Transportation and Public Utilities Law PDF

LAW ON TRANSPORTATION AND PUBLIC UTILITIES
Contract of Transportation person obligates himself to transport persons or property from one
place to another for a consideration.
2 KINDS:
1. CARRIAGE OF PASSENGERS
Parties: common carrier & passenger (carried gratuitously or not)

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 accepted as an equivalent thereof
Perfection:
2 types of contracts of carriage of PASSENGERS:

> contract to carry (agreement to carry the passenger at some future date) consensual contract
and perfected by mere consent
* AIRCRAFT perfected even without issuance of ticket as long as there was already meeting of
minds with respect to the subject matter and consideration
> Contract of Carriage

real contract; not until the facilities of the carrier are actually used can the carrier be said to have
assumed the obligation of the carrier; perfected by actual use.
* AIRCRAFT perfected if it was established that the passenger had checked in at the departure
counter, passed through customs and immigration, boarded the shuttle bus and proceeded to the
ramp of the aircraft and baggage already loaded to the aircraft.
* Public Utility Bus or Jeepneys or Street Cars once it stops it is in effect making a continuous offer
to riders; perfected when passenger is already attempting to board the vehicle
* TRAINS perfected when a person:

a. purchased a ticket/ possess sufficient fare with which to pay for his passage
b. presented himself at the proper place and in a proper manner to be transported
c. has a bona fide intention to use facilities of the carrier
2. CARRIAGE OF GOODS
Parties: shipper & carrier
Shipper the person who delivers the goods to the carrier for transportation; pays the
consideration or on whose behalf payment is made
Consignee person to whom the goods are to be delivered. May be the shipper himself or a third
person who is not actually a party to the contract
APRIL LYNN L. URSAL Page 1

Perfection:
> contract to carry goods consensual
> contract of carriage - act of delivery of goods ( goods are unconditionally placed in the possession
and control of the carrier and upon their receipt by the carrier for transportation)
CARRIER:
Common carriers (CC) (1732)
persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering
their services to the public. (NOT the means of transportation)
one that holds itself out as ready to engage in the transportation of goods for hire as a public
employment and not as a casual occupation.
Tests for determining WON a party is a common carrier of goods:

1. He must be engaged in the business of carrying goods for others as a public employment,
and must hold himself out as ready to engage in the transportation of goods for persons
generally as a business and not as a casual occupation.
2. He must undertake to carry goods of the kind to which his business is confined.
3. He must undertake to carry by the method by which his business is conducted and over his
established roads.
4. Transportation must be for hire.
Characteristics of Common carriers (CC):

no distinction between one whose principal business is the transportation of persons/goods
and one who does such as an ancillary business (sideline)
no distinction between regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled business
still a CC even if services offered to a limited clientele (between the general public and a
narrow segment of the general population)
Still considered a CC even if he did not secure a Certificate of Public Convenience
No distinction as to the means of transporting, as long as it is by land, water or air
The Civil Code does not provide that the transportation should be by motor vehicle
Still a CC even if he has no fixed and publicly know route, maintains no terminals, and issues
no tickets
pipeline operators are CCs not necessarily motor vehicles (Case: First Philippine Industrial
Corp. vs. CA)
Case: Jose Mendoza vs. Philippine Airlines Inc

- 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 everyone bringing goods to him for carriage, not
whether he is carrying as a public employment or whether he carries to a fixed place
CHARTER PARTY:

- Contract by which an entire ship or some principal part thereof is let by the owner to
another person for a specified time or use.
Q: What is the effect of charter party?

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 people and becomes, in effect,
the owner for the voyage or service stipulated
2 types:
1. Contract of Affreightment
- involves the use of shipping space on vessels leased by the owner in part or as a
whole, to carry goods for another
- CC = observe extraordinary diligence; in case of loss, deterioration or destruction of
goods of goods, CCs are presumed to be at fault or have acted negligently
- 2 types
i. Time charter: vessel is leased to the charterer for a fixed period of time
ii. Voyage charter: ship is leased for a single voyage
2. Charter by demise/ Bareboat Charter

- whole vessel is let to the charterer with a transfer to him of its entire command and
possession and consequent control over its navigation including the master and the
crew who are his servants.
- charter includes both vessel and crewCC becomes private carrier (PC) insofar as
that particular voyage is concerned
- if it is already a PC- ordinary diligence in the carriage of goods will suffice
- PC = undertaking is a single transaction, not a part of the general business or
occupation, although involving the carriage of goods for a fee; NO presumption of
negligence applies whosoever alleges damage to or deterioration of the goods
carried has the burden of proving that the cause was the negligence of the carrier.
Distinction between Common Carriers and Private Carriers

COMMON CARRIER PRIVATE CARRIER
Extraordinary diligence in Ordinary diligence in the
the vigilance over the carriage of goods will
goods they carry suffice
In case of loss, No such presumption
destruction, or applies to private
deterioration of goods, carriers, for whosoever
they are presumed to alleges damage to or
have been at fault or to deterioration n of the
have acted negligently; goods carried has the
burden of proving onus of proving that the
otherwise rests on them cause was the negligence
of the carrier

Cannot stipulate that it is May validly enter into
exempt from liability for such stipulation
the negligence of its
agents or employees
Factors to be considered whether a carrier is common/private:

Law applicable
o Common Civil Code
o Private contract
Diligence required
o Common extraordinary diligence
o Private diligence of a good father of a family
Burden of proof in relation to negligence
o Common the carrier
o Private on the party having a claim against the carrier
Case: Planters Products, Inc. vs. CA

- It is therefore imperative that a public carrier shall remain as such, notwithstanding the
charter of the whole or portion of a vessel by one or more persons, provided the charter is
limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when
the charter includes both the vessel and its crew that a common carrier becomes private
True Test of Common Carrier Is the carriage of passengers or goods, provided it has space, for all
who opt to avail themselves of its transportation service for a fee
Generally, private carriage is undertaken by spcial agreement and the carrier does not hold hiself
out to carry goods for the general public
Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International
- By definition, a contract of carriage is one whereby a certain person or association of
persons obligate themselves to transport person, thing or new from one place to another for
a fixed price
- It is obvious from the above definition that respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private nor a
common carrier. Its covenant with its customers is simply to make travel arrangements in
their behalf.
- It is in this sense that the contract between the parties in this case was an ordinary one for
services and not one of carriage; it is thus not bound under the law to observe extraordinary
diligence in the performance of its obligation.
COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING
Towage
- A vessel is hired to bring another vessel to another place
- e.g. a tugboat may be hired by CC to bring the vessel to a port (operator of tugboat not CC)

- in maritime law: towing for the mere purpose of expediting her voyage without reference to
any circumstances of danger
Arrastre
- Arrastre operators functions has nothing to do with the trade and business of navigation
nor to the use or operation of vessels
- Services are not maritime
- Functions of arrastre operator:
o Receive, handle, care for, and deliver all merchandise imported and exported, upon
or passing over Government-owned wharves and piers in the port
o Record or check all merchandise which may be delivered to said port ant shipside
o Furnish light, and water services and other incidental service in order to undertake
its arrastre service
- Such service is in face, no different from those of a depositary or warehouseman
Stevedoring
- involves the loading and unloading of coastwise vessels calling at the port.
>>> Common carriers are public utilities, impressed with public interest and concern subject to
regulation by the state.
GOVERNING LAWS
- read summary of rules on page 40 of book
Article 1766 (Civil Code). In all matters not regulated by this Code, the rights and obligations of
common carriers shall be governed by the Code of Commerce and by special laws.
NATURE OF BUSINESS
- Common Carriers exercise a sort of public office
- Consequently, common carriers are subject to regulation by the State
REGISTERED OWNER RULE/REGISTRATION LAWS

- Governed by the Land Transportation and Traffic Code and administered by the Land
Transportation Office
- The registered owner of a vehicle is liable fro any damage caused by the negligent operation
of the vehicle although the same was already sold or conveyed to another person at the time
of the accident.
- The registered owner is liable to the injured party subject to his right of recourse against the
transferee or the buyer
- Applicable in case of lease
- Registered owner not liable if vehicle was taken form him without his knowledge and
consent.
Q: what is the purpose of such law?

A: The main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility
therefor can be fixed on a definite individual the registered owner.

KABIT SYSTEM
- The registered owner rule is applicable to people involved on a kabit system
- arrangement whereby a person who has been granted a certificate of public convenience allows
other persons who own motor vehicles to operate them under his license, sometimes for a fee
or percentage of the earnings --- contrary to public policy (thus VOID and INEXISTENT)
- parties to the kabit system cannot invoke the same as against each other either to enforce
their illegal agreement or to invoke the same to escape liability --- pari delicto rule
- having entered into an illegal contract, neither can seek relief from the courts and each must
bear the consequences of his acts
- also applicable to aircrafts and vessels basic rule that no person can operate a common carrier
without securing a certificate of public convenience and necessity.
Case: Dizon vs. Octavio

- the primary factors considered in the granting of a certificate of public convenience for the
business of public transportation is the financial capacity of the holder of the license, so that
liabilities arising from accidents may be duly compensated
- Thus, for the safety of passengers and the public who may have been wronged and deceived
through the baneful kabit system, the registered owner of the vehicle is not allowed to
prove that another person has become the owner so that he may be thereby relived of
responsibility
CHAPTER 2
OBLIGATIONS OF THE PARTIES
I. Obligations of the carrier
A. DUTY TO ACCEPT
- A common carrier granted a certificate of public convenience is duty bound to accept
passengers or cargo without any discrimination.
- It is illegal for domestic ship operators to refuse to accept or carry passengers or cargo
without just cause. (Section 16, RA 9295)
Note: In air transportation, passengers with confirmed tickets who were not allowed to board are
provided with denied boarding compensation and priority boarding rules.
No compensation for refusal if it is because of:
1. government requisition of the space
2. substitution of equipment of lesser capacity when required by operational and or safety
and/or other causes beyond the control of the carrier, and
3. if arrangements have been made for the passenger to take another flight in a comparable air
transportation which will arrive not later than three hours after the time of flight on which
the confirmed space is held is supposed to arrive. (Civil Aeronautics Board Economic
Regulation)

Grounds for Valid Refusal to Accept Goods
- GR: common carriers cannot lawfully decline to accept a particular class of goods
- EXC: it appears that for some sufficient reason the discrimination against the traffic in such
goods is reasonable and necessary:
i. dangerous objects or substances including dynamites and other explosives
ii. goods are unfit for transportation
iii. acceptance would result in overloading
iv. contrabands or illegal goods
v. goods injurious to health
vi. goods will be exposed to untoward danger like flood, capture by enemies and the like
vii. goods like livestock will be exposed to diseases
viii. strike
ix. failure to tender goods on time
Case: Fisher v. Yangco

- factors in determining reasonable discrimination include:
i. suitability to the vessel for the transportation of such products;
ii. reasonable possibility of danger or disaster resulting from their transportation in the form
and under the conditions in which they are offered for carriage; and
iii. the general nature of the business done by the carrier.
(1) Hazardous and Dangerous Substances

- Carrier not properly equipped to transport dangerous chemicals or explosives may validly
refuse to accept the same for transport.
- Those which are not authorized by the Maritime Industry Authority to carry such goods may
also validly refuse the same for transport.
- There must be a Special Permit to Carry from the MARINA. (accept only if the said cargoes
are covered by the necessary clearance from appropriate government agencies)
(2) Unfit for Transport

- Carriers may refuse to accept goods that are unfit for transportation
- These goods may by nature be unfit for transportation or are unfit because of improper
packaging or defect in their containers.
- However, carriers may accept the goods and limit its liability by stipulation.
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 the presence of witnesses, with the shipper
and consignee in attendance. If declaration of shipper is true, expenses occasioned by the
examination and of repacking the packages shall be for the account of the carrier
Even if the cause of the loss, destruction or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common carrier
must exercise due diligence to forestall or lessen the loss.

B. DUTY TO DELIVER THE GOODS
Time of Delivery
- Where a carrier has made an express contract, the goods must be delivered within a specified
time otherwise he is liable for any delay (indemnity for damages).
- In the absence of any agreement, goods must be delivered at its destination within a
reasonable time (depending on the attending circumstances, nature of the goods; expected date
of arrival in the BOL may be considered).
- In the absence of a special contract, a carrier is NOT an insurer against delay in transportation of
goods
Consequences/Effects of Delay
- Excusable delays in carriage suspend, but do not generally terminate, the contract of carriage;
when the cause is removed, the master must proceed with the voyage and make delivery.
- During the detention or delay, vessel continues to be liable as a common carrier, not a
warehouseman, and remains duty bound to exercise extraordinary diligence.
Article 1740 (NCC). If common carrier negligently delays in transporting the goods, a natural
disaster shall not free it from responsibility.
Article 1747 (NCC). If common carrier delays , without just cause, in transporting the goods or
changes the stipulated or usual route, the contract limiting its liability cannot be availed of in case of
the loss, destruction, or deterioration of the goods.
Note: read page 72 of book for other provisions.
(1) Abandonment
- 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 the carrier. It must be communicated to the
carrier in writing.
- This right must be exercised between the time of delay and before the arrival of the goods at
its destination.
- The carrier must pay the full value of the goods as if they had been lost or mislaid.
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 have on the day and at the place they
are to be delivered.
The value of the goods which the carrier must pay in case of loss or misplacement shall be that
what is declared in the bill of lading.
Consignee must not defer the payment of the expenses and transportation charges of the goods
otherwise carrier may demand the judicial sale of the goods.

Case: Magellan Mfg. Marketing Corp. vs. CA
- Abandonment may also be made by virtue of stipulation or agreement between parties
(2) Rights of Passengers in Case of Delay

- As to the rights and duties of the parties strictly arising out of delay, the Civil Code is silent.
However, the Code of Commerce provides for such a situation:
ARTICLE 698. In case a voyage already begun should be interrupted, the passengers shall be obliged
to pay the fare in proportion to the distance covered, without right to recover for losses and
damages if the interruption is 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
interruption should be caused by the disability of the vessel and a passenger should agree to await
the repairs, he may not be required to pay any increased price of passage, but his living expenses
during the stay shall be for his own account.
Note: the carrier is liable for any loss or damage, including any pecuniary loss or loss of profit, which
the passenger may have suffered by reason thereof.
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 refund service fee from the authorized
issuing/ticketing office.
Where and to Whom Delivered

a. Place Goods should be delivered to the consignee in the place agreed upon by the parties.
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 carrier be returned to him, in exchange for
another wherein the novation of the contract appears. The expenses occasioned by the change shall
be for the account of the shipper.
b. Consignee Delivery must generally be made to the owner or consignee or to someone

lawfully authorized by him to receive the goods for his account or to the holder of the
negotiable instrument.
c. Delay to Transport Passengers A carrier is duty bound to transport the passenger with
reasonable dispatch
Effects of delayed and unfinished voyage in inter-island vessels:

vessel cannot continue or complete her voyage for any cause carrier is under obligation to
transport the passenger to his/her destination at the expense of the carrier including free
meals and lodging before the passenger is transported to his/her destination; 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 or to an amount that will suffice to defray transportation cost at
the shortest possible route if the cause of the unfinished voyage is fortuitous event.
vessel is delayed in arrival at the port of destination free meals during mealtime

delay in departure at the point of origin due to carriers negligence; fortuitous event - free
meals during mealtime; carrier not obliged to serve free meals
carrier is not obliged to inform passengers of sailing schedule of the vessel
C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE

- Goods should be delivered in the same condition that they were received and to transport
the passengers without encountering any harm or loss.
- Read page 79-80 for provisions
ARTICLE 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances. (Civil Code)
- Presumption of Negligence
- Two conditions for the birth of the presumption of negligence:
1. there exists a contract between the passenger or the shipper and the common carrier
2. the loss, deterioration, injury or death took place during the existence of the contract
Doctrine of Proximate Cause there is presumption of negligence

If the goods are lost, destroyed or deteriorated, common carriers are presumed to have acted
negligently, unless they prove that they observed extraordinary diligence. In case of death of or
injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence.
- Duration of Duty:
(1) Carriage of Goods

- Due diligence should be exercised the moment the goods are delivered to the carrier.
- Goods are deemed delivered to the carrier when the goods are ready for and have been
placed in the exclusive possession, custody and control of the carrier for the purpose of
their immediate transportation and the carrier has accepted them
ARTICLE 1736. The extraordinary responsibility of the common carrier lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to the consignee or to the person
who has a right to receive them
ARTICLE 1737. The common carriers duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored in transit, unless
the shipper or owner has made use of the right of stoppage in transitu. (common carrier becomes a
warehouseman ordinary diligence)
ARTICLE 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place if destination, until

the consignee has been advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.
(2) Carriage of Passengers
By trains the extraordinary responsibility of common carrier commences the moment the person
who purchases the ticket (or a token or card) from the carrier presents himself at the proper
place and in a proper manner to be transported with a bona fide intent to ride the coach.
* Mere purchase of a ticket does not of itself create the relation of carrier and passenger but it is an
element in the inception of the relation.
* A proper person who enters upon the carriers premises (station, ticketing office, or waiting room)
with the intention of becoming a passenger will ordinarily be viewed as assuming the status of a
passenger.
* One who goes to the railroad station to inquire as to the possibility of securing passage on a
freight train, which he knows, by the rules of the company, is not 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.
* One who rides upon any part of the vehicle or conveyance which is unsuitable 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 drivers pass or similar arrangement, to look after livestock
being transported and as incident to such transportation is, generally regarded as a passenger for
hire.
Motor vehicles like jeepneys and buses are duty bound to stop their conveyances for a
reasonable length of time in order to afford passengers an opportunity to board and enter, and they
are liable for injuries suffered by boarding passengers resulting from the sudden starting up or
jerking of their conveyances while they do so. Once a public utility bus or jeepney stops, it is making
a continuous offer to bus riders.
Case: Dangwa Transportation Company vs. CA

- When the bus is not in motion there is no necessity for a person who wants to ride the same
to signal his intention to board. A public utility bus, once it stops, is in effect making a
continuous offer to bus riders
- The premature acceleration of the bus in this case was a breach of such duty
Case: La Mallorca vs. CA

- Duty to exercise utmost diligence with respect to passengers will not ordinarily terminate until
the passenger has, after reaching his destination, safely alighted from the carriers conveyance
or had a reasonable opportunity to leave the carriers premises. And what is reasonable time or
a reasonable delay within this rule is to be determined from all the circumstances.
Case: Aboitiz Shipping Corporation vs. CA
- Same ruling with La Mallorca vs. CA
- That reasonableness of time should be made to depend on the attending circumstances of the
case, such as the kind of common carrier, the nature of its business, the customs of the place,
and so forth, and therefore precludes a consideration of the time element per se without
taking into account such other factors
- The primary factor to be considered is the existence of a reasonable cause as will justify the
presence of the victim on or near the petitioners vessel. We believe there exists such a
justifiable cause (baggage were left)
DEFENSES OF COMMON CARRIERS
Article 1734 (No other defense may be raised: exclusive or closed list)
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packing or in the containers
5. Order or act of competent public authority
6. Exercise of extraordinary diligence
Fortuitous Event to be a valid defense must be established to be the proximate cause of the loss
Note: Since common carrier is presumed is to be negligent, it has been observed that the DOCTRINE
of PROXIMATE CAUSE is INAPPLICABLE to a contract of carriage. The injured passenger or owner of
goods need not prove causation to establish his case.
The absence of causal connection is only a matter of defense.
Requisites of Fortuitous Event:

1. The cause of the unforeseen and the unexpected occurrence, or of the failure of the debtor to
comply with his obligation, must be independent of the human will
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
3. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner
4. The obligor (debtor) must be free from any participation in or the aggravation of the injury
resulting to the creditor
In order for the common carrier to be exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss. However, the common carrier must exercise due
diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or

other natural disaster in order that the common carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods.
Fire not considered as a natural calamity or disaster
Fire caused by lightning a natural calamity
Hijacking does not fall under the categories of exempting causes; the common carrier is presumed
to be at fault or to have acted negligently unless there is a proof of extraordinary diligence on its
part
Mechanical defects damage or injury resulting from mechanical defects is not a damage or injury
that was caused by fortuitous event; carrier is liable to its passengers for damages caused by
mechanical defects of the conveyance (breakage of a faulty drag-link spring, fracture of the vehicles
right steering knuckle, defective breaks)
- One of the reason why carrier is made liable despite the presence of mechanical defect is
the absence of privity between the passenger and the manufacturer
Case: Juntilla v. Fontanar

- Tire-blowouts was not considered as fortuitous event although it was alleged that the tires
were in good condition; no evidence was presented to show that the evidence were due to
adverse road conditions the carrier must prove all angles.
- The explosion could have been caused by too much air pressure injected into the tires and the
fact that the jeepney was overloaded and speeding at the time of the accident.
OTHER INVALID DEFENSES

1. Damage to cargo due to EXPLOSION of another cargo not attributable to peril of the seas
or accidents of navigation.
2. Damage by WORMS and RATS resulting to damage to cargoes cant be cited as an excuse
by the carrier.
3. Damage by WATER through a port which had been left open or insufficiently fastened on
sailing.
4. Carrier cannot escape liabilities to third persons if damage was caused by BARRATRY
where the master or crew of the ship committed unlawful acts contrary to their duties
includes theft and fraudulently running the ship ashore.
Cases:
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 repair shop, a typhoon came resulting to the
spoilage of cargoes.
Answer: A typhoon although a natural disaster, is not a valid defense if it is shown that it was
not the only cause of the loss. Especially when the facts indicate that the typhoon was
foreseeable and could have been detected through the exercise of reasonable care. Cargoes
should have been secured while the bus was being repaired for 2 days.

2. Problem: A passenger told the driver that he has valuable items in his bag which was placed
under his feet and he asked the driver (to which he is seated near) to watch for the bag
while he is asleep.
(a) There have been incidents of throwing of stones at passing vehicles in the North Express
Way. While the bus was traversing the super highway, a stone hurled from the overpass
and hit the passenger resulting to injuries. Can the passenger hold the bus liable for
damages?
Answer: Yes. The incident was foreseeable due the prior incidents of stone hurling. The
bus should have exercised 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 and the carrier exercised
the utmost diligence, then, the bus cant be held liable.
Nonetheless, the burden of proof is on the carrier to prove such exercise of diligence. It
is up to the carrier to overthrow the presumption of negligence.
If the passenger decides to file a case, al the passenger has to do is to prove that she was
a passenger of the bus and that she suffered injuries while on board the bus.
(b) Supposing that there were armed men who staged a hold-up while the bus was speeding
along the highway. One of them stole the passengers bag and wallet while pointing a
gun him. Is the bus liable?
Answer: No. Hand-carried luggages are governed by necessary deposit. Besides, theft
with use of arms or through irresistible force is a force majeure which exempts carriers
from liability.
3. Hi-jacking cannot exculpate the carrier from liability if it is shown that the employees of the
carrier were not overwhelmed by the hijackers and that there was no showing of irresistible
force. Since, there were 4 employers while there were only 2 hijackers and only one of them
was armed with bladed weapon.
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 carrier may be adjudged from liability if it can be
proven that the hijacking was unforeseeable.
Case: Philippine American General Insurance Co. vs. MCG

- Even in cases where a natural disaster is the proximate and only cause of the loss, a common
carrier is still required to exercise due diligence to prevent or minimize loss before, during
and after the occurrence of the natural disaster, for it to be exempt from liability under the
law for the loss of the goods
Case: Pilapil vs. CA

- Facts: a bystander alongside national highway hurled a stone at the left side of the bus,
hitting petition above his left eye which resulted to partial loss of the left eyes vision
- SC: A common carrier does not give its consent to become an insurer of any and all risks to
passengers and goods. It merely undertakes to perform certain duties to the public as the
law imposes, and holds itself liable for any breach thereof.

- The law does not make the carrier an insurer of the absolute safety of its passengers
- Article 1763: A common carrier is responsible for injuries suffered by a passenger on account
of the willful acts or negligence of other passengers or of strangers, if the common carriers
employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission
o Clearly, a tort committed by a stranger which causes injury to a passenger does not
accord the latter a cause of action against the carrier. The negligence for which a
common carrier is held responsible is the negligent omission by the carriers
employees to prevent the tort from being committed when the same could have
been foreseen and prevented by them
Case: Franklin Gacal vs. PAL

- It is therefore not enough that the event should not have been foreseen or anticipated, as is
commonly believed, but it must be one impossible to foresee or to avoid.
- The mere difficulty to foresee the happening is not the impossibility to foresee the same
PUBLIC ENEMY
- Presupposes a state of war and refers to the government of a foreign nation at war with the
country to which the carrier belongs, though not necessarily with that to which the owner of the
gods owes allegiance.
- Thieves, rioter, and insurrectionists are not included. They are merely private depredators for
whose acts a carrier is answerable.
- Rebels in insurrection against their own government are generally not embraced in the
definition of public enemy. However, if the rebels hold a portion of territory, they have declared
their impendence, cast off their allegiance and has organized armed hostility to the government,
and the authority of the latter is at the time overthrown, such an uprising may take on the
dignity of a civil war, and so matured and magnified, the parties are belligerent and are entitled
to belligerent rights.
- Depredation by pirates (which are enemy of all civilized nation) excuses the carrier from liability.
- Common carriers may be exempted from responsibility only if the act of 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 the loss before, during and after the performance of the act of the
public enemy in order that the carrier may be exempted from liability for the loss, destruction,
or deterioration of the goods.
IMPROPER PACKING
Character of the goods and defects in the packaging or in the containers are defenses available to
the common carrier. Similarly, the Carriage of Good by Sea Act provides that carrier shall not liable
for:
1. Wastage in bulk or weight or any damages arising form the inherent defect, quality or vice of
goods;
2. Insufficiency of packing;
3. Insufficiency or inadequacy of the marks, or

4. Latent defects no discoverable by due diligence.
However, NCC likewise provides:

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or the containers, the common carrier
must exercise due diligence to forestall or lessen the loss.
Thus, if the carrier accepted the goods knowing the fact of improper packing or even if the carrier
does not know but the defect was nonetheless apparent upon ordinary observation, it is not
relived from liability for loss or injury to goods resulting therefrom.
Cases:
1. Problem: A carrier knowing that some of a cargo of sacks of rice had big holes and others
had openings just loosely tied with strings resulting to the spillage of rice during the trip.
Thus, there was shortage in the delivery of the cargoes. When sued due to the shortage, the
carrier interposed a defense that it was not liable since the shortage was due to the
defective condition of the sacks. Decide.
Answer: Carrier must still exercise extraordinary diligence if the fact of improper packing is
known to the carrier or its servants, or apparent upon ordinary observation. If the carrier
accepted the cargo without protests or exception notwithstanding such condition, he is not
relived of liability for damage resulting therefrom. Apply Article 1742.
ORDER OF PUBLIC AUTHORITY
Art. 1743. If through the order of public authority the goods are seized or destroyed, the
common carrier is not responsible, provided said public authority had power to issue order.
Cases:
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 required that public authority who issued the order
must be duly authorized to issue the order.
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
- Primary defense of carrier is exercise of extraordinary diligence in transporting passengers. Even if

there is a fortuitous event, the carriers must also present proof of exercise of extraordinary
diligence.
Art. 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the carriers employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.

The liability does not cease even upon proof that they exercised diligence in the selection and
supervision of their employees.
Art. 1763. Carrier is responsible for injuries suffered by a passenger on account of the willful acts
or negligence of other passengers or of strangers, if the common carriers employees through the
exercise of the diligence of a good father of a family could have prevented or stopped the act or
omission.
a. Employees
- Carrier is liable for the acts of its employees. It cant escape liability by claiming that it
exercised due diligence in supervision and selection of its employees (unlike in quasi-delicts).
Reasons for the rule:

1. Undertaking of the carrier requires that its passenger that full measure of protection
afforded by the exercise of high degree of care prescribed by law, inter alia from violence
and insults at the hands of strangers and other passengers, but above all, from the acts of
the carriers own servants.
2. The liability of the carrier for the servants violation of duty to performance of his contract to
safely transport the passenger, delegating therewith the duty of protecting the passenger
with utmost care prescribed by law.
3. As between the carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carriers employees against passenger, since it, and not the passenger, has
the power to select and remove them.
Rationale: On the other hand, if the ship owner derives profits from 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 rule of
natural law contained in the partidas --- that he who enjoys the benefits derived from a thing
must likewise suffer the losses that ensue therefrom
- Note: Willful acts of the employees include theft
b. Other Passengers and Third Persons
- With respect to acts of strangers and other passengers resulting in injury to a passenger, the
availability of such defense is also subject to the exercise of a carrier of due diligence to
prevent or stop the act or omission.
- Negligence of the carrier need not be the sole cause of the damage or injury to the
passenger or the goods. The carrier would still be liable even if the contractual breach
concurs with the negligent act or omission of another person.
Remember: the negligence of the other river in a collision is NOT a prejudicial question to an
action against the carriers company.

Article 1759. Common carriers are liable for the death of or injuries to passenger through the
negligence or willful acts of the formers employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.
PASSENGERS BAGGAGES
- The term baggage has been defined to include whatever articles a passenger usually takes
with him for his own personal use, comfort and convenience
- Rules that are applicable to goods that are being shipped are also applicable to baggage
delivered to the custody of the carrier. Arts. 1733. 1734 and 1736 of Civil Code are applicable.
- However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall apply.
Distinction: W/N the baggage is in the personal custody of the passenger.

if yes, hand carried baggage
if no, checked-in baggage
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided
that notice was given to them, or to their employees, of the effects brought by the guests and
that, on the part of the latter, they take the precautions which said hotel-keepers or their
substitutes advised relative to the care and vigilance of their effects. (1783)
Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or
injury to the personal property of the guests caused by the servants or employees of the keepers
of hotels or inns as well as strangers; but not that which may proceed from any force majeure.
The fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns
shall be considered in determining the degree of care required of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure,
unless it is done with the use of arms or through an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the
guest, his family, servants or visitors, or if the loss arises from the character of the things brought
into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the guest. Any stipulation between the
hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998
to 2001 is suppressed or diminished shall be void. (n)
Cases:
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 hand-carried luggage since it is governed by
rules on necessary deposits. Under Art. 20000, the responsibility of the depositary includes
the loss of property of the guest caused by strangers but not that which may proceed from
force majeure. Moreover, article 2001 considers theft as force majeure if it is done with use
of arms or through irresistible force.
2. Even if the passenger did not declare his baggage nor pay its charges 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 extraordinary diligence over the baggage that was turned over to
the carrier or placed in the baggage compartment of the bus. The non-payment of the
charges is immaterial as long as the baggage was received by the carrier for transportation.
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER
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 carriers liability; it is not a total excuse.
- However, if the negligence of the shipper/ passenger is the proximate and only cause of the
loss, then, the carrier shall not be liable. The carrier may overcome the presumption of
negligence and may be able to prove that it exercised extraordinary diligence in handling the
goods or in transporting the passenger.
The carrier may be able to prove that the only cause of the loss of the goods is any of the
following:
1. Failure of the shipper to disclose the nature of the goods;
2. Improper marking or direction as to the destination;
3. Improper loading when he assumes such responsibility.
The shipper must likewise see to it that the goods are properly packed; otherwise, liability of
the carrier may either be mitigated or barred depending on the circumstances.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being the negligence of the common carrier, the
latter shall be liable in damages, which however, shall be equitably reduced.
Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to
himself.
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 negligence of the common carrier, but the
amount of damages shall be equitably reduced.
a. Last Clear Chance

A negligent carrier is liable to a negligent passenger in placing himself in peril, if the carrier was
aware of the passengers peril, or should have been aware of it in the reasonable exercise of due
care, had in fact an opportunity later than that of the passenger to avoid an accident.
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 carrier to enforce its contractual
obligations. For it would be inequitable to exempt the negligent driver of the carrier and its owner
on the ground that the other driver was likewise guilty of negligence.
b. Assumption of Risk
Passengers must take such risks incident to the mode of travel. Carriers are not 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 travel, the consequence of which the passenger must assume or
expect.
However, there is no assumption of risk in a case wherein a passenger boarded a carrier that was
filled to capacity. The act of the passenger in taking the extension chair does not amount to implied
assumption of risk.
Note: there is also no assumption of risk by the mere fact that the carrier posted notices against
such liability
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 responsibility for any accident:. Nonetheless,
the passengers dared the driver to race with another bus, as the bus speeds up in the attempt to
overtake the 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?
Answer: Yes. The bus company is obligated to exercise utmost diligence in carrying passengers. This
liability cannot be eliminated or limited by simply posting notices. The passenger cannot be said to
have assumed the risk of being injured when he urged the driver to accept the dare. At most, the
passengers can only be said to be guilty of contributory negligence which would mitigate the liability
of the driver, since the proximate cause of the accident was the drivers willful and reckless act in
running the race with the other bus.
Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.

- Where a carriers employee is confronted with a sudden emergency, the fact that he is
obliged to act quickly and without a 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 exercise in
the absence of such emergency but must exercise only such care as any ordinary prudent
person would exercise under like circumstances and conditions, and the failure on his part to
exercise the best judgment the case renders possible does no establish lack of care and skill
on his part which renders the company liable.
Case: Compania Maritima vs. CA and Vicente Concepcion

- While the act of private respondent in furnishing petitioner with an inaccurate with of the
payloader cannot successfully be used as an excuse by petitioner to avoid liability to the
damage thus caused, 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.
Case: Philippine National Railways vs. CA

- While petitioner failed to exercise extraordinary diligence as required by law, it appears that
the deceased was chargeable with contributory negligence.
- 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 the speeding train
B. FREIGHT
a. Amount to be Paid
The regulation of rates is founded upon the valid exercise of the Police Power of the state in order
to protect the public from arbitrary and excessive rates while maintaining the efficiency and quality
of services rendered. The fixing of just and reasonable rates involves a balancing of investor and the
consumer interest.
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 beyond the maximum amount fixed by
appropriate government agency.
b. Who will pay
Although either of the shipper or the consignor may pay the freight before or at time the goods are
delivered to the carrier for shipment, nonetheless, it is the consignor (whom the contract of carriage
is made) who is primarily liable for the 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
with the carrier for the purpose of transportation.
c. Time to pay
Code of Commerce provides that in the absence of any agreement, the consignee who is supposed
to pay must do so within 24-hours from the time of delivery.
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.

(1) Carriage of Passengers by Sea
With respect to carriage of goods by sea, the tickets are purchased in advance. Carriers are not
supposed to allow passengers without tickets --- the carrier is bound to observe a No Ticket, No
Boarding Policy. The carrier shall collect/ inspect the passengers ticket within one hour from
vessels departure as not to disrupt resting or sleeping passengers.
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.
Delayed voyage means late departure of the vessel from its port of origin and/ or late arrival of the
vessel to its port of destination. Unreasonable delay means the period of time that has lapsed
without just cause and is solely attributable to the carrier which has prejudiced the transportation
of the passenger and/ or cargoes to their port of destination.
A passenger who failed to board the vessel can refund or revalidate the ticket subject to surcharges.
Revalidation means the accreditation of the ticket that is not used and intended to be used for
another voyage.
(2) Carriers Lien
If consignor or the consignee fails to pay the consideration for the transportation of goods, the
carrier may exercise his lien in accordance with Art. 375 of Code of Commerce:
ARTICLE 375. The goods transported shall be especially bound to answer for the cost of
transportation and for the expenses and fees incurred for them during their conveyance and until
the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and once prescribed,
the carrier shall have no other action than that corresponding to him as an ordinary creditor.
DEMURRAGE
Demurrage is the compensation provided for the contract of affreightment for the detention of the
vessel beyond the time agreed on for loading and unloading. It is the claim for damages for failure
to accept delivery. In broad sense, very improper detention of a vessel may be considered a
demurrage. Technically, liability for demurrage exists only when expressly stipulated in the contract.
Using the term in broader sense, damages in the nature of demurrage are recoverable for a breach
of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party
to whom the duty is owed and only against on who is a party to the shipping contract. Notice of
arrival of vessels or conveyances, or their placement for purposes of unloading is often a condition
precedent to the right to collect demurrage charges.
CHAPTER 3
EXTRAORDINARY DILIGENCE

I. RATIONALE
A common carrier is bound to carry the passengers safely as far a human care and foresight
provide, using the utmost diligence of very cautious persons, with due regard for all circumstances.
Extraordinary diligence: Calculated to protect the passengers from the tragic mishaps that
frequently occur in connection with rapid modern transportation.
II. HOW DUTY IS COMPLIED WITH

- There is no hard and fast rule in the exercise of extraordinary diligence
- Common carrier binds itself to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of a very cautious person, with due regard for all the
circumstances.
- The duty even extends to the members of the crew or complement operating the carrier
Case: Kapalaran Bus Lines vs. Coronado

- If common carriers carefully observed the statutory standard of extraordinary diligence in
respect of their own passengers, they cannot help but simultaneously benefit pedestrians
and the owners and passengers of other vehicles who are equally entitled to the safe and
convenient use of our roads and highways
A reasonable man or a good father of a family in the position of the carrier must exercise
extraordinary diligence in the performance of his contractual obligation.
- Generally, what should be determines is whether or not a reasonable man, exercising
extraordinary diligence, could have foreseen and prevented the damage or loss that
occurred.
III. EFFECT OF STIPULATION
A. GOODS
- The parties cannot stipulate that the carrier will NOT exercise ANY diligence in the custody of
goods
- The law allows a stipulation whereby the carrier will exercise a degree of diligence which is
less than extraordinary with respect to goods.
Art. 1744. A stipulation between the common carrier and the shipper owner limiting the
liability of the former for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence shall be valid, provided it be:
1. In writing, signed by the shipper/owner;

2. Supported by a valuable consideration other than the service rendered by the common
carrier (Note: Typically fare/freight); and
3. Reasonable, just and contrary to public policy.
B. PASSENGERS
- There can be no stipulation lessening the utmost diligence that is owed to passengers.

Art. 1757. The responsibility of a common carrier for the safety of passengers as required in
Arts. 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise. (Note: Absolute; extraordinary at all times.)
Gratuitous passenger A stipulation limiting the common carriers liability for negligence is valid,
but not for willful acts of gross negligence. The reduction of fare does not justify any limitation.
Case: Lara vs. Valencia

- Diligence owed to accommodation passengers is only ordinary diligence
- However, this case is not controlling with respect to common carriers because the defendant
in the said case was not a common carrier
IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
A. SEAWORTHINESS
a. Warranty of Seaworthiness of Ship

- This is the first step that should be undertaken
- Extraordinary diligence requires that the ship which will transport the passengers and
goods is seaworthy.
- Seaworthiness of the vessel is impliedly warranted.
- The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to make the ship seaworthy.
b. No duty to inquire
- Because of the implied warranty of seaworthiness, shippers of goods, when transacting
with common carriers, are not expected to inquire into the vessels seaworthiness,
genuineness of its licenses and compliance with all maritime laws. Passengers cannot be
expected to inquire everytime they board a common carrier, whether the carrier
possesses the necessary papers or that all the carriers employees are qualified.
- It is the carrier that carries such burden of proving that the ship is seaworthy.
- Sufficient evidence must be submitted and the presentation of certificates of
seaworthiness is not sufficient to overcome the presumption of negligence.
c. Meaning of Seaworthiness
- A vessel must have such degree of fitness which an owner who is exercising
extraordinary diligence would require his vessel to have at the commencement of the
voyage, having regard to all the probable circumstances of it. This includes fitness of the
vessel itself to withstand the rigors of voyage, fitness of the vessel to store the cargoes
and accommodate passengers to be transported and that it is adequately equipped and
properly manned.
- Seaworthiness is that strength, durability and engineering skill made a part of a ships
construction and continued maintenance, together with a competent and sufficient

crew, which would withstand the vicissitudes and dangers of the elements which might
reasonably be expected or encountered during her voyage without loss or damage to
her particular cargo
Example: The carrier was able to establish that the ship itself was seaworthy because the records
reveal that the vessel was dry-docked and inspected by the Phil. Coast Guard before its first
destination.
A warranty of seaworthiness requires that it be properly laden, and provided with a competent
master, a sufficient number of competent officers and seamen, and the requisite appurtenances
and equipment.
The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are carried, fit and safe for their reception,
carriage, and preservation.
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the
goods carried.
Note: Seaworthiness is relative it its construction and its application depends on the facts of a
particular case (ex. Length and nature of the voyage)
Fitness of the Vessel Itself

- It is necessary that the vessel can be expected to meet the normal hazards of the journey
- General Test of Seaworthiness: Whether the ship and its appurtenances are reasonably fit to
perform the service undertaken.
The ship must be cargoworthy

- Even if the vessel was properly maintained and is free from defect, the carrier must not
accept the goods that cannot properly be transported in the ship
- The ship must be efficiently strong and equipped to carry the particular kind of cargo which
she has contracted to carry and her cargo must be so loaded that it is safe for her to proceed
on her voyage.
The vessel must be adequately equipped and properly manned.

- On top of regular maintenance and inspection, Captains, masters or patrons of vessels must
prove the skill, capacity, and qualifications necessary to command and direct the vessel.
- If the owner of a vessel desires to be the captain without having the legal qualifications, he
shall limit himself to the financial administration of the vessel and shall entrust the
navigation to a qualified person.

Note: It is not an excuse that the carrier cannot afford the salaries of competent and licensed crew
or that latter is unavailable.
Adequate Equipment
- With respect to vessels that carries passengers, the Maritime Industry Authority prescribes
rules which provide for indispensable equipment and facilities
- ex. Exit doors, life boats, live vests
B. OVERLOADING
- Duty to exercise due diligence likewise includes the duty to take passengers or cargoes that
are within the carrying capacity of the vessel.
C. PROPER STORAGE
- The vessel itself may be suitable for the cargo but this is not enough because the cargo must
also be properly stored.
Cargo must generally not be placed on deck. The carrying of deck cargo raises the presumption of
unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper
management of the ship.
D. NEGLIGENCE OF CAPTAIN AND CREW
- Failure on the part of the carrier to provide competent captain and crew should be
distinguished from the negligence of the said captain and crew, because the latter is covered
by the Limited Liability Rule (liability of the shipowner may be limited to the value of the
vessel).
- 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 invoked because the shipowner may be
deemed negligent.
Rules on passenger safety

- Negligence on the part of the captain and crew as well as the operator includes failure to
comply with the regulation issued by the Maritime Industry Authority (MARINA) on the
safety of the passengers
- Memorandum Circular No. 112 : passengers do not merely contract for transportation
because they have the right to be treated by the carrier and its employees with kindness,
respect, courtesy and due consideration. They are entitled to be protected against personal
conduct, injurious language, indignities and abuses from the said carrier and its employees
- Read Memorandum Circular No. 114: p. 204
Case: Planters Products Inc. vs. CA

- The period during which private respondent was to observe the degree of diligence required
of it as a public carrier began from the time the cargo was unconditionally placed in its

charge after the vessels 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 road over which the
conveyance is to be made (subject to the approval by the Maritime Industry Authority), the
carrier may not change the route, unless it be by reason of force majeure. Without this
cause, he shall be liable for all the losses which the goods may suffer, aside from paying the
sum stipulated for that case.
- When on account of the force majeure, the carrier had to take another route which resulted
to an increase in transportation charges, he shall be reimbursed upon formal proof.
Note: With respect to carriers by sea, the routes are subject to approval by MARINA and the same
cannot generally be changed without the authorization from said administrative agency
2. Transshipment
- The act of taking cargo out of one ship and loading it into another; to transfer goods from
the vessel stipulated in the contract of affreightment to another vessel before the place of
destination named in the contract has been reached.
- Transshipment of freight without legal excuse is a violation of the contract and subjects the
carrier to liability if the freight is lost even by a cause otherwise excepted.
Note: there is transshipment whether or not the same person, firm or entity owns the vessels (what
matters is the actual physical transfer of cargo from one vessel to another)
V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
A. CONDITION OF VEHICLE
- Common carriers that offer transportation by land are similarly required to make sure that
the vehicles that they are using are in good order and condition.
Rule on Mechanical Defects If the carriers will replace certain parts of the 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 cannot escape liability by claiming that the accident that resulted
because of a defective break or tire is due to a fortuitous event. This is true even if it can be
established that the tire that was subject of a blow-out is brand new. The duty to exercise
extraordinary diligence requires the carrier to purchase and use vehicle parts that are not defective.

B. TRAFFIC RULES
- The carrier fails to exercise extraordinary diligence if it will not comply with basic traffic
rules. The Civil Code provides for a presumption of negligence in case the accident occurs
while the operator of the motor vehicle is violating traffic rules.
In cases involving breach of contract of carriage, proof of violation of traffic rules confirms that the
carrier failed to exercise extraordinary diligence.
Case: Mallari Sr and Jr vs. CA

- The rule is settled that a driver abandoning his proper lane for the purpose of overtaking
another vehicle in an ordinary situation has the duty to see to it that the road is clear and
not to proceed if he cannot do so in safety
C. DUTY TO INSPECT
- There is no unbending duty to inspect each and every package or baggage that is being
brought inside the bus or jeepney. The carrier is duty bound to conduct such inspection
depending on the circumstances.
Case: Nocum vs. Laguna Tayabas Bus Company

- While it is true the passengers of appellants bus should not be made to suffer for something
over which they had no control, fairness demands that in measuring a common carriers
duty towards its passengers, allowance must be given to the reliance that should be reposed
on the sense of responsibility of all the passengers in regard to their common safety.
- It is to be presumed that a passenger will not take with him anything dangerous to the lives
and limbs of his co-passengers not to speak of his own.
- Not to be lightly considered is the right to privacy to which each passenger is entitled
- In other words, inquiry may be verbally made as to the nature of a passengers baggage
when such is not outwardly perceptible, but beyond this, constitutional boundaries are
already in danger of being transgressed
- SC held that carrier has succeeded in rebutting the presumption of negligence by showing
that it has exercised extraordinary diligence for the safety of its passenger, according to the
circumstances of each case
Note: although overland transportation are not bound nor empowered to make an examination on
the contents of packages or bags particularly those hand carried by passengers, such is different
with regards to an airline company.
VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR

- The aircraft must be in such a condition that it must be able to withstand the rigors of flight.
Airworthiness An aircraft, its engines propellers, and other components and accessories, are of
proper design and construction, and are safe for air navigation purposes, such design and
construction being consistent with accepted engineering practice and in accordance with
aerodynamic laws and aircraft science.

Proof of airworthiness is not by itself sufficient to prove exercise of extraordinary diligence.
Case: Japan Airlines vs. CA

- The fact that the flight was cancelled due to fortuitous event does not mean that the
carriers duty already ended. The carrier is still obligated to look after the convenience and
comfort of the passenger
- Thus the carrier was obligated to make the necessary arrangements to transport the
passenger on the first available flight.
A. INSPECTION
- It is the duty of the carrier to make inquiry as to the general nature of the articles shipped
and of their value before it consents to carry them; and its failure to do so cannot defeat the
shippers right to recovery of full value of the package if lost, in the absence of showing of
fraud or deceit on the part of the shipper.
Where a common carrier has reasonable ground to suspect that the offered goods are of a
dangerous character, the carrier has the right to know the character of such goods and to insist
inspection, if reasonable and practical under the circumstances, as a condition of receiving and
transporting such goods. To be subjected to unusual search, other than the routinary inspection
procedure customarily undertaken, there must exist proof that would justify cause for apprehension
that the baggage is dangerous as to warrant exhaustive inspection, or even refusal to accept
carriage of the same.
Case: Northwest Airlines vs. Laya

- The fact that the plaintiff was greatly inconvenienced by the fact that his attach case was
subjected to further inspection does not warrant imposition of liability because he was not
singled out and discriminated by the employees of the carrier
- Protection of passengers must take precedence over convenience
- Nevertheless, the implementation of security measures must be attended by basic
courtesies
CHAPTER 4
BILL OF LADING
I. CONCEPTS, DEFINITION AND KINDS
Bill of Lading (BOL)

- a written acknowledgement, signed by the master of a vessel or other authorized agent of
the carrier, that he has received the described goods from the shipper, to be transported on
the expressed terms to be described the place of destination, and to be delivered to the
designated consignees of the parties.
- It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT OF TITLE.

A BOL is not necessary for the perfection of a contract of carriage. Thus, the obligation to exercise
extraordinary diligence by the carrier is still required even if there is no bill of lading.
In the absence of the bill of lading, disputes shall be determined on the basis of the provisions in
the New Civil Code and suppletory by the Code of Commerce.
KINDS of BILL of LADING:
1. Clean Does not contain any notation

Bill of indicating any defect in the goods.
Lading
2. Foul Bill One that contains the
of Lading abovementioned notation.
3. Spent The goods are already delivered but
Bill of the bill of lading was not yet
Lading returned (upon delivery, the carrier
is supposed to retrieve the covering
bill of the goods)
4. Through Issued by a carrier who is obliged to
Bill of use the facilities of other carriers as
Lading well as his own facilities for the
purpose of transporting the goods
from the city of the seller to the city
of the buyer, which BOL is honored
by the second and other interested
carriers who dont issue their own
BOL.
5. On -states that the goods have been
Board Bill received on board the vessel which
is to carry the goods.
-apparently guarantees the certainty
of shipping as well as the
seaworthiness of the vessel to carry
the goods.
-basically means that the goods are
already inside the vessel
6. -states that the goods have been
Received received for shipment with or
for without specifying the vessel by
Shipment which the goods are to be shipped.
Bill -issued when conditions are not
normal and there is insufficiency of
shipping space.

7. Custody The goods are already receied by
Bill of the carrier but the vessel indicated
Lading therein has not yet arrived in the
port.
8. Port Bill The vessel indicated in the BOL that
of Lading will transport the goods is already in
the port.
Note: A party to a maritime contract would require an on board bill of lading because of its
apparent guaranty of certainty of shipping as well as the seaworthiness of the vessel which is to
carry the goods.
Effectivity of BOL
- upon its delivery to and acceptance by the shipper.
- The acceptance of the bill without dissent raises the presumption that all the terms therein
were brought to the knowledge of the shipper and agreed to by him, and in the absence of
fraud or mistake, he is stopped thereafter from denying that he assented to such claims
(whether he reads the bill or not)
THE 3-FOLD NATURE OF THE BILL OF LADING

- The three fold nature of a bill of lading is obviously applicable only to carriage of goods
- As receipt and document of title: issued for goods
- As contract: applies to tickets issued to passengers
I. RECEIPT
- As comprehending all methods of transportation, a BOL may be 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 person named or on his order.
- Other terms, shipping receipts, forwarders receipts, and receipts for transportation.
- (SC) the designation however is not material, and neither is the form of the instrument. If it
contains an acknowledgement by the carrier 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 goods were delivered to the
carrier issuing the bill, for immediate shipment, and it is nowhere questioned that a bill of
lading is prima facie evidence of the receipt of the goods by the carrier
II. CONTRACT
- It expresses the terms and conditions of the agreement between the parties; names the
parties; includes consignees etc. It is the law between the parties bound by its terms and
conditions.
Contracts of Adhesion
- It is to be construed liberally in favor of the shipper who adhered to such bill as it is a
contract of adhesion. The only participation of the party is the signing of his signature or his
adhesion thereto.

- The shipper or passenger is bound by the terms and conditions if there is no occasion to
speak of ambiguities or obscurities
- If the words appear to be contrary to the evident intention of the parties, the latter shall
prevail over the former
ART. 24 (NCC). In all contractual property or other relations, when one of the parties is at a
disadvanatge on account of his moral dependence, ignorance indigence, mental weakness, tender
age and other handicap, the court must be vigilant for his protection.
Parole Evidence Rule

- BOL is covered by the parol evidence rule, that the terms of the contract are conclusive upon
the parties and evidence aliunde is not admissible to vary or contradict a complete
enforceable agreement, subject to well defined exceptions
- The mistake contemplated as an exception to the parol evidence rule is one which is a
mistake of fact mutual to the parties.
- 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 evidence thereon
Bill of Lading as Evidence

- The BOL is the legal evidence of the contract and the entries thereof constitutes prima facie
evidence of the contract.
- All the essential elements of a valid contract (cause, consent, object) are present when such
bill are issued.
III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE

- In a contractual obligation, the bill of lading can be categorized as an actionable document
under the Rules of Court. Hence, the bill of lading must be properly pleaded either as causes
of action or defenses
- ART 1507 (NCC). A document of title in which it is stated that the 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
o a. Bearer document- negotiated by delivery

o b. Order document- negotiated by indorsement of the specified person so named
- Effects of negotiation. Negotiation of the document has the effect of manual delivery so as
to constitute the transferee the owner of the goods.
BASIC STIPULATIONS
- Provided for in the Code of Commerce

- (for overland transportation, maritime commerce and electronic documents, please refer to
the textbook for the codal pp. 203-210)
PROHIBITED AND LIMITING STIPULATION
1. Exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence - INVALID as it is contrary to public policy.
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:
a. in writing and signed by both parties
b. supported by a valuable consideration other than the service rendered by the
common carrier
c. the stipulation is just, reasonable and not contrary to law.
3. Providing an unqualified limitation of such liability to an agreed valuation - INVALID
4. Limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher
value and pays a higher rate of freight- VALID and ENFORCEABLE.
Note: the purpose of limiting stipulations in the bill of lading is to protect th common carrier. Such
stipulation obliges the shipper/consignee to notify the common carrier of the amount that the latter
may be liable for in case of loss of the goods
Remember:
1. The parties cannot stipulate so as to totally exempt the carrier from exercising any degree of
diligence whatsoever
2. The parties cannot stipulate that the common carrier shall exercise diligence less than the
diligence of a good father of a family
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS:

1. Inter-island - if goods arrived in damaged condition (Art. 366):
a. If damage is apparent, the shipper must file a claim immediately (it may be oral or written);
b. If damage is not apparent, he should file a claim within 24 hours from delivery.
The filing of claim under either (1) or (2) is a condition precedent for recovery.
If the claim is filed, but the carrier refuses to pay: enforce carriers liability in court by filing a case:
a. within 6 year, if no bill of lading has been issued; or
b. within 10 years, if a bill of lading has been issued.
2. Overseas where goods arrived in a damaged condition from a foreign port to a Philippine port of
entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim should be filled immediately;
b. if damage is not apparent, claim should be filled within 3 days from delivery.
Filing of claim is not a condition precedent, but an action must be filed against the carrier within a
period of 1 year from discharge; if there is no delivery, the one-year period starts to run from the
day the vessel left port (in case of undelivered or lost cargo), or from delivery to the arrastre (in case
of damaged cargo).

Where there was delivery to the wrong person, the prescriptive period is 10 years because there is a
violation of contract, and the carriage of goods by sea act does not apply to misdelivery. (Ang v.
American SS Agencies (19 SCRA 631)
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
- Applies suppletorily to the Civil Code if the goods are to be shipped form a foreign port to
the Philippines
- COGSA is applicable in international maritime commerce. It can be applied in domestic sea
transportation if agreed upon by the parties. (paramount clause)
- Under the Sec. 4 (5), the liability limit is set at $500 per package 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 mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463).
- If by agreement, another maximum amount than that mentioned may be fixed provided
that such maximum shall not be less than $500 and in no event shall the carrier be liable for
more than the amount of damage actually sustained
Note that Art. 1749 of the NCC applies to inter-island trade.
Meaning of Package
- If the goods are shipped in cartons, each carton is considered a package even if they are
stored in container vans
- When what ordinarily be considered packages are shipped in a container supplied by the
carrier and the number of such units is disclosed in the shipping documents, each of those
units and not the container constitutes the package.
Prescriptive periods
- Suit for loss or damage to the cargo should be brought within one year after:
a. delivery of the goods; or
b. the date when the goods should be delivered. (Sec. 3[6])
The one-year prescriptive period is suspended by:

1. express agreement of the parties (Universal Shipping Lines, Inc. v. IAC, 188 SCRA 170)
2. when an action is filed in court until it is dismissed. (Stevens & Co. v. Nordeutscher Lloyd, 6
SCRA 180)
Things to Remember:
1. Article 1757 provides that the responsibility of a common carrier to exercise utmost
diligence for the safety of PASSENGERS CANNOT be dispensed with or lessened by
stipulation or statement on tickets or otherwise
2. Article 1750 of the Civil Code provides that a contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction, or deterioration of the GOODS is VALID, if
it is REASONABLE and JUST under the circumstances, and has been FAIRLY AND FREELY
AGREED UPON

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
Note: it has been suggested that the signature of the shipper in the bill of lading with regards
to the limitation applies only to reduction of diligence and not to the stipulated amount to
be paid.
4. It is unjust and contrary to public policy if the common carriers liability for acts committed
by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is
dispensed with or diminished
5. The common carrier may EXEMPT itself from liability if he can prove that:
a. He observed extraordinary diligence
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
Note: to limit its liability or at least mitigate the same, the carrier can cite CONTRIBUTORY
NEGLIGENCE of the plaintiff and the DOCTIRNE OF AVOIDABLE CONSEQUENCES
Case: Sea-Land Service Inc. vs. IAC

- Liability of a common carrier for loss of or damage to goods transported by it under a
contract of carriage is governed by the laws of the country of destination
- COGSA is applicable up to the final port of destination and that the fact that transshipment
was made on an interisland vessel did not remove the contract of carriage of goods from the
operation of said Act.
Case: Citadel Lines Inc. vs. CA

- The duty of the consignee is to prove merely that the goods were lost. Thereafter, the
burden is shifted to the carrier to prove that it has exercised the extraordinary diligence
required by law. And, its extraordinary responsibility lasts from the times that goods are
unconditionally placed in the possession of, and received by the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee or to
the person who has the right to receive them
Case: Everett Steamship Corporation vs. CA

- Considering that the shipper did not declare a higher valuation it had itself to blame for not
complying with the situations
- The trial courts ratiocination that private respondent could not have fairly and freely
agreed to the limited liability clause in the bill of lading because the said conditions were
printed in small letters does not make the bill of lading invalid
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
- Applies to all international transportation of person, baggage or goods performed by aircraft
for hire.

- International transportation means any transportation in which the place of departure
and the place of destination are situated either:
o within the territories of two High Contracting Parties regardless of whether or not
there be a break in the transportation or transshipment, or
o within the territory of a single High Contracting Party, if there is an agreed stopping
place within a territory subject to the sovereignty, mandate or authority of another
power, even though that power is not a party to the Convention.
Transportation to be performed by several successive air carriers shall be deemed to be one

undivided transportation, if it has been regarded by the parties as a single operation, whether it has
been agreed upon under the form of a single contract or of a series of contracts, and it shall not lose
its international character merely because one contract or a series of contracts is to be performed
entirely within a territory subject to the sovereignty, suzerainty, mandate, or authority of the same
High Contracting Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in the Philippines since an
international law prevails over general law.
WHEN NOT APPLICABLE:

1. If there is willful misconduct on the part of the carriers employees. The Convention does
not regulate, much less exempt, carrier from liability for damages for violating the rights of
its passengers under the contract of carriage (PAL v. CA, 257 SCRA 33). --- if the damage is
similarly caused by any agent of the carrier acting within the scope of his employment
2. when it contradicts public policy;
3. if the requirements under the Convention are not complied with.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in
the course of its operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage;
(Art. 18) and
3. Delay in the transportation of passengers, luggage or goods. (Art. 19)
NOTE: The Hague Protocol amended the Warsaw Convention by removing the provision that if the
airline took all necessary steps to avoid the damage, it could exculpate itself completely (Art. 20(1)).
(Alitalia v. IAC, 192 SCRA 9)
Remember: The said provisions merely declare the carrier liable for damages in the enumerated
cases if the conditions therein specified are present. Neither said provisions nor others in the
aforementioned Convention regulate or exclude liability for OTHER BREACHES of contract of carrier.
The Convention does not thus operate as an exclusive enumeration of the instances of an airlines
liability, or as an absolute limit of the extent of that liability.
LIMIT OF LIABILITY
1. passengers - limited to 250,000 francs;

except: agreement to a higher limit
2. goods and checked-in baggage - 250 francs/kg
except: consigner declared its value and paid a supplementary sum, carrier liable to
not more than the declared sum unless it proves the sum is greater than its actual
value.
3. hand-carry baggage - limited to 5,000 francs/passenger
An agreement relieving the carrier from liability or fixing a lower limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is caused by willful misconduct or default on
its part. (Art. 25)
Case: China Airlines vs. Daniel Chiok

- The ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the
acts and the omissions of any errant carrier to which it may have endorsed any sector of the
entire, continuous trip.
Place of Destination- within the meaning of the Warsaw Convention, is determined by the terms of
the contract of carriage, or specifically the ticket between the passenger and the carrier. It is the
destination and not an agreed stopping place that controls for the purpose of ascertaining
jurisdiction under the Convention. (Case: Santos III vs. Northwest Orient Airlines and CA)
ACTION FOR DAMAGES

1. Condition precedent
A written complaint must be made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of baggage/goods
F otherwise the action is barred except in case of fraud on the part of the carrier. (Art. 26)
2. Jurisdiction governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business through which the contract has been made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers the action is filed only against the carrier in which the
accident or delay occurred unless there is an agreement whereby the first carrier assumed
liability for the whole journey.
b. In case of transportation of baggage or goods
i. the consignor can file an action against the first carrier and the carrier in which the damage
occurred

ii. the consignee can file an action against the last carrier and the carrier in which the damage
occurred. These carriers are jointly and severally liable. (Art. 30)
Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or international travel

Code of Commerce applies to inter-island or domestic travel.
Bill of Lading as Document of Title
Bill of lading is a document of title under the Civil Code. It can be a negotiable document of
title.
A. Negotiability
- It is negotiable if it is deliverable to the bearer, or to the order of any person named in such
document. (Art. 1507, Civil Code)
a) Effect of Stamp or Notation Non-Negotiable

the document remains to be negotiable even if the words not-negotiable or non-
negotiable are placed thereon. - Art. 1510 (Civil Code)
B. How Negotiated
a) Bearer document (Art. 1508 and 1511)
- may be negotiated be delivery
b) Order document (Sec. 38, NIL and Art. 1509, NCC)

- can only be negotiated through the indorsement of the specified person so named.
- such indorsement may be in blank, to bearer or to a specified person.
Where a negotiable document of title is transferred for value by delivery, and the
endorsement of the transferor is essential for negotiation, the transferee acquires a right
against the transferor to compel him to endorse the document. xxx (Art. 1515, Civil Code)
C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the transferee the owner of the goods
- results in the transfer of ownership because transfer of document likewise transfers control over
the goods
- refer to Art. 1513
Chapter 5
Actions and Damages in Case of Breach
Cause of action of a passenger and shipper:

a) against common carrier based on culpa contractual or culpa aquiliana
b) on the part of the driver based on either culpa delictual or culpa aquiliana
Note: The source of obligation based on culpa contractual is separate and distinct from quasi-delict.

Article 1903 (last paragraph) 2 things are apparent:
1. That when an injury is caused by the negligence of a servant or employee there instantly
arises a presumption of law that there was negligence on the part of the master or the
employer either in the selection of the servant or employee, or in supervision over him after
the selection, or both.
2. That presumption is juris tantum and not juris et de jure (of law and of right), and
consequently may be rebutted
Note however: that Article 1903 of the Civil Code is not applicable to acts of negligence which
constitute the breach of contract. It is applicable only to culpa contractual.
The fundamental distinction between obligation of extra-contractual and those which arise
from contract, rests upon the fact that in cases of non-contractual obligation it is the wrongful
or negligent act or omission itself which creates the vinculum juris, whereas in contractual
relations the vinculum (bond) exists independently of the breach of the voluntary duty assumed
by the parties when entering into the contractual relation.
CONCURRENT CAUSES OF ACTION

- There is one action but several causes of action
- The same act that breaches the contract may also be tort
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 part of the driver is either culpa
delictual or culpa aquiliana. The driver of the carrier is not liable based on contract because there is
NO PRIVITY of contract between him and the passenger or shipper.
If the negligence of third persons concurs with the breach, the liability of the 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 be imposed upon him based on delict. In the latter case, the
employer is subsidiarily liable.
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 and driver of the other vehicle are not
impleaded, the carrier may implead them by filing a third party complaint.
Solidary liability
- In case the negligence of the carriers driver and a third person concurs, the liability of the
parties carrier and his driver, third person is joint and several.
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD
A. Overland Transportation of Goods and Coastwise Shipping

a) When to file a claim with carrier
- Art. 366 constitutes a condition precedent to the accrual of a right of action against a
carrier for damage caused to the merchandise.

Under Art. 366 of the Code of Commerce, an action for damages is barred if the goods arrived
in damaged condition and no claim is filed by the shipper within the following period:
1. Immediately if damage is apparent;
2. within twenty four (24) hours from delivery if damage is not apparent.
- The period does not begin to run until the consignee has received possession of the
merchandise that he may exercise over it the ordinary control pertinent to ownership.
- This provision applies even to transportation by sea within the Phils. or coastwise shipping.
- Does NOT apply to misdelivery of goods.
Q: Why does it not apply to misdelivery of goods?

A: In such cases (misdelivery), there can be no question of claim for damages suffered by the goods
while in transport, since the claim for damages arises exclusively out of the failure to make delivery.
Case: Monica Roldan vs. Lim Ponzo and Co.

- Article 366 of the Commercial Code is limited to cases of claims for damage to goods actually
turned over by the carrier and received by the consignee.
But the period prescribed in Art. 366 may be subject to modification by agreement of the
parties.
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 shippers remedy and does not affect the liability of the carrier.
b) Extinctive Prescription
- six (6) years if there is no written contract (bill of lading)
- ten (10) years if there is written contract
This rule likewise applies to carriage of passengers for domestic transportation.
B. International Carriage of Goods by Sea

A claim must be filed with the carrier within the following period:
1. if the damage is apparent, the claim should be filed immediately upon discharge of the
goods; or
2. within 3 days from delivery, if damage is not apparent.
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 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
delivered
a) Prescription
Action for damages must be filed within a period of one (1) year from discharge of the goods.

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 possible)
o Case: Dole Philippines Inc. vs. Maritime Company of the Philippines - the prescriptive
period is not tolled or interrupted by a written extra-judicial demand. Article 1155 is
NOT applicable.
The period does not apply to conversion or misdelivery.
The one (1) year period refers to loss of goods and not to misdelivery.
- Damages arising from delay or late delivery are not the damage or loss contemplated under
the COGSA. The goods are not actually lost or damaged. The applicable period is ten (10)
years.
- Case: Domingo Ang vs. American Steamship Agencies
What is to be resolved in order to determine the applicability of the prescriptive
period of one year is whether or not there was loss of the goods subject matter of
the complaint.
Loss contemplates merely a situation where no delivery at all was made by the
shipper of the goods because the same had perished, gone out of commerce, or
disappeared in such a way that their existence is unknown or they cannot be
recovered. (Note: It is not loss due to misdelivery or delivery to the wrong person.)
This rule applies in collision cases. The one (1) year period starts not from the date of the
collision but when the goods should have been delivered, had the cargoes been saved.
Case: Maritime Agencies and Services Inc. vs. CA

- When there is two destination of delivery, the one year period should commence when the
last item was delivered to the consignee.
Insurance
The insurer who is exercising its right of subrogation is also bound by the one (1) year
prescriptive period.
However, it does not apply to the claim against the insurer for the insurance proceeds. The
claim against the insurer is based on contract that expires in ten (10) years.
II. Recoverable Damages

Damages is the pecuniary compensation, recompense or satisfaction for an injury
sustained, or as otherwise expressed, the pecuniary consequences which the law imposes for
the breach of some duty or violation of some rights.
A. Extent of Recovery (Contractual Breach: Art. 220, NCC)

Carrier in good faith is liable only to pay for the damages that are the natural and probable
consequences of the breach of the obligation and which the parties have foreseen or could
have reasonably foreseen at the time the obligation was constituted.
Carrier in bad faith or guilty of gross negligence liable for all damages, whether the same
can be foreseen or not. Those which may be reasonably attributed to the non-performance
of the obligation.

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.
B. Kinds of Damages
Article 2216 provides that no proof of pecuniary loss is necessary in order that moral, nominal,
temperate, liquidated or exemplary damages may be adjudicated. The assessment of such damages,
except liquidated ones, is left to the discretion of the court, according to the circumstances of each
case. However, proof of pecuniary loss is necessary if actual or compensatory damages are being
claimed.
a) Actual or Compensatory Damages

- only for the pecuniary loss suffered by him as he has duly proved
- not only the value of the loss suffered, but also that of the profits which the obligee failed to
obtain
- 2 Kinds:
1. the loss of what a person already possesses (dao emergente);
2. the failure to receive as a benefit that would have pertained to him (lucro cesante).
- It should be proven: cannot be decided based on the consideration of the judge; not to be
based on the perception, observation and consideration of the judge
- With respect to restorative medical procedure: to be entitled to actual damage, you need to
have an EXPERT TESTIMONY. Without such, you cannot recover.
Damages may be recovered: Art. 2205 (Civil Code)

1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury;
2) For injury to the plaintiffs business standing or commercial credit.
Damages cannot be presumed. The burden of proof rests on the plaintiff who is claiming actual
damages against the carrier.
In case of goods the plaintiff is entitled to their value at the time of destruction. The award is
the sum of money which plaintiff would have to pay in the market for identical or essentially
similar goods
For personal injury and even death the claimant is entitled to all medical expenses as well as
other reasonable expenses that he incurred to treat his or her relatives injuries.
In case of death the plaintiff is entitled to the amount that he spent during the wake and
funeral of the deceased. But, expenses after the burial are not compensable.
Read Art. 2206 (Civil Code):
death caused by a crime or quasi-delict shall be at least P3,000; [The amount of fixed
damages is now P50,000.00]
the defendant shall be liable for the loss of the earning capacity of the deceased;
If deceased is obliged to give support, recipient may demand support from the
person causing the death for a period not exceeding five years

Spouse, legitimate and illegitimate descendant and 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]
Life expectancy (2/3 x 80 age at death)

Net earnings based on the gross income of the victim minus the necessary incidental living
expenses which the victim would have incurred if he were alive.
Amount of living expenses must be established. In the absence of proof, it is fixed at fifty (50%)
of the gross income.
Rules on loss of earning apply when the breach of the carrier resulted in the plaintiffs
permanent incapacity.
2) Attorneys fees
- refer to Art. 2208 of the Civil Code
- attorneys fees may be awarded in an action for breach of contract of carriage under par.
1,2,4,5,10 and 11 of Art. 2208.
- If awarded exemplary, one is entitled to attorneys fees
- 2 kinds: ordinary (compensation to the lawyer); extraordinary (indemnity as a form of
damages suffered due to the breach of contract)
- You can be awarded if you show that you were forced to litigate and when you are entitled
to exemplary damage.
- But this award is subject to the discretion of the court (you cannot dictate usually 10%-
15%)
3) Interests
12% per annum if it constitutes a loan or forbearance of money
6% per annum if it does not constitute loan or forbearance of money
12% - for final judgment
Note: No interest, however, shall be adjudged on unliquidated claims for 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 judicially or extrajudicially.
b) Moral Damages
- Includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation and similar injury.
- Though incapable of pecuniary computation, moral damages may be recovered if they were the
proximate result of the defendants wrongful act or omission.
- Moral damages are not awarded to punish the defendant but to compensate the victim
- May be recovered when there is death or there is malice or bad faith. (in transportation of
passengers)

- Refer to Art. 2219 and 2220 (enumerates cases when moral damages may be awarded)
- Generally, no moral damages may be awarded where the breach of contract is not malicious.
- Moral damages may be awarded if the contractual negligence is considered gross negligence.
- Subject to three conditions in transportation law:
o Death
o Malice or bad faith (must be done in the performance of the contract of carriage)
o Physical Injuries
- Requisites:
o There must be an injury, whether physical, mental or psychological, clearly sustained
by the claimant
o There must be a culpable act or omission factually established
o The wrongful act or omission of the defendant is the proximate cause of the injury
sustained by the claimant
o The award of damages is predicated on any of the cases stated in Art. 2219.
- Factors to consider that could affect the amount to be recovered:

o The extent of humiliation may also determine the amount of moral damages that can
be awarded
o The extent of pain and suffering likewise determines the award
o Official, political, social and financial standing of the offended party and the business
and financial position of the offender affect the amount of damages
o The age of the claimant.
c) Nominal Damages
- Refer to Art. 2221-2223 (Civil Code)
- It is adjudicated in order that the right of plaintiff may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered by him.
- The assessment of nominal damages is left to the discretion of the court according to the
circumstances of the case.
- The award of nominal damages is also justified in the absence of competent proof of the specific
amounts of actual damages suffered.
- Cannot co-exist with actual damages.
- There is no loss in nominal damages, unlike in actual and temperate damages, loss is present
which is proven and not proven but rather ascertained by the court, respectively.
Case: Japan Airlines vs. CA

- The award of moral damages was justified because JAL failed to make necessary
arrangement to transport the plaintiffs on the first available connecting flight to Manila.
- Only Nominal damages were awarded in the absence of proof of actual damages
d) Temperate or Moderate Damages

- More than nominal but less than compensatory damages.
- Art. 2224 provides:
may be recovered when the court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be provided with certainty.
- cannot co-exist with actual damages
- Definite proof of pecuniary loss cannot be offered, although the court is convinced that there
has been such loss.
e) Liquidated Damages
- Those agreed by the parties to a contract, to be paid in case of breach thereof.
- Ordinarily, the court cannot change the amount of liquidated damages agreed upon by the
parties. However, Art. 2227 of the Civil Code provides that liquidated damages, whether
intended as an indemnity or a penalty, shall be equitably reduced if they were iniquitous or
unconscionable.
f) Exemplary or Corrective Damages

- Requisites for the award of exemplary damages:
1. They may be imposed by way of example in addition to compensatory damages, and only
after the claimants right to them has been established.
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.
Note: If gross negligence warrants the award of exemplary damages, with more reason is its
imposition justified when the act performed is deliberate, malicious and tainted with bad faith. The
rationale behind exemplary or corrective damage is to provide an example or correction from public
good.
The award of exemplary damages in breach of contract of carriage is subject to the provisions
under Art. 2232-2235 of the Civil Code.
Case: Air France vs. Rafael Carrascoso and CA

- The inference of bad faith is there; it may be drawn from the facts and circumstances set
forth therein. The contract was averred to establish the relation between the parties.
- Deficiency in the complaint in stating that there was bad faith, if any, was cured by the
evidence.
Case: Philippine Airlines Inc. vs. CA

- Moral damages are recoverable in a breach of contract of carriage where the air carrier
thought its agents acted fraudulently or in bad faith.
- The contract of air carriage generates a relation attended with a public duty. Neglect or
malfeasance of the carriers employees naturally could give ground for an action for
damages.
MARITIME LAW
A. CONCEPTS (Chapter 6)

Maritime Law is the system of laws which particularly relates to the affairs and business of the
sea, to ships, their crews and navigation and to marine conveyance of persons and property
Governing Laws:
1. New Civil Code primary law on maritime commerce
2. Book III Code of Commerce applied suppletorily
3. Special Laws
a. Salvage Law (Act No. 2616)
b. Carriage of Goods by Sea Act (CA No. 65)
c. Ship Mortgage Decree of 1978 (PD 1521)
REAL AND HYPOTHECARY NATURE OF MARITIME LAW
Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara

That which distinguishes the maritime from the civil law and even from the mercantile law in
general is the real and hypothecary nature of the former
Evidence of this real nature of maritime law:

o The limitation of the liability of the agents to the actual value of the vessel and the
freight money
o The right to retain the cargo and the embargo and detention of the vessel even cases
where the ordinary civil law would not allow more than a personal action against the
debtor or person liable
This repeals the civil law to such extent that, in certain cases where the mortgaged property
is lost no personal action lies against the owner or agent of the vessel
Two reasons why it is impossible to do away with these privileges:

o The risk to which the thing is exposed
o The real nature of maritime law, exclusively real, according to which the liability of
the parties is limited to a thing to which is at mercy of the waves
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation, Ltd.
The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the vessel,
which is hypothecated for such obligations or which stands as the guaranty for their
settlement
Purpose: It was designed to offset such adverse conditions and to encourage people and
entities to venture into maritime commerce despite the risks and prohibitive cost of
shipbuilding
Thus, the liability of the vessel owner and agent arising from the operation of such vessel
were confined to the (1) vessel itself, (2) its equipment, (3) freight, (4) and insurance if any,
which limitation served to induce capitalists into effectively wagering their resources against
the consideration of the large profits attainable in trade

Real similar to transactions over real property where to effect against third persons, registration is
necessary
Hypothecary the liability of the owner of the value of the vessel is limited to the vessel itself
STATUTORY PROVISIONS
Article 837, 587, 590 and 643 provides for limited liability of shipowner. (read full provision)
Art. 837: civil liability incurred by the ship owner: liability limited to value of the vessel +
appurtenances + freightage earned during voyage
Art. 643: vessel and cargo lost by reason of capture or wreck: all rights shall be extinguished, both as
regards the crew to demand any wages whatsoever, and as regards the ship agent to recover the
advances made
If a portion of the vessel or of the cargo, or both, should be saved, the crew engaged on
wages, including the captain, shall retain their rights on the salvage, so far as they go, on the
remainder of the vessel as well on the amount of the freightage of the cargo saved; but sailors who
are engaged on shares shall not have any right whatsoever on the salvage of the hull, but only the
portion of the freightage saved. If they should have worded to recover the remainder of the
shipwrecked vessel they shall be given from the amount of the salvage an award in proportion of
the efforts made and to the risks encountered in order to accomplish the salvage
Art. 587: ship agent may exempt himself of the civil liabilities for the indemnities in favor of third
persons by abandoning vessel with all equipments and freight it earned during voyage
Art. 590: co-owners civilly liable in proportion to their interest and may exempt liability by
abandonment of the part of the vessel belonging to him
Limited liability rule means that the liability of a shipowner for damages in case of loss is limited
to the value of his vessel.
No vessel, no liability.
The civil liability for collision is merely co-existent with the interest in the vessel; if there was
total loss, liability is also extinguished.
GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof still exists, he can
escape liability by abandoning the vessel, its appurtenances and its freight.
Case: Monarch Insurance Co., Inc. vs. Court of Appeals

The total destruction of the vessel extinguishes maritime liens because there are no longer
any res to which it can attach. This doctrine is based on the real and hypothecary nature of
maritime law.

Note: Since the Civil Code contains no provision regulating liability of shipowners or agents in the
event of total loss or destruction of the vessel, Article 587 of the Code of Commerce governs.
Article 837, 587 and 590 of Code of Commerce cover only:

1. Liability to third persons
2. Acts of the captain
3. Collisions
EXCEPTIONS TO THE LIMITED LIABILITY RULE

1. Where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain (NEGLIGENCE)
GR: Shipowner is liable for the negligence of the captain in collision cases
---- liability is limited to value of the vessel
Limited liability rule applies if the captain or the crew caused the damage or injury as when
unseaworthiness of the vessel was caused by the negligence of the captain or crew during
the voyage
However, if the failure to maintain the seaworthiness of the vessel can be ascribed to the
shipowner alone or the shipowner concurrently with the captain, then the limited liability
principle cannot be invoked --- LIABILITY FOR THE DAMAGES IS TO THE FULL EXTENT (ex.
Overloading, unseaworthiness even at the time of departure)
2. Where the vessel is insured (INSURANCE)
Limited liability rule does not apply to insurance claims

Case: Vasquez vs. CA
- The total loss of the vessel did not extinguish the liability of the carriers insrured
- Despite the loss of the vessel, therefore, its insurance answers for the damages that a
shipowner or agent, may be held liable for by reason of the death of its passengers.
3. In the workmens compensation claims (WORKERS COMPENSATION)
The provisions of the Code of Commerce have no room in the application of the Workmens
Compensation Act which seeks to improve, and aims at the amelioration of, the condition of
laborers and employees
If an accident is compensable under the Workmens Compensation Act, it must be
compensated even when the workmans right is not recognized by or is in conflict with other
provisions of the Civil Code or of the Code of Commerce
Liability under the Workmens compensation Act, even if the vessel was lost, is still
enforceable against the employer or shipowner.
4. Expenses for repairs and provisioning of the ship prior to the departure thereof
5. The vessel is not abandoned (ABANDONMENT)

Abandonment of the vessel, its appurtenances and the freightage is an indispensable
requirement before the shipowner or ship agent can enjoy the benefits of the limited
liability rule. If the carrier does not want to abandon the vessel, he is still liable even beyond
the value of the vessel
The only instance where abandonment is dispensed with is when the vessel was entirely
lost. In such case, the obligation is extinguished.
Only shipowner and ship agent can make an abandonment
PROCEDURE FOR ENFORCEMENT
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation, Ltd.
- Rights of the parties to claim against an agent or owner of vessel may be compared to those
of creditors against an insolvent corporation whose assets are not enough to satisfy the
totality of claims as against it.
- Creditors must limit their recovery to what is left in the name of the corporation
- In the sinking of a vessel, the claimants or creditors are limited in their recovery to the
remaining value of accessible assets. In the case of lost vessel, these assets are the insurance
proceeds and pending freightage for the particular voyage
PROTESTS
- is the written statement by the master of a vessel or any authorized officer, attested by
proper officer or a notary, to the effect that damages has been suffered by the ship
Required under the following cases:

1. When the vessel makes an arrival under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the captain believe that the cargo has
suffered damages or averages
4. Maritime collisions
Q: when is it not required?

A:
1. when it does not fall under the four cases mentioned above
2. when what is not involve is not a vessel
ADMIRALTY JURISDICTION (RTC)

- Section 19 (3) of BP 129 as amended by RA 7691
(3) In all actions in admiralty and maritime jurisdiction where the demand or claim
exceeds 300, 000 or in Metro manila, where such demand or claim exceeds 400,000.
- if less MTC
3 concepts: (they are the same)
1. real and hypothecary --- the supreme court did not explain the literal meaning of it.

- real: refers to the risk in maritime thats why there are privileges for the shipowner. Risks are
certain to happen
- hypothecary: remember guaranty and collateral which is the vessel. For the particular voyage, the
guaranty is the vessel wherein if the vessel is lost, the shipowner no longer has the liability
2. limited liabililty rule --- no literal explanation

- limited: it means that the liability is limited to the value of the vessel
-liability: assumption that the shipowner is liable for the losses. There are no valid defenses that
shipowner can invoke to escape liability. Same concept with 1479. Difference is that there is a fixed
amount and there is qualification
-under the limited liability no fixed amount but amount is confined on the vessel
The question here: is this a right to limit the liability?

A: admittedly it is a right that only shipowner can exercise
Q; how to exercise?
A: by way of pleading. But do not follow the way it was filed in yangco. Here it was after judgment
that the shipowner sought to abandon the ship to abandon liability
But right now, it is a matter of procedure. To limit liability by abandoning the vessel; IF it is a matter
of procedure, you check the rules of civil procedure
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 shipownver cannot
allege, then that defense is deemed waiver. Therefore you cannot seek abandonment after
judgment was been rendered.
CASES:
Yangco vs. Lacerna

- even captain was aware of the typhoon and the vessel capsized, SC upheld limited liability
Chua Hek Kong

- there being no exceptions, the court upheld limited liability
The more critical issue is on the EXCEPTIONS in the LLRule:

1. workmens compensation (Abueg case: the repairs constitue maritime lient)
2. insurance coverage--- if the vessel is lost in the course of voyage and it is insured, is it automatic
that the limited liability rule does not apply?
A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned very little 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 because it has no privity of
contract with the insurance company

Q: when does insurance argument come in?
A: only when the shipowner will bring the insurance company to the case filed by the plaintiffby
way of third party complaint. Once insurance company is impleaded then this can be used: that the
owner cannot avail of limited liability.
But no shipowner will ever implead the insurance. Because they will be the one who will claim the
insurance without telling the plaintiffs. In the case, there is no proof that the vessel is insured. Even
if we know outside court, it is insured 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: is it really an exception in its strict sense?

A: Not really (CAPANAS). What is the implication if you properly invoke the LLRule the plaintiff
cannot avail beyond the value of the vessel.
If not apply plaintiff will recover more than the value of vessel subject to rules on claiming of
damages.
But question, if vessel if covered with insurance, does this mean that plaintiff can recover to the
amount applied? No, they can only recover until the coverage of the insurance proceeds.
3. Negligence
- common carrier is presumed negligent if common carrier. However, this does 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 on the facts presented. You cannot invoke presumption
of negligence so that limited liability rule will not apply.
Monarch _-- SC: since there is a presumption of negligence then LLR will not 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 knowledge on the negligence of the ship captain.
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 Commerce or Special
law will apply. There is no rule in Civil Code in limited liability rule thus Code of Commerce will
apply. (but in monarch, this was not applied--- all the negligence was related to the absence of
exercising extraordinary diligence)
Note: that in the subsequent cases, Consolidated of Aboitiz case: there were 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 order to refute, petitioner should prove negligence.
REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not presumption.
Loadstar case
- the shipowner is aware of the typhoon
- insufficient manning negligent

- Captain playing mahjong there was negligence. But SC said that it was negligent because the
shipowner did not prove that it was the first. Supposedly facts are established in court proceedings
and not on presumption.
3. no vessel, no liability
- they all mean one and the same such that the liability of the shipowner for the losses is confined
to the value of the vessel and the freight, if any.
MARITIME PROTEST (4 INSTANCES) REQUIRED (LOOK AT CODE OF COMMERCE and above notes)
INSTANCES WHEN IT DOES NOT APPLY:

1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN NOT MARITIME PROTEST
2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor boat is not a vessel under
maritime law, it is only engaged in bay traffic. A vessel in maritime law, should be engaged in
transporting goods, persons, or both from one port to another)
(But to be sure: you file maritime and allege such bahala dili kelangan coz otherwise dismiss ang
case)
Since a vessel is a personal property, it can be mortgaged

Same concept with mortgage but different rule
- PD 1521:
Q: what about process of extra judicial foreclosure of vessel?

A: chattel mortgage law should govern
Q: what to remember under PD 1521?

A: Section 4
registration, non waiver
Section17: priority of claims
Q: are there claims in maritime law over and above preferred mortgage?
A: yes. Look at section 17.
Case: Poliand Industrial

- facts shows that the proceeds debted from hardwood was for the modification of the vessel
(extended for vessels benefit), for crews wage
Characteristics of maritime lien:

1. maritime property
2. travels with the property--- it cannot be extinguished
3. enforceable in an action in rem--- action directed to the property (crescent case: ang gi kiha ang
vessel)

Under section 22: persons authorize to procure repairs (presumed):
1. managing agent
2. ships husband --- agent of the vessel
If mortgagor does not pay:

1. judicial foreclosure file actual case and implead the vessel as party defendant (served to captain
or authorized person); you can ask the court order to arrest the vessel.
2. extrajudicial
- the problem with vessel, mortgagee is not in possession of the vessel. It is with the mortgagor, you
cannot sell the property not in your possession.
In PD 1521the order of arrest can be asked

Grounds to discharge
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 the claim.
Maritime lien on necessaries (5 requisites) brief yourself cresent petroleum case (look at book for
requisites)
B. VESSELS (Chapter 7)
1. General Concepts
A vessel or watercraft is defined under PD No. 447 as any barge, lighter, bulk carrier, passenger
ship freighter, tanker, container ship, fishing boats, or other artificial contrivance utilizing any
source of motive power, designed use or capable of being used as a means of transportation
operating either as a common carrier, including fishing vessels covered under PD No. 43,
Except:
1. Those owned and/or operated by the Armed Forces of the Philippines and by the Foreign
Government for its Military Purpose.
2. Bancas, sailboat and other waterbone contrivance of less than three tons capacity and not
motorized.
Case: Yu Con vs. Ipil

- The word vessel serves to designate every kind of craft by whatever particular or technical
name it may not be known or which nautical advancements may give it in the future
- The court held that a small vessel used for the transportation of merchandise by sea and for
the making of voyages from one port to another of these Islands, equipped and victualed for
this purpose by its owner, is a vessel, within the purview of the Code of Commerce, for the
determination of the character and effect of the relations created between the owners of
the merchandise laden on it and its owner
When the mercantile code speaks of vessels, they refer solely and exclusively to mercantile

ships, as they do not include warships, and furthermore, they almost always refer to craft which
are not accessory to another as in the case of launches, lifeboats and etc.
Further, they refer exclusively to those which are engaged in the transportation of passengers
and freight from one port to another or from one place to another
They refer to merchant vessels and in NO WAY can they or should they be understood as
referring to pleasure craft, yachts, pontoons, health service and harbor police vessels, etc.
Ships ought to be understood in the sense of vessel serving the purpose of maritime navigation
or seagoing vessel, and not in the sense of vessel devoted to the navigation of rivers
The third book of the code of commerce, dealing with maritime commerce, was evidently
intended to define laws relative to merchant vessels and maritime shipping; and as appears
from said code, the vessel intended in that book are such run by masters having special training
with elaborate apparatus of crew and equipment indicated in the code.
Only vessels engaged in what is ordinarily known as maritime commerce are within the
provision of law conferring limited liability on the owner in case of maritime disaster.
Other vessel of minor nature not engaged in maritime commerce, such as river boats and those
carrying passengers from ship to shore, must be governed, as to their liability to passenger, by
the provision of the civil code or other appropriate special provisions of law.
Case: Augusto Lopez vs. Juan Duruelo, et. al

- The code of commerce are not applicable to small craft which are only subject to
administrative (customs) regulations in the matter of port service and in the fishing industry
- Only vessels engaged in what is ordinarily known as maritime commerce are within the
provisions of law conferring limited liability on the owner in case of maritime disaster
- It is therefore clear that a passenger on a boat like the Jison, in the case before use, is not
required to make protest as a condition precedent to his right of action for the injury
suffered by him in the collision described in the complaint article 835 of the Code of
Commerce does not apply
CONSTRUCTION, EQUIPMENT AND MANNING
The Construction, equipment and manning of vessel are subject to the rules issued by the Maritime
Industry Authority (MARINA) and consistent with Article 574 of the Code of Commerce
Article 574. Builders of vessels may employ the materials and follow, with respect to their
construction and rigging, the systems most suitable to their interests. Ship owners and seamen shall
be subject to what the laws and regulations of the public administration on navigation, customs,
health, safety of vessels, and other similar matters.
PERSONAL PROPERTY

Vessels are considered personal property under the Civil Law. The Code of Commerce likewise
expressly acknowledges the special nature of a vessel as personal property.
Case: Philippine Refining Company vs. Jargue

- Vessels are personal property although occasionally referred to as a peculiar kind of personal
property
- They are subject to mortgage agreeably to the provisions of the Chattel Mortgage Law
- The only difference between a chattel mortgage of a vessel and a chattel mortgage of other
personality is that it is not now necessary for a chattel mortgage of a vessel to be noted in
the registry of the register of deeds, but it is essential that a record of documents affecting
the title to a vessel be entered in the record of the Collector of Customs at the port of entry
Case: Rubiso and Calixto vs. Rivera

- Ships or vessels, whether moved by steam or by sail, partake, to a certain extent, of the
nature and conditions of real property, on account of their value and importance in the
world of commerce
- Transfer of vessels should be in writing and must be recorded in the appropriate registry
2. OWNERSHIP
ACQUISITION
Vessel may be acquired or transferred by any means recognized by laws. Thus, vessel may be
sold, donated and may even be acquired through prescription.
Under the present laws, vessels that are under the jurisdiction of MARINA can be transferred
only with notice to said administrative agency.
A. Prescription (Code of Commerce)
Article 573. Merchant vessels constitute property which may be acquired and transferred by any of
the means recognized by law. The acquisition of a vessel must appear in a written instrument, which
shall not produce any effect with respect to third persons if not inscribed in the registry of vessels.
The ownership of a vessel shall likewise be acquired by possession in good faith, continued for three
years, with a just title duly recorded.
In the absence of any of these requisites, continuous possession for ten years shall be necessary in
order to acquire ownership.
A captain may not acquire by prescription the vessel of which he is in command.
ARTICLE 575. Co-owners of vessels shall have the right of repurchase and redemption in sales made
to strangers, but they may exercise the same only within the nine days following the inscription of
the sale in the registry, and by depositing the price at the same time.

B. Sale (Code of Commerce)
Article 576. In the sale of a vessel it shall always be understood as included the rigging, masts,
stores and engine of a streamer appurtenant thereto, which at the time belongs to the vendor.
The arms, munitions of war, provisions and fuel shall not be considered as included in the sale.
The vendor shall be under the obligation to deliver to the purchaser a certified copy of the record
sheet of the vessel in the registry up to the date of the sale.
Article 577. If the alienation of the vessel should be made while it is on a voyage, the freightage
which it earns from the time it receives its last cargo shall pertain entirely to the purchaser, and the
payment of the crew and other persons who make up its complement for the same voyage shall be
for his account.
If the sale is made after the vessel has arrived at the port of its destination, the freightage shall
pertain to the vendor, and the payment of the crew and other individuals who make up its
complement shall be for his account, unless the contrary is stipulated in either case.
Article 578. If the vessel being on a voyage or in a foreign port, its owner or owners should
voluntarily alienate it, either to Filipinos or to foreigners domiciled in the capital or in a port of
another country, the bill of sale shall be executed before the consul of the Republic of the
Philippines at the port where it terminates its voyage and said instrument shall produce no effect
with respect to third persons if it is not inscribed in the registry of the consulate. The consul shall
immediately forward a true copy of the instrument of purchase and sale of the vessel to the registry
of vessels of the port where said vessel is inscribed and registered.
In every case the alienation of the vessel must be made to appear with a statement of whether the
vendor receives its price in whole or in part, or whether he preserves in whole or in part any claim
on said vessel. In case the sale is made to a Filipino, this fact shall be stated in the certificate of
navigation.
When a vessel, being on a voyage, shall be rendered useless for navigation, the captain shall apply
to the competent judge on court of the port of arrival, should it be in the Philippines; and should it
be in a foreign country, to the consul of the Republic of the Philippines, should there be one, or,
where there is none, to the judge or court or to the local authority; and the consul, or the judge or
court, shall order an examination of the vessel to be made.
If the consignee or the insurer should reside at said port, or should have representatives there, they
must be cited in order that they may take part in the proceedings on behalf of whoever may be
concerned.
REGISTRATION
Vessels are now registered through MARINA. It is a long standing rule that the person who is the
registered owner of the vessel is presumed to be the owner of the vessel.
It is a settled rule that the sale or transfer of the vessel is not binding on the third person unless
the same is registered.

SHIP'S MANIFEST
Vessels are required to carry manifest coast-wise trade.
A manifest is a declaration of the entire cargo. The object of a manifest is to furnish custom
officers with list of check against, to inform the revenue officers what goods are being brought
into a port of the country on a vessel.
The requirement that a vessel must carry a manifest is not complied with even if a bill of lading
can be presented. A bill of lading is just a declaration of a specific cargo rather than the entire
cargo
Sec 906 of the Tariff and Custom Code provides that manifest shall be required for cargo and
passengers transported from one place to another only when one or both of such place is a port
of entry.
MORTGAGE
Since the term personal property includes vessel, they are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law.
Mortgage and other encumbrances over vessels are governed by the provisions of presidential
decree 1521 (Ship Mortgage Decree of 1978)
OTHER CODE OF COMMERCE PROVISIONS

The provisions of the Code of Commerce reproduced hereunder are deemed modified not only
by the Civil Code but also by special laws
SAFETY REGULATIONS
On February 23, 2000, the Maritime Industry Authority directed all domestic shipowners and
operators under Memorandum Circular No. 154 to strictly comply with existing Safety-Related
Policies, Guidelines, Rules and Regulations
Rules include: (read book page 488-489)
Monitoring of compliances shall be undertaken by the Authority and its Maritime Regional
Offices, together with the needed coordination with the Philippine Coast Guard
The MARINA shall have the power to inspect vessels and all equipment on board to ensure
compliance with safety standards
C. PERSONS WHO TAKE PART IN MARITIME COMMERCE
In sum, the following are persons who take part in Maritime Commerce:
SHIPOWNERS and SHIP AGENTS;

CAPTAINS and MASTERS OF VESSELS;
OFFICERS and CREW OF VESSELS
SHIPOWNER V. SHIP AGENT
SHIPOWNER the person who is primarily liable for damages sustained in the operation of vessel.

Code of Commerce places the primary responsibility on the owner of the vessel.
(Uses the term naviero which has been construed to include shipowner, ship agent and even the
charterer who is considered as owner pro hac vice.)
SHIP AGENT (Code of Commerce) the person entrusted with provisioning of the vessel, or who
represents her in the port in which she happens to be. There is also the intention under the
Code of Commerce to make the ship agent solidarily liable with the owner. The solidary liability
applies both for breach of contract and extra-contractual obligations such as tort. The ship
agent, even though he is not the owner, is liable in every way to the creditor for losses and
damages without prejudice to his right against the owner, the vessel and its equipment and
freight. But his liability, however is subject to the LIMITED LIABILITY RULE (Chapter 6 of the
Aquino book).
CAPTAINS V. MASTERS OF VESSELS
For purposes of Maritime Commerce:

The words captain and master have the same meaning; both being chiefs or commanders of
ships. Thus, the terms captain and master are used synonymously in the Code of Commerce.
MARINA regulations:
MASTER the person having command of the ship. The same term is being used both for domestic
trade and international trade.
BOAT CAPTAIN a person authorized by the MARINA to act as officer and/or in command of a
boat/ship or has the qualification/license to act as such.
3 Distinct Roles a captain commonly performs:

(Inter-Orient Maritime case)
1. He is a GENERAL AGENT OF THE SHIPOWNER;
2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel (most important role for this has
something to do with the operation and preservation of the vessel during its voyage and the
protection of the passengers, if any, and crew and cargo);
3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he navigates.
Based on the first aforementioned role, the captain is regarded as the GENERAL AGENT of the
shipowner and as such, he:
a. Has authority to sign bills of lading;

b. Carry goods aboard and deal with the freight earned;
c. Agree upon rates and decide whether to take cargo;
d. Has legal authority to enter into contracts with respect to the vessel and the trading of the
vessel, subject to applicable limitations established by statute, contract or instructions and
regulations of the shipowner.
All aforementioned functions verily commits to the captain the governance, care, and management
of the vessel. Clearly then, the captain is vested with both MANAGEMENT and FIDUCIARY functions.
POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND THE MASTER: (See Arts. 610-612 of
the Code of Commerce)
DISCRETION OF CAPTAIN AND MASTER

A ships captain must be accorded a REASONABLE MEASURE OF DISCRETIONARY AUTHORITY
to decide what the safety of the ship and of its crew and cargo specifically requires on a stipulated
ocean voyage.
Presumption: A captain is knowledgeable as to the specific requirements of seaworthiness and the

particular risks and perils of the voyage he is to embark upon.
Applicable Principle: The captain has control of ALL departments of service in the vessel, and
reasonable discretion as to its navigation.
Basic Principle in Admiralty Law: In navigating the vessel, the master must be left free to exercise
his own best judgment.
Requirements of Safe Navigation: The judgment and discretion of the captain of a vessel may be
confined within a straitjacket, even in this age of electronic communications.
PILOTAGE: Who is a pilot?
Maritime Law: a person duly qualified, and licensed, to conduct a vessel into or out of ports, or in
certain waters.
Broad sense: includes both (1) those whose duty it is to guide vessels into or out of ports, or in
particular waters; and (2) those entrusted with the navigation of vessels on the high seas.
General understanding: a person taken on board at a particular place for the purpose of conducting
a ship through a river, road or channel, or from a port.
COMPULSORY PILOTAGE. In compulsory pilotage, states possessing harbors enacted laws or

promulgated rules requiring vessels approaching their ports to take on board pilots licensed under
local law. In the Philippines, compulsory pilotage is being implemented in the Port of Manila, the
latter being within the Manila Pilotage District.
a. Master and Pilot (See Far Eastern Shipping case on page 520 of the Aquino book for the SC
discussion on the duties of a pilot)
b. Shipowner and Pilot
GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused by his own negligence or
default to the OWNERS of the vessel, and to THIRD PARTIES for damages sustained in a collision.
Such negligence of the pilot in the performance of duty constitutes a MARITIME TORT.

In cases of COLLISION: the COLLIDING VESSEL is prima facie responsible, hence, the burden of
proof is upon the party claiming benefit of the exemption from liability. Thus, it must be shown
affirmatively that the pilot was at fault, and that there was no fault on the part of the officers or
crew, which might have been conducive to the damage. The fact that the law compelled the
master to take the pilot does not exonerate the vessel from liability. The injured party shall seek
redress from the vessel. The owners of the vessel are responsible to the injured party for the
acts of the pilot, and they must be left to recover the amount as well as they can against him.
c. Pilot and his Association
The fact that the pilot is a member of an association does not make the association jointly and
severally liable. Article 2180 of the Civil Code does not apply because there is NO EMPLOYER-
EMPLOYEE Relationship.
Well-established is the rule that pilot associations are immune to vicarious liability for the tort
of their members. They are not the employer of their members and exercise no control over
them once they take the helm of the vessel. They are also not partnerships because the
members do not function as agents for the association or for each other. Pilots associations are
also not liable for negligently assuring the competence of their members because as
PROFESSIONAL ASSOCIATIONS, they made no guarantee of the professional conduct of their
members to the general public.
CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino book)
OFFICERS AND CREW OF VESSELS
COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)

-- all the persons on board from the captain to the cabin boy, necessary for the management,
maneuvers, and service, and therefore, it includes the CREW, the SAILING MATES, ENGINEERS,
STOKERS, and OTHER EMPLOYEES ON BOARD not having specific designations; but it SHALL NOT
INCLUDE the passengers or the persons whom the vessel is transporting.
REGULATION OF MERCHANT MARINE PROFESSION

The practice of marine profession is now governed by special laws and pertinent rules issued by the:
- MARINA;
- BOARD OF MARINE DECK OFFICERS;
- BOARD OF MARINE ENGINEER OFFICERS
MINIMUM SAFE MANNING

It is not enough that the officers manning the merchant vessel have all the qualifications
imposed by the Philippine Merchant Marine Officers Act and other special laws or regulations. It
is also required that there is sufficient number of officers and crew that are serving in the vessel.
(Quality and Quantity)

SECURITY OF TENURE
The Labor Code provisions apply to OFFICERS and CREW of merchant vessels in DOMESTIC Trade
or COASTWISE Shipping. Hence, matters concerning their dismissal or disciplinary action must be
in accordance with provisions of the Labor Code. For officers and crew who are working in
foreign vessels who are involved in overseas shipping, there must be compliance with the
applicable laws on overseas employment as well as regulations issued by the Philippine
Overseas Employment Administration (POEA).
CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and Marine Engineer, Crew, and
Captain (See pages 552-560 of the Aquino book).
Parties --- those provided above plus seamen, other members of the complement including the
stokers (incharge of boilers) and supercargo (agent of the shippers who has authority to sell goods
while on voyage)
4 maritime contracts
1. charter parties
2. Botomry
3. Repondentia
4. Marine insurance (incorporated in the subject insurance)
ON PERSONS
Shipowner
- he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can invoke the LLR? No jurisprudence.
Personal opinion of sir: distinguish on the type of charter party. If affreightment, shipowner
retains possession, command and navigation of the vessel. If bareboat it is vested upon the
charterer.
- Jurisprudence: except for registration, the charterer is the temporary owner of the vessel.
With this, the charterer can invoke LLR (this part no juris)
Note: there is not distinction of liability of shipowner and ship agent. They are civilly liable
There is a situation in maritime law that shipower and agent they are held liable for the act or
omission of a third person which is the ship captain or master.
ACTS of CAPTAIN
Case: Yucon case and Sweetlines case
- In Yucon, money was entrusted to the captain and the money was lost. SC concluded that
shipowner was liable for the lost because the captain failed to put up measures while in
custody of the money. It may not technically to an act but may refer to admission but would
fall under the term acts
- In sweetlines, bound for catbalogan but the captain chose to allow the passengers to
disembark in tacloban. This time, this is the act of captain. The SC concluded that the

damages sustained by passengers bound for catbalogan are to shouldered by the shiponwer
Indemnities in Favor of 3rd person: OTTA devt case sited in walter smith case
- In OTTA the owner of the pier was at the same time the owner of the goods. SC, because
there was a relationship of owner of vessel and goods, then there is presumption of
negligence new civil code prevails
- Walter smith case: There was no relationship. Owner of port and owner of goods are
different. What was applied by court was the law on torts. No presumption of negligence.
There should be proof of negligence. The owner of vessel proved that he exercised ordinary
diligence (required in ports). What was presented was the competence of shipcaptain. The
shipowner proved ordinary diligence in choosing the ship captain
Contracts entered into by shipcaptain or master
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 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 result of contract of carriage.
The case in point with the contracts entered into was the case Wing Kee. There were supplies
delivered. Shipagent was said to be liable. SC said at the time you were still an agent you were liable
but at the time agency was terminated you are no longer liable.
If both SO and SA are sued, being solidarily liable, the SA has right of recourse over SO.
Shipcaptain or master
- The difference is with regard to the tonnage of the vessel (higher: captain; lower: master;
major patron and minor patron)
- The question on the shipcaptain or master is the exercise of discretion
- Inter orient case: captain tayong did not want to proceed with the voyage from Singapore to
Africa bec. Of lack of oxygen and acetylene. But because of order of management he
proceeded. He was then ordered to repatriated and then another captain took his place. He
filed for illegal dismissal. The issue was the discretion exercised by the captain. WON he has
the discretion not to proceed bec. Of lack of supply. SC said you should emphasize
reasonable discretion--- it is the captains duty
- Inter Orient: triple roles of the captain --- general agent, commander and technical manager,
representative of country
Shipcaptain and harbor pilot

- Harbor pilot: distinguish if voluntary or compulsory
- Case cited by SC on proper relationship of captain and pilot. In far eastern shipping case 521
3rd par --- ther are occasion when the master may and should interfere and even displace the
pilot when he is obviously incapacitate and intoxicated. (look at the book)
- In this case, there is relevance on when the captain should interfere. If it is voluntary (pilot
engaged by shipowner) --- damages caused by pilot, shipowner is liable. If compulsory,

shipowner can escape liability
- If compulsory distinguish whether there was circumstances that would require the
shipcaptain to interfere with the ship pilot. If there are circumstances but captain did not
interfere then shipowner is liable. If there are circumstances and captain interfere but still
there is damage, the shipowner will not be liable.
- Cebu Port Authority --- covered by compulsory pilotage
Chiefmate or sailing mate (then there are engineers)

- 2008 case, citing the article the code of commerce specifying the functions of chiefmate
being second in command of the vessel Chiefmate is a managerial employee (as provided
in labor code --- loss of trust and confidence
-
Seaman
- On security of tenure: distinguish DOMESTIN (labor code) abroad (POEA).. there is a
standard contract (poea prepared and drafted it and every seaman shall comply with this ---
this is to protect filipino seaman working abroad) that will be signed by every seaman
stipulating the security of tenure, repatriation, benefits, etc.
- Difference for abroad: bigger income but contractual (after contract go home).. DOMEstic,
you can be a regular employee in accordance with the labor code
- JumpShip scenario: it is a valid ground to terminate a seaman
Shipcaptain should conduct preliminary investigation for crimes conducted on board
D. CHARTER PARTIES
Charter Parties
- a contract whereby the entire ship, or some of the principal part, is let by the owner to a
merchant or other person for a specified time or use for the conveyance of goods, consideration
of payment of freight
- it is a contract, hence, parties are free to stipulate upon such terms and conditions that would
suit their purposes subject to the caveat that these should not be contrary to law or public
policy
Parties
1. Charterer- merchant or a person who desire s to lease ship or vessel owned by another by
transport of his or her goods for commercial purposes or persons from one port to another
2. Shipowner (SO)
KINDS:
1. bareboat or demise charterer shipowner leases to the charterer the whole vessel, transferring
to the charterer the entire command, possession and consequent control over the vessels
navigation, including the master and the crew, who becomes the charterers servants
- charterer becomes an owner pro hac vice

2. Contract of affreightment charterer hires the vessel only, either for a determinate period of
time or for a single or consecutive voyage, with the SO providing for the provision of the ship, wages
of the master and crew, and expenses for maintenance of the vessel
a. time charter vessel is leased to a charterer for a fixed period of time
b. voyage charter vessel is leased for a single or particular voyage
REQUISITES OF A VALID CHARTER PARTY

1. consent of the contracting parties
2. an existing vessel which should be placed at the disposition of the shipper
3. the freight
4. compliance with requirements of art 652 of Code of commerce
(Aticle 652 of the Code of Commerce provides that the charter party shall contain, among
others, the name, surname, and domicile of the charterer, and if he states that he is acting by
commission, that of the person for whose account he makes the contract.)
Caltex v. Sulpicio Lines

There was a voyage charter; collision between MT Vector (tanker) and Doa Paz (owned by Sulpicio)
; breach of contract filed by the passengerss heirs against Sulpicio ; 3d party complaint against
registered owner of the tanker including Caltex ( that they were negligent and in bad faith by not
seeing to it that the tanker was seaworthy)
Issue: WON charterer shall be liable under Maritime Law?
Ruling: Liability cannot be attached to Caltex; the charter did not affect the business of Sulpicio as a
common carrier ; rights and responsibilities of ownership still rested on the owner
Planters Product v CA
- time charter; Planters purchased fertilizers from the US; voyage to the Philippines ; upon
arrival, shortage in the cargo was discovered ; filed actions against carrier fro damages (
breach of Contract) ; RTC ruled in favor of the Planters; Ca reversed & absolved carrier as it
was converted from common carrier to private ;
- Ruling : It cannot become a private carrier ; bareboat charter can become a private carrier
but in contract of affreightment remains as common carrier ( action based on contract of
carriage ; presumption of negligence ) ; carrier was able to rebut the presumption of
negligence ( result the inherent character of the fertilizers)
Coastwise Lighterage v. CA
- WON private carrier would convert to a common carrier; contract of affreightment
- Ruling : reiterated Planters ruling ; but was not able to rebut presumption of negligence ; did
not exercise EO diligence ( hired unlicensed patron)
Home Insurance v. American Steamship

- case mostly used by the common carrier as defense ; Home Insurance is subrogee (paid SMC
of loss cargo shipped thru American Steamship ; no reference as to what contract but there
was a mention that it was in affreightment

- Ruling : Common Carrier undertaking to carry special cargo (chartered to special person only
) become a private carrier and stipulation exempting owner from liability for loss due to the
negligence of its agents is valid;
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 principles will have to be mixed.
The whereabouts of the vessel is important to know the time for loading and unloading
Policy marina
Implementing or enforcement --- Coastguard
2 conditions implied in charter party

1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter party
2. --- look at book (ala kaapas)
JURISDICTION OF ADMIRALTY CASES

- depends on the jurisdictional amount
- important element of the contract = the subject matter of the contract (nature and
character)
International Harvester v Aragon

-involves loss of cargo shipped from LA to Manila; cargo owner filed an action against common
carrier
-SC said liability of petitioner was predicated upon the contract of carriage ; admiralty would involve
all maritime contract in whatever form and wherever made
Macondry v Delgado Brothers
- Delgado was an operator of a pier service ; WON operator exercised its duty in loading and
unloading of cargos ; no contract of carriage ; obligation was only to load the to the ship ; no
application of admiralty
FRIEGHT OR FREIGHTAGE
- price of carriage
- shall accrue according to what is stipulated in the contract
- should there be no stipulation or if it is ambiguous , rules shall be
a. freight shall begin to run from the day of loading on the vessel
b. in charters with fixed period, the freight shall begin to run upon that very day
c. If freight is charged according o weight , payment shall be made according to gross
weight , including the weight of the containers
LAST DAYS- period of time stipulated fro loading and unloading ( provided for in charter party ) ; if
no lay days provided for in the charter party, it is understood that the charterer will unload and
discharge cargoes within a reasonable time or with reasonable diligence

Demurrage a sum of money due by express contract for detention of the vessel in loading ,
beyond time allowed for that purpose in that charter party ; sum of which is usually fixed by the
parties in the charter party ; liability for this exists only when expressly stipulated
Deadfreight where the charterer failed to occupy the leased portion of the vessel, he may thereby
be liable by the shipowner for the deadfreight that occurred
STIPULATION IN CHARTER PARTIES
GR: parties are free to stipulate subject to art 1744 t01754 0f NCC
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the
liability of the former for the loss, destruction, or deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common
carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust
and contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of
the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good
father of a family, or of a man of ordinary prudence in the vigilance over the movables
transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do
not act with grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of
goods on account of the defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or
owner if the common carrier refused to carry the goods unless the former agreed to such
stipulation.
Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract limiting the common carrier's liability cannot
be availed of in case of the loss, destruction, or deterioration of the goods.

Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or
riots is valid.
Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part
thereof, to which the contract refers shall be taken into consideration on the question of whether
or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance
with public policy.
Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the
vigilance over the goods, the common carrier is disputably presumed to have been negligent in
case of their loss, destruction or deterioration.
Art. 1753. The law of the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction or deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is
not in his personal custody or in that of his employee. As to other baggage, the rules in Articles
1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.
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 appears in the bill of lading, the sole
evidence of title with regard to the cargo for determining the rights and obligations of the ship
agent, captain and charterer
- If there is charter party or bill of lading (BOL) = no contract at all; but according to Blanco, if there
is delivery and receipt of cargo combined with the GF and mutual consent = contract present ,
better than BOL
E. LOANS ON BOTTOMRY AND RESPONDENTIA
LOAN ON BOTTOMRY loan made by shipowner or ship agent guaranteed by vessel itself and
repayable upon arrival of vessel at destination; vessel/portion
LOAN ON RESPONDENTIA loan, taken on security of the cargo laden on a vessel, and repayable
upon safe arrival of cargo at destination; cargo/goods
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS:

1. Exposure of security to marine peril;

2. Obligation of the debtor conditioned only upon safe arrival of the security at the point of
destination.
Requisites of a Loan on Bottomry/Respondentia:

1. Shipowner borrows money for use, equipment or repair of vessel
2. For a definite term and with extraordinary interest called premium
3. Secured by pledged of vessel or portion thereof in the case on loan on Bottomry; or pledge of
goods in case of Respondentia
4. Loan repayment depends or conditioned on the safe arrival of goods for respondentia and
obligation to repay is extinguished if pledged goods are lost (Respondentia)
5. Obligation to repay is extinguished if vessel is lost due to specified marine perils in the course
of voyage or within limited time (Bottomry)
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
May be executed by means of:
1. public instrument
2. policy signed by the contracting parties and the broker taking part therein
3. private instrument (Art. 720)
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 or Bottomry for his own transactions.
EXCEPTIONS:
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 obligation chargeable against her.
2. When he is permitted to do so, he must necessarily state what interest he has in the vessel.
CONTENTS OF THE LOAN CONTRACT:
1. kind, name and registry of the vessel;
2. name, surname and domicile of the captain;
3. names, surnames and domiciles of the borrower and the lender;
4. amount of the loan and the premium stipulated;
5. time for repayment;
6. goods pledged to secure repayment;
7. voyage during which the risk is run (Art.721)
WHO MAY CONTRACT:

1. Bottomry by the ship owner or ship agent; outside of the residence of the owners, the captain.
2. Respondentia only the owner of the cargo
DISTINCTIONS:
BOTTOMRY/ ORDINARY LOAN
RESPONDENTIA
1. Not subject to Usury 1. Subject to Usury Law
Law
2. Liability of the 2. Not subject to any

borrower is contingent contingency
on the safe arrival of the
vessel or cargo at
destination
3. The last lender is a 3. The first lender is a
preferred creditor preferred creditor
4. Must have a collateral 4. May or may not

have collateral
5. Collateral is the vessel 5. Maybe property,
or cargo subject to real or personal
maritime risk
6. Must be in writing 6. Need not be in
writing but interest
shall not be due unless
expressly stipulated in
writing
7. To be binding on third 7. Need not be
person must be recorded registered
in the registry of vessels
of port of registry of the
vessel
8. Loss of collateral 8. Does not
extinguishes the same extinguished if there is
a loss of the collateral
(if any)
Consequences of loss of effects of the loans
1. Effects of loans be lost due to accident of the sea during the time, and on the occasion of the
voyage which has been designated in the contract and proven that the cargo was on board
- lender losses the right to institute the action which would pertain to him
Except: when the loss was

1. caused by inherent defect of the thing
2. through fault or malice of the borrower
3. through barratry on the part of the captain
4. caused by damages suffered by the vessel as a consequence of being engaged in a
contraband
5. loaded the goods on a vessel different from that designated in the contract unless the
change was caused by force majeure
2. The lenders on bottomry or respondentia shall suffer in proportion to their respective interest,
the general average which may take place in the things upon which the loans were made.

3. In case of shipwreck, the amount for payment of the loan shall be deduced to the proceeds of the
effects which have been saved but only after deducting the costs of the salvage.
4. If the loan should be on the vessel or any of her parts, the freight earned during the voyage for
which the loan was contracted shall also be liable for its payment, as far as it may reach.
5. If the same vessel or cargo should be the object of the loan of Bottomry or respondentia and
maritime insurance, the value of what may be saved in case of shipwreck shall be divided between
the lender and the insurer, in proportion to the legitimate interest of each one, taking in
consideration, for this purpose only, the principal with respect to the
Maritime contracts include charter parties and loans on bottomry and respondentia are
considered maritime contracts
Q: why do we have to study this topic? Are these relevant?
A: they are hardly used at present. However, we have to study this just in case this will be asked in
the bar. Especially in the unique terms used in this topic..
General provisions in contracts will govern
Basic provision you should not forget:

1. there should be a marine risk
2. the condition that the vessel or the goods has perished then the right of the lender to collect
everything as well as stipulated interest is extinguished
(not sure if there are other more.. basin ala ko kaapas)
BOTTOMRY
- It may refer to the vessel
- The bottom or the hull or the kill of the vessel can be pledged in this case
- The whole vessel can be a subject of a security or collateral
- PD. 1521: (is this different) --- loan is the principal, mortgage is the accessory.
- The contract of bottomry is principal, the mortgage under pd 1521 is merely a security
- In pd 1521 under section 4 it is a requirement that the whole of the vessel must be
mortgaged (no jurisprudence on this matter whether a part of the vessel can be mortgaged)
- In bottomry the whole or the part of the vessel can be the subject
- IF the part of the vessel can be pledged, is it necessary that there should be goods? No. no
need for goods.
RESPONDENTIA
- The vessel should have goods. The goods must be laden in the vessel
- Is it necessary that the boat is on voyage? The vessel must be in the actual course of voyage
because this is the objective of the law. Because if the vessel is docked in the port the owner
can simply obtain loans. And besides there is no risk when the vessel is docked (but no
jurisprudence)
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the bar) --- 5 differences

1. with respect to form --- can you validly execute a bottomry or respondentia verbally? You cannot.
Bec under the code of commerce no judicial action can arise when the contract is not reduced in
writing. But this is not the case in simple loan. But in simple loan you take note the statute of
frauds if not in writing B and R, you can dismiss case due to failure to state cause of action.
Q: why hardly used at present?

A: because of sophistication. Captains can just call up any agent the shipowner to deliver anything
for the use of the vessel to deliver. This contract was recognized in medieval times.
F. AVERAGES AND COLLISIONS
ACCIDENTS IN MARITIME COMMERCE:

1. Averages
2. Arrival Under Stress
3. Collision
4. Shipwreck
* Averages an extra-ordinary or accidental expense incurred during the voyage in order to

preserve the cargo, vessel or both; and all damages or deterioration suffered by the vessel from
departure to the port of destination, and to the cargo from the port of loading to the port
consignment. (Art. 806)
CLASSES OF AVERAGES:
A. Particular or Simple Average
B. Gross or General Average
A. Particular or Simple Average
Damage or expenses caused to the vessel or cargo that did not inure to common benefit, and
borne by respective owners. (809)
The owner of the goods which gave rise to the expense or suffered th e damage shall bear this
average. (Art. 810)
res perit domino applies
if the vessel or goods are hypothecated by loan on bottomry and respondentia, the lender shall
bear the loss in proportion to his interest
Examples: see article 809 of the code of commerce
RULES ON AVERAGES:
1. Averages is defined as damage deliberately caused or an expense deliberately incurred due to a
marine peril and which has resulted in saving both vessel and cargo or only the vessel or cargo.
2. Where both vessel and cargo are saved, it is general average; where only the vessel or only the
cargo is saved, it is particular average.
3. The person whose property has been saved must contribute to reimburse the damage caused or
expense incurred if the situation constitutes general average.
B. Gross or General Average
Damage or expenses deliberately caused in order to save the vessel, its cargo or both from real
and known risk. (Art. 811)
All the persons having an interest in the vessel and the cargo therein at the time of the
occurrence of the average shall contribute to satisfy this average. (Art. 812)
REQUISITES:
1. common danger present
2. arising from accidents of sea, disposition of authority
3. peril imminent and ascertained
4. part of vessel or cargo deliberately sacrificed
5. intended to save vessel or cargo
6. proper legal steps and authority taken
Common danger
- means both the ship and the cargo, after has been loaded, are subject to the same danger,
whether during the voyage, or in the port of loading or unloading, that the danger arises from the
accidents of the sea, disposition of authority, or faults of men, provided that circumstances
producing the peril should be ascertained and imminent or may rationally be said to be certain and
imminent
- When the measure of precaution adopted solely and exclusively for the preservation of the vessel
from the danger of seizure or capture and not for the common safety is not considered as common
danger
Deliberate Sacrifice
- voluntary sacrifice of a part for the benefit of the whole in order to justify the average contribution
* voluntary jettison- the casting away of some portion of the associated interests for the purpose
of avoiding the common peril from the whole to a particular portion of those interests
- the goods on board refer to in jettison should be proven by means of bill of lading and with
regards to those belonging to vessel by means of inventory prepared before the departure
2 cases where there can also be general averages even if the sacrifice was not made during the
voyage:
a. where the sinking of the vessel is necessary to extinguish a fire in a port, roadstead, creek
or bay
b. where cargo is transferred to lighten the ship on account of a storm to facilitate entry into
a port
Art. 816: in order that the goods jettisoned may be included in the gross average and the owners
entitled to indemnity it is necessary that the cargos existence on board be proven by a bill of

lading; and with regard to those belonging to the vessel, by means of an inventory prepared before
departure.
Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry to a port or
roadstead, part of the cargo should be transferred to barges or lighters and be lost, the owner of
the said part is entitled to indemnity as if the loss originated from a gross average, the amount
being distributed between the vessel and cargo from which it came.
If on the contrary the merchandise transferred should be saved and the vessel should be lost, no
liability may be demanded of the salvage.
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, creek, or bay, it should
be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved
should contribute.
Note: the loss or damage sustained by cutting away wreck or parts of the ship which have been
previously carried away or effectively lost by accident shall not be made good as general average
Sacrifice must be Successful

- no general contribution can be demanded if the vessel and other cargo that are sought to be saved
were in fact not saved (art. 860)
- owners of the goods saved shall not be liable for the indemnification of those jettisoned, lost or
damaged
- hence when the sacrifice was not successful in saving the ship, there will be no general
contribution
Compliance with Legal Steps
- Procedure for recovery: (Art. 813-814)

1. There must be a resolution of the captain, adopted after a deliberation with the other officers
of the vessel and after hearing all persons interested in the cargoes. If the latter disagree, the
decision of the captain should prevail but they shall register their objections.
2. The resolution must be entered in the logbook, stating the reasons and motives for the dissent,
and the irresistible and urgent causes if he acted in his own accord. It must be signed, in the first
case, by all persons present in the hearing. In the second case, by the captain and all the officers
of the vessel.
3. The minutes must also contain a detail of all the goods jettisoned and those injuries caused to
those on board.
4. The captain shall deliver it to the maritime judicial authority of the first port he may make,
within 24 hours after his arrival, and to ratify it immediately under oath.
- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON:

1. those which are on the deck, preferring the heaviest one with the least utility and value;
2. those which are below the upper deck, beginning with the one with greatest weight and
smallest value. (Art. 815)

Examples of General Average
Read Art 811 of the Code of Commerce
By Whom Borne
- shall be borne by those who benefited from the sacrifice; the shipowner and the owner of the
cargoes that were saved
Contribution may be imposed to;

a. insurers ( Insurance Code of the Philippines)
- they are obliged to pay for the indemnification of the gross average provided that the liability shall
be limited to the proportion of contribution attaching to his policy value where this is less than the
contributing value of the thing insured
b. lenders of bottomry and respondentia (Code of Commerce)

-obliged to pay in proportion to their respective interest, the general average which may take place
in the goods which the loan is made
Who is entitled to indemnity?

Owner of the goods which were sacrificed is entitled to receive the general contribution
Except;
1. goods carried on desk unless the rule special law or customs of the place allow the
same
2. goods that are not recorded in the books or records of the vessel
3. fuel of the vessel if there is more than sufficient fuel for the voyage
American Home Insurance v. CA

Art 848 states that claims shall not be admitted if they do not exceed 5% of the interest which the
claimant may have in the vessels or cargo if it is general average, and 1% of the goods damaged if
particular average deducting in both cases the expenses of appraisal, unless there is an agreement
to the contrary.
It is clear that the damage of the cargo is particular average since the loss is less than 1% to the
value of the cargo and there appears to be no allegations as to any agreement defendants and
consignee of the goods to the contrary, by express provision of law, plaintiff is barred from suing
for recovery.
Law on averages does not apply if the CC is negligent.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR CONTRIBUTION ON AVERAGES
Under the rule, deck cargo is permitted in coastwise shipping but prohibited in overseas shipping.

1. If deck cargo is located with the consent of the shipper on overseas trade, it must always
contribute to general average, but should the same be jettisoned, it would not be entitled to
reimbursement because there is violation of the Y-A Rules.
2. If deck cargo is loaded with the consent of the shipper on coastwise shipping, it must always
contribute to general average and if jettisoned would be entitled to reimbursement.
- may also be used to solve controversies where no provision of the code of commerce is in
point because the said rules embody the custom of maritime states
AVERAGES
- the same concept that was existing in medieval times can be applied at present
Relevance of averages (take note these ex. Connected to expenses under 806)
under 806 --- averages are:
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 considered an average? YES. (question now if it is particular or
general)
o Damages or deterioration suffered refer to the physical feature or attribute of the
goods.
- these two are different
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES
Hernandez averages are losses. If there is a loss incurred, the loss will be shouldered on where it
falls. (ex. If you have goods transported from origin to destination but in process it was damaged by
sea water. The shipper or owner will shoulder the loss. What will shipper do to recover loss? If
insured go after insurance. Insurance then files action against common carrier due to negligence) ---
if general average, there is special circumstance, the loss will not be shouldered on where it falls but
wil be shouldered proportionately by persons who have benefited the circumstance
4 reqs for general averages (see above notes) MEMORIZE; MAGSAYSAY VS. AGAN
1. common danger TO Both vessel and cargo
2. deliberate sacrifice
3. successful saving
4. compliance with the proper steps
If no special circumstance, it is a particular or simple average --- the owner of the vessel will be the
one who will shoulder the loss. The negligence of captain, the owner of the vessel will shoulder. But
if there is special circumstance, the loss will be shouldered proportionately by those who benefited
Standard oil case the ship captain will not release goods to the shipper unless the shipper will
contribute their share. The issue was the duty of the captain to liquidate he did not file for the

appropriate proceeding, you should result to legal liquidation. Captain here failed TO INITIATE
proper proceeding thus shipowner is liable for actions of captain
Q: is the duty of captain to initiate a condition precedent?

A: no. even if ship captain does not initiate, the shipowner can still file the appropriate proceeding
in court.
COMMON DANGER both to vessel and cargo. If one invokes general average then that person
must prove what he allege. In standard oil since ship captain invoked gen aver they should be the
one to prove. Failure to prove, they cannot ask for contribution from owners of the goods.
It is also possible that there are no goods involved. Only extraordinary expense Phil. Home
assurance case --- discussed also in chapter 3 --- when it exploded, vessel got burned, another vessel
came to the rescue to extinguish the fire and towed the vessel to the nearest destination. Goods
were saved from the subject vessel. The shipowner asked for contribution to the owner of the
goods which were saved. SC said, shipowner did not comply legal steps 813-815 thus you cannot
allege general averages.
If the averages are not general, it is particular. the shipowner will be solely liable in the case of
Magsaysay, there was no deliberate sacrifice.
SUCCESSFUL SAVING
- Both vessel and goods must be saved
- If vessel not saved, no general averages. Even if goods were saved
- You have to start with resolution, placing of reso in the log book, accounting of goods
thrown away starting those on deck and to follow from those not on deck (read 83-815)
American Home insurance (take note this case--- bar)

- Transportation of tv sets, the shipcapatain was uprised of the typhoon. Still captain
continued with the journey. Then na abot ang typhoon captain directed that the tv sets
should be jettison. Saved vessel. Reklamo owner. Is there general average? No. if the
shipowner is negligent, the law on general averages does not apply.
Note that examples of the two types of averages are not exclusive. There is a word especially thus
there may be other example that may fall under this two type of averages.
YORK AND TURP RULES

- THIS CAN be stipulated in a contract that this rule will apply in respect to averages
- In the absence of stipulation in the contract in applying this rule, such rule is inapplicable
Q: ordinary expenses are not averages bec. They are foreseeable, are there instance that they can
be considered to be extraordinary ave
A; if the parties agree that the averages will cover ordinary expenses. The code of commerce does
not prohibit the inclusion of other expenses under averages.
G. COLLISIONS

Collisions - impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary one.
3 Zones of Time in the Collision of vessels:

1. First zone all time up to the moment when risk of collision begins;
2. Second zone time between moment when risk of collision begins and moment it becomes a
practical certainty;
3. Third zone time when collision is certain and time of impact.
Error in Extremis - sudden movement made by a faultless vessel during the 3rd zone of collision
with another vessel which is at fault during the 2nd zone. Even if such sudden movement is wrong,
no responsibility will fall on said faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26
PHIL 632).
Rules on Collision of Vessels under Code of Commerce:

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 vessel. The owner of the vessel at fault be liable
for losses or damage. (Art. 826)
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 shall be jointly and severally liable. (Art. 827)
3. If it cannot be determined which vessel is at fault. Each vessel shall also suffer its own losses
and both shall be solidarily liable for losses o damages on the cargoes. (Art. 828)
4. The vessels may collide with each other through fortuitous event or force majeure. In this case
each shall bear its own damage. (Art. 830)
5. Two vessels may collide with each other without their fault by reason of a third vessel. The third
vessel will be liable for losses and damages. (Art. 831)
6. A vessel which is properly anchored and moored may collide with those nearby reasons of storm
or other cause of force majeure. The vessel run into shall suffer its own damage and expense.
(Art. 832)
Cases covered by collision and allision:

1. One vessel at fault such vessel is liable for damage caused to innocent vessel as well as
damages suffered by the owners of cargo of both vessels.
2. Both vessels at fault each vessel must bear its own loss, but the shippers of both vessels may
go against the ship owners who will be solidarily liable.
3. Vessel at fault not known same as rule as (2). (Doctrine of Inscrutable Fault)
4. Third vessel at fault same rule as (1).
5. Fortuitous event no liability. Each bears its own loss.
Prerequisite to recovery:
Protest should be made within 24 hours before the competent authority at the point of collision
or at the first port of arrival, if in the Philippines and to the Philippine consul, if the collision took
place abroad. (Art. 835)

Injuries to persons and damage to cargo of owners not on board on collision time need not be
protested. (Art. 836)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT APPLICABLE.
DOCTRINE OF INSCRUTABLE FAULT

In case of collision where it cannot be determined which between the two vessels was at fault,
both vessels bear their respective damage, but both should be solidarily liable for damage to the
cargo of both vessels.
NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall be limited only to
the value of the vessel with all its appurtenances and freightage earned during the voyage. When
the latter is not sufficient to cover all the liabilities, the indemnity due by reason of the death or
injury of persons shall have preference. (Arts. 837 and 838)
H. ARRIVAL UNDER STRESS
* ARRIVAL UNDER STRESS arrival of a vessel at a port of destination on account of lack of

provision, well founded fear of seizure, privateers, pirates, or accidents of sea disabling navigation.
(Art. 819)
NOTE: Captain must make a protest
Steps to be taken in the determination of the propriety of arrival under stress

1. captain should determine during the voyage if there is a well founded fear of seizure, privateers
of other valid grounds
2. captain shall then assemble the officers
3. captain shall summon the persons interested in the cargo who may be present and who may
attend but without right to vote
4. the officers shall determine and agree if there is well founded reason after examining the
circumstances; Captain shall have the deciding vote
5. agreement shall be drafter and the proper minutes shall be signed and entered into the log
book
6. objections and protests shall likewise be entered in the minutes
- Absence of one of the steps, can still be considered arrival under stress.
When not lawful:

1. lack of provisions due to negligence to carry according to usage and customs;
2. risk of enemy not well known or manifest
3. defect of vessel due to improper repair; and
4. malice, negligence, want of foresight or lack of skill of captain. (Art. 820)
Who bears expenses:

if arrival under stress is proper shipowner or ship agent will only be liable for the
expenses of the arrival

if arrival under stress is improper shipowner and ship agent will be liable for the same
expenses and, in addition, they shall be solidarily liable for damages caused to the cargoes
by such arrival under stress
(Art. 821)
NOTE:
- After cessation of the cause of the arrival under stress, captain should continue voyage or else
he shall be liable.
Unloading of cargoes to make repairs:

- in order to make repairs to the vessel or because there is danger that cargo may suffer
damage necessary to unload; captain must request authorization from competent judge
or court for removal, and carry it out w/ knowledge of the person interested in the cargo
- in a foreign port Philippine Consul
- in case of the vessel expenses shall be for the account of the ship owner or agent
- in case of the cargo chargeable against the owners of the merchandise for whose benefit
the act was performed
- if both expenses to be divided proportionately between the value of the vessel and cargo
(Art. 822)
Custody of cargo:
intrusted to the captain (except in cases of force majeure)
(Art. 823)
if entire cargo or part thereof should appear to be damaged, or there should be imminent
danger of its being damaged
captain may request judge of competent court / consul, the sale of all or part of the cargo
person taking cognizance shall authorize it (after examination and declaration)
captain shall justify the legality of his conduct, answering to the shipper for the price of
the merchandise would have brought if they had arrived in good condition
(Art. 824)
Liability of captain:
captain responsible for the damages caused by his delay
if cause of arrival under stress ceases he should not continue the voyage
if cause of arrival should have been the fear of enemies deliberation and resolution (in a
meeting of officers of the vessel and persons interested in the cargo) shall precede the
departure
(Art. 825)
* Shipwreck the demolition or shattering of a vessel caused by her driving ashore or on rocks and
shoals in the midseas, or by the violence of winds or waves in tempests
- loss of the vessel at sea as a consequence of its grounding, or running against an object in sea or
on the coast

Loss or deteriorations of vessel or cargo caused by shipwreck or stranding individually account
of the owners; part which may be saved belonging to them, same proportion. (Art. 840)
If the wreck was due to malice, negligence or lack of skill of the captain, the owner of the vessel
may demand indemnity from said captain. (Art. 841)
The goods saved from the wreck to be specially bound for the payment of the expenses of the
respective salvage. (Art. 842)
If several vessels sail under convoy, and any of them should be wrecked, the cargo saved will be
distributed among the rest in proportion to the amount which each one is able to take. If any
captain should refuse, without sufficient cause, to receive what may correspond to him, the captain
of the wrecked vessel to enter a marine protest against him. If it is not possible to transfer to the
other vessels the entire cargo of the vessel wrecked, the goods of the highest value and smallest
volume to be saved first. Designation to be made by the captain with concurrence of his officers.
(Art. 843)
The captain taking on-board the goods saved from the wreck to continue his course to the port of
destination and upon arrival he should deposit the goods for disposal to their owners. In case the
captain changes his course, and if he can unload them at the port of which they were consigned, he
may make said port if the shippers or supercargoes present and the officers and passengers of the
vessel consent thereto. But he is not required to do so even if he has the consent during time of war
or when the port is difficult and dangerous to make. The owners of the cargo to defray all the
expenses of this arrival and the payment of the freightage. (Art. 844)
If cannot be, proceed to judicial sale complying with the formalities and on publicity. (Art. 845)
I. SALVAGE LAW (Act No. 2616)
* SALVAGE services one person renders to the owner of a ship or goods, by his own labor,
preserving the goods or the ship which the owner or those entrusted with the care of them have
either abandoned in distress at sea, or are unable to protect or secure.
Kinds of Salvage:
Voluntary compensation is dependent on the success.
Under contract for a per diem or per horam wage payable at all events.
Under contract for compensation payable only in case of success.
Claim for valid salvage:

- Provides for a reward for voluntary salvage
- Other persons who assist in saving the vessel or its cargo from shipwreck shall be entitled to
a similar award
Persons not entitled to salvage compensation:

1. Crew of the vessel shipwrecked or which was in danger of shipwreck
2. He who shall have commenced the salvage in spite of opposition of the captain or of his
representatives
3. He who shall have failed to comply with the provisions of Section 3 (Section 3. Tthe salvor
who saves or picks up a vessel or merchandise at sea, in the absence of the ship captain, ship
owner or a representative of either of them, they being unknown, shall convey and deliver
the vessel or merchandise ASAP to the collector of customs if the port has a collector and
otherwise to the provincial treasurer or municipal mayor.)
Requisites of compensation or salvage reward:

1. Object must have been exposed to marine peril (fire, acts of pirate, thieves)
2. Salvage services rendered voluntarily and is not required as an existing duty or a form of
contract (See Sec. 8)
* Pilots are not entitled to a reward (Atty. Capanas)
3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of the crew or shall have been
abandoned (not necessary)
* Courts will not interfere in the agreement of the parties except but where there is no agreement
or it is excessive the reward is fixed by the RTC judge.
* Derelict a ship or cargo which is abandoned and deserted at sea by those who were in charge of
it, without any hope of recovering it or without any intention of returning to it
- determined by ascertaining what was the intention and expectation of those in charge of it when
they quitted it
- boat or vessel found entirely deserted or abandoned on the sea without hope or intention of
recovery or return by the master or the crew, whether resulting from wreck, accident, necessity, or
voluntary abandonment
JETSAM, FLOTSAM, LIGAN:

Jetsam goods that were thrown off a ship which was in danger
Flotsam goods that floated off the ship while ship was in danger or when it sank
Ligan goods left as sea on the wreck or tied to a buoy so that they can be recovered later
Basis of entitlement to salvage reward (Circumstances to consider):

1. The labor expended by the salvors in rendering the salvage service
2. The promptitude, skill and energy displayed in rendering the service and saving the property
3. The value of the property employed by the salvors in rendering the service, and danger to
which such property was exposed
4. The risk incurred by the salvors in rescuing the property from the impending peril
5. The value of the property salved
6. The degree of danger which the property was rescued
Rights and obligations of salvors and owners:

Salvor is entitled to compensation for services rendered. He has, under the Salvage Law, a
lien upon the property salvaged.
On the other hand, the owner does not denounce his right to the property. There is no
presumption of an intention to abandon such property rights.
Maritime Lien
A salvor, in maritime law, has an interest in the property; called a lien, but it never goes, in the
absence of a contract expressly made, upon the idea of debt due from the owner to the salvor but
upon the principle that the service creates a property in the thing saved.

Rule on salvage reward:
1. The reward is fixed by the RTC judge in the absence of agreement or where the latter is
excessive (Sec. 9).
2. If sold (no claim being made within 3 months from publication), the proceeds, after deducting
expenses and the salvage claim, shall go to the owner; if the latter does not claim it within 3
years, 50% of the said proceeds shall go to the salvors, who shall divide it equitably, and the
other half to the government (Secs. 11-12).
3. If a vessel is the salvor, the reward shall be distributed as follows:
a. 50% to the shipowner;
b. 25% to the captain; and
c. 25% to the officers and crew in proportion to their salaries
SALVAGE LAW
SECTION 1. WHEN IN CASE OF SHIPWRECK, THE VESSEL OR ITS CARGO SHALL BE BEYOND THE
CONTROL OF THE CREW, OR SHALL HAVE BEEN ABANDONED BY THEM, AND PICKED UP AND
CONVEYED TO A SAFE PLACE BY OTHER PERSONS, THE LATTER SHALL BE ENTITLED TO A REWARD
FOR THE SALVAGE.
THOSE WHO, NOT BEING INCLUDED IN THE ABOVE PARAGRAPH, ASSIST IN SAVING A VESSEL OR ITS
CARGO FROM SHIPWRECK, SHALL BE ENTITLED TO A LIKE REWARD.
SEC. 2. IF THE CAPTAIN OF THE VESSEL, OR THE PERSON ACTING IN HIS STEAD, IS PRESENT, NO ONE
SHALL TAKE FROM THE SEA, OR FROM THE SHORES OR COAST MERCHANDISE OR EFFECTS
PROCEEDING FROM A SHIPWRECK OR PROCEED TO THE SALVAGE OF THE VESSEL, WITHOUT THE
CONSENT OF SUCH CAPTAIN OR PERSON ACTING IN HIS STEAD.
SEC. 3. HE WHO SHALL SAVE OR PICK UP A VESSEL OR MERCHANDISE AT SEA, IN THE ABSENCE OF
THE CAPTAIN OF THE VESSEL, OWNER, OR A REPRESENTATIVE OF EITHER OF THEM, THEY BEING
UNKNOWN, SHALL CONVEY AND DELIVER SUCH VESSEL OR MERCHANDISE, AS SOON AS POSSIBLE,
TO THE COLLECTOR OF CUSTOMS, IF THE PORT HAS A COLLECTOR, AND OTHERWISE TO THE
PROVINCIAL TREASURER OR MUNICIPAL MAYOR.
SEC. 4. AFTER THE SALVAGE IS ACCOMPLISHED, THE OWNER OR HIS REPRESENTATIVE SHALL HAVE
A RIGHT TO THE DELIVERY OF THE VESSEL OR THINGS SAVED, PROVIDED THAT HE PAYS, OR GIVES A
BOND TO SECURE, THE EXPENSES AND THE PROPER REWARD.
THE AMOUNT AND SUFFICIENCY OF THE BOND, IN THE ABSENCE OF AGREEMENT, SHALL BE
DETERMINED BY THE COLLECTOR OF CUSTOMS OR BY THE JUDGE OF THE COURT OF FIRST
INSTANCE OF THE PROVINCE IN WHICH THE THINGS SAVED MAY BE FOUND.
SEC. 5. THE COLLECTOR OF CUSTOMS, PROVINCIAL TREASURER, OR MUNICIPAL MAYOR, TO WHOM

A SALVAGE IS REPORTED, SHALL ORDER:

A. THAT THE THINGS SAVED BE SAFEGUARD AND INVENTORIED.
B. THE SALE AT PUBLIC OPTION OF THE THINGS SAVED WHICH MAY BE IN DANGER OF IMMEDIATE
LOSS OR OF THOSE WHOSE CONSERVATION IS EVIDENTLY PREJUDICIAL TO THE INTERESTS OF
THE OWNER, WHEN NO OBJECTION IS MADE TO SUCH SALE.
C. THE ADVERTISEMENT WITHIN THE THIRTY DAYS SUBSEQUENT TO THE SALVAGE, IN ONE OF THE
LOCAL NEWSPAPERS OR IN THE NEAREST NEWS-PAPER PUBLISHED, OF ALL THE DETAILS OF THE
DISASTER, WITH A STATEMENT OF THE MARK AND NUMBER OF THE EFFECTS REQUESTING ALL
INTERESTED PERSONS TO MAKE THEIR CLAIMS.
SEC. 6. IF, WHILE THE VESSEL OR THINGS SAVED ARE AT THE DISPOSITION OF THE AUTHORITIES,
THE OWNER OR HIS REPRESENTATIVE SHALL CLAIM THEM, SUCH AUTHORITIES SHALL ORDER THEIR
DELIVERY TO SUCH OWNER OR HIS REPRESENTATIVE, PROVIDED THAT THERE IS NO CONTROVERSY
OVER THEIR VALUE, AND A BOND IS GIVEN BY THE OWNER OR HIS REPRESENTATIVE TO SECURE THE
PAYMENT OF THE EXPENSES AND THE PROPER REWARD. OTHERWISE, THE DELIVERY SHALL NOR BE
MADE UNTIL THE MATTER IS DECIDED BY THE COURT OF FIRST INSTANCE OF THE PROVINCE.
SEC. 7. NO CLAIM BEING PRESENTED IN THE THREE MONTHS SUBSEQUENT TO THE PUBLICATION OF
THE ADVERTISEMENT PRESCRIBED IN SUB-SECTION (C) OF SECTION FIVE, THE THINGS SAVE SHALL
BE SOLD AT PUBLIC AUCTION, AND THEIR PROCEEDS, AFTER DEDUCTING THE EXPENSES AND THE
PROPER REWARD SHALL BE DEPOSITED IN THE INSULAR TREASURY. IF THREE YEARS SHALL PASS
WITHOUT ANYONE CLAIMING IT, ONE-HALF OF THE DEPOSIT SHALL BE ADJUDGED TO HIM WHO
SAVED THE THINGS, AND THE OTHER HALF TO THE INSULAR GOVERNMENT.
SEC. 8. THE FOLLOWING SHALL HAVE NO RIGHT TO A REWARD FOR SALVAGE OR ASSISTANCE:
A. THE CREW OF THE VESSEL SHIPWRECKED OR WHICH WAS IS DANGER OF SHIPWRECK;
B. HE WHO SHALL HAVE COMMENCED THE SALVAGE IN SPITE OF OPPOSITION OF THE CAPTAIN OR
HIS REPRESENTATIVE; AND
C. HE WHO SHALL HAVE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION THREE.
SEC. 9. IF, DURING THE DANGER, AN AGREEMENT IS ENTERED INTO CONCERNING THE AMOUNT OF
THE REWARD FOR SALVAGE OR ASSISTANCE, ITS VALIDITY MAY BE IMPUGNED BECAUSE IT IS
EXCESSIVE, AND IT MAY BE REQUIRED TO BE REDUCED TO AN AMOUNT PROPORTIONATE TO THE
CIRCUMSTANCES.
SEC. 10. IN A CASE COMING UNDER THE LAST PRECEDING SECTION, AS WELL AS IN THE ABSENCE OF
AN AGREEMENT, THE REWARD FOR SALVAGE OR ASSISTANCE SHALL BE FIXED BY THE COURT OF
FIRST INSTANCE OF THE PROVINCE WHERE THE THINGS SALVAGED ARE FOUND, TAKING INTO
ACCOUNT PRINCIPALLY THE EXPENDITURES MADE TO RECOVER OR SAVE THE VESSEL OR THE
CARGO OR BOTH, THE ZEAL DEMONSTRATED, THE TIME EMPLOYED, THE SERVICES RENDERED, THE
EXCESSIVE EXPRESS OCCASIONED THE NUMBER OF PERSONS WHO AIDED, THE DANGER TO WHICH
THEY AND THEIR VESSELS WERE EXPOSED AS WELL AS THAT WHICH MENACED THE THINGS
RECOVERED OR SALVAGED, AND THE VALUE OF SUCH THINGS AFTER DEDUCTING THE EXPENSES.

SEC. 11. FROM THE PROCEEDS OF THE SALE OF THE THINGS SAVED SHALL BE DEDUCTED, FIRST, THE
EXPENSES OF THEIR CUSTODY, CONSERVATION, ADVERTISEMENT, AND AUCTION, AS WELL AS
WHATEVER TAXES OR DUTIES THEY SHOULD PAY FOR THEIR ENTRANCE; THEN THERE SHALL BE
DEDUCTED THE EXPENSES OF SALVAGE; AND FROM THE NET AMOUNT REMAINING SHALL BE TAKEN
THE REWARD FOR THE SALVAGE OR ASSISTANCE WHICH SHALL NOT EXCEED FIFTY PER CENT OF
SUCH AMOUNT REMAINING.
SEC. 12. IF IN THE SALVAGE OR IN THE RENDERING OF ASSISTANCE DIFFERENT PERSONS SHALL
HAVE INTERVENED THE REWARD SHALL BE DIVIDED BETWEEN THEM IN PROPORTION TO THE
SERVICES WHICH EACH ONE MAY HAVE RENDERED, AND, IN CASE OF DOUBT, IN EQUAL PARTS.
THOSE WHO, IN ORDER TO SAVE PERSONS, SHALL HAVE BEEN EXPOSED TO THE SAME DANGERS
SHALL ALSO HAVE A RIGHT TO PARTICIPATION IN THE REWARD.
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED, ENTIRELY OR PARTIALLY,
BY ANOTHER VESSEL, THE REWARD FOR SALVAGE OR FOR ASSISTANCE SHALL BE DIVIDED BETWEEN
THE OWNER, THE CAPTAIN, AND THE REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO
GIVE THE OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE REMAINDER OF THE CREW THE
OTHER FOURTH OF THE REWARD, IN PROPORTION TO THEIR RESPECTIVE SALARIES, IN THE
ABSENCE OF AN AGREEMENT TO THE CONTRARY. THE EXPRESS OF SALVAGE, AS WELL AS THE
REWARD FOR SALVAGE OR ASSISTANCE, SHALL BE A CHARGE ON THE THINGS SALVAGED ON THEIR
VALUE.
COGSA (CARRIAGE OF GOODS BY SEA ACT)

- Adopted by the Philippines on October 22, 1936 through Commonwealth Act No. 65
- New Civil Code primary law on goods that are being transported from a foreign port to
the Philippines
- COGSA remains to be a suppletory law for such type of transportation international
shipping
ART. 1753, NCC: THE LAW OF THE COUNTRY TO WHICH THE GOODS ARE TO BE TRANSPORTED
SHALL GOVERN THE LIABILITY OF THE COMMON CARRIER FOR THEIR LOSS, DESTRUCTION OR
DETERIORATION.
* Goods includes goods, wares, merchandise, and articles of every kinds whatsoever
- does not include live animals and cargo which by the contract of carriage is stated as being
carried on deck and is so carried
Parties:
Carrier, and
Shipper
- They are given their respective rights and obligations under COGSA.
- Carrier (covered by COGSA) not limited to the shipowner; includes charterer who enters into a
contract of carriage with the shipper
- Charterer charters a vessel and conducts his own business for his own account

after chartering the vessel, he uses the vessel to conduct a business of transportation
obtaining goods from 3rd persons to transport the latters goods
Duties of the carrier:

Civil Code requires international carriers to exercise extraordinary diligence in the
performance of their contractual obligations
Section 2 of COGSA carriers obligation and liabilities in relation to the loading, handling,
stowage, carriage, custody, care and discharge of such goods
Section 3 of COGSA responsibilities of the carrier under COGSA
Document of title required

- evidenced by the Bill of Lading
- BOL serves as prima facie evidence of the receipt by the carrier of the goods
Notice of claim and prescriptive period

* Notice of claim must be made within 3 days from delivery if the damage is not apparent; not
mandatory
* Prescriptive period 1 year from delivery for the filing of the case is a condition precedent or
mandatory; does not apply to cases of misdelivery or conversion
Defenses and immunities

- provided for by Section 4 of COGSA
- Section 49(1) of COGSA carrier shall not be liable for loss or damages arising from
unseaworthiness
- New Civil Code carrier will not be liable only if it can present proof that the unseaworthiness was
caused exclusively by any of the circumstances specified in Art. 1734 of the NCC
Waiver
- The shipowner and the ship agent may waive the benefit of any of the defenses in its favor
provided not only under COGSA but also under other laws
Limiting provision
- COGSA contains a provision that allows the shipper to recover only US$500 per package unless
there is a special declaration unless there the real value of the goods is declared
- declaration made by the shipper stating an amount bigger than $500 per package will make the
carrier liable for such bigger amount but only if the amount so declared is the real value of the
goods
Right to discharge dangerous cargo

- COGSA allows the carrier to discharge the good of the carrier discovers that the goods are
dangerous, inflammable or are explosives

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LAW ON TRANSPORTATION AND PUBLIC UTILITIES

Parties: common carrier & passenger (carried gratuitously or not)

2 types of contracts of carriage of PASSENGERS:

> Contract of Carriage

* TRAINS perfected when a person:

APRIL LYNN L. URSAL Page 1

Tests for determining WON a party is a common carrier of goods:

Characteristics of Common carriers (CC):

Case: Jose Mendoza vs. Philippine Airlines Inc

APRIL LYNN L. URSAL Page 2

Q: What is the effect of charter party?

2. Charter by demise/ Bareboat Charter

Distinction between Common Carriers and Private Carriers

APRIL LYNN L. URSAL Page 3

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

Case: Planters Products, Inc. vs. CA

COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING

APRIL LYNN L. URSAL Page 4

REGISTERED OWNER RULE/REGISTRATION LAWS

Q: what is the purpose of such law?

APRIL LYNN L. URSAL Page 5

Case: Dizon vs. Octavio

I. Obligations of the carrier

APRIL LYNN L. URSAL Page 6

Case: Fisher v. Yangco

(1) Hazardous and Dangerous Substances

(2) Unfit for Transport

APRIL LYNN L. URSAL Page 7

Note: read page 72 of book for other provisions.

APRIL LYNN L. URSAL Page 8

(2) Rights of Passengers in Case of Delay

Where and to Whom Delivered

b. Consignee Delivery must generally be made to the owner or consignee or to someone

Effects of delayed and unfinished voyage in inter-island vessels:

APRIL LYNN L. URSAL Page 9

C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE

Doctrine of Proximate Cause there is presumption of negligence

(1) Carriage of Goods

APRIL LYNN L. URSAL Page 10

(2) Carriage of Passengers

Case: Dangwa Transportation Company vs. CA

Case: La Mallorca vs. CA

APRIL LYNN L. URSAL Page 11

DEFENSES OF COMMON CARRIERS

The absence of causal connection is only a matter of defense.

Requisites of Fortuitous Event:

APRIL LYNN L. URSAL Page 12

Fire not considered as a natural calamity or disaster

Fire caused by lightning a natural calamity

Case: Juntilla v. Fontanar

OTHER INVALID DEFENSES

APRIL LYNN L. URSAL Page 13

Case: Philippine American General Insurance Co. vs. MCG

Case: Pilapil vs. CA

APRIL LYNN L. URSAL Page 14

Case: Franklin Gacal vs. PAL

APRIL LYNN L. URSAL Page 15

However, NCC likewise provides:

ORDER OF PUBLIC AUTHORITY

DEFENSES IN CARRIAGE OF PASSENGERS

- Primary defense of carrier is exercise of extraordinary diligence in transporting passengers. Even if

APRIL LYNN L. URSAL Page 16

Reasons for the rule: