages.
- Art. 2224 provides:
b) Moral Damages  may be recovered when the court finds that some pecuniary loss has
- Includes physical suffering, mental anguish, fright, serious anxiety, been suffered but its amount cannot, from the nature of the case, be
besmirched reputation, wounded feelings, moral shock, social humiliation provided with certainty.
and similar injury. - cannot co-exist with actual damages
- Though incapable of pecuniary computation, moral damages may be - Definite proof of pecuniary loss cannot be offered, although the court is
recovered if they were the proximate result of the defendant’s convinced that there has been such loss.
wrongful act or omission.
- Moral damages are not awarded to punish the defendant but to e) Liquidated Damages
compensate the victim - Those agreed by the parties to a contract, to be paid in case of
- May be recovered when there is death or there is malice or bad faith. (in breach thereof.
transportation of passengers) - Ordinarily, the court cannot change the amount of liquidated
- Refer to Art. 2219 and 2220 (enumerates cases when moral damages may damages agreed upon by the parties. However, Art. 2227 of the Civil
be awarded) Code provides that liquidated damages, whether intended as an
- Generally, no moral damages may be awarded where the breach of indemnity or a penalty, shall be equitably reduced if they were
contract is not malicious. iniquitous or unconscionable.
- Moral damages may be awarded if the contractual negligence is
considered gross negligence. f) Exemplary or Corrective Damages
- Subject to three conditions in transportation law: - Requisites for the award of exemplary damages:
o Death 1. They may be imposed by way of example in addition to
o Malice or bad faith (must be done in the performance of compensatory damages, and only after the claimant’s right to
the contract of carriage) them has been established.
o Physical Injuries 2. They cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may be
awarded to the claimant.
3. The act must be accompanied by bad faith or done in wanton,
fraudulent, oppressive or malevolent manner.
- Requisites:
o There must be an injury, whether physical, mental or Note: If gross negligence warrants the award of exemplary damages, with more
psychological, clearly sustained by the claimant reason is its imposition justified when the act performed is deliberate, malicious
o There must be a culpable act or omission factually and tainted with bad faith. The rationale behind exemplary or corrective
established damage is to provide an example or correction from public good.
o The wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant  The award of exemplary damages in breach of contract of carriage is
o The award of damages is predicated on any of the cases subject to the provisions under Art. 2232-2235 of the Civil Code.
stated in Art. 2219.
Case: Air France vs. Rafael Carrascoso and CA - The inference of bad faith is there; it may be drawn from the facts

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 and circumstances set forth therein. The contract was averred to served to induce capitalists into effectively wagering their resources
establish the relation between the parties. against the consideration of the large profits attainable in trade
- Deficiency in the complaint in stating that there was bad faith, if
any, was cured by the evidence. Real – similar to transactions over real property where to effect against third
persons, registration is necessary
Case: Philippine Airlines Inc. vs. CA
- Moral damages are recoverable in a breach of contract of carriage Hypothecary – the liability of the owner of the value of the vessel is limited to
where the air carrier thought its agents acted fraudulently or in bad the vessel itself
faith.
- The contract of air carriage generates a relation attended with a STATUTORY PROVISIONS
public duty. Neglect or malfeasance of the carrier’s
employees naturally could give ground for an action for Article 837, 587, 590 and 643 – provides for limited liability of shipowner.
damages. (read full provision)

MARITIME LAW Art. 837: civil liability incurred by the ship owner: liability limited to value of the
vessel + appurtenances + freightage earned during voyage
A. CONCEPTS (Chapter 6)
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
Maritime Law – is the system of laws which particularly relates to the affairs as regards the ship agent to recover the advances made
and business of the sea, to ships, their crews and navigation and to marine If a portion of the vessel or of the cargo, or both, should be saved,
conveyance of persons and property 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
Governing Laws: amount of the freightage of the cargo saved; but sailors who are engaged on
1. New Civil Code – primary law on maritime commerce shares shall not have any right whatsoever on the salvage of the hull, but only
2. Book III Code of Commerce – applied suppletorily the portion of the freightage saved. If they should have worded to recover the
3. Special Laws remainder of the shipwrecked vessel they shall be given from the amount of the
a. Salvage Law (Act No. 2616) salvage an award in proportion of the efforts made and to the risks encountered
b. Carriage of Goods by Sea Act (CA No. 65) in order to accomplish the salvage
c. Ship Mortgage Decree of 1978 (PD 1521)
Art. 587: ship agent may exempt himself of the civil liabilities for the
REAL AND HYPOTHECARY NATURE OF MARITIME LAW indemnities in favor of third persons by abandoning vessel with all equipments
and freight it earned during voyage
Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara
 That which distinguishes the maritime from the civil law and even Art. 590: co-owners civilly liable in proportion to their interest and may exempt
from the mercantile law in general is the real and hypothecary liability by abandonment of the part of the vessel belonging to him
nature of the former
Limited liability rule – means that the liability of a shipowner for damages in
 Evidence of this “real “ nature of maritime law: case of loss is limited to the value of his vessel.
o The limitation of the liability of the agents to the actual  No vessel, no liability.
value of the vessel and the freight money  The civil liability for collision is merely co-existent with the interest
o The right to retain the cargo and the embargo and in the vessel; if there was total loss, liability is also extinguished.
detention of the vessel even cases where the ordinary
civil law would not allow more than a personal action GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof
against the debtor or person liable still exists, he can escape liability by abandoning the vessel, its appurtenances
and its freight.
 This repeals the civil law to such extent that, in certain cases where
the mortgaged property is lost no personal action lies against the Case: Monarch Insurance Co., Inc. vs. Court of Appeals
owner or agent of the vessel  The total destruction of the vessel extinguishes maritime liens
because there are no longer any res to which it can attach. This
 Two reasons why it is impossible to do away with these privileges: doctrine is based on the real and hypothecary nature of maritime
o The risk to which the thing is exposed law.
o The real nature of maritime law, exclusively real,
according to which the liability of the parties is limited to Note: Since the Civil Code contains no provision regulating liability of
a thing to which is at mercy of the waves shipowners or agents in the event of total loss or destruction of the vessel,
Article 587 of the Code of Commerce governs.
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
Corporation, Ltd. Article 837, 587 and 590 of Code of Commerce cover only:
1. Liability to third persons
 The real and hypothecary nature of maritime law simply means 2. Acts of the captain
that the liability of the carrier in connection with losses related to 3. Collisions
maritime contracts is confined to the vessel, which is hypothecated
for such obligations or which stands as the guaranty for their EXCEPTIONS TO THE LIMITED LIABILITY RULE
settlement 1. Where the injury or death to a passenger is due either to the fault of
 Purpose: It was designed to offset such adverse conditions and to the shipowner, or to the concurring negligence of the shipowner and
encourage people and entities to venture into maritime commerce the captain (NEGLIGENCE)
despite the risks and prohibitive cost of shipbuilding
 Thus, the liability of the vessel owner and agent arising from the GR: Shipowner is liable for the negligence of the captain in collision
operation of such vessel were confined to the (1) vessel itself, (2) its cases
equipment, (3) freight, (4) and insurance if any, which limitation ---- liability is limited to value of the vessel

APRIL LYNN L. URSAL Page 18

  Limited liability rule applies if the captain or the crew caused the Required under the following cases:
damage or injury as when unseaworthiness of the vessel was caused 1. When the vessel makes an arrival under stress
by the negligence of the captain or crew during the voyage 2. Where the vessel is shipwrecked
 However, if the failure to maintain the seaworthiness of the vessel 3. Where the vessel has gone through a hurricane or the captain
can be ascribed to the shipowner alone or the shipowner believe that the cargo has suffered damages or averages
concurrently with the captain, then the limited liability principle 4. Maritime collisions
cannot be invoked --- LIABILITY FOR THE DAMAGES IS TO THE FULL
EXTENT (ex. Overloading, unseaworthiness even at the time of Q: when is it not required?
departure) A:
1. when it does not fall under the four cases mentioned above
2. Where the vessel is insured (INSURANCE) 2. when what is not involve is not a vessel

 Limited liability rule does not apply to insurance claims ADMIRALTY JURISDICTION (RTC)
Case: Vasquez vs. CA - Section 19 (3) of BP 129 as amended by RA 7691
(3) In all actions in admiralty and maritime jurisdiction
- The total loss of the vessel did not extinguish the liability of the where the demand or claim exceeds 300, 000 or in Metro
carrier’s insrured manila, where such demand or claim exceeds 400,000.
- Despite the loss of the vessel, therefore, its insurance answers - if less  MTC
for the damages that a shipowner or agent, may be held liable
for by reason of the death of its passengers. 3 concepts: (they are the same)

3. In the workmen’s compensation claims (WORKER’S 1. real and hypothecary --- the supreme court did not explain the literal
COMPENSATION) meaning of it.
- real: refers to the risk in maritime that’s why there are privileges for the
 The provisions of the Code of Commerce have no room in the shipowner. Risks are certain to happen
application of the Workmen’s Compensation Act which seeks - hypothecary: remember guaranty and collateral which is the vessel. For the
to improve, and aims at the amelioration of, the condition of particular voyage, the guaranty is the vessel wherein if the vessel is lost, the
laborers and employees shipowner no longer has the liability
 If an accident is compensable under the Workmen’s
Compensation Act, it must be compensated even when the 2. limited liabililty rule --- no literal explanation
workman’s right is not recognized by or is in conflict with other - limited: it means that the liability is limited to the value of the vessel
provisions of the Civil Code or of the Code of Commerce -liability: assumption that the shipowner is liable for the losses. There are no
 Liability under the Workmen’s compensation Act, even if the valid defenses that shipowner can invoke to escape liability. Same concept with
vessel was lost, is still enforceable against the employer or 1479. Difference is that there is a fixed amount and there is qualification
shipowner. -under the limited liability – no fixed amount but amount is confined on the
vessel
4. Expenses for repairs and provisioning of the ship prior to the
departure thereof The question here: is this a right to limit the liability?
A: admittedly it is a right that only shipowner can exercise
5. The vessel is not abandoned (ABANDONMENT)
 Abandonment of the vessel, its appurtenances and the freightage is Q; how to exercise?
an indispensable requirement before the shipowner or ship agent A: by way of pleading. But do not follow the way it was filed in yangco. Here it
can enjoy the benefits of the limited liability rule. If the carrier does was after judgment that the shipowner sought to abandon the ship to abandon
not want to abandon the vessel, he is still liable even beyond the liability
value of the vessel But right now, it is a matter of procedure. To limit liability by abandoning the
 The only instance where abandonment is dispensed with is when the vessel; IF it is a matter of procedure, you check the rules of civil procedure
vessel was entirely lost. In such case, the obligation is extinguished.
 Only shipowner and ship agent can make an abandonment Q: so when does shipowner inform the court the right to limit liability?
A: in a pleading and normally in an answer. IT will be raised as a defense. If
PROCEDURE FOR ENFORCEMENT shipownver cannot allege, then that defense is deemed waiver. Therefore you
cannot seek abandonment after judgment was been rendered.
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
Corporation, Ltd. CASES:
- Rights of the parties to claim against an agent or owner of vessel
may be compared to those of creditors against an insolvent Yangco vs. Lacerna
corporation whose assets are not enough to satisfy the totality of - even captain was aware of the typhoon and the vessel capsized, SC upheld
claims as against it. limited liability
- Creditors must limit their recovery to what is left in the name of the
corporation Chua Hek Kong
- In the sinking of a vessel, the claimants or creditors are limited in - there being no exceptions, the court upheld limited liability
their recovery to the remaining value of accessible assets. In the case
of lost vessel, these assets are the insurance proceeds and pending The more critical issue is on the EXCEPTIONS in the LLRule:
freightage for the particular voyage 1. workmen’s compensation (Abueg case: the repairs constitue maritime
lient)
PROTESTS 2. insurance coverage--- if the vessel is lost in the course of voyage and it is
- is the written statement by the master of a vessel or any authorized insured, is it automatic that the limited liability rule does not apply?
officer, attested by proper officer or a notary, to the effect that A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned very little
damages has been suffered by the ship about insurance: if the vessel is insured, the insurance proceeds shall answer
the credit)
If the plaintiff was injured or heirs will file action from insurance company, and since shipowner cannot avail of limited liability, this is not advisable to the plaintiff

APRIL LYNN L. URSAL Page 19

because it has no privity of contract with the insurance company maritime law, should be engaged in transporting goods, persons, or both from
one port to another)
Q: when does insurance argument come in?
A: only when the shipowner will bring the insurance company to the case filed (But to be sure: you file maritime and allege such bahala dili kelangan coz
by the plaintiff—by way of third party complaint. Once insurance company is otherwise dismiss ang case)
impleaded then this can be used: that the owner cannot avail of limited liability.
Since a vessel is a personal property, it can be
But no shipowner will ever implead the insurance. Because they will be the one mortgaged… Same concept with mortgage but different
who will claim the insurance without telling the plaintiffs. In the case, there is rule
no proof that the vessel is insured. Even if we know outside court, it is insured - PD 1521:
because in the court, there is no proof that the vessel is insured. Court will not
identify evidence not properly identified and recoded in court. Q: what about process of extra judicial foreclosure of vessel?
A: chattel mortgage law should govern
Q: is it really an exception in its strict sense?
A: Not really (CAPANAS). What is the implication if you properly invoke the Q: what to remember under PD 1521?
LLRule – the plaintiff cannot avail beyond the value of the vessel. A: Section 4
If not apply – plaintiff will recover more than the value of vessel subject to rules registration, non waiver
on claiming of damages. Section17: priority of claims…

But question, if vessel if covered with insurance, does this mean that plaintiff Q: are there claims in maritime law over and above preferred mortgage?
can recover to the amount applied? No, they can only recover until the A: yes. Look at section 17.
coverage of the insurance proceeds.
Case: Poliand Industrial
3. Negligence - facts shows that the proceeds debted from hardwood was for the modification
- common carrier is presumed negligent if common carrier. However, this does of the vessel (extended for vessels benefit), for crews wage
not apply when there is an invocation on limited liability. (in all cases except
MONARCH vs. CA) --- the rest of the case, the court has found negligence based Characteristics of maritime lien:
on the facts presented. You cannot invoke presumption of negligence so that 1. maritime property
limited liability rule will not apply. 2. travels with the property--- it cannot be extinguished
3. enforceable in an action in rem--- action directed to the property (crescent
Monarch _-- SC: since there is a presumption of negligence then LLR will not case: ang gi kiha ang vessel)
apply. But SC also said that if LLR is invoked, the initial burden to invoke
negligence shifts to the shipowner. They should prove that there is no privity or Under section 22: persons authorize to procure repairs (presumed):
knowledge on the negligence of the ship captain. 1. managing agent
2. ship’s husband --- agent of the vessel
Q: what is the relationship of Civil Code and LLR?
A: There is none. Under 1766 in all matters not provided by Civil Code, Code of If mortgagor does not pay:
Commerce or Special law will apply. There is no rule in Civil Code in limited 1. judicial foreclosure – file actual case and implead the vessel as party
liability rule thus Code of Commerce will apply. (but in monarch, this was not defendant (served to captain or authorized person); you can ask the court order
applied--- all the negligence was related to the absence of exercising to arrest the vessel.
extraordinary diligence) 2. extrajudicial
- the problem with vessel, mortgagee is not in possession of the vessel. It is with
Note: that in the subsequent cases, Consolidated of Aboitiz case: there were the mortgagor, you cannot sell the property not in your possession.
findings of facts of the negligence of Aboitiz. The point is when it comes to LLR,
the Code of Commerce apply. You cannot invoke presumption of negligence. In In PD 1521—the order of arrest can be asked
order to refute, petitioner should prove negligence. Grounds to discharge
REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not presumption. 1. irregularly issued (mortgagee na ilad. Wala pa diay due obligation
2. posting of a bond to discharge..the bond to be posted is double the value of
Loadstar case the claim.
- the shipowner is aware of the typhoon
- insufficient manning – negligent Maritime lien on necessaries (5 requisites) – brief yourself cresent petroleum
- Captain playing mahjong – there was negligence. But SC said that it was case (look at book for requisites)
negligent because the shipowner did not prove that it was the first. Supposedly
facts are established in court proceedings and not on presumption. B. VESSELS (Chapter 7)

3. no vessel, no liability 1. General Concepts

- they all mean one and the same such that the liability of the shipowner for the  A vessel or watercraft is defined under PD No. 447 as any barge, lighter,
losses is confined to the value of the vessel and the freight, if any. bulk carrier, passenger ship freighter, tanker, container ship, fishing
boats, or other artificial contrivance utilizing any source of motive power,
MARITIME PROTEST (4 INSTANCES) – REQUIRED (LOOK AT CODE OF designed use or capable of being used as a means of transportation
COMMERCE and above notes) operating either as a common carrier, including fishing vessels covered
under PD No. 43,
INSTANCES WHEN IT DOES NOT APPLY:
1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN NOT Except:
MARITIME PROTEST 1. Those owned and/or operated by the Armed Forces of the Philippines
2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor boat is and by the Foreign Government for its Military Purpose.
not a vessel under maritime law, it is only engaged in bay traffic. A vessel in 2. Bancas, sailboat and other waterbone contrivance of less than three
tons capacity and not motorized.
Case: Yu Con vs. Ipil - The word vessel serves to designate every kind of craft by whatever

APRIL LYNN L. URSAL Page 20

 particular or technical name it may not be known or which nautical Vessels are considered personal property under the Civil Law. The Code of
advancements may give it in the future Commerce likewise expressly acknowledges the special nature of a vessel as
- The court held that a small vessel used for the transportation of personal property.
merchandise by sea and for the making of voyages from one port to
another of these Islands, equipped and victualed for this purpose by Case: Philippine Refining Company vs. Jargue
its owner, is a vessel, within the purview of the Code of Commerce, - Vessels are personal property although occasionally referred to as a
for the determination of the character and effect of the relations peculiar kind of personal property
created between the owners of the merchandise laden on it and its - They are subject to mortgage agreeably to the provisions of the
owner Chattel Mortgage Law
- The only difference between a chattel mortgage of a vessel and a
 When the mercantile code speaks of vessels, they refer solely and chattel mortgage of other personality is that it is not now necessary
exclusively to mercantile ships, as they do not include warships, and for a chattel mortgage of a vessel to be noted in the registry of the
furthermore, they almost always refer to craft which are not accessory to register of deeds, but it is essential that a record of documents
another as in the case of launches, lifeboats and etc. affecting the title to a vessel be entered in the record of the Collector
of Customs at the port of entry
 Further, they refer exclusively to those which are engaged in the
transportation of passengers and freight from one port to another or Case: Rubiso and Calixto vs. Rivera
from one place to another - Ships or vessels, whether moved by steam or by sail, partake, to a
certain extent, of the nature and conditions of real property, on
 They refer to merchant vessels and in NO WAY can they or should they be account of their value and importance in the world of commerce
understood as referring to pleasure craft, yachts, pontoons, health service - Transfer of vessels should be in writing and must be recorded in the
and harbor police vessels, etc. appropriate registry

 Ships ought to be understood in the sense of vessel serving the purpose 2. OWNERSHIP
of maritime navigation or seagoing vessel, and not in the sense of vessel
devoted to the navigation of rivers ACQUISITION

 The third book of the code of commerce, dealing with maritime  Vessel may be acquired or transferred by any means recognized by laws.
commerce, was evidently intended to define laws relative to merchant Thus, vessel may be sold, donated and may even be acquired through
vessels and maritime shipping; and as appears from said code, the vessel prescription.
intended in that book are such run by masters having special training with  Under the present laws, vessels that are under the jurisdiction of MARINA
elaborate apparatus of crew and equipment indicated in the code. can be transferred only with notice to said administrative agency.

 Only vessels engaged in what is ordinarily known as maritime commerce A. Prescription (Code of Commerce)
are within the provision of law conferring limited liability on the owner in
case of maritime disaster. 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
 Other vessel of minor nature not engaged in maritime commerce, such as must appear in a written instrument, which shall not produce any effect with
river boats and those carrying passengers from ship to shore, must be respect to third persons if not inscribed in the registry of vessels.
governed, as to their liability to passenger, by the provision of the civil
code or other appropriate special provisions of law. The ownership of a vessel shall likewise be acquired by possession in good faith,
continued for three years, with a just title duly recorded.
Case: Augusto Lopez vs. Juan Duruelo, et. al
- The code of commerce are not applicable to small craft which are In the absence of any of these requisites, continuous possession for ten years
only subject to administrative (customs) regulations in the matter of shall be necessary in order to acquire ownership.
port service and in the fishing industry
- Only vessels engaged in what is ordinarily known as maritime A captain may not acquire by prescription the vessel of which he is in command.
commerce are within the provisions of law conferring limited liability
on the owner in case of maritime disaster ARTICLE 575. Co-owners of vessels shall have the right of repurchase and
- It is therefore clear that a passenger on a boat like the Jison, in the redemption in sales made to strangers, but they may exercise the same only
case before use, is not required to make protest as a condition within the nine days following the inscription of the sale in the registry, and by
precedent to his right of action for the injury suffered by him in the depositing the price at the same time.
collision described in the complaint – article 835 of the Code of
Commerce does not apply B. Sale (Code of Commerce)
CONSTRUCTION, EQUIPMENT AND MANNING
Article 576. In the sale of a vessel it shall always be understood as included the
The Construction, equipment and manning of vessel are subject to the rules rigging, masts, stores and engine of a streamer appurtenant thereto, which at
issued by the Maritime Industry Authority (MARINA) and consistent with Article the time belongs to the vendor.
574 of the Code of Commerce
The arms, munitions of war, provisions and fuel shall not be considered as
Article 574. Builders of vessels may employ the materials and follow, with included in the sale.
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 The vendor shall be under the obligation to deliver to the purchaser a certified
regulations of the public administration on navigation, customs, health, safety copy of the record sheet of the vessel in the registry up to the date of the sale.
of vessels, and other similar matters.
Article 577. If the alienation of the vessel should be made while it is on a
PERSONAL PROPERTY 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.

APRIL LYNN L. URSAL Page 21

If the sale is made after the vessel has arrived at the port of its destination, the the Philippine Coast Guard
freightage shall pertain to the vendor, and the payment of the crew and other The MARINA shall have the power to inspect vessels and all equipment on
individuals who make up its complement shall be for his account, unless the board to ensure compliance with safety standards
contrary is stipulated in either case.
C. PERSONS WHO TAKE PART IN MARITIME COMMERCE
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 In sum, the following are persons who take part in Maritime Commerce:
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  SHIPOWNERS and SHIP AGENTS;
it terminates its voyage and said instrument shall produce no effect with  CAPTAINS and MASTERS OF VESSELS;
respect to third persons if it is not inscribed in the registry of the consulate. The  OFFICERS and CREW OF VESSELS
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 SHIPOWNER V. SHIP AGENT
inscribed and registered.
In every case the alienation of the vessel must be made to appear with a SHIPOWNER – the person who is primarily liable for damages sustained in the
statement of whether the vendor receives its price in whole or in part, or operation of vessel.
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. Code of Commerce – places the primary responsibility on the owner of the
vessel.
When a vessel, being on a voyage, shall be rendered useless for navigation, the (Uses the term naviero which has been construed to include shipowner, ship
captain shall apply to the competent judge on court of the port of arrival, agent and even the charterer who is considered as owner pro hac vice.)
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 SHIP AGENT (Code of Commerce) – the person entrusted with provisioning of
is none, to the judge or court or to the local authority; and the consul, or the the vessel, or who represents her in the port in which she happens to be.
judge or court, shall order an examination of the vessel to be made. There is also the intention under the Code of Commerce to make the ship
agent solidarily liable with the owner. The solidary liability applies both for
If the consignee or the insurer should reside at said port, or should have breach of contract and extra-contractual obligations such as tort. The ship
representatives there, they must be cited in order that they may take part in agent, even though he is not the owner, is liable in every way to the
the proceedings on behalf of whoever may be concerned. creditor for losses and damages without prejudice to his right against the
owner, the vessel and its equipment and freight. But his liability, however
REGISTRATION is subject to the LIMITED LIABILITY RULE (Chapter 6 of the Aquino book).
 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 CAPTAINS V. MASTERS OF VESSELS
the owner of the vessel.
 It is a settled rule that the sale or transfer of the vessel is not binding on For purposes of Maritime Commerce:
the third person unless the same is registered. The words “captain” and “master” have the same meaning; both
being chiefs or commanders of ships. Thus, the terms “captain” and
SHIP'S MANIFEST “master” are used synonymously in the Code of Commerce.
 Vessels are required to carry manifest coast-wise trade.
 A manifest is a declaration of the entire cargo. The object of a manifest is MARINA regulations:
to furnish custom officers with list of check against, to inform the revenue MASTER – the person having command of the ship. The same term is being
officers what goods are being brought into a port of the country on a used both for domestic trade and international trade.
vessel.
 The requirement that a vessel must carry a manifest is not complied with BOAT CAPTAIN – a person authorized by the MARINA to act as officer and/or in
even if a bill of lading can be presented. A bill of lading is just a command of a boat/ship or has the qualification/license to act as such.
declaration of a specific cargo rather than the entire cargo
 Sec 906 of the Tariff and Custom Code provides that “manifest shall 3 Distinct Roles a captain commonly performs:
be required for cargo and passengers transported from one place to (Inter-Orient Maritime case)
another only when one or both of such place is a port of entry.” 1. He is a GENERAL AGENT OF THE SHIPOWNER;
2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel (most
MORTGAGE important role for this has something to do with the operation and
 Since the term personal property includes vessel, they are subject to preservation of the vessel during its voyage and the protection of the
mortgage agreeably to the provisions of the Chattel Mortgage Law. passengers, if any, and crew and cargo);
 Mortgage and other encumbrances over vessels are governed by the 3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he
provisions of presidential decree 1521 (Ship Mortgage Decree of 1978) navigates.

OTHER CODE OF COMMERCE PROVISIONS Based on the first aforementioned role, the captain is regarded as the GENERAL
 The provisions of the Code of Commerce reproduced hereunder are AGENT of the shipowner and as such, he:
deemed modified not only by the Civil Code but also by special laws
a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the freight earned;
SAFETY REGULATIONS c. Agree upon rates and decide whether to take cargo;
 On February 23, 2000, the Maritime Industry Authority directed all d. Has legal authority to enter into contracts with respect to the vessel and
domestic shipowners and operators under Memorandum Circular No. the trading of the vessel, subject to applicable limitations established by
154 to strictly comply with existing Safety-Related Policies, Guidelines, statute, contract or instructions and regulations of the shipowner.
Rules and Regulations All aforementioned functions verily commits to the captain the governance,
 Rules include: (read book page 488-489) care, and management of the vessel. Clearly then, the captain is vested with
 Monitoring of compliances shall be undertaken by the Authority and its both MANAGEMENT and FIDUCIARY functions.
Maritime Regional Offices, together with the needed coordination with
POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND THE MASTER: (See

APRIL LYNN L. URSAL Page 22

Arts. 610-612 of the Code of Commerce) 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.
DISCRETION OF CAPTAIN AND MASTER Pilots’ associations are also not liable for negligently assuring the
A ship’s captain must be accorded a REASONABLE MEASURE competence of their members because as PROFESSIONAL ASSOCIATIONS,
OF DISCRETIONARY AUTHORITY to decide what the safety of the ship and of its they made no guarantee of the professional conduct of their members to
crew and cargo specifically requires on a stipulated ocean voyage. the general public.

Presumption: A captain is knowledgeable as to the specific requirements of CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino
seaworthiness and the particular risks and perils of the voyage he is to embark book)
upon.
OFFICERS AND CREW OF VESSELS
Applicable Principle: The captain has control of ALL departments of service in
the vessel, and reasonable discretion as to its navigation. COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
-- all the persons on board from the captain to the cabin boy, necessary for the
Basic Principle in Admiralty Law: In navigating the vessel, the master must be management, maneuvers, and service, and therefore, it includes the CREW, the
left free to exercise his own best judgment. SAILING MATES, ENGINEERS, STOKERS, and OTHER EMPLOYEES ON BOARD not
having specific designations; but it SHALL NOT INCLUDE the passengers or the
Requirements of Safe Navigation: The judgment and discretion of the captain persons whom the vessel is transporting.
of a vessel may be confined within a straitjacket, even in this age of electronic
communications. REGULATION OF MERCHANT MARINE PROFESSION
The practice of marine profession is now governed by special laws and pertinent
PILOTAGE: Who is a pilot? rules issued by the:
- MARINA;
Maritime Law: a person duly qualified, and licensed, to conduct a vessel into or - BOARD OF MARINE DECK OFFICERS;
out of ports, or in certain waters. - BOARD OF MARINE ENGINEER OFFICERS

Broad sense: includes both (1) those whose duty it is to guide vessels into or out MINIMUM SAFE MANNING
of ports, or in particular waters; and (2) those entrusted with the navigation of It is not enough that the officers manning the merchant vessel have all the
vessels on the high seas. qualifications imposed by the Philippine Merchant Marine Officers Act and
other special laws or regulations. It is also required that there is sufficient
General understanding: a person taken on board at a particular place for the number of officers and crew that are serving in the vessel. (Quality and
purpose of conducting a ship through a river, road or channel, or from a port. Quantity)

COMPULSORY PILOTAGE. In compulsory pilotage, states possessing harbors SECURITY OF TENURE

enacted laws or promulgated rules requiring vessels approaching their ports to The Labor Code provisions apply to OFFICERS and CREW of merchant
take on board pilots licensed under local law. In the Philippines, compulsory vessels in DOMESTIC Trade or COASTWISE Shipping. Hence, matters
pilotage is being implemented in the Port of Manila, the latter being within the concerning their dismissal or disciplinary action must be in accordance
Manila Pilotage District. 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
a. Master and Pilot (See Far Eastern Shipping case on page 520 of the compliance with the applicable laws on overseas employment as well as
Aquino book for the SC discussion on the duties of a pilot) regulations issued by the Philippine Overseas Employment Administration
(POEA).
b. Shipowner and Pilot
CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and Marine
GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused by Engineer, Crew, and Captain (See pages 552-560 of the Aquino book).
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 Parties --- those provided above… plus seamen, other members of the
in the performance of duty constitutes a MARITIME TORT. complement including the stokers (incharge of boilers) and supercargo (agent of
the shippers who has authority to sell goods while on voyage)
In cases of COLLISION: the COLLIDING VESSEL is prima facie responsible,
hence, the burden of proof is upon the party claiming benefit of the 4 maritime contracts
exemption from liability. Thus, it must be shown affirmatively that the 1. charter parties
pilot was at fault, and that there was no fault on the part of the officers or 2. Botomry
crew, which might have been conducive to the damage. The fact that the 3. Repondentia
law compelled the master to take the pilot does not exonerate the vessel 4. Marine insurance (incorporated in the subject insurance)
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 ON PERSONS
the pilot, and they must be left to recover the amount as well as they can
against him. Shipowner
- he has the privilege to invoke limited liability rule
c. Pilot and his Association - what if with a charter party with charterer, who can invoke the LLR?
No jurisprudence. Personal opinion of sir: distinguish on the type of
The fact that the pilot is a member of an association does not make the charter party. If affreightment, shipowner retains possession,
association jointly and severally liable. Article 2180 of the Civil Code does command and navigation of the vessel. If bareboat it is vested upon
not apply because there is NO EMPLOYER-EMPLOYEE Relationship. the charterer.
- Jurisprudence: except for registration, the charterer is the temporary
Well-established is the rule that pilot associations are immune to owner of the vessel. With this, the charterer can invoke LLR (this part
vicarious liability for the tort of their members. They are not the no juris)
employer of their members and exercise no control over them once they
Note: there is not distinction of liability of shipowner and ship agent. They are
civilly liable There is a situation in maritime law that shipower and agent they are held liable
APRIL LYNN L. URSAL Page 23
for the act or omission of a third person which is the ship captain or master. If it is voluntary (pilot engaged by shipowner) --- damages caused by
pilot, shipowner is liable. If compulsory, shipowner can escape
ACTS of CAPTAIN liability
Case: Yucon case and Sweetlines case - If compulsory distinguish whether there was circumstances that
- In Yucon, money was entrusted to the captain and the money was would require the shipcaptain to interfere with the ship pilot. If
lost. SC concluded that shipowner was liable for the lost because the there are circumstances but captain did not interfere then
captain failed to put up measures while in custody of the money. It shipowner is liable. If there are circumstances and captain interfere
may not technically to an act but may refer to admission but would but still there is damage, the shipowner will not be liable.
fall under the term acts - Cebu Port Authority --- covered by compulsory pilotage
- In sweetlines, bound for catbalogan but the captain chose to allow
the passengers to disembark in tacloban. This time, this is the act of Chiefmate or sailing mate (then there are engineers)
captain. The SC concluded that the damages sustained by passengers - 2008 case, citing the article the code of commerce specifying the
bound for catbalogan are to shouldered by the shiponwer functions of chiefmate being second in command of the
vessel… Chiefmate is a managerial employee (as provided in labor
Indemnities in Favor of 3rd person: OTTA devt case sited in walter smith case code --- loss of trust and confidence
- 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 Seaman
goods, then there is presumption of negligence new civil code - On security of tenure: distinguish DOMESTIN (labor code) abroad
prevails (POEA).. there is a standard contract (poea prepared and drafted it
- Walter smith case: There was no relationship. Owner of port and and every seaman shall comply with this --- this is to protect filipino
owner of goods are different. What was applied by court was the law seaman working abroad) that will be signed by every seaman
on torts. No presumption of negligence. There should be proof of stipulating the security of tenure, repatriation, benefits, etc.
negligence. The owner of vessel proved that he exercised ordinary - Difference for abroad: bigger income but contractual (after contract
diligence (required in ports). What was presented was the go home).. DOMEstic, you can be a regular employee in accordance
competence of shipcaptain. The shipowner proved ordinary diligence with the labor code
in choosing the ship captain - JumpShip scenario: it is a valid ground to terminate a seaman

Contracts entered into by shipcaptain or master Shipcaptain should conduct preliminary investigation for crimes conducted on
board
Inter orient case: one role is they are the general agent of the shipowener. But
if the obligation contracted by the captain does not enure to the benefit of the D. CHARTER PARTIES
vessel, then the shipowner has no liability. There is no conflict bec. 586
obligations contracted by the shipper while 1759 death or injury of passenger as Charter Parties
result of contract of carriage. - 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 case in point with the contracts entered into was the case Wing Kee. There the conveyance of goods, consideration of payment of freight
were supplies delivered. Shipagent was said to be liable. SC said at the time you - it is a contract, hence, parties are free to stipulate upon such terms and
were still an agent you were liable but at the time agency was terminated you conditions that would suit their purposes subject to the caveat that these
are no longer liable. should not be contrary to law or public policy

If both SO and SA are sued, being solidarily liable, the SA has right of recourse Parties
over SO. 1. Charterer- merchant or a person who desire s to lease ship or vessel owned
by another by transport of his or her goods for commercial purposes or persons
Shipcaptain or master from one port to another
- The difference is with regard to the tonnage of the vessel (higher: 2. Shipowner (SO)
captain; lower: master; major patron and minor patron)
- The question on the shipcaptain or master is the exercise of KINDS:
discretion 1. bareboat or demise charterer – shipowner leases to the charterer the whole
- Inter orient case: captain tayong did not want to proceed with the vessel, transferring to the charterer the entire command, possession and
voyage from Singapore to Africa bec. Of lack of oxygen and consequent control over the vessel’s navigation, including the master and
acetylene. But because of order of management he proceeded. He the crew, who becomes the charterer’s “servants”
was then ordered to repatriated and then another captain took his - charterer becomes an owner “pro hac vice”
place. He filed for illegal dismissal. The issue was the discretion
exercised by the captain. WON he has the discretion not to proceed 2. Contract of affreightment – charterer hires the vessel only, either for a
bec. Of lack of supply. SC said you should emphasize reasonable determinate period of time or for a single or consecutive voyage, with the SO
discretion--- it is the captain’s duty providing for the provision of the ship, wages of the master and crew, and
- Inter Orient: triple roles of the captain --- general agent, commander expenses for maintenance of the vessel
and technical manager, representative of country a. time charter – vessel is leased to a charterer for a fixed period of
time
Shipcaptain and harbor pilot b. voyage charter – vessel is leased for a single or particular voyage
- Harbor pilot: distinguish if voluntary or compulsory
- Case cited by SC on proper relationship of captain and pilot. In far REQUISITES OF A VALID CHARTER PARTY
eastern shipping case 521 3 rd par --- ther are occasion when the 1. consent of the contracting parties
master may and should interfere and even displace the pilot when 2. an existing vessel which should be placed at the disposition of the
he is obviously incapacitate and intoxicated…. (look at the shipper
book) 3. the freight
- In this case, there is relevance on when the captain should interfere. 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.)

APRIL LYNN L. URSAL Page 24

 Macondry v Delgado Brothers
Caltex v. Sulpicio Lines - Delgado was an operator of a pier service ; WON operator exercised
There was a voyage charter; collision between MT Vector (tanker) and Doña Paz its duty in loading and unloading of cargos ; no contract of carriage ;
(owned by Sulpicio) ; breach of contract filed by the passengers’s heirs obligation was only to load the to the ship ; no application of
against Sulpicio ; 3d party complaint against registered owner of the tanker admiralty
including Caltex ( that they were negligent and in bad faith by not seeing to it
that the tanker was seaworthy) FRIEGHT OR FREIGHTAGE
- price of carriage
Issue: WON charterer shall be liable under Maritime Law? - shall accrue according to what is stipulated in the contract
- should there be no stipulation or if it is ambiguous , rules shall be
Ruling: Liability cannot be attached to Caltex; the charter did not affect the a. freight shall begin to run from the day of loading on the vessel
business of Sulpicio as a common carrier ; rights and responsibilities of b. in charters with fixed period, the freight shall begin to run
ownership still rested on the owner upon that very day
c. If freight is charged according o weight , payment shall be
Planters Product v CA made according to gross weight , including the weight of the
- time charter; Planters purchased fertilizers from the US; voyage to containers
the Philippines ; upon arrival, shortage in the cargo was discovered ;
filed actions against carrier fro damages ( breach of Contract) ; RTC LAST DAYS- period of time stipulated fro loading and unloading ( provided for in
ruled in favor of the Planters; Ca reversed & absolved carrier as it charter party ) ; if no lay days provided for in the charter party, it is understood
was converted from common carrier to private ; that the charterer will unload and discharge cargoes within a reasonable time or
- Ruling : It cannot become a private carrier ; bareboat charter can with reasonable diligence
become a private carrier but in contract of affreightment remains as
common carrier ( action based on contract of carriage ; presumption Demurrage – a sum of money due by express contract for detention of the
of negligence ) ; carrier was able to rebut the presumption of vessel in loading , beyond time allowed for that purpose in that charter party ;
negligence ( result the inherent character of the fertilizers) sum of which is usually fixed by the parties in the charter party ; liability for this
exists only when expressly stipulated
Coastwise Lighterage v. CA
- WON private carrier would convert to a common carrier; contract of Deadfreight – where the charterer failed to occupy the leased portion of the
affreightment vessel, he may thereby be liable by the shipowner for the deadfreight that
- Ruling : reiterated Planters ruling ; but was not able to rebut occurred
presumption of negligence ; did not exercise EO diligence ( hired
unlicensed patron) STIPULATION IN CHARTER PARTIES

Home Insurance v. American Steamship GR: parties are free to stipulate subject to art 1744 t01754 0f NCC
- case mostly used by the common carrier as defense ; Home
Insurance is subrogee (paid SMC of loss cargo shipped thru Art. 1744. A stipulation between the common carrier and the shipper or
American Steamship ; no reference as to what contract but there owner limiting the liability of the former for the loss, destruction, or
was a mention that it was in affreightment deterioration of the goods to a degree less than extraordinary diligence shall
- Ruling : Common Carrier undertaking to carry special cargo be valid, provided it be:
(chartered to special person only ) become a private carrier and (1) In writing, signed by the shipper or owner;
stipulation exempting owner from liability for loss due to the (2) Supported by a valuable consideration other than the service
negligence of its agents is valid; rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Shipowner can appoint senior officers for the vessel even if bareboat contract.
But technically it is an affreightment. Most conflicts will occur if these various Art. 1745. Any of the following or similar stipulations shall be considered
principles will have to be mixed. unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or
The whereabouts of the vessel is important to know the time for loading and shipper;
unloading… (2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
Policy – marina (3) That the common carrier need not observe any diligence in the
Implementing or enforcement --- Coastguard custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less
2 conditions implied in charter party than that of a good father of a family, or of a man of ordinary
1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter party prudence in the vigilance over the movables transported;
2. --- look at book (ala kaapas) (5) That the common carrier shall not be responsible for the acts or
omission of his or its employees;
JURISDICTION OF ADMIRALTY CASES (6) That the common carrier's liability for acts committed by
- depends on the jurisdictional amount thieves, or of robbers who do not act with grave or irresistible
- important element of the contract = the subject matter of the threat, violence or force, is dispensed with or diminished;
contract (nature and character) (7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the defective
International Harvester v Aragon condition of the car, vehicle, ship, airplane or other equipment
-involves loss of cargo shipped from LA to Manila; cargo owner filed an action used in the contract of carriage.
against common carrier
-SC said liability of petitioner was predicated upon the contract of carriage ; Art. 1746. An agreement limiting the common carrier's liability may be
admiralty would involve all maritime contract in whatever form and wherever annulled by the shipper or owner if the common carrier refused to carry the
made goods unless the former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays the transportation common carrier's liability cannot be availed of in case of the loss, destruction, or
of the goods or changes the stipulated or usual route, the contract limiting the deterioration of the goods.

APRIL LYNN L. URSAL Page 25

 FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
Art. 1748. An agreement limiting the common carrier's liability for delay on  May be executed by means of:
account of strikes or riots is valid. 1. public instrument
2. policy signed by the contracting parties and the broker taking part therein
Art. 1749. A stipulation that the common carrier's liability is limited to the 3. private instrument (Art. 720)
value of the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding. GR: The captain cannot contract loans on respondentia secured by the cargo,
and should he do so, the contract shall be void. Neither can he borrow money
Art. 1750. A contract fixing the sum that may be recovered. by the owner or or Bottomry for his own transactions.
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 EXCEPTIONS:
agreed upon. 1. On the portion of the vessel he owns, provided no money has been
previously borrowed on the whole vessel, nor exists any other kind of lien or
Art. 1751. The fact that the common carrier has no competitor along the line obligation chargeable against her.
or route, or a part thereof, to which the contract refers shall be taken into 2. When he is permitted to do so, he must necessarily state what interest he
consideration on the question of whether or not a stipulation limiting the has in the vessel.
common carrier's liability is reasonable, just and in consonance with public CONTENTS OF THE LOAN CONTRACT:
policy. 1. kind, name and registry of the vessel;
2. name, surname and domicile of the captain;
Art. 1752. Even when there is an agreement limiting the liability of the 3. names, surnames and domiciles of the borrower and the lender;
common carrier in the vigilance over the goods, the common carrier is 4. amount of the loan and the premium stipulated;
disputably presumed to have been negligent in case of their loss, destruction 5. time for repayment;
or deterioration. 6. goods pledged to secure repayment;
7. voyage during which the risk is run (Art.721)
Art. 1753. The law of the country to which the goods are to be transported
shall govern the liability of the common carrier for their loss, destruction or WHO MAY CONTRACT:
deterioration.
1. Bottomry – by the ship owner or ship agent; outside of the residence of
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the the owners, the captain.
passenger's baggage which is not in his personal custody or in that of his 2. Respondentia – only the owner of the cargo
employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be applicable. DISTINCTIONS:
BOTTOMRY/ RESPONDENTIA ORDINARY LOAN
ART. 653. if the cargo should be received without the charter party having been
signed, the contract shall be understood as executed In accordance with what 1. Not subject to Usury Law 1. Subject to Usury Law
appears in the bill of lading, the sole evidence of title with regard to the cargo 2. Liability of the borrower is 2. Not subject to any contingency
for determining the rights and obligations of the ship agent, captain and contingent on the safe arrival of the
charterer vessel or cargo at destination
3. The last lender is a preferred 3. The first lender is a preferred
- If there is charter party or bill of lading (BOL) = no contract at all; but according creditor creditor
to Blanco, if there is delivery and receipt of cargo combined with the GF and
mutual consent = contract present , better than BOL 4. Must have a collateral 4. May or may not have collateral

E. LOANS ON BOTTOMRY AND RESPONDENTIA 5. Collateral is the vessel or cargo 5. Maybe property, real or
subject to maritime risk personal
LOAN ON BOTTOMRY – loan made by shipowner or ship agent guaranteed by 6. Must be in writing 6. Need not be in writing but
vessel itself and repayable upon arrival of vessel at destination; vessel/portion interest shall not be due unless
expressly stipulated in writing
LOAN ON RESPONDENTIA – loan, taken on security of the cargo laden on a 7. To be binding on third person must 7. Need not be registered
vessel, and repayable upon safe arrival of cargo at destination; cargo/goods be recorded in the registry of vessels
of port of registry of the vessel
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS: 8. Loss of collateral extinguishes the 8. Does not extinguished if there is
1. Exposure of security to marine peril; same a loss of the collateral (if any)
2. Obligation of the debtor conditioned only upon safe arrival of the security
at the point of destination. Consequences of loss of effects of the loans

Requisites of a Loan on Bottomry/Respondentia: 1. Effects of loans be lost due to accident of the sea during the time, and on the
1. Shipowner borrows money for use, equipment or repair of vessel occasion of the voyage which has been designated in the contract and proven
2. For a definite term and with extraordinary interest called premium that the cargo was on board
3. Secured by pledged of vessel or portion thereof in the case on loan on - lender losses the right to institute the action which would pertain to him
Bottomry; or pledge of goods in case of Respondentia
4. Loan repayment depends or conditioned on the safe arrival of goods for Except: when the loss was
respondentia and obligation to repay is extinguished if pledged goods 1. caused by inherent defect of the thing
are lost (Respondentia) 2. through fault or malice of the borrower
5. Obligation to repay is extinguished if vessel is lost due to specified 3. through barratry on the part of the captain
marine perils in the course of voyage or within limited time (Bottomry) 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
2. The lenders on bottomry or respondentia shall suffer in proportion to their upon which the loans were made.
respective interest, the general average which may take place in the things
APRIL LYNN L. URSAL Page 26
3. In case of shipwreck, the amount for payment of the loan shall be deduced to F. AVERAGES AND COLLISIONS
the proceeds of the effects which have been saved but only after deducting the
costs of the salvage. ACCIDENTS IN MARITIME COMMERCE:
1. Averages
4. If the loan should be on the vessel or any of her parts, the freight earned 2. Arrival Under Stress
during the voyage for which the loan was contracted shall also be liable for its 3. Collision
payment, as far as it may reach. 4. Shipwreck

5. If the same vessel or cargo should be the object of the loan of Bottomry or * Averages – an extra-ordinary or accidental expense incurred during the
respondentia and maritime insurance, the value of what may be saved in case voyage in order to preserve the cargo, vessel or both; and all damages or
of shipwreck shall be divided between the lender and the insurer, in proportion deterioration suffered by the vessel from departure to the port of destination,
to the legitimate interest of each one, taking in consideration, for this purpose and to the cargo from the port of loading to the port consignment. (Art. 806)
only, the principal with respect to the
CLASSES OF AVERAGES:
Maritime contracts include charter parties… and loans on bottomry and A. Particular or Simple Average
respondentia are considered maritime contracts B. Gross or General Average
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 A. Particular or Simple Average
this will be asked in the bar. Especially in the unique terms used in this topic..
Damage or expenses caused to the vessel or cargo that did not
General provisions in contracts will govern inure to common benefit, and borne by respective owners. (809)
 The owner of the goods which gave rise to the expense or suffered
Basic provision you should not forget: th e damage shall bear this average. (Art. 810)
1. there should be a marine risk res perit domino applies
2. the condition that the vessel or the goods has perished then the right of the if the vessel or goods are hypothecated by loan on bottomry and
lender to collect everything as well as stipulated interest is extinguished respondentia, the lender shall bear the loss in proportion to his interest
(not sure if there are other more.. basin ala ko kaapas)
Examples: see article 809 of the code of commerce
BOTTOMRY
- It may refer to the vessel RULES ON AVERAGES:
- The bottom or the hull or the kill of the vessel can be pledged in this 1. Averages is defined as damage deliberately caused or an expense
case deliberately incurred due to a marine peril and which has resulted in
- The whole vessel can be a subject of a security or collateral saving both vessel and cargo or only the vessel or cargo.
- PD. 1521: (is this different) --- loan is the principal, mortgage is the 2. Where both vessel and cargo are saved, it is general average; where only
accessory. the vessel or only the cargo is saved, it is particular average.
- The contract of bottomry is principal, the mortgage under pd 1521 is 3. The person whose property has been saved must contribute to reimburse
merely a security the damage caused or expense incurred if the situation constitutes
- In pd 1521 under section 4 it is a requirement that the whole of the general average.
vessel must be mortgaged (no jurisprudence on this matter whether
a part of the vessel can be mortgaged) B. Gross or General Average
- In bottomry the whole or the part of the vessel can be the subject  Damage or expenses deliberately caused in order to save the vessel,
- IF the part of the vessel can be pledged, is it necessary that there its cargo or both from real and known risk. (Art. 811)
should be goods? No. no need for goods.  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
RESPONDENTIA average. (Art. 812)
- 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 REQUISITES:
actual course of voyage because this is the objective of the law. 1. common danger present
Because if the vessel is docked in the port the owner can simply 2. arising from accidents of sea, disposition of authority
obtain loans. And besides there is no risk when the vessel is docked 3. peril imminent and ascertained
(but no jurisprudence) 4. part of vessel or cargo deliberately sacrificed
5. intended to save vessel or cargo
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the bar) -- 6. proper legal steps and authority taken
- 5 differences
1. with respect to form --- can you validly execute a bottomry or respondentia Common danger
verbally? You cannot. Bec under the code of commerce no judicial action can - means both the ship and the cargo, after has been loaded, are subject to the
arise when the contract is not reduced in writing. But this is not the case in same danger, whether during the voyage, or in the port of loading or unloading,
simple loan. But in simple loan you take note the statute of frauds… if not that the danger arises from the accidents of the sea, disposition of authority, or
in writing B and R, you can dismiss case due to failure to state cause of action. faults of men, provided that circumstances producing the peril should be
ascertained and imminent or may rationally be said to be certain and imminent
Q: why hardly used at present?
A: because of sophistication. Captains can just call up any agent the shipowner - When the measure of precaution adopted solely and exclusively for the
to deliver anything for the use of the vessel to deliver. … This contract was preservation of the vessel from the danger of seizure or capture and not for the
recognized in medieval times. 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 particular portion of those interests
interests for the purpose of avoiding the common peril from the whole to a

APRIL LYNN L. URSAL Page 27

- the goods on board refer to in jettison should be proven by means of bill of Examples of General Average
lading and with regards to those belonging to vessel by means of inventory Read Art 811 of the Code of Commerce
prepared before the departure
By Whom Borne
2 cases where there can also be general averages even if the sacrifice was not - shall be borne by those who benefited from the sacrifice; the shipowner and
made during the voyage: the owner of the cargoes that were saved
a. where the sinking of the vessel is necessary to extinguish a fire in a
port, roadstead, creek or bay Contribution may be imposed to;
b. where cargo is transferred to lighten the ship on account of a a. insurers ( Insurance Code of the Philippines)
storm to facilitate entry into a port - 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
Art. 816: in order that the goods jettisoned may be included in the gross his policy value where this is less than the contributing value of the thing
average and the owners entitled to indemnity – it is necessary that the insured
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 b. lenders of bottomry and respondentia (Code of Commerce)
departure. -obliged to pay in proportion to their respective interest, the general average
which may take place in the goods which the loan is made
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 Who is entitled to indemnity?
lighters and be lost, the owner of the said part is entitled to indemnity as if the Owner of the goods which were sacrificed is entitled to receive the general
loss originated from a gross average, the amount being distributed between the contribution
vessel and cargo from which it came. Except;
If on the contrary the merchandise transferred should be saved and the vessel 1. goods carried on desk unless the rule special law or
should be lost, no liability may be demanded of the salvage. customs of the place allow the same
2. goods that are not recorded in the books or records of the
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, vessel
creek, or bay, it should be decided to sink any vessel, this loss shall be 3. fuel of the vessel if there is more than sufficient fuel for
considered gross average, to which the vessels saved should contribute. the voyage

Note: the loss or damage sustained by cutting away wreck or parts of the ship American Home Insurance v. CA
which have been previously carried away or effectively lost by accident shall not Art 848 states that claims shall not be admitted if they do not exceed 5% of the
be made good as general average 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
Sacrifice must be Successful both cases the expenses of appraisal, unless there is an agreement to the
- no general contribution can be demanded if the vessel and other cargo that contrary.
are sought to be saved were in fact not saved (art. 860)
It is clear that the damage of the cargo is particular average since the loss is less
- owners of the goods saved shall not be liable for the indemnification of those than 1% to the value of the cargo and there appears to be no allegations as to
jettisoned, lost or damaged any agreement defendants and consignee of the goods to the contrary, by
- hence when the sacrifice was not successful in saving the ship, there will be no express provision of law, plaintiff is barred from suing for recovery.
general contribution
Law on averages does not apply if the CC is negligent.
Compliance with Legal Steps
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR CONTRIBUTION ON
- Procedure for recovery: (Art. 813-814) AVERAGES
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  Under the rule, deck cargo is permitted in coastwise shipping but
interested in the cargoes. If the latter disagree, the decision of the captain prohibited in overseas shipping.
should prevail but they shall register their objections. 1. If deck cargo is located with the consent of the shipper on overseas
2. The resolution must be entered in the logbook, stating the reasons and trade, it must always contribute to general average, but should the same
motives for the dissent, and the irresistible and urgent causes if he acted be jettisoned, it would not be entitled to reimbursement because there
in his own accord. It must be signed, in the first case, by all persons is violation of the Y-A Rules.
present in the hearing. In the second case, by the captain and all the 2. If deck cargo is loaded with the consent of the shipper on coastwise
officers of the vessel. shipping, it must always contribute to general average and if jettisoned
3. The minutes must also contain a detail of all the goods jettisoned and would be entitled to reimbursement.
those injuries caused to those on board.
4. The captain shall deliver it to the maritime judicial authority of the first - may also be used to solve controversies where no provision of the
port he may make, within 24 hours after his arrival, and to ratify it code of commerce is in point because the said rules embody the
immediately under oath. custom of maritime states

- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON: AVERAGES

1. those which are on the deck, preferring the heaviest one with the least - the same concept that was existing in medieval times can be applied at
utility and value; present
2. those which are below the upper deck, beginning with the one with
greatest weight and smallest value. (Art. 815) Relevance of averages (take note these ex. Connected to expenses under 806)
under 806 --- averages are:
o 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
APRIL LYNN L. URSAL Page 28
 considered an average? YES. (question now if it is Note that examples of the two types of averages are not exclusive. There is a
particular or general) word “especially” thus there may be other example that may fall under
o Damages or deterioration suffered – refer to the physical this two type of averages.
feature or attribute of the goods.
- these two are different YORK AND TURP RULES
- THIS CAN be stipulated in a contract that this rule will apply in
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES respect to averages
- In the absence of stipulation in the contract in applying this rule,
Hernandez – averages are losses. If there is a loss incurred, the loss will be such rule is inapplicable
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 Q: ordinary expenses are not averages bec. They are foreseeable, are there
will shoulder the loss. What will shipper do to recover loss? If insured go after instance that they can be considered to be extraordinary ave
insurance. Insurance then files action against common carrier due to A; if the parties agree that the averages will cover ordinary expenses. The code
negligence) --- if general average, there is special circumstance, the loss will not of commerce does not prohibit the inclusion of other expenses under averages.
be shouldered on where it falls but wil be shouldered proportionately by
persons who have benefited the circumstance G. COLLISIONS

4 reqs for general averages (see above notes) – MEMORIZE; MAGSAYSAY VS. Collisions - impact of 2 vessels both of which are moving.
AGAN Allision - impact between a moving vessel and a stationary one.
1. common danger TO Both vessel and cargo
2. deliberate sacrifice  3 Zones of Time in the Collision of vessels:
3. successful saving 1. First zone – all time up to the moment when risk of collision begins;
4. compliance with the proper steps 2. Second zone – time between moment when risk of collision begins and
moment it becomes a practical certainty;
If no special circumstance, it is a particular or simple average --- the owner of 3. Third zone – time when collision is certain and time of impact.
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  Error in Extremis - sudden movement made by a faultless vessel
loss will be shouldered proportionately by those who benefited 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
Standard oil case – the ship captain will not release goods to the shipper unless will fall on said faultless vessel. (Urrutia and Co. v. Baco River Plantation
the shipper will contribute their share. The issue was the duty of the captain to Co., 26 PHIL 632).
liquidate – he did not file for the appropriate proceeding, you should result to
legal liquidation. Captain here failed TO INITIATE proper proceeding thus  Rules on Collision of Vessels under Code of Commerce:
shipowner is liable for actions of captain 1. The collision may be due to the fault, negligence or lack of skill of the
captain, sailing mate, or any other member of the complement of the
Q: is the duty of captain to initiate a condition precedent? vessel. The owner of the vessel at fault be liable for losses or damage.
A: no. even if ship captain does not initiate, the shipowner can still file the (Art. 826)
appropriate proceeding in court. 2. 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
COMMON DANGER – both to vessel and cargo. If one invokes general average shall be jointly and severally liable. (Art. 827)
then that person must prove what he allege. In standard oil since ship captain 3. If it cannot be determined which vessel is at fault. Each vessel shall also
invoked gen aver – they should be the one to prove. Failure to prove, they suffer its own losses and both shall be solidarily liable for losses o
cannot ask for contribution from owners of the goods. damages on the cargoes. (Art. 828)
4. The vessels may collide with each other through fortuitous event or force
It is also possible that there are no goods involved. Only extraordinary expense majeure. In this case each shall bear its own damage. (Art. 830)
Phil. Home assurance case --- discussed also in chapter 3 --- when it exploded, 5. Two vessels may collide with each other without their fault by reason of a
vessel got burned, another vessel came to the rescue to extinguish the fire and third vessel. The third vessel will be liable for losses and damages. (Art.
towed the vessel to the nearest destination. Goods were saved from the subject 831)
vessel. The shipowner asked for contribution to the owner of the goods which 6. A vessel which is properly anchored and moored may collide with those
were saved. SC said, shipowner did not comply legal steps 813-815 thus you nearby reasons of storm or other cause of force majeure. The vessel run
cannot allege general averages. into shall suffer its own damage and expense. (Art. 832)

If the averages are not general, it is particular. the shipowner will be solely  Cases covered by collision and allision:
liable… in the case of Magsaysay, there was no deliberate sacrifice. 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.
SUCCESSFUL SAVING 2. Both vessels at fault – each vessel must bear its own loss, but the shippers
- Both vessel and goods must be saved of both vessels may go against the ship owners who will be solidarily
- If vessel not saved, no general averages. Even if goods were saved liable.
- You have to start with resolution, placing of reso in the log book, 3. Vessel at fault not known – same as rule as (2). (Doctrine of Inscrutable
accounting of goods thrown away starting those on deck and to Fault)
follow from those not on deck (read 83-815) 4. Third vessel at fault – same rule as (1).
5. Fortuitous event – no liability. Each bears its own loss.
American Home insurance (take note this case--- bar)
- Transportation of tv sets, the shipcapatain was uprised of the Prerequisite to recovery:
typhoon. Still captain continued with the journey. Then na abot ang  Protest should be made within 24 hours before the competent
typhoon captain directed that the tv sets should be jettison. Saved authority at the point of collision or at the first port of arrival, if in the
vessel. Reklamo owner. Is there general average? No. if the Philippines and to the Philippine consul, if the collision took place abroad.
shipowner is negligent, the law on general averages does not apply. (Art. 835)
 Injuries to persons and damage to cargo of owners not on board on
collision time need not be protested. (Art. 836)

APRIL LYNN L. URSAL Page 29

DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT Custody of cargo:
APPLICABLE.  intrusted to the captain (except in cases of force majeure)
(Art. 823)
DOCTRINE OF “INSCRUTABLE FAULT”  if entire cargo or part thereof should appear to be damaged, or there
 In case of collision where it cannot be determined which between the should be imminent danger of its being damaged
two vessels was at fault, both vessels bear their respective damage, but both  captain may request judge of competent court / consul, the sale
should be solidarily liable for damage to the cargo of both vessels. of all or part of the cargo
 person taking cognizance shall authorize it (after examination and
NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall declaration)
be limited only to the value of the vessel with all its appurtenances and  captain shall justify the legality of his conduct, answering to the
freightage earned during the voyage. When the latter is not sufficient to cover shipper for the price of the merchandise would have brought if they
all the liabilities, the indemnity due by reason of the death or injury of persons had arrived in good condition
shall have preference. (Arts. 837 and 838) (Art. 824)

H. ARRIVAL UNDER STRESS Liability of captain:

 captain responsible for the damages caused by his delay
* ARRIVAL UNDER STRESS – arrival of a vessel at a port of destination on  if cause of arrival under stress ceases  he should not continue the
account of lack of provision, well founded fear of seizure, privateers, pirates, or voyage
accidents of sea disabling navigation. (Art. 819)  if cause of arrival should have been the fear of enemies 
NOTE: Captain must make a protest deliberation and resolution (in a meeting of officers of the vessel and
persons interested in the cargo) shall precede the departure
Steps to be taken in the determination of the propriety of arrival under stress (Art. 825)
1. captain should determine during the voyage if there is a well founded fear
of seizure, privateers of other valid grounds * Shipwreck – the demolition or shattering of a vessel caused by her driving
2. captain shall then assemble the officers ashore or on rocks and shoals in the midseas, or by the violence of winds or
3. captain shall summon the persons interested in the cargo who may be waves in tempests
present and who may attend but without right to vote - loss of the vessel at sea as a consequence of its grounding, or running against
4. the officers shall determine and agree if there is well founded reason an object in sea or on the coast
after examining the circumstances; Captain shall have the deciding vote
5. agreement shall be drafter and the proper minutes shall be signed and  Loss or deteriorations of vessel or cargo caused by shipwreck or
entered into the log book stranding  individually account of the owners; part which may be saved
6. objections and protests shall likewise be entered in the minutes belonging to them, same proportion. (Art. 840)
 If the wreck was due to malice, negligence or lack of skill of the
- Absence of one of the steps, can still be considered arrival under stress. captain, the owner of the vessel may demand indemnity from said captain.
(Art. 841)
When not lawful:  The goods saved from the wreck to be specially bound for the
1. lack of provisions due to negligence to carry according to usage and payment of the expenses of the respective salvage. (Art. 842)
customs;  If several vessels sail under convoy, and any of them should be wrecked,
2. risk of enemy not well known or manifest the cargo saved will be distributed among the rest in proportion to the
3. defect of vessel due to improper repair; and amount which each one is able to take. … If any captain should refuse,
4. malice, negligence, want of foresight or lack of skill of captain. (Art. 820) 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
Who bears expenses: is not possible to transfer to the other vessels the entire cargo of the vessel
 if arrival under stress is proper  shipowner or ship agent will only wrecked, the goods of the highest value and smallest volume to be saved first.
be liable for the expenses of the arrival Designation to be made by the captain with concurrence of his officers. (Art.
 if arrival under stress is improper  shipowner and ship agent will 843)
be liable for the same expenses and, in addition, they shall be  The captain taking on-board the goods saved from the wreck to continue
solidarily liable for damages caused to the cargoes by such arrival his course to the port of destination and upon arrival he should deposit the
under stress goods for disposal to their owners. … In case the captain changes his course,
(Art. 821) and if he can unload them at the port of which they were consigned, he may
make said port if the shippers or supercargoes present and the officers and
NOTE: passengers of the vessel consent thereto. But he is not required to do so
- After cessation of the cause of the arrival under stress, captain should even if he has the consent during time of war or when the port is difficult and
continue voyage or else he shall be liable. dangerous to make.
… The owners of the cargo to defray all the expenses of this arrival and
Unloading of cargoes to make repairs: the payment of the freightage. (Art. 844)
- in order to make repairs to the vessel or because there is danger that  If cannot be, proceed to judicial sale complying with the formalities
cargo may suffer damage  necessary to unload; captain must and on
request authorization from competent judge or court for removal, publicity. (Art. 845)
and carry it out w/ knowledge of the person interested in the cargo
- in a foreign port  Philippine Consul I. SALVAGE LAW (Act No. 2616)
- in case of the vessel  expenses shall be for the account of the ship
owner or agent * SALVAGE – services one person renders to the owner of a ship or goods, by
- in case of the cargo  chargeable against the owners of the his own labor, preserving the goods or the ship which the owner or those
merchandise for whose benefit the act was performed entrusted with the care of them have either abandoned in distress at sea, or are
- if both  expenses to be divided proportionately between the value unable to protect or secure.
of the vessel and cargo
(Art. 822) Kinds of Salvage:
 Voluntary – compensation is dependent on the success.
 Under contract for a per diem or per horam wage – payable at all
events.
APRIL LYNN L. URSAL Page 30
  Under contract for compensation – payable only in case of success.

APRIL LYNN L. URSAL Page 31

Claim for valid salvage: Rule on salvage reward:
- Provides for a reward for voluntary salvage 1. The reward is fixed by the RTC judge in the absence of agreement or
- Other persons who assist in saving the vessel or its cargo from where the latter is excessive (Sec. 9).
shipwreck shall be entitled to a similar award 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
Persons not entitled to salvage compensation: owner; if the latter does not claim it within 3 years, 50% of the said
1. Crew of the vessel shipwrecked or which was in danger of shipwreck proceeds shall go to the salvors, who shall divide it equitably, and the
2. He who shall have commenced the salvage in spite of opposition of other half to the government (Secs. 11-12).
the captain or of his representatives 3. If a vessel is the salvor, the reward shall be distributed as follows:
3. He who shall have failed to comply with the provisions of Section 3 a. 50% to the shipowner;
(Section 3. Tthe salvor who saves or picks up a vessel or merchandise b. 25% to the captain; and
at sea, in the absence of the ship captain, ship owner or a c. 25% to the officers and crew in proportion to their salaries
representative of either of them, they being unknown, shall convey
and deliver the vessel or merchandise ASAP to the collector of SALVAGE LAW
customs if the port has a collector and otherwise to the provincial
treasurer or municipal mayor.) SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR ITS CARGO SHALL
BE BEYOND THE CONTROL OF THE CREW, OR SHALL HAVE BEEN ABANDONED
Requisites of compensation or salvage reward: BY THEM, AND PICKED UP AND CONVEYED TO A SAFE PLACE BY OTHER
1. Object must have been exposed to marine peril (fire, acts of pirate, PERSONS, THE LATTER SHALL BE ENTITLED TO A REWARD FOR THE SALVAGE.
thieves)
2. Salvage services rendered voluntarily and is not required as an THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH, ASSIST IN
existing duty or a form of contract (See Sec. 8) SAVING A VESSEL OR ITS CARGO FROM SHIPWRECK, SHALL BE ENTITLED TO A
* Pilots are not entitled to a reward – (Atty. Capanas) LIKE REWARD.
3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of the crew or SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON ACTING IN HIS STEAD,
shall have been abandoned (not necessary) IS PRESENT, NO ONE SHALL TAKE FROM THE SEA, OR FROM THE SHORES OR
* Courts will not interfere in the agreement of the parties except but where COAST MERCHANDISE OR EFFECTS PROCEEDING FROM A SHIPWRECK OR
there is no agreement or it is excessive the reward is fixed by the RTC judge. PROCEED TO THE SALVAGE OF THE VESSEL, WITHOUT THE CONSENT OF SUCH
CAPTAIN OR PERSON ACTING IN HIS STEAD.
* 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 SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR MERCHANDISE AT SEA, IN
intention of returning to it THE ABSENCE OF THE CAPTAIN OF THE VESSEL, OWNER, OR A REPRESENTATIVE
- determined by ascertaining what was the intention and expectation of those OF EITHER OF THEM, THEY BEING UNKNOWN, SHALL CONVEY AND DELIVER
in charge of it when they quitted it SUCH VESSEL OR MERCHANDISE, AS SOON AS POSSIBLE, TO THE COLLECTOR OF
- boat or vessel found entirely deserted or abandoned on the sea without hope CUSTOMS, IF THE PORT HAS A COLLECTOR, AND OTHERWISE TO THE
or intention of recovery or return by the master or the crew, whether resulting PROVINCIAL TREASURER OR MUNICIPAL MAYOR.
from wreck, accident, necessity, or voluntary abandonment
SEC. 4. AFTER THE SALVAGE IS ACCOMPLISHED, THE OWNER OR HIS
JETSAM, FLOTSAM, LIGAN: REPRESENTATIVE SHALL HAVE A RIGHT TO THE DELIVERY OF THE VESSEL OR
 Jetsam – goods that were thrown off a ship which was in danger THINGS SAVED, PROVIDED THAT HE PAYS, OR GIVES A BOND TO SECURE, THE
 Flotsam – goods that floated off the ship while ship was in danger or EXPENSES AND THE PROPER REWARD.
when it sank
 Ligan – goods left as sea on the wreck or tied to a buoy so that they THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE OF
can be recovered later 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
Basis of entitlement to salvage reward (Circumstances to consider): THINGS SAVED MAY BE FOUND.
1. The labor expended by the salvors in rendering the salvage service
2. The promptitude, skill and energy displayed in rendering the service SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL TREASURER, OR MUNICIPAL
and saving the property MAYOR, TO WHOM A SALVAGE IS REPORTED, SHALL ORDER:
3. The value of the property employed by the salvors in rendering the A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.
service, and danger to which such property was exposed B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN
4. The risk incurred by the salvors in rescuing the property from the DANGER OF IMMEDIATE LOSS OR OF THOSE WHOSE CONSERVATION IS
impending peril EVIDENTLY PREJUDICIAL TO THE INTERESTS OF THE OWNER, WHEN NO
5. The value of the property salved OBJECTION IS MADE TO SUCH SALE.
6. The degree of danger which the property was rescued C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE
SALVAGE, IN ONE OF THE LOCAL NEWSPAPERS OR IN THE NEAREST NEWS-
Rights and obligations of salvors and owners: PAPER PUBLISHED, OF ALL THE DETAILS OF THE DISASTER, WITH A
 Salvor is entitled to compensation for services rendered. He has, STATEMENT OF THE MARK AND NUMBER OF THE EFFECTS REQUESTING
under the Salvage Law, a lien upon the property salvaged. ALL INTERESTED PERSONS TO MAKE THEIR CLAIMS.
 On the other hand, the owner does not denounce his right to the
property. There is no presumption of an intention to abandon such SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION OF
property rights. THE AUTHORITIES, THE OWNER OR HIS REPRESENTATIVE SHALL CLAIM THEM,
SUCH AUTHORITIES SHALL ORDER THEIR DELIVERY TO SUCH OWNER OR HIS
Maritime Lien REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY OVER THEIR
 A salvor, in maritime law, has an interest in the property; called a lien, but it VALUE, AND A BOND IS GIVEN BY THE OWNER OR HIS REPRESENTATIVE TO
never goes, in the absence of a contract expressly made, upon the idea of debt SECURE THE PAYMENT OF THE EXPENSES AND THE PROPER REWARD.
due from the owner to the salvor but upon the principle that the service creates OTHERWISE, THE DELIVERY SHALL NOR BE MADE UNTIL THE MATTER IS
a property in the thing saved. DECIDED BY THE COURT OF FIRST INSTANCE OF THE PROVINCE.
SEC. 7. NO CLAIM BEING PRESENTED TO THE PUBLICATION OF THE
IN THE THREE MONTHS SUBSEQUENT ADVERTISEMENT PRESCRIBED IN SUB-

APRIL LYNN L. URSAL Page 31

SECTION (C) OF SECTION FIVE, THE EXPENSES OF THEIR CUSTODY, - New Civil Code  goods
THINGS SAVE SHALL BE SOLD AT CONSERVATION, ADVERTISEMENT, primary law on goods  Section 3 of COGSA 
PUBLIC AUCTION, AND THEIR AND AUCTION, AS WELL AS that are being responsibilities of the
PROCEEDS, AFTER DEDUCTING THE WHATEVER TAXES OR DUTIES THEY transported from a carrier under COGSA
EXPENSES AND THE PROPER SHOULD PAY FOR THEIR ENTRANCE; foreign port to the
REWARD SHALL BE DEPOSITED IN THEN THERE SHALL BE DEDUCTED Philippines Document of title required
THE INSULAR TREASURY. IF THREE THE EXPENSES OF SALVAGE; AND - COGSA  remains to be - evidenced by the Bill of Lading
YEARS SHALL PASS WITHOUT FROM THE NET AMOUNT REMAINING a suppletory law for - BOL serves as prima facie evidence of
ANYONE CLAIMING IT, ONE-HALF OF SHALL BE TAKEN THE REWARD FOR such type of the receipt by the carrier of the
THE DEPOSIT SHALL BE ADJUDGED THE SALVAGE OR ASSISTANCE WHICH transportation – goods
TO HIM WHO SAVED THE THINGS, SHALL NOT EXCEED FIFTY PER CENT international shipping
AND THE OTHER HALF TO THE OF SUCH AMOUNT REMAINING.
Notice of claim and prescriptive
INSULAR GOVERNMENT.
ART. 1753, NCC: THE LAW OF THE period
SEC. 12. IF IN THE SALVAGE OR IN
COUNTRY TO WHICH THE GOODS * Notice of claim  must be made
SEC. 8. THE FOLLOWING SHALL THE RENDERING OF ASSISTANCE
ARE TO BE TRANSPORTED SHALL within 3 days from delivery if the
HAVE NO RIGHT TO A REWARD FOR DIFFERENT PERSONS SHALL HAVE
GOVERN THE LIABILITY OF THE damage is not apparent; not
SALVAGE OR ASSISTANCE: INTERVENED THE REWARD SHALL BE
COMMON CARRIER FOR THEIR mandatory
DIVIDED BETWEEN THEM IN
LOSS, DESTRUCTION OR * Prescriptive period  1 year
A. THE CREW OF THE VESSEL PROPORTION TO THE SERVICES
DETERIORATION. from delivery for the filing of the
SHIPWRECKED OR WHICH WAS IS WHICH EACH ONE MAY HAVE
case is a condition precedent or
DANGER OF SHIPWRECK; RENDERED, AND, IN CASE OF DOUBT,
* Goods – includes goods, wares, mandatory; does not apply to cases
IN EQUAL PARTS.
merchandise, and articles of every of misdelivery or conversion
B. HE WHO SHALL HAVE
kinds whatsoever
COMMENCED THE SALVAGE IN THOSE WHO, IN ORDER TO SAVE
- does not include live Defenses and immunities
SPITE OF OPPOSITION OF THE PERSONS, SHALL HAVE BEEN
animals and cargo which by the - provided for by Section 4 of COGSA
CAPTAIN OR HIS REPRESENTATIVE; EXPOSED TO THE SAME DANGERS
contract of carriage is stated as - Section 49(1) of COGSA – carrier
AND SHALL ALSO HAVE A RIGHT TO
being carried on deck and is so shall not be liable for loss or
PARTICIPATION IN THE REWARD.
carried damages arising from
C. HE WHO SHALL HAVE FAILED TO
unseaworthiness
COMPLY WITH THE PROVISIONS OF SEC. 13. IF A VESSEL OR ITS CARGO
Parties: - New Civil Code – carrier will not
SECTION THREE. SHALL HAVE BEEN ASSISTED OR
 Carrier, and be liable only if it can present proof
SAVED, ENTIRELY OR PARTIALLY, BY
 Shipper that the unseaworthiness was
SEC. 9. IF, DURING THE DANGER, AN ANOTHER VESSEL, THE REWARD FOR
- They are given their respective caused exclusively by any of the
AGREEMENT IS ENTERED INTO SALVAGE OR FOR ASSISTANCE SHALL
rights and obligations under COGSA. circumstances specified in Art. 1734
CONCERNING THE AMOUNT OF THE BE DIVIDED BETWEEN THE OWNER,
- Carrier (covered by COGSA)  of the NCC
REWARD FOR SALVAGE OR THE CAPTAIN, AND THE REMAINDER
not limited to the shipowner;
ASSISTANCE, ITS VALIDITY MAY BE OF THE CREW OF THE LATTER VESSEL,
includes charterer who enters into Waiver
IMPUGNED BECAUSE IT IS SO AS TO GIVE THE OWNER A HALF,
a contract of carriage with the - The shipowner and the ship agent
EXCESSIVE, AND IT MAY BE THE CAPTAIN A FOURTH, AND ALL
shipper may waive the benefit of any of the
REQUIRED TO BE REDUCED TO AN THE REMAINDER OF THE CREW THE
- Charterer  charters a vessel defenses in its favor provided not
AMOUNT PROPORTIONATE TO THE OTHER FOURTH OF THE REWARD, IN
and conducts his own business for only under COGSA but also under
CIRCUMSTANCES. PROPORTION TO THEIR RESPECTIVE
his own account other laws
SALARIES, IN THE ABSENCE OF AN
 after chartering the
SEC. 10. IN A CASE COMING UNDER AGREEMENT TO THE CONTRARY. THE
vessel, he uses the vessel to Limiting provision
THE LAST PRECEDING SECTION, AS EXPRESS OF SALVAGE, AS WELL AS
conduct a business of - COGSA contains a provision that
WELL AS IN THE ABSENCE OF AN THE REWARD FOR SALVAGE OR
transportation obtaining goods allows the shipper to recover only
AGREEMENT, THE REWARD FOR ASSISTANCE, SHALL BE A CHARGE ON
from 3rd persons to transport the US$500 per package unless there is
SALVAGE OR ASSISTANCE SHALL BE THE THINGS SALVAGED ON THEIR
latter’s goods a special declaration unless there
FIXED BY THE COURT OF FIRST VALUE.
the real value of the goods is
INSTANCE OF THE PROVINCE WHERE
Duties of the carrier: declared
THE THINGS SALVAGED ARE FOUND, COGSA (CARRIAGE OF GOODS BY
 Civil Code requires - declaration made by the shipper
TAKING INTO ACCOUNT SEA ACT)
international carriers to stating an amount bigger than $500
PRINCIPALLY THE EXPENDITURES - Adopted by the
exercise extraordinary per package will make the carrier
MADE TO RECOVER OR SAVE THE Philippines on October 22,
diligence in the liable for such bigger amount but
VESSEL OR THE CARGO OR BOTH, 1936 through
performance of their only if the amount so declared is the
THE ZEAL DEMONSTRATED, THE Commonwealth Act No.
contractual obligations real value of the goods
TIME EMPLOYED, THE SERVICES 65
 Section 2 of COGSA 
RENDERED, THE EXCESSIVE EXPRESS
carrier’s obligation Right to discharge dangerous cargo
OCCASIONED THE NUMBER OF
and liabilities in - COGSA allows the carrier to
PERSONS WHO AIDED, THE DANGER
relation to the loading, discharge the good of the carrier
TO WHICH THEY AND THEIR VESSELS
handling, stowage, discovers that the goods are
WERE EXPOSED AS WELL AS THAT
carriage, custody, care dangerous, inflammable or are
WHICH MENACED THE THINGS
and discharge of such explosives
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

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