Commercial Law Review
Transportation Law
TRANSPORTATION LAW
PRELIMINARY CONSIDERATIONS:
A. Governing Laws
1. New Civil Code – Primary law
2. Warsaw Convention – for international
transportation by air
3. Code of Commerce – governs suppletorily;
it governs maritime transaction
4. Carriage of Goods by Sea Act – for
transportation by sea; governs suppletorily
5. Salvage Law
6. Public Service Act
7. Article XII Sec 11 on operation of public
convenience of the 1987 Philippine
Constitution
B. Concept of Public Utility & public service
Sec. 13 (b) of the Public Service Act provides
that: “The term 'public service' includes every
person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele,
whether permanent, occasional or accidental,
and done for general business purposes, any
common carrier, railroad, street railway,
traction railway, sub-way motor vehicle, either
for freight or passenger, or both with or without
fixed route and whatever may be its
classification, freight or carrier service of any
class, express service, steamboat, or steamship
line, pontines, ferries, and water craft, engaged
in the transportation of passengers or freight or
both, shipyard, marine railway, marine repair
shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas electric light,
heat and power, water supply and power,
petroleum, sewerage system, wire or wireless
communications system, wire or wireless
broadcasting stations and other similar public
services: Provided, however, That a person
engaged in agriculture, not otherwise a public
service, who owns a motor vehicle and uses it
personally and/or enters into a special contract
whereby said motor vehicle is offered for hire
or compensation to a third party or third
engaged in agriculture, not itself or themselves
a public service, for operation by the latter for a
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limited time and for a specific purpose directly
connected with the cultivation of his or their
farm, the transportation, processing, and
marketing of agricultural products of such third
party or third parties shall not be considered as
operating a public service for the purposes of
this Act.”
Public utilities are privately owned and
operated business whose services are essential
to the general public.
Case: National Development Company v CA
C. Constitutional limitations on operation of
public utilities
Sec. 11 of Article XII of the 1987 Constitution
states that: “No franchise, certificate, or any
other form of authorization for the operation of
a public utility shall be granted except to
citizens of the Philippines or to corporations or
associations organized under the laws of the
Philippines, at least sixty per centum of whose
capital is owned by such citizens; nor shall such
franchise, certificate, or authorization be
exclusive in character or for a longer period
than fifty years. Neither shall any such franchise
or right be granted except under the condition
that it shall be subject to amendment,
alteration, or repeal by the Congress when the
common good so requires. The State shall
encourage equity participation in public utilities
by the general public. The participation of
foreign investors in the governing body of any
public utility enterprise shall be limited to their
proportionate share in its capital, and all the
executive and managing officers of such
corporation or association must be citizens of
the Philippines.”
*The corporation must be a domestic
corporation and that 60% of the capital must be
owned by Filipino citizens.
Sec. 18 of Article XII of the 1987 Constitution
provides that: “The State may, in the interest of
national welfare or defense, establish and
operate vital industries and, upon payment of
just compensation, transfer to public ownership
utilities and other private enterprises to be
operated by the Government.”
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Q: What are the bases/reasons for regulation of
public utilities?
A: Basis: Police Power
Justification: Common good
D. Regulatory agencies
1. Land Transportation Franchising Regulatory
Board (LTFRB) – land transportation
2. Land Transportation Office – issue license to
drivers
3. Maritime Industry Authority (MARINA) –
water transportation
4. National Telecommunications Commission
– communication utilities and services,
radio communications systems, wire or
wireless telephone and telegraph systems,
radio and television broadcasting systems
and other similar public utilities
5. Energy Regulatory Board – electric or power
companies
6. National Water Resources Council – water
resources
7. Civil Aeronautics Board – air transportation
Q: What conditions must concur in the grant of
certificate of public convenience and necessity?
A: 1. The grantee must be a citizen of the
Philippines or a corporation or entity 60% of
which is owned by such citizens; 2. The grantee
must have sufficient financial capability to
undertake the service; and 3. The service will
promote public interest and convenience in a
proper and suitable manner.
*In Tatad v Garcia, the SC held that the
controlling factor is the citizenship of the
person operating a common carrier.
Guiding Principles:
1. Prior or Old Operator Rule – the first
licensee will be protected in his investment
and will not be subjected to ruinous
competition.
*No certificate of public convenience and
necessity will be issued to other operator
as long as the prior operator still in
operation and can satisfy the public and
that it still has the capacity to do so.
2. Protection Investment Rule – protects from
unfair competition
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3. Prior Applicant Rule – protects the first
applicant. Principle: all things being equal
*Public interest is the first and paramount
consideration.
E. Concept of franchise and certificate of public
convenience
Franchise is a grant or privilege from the
sovereign power.
Certificate of Public Convenience is a form of
regulation through an administrative agency.
Q: Is a legislative franchise necessary before a
public utility can be allowed to secure a
certificate of public convenience?
A: General Rule: NO.
Exception: If a pertinent law requires such
legislative franchise.
Factors:
1. Public interest
2. Public convenience
3. Public necessity
GENERAL CONCEPTS:
A. Contract of transportation in general
Transportation is a contract whereby a person,
natural or juridical, obligates to transport
persons, goods, or both, from one place to
another, by land, air, or water, for a price or
commission.
*Importance: For liability purposes
B. Perfection
There is a perfected contract when there was a
meeting of the minds as to the subject matter
and consideration.
C. Common Carrier
1. Statutory definition
Article 1732 of the New Civil Code provides
that: “Common carriers are 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.”
- one that holds itself out as ready to
engage in the transportation of goods
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for hire as a public employment and not

as a casual occupation. 3. Distinguished from towage, arrastre and
Implications being a common carrier: stevedoring
a. extraordinary diligence must be Distinctions:
exercised Towage Arrastre Stevedorin
b. in case of damage, presumption of g
negligence on the part of the common The functions The
One vessel is of an arrastre function of
carrier
hired to operator has stevedores
*It is the activity of the carrier that is bring nothing to do involves
controlling. another with the trade the loading
Cases: A.F. Sanchez Brokerage, Inc v CA; vessel to and business and
Asia Lighterage v CA; De Guzman v CA another of navigation, unloading
*The fact that there is no license at the time place; refers nor to the use of
of the incident happen is of no moment for to a service or operation coastwise
rendered to of vessels. He vessels
liability purposes.
a vessel by is no different calling at
2. Distinguished from private carrier towing for from that of a the port.
Common Private the mere depositary or
Carrier Carrier purpose of warehousema
As to holds himself Contracts expediting n.
availability: out for all with her voyage
people particular without
indiscriminate individuals reference to
ly or groups any
only circumstanc
As to Extraordinary Ordinary es of danger.
required diligence is diligence is *The SC held that the following services are not
diligence: required required considered a common carrier:
As to Subject to Not subject 1) purely arrastre services;
regulation: state to state
*comparable to that as warehouseman and depositor
regulation regulation
Stipulation Parties may Parties may 2) purely stevedoring services; and
limiting not agree on limit the 3) purely towage services.
liability: limiting the carrier’s *In Crisostomo v CA, the SC held that the respondent
carrier’s liability, being a travel agency is not a common carrier because
liability except provided it the services offered is not one that carries passenger
when is not from one place to another.
provided by contrary to
4. Tests to determine common carrier
law law, morals
or good Tests:
customs a. He must engaged in the business of
Exempting Prove Caso carrying goods for others as a public
circumstanc extraordinary fortuito, employment and must hold himself out
e: diligence and Article as ready to engage in the transportation
Article 1734 1174 NCC of goods for person generally as a
NCC
business and not as a casual occupation;
Presumptio There is a No
n of presumption presumptio b. He must undertake to carry goods of
Negligence: of fault or n of fault or the kind to which his business is
negligence negligence confined;
Governing Law on Law on c. He must undertake to carry by the
law: common obligations method by which his business is
carriers and
contracts
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conducted and over his established
roads;
d. The transportation must be for hire
Case: First Philippine Industrial
Corporation v CA
*Under Sec. 22 of the Electric Power
Distribution Reform Act, the company like
MERALCO distributing electricity is a
common carrier.
5. Parties to the contract of carriage
a. Carriage of passengers:
1. Common carrier
2. Passengers
b. Carriage of goods:
1. Shipper
2. Carrier
D. Registered owner rule and Kabit system
General Rule: Registered owner rule is
applicable in this jurisdiction.
Registered owner rule states that the person
who is the registered owner of a vehicle is liable
for any damages 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.
Purpose of this rule: easy identification of the
owner to be sued for liability.
Recourse: Registered owner may bring the case
to the court to sue the buyer or operator of the
vehicle at fault.
Exception: in case of stolen vehicle registered
owner is not liable.
*In the case of Duavit v CA, the SC held that the
registered owner is not liable if the vehicle was
taken from his garage without his knowledge or
consent. To hold the registered owner liable
would be absurd as it would be holding liable
the owner of a stolen vehicle for an accident
caused by the person who stole such vehicle.
Kabit System is an arrangement whereby a
person who has been granted a certificate of
public convenience allows other persons who
own motor vehicles to operate them under his
license, sometimes for a fee or percentage of
the earnings.
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*Kabit system is invariably recognized as being
contrary to public policy and therefore void and
inexistent under Article 1409 of the New Civil
Code.
*If the registered owner and the buyer entered
into this transaction they are In pari delicto thus,
in case something happen the court will not aid
them. The court will leave them as they were.
*This arrangement is a circumvention of the
requirement for license.
OBLIGATIONS OF THE COMMON CARRIER IN A
CONTRACT OF CARRIAGE OF GOODS:
A. Vigilance over the goods
1. Duty to exercise extraordinary diligence
Article 1733 of the New Civil Code states
that: “Common carriers, from the nature of
their business and for reasons of public
policy, are bound to observe extraordinary
diligence in the vigilance over the goods
and for the safety of the passengers
transported by them, according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance
over the goods is further expressed in
Articles 1734, 1735, and 1745, Nos. 5, 6,
and 7, while the extraordinary diligence for
the safety of the passengers is further set
forth in Articles 1755 and 1756.”
Reason: The nature of the business is
imbued with public interest and public
policy; because of the exigencies of the
business. The public has no choice but to
trust on the skills of the employees of the
common carrier. The goods and the life of
the passenger are placed in the hands of
the common carrier.
Article 363 of the Code of Commerce
provides that: “Outside of the cases
mentioned in the second paragraph of
Article 361, the carrier shall be obliged to
deliver the goods shipped in the same
condition in which, according to the bill of
lading, they were found at the time they
were received, without any damage or
impairment, and failing to do so, to pay the
value which those not delivered may have
at the point and at the time at which their
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delivery should have been made. If those
not delivered form part of the goods
transported, the consignee may refuse to
receive the latter, when he proves that he
cannot make use of them independently of
the others.”
Article 364 of the Code of Commerce
provides that: “If the effect of the damage
referred to in Article 361 is merely a
diminution in the value of the gods, the
obligation of the carrier shall be reduced to
the payment of the amount which, in the
judgment of experts, constitutes such
difference in value.”
Article 365 of the Code of Commerce
provides that: “If, in consequence of the
damage, the goods are rendered useless for
sale and consumption for the purposes for
which they are properly destined, the
consignee shall not be bound to receive
them, and he may have them in the hands
of the carrier, demanding of the latter their
value at the current price on that day. If
among the damaged goods there should be
some pieces in good condition and without
any defect, the foregoing provision shall be
applicable with respect to those damaged
and the consignee shall receive those which
are sound, this segregation to be made by
distinct and separate pieces and without
dividing a single object, unless the
consignee proves that impossibility of
conveniently making use of them in this
form. The same rule shall be applied to
merchandise in bales or packages,
separating those parcels which appear
sound.”
Presumption of negligence
Article 1735 of the New Civil Code provides
that: “In all cases other than those
mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost,
destroyed or deteriorated, common carriers
are presumed to have been at fault or to
have acted negligently, unless they prove
that they observed extraordinary diligence
as required in Article 1733.”
2. Duration of liability
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Article 1736 of the New Civil Code states
that: “The extraordinary responsibility of
the common carrier lasts from the time the
goods are unconditionally placed in the
possession of, and received by the carrier
for transportation until the same are
delivered, actually or constructively, by the
carrier to the consignee, or to the person
who has a right to receive them, without
prejudice to the provisions of Article 1738.”
Article 1737 of the New Civil Code states
that: “The common carrier's duty to
observe extraordinary diligence over the
goods remains in full force and effect even
when they are temporarily unloaded or
stored in transit, unless the shipper or
owner has made use of the right of
stoppage in transitu.”
Article 1738 of the New Civil Code provides
that: “The extraordinary liability of the
common carrier continues to be operative
even during the time the goods are stored
in a warehouse of the carrier at the place of
destination, until the consignee has been
advised of the arrival of the goods and has
had reasonable opportunity thereafter to
remove them or otherwise dispose of them.”
3. Defenses of common carriers
Article 1734 of the New Civil Code provides
that: “Common carriers are responsible for
the loss, destruction, or deterioration of the
goods, unless the same is due to any of the
following causes only:
(1) Flood, storm, earthquake, lightning, or
other natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act of 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.”
*The enumeration is exclusive or a closed
list.
General Rule: Common carriers are
responsible for the loss, destruction or
deterioration of the goods.
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Exceptions:
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 of omission of the shipper or
owner of the goods;
4. The character of the goods or
defects in the packaging or in the
containers; and
5. Order or act of the competent
public authority
Article 1740 of the New Civil Code states
that: “If the common carrier negligently
incurs in delay in transporting the goods, a
natural disaster shall not free such carrier
from responsibility.”
a. Fortuitous event
Article 1739 of the New Civil Code
provides that: “In order that the
common carrier may 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. The same duty is incumbent
upon the common carrier in case of an
act of the public enemy referred to in
Article 1734, No. 2.”
*Fire is not within the ambit of natural
disaster or calamity.
*Calamity includes thunderstorm.
*mechanical defect is not within the
ambit of the natural disaster; it is within
the control of the common carrier.
Requisites:
1. Proximate cause is the natural
calamity
2. Absence of negligence on the part
of the common carrier
3. The common carrier must exercise
due diligence to prevent loss before,
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during and after the occurrence of
the disaster
4. Free from unreasonable delay by
the common carrier or
unreasonable deviation
b. Public enemy
Article 1739 of the New Civil Code
states that: “In order that the common
carrier may 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. The same duty is incumbent
upon the common carrier in case of an
act of the public enemy referred to in
Article 1734, No. 2.”
*Public enemy includes pirates however
it does not include robbery and thief.
*Pirates are enemies of all civilized
nation.
General Rule: rebels and insurreccion is
not included.
Exception: If it they are cast of and took
allegiance a hostile manner territory
*Existence of actual war is imperative.
c. Act of omission on the part of the
shipper or owner of the goods
*There must be no fault or contributory
negligence on the part of the carrier.
*In Compania Maritima v CA, the SC
held that the common carrier is also at
fault; the common carrier should have
exercise extraordinary diligence by not
relying solely on the statement of the
shipper; it should have conducted its
own weighing. In this case the common
carrier is not totally absolved from its
liability.
d. Improper packing
Article 1742 of the New Civil Code
states that: “Even if the loss,
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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.”
*If the defect is apparent, the carrier
may refuse to accept the goods for
carriage; if the shipper insists, the
remedy is to make a protestation; make
a clean bill of lading.
e. Order of public authority
Article 1743 of the New Civil Code
states that: “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 the order.”
*The important requisite is that the
public authority has the power to issue
an order.
Case: Ganzon v CA
4. Contributory negligence of the shipper
Article 1741 of the New Civil Code states
that: “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.”
5. Stipulation limiting liability of carrier
Article 1744 of the New Civil Code states
that: “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.”
*This is for the benefit of the carrier.
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Consideration: Reduction of fare
*The stipulation must be in writing for the
purpose of preventing abuse from the
carrier.
Article 1748 of the New Civil Code provides
that: “An agreement limiting the common
carrier's liability for delay on account of
strikes or riots is valid.”
Article 1749 of the New Civil Code states
that: “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.”
Article 1750 of the New 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.”
a. Requisites
Article 1744 of the New Civil Code
states that: “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.”
Article 1751 of the New Civil Code
provides that: “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.”
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*Liability can be limited but cannot be
totally exempted.
*Stipulations reducing diligence or
limiting liability must be in writing to be
enforceable.
b. Invalid stipulations
Article 1745 of the New Civil Code
states that: “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.”
*Even if they agreed with regard to
numbers 1,2 and 3, the stipulation is
void because it is contrary to public
policy because all these stipulations
exempt the carrier from liability.
General Rule: The degree of diligence
may be lowered
Exception: Not lower than that of a
good father of a family.
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General Rule: stipulations exempting
from liability acts committed by robbers
and thieves who do not act with grave
threat or irresistible threats are not
valid.
Exception: In case the robbers or
thieves used grave threat or irresistible
threats.
*In this case, the presumption of
negligence is still applicable, the
stipulation only affects the outcome of
the case.
c. Effect of delay
Article 1747 of the New Civil Code
states that: “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.”
*Delay will prevent the carrier from
raising natural disaster as a defense and
that the agreement limiting its liability
cannot be raised as a defense.
d. Rule on presumption of negligence
despite stipulation
Article 1752 of the New Civil Code
states that: “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.”
B. Other obligations
1. Duty to accept goods
a. Grounds for valid refusal to accept
goods
i. General Rule: Goods sought to be
transported are dangerous objects
or substances including dynamite
and other explosives;
Exception: Carriers that are
permitted or allowed to transport
dangerous objects or substances for
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the reason that it is their function similar goods

to do so or it is their operation. which he
ii. Goods are unfit for transportation; may make to
the point of
*This can be found under Code of
delivery
Commerce
iii. Acceptance would result in
b. Consequences of delay
overloading;
Article 1740 of the New Civil Code
iv. Contrabands or illegal goods;
provides that: “If the common carrier
v. Goods are injurious to health;
negligently incurs in delay in
vi. Goods will be exposed to untoward
transporting the goods, a natural
danger like flood, capture by
disaster shall not free such carrier from
enemies and the like;
responsibility.”
vii. Goods like livestock will be exposed
Article 1747 of the New Civil Code
to disease;
provides that: “If the common carrier,
viii. Strike; and
without just cause, delays the
ix. Failure to tender goods on time
transportation of the goods or changes
2. Duty to deliver goods
the stipulated or usual route, the
a. Time of delivery
contract limiting the common carrier's
General Rule: It is by stipulation
liability cannot be availed of in case of
Exception: In the absence of stipulation
the loss, destruction, or deterioration of
Code of Commerce governs.
the goods.”
Article 358 of the Code of Commerce
Article 370 of the Code of Commerce
provides that: “If there is no period
provides that: “If a period has been
fixed for the delivery of the goods the
fixed for the delivery of the goods, it
carrier shall be bound to forward them
must be made within such time, and,
in the first shipment of the same or
for failure to do so, the carrier shall pay
similar goods which he may make to the
the indemnity stipulated in the bill of
point where he must deliver them; and
lading, neither the shipper nor the
should he not do so, the damages
consignee being entitled to anything
caused by the delay should be for his
else. If no indemnity has been
account.”
stipulated and the delay exceeds the
*When a common carrier undertakes to
time fixed in the bill of lading, the
convey goods, the law implies a
carrier shall be liable for the damages
contract that they shall be delivered at
which the delay may have caused.”
destination within a reasonable time, in
Article 371 of the Code of Commerce
the absence of any agreement as to the
provides that: “In case of delay through
time of delivery.
the fault of the carrier, referred to in
*Mercantile usage or practice
the preceding articles, the consignee
With Without stipulation
may leave the goods transported in the
stipulation
hands of the former, advising him
Carrier is bound 1. Within a
to fulfil the reasonable thereof in writing before their arrival at
contract and is time. the point of destination. When this
liable for any 2. Carrier is abandonment takes place, the carrier
delay; no bound to shall pay the full value of the goods as if
matter from forward they had been lost or mislaid. If the
what cause it them in the
abandonment is not made, the
may have arisen first
shipment of indemnification for losses and damages
the same or by reason of the delay cannot exceed
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the current price which the goods
transported would have had on the day
and at the place in which they should
have been delivered; this same rule is
to be observed in all other cases in
which this indemnity may be due.”
Article 372 of the Code of Commerce
states that: “The value of the goods
which the carrier must pay in cases of
loss or misplacement shall be
determined in accordance with that
declared in the bill of lading, the
shipper not being allowed to present
proof that among the goods declared
therein there were articles of greater
value and money. Horses, vehicles,
vessels, equipment and all other
principal and accessory means of
transportation shall be especially bound
in favour of the shipper, although with
respect to railroads said liability shall be
subordinated to the provisions of the
laws of concession with respect to the
property, and to what this Code
established as to the manner and form
of effecting seizures and attachments
against said companies.”
Article 373 of the Code of Commerce
states that: “The carrier who makes the
delivery of the merchandise to the
consignee by virtue of combined
agreements or services with other
carriers shall assume the obligations of
those who preceded him in the
conveyance, reserving his right to
proceed against the latter if he was not
the party directly responsible for the
fault which gave rise to the claim of the
shipper or consignee. The carrier who
makes the delivery shall likewise
acquire all the actins and rights of those
who preceded him in the conveyance.
The shipper and the consignee shall
have an immediate right of action
against the carrier who executed the
transportation contract, or against the
other carriers who may have received
the goods transported without
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reservation. However, the reservation
made by the latter shall not relieve
them from the responsibilities which
they may have incurred by their own
acts.”
Article 374 of the Code of Commerce
states that: “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 24 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.”
Effects of delay:
1. Excusable delay in carriage merely
suspends and generally does not
terminate the contract of carriage.
When the cause is removed, the
master must proceed with the
voyage and make delivery;
2. Carrier remains duty bound to
exercise extraordinary diligence;
3. Natural disaster shall not free the
carrier from responsibility;
4. If delay is without just cause, the
contract limiting the common
carrier’s liability cannot be availed
of in case of loss or deterioration of
the goods.
c. Place of Delivery
Article 360 of the Code of Commerce
provides that: “The shipper, without
changing the place where the delivery is
to be made, may change the
consignment of the goods which he
delivered to the carrier, provided that
at the time of ordering the change of
consignee the bill of lading signed by
the carrier, if one has been issued, be
returned to him, in exchange for
another wherein the novation of the
contract appears. The expenses which
this change of consignment occasions
shall be for the account of the shipper.”
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d. To whom delivery shall be made
Article 368 of the Code of Commerce
provides that: “The carrier must deliver
to the consignee, without any delay or
obstruction, the goods which he may
have received, by the mere fact of being
named in the bill of lading to receive
them; and if he does not do so, he shall
be liable for the damages which may be
caused thereby.”
Article 369 of the Code of Commerce
provides that: “If the consignee cannot
be found at the residence indicated in
the bill of lading, or if he refuses to pay
the transportation charges and
expenses, or if he refuses to receive the
goods, the municipal judge, where
there is none of the first instance, shall
provides for their deposit at the
disposal of the shipper, this deposit
producing all the effects of delivery
without prejudice to third parties with a
better right.”
OBLIGATIONS OF THE COMMON CARRIER IN A
CONTRACT OF CARRIAGE OF PASSENGERS:
A. Safety of Passengers
1. Duty to observe utmost diligence
Article 1755 of the New Civil Code provides
that: “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.”
*There are claims not really focused on
death, injuries, loss or damage of goods but
concentrates on moral damages; and the SC
said that these claims can still prosper in
because there is still a breach of contract of
carriage.
*Behavior of the employees towards to
passengers is also a factor considered by
the court to rule against a common carrier.
Case: Singapore Airline v Andion
Fernandez
*In Japan airlines v Asuncion, the SC held
that it is not under the obligation of the
carrier to check the veracity of the
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information in the travel document; it also
held that the obligation of the carrier is
limited to endorsing and not to influence.
2. Duration of liability
*The carrier is bound to exercise utmost
diligence with respect to passengers the
moment the person who purchases the
ticket or token from the carrier presents
himself at the proper place and in a proper
manner to be transported. Such person
must have a bona fide intention to use the
facilities of the carrier, possess sufficient
fare with which to pay for his passage, and
present himself to the carrier for
transportation in the place and manner
provided.
*In LRTA v Navidad, the SC held the
petitioner carrier liable for breach of
contract. The SC held that Nicanor Navidad
was a passenger when he died after he fell
on the LRT tracks and was struck by a
moving train. He was considered a
passenger because he entered the LRT
station after having purchased a token and
he fell while he was on the platform waiting
for a train. Thus, he was where he was
supposed to be with the intention of
boarding a train.
*Once created, the relationship will not
ordinarily terminate until the passenger has,
after reaching his destination, safely
alighted from the carrier’s conveyance or
has had a reasonable opportunity to leave
the carrier’s premises. All persons who
remain on the premises within a reasonable
time after leaving the conveyance are to be
deemed passengers, and what is a
reasonable time or a reasonable delay
within this rule is to be determined from all
the circumstances, and includes reasonable
time to look after his baggage and prepare
for his departure.
*In La Mallorca v CA, the SC held that there
was a breach of duty to exercise
extraordinary diligence with respect to the
4 year old child and the carrier is liable as a
consequence. The presence of passengers
near the bus was not unreasonable and
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they were, therefore, to be considered still
as passengers of the carrier, entitled to the
protection under their contract.
*In Aboitiz Shipping Corporation v CA, the
SC held that extraordinary diligence was still
owed to AV at the time of the accident. It
was ruled that AV’s presence in the
premises was not without cause. The victim
had to claim his baggage which was possible
only one hour after the vessel arrived since
it was the standard procedure in the case of
petitioner’s vessels that the unloading
operation shall start only after that time.
*The differences between the La Mallorca
case and Aboitiz Shipping Corporation are: 1.
The business is different from that of La
Mallorca case; and 2. The capacity of
passengers and baggages are different
3. Presumption of negligence
Article 1756 of the New Civil Code states
that: “In case of death of or injuries to
passengers, common carriers are presumed
to have been at fault or to have acted
negligently, unless they prove that they
observed extraordinary diligence as
prescribed in Articles 1733 and 1755.”
4. Liability for acts of employees
Article 1759 of the New Civil Code provides
that: “Common carriers are liable for the
death of or injuries to passengers through
the negligence or wilful acts of the former's
employees, although such employees may
have acted beyond the scope of their
authority or in violation of the orders of the
common carriers.
This liability of the common carriers does
not cease upon proof that they exercised all
the diligence of a good father of a family in
the selection and supervision of their
employees.”
Case: Maranan v Perez
5. Liability for acts of strangers
Article 1763 of the New Civil Code provides
that: “A common carrier is responsible for
injuries suffered by a passenger on account
of the wilful acts or negligence of other
passengers or of strangers, if the common
carrier's employees through the exercise of
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the diligence of a good father of a family
could have prevented or stopped the act or
omission. “
Case: Bachelor Express v CA
6. Effect of stipulation on liability
Article 1757 of the New Civil Code provides
that: “The responsibility of a common
carrier for the safety of passengers as
required in Articles 1733 and 1755 cannot
be dispensed with or lessened by
stipulation, by the posting of notices, by
statements on tickets, or otherwise.”
Article 1758 of the New Civil Code provides
that: “When a passenger is carried
gratuitously, a stipulation limiting the
common carrier's liability for negligence is
valid, but not for wilful acts or gross
negligence.
The reduction of fare does not justify any
limitation of the common carrier's liability.”
Article 1760 of the New Civil Code states
that: “The common carrier's responsibility
prescribed in the preceding article cannot
be eliminated or limited by stipulation, by
the posting of notices, by statements on the
tickets or otherwise.”
B. Passenger’s Baggages
Article 1754 of the New Civil Code provides
that: “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.”
Article 1998 of the New Civil Code states that:
“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.”
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Article 2000 of the New Civil Code states that:
“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.”
Article 2001 of the New Civil Code provides
that: “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.”
Article 2002 of the New Civil Code provides
that: “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.”
Article 2003 of the New Civil Code provides
that: “The hotel-keeper cannot free himself
from responsibility by posting notices to the
effect that he is not liable for the articles
brought by the guest. Any stipulation between
the hotel-keeper and the guest whereby the
responsibility of the former as set forth in
articles 1998 to 2001 is suppressed or
diminished shall be void.”
*The baggage in the personal custody of the
passenger or his employee in that the baggage
in transit will be considered as necessary
deposits. The common carrier shall be
responsible for the baggage as depositaries,
provided that notice was given to them or its
employees, and the passenger took the
necessary precaution, which the carrier has
advised them relative to the care and vigilance
of their baggage. In case of loss due to the fault
of the passenger the carrier will not be liable.
*They are not absolutely responsible as
depository because the law requires notice.
*It is also required to declare the value of the
baggage.
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*The carrier who has in his custody the baggage
of the passenger to be carried like any other
goods is required to observe extraordinary
diligence. In case of loss or damage the carrier is
presumed negligent.
OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND
PASSENGER:
A. Effect of negligence of shipper or passenger
Article 1741 of the New Civil Code states that:
“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.”
Article 1761 of the New Civil Code provides
that: “The passenger must observe the diligence
of a good father of a family to avoid injury to
himself.”
Article 1762 of the New Civil Code states that:
“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.”
*The shipper is also obliged to exercise due
diligence in avoiding damage or injury.
*With respect to carriage of passengers, the
said passengers are likewise bound to observe
due diligence to avoid injury.
*The contributory negligence on the part of the
passenger is not a defense that will excuse the
carrier from liability. It will only mitigate such
liability.
*The carrier may be able to prove that the only
cause of the loss of the goods is any of the
following acts of the shipper:
1. failure of the shipper to disclose the nature of
the goods;
2. improper marking or direction as to
destination; and
3. improper loading when he assumed such
responsibility.
*The shipper must likewise see to it that the
goods are properly packed; otherwise, liability
of the carrier may be mitigated or barred
depending on the circumstances.
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B. Payment of freight
Who will pay:
Shipper - before or at the time he delivers the
goods to the carrier for shipment.
Consignee - if agreed upon by the parties at the
point of destination is bound by such stipulation
the moment he accepts the goods.
Passengers - they are contractually bound to
pay the fare within such time as prescribed by
regulations or by the carrier.
Time to pay:
Tickets are purchased in advance from ticket
outlets.
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 24 hours following
their delivery.
*In case of delay in 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.
Article 374 of the Code of Commerce provides
that: “The carrier who makes the delivery of the
merchandise to the consignee by virtue of
combined agreements or services with other
carriers shall assume the obligations of those
who preceded him in the conveyance, reserving
his right to proceed against the latter if he was
not the party directly responsible for the fault
which gave rise to the claim of the shipper or
consignee. The carrier who makes the delivery
shall likewise acquire all the actions and rights
of those who preceded him in the conveyance.
The shipper and the consignee shall have an
immediate right of action against the carrier
who executed the transportation contract, or
against the other carriers who may have
received the goods transported without
reservation. However, the reservation made by
the latter shall not relieve them from the
responsibilities which they may have incurred
by their own acts.”
Article 375 of the Code of Commerce provides
that: “The goods transported shall be especially
bound to answer for the cost of transportation
and for the expenses and fees incurred for them
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during their conveyance and until the moment
of their delivery. This special right shall
prescribe 8 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.”
C. Liability for demurrage
Demurrage is the compensation provided for in
the contract of affreightment for the detention
of the vessel beyond the time agreed on for
loading and unloading. It is a claim for damages
for failure to accept delivery.
*Liability for demurrage exists only when
expressly stipulated in the contract.
EXTRAORDINARY DILIGENCE:
A. Underlying reason
Reasons:
1. From the nature of the business and for
reasons of public policy;
2. Relationship of trust;
3. Business is impressed with a special
public duty;
4. Possession of the goods;
5. Preciousness of human life
B. Effect of Stipulation
Article 1744 of the New Civil Code states
that: “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.”
Article 1757 of the New Civil Code states
that: “The responsibility of a common
carrier for the safety of passengers as
required in Articles 1733 and 1755 cannot
be dispensed with or lessened by
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stipulation, by the posting of notices, by
statements on tickets, or otherwise.”
Article 1758 of the New Civil Code states
that: “When a passenger is carried
gratuitously, a stipulation limiting the
common carrier's liability for negligence is
valid, but not for wilful acts or gross
negligence.
The reduction of fare does not justify any
limitation of the common carrier's liability.”
Article 1760 of the New Civil Code states
that: “The common carrier's responsibility
prescribed in the preceding article cannot
be eliminated or limited by stipulation, by
the posting of notices, by statements on the
tickets or otherwise.”
C. Extraordinary diligence in carriage by sea
1. Seaworthiness of the vessel
Sec. 3 [1] of the COGSA provides that:
“The carrier shall be bound before and
at the beginning of the voyage to
exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man,equip, and supply the
ship;
(c) Make the holds, refrigerating and
cooling chambers, and all other parts of
the ship in which goods are carried, fit
and safe for their reception, carriage,
and preservation.”
Sec. 3 [2] of the COGSA provides that:
“The carrier shall properly and carefully
load, handle, stow, carry, keep, care for,
and discharge the goods carried.”
Sec. 116 of the IC
Sec. 119 of the IC
Article 609 of the Code of Commerce
states that: “Captains, masters or
patrons of vessels must be Filipinos,
have legal capacity to contract in
accordance with this code, and prove
the skill, capacity, and qualifications
necessary to command and direct the
vessel, as established by marine or
navigation laws, ordinances, or
regulations, and must not be
disqualified according to the same for
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the discharge of the duties of the
position. If the owner of a vessel desires
to be the captain thereof, without
having the legal qualifications therefor,
he shall limit himself to the financial
administration of the vessel, and shall
intrust the navigation to a person
possessing the qualifications required
by said ordinances and regulations.”
*Extraordinary diligence requires that
the ship which will transport the
passengers and goods is seaworthy.
*The carriers are deemed to warrant
impliedly the seaworthiness of the ship.
The failure of a common carrier to
maintain in seaworthy condition the
vessel involved in its contract of
carriage is a clear breach of its duty
prescribed in Article 1755 of the NCC.
*Shippers of goods are not expected to
inquire into the vessel’s seaworthiness
and compliance with all maritime laws.
*The unseaworthiness can be
established by the fact that it did not
withstand the natural and inevitable
action of the sea.
2. Overloading
*Duty to exercise due diligence includes
the duty to take passengers or cargoes
that are within the carrying capacity of
the vessel.
3. Proper storage
*The ship must not be only seaworthy
but it must also be cargoworthy. The
ship must be an efficient storehouse for
her cargo.
*The vessel must be adequately
equipped and properly manned.
4. Obligation of captain and crew
*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 ship owner may be
deemed negligent.
5. Rule on deviation and transhipment
Deviation
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*If route is stipulated upon by the
shipper and carrier, carrier can’t change
unless due to force majeure.
*Carrier shall be liable for all losses
suffered from any other cause, beside
the sum stipulated for such case.
*If due to said force majeure he took
another route and incurred expenses by
reason thereof, he shall be reimbursed
for such increase upon formal proof
thereof (Art. 359, Code of Commerce).
Transshipment is the act of taking cargo
out of one ship and loading it in another.
*When done without legal excuse,
however competent and safe the vessel
into which the transfer is made, is a
violation of the contract and an
infringement of the right of the shipper
and subjects the carrier to liability if the
freight is lost even by a cause otherwise
excepted (Magellan Manufacturing
Corp. v. CA).
Article 359 of the Code of Commerce
provides that: “If there is an agreement
between the shipper and the carrier as
to the road over which the conveyance
is to be made, the carrier may not
change the route, unless it be by reason
of force majeure; and should he do so
without this cause, he shall be liable for
all the losses which the goods he
transports may suffer from any other
cause, beside paying the sum which
may have been stipulated for such case.
When on account of said cause of force
majeure, the carrier had to take
another route which produced an
increase in transportation charges, he
shall be reimbursed for such increase
upon formal proof thereof.”
D. Extraordinary diligence in carriage by land
1. Vehicle’s condition
*Owners are required to make sure that
the vehicles they are using are in good
order and condition.
2. Traffic rules (RA 4136)
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*In cases involving breach of contract of
carriage, proof of violation of traffic
rules confirms that the carrier failed to
exercise extraordinary diligence.
3. Obligation to Inspect
*in overland transportation, common
carrier is not bound nor empowered to
make an examination of the contents of
packages or bags particularly those
hand carried. Airline companies are
required to inspect each and every
cargo brought into the aircraft (RA
6235).
E. Extraordinary diligence in carriage by air
1. 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 (RA
779).
2. Competent and well trained crew
3. To take the required and prescribed
route
4. Adverse weather conditions or extreme
climatic changes are some of the perils
involved in air travel consequence of which
the passenger must assume or expect.
5. RA 6235 (An Act Prohibiting Certain
Acts Inimical to Civil Aviation and for Other
Purposes) - acts punishable:
a. to compel a change in the course or
destination of an aircraft of Philippine
registry; or
b. to seize or usurp control of the aircraft
while in flight.
ACTIONS IN CASE OF BREACH OF CONTRACT OF
CARRIAGE:
A. Causes of action and nature/extent of
liability (culpa contractual, culpa aquiliana
and culpa delictual)
Culpa contractual only the carrier is
primarily liable and not the driver.
Reason: There is no privity between the
driver and the passenger.
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*The party to be impleaded is the carrier
itself.
Basis: Article 1759 of the New Civil Code
Culpa delictual/criminal the driver is
primarily liable. The carrier is subsidiarily
liable only if the driver is convicted and
declared insolvent.
Basis: Article 100 of the Revised Penal Code
Culpa aquiliana the carrier and the driver
are solidarily liable as joint tortfeasor.
Basis: Article 2180 of the New Civil Code
B. Prescriptive period and conditions
precedent
1. Overland transportation of goods and
coastwise shipping (Domestic)
Article 366 of the Code of Commerce
provides that: “Within the 24 hours
following the receipt of the
merchandise, the claim against the
carrier for damage or average which
may be found therein upon opening the
packages, may be made, provided that
the indications of the damage or
average which gives rise to the claim
cannot be ascertained from the outside
part of such packages, in which case the
claim shall be admitted only at the time
of receipt. After the periods mentioned
have elapsed, or the transportation
charges have been paid, no claim shall
be admitted against the carrier with
regard to the condition in which the
goods transported were delivered.”
*Prior notice of claim does not apply to
misdelivery of goods.
Purpose of notice: To inform the carrier
that the shipment has been damaged
and that it is charged with liability
therefor, and to give it an opportunity
to make an investigation and fix
responsibility while the matter is fresh.
*The filing of notice of claim is a
condition precedent for recovery in
case of damage condition of the goods.
*Not provided by Article 366 of the
Code of Commerce. Thus, in such
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absence, the New Civil Code rules on
prescription apply.
Prescriptive period:
General Rule: If written, 10 years, if not
written, 6 years
Exceptions:
1. COGSA – 1 year
2. Warsaw Convention – 2 years
Example: Q: In case of pending
extrajudicial claim, does it suspend the
one year period?
A: NO
*One year period applies to shipper,
assignee, insurer, subrogees, and
successor in interest.
*One year period does not apply in
cases of delay or misdelivery.
International Carriage of Goods by Sea
Sec. 3 [6] of the COGSA substantially
provides that in case of patent damage,
the shipper should file a claim with the
carrier immediately upon delivery. In
case of latent damage, the shipper
should file a claim with the carrier
within 3 days from delivery. Action for
loss or damage to the cargo should be
brought within one year after: delivery
of the goods (delivered but damaged
goods); or the date when the goods
should have been delivered (loss).
*The filing of a notice of claim is not a
condition precedent.
Recoverable Damages
The court may award the following damages:
1. Actual/Compensatory Damages
2. Temperate Damages
3. Liquidated Damages
4. Exemplary Damages
5. Moral Damages
6. Nominal Damages
Actual/Compensatory damages are those
awarded to the aggrieved party as adequate
compensation only for such pecuniary loss
suffered by him as he has alleged and duly
proved.
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Article 2199 of the Civil Code states that:
“Except as provided by law or by stipulation,
one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as
he has duly proved. Such compensation is
referred to as actual or compensatory damages.”
*To claim this award, proving the amount is
necessary.
*Procedures or plastic surgeries performed to
restore the part of the body injured are
included as a component of actual damages.
Temperate damages or moderate damages
these are damages the amount of which is left
to the sound discretion of the court, but it is
necessary that there be some injury or
pecuniary loss established, the exact amount of
which, could not be determined by the plaintiff
by reason of the nature of the case.
Article 2224 of the New Civil Code provides
that: “Temperate or moderate damages, which
are more than nominal but less than
compensatory damages, may be recovered
when the court finds that some pecuniary loss
has been suffered but its amount can not, from
the nature of the case, be provided with
certainty.”
*The court is convinced that there is pecuniary
loss.
*There is no actual certainty of the actual
amount loss. The court is allowed to calculate
the amount.
*This is in the form of actual damages
Liquidated damages are fixed damages
previously agreed by the parties to the contract
and payable to the innocent party in case of
breach by the other.
Article 2226 of the New Civil Code provides
that: “Liquidated damages are those agreed
upon by the parties to a contract, to be paid in
case of breach thereof.”
*This is in the form of actual damages but a
stipulated one.
*Proving the amount is not necessary.
*In this kind of damages, estoppel applies.
General Rule: The court cannot change the
amount.
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Exception: If the amount stipulated is excessive
the court may disregard said amount and may
compute the actual damages.
*The only thing to be proved is the fact of loss.
Exemplary damages are mere accessories to
other forms of damages except nominal
damages. They are mere additions to actual,
moral, temperate and liquidated damages
which may or may not be granted at all
depending upon the necessity of setting an
example for the public good as a form of
deterrent to the repetition of the same act by
any one.
Article 2229 of the New Civil Code provides
that: “Exemplary or corrective damages are
imposed, by way of example or correction for
the public good, in addition to the moral,
temperate, liquidated or compensatory
damages.”
*Awarded because of the wanton, fraudulent,
malevolent, oppressive acts of the carrier.
*This is awarded to prevent other carrier to
commit oppressive acts.
*This cannot be awarded unless the plaintiff is
entitled to moral at the same time actual or
temperate damages.
Nominal damages are not for indemnification
of loss but for vindication of a right violated.
Article 2221 of the New Civil Code provides
that: “Nominal damages are adjudicated in
order that a right of the plaintiff, which has
been violated or invaded by the defendant, may
be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any
loss suffered by him.”
*In Japan Airlines v CA, JAL failed to give the
plaintiff the priority for the first available flight.
The SC awarded nominal damages.
Moral damages are in the category of an award
designed to compensate the claimant for actual
injury suffered and not to impose a penalty on
the wrongdoer.
Article 2217 of the New Civil Code provides
that: “Moral damages include physical suffering,
mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar
injury. Though incapable of pecuniary
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computation, moral damages may be recovered
if they are the proximate result of the
defendant's wrongful act for omission.”
Q: When moral damages may be awarded?
A: 1. Death of a passenger; 2. Carrier is guilty of
fraud, malice, bad faith even if there is no death
of a passenger (Case: Lopez v Pan-American); 3.
In Air France case
MARITIME LAW:
Source: Code of Commerce
A. Concept of Maritime Law
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 maritime conveyance of persons and
property.
*Apply only to maritime trade and sea voyages.
B. Limited Liability Rule
1. Concept
The exclusively real and hypothecary nature
of maritime law operates to limit the
liability of the shipowner to the value of the
vessel, earned freightage and proceeds of
the insurance, if any. “NO VESSEL NO
LIABILITY” expresses in a nutshell the
limited liability rule. The total destruction of
the vessel extinguishes maritime lien as
there is no longer any res to which it can
attach.
Q: Is this rule applies in the handling of the
passengers?
A: YES
Q: Whose liability is this?
A:Shipowner or Agents
Q: What kind?
A: Maritime in nature; marine transactions
connected with maritime law; maritime
trade and commerce
Purpose: To encourage shipbuilding and
maritime transactions
Article 587 of the Code of Commerce
provides that: “The ship agent shall also be
civilly liable for the indemnities in favor of
third persons which may arise from the
conduct of the captain in the care of the
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goods which he loaded on the vessel; but
he may exempt himself therefrom by
abandoning the vessel with all her
equipments and the freight it may have
earned during the voyage.”
Article 590 of the Code of Commerce
provides that: “The co-owners of a vessel
shall be civilly liable in the proportion of
their interests in the common fund, for the
results of the acts of the captain, referred
to in Article 587. Each co-owner may
exempt himself from this liability by the
abandonment, before a notary, of the part
of the vessel belonging to him.”
Article 837 of the Code of Commerce
provides that: “The civil liability incurred by
the shipowners in the case prescribed in
this section, shall be understood as limited
to the value of the vessel with all its
appurtenances and freightage earned
during the voyage.”
When applicable:
The Code of Commerce sanctions the
application of the doctrine in the following
cases: 1. Civil liability for indemnities in
favor of third persons which arise from the
conduct of the captain in the case of the
goods which the vessel carried; 2. Civil
liability arising from collisions; 3. Unpaid
wages of the captain and the crew if the
vessel and its cargo are totally lost by
reason of capture of shipwreck.
2. Exceptions to the rule
Exceptions:
1. When the injury to or death of a
passenger is due either to the fault of
the shipowner, or to the concurring
negligence of the shipowner and the
captain;
2. When the vessel is insured to the extent
of the insurance proceeds; and
*Freightage collectible
Q: How come insurance is an exception?
A: Because there is no loss. The loss was
compensated by the insurance
company
3. In Workmen’s Compensation claims
Q: Why is an exception?
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A: Because not maritime in nature
*In Yangco v Laserna case, the SC held
that it covers anything that is connected
with maritime transactions
3. Abandonment
Q: If there’s partial loss can the
shipowner/agent be exempted from liability?
A: YES. If there is abandonment.
Q: If there is total loss, is it necessary to
abandon?
A: NO. There is nothing to abandon.
Case: Luzon Stevedoring
*Under Article 587 of the Code of
Commerce, the shipowner or ship agent
may exempt themselves from liability by
abandoning the vessel with all her
equipment and the freight it may have
earned during the voyage. If there is
insurance over the vessel, abandonment
covers the insurance proceeds while the
vessel itself shall be abandoned in favor of
the insurer.
Q: How claims are satisfied under the
Limited Liability Rule?
A: All claims should be collated before they
can be satisfied from what remains of the
insurance proceeds and freightage at the
time of the loss. No claimant should be
given preference over the others by the
simple expedience of having filed or
completed its action earlier than the rest.
Thus, the execution of judgment in earlier
completed cases, even those already final
and executory, must be stayed pending
completion of all cases occasioned by the
subject sinking. Then and only then can all
such claims be simultaneously settled,
either completely or pro-rata should the
insurance proceeds and freightage be not
enough to satisfy the claim.
Case: Aboitiz Shipping Co. v General
Accident Fire and Life Insurance
Corporation
C. Vessels
- Those engaged in navigation, whether
coastwise or on the high seas, including
floating docks, pontoons, dredges,
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scows and any other floating apparatus
destined for the services of the industry
or maritime commerce. Excluded are
local and foreign military vessels,
bancas and other watercrafts of less
than 3 tons gross capacity and small
watercrafts engaged in river and bay
traffic.
1. Acquisition
a. By prescription
Article 573 of the Code of Commerce
states that: “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.”
Requisites:
1. Acquisition must appear in a
written instrument
2. Such shall not produce any effect to
third persons if not inscribed in the
registry of vessels
3. Shall be acquired by possession in
good faith, continued for 3 years
4. With a just title duly recorded
5. In the absence of any of there,
continuous possession for 10 years
shall be necessary to acquire
ownership
Q: Can the ship captain acquire vessel
by prescription?
A: NO. The character of possession he
has is not those for acquisitive
possession. The requisite for acquisitive
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possession is that possession as an
owner.
Article 575 of the Code of Commerce
states that: “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 9 days following the
inscription of the sale in the registry,
and by depositing the price at the same
time.”
b. By sale
Article 576 of the Code of Commerce
states that: “In the sale of a vessel it
shall always be understood as included
the rigging, masts, stores and engine of
a steamer 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 sale.”
Article 577 of the Code of Commerce
states that: “If the alienation of the
vessel should be made while it is on
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.
*If made while it is on 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
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who make up its complement shall be
for his account.
*If made after vessel arrived at port of
its destination, 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 of the Code of Commerce
states that: “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 in a voyage, shall be
rendered useless for navigation, the
captain shall apply to the competent
judge or 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
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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.”
c. Registration
Section 810 of the Tariff and Customs
Code provides that: “The Bureau of
Customs is vested with exclusive
authority over the registration and
documentation of Philippine vessels. By
it shall be kept and preserved the
records of registration and of transfers
and encumbrances of vessels; and by it
shall be issued all certificates, licenses
or other documents incident to
registration and documentation, or
otherwise requisite for Philippine
vessels.”
*Through the MARINA
d. Ship’s manifest
Sec. 906 of the Tariff and Customs
Code provides that: “Manifests shall be
required for cargo and passengers
transported from one place or port in
the Philippines to another only when
one or both of such places is a port of
entry.”
*Declaration of the entire cargo. The
object is to furnish customs officers
with a list to check against, to inform
the revenue officers what goods are
brought into a port of the country on a
vessel. Hence, 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. It is issued as a matter of
convenience by virtue of a contract.
D. Persons who take part in Maritime Commerce
1. Shipowners and shipagents
Article 586 of the Code of Commerce
provides that: “The shipowner and the ship
agent shall be civilly liable for the acts of
the captain and for the obligations
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contracted by the latter to repair, equip,
and provision the vessel, provided the
creditor proves that the amount claimed
was invested for the benefit of the same. By
ship agent is understood the person
entrusted with provisioning or representing
the vessel in the port in which it may be
found.”
Article 587 of the Code of Commerce
provides that: “The ship agent shall also be
civilly liable for the indemnities in favor of
third persons which may arise from the
conduct of the captain in the care of the
goods which he loaded on the vessel; but
he may exempt himself thereform by
abandoning the vessel with all her
equipments and the freight it may have
earned during the voyage.”
Article 588 of the Code of Commerce
provides that: “Neither the shipowner nor
the ship agent shall be liable for the
obligations contracted by the captain, if the
latter exceeds the powers and privileges
pertaining to him by reason of his position
or conferred upon him by the former.
Nevertheless, if the amounts claimed were
invested for the benefit of the vessel, the
responsibility therefor shall devolve upon
its owner or agent.”
a. Rules in case of part-owners
Article 589 of the Code of Commerce
provides that: “If two or more persons
should be part owners of a merchant
vessel, a partnership shall be presumes
as estrablished by the co-owners. This
partnership shall be governed by the
resolution of the majority of the
members. If the part-owners should not
be more than two, the disagreement of
views, if any, shall be decided by the
vote of the member having the largest
interest. If the interests are equal, it
should be decided by lot. The person
having the smallest share in the
ownership shall have one vote; and
proportionately the other part owners
as many votes as they have parts equal
to the smallest one. A vessel may not be
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detained, attached or levied upon in
execution in its entirety, for the private
debts of a part owner, but the
proceedings shall be limited to the
interest which the debtor may have in
the vessel, without interfering with the
navigation.”
Article 590 of the Code of Commerce
provides that: “The co-owners of a
vessel shall be civilly liable in the
proportion of their interests in the
common fund, for the results of the
acts of the captain, referred to in Article
587.”
Article 591 of the Code of Commerce
provides that: “All the part owners shall
be liable, in proportion to their
respective ownership, for the expenses
for repairing the vessel, and for other
expenses which are incurred by virtue
of a resolution of the majority. They
shall likewise be liable in the same
proportion for the expenses for the
maintenance, equipment, and
provisioning of the vessel, necessary for
navigation.”
Article 592 of the Code of Commerce
provides that: “The resolution of the
majority with regard to the repair,
equipment, and provisioning of the
vessel in the port of departure shall
bind the minority, unless the minority
members renounce their interests,
which must be acquired by the other
co-owners, after a judicial
appraisement of the value of the
portion or portions assigned. The
resolutions of the majority relating to
the dissolution of the partnership and
sale of the vessel shall also be binding
on the minority. The sale of the vessel
must be made at public auction, subject
to the provisions of the law of civil
procedure, unless the co-owners
unanimously agree otherwise, saving
always the right of repurchase and
redemption provided for in Article 575.”
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Article 593 of the Code of Commerce
provides that: “The owners of a vessel
shall have preference in her charter
over other persons, under the same
conditions and price. If two or more of
them should claim this right, the one
having the greater interest shall be
preferred; and should they have equal
interests, the matter shall be decided
by lot.”
Article 594 of the Code of Commerce
states that: “The co-owners shall elect
the manager who is to represent them
in the capacity of ship agent. The
appointment of director or ship agent
shall be revocable at the will of the
members.”
b. Rules in case of shipagents
Article 595 of the Code of Commerce
states that: “The ship agent, whether he
is at the same time the owner of the
vessel, or a manager for an owner or for
an association of co-owners, must have
the capacity to trade and must be
recorded in the merchant’s registry of
the province. The ship agent shall
represent the ownership of the vessel,
and may, in his own name and in such
capacity, take judicial and extrajudicial
steps in matters relating to commerce.”
Article 596 of the Code of Commerce
provides that: “The ship agent may
discharge the duties of captain of the
vessel, subject in every case to the
provision of Article 609. If two or more
co-owners apply for the position of
captain, the disagreement shall be
decided by a vote of the members; and
if the vote should result in a tie, it shall
be decided in favor of the co-owner
having the larger interest in the vessel.
If the interests of the applicants should
be equal, and there should be a tie, the
matter shall be decided by lot.”
Article 597 of the Code of Commerce
states that: “The ship agent shall
designate and come to terms with the
captain, and shall contract in the name
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of the owners, who shall be bound in
all that refer to repairs, details
equipment, armament, provisions of
food and fuel, and freight of the vessel,
and, in general, in all that relate to the
requirements of navigation.”
Article 598 of the Code of Commerce
states that: “The ship agent may not
order a new voyage, or make contracts
for a new charter, or insure the vessel,
without the authorization of its owner
or resolution of the majority of the co-
owners, unless these powers were
granted him in the certificate of his
appointment. If he insures the vessel
without authorization therefore, he is
subsidiarily liable for the solvency of the
insurer.”
Article 599 of the Code of Commerce
states that: “The ship agent managing
for an association shall render to his
associates an account of the results of
each voyage of the vessel, without
prejudice to always having the books
and correspondence relating to the
vessel and to its voyages at their
disposal.”
Article 600 of the Code of Commerce
states that: “After the account of the
managing agent has been approved by
a relative majority, the co-owners shall
pay the expenses in proportion to their
interest, without prejudice to the civil
or criminal actions which the minority
may deem fit to institute afterwards. In
order to enforce the payment, the
managing agent shall be entitled to an
executor action (‘accion ejecutiva’),
which shall be instituted by virtue of a
resolution of the majority, and without
further proceedings than the
acknowledgment of the signatures of
the persons who voted for the
resolution.”
Article 601 of the Code of Commerce
states that: “Should there be any profits,
the co-owners may demand of the
managing agent the amount
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corresponding to their interests by
means of an executor action (‘accion
ejecutiva’), without any other requisite
than the acknowledgment of the
signatures on the instrument approving
the account.”
Article 602 of the Code of Commerce
states that: “The ship agent shall
indemnify the captain for all the
expenses he may have incurred with
funds of his own or of others, for the
benefit of the vessel.”
*The ship agent is entrusted with the
provisioning and representing the
vessel in the port in which it may be
found. His liability to passengers and
cargo owners for loss or injury is the
same as the shipowner.
*He is solidarily liable with the owner
for such loss or damage subject to his
right to claim reimbursement from the
shipowner.
*Only agent that can be sued directly.
2. Captains and masters of vessels
a. Qualifications
Article 609 of the Code of Commerce
states that: “Captains, masters or
patrons of vessels must be Filipinos,
have legal capacity to contract in
accordance with this code, and prove
the skill, capacity, and qualifications
necessary to command and direct the
vessel, as established by marine or
navigation laws, ordinances, or
regulations, and must not be
disqualified according to the same for
the discharge of the duties of the
position. If the owner of a vessel
desired to be the captain thereof,
without having the legal qualifications
therefor, he shall limit himself to the
financial administration of the vessel,
and shall intrust the navigation to a
person possessing the qualifications
required by said ordinances and
regulations.”
b. Powers and functions
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Article 610 of the Code of Commerce
states that: “The following powers shall
be inherent in the position of captain,
master or patron of a vessel: 1. To
appoint or make contracts with the
crew in the absence of the ship agent,
and to propose said crew, should said
agent be present; but the ship agent
may not employ any member against
the captain’s express refusal; 2. To
command the crew and direct the
vessel to the port of its destination, in
accordance with the instructions he
may have received from the ship agent;
3. To impose, in accordance with the
contracts and with the laws and
regulations of the merchant marine,
and when on board the vessel,
correctional punishment upon those
who fail to comply with his orders or
are wanting in discipline, holding a
preliminary hearing on the crimes
committed on board the vessel on the
seas, which crimes shall be turned over
to the authorities having jurisdiction
over the same at the first port touched;
4. To make contracts for the charter of
the vessel in the absence of the ship
agent or of its consignee, acting in
accordance with the instructions
received and protecting the interests of
the owner with utmost care; 5. To
adopt all proper measures to keep the
vessel well supplied and equipped,
purchasing all that may be necessary for
the purpose, provided there is no time
to request instruction from the ship
agent; and 6. To order, in similar urgent
cases while on a voyage, the repairs on
the hull and engines of the vessel and in
its rigging and equipment, which are
absolutely necessary to enable it to
continue and finish its voyage; but if he
should arrive at a point where there is a
consignee of the vessel, he shall act in
concurrence with the latter.”
Article 611 of the Code of Commerce
states that: “In order to comply with
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the obligations mentioned in the
preceding article, the captain, when he
has no funds and does not expect to
receive any from the ship agent, shall
obtain the same in the successive order
stated below: 1. By requesting said
funds from the consignee of the vessel
or correspondents of the ship agent; 2.
By applying to the consignees of the
cargo or to those interested therein; 3.
By drawing on the ship agent; 4. By
borrowing the amount required by
means of a loan on bottomry; and 5. By
selling a sufficient amount of the cargo
to cover the sum absolutely
indispensable for the repair of the
vessel and to enable it to continue its
voyage. In these two last cases he must
apply to the judicial authority of the
port, if in the Philippines, and to the
consul of the Republic of the Philippines
if in a foreign country, and where there
is none, to the local authority,
proceeding in accordance with the
provisions of Article 583, and with the
provisions of the law of civil procedure.”
Article 612 of the Code of Commerce
states that: “The following obligations
shall be inherent in the office of the
captain:
1. To have on board before starting on a
voyage a detailed inventory of the hull,
engines, rigging, spare-masts, tackle,
and other equipment of the vessel; the
royal or the navigation certificate; the
roll of the persons who make up the
crew of the vessel, and the contracts
entered into with them; the lists of
passengers; the bill of health; the
certificate of the registry proving the
ownership of the vessel and all the
obligations which encumber the same
up to that date; the charter parties or
authenticated copies thereof; the
invoices or manifests of the cargo, and
the memorandum of the visit or
inspection by experts, should it have
been made at the port of departure;
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2. To have a copy of this code on board;
3. To have thee folioed and stamped
books, placing at the beginning of each
one a memorandum of the number of
folios it contains, signed by the
maritime authority, and in his absence
by the competent authority. In the first
book, which shall be called “log book,”
he shall enter day by day the condition
of the atmosphere, the prevailing winds,
the courses taken, the rigging carried,
the power of the engines used in
navigation, the distances covered, the
maneuvers executed, and other
incidents of navigation; he shall also
enter the damage suffered by the vessel
in her hull, engines, rigging, and tackle,
no matter what its cause may be, as
well as the impairment and damage
suffered by cargo, and the effect and
importance of the jettison, should there
be any; and in cases of serious decisions
which require the advice or a meeting
of the officers of the vessel, or even of
the crew and passengers, he shall
record the decisions adopted. For the
information indicated he shall make use
of the binnacle book and of the steam
of engine book kept by the engineer. In
the second book called the “accounting
book,” he shall record all the amounts
collected and paid for the account of
the vessel, entering specifically the
article by article, the source of the
collection and the amounts spent for
provisions, repairs, acquisitions of
equipment or goods, fuel, food, outfits,
wages, and other expenses of whatever
nature they may be. He shall
furthermore enter therein a list of all
the members of the crew, stating their
domiciles, their wages and salaries, and
the amounts they may have received on
account, directly or by delivery to their
families. In the third book, called
“freight book,” he shall record the
loading and discharge of all the gods,
stating their marks and packages,
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names of the shippers and of the
consignees, ports of loading and
unloading, and the freightage they give.
In this same book he shall record the
names and places of sailing of the
passengers, the number of packages in
their baggage, and the price of passage;
4. Before receiving cargo, to make with
the officers of the crew and two experts,
if required by the shippers and
passengers, an examination of the
vessel, in order to ascertain whether it
is water-tight, with the rigging and
engines in good condition, and with the
equipment required for good navigation,
preserving under his responsibility a
certificate of the memorandum of his
inspection, signed by all those who may
have taken part therein. The experts
shall be appointed, one by the captain
of the vessel and another by those who
request its examination, and in case of
disagreement a third shall be appointed
by the marine authority of the port or
by the authority exercising his functions;
5. To remain constantly on board the
vessel with the crew while the cargo is
being taken on board and to carefully
watch the stowage thereof; not to
consent to the loading of any
merchandise or matter of a dangerous
character, such as inflammable or
explosive substances, without the
precautions which are recommended
for their packing, handling and isolation;
not to permit the carriage on deck of
any cargo which by reason of its
arrangement, volume, or weight makes
the work of the sailors difficult, and
which might endanger the safety of the
vessel; and if, on account of the nature
of the merchandise, the special
character of the shipment, and
principally the favorable season in
which it is undertaken, merchandise
may be carried on deck, he must hear
the opinion of the officers of the vessel
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and have the consent of the shippers
and of the ship agent;
6. To demand a pilot at the expense of
the vessel whenever required by the
navigation, and principally when he has
to enter a port, canal, or river, or has to
take a roadstead or anchoring place
with which neither he nor the officers
and crew are acquainted;
7. To be on deck on reaching land and
to take command on entering and
leaving ports, canals, roadsteads, and
rivers, unless there is a pilot on board
discharging his duties. He shall not
spend the night away from the vessel
except for serious causes or by reason
of official business;
8. To present himself, when making a
port in distress, to the maritime
authority if in the Philippines and to the
consul of the Republic of the Philippines
if in a foreign country, before 24 hours
have elapsed, and to make a statement
of the name registry, and port of
departure of the vessel, of its cargo,
and the cause of arrival which
declaration shall be visaed by the
authority or the consul, if after
examining the same it is found to be
acceptable, giving the captain the
proper certificate proving his arrival in
distress and the reasons therefor. In the
absence of the maritime authority or of
the consul, the declaration must be
made before the local authority;
9. To take the necessary steps before
the competent authority in order to
record in the certificate of the vessel in
the registry of vessels the obligations
which he may contract in accordance
with Article 583;
10. To place under good care and
custody all the papers and belongings of
any members of the crew who might
die on the vessel, drawing up a detailed
inventory, in the presence of
passengers, or, in their absence, of
members of the crew as witnesses;
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11. To conduct himself according to the
rules and precepts contained in the
instructions of the ship agent, being
liable for all that which he may do in
violation thereof;
12. To inform the ship agent from the
port at which the vessel arrives, of the
reason of his arrival, taking advantage
of the semaphore, telegraph, mail, etc.,
as the case may be; to notify him of the
cargo he may have received, stating the
names and domiciles of the shippers,
freightage earned, and amounts
borrowed on bottomry loan; to advise
him of his departure, and of any
operation and date which may be of
interest to him;
13. To observe the rules with respect to
situation, lights and maneuvers in order
to avoid collisions;
14. To remain on board, in case the
vessel is in danger, until all hope to save
it is lost, and before abandoning it, to
hear the officers of the crew, abiding by
the decision of the majority; and if the
boats are to be taken to, he shall take
with him, before anything else, the
books and papers, and then the articles
of most value, being obliged to prove,
in case of the loss of the books and
papers, that he did all he could to save
them;
15. In case of wreck, to make the
proper protest in due form at the first
port of arrival, before the competent
authority or the Philippine consul,
within 24 hours, specifying therein all
the incidents of the wreck, in
accordance with subdivision 8 of this
article;
16. To comply with the obligations
imposed by the laws and regulations on
navigation, customs, health, and others.”
c. Discretion powers
*A ship’s captain must be accorded a
reasonable measure of discretionary
authority to decide what the safety of
the ship and of its crew and cargo
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specifically requires on a stipulated
ocean voyage.
Case:Inter-Orient Maritime Enterprises
Inc. v CA
3. Pilot
a. Concept
Pilot is a person duly qualified and
licensed to conduct a vessel into or out
of ports or in certain waters.
*Generally connotes 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.
*If he is in command, he becomes the
Master pro hac vice.
*While exercising his functions a pilot is
in sole command of the ship and
supersedes the master for the time
being in the command and navigation
of the ship; the master does not
surrender his vessel to the pilot and the
pilot is not the master. There are
occasions when the master may and
should interfere and even displace the
pilot, as when the pilot is obviously
incompetent or intoxicated.
Case: Far Eastern Shipping v CA
b. Relationship to master and shipowner
4. Officers and crew of the vessel
i. Sailing mate/First mate
ii. Second mate
iii. Engineers – marine engineers
iv. Crew – cabin boy; paramedics;
watchkeeper; radio officers
5. Supercargoes person who discharges
administrative duties assigned to him by
ship agent or shippers, keeping an account
and record of transaction as required in the
accounting book of the captain.
E. Charter parties
1. Concept
Article 655 of the Code of Commerce states
that: “Charter parties executed by the
captain in the absence of the ship agent
shall be valid and effective, even though in
executing them he should have acted in
violation of the orders and instructions of
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the ship agent or shipowner; but the latter
shall have a right of action against the
captain for indemnification of damages.”
Charter party is a lease contract by which
with the entire ship or some principal part
thereof is let by the owner to another
person for a specified period of time or use.
2. Kinds; bareboat and contract of
affreightment
Kinds:
1. Bareboat or demise means the whole
vessel is lend to the charterer which
transfers to him its entire command
and possession and consequent control
over its navigation, including the master
and crew who are his servants. The
charterer is treated as owner pro hac
vice of the vessel. In such case, a
common carrier becomes a private
carrier.
*Charterer means the vessel assumes
all responsibilities of navigation and
provides his own people.
*Shipowner is not liable to third person;
it is the charterer who is liable to them.
General Rule: The charterer is liable to
the third person.
Exception: Shipowner may still be held
liable if the injury was caused by
unseaworthiness or negligence of the
shipowner beyond before the demise or
bareboat took over.
2. Contract of affreightment involves that
use of shipping space leased by the
owner in part or as a whole, to carry
goods for others.
*The shipowner retains the possession,
command and navigation of the ship,
the charterer merely having use of the
space in the vessel in return for his
payment of the charter hired.
*The shipowner is liable to third person.
3. Persons qualified to make charter
Q: Can the captain enter into a charter
contract?
A: YES provided that he is authorized.
Q: Can the charterer enter into a sub-
charter contract?
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A: YES provided it is not prohibited. This is loading and unloading, beyond the time
just like the rule in lease. allowed in the contract of affreightment,
4. Requisites of a valid charter and to any other improper detention or
Article 652 of the Code of Commerce states delay beyond the time set for loading.
that: “A charter party must be drawn in 6. Rights and obligations of charter parties
duplicate and signed by the contracting Shipowner or Ship Charterer
parties, and when either does not know agent
how or is not able to do so, by two If the vessel is To pay the agreed
witnesses at his request. The charter party chartered wholly, charter price
not to accept cargo
shall contain, besides the conditions freely
from others
stipulated, the following circumstances: 1. To observe To pay freightage on
The kind, name, and tonnage of the vessel; represented unboarded cargo
2. Its flag and port of registry; 3. The name, capacity
surname, and domicile of the captain; 4. To unload cargo To pay losses to
The name, surname, and domicile of the clandestinely placed others for loading
ship agent, if the latter should make the uncontracted cargo
or illicit cargo
charter party; 5. The name, surname, and
To substitute To wait if the vessel
domicile of the charterer; and if he states another vessel if needs repair
that he is acting by commission, that of the load is less than 3/5
person for whose account he makes the of capacity
contract; 6. The port of loading and To leave the port if To pay expenses for
unloading; 7. The capacity, number of tons the charterer does deviation
or the weight or measurement which they not bring the cargo
within the lay days
respectively bind themselves to load and to
and extra lay days
transport, or whether the charter party is allowed
total; 8. The freightage to be paid, stating To place in a vessel
whether it is to be a fixed amount for the in a condition to
voyage or so much per month, or for the navigate; to bring
space to be occupied, or for the weight or cargo to nearest
measure of the goods of which the cargo neutral port in case
of war or blockade
consists, or in any other manner
whatsoever agreed upon; 9. The amount of
F. Loans on Bottomry and Respondentia
primage to be paid to the captain; 10. The
1. Definition
days agreed upon for loading and unloading;
Article 719 of the Code of Commerce states
11. The lay days and extra lay days to be
that: “A loan in which under any condition
allowed and the demurrage to be paid for
whatever, the repayment of the sum loaned
each of them.”
and of the premium stipulated depends
Requisites:
upon the safe arrival in port of the goods on
1. Consent of the contracting parties
which it is made, or of the price they may
2. Existing vessel which should be placed
receive in case of accident, shall be
at the disposition of the shipper
considered a loan on bottomry or
3. Freight
respondentia.”
4. Compliance with Article 652 of the
Bottomry is a loan secured by the
Code of Commerce
shipowner or ship agent guaranteed by the
vessel itself and payable only upon arrival of
5. Concept of and liability for demurrage
vessel at destination.
Demurrage is the sum due, by express
contract, for the detention of the vessel, in

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*Captain may enter into bottomry loan
provided there is justification, example of
which is, for immediate repairs.
Respondentia is a loan secured by the
owner of the cargo payable upon safe
arrival of cargo at destination.
Barratry is an act of the captain or crew for
fraudulent purposes.
2. Distinguished from ordinary loan
Ordinary Loan Bottomry/Respondentia
With or without Always with collateral
collateral
Any property Property is limited to
may be used as vessel/cargo
collateral
Absolutely Conditionally payable
payable
Obligation to Loan is extinguished in
pay still exists in the event that the
the event the vessel/cargo was lost
collateral was
lost
First lender is Last lender is the first
the first priority priority
Need not be in Need to be in writing to
writing to be be enforceable
enforceable
3. Parties to the loan
Parties:
1. Ship owner or ship agent
2. Owner of the cargo
3. Lender
4. Formalities needed
Article 720 of the Code of Commerce states
that: “Loans on bottomry or respondentia
may be executed:
1. By means of a public instrument;
2. By means of a policy signed by the
contracting parties and the broker taking
part therein;
3. By means of a private instrument.
Under whichever of these forms the
contract is executed, it shall be entered in
the certificate of the registry of the vessel
and shall be recorded in the registry of
vessels, without which requisites the credits
of this kind shall not have, with regard to
other credits, the preference which,
according to their nature, they should have,
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although the obligation shall be valid
between the contracting parties.”
Formal Requirements: a. By means of
public instrument; b. Policy signed by the
contracting parties and the broker taking
part therein; and c. by means of private
instrument.
Reason: Must be in writing to be
enforceable.
5. Effect of loss of on loan
Article 731 of the Code of Commerce states
that: “The actions pertaining to the lender
shall be extinguished by the absolute loss of
the goods on which the loan was made, if it
arose from an accident of the sea at the
time and during the voyage designated in
the contract, and it is proven that the cargo
was on board; but this shall not take place if
the loss was caused by the inherent defect
of the thing, or through the fault or malice,
of the borrower, or barratry on the part of
the captain, or if it was caused by damages
suffered by the vessel as a consequence of
being engaged in contraband, or if it arose
from having loaded the merchandise on a
vessel different from that designated in the
contract, unless this change should have
been made by reason of force majeure.
Proof of the loss as well as of the existence
of the vessel of the goods declared to the
lender as the object of the loan is
incumbent upon him who received the
loan.”
General Rule: If the property that was
collateral was loss, the loan is extinguished.
Exceptions: 1. Perished due to inherent
defects; 2. Brought about by malicious
conduct of the shipowner; 3. Barratry of the
captain; 4. Engaged in unlawful transaction;
and 5. The cargo loaded on the vessel be
different in from that agreed upon.
*Commonality of all the exceptions is that
the borrower is at fault.
6. Cases where loan is regarded as simple
loan
a. The loan must be made in connection
with the maritime transaction
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otherwise the loan becomes a simple
loan.
b. If the loan is bigger than the value of
the collateral, the loan becomes a
simple loan.
c. If the property is not exposed to
maritime peril.
Reason: To prevent abuse by the borrower
of the benefits of this loan.
Article 726 of the Code of Commerce states
that: “If the lender should prove that he
loaned as amount larger than the value of
the object liable for the bottomry loan, on
account of fraudulent measures employed
by the borrower, the loan shall be valid only
for the amount at which said object is
appraised by experts. The surplus principal
shall be returned with legal interests for the
entire time required for repayment.”
Article 727 of the Code of Commerce states
that: “If the full amount of the loan
contracted in order to load the vessel
should not be used for the cargo, the
balance shall be returned before clearing.
The same procedure shall be observed with
regard to the goods taken as loan, if they
were not loaded.”
Article 728 of the Code of Commerce states
that: “The loan which the captain takes at
the point of residence of the owners of the
vessel shall only affect that part thereof
which belongs to the captain, if the other
owners or their agents should not have
given their express authorization therefor
or should not have taken part in the
transaction. If one or more of the owners
should be requested to furnish the amount
necessary to repair or provision the vessel,
and they should not do so within 24 hours,
the interest which the parties in default
may have in the vessel shall be liable for the
loan in the proper proportion. Outside of
the residence of the owners the captain
may contract loans in accordance with the
provisions of Articles 583 and 611.”
Article 729 of the Code of Commerce
provides that: “Should the goods on which
money is taken not be subjected to risk, the
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contract shall be considered a simple loan,
with the obligation on the part of the
borrower to return the principal and
interest at the legal rate, if that agreed
upon should not be lower.”
G. Averages
1. Concept
Article 806 of the Code of Commerce
provides that: “For the purposes of this
code the following shall be considered
averages: 1. All extraordinary or accidental
expenses which may be incurred during the
voyage in order to preserve the vessel, the
cargo, or both; 2. Any damages or
deteriorations which the vessel may suffer
from the time it puts to sea from the port of
departure until it casts anchor in the port of
destination, and those suffered by the
merchandise from the time they are loaded
in the port of shipment until they are
unloaded in the port of their consignment.”
2. Classes of average and the persons liable
a. Simple average
Article 809 of the Code of Commerce
provides that: “As a general rule, simple
or particular averages shall include all
the expenses and damages caused to
the vessel or to her cargo which have
not inured to the common benefit and
profit of all the persons interested in
the vessel and her cargo, and especially
the following:
1. The losses suffered by the cargo
from the time of its embarkation
until it is unloaded, either on
account of inherent defect of the
goods or by reason of an accident
of the sea or force majeure, and the
expenses incurred to avoid and
repair the same;
2. The losses and expenses suffered
by the vessel in its hull, rigging,
arms, and equipment, for the same
causes and reasons, from the time
it puts to sea from the port of
departure until it anchors and lands
in the port of destination;
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3. The losses suffered by the
merchandise loaded on deck,
except in coastwise navigation, if
the marine ordinances allow it;
4. The wages and victuals of the crew
when the vessel is detained or
embargoed by legitimate order or
force majeure, if the charter has
been contracted for a fixed sum for
the voyage;
5. The necessary expenses on arrival
at a port, in order to make repairs
or secure provisions;
6. The lowest value of the goods sold
by the captain in arrivals under
stress for the payment of provisions
and in order to save the crew, or to
meet any other need of the vessel,
against which the proper amount
shall be charged;
7. The victuals and wages of the crew
while the vessel is in quarantine;
8. The loss inflicted upon the vessel or
cargo by reason of an impact or
collision with another, if it is
accidental and unavoidable. If the
accident should occur through the
fault or negligence of the captain,
the latter shall be liable for all the
losses caused;
9. Any loss suffered by the cargo
through the fault, negligence, or
barratry of the captain or of the
crew, without prejudice to the right
of the owner to recover the
corresponding indemnity from the
captain, the vessel, and the
freightage.”
General Rule: No reimbursement
Principle: Loss will lie where it falls
Reason: There was no common benefit
Exception: if there is insurance
Exception to the Exception: Stipulated
in the insurance policy stating no
liability on the part of the insurer
regarding particular average.
Article 810 of the Code of Commerce
provides that: “The owner of the goods
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which gave rise to the expense or
suffered the damage shall bear the
simple or particular averages.”
Q: Who is liable?
A: Owner of the goods
b. General average
Article 811 of the Code of Commerce
provides that: “As a general rule,
general or gross averages shall include
all the damages and expenses which are
deliberately caused in order to save the
vessel, its cargo, or both at the same
time, from a real and known risk, and
particularly the following:
1. The goods or cash invested in the
redemption of the vessel or of the
cargo captured by enemies,
privateers, or pirates, and the
provisions, wages, and expenses of
the vessel detained during the time
the settlement or redemption is
being made;
2. The goods jettisoned to lighten the
vessel, whether they belong to the
cargo, to the vessel, or to the crew,
and the damage suffered through
said act by the goods which are
kept on board;
3. The cables and masts which are cut
or rendered useless, the anchors
and the chains which are
abandoned, in order to save the
cargo, the vessel, or both;
4. The expenses of removing or
transferring a portion of the cargo
in order to lighten the vessel and
place it in condition to enter a port
or roadstead, and the damage
resulting therefrom to the goods
removed or transferred;
5. The damage suffered by the goods
of the cargo by the opening made in
the vessel in order to drain it and
prevent its sinking;
6. The expenses caused in order to
float a vessel intentionally stranded
for the purpose of saving it;
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7. The damage caused to the vessel
which had to be opened, scuttled or
broken in order to save the cargo;
8. The expenses for the treatment and
subsistence of the members of the
crew who may have been wounded
or crippled in defending or saving
the vessel;
9. The wages of any member of the
crew held as hostage by enemies,
privateers, or pirates, and the
necessary expenses which he may
incur in his imprisonment, until he
is returned to the vessel or to his
domicile, should he prefer it;
10. The wages and victuals of the crew
of a vessel chartered by the month,
during the time that it is
embargoed or detained by force
majeure or by order of the
government, or in order to repair
the damage caused for the common
benefit;
11. The depreciation resulting in the
value of the goods sold at arrival
under stress in order to repair the
vessel by reason of gross average;
12. The expenses of the liquidation of
the average.”
Article 812 of the Code of Commerce
provides that: “In order to satisfy the
amount of the gross or general
averages, all the persons having an
interest in the vessel and cargo therein
at the time of the occurrence of the
average shall contribute.”
Article 813 of the Code of Commerce
provides that: “In order to incur the
expenses and cause the damages
corresponding to gross average, there
must be a resolution of the captain,
adopted after deliberation with the
sailing mate and other officers of the
vessel, and after hearing the persons
interested in the cargo who may be
present. If the latter shall object, and
the captain and officers or a majority of
them, or the captain, if opposed to the
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majority, should consider certain
measures necessary, they may be
executed under his responsibility,
without prejudice to the right of the
shippers to proceed against the captain
before the competent judge or court, if
they can prove that he acted with
malice, lack of skill, or negligence. If the
persons interested in the cargo, being
on board the vessel, have not been
heard, they shall not contribute to the
gross average, their share being
chargeable against the captain, unless
the urgency of the case should be such
that the time necessary for previous
deliberations was wanting.”
Article 816 of the Code of Commerce
states that: “In order that the goods
jettisoned may be included in the gross
average and the owners thereof be
entitled to indemnity, it shall be
necessary insofar as the cargo is
concerned that their existence on board
be proven by means of the bill of lading;
and with regard to those belonging to
the vessel, by means of the inventory
prepared before the departure in
accordance with the first paragraph of
Article 812.”
Article 817 of the Code of Commerce
states that: “if in lightning a vessel on
account of a storm, in order to facilitate
its entry into a port or roadstead, part
of the cargo should be transferred to
lighters or barges and be lost, the
owner of said part shall be entitled to
indemnity, as if the loss had originated
from a gross average, the amount
thereof 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.”
Article 818 of the Code of Commerce
states that: “If, as a necessary measure
to extinguish a fire in port, roadstead,
creek, or bay, it should be decided to
33

sink any vessel, this loss shall be
considered gross average, to which the
vessels saved shall contribute.”
Article 732 of the Code of Commerce
provides that: “Lenders on bottomry or
respondentia shall suffer, in proportion
to their respective interest, the general
average which may take place in the
goods on which the loan is made. In
particular averages, in the absence of
an express agreement between the
contracting parties, the lender on
bottomry or respondentia shall also
contribute in proportion to his
respective interest, should it not belong
to the kind of risks excepted in the
foregoing article.”
Article 859 of the Code of Commerce
provides that: “The insurers of the
vessel of the freightage, and of the
cargo shall be obliged to pay for the
indemnification of the gross average,
insofar as is required of each one of
these objects respectively.”
Article 860 of the Code of Commerce
provides that: “If, notwithstanding the
jettison of merchandise, breakage of
masts, ropes, and equipment, the
vessel should be lost running the same
risk, no contribution whatsoever by
reason of gross average shall be proper.
The owners of the goods saved shall not
be liable for the indemnification of
those jettisoned, lost, or damaged.”
Article 861 of the Code of Commerce
provides that: “If, after the vessel has
been saved from the risk which gave
rise to the jettison, it should be lost
through another accident taking place
during the voyage, the goods saved and
existing from the first risk shall continue
liable to contribution by reason of the
gross average according to their value
in the condition in which they may be
found, deducting the expenses incurred
in saving them.”
Remedy: Reimbursement
H. Collisions
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General Rule: The sacrifice made must
be in the course of the voyage.
Exceptions: General average exists even
if there is no voyage yet: 1. Article 817
of the Code of Commerce which covers
fire in the port; and 2. Article 818 of the
Code of Commerce which covers
transfer of cargo to another vessel for
the necessity to enter another port.
Requisites:
1. Exposure to common danger to ship
and the cargo after it has been
loaded whether during voyage or
port of loading and unloading;
2. That for the common safety part of
the vessel or the cargo or both is
sacrificed deliberately;
3. That from the expenses or damages
caused follows the successful saving
of the vessel and cargo;
4. That the expenses or damages
should have been incurred or
inflicted after taking legal steps and
authority
Formalities:
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. The
minutes must also contain a detail
of all the goods jettisoned and
those injuries caused to those on
board.
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1. Definition
Collision is an impact of two vessels both of
which are moving.
Allision is an impact between a moving
vessel and a stationary one.
Possible damage:
a. Damage to vessel
b. Loss/damage to cargo
c. Injury or death of passenger
Example:
Q: A and B collided, A was found to be
negligent, who bears the consequential
damages?
A: A shall be liable for the consequential
damages for she is at fault.
Q: What if A and B were found to be
negligent, who bears the consequential
damages?
A: With regard to the vessel, each vessel
shall be liable for their own losses. With
regard to the cargoes and passengers, they
are solidarily liable.
2. Zones in collision (Doctrine of error in
extremis)
*Knowing these zones are important for
liability purposes.
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.
*It is in this period where conduct of
the vessels is primordial. It is in this
zone that vessels must strictly observe
nautical rules unless a departure
therefrom becomes necessary to avoid
imminent danger.
3. Third zone – time when collision is
certain and time of impact.
*An error in this zone would no longer
be legally consequential.
Doctrine of Error in Extremis is a sudden
movement made by a faultless vessel
during the third zone of collision with
another vessel which is at fault during the
second zone. Even if such sudden
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movement is wrong, no responsibility will
fall on said faultless vessel.
Doctrine of Last Clear Chance provides that
a negligent defendant is held liable to a
negligent plaintiff or even to a plaintiff who
has been grossly negligent where he should
have been aware of it in the reasonable
exercise of due care, had in fact an
opportunity later than that of the plaintiff
to avoid an accident.
*In this doctrine, both parties are at fault
but only one party is liable. Only the party
who has the last clear opportunity to avoid
the impact is held liable.
*This doctrine is inapplicable in the
following instances:
1. If the suit is between a parties of contract
of carriage; and
2. In case of collision of vessels
3. Rule on liability
Article 826 of the Code of Commerce
provides that: “If a vessel should collide
with another, through the fault, negligence,
or lack of skill of the captain, sailing mate,
or any other member of the complement,
the owner of the vessel at fault shall
indemnify the losses and damages suffered,
after an expert appraisal.”
Article 827 of the Code of Commerce
provides that: “If the collision is imputable
to both vessels, each one shall suffer its
own damages, and both shall be solidarily
responsible for the losses and damages
occasioned to their cargoes.”
*This is known as the Doctrine of
Inscrutable Fault.
Doctrine of Inscrutable Fault provides that
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.
Article 828 of the Code of Commerce states
that: “The provisions of the preceding
article are applicable to the use in which it
cannot be determined which of the two
vessels has caused the collision.”
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Article 829 of the Code of Commerce states
that: “In the cases above mentioned the
civil action of the owner against the person
causing the injury as well as the criminal
liabilities, which may be proper, are
reserved.”
Article 830 of the Code of Commerce states
that: “If a vessel should collide with another,
through fortuitous event or force majeure,
each vessel and its cargo shall bear its own
damages.”
Requisites:
1. The natural disaster must have been
the proximate and only cause of the
loss;
2. The common carrier must have
exercised due diligence to prevent or
minimize loss before, during and after
the occurrence of the natural disaster;
3. The common carrier must not have
been guilty of delay; and
4. The captain must have made a protest
before the competent authority at the
first port he touched within the 24
hours following his arrival, and should
have ratified it within the same period
when he arrived at the port of
destination, proceeding immediately
with the proof of the facts, without
opening the hatches until after this has
been done.
Article 831 of the Code of Commerce
provides that: “If a vessel should be forced
by a third vessel to collide with another, the
owner of the third vessel shall indemnify
the losses and damages caused, the captain
thereof being civilly liable to said owner.”
*This is known as the Doctrine of
Proximate Cause
Article 832 of the Code of Commerce states
that: “If by reason of a storm or other cause
of force majeure, a vessel which is properly
anchored and moored should collide with
those nearby, causing them damages, the
injury occasioned shall be considered as
particular average of the vessel run into.”
4. Limited liability rule
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*There must be no fault on the part of the
shipowner.
*The fault falls only with his crew.
Article 837 of the Code of Commerce states
that: “The civil liability incurred by the
shipowners in the case prescribed in this
section, shall be understood as limited to
the value of the vessel with all its
appurtenances and freightage.”
I. Arrival under stress
1. Concept
The arrival of a vessel at the nearest and
most convenient port instead of the port of
destination, if during the voyage the vessel
cannot continue the trip to the port of
destination.
Article 819 of the Code of Commerce
provides that: “If during the voyage the
captain should believe that the vessel can
not continue the trip to the port of
destination on account of the lack
provisions, well founded fear of seizure,
privateers, or pirates, or by reason of any
accident of the sea disabling it to navigate,
he shall assemble the officers and shall
summon the persons interested in the
cargo who may be present, and who may
attend the meeting without the right to
vote; and if, after examining the
circumstances of the case, the reason
should be considered well-founded, the
arrival at the nearest and most convenient
port shall be agreed upon, drafting and
entering the proper minutes, which shall be
signed by all, in the log book. The captain
shall have the deciding vote, and the
persons interested in the cargo, may make
the objections and protests they may deem
proper, which shall be entered in the
minutes in order that they may make use
thereof in the manner they may consider
advisable.”
2. When improper
Article 820 of the Code of Commerce
provides that: “An arrival shall not be
considered lawful in the following cases:
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1. If the lack of provisions should arise
from the failure to take the necessary
provisions for the voyage according to
usage and customs, or if they should
have been rendered useless or lost
through bad stowage or negligence in
their care;
2. If the risk of enemies, privateers, or
pirates should not have been well
known, manifest, and based on positive
and provable facts;
3. If the defect of the vessel should have
arisen from the fact that it was not
repaired, rigged, equipped, and
prepared in a manner suitable for the
voyage, or from some erroneous order
of the captain;
4. When malice, negligence, want of
foresight, or lack of skill on the part of
the captain exists in the act causing the
damage.”
3. Expenses
Article 821 of the Code of Commerce
provides that: “The expenses of an arrival
under stress shall always be for the account
of the shipowner or agent, but they shall
not be liable for the damages which may be
caused the shippers by reason of the arrival,
provided the latter is legitimate. Otherwise,
the ship agent and the captain shall be
jointly liable.”
Article 822 of the Code of Commerce
provides that: “If in order to make repairs to
the vessel or because there is danger that
the cargo may suffer, it should be necessary
to unload, the captain must request the
authorization from the competent judge or
court for the removal, and carry it out with
the knowledge of the person interested in
the cargo, or his representative, should
there be any. In a foreign port, it shall be
the duty of the Philippine Consul, where
there is one, to give the authorization. In
the first case, the expenses shall be for the
account of the ship agent or owner, and in
the second, they shall be chargeable against
the owners of the merchandise for whose
benefit the act was performed. If the
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unloading should take place for both
reasons, the expenses shall be divided
proportionately between the value of the
vessel and that of the cargo.”
4. Custody of Cargo
Article 823 of the Code of Commerce
provides that: “The custody and
preservation of the cargo which has been
unloaded shall be intrusted to the captain,
who shall be responsible for the same,
except in cases of force majeure.”
Article 824 of the Code of Commerce states
that: “If the entire cargo or part thereof
should appear to be damaged, or there
should be imminent danger of its being
damaged, the captain may request of the
competent judge or court, or of the consul
in a proper case, the sale of all or of part of
the former, and the person taking
cognizance of the matter shall authorize it,
after an examination and declaration of
experts, advertisements, and other
formalities required by the case, and an
entry in the book, in accordance with the
provisions of Article 624. The captain shall,
in proper case, justify the legality of his
conduct, under the penalty of answering to
the shipper for the price the merchandise
would have brought if they had arrived in
good condition at the port of destination.”
5. Captain’s liability
Article 825 of the Code of Commerce states
that: “The captain shall be responsible for
the damages caused by his delay, if after
the cause of the arrival under stress has
ceased, he should not continue the voyage.
If the cause of arrival should have been the
fear of enemies, privateers, or pirates, a
deliberation and resolution in a meeting of
the officers of the vessel and persons
interested in the cargo who may be present,
in accordance with the provisions contained
in Article 819, shall precede the departure.”
6. Rules in case of shipwreck
Shipwreck denotes all types of loss/ wreck
of a vessel at sea either by being swallowed
up by the waves, by running against
another vessel or thing at sea or on coast
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where the vessel is rendered incapable of
navigation.
Article 840 of the Code of Commerce
provides that: “The losses and
deteriorations by a vessel and her cargo by
reason of shipwreck or stranding shall be
individually for the account of the owners,
the part which may be saved belonging to
them in the same proportion.”
Article 841 of the Code of Commerce states
that: “If the wreck or stranding should be
caused by the malice, negligence, or lack of
skill of the captain, or because the vessel
put to sea was insufficiently repaired and
equipped, the ship agent or the shippers
may demand indemnity of the captain for
the damages caused to the vessel or to the
cargo by the accident, in accordance with
the provisions contained in Articles 610,
612, 614, and 621.”
Article 842 of the Code of Commerce states
that: “The goods saved from the wreck shall
be specially bound for the payment of the
expenses of the respective salvage, and the
amount thereof must be paid by the owners
of the former before they are delivered to
them, and with preference over any other
obligation if the merchandise should be
sold.”
Article 843 of the Code of Commerce states
that: “If several vessels sail under convoy,
and any of them should be wrecked, the
cargo saved shall 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 shall enter a
protest against him, before two sea officials,
of the losses and damages resulting
therefrom, ratifying the protest within 24
hours after arrival at the first port, and
including it in the proceedings he must
institute in accordance with the provisions
contained in Article 612. 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 shall
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Claudine Mayor
be saved first, the designation thereof to be
made by the captain with the concurrence
of the officers of his vessel.”
Article 844 of the Code of Commerce
provides that: “A captain who may have
taken on board the goods saved from the
wreck shall continue his course to the port
of destination, and on arrival shall deposit
the same, with judicial intervention, at the
disposal of their legitimate owners. In case
he changes his course, if he can unload
them at the port of which they were
consigned, the captain may make said port
if the shippers or supercargoes present and
the officers and passengers of the vessel
consent thereto; but he may not do so,
even with said consent, in time of war or
when the port is difficult and dangerous to
make. The owners of the cargo shall defray
all the expenses of this arrival as well as the
payment of the freightage which, after
taking into consideration the circumstances
of the case, may be fixed by agreement or
by a judicial decision.”
Article 845 of the Code of Commerce
provides that: “If on the vessel there should
be no person interested in the cargo who
can pay the expenses and freightage
corresponding to the salvage, the
competent judge or court may order the
sale of the part necessary to cover the same.
This shall also be done when its
preservation is dangerous, or when in a
period of one year it should not have been
possible to ascertain who are its legitimate
owners. In both cases the proceedings shall
be with the publicity and formalities
prescribed in Article 579, and the net
proceeds of the sale shall be safely
deposited, in the discretion of the judge or
court, so that they may be delivered to the
legitimate owner thereof.”
*It is the loss of the vessel at sea as a
consequence of its grounding, or running
against an object in sea or on the coast. It
occurs when the vessel sustains injuries due
to a marine peril rendering her incapable of
navigation.
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*The rules on collision or allusion, as may Warsaw Convention is an agreement among sovereign
be pertinent, can equally apply to countries concerning the regulation in a uniform
shipwrecks. manner of the conditions of international
transportation by air in respect of the documents used
J. Salvage for such transportation and of the liability of the carrier.
1. Definition - Signed on October 12, 1929 in Warsaw, Poland.
Salvage - Compensation allowed to persons Purpose: To protect the emerging air transportation
by whose voluntary assistance a ship at sea industry and to secure the uniformity of recovery by the
or her cargo or both have been saved in passengers.
whole or in part from an impending or Applicability: The transportation must be:
actual peril, shipwrecks, derelicts or 1. International transportation
recapture 2. Air transportation
- Services one person render to the owner 3. Carriage of passengers, baggage or goods
of a ship or goods, by his own labor, *The Warsaw Convention shall also apply to fortuitous
preserving the goods or the ship which the events affecting transportation by aircraft performed by
owner or those entrusted with the care of an air transportation enterprise.
them have either abandoned in distress at *The Convention is likewise applicable to air
sea, or are unable to protect or secure. transportation by legal entities constituted under public
2. Rights and obligations of salvors and law of the High Contracting Parties.
owners (Salvage Law) *The Convention does not apply to transportation
Salvors Owners performed under the terms of any international postal
Entitled to He does not convention.
compensation for renounce his right to International Transportation is any transportation in
services rendered the derelict which the place of departure and the place of
Acquires a lien upon Has a right to the
destination are situated either:
the property delivery of the
salvaged until he is vessel or things 1. Within the territories of two High Contracting
compensated saved after the Parties regardless of whether or not there be a
salvage is break in the transportation or transhipment; or
accomplished, Controlling: Two territories must be High
provided he pays or Contracting Parties
gives a bond *Also called as one way ticket
To all intents and Should make a claim
2. Within the territory of a single High Contracting
purposes, he is a within 3 months
joint owner and if after the publication Parties, if there is an agreed stopping place
the property is lost of a salvage report, within a territory subject to the sovereignty,
he must bear his otherwise the thing mandate or authority of another power, even
share saved shall be sold though that power is not a party to the
Acquires the right of Entitled to the Convention.
possession of salvage reward for Controlling: There must be a stopping place in
derelict for purposes the use of his vessel
another territory.
of a salvage claim in rendering salvage
services *Also called as round trip ticket.
Entitled to half of High Contracting Party is one of the original parties to
the deposit of the the convention.
derelict sold, if after When inapplicable:
the lapse of 3 years 1. When public policy is contradicted;
no claim was made 2. If the requirement under the Convention are
not complied with
WARSAW CONVENTION: Transportation Documents:
a. Passenger – passenger ticket

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b. Checked-in baggage – baggage check *An intermediate place where

c. Goods to be shipped – airway bill carriage may be broken is not a
Liability of carrier for damages: place of destination.
1. Death or injury of a passenger if the accident b. The date of expected arrival
causing it took place on board the aircraft or in c. The date on which the
the course of its operations of embarking or transportation stopped
disembarking; Venue:
2. Destruction, loss or damage to any baggage or At the option of the plaintiff, the action for damages
goods, if it took place during the transportation may be filed in the:
by air; and 1. Court of domicile of the carrier;
3. Delay in the transportation of passengers, 2. Court of its principal place of business;
baggage or goods. 3. Court where it has a place of business through
Limit of Liability: which the contract has been made; or
1. Passenger: 4. Court of the place of destination.
In case of death or injury, general rule: 100,000 *In Santos III v Northwest Airline, the SC held that the
STR per passenger forum of action is a matter of jurisdiction rather than of
*1.51 US Dollar venue.
Exception: Agreement to a higher limit
In case of delay, 4150 STR per passenger
2. Checked in baggage:
General Rule: 20 STR per kilogram
Exception: In case of special declaration of
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the
declared sum unless it proves the sum is greater
than actual value.
3. Hand carried baggage: 1000 STR per passenger
4. Goods to be shipped:
General Rule: 17 STR per kilogram
Exception: In case of special declaration of
value and payment of a supplementary sum by
consignor, carrier is liable to not more than the
declared sum unless it proves the sum is greater
than actual value.
Action for damages:
1. Notice of claim
*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.
*The complaint is a condition precedent.
Without the complaint, the action is barred
except in case of fraud on the part of the
carrier.
2. Prescriptive period
*Action must be filed within 2 years from:
a. The date of arrival at the
destination

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