Professional Documents
Culture Documents
Congress does not necessarily imply that only shall not be considered as operating a public
Congress has the power to grant such authorization. service for the purposes of this Act.
There are several laws granting specified agencies in
the Executive Dept. the power to issue such
authorization for certain classes of public utilities. [ 1. B. Transportation
LTFRB wrt Certificates of Public Convenience
authorizing the operation of public land transportation 1. Definition - A contract of
services provided by motorized vehicles; 2. ERB wrt transportation is one whereby a certain person or
operation of electric power utilities and services association of persons obligate themselves to
except electric coops] transport persons, things, news from one place to
Reading EO 30 and PD 857 together, the PPA another for a fixed price. It is the removal of goods or
has been empowered to undertake by itself or to persons from one place to another.
authorize the operation and mgmt. of the MICT by
another by contract. The latter power having been 2. Public Nature
delegated to the PPA, a legislative franchise is no
longer necessary. In this case, the PPA's contracting (a) Public Service Act
with ICTSI is wholly within its jurisdiction and powers.
3. The award of the contract to ICTSI is all the Section 13 (a) The Commission (PSC)
authorization that is necessary. The award made by shall have jurisdiction, supervision, and control
the PPA and the President enjoys the presumption of over all public services and their franchises,
validity and regularity of official action. There is no eqpt., and other properties, and in the exercise
evidence to the contrary. of its authority, it shall have the necessary
4. Albano has standing to assail the contract. While powers and the aid of the public force:
the expenditure of public funds may not be involved Provided, That public services owned or
under the contract, public interest is definitely operated by govt. entities or GOOCs shall be
involved considering the important role of the MICP in regulated by the Commission in the same way
the economic devt. of the country and the magnitude as privately owned public services, but
of the amount involved. He has sufficient standing certificates of public convenience or certificates
since a public right (disclosure provision) is sought to of public convenience and necessity shall not
be enforced. be required of such entities or corporations: And
5. There in no conflict among the 3 branches of govt. provided, further, That it shall have no authority
The Executive Dept. has not contravened an act of to require steamboats, motorships and
Congress. There is no usurpation of powers of another steamship lines, whether privately owned or
branch. owned or operated by any govt. controlled
6. The determination of the winning bid should be left corporation or instrumentality to obtain
to the sound judgment of the PPA. It is in the best certificates of public convenience or to
position to evaluate the bids. It has the technical prescribe their definite routes or lines of
expertise which neither the Court nor Congress has. service.
No abuse of discretion has been shown.
(b) The term public service includes
every person that now or hereafter may
2. CA 146, as amended, Sec 13 (b) operate, manage, or control in the Philippines,
for hire or compensation, with general or limited
The term public service includes every clientele, whether permanent, occasional or
person that now or hereafter may operate, accidental, and done for general business
manage, or control in the Philippines, for hire or purposes, any common carrier, railroad, street
compensation, with general or limited clientele, railway, traction railway, sub-way motor vehicle,
whether permanent, occasional or accidental, either for freight or passenger, or both with or
and done for general business purposes, any without fixed route and whatever may be its
common carrier, railroad, street railway, traction classification, freight or carrier service or any
railway, sub-way motor vehicle, either for class, express service, steamboat, or steamship
freight or passenger, or both with or without line, pontines, ferries, and water craft, engaged
fixed route and whatever may be its in the transportation of passengers and freight
classification, freight or carrier service or any or both, shipyard, marine repairshop,
class, express service, steamboat, or steamship warehouse, wharf or dock, ice plant, ice
line, pontines, ferries, and water craft, engaged refrigeration plant, canal, irrigation system,
in the transportation of passengers and freight gas, electric light, heat and power, water supply
or both, shipyard, marine repairshop, and power, petroleum, sewerage system, wire or
[warehouse], wharf or dock, ice plant, ice wireless communications system, wire or
refrigeration plant, canal, irrigation system, wireless broadcasting stations and other similar
gas, electric light, heat and power, water supply public services: Provided, however, that a
and power, petroleum, sewerage system, wire or person engaged in agriculture, not otherwise a
wireless communications system, wire or public service, who owns a motor vehicle and
wireless broadcasting stations and other similar uses it personally and/or enters into a special
public services: Provided, however, that a contract whereby said motor vehicle is offered
person engaged in agriculture, not otherwise a for hire or compensation to a third party or third
public service, who owns a motor vehicle and parties engaged in agriculture, not itself or
uses it personally and/or enters into a special themselves a public service, for operation by
contract whereby said motor vehicle is offered the latter for a limited time and for a specific
for hire or compensation to a third party or third purpose directly connected with the cultivation
parties engaged in agriculture, not itself or of his or their farm, the transportation,
themselves a public service, for operation by processing, and marketing of agricultural
the latter for a limited time and for a specific products of such third party or third parties
purpose directly connected with the cultivation shall not be considered as operating a public
of his or their farm, the transportation, service for the purposes of this Act.
processing, and marketing of agricultural
products of such third party or third parties (c) The word "person" includes every
individual, co- partnership, joint stock co. or
PAGE 2
TRANSPORTATION AND MARITIME LAW
corporation, whether domestic or foreign, their Philippines; Provided, that 60% of the stock or
lessees, trustees, or receivers, as well as any paid-up capital ... must belong entirely to
municipality, province, city, GOOC, or agency of citizens of the Philippines or of the US;
the govt. of the Philippines, and whatever other Provided, further, that no such certificate shall
person or entities that may own or possess or be issued for a period of more than 50 years.
operate public services.
(b) To approve, subject to constitutional
Section 14. The ff. are exempted from limitations any franchise, privilege granted
the provisions of the preceding section : under the provisions of Act No. 667, as amended
(a) Warehouses; by Act. No. 1022, by any political subdivision of
(b) Vehicles drawn by animals and the Philippines when, in the judgment of the
bancas moved by oar or sail, and tugboats and Commission, such franchise or privilege will
lighters; properly conserve the public interests xxx
(c) Airships within the Philippines except
as regards the fixing of their maximum rates on (c) To fix and determine individual or
freight and passengers; joint rates, tolls, charges, classifications, or
(d) Radio companies except with respect schedules thereof, as well as commutation,
to the fixing of rates; mileage, kilometrage, and other special rates
(e) Public services owned or operated by which shall be imposed, observed and followed
any instrumentality of the Natl. Govt. or by any thereafter by any public service ; Provided,
GOOC, except with respect to the fixing of rates. further that in case the public service
equipment of an operator is used principally or
Section 15. With the exception of those secondarily for the promotion of a private
enumerated in the preceding section, no public business, the net profits of said business shall
service shall operate in the Philippines without be considered in relation with the public service
possessing a valid and subsisting certificate of such operator for the purpose of fixing the
from the PSC known as the certificate of public rates.
convenience, or certificate of public
convenience and necessity as the case may be, (d) To fix just and reasonable standards,
to the effect that the operation of said service classifications, regulations, practices,
and the authorization to do business will measurements, or service to be furnished,
promote the public interests in a proper and imposed, observed, and followed thereafter by
suitable manner. any public service.
The Commission may prescribe as a
condition for the issuance of the certificate (e) To ascertain and fix adequate and
provided in the preceding paragraph that the serviceable standards for the measurement of
service can be acquired by the Republic of the quantity, quality, pressure, initial voltage, or
Philippines or any instrumentality thereof upon other condition pertaining to the supply of the
payment of the cost price of its useful eqpt., product or service rendered by any public
less reasonable depn.; and likewise, that the service, and to prescribe reasonable regulations
certificate shall be valid only for a definite for the examination and test of such product or
period of time; and that the violation of any of service and for the measurement thereof.
these conditions shall produce the immediate
cancellation of the certificate without the (f) To establish reasonable rules,
necessity of any express action on the part of regulations, instructions, specifications, and
the Commission. standards, to secure the accuracy of all meters
In estimating the depn., the effect of the and appliances for measurements.
use of the eqpt., its actual condition, the age of
the model, or other circumstances affecting its (g) To compel any public service to
value in the market shall be taken into furnish safe, adequate, and proper service as
consideration. regards the manner of furnishing the same as
The foregoing is likewise applicable to well as the maintenance of the necessary
any extension or amendment of certificates material and eqpt.
actually in force and to those which may
hereafter be issued, to permit to modify (h) To require any public service to
itineraries and time schedules of public establish, construct, maintain and operate any
services, and to authorizations to renew and reasonable extension of its existing facilities,
increase eqpt. and properties. where, in the judgment of said commission,
such extension is reasonable and practicable,
Section 16. Proceedings of the and will furnish sufficient business to justify the
Commission, upon notice and hearing. The construction and maintenance of the same, and
Commission shall have power, upon proper when the financial condition of the said public
notice and hearing in accordance with the rules service reasonably warrants the original
and provisions of this Act, subject to the expenditure required in making and operating
limitations and exceptions mentioned and such extension.
saving provisions to the contrary.
(i) To direct any railroad, street, railway
(a) To issue certificates ... authorizing the or traction co. to establish and maintain at any
operation of public services within the junction or point of connection or intersection
Philippines, whenever the Commission finds with any other line of said road or track, or with
that the operation of the public service any other line of any other railroad, street,
proposed and the authorization to do business railway or traction co., such just and reasonable
will promote the public interest in a proper and connection as shall be necessary to promote the
suitable manner. Provided, that certificates will convenience of shippers of property, or of
be granted only to citizens of the Philippines or passengers, and in like manner to direct any
of the US or to corps., co-partnerships, railroad, street railway or traction co. engaged
associations or joint stock companies in carrying merchandise, to construct, maintain
constituted and organized under the laws of the and operate, upon reasonable terms, a switch
PAGE 3
TRANSPORTATION AND MARITIME LAW
connection with any private sidetrack which Provided, that said fees shall be smaller than
may be constructed by any shipper to connect those charged for auto- buses, trucks, and
with the railroad, street railway or traction motor trucks of types not made regulation
company line where, in the judgment of the under this subsection.
commission, such connection is reasonable and
practicable, and can be put in with safety, and Section 17. Proceedings of commission
will furnish sufficient business to justify the without previous hearing:
construction and maintenance of the same. (a) To investigate, upon its own initiative,
or upon complaint in writing, any matter
(j) To authorize, in its discretion, any concerning any public service as regards
railroad, street railway of traction company to matters under its jurisdiction; to require any
lay its tracks across tracks of any other railroad, public service to furnish safe, adequate and
street railway or traction company, or across proper service as the public interest may
any public highway. require and warrant; to enforce compliance with
(k) To direct any railroad or street any standard xxx and to prohibit or prevent any
railway co. to install such safety devices or to public service from operating without first
adopt such other reasonable measures as may securing a certificate of public convenience or
in the judgment of the commission be necessary public necessity and convenience xxx and
for the protection of the public at passing grade require existing public services to pay the fees
crossings of (1) public highways and railroads, provided for in this act for the issuance of the
(2) public highways and street railways, or (3) proper certificate xxx under the penalty, in the
railroads and street railways. discretion of the commission, of the revocation
and cancellation of any acquired right.
(l) To fix and determine the proper and
adequate rates of depn. of the property of any (b) To require payment of actual
public service which will be observed in proper expenses incurred in any investigation if a
and adequate depn. account to be carried for violation shall be found; to assess costs not to
the protection of stockholders, or bondholders exceed 25% with reference to such investigation
or creditors, in accordance with such rules,
regulations, and forms of account as the (c) To appraise and value the property of
commission may prescribe. Said rates shall be any public service; in relation thereto, to have
sufficient to provide the amounts required over access to and use any books, documents or
and above the expenses of maintenance to keep records in the possession of any govt. dept.,
such property in a state of efficiency bureau, office, or political subdivision
corresponding to the progress of the industry.
Each public service shall conform its (d) To provide, on motion by or at the
depreciation accounts to the rates so request of any consumer, for the examination
determined and fixed, and shall set aside the and test of any appliance used for the
money so provided for out of its earnings and measuring of any product or service of a public
carry the same in a depreciation fund. The service, to enter any premises where said
income from such investments of money in such appliances may be, and other premises of the
fund shall likewise be carried in such fund. This public service, for the purpose of setting up and
fund shall not be expended otherwise than for using on said premises any apparatus necessary
depreciation, improvements, extensions, new therefor, and to fix fees to be paid by the
constructions or additions to the property of consumer who may apply for such examination,
such public service. and in case of defect, to refund the fees paid
(m) To amend, modify or revoke at any (e) To permit any street railway or
time any certificate under the provisions of this traction company to change its existing gauge
act, whenever the facts and circumstances on to standard steam railroad gauge
the strength of which said certificate was issued
have been misrepresented or materially (f) To grant any public service special
changed. permits to make extra or special trips within the
territory covered by its certificate and to make
(n) To suspend or revoke any certificate special excursions outside if the public interest
issued under the provisions of this act whenever or special circumstances so require; Provided
the holder thereof has violated or willfully and where the public service cannot render such
consumatedly refused to comply with any order, extra service on its own line or in its own
rule or regulation of the commission or any territory, a special permit for such extra service
provisions of this act: Provided, that the may be granted to any other public service
commission for good cause, may prior to the
hearing suspend for a period not exceeding 30 (g) To require any public service to keep
days any certificate or the exercise of any right its books, records, and accounts; to adopt a
or authority issued or granted under this act by uniform system of accounting as approved by
order of the commission, whenever such step the auditor general
shall in the judgment of the commission be
necessary to avoid serious and irreparable (h) To require any public service to
damage or inconvenience to the public or to furnish annual reports of finances and
private interests. operations, covering the 12 month period
ending December 31
(o) To fix, determine, and regulate, as the
convenience of the state may require, a special (i) To require every public service to file
type for auto buses, trucks and motor trucks, to with the commission a written, verified
be hereafter constructed, purchased, and statement made by the owner, president or
operated by operators after the approval of this secretary setting forth the officers, authority,
act; to fix and determine a special registration power and duties of every officer, as to disclose
fee for auto-buses, trucks and motor trucks so the source and origin of each administrative act
constructed, purchased, and operated: or rule
PAGE 4
TRANSPORTATION AND MARITIME LAW
Nothing herein contained shall be construed to - prior operator is given opportunity to improve service
prevent the holding of shares lawfully acquired. - prior operator given opportunity to extend lines
- basis of rule : to prevent ruinous and wasteful
(i) To sell, alienate or in any manner competition in order that the interests of the public
transfer shares of its capital stock to any alien would be conserved and preserved; so long as the
if the result of that sale, alienation, or transfer operator complied with the terms and conditions of the
in itself or in connection with another previous license and the reasonable demands of the public, it is
sale shall be the reduction to less than 60% of the duty of the PSC to protect rather than to destroy
the capital stock belonging to Philippine its investment
citizens. Such sale, alienation or transfer shall
be void and of no effect and shall be sufficient Raymundo vs Luneta Motor 58 Phil 889
cause for ordering the cancellation of the
certificate. F: Nicanor de Guzman signing as Guzco Transit
purchased trucks from Luneta Motor and executed PNs
guaranteed by a chattel mortgage on several trucks.
(b) The Certificate of Public Failing to pay the PNs, a suit for collection was filed. A
Convenience (CPC), the Certificate of writ of attachment was issued and garnishment was
Public Convenience and Necessity served on the PSC attaching the right, title, and
(CPCN), and the Prior Operator Rule participation of Guzco Transit in the CPC covering the
bus transportation lines between Manila and Rizal. The
Difference between CPC and CPCN : A CPCN is issued CFI ordered the selling of these certificates in a public
by the PSC to a public service to which any political bidding in which Luneta Motor was the highest bidder.
subdivision has granted a franchise under Act 667 Nine days after the certificates were attached,
after the PSC has approved the same under Section these were sold to Raymundo (including certificate No.
16(b). A CPC is any authorization to operate a public 25951 which was not included in the sale to Luneta
service issued by the PSC. A CPC is an authorization Motor Co.). The approval of the sale was sought from
issued by the Commission for the operation of public the PSC. The PSC approved the sale in the public
services for which no franchise, either municipal or bidding and disapproved the sale to Raymundo except
legislative, is required by law (e.g. auto-trucks and with respect to Certificate No. 25951 which Raymundo
motor vehicles). A CPCN is an authorization issued by could apply for its approval.
the PSC for the operation of public services for which a
franchise is required by law (e.g. electric, telephone Issue : Which of the two sales should prevail? public
services). auction by virtue of an attachment vs voluntary sale
Held : Sale to Luneta Motor Co. in a public auction
Nature of certificate : It constitutes neither a franchise The Public Service Law authorizes certificates
nor a contract, confers no property rights and is a of public convenience to be secured by public service
mere license or privilege, and such privilege is operators from the PSC. A CPC grants a right in the
forfeited when the grantee fails to comply with his nature of a limited franchise. The Code of Civil
commitments behind which lies the paramount Procedure does not exclude franchises or certificates
interest of the public, for public necessity cannot be from the word "property." The test by which to
made to wait, nor sacrificed for private convenience. determine WON a property can be attached and sold
However, certificates represent property rights upon execution is whether the judgment debtor has
to the extent that if the rights which any public utility such a beneficial interest therein that he can sell or
is exercising pursuant to lawful orders of the PSC has otherwise dispose of it for value. The Public Service
been invaded by another public utility, in appropriate Law permits the PSC to approve the sale, alienation,
cases actions may be maintained by the complainant mortgaging, encumbering or leasing of property,
public utility. Owners of public utilities have the right franchises, privileges, or rights or any part thereof. If
to maintain appropriate actions against other public the holder of a certificate can voluntary sell it, there is
utilities not authorized to operate in competition with no reason why the same cannot be sold involuntarily
the complainant. pursuant to court process.
Certificates are considered as property as used CPCs have considerable material value. They
in Civil Procedure as they have material value and are are valuable assets. They are subject to being sold for
material assets. They are subject to attachment and consideration as much as any other property. They are
seizure by legal process, and may be acquired by even more valuable than ordinary properties, taking
purchase. into consideration that they are not granted to every
one who applies for them but only to those who
Determination of WON an issuance of a certificate is undertake to furnish satisfactory and convenient
for public convenience - (1) financial responsibility of service to the public. Though intangible, they are of
the applicant, (2) reliability of the applicant, (3) value and are considered properties which can be
priority of filing the application for a certificate, and seized through legal process.
(4) priority of operation
Prior operator rule - to carry out the purpose and Batangas Transportation Co. vs Orlanes 52 Phil 455
intent for which the PSC was created the law
contemplates that the first licensee will be protected F: Orlanes sought to have a CPC to operate a line
in his investment and will not be subjected to a of auto trucks with fixed times of departure between
ruinous competition. It is not therefore the policy of Taal and Bantilan, with the right to receive passengers
the law for the PSC to issue a CPC to a second and freight from intermediate points. The evidence is
operator to cover the same field and in competition conclusive that at the time of his application, Orlanes
with a first operator who is rendering sufficient, was an irregular operator between Bantilan and Taal,
adequate and satisfactory service, and who in all and that BTC was a regular operator between
things and respects is complying with the rules and Batangas and Rosario. Orlanes sought to have his
regulations of the PSC. Accordingly, a CPC or CPCN irregular operation changed into a regular operation,
ought not to be granted where there is no complaint and to set aside and nullify the prohibition against him
as to existing rates and the co. in the field is rendering in his CPC that he shall not have or receive any
adequate services. passengers or freight at any of the points served by
- regular operators are preferred over irregular the BTC which holds a prior license from the PSC. His
operators petition is based on the fact that to comply with the
PAGE 6
TRANSPORTATION AND MARITIME LAW
growing demands of the public, the BTC applied for a Carmelo and Oriol then applied to the PSC for
permit to increase the no. of trip hours at and between a CPC to operate a taxicab service within Manila.
the same places and for an order that all irregular Monserrat opposed. The PSC denied the application.
operators be prohibited from operating unless they
should observe an interval of 2 hours before or one Held : There is no valid, legal reason why Monserrat
hour after the regular hours of the BTC. The PSC should have the exclusive right of operating a taxicab
granted the petition of Orlanes. service. In the granting and refusal of a CPC, the
question is what is for the best interest of the public.
Issue : WON a CPC should be issued to a second Tested by that rule, it is hard to conceive how it would
operator in a field where, and in competition with, a be for the best interests of the public to have one
first operator who is already operating a sufficient, taxicab service only, and how the public would be
adequate and satisfactory service. injured by the granting of the certificate in question,
for it must be conceded that two companies in the
Held : NO. Decision of PSC is revoked. field would stimulate the business, and the public
An autobus line is a public utility, and as such, would much sooner and much easier become
is a common carrier and an impt. factor in the educated in the use of taxi.
business affairs of the community. Monserrat does not have a vested right in the
The PSC has the power to specify and define business of any person that might want the use of a
the terms and conditions upon which any public utility taxi, for the simple reason that the use of any taxi is
shall operate and to make reasonable rules and the sole discretion of the customer. This is unlike the
regulations for its operation, and to fix the BTC case which dealt with an autobus service with
compensation that it shall receive for its service to the fixed schedules and routes.
public, and for good cause may suspend or even
revoke a license granted. San Pablo vs Pantranco South Express, Inc. 153 SCRA
It is not the policy of the law for the PSC to 199
issue a CPC to a second operator to cover the same
field and in competition with a first operator who is F: Pantranco operates passenger buses from
rendering sufficient, adequate and satisfactory service, Metro Manila to Bicol and Eastern Samar. It wrote to
and who in all things and respects is complying with the Maritime Industry Authority (MARINA) requesting
the rules and regulations of the PSC. authority to lease/purchase MV Black Double to be
The power of the PSC to issue a CPC is founded used in operating a ferryboat service from Matnog,
on the condition precedent that after a full hearing and Sorsogon and Allen, Samar that will provide service to
investigation, it shall find as a fact that the proposed co. buses and freight trucks that have to cross the
operation is for the convenience of the public. Bernardo Strait. MARINA denied the petition on the
So long as the first operator keeps and ground that the Matnog- Allen run is adequately
performs his terms and conditions of its license and serviced by the Cardinal Shipping Corp. and Epitacio
complies with the reasonable demands of the public, it San Pablo and that market conditions cannot support
has more or less of a vested and preferential right the entry of additional tonnage.
over another who seeks to acquire a later license to Pantranco acquired the vessel. It then applied
operate over the same route. to BOT claiming that it can operate a ferry service in
To carry out the purpose and intent for which connection with its franchise for bus operation in the
the PSC was created, the law contemplates that the highway from Pasay City to Tacloban City for the
first license will be protected in his investment and will purpose of continuing the highway, which is
not be subjected to ruinous competition. interrupted by a small body of water, and that the
The primary purpose of the PSC is to secure proposed ferry operation is merely a necessary and
adequate, sustained service for the public at the least incidental service to its main service and obligation of
possible cost and to protect and conserve investments transferring passengers from Pasay City to Tacloban
which have already been made for that purpose. A City. Accdg. to it, there is no need to obtain a separate
CPCN for the operation of an auto truck line in CPC to operate a ferry service to cater exclusively to
occupied territory should not be granted where there its passenger buses and ferry trucks. Pantranco began
is no complaint as to existing rates and the co. in the operating its ferry service. The BOT held that the
field is rendering adequate service. It is the duty of ferryboat service is part of Pantranco's CPC and
the PSC to protect rather than to destroy the amended Pantranco's CPC to provide so. The two
investment of a public utility. other ferry boat services filed motions for
The policy of regulation upon which the reconsideration.
present public utility commission plan is based and
which tends to do away with competition among public Issue : WON the sea can be considered as a
utilities as they are natural monopolies, is at once the continuation of the highway. WON a land transpo co.
reason that the regulation of an existing system of can be authorized to operate a ferry service or
transportation, which is properly serving a given field, coastwise or interisland shipping service along its
or may be required to do so, is to be preferred to authorized route as an incident to its franchise without
competition among several independent systems. the need of filing a separate application for the same.
While requiring a proper service from a single system Held : The water transport service between Matnog
for a territory in consideration for protecting it as a and Allen is not a ferryboat service but a coastwise or
monopoly for all the service required and in conserving interisland shipping service. Before private
its resources, no economic waste results and service respondent may be issued a franchise or CPC for the
may be furnished at a minimum cost. operation of the said service as a common carrier, it
must comply with the usual reqts. of filing an
application, payment of the fees, publication, adducing
Carmelo vs Monserrat 55 Phil 644 evidence at a hearing and affording the oppositors the
opportunity to be heard.
F: Monserrat twice applied to Congress for an Considering the environmental circumstances
exclusive franchise to operate a taxicab service in of the case, the conveyance of passengers from
Manila. The Governor General twice vetoed the bill. Matnog to Allen is not a ferryboat service but a
Monserrat then applied to the PSC for a CPC. It was coastwise or interisland shipping service. Under no
granted. circumstances can the sea between Matnog and Allen
be considered a continuation of the highway. While a
ferryboat service has been considered as a
PAGE 7
TRANSPORTATION AND MARITIME LAW
continuation of the highway when crossing rivers or EO 125, Sec. 4. Mandate. The DOTC shall
even lakes, which are small body of waters separating be the primary policy, planning, programming,
the land, however, when as in this case the two coordinating, implementing, regulating, and
terminals are separated by an open sea, it cannot be administrative entity of the Executive Branch of
considered a continuation of the highway. Pantranco the govt. in the promotion, devt. and regulation
must secure a separate CPC for the operation of an of dependable and coordinated networks of
interisland or coastwise shipping service. Its CPC transportation and communication systems, as
cannot be merely amended to include this water well as in the fast, safe, efficient, and reliable
service under the guise that it is a mere private ferry postal, transportation and communication
service. services.
Pantranco does not deny that it charges its To accomplish such mandate, the Dept.
passengers separately from the charges for the bus shall have the ff. objectives:
trips and issues separate tickets whenever they board (a) promote the devt. of dependable and
the MV Black Double. It cannot pretend that it issued coordinated networks of transportation and
tickets as a private carrier and not as a common communication systems;
carrier. It in fact accepts walk in passengers during (b) guide govt. and private investments
the trips. It cannot claim that it is both a private in the devt. of the country's inter-modal
carrier and a common carrier at the same time. transportation and communication system in a
most practical, expeditious, and orderly fashion
In the case of Javellana vs PSC, the Court for maximum safety, service and cost
differentiated between ferry service and interisland or effectiveness;
coastwide service. Ferry means service either by (c) impose appropriate measures so that
barges or rafts, even by motor or steam vessels, technical, economic and other conditions for the
between the banks of a river or stream to continue the continuing economic viability of the
highway which is interrupted by a body of water, or in transportation and communication entities are
some cases, to connect two points on opposite shores not jeopardized and do not encourage
of an arm of the sea such as a bay or lake which does inefficiency and distortion of traffic patronage;
not involve too great a distance or too long a time to (d) develop an integrated plan for a
navigate. But where the line or service involves nationwide transmission system in accordance
crossing a body of water which is wide and dangerous with national and intl. telecommunications
with big waves, then such line or service belongs service reqts. including, among others, radio
properly to interisland or coastwide trade. and television broadcast relaying leased
3. Private nature: rights and channel services and data transmission;
obligations of parties inter se arising from (e) guide govt. and private investments
transactions relating to transportation in the establishment, operation and
maintenance of an intl. switching system for
(a) absent a transportation incoming and outgoing telecommunication
contract services;
(f) encourage the devt. of a domestic
(b) arising from a telecommunications industry in coordination
transportation contract with the concerned entities particularly, the
manufacture of communications/electronics
equipment and components to complement and
(i) contract of support, as much as possible, the expansion,
transportation, defined - one development, operation and maintenance of the
whereby a certain person or nationwide telecommunication network;
association of persons obligate (g) Provide for a safe, reliable and
themselves to transport efficient postal system for the country.
persons, things or news from
one place to another for a fixed
price EO 125-A, Sec. 5. To accomplish its
mandate, the Dept. shall have the ff. powers
(ii) contract of and functions:
transportation, elements (a) formulate and recommend national
policies and guidelines for the preparation and
Parties to the contract : implementation of integrated and
comprehensive transportation and
1. shipper - one who gives rise to the contract communications systems at the national,
of transportation by agreeing to deliver the things or regional and local levels; (b) establish and
news to be transported, or to present his own person administer comprehensive and integrated
or those of other or others in the case of programs for transportation and
transportation of passengers communications, xxx call on any agency, corp.,
2. carrier or conductor - one who binds himself or organization xxx to participate and assist in
to transport persons, things, or news as the case may the preparation and implementation of such
be or one employed in or engaged in the business of program;
carrying goods for others for hire (c) assess, review and provide direction
to xxx research and devt. programs of the govt
Persons or corporations who undertake to xxx;
transport or convey goods, property, or persons from (d) administer and enforce all laws xxx in
one place to another, gratuitously or for hire, and are the field of transportation and communication;
classified as private or special carriers and common or (e) coordinate with the DPWH in the
public carriers design, location, devt, rehabilitation,
improvement, etc. of all infrastructure projects
C. Regulation of the Transportation Industry and facilities of the Dept. xxx
(f) establish, operate and maintain a
* The Department of Transportation nationwide postal system xxx;
and Communications
PAGE 8
TRANSPORTATION AND MARITIME LAW
Sec. 25, RA 776. The Civil Aeronautics Section 12. Except as otherwise provided
Administration shall be under the administrative in the Constitution and existing treaty or
supervision and control of the Dept. of treaties, a permit authorizing a person to
Commerce and Industry (now the DOTC) xxx engage in domestic air commerce and/or air
transportation shall be issued only to citizens of
(ii) Civil Aeronautics the Philippines.
Board
PAGE 9
TRANSPORTATION AND MARITIME LAW
by the President xxx. He shall have the rank, The Maritime Industry Authority is
salary and privileges of a Dept. Service Chief. hereby retained and shall have the ff. functions:
He shall assist the Board in the performance of a. develop and formulate plans, policies,
its powers and functions. projects xxx geared toward the promotion and
The Board shall be supported by the devt. of the maritime industry, the growth and
Technical Evaluation Division, Legal Division, effective regulation of shipping enterprises, and
Management Information Division, for the national security objectives of the
Administrative Division and Finance Division. country;
b. establish, prescribe and regulate
Sec. 18. The Secretary of Transportation routes, zones and/or areas of operation of
and Communications shall exercise particular operators of public water services;
administrative supervision and control over the c. issue CPCs for the operation of
Board. domestic and overseas water carriers;
d. register vessels as well as issue
certificates, licenses or document necessary or
Sec. 19. Powers and functions of the incident thereto;
Board: e. undertake the safety regulatory
1. prescribe and regulate routes xxx; functions pertaining to vessel construction and
2. issue, amend, revise, suspend, or operation including the determination or
cancel CPCs or permits, xxx; manning levels and issuance of certificates of
3. determine, prescribe, approve and competency to seamen;
periodically review and adjust reasonable fares f. enforce laws, prescribe and enforce
xxx; rules and regulations, including penalties for
4. issue injunctions xxx; violations thereof, governing water
5. punish for contempt of the Board xxx; transportation and the Phil. merchant marine
6. issue subpoena and subpoena duces xxx;
tecum and to summon witnesses xxx; g. undertake the issuance of licenses to
7. conduct investigations and hearings of qualified seamen and harbor, bay and river
complaints for violation of the public service pilots;
laws on land transportation xxx; h. determine, fix, prescribe charges/rates
8. review motu proprio the decisions, pertinent to the operation of public water
actions of the Regional Franchising and transport utilities xxx;
Regulatory Offices xxx; i. accredit marine surveyors and
9. promulgate rules and regulations maritime enterprises engaged in shipbuilding,
governing proceedings before the Board and the ship repair xxx;
Regional Franchising and Regulatory Office xxx; j. issue and register the continuous
10. fix, impose and collect, and discharge book of Filipino seamen;
periodically review and adjust reasonable fees, k. establish and prescribe rules and
and other related charges for services regulations, standards and procedures for the
rendered; efficient and effective discharge of the above
11. formulate, promulgate, administer, functions;
implement and enforce rules and regulations on l. perform such other functions as may
land transportation xxx; now or hereafter be provided by law.
12. coordinate and cooperate with other
govt. agencies and entities concerned with any II. Common Carriers
aspect involving public land transportation
services xxx; A. In General
13. perform such other functions and
duties as may be provided by law, or as may be 1. Definitions; essential elements
necessary, or proper or incidental to the
purposes and objectives of the Dept.
Art. 1732. Common carriers are persons,
Sec. 20. The Board shall xxx sit and corporations, firms or associations engaged in
decide en banc; concurrence and signature of at the business of carrying or transporting
least 2 members; decision shall be appealable passengers or goods or both, by land, water or
to the Secretary within 30 days from receipt of air, for compensation, offering their services to
the decision; the Secretary may motu proprio the public.
review any decision or action of the Board
before it becomes final.
Aguedo F. Agbayani, COMMERCIAL LAWS OF THE
Sec. 21. Regional Franchising and PHILIPPINES, vol. 4, 1989 ed. (hereinafter 4 Agbayani)
Regulatory Offices - hear and decide
uncontested applications/ petitions for routes
xxx; Transportation defined.-- a contract of
transportation is one whereby a certain person or
Sec. 22. decisions of the Regional association of persons obligate themselves to
Franchising and Regulatory Offices shall be transport persons, things, or news from one place to
appealable to the Board within 30 days from another for a fixed price
receipt of the decision.
Classification :
1. As to object: (1) things; (2) persons; (3) news
(c) Water
2. As to place of travel: (1) land; (2) water; (3) air
(i) Maritime Industry
Authority
Parties to contract of transportation:
EO 125, Sec. 14 as amended by EO 125-A, Sec. 3
PAGE 11
TRANSPORTATION AND MARITIME LAW
Contracts through transportation agents.-- A Case : an airplane owner is a common carrier where
contract of transportation is not changed, altered or he undertakes for hire to carry all persons who apply
affected by the mere fact that the obligor avails of for passage indiscriminately as long as there is room
other parties to effect the transportation agreed upon, and no legal excuse for refusing; airlines engaged in
as in the case of transportation agents. the passenger service on regular schedules on definite
routes, who solicit patronage of the traveling public,
Carriers defined.-- Persons or corporations who advertise schedules for routes, times of leaving and
undertake to transport or convey goods, property or rates of fare, and make the usual stipulation as to
persons, from one place to another, gratuitously or for baggage are common carriers
hire, and are classified as private or special carriers,
and common or public carriers
Characteristics of common carriers:
Private carriers defined.-- Those who transport or
undertake to transport in a particular instance for hire (1) The common carrier undertakes to carry for
or reward all people indifferently; he holds himself out as ready
to engage in the transportation of goods for hire as a
Common carriers vs Private carriers: public employment and not as a casual occupation,
and he undertakes to carry for all persons indifferently,
(1) the common carrier holds within the limits of his capacity and the sphere of the
(1) the private carrier agrees business required of him, so that he is bound to serve
himself out in common, that is, all who apply and is liable for refusal, without sufficient
in some special case with some reason, to do so
to all persons who choose to em- (2) The common carrier cannot lawfully decline
private individual to carry to accept a particular class of goods for carriage to the
ploy him, as ready to carry for prejudice of the traffic in those goods
for hire Exception : for some sufficient reason, where
hire; no one can be a common the discrimination in such goods is reasonable and
carrier unless he has held himself necessary (substantial grounds)
out to the public as a carrier in (3) No monopoly is favored - the Commission
such a manner as to render him has the power to say what is a reasonable
liable to an action if he should compensation to the utility and to make reasonable
refuse to carry for anyone who rules and regulations for the convenience of the
wished to employ him traveling public and to enforce them
(4) Public convenience - for the best interests
(2) a common carrier is bound to of the public
(2) a private carrier is not
carry all who offer such goods as Meaning of Public use.-- It is not confined to
bound to carry for any reason, privileged individuals, but is open to the indefinite
it is accustomed to carry and public; there must be a right which the law compels
unless it enter into a special the owner to give to the general public. Public use is
tender reasonable compensation not synonymous with public interest. The true criterion
agreement to do so is whether the public may enjoy it by right or only by
for carrying them permission
(3) a common carrier is a public service The law prohibits unreasonable discrimination
(3) a private carrier does not by common carriers.-- The law requires common
and is therefore subject to regulation carriers to carry for all persons, either passengers or
hold itself out as engaged in property, for exactly the same charge for a like or
contemporaneous service in the transportation of like
the business for the public, kind of traffic under substantially similar
PAGE 12
TRANSPORTATION AND MARITIME LAW
circumstances or conditions. The law prohibits owner to give to the general public. It is not enough
common carriers (CC) from subjecting any person, etc. that the general prosperity of the public is promoted.
or locality, or any kind of traffic, to any undue or Public use is not synonymous with public interest. The
unreasonable prejudice or discrimination whatsoever. true criterion by which to judge the character of the
Exception: When the actual cost of handling use is whether the public may enjoy it by right or only
and transporting is different, then different rates may by permission.
be charged
Cases : (1) merchandise of like quantity may not be Home Insurance Co. vs American Steamship Agencies,
considered alike - the quantity, kind and quality may 23 SCRA 24
be exactly the same, and yet not be alike, so far as the
cost of transportation is concerned F: A Peruvian firm shipped fishmeal through the
(2) shipments may be alike although SS Crowborough consigned to the SMB and insured by
composed of different classes of merchandise - the Home Insurance Co. The cargo arrived with
difference in the charge for handling and transporting shortages. SMB demanded and Home Insurance Co.
may only be made when the difference is based upon paid P14,000 in settlement of SMB's claim. Home
actual cost Insurance filed for recovery from Luzon Stevedoring
and American Steamship Agencies. Luzon Stevedoring
claimed that it merely delivered what it received from
Determination of justifiable refusal: the carrier in the same condition it received it.
American Steamship contended that it was not liable
This involves a consideration of the following-- because of a stipulation in the charter party that the
charterer and not the shipowner was to be liable for
(1) suitability of the vessels of the company for any loss or damage to the cargo. The CFI absolved
the transportation of such products; Luzon Stevedoring but ordered American Steamship to
(2) reasonable possibility of danger or disaster, reimburse the P14,000 to Home Insurance, declaring
resulting from their transportation in the form and that Art. 587 of the Code of Commerce makes the ship
under the conditions in which they are offered for agent civilly liable for damages in favor of third
carriage; persons due to the conduct of carrier's captain and
(3) the general nature of the business done by that the stipulation in the charter party exempting
the carrier; owner from liability is against public policy under Art.
(4) all the attendant circumstances which 1744 of NCC.
might affect the question of the reasonable necessity
for the refusal by the carrier to undertake the Issue : Is the stipulation valid? YES.
transportation of this class of merchandise
Held : The provisions of our Civil Code on common
Case: The mere fact that the carriage of dynamites carriers were taken from Anglo-American law. Under
may lead to destructive explosions is not sufficient to American jurisprudence, a common carrier
justify refusal if it can be proven that in the condition undertaking to carry a special cargo or chartered to a
in which it is offered for carriage there is no real special person only, becomes a private carrier. As a
danger to the carrier nor reasonable ground to fear private carrier, a stipulation exempting the owner
that the vessel and those on board will be exposed to from liability for the negligence of its agents is not
unnecessary or unreasonable risks against public policy and is deemed valid.
The Civil Code provisions on common carriers
should not be applied where the carrier is not acting
US vs Tan Piaco, 40 Phil 853 as such but as a private carrier. The stipulation in the
charter party absolving the owner from liability for loss
F: Tan Piaco rented two automobile trucks and due to the negligence of the agent would be void only
was using them upon the highways of Leyte for the if the strict public policy governing CC is applied. Such
purpose of carrying some passengers and freight. He policy has no force where the public at large is not
carried passengers and freight under a special involved, as in the case of a ship totally chartered (as
contract in each case and had not held himself out to in this case) for the use of a single party. Based on the
carry all passengers and freight for all persons who stipulation, recovery cannot be had, for loss or
might offer passengers and freight. He was convicted damage to the cargo against shipowners, unless the
for violation of the Public Utility Law for operating a same is due to personal acts or negligence of said
public utility without permission from the Public Utility owner or its managers, as distinguished from agents
Commission. or employees. No personal act or negligence has been
proved.
Issue: WON defendant operated a public utility. NO. In a charter of the entire vessel, the bill of
lading issued by the master to the charterer, as
Held: There is no public use. The trucks were used shipper, is in fact and legal contemplation merely a
under special agreements to carry particular persons receipt and a document of title and not a contract, for
and property. the contract is the charter party.
Under the Public Service Law, two things are
necessary : (1) the individual, co-partnership, etc. De Guzman vs CA, 168 SCRA 612
must be a public utility; and (2) the business in which
such individual, co-partnership, etc. is engaged must F: Cendana was a junk dealer and was engaged
be for public use. "Public use" means the same as in buying used bottles and scrap materials in
"use by the public." The essential feature of public use Pangasinan and brought these to Manila for resale. He
is that it is not confined to privileged individuals, but used two 6-wheeler trucks. On the return trip to
is open to the indefinite public. In determining whether Pangasinan, he would load his vehicles with cargo
a use is public, we must look not only to the character which various merchants wanted delivered to
of the business to be done, but also to the proposed Pangasinan. For that service, he charged freight lower
mode of doing it. If the use is merely optional with the than regular rates. General Milk Co. contracted with
owners, or the public benefit is merely incidental, it is him for the hauling of 750 cartons of mild. On the way
not a public use, authorizing the exercise of the to Pangasinan, one of the trucks was hijacked by
jurisdiction of the public utility commission. There armed men who took with them the truck and its cargo
must be, in general, a right which the law compels the and kidnapped the driver and his helper. Only 150
PAGE 13
TRANSPORTATION AND MARITIME LAW
cartons of milk were delivered. The Milk Co. sued to hired a marine and cargo surveyor to determine if
claim the value of the lost merchandise based on an there was any shortage. A shortage and
alleged contract of carriage. Cendana denied that he contamination of the fertilizer was discovered. PPI
was a common carrier and contended that he could sent a claim letter to SSA, the resident agent of KKKK
not be liable for the loss since it was due to force for the amount of the loss. An action for damages was
majeure. The TC ruled that he was a common carrier. filed. SSA contended that the provisions on CC do not
The CA reversed. apply to them because they have become private
carriers by reason of the charter-party. The TC awarded
Issue : WON Cendana is a common carrier. YES. damages. The CA reversed.
Held : Cendana is properly characterized as a common Issue : Does a charter party between a shipowner and
carrier even though he merely backhauled goods for a charterer transform a CC into a private one as to
other merchants, and even if it was done on a periodic negate the civil law presumption of negligence in case
basis rather than on a regular basis, and even if his of loss or damage to its cargo? NO.
principal occupation was not the carriage of goods.
Art. 1732 makes no distinction between one Held : A charter-party is a contract by which an entire
whose principal business activity is the carrying of ship, or some principal part thereof, is let by the owner
persons or goods or both, and one who does such to another person for a specified time or use. There
carrying only as an ancillary activity. It also avoids are 2 kinds: (1) contract of affreightment which
making a distinction between a person or enterprise involves the use of shipping space or vessels leased by
offering transportation services on a regular or the owner in part or as a whole, to carry goods for
scheduled basis and one offering service on an others; and (2) charter by demise or bareboat charter
occasional, episodic or unscheduled basis. Neither where the whole vessel is let to the charterer with a
does it make a distinction between a carrier offering transfer to him of its entire command and possession
its services to the general public and one who offers and consequent control over its navigation, including
services or solicits business only from a narrow the master and the crew, who are his servants.
segment of the population. It is not disputed that the carrier operates as a
The fact that Cendana does not hold a CPC is CC in the ordinary course of business. When PPI
no excuse to exempt him from incurring liabilities as a chartered the vessel, the ship captain, its officers and
CC. Otherwise, it would be to reward persons who fail crew were under the employ of the shipowner and
to comply with applicable statutory reqts. and would therefore continued to be under its direct supervision
be offensive to public policy. The liability arises the and control. Thus it continued to be a public carrier.
moment a person or firm acts as a common carrier, It is therefore imperative that a public carrier
without regard to whether or not such carrier has also shall remain as such, notwithstanding the charter of
complied with the requirements of the applicable the whole or portion of a vessel, provided the charter
regulatory statute and implementing regulations. is limited to the ship only, as in the case of a time-
charter or a voyage-charter. It is only when the
Issue : WON Cendana may be held liable for the loss of charter includes both the vessel and the crew, as in a
the milk. NO. bareboat or demise that a CC becomes private, insofar
as such particular voyage is concerned.
Held: Common carriers by the very nature of their
business and for reasons of public policy are held to a Issue : WON the carrier is liable for damages. NO.
very high degree of care and diligence (extra-ordinary
diligence) in the carriage of goods as well as Held : The presumption of negligence on the part of
passengers. Article 1734 establishes the general rule respondent carrier has been overcome by the showing
that CC are responsible for the loss, destruction, or of extraordinary zeal and assiduity exercised by the
deterioration of the goods which they carry unless the carrier in the care of the cargo. On the other hand, no
same is due to the causes enumerated therein. Such proof was adduced by the petitioner showing that the
enumeration is a closed list. Causes falling outside carrier was remiss in the exercise of due diligence in
the list, even if they are force majeure, fall within the order to minimize the loss or damage to the goods it
scope of Art. 1735 which provides that CC are carried.
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence required under Art. 1733. Coastwise Lighterage Corp. vs. CA, GR No. 114167,
However, Art. 1745 provides that a CC cannot July 12, 1995
be allowed to divest or diminish his responsibility even
for acts of strangers like thieves or robbers, except F: Pag-asa Sales, Inc. entered into a contract to
where such thieves or robbers acted with grave or transport molasses from Negros to Mla. w/ Coastwise,
irresistible threat, violence or force. The limits of using the latter's dumb barges. The barges were
extraordinary diligence are reached where there is towed in tandem by the tugboat MT Marcia, w/c is
grave or irresistible threat, violence or force. In this likewise owned by Coastwise.
case, the loss was quite beyond the control of the CC. Upon reaching Mla. Bay, while approaching
Even CC are not made absolute insurers against all Pier 18, one of the barges, "Coastwise 9," struck an
risks of travel and of transport of goods, and are not unknown sunken object. The forward buoyancy
liable for acts or events which cannot be foreseen or compartment was damaged, and water gushed in
are inevitable, provided that they shall have complied through a hole 2 inches wide and 22 inches long. As a
with the rigorous standard of extraordinary diligence. consequence, the molasses at the cargo tanks were
contaminated and rendered unfit for the use it was
intended. This prompted the consignee, Pag-asa to
Planters Products vs CA, G.R. 101503 (Sept. 15, 1993) reject the shipment of molasses as a total loss.
Thereafter, Pag-asa filed a formal claim w/ the insurer
F: Planters purchased urea fertilizer from of its cargo, herein pvt. resp., Phil. Gen. Insurance Co.
Mitsubishi, New York. The fertilizer was shipped on MV (Philgen) and against the carrier, herein petitioner
Sun Plum, which is owned by KKKK, from Alaska to San Coastwise. Coastwise denied the claim and it was
Fernando, La Union. A time charter party was entered Philgen w/c paid the consignee the amount of
into between Mitsubishi as shipper/charterer and KKKK P700,000 representing the value of the damaged cargo
as shipowner. Upon arrival in the port, PPI unloaded of molasses.
the cargo. It took PPI 11 days to unload the cargo. PPI
PAGE 14
TRANSPORTATION AND MARITIME LAW
In turn, Phil-gen filed an action agsint or its duty to observe extraordinary diligence as
Coastwise bef. RTC-Mla. seeking to recover the prescribed in this Section.
P700,000 it paid to Pag-asa. RTC ruled in favor of
Philgen. CA affirmed the RTC decision. Hence, this 4 Agbayani:
petition.
Common carriers are subject to legislative
RULINGS: (1) Bareboat charter and contract of regulation.-- The business of a common carrier holds
affreightment, difference; Coastwise, by the contract such a peculiar relation to the public interest that
of affreightment, was not converted into a private there is superinduced upon it the right of public
carrier, but remained a common carrier.-- Under the regulation. The business of a common carrier is
demise or bareboat charter of the vessel, the charterer affected with public interest. When, therefore, one
will generally be regarded as the owner of the voyage devotes his property to a use in which the public has
or service stipulated. The charterer mans the vessel an interest, he, in effect, grants to the public an
w/ his own people and becomes the owner pro hac interest in that use, and must submit to be controlled
vice, subject to liability to others for damages caused by the public for the common good, to the extent of
by negligence. To create a demise, the owner of a the interest he had thus created.
vessel must completely and exclusively relinquish
possession, command and navigation thereof to the Limitation on power to regulate.-- Such
charterer; anything short of such a complete transfer regulations must not have the effect of depriving an
is a contract of affreightment (time or voyage charter owner of his property without due process of law, nor
party) or not a charter party at all. of confiscating, or appropriating private property
A contract of affreightment is one in w/c the without just compensation, nor of limiting or
owner of the vessel leases part or all of its space to prescribing irrevocably vested rights or privileges
haul goods for others. It is a contract for special lawfully acquired under a charter or franchise [just
service to be rendered by the owner of the vessel and compensation, due process of law]
under such contract the general owner retains the
possession, command and navigation of the ships, the When judiciary may interfere with legislative
charterer or freighter merely having use of the space regulation of common carriers.-- The judiciary
in the vessel in return for his payment of the charter ought not to interfere with legislative regulations
hire. xxx unless they are so plainly and palpably unreasonable
xxx as to make their enforcement equivalent to the taking
Although a charter party may transform a of property for public use without such compensation
common carrier into a private one, the same, however, as under all circumstances is just both to the owner
is not true in a contract of affreightment on account of and to the public.
the aforementioned distinctions bet. the two.
Petitioner admits that the contract it entered
into w/ the consignee was one of afreightment. We Pantranco vs PSC, 70 Phil 221
agree. Pag-asa only leased 3 of petitioner's vessels, in
order to carry cargo from one point to another, but the F: Pantranco has been engaged for the past 20
possession, command and navigation of the vessels years in the business of transporting passengers by
remained w/ petitioner. means of motor vehicles in accordance with the CPCN
issued to it. It filed with the PSC an application for
(2) Petitioner is liable for breach of contract of authorization to operate 10 addtl. new trucks. The
carriage, having failed to overcome the presumption application was granted with two conditions : (1) that
of negligence w/ the loss and destruction of goods it the CPCN would be valid for only 25 years and (2) that
transported, by proof of its exercise of extraordinary the service can be acquired by the govt. upon
diligence.-- Mere proof of delivery of goods to a carrier payment of cost price of its useful eqpt. less
and the subsequent arrival of the same goods at the reasonable depreciation. Pantranco challenged the
place of destination in bad order makes for a prima constitutionality of Art. 15, CA 146 as an undue
facie case against the carrier. Jesus Constantino, the delegation of legislative powers.
patron of the vessel "Coastwise 9" admitted that he
was not licensed. This violates the rule in the Code of Issue : WON the PSC may prescribe the 2 conditions as
Commerce (Art. 609) w/c requires that patrons must a prerequisite to the issuance of the CPCN.
"have the legal capacity to contract in accordance w/
this code, and prove the skill, capacity and Held : Yes. CA 146 provides a sufficient standard,
qualifications necessary to command and direct the which is public interest, by which the PSC is guided in
vessel xxx and must be qualified xxx for the discharge imposing such conditions.
of the duties of the position. xxx" Coastwise cannot The business of a common carrier holds such a
safely claim to have extraordinary diligence, by peculiar relation to the public interest that there is
placing a person whose navigational skills are superinduced upon it the right of public regulation.
questionable, at the helm of the vessel w/c eventually When private property is affected with a public
met the fateful accident. xxx Had the patron been interest, it ceases to be juris privati only. When,
licensed, he could be presumed to have both the skill therefore, one devotes his property to a use in which
and the knowledge that would have prevented the the public has an interest, he, in effect, grants to the
vessel's hitting the sunken derelict ship that lay on public an interest in that use, and must submit to be
their way to Pier 8. RAM. controlled by the public for the common good, to the
extent of the interest he had thus created. He may
withdraw his grant by discontinuing the use, but so
2. Nature of business; power of State long as he maintains the use, he must submit to
to regulate control. Indeed this right is so far beyond question that
it is settled that the power of the state to exercise
Art. 1765. The [Public Service legislative control over public utilities may be
Commission] Board of Transportation may, on its exercised through the board of commissioners. This
own motion or on petition of any interested right of the state to regulate public utilities is founded
party, after due hearing, cancel the certificate upon the police power, and statutes for the control and
of public convenience granted to any common regulation of utilities are a legitimate exercise thereof,
carrier that repeatedly fails to comply with his for the protection of the public as well as the utilities
themselves. Such statutes are not unconstitutional,
PAGE 15
TRANSPORTATION AND MARITIME LAW
Art. 1733. Common carriers, from the Art. 1756. In case of death
nature of their business and for reasons of of or injuries to passengers,
public policy, are bound to observe common carriers are presumed to
extraordinary diligence in the vigilance over the have been at fault or to have
goods and for the safety of the passengers acted negligently, unless they
transported by them, according to the prove that they observed
circumstances of each case. extraordinary diligence as
Such extraordinary diligence in the prescribed in articles 1733 and
vigilance over the goods is further expressed in 1755.
Articles 1734, 1735, and 1745, Nos. 5,6, and 7,
while the extraordinary diligence for the safety 4 Agbayani:
of the passengers is further set forth in Articles
1755 and 1756. Extraordinary diligence required of common
carriers.-- The law requires CC to exercise extra-
Art. 1734. Common carriers ordinary diligence which means that they must render
are responsible for the loss, service with the greatest skill and utmost foresight.
destruction, or deterioration of The extra-ordinary diligence required of carriers in the
the goods, unless the same is due handling of the goods of the shippers and consignees
to any of the following causes last from the time the cargoes are loaded in the
only: vessels until they are discharged and delivered to the
(1) Flood, storm, consignees.
earthquake, lightning, or other
natural disaster or calamity; Reasons for requiring extra-ordinary diligence.--
(2) Act of the public enemy The nature of the business of common carriers and the
in war, whether international or exigencies of public policy demand that they observe
civil; extra-ordinary diligence; the business of CC is
(3) Act or omission of the impressed with a special public duty and therefore
shipper or owner of the goods; subject to control and regulation by the state. The
(4) The character of the public must of necessity rely on the care and skill of
goods or defects in the packaging CC in the vigilance over the goods and safety of the
or in the containers; passengers
(5) Order or act of
competent public authority. Rigorous law on common carriers not applicable
to special employment as carrier.-- The laws
Art. 1735. In all cases other applicable to CC are rigorous and should not be
than those mentioned in Nos. 1, 2, extended to a person who has neither expressly
3, 4 and 5 of the preceding article, assumed that character, nor by his conduct and from
if the goods are lost, destroyed or the nature of his business justified the belief on the
deteriorated, common carriers are part of the public that he intended to assume it.
presumed to have been at fault or
to have acted negligently, unless Registered owner primarily and solidarily liable
they prove that they observed with driver, under the "kabit system."--
extraordinary diligence as Registered owner is primarily and solidarily liable for
required in Art. 1733. the damage caused by the vehicle registered in his
name, even if the said vehicle had already been sold,
Art. 1745. Any of the ff. or leased or transferred to another person who was, at
similar stipulations shall be the time of the accident, actually operating the
considered unreasonable, unjust vehicle. The operator of record continues to be the
and contrary to public policy: operator of the vehicle in contemplation of law, as
xxx regards the public and third persons, and as such is
(5) That the common responsible for the consequences incident to its
carrier shall not be responsible for operation; such owner/operator of record is held in
the acts or omissions of his or its contemplation of law as the employer of the driver.
employees;
(6) That the common Kabit system.-- One whereby a person who has
carrier's liability for acts been granted a certificate of public convenience allows
committed by thieves, or of other persons who own vehicles to operate them
robbers who do not act with grave under such license, for a fee or percentage of the
or irresistible threat, violence or earnings. This is contrary to public policy, and
force, is dispensed with or therefore, void and inexistent; "this is a pernicious
diminished; system that cannot be too severely condemned; it
(7) That the common constitutes an imposition upon the good faith of the
carrier is not responsible for the govt."
PAGE 16
TRANSPORTATION AND MARITIME LAW
(3) a carrier is presumed to have been at fault Ratio: The principle of last clear chance would call for
or to have acted negligently in case of death of, or application in a suit between the owners and drivers of
injury to, passengers, it being it duty to prove that it two colliding vehicles. It does not arise where a
exercised extra-ordinary diligence passenger demands responsibility from the carrier to
(4) the carrier is not an insurer against all risks enforce its contractual obligations. For it would be
of travel. inequitable to exempt the negligent driver of the
jeepney and its owners on the ground that the other
driver was likewise guilty of negligence.
Fores vs Miranda, 105 Phil 266 On the presumption that the drivers who bump
the rear of another vehicle are guilty and the cause of
F: Respondent, a professor of Fine Arts, was a the accident, unless contradicted by other evidence,
passenger of a jeep registered in the name of Fores the SC held that the jeep made a sudden U-turn which
but actually operated by Carmen Sackerman. While was so abrupt that the other driver de los Reyes did
the jeep was descending at Sta. Mesa bridge at not anticipate the sudden U-turn.
excessive speed, the driver lost control of it causing it The proximate cause of the accident was the
to swerve and hit the bridge wall resulting to injuries negligence of Manalo and the spouses Mangune. In
to its passengers including respondent who suffered a culpa contractual, the carrier is presumed to have
fracture of the upper right humerus. In an action for been at fault or to have acted negligently, and this
damages, the CFI awarded actual damages. The CA disputable presumption may only be overcome by
reduced the actual damages and added moral evidence that he had observed extra-ordinary
damages and attorney's fees. diligence or that the death or injury of the passenger
was due to a fortuitous event.
Issue : WON the approval of the PSC is necessary for The driver cannot be held jointly liable with the
the sale of a public service vehicle even without owners of the jeep in case of breach of the contract of
conveying therewith the authority to operate the carriage. The contract of carriage is between the
same. YES. carrier and the passenger, and in the event of
contractual liability, the carrier is exclusively
Held : A transfer made without the requisite approval responsible therefore to the passenger, even if such
of the PSC is not effective and binding in so far as the breach be due to the negligence of the driver. To make
responsibility of the grantee under the franchise in the driver jointly liable would make the carrier's
relation to the public is concerned. The law was liability personal instead of merely vicarious and
designed primarily for the protection of the public consequently, the victim is entitled to recover only the
interest. share which corresponds to the driver.
Phil. Rabbit Bus Lines vs IAC, 189 SCRA 159 Art. 1755. A common carrier is bound to
carry the passengers safely as far as human
F: Several passengers boarded the jeepney care and foresight can provide, using the
owned by spouses Mangune and driven by Manalo at utmost diligence of very cautious persons, with
Dau, Pampanga bound for Carmen, Rosales, a due regard for all circumstances.
Pangasinan. Their contract with Manalo was P24 for
the trip. Upon reaching Tarlac, the right wheel of the
jeepney was detached, so it was running in an 5. Laws applicable
unbalanced position. Manalo stepped on the brake,
making a sudden U-turn and encroaching on the right Art. 1766. In all matters not regulated by
of way of the other vehicles. The Phil. Rabbit bus this Code, the rights and obligations of common
bumped from behind the jeepney. As a result of the carriers shall be governed by the Code of
collision, 3 persons died while the others sustained Commerce and by special laws.
injuries. Cases were filed against the spouses
Mangune, Manalo, Phil. Rabbit and De los Reyes 4 Agbayani:
(driver).
New Civil Code primarily governs common
Issue: Who should be held liable? the Mangunes and carriers.-- The Provisions of the Civil Code [1732-
Filriters Guaranty Assurance Corp. (Insurance co.) 1766] primarily govern common carriers and the
provisions of the Code of Commerce [Overland
PAGE 18
TRANSPORTATION AND MARITIME LAW
Transportation and Maritime Commerce] and special of the goods unless the same is due to any of the ff.
laws [Carriage of Goods by Sea Act; Salvage Act] have causes only (Art. 1734, NCC):
only subsidiary application to common carriers. "(1) Flood, storm, earthquake, lightning or
other natural disaster or calamity; xxx"
Art. 1753, NCC. The law of the country to The Carrier claims that the loss of the vessel
which the goods are to be transported shall by fire exempts it from liability under the phrase
govern the liability of the common carrier for "natural disaster or calamity." However, we are of the
their loss, destruction or deterioration. opinion that fire may not be considered a natural
disaster or calamity. This must be so as it arises
The provisions of the NCC primarily govern almost invariably from some act of man or by human
contracts of carriage of goods from foreign ports to means. It does not fall within the category of an act of
Philippine ports God unless caused by lightning or by other natural
disaster or calamity. It may even be caused by the
actual fault or privity of the carrier.
As the peril of fire is not comprehended within
the exceptions in Article 1734, then Article 1735
provides that in all cases other than those mentioned
Eastern Shipping Lines vs IAC 150 SCRA 463 in Art. 1734, the CC shall be presumed to have been at
fault or to have acted negligently, unless it proves that
F: These two cases, both for the recovery of value it has observed the extra-ordinary diligence required
of cargo insurance, arose from the same incident, the by law.
sinking of the M/S ASIATICA when it caught fire, In this case, the respective Insurers, as
resulting in the total loss of ship and cargo. subrogees of the cargo shippers, have proven that the
In the first case, the M/S ASIATICA, a vessel transported goods have been lost. Petitioner carrier
operated by petitioner Eastern Shipping Lines, loaded has also proven that the loss was caused by fire. The
at Kobe, Japan for transportation to Manila 5,000 burden then is upon Petitioner carrier to prove that it
pieces of colorized lance pipes in 28 packages valued has exercised the extra-ordinary diligence required by
at P256,039 consigned to Phil. Blooming Mills and 7 law.
cases of spare parts valued at P92,361.75 consigned Having failed to discharge the burden of
to Central Textile Mills. Both sets of goods were proving that it had exercised the extra-ordinary
insured against marine risk for their stated value with diligence required by law, Petitioner Carrier can not
respondent Devt. Insurance and Surety Corporation. escape liability for the loss of the cargo.
In the second case, the same vessel took on And even if fire were to be considered a
board 128 cartons of garment fabrics and accessories, natural disaster within the meaning of Art. 1734, it is
in 2 containers, consigned to Mariveles Apparel required under Art. 1739 of the same Code that the
Corporation, and 2 cases of surveying instruments natural disaster must have been the proximate and
consigned to Aman Enterprises and General only cause of the loss, and that the carrier has
Merchandise. The 128 cartons were insured by exercised due diligence to prevent or minimize the
respondent Nisshin Fire and Marine Insurance Co. and loss before, during or after the occurrence of the
Dowa Fire & Marine Insurance Co. disaster. This petitioner carrier has also failed to
En route for Manila, the ship caught fire and establish satisfactorily.
sank. The insurers paid the corresponding marine Nor may Petitioner Carrier seek refuge from
insurance values and were subrogated to the rights of liability under the COGSA. It is provided therein that:
the latter as the insured. They filed suits against the
petitioner Carrier and won (affirmed by the CA). "Sec.4 (2). Neither the carrier nor the ship
Petitioner carrier denies liability on the ff. grounds: shall be responsible for loss or damage arising or
(a) that the loss was due to an extraordinary resulting from: (b) Fire, unless caused by the actual
fortuitous even which is an exempting circumstance fault or privity of the carrier."
under Sec. 4(2)(b) of the Carriage of Goods by Sea Act
(COGSA); In this case, both the TC and the CA, in effect,
(b) that when fire is established, the burden of found, as a fact, that there was "actual fault" of the
proving negligence is shifted to the cargo shipper. carrier shown by lack of diligence in that when the
smoke was noticed, the fire was already big; that the
Issues: (1)Which law should govern : the Civil Code or fire must have started 24 hrs before the same was
the Carriage of Goods by Sea Act. noticed; and that after the cargoes were stored in the
(2)Who has the burden of proof to show hatches, no regular inspection was made as to their
negligence of the carrier. condition during the voyage.
The foregoing suffices to show that the
Ratio : (1) The law of the country to which the goods circumstances under which the fire originated and
are to be transported governs the liability of the spread are such as to show that Petitioner carrier or its
common carrier in case of their loss, destruction or servants were negligent in connection therewith.
deterioration. As the cargoes in question were Consequently, the complete defense afforded by the
transported from Japan to the Philippines, the liability COGSA when the loss results from fire is unavailing to
of Petitioner Carrier is governed primarily by the Civil petitioner carrier.
Code. However, in all matters not regulated by said
Code, the rights and obligations of common carriers
shall be governed by the Code of Commerce and B. Common Carriers
special laws. Thus, the COGSA, a special law, is
suppletory to the provisions of the Civil Code. 1. Liability and presumption of
negligence
(2) Under the Civil Code, common carriers,
from the nature of their business and for reasons of Art. 1733. Common carriers, from the
public policy, are bound to observe extra-ordinary nature of their business and for reasons of
diligence in the vigilance over goods, accdg. to all the public policy, are bound to observe
circumstances of each case. Common carriers are extraordinary diligence in the vigilance over the
responsible for the loss, destruction, or deterioration goods and for the safety of the passengers
PAGE 19
TRANSPORTATION AND MARITIME LAW
transportation of passengers from all possible perils. loss of the other. Mirasol filed claims, but Dollar
A CC is not an insurer of the safety of the passengers refused to pay alleging that the damage was caused
and is not absolutely and at all events to carry them by sea water and that Mirasol entered into a contract
safely and without injury. providing that Dollar will not be held liable for loss or
damage of merchandise resulting from "acts of God" or
Ynchausti Steamship Co. vs Dexter 41 Phil 289 "perils of the sea," and that in no case shall it be held
liable beyond $250 for any article not enclosed in a
F: The Govt. of the Philippines, acting through the package unless a higher value is stated therein and ad
Insular Purchasing Agent, employed the services of valorem freight paid or assessed thereon. The LC ruled
petitioner, Ynchausti Steamship Co., a common carrier in favor of Mirasol for payment of P 2,080.
for the transportation, on board the steamship Venus,
from the port of Manila to the port of Appari, Cagayan, Issue : WON Dollar may be held liable. YES.
of consignments of merchandise, consisting of 30
cases of Wine Rose mineral oil of two 5-gallon cans to Ratio: There was no claim or pretense that Mirasol
the case. On another occasion, the Govt. also sent 96 signed the bill of lading or that he knew of its
cases of Cock brand mineral oil, ten gallons to the contents. In that situation, he was not legally bound by
case. The goods were delivered by the shipper to the the clause limiting Dollar's liability. Where it appears
carrier which accordingly received them, and to that a bill of lading was issued to a shipper containing
evidence the contract of transportation, the parties a clause limiting the carrier's liability, printed in fine
duly executed and delivered what is popularly called letters on the back of the bill of lading, which the
Govt. bill of lading, whereby it was stipulated that the shipper did not sign and of which he was not advised,
carrier, Ynchausti, received the above-mentioned the shipper is not bound by the clause limiting liability
supplies in apparent good condition, obliging itself to and the stipulation is void or against public policy.
carry said supplies to the place agreed upon. Shippers who are forced to ship goods in an
Both shipments arrived with one case missing ocean liner have legal rights. When the goods are
per shipment. Ynchausti denied negligence. However, delivered on board the ship in good order and
upon investigation, the Insular Auditor decided that condition and the carrier delivers them to the shipper
the leakages were due to Ynchausti's negligence. The in bad order and condition, in an action for damages,
Insular Auditor deducted the amount of the lost goods the burden of proof shifted and it devolves upon the
from the entire amount payable to Ynchausti. carrier to both allege and prove that the goods were
Petitioner refused to accept the warrant. Hence, this damaged by reason of some act which legally exempts
action was filed. it from liability.
Having received the boxes in good condition,
Issue : Is Ynchausti liable for the loss? YES. its legal duty was to deliver them in the same
condition as received. Dollar, having admitted that
Ratio : Sec. 646 of the Administrative Code provided the goods were damaged while in transit and in its
that when Govt. property is transmitted from one possession, the burden of proof then shifted and it
source to another by carrier, it shall be upon proper devolved upon him to allege and prove that the
bill of lading or receipt, from such carrier; and it shall damage was caused by reason of some fact which
be the duty of the consignee or his representative to exempted it from liability. As to when and how the
make all notation of any evidence of loss, shortage, or goods were damaged in transit is a matter peculiarly
damage, on the bill of lading or receipt before within the knowledge of the carrier and its employees.
accomplishing it. It is admitted by petitioner that the To require Mirasol to prove such, would force him to
consignee, at the time the goods were delivered, rely upon the EEs of Dollar's ship, which in legal effect
noted the losses in the respective bill of ladings. Such would be to say that he could not recover damages at
notation made in obedience to the code, is competent all.
evidence to show that the shortage did exist. Since Dollar was not even able to prove that
Inasmuch as the fact of loss was proven, it results in the goods were wet with sea water due to a fortuitous
the presumption that the petitioner was to blame for event, it must be presumed that the carrier was liable.
the loss; and it was incumbent upon the petitioner to
rebut that presumption by proving that the loss was
not due to any fault or negligence of the petitioner. 2. Exemption from liability
The mere proof of delivery of goods in good
order to a carrier, and of their arrival at the place of Proof of the delivery of the goods in good order
destination in bad order, makes out a prima facie case to a carrier, and of their arrival at the place of
against the carrier, so that if no explanation is given destination short or in bad order, makes a prima facie
as to how the injury occurred, the carrier must be held case; it is incumbent on the carrier, in order to
responsible. It is incumbent upon the carrier to prove exonerate itself, to prove that the loss or injury was
that the loss was due to accident or some other due to some circumstances inconsistent with its
circumstance inconsistent with its liability. Indeed, if liability
the Govt. had instituted an action in court against
petitioner to recover the value of the oil lost, it would, (a) Natural disaster
based on the facts, be entitled to judgment. In the
absence of proof showing that the carrier was not at Art. 1734. Common carriers are
fault for the loss, the Insular Auditor was entitled to responsible for the loss, destruction, or
withhold the amount admittedly due to the petitioner deterioration of the goods, unless the same is
for the freight charges, a sum sufficient to cover the due to any of the ff. causes only:
value of the oil lost in transit. (1) Flood, storm, earthquake, lightning,
or other natural disaster or calamity;
xxx
Mirasol vs Dollar 53 Phil 124
Art. 1739. In order that the common carrier
F: Mirasol was the owner of two cases of may be exempted from responsibility, the natural
Encyclopedia Brittanica shipped in good order and disaster must have been the proximate and only cause
condition on board Dollar's steamship, President of the loss. However, the common carrier must
Garfield, to be transported from New York to Manila. exercise due diligence to prevent or minimize loss
The books arrived in bad order and damaged before, during and after the occurrence of flood, storm,
condition, resulting in total loss of one case and partial or other natural disaster in order that the common
PAGE 21
TRANSPORTATION AND MARITIME LAW
carrier may be exempted from liability for the loss, Tan Chiong San vs Ynchausti & Co., 22 Phil 152
destruction, or deterioration of the goods. The same
duty is incumbent upon the common carrier in case of F: Ynchausti and Co. received from Ong Bien Sip
an act of the public enemy referred to in Art. 1734 (2). in Manila 205 bundles of goods to be conveyed by YC's
steamer to Gubat in Sorsogon, and there to be
Art. 1740. If the CC negligently incurs in transhipped to another vessel belonging to YC and
delay in transporting the goods, a natural transported to Catarman, in Samar. As the lorcha
disaster shall not free such carrier from Pilar, which was to transport the goods to Catarman
responsibility. was not yet in Gubat when the cargo arrived, the cargo
was stored in YC's warehouse.
Art. 361. Merchandise shall be Several days later, the lorcha arrived and the
transported at the risk and venture of the goods were loaded. However, as the lorcha was being
shipper, if the contrary has not been expressly towed, a storm arose, drove the lorcha to the shore
stipulated. and wrecked it, scattering the goods on the beach.
As a consequence, all the losses and YC's laborers proceeded to gather up the goods. As it
deteriorations which the goods may suffer was impossible to preserve the goods, they were sold
during the transportation by reason of at a public auction. Plaintiff filed an action for
fortuitous event, force majeure, or the inherent damages for P 20,000. LC decided that plaintiff was
nature and defect of the goods, shall be for the entitled only to P 14,642.63.
account and risk of the shipper.
Proof of these accidents is incumbent Issues: (1) WON the carrier is relieved from liability
upon the carrier. (Code of Commerce.) due to force majeure. YES.
(2) WON the carrier is liable for the loss of the
cargo and for failure to deliver the same at the place
of destination. NO.
4 Agbayani: Ratio: (1) It is a proven fact that the loss or damage to
the goods shipped on the said lorcha was due to the
Effect of New Civil Code.-- Transportation of the force majeure which caused the wreck of the said
merchandise "at the risk and venture of the shipper" craft. Accdg. to Art. 361 of the Code of Commerce,
means that the shipper will suffer losses and merchandise shall be transported at the risk and
deterioration arising from fortuitous event, force venture of the shipper, unless the contrary be
majeure, or inherent nature and defects of the goods. expressly stipulated. No such stipulation appears of
It does not mean that the carrier is free from liability record, therefore, all damages and impairment
for losses and deterioration arising from his negligence suffered by the goods in transportation, by reason of
or fault, w/c is presumed. Thus construed, par. 1 of accident, force majeure, or by virtue of the nature or
Art. 361 is not inconsistent with Art. 1735 of the NCC. defect of the articles, are for the account and risk of
the shipper. The carrier is exempt from liability if he is
Requisites for defense of natural disaster: able to prove, as he did prove, that the loss or
destruction of the merchandise was due to accident
1. Art. 1739 -- natural disaster must have been and force majeure and not to fraud, fault or negligence
the proximate and only cause of the loss on the part of the captain or owner of the ship -- that
2. The CC must exercise due diligence to the loss was a result of the stranding of Pilar because
prevent or minimize the loss before, during and after of the hurricane that overtook it.
the occurrence of flood, storm, or other natural
disaster. If the CC does not exercise due diligence in (2) The record bears no proof that said loss
minimizing the loss, he may yet be held liable caused by the destruction of Pilar occurred through the
notwithstanding the fact that the loss, destruction or carelessness or negligence of the defendant, its
deterioration of the goods arose out of natural agents or patron of the lorcha. The defendant as well
disaster. as its agents and patron had a natural interest in
3. Art. 1740 -- the CC must not be in delay. If preserving the craft -- an interest equal to that of the
the CC incurs in delay, a natural disaster shall not free plaintiff. The record discloses that Pilar was manned
it from responsibility. Under Art. 1165 par. 3, if the by an experienced patron and a sufficient number of
obligor incurs delay, he shall be responsible for any crewmen plus the fact that it was fully equipped. The
fortuitous event until he has effected delivery. crewmen took all the precautions that any diligent
man should have taken whose duty it was to save the
However, if between the delay or refusal of the boat and its cargo, and by the instinct of self-
CC to transport the goods and the loss of the goods preservation of their lives. Considering, therefore, the
due to an act of God there intervened the shipper's conduct of the men of the defendant Pilar and of its
negligence, thus causing a break in the chain of agents during the disaster, the defendant has not
causation between the act of God which caused their incurred any liability whatsoever for the loss of the
loss and the CC's fault, the act of God is the proximate goods, inasmuch as such loss was the result of a
cause of the loss and the carrier's delay or refusal to fortuitous event or force majeure, and there was no
transport the goods, is merely the remote cause. In negligence or lack of care or diligence on the part of
such cases, the shipper is not even entitled to set up the defendant or its agents.
the claim of contributory negligence. It is then Loss of a ship and of its cargo, in a wreck due
necessary that it be established that the CC was guilty to accident or force majeure must, as a general rule,
of a willful or negligent act and that between this fall upon their respective owners, except in cases
willful or negligent act and the act of God, no where the wrecking or stranding of the vessel occurred
negligence on the part of the shipper intervened. through malice, carelessness or lack of skill on the
part of the captain or because the vessel put to sea is
Accident due to defects of carrier not caso insufficiently repaired and prepared. (Art. 841, Code of
fortuito.-- Accidents caused either by defects in the Commerce)
carrier or through the negligence of the carrier is not
caso fortuito. The passenger or shipper has every
right to presume that the carrier is perfectly in good Martini Ltd. vs Macondray & Co., 39 Phil 934
condition and could transport him safely and securely
to his destination F: Martini shipped on board the Easter, owned by
the Australian Steamship Co. represented in the
PAGE 22
TRANSPORTATION AND MARITIME LAW
Philippines by Macondray, 219 cases of chemicals for might have been avoided by the exercise of
Kobe, Japan. Upon arrival in Kobe, it was discovered reasonable skill and attention on their part. However,
that the shipment was damaged by rain and sea water. in this case, where the shipper consented to the
Martini claims that it was the ship's duty to stow the conditions of carriage, the burden of proof is shifted to
cargo in the hold and not to place it on the deck the shipper.
exposed to the elements. Macondray denied any As there is no allegation or proof of negligence
responsibility on the ground that the contract of on the part of the carrier in protecting the cargo from
affreightment clearly states that the cargo was to be rain or sea water and as the complaint clearly
carried on deck at shipper's risk as evidenced by the indicates that the damage was due to it being kept on
words "on deck at shipper's risk" stamped on the bill of deck, and such manner of carriage having been
lading. consented to by the plaintiff, the defendant is
Ordinarily, when a shipper wishes to avail of absolved. It is not permissible for the court, in the
space on board a ship, he first obtains a shipping order absence of any allegation or proof of negligence, to
from the ship owner. This shipping order is authority attribute negligence to the ship's employees in the
for the ship's officers to accept the shipper's cargo. matter of protecting the goods from rains and storms.
When signed by the ship's mate, this would constitute
the mate's receipt showing that the cargo has been Eastern Shipping Lines vs IAC, 150 SCRA 463
taken aboard. The shipper would then present this
receipt to the agent of the ship's company who would Issue: Should petitioner be exempted from liability
then issue the bill of lading. However, in this case, under Art. 1734 on the ground that the loss of the
the shipper obtained the bill of lading without first vessel by fire comes under the phrase "natural
presenting the mate's receipt (so as to expedite the disaster or calamity?" NO.
negotiation of the bill with the banks). By doing so, the
shipper entered into a written guaranty, binding Ratio: Fire may not be considered a natural disaster or
himself to abide by the terms of the mate's receipt calamity. This must be so as it arises almost
which in this case obtained a stipulation that the cargo invariably from some act of man or by human means.
shall be shipped on or under the deck at the option of It does not fall within the category of an act of God
the ship and at shipper's risk. unless caused by lightning or by another natural
In this case, plaintiff protested the disaster or calamity. It may even be caused by the
arrangement but when the defendant informed them actual fault or privity of the carrier. Art. 1680 which
that the cargo could be discharged if they were considers fire as an extra-ordinary fortuitous event
dissatisfied, plaintiff did not order its discharge. The does not apply since it refers only to leases of rural
CFI ruled for Martini. lands where a reduction of rent is allowed when more
than 1/2 of the fruits have been lost due to such event.
Issues: (1) WON plaintiff consented to having the As the peril of fire is not comprehended under
cargo carried on deck. YES. Art. 1734, Art. 1735 applies and the CC shall be
(2) WON defendant was negligent and thus presumed to have been at fault or to have acted
liable for the damage to the cargo. NO. negligently, unless it proves extra-ordinary diligence.
The burden is on the CC.
Ratio: While Martini would have greatly preferred for The LC and the CA found that there was lack of
the cargo to be carried under the hatches, they diligence on the part of CC amounting to actual fault.
nevertheless consented for it to go on deck. Codina, Even if the fire were to be considered a natural
an EE of Martini, if attentive to the interests of his disaster under Art. 1734, it is required under Art. 1739
company, must have known from the tenor of the that the disaster must have been the proximate and
guaranty which he signed that defendant had reserved only cause of the loss, and that the CC exercised due
the right to carry the cargo on deck. The bill of lading diligence to prevent or minimize the loss before,
plainly showed that the cargo would be so carried. during or after the occurrence of the disaster. Nor may
The plaintiff was duly notified as to the manner by petitioner seek refuge under COGSA since fire is only
which was the cargo was to be shipped. They only an exempting circumstance if not caused by actual
protested after the bill had been negotiated at the fault or privity of the carrier.
bank and even when there was time to stop the
shipment, they failed to give the necessary Issue: On the $500 Per Package Limitation
instructions thereby manifesting acquiescence.
In every contract of affreightment, losses by Ratio: Petitioner carrier avers that its liability should
dangers of the seas are excepted from the risk which not exceed $500 per package as provided in Section
the carrier takes upon himself whether the exception 4(5) of the COGSA, which reads:
is expressed in contract or not. The exception is made
by law and falls within the general principle that no "(5) Neither the carrier nor the ship shall in
one is responsible for fortuitous events. But then this any event be or become liable for any loss or damage
general law is subject to the exception that when the to or in connection with the transportation of goods in
inevitable accident is preceded by fault of the carrier, an amount exceeding $500 per package xxx or in case
without which it would not have happened, then he of goods not shipped in packages, per customary
becomes responsible for it. freight unit, or the equivalent of that sum in other
The carrier is responsible for safe and proper currency, unless the nature and value of such goods
storage of the cargo, and there is no doubt that by the have been declared by the shipper before shipment
general maritime law he is bound to secure the cargo and inserted in the bill of lading."
safely under deck. If he carries the goods on deck
without the consent of the shipper and the goods are Article 1749, NCC also allows the limitations of
damaged or lost in consequence of being exposed, the liability in that it provides that "a stipulation that the
carrier cannot protect himself by showing that they CC's liability is limited to the value of the goods
were damaged or lost by the dangers of the sea. appearing in the bill of lading, unless the shipper or
When the shipper consents to his goods being carried owner declares a greater value, is binding."
on deck, he takes the risk upon himself. It is to be noted that the Civil Code does not of
If goods shipped are found to have been itself limit the liability of the CC to a fixed amount per
damaged, the burden of proof is on the carrier to show package, although the Code expressly permits a
that the damage was due to fortuitous events. But, stipulation limiting such liability. Thus, the COGSA,
even if the damage is caused by one of the excepted which is suppletory to the Civil Code, steps in and
causes, the carrier is still responsible if the injury supplements the Code by establishing a statutory
PAGE 23
TRANSPORTATION AND MARITIME LAW
provision limiting the carrier's liability in the absence thereof being the negligence of the common
of a declaration of a higher value of the goods by the carrier, the latter shall be liable in damages,
shipper in the bill of lading. The provisions of the which, however, shall be equitably reduced.
COGSA on limited liability are as much a part of a bill
of lading as though physically in it and as much a part
thereof as though placed therein by agreement of the Act or omission of the shipper.-- The act or
parties. omission of the shipper must be the proximate cause
In these cases, there is no stipulation in the of the loss, destruction or deterioration of the goods.
respective bills of lading limiting the carrier's liability If the shipper merely contributed to the loss,etc. and
for the loss or destruction of the goods. Nor is there a the proximate cause is still the negligence of the CC,
declaration of a higher value of the goods. Hence, the CC shall still be liable for damages although the
petitioner carrier's liability should not exceed $500 per damages shall be equitably reduced.
package, or its peso equivalent, at the time of the
payment of the value of the goods lost, but in no case
"more than the amount of damage actually sustained." (d) Character of goods, etc.
The liability was computed as: 128 cartons
(shipping unit) x $500 = $64,000. The cartons and not Art. 1734. Common carriers are
the containers should be considered as the shipping responsible for the loss, destruction, or
unit. deterioration of the goods, unless the same is
due to any of the following causes only:
(4) The character of the goods or defects
Dissenting : Yap, J. in the packaging or in the containers;
There is no evidence that the containers were
carrier- supplied. The shipper must have saved on Art. 1742. Even if the loss, destruction,
freight charges by using containers for shipment. The or deterioration of the goods should be caused
containers should be considered as the shipping unit. 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
(b) Act of public enemy forestall or lessen the loss.
Art. 1734. Common carriers are Art. 366. Within the twenty four hours
responsible for the loss, destruction, or following the receipt of the merchandise, a
deterioration of the goods, unless the same is claim may be brought against the carrier on
due to any of the following causes only: account of damage or average found therein on
xxx opening the packages, provided that the signs
(2) Act of the public enemy in war, of the damage or average giving rise to the
whether international or civil; claim may not be known from the exterior part
of the packages, and in case that they may be
Art. 1739. In order that the common so ascertained, said claim shall only be
carrier may be exempted from responsibility, admitted at the time of the receipt of the
the natural disaster must have been the packages.
proximate and only cause of the loss. However, After the periods mentioned have
the common carrier must exercise due diligence elapsed, or after the transportation charges
to prevent or minimize loss before, during and have been paid, no claim whatsoever shall be
after the occurrence of flood, storm, or other admitted against the carrier with regard to the
natural disaster in order that the common condition in which the goods transported were
carrier may be exempted from liability for the delivered. (Code of Commerce.)
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 Claims for damages must be made at the time
referred to in Art. 1734 (2). the goods are delivered unless the indications of the
damage cannot be ascertained from the exterior of the
4 Agbayani: package, in which case such written claims must be
made w/in 24 hours from delivery
Acts of public enemy.-- This defense is not
absolute. Under 1739, in order for the CC to be Rule: As long as the damage to the goods
exempted from liability, (1) the act of the public was due purely to the inherent nature or defect of the
enemy must have been the proximate and only cause; goods or of the containers thereof, the CC cannot be
and (2) the CC must have exercised due diligence to held responsible. However, under 1742, the CC must
prevent or minimize the loss before, during and after exercise due diligence to forestall or lessen the loss for
the act of the public enemy causing the loss, it to completely escape liability.
destruction or deterioration of the goods.
impossible the fulfillment by the carrier of its carrier, due in turn to the failure of the former, upon
obligation. The petitioner was not duty bound to obey receipt of notice of the arrival of the goods at the place
the illegal order to dump into the sea the scrap iron. of destination, to unload forthwith and take away the
There is absence of sufficient proof that the issuance cargo from the vehicles. This is a charge for
of the order was attended with such force or demurrage (addtl. service provided by CC)
intimidation as to completely overpower the will of the
carrier's EEs. Effect of storing in transit.-- Under 1737, the
temporary unloading or storage of the goods during
Melencio-Herrera, Dissenting: Through the order or the time that they are being transported does not
act of competent public authority, the performance of interrupt the extra-ordinary responsibility of the CC
the contract was rendered impossible. The captain has Exception: Where the shipper or owner
no control over the situation just as Tumambing had no exercises its right of stoppage in transitu (the act by
control over the situation. which the unpaid vendor of goods stops their progress
and resumes possession of them, while they are in the
3. Duration of Extraordinary course of transit from him to the purchaser, and not
Responsibility yet actually delivered to the latter. This is exercised
when the buyer is or becomes insolvent.)
Art. 1736. The extraordinary
responsibility of the common carrier lasts from Responsibility of carrier when right exercised.--
the time the goods are unconditionally placed in The extra-ordinary responsibility of the CC ceases
the possession of, and received by the carrier when the goods being transported are temporarily
for transportation until the same are delivered, unloaded or stored in transit be reason of the exercise
actually or constructively, by the carrier to the of the right of stoppage in transitu by the unpaid
consignee, or to the person who has a right to seller. The CC holds the goods in the capacity of an
receive them, without prejudice to the ordinary bailee or warehouseman upon the theory that
provisions of Art. 1738. the exercise of the right of stoppage in transitu
terminates the contract of carriage (ordinary diligence
Art. 1737. The common carrier's duty to is required)
observe extra-ordinary diligence in the vigilance
over the goods remains in full force and effect Effect of storage in warehouse of carrier.--
even when they are temporarily unloaded or Under 1738, the extra-ordinary responsibility of the CC
stored in transit, unless the shipper or owner does not cease notwithstanding the fact that the
has made use of the right of stoppage in goods being transported are stored in the warehouse
transitu. of the CC at the place of destination. Extra-ordinary
responsibility ceases only after the consignee has
Art. 1738. The extra-ordinary liability of been advised of the arrival of the goods and has had
the common carrier continues to be operative reasonable opportunity to remove them or otherwise
even during the time the goods are stored in a dispose of them.
warehouse of the carrier at the place of Liability as a warehouseman (ordinary
destination until the consignee has been diligence) arises only when the consignee has been
advised of the arrival of the goods and has advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove reasonable opportunity to remove them or otherwise
them or otherwise dispose of them. dispose of them
4 Agbayani:
Cia Maritima vs Insurance Co. of North America, 12
When carrier's responsibility begins.-- Under Art. SCRA 213
1738, the extra-o responsibility of the CC begins from
the time the goods are delivered to the carrier. The F: Macleod and Co. contracted the services of Cia
delivery to the CC must place the goods to be Maritima for the shipment of bales of hemp from
transported unconditionally in the possession of the Davao to Manila. The bales were loaded into CC's
CC and the CC must receive them. Otherwise, the lighters. One of the lighters sunk. The insurance co.
extra-ordinary responsibility of the CC will not paid Macleod and filed to collect from CC. CC denied
commence. liability on the grounds that the hemp was loaded on a
barge owned by the CC free of charge, that there was
When carrier's responsibility terminates.-- no bill of lading issued thereby resulting to the
Under 1738, the extra-ordinary responsibility of the CC nonexistence of a contract of carriage, that the sinking
is terminated at the time the goods are delivered to was due to a fortuitous event, and that the insurance
the consignee or the person who has a right to receive co. has no personality to sue.
them (actual or constructive delivery).
Constructive delivery: Notice by the CC that Held: There was a complete contract of carriage the
the cargo had already arrived, placing them at the consummation of which has already begun when the
disposal of the shipper or consignee releases CC from shipper delivered the cargo to the carrier and the
extra-ordinary responsibility. From such moment the latter took possession of the same by placing it on a
consignee or shipper should exercise over the cargo lighter manned by its EEs, under which Macleod
the ordinary control pertinent to ownership (should became entitled to the privilege secured to him by law
unload cargo from the CC) for its safe transportation and delivery, and the carrier
to the full payment of its freight upon completion of
Shipper bound to observe all diligence in the voyage. The barges or lighters were merely
obtaining delivery of goods.-- The shipper is employed as the first step of the voyage, which is part
bound to observe all diligence in obtaining delivery of of the contract.
the goods. Once the goods are delivered, the extra- The receipt of the goods by the carrier has
ordinary responsibility of the CC ceases. been said to lie at the foundation of the contract to
carry and deliver, and if no goods are received there
Liability of shipper for delay in obtaining can be no such contract. The liability and
delivery of goods, demurrage.-- The shipper is responsibility of the carrier under a contract for the
liable for lost earnings occasioned by the unnecessary carriage of goods commence on their actual delivery
delay in the use of the vehicles belonging to the to, or receipt by the carrier or an authorized agent, of
PAGE 26
TRANSPORTATION AND MARITIME LAW
F: Plaintiff sought to recover from defendant the freight is valid and enforceable. If a CC gives to a
alleged value of 4 cases of merchandise which it shipper the choice of 2 rates, the lower of them
delivered to a vessel of defendant at the port of Manila conditioned upon his agreeing to a stipulated valuation
to be shipped to Surigao, but which were never of his property in case of loss, even by the carrier's
delivered to consignee. Defendant relied on clause 7 negligence, if the shipper makes the choice
of the bill of lading where it provided that actions not understandingly and freely, and names his valuation,
brought within 60 days from the time the cause of he cannot thereafter recover more than the value
action accrued shall be barred, and on clause 12 which which he thus places upon his property.
provided that the defendant is not liable for any
package in excess of P 300 unless the value and
contents of such package are correctly stated in the
bill of lading at the time of the shipment. Plaintiffs
complaint was filed a little less than 6 months after Shewaram vs PAL, 17 SCRA 606
the shipment was made.
F: Plaintiff bought a plane ticket from Zamboanga
Held: The evidence shows that 164 cases were to Manila. When he arrived in Manila, his suitcase was
shipped valued at P 2,500 a case. The limit of tampered with and his camera and radio were lost.
defendant's liability for each case for loss or damage PAL contended that plaintiff was bound by the
from any cause or for any reason, would put it in the conditions printed at the back of his ticket which
power of the defendant to take the whole cargo of 164 provided that the liability of PAL for any loss is limited
cases at a value of P 300/case, or less than 1/8 of its to the value of the thing unless the passenger declares
actual value. If that rule should be sustained, no silk in advance a higher valuation and pays an additional
would ever be shipped. Such limitation of value is charge, and that the value is conclusively deemed not
unconscionable and void as against public policy. to exceed P 100/ticket.
The validity of stipulations limiting the carrier's
liability is to be determined by their reasonableness Held : Two requisites must be fulfilled in order that the
and their conformity to the sound public policy. It liability of PAL be limited according to the stipulations
cannot lawfully stipulate for exemption from liability behind the ticket stub : (1) the contract is just and
unless such exemption is just and reasonable and reasonable under the circumstances; and (2) it has
unless the contract is freely and fairly made. No been fairly and freely agreed upon. (Art. 1750)
contractual limitation is reasonable which is The fact that the conditions are printed at the
subversive of public policy. A CC cannot limit its back of the ticket stub in letters so small that they are
liability for injury or loss where such is caused by its hard to read would not warrant the presumption that
own negligence, unskillfulness or carelessness of its plaintiff was aware of those conditions such that he
EEs. The rule rests on public policy. The shipper and had "fairly and freely agreed" to those conditions. PAL
CC are not on equal terms; the shipper is entirely at has admitted that passengers do not sign the ticket.
the mercy of the CC unless protected by the law. Such Also the carrier cannot limit his liability for injury or
contracts are wanting in the element of voluntary loss of goods shipped when such injury or loss was
assent. caused by its own negligence. (Arts. 1734, 1735)
The action was brought within reasonable time
considering the distance between Surigao and Manila
and the fact that plaintiff had to make a full Ong Yiu vs CA, 91 SCRA 223
investigation to determine liability. Stipulations
limiting the time for bringing suit must be reasonable, F: Atty. Ong Yiu was a passenger on a PAL Cebu-
otherwise they can be declared void. Butuan flight to attend court hearings in Butuan. His
suitcase was accidentally sent to Manila. PAL-Manila
sent the suitcase to Butuan but the lock had been
Heacock vs Macondray, 42 Phil 205 opened and a folder containing court documents was
missing. Plaintiff refused to accept the luggage. PAL-
F: Plaintiff shipped Edmonton clocks from NY to Cebu delivered the luggage to Ong Yiu with the
Manila on board defendant's vessel. It was agreed in promise to investigate the matter. Plaintiff sued and
the bill of lading that the value of the goods receipted was awarded moral and exemplary damages. CA
do not exceed $500 per freight on or in proportion for reversed holding that PAL was guilty of simple
any part of a ton, unless the value be expressly stated negligence and denied moral and exemplary damages
in the bill and freight paid. It was also agreed that in but ordered PAL to pay P100, the baggage liability
the event of claims for shortage or damage the carrier assumed by it under the condition of carriage printed
shall not be liable for more than the net invoice price on the back of the ticket.
plus freight and insurance less charges, and any loss
or damage for which the carrier may be liable shall be Held: PAL incurred delay in the delivery of petitioner's
adjusted pro rata on said basis. The clocks were not luggage. However, there was no bad faith. The liability
delivered despite demands. Plaintiff claimed P420 as of PAL was limited to the stipulations printed on the
the MV of the clocks, while defendant claimed P76.36 back of the ticket.
as the proportionate freight ton value. While the passenger had not signed the plane
ticket, he is nevertheless bound by the provision
Held: Three kinds of stipulations have often been thereof; such provisions have been held to be part of
made in a bill of lading. First, one exempting the the contract of carriage and valid and binding upon
carrier from any and all liability for loss or damage the passenger regardless of the latter's lack of
occasioned by its own negligence. Second, one knowledge or assent to the regulation. It is what is
providing for an unqualified limitation of such liability known as a contract of adhesion wherein one party
to an agree valuation. Third, one limiting the liability imposes a ready made form of contract on the other; it
of the carrier to an agreed valuation unless the is not entirely prohibited. The one who adheres to the
shipper declares a higher value and pays a higher rate contract is in reality free to reject it entirely; if he
of freight. The first and second stipulations are invalid adheres, he gives his consent. A contract limiting
as contrary to public policy. The third is valid and liability upon an agree valuation does not offend
enforceable. against the policy of the law forbidding one from
A stipulation in the bill of lading limiting the contracting against his own negligence.
liability of the CC to a specified amount unless the Considering that petitioner had failed to
shipper declares a higher value and pays a higher declare a higher value for his baggage, he cannot be
PAGE 28
TRANSPORTATION AND MARITIME LAW
permitted a recovery in excess of P 100.00. Besides, Pan Am contended that the claim was subject
passengers are advised not to place valuable items to the Notice of Baggage Liability Limitations attached
inside their baggage. Also, there is nothing in the to the ticket. Such notice was also conspicuously
evidence to show the actual value of the goods posted in its offices. It alleged that its liability is
allegedly lost by petitioner. limited to $160 because Rapadas did not declare a
higher value and did not pay the corresponding
additional charges.
PAN AM vs IAC, 164 SCRA 268 The lower court ruled in favor of Rapadas. It
however did not find Pan Am guilty of discriminatory
F: This is a petition filed by Pan Am to limit its acts or bad faith. CA affirmed the decision.
liability for lost baggage containing promotional and
advertising materials for films to be exhibited in Guam Issue: WON a passenger is bound by the terms of a
and the US, clutch bags, barong tagalogs and personal passenger ticket declaring that the limitations of
belongings of Rene Pangan to the amount specified in liability set forth in the Warsaw Convention as
the airline ticket absent a declaration of a higher amended by the Hague Protocol shall apply in case of
valuation and payment of additional charges. loss, damage or destruction to a registered luggage of
Pan Am contends that its liability for lost a passenger. YES. Pan Am was ordered to pay $400
baggage is limited to $600 ($20 x 30 kilos) as the and P 10,000 as attorney's fees and costs of suit.
latter did not declare a higher value for his baggage.
Such stipulation is printed at the back of the ticket. Held: There is no dispute that there was a notice
appearing on page 2 of the ticket stating that the
Held : Pan Am cited Ong Yiu vs CA. Such case is Warsaw Convention governs in case of death or injury
squarely applicable in this case. The ruling in to a passenger or of loss, damage or destruction to a
Shewaram vs PAL is inapplicable since it was premised passenger's luggage. Such notice should be sufficient
on the fact that the conditions printed at the back of notice showing the applicability of the Warsaw
the ticket were so small and hard to read. limitations. The passenger, upon contracting with the
Liability is limited to $600 as stipulated at the airline and receiving the plane ticket, was expected to
back of the ticket. be vigilant insofar as his luggage is concerned. If the
The SC reversed the CA ruling awarding passenger fails to adduce evidence to overcome the
respondent damages for lost profits. The rule laid stipulations, he cannot avoid the application of the
down in Mendoza vs PAL provides that before damages liability limitations.
can be awarded for loss of profits on account of delay The Warsaw Convention, as amended,
or failure of delivery, it must have appeared that CC specifically provides that it is applicable to
had notice at the time of delivery to him of the international carriage which it defines as "any carriage
particular circumstances attending the shipment, and in which, according to the agreement between the
which probably would lead to such special loss if he parties, the place of departure and the place of
defaulted. In the absence of a showing that Pan Am's destination xxx are situated either within the
attention was called to the special circumstances territories of two High Contracting Parties or within the
requiring prompt delivery of the luggage, it cannot be territory of a single High Contracting Party if there is
held liable for the cancellation of respondent's an agreed stopping place within the territory of
contracts as it could not have foreseen such an another State xxx." Nowhere in the Warsaw
eventuality when it accepted the luggage for transit. Convention is such detailed notice of baggage liability
limitations required. It is however a common, safe and
practical custom for air carriers to indicate beforehand
Pan Am vs Rapadas, 209 SCRA 67 the precise sums equivalent to those fixed by Art.
22(2) of the Convention.
F: Jose Rapadas was en route from Guam to The facts show that Rapadas actually refused
Manila. While standing in line to board the flight, he to register his attache case. In attempting to avoid
was ordered by Pan Am's handcarry control agent to registering the luggage, he manifested a disregard of
check in his Samsonite attache case. He protested on airline rules on allowable handcarried baggages.
the ground that other passengers were permitted to Prudence dictates that cash and jewelry should be
handcarry bulkier baggages. He tried to check-in removed from checked-in luggage and placed in one's
without having to register his attache case. He was pockets or handcarried. The alleged lack of enough
however forced to register his baggage. He gave his time for him to make a declaration of a higher value
attache case to his brother who checked it in for him and to pay the corresponding supplementary charges
without declaring its contents or the value of its cannot justify his failure to comply with the
contents. Upon arriving in Manila, he was given all his requirement that will exclude the application of limited
checked-in baggages except the attache case. Since liability. Had he readily complied with airline
he felt ill, he sent his son to request for the search of regulations from the start, this situation would not
the missing luggage. He sent letters of demand to Pan have arisen.
Am. While contracts of adhesion are not entirely
Pan Am offered to settle the claim for $160, prohibited, neither is blind reliance on them
representing the CC's alleged limit of liability for loss encouraged. In the face of facts showing they should
or damage to a passenger's personal property. be ignored because of their basically one- sided
Rapadas filed this action for damages. He alleged that nature, the Court does not hesitate to rule out blind
Pan Am discriminated or singled him out in ordering adherence to their terms. The SC is not saying that
that his luggage be checked in; that Pan Am neglected passengers are always bound to the stipulated
its duty in the handling and safekeeping of his attache amounts printed on a ticket, found in a contract of
case from the point of embarkation in Guam to his adhesion, or printed elsewhere but referred to in
destination in Manila; that the value of the lost attache handouts or forms. The Court simply recognizes that
case and its contents is $42,403.90. According to him, the reasons behind stipulations on liability limitations
the loss resulted in his failure to pay certain arise from the difficulty, if not impossibility, of
obligations, failure to remit money sent through him to establishing with a clear preponderance of evidence
relatives, inability to enjoy the fruits of his retirement the contents of a lost suitcase. Unless the contents
and vacation pay and inability to return to Tonga are declared, it will always be the word of a passenger
Construction Co. to comply with then existing against that of the airline. If the loss of life or property
contracts. During the trial, he showed proof of the is caused by the gross negligence or arbitrary acts of
contents of his attache case. the airline or the contents of the lost luggage are
PAGE 29
TRANSPORTATION AND MARITIME LAW
proved by satisfactory evidence other than the self- The parties may stipulate that the diligence to
serving declarations of one party, the Court will not be exercised by the CC be less than extra-ordinary
hesitate to disregard the fine print in a contract of diligence, provided that the requirements under Article
adhesion. Otherwise, the Court is constrained to rule 1744 are complied with. However, the parties cannot
that we have to enforce the contract as it is the only reduce the diligence to less than that of a good father
reasonable basis to arrive at a just award. of a family. Art. 1745 provides for 7 stipulations which
shall be considered unreasonable, unjust and contrary
to public policy.
(c) Factors affecting agreement
Construction of stipulations limiting common
Art. 1746. An agreement limiting the carrier's liability.-- An exemption in general words
common carrier's liability may be annulled by not expressly relating to negligence, even though the
the shipper or owner if the CC refused to carry words are wide enough to include loss by negligence
the goods unless the former agree to such or default of CC's servants, must be construed as
stipulation. limiting the liability of the CC as assurer, and not as
relieving him from the duty of exercising reasonable
Art. 1747. If the common carrier, without skill and care
just cause, delays the transportation of the Effect of lack of competitor to common carrier.--
goods or changes the stipulated or usual route, Under 1751, the lack of competition of the CC shall be
the contract limiting the common carrier's considered in determining WON a stipulation limiting
liability cannot be availed of in case of the loss, CC's liability is reasonable, just and in consonance
destruction, or deterioration of the goods. with public policy.
Kinds of stipulation limiting liability.-- The Principles : [St. Paul Insurance vs Macondray, 70 SCRA
following stipulations are often made in a bill of lading 122]
bill of lading: 1. A stipulation in the bill of lading limiting the
1. stipulation exempting the CC from any and CC's liability to the value of the goods appearing in the
all liability for loss or damage occasioned by its own bill, unless the shipper or owner declares a greater
negligence - VOID value, is valid and binding.
2. stipulation providing for an unqualified 2. The insurer who pays the insured on his
limitation of such liability to an agreed stipulation - claim for damage is merely subrogated to the rights of
VOID the insured; therefore, said insurer cannot collect from
3. stipulation limiting the liability of the CC to the CC more than what the insured can collect from
an agreed valuation unless the shipper declares a the CC.
higher value and pays a higher rate of freight -- VALID 3. The obligation to pay the damage begins
and ENFORCEABLE from the date it fails to deliver the shipment in good
condition to the consignee (on the basis of the rate of
When stipulation limiting liability valid.-- Under exchange on that date).
1744, the shipper or owner and the CC may stipulate
to limit the liability of the CC for the loss, destruction Effect of delay in transportation, etc.-- Under
or deterioration of goods to a degree less than extra- 1747, the CC cannot avail of the contract limiting his
ordinary diligence : liability in these cases : (1) where the CC delays the
1. the stipulation must be in writing and transportation of the goods; (2) where the CC changes
signed by both parties; the stipulated or usual route [in both cases, the delay
2. the stipulation must be supported by or change of route must be without just cause]
valuable consideration other than the service rendered
by the CC; Presumption as to negligence in case of limited
3. the stipulation must be reasonable, just and liability.-- Under 1752, the presumption continues
not contrary to public policy. This applies only when even when there is an agreement limiting the liability
the CC is acting as such but not when it acts as a of the CC in the vigilance of the goods. This
private carrier [in Home Insurance vs American presumption is disputable or rebuttable by evidence
Steamship Co., the SC held that the Civil Code that the CC exercised extra-ordinary diligence.
provisions on CC should not be applied where the CC
is not acting as such but as a private carrier; such
policy has no force where the public at large is not 5. Applicable Law in foreign trade
involved]
PAGE 30
TRANSPORTATION AND MARITIME LAW
Art. 1753. The law of the country to regarded as necessary deposits. The CC shall be
which the goods are to be transported shall responsible for such baggage as depositaries, provided
govern the liability of the common carrier for that (1) notice was given to them or to their EEs, of the
their loss, destruction or deterioration. baggage brought by their passengers, and that (2) the
passengers take the precautions which said CCs
4 Agbayani: advised relative to the care and vigilance of their
baggage.
The Civil Code governs the liability of the CC in
case of loss, damage or deterioration. Under 1766, in Responsibility for acts of EEs, thieves.--
all matters not regulated by the Civil Code, the rights Under 2000, a CC is responsible as a depositary for the
and obligations of CC shall be governed by the Code of loss of or injury to the baggage in the personal
Commerce and by special laws which are suppletory to custody of passengers, caused by the CC's servants or
the provisions of the Civil Code. EEs but not those caused by force majeure.
Under 2001, the act of a thief or robber, who
has entered the CC's vehicle is not deemed force
6. Rules on Passenger Baggage majeure, unless it is done with the use of arms or
through irresistible force.
Art. 1754. The provisions of Arts.1733 to Under 2002, the CC is not liable if the loss of
1753 shall apply to the passenger's baggage the baggage in the personal custody of the passenger
which is not in his personal custody or in that of is due to the acts of the passengers, his family,
his employees. As to other baggage, the rules servants or visitors, OR if the loss arises from the
in Articles 1998 and 2000 to 2003 concerning character of the baggage.
the responsibility of hotel keepers shall be
applicable. Stipulations limiting liability.-- Under
2003, a CC cannot free himself from responsibility by
Art. 1998. The deposit of effects made posting notices to the effect that he is not liable for
by travelers in hotels and inns shall also be the baggage brought by the passengers. Any
regarded as necessary. The keepers of hotels stipulation diminishing the responsibility required
and inns shall be responsible for them as under 1998 to 2001 shall be void.
depositaries, provided that notice was given to
them, or to their employees, of the effects Liability for baggage not in custody of
brought by the guests and that, on the part of passenger.-- This refers to baggage delivered to the
the latter, they take the precautions which said custody of the CC and received by him, to be carried
hotel-keepers or their substitutes advised in the same manner as other goods being transported
relative to the care and vigilance of their by him. As the CC has custody of such baggage and
effects. are carried like any other goods, the provisions on
carriage of goods shall apply (extra-ordinary diligence
Art. 2000. The responsibility referred to in the vigilance over the goods).
in the preceding article shall include the loss of, The moment the effects of a passenger are
or injury to the personal property of the guests unconditionally placed in the possession of and
caused by the servants or employees of the received by a carrier for conveyance, the law
keepers of hotels or inns as well as by immediately imposes on the CC extra-ordinary
strangers; but not that which may proceed from responsibility for the loss thereof which lasts until the
any force majeure. The fact that travelers are actual or constructive delivery of the effects to the
constrained to rely on the vigilance of the passenger as the person who has the right to receive
keeper of the hotel or inn shall be considered in them (presumption of negligence exists but may be
determining the degree of care required of him. rebutted by proof of exercise of extraordinary diligence
or causes under 1734).
Art. 2001. The act of a thief or robber, A CC is liable for the loss of baggage although
who has entered the hotel is not deemed force not declared and the charges not paid, if it accepted
majeure, unless it is done with the use of arms them for transportation
or through irresistible force.
Strong vs Iloilo-Negros Air Express, 40 OG 269 F: Plaintiffs are parents of 2 girls who were
passengers on a Pantranco bus on an excursion trip
F: Plaintiff was a passenger aboard defendant's from Dagupan to Baguio. The bus was open on one
plane en route from Iloilo to Manila. The plane's side. The TC found that the crossjoint of the bus broke
motors went dead and, notwithstanding the efforts of and the bus started to roll back. Some passengers
its pilot, it plunged into the sea and sank. The jumped out. The bus driver maneuvered the bus safely
passengers and the pilot were rescued. to the mountainside. Two of the girls who jumped
were seriously injured and died.
PAGE 32
TRANSPORTATION AND MARITIME LAW
passenger continues until the passenger has been The contract of air carriage is a peculiar one.
landed at the port of destination and has left the Being imbued with public interest, the law requires
vessel owner's dock. Once created the relationship common carriers to carry the passengers safely as far
will not ordinarily terminate until the passenger has as human care and foresight can provide, using the
safely alighted from the carrier's conveyance or had utmost diligence of very cautious persons, with due
reasonable opportunity to leave the carrier's premises. regard for all the circumstances. In Air France vs
All persons who remain on the premises a reasonable Carrascoso, the SC held that the contract to transport
time after leaving the conveyance are to be deemed passengers is quite different from any contractual
passengers and what is reasonable time is to be relation in that it invites people to avail of the comforts
determined from all circumstances and includes a and advantages it offers. The diversion of the flight
reasonable time to see after his baggage and prepare was due to a fortuitous event. However, such did not
for his departure. The CC-passenger relationship is terminate PAL's contract with its passengers. Being in
not terminated merely by the fact that the person the business of air carriage, PAL is deemed equipped
transported has been carried to his destination if the to deal with situations like the case at bar. The
person remains in the premises to claim his baggage. relation of carrier and passenger continues until the
The test is the existence of a reasonable cause latter has been landed at the port of destination and
as will justify the presence of the passenger near the has left the CC's premises. Hence, PAL necessarily
vessel. would still have to exercise extraordinary diligence in
A CC is bound to carry its passengers as far as safeguarding the comfort, convenience and safety of
human care and foresight can provide, using the the stranded passengers until they have reached their
utmost diligence of a very cautious person with due final destination. PAL was therefore remiss in its duty
regard for all circumstances. of extending utmost care to Zapatos while being
stranded in Cotabato City.
The CA held : "While the failure of Zapatos to
PAL vs CA, G.R. 82619, Sept. 1993 reach his destination xxx in accordance with the
contract of carriage was due to the closure of the
F: Pedro Zapatos was among 21 passengers on a airport on account of rain and inclement weather xxx it
PAL flight from Cebu to Ozamis. The flight was Cebu- becomes the duty of PAL to provide all means of
Ozamis-Cotabato. Fifteen minutes before landing in comfort and convenience to its passengers when they
Ozamis, the pilot received a message that the airport would have to be left in a strange place in case of such
was closed due to heavy rains and inclement weather by-passing. If the cause of non-fulfillment of the
and that he should proceed to Cotabato City. In contract is due to a fortuitous event, it has to be the
Cotabato, PAL informed the passengers of their options sole and only cause. Since part of the failure to
and that due to limited number of seats in the other comply with the obligation to deliver its passengers
flights, the basis for priority would be the check-in safely to their destination lay in PAL's failure to provide
sequence at Cebu. Zapatos chose to return to Cebu comfort and convenience to its stranded passengers
but was not accommodated because he checked in as using extraordinary diligence, the cause of non-
passenger no. 9. However, his personal belongings fulfillment is not solely and exclusively due to
including a camera from Japan were still on board the fortuitous event, but due to something that PAL could
flight to Manila. He tried to stop the departure but his have prevented, PAL becomes liable to the passenger."
plea fell on deaf ears. He was given a free ticket to However the SC found that although PAL was remiss in
Iligan City which he received under protest. He was its duty of extending utmost care to Zapatos while
left at the airport. PAL neither provided him with being stranded in Cotabato City, there was no
transportation from the airport to the city proper nor sufficient basis to conclude that PAL failed to inform
food and accommodation for his stay in Cotabato City. him about his other options.
The next day, he purchased a ticket to Iligan City. He
informed PAL that he would not use the free ticket
because he was filing a case against PAL. His personal 3. Presumption of negligence
belongings were never recovered.
PAL denied that it unjustifiably refused to Art. 1756. In case of death of or injuries
accommodate Zapatos. It alleged that there was to passengers, common carriers are presumed
simply no more seat for him on Flight 560 to Manila; to have been at fault or to have acted
and that there was force majeure which was a valid negligently, unless they prove that they
justification for the pilot to bypass Ozamis City and observed extraordinary diligence as prescribed
proceed directly to Cotabato City. PAL contended that in articles 1733 and 1755.
it did not unjustifiably deny his demand for priority
over confirmed passengers which they could not 4 Agbayani:
satisfy in view of the limited seats. PAL also asserted
that it should not be charged with the task of looking Presumption of negligence.-- CCs are presumed to
after the passengers' comfort and convenience have been at fault or to have acted negligently in case
because the diversion of the flight was due to a of death or injuries to passengers. This disputable
fortuitous event, and that if made liable, an added presumption may only be overcome by superior
burden is given to PAL which is over and beyond its evidence that he had observed extraordinary diligence
duties under the contract of carriage. It argued that prescribed in 1733, 1755, 1756
granting there was negligence, PAL cannot be liable in Where death or injury results to the passenger
damages in the absence of fraud or bad faith. because of the negligence of the CC's Es, the CC is
The RTC held in favor of plaintiff. The CA liable, notwithstanding the fact that he had exercised
affirmed. all the diligence of a good father of a family, in the
selection and supervision of his EEs
Held: The passenger's complaint touched on PAL's xxx
indifference and inattention to his predicament and Consequently, in an action for damages, the
not on PAL's refusal to comply with his demand for issue is not WON the party seeking damages has
priority over the other passengers. He claimed that he adduced sufficient evidence to show the negligence of
was exposed to the peril of Muslim rebels and that he the CC but WON the carrier has presented the required
suffered mental anguish, mental torture, social quantum of proof to overcome the presumption that it
humiliation, besmirched reputation and wounded has been at fault or that it acted negligently in the
feeling. He referred to PAL's apathy. performance of its duty.
PAGE 34
TRANSPORTATION AND MARITIME LAW
In the exercise of extraordinary diligence, the in Tabon-Tabon, Butuan, the bus picked up a
CC must give due regard for all circumstances in passenger. A passenger suddenly stabbed a PC soldier
connection with the transport of passengers which caused commotion and panic among the
passengers. Two passengers jumped out (finding of
How presumption of negligence overcome.-- To the TC which was reversed by the CA) of the bus and
overcome such presumption, it must be shown that were found dead as a result of head injuries. The
the CC had observed the required extraordinary passenger- assailant ran away from the bus but was
diligence or that the accident was caused by fortuituos killed by the police. The parents of the dead
event. In order to constitute caso fortuito that would passengers filed a complaint for a sum of money
exempt a person from responsibility, it is necessary against the CC, the owner and the driver.
that : The CC denied liability and alleged that the
1. The event must be independent of human driver was able to transport his passengers safely to
will; their respective places of destination except for the
2. The occurrence must render it impossible two passengers who jumped off the bus without the
for the obligor to fulfill his obligation in a normal knowledge and consent, much less, the fault of the
manner; driver; that the CC exercised due diligence in the
3. The obligor must be free of a concurrent or choice of its EEs to avoid as much as possible
contributory fault or negligence. [Estrada vs accidents; that the incident was not a traffic or
Consolacion, 71 SCRA 523] vehicular accident but was an incident very much
beyond the control of the CC; that the CC was not a
Carrier not precluded from proving negligence party to the incident as it was an act of a third party
of other carrier involved in collision.-- While the who is not in any way connected with the CC and of
plaintiff-passenger does not need to prove the which they have no control and supervision. The CC
negligence of the CC, he may not preclude the CC argued that the incident's proximate cause was the act
from proving the legal defense of negligence of the of the passenger who ran amuck and which triggered
other vehicle involved in the collision (the CC may file off the commotion and panic.
a third-party complaint against the other vehicle for The TC dismissed the complaint. The CA
reimbursement) reversed and ordered the CC, the owner and driver
solidarily liable to the heirs of the deceased.
"Last clear chance" rule not applicable to
contracts of carriage.-- The principle of last clear Held : The CC is liable for the death of the passengers.
chance applies only in a suit between the owners and Bachelor Express as a CC is bound to carry its
drivers of two colliding vehicles; it does not apply passengers safely as far as human care and foresight
where a passenger demands responsibility from the can provide using the utmost diligence of very
CC to enforce its contractual obligation; it would be cautious person, with due regard for all the
iniquitous to exempt the driver and his ER on the circumstances. In this case where passengers suffered
ground that the other driver was also negligent injuries which caused their death, under 1756, the CC
is presumed to have acted negligently unless it can
Court need not make express finding of carrier's prove that it had observed extraordinary diligence. The
fault or negligence.-- The court need not make an CC raised the defense of caso fortuito. Art. 1174
express finding of fault or negligence on the part of the provides that no person shall be responsible for those
CC in order to hold it responsible to pay the damages events which could not be foreseen or which though
sought by the passenger. By the contract of carriage, foreseen were inevitable. In Lasam vs Smith, the SC
the CC assumes the express obligation to observe held that a caso fortuito must have the following
extraordinary diligence in transporting the passenger elements: (1) The cause of the unforeseen and
This is an exception to general rule that negligence unexpected occurrence must be independent of the
must be proved. human will; (2) It must be impossible to foresee the
event; (3) The occurrence must be so as to render it
Carriers not ordinarily liable for injuries to impossible for the debtor to fulfill his obligation in a
passengers due to fires or explosions caused by normal manner; and (4) The obligor must be free
articles brought into conveyance by other from any participation in the aggravation of the injury
passengers.-- CC is not ordinarily liable for injuries resulting to the creditor. The running amuck of the
to passengers due to fires or explosions caused by passenger was the proximate cause of the incident
articles brought into conveyance by other passengers. and is within the context of force majeure.
Fairness demands that in measuring the CC's duty However, in order that a CC may be absolved
towards its passengers, allowance should be given to from liability in case of force majeure, it is not enough
the reliance that should be reposed on the sense of that the accident was caused by force majeure. The
responsibility of all the passengers in regard to their CC must still prove that it was not negligent in causing
common safety (that the passenger will not take with the injuries resulting from such accident. It must prove
him anything dangerous to his co-passengers.) For that there was no negligence or lack of care and
the carrier to be liable, he must be aware, through his diligence on the part of the CC.
EEs of the nature of the article or must have had some The TC and the CA had conflicting findings of
reason to anticipate danger therefrom (circumstances fact. The SC upheld the findings of the CA-- the driver
must show that there are causes for apprehension that did not immediately stop the bus at the height of the
the passenger's baggage is dangerous and that the CC commotion; the bus was speeding from a full stop; the
fails to act in the fact of such evidence) [Nocum vs victims fell from the bus door when it was opened or
Laguna Bus Co., 1969] gave way while the bus was still running; the
conductor panicked and blew his whistle after people
had already fallen off the bus; the bus was not
4. Force Majeure properly equipped with doors in accordance with law.
It is therefore clear that the petitioners have failed to
Bachelor Express vs CA 188 SCRA 217 overcome the presumption of fault and negligence
found in the law governing CCs.
F: Bus No. 800 owned by Bachelor Express and The CC's argument that it is not an insurer of
driven by Cresencio Rivera was the situs of a its passengers deserves no merit in view of the failure
stampede which resulted in the death of passengers of the CC to prove that the deaths of the 2 passengers
Beter and Rautrat. The bus came from Davao City on were exclusively due to force majeure and not to the
its way to Cagayan de Oro passing Butuan City. While failure of the CC to observe extra-ordinary diligence in
PAGE 35
TRANSPORTATION AND MARITIME LAW
transporting safely the passengers to their consideration, not contrary to law will still be void
destinations as warranted by law. where the passenger is not carried gratuitously.
CC, as far as regards the work of constructing the a caso fortuito, both being unforeseeable and
appliance inevitable under the circumstances.
When the crime took place, the guard had no
Common carrier is exempt from acts of EE not duties to discharge. His position would be that of a
done in line of duty.-- The CC is exempt from passenger also waiting transportation and not of an EE
liability where the EE was never in a position in which assigned to discharge duties.
it became his duty to his ER to represent him in
discharging any duty of the CC towards the passenger;
the EE is deemed as a stranger or co-passenger since Maranan vs Perez, 20 SCRA 412
his act was not done in the line of duty
F: A passenger in a taxicab was stabbed and
Defense of diligence in selection, etc., of killed by the driver. The driver claimed self defense
employees.-- CC cannot escape liability by since accdg to him, he was stabbed first by the
interposing defense that he exercised due diligence in passenger. The taxicab operator claimed caso fortuito.
the selection and supervision of his EEs; his liability is
based on culpa contractual Held: The NCC unlike the OCC makes the CC
absolutely liable for intentional assaults committed by
When relationship of carrier and passenger its EEs upon its passengers (Art. 1754). The CC's
terminates.-- The relation of CC and passenger does liability is based on either (1) respondeat superior or
not cease at the moment that the passenger alights (2) the CC's implied duty to transport the passenger
from the CC's vehicle at a place selected by the CC at safely. Under respondeat superior (w/c is the minority
the point of destination, but continues until the view), the CC is liable only when the act of the EE is
passenger had reasonable time or a reasonable within the scope of his authority and duty. Under the
opportunity to leave the CC's premises. What is a second view, the CC is liable as long as the assault
reasonable time or a reasonable delay within this rule occurs within the course of the performance of the
is to be determined from all the circumstances EE's duty. It is no defense that the act was done in
excess of authority or in disobedience of the CC's
Elimination or limitation of carrier's liability.-- orders. The CC's liability is absolute in the sense that
Under 1760, the CC's liability for the negligence or it practically secures the passengers from assaults
willful acts of his EEs which cause death of or injury to committed by its own EEs. Three cogent reasons
passengers cannot be eliminated or limited by (1) underlie this rule : (1) the special undertaking of the
stipulation, (2) by the posting of notice, (3) by CC requires that it furnish the passengers the full
statements on the tickets, or (4) otherwise measure of protection afforded by the exercise of the
high degree of care prescribed in the law, from
Bataclan vs Medina, 104 Phil 181 violence and insults in the hands of strangers, other
passengers, and from its own servants charged with
F: supra. Bus turned turtle with gas leaking out. the passenger's safety; (2) liability is based on the
Rescuers brought torches which resulted in fire. CC's confiding in the servant's hands the performance
of his contract to safely transport the passenger,
Held : There was a breach of the contract of carriage delegating therewith the duty of protecting the
and negligence on the part of the agent of the CC, the passenger with utmost care prescribed by law; (3) as
driver. At the time of the blowout of the tires, the bus between the CC and the passenger, the CC must bear
was speeding. The proximate cause of the death was the risk of wrongful acts or negligence of the CC's EEs
the overturning of the vehicle which was followed by against passengers since it has the power to select
the negligence of the driver and the conductor who and remove them.
were on the road walking back and forth. They should It is the CC's obligation to select its drivers
have known that with the position of the bus, leakage with due regard not only to their technical competence
was possible aside from the fact that gas when spilled and physical ability but also to their total personality,
can be smelled from a distance. The failure of the including patterns of behavior, moral fiber, and social
driver and conductor to have cautioned or taken steps attitude.
to warn rescuers not to bring a lighted torch too near
the bus constitutes negligence on the part of the 7. Responsibility for acts of strangers
agents of the carrier. and co-passengers
Bachelor Express vs CA, 180 SCRA 217 Held: The conduct of plaintiff in undertaking to alight
while the train was yet slightly underway was not
F: supra. A passenger stabbed a PC officer which characterized by imprudence and that he was not
caused a commotion which resulted in the death of 2 guilty of contributory negligence.
passengers. The circumstances show that it was no means so risky
for him to get off while the train was yet moving. It is
Held: The CC raised the defense of caso fortuito. The not negligence per se for a traveler to alight from a
running amuck of the passenger was the proximate slowly moving train.
cause of the incident and is within the context of force
majeure. However, in order that a CC may be absolved
from liability in case of force majeure, it is not enough Isaac vs A. L. Ammen
that the accident was caused by force majeure. The
CC must still prove that it was not negligent in causing F: supra. Passenger aboard a bus who placed his
the injuries resulting from such accident. It must prove left arm on the window lost his arm when the bus
that there was no negligence or lack of care and collided with a pick up.
diligence on the part of the CC.
The TC and the CA had conflicting findings of Held: By placing his left arm on the window, the
fact. The SC upheld the findings of the CA-- the driver passenger is guilty of contributory negligence, and
did not immediately stop the bus at the height of the although contributory negligence cannot relieve the
commotion; the bus was speeding from a full stop; the carrier but can only reduce his liability (Art. 1762), this
victims fell from the bus door when it was opened or is a circumstance which militates against plaintiff's
gave way while the bus was still running; the position. It is negligence per se for passengers to
conductor panicked and blew his whistle after people protrude any part of his body and that no recovery can
had already fallen off the bus; the bus was not be had for an injury.
properly equipped with doors in accordance with law. In this case, the bus driver had done what a
It is therefore clear that the petitioners have failed to prudent man could have done to avoid the collision.
overcome the presumption of fault and negligence The injury was due to passenger's fault.
found in the law governing CCs.
The CC's argument that it is not an insurer of Liability of air carrier under the Warsaw
its passengers deserves no merit in view of the failure Convention (Oct. 12, 1929)
of the CC to prove that the deaths of the 2 passengers
were exclusively due to force majeure and not to the Art. 17. The carrier shall be liable for
failure of the CC to observe extraordinary diligence in damages sustained in the event of death or
transporting safely the passengers to their wounding of a passenger or any other bodily
destinations as warranted by law. injury suffered by a passenger, if the accident
which caused the damage so sustained took
place on board the aircraft or in the course of
8. Duty of passenger; effect of any of the operations of embarking or
contributory negligence disembarking.
PAGE 38
TRANSPORTATION AND MARITIME LAW
Art. 18. (1) The carrier shall be liable for In case of fraud, bad faith, malice or
damage sustained in the event of the wanton attitude, the obligor shall be
destruction or loss of, or of damage to, any responsible for all damages which may be
checked baggage or any goods, if the reasonably attributed to the non-performance
occurrence which caused the damage so of the obligation.
sustained took place during the transportation
by air. Art. 2203. The party suffering loss or
(2) The transportation by air within the injury must exercise diligence of a good father
meaning of the preceding paragraph shall of a family to minimize the damages resulting
comprise the period during which the baggage from the act or omission in question.
or goods are in the charge of the carrier,
whether in an airport or on board an aircraft, or, Art. 1764. Damages in cases comprised
in case of a landing outside an airport, in any in this Section shall be awarded with the title
place whatsoever. XVIII of this book concerning damages. Article
(3) The period of the transportation by 2206 shall also apply to the death of a
air shall not extend to any transportation by passenger caused by the breach of contract by
land, by sea, or by river performed outside an a common carrier.
airport. If however, such transportation takes
place in the performance of a contract for Art. 2206. The amount of damages for
transportation by air, for the purpose of loading, death caused by a crime or quasi-delict shall be
delivery, or transshipment, any damage is at least P 3,000 (now P50,000), even though
presumed, subject to proof to the contrary, to there may have been mitigating circumstances.
have been the result of an event which took In addition:
place during the transportation by air. (1) The defendant shall be liable for the
loss of the earning capacity of the deceased,
Art. 19. The carrier shall be liable for and the indemnity shall be paid to the heirs of
damages occasioned by delay in the the latter; such indemnity shall in every case be
transportation by air of passengers, baggage or assessed and awarded by the court, unless the
goods deceased on account of permanent physical
disability not caused by the defendant, had no
earning capacity at the time of his death;
SC has held that these provisions merely (2) If the deceased was obliged to give
declare the carrier liable for damages in the support according to the provisions of article
enumerated cases, if the conditions therein specified 291, the recipient who is not an heir called to
are present. Neither said provisions nor others in the the decedent's inheritance by the law of testate
Convention regulate or exclude liability for other or intestate succession, may demand support
breaches of contract by the carrier. from the person causing the death, for a period
not exceeding five years, the exact duration to
be fixed by the court;
D. Damages Recoverable from Common (3) The spouses, legitimate and
Carriers illegitimate descendants and ascendants of the
deceased may demand moral damages for
1. In general mental anguish by reason of the death of the
deceased.
Art. 1764. Damages in cases comprised
in this Section shall be awarded with the title
XVIII of this book concerning damages. Article Cariaga vs LTBCo., 110 Phil 346
2206 shall also apply to the death of a
passenger caused by the breach of contract by F: Edgardo Cariaga, a fourth year medical
a common carrier. student of UST, was a passenger of an LTBC bus which
bumped against a train of MRR on the national
Art. 2197. Damages may be: highway crossing a railroad tract at Laguna de Bay.
(1) Actual or compensatory; Cariaga suffered severe injuries on the head making
(2) Moral; him unconscious during the first 35 days after the
(3) Nominal; accident, reducing his intelligence by 50% and
(4) Temperate or moderate; rendering him in a helpless condition, virtually invalid,
(5) Liquidated; both physically and mentally. LTBC paid all medical
(6) Exemplary or corrective. expenses plus allowance during convalescence. Later,
Cariaga's parents brought an action to recover
damages from LTBC and MRR in the amount of P
2. Actual or compensatory 312,000 as actual, compensatory, moral and
exemplary damages. LTBC disclaimed liability and
Art. 2199. Except as provided by law or filed a cross-complaint against MRR for recovery of
by stipulation, one is entitled to an adequate expenses paid by it to the plaintiff placing MRR
compensation only for such pecuniary loss negligent for not providing a crossing bar at the
suffered by him as he has duly proved. Such national highway railroad track. Laguna CFI dismissed
compensation referred to as actual or the cross-complaint against MRR and held LTBC liable
compensatory damages. for P 10,000 as compensatory damages with interest.
Plaintiff and LTBC appealed.
Art. 2201. In contracts and quasi-
contracts, the damages for which the obligor Held: The train driver was not negligent. He sounded
who acted in good faith is liable shall be those the train's whistle four times before the intersection,
that are natural and probable consequences of which were heard even by the bus passengers. The
the breach of the obligation, and which the bus did not slow down but instead the bus driver tried
parties have foreseen or could have reasonably to pass the intersection before the train. In addition,
foreseen at the time the obligation was another LTBC bus which arrived ahead of the bus in
constituted. this case, at the crossing heeded the train whistle by
stopping and allowing the train to pass. Clearly, the
PAGE 39
TRANSPORTATION AND MARITIME LAW
bus driver was negligent in totally disregarding the probably would lead to such special loss if he
warning. On the other hand, MRR cannot be held to be defaulted. In order to impose on the defaulting party
contributorily negligent because LTBC was not able to further liability than for damages naturally and
discharge its burden of proof when it alleged that MRR directly, i.e. in the ordinary course of things, arising
violated its charter by failing to ring the locomotive from a breach of contract, such unusual or
bell. extraordinary damages must have been brought
The evidence shows that Ed C. had been within the contemplation of the parties as the
rendered physically and mentally invalid by the probable result of the breach at the time of or prior to
accident. He suffered head injuries specifically a contracting. In the absence of proof that Pan Am's
fractured right forehead necessitating the removal of attention was called to the special circumstances
all the right frontal lobe of his brain, which reduced his requiring prompt delivery of Pangan's luggages,
intelligence by 50% so that he can no longer finish his petitioner cannot be held liable for the cancellation of
medical course. In addition, he has to lead a quiet and Pangan's contracts as it could not have reasonably
retired life because if the tantalum plate which foreseen such eventuality when it accepted the
replaced a portion of his skull is pressed in or dented, luggage for transit. Pan Am was not privy to the
it would cause his death. contracts of Pangan nor was its attention called to the
LTBC admitted that under Art. 2201, it is liable condition therein requiring delivery of the promotional
for damages that are the natural and probable and advertising materials on or before a certain date.
consequences of the breach and which the parties had No attorney's fees could be awarded since
foreseen or could have reasonably foreseen at the there was no unjustified refusal by Pan Am to satisfy
time the obligation was constituted. It however claims the passenger's just and valid claim.
that the said provision contemplates only the medical,
hospital, and other expenses in the total sum of P
17,719.75. The SC ruled that the income which Ed Villa Rey Transit vs CA, 31 SCRA 511
could earn if he should finish the medical course, and
pass the corresponding board exams must be deemed F: Policronio Quintos boarded a Villa Rey Transit
included because they could have reasonably been bus at Lingayen, Pangasinan for Manila and was
foreseen by the parties at the time he boarded the seated on the first seat right side. When they reached
bus. the national highway in Pampanga, the bus frontally
While his scholastic record may not be first hit the rear side of a bull cart filled with hay. The end
rate, it is sufficient to justify the assumption that he of the bamboo pole tied to the cart hit the windshield
could have finished his course and would have passed and landed on the face of Quintos who was seated in
the board exams in due time. As regards the income front. He died of cerebral injuries. His sisters and
that he could possibly earn as a doctor, P 300 (accdg. surviving heirs brought an action against the bus co.
to LTBC witness, Dr. Doria) could easily be expected as The TC and CA held Villa Rey liable for P 63,750.00.
minimum monthly income of Ed C. had he finished his
studies. Compensatory damages should be increased Held: The determination of damages due is dependent
to P 25,000. on 2 factors : (1) on the no. of years on the basis of
The claim for moral damages could not be which damages shall be computed (life expectancy);
granted because Art. 2219 enumerates the instances and (2) rate at which the losses sustained should be
when moral damages may be recovered and the fixed.
present case does not fall under any of them, even CA determined life expectancy accdg. to the
par. (2) thereof because this case is not one of quasi- American Expectancy Table of Mortality; and since
delict and could not be considered as such because of Quintos was around 30 years old at the time of his
a pre-existing contractual relation between Ed C. and death : 2/3 x [80 - 30] = 33 1/3 years. The bus co.
LTBC. Neither could LTBC be liable under Art. 2220 wanted to use the 4 year basis adopted in Alcantara vs
because it did not act fraudulently or in bad faith. Surro but the court held that the case is not controlling
Attorney's fees could also not be granted because this as it did not lay down any rule on the length of time to
case does not fall under Art. 2208. be used in the computation of damages. In fact, it
The claim by the parents for actual and declared that there is no fixed basis for determination
compensatory damages is also without merit because of indemnity and much is left to the discretion of the
the present action is based upon a breach of contract court considering the material damages involved and
of carriage and the parents were not a party thereto, that there can be no exact or uniform rule for
and were not themselves injured as a result of the measuring the value of human life and the measure of
collision. damages cannot be arrived at by precise
mathematical calculations.
Villa Rey impugns the decision on the ground
Pan Am vs IAC, 164 SCRA 268 that damages will have to be paid NOW where most of
those sought to be indemnified will be suffered years
F: supra. Baggage containing promotional and later. This argument if offset by the fact that payment
advertising materials for films to be exhibited in the of the award will take place upon the finality of the
US, clutch bags, barong tagalogs and personal decision, fixed at the rate of P 2,184 per year and did
belongings was lost. PAN AM sought to limit its not anymore compute the potentiality and capacity of
liability to the amount specified in the ticket absent a Quintos to increase his future income, upon conclusion
declaration of higher valuation and the payment of of his training, when he would be promoted and
addtl. charges. receive a higher salary.
In determining the losses sustained by the
Held: On the basis of stipulations printed at the back dependents and heirs of Quintos. they consist NOT of
of the ticket, Pan Am contends that its liability for the the full amount of his earnings but of the support they
lost baggage of Pangan is limited to $ 600.00 ($20 x would have received from him had he not died. In
30 kilos) as the latter did not declare a higher value for fixing said amount, the necessary living expenses
his baggage and pay the corresponding charges. should therefore be deducted from his earnings. The
The SC applied the ruling in Mendoza vs PAL: amount recoverable would therefore be the NET
Before defendant could be held to special damages, earnings, which is the portion which the beneficiaries
such as alleged loss of profits on account of delay or would have received. To this sum must be added
failure of delivery, it must have appeared that he had P12,000 pursuant to Art. 104 and 107 of the RPC, in
notice at the time of delivery to him of the particular relation to Art. 2206, NCC and P 1,727.95 for the
circumstances attending the shipment, and which
PAGE 40
TRANSPORTATION AND MARITIME LAW
amount actually spent by the sisters for his medical discretion of the court, according to the
and burial expenses and circumstances of each case.
P 2, 500 attorney's fees.
mission for which she was singled out by the faculty to and further just and equitable relief in the premises."
represent her institution and the country. Also absent any claim for actual or compensatory
Alitalia appealed on the following grounds: (1) damages (she asked for moral and exemplary
That the Warsaw Convention should have been applied damages and attorney's fees), and with proof of Dr.
to limit Alitalia's liability; and (2) That there is no Pablo's right being violated, the issue of nominal
warrant in fact or in law for the award of nominal damages is raised.
damages and attorney's fees. The award of P 5,000 for attorney's fees is
reasonable. The law authorizes recovery of attorney's
Held: Under the Warsaw Convention, an air carrier is fees where the defendant's act or omission has
made liable for damages for: (1) The death, wounding compelled the plaintiff to litigate with third person or
or other bodily injury of a passenger if the accident to incur expenses to protect his interest, or where the
causing it took place on board the aircraft or in the court deems it just and equitable.
course of its operations of embarking or disembarking;
(2) Saludo vs CA 207 SCRA 498
The destruction, or loss of damage to, any registered
luggage or goods, if the occurrence causing it took F: After the death of plaintiff's mother Crispina
place during the carriage by air; and (3) Delay in the Galdo, Saludo in Chicago, Pomierski and Son Funeral
transportation by air of passengers, luggage or goods. Home, made the necessary preparations and
The Convention also limits the liability of the carriers arrangements for the shipment of the body from
for each passenger to 250,000 francs and for Chicago to the Philippines. They had the body
registered baggage and cargo to 250 francs per kg embalmed and secured a permit from the Philippine
unless the passenger has declared a higher rate and Vice Consul in Chicago. The Phil. Vice Consul sealed
has paid additional charges. The Warsaw Convention, the shipping case on Oct. 26,1976. On the same date,
however, denies to the carrier availment of the Pomierski brought the remains to the Continental
provisions which exclude or limit his liability, if the Mortuary Air Service (CMAS) which made the
damage is caused by his wilful misconduct or by such necessary arrangements such as flights, transfers,etc.
default on his part as is considered to be equivalent to CMAS is a national service used by undertakers which
wilful misconduct or if the damage is similarly caused furnishes the air pouch in which the casket is enclosed
by any agent of the carrier acting within the scope of in and they see to it that the remains are taken to the
his employment. The Convention does not thus proper air freigh terminal. CMAS booked the shipment
operate as an exclusive enumeration of the instances with PAL, through its agent Air Care International, with
of an airline's liability, or as an absolute limit of the Pomierski as shipper and Maria Saludo as consignee.
extent of that liability. Such proposition is not borne PAL Airway Bill was issued for the route from Chicago
out by the language of the Convention. The to SF on board TWA Flight 131 of Oct. 27, 1976, and
Convention should be deemed a liability only in those from SF to Manila, on board PAL Flight 107 of Oct. 27,
cases where the cause of the death or injury to person, 1976, and from Manila to Cebu on board PAL Flight 149
or destruction, loss or damage to property or delay in of Oct. 29, 1976.
its transport is not attributable to or attended by any Maria Saludo and Saturnino Saludo, children of
wilful misconduct, bad faith, recklessness, or the deceased were booked with United Airlines from
otherwise improper conduct. The Convention does not Chicago to California and with PAL from California to
regulate or exclude liability for other breaches of Manila. When she learned of her mother's
contract by the carrier. Otherwise, an air carrier would arrangements, she changed reservations from UA to
be exempt from any liability for damages in the event TWA. She watched from the look-out area but she saw
of its absolute refusal, in bad faith, to comply with a no body being brought on the flight. She reluctantly
contract of carriage. The Warsaw Convention has took the TWA flight with her cousin's assurance to look
invariably been held inapplicable, or as not restrictive into the matter. Upon arrival in SF, she went to the
of the carrier's liability, where there was satisfactory TWA counter to inquire about her mother's remains
evidence of malice or bad faith attributable to its but she was told that they did not know anything
officers and employees. about it. She then called Pomierski who then called
In the case at bar, no bad faith or otherwise CMAS which in a matter of 10 minutes told him that
improper conduct may be ascribed to the EEs of the remains had been switched with another body and
Alitalia. Dr. Pablo's luggage was eventually returned had been sent to Mexico. Based on the facts, there was
belatedly, but without appreciable damage. The fact a mix-up in Chicago Airport between the two bodies.
is, nevertheless, that some special species of injury Arrangements were made to send the body to
was caused to her because Alitalia misplaced her California through Texas. On October 28, 1976, the
baggage and failed to deliver it to her at the time remains arrived in SF and was received by PAL at 7:45
appointed -- a breach of its contract of carriage -- with p.m. The shipment was immediately loaded on PAL
the result that she was unable to read her paper that flight for Manila that same evening and arrived in
she had painstakingly labored over. The opportunity Manila on October 30, 1976, a day after its expected
to claim honor or distinction for herself, for UP and for arrival on October 29, 1976.
the country, was irretrievably lost to her. She also Plaintiffs then filed a case against PAL and
underwent profound distress and anxiety, which TWA before the CFI of Leyte, praying for the award of
gradually turned into panic and despair, when she actual damages of P 50,000, moral damages of P
learned that her suitcases were missing. 1,000,000, exemplary damages and attorney's fees
The compensation for the injury suffered by Dr. and costs of suit. The CFI and CA absolved the two
Pablo cannot under the circumstances be restricted to airline companies. Plaintiffs then appealed the
that prescribed by the Warsaw Convention for delay in decision on the ff. grounds: (1) That the delay in the
the transport of baggage. She is not entitled to be delivery of the remains was due to the fault of the
compensated for loss or damage to her luggage since airlines, (2) The one day delay in the delivery
they were ultimately delivered to her. She is however constitutes breach of contract as would entitle them to
entitled to nominal damages, which is adjudicated in damages, (3) That damages are recoverable by
order that a right of the plaintiff, which has been petitioners for the humiliating, arrogant, and
violated or invaded by the defendant, may be indifferent acts of the EEs of TWA and PAL. The airlines
vindicated and recognized, and not for the purpose of objected on the ground that this petition only raises
indemnifying the plaintiff for any loss suffered. factual questions. Since it is precisely the soundness
As to the argument that she failed to include a of the inferences or conclusions that may be drawn
specific claim for nominal damages in her complaint, from the factual issues which are here being assailed,
it suffices that her general prayer includes "such other
PAGE 44
TRANSPORTATION AND MARITIME LAW
the issues raised in the petition indeed warrant a of the package offered for transportation and is not
second look. bound to inquire particularly about them. It can safely
be said that a CC is entitled to fair representation of
Held: (1) Petitioners allege that private respondents the nature and value of the goods to be carried, with
received the casketed remains of petitioner's mother the concomitant right to rely thereon, and that a
on Oct. 26, 1976 as evidenced by the issuance of the carrier has no obligation to inquire into the correctness
PAL Airway Bill. From said date, private respondents or sufficiency of such information. The consequent
were charged with the responsibility to exercise duty to conduct an inspection arises in the event that
extraordinary diligence so much so that for the alleged there should be reason to doubt the veracity of such
switching of the caskets on Oct. 27, 1976, or one day representations.
after private respondents received the cargo, the latter In this case, private respondents had no
must necessarily be liable. Petitioners relied on the reason to doubt the truth of the shipper's
doctrine that the issuance of the bill of lading carries representations. The airway bill was issued on the
the presumption that the goods were delivered to the basis of such representations.
carrier issuing the bill, for immediate shipment, and it Neither can they be held accountable on the
is nowhere questioned that a bill of lading is prima basis of petitioner's theory that whoever brought the
facie evidence of the receipt of the goods by the cargo to the airport or loaded it on the plane did so as
carrier. A bill of lading is a written acknowledgment of an agent of private respondents, so that even if CMAS
the receipt of the goods and an agreement to was indeed at fault, the liability would be attributed to
transport and deliver them at a specified place to a the airlines. CMAS was not an agent of private
person named or on his order. A bill of lading is a respondents. It was hired to handle all the necessary
receipt as to the quantity and description of the goods shipping arrangements for the transportation of the
shipped and a contract to transport the goods to the remains. CMAS may be classified as a forwarder,
consignee or other person therein designated, on the which is regarded as the agent of the shipper
terms specified in such instrument. (Pomierski) and not of the crrier. It merely contracts
SC: An airway bill estops the carrier from for the transportation of goods by carriers and has no
denying receipt of goods. However, as between the interest in the freight but receives compensation from
shipper and the carrier, when no goods have been the shipper as his agent.
delivered for shipment no recitals in the bill can estop The facts of the case would point to CMAS as
the carrier from showing the true facts. We must the culprit. In fact, even the petitioners wrote CMAS
therefore allow the airline companies to explain, why, entertaining serious doubts as to whether they were
despite the issuance of the airway bill and the date responsible for the mix-up. But the court cannot rule
thereof, they deny having received the remains of on the possible liability of CMAS as such is not at issue
Saludo on Oct. 26, 1976. in this case and there has not been convincing
As found by the CA, the airway bill was issued, evidence on the matter.
not as evidence of receipt of delivery but merely as
confirmation for the booking made for the SF-Manila (3) Petitioners contended that TWA by agreeing to
flight scheduled on October 27, 1976. It was not until transport the remains, it made itself a party to the
Oct. 28 that PAL received physical delivery of the body contract of carriage nad was therefore bound by the
at SF. The extraordinary responsibility of CC begins airway bill. When TWA shipped the remains ten hours
from the time the goods are delivered to the carrier. earlier than scheduled, it allegedly violated the terms
This responsibility remains in force even when they are of the airway bill which compounded, if not directly
temporarily unloaded or stored in transit, unless the caused, the switching of the caskets. The EEs of TWA
shipper exercises the right of stoppage in transitu, and presumably caused the mix-up by loading the wrong
terminates ony after the lapse of a reasonable time for casket on the plane. TWA must be presumed
the acceptance of the goods by the consignee or other negligent unless such is rebutted. TWA contends that
person entitled to receive them. For such duty to it faithfully complied with the obligations under the
commence, there must in fact have been delivery of airway bill. Said faithful compliance was not affected
the cargo subject of the contract of carriage. Only by the fact that the remains were shipped on an earlier
when such fact of delivery has been unequivocally flight as there was no fixed time for completion of
esablished can the reqt. of extraordinary responsibility carriage stipulated on. TWA did not undertake to carry
arise. the cargo aboard any specified aircraft, in view of the
As found by the CA, the body was really condition on the back of the airway bill, which provides
received by PAL on Oct. 28, 1976 and it was from such that " xxx no time is fixed for the completion of the
date that it became responsible for the agreed cargo carriage, xxx and that Carrier may without notice
under the airway bill. Consequently, for the switching substitute alternate carriers or aircrafts xxx."
of caskets prior thereto which was not caused by them
and subsequent events caused thereby, PAL cannot be SC : TWA's contention is tenable. TWA can use
held liable. substitute aircraft, even without notice and without the
assumption of any obligation whatsoever to carry the
(2) Petitioners allege that even assuming CMAS was at goods on any specified aircraft. This is clearly
fault, PAL would still be liable because whoever sanctioned by the contract of carriage. When a CC
brought the cargo to the airport or loaded it on the undertakes to convey goods, the law implies a
plane did so as agent of PAL. contract that they shall be delivered at destination
within a reasonable time, in the absence of any
SC: This contention is without merit. When agreement as to the time of delivery. In case at bar, no
the cargo was received from CMAS, Air Care Intl, PAL's special contract for prompt delivery was entered into
agent and TWA had no way of determining its actual by the parties.
contents, since the casket was hermetically sealed by Condition No. 5 is binding on the plaintiff even
the Philippine Vice-Consul. They had to rely on the if it is printed at the back of the airway bill. This is in
information given by CMAS. No amount of inspection the nature of a contract of adhesion. However, such
by the airlines could have guarded against the condition only serves to insulate the carrier from
switching that had taken place. They had no authority liability in those instances when the changes in routes,
to unseal and open the casket. It is the right of the flights and schedules are clearly justified by the
carrier to require good faith on the part of those peculiar circumstances of a particular cae, or by
persons who deliver goods to be carried by it. In the general transportation practices, customs and usages,
absence of more definite information, the carrier has or by contingencies, emergencies in aviation, such as
the right to accept shipper's marks as to the contents weather turbulence, mechanical failure, reqts. of
PAGE 45
TRANSPORTATION AND MARITIME LAW
national security and the like. In this case, the delay (4) In case of a clearly unfounded civil
in the delivery of the remains cannot be attributed to action or proceeding against the plaintiff;
the fault, negligence or malice of private respondents. (5) Where the defendant acted in gross
When TWA shipped the remains on an earlier flight, it and evident BF in refusing to satisfy the
did so in the exercise of sound discretion and with plaintiff's plainly valid, just and demandable
reasonable prudence -- they wanted to assure that the claim;
shipment would be received in SF in sufficient time for (6) In actions for legal support;
transfer to PAL. TWA knew of the urgency of the (7) In actions for the recovery of wages
shipment due to the notation on the airway bill : "xxx or household helpers, laboreres and skilled
Please return bag first available flight to SFO." workers;
(8) In actions for indemnity under
(4) Petitioners alleged that private respondents are workmen's compensation and employer's
liable for tort on account of humiliating, arrogant and liability laws;
indifferent acts of their officers and personnel. They (9) In a separate civil action to recover
contended that there was no reason for the personnel civil liability arising from a crime;
to disclaim knowledge of the arrival or whereabouts of (10) When at least double judicial costs
the body other than their sheer arrogance, indifference are awarded;
and extreme insensitivity to their feelings. (11) In any other cases where the court
deems it just and equitable that attorney's fees
SC: It affirmed the CA's findings that TWA EEs and expenses of litigation should be recovered.
did not deal with petitioners in a grossly humiliating, In all cases, the attorney's fees and
arrogant or indifferent manner as to amount to BF or expenses of litigation must be reasonable.
malice. It must be pointed out that the lamentable
actuations of TWA's EEs leave much to be desired, Art. 2210. Interest may, in the discretion
particularly so given the grief of petitioners, their of the court, be allowed upon damages awarded
tension and anxiety wrought by the confusion and the for breach of contract.
fear about where their mother's remains were. Airline
companies are sternly admonished to strictly require
their personnel to be more accommodating to 4 Agbayani:
passengers and the general public.
Petitioners agonized for 5 hours unattended to Damages arising from death; factors to be
and without any assurance from the EEs of TWA. considered
Common sense should have dictated that they exert a 1. number of years on the basis of which the
little extra effort in making more extensive inquiry, by damages shall be computed
themselves or through their superiors, rather than just 2. the rate at which the losses sustained
shrug off the promblem with a callous and uncaring should be fixed. In the determination of the losses or
remark that they had no knowledge about it. damages sustained by dependents and heirs of the
The foregoing observations do not appear to deceased, said damages consist not of the full amount
be applicable to PAl and its EEs. of his earnings, but of the support they received or
would have received from him had he not died in
(5) In the absence of strong and positive evidence of consequence of the negligence of defendant.
fraud, malice or bad faith, moral damages cannot be In fixing the amount of support, only net
awarded. Neither can exemplary damages nor earnings are to be considered-- total earnings less
attorney's fees, in the absence of proof that expenses necessary in the creation of such earnings
defendants acted with malice, fraud or BF. The less living and incidental expenses
censurable conduct of TWA's EEs cannot be said to
have approximated the dimensions of fraud, malice or Damages recoverable when death occurs due to
BF. Nonetheless, the facts show that petitioners' right commission of crime.-- (1) indemnity for the death
to be treated with due courtesy in accordance with the of victim (P 50T); (2) indemnity for loss of earning
degree of diligence required by law to be exercised by capacity of the deceased; (3) moral damages; (4)
every common carrier was violated by TWA and this exemplary damages; (5) attorney's fees and expenses
entitles them, at least, to nominal damages from TWA of litigation; and (6) interest. Indemnity arising from
alone. Arts. 2221 and 2222 of the Civil Code makes it the fact of death is fixed whereas the others are still
clear that nominal damages are not intended for subject to the determination of the court based on
indemnification of loss suffered but for the vindication evidence presented; indemnity for death is distinct
or recognition of a right violated or invaded. They are and separate from the other forms of indemnity
recoverable where some injury has been done but the
amount of which the evidence fails to show, the
assessment of damages being left to the discretion of Common carrier not liable for moral damages to
the court accdg. to the circumstances of the case. passenger injured due to negligence of driver.--
Nominal damages of P 40,000 to be paid by TWA was A CC's bad faith is not to be lightly inferred from a
awarded in favor of petitioners as a reasonable mere finding that the contract was breached through
amount in the circumstances. negligence of the CC's employees (Fores vs Miranda)
III. CODE OF COMMERCE PROVISIONS ON Art. 352. The bills of lading or tickets in
OVERLAND TRANSPORTATION cases of transportation of passengers may be
COMMERCIAL CONTRACTS FOR diverse, one for persons and another for
TRANSPORTATION OVERLAND baggage; but all of them shall bear the name of
the carrier, the date of shipment, the point of
departure and arrival, the cost, and with regard
A. Scope of Overland Transportation to the baggage, the number and weight of the
packages, with such other statements which
may be necessary for their easy identification.
B. Nature of Contract
A bill of lading may defined as a written
acknowledgment of the receipt of goods and an
agreement to transport and to deliver them at a
PAGE 48
TRANSPORTATION AND MARITIME LAW
specified place to a person named or on his order. It receipt of goods for transportation, it is in legal effect,
comprehends all methods of transportation. a bill of lading
A ticket issued by a carrier to a passenger is
Nature : (1) each bill is a contract in itself and the not only a receipt for the fare paid but is the contract
parties are bound by its terms between the passenger and the carrier, of the
(2) a bill of lading is also a receipt passenger's right to ride in the CC's vehicle
(3) it is also a symbol of the goods covered by
it Classes of bills of lading :
1. negotiable B/L - where it is stated that the
A bill of lading is also a document of title. A goods will be delivered to the bearer, or to the order of
document of title is any document used in the ordinary any person named in such document
course of business in the sale or transfer of goods, as 2. non-negotiable B/L - where the goods are to
proof of the possession or control of goods, or be delivered to a specified person
authorizing or purporting to authorize the possessor of 3. clean B/L - does not indicate any defect in
the document to transfer or receive, either by the goods
indorsement or by delivery, goods represented by such 4. foul B/L - indicates that the goods covered
document. by it are in bad condition
5. spent B/L - covers goods that have already
(b) Form, Contents been delivered by the CC without a surrender of a
signed copy of the B/L; the subsequent delivery of the
Art. 350. The shipper as well as the spent B/L cannot give to the buyer of it any actual
carrier of merchandise and goods may mutually control of the goods, or anything which can fairly be
demand of each other the issuance of a bill of called delivery
lading in which there shall be stated: 6. through B/L - issued by the CC who is
1. The name, surname, and domicile of obliged to use the facilities of other carriers as well as
the shipper. his own facilities for the purpose of transporting the
2. The name, surname, and domicile of goods from the city of the seller to the city of the
the carrier. buyer, which B/L is honored by the subsequent
3. The name, surname, and domicile of interested carriers who do not issue their own ladings
the person to whom or to whose order the goods 7. on board B/L - states that the goods have
are addressed, or whether they are to be been received on board the vessels which is to carry
delivered to the bearer of the said bill. the goods
4. A description of the goods, stating 8. received for shipment B/L - states that the
their generic character, their weight, and the goods have been received for shipment with or w/o
external marks or signs of the packages specifying the vessel by which the goods are to be
containing the same. shipped; issued when conditions are not normal and
5. The cost of the transportation. there is an insufficiency of shipping space
6. The date of which the shipment is 9. custody B/L - issued by the CC to whom the
made. goods have been delivered for shipment but the
7. The place of the delivery to the steamer indicated in the B/L which is to carry the
carrier. goods has not yet reached the port where the goods
8. The place and time at which the are held for shipment
delivery is to be made to the consignee. 10. port B/L - issued by the CC to whom the
9. The damages to be paid by the goods have been delivered and the steamer indicated
carrier in case of delay, if any agreement is in the B/L by which the goods are to be shipped is
made on this point. already in the port where the goods are held for
shipment
terms of the document; prior to notification of the CC, Art. 357. If by reason of well-founded
the title of the transferee may be defeated by levy suspicions of falsity in the declaration of the
upon the goods or a subsequent purchaser from the contents of a package, the carrier should decide
transferor of a subsequent sale of the goods by a to examine it, he shall do so before witnesses,
transferor in the presence of the shipper or of the
consignee.
Should the shipper or consignee cited not
(c) Function appear, the examinations shall be made before
a notary, who shall draft a certificate of the
Art. 353. The legal basis of the contract result of the examination, for such purposes as
between the shipper and the carrier shall be the may be proper.
bills of lading, by the contents of which all If the declaration of the shipper should
disputes which may arise with regard to their be correct, the expenses caused by the
execution and fulfillment shall be decided, no examination and those of carefully repacking
exceptions being admissible other than forgery the packages shall be defrayed by the carrier,
or material errors in the drafting thereof. and in a contrary case by the shipper.
After the contract has been complied If the CC has a well-founded suspicion of falsity in the
with, the bill of lading shall be returned to the declaration as to the contents of a package, he may
carrier who may have issued it, and by virtue of examine it --> he must follow the procedure under 357
the exchange of this title for the article
transported, the respective obligations and 4. No bill of lading
actions shall be considered canceled, unless the
same act the claims which the contracting Art. 354. In the absence of a bill of
parties desire to reserve are reduced to writing, lading the respective claims of the parties shall
exception being made of the provisions of be decided by the legal proofs that each one
Article 366. may submit in support of his claims, in
accordance with the general provisions
In case the consignee, upon receiving the established in this Code for commercial
goods, cannot return the bill of lading contracts.
subscribed by the carrier, due to its loss or for
any other cause, he shall give said carrier a Art. 351. In transportation made by
receipt for the goods delivered, this receipt railroads or other enterprises which are subject
producing the same effect as the return of the to schedules or the time fixed by regulations, it
bill of lading. shall be sufficient that the bills of lading or the
declarations of shipment furnished by the
shipper refer, with respect to the rate, terms,
B/L constitutes the legal evidence of the contract of and special conditions of the transportation, to
transportation --> all disputes between the parties the schedules and regulations, the application
regarding the execution and performance of the of which he requests; and should no schedule be
contract shall be decided by the contents of the B/L determined, the carrier must apply the rate of
issued by the CC --> the law admits no exceptions the merchandise paying the lowest, with the
other than falsity and material error in the drafting of conditions inherent therein, always including
the B/L such statement or reference to them in the bill
of lading which he delivers to the shipper.
As a contract expressing the terms and
conditions upon which the property is to be
transported, it is to be regarded as merging all prior Bill not essential to contract : While under 350, the
and contemporaneous agreements of the parties, and shipper and the CC may mutually demand that a B/L is
in the absence of fraud, concealment or mistake, its made, it is not obligatory. The fact that a B/L is not
terms or legal import, when free from ambiguity issued does not preclude the existence of a contract of
cannot be explained nor added to by parol (Parol transpo. Provided there is a meeting of the minds and
Evidence Rule) from such meeting arise rights and obligations, there
should be no limitations as to form.
2. Refusal to Transport The B/L is not essential to the contract,
although it may become obligatory by reason of the
Art. 356. Carriers may refuse to accept regulations of companies or as a condition imposed in
packages which appear unfit for transportation; the contract by agreement of the parties themselves
and if said transportation is to be made by Where no B/L is issued, the disputes between
railway, and the shipment is insisted on, the the parties shall be decided accdg. to the rules laid
company shall carry them, being exempt from down in Art. 354
all liability if its objections are so stated in the
bill of lading.
E. Responsibility of the Carrier
Where there is an agreed route, the CC shall be liable Where goods run risk of loss due to their
for losses due not only to the change of route but also nature, Art. 362 provides for the remedy of sale by the
to other causes, together with the indemnity agreed CC of the goods, placing them for the purpose at the
upon --> the CC may not avail of the contract limiting disposal of the judicial authority or of the officials
his liability in case of unjustified change of route designated by special provisions
were found at the time they were received, without packages, in which case said claim shall only be
damage or impairment --> otherwise, the CC is liable admitted at the time of the receipt of the
for damages packages.
Partial delivery: The consignee may refuse to After the periods mentioned have
receive the goods delivered, if he can prove that he elapsed, or after the transportation charges
cannot make use of them independently of those not have been paid, no claim whatsoever shall be
delivered --> true solution depends upon the economic admitted against the carrier with regard to the
use which the goods transported have (consignee condition in which the goods transported were
cannot be arbitrary and must justify his determination) delivered.
Estoppel of shipper by laches : neglect or
delay of shipper to demand immediately, or within a
reasonable time, the return of the merchandise In case of damaged goods, the damage may either be
shipped or its value in case of non-delivery (1) ascertainable only by opening of the packages, or
constitutes estoppel by laches (2) ascertainable from the outside part of the package
Places the CC at a disadvantageous position to In Case 1, the claim against the CC for
show that it had fulfilled what it had undertaken; damages must be made within 24 hours following the
makes it difficult for the CC to prove delivery receipt of the merchandise
In Case 2, the claim must be made at the time
of receipt
Art. 364. If the effect of the damage The claim must be made before the payment
referred to in Article 361 should be only a of transportation charges
reduction in the value of the goods, the ** otherwise, no action for damages may be
obligation of the carrier shall be reduced to the maintained against the CC
payment of the amount of said reduction in
value, after appraisal by experts. When period begins to run : period begins to
run when the consignee received possession of the
Where all the goods are delivered but damage goods such that he may exercise over it the ordinary
is to such an extent that their value is diminished, the control pertinent to ownership
obligation of the CC shall be reduced to the payment There must be delivery of the merchandise by
of the amount which, in the judgment of experts, the CC to the consignee at the place of destination -->
constitute such difference in value --> subject of Art. 366 applies only to cases of claims for damage to
course to other damages under the NCC goods actually turned over by the CC and received by
the consignee
Art. 365. If, on account of the damage, The conditions under Art. 366 are not
the goods are rendered useless for sale or limitation of action but are conditions precedent to a
consumption for the use for which they are cause of action --> if the shipper or consignee fails to
properly destined the consignee shall not be allege and prove the conditions under 366, he shall
bound to receive them, and may leave them in have no right of action against the CC
the hands of the carrier, demanding payment of
their value at the current market price that day. The CC may require in the B/L that the goods
If among the goods damages there be examined at the time of delivery thereof --> the CC
should be some in good condition and without may likewise waive such right
any defect whatsoever, the foregoing provision
shall be applicable with regard to the damaged Art. 366 is modified by a B/L prescribing a
ones, and the consignee shall receive those longer period for filing of written claim with the CC or
which are sound, this separation being made by its agent
distinct and separate articles, no object being The unilateral action of a CC in stamping a
divided for the purpose, unless the consignee condition in the notice of arrival, requiring examination
proves the impossibility of conveniently making of bad order cargo by the ship's agent before removal
use thereof in this form. from port authorities as condition precedent to an
The same provision shall be applied to action for recovery cannot modify or add conditions to
merchandise in bales or packages, with the B/L --> unreasonable and unfair in that it allows
distinction of the packages which appear sound. CC to avoid responsibility for the loss of or damage to
their cargo when in packages or covered
Where damage renders the goods useless for sale and The purpose of short period for claiming
consumption for the purposes for which they are damages : to afford the CC a reasonable opportunity
properly destined: and facilities to check the validity of the claims while
1. if the damage affects all goods, the the acts are still fresh in the minds of the person who
consignee may abandon all the goods to the CC who took part in the transaction and the documents are
shall pay the corresponding damages still available.
2. if the damage affects only some of the
goods, the consignee may abandon only the damaged The consignee may file a provisional claim : it
goods --> but if the consignee can prove that it is is not necessary that such claim should state a
impossible to conveniently use the undamaged goods detailed list of the loss or damage; they only have to
in that form, without the damaged goods, the law contain descriptions of the shipments in question
authorizes the consignee to abandon all the goods sufficient to have allowed the CC to make reasonable
verifications of such claim --> the determination of the
specific amount of damages claimed should be done
Art. 366. Within the twenty-four hours carefully and without haste and these can be done
following the receipt of the merchandise a claim only in a formal claim which will be filed after the
may be made against the carrier on account of provisional claim
damage or average found upon opening the
packages, provided that the indications of the This stipulation is in the nature of a limitation
damage or average giving rise to the claim upon the owner's right to recovery --> the burden of
cannot be ascertained from the exterior of said proof is on the CC to show that the limitation was
PAGE 52
TRANSPORTATION AND MARITIME LAW
reasonable and in proper form or within the time shall be ordered by the municipal judge, where
stated (see Southern Lines vs CA) there is no judge of first instance, to be placed
at the disposal of the shipper or sender, without
A a stipulation in the B/L providing for a prejudice to a person having a better right, this
shorter period than the statutory period within which deposit having all the effects of a delivery.
to bring action for breach is valid --> does not in
any way defeat the right to recover but merely
requires that said right be asserted by action at an Judicial deposit as a remedy:
earlier period (filing of claims is different from filing of 1. where the consignee cannot be found at the
suits) residence indicated
2. where the consignee refused to pay the
transportation charges
Art. 367. If there should occur doubts 3. where the consignee refuses to receive the
and disputes between the consignee and the goods
carrier with regard to the condition of goods Judicial deposit shall produce all the effects of
transported at the time of their delivery to the delivery subject to third persons with better rights
former, the said goods shall be examined by Duty to look for consignee : if consignee is not
experts appointed by the parties, and in case of present, he is entitled to reasonable notice from the
disagreement, a third one appointed by the CC of their arrival and a fair opportunity to take care of
judicial authority, the result of the examination and remove them
being reduced to writing; and if the persons : if the consignee is unknown to the CC, the
interested should not agree to the report of the latter must use proper and reasonable diligence to find
experts and could not settle their disputes, said him, and if the consignee still cannot be found, the
judicial authority shall order the deposit of the goods may be stored in a proper place and the CC will
merchandise in a safe warehouse, and the have performed his whole duty and shall be
parties interested shall make use of their rights discharged from liability as a CC
in the proper manner. Failure to look for consignee and to give him
reasonable notice shall make the CC liable for
If doubts and disputes should arise between the damages resulting from the delay in the receipt of the
consignee and the CC with respect to the condition of goods by the consignee --> apply 1738 on the liability
the goods transported at the time of the delivery, Art. of the CC even when the goods are deposited in its
367 shall govern --> expert opinion on the matter is warehouse until after the consignee has been given
not conclusive on the parties reasonable notice and opportunity to remove the
goods
The delivery must be made to the consignee Article 370. If a period has been fixed for
the delivery of the goods, it must be made
Where the B/L is issued to the order of the shipper, the within the same, otherwise the carrier shall pay
CC is under a duty not to deliver the merchandise the indemnity agreed upon in the bill of lading,
except upon presentation of the B/L duly indorsed by neither the shipper nor consignee being entitled
the shipper, and where the CC delivered the goods to to anything else.
another person who did not present the B/L, such CC is Should no indemnity have been agreed
liable for misdelivery --> duty to transport the goods upon and the delay exceeds the time fixed in
safely and to deliver them to the person indicated in the bill of lading, the carrier shall be liable for
the B/L the damages which may have been caused by
the
Misdelivery: Delivery to a person different from that delay.
indicated in the B/L --> different from non-delivery
In case of conflicting orders of the shipper and Art. 358. Should no period within which
the consignee (where one orders the return and the goods are to be delivered be previously fixed,
other orders the delivery of the goods), there is no the carrier shall be under the obligation to
other recourse than to determine at what moment the forward them in the first shipment of the same
right of the shipper to countermand the shipment or similar merchandise which he may make to
terminates --> this moment can be no other than the the point of delivery; and should he not do so,
time when the consignee or legitimate holder of the the damages occasioned by the delay shall be
B/L appears with such B/L before the CC and makes suffered by him.
himself a party to the contract (prior to that time, he is
a stranger to the contract)
Where period fixed for delivery : the CC must deliver
the goods within the time fixed --> for failure to do so,
(c) Judicial Deposit the CC shall pay indemnity stipulated in the B/L,
neither the shipper nor the consignee being entitled to
Art. 369. Should the consignee be not anything else --> however, under the CC, damages
found at the domicile indicated in the bill of shall be paid if the carrier refuses to pay the stipulated
lading, or should refuse to pay the indemnity or is guilty of fraud in the fulfillment of his
transportation charges and expenses, or to obligation (Art. 1126,NCC)
receive the goods, the deposit of said goods
PAGE 53
TRANSPORTATION AND MARITIME LAW
A CC in GF may be held liable only for Art. 378. Transportation agents shall be
damages that were foreseen or might have been obliged to keep a special registry, with the
foreseen at the time the contract of transpo was formalities required by Article 36, in which there
entered into --> before a CC could be held liable for shall be entered, in progressive order of number
special damages, such as loss of profits on account of and dates, all the goods the transportation of
the delay or failure of deliver, he must have notice at which is undertaken, stating the circumstances
the time of the delivery of the particular circumstances required by Articles 350 et seq. for the
attending the shipment and which would probably lead respective bills of lading.
to such special loss if he defaulted (Mendoza vs PAL)
If the CC incurs in delay in transporting the
goods, a natural disaster shall not free such carrier (g) Compliance with
from responsibility; where the CC without cause delays administrative regulations
the transportation of the goods, the contract limiting
the CC's liability cannot be availed of in case of the Art. 377. The carrier shall be liable for all
loss, destruction or deterioration of the goods the consequences arising from noncompliance
Where property in the hands of a CC is not on his part with the formalities prescribed by
delivered within a reasonable time after it has reached the laws and regulations of the public
its destination, the CC in the absence of any legal administration during the entire course of the
exemption and after demand has been made and trip and upon arrival at the point of destination,
delivery refused, is liable for a conversion of the except when his omission arises from his having
property --> the consignee may waive title to the been induced into error by false statements of
property and sue for conversion and is entitled to the the shipper in the declaration of the
value of the goods at the time they should have been merchandise.
delivered to him --> subsequent tender of the goods If the carrier has acted in accordance
by the CC is not available as a defense with a formal order received from the shipper or
If there has been demand and the CC tenders consignee of the merchandise both shall incur
the goods, the consignee cannot refuse to receive the liability.
goods and sue for conversion; his sole remedy is an
action for damages on account of the delay --> there
can only be conversion if there has been demand and The CC is exempted from responsibility where his
the CC refuses delivery failure to comply arises from having been led into error
The time for delivery when no period fixed : by the falsehood on the part of the shipper in the
the CC shall be bound to forward them in the first declaration of the merchandise
shipment of the same or similar goods which he makes The shipper or consignee may become liable
to the point where he must deliver them --> should he for noncompliance with govt. rules and regulations,
not do so, the damages caused by the delay shall be when the CC has acted by virtue of a formal order of
for his account the shipper or consignee --> but the CC continues to
Art. 358 is not violated when though the be liable
goods were not shipped on the train agreed upon, they
were shipped on another train which arrived earlier F. Rights and Obligations of Shipper and/or
than the one agreed upon Consignee
1. Right to Damages
(e) Two or more carriers
(a) Condition imposed on right
Art. 373. A carrier who delivers
merchandise to a consignee by virtue of
agreements or combined services with other Art. 366. Within the twenty-four hours
carriers shall assume the obligations of the following the receipt of the merchandise a claim
carriers who preceded him, reserving his right may be made against the carrier on account of
to proceed against the latter if he should not be damage or average found upon opening the
directly responsible for the fault which gives packages, provided that the indications of the
rise to the claim of the shipper or of the damage or average giving rise to the claim
consignee. cannot be ascertained from the exterior of said
packages, in which case said claim shall only be
The carrier making the delivery shall also admitted at the time of the receipt of the
assume all the actions and rights of those who packages.
may have preceded him in the transportation. After the periods mentioned have
elapsed, or after the transportation charges
The shipper and the consignee shall have have been paid, no claim whatsoever shall be
an immediate right of action against the carrier admitted against the carrier with regard to the
who executed the transportation contract, or condition in which the goods transported were
against the other carriers who received the delivered.
goods transported without reservation.
The reservations made by the latter shall Art. 357. If by reason of well-founded
not however exempt them from the liabilities suspicions of falsity in the declaration of the
they may have incurred by reason of their own contents of a package, the carrier should decide
act. to examine it, he shall do so before witnesses,
PAGE 54
TRANSPORTATION AND MARITIME LAW
in the presence of the shipper or of the Par. 2 especially binds the horses, vehicles, vessels
consignee. and eqpt. and all other principal and accessory means
Should the shipper or consignee cited not of the CC in favor of the shipper --> this lien is a
appear, the examinations shall be made before security for the payment of the value of the goods
a notary, who shall draft a certificate of the which the CC must pay in case of loss or
result of the examination, for such purposes as misplacement
may be proper. Art. 1744, NCC. A stipulation between
If the declaration of the shipper should the CC and the shipper or owner limiting the
be correct, the expenses caused by the liability of the former for the loss, destruction or
examination and those of carefully repacking deterioration of the goods to a degree less than
the packages shall be defrayed by the carrier, extra-o diligence shall be valid, provided it be:
and in a contrary case by the shipper. (1) in writing, signed by the shipper or
owner;
(2) supported by a valuable consideration
Art. 353. The legal basis of the contract other than the service rendered by the CC; and
between the shipper and the carrier shall be the (3) reasonable, just, and not contrary to
bills of lading, by the contents of which all public policy. (New Civil Code.)
disputes which may arise with regard to their
execution and fulfillment shall be decided, no (c) Amount of damages for
exceptions being admissible other than forgery delay
or material errors in the drafting thereof.
After the contract has been complied Art. 371. In cases of delay on account of
with, the bill of lading shall be returned to the the fault of the carrier, referred to in the
carrier who may have issued it, and by virtue of foregoing articles, the consignee may leave the
the exchange of this title for the article goods transported in the hands of the carrier,
transported, the respective obligations and informing him thereof in writing before the
actions shall be considered canceled, unless the arrival of the same at the point of destination.
same act the claims which the contracting When this abandonment occurs, the
parties desire to reserve are reduced to writing, carrier shall satisfy the total value of the goods,
exception being made of the provisions of as if they had been lost or mislaid.
Article 366. Should the abandonment not occur the
In case the consignee, upon receiving the indemnity for loss and damages on account of
goods, cannot return the bill of lading the delays cannot exceed the current price of
subscribed by the carrier, due to its loss or for the goods transported on the day and at the
any other cause, he shall give said carrier a place where the delivery was to have been
receipt for the goods delivered, this receipt made. The same provision shall be observed in
producing the same effect as the return of the all cases where this indemnity is due.
bill of lading.
Art. 372. The value of the goods which Art. 371. In cases of delay on account of
the carrier must pay in case of their being lost the fault of the carrier, referred to in the
or mislaid shall be fixed in accordance with foregoing articles, the consignee may leave the
what is stated in the bill of lading, no proofs goods transported in the hands of the carrier,
being allowed on the part of the shipper that informing him thereof in writing before the
there were among the goods declared therein arrival of the same at the point of destination.
articles of greater value, and money. When this abandonment occurs, the
carrier shall satisfy the total value of the goods,
Horses, vehicles, vessels, equipments, as if they had been lost or mislaid.
and all the other principal and accessory means Should the abandonment not occur the
of transportation, shall be especially obligated indemnity for loss and damages on account of
in favor of the shipper, although with respect to the delays cannot exceed the current price of
railroads said obligation shall be subordinated the goods transported on the day and at the
to the provisions of the laws of concession with place where the delivery was to have been
regard to property and to those of this Code made. The same provision shall be observed in
with regard to the manner and form of making all cases where this indemnity is due.
attachments and seizures against the said
companies.
Right of abandonment: Exceptional but limited
right
The value of the goods stated in the B/L is conclusive The right must be exercised during the
between the parties and the shipper is not allowed to intervening period between the moment when the
prove a higher value fault of the CC produces a delay, which is the
It is only when the CC's fault is so gross as to generative cause of the action, until the moment just
amount to actual fraud, that the actual amount of the before the arrival of the goods at the place of delivery,
losses and damages suffered may be proved by the by communicating such abandonment to the CC in
shipper against the carrier writing
PAGE 55
TRANSPORTATION AND MARITIME LAW
Where these conditions do not concur, the bill of lading subscribed by the carrier, if one
refusal to accept cannot be effective were issued, be returned to him, exchanging it
for another containing the novation of the
Damages for abandonment : Art. 371 (2) --> subject to contract.
Civil Code The expenses arising from the change of
consignment shall be defrayed by the shipper.
Art. 360. The shipper may, without
changing the place where the delivery is to be 3. Obligation to pay transportation
made, change the consignment of the goods charges
delivered to the carrier, and the latter shall
comply with his orders, provided that at the Art. 374. The consignees to whom the
time of making the change of the consignee the remittance may have been made may not defer
bill of lading subscribed by the carrier, if one the payment of the expenses and transportation
were issued, be returned to him, exchanging it charges on the goods that they received after
for another containing the novation of the twenty-four hours have elapsed from the time
contract. of the delivery; and in case of delay in making
The expenses arising from the change of this payment, the carrier may demand the
consignment shall be defrayed by the shipper. judicial sale of the goods he transported to a
sufficient amount to cover the transportation
charges and the expenses incurred.
Art. 365. If, on account of the damage,
the goods are rendered useless for sale or Railroad corporations have the power to detain
consumption for the use for which they are freight, goods or luggage, to answer for the freight,
properly destined the consignee shall not be storage and other transportation charges
bound to receive them, and may leave them in In case of failure of the shipper, owner or
the hands of the carrier, demanding payment of consignee to pay for such charges, the CC has the
their value at the current market price that day. power to sell such freight, goods, or luggage at public
If among the goods damages there auction following the procedure under the law
should be some in good condition and without
any defect whatsoever, the foregoing provision
shall be applicable with regard to the damaged Art. 375. The goods transported shall be
ones, and the consignee shall receive those specifically bound to answer for the
which are sound, this separation being made by transportation charges and for the expenses
distinct and separate articles, no object being and fees caused by the same during their
divided for the purpose, unless the consignee transportation, and until the time of their
proves the impossibility of conveniently making delivery.
use thereof in this form.
The same provision shall be applied to This special right shall be limited to eight
merchandise in bales or packages, with days after the delivery has been made, and
distinction of the packages which appear sound. after said prescription the carrier shall have no
further right of action than that corresponding
to an ordinary creditor.
Art. 363. With the exception of the cases
prescribed in the second paragraph of Article
361, the carrier shall be obliged to deliver the Art. 376. The preference of the carrier to
goods transported in the same condition in the payment of what is due him for the
which, according to the bill of lading, they were transportation and expenses of the goods
at the time of their receipt, without any damage delivered to the consignee shall not be affected
or impairment, and should he not do so, he shall by the bankruptcy of the latter, provided the
be obliged to pay the value of the goods not action is brought within the eight days
delivered at the point where they should have mentioned in the foregoing article.
been and at the time the delivery should have
taken place.
If part of the goods transported should Art. 2241. With reference to specific
be delivered the consignee may refuse to movable property of the debtor, the ff. claims or
receive them, when he proves that he cannot liens shall be preferred :
make use thereof without the others. xxx
(9) Credits for transportation, upon the
Cases where consignee may abandon goods : goods carried, for the price of the contract and
1. Art. 363, in case of partial non-delivery incidental expenses, until their delivery and for
where the consignee proves that he cannot make use thirty days thereafter. (New Civil Code.)
of the goods capable of delivery independently of
those not delivered
2. Art. 365, where the goods are rendered Two sanctions for the enforcement by the CC of the
useless for sale and consumption for the purposes for payment of expenses and transpo charges :
which they are properly destined 1. Art. 374 - judicial sale of the goods
3. Art. 371, where there is delay through the transported
fault of the carrier 2. Art. 375 - creating a lien in favor of the CC
on the goods transported --> 8 day period has been
increased to 30 days by the NCC
2. Right to change consignment The purpose of the lien and time limit:
Reciprocal to that established in favor of the shipper
Art. 360. The shipper may, without under
changing the place where the delivery is to be
made, change the consignment of the goods Art. 372(par. 2); time limit rests on the necessity which
delivered to the carrier, and the latter shall the consignee must have for alienation of the goods,
comply with his orders, provided that at the by which the CC is given a period relatively urgent
time of making the change of the consignee the pertaining to the said goods transported --> after the
PAGE 56
TRANSPORTATION AND MARITIME LAW
The mere fact that the goods remain in the A. Concept of Admiralty; Jurisdiction over
possession of the CC because they have not been Admiralty Cases
removed by the consignee, and the right of the CC to
demand the sale of the goods to satisfy the cost of BP 129, Sec. 19. Regional Trial Courts
transportation and other expenses, do not deprive the shall exercise exclusive original jurisdiction:
CC of its right to demand in a proper action the xxx
amounts owing to it by reason of the contract of (3) In all actions in admiralty and
transpo maritime jurisdiction where the demand or
claim exceeds one hundred thousand pesos
The bankruptcy of the consignee shall not cut (P100,000) xxx.
off the preference of the CC, provided that the claim is
made w/in 30 days from date of delivery (NCC)
BP 129, Sec. 33. Metropolitan Trial
Courts, Municipal Trial Courts and Municipal
5. Obligation to return bill of lading Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over
Art. 353. The legal basis of the contract civil actions and probate proceedings, testate
between the shipper and the carrier shall be the and intestate, including the grant of provisional
bills of lading, by the contents of which all remedies in proper cases, where the value of
disputes which may arise with regard to their the personal property, estate or amount of the
execution and fulfillment shall be decided, no demand does not exceed one hundred thousand
exceptions being admissible other than forgery pesos (P100,000), or in Metro Manila where such
or material errors in the drafting thereof. personal property, estate, or amount of the
After the contract has been complied demand does not exceed Two hundred thousand
with, the bill of lading shall be returned to the pesos (P200,000), exclusive of interest,
carrier who may have issued it, and by virtue of damages of whatever kind, attorney's fees,
the exchange of this title for the article litigation expenses, and costs, the amount of
transported, the respective obligations and which must be specifically alleged: Provided,
actions shall be considered canceled, unless the That interest, damages of whatever kind,
same act the claims which the contracting attorney's fees, litigation expenses, and costs
parties desire to reserve are reduced to writing, shall be included in the determination of the
exception being made of the provisions of filing fees: Provided, further, That where there
Article 366. are several claims or causes of action between
In case the consignee, upon receiving the the same or different parties, embodied in the
goods, cannot return the bill of lading same complaint, the amount of the demand
subscribed by the carrier, due to its loss or for shall be the totality of the claims in all the
any other cause, he shall give said carrier a causes of action, irrespective of whether the
receipt for the goods delivered, this receipt causes of action arose out of the same or
producing the same effect as the return of the different actions.
bill of lading.
maritime depends not on the place where the contract Book of the Code of Commerce which deals with
is made and is to be executed, making the locality the maritime commerce and in which Art. 865 is found
test, but on the subject matter of the contract, making was evidently intended to define the law relative to
the true criterion a maritime service or a maritime merchant vessels and marine shipping, and the
transaction. Specifically, admiralty has jurisdiction of vessels intended in that Book are such as are run by
a proceeding in rem or in personam for the breach of a masters having special training with the elaborate
contract of affreightment, whether evidenced by a B/L apparatus of crew and equipment indicated in the
or a charter party. And typical of a controversy over Code. The word "vessel" used in the section was not
contracts of affreightment is a suit of one party intended to include all ships, craft, or floating
against the other for loss or damage to the cargo. This structures of every kind without limitation, and the
is the very case before us, because the respondent provision of that section should not be held to include
Yaras & Co. seeks to recover from the petitioner IH the minor craft engaged only in river or bay traffic. Vessels
value of certain lost cargo. of minor nature, such as river boats and those carrying
The contention of Yaras that the admiralty passengers from ship to shore are governed as to their
jurisdiction is not involved because the contract in liability in passengers, by the Civil Code.
question was made upon land and to be terminated The word ship and vessel, in their grammatical
upon land, merely reflects the English rule which had sense are applied to designate every kind of craft,
long been rejected in the US. It is now well-settled in large or small, merchant or war, a signification which
the latter country that the jurisdiction of admiralty in does not differ essentially from its juridical meaning
matters of contract depends upon the subject matter, according to which vessels for the purpose of the Code
i.e., the nature and character of the contract and that of Commerce, are considered not only those engaged
the English rule which conceded jurisdiction only to in navigation whether coastwise or high seas, but also
contracts made upon and to be performed upon floating docks, pontoons,dredges, scows, and other
navigable waters, is inadmissible, the true criterion floating apparatus for the service of the industry or
being that the contract has reference to maritime maritime commerce.
service or maritime transaction. Under the law, the Yet notwithstanding these principles from
CFI has jurisdiction over admiralty cases. which it would seem that any floating apparatus which
serves directly for the transportation of things or
persons or which indirectly is related to this industry,
B. Vessels ought to be subjected to the principles of the Code
with reference to ownership, transfer, rights,
1. Meaning registrations, etc. they are not applicable to small craft
which are only subject to administrative regulations in
the matter of port service and in the fishing industry.
Lopez vs Duruelo 52 Phil 229 But even if The Code Of Commerce was
applicable, a protest still need not be made since
F: Augusto Lopez, of Silay, Occidental Negros, under Art. 836, want of protest cannot prejudice a
wanted to embark on the interisland steamer San person not in a condition to make known his wishes. A
Jacinto bound for Iloilo. The steamer was anchored person who has suffered injuries like that of the
some half a mile from the shore or port of Silay. In plaintiff cannot be supposed to be in a condition to
order to board the steamer, Lopes boarded the motor make a protest.
boat Jison at the landing which was then engaged in
conveying passengers and luggage to and from the
steamer. Whether due to negligence or incompetence 2. Nature and acquisition of vessels
of Duruelo, the engineer of Jison aged 16, as alleged,
the boat approached too near to the stern of the Art. 573. Merchant vessels constitute
steamer wherein it was struck by the still turning property which may be acquired and transferred
propeller of the steamer. The boat sunk and Lopez by any of the means recognized by law. The
was thrown into the water against the propeller acquisition of a vessel must be included in a
wherein he suffered a bruise in the breast, two serious written instrument, which shall not produce any
fractures of the bones of the left leg and a compound effect with regard to third persons if not
fracture of the left femur. As a result, Lopez was recorded in the registry of vessels. The
hospitalized from February 28 to October 19, 1927 or ownership of a vessel shall also be acquired by
eight months. Lopez filed a complaint and sought the possession thereof in good faith for three
damages amounting to P120,000 alleging that he years, with a good title duly recorded.
suffered injuries due to the negligence and In the absence of any of these requisites,
inexperience having only been in its third day of uninterrupted possession for ten years shall be
apprenticeship on the day of the accident. It was also necessary in order to acquire ownership.
alleged that Jison was overloaded when it carried 14 A captain cannot acquire by prescription
passengers instead of its capacity for eight or nine. the ship of which he is in command.
The defendants assigned in it demurrer that the
plaintiff did not show a right of action since the
complaint did not allege that a protest had been Vessels: Those engaged in navigation , whether
presented by the plaintiff within 24 hours after the coastwise or on the high seas, including floating
occurrence, to the competent authority of the port docks, pontoons, dredges, scows and any other
where the accident occurred as provided under the floating apparatus destined for the services of the
Code of Commerce. CFI dismissed the complaint, industry or maritime commerce
hence the appeal.
Vessels engaged in the business of carrying or
Held : Assuming that article 835 of the Code of transporting passengers or goods for compensation,
Commerce states a condition precedent to the offering their services to the public are common
maintenance of an action in a case requiring protest, carriers --> governed primarily by the Civil Code
such as protest is nevertheless not necessary in the provisions on common carriers and subsidiarily by the
case at bar. The article is found in the section dealing Code of Commerce and special laws
with collisions and the context shows the collisions The Code of Commerce regulates merchant
intended are collisions of sea-going vessels. Said ships or those engaged in the transportation of
article cannot be applied to small boats engaged in passengers and freight from one port to another or
river and bay traffic. The vessels intended in the Third from place to another
PAGE 58
TRANSPORTATION AND MARITIME LAW
The Code of Commerce does not refer to agencies, as Bureau of Commerce, SEC, NACIDA,
pleasure ships, yachts, pontoons, health service and BOI, Export Incentives Board or Oil Commission,
harbor police vessels, floating storehouses, warships as now or may hereafter be required by law.
or patrol vessels, coast guard vessels, fishing vessels,
towboats and other craft destined to other uses, such
as coast and geodetic survey, scientific research and PD 761 as amended by PD 1064, 1521
exploration, crafts engaged in the loading and the
discharge of vessels, or transhipments from one vessel Sec. 806. Upon registration of a vessel of
to another domestic ownership, and of more than 15 tons
Vessels of a minor nature not engaged in gross, a certificate of Philippine registry shall
maritime commerce, such as, river boats and those be issued for it. If the vessel is of domestic
carrying passengers from ship to shore, must be ownership and of 15 tons gross or less, the
governed as to their liability to passengers, by the taking of the certificate of Philippine registry
provisions of the Civil Code shall be optional with the owner.
Domestic ownership means ownership
Modes of acquisition: (1) purchase and sale, vested in the citizens of the Philippines or
(2) prescription, (3) construction, (4) capture, (5) corporations or association organized under the
donation, (6) succession, and (7) other means, such as laws of the Philippines at least 60% of the C/S or
barter capital of which is wholly owned by citizens of
Possession in GF will ripen into ownership in 3 the Philippines, and in the case of corporations
years; if the possession is otherwise, it will ripen into or associations which will engage in coastwise
ownership in 10 years trade the president and managing directors
There can be no prescription in favor of the thereof shall be such citizens xxx
captain because the nature of the possession of the xxx an enterprise duly registered with
captain is such that he is only an agent of the owner, a the Board of Investments WON entirely owned
depositary of the vessel by foreign nationals, may register its own
vessels xxx if such vessels are to be used
The acquisition of a vessel must appear in a exclusively to transport its own raw materials
written instrument and such instrument must be and finished products in Philippine waters as an
registered in order that the transfer may affect third incident to its manufacturing, processing or
persons business activity registered with the BOI and
certified to by said Board as an essential
Art. 574. Builders of vessels may employ element in the operation of the registered
the material and follow with regard to their project.
construction and rigging the systems most
suitable to their interest. Ship owners and
seamen shall be subject to the provisions of the Rule III, Marina Rules and Regulations:
laws and regulations of the public
administration on navigation, customs, health, Subjects of Registration:
safety of vessels, and other similar matters. 1) All vessels used in Phil. waters, not
being transients of foreign registry, shall be
registered with the MARINA. To this end, it shall
The business of constructing and repairing vessels or be the duty of the master, owner and agent of
parts thereof shall not be considered a public utility every such vessel to make application to the
and no CPC shall be required thereof proper MARINA district office for registration
thereof within 15 days after the vessel becomes
subject to such registration.
Art. 585. For all purposes of law not 2) A vessel of 3 tons gross or less shall
modified or restricted by the provisions of this not be registered unless the owner shall so
Code, vessels shall continue to be considered as desire, nor shall documents licenses of any kind
personal property. be required for such vessel, but the proper fee
shall be charged for measurement when
Vessels are considered personal or movable property; measurement is necessary, except when the
but they partake to a certain extent, of the nature and same is engaged in towing or carrying of
conditions of real property, on account of their value articles and passengers for hire.
and importance in the world of commerce 3) All undocumented vessels shall be
numbered in such form as may be prescribed by
the Administrator.
Art. 712. Ownership is acquired by
occupation and by intellectual creation.
Ownership and other real rights over
property are acquired and transmitted by law,
by donation, by testate and intestate
succession, and in consequence of certain Vessels exempt from Registration :
contracts, by tradition. AFP vessels, vessels owned and/or
They may also be acquired by means of operated by the AFP or by foreign govt. for
prescription. (New Civil Code.) military purposes, and bancas, sail boats and
3. Registration; certificates issued; other water craft which are not motorized of
distinctions less than 3 gross tons shall not be subject to the
requirements of these rules and regulations
Tariff and Customs Code, Sec. 802 relative to registration and navigation, except in
so far as may be prescribed by regulations of
(1) vessels - every sort of boat, craft or MARINA.
other artificial contrivance used, or capable of
being used, as a means of transportation on The Phil. Coast Guard is vested with exclusive
water authority over the registration and documentation of
(2) duly registered - person, natural or Phil. vessels, as well as the issuance of all certificates,
juridical, registered with the proper govt.
PAGE 59
TRANSPORTATION AND MARITIME LAW
licenses, or other documents necessary or incident to bank's defective title. That the collector did not
such registration perform his duty was no fault of PNB.
The registration shall be effected at its home Judgment affirmed in part in the sense that as
port or at the nearest Coast Guard district or station between Yu and PNB, the latter has a superior right to
when the home port does not have such its claim for P20,000, and set aside in part in the sense
that the record is remanded for further proceedings.
Certificates of Philippine register: upon
registration of a vessel of domestic ownership and of
more than 15 tons gross, a certificate of Phil. register Rubiso vs Rivera 37 Phil 72
shall be issued for it
The purpose of certificates of register of F: Defendant Rivera acquired by purchase the
vessels : to declare the nationality of a vessel engaged pilot boat Valentina on a date prior to that of the
in trade with foreign nations and to enable her to purchase and adjudication at public auction by plaintiff
assert that nationality wherever found Rubiso. But the sale at public auction to Rubiso was
recorded in the office of the collector of customs on
Privileges of certificate: It confers upon the Jan. 27, 1915 and in the commercial registry on March
vessel the right to engage, consistently with law, in 4, 1915, while the sale to Rivera was entered in the
the Philippines coastwise trade and entitles it to the customs registry only on March 17, 1915. Lower court
protection of the authorities and the flag of the decided for plaintiff. Defendant appealed.
Philippines in all ports and on the high seas, and at the
same time secures to it the same privileges and HELD : The requisite of registration in the registry of
subjects it to the same disabilities as, under the laws the purchase of a vessel is necessary and
of the Philippines, pertain to foreign built vessels indispensable in order that the purchaser's rights may
transferred abroad to citizens of the Philippines be maintained against a claim filed by a third person.
Certificates of ownership : upon registration of a Such registration is required both Art. 573 of the Code
vessel of more than 5 tons gross, a certificate of of Commerce in connection with Sec 2 of Act No. 1900
ownership shall be issued for it which Act amended said article. The amendments
solely consisted in charging the Insular Collector of
Customs, as at present, with the fulfillment of the
4. Significance of registration of duties of the commercial register concerning the
transactions affecting vessels registering of vessels, so that the registration of a bill
of sale of a vessel shall be made in the Insular
Presumption of ownership from registration : the Collector of Customs, who, since May 18, 1909, has
presumption is that the person in whose name a been performing the duties of the commercial registry
vessel is registered has legal title thereto --> but such in place of this latter official. In view of said legal
is not conclusive proof against the real owners provisions, it is undeniable that defendant's rights
It is essential that a record of documents cannot prevail over those acquired by plaintiff in the
affecting the title of a vessel be entered in the ownership of said boat, in as much as defendant's
Philippine Coast Guard registration came after plaintiff's registration.
(1) under Art. 857, for the acts of the captain They shall likewise be liable in the same
(2) for contracts entered into by the captain to proportion for the expenses of maintenance,
repair, equip and provision the vessel, provided that equipment, and provisioning of the vessel,
the amount claimed was invested for the benefit of the necessary for navigation.
vessel
(3) for the indemnities in favor of third persons
which may arise from the conduct of the captain in the Art. 592. The resolutions of the majority
care of the goods transported, as well as for the safety with regard to the repair, equipment, and
of passengers transported provisioning of the vessel in the port of
(4) for damages to third persons for tort or departure shall bind the minority, unless they
quasi-delict committed by the captain, except collision renounce their participation therein, which must
with another vessel be acquired by the other part owners after a
(5) under Art. 826, for damages in case of judicial appraisement of the value of the portion
collision due to the fault, negligence, or want of skill of or portions assigned.
the captain, sailing mate, or any other member of the The resolutions of the majority relating
complement to the dissolution of the association and sale of
The agent is liable to the shippers and owners the vessel shall also be binding on the minority.
of the cargo transported by it, for losses and damages The sale of the vessel shall be made at a
occasioned to such cargo without prejudice to his public auction, subject to the provisions of the
rights against the owner of the ship, to the extent of law of civil procedure unless the part owners
the value of the vessel, its equipment and the freight unanimously agree otherwise, subject always to
the right of pre-emption and redemption
mentioned in Article 575.
Under 588, the shipowner and the shipagent are not
liable for the obligations contracted by the captain if
he exceeds his authority, unless the amounts claimed Art. 593. The owners of a vessel shall
were invested for the benefit of the vessel --> however have preference in her charter over other
under Art. 1759, NCC, the ship owner is liable for the persons, offering equal conditions and price. If
death of or injuries to the passengers which are two or more of the former should claim said
caused by the negligence or wilful acts of his EEs right the one having greater interest shall be
although such EEs may have acted beyond the scope preferred, and should they have an equal
of their authority or in violation of the orders of the interest it shall be decided by lot.
shipowner
Art. 599. The managing agent of an Art. 607. If the captain who is a part
association, shall give his co-owners an account owners should have obtained the command of
of the results of each voyage of the vessel, the vessel by virtue of a special agreement
without prejudice to always having the books contained in the articles of copartnership, he
and correspondence relating to the vessel and cannot be deprived thereof except for the
to its voyages at their disposal. reasons mentioned in Article 605.
Art. 600. After the account of the Art. 608. In case of the voluntary sale of
managing agent has been approved by a the vessel, all contracts between the agent and
relative majority, the co-owners shall satisfy the captain shall terminate, reserving to the latter
expenses in proportion to their interest, without his right to the indemnity which may be proper,
prejudice to the civil or criminal actions which according to the agreements made with the
the minority may deem fit to institute agent.
afterwards. The vessel sold shall remain subject to
In order to enforce the payment, the the security of the payment of said indemnity if,
managing agents shall be entitled to an after the action against the vendor has been
executory action, which shall be instituted by instituted, the latter should be insolvent.
virtue of a resolution of the majority, and
without further proceedings than the
acknowledgment of the signatures of the Art. 618. The captain shall be civilly
persons who voted for the resolution. liable to the ship agent and the latter to the
third persons who may have made contracts
* Note : an executory action is no longer recognized in with the former -
this jurisdiction 1. For all the damages suffered by the
vessel and its cargo by reason of want of skill or
Art. 601. Should there be any profits, the negligence on his part. If a misdemeanor or
co-owners may demand of the managing agent crime has been committed he shall be liable in
the amount due them, by means of an executory accordance with the Penal Code.
action without further requisite than the 2. For all the thefts and robberies
acknowledgment of the signatures in the committed by the crew, reserving his right of
instrument approving the account. action against the guilty parties.
3. For the losses, fines, and
confiscations imposed on account of violation of
Art. 602. The agent shall indemnify the the laws and regulations of customs, police,
captain for all the expenses he may have made health, and navigation.
from his own funds or from those of other 4. For the losses and damages caused by
persons, for the benefit of the vessel. mutinies on board the vessel, or by reason of
faults committed by the crew in the service and
defense of the same, if he does not prove that
Art. 603. Before a vessel goes out to sea he made full use of his authority to prevent or
the agent may at his discretion, discharge the avoid them.
captain and members of the crew whose 5. For those arising by reason of a
contract did not state a definite period nor a misuse of powers and nonfulfillment of the
definite voyage, paying them the salaries duties which pertain to him in accordance with
earned according to their contracts, and without Articles 610 and 612.
any indemnity whatsoever, unless there is an 6. For those arising by reason of his
expressed and specific agreement in respect going out of his course or taking a course which,
thereto. in the opinion of the officers of the vessel, at a
meeting attended by the shippers or
supercargoes who may be on board, he should
Art. 604. If the captain or any other member not have taken without sufficient cause.
of the crew should be discharged during the voyage, No exception whatsoever shall exempt
they shall receive their salary until their return to the him from his obligation.
place where the contract was made, unless there are 7. For those arising by reason of his
good reasons for the discharge, all in accordance with voluntarily entering a port other than his
Art. 636 et seq. of this Code. destination, with the exception of the cases or
without the formalities referred to in Article
Art. 605. If the contracts of the captain 612. 8. For those arising by reason of the
and members of the crew with the agent should nonobservance of the provisions contained in
be for a definite period or voyage, they cannot the regulations for lights and maneuvers for the
be discharged until the fulfillment of their purpose of preventing collisions.
contracts, except for reasons of insubordination
in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel Art. 618 provides for the direct responsibility of the
or to its cargo by malice or manifest or proven shipowner and shipagent to third persons; the captain
negligence. shall be civilly liable to the ship agent and the latter is
the one liable to third persons This article applies to
PAGE 62
TRANSPORTATION AND MARITIME LAW
breaches of contract and tortious negligence of the to its total loss as the value of both ship and cargo
captain bears to the value of ship and entire cargo before
But where the vessel is totally chartered for jettison was effected.
use of a single party, the shipowner and that party It is universally recognized that the captain is
may validly stipulate that the latter shall be exempt the representative of the owner and both under Art.
from liability for the negligence of the captain and 586 of the Code of Commerce, are civilly liable for the
crew acts of the master. When jettison of cargo occurs, it is
the duty of the captain to effect the adjustment,
Reason for imposition of liability on owner for liquidating and distribution of the general average; his
damages suffered by third persons occasioned failure gave rise to liability for which the owner of the
by the acts of the captain: To place the primary ship must answer.
liability upon the person who has actual control over The owner of the ship ordinarily has vastly
the conduct of the voyage and who has the most more capital embarked upon a voyage than has any
capital embarked in the venture, namely, the owner of shipper of cargo. Moreover, the shipowner, in
the ship, leaving him to obtain recourse, from other captain's person, has complete and exclusive control
individuals who have been drawn into the venture as of the crew and ship navigation. It is therefore proper
shippers that any person whose property may have been cast
The shippers and passengers in making should have a right of action directly against the
contracts with the captain do so through the shipowner for breach of duty which the law imposed
confidence they have in the shipowner who appointed on the captain with respect to such cargo. The evident
him --> they presume that the owner made a most intention of the Com. Code is to place primary liability
careful investigation before appointing him upon the person who has actual control over the
conduct of the voyage and who has most capital in the
Distinction between liability for lawful and venture, namely, the shipowner, leaving him to obtain
unlawful acts : recourse, as it is very easy to do, from other
The lawful acts and obligations of the captain individuals who have been drawn into the venture as
beneficial to the vessel may be enforced as against the shippers. Defendant is therefore liable.
agent/owner for the reason that such obligations arise
from the contract of agency ( provided that the captain Araullo, and Avancena, dissenting :
does not exceed his authority) Action for recovery, if any, should be brought
As to any liability incurred by the captain not against the defendant owner but against the
through his unlawful acts, the ship agent is simply captain thereof.
subsidiarily liable
causes the damage or loss to goods entrusted to him and vigilance of the officers and crew as exempting
by said third persons under a contract to carry said the shipowner from any liability for their faults, would
goods. Thus, it is well and god that the shipowner be render nugatory the solidary liability in Art. 827 for the
not held criminally liable for such crimes or quasi greater protection of injured parties.
crimes but he cannot be excused from liability for the (2) It is to be noted that Macrohon was not
damage and harm which in consequence of those acts duly licensed as a shipmaster and Lim knew of this
may be suffered by the third parties who contracted fact when it hired the former, thus deliberately
with the captain in his double capacity of agent and increasing the risk to which the unknowing passengers
subordinate of the shipowner himself. In maritime would be subjected. The liability of Lim, cannot,
commerce, the shippers and passengers in making therefore be identical to that of a shipowner who bears
contracts with the captain do so through the in mind the safety of the passengers by employing
confidence they have in the shipowner who appointed duly licensed officers. To hold, as the CA had done,
him. that Lim may limit his liability to the value of his
The owner of a minor craft who has equipped vessels, is to erase all differences between compliance
and victualed it for the purpose of using it in the with law and the deliberate disregard thereof.
transportation of merchandise from one port to The international rule is to the effect that the
another is under the law a shipowner and the master right of abandonment of vessels, as a legal limitation
of the craft is to be considered as its captain in the of a shipowner's liability, does not apply to cases
legal acceptation of this word, and the former must be where the injury of the average is due to shipowner's
held civilly liable for indemnities in favor of third own fault.
parties to which the conduct of the master/captain
may give rise in the custody of the effects laden on the
craft, and for all losses which, through his fault or (b) The doctrine of limited
negligence, may occur to the merchandise or effects liability
delivered to him for their transportation as well as for
the damages suffered by those who contracted with * Doctrine of limited liability is provided for in Arts.
him, in consequence of misdemeanors and crimes 587, 590 and 837
committed by him or by the members of the crew of
the craft. Art. 587. The ship agent shall also be
civilly liable for the indemnities in favor of third
persons which arise from the conduct of the
Manila Steamship vs Abdulhaman 100 Phil 32 captain in the care of the goods which the
vessel carried; but he may exempt himself
F: At around 7 p.m., M/L Consuelo V, owned by therefrom by abandoning the vessel with all her
Lim Hong To, laden with cargoes and passengers left equipments and the freightage he may have
Zamboanga City bound for Siokon under the command earned during the voyage.
of Faustino Macrohon. Among her passengers were
plaintiff Insa Abdulhaman, his wife, and their 5 kids.
On the same night, the M/S Bowline Knot owned by the A shipagent is liable notwithstanding the insolvency of
Manila Steamship Co. were navigating from Maribojoc the principal/owner
towards Zamboanga City. The weather then was
considered fair. BUT the ship agent may exempt himself from liability
At around 10 PM, without any warning to the by abandoning the vessel with all her equipment and
resting passengers, both vessels collided. M/L the freight it may have earned during the voyage -->
Consuelo V capsized, resulting in the death of the effect of abandonment is to extinguish the liability
Abdulhaman's five children. The above facts found by of the shipagent
the Board of Marine Inquiry, was used by the CFI to The ship agent's liability is confined to that
hold the owners of both vessels solidarily liable to which he is entitled as a matter of right to abandon :
Abdulhaman for P 20,784 as damages. The CA, the vessel with all her eqpt. and the freight it may
however, exempted Lim from liability by reason of the have earned during the voyage and to the insurance
sinking and total loss of his vessel. Hence, this thereof
petition by the Manila Steamship Co. questioning the Limited liability is not applicable when no
exemption of Lim while also alleging its exemption abandonment of vessel is made
having had exercised due diligence in the selection of
its EEs. Effect of abandonment: An abandonment amounts
to an offer of the value of the vessel, of her equipment,
Held : (1) While it is true that plaintiff's action against and freight money earned --> results in the cessation
petitioner is based on a tort or quasi-delict, the tort in of the responsibility of the owner/agent
question is not a civil tort under the Civil Code but is a Abandonment cannot be refused by creditors
maritime tort resulting in a collision at sea, governed This applies to all cases where the
by Arts. 826-939 of the Code of Commerce, while the owner/agent may be held liable for the negligent or
owners of both colliding vessels are solidarily liable for illicit acts of the captain
damages caused. This direct responsibility is
recognized in Art. 618 of the Code of Commerce, Effect of loss or destruction of vessel: The
under which the captain shall be civilly liable to the shipagent's liability is merely co-extensive with his
ship agent, and the latter is the one liable to third interest in the vessel such that the total loss thereof
persons. results in its extinction --> the total destruction of the
In fact it is a general principle well established vessel extinguishes a maritime lien as there is no
in the maritime law and custom, that shipowners and longer any res to which it can attach.
shipagents are civilly liable for the acts of the captain
(Art. 586) and for the indemnities due to the third Thre (3) cases where the loss of the
persons (Art. 587). This direct liability moderated and vessel extinguishes the liability of the
limited by the owner's right of abandonment of the shipowner:
vessel and earned freight (Art. 587) has been declared (1) under 587, liability arising from the
to exist not only in the case of breached contracts but conduct of the captain in the vigilance of the goods
also in cases of tortious negligence. and for the safety of the passengers and for any
It is easy to see that to admit the defense of liability arising from the negligent or illicit acts of the
the diligence of a bonus pater familias in the selection
PAGE 64
TRANSPORTATION AND MARITIME LAW
captain for which the shipowner or ship agent may be to sail after some loading. The boat was overloaded
held liable with cargo and passengers (180 instead of only 123).
(2) under 643, liability for the wages of the After two weeks of sailing, the sea became too
captain and the crew and for advances made by the dangerous. The captain ordered that they return to
shipagent if the vessel is lost by shipwreck or capture Romblon and while turning, a big wave caught them
(3) under 837, liability for collision on the side causing it to capsize. Among the
passengers who perished were the relatives of
Exceptions: respondents Laserna.
(1) Doctrine does not apply where shipowner is at fault In the separate civil action for damages for the
: the doctrine is premised on the condition that the death of the passengers, the CFI held Yangco liable for
death or injury to the passenger occurred by reason of a total of P3,180. After the rendition of the judgment,
the fault or negligence of the captain only Yangco sought to abandon the vessel to
(2) Doctrine does not apply in cases of Workmen's plaintiffs/respondents with all its equipments.
Compensation --> such compensation has nothing to Abandonment was denied. The CA affirmed the
do with maritime commerce; it is an item in the cost of judgment.
production which must be included in the budget of
any well-managed industry Held : Art. 587 accords a shipowner or agent the right
(3) Total destruction of the vessel does not affect the of abandonment; and by necessary implication, his
liability of the owner for repairs on the vessel liability is confined to that which he is entitled as of
completed before its loss --> owners of a vessel are right to abandon -- the vessel with all her equipments
liable for necessary repairs; its liability for repairs and the freight it may have earned during the voyage.
remains unaffected by the loss of the thing In other words, such liability is limited to the value of
the vessel and other things appertaining thereto such
Reason for limited liability: This doctrine had its that a total loss thereof results in its extinction.
origin when maritime trade and sea voyage was Although the article appears to deal only with the
attended by innumerable hazards and perils --> to limited liability of shipowners or agents for damages
offset against these adverse conditions and to arising from the misconduct of the captain in the care
encourage shipbuilding and maritime commerce, it of the goods which the vessel carries, this is a mere
was deemed necessary to confine the liability of the deficiency of language and in no way indicates the
owner or agent arising from the operation of a ship to true extent of such liability, to wit, the benefit of
the vessel, eqpt. and freight or insurance, if any limited liability applies in all cases (as regards both
goods and passengers of the vessel) wherein the
Limited liability is evidence of the real and shipowner or agent may properly be held for the
hypothecary nature of maritime law: negligent or illicit acts of the captain.
(1) limitation of liability to the actual value of the The reason for the limited liability is the real
vessel and freight; (2) right to retain the cargo and the and hypothecary nature of maritime law as
embargo and detention of the vessel in cases where distinguished from civil law and mercantile law in
the ordinary civil law would not allow more than a general. As evidence of this real nature, we have (1)
personal action against the debtor or personal liable -- the limitation of the liability of the agents to the actual
> the maritime creditor may attach the vessel itself to value of the vessel and the freight money and (2) the
secure his claim without waiting for a settlement of his right of the maritime creditor to retain the cargo, and
rights by a final judgment, even to the prejudice of a the embargo and detention of the vessel in cases
third person where the ordinary civil law would not allow more than
a personal action against the debtor or person liable.
Thus, even assuming that Yangco is liable for breach of
Manila Steamship vs Abdulhaman 100 Phil 32 contract because his relationship to the passengers
rests on a contract of carriage, the exclusively real and
Issue : How is the doctrine of limited liability applied in hypothecary nature of maritime law still operates to
this case with M/V Consuelo? limit his liability to the value of the vessel or to the
insurance thereon, if any. In this case, the vessel was
Held : The direct liability may be moderated or limited not insured. Whether the abandonment of the vessel
by the shipowner's right to abandon the vessel and sought by the petitioner in instant case was in
earned freight. However, this right of abandonment of accordance with law or not, is immaterial. The vessel
vessels, as a legal limitation of a shipowner's liability having totally perished, any act of abandonment would
does not apply to cases where the injury or the be an idle ceremony. Petitioner is absolved from all
average is due to shipowner's fault. Thus, the owner of complaints.
Consuelo is solidarily liable with Manila Steamship, the
former having caused the vessel to sail without Abueg vs San Diego 77 Phil 730
licensed officers, for injuries caused by the collision
over and beyond the value of the said vessel. F: Bartolome San Diego was the owner of 2
In the application for permission to operate, motorships, San Diego II and Bartolome S. Dionisia
despite lack of trained crew, Lim Hong To even Abueg is the widow of Amado Nunez, who was a
declared expressly, "that in case of any accident, machinist on board the M/S San Diego II. Marciana de
damage, or loss, I shall assume full risks and Salvacion is the widow of Victoriano Salvacion, who
responsibility for all consequences, thereof." Hence, was a machinist on board the M/S Bartolome S.
Lim cannot escape liability because of the sinking of Rosario Oching is the widow of Francisco Oching, who
the vessel. Operating with an unlicensed shipmaster was the captain of the M/S Bartolome S. The 2 ships,
constitutes such negligence as would prevent the while engaged in fishing operations around Mindoro
shipowner from claiming the benefit of limited liability Island on October 1941, were caught by a typhoon as
under Art. 587. a consequence of which they were sunk and totally
lost. Nunez, Salvacion and Oching while acting in their
capacities perished in the shipwreck. The vessels
Yangco vs Laserna 73 Phil 330 were not covered by any insurance. The widows were
awarded compensation under the Workmen's
F: Petitioner Yangco's vessel SS Negros left Compensation Act by the CFI.
Romblon for Manila. The captain was duly advised and
his attention was called by the passengers that Held : The real and hypothecary nature of the liability
typhoon Signal No. 2 was up. But the boat proceeded of the shipowner or agent embodied in the provisions
PAGE 65
TRANSPORTATION AND MARITIME LAW
of the Maritime Law, had its origin in the prevailing limited liability doctrine applies not only to the goods
conditions of the maritime trade and sea voyages but also in all cases like death or injury to passengers
during the medieval ages, attended by innumerable wherein the shipowner of agent may properly be held
hazards and perils. To offset against these adverse liable for the negligent or illicit acts of the captain.
conditions and to encourage shipbuilding and Art. 587 speaks only of situations where the fault or
maritime commerce, it was deemed necessary to negligence is committed solely by the captain. In
confine the liability of the owner or agent arising from cases where the shipowner is likewise to be blamed,
the operation of a ship to the vessel, equipment, and Art. 587 does not apply. Such a situation will be
freight, or insurance, if any, so that if the shipowner or covered by the Civil Code provisions on CCs. Owing to
agent abandoned the ship, equipment, and freight, his the nature of their business and for reasons of public
liability was extinguished. policy, they are required to observe EO diligence.
The provisions of the Code of Commerce Maritima's claim that it had no information of
regarding maritime commerce have no room in the typhoon Welming until after the boat was at sea is
application of the Workmen's Compensation Act which untenable in light of modern technology which enables
seeks to improve, and aims at the amelioration of, the it to detect any incoming atmospheric disturbances.
condition of laborers and EEs. Said Act creates a In fact, the Weather Bureau issued a total of 17
liability to compensate EEs and laborers in cases of warnings or advisories of typhoon Welming. In
injury received by or inflicted upon them, while allowing the ship to depart late from Manila despite
engaged in the performance of their work or the typhoon advisories, Maritima displayed lack of
employment, or the heirs and dependents of such foresight and minimum concern for the safety of its
laborers and EEs in the event of death caused by their passengers taking into account the surrounding
employment. circumstances of the case.
The officers of motor ships engaged in fishing
are industrial EEs and are entitled to the benefits of While the captain was negligent for
the Workmen's Compensation Act. If an accident is overloading the ship, Maritima shares equally in his
compensable under the WCA, it must be compensated negligence. M/V Mindoro was cleared for departure at
even when the workman's right is not recognized by or 2 PM by the Bureau of Customs and the Coast Guard
is in conflict with other provisions of the Civil Code or but its departure was delayed for 4 hours. Maritima
Code of Commerce. The reason is that the WCA was could not account for the delay because it neither
enacted in abrogation of existing laws. checked from the captain the reasons behind the
delay. It was due to this interim that there is great
probability that unmanifested cargo and passengers
Heirs of Amparo de los Santos vs CA 186 SCRA 649 were loaded.
Maritima presented evidence of the seaworthy
F: M/V Mindoro owned by Compania Maritima condition of the ship prior to its departure, including
sailed from Manila bound for New Washington, Aklan. the installation of life saving equipment and other
Said vessel met typhoon Welming on the Sibuyan Sea, navigational instruments. But it could not present
causing the death of many of its passengers, although evidence that it specifically installed a radar which
about 136 survived. Mauricio de los Santos declared could have allowed the vessel to navigate safely for
that he, his wife and 4 children were aboard the boat shelter during the storm. An important device such as
together with their household utensils valued at P the radar could have enabled the ship to pass through
1,000, with the intention of living in Aklan the river and to safety.
permanently. His wife and his children were among Maritima's lack of EO diligence coupled with
the casualties. The Board of Marine Inquiry found that the negligence of the captain were the proximate
the captain and some officers of the crew were causes of the sinking of M/V Mindoro. Maritima is liable
negligent in operating the vessel and imposed upon for the deaths and injury of the victims. It was ordered
them a suspension and/or revocation of their license to pay death indemnities to the heirs of the victims,
certificates. This decision could not be executed moral damages, actual damages and attorney's fees.
against the captain who perished with the vessel. The
shipowner alleged that no negligence was ever
established and in fact they took all the necessary
precautions in operating the vessel. Furthermore, the (c) Specific rights and prerogatives
loss of lives as a result of the drowning of some
passengers, including the relatives of the plaintiffs,
was due to force majeure because of the strong Art. 575. Part owners of vessels shall
typhoon Welming. It also presented the findings of the enjoy the right of pre-emption and redemption
Board of Marine Inquiry recommending that the in the sales made to strangers; but they can
captain be exonerated and that the ship was in only exercise it within the nine days following
seaworthy condition. The CFI dismissed the complaint the record of the sale in the registry and by
in view of lack of sufficient evidence. The CA ruled that delivering the price at once.
while concurring negligence on the part of the captain
is imputable to Maritima, Maritima could not be held
liable in damages based on the principle of limited Art. 593. The owners of a vessel shall
liability of the shipowner or shipagent under Art. 587 have preference in her charter over other
of the Code of Commerce. persons, offering equal conditions and price. If
two or more of the former should claim said right
Held : There is no dispute as to the finding of the the one having greater interest shall be preferred, and
captain's negligence. The present controversy centers should they have an equal interest it shall be decided
on the questions of Maritima's negligence and of the by lot.
application of Art. 587 of the Code of Commerce.
Under this provision, a shipowner or agent has the
right of abandonment; and by necessary implication, Art. 594. The part owners shall elect the
his liability is confined to that which he is entitled as of manager who is to represent them in the
right to abandon -- the vessel with all her equipments capacity of agent.
and the freight it may have earned during the voyage.
This rule is found necessary to offset against the The appointment of director or agent
innumerable hazards and perils of a sea voyage and to shall be revocable at the will of the partners.
encourage shipbuilding and marine commerce. The
PAGE 66
TRANSPORTATION AND MARITIME LAW
2. By applying to the consignees of the In the first book, which shall be called "log
cargo or to the persons interested therein. book," he shall enter every day the condition of
3. By drawing on the ship agent. the atmosphere, the prevailing winds, the course
4. By borrowing the amount required by sailed, the rigging carried, the horsepower of the
means of a bottomry loan. engines, the distance covered, the maneuvers
5. By selling a sufficient amount of the executed, and other incidents of navigation. He
cargo to cover the amount absolutely necessary shall also enter the damage suffered by the
to repair the vessel and to equip her to pursue vessel in her hull engines, rigging, and tackle, no
the voyage. matter what is its cause, as well as the
In the two last cases he must apply to the imperfections and averages of the cargo, and the
judicial authority of the port, if in the Philippines effects and consequence of the jettison, should
and to the Filipino consul, if in a foreign country; there be any; and in cases of grave resolutions
and where there should be none, to the local which require the advice or a meeting of the
authority, proceeding in accordance with the officers of the vessel, or even of the passengers
prescriptions of Article 583, and with the and crew, he shall record the decision adopted.
provisions of the law of civil procedure. For the informations indicated he shall make use
of the binnacle book, and of the steam or engine
Art. 583. If while on a book kept by the engineer.
voyage the captain should find it In the second book, called the "accounting
necessary to contract one or more book", he shall enter all the amounts collected
of the obligations mentioned in and paid for the account of the vessel, entering
subdivisions 8 and 9 of articl 580, specifically article by article, the sources of the
he shall apply to the judge or collection, and the amounts invested in
court if he is in the Philippine provisions, repairs, acquisition of rigging or
territory, and otherwise to the goods, fuel, outfits, wages, and all other
consul of the Republic of the expenses. He shall furthermore enter therein a
Philippines, should there be one, list of all the members of the crew, stating their
and in his absence, to the judge or domiciles, their wages and salaries, and the
court or proper local authority, amounts they may have received on accounts,
presenting the certificate of the either directly or by delivery to their families.
registration sheet treated of in In the third book, called "freight book," he
Article 612 and the instruments shall record the entry and exit of all the goods,
proving the obligation contracted. stating their marks and packages, names of the
The judge or court, the shippers and of the consignees, ports of loading
consul, or the local authority, as and unloading, and the freight earned. In the
the case may be, in view of the same book he shall record the names and places
result of the proceedings of sailing of the passengers and the number of
institutied, shall make a packages of which their baggage consists, and
temporary memorandum of their the price of the passage.
result in the certificate, in order 4. To make, before receiving the freight,
that it may be recorded in the with the officers of the crew, and the two
registry when the vessel returns experts, if required by the shippers and
to the port of its registry, or so passengers, an examination of the vessel, in
that it can be admitted as a legal order to ascertain whether she is watertight, and
and preferred obligation in case of whether the rigging and engines are in good
sale before its return, by reason condition; and if she has the equipment required
of the sale of the vessel on for good navigation, preserving a certificate of
account of a declaration of the memorandum of this inspection, signed by all
unseaworthiness. the persons who may have taken part therein,
The omission of this under their liability.
formality shall make the captain The experts shall be appointed one by the
personally liable for the credits captain of the vessel and the other one by the
prejudiced on his account. persons who request the examination, and in
case of disagreement a third shall be appointed
(the ff. is not required by the outline) by the marine authority of the port.
Art. 612. The following duties are inherent 5. To remain constantly on board the
in the office of captain: vessel with the crew during the time the freight
1. To have on board before starting on a is taken on board and carefully watch the
voyage a detailed inventory of the hull, engines, stowage thereof; not to consent to any
rigging, tackle, stores, and other equipments of merchandise or goods of a dangerous character
the vessel; the navigation certificate; the roll of to be taken on, such as inflammable or explosive
the persons who make up the crew of the vessel, substances, without the precautions which are
and the contracts entered into with the crew; the recommended for their packing, management
list of passengers; the health certificate; the and isolation; not to permit that any freight be
certificate of the registry proving the ownership carried on deck which by reason of its dispo-
of the vessel; and all the obligations which sition, volume, or weight makes the work of the
encumber the same up to that date; the charters sailors difficult, and which might endanger the
or authenticated copies thereof; the invoices or safety of the vessel; and if, on account of the
manifest of the cargo, and the instrument of the nature of the merchandise, the special character
expert visit or inspection, should it have been of the shipment, and principally the favorable
made at the port of departure. season it takes place, he allows merchandise to
2. To have a copy of this Code on board. be carried on deck, he must hear the opinion of
3. To have three folioed and stamped the officers of the vessel, and have the consent
books, placing at the beginning of each one a of the shippers and of the agent.
note of the number of folios it contains, signed by 6. To demand a pilot at the expense of the
the marine official, and in his absence by the vessel whenever required by navigation, and
competent authority. principally when a port, canal, or river, or a
roadstead or anchoring place is to be entered
PAGE 68
TRANSPORTATION AND MARITIME LAW
PAGE 69
TRANSPORTATION AND MARITIME LAW
4. After the supplies were delivered, the vessel sailed for Art. 613. A captain who navigates for
South Africa, where upon arrival, the Captain was freight in common or on shares may not make
instructed to turn over his post to a new captain. He was any separate transaction for his own account,
then repatriated to the Philippines. and should he do so the profits shall belong to
the other persons interested, and the losses shall
5. Captain Tayong filed with the POEA a complaint for be borne by him alone.
illegal dismissal, which was dismissed.
6. On appeal, the NLRC reversed and ordered the Art. 615. Without the consent of the ship
shipowner to pay his salary for the unexpired contract agent, the captain may not have himself
plus one month leave benefit, and attorney's fees. substituted by another person; and should he do
Hence, this appeal. so, besides being liable for all the acts of the
substitute and bound to pay the indemnities
ISSUE: W/N CAPTAIN TAYONG WAS ILLEGALLY mentioned in the foregoing article, the substitute
DISMISSED? as well as the captain may be discharged by the
ship agent.
HELD: Yes.
Notes: The duties of a captain are essentially personal
1. It is well settled that confidential and managerial due to the confidence given to him arising from the fact
employees cannot be arbitrarily dismissed at any time, that he possesses the required technical ability and that
and without case as reasonably established in an he is a man worthy of trust of the shipowner
appropriate investigation.
2. The captain of a vessel is a confidential and Art. 617. The captain may not contract
managerial employee within the meaning of the above loans on respondentia secured by the cargo, and
doctrine. A master or captain, for purposes of maritime should he do so the contract shall be void.
commerce, is one who has command of a vessel. A Neither may he borrow money on bottomry
captain commonly performs three (3) distinct roles: (1) for his own transactions, except on the portion of
he is a general agent of the shipowner; (2) he is also the vessel he owns, provided no money has been
commander and technical director of the vessel; and (3) previously borrowed on the whole vessel, and
he is a representative of the country under whose flag provided there does not exist any other kind of
he navigates. Of these roles, by far the most important lien or obligation chargeable against the vessel.
is the role performed by the captain as commander of When he is permitted to do so, he must
the vessel, for such role (which to our mind, is necessarily state what interest he has in the
analogous to that of "Chief Executive Officer" [CEO] of a vessel.
present-day corporate enterprise) has to do with the In case of violation of this article the
operation and protection of the vessel during its voyag principal, interest, and costs shall be charged to
and the protection of the passengers (if any) and crew the private account of the captain, and the ship
and cargo. In his role as general agent of the shipowner, agent may furthermore discharge him.
the captain has authority to sign bills of lading, carry
goods aboard and and deal with the freight earned,
agree upon rates and decide whether to take cargo. The Art. 621. A captain who borrows money on
ship captain, as agent of the shipowner, has legal the hull, engine, rigging, or tackle of the vessel,
authority to enter into contracts with respect to the or who pledges or sells merchandise or provisions
vessel and the trading of the vessel, subkect to outside of the cases and without the formalities
applicable limitations established by statute, contract or prescribed in this Code, shall be liable for the
instructions and regulations of the shipowner. To the principal, interest, and costs, and shall indemnify
captain is committed the governance, care and for the damages he may cause.
management of the vessel. Clearly, the captain is veste He who commits fraud in his accounts
with both management and fiduciary functions. shall reimburse the amount defrauded, and shall
be subject to the provisions of the Penal Code.
3. More importantly, a ship's captain must be accorded
a reasonable measure of discretionary authority to
decide what the safety of the ship and its crew and Art. 583. If the ship being on a voyage the
cargo specifically requires on a stipulated ocean voyage. captain should find it necessary to contract one
The captain is held responsible, and properly so, for or more of the obligations mentioned in Nos. 8
such safety. and 9 of Article 580, he shall apply to the judge or
PAGE 70
TRANSPORTATION AND MARITIME LAW
court if he is in Philippine territory, and otherwise may arise between the captain and the crew with
to the Filipino consul, should there be one, and in regard to the agreements contained therein and
his absence to the judge or court or to the proper the amounts paid on account of the same.
local authority, presenting the certificate of the Every member of the crew may demand of
registry of the vessel treated of in Article 612, the captain a copy, signed by the latter, of the
and the instruments proving the obligation agreement and of the liquidation of his wages, as
contracted. they appear in the book.
The judge or court, the consul or the local
authority as the case may be in view of the result Notes: The contract with a seaman has the nature of a
of the proceedings instituted, shall make a lease of service, in virtue of which one person binds
temporary memorandum in the certificate of their himself to perform or to do the services or works for
result, in order that it may be recorded in the which he has signed himself in the vessel in
registry when the vessel returns to the port of consideration of the compensation stipulated
her registry, or so that it can be admitted as a
legal and preferred obligation in case of sale
before the return, by reason of the sale of the (b) Duties and liabilities
vessel by virtue of a declaration of
unseaworthiness.
The lack of this formality shall make the Art. 635. A sailor who has been contracted
captain personally liable to the creditors who may to serve on a vessel cannot rescind his contract
be prejudiced through his fault. nor fail to comply therewith except by reason of a
legitimate impediment which may have occurred.
Neither can he pass from the service of
Notes: Obligations covered by this article : (1) price one vessel to another without obtaining the
which has not been paid to the last vendor; (2) for written consent of the vessel on which he may be.
materials and labor in the construction of the vessel; (3) If, without obtaining said permission, the
for the repair, equipment and provisioning with the sailor who has signed for one vessel should sign
victuals and fuel; (4) loan on bottomry before departure for another one, the second contract shall be
of the vessel; (5) insurance premiums under Art. 580 void, and the captain may choose between forc-
pars. 8 and 9. ing him to fulfill the service to which he first
bound himself or look for a person to substitute
him at his expense.
3. Other Officers and Crew Said sailor shall furthermore lose the
wages earned on his first contract to the benefit
notes: of the vessel for which he may have signed.
Art. 626 - 631 : sailing mate or second in command A captain who, knowing that a sailor is in
Art. 632 - 633 : second mate or third in command the service of another vessel, should have made
Complement of a vessel or crew - all the persons on a new agreement with him, without having
board, from the captain to the cabin boy, necessary for requested the permission referred to in the
the management, maneuvers, and service; includes the foregoing paragraphs, shall be personally liable
sailing mates, engineers, stokers, and other employees. to the captain of the vessel to which the sailor
first belonged for that part of the indemnity,
referred to in the third paragraph of this article,
(a) Contracts and formalities which the sailor may not be able to pay.
revocation, delay, or greater extension of the credits of such kind pertaining to the preceding
voyage, to anything but the proportionate part of voyage shall lose the preference.
the indemnity which may be paid to the common
funds by the persons responsible for said Art. 647. The officers and the crew of the
occurrences. vessel shall be exempted from all obligations
contracted, if they deem if proper, in the
Art. 643. If the vessel and her cargo following cases;
should be totally lost by reason of capture or 1. If, before the beginning of the voyage,
shipwreck, all rights shall be extinguished, both the captain attempts to change it, or there occurs
as regards the right of the crew to demand any a naval war with the power to which the vessel
wages and as regards the right of the ship agent was destined.
to recover the advances made. 2. If a disease should break out and be
If a portion of the vessel or of the cargo, officially declared epidemic in the port of
or of both, should be saved, the crew engaged on destination.
wages, including the captain, shall retain their 3. If the vessel should change owner or
rights on the salvage, as far as possible, on the captain.
remainder of the vessel as well as on the value of
the freightage or the cargo saved; but sailors 4. Supercargoes
who are engaged on shares shall have no right on
the salvage of the hull, but only on the portion of Art. 649. Supercargoes shall discharge on
the freightage saved. (If they should have board the vessel the administrative duties which
worked to recover the remainder of the the agent or shippers may have assigned them;
shipwrecked vessel, they shall be given from the they shall keep an account and record of their
amount of the salvage an award in proportion to transactions in a book which shall have the same
the efforts made and to the risks encountered in conditions and requisites as required for the
order to accomplish the salvage.) accounting book of the captain, and shall respect
the latter in his duties as chief of the vessel.
Art. 644. A sailor who falls sick shall not The powers and liabilities of the captain
lose his right to wages during the voyage, unless shall cease, when there is a supercargo, with
his sickness is the result of his own fault. At any regard to that part of the administration
rate, the costs of medical attendance and legitimately conferred upon the latter, but shall
treatment shall be defrayed from the common continue in force for all acts which are
funds, in the form of a loan. inseparable from his authority and office.
If the sickness should be caused by an
injury received in the service or defense of the Supercargo: An agent of the owner of the goods
vessel, the sailor shall be attended and treated at shipped as cargo on a vessel, who has charge of the
the expense of the common funds, deducting, cargo on board, sells the same to the best advantage in
before anything else, from the proceeds of the the foreign markets, buys cargo to be brought back on
freightage, the cost of the attendance and the return voyage of the ship, and comes home with it
treatment.
Art. 650. All the provisions contained in
Art. 645. If a sailor should die during the the second section of Title III, Book II, with regard
voyage, his heirs shall be given the wages earned to qualifications, manner of making contracts,
and not received, according to his contract and and liabilities of factors shall be applicable to
the cause of his death, namely --- supercargoes.
If he died a natural death and was
engaged on wages, that which may have been Now governed by the provisions on agency
earned up to the date of his death shall be paid.
If the contract was for a fixed sum for the Art. 651. Supercargoes cannot, without
whole voyage, half the amount earned shall be special authorization or agreement, make any
paid if the sailor died on the voyage out, and the transaction for their own account during the
whole amount if he died on the return voyage. voyage, with the exception of the ventures which,
And if the contract was on shares and the in accordance with the custom of the port of
death occurred after the voyage was begun, the destination, they are permitted to do.
heirs shall be paid the entire portion due the Neither shall they be permitted to invest
sailor; but if the latter died before the departure in the return trip more than the profits from the
of the vessel from the port, the heirs shall not be ventures, unless there is a special authorization
entitled to claim anything. therefor from the principals.
If death occurred in the defense of the
vessel, the sailor shall be considered as living, D. Accidents and Damages in Maritime
and his heirs shall be paid, at the end of the Commerce
voyage, the full amount of wages or the entire
part of the profits which may be due him as RISKS, DAMAGES, AND ACCIDENTS OF MARITIME
others of his class. COMMERCE
The sailor shall likewise be considered as
present if he was captured while defending the 1. Averages
vessel, in order to enjoy the benefits as the rest;
but should he have been captured on account of (a) Nature and Kinds
carelessness or other accident not related to the
service, he shall only receive the wages due up
to the day of his capture. Art. 806. For the purposes of this Code
the following shall be considered averages:
Art. 646. The vessel with her engines, 1. All extraordinary or accidental
rigging, equipment, and freightage shall be liable expenses which may be incurred during the
for the wages earned by the crew engaged per voyage for the preservation of the vessel or
month or for the trip, the liquidation and payment cargo, or both.
to take place between one voyage and the other. 2. All damages or deterioration which
// After a new voyage has been undertaken, the vessel may suffer from the time it puts to
PAGE 73
TRANSPORTATION AND MARITIME LAW
sea at the port of departure until it casts anchor 5. The necessary expenses on arrival at
at the port of destination, and those suffered by port, in order to make repairs or secure
the merchandise from the time they are loaded provisions.
in the port of shipment until they are unloaded 6. The lowest value of the goods sold by
in the port of their consignment. the captain in arrivals under stress for the
payment of provisions and to save the crew, to
meet any other need of the vessel against which
Art. 807. The petty and ordinary the proper amount shall be charged.
expenses incident to navigation, such as those 7. The victuals and wages of the crew
of pilotage of coasts and ports, lighterage and while the vessel is in quarantine.
towage, anchorage, inspection, health, 8. The loss inflicted upon the vessel or
quarantine lazaretto, and other so-called port cargo by reason of an impact or collision with
expenses, costs of barges, and unloading, until another, if it is accidental and unavoidable. If
the merchandise is placed on the wharf, and the accident should occur through the fault or
other usual expenses of navigation shall be negligence of the captain, the latter shall be
considered ordinary expenses to be defrayed by liable for all the damage caused.
the shipowner, unless there is an express 9. Any loss suffered by the cargo
agreement to the contrary. through the faults, negligence, or barratry of
the captain or of the crew, without prejudice to
the right of the owner to recover the
Art. 808. Averages shall be: corresponding indemnity from the captain, the
1. Simple or particular. vessel, and the freight.
2. General or gross.
may have been wounded or crippled in If the latter should object, and the
defending or saving the vessel. captain and officers or a majority of them, or
9. The wages of any member of the crew the captain, if opposed to the majority, should
held as hostage by enemies, privateers, or consider certain measures necessary, they may
pirates, and the necessary expenses which he be executed under his responsibility, without
may incur in his imprisonment, until he is prejudice to the right of the shippers to proceed
returned to the vessel or to his domicile, should against the captain before the competent judge
he prefer it. or court, if they can prove that he acted with
10. The wages and victuals of the crew malice, lack of skill, or negligence.
of a vessel chartered by the month, during the If the persons interested in the cargo,
time that it is embargoed or detained by force being on board the vessel, have not been heard,
majeure or by order of the Government, or in they shall not contribute to the gross average,
order to repair the damage caused for the their share being chargeable against the
common benefit. captain, unless the urgency of the case should
11. The depreciation resulting in the be such that the time necessary for previous
value of the goods sold at arrivals under stress deliberation was wanting.
in order to repair the vessel by reason of gross
average.
12. The expenses of the liquidation of Art. 814. The resolution adopted to
the average. cause the damages which constitute general
average must necessarily be entered in the log
book, stating the motives and reasons on which
Art. 817. If in the lightening a vessel on it is based, the votes against it and the reason
account of a storm, in order to facilitate its for the dissent, should there be any, and the
entry into a port or roadstead, part of her cargo irresistible and urgent causes which impelled
should be transferred to lighters or barges and the captain if he acted of his own accord.
be lost, the owner of said part shall be entitled In the first case the minutes shall be
to indemnity, as if the loss had originated from signed by all the persons present who could do
a gross average, the amount thereof being so before taking action, if possible; and if not,
distributed between the vessel and cargo from at the first opportunity. In the second case, it
which it came. shall be signed by the captain and by the
If, on the contrary, the merchandise officers of the vessel.
transferred should be saved and the vessel In the minutes, and after the resolution,
should be lost, no liability may be demanded of shall be stated in detail all the goods jettisoned,
the salvage. and mention shall be made of the injuries
caused to those kept on board. The captain
shall be obliged to deliver one copy of these
Art. 818. If, as a necessary measure to minutes to the maritime judicial authority of the
extinguish a fire in port, roadstead, creek, or first port he may make, within twenty- four
bay, it should be decided to sink any vessel, this hours after his arrival, and to ratify it
loss shall be considered gross average, to which immediately under oath.
the vessels saved shall contribute.
Plaintiff had it refloated by Luzteveco for surrender the machineries to the owner's agent unless
compensation. After refueling, the vessel proceeded the latter would agree to subject said cargo to liability
to Basco where the cargoes were delivered. On the upon general average to satisfy the cost and expenses
theory that the expenses incurred in floating the of the vessel incident to its stay in Manila. Plaintiff did
vessel constituted a general average to which both the not assent and brought an action for recovery of the
ship and cargo should contribute, plaintiff asked from machineries plus damages. The plaintiff later
the shippers a deposit or bond to answer for obtained said cargo by a writ of replevin and
contribution to the average. All shippers acceded forwarded it to Vladivostok by another streamer.
except the defendant. In action to recover said Defendant denied liability asserting its lien on the
contribution, the Manila CFI decided for the plaintiff. cargo for general average. Trial court awarded the
Defendant appealed contending that the floating of a plaintiff damages. Defendant appealed.
vessel, unintentionally stranded inside a port and at
the mouth of a river during a fine weather, does not Held: It is clear that the cargo in question is not liable
constitute general average expenses. to a general average. It is not claimed that said cargo
was contraband of war and being neutral goods, they
Held: In classifying averages into simple or particular were not liable to forfeiture in the event of capture by
and general or gross and defining each class, the Code the enemies of the ship's flag. It follows that when the
of Commerce at the same time enumerate certain master of the vessel decided to take refuge in Manila,
specific cases as coming specially under one or the he acted exclusively with a view to the vessel's
other class. While the expenses incurred in putting protection. There was no common danger to the ship
the vessel afloat may well come under No. 2 of Art. and cargo; and, therefore, it was not a case for a
809 - referring to expenses suffered by the vessel due general average.
to an accident of the sea or force majeure- said The outbreak of the war between Germany and
expenses do not fit into any of the specific cases of Russia absolved the defendant from conveying the
general average enumerated in ART. 811. No. 6 of Art. cargo to Russia, and no damage could be recovered by
811 mentions expenses caused to afloat a vessel, but the plaintiff from the defendant for the latter's failure
it specifically refers to a vessel intentionally stranded to convey the cargo to the port of destination on that
for the purpose of saving it, and would have no ship. But by the terms of the contract of
application where the stranding was unintentional. affreightment, the defendant was bound to forward the
The following are the requisites for a general cargo to Vladivostok at its expense, not necessarily by
average: 1) there must be common danger, 2) for the a streamer of defendant. It does not by any means
common safety part of the vessel or cargo or both is follow that it is not liable for the expenses incurred by
sacrificed deliberately, 3) from the expenses or the plaintiff in completing the unfinished portion of the
damages caused follows the successful saving of the voyage in another ship. Defendant is, therefore, liable
vessel and cargo, and 4) the expenses or damages for the cost of forwarding the cargo by another line,
should have been incurred or inflicted after taking the the full freight having been received by the ship at the
proper legal steps and authority. commencement of the voyage.
It is the deliverance from an immediate peril, Judgment affirmed.
by reason of a common sacrifice, that constitutes the
essence of a general average. Where there is no proof
that the stranded vessel had to be put afloat to save it Compagnie de Commerce vs Hamburg 36 Phil 590
from imminent danger, and what does appear is that
the vessel had to be salvaged in order to enable it to F: In July 1914, defendant's vessel undertook to
proceed to its port of destination, the expenses carry a cargo of rice meal in the French port of Saigon
incurred in floating the vessel do not constitute for delivery to Dunkirk under a contract of
general average. It is the safety of the property, and affreightment with a French shipper. While the loading
not of the voyage which constitutes the true of the cargo was made, rumors of the outbreak of war
foundation of general average. between French and Germany spread. The master of
The expenses incurred for the common safety the German vessel, after completion of the loading of
of the vessel and cargo in this case did not arise from the cargo and after being refused by the French
the imminent peril of both. The cargo could have been Governor at Saigon for a pass of safe-conduct, fled
unloaded by the owners had they been required to do with his vessel and her cargo and took refuge in
so. The refloating was a success, but as the sacrifice Manila. Considering the nature of the cargo and its
was for the vessel's benefit -- to enable it to proceed to impossibility of being delivered to its destination
its destination -- and not for the purpose of saving the within reasonable time, the master of the vessel
cargo, the cargo owners are not in law bound to consulted the shipper's instruction as to the
contribute to expenses. The final requisite has not disposition of the cargo, but the shipper's agent
been proved for it does not appear that the expenses refused to assume responsibility. Defendant's agent in
in question were incurred after following the procedure Manila, upon the court's authority secured by the
laid down in Art. 913. master of the vessel, sold said rice meal and deposited
Decision reversed. the proceeds thereof with the court minus the
expenses incident to the sale. Plaintiff filed an action
for recovery of the proceeds of the sale and the
resulting damages. Defendant also claimed, in a
International Harvester vs Hamburg American Line 42 cross-complaint, contribution from plaintiff for general
Phil 845 average for the expenses incurred by the vessel's stay
in Manila. Trial court decided for the plaintiff including
F: In the spring of 1917, defendant undertook to damages for the defendant's breach of the charter
carry agricultural machineries, belonging to the party. Both parties appealed.
plaintiff, from Hamburg to Vladivostok, Russia. Freight
charges were prepaid to ultimate destination and Held: The danger from which the master of the vessel
defendant reserved the right to forward the fled was a real and not merely an imaginary one.
machineries at its own expense by some other means Seizure at the hands of the enemy, though not
in case of its inability to effect discharge at the port of inevitable, was a possible outcome of a failure to leave
destination. When the voyage was almost completed the port of Saigon; and it cannot be said that under
at the China Sea, war broke out between Germany and the conditions existing at the time when the master
Russia, and the ship put in to the port of Manila, where elected to flee from that port, there were no grounds
it was interned. Captain of the vessel refused to for a reasonable apprehension of danger from seizure
PAGE 76
TRANSPORTATION AND MARITIME LAW
by French authorities, and therefore no necessity for the sacrifice or expenditure may have been due to the
flight. The deviation of the vessel therefore, from the fault of one of the parties to the adventure; but this
route prescribed in her charter party, and the shall not prejudice any remedies which may be open
subsequent abandonment by the master of the voyage against that party for such fault.
contemplated in the contract of affreightment, must
be held to have been justified by the necessity under
which the master was placed to elect that course (b) Proof and Liquidation of
which would remove and preserve the vessel from Averages
danger of seizure by the public enemy of the flag
which the vessel sailed; and that neither the vessel (1) Modes
nor her owners are liable for the resultant damages
suffered by the owner of the cargo. Art. 846. Those interested in the proof
The claim for general average by the and liquidation of averages may mutually agree
shipowner, however, cannot be sustained under the and bind themselves at any time with regard to
provisions of the York-Antwerp Rules. An examination the liability, liquidation and payment thereof.
of the entire body of these rules discloses that general In the absence of agreements, the
average is never allowed thereunder unless the loss or following rules shall be observed:
damage sought to be made good as general average 1. The proof of the average shall take
has been incurred for the `common safety'. It is very place in the port where the repairs are made,
clear that in fleeing from the port of Saigon and taking should any be necessary, or in the port of
refuge in Manila, the master of the vessel was not unloading.
acting for the common safety of the vessel and her 2. The liquidation shall be made in the
cargo. The French cargo was absolutely secure from port of unloading, if it is a Philippine port.
danger of seizure or confiscation so long as it 3. If the average occurred outside of the
remained in the port of Saigon, and there can be no jurisdictional waters of the Philippines, or the
question that the flight of the vessel was a measure of cargo has been sold in a foreign port by reason
precaution adopted solely and exclusively for the of an arrival under stress, the liquidation shall
preservation of the vessel from danger of seizure or be made in the port of arrival.
capture. Delivery of the net proceeds of the sale to 4. If the average has occurred near the
plaintiff should be affirmed, but recovery of damages port of destination, so that said port can be
by plaintiff should be reversed. Defendant cannot made, the proceedings mentioned in rules 1 and
claim for general average. 2 shall be held there.
Judgment modified.
For this purpose the captains shall be are delivered. Should it not be visible at the
obliged to demand of the expert appraisers and time of unloading, said examination may be
of the contractors making the repairs, as well as made after the delivery, provided that it is done
of those appraising and taking part in the within forty-eight hours from the unloading, and
unloading, repair, sale, or utilization of the without prejudice to the other proofs which the
merchandise, that in their appraisements or experts may deem proper.
estimates and accounts they set down
separately and accurately the expenses and
damages pertaining to each average, and in Art. 854. The valuation of the objects
those of each average those corresponding to which are to contribute to the gross average,
the vessel and to the cargo, also stating and that of those which constitute the average,
separately whether or not there are damages shall be subject to the following rules:
proceeding from inherent defect of the thing 1. The merchandise saved which is to
and not from accident of the sea; and in case contribute to the payment of the gross average
there should be expenses common to the shall be valued at the current price at the port
different averages and to the vessel and its of unloading, deducting the freightage, customs
cargo, the amount corresponding to each must duties, and expenses of unloading, as may
be estimated and stated distinctly. appear from a material inspection of the same,
without taking the bills of lading into
consideration, unless there is an agreement to
Art. 851. At the instance of the captain, the contrary.
the adjustment, liquidation, and distribution of 2. If the liquidation is to be made in the
gross averages shall be held privately, with the port of departure, the value of the merchandise
consent of all the parties in interest. loaded shall be determined by the purchase
For this purpose, within forty-eight price, including the expenses until they are
hours, following the arrival of the vessel at the placed on board, the insurance premium
port, the captain shall convene all the persons excluded.
interested in order that they may decide as to 3. If the merchandise should be
whether the adjustment or liquidation of the damaged, it shall be appraised at its true value.
gross average is to be made by experts and 4. If the voyage having been interrupted,
liquidators appointed by themselves, in which the merchandise should have been sold in a
case did shall be so done if the interested foreign port, and the average cannot be
parties agree. estimated, the value of the merchandise in the
If an agreement is not possible, the port of arrival, or the net proceeds obtained at
captain shall apply to the competent judge or the sale thereof, shall be taken as the
court, who shall be the one in the port where contributing capital.
these proceedings are to be held in accordance 5. Merchandise lost, which constitutes
with the provisions of this Code, or to the consul the gross average, shall be appraised at the
of the Philippines should there be one, and value which merchandise of its kind may have in
should there be none, to the local authority the port of unloading, provided that its kind and
when they are to be held in a foreign port. quality appear in the bill of lading; and should
they not appear, the value shall be that stated
in the invoices of the purchase issued in the
Art. 852. If the captain does not comply port of shipment, adding thereto the expenses
with the provisions of the preceding article, the and freightage subsequently arising.
ship agent or the shippers shall demand the 6. The masts cut down, the sails, cables,
liquidation, without prejudice to the action they and other equipment of the vessel rendered
may bring to demand indemnity from him. useless for the purpose of saving it, shall be
appraised at the current value, deducting one-
third by reason of the difference between new
Under Art. 851, the captain is required to initiate the and old.
proceedings for the adjustment, liquidation and This deduction shall not be made with
distribution of any gross average; it is his duty to take respect to anchors and chains.
the proper steps to protect any shipper whose goods 7. The vessel shall be appraised at its
may have been jettisoned for the general safety ==> true value in the condition in which it is found.
if the captain does not comply with his duty under 8. The freightage shall represent 50 per
851, the shipowner or shipper has the right to cent by way of contributing capital.
maintain an action against the captain for
indemnification for the loss --> this does not involve
the suppression of the right of action of the shipper Art. 855. The merchandise loaded on the
against the shipowner upper deck of the vessel shall contribute to the
gross average should it be saved; but there
shall be no right to indemnify if it should be lost
Art. 853. After the experts have been by reason of having been jettisoned for common
appointed by the persons interested, or by the safety, except when the marine ordinances
court, and after the acceptance, they shall allow its shipment in this manner in coastwise
proceed to the examination of the vessel and of navigation.
the repairs required and to the appraisal of The same shall take place with that
their cost, separating these losses and damages which is on board and is not included in the bills
from those arising from the inherent defect of of lading or inventories, according to the cases.
the things. In any case the shipowner and the
The experts shall also declare whether captain shall be liable to the shippers for the
the repairs may be made immediately, or damages from the jettison, if the storage on the
whether it is necessary to unload the vessel in upper deck was made without the consent of
order to examine and repair it. the latter.
With regard to the merchandise, if the The goods may be stowed on deck (1) with the
average should be visible at a mere glance, the consent of the shipper or (2) without his consent --> if
examination thereof must be made before they stowed on deck with his consent, he takes the risk
PAGE 78
TRANSPORTATION AND MARITIME LAW
(3) Liquidation of
general average (4) Liquidation of
particular average
Art. 858. In order to effect the
liquidation, the liquidator shall examine the Art. 869. The experts whom the court or
protest of the captain, comparing it, if the persons interested may appoint, as the case
necessary, with the log book, and all the may be, shall proceed with the examination and
contracts which may have been made among appraisement of the averages in the manner
the persons interested in the average, the prescribed in Articles 853 and 854, Rules 2 to 7,
appraisements, expert examinations, and in so far as they are applicable.
accounts of repairs made. If, as a result of this
examination, he should find any defect in the
procedure which might injure the rights of the 2. Arrivals Under Stress
persons interested or affect the liability of the
captain, he shall call attention thereto in order (a) Causes
that it may be corrected, if possible, and
otherwise he shall include it in the exordial of Art. 819. If during the voyage the
the liquidation. captain should believe that the vessel cannot
Immediately thereafter he shall proceed continue the trip to the port of destination on
with the distribution of the amount of the account of the lack of provisions, well-founded
average, for which purpose he shall fix: fear of seizure, privateers, or pirates, or by
1. The contributing capital, which he reason of any accident of the sea disabling it to
shall determine by the value of the cargo, in navigate, he shall assemble the officers and
accordance with the rules established in Article shall summon the persons interested in the
854. cargo who may be present, and who may attend
2. That of the vessel in its actual the meeting without the right to vote; and if,
condition, according to a statement of experts. after examining the circumstances of the case,
3. The 50 per cent of the amount of the the reason should be considered well-founded,
freightage, deducting the remaining 50 per cent the arrival at the nearest and most convenient
for wages and maintenance of the crew. port shall be agreed upon, drafting and entering
After the amount of the gross average the proper minutes, which shall be signed by all,
has been determined in accordance with the in the log book.
provisions of this Code, it shall be distributed The captain shall have the deciding vote,
pro rata among the goods which are to cover and the persons interested in the cargo may
the same. make the objections and protests they may
deem proper, which shall be entered in the
minutes in order that they may make use
Art. 865. The distribution of the gross thereof in the manner they may consider
average shall not be final until it has been advisable.
agreed to, or in the absence thereof, until it has
been approved by the judge or court, after an
examination of the liquidation and a hearing of
the persons interested who may be present or Art. 820. An arrival shall not be
of their representatives. considered lawful in the following cases:
1. If the lack of provisions should arise
from the failure to take the necessary
Art. 866. After the liquidation has been provisions for the voyage according to usage
approved, it shall be the duty of the captain to and custom, or if they should have been
collect the amount of the contribution, and he rendered useless or lost through bad stowage or
shall be liable to the owners of the goods negligence in their care.
averaged for the damages they may suffer 2. If the risk of enemies, privateers, or
through his delay or negligence. pirates should not have been well known,
PAGE 79
TRANSPORTATION AND MARITIME LAW
PAGE 80
TRANSPORTATION AND MARITIME LAW
stress has ceased, he should not continue the 7. The vessel which is not properly moored or
voyage. does not observe the proper distances, has the
If the cause of the arrival should have presumption against itself.
been the fear of enemies, privateers, or pirates,
a deliberation and resolution in a meeting of the 8. The vessel which is moored at a place not
officers of the vessel and persons interested in used for the purpose, or which is improperly moored or
the cargo who may be present, in accordance does not have sufficient cables, or which has been left
with the provisions contained in Article 819, without watch, has also against itself the presumption.
shall precede the departure.
9. The same rule applies to those vessels
which do not have buoys to indicate the location of its
The captain has the duty to continue the voyage anchors to prevent damage to these vessels which
without delay after the cause of the arrival under may approach it.
stress has ceased--> otherwise, he shall be liable for
damages caused by the delay
Zones in time of collisions (3 time zones):
3. Collisions
1. all the time up to the moment when the risk
Collision: impact of two vessels both of which are of collision may have said to have begun
moving --> within this zone, no rule is applicable
Allision: striking of a moving vessel against one that because none is necessary. Each vessel is free to
is stationary direct its course as it deems best with reference to the
movements of the other vessel.
Cases of collision :
1. due to the fault, negligence or lack of skill of the 2. the time between the moment when the risk
captain, sailing mate or the complement of the vessel of collission begins and the moment when it has
--> under 826, the shipowner shall be liable for the become a practical necessity.
losses and damages
2. due to the fault of both vessels --> under 827, each 3. the time between the moment when
vessel shall suffer its own losses, but as regards the collission has become a practical certainty and the
owners of the cargoes, both vessels shall be jointly moment of actual contact
and severally liable
3. where it cannot be determined which of the 2
vessels is at fault --> under 828, each vessel shall Effect of fault of privileged vessel during third
suffer its own losses, and both shall also be solidarily zone :
responsible for the losses and damages caused to
their cargoes If a vessel having a right of way suddenly
4. collision due to fortuitous event or force majeure --> changes its course during the third zone, in an effort to
under 830, each vessel shall bear its own damages avoid an imminent collision due to the fault of another
5. where two vessels collide with each other without vessel, such act may be said to be done in extremis,
their fault but by reason of the fault of a third vessel -- and even if wrong, cannot create responsibility on the
> under 831, the owner of the third vessel causing the part of said vessel with the right of way. Thus, it has
collision shall be liable for the losses and damages 6. a been held that fault on the part of the sailing vessel at
vessel which is properly anchored and moored may the moment preceding a collission, that is, during the
collide with those nearby by reason of a storm or other third division of time, does not absolve the steamship
cause of force majeure --> under 832, the vessel run which has suffered herself and a sailing vessel to get
into shall suffer its own damages and expenses into such dangerous proximity as to cause inevitable
harm and confusion, and a collision results as a
Nautical Rules to determine negligence : consequence. The steamer having a far greater fault in
allowing such proximity to be brought about is charge-
1. When 2 vessels are about to enter a port, able with all the damages resulting from the collission;
the farther one must allow the nearer to enter first; if and the act of the sailing vessel having been done in
they collide, the fault is presumed to be imputable to extremis and even wrong, is not responsible for the
the one who arrived later, unless it can be proved that result.
there was no fault on its part.
(a) Classes and Effects
2. When 2 vessels meet, the smaller should
give the right of way to the larger one. (1) Fortuitous
3. A vessel leaving port should leave the way Art. 830. If a vessel should collide with
clear for another which may be entering the same another through fortuitous event or force
port. majeure, each vessel and its cargo shall bear its
own damages.
4. The vessel which leaves later is presumed to
have collided against one who has left earlier.
Art. 832. If, by reasons of a storm or
5. There is also a presumption against the other cause of force majeure, a vessel which is
vessel which sets sail at night. properly anchored and moored should collide
with those nearby, causing them damages, the
6. The presumption also works against the injury occasioned shall be considered as
vessel with spread sails which collides with another particular average of the vessel run into.
which is at anchor, and cannot move, even when the
crew of the latter has received word to lift anchor, Each to his own damage --> particular damage
when there was not sufficient time to do so or there
was fear of a greater damage or other legitimate
reason. (2) Culpable
PAGE 81
TRANSPORTATION AND MARITIME LAW
Art. 826. If a vessel should collide with having been obliged to make a port to repair the
another, through the fault, negligence, or lack of damages caused by the collision, is lost during
skill of the captain, sailing mate, or any other the voyage or is obliged to be stranded in order
member of the complement, the owner of the to be saved, shall be presumed as lost by
vessel at fault shall indemnify the losses and reason of collision.
damages suffered, after an expert appraisal.
(c) Liabilities
Where the obligation arises from tortious act and not
from contract, both the owner and the shipagent (1) Shipowner or agent
should be declared liable
Art. 837. The civil liability incurred by
the shipowners in the cases prescribed in this
Art. 827. If the collision is imputable to section, shall be understood as limited to the
both vessels, each one shall suffer its own value of the vessel with all its appurtenances
damages, and both shall be solidarily and freightage earned during the voyage.
responsible for the losses and damages
occasioned to their cargoes. Art. 838. When the value of the vessel
and her appurtenances should not be sufficient
to cover all the liabilities, the indemnity due by
Defense of due diligence of a good father of a family in reason of the death or injury of persons shall
the selection and vigilance of the officers and crew have preference.
cannot be used to render nugatory the solidary liability
under 827
Limited liability : limited to the value of the vessel and
Under the express provisions of 827, the shipowners the freight earned during the voyage [provided for in
cannot successfully maintain an action against the Arts. 587, 590 and 837]
other for the loss or injury to his vessel Damages may be recovered to the extent of
what may be salvaged or of the freightage received or
of the value of the insurance recoverable
Art.831. 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 (2) Captain, pilot,
civilly liable to said owner. others
The doctrine of last clear chance cannot be Art. 836. With respect to damages
raised --> under the express provisions of Art. 827, caused to persons or to the cargo, the absence
under which the evidence disclosing that both vessels of a protest may not prejudice the persons
are blameworthy, the owners of neither can interested who were not on board or were not in
successfully maintain an action against the other for a condition to make known their wishes.
the loss or injury to his vessel
Art. 835 establishes a condition precedent before any
action for the recovery of damages arising from
(b) Presumption of loss by collisions may be admitted --> presentation of a
collision protest or declaration within 24 hours before the
proper authorities [competent authority at the point
Art.833. A vessel which, upon being run where the collision took place or of the first port of
into, sinks immediately, as well as that which,
PAGE 82
TRANSPORTATION AND MARITIME LAW
arrival of the vessel or to the consul of the Philippines same as in general averages and neither is liable for
if it occurred in a foreign country] the salvage due from the other
Where a personal action is brought by the
The requirement of protest is not necessary with salvor against the owner of the ship, the liability of the
respect to small boats engaged in river and bay traffic latter is limited to such part of the salvage
and boats manned by a group of fishermen compensation due for the entire service as is
proportionate to the value of the ship
Reason for requiring protest: Neccesity of
preventing fictitious collisions and improper
indemnities Art. 843. If several vessels sail under
convoy, and any of them should be wrecked, the
cargos saved shall be distributed among the
Summary of cases where protest is required: rest in proportion to the amount which each one
1. under 612, when the vessel makes an arrival under is able to take.
stress If any captain should refuse, without
2. under 612, 624 and 843, where the vessel is sufficient cause, to receive what may
shipwrecked correspond to him, the captain of the wrecked
3. under 624, where the vessel has gone through a vessels shall enter a protest against him, before
hurricane or when the captain believes that the cargo two sea officials, of the losses and damages
has suffered damages or averages resulting therefrom, ratifying the protest within
4. under 835, in case of maritime collisions twenty-four hours after arrival at the first port,
and including it in the proceedings he must
institute in accordance with the provisions
Art. 839. If the collision should take contained in Article 612.
place between Philippine vessels in foreign If it is not possible to transfer to the
waters, of if having taken place in the open other vessels the entire cargo of the vessel
seas, and the vessels should make a foreign wrecked, the goods of the highest value and
port, the Filipino consul in said port shall hold a smallest volume shall be saved first, the
summary investigation of the accident, designation thereof to be made by the captain
forwarding the proceedings to the Secretary of with the concurrence of the officers of his
the Department of Foreign Affairs for vessel.
continuation and conclusion.
Salvage Law (Act No. 2616)
4. Shipwrecks
Section 1. When in case of shipwreck, the
Art. 840. The losses and deteriorations vessel or its cargo shall be beyond the control
suffered by a vessel and her cargo by reason of of the crew, or shall have been abandoned by
shipwreck or stranding shall be individually for them, and picked up and conveyed to a safe
the account of the owners, the part which may place by other persons, the latter shall be
be saved belonging to them in the same entitled to a reward for the salvage.
proportion. Those who, not being included in the
above paragraph, assist in saving a vessel or its
cargo from shipwreck, shall be entitled to a like
Art. 841. If the wreck or standing should reward.
be caused by the malice,e negligence, or lack of
skill of the captain, or because the vessel put to Salvage.-- The compensation allowed to persons by
sea insufficiently repaired and equipped, the whose voluntary assistance a ship at sea or her cargo
ship agent or the shippers may demand or both have been saved in whole or in part from
indemnity of the captain for the damages impending sea peril, or such property recovered from
caused to the vessel or to the cargo by the actual peril or loss, as in cases of shipwrecks, derelict
accident, in accordance with the provisions or recapture -- a service which one person, renders
contained in Articles 610, 612, 614, and 621. to the owner of a ship or goods by his own labor,
preserving the goods or ship which the owner or those
entrusted with the care of them either abandoned in
Shipwreck: Loss of a vessel at sea, either by being distress at sea or are unable to protect and secure --->
swallowed up by the waves, by running against a permit is required to engage in salvage business
another vessel or thing at sea, or on coast --> renders
the ship incapable of navigation Shipwreck-- means a ship which has received
Under 841, in case the wreck or stranding is injuries rendering her incapable by navigation; loss of
due to the (1) malice, negligence, or lack of skill of the a vessel at sea, either by being swallowed up by the
captain, or (2) because the vessel put to sea was waves, running against a thing at sea, or on the coast
insufficiently repaired and equipped, the captain shall
be liable Derelict.-- A ship or her cargo which is abandoned
and deserted at sea by those who are in charge of it,
without any hope of recovering it, or without any
Art. 842. The goods saved from the intention of returning it --> if those in charge of the
wreck shall be specially bound for the payment property left it with the intention of finally leaving it, it
of the expenses of the respective salvage, and is a derelict and the change of their intention and an
the amount thereof must be paid by the owners attempt to return to it will not change its nature
of the former before they are delivered to them, ex. a schooner which has capsized in the high
and with preference over any other obligation if seas, deserted by her captain with no intention to
the merchandise should be sold. return, is a derelict
a vessel, though not abandoned, may be the
subject of salvage, if at the time the services were
Where a ship and its cargo are saved together, the rendered, there was a probable, threatening danger to
salvage allowance should be charged against the ship the vessel or its cargo --> if the vessel towed is aided
and cargo in proportion of their respective values, the in escaping present or prospective danger, the service
is one of salvage an the towage is merely incidental
PAGE 83
TRANSPORTATION AND MARITIME LAW
No other person has the right to interfere with the Issues : Is the plaintiff entitled to recover renumeration
salvage of a vessel or cargo if the salvor is able to effect for saving the cargo as well as for saving the ship? What
the salvage with fidelity and vigor --> if their means are is the reasonable compensation which should be
inadequate, they are bound to accept additional allowed?
assistance if offered Held : There is no question as to the liability of
defendant for the service rendered by plaintiff. Nor is
Taking passengers from a sinking ship, without there any dispute over the fact that the service
rendering any service in rescuing the vessel, is not a rendered was a salvage service and renumerable as
salvage service, being a duty of humanity and not for such. Where a ship and its cargo are saved together, as
reward --> the Salvage Act, giving salvors of human life a result of services carried on with a view to saving
a fair share or remuneration offered to salvors of the both, the salvage allowance should be apportioned
vessel, refers to a situation where both lives and between the ship and cargo in the proportion of their
PAGE 85
TRANSPORTATION AND MARITIME LAW
respective values, the same as in a case of general In this case, the sum of P 1,000 is adequate for
average; and neither is liable for the salvage due from the service rendered.
the other. If one who have salved both ship and cargo
brings before the court in his salvage action only the
ship, or only the cargo, he will get judgment only for Barrios vs Go Thong 7 SCRA 535
such amount of reward as the court finds to be due in
respect of the value of that property which is before the F: Plaintiff Barrios was the captain of MV Henry I, a
court. Not only is the salvage charge a separate and vessel of William Lines, Inc. At about 8:00 p.m. of May
divisible burden as between ship and cargo, but also as 1, 1958, plaintiff as captain received an SOS or distress
between portions of the cargo belonging to different signal by blinkers from the MV Alfredo, owned by the
owners. There is no common liability for the amounts defendant Carlos Go Thong & Co. Answering the SOS
due from the ship or other portions of the cargo when call, the plaintiff as captain of MV Henry, which was then
the ship and cargo, or either, are brought into the sailing from Dumaguete City, altered the course of said
custody of the court as a result of a proceeding in rem. vessel, and headed towards the MV Don Alfredo, which
The rule of liability must be the same where a personal plaintiff found to be in trouble, due to engine failure and
action is instituted against the owners of the one or the the loss of her propeller, for which reason, it was drifting
other. The personal liability of each must be limited to slowly southward from Negros Island towards Borneo in
the portion of the salvage charge which should be borne the open China Sea, at the mercy of a moderate easterly
by his own property. wind. At about 8:25 p.m. on the same day, May 1, 1958,
If it had been alleged and proved that the ship the MV Henry, under the command of the plaintiff,
was unseaworthy when she put to sea or that the succeeded in getting near the MV Don Alfredo -- in fact
necessity for the salvage service was due to the as near as about 7 meters from the latter ship -- and
negligence of the master, or of the ship's owner, the with the consent and knowledge of the captain and/or
latter might have been liable, at least between himself master of the MV Don Alfredo, the plaintiff caused the
and the shipper, for the entire cost of the service. But latter vessel to be tied to, or well-secured and
when the claim is put upon the basis of salvage, the connected with two lines from the MV Henry; and the
fixing of the compensation goes beyond the limits of a latter had the MV Don Alfredo in tow and proceeded
quantum meruit for the work and labor done and towards the direction of Dumaguete City, as evidenced
involves the assessment of a bounty. The amount to be by a written certificate to this effect executed by the
allowed is in part determined upon considerations of Master, the Chief Engineer, the Chief Officers, and the
equity and public policy; and it is not proper to make the Second Engineer of the MV Don Alfredo, who were then
ship or the ship's owner liable for the whole amount. But on board the latter ship at the time of the occurrence.
where the owner of the cargo has not been made a When both vessels were approaching the vicinity of
party to the action, no recovery can be had in this action Negros Oriental, the MV Lux, a sister ship of MV Don
in regard to the service rendered to the cargo. Alfredo, was sighted heading towards the two vessels.
In fixing the compensation, the ff. circumstances At the request and instance of the captain of MV Don
are taken into consideration: (1) the labor expended by Alfredo, the plaintiff caused the tow lines to be released,
the salvors in rendering the salvage service; (2) the thereby also releasing the MV Don Alfredo.
promptitude, skill and energy displayed in rendering the
service and saving the property; (3) the value of the Issue: WON the service rendered by plaintiff constituted
property employed by the salvors, and the danger to salvage or towage, and if so, WON plaintiff may recover
which such property was exposed; (4) the risk incurred from defendant compensation for such service.
by the salvors in rescuing the property from the Held :(1) According to Sec. 1 of the Salvage Law, those
impending peril; (5) the value of the property salved; who assist in saving a vessel or its cargo from
and (6) the degree of danger from which the property shipwreck, shall be entitled to a reward (salvage).
was rescued. "Salvage" has been defined as the compensation
In applying these criteria to this case, the ff. allowed to persons by whose assistance a ship or her
circumstances are pertinent : the Hondagua was cargo has been saved, in whole or in part, form
delayed in her voyage about nine hours. This delay impending peril on the sea, or in recovering such
caused her to enter Iloilo, the port of destination, in the property from actual loss, as in case of shipwreck,
early hours of the morning instead of the late afternoon derelict or recapture. There was no marine peril in this
of the previous day; but the unloading of her cargo was case. Although defendant's vessel was in a helpless
not thereby retarded. Under the charter party contract condition due to engine failure, it did not drift too far
under which she was operating, the Hondagua was from the place where it was. As found by the LC, the
earning about P 300/day, which was considered weather was fair, clear and good. The waves were small
reasonable compensation for her use, including the and too slight, so much so, that there were only ripples
services of officers and crew. The service rendered did on the sea, which was quite smooth. During the towing
not involve any further expenditure of labor on the part of the vessel on the same night, there was moonlight.
of the salvors, no unusual display of skill and energy and Although said vessel was drifting towards the open sea,
the condition of the sea was not such as to involve any there was no danger of its foundering or being stranded,
special risk either to Hondagua or her crew. Finally, the as it was far from any island or rocks. In case of danger
danger from which the Seward was rescued was real of stranding, its anchor could be released, to prevent
since the ship was confronted by a serious peril. such occurrence. There was no danger that defendant's
In determining the amount of the award, the aim vessel would sink, in view of the smoothness of the sea
should be to hold out to seafaring men a fair and the fairness of the weather. That there was absence
inducement to the performance of salvage service of danger is shown by the fact that said vessel or its
without fixing a scale of compensation so high as to crew did not even find it necessary to lower its launch
cause vessels in need of such services to hesitate and and two motor boats, in order to evacuate its
decline to receive them because of the ruinous cost. passengers no were the cargo in danger of perishing.
That the salvor is entitled, as of bounty, to something All that the vessel's crew members could no do was to
more than mere renumeration for his own work and the move the vessel on its own power. That did not make
risk incurred by him is conceded; but the interests of the vessel a quasi-derelict, considering that even before
commerce should also be considered. Towage is not the plaintiff-appellant extended the help to the
considered a salvage service of high order of merit and distressed ship, a sister vessel was known to be on its
where the risk is inconsiderable and other conditions way to succor it.
favorable, the compensation to be allowed should be (2) But plaintiff's service can be considered as a
modest in its amount. quasi- contract of towage. In consenting to plaintiff's
offer to tow the vessel, the defendant through its
PAGE 86
TRANSPORTATION AND MARITIME LAW
captain, thereby impliedly entered into a juridical chartered the vessel, the ship captain, its officers and
relation of towage with the owner of the MV Henry. If crew were under the employ of the shipowner and
the contract thus created is one for towage, then only therefore continued to be under its direct supervision
the owner of the towing vessel , to the exclusion of the and control. Thus it continued to be a public carrier.
crew of the said vessel, may be entitled to It is therefore imperative that a public carrier shall
renumeration. And as the vessel-owner, William Lines, remain as such, notwithstanding the charter of the
had expressly waived its claim for compensation for the whole or portion of a vessel, provided the charter is
towage service rendered to defendant, it is clear that limited to the ship only, as in the case of a time-
plaintiff, whose right if at all depends upon and not charter or a voyage-charter. It is only when the
separate from the interest, is not entitled to payment for charter includes both the vessel and the crew, as in a
such towage services. Neither may the plaintiff captain bareboat or demise that a CC becomes private, insofar
invoke equity in support of his claim for compensation as such particular voyage is concerned.
against defendant. There being an express provision of
law (Art. 2142, NCC) applicable to the relationship Issue : WON the carrier is liable for damages. NO.
created in this case, that is, that of a quasi-contract of
towage where the crew is not entitled to compensation Held : The presumption of negligence on the part of
separate from that of the vessel, there is no occasion to respondent carrier has been overcome by the showing
resort to equitable considerations. of extraordinary zeal and assiduity exercised by the
carrier in the care of the cargo. On the other hand, no
proof was adduced by the petitioner showing that the
carrier was remiss in the exercise of due diligence in
E. SPECIAL CONTRACTS OF MARITIME COMMERCE order to minimize the loss or damage to the goods it
carried.
1. Charter Parties
b. Kinds
a. Definition; as common
carrier Classes of charter party:
should not answer for whatever responsibility might the vessel. Transcontinental was disclosed as the
have attached to the principal. Union asked that charterer's principal and Maritime only acted within
Maritime should be made solidarily liable since its the scope of its authority.
principal had not been impleaded. The TC's findings were upheld except for some
modifications. The liability of Macondray can no longer
Held : There are 3 general categories of charters: be enforced because of prescription. Maritima cannot
1. Demise or bareboat charter - involves the be held liable for the principal's acts.
transfer of full possession and control of the vessel for
the period covered by the contract, the charterer c. Forms and Effects
obtaining the right to use the vessel and carry
whatever cargo it chooses, while manning and Art. 652. A charter party must be drawn
supplying the ship as well in duplicate and signed by the contracting
2. Time Charter - contract to use a vessel for a parties, and when either does not know how or
particular period of time, the charterer obtaining the is not able to do so, by two witnesses at his
right to direct the movements of the vessel during the request.
chartering period, although the owner retains The charter party shall include, besides
possession and control the condition stipulated, the following
3. Voyage Charter - contract for the hire of a circumstances:
vessel for one or a series of voyages usually for the 1. The kind, name, and tonnage of the
purpose of transporting goods for the charterer; the vessel.
voyage charter is a contract of affreightment and is 2. Her flag and port or registry.
considered a private carriage 3. The name, surname, and domicile of
- being a private carriage, the parties may the captain.
freely contract respecting liability for damages to the 4. The name, surname, and domicile of
goods and other matters; responsibility for the cargo the agent, if the latter should make the charter
loss falls on the one who agreed to perform the duty party.
involved in accordance with the terms of the voyage 5. The name, surname, and domicile of
charter the charterer, and if he states that he is acting
by commission, that of the person for whose
This case involves a voyage charter.In the account he makes the contract.
present case, the charterer was responsible for 6. The port of loading and unloading.
loading, stowage and discharging at the ports visited, 7. The capacity, number of tons or
while the owner was responsible for the care of the weight, or measure which they respectively
cargo. Par. 2 of the Uniform General Charter provided bind themselves to load and transport, or
that the owner shall be responsible for loss or damage whether it is the total cargo.
or delay in the delivery of goods caused by improper 8. The freightage to be paid, stating
or negligent stowage of the goods or by personal want whether it is to be a fixed amount for the
of due diligence in making the vessel seaworthy and voyage or so much per month, or for the space
properly manned. However, the owner shall not be to be occupied, or for the weight or measure of
liable for any other cause, even from the neglect of the the goods of which the cargo consists, or in any
captain or the crew or any other person employed by other manner whatsoever agreed upon.
the owner on board, or for any unseaworthiness of the 9. The amount of primage to be paid the
vessel on loading or commencement of the voyage. captain.
In cases at bar, the TC found that there were 10. The days agreed upon for loading and
shortlanded bags, which could only mean that they unloading.
were damaged or lost on board the vessel before 11. The lay days and extra lay days to
unloading of the shipment. The entire cargo was be allowed and the rate of demurrage.
covered by a clean B/L. As the bags were in good order
when received by the vessel, the presumption is that
they were damaged or lost during the voyage as a Art. 653. If the freight should be
result of their negligent improper storage. The received without the charter party having been
shipowner should be held liable. signed, the contract shall be understood as
The filing of the claim must be within one year, executed in accordance with what appears in
in accordance with the COGSA. Otherwise, the carrier the bill of lading, which shall be the only
and the ship shall be discharged from liability. The one instrument with regard to the freight to
year period should commence from Oct. 20, 1979, the determine the rights and obligations of the ship
date when the last item was delivered to the agent, of the captain, and of the charterer.
consignee. Union filed the complaint against
Hongkong within the one year period but tardily
against Macondray. The action has prescribed with If the cargo is received without a charter party, the B/L
respect Macondray but not against the principal, shall be considered the contract of the parties
Hongkong Island.
As regards the goods damaged or lost during Q: If there is no charter party and B/L, would there be
unloading, the charterer is liable thereof, having a valid contract?
assumed this activity under the charter party free of A: Taking Art. 653 literally, the answer is no.
expense to the vessel. The difficulty is that However, if we take into account the fact that delivery
Transcontinental has not been impleaded and so is of the cargo does not constitute the making of a
beyond the court's jurisdiction. The liability imposed contract but rather the partial performance thereof,
on it cannot be borne by Maritime which is a mere the mere fact of delivery and receipt of such cargo, the
agent and is not answerable for the injury caused by GF and mutual consent with which they have been
its principal (unless the principal is undisclosed). made, should be a better substitute for the charter
In this case, the charterer did not represent party than is the B/L which is nothing more than the
itself as a carrier and indeed assumed responsibility proof of such delivery.
only for the unloading of the cargo. Maritime acted in
representation of the charterer and not of the vessel. Primage.-- Formerly, a small allowance or
As a mere charterer's agent, it cannot be held compensation payable to the master and marines of a
solidarily liable with Transcontinental for the ship; to the former for the use of his cables and ropes
losses/damages to the cargo outside the custody of
PAGE 88
TRANSPORTATION AND MARITIME LAW
to discharge the goods of the merchant; to the latter The same authority shall judicially
for lading and unlading in any port of haven compel the captain to carry out for his account
Primage, at present, it is no longer a gratuity and under his responsibility the charter made
to the master, unless especially stipulated; but it by the shippers.
belongs to owners or freighters and is nothing but an If the captain, notwithstanding his
increase of the freight rate. diligence, should not find a vessel to charter, he
shall deposit the cargo at the disposal of the
Demurrage.-- Sum which is fixed by the contract of shippers, to whom he shall communicate the
carriage, or which is allowed, as remuneration to the facts on the first opportunity, the freight being
owner of a ship for the detention of his vessel beyond adjusted in such cases by the distance covered
the number of days allowed by the charter party for by the vessel, with no right to any
loading and unloading or for sailing; it is an extended indemnification whatsoever.
freight or reward to the vessel in compensation for the
earnings she is improperly caused to lose
Articles 659 to 664 : Some of the goods being
Lay days.-- Days allowed to charter parties for transported may : (1) be sold by the captain to pay for
loading and unloading the cargo necessary repairs; (2) be jettisoned for the common
safety; (3) be lost by reason of shipwreck or stranding;
(4) be seized by pirates or enemies; (5) suffer
Art. 654. The charter parties executed deteriorations or dimunitions; or (6) increase by
with the intervention of a broker, who certifies natural cause in weight or size
to the authenticity of the signatures of the
contracting parties made in his presence, shall ** Goods that shall not pay freightage:
be full evidence in court; and, if they should be (1) Art. 660 - goods jettisoned for the common safety
conflicting, that which agrees with the one but the amount of freightage that should have been
which the broker must keep in his registry, if paid shall be considered as a general average and
kept in accordance with law, shall govern. shall be computed in proportion to the distance
The contracts shall also be admitted as covered when they were jettisoned
evidence, even though a broker has not taken (2) Art. 661 - merchandise lost by reason of shipwreck
part therein, if the contracting parties or stranding; if freight had been paid in advance, it
acknowledge the signatures of the same as shall be returned
their own. (3) Art. 661 - goods seized by pirates or enemies;
Should no broker have taken part in the freight paid in advance shall be returned
charter party and the signatures be not ** Goods required to pay freightage:
acknowledged, doubts shall be decided by what (1) Art. 659 - goods sold by the captain to pay for the
is provided for in the bill of lading, and, in the necessary repairs to the hull, machinery or equipment
absence thereof, by the proofs submitted by the or for unavoidable and urgent needs --> but the freight
parties. may not be required to be paid in full
(2) Art. 663 - goods which suffer deterioration or
dimunition on account of (a) inherent defects or bad
Art. 655. Charter parties executed by the quality of packing, or of (b) fortuitous event
captain in the absence of the ship agent shall be (3) Art. 644 - goods that increase in size or weight by
valid and effective, even though in executing natural cause
them he should have acted in violation of the
orders and instructions of the agent or
shipowner; but the latter shall have a right of d. Rights and Obligations of
action against the captain to recover damages. Shipowners
rest shall take the place corresponding to them and keep the vessel in trim, demanding by way
in the order of the dates of their contracts. of freightage the highest price which may have
Should there be no priority, the been stipulated for said voyage.
charterers may load, if they wish, in proportion
to the weight or space they may have engaged,
and the person from whom the vessel was Art. 675. If the vessel has been
chartered shall be obliged to indemnify them for chartered to receive the cargo in another port,
losses and damages. the captain shall appear before the consignee
designated in the charter party, and should the
latter not deliver the cargo to him, he shall
Art. 670. If the person from whom the inform the charterer and await his instructions,
vessel is chartered, after receiving a part of the the lay days agreed upon, or those allowed by
cargo, should not find sufficient to make up at custom in the port, beginning to run in the
least three fifths of the amount the vessel can meantime, unless there is an express
hold, at the price he may have fixed, he may agreement to the contrary.
substitute for that transportation another Should the captain not receive an answer
vessel inspected and declared suitable for the within the time necessary therefore, he shall
same voyage, the expenses of transfer, and the make efforts to find cargo; and should he not
increase in the price of the charter, should there find any after the lay days and extra lay days
be any, being for his account. Should he not be have elapsed, he shall make a protest and
able to make this change, the voyage shall be return to the port where the charter was made.
undertaken at the time agreed upon; and should The charterer shall pay the freightage in
no time have been fixed, within fifteen days full, discounting that which may have been
from the time the loading began, should nothing earned on the merchandise which may have
to the contrary have been stipulated. been carried on the voyage out or on the return
If the owner of the part of the cargo trip, if carried for the account of third persons.
already loaded should procure some more at the The same shall be done if a vessel,
same price and under similar or proportionate having been chartered for the round trip, should
conditions to those accepted for the freight not be given any cargo for her return.
received, the person from whom the vessel is
chartered or the captain may not refuse to
accept the rest of the cargo; and should he do Art. 676. The captain shall lose the
so, the charterer shall have a right to demand freightage and shall indemnify the charterers if
that the vessel put to sea with the cargo she the latter should prove, even against the
may have on board. certificate of inspection, if one has been made
at the port of departure, that the vessel was not
Art. 671. After three-fifths of the vessel in a condition to navigate at the time of
is loaded, the person from whom she is receiving the cargo.
chartered may not, without the consent of the
charterers or shippers, substitute the vessel
designated in the charter party with another Art. 677. The charter party shall subsist
one, under the penalty of making himself if the captain should not have any instructions
thereby liable for all the losses and damages from the charterer, and a declaration of war or a
occurring during the voyage to the cargo of blockade should take place during the voyage.
those who did not consent to the change. In such case the captain must proceed to
the nearest safe and neutral port, requesting
and awaiting orders from the shipper; and the
Art. 672. If the vessel has been expenses and salaries accruing during the
chartered in whole, the captain may not, detention shall be paid as general average.
without the consent of the person chartering If, by orders of the shipper, the cargo
her, accept cargo from any other person; and should be discharged at the port of arrival, the
should he do so, said charterer may oblige him freightage for the voyage out shall be paid in
to unload it and to indemnify him for the losses full.
suffered thereby.
3. Art. 670 - where the shipowner should not find cargo was chartered or of the captain, and should
sufficient to make up at least 3/5 of the amount which thereby give rise to losses, by reason of
the vessel may hold, to accept other cargo procured confiscation, embargo, detention, or other
by the owner of the freight already loaded under the causes, to the person from whom the vessel was
same price and conditions chartered or to the shippers, the person giving
4. Art. 671- not to change the vessel after 3/5 of the rise thereto shall be liable with the value of his
vessel has been loaded, without the consent of the shipment and furthermore with his property, for
charterers or shippers the full indemnity to all those injured through
5. Art. 672 - if the vessel has been chartered in whole, his fault.
not to accept cargo from any other person without the
consent of the charterer
6. Art. 673 - to answer for losses arising from delay in Art. 682. If the merchandise should have
putting to sea been shipped for the purpose of illicit
7. Art. 676 - to have the vessel in a condition to commerce, and was taken on board with the
navigate at the time of receiving the cargo knowledge of the person from whom the vessel
8. Art. 677 - in case of declaration of war or blockade was chartered or of the captain, the latter,
during the voyage, where the captain has not received jointly with the owner of the merchandise, shall
any instructions from the charterer, for the captain to be liable for all the losses which may be caused
proceed to the nearest safe and neutral port, to other shippers, and even though it may have
requesting and awaiting orders from the shippers been agreed, they cannot demand any
indemnity whatsoever from the charterer for
Rights of Shipowner: the damage caused the vessel.
1. Art. 670 - where the cargo is not sufficient to make
up at least 3/5 of the amount which the vessel may
hold, he may substitute anohter vessel inspected and Art. 683. In case of making a port to
declared suitable for the voyage --> expenses of repair the hull, machinery, or equipment of the
transfer and increase in price of the charter shall be vessel, the shippers must wait until the vessel is
paid by him repaired, being permitted to unload her at their
2. Art. 674 - to collect the freight in accordance with own expense should they deem it advisable.
the price stipulated for cargo in excess of that agreed If, for the benefit of cargo which runs the
upon is such excess can be properly stowed 3. Art. 674 risk of deterioration, the shippers or the court,
- to refuse and unload at the expense of the owner or the consul, or the competent authority in a
excess cargo that cannot be properly stowed foreign land should order the merchandise to be
4. Art. 674 - to unload merchandise clandestinely unloaded, the expenses of unloading and
placed on board, or to transport them if he can do so, reloading shall be for the account of the former.
demanding the highest freightage
5. Art. 675- to find freight to take place of freight not
received, if the vessel has been chartered to receive Art. 684. If the charterer, without the
cargo in another port, after he receives no cargo from occurrence of any
the consignee and after he receives no answer from of the cases of force majeure mentioned in the
the charterer foregoing article, should wish to unload his
6. Art. 675 - to receive freight in full, discounting that merchandise before arriving at the port of
which may have been earned on the merchandise destination, he shall pay the full freightage, the
carried as substitute expenses of the arrival made at his request, and
7. Art. 677 - to have the charter party subsist the losses and damages caused the other
notwithstanding the declaration of war or a blockade shippers, should there be any.
during the voyage, and to receive in such cases, the
freightage in full where the shipper orders that the
cargo should be discharged at the port of arrival Art. 685. In charters for transportation
of general freight any of the shippers may
unload the merchandise before the beginning of
e. Obligations of charterers the voyage, paying one half the freightage, the
expense of stowing and restoring the cargo, and
Art. 679. The charterer of an entire any other damage which may be caused the
vessel may subcharter the whole or part thereof other shippers.
for the amounts he may consider most
convenient, the captain not being allowed to
refuse to receive on board the cargo delivered Art. 686. After the vessel has been
by the second charterers, provided the unloaded and the cargo placed at the disposal
conditions of the first charter are not changed, of the consignee, the latter must immediately
and that the price agreed upon is paid in full, pay the captain the freightage due and the
even though the full cargo is not loaded, with other expenses for which the cargo may be
the limitation established in the next article. liable.
The primage must be paid in the same
proportion and at the same time as the
Art. 680. A charterer who does not freightage, all the changes and modifications to
complete the full cargo he bound himself to ship which the latter should be subject also
shall pay the freightage of the amount he fails governing the former.
to load, if the captain does not take other
freight to complete the load of the vessel, in
which case he shall pay the first charterer the Art. 687. The charterers and shippers
difference should there be any. may not abandon merchandise damaged on
account of its own inherent defect or of
fortuitous event for the payment of the
Art. 681. If the charterer should ship freightage and other expenses.
goods different from those indicated at the time The abandonment shall be proper,
of executing the charter party, without the however, if the cargo should consist of liquids
knowledge of the person from whom the vessel which may have leaked out, there remaining in
PAGE 91
TRANSPORTATION AND MARITIME LAW
the containers not more than one-fourth of their When the delay does not exceed thirty
contents. days, the shippers shall pay the full freightage
for the voyage out.
Should the delay exceed thirty days, they
Obligations of the charterer: shall pay the freight in proportion to the
1. Art. 680 - to pay the freight in full even if the distance covered by the vessel.
charterer does not complete the full cargo he bound
himself to ship
2. Art. 681- to answer with the value of his shipment Art. 689. At the request of the person
and other property for the losses suffered by the from whom the vessel is chartered the charter
shipowner, captain or other shippers arising from party may be rescinded:
confiscation, embargo, detention, or other causes, 1. If the charterer at the termination of
where the charterer loads goods different from those the extra lay days does not place the cargo
stated at the time of the execution of the charter party alongside the vessel.
3. Art. 682 - to be jointly liable with the captain for In such case the charterer must pay half
losses which may be caused to the other shippers of the freightage stipulated besides the
where the charterer ships goods for illicit commerce demurrage due for the lay days and extra lay
with the knowledge of the shipowner or captain days.
4. Art. 682 - in case of making a port to repair the hull, 2. If the person from whom the vessel
machinery or equipment of the vessel, to wait until the was chartered should sell it before the charterer
vessel is repaired or to pay for the expenses of has begun to load it and the purchaser should
unloading should the charterer choose to unload load it for his own account.
5. Art. 684 - where the charterer unloads goods before In such case the vendor shall indemnify
arriving at port of destination without any force the charterer for the losses he may suffer.
majeure occurring, to pay (1) expenses of arrival, (2) If the new owner of the vessel should not
full freight and (3) for the damages and losses caused load it for his own account the charter party
to other shippers, if any shall be respected, and the vendor shall
6. Art. 685 - where the charterer unloads before the indemnify the purchaser if the former did not
beginning of the voyage, (1) to pay 1/2 of the freight, inform him of the charter pending at the time of
(2) to pay for the expenses of stowing and restowing making the sale.
the cargo, (3) to pay any other damage which he may
have caused other shippers
7. Art. 686 - to pay for freight, other expenses and the Art. 690. The charter party shall be
primage after the vessel has been unloaded and the rescinded and all action arising therefrom shall
cargo placed at the disposal of the consignee be extinguished if, before the vessel puts to sea
8. Art. 687 - not to abandon merchandise damaged from the port of departure, any of the following
on account of inherent defect or fortuitous event, for cases should occur:
the payment of the freight and other expenses 1. A declaration of war or interdiction of
commerce with the power to whose ports the
vessel was to make its voyage.
f. Rescission 2. A condition of blockage of the port of
destination of said vessel, or the breaking out of
Art. 688. A charter party may be an epidemic after the contract was executed.
annulled at the request of the charterer: 3. The prohibition to receive at the said
1. If before loading the vessel he should port the merchandise constituting the cargo of
abandon the charter, paying half the freightage the vessel.
agreed upon. 4. An indefinite detention, by reason of
2. If the capacity of the vessel should an embargo of the vessel by order of the
not agree with that stated in the certificate of government, or for any other reason inde-
tonnage, or if there be an error in the statement pendent of the will of the ship agent.
of the flag under which she sails. 5. The inability of the vessel to navigate,
3. If the vessel should not be placed at without fault of the captain or ship agent.
the disposal of the charterer within the period The unloading shall be made for the
and in the manner agreed upon. account of the charterer.
4. If, after the vessel has put to sea, she
should return to the port of departure, on
account of risk from pirates, enemies, or bad Art. 691. If the vessel cannot put to sea
weather, and the shippers should agree to on account of the closing of the port of
unload her. departure, or any other temporary cause, the
In the second and third cases the person charter shall remain in force without right of
from whom the vessel was chartered shall either of the contracting parties to claim
indemnify the charterer for the losses he may damages.
suffer. The subsistence and wages of the crew
In the fourth case the person from whom shall be considered as general average.
the vessel was chartered shall have a right to During the interruption the charterer
the freightage in full for the voyage out. may, at the proper timer and for his own
If the charter should have been made by account, unload and load the merchandise,
the month, the charterers shall pay the full paying demurrage if the reloading should
freightage for one month, if the voyage is for a continue after the cause for the detention has
port in the same waters; and two months, if for ceased.
a port in different waters.
(From one port to another of the
Peninsula (Philippines) and adjacent islands, the Art. 692. A charter party shall be
freightage for one month only shall be paid.) partially rescinded, unless there is an
5. If a vessel should make a port during agreement to the contrary, and the captain shall
the voyage in order to make urgent repairs and only be entitled to the freightage for the voyage
the charterers should prefer to dispose of the out, if, by reason of a declaration of war, closing
merchandise. of ports, or interdiction of commercial relations
PAGE 92
TRANSPORTATION AND MARITIME LAW
of the broker who took part therein. With the object liable for the bottomry loan, on
respect to those executed in accordance with account of fraudulent measures employed by
No. 3 the acknowledgment of the signature shall the borrower, the loan shall be valid only for the
be required. amount at which said object is appraised by
Contracts which are not reduced in experts.
writing shall not give rise to judicial action. The surplus principal shall be returned
with legal interest for the entire time required
for repayment.
Effect of registration:
Art. 727. If the full amount of the loan
1. the loan shall have, with regard to other credits, the contracted in order to load the vessel should not
preference which, according to its nature, it should be used for the cargo, the balance shall be
have (Art. 580 - 8th in the order of preference) returned before clearing.
2. effective against third persons from the time of The same procedure shall be observed
execution/registration with regard to the goods taken as loan, if they
were not loaded.
Art. 721. In a contract on bottomry or
respondentia the following must be stated:
1. The kind, name, and registry of the The excess shall be valid only as an ordinary loan
vessel.
2. The name, surname, and domicile of
the captain. g. By whom
3. The names, surnames, and domiciles
of the person giving and the person receiving Art. 728. The loan which the captain
the loan. takes at the point of residence of the owners of
4. The amount of the loan and the the vessel shall only affect that part thereof
premium stipulated. which belongs to the captain, if the other
5. The time for repayment. owners or their agents should not have given
6. The goods pledged to secure their express authorization therefor or should
repayment. not have taken part in the transaction.
7. The voyage during which the risk is If one or more of the owners should be
run. requested to furnish the amount necessary to
repair or provision the vessel, and they should
not do so within twenty-four hours, the interest
Art. 722. The contracts may be made to which the parties in default may have in the
order, in which case they shall be transferable vessel shall be liable for the loan in the proper
by indorsement, and the indorsee shall acquire proportion.
all the rights and shall incur all the risks Outside of the residence of the owners,
corresponding to the indorser. the captain may contract loans in accordance
with the provisions of Articles 583 and 611.
e. On What Constituted
Art. 724. The loans may be constituted Art. 617. The captain may not contract
jointly or separately: loans on respondentia secured by the cargo,
1. On the hull of the vessel. and should he do so the contract shall be void.
2. On the rigging. Neither may he borrow money on
3. On the equipment, provisions, and bottomry for his own transactions, except on
fuel. the portion of the vessel he owns, provided no
4. On the engine, if the vessel is a money has been previously borrowed on the
steamer. whole vessel, and provided there does not exist
5. On the merchandise loaded. any other kind of lien or obligation chargeable
If the loan is constituted on the hull of against the vessel. When he is permitted to do
the vessel, the rigging, equipment and other so, he must necessarily state what interest he
goods, provisions, fuel, steam engines, and the has in the vessel.
freightage earned during the voyage on which In case of violation of this article the
the loan is made, shall also be considered as principal, interest, and costs shall be charged to
included in the liability for the loan. the private account of the captain, and the ship
If the loan is made on the cargo, all that agent may furthermore discharge him.
which constitutes the same shall be subject to
the repayment; and if on a particular object of
the vessel or of the cargo, only the object con- Art. 611. In order to comply with the
cretely and specifically mentioned shall be obligations mentioned in the foregoing article,
liable. and when he has no funds and does not expect
to receive any from the agent, the captain shall
procure the same in the successive order stated
Art. 725. No loans on bottomry may be below:
made on the salaries of the crew or on the 1. By requesting said funds of the
profits expected. consignees of the vessel or the correspondents
of the ship agent.
f. Amount 2. By applying to the consignees of the
cargo or to the persons interested therein.
Art. 723. Loans may be made in goods 3. By drawing on the ship agent.
and in merchandise, fixing their value in order 4. By borrowing the amount required by
to determine the principal of the loan. means of a bottomry loan.
5. By selling a sufficient amount of the
Art. 726. If the lender should prove that cargo to cover the amount absolutely necessary
he loaned an amount larger than the value of
PAGE 94
TRANSPORTATION AND MARITIME LAW
to repair the vessel and to equip her to pursue Art. 730. Loans made during the voyage
the voyage. shall have preference over those made before
In the two last cases he must apply to the clearing of the vessel, and they shall be
the judicial authority of the port, if in the graduated in the inverse order of their dates.
Philippines and to the Filipino consul, if in a The loans for the last voyage shall have
foreign country; and where there should be preference over prior ones.
none, to the local authority, proceeding in Should several loans have been made at
accordance with the prescriptions of Article 583, the same port of arrival under stress and for the
and with the provisions of the law of civil same purpose, all of them shall be paid pro rata.
procedure.
that it is not valid except in default of the first Art. 693. If the passage price has not
one must be stated therein. been agreed upon, the judge or court shall
summarily fix it, after a statement of experts.
Art. 714. If before the vessel puts to sea Art. 694. Should the passenger not
the captain should die or should cease to hold arrive on board at the time fixed, or should he
his position through any cause, the shipper shall leave the vessel without permission from the
have the right to demand of the new captain the captain, when the latter is ready to leave the
ratification of the first bills of lading, and the port, the captain may continue the voyage and
latter must do so, provided that all the copies demand the full passage price.
previously issued be presented or returned to
him, and it should appear from an examination
of the cargo that they are correct. Art. 700. In all that pertains to the
The expenses arising from the preservation of order and discipline on board
examination of the cargo shall be for the the vessel, the passengers shall be subject to
account of the ship agent, without prejudice to the orders of the captain, without any
his right of action against the first captain, if he distinction whatsoever.
ceased to be such through his own fault. Should
said examination not be made, it shall be
understood that the new captain accepts the 3. Rights of Passengers
cargo as it appears from the bills of lading.
PAGE 96
TRANSPORTATION AND MARITIME LAW
matter what the number of passengers may be, notified them previously and offered to bring them to
making all the stops indicated in its itinerary. their destination at its expense or refunded the value
of the tickets purchased, perhaps this controversy
would not have arisen.
In the Philippines, there is no law which requires Furthermore, the conditions relied upon by
shipowners to publish a schedule of the arrivals and petitioner cannot prevail over Arts. 614 and 698 of the
departures of their vessels in the different ports of call, Code of Commerce.
and which holds them liable in damages to passengers The voyage to Catbalogan was interrupted by
for any deviation from said schedule the captain upon instruction of management. The
interruption was not due to fortuitous event or force
majeure nor to disability of the vessel. Having been
Sweet Lines vs CA 121 SCRA 769 caused by the captain upon instructions of
management, the passengers' right to indemnity is
F: Private respondents purchased first-class evident. The owner of a vessel and the ship agent
tickets from petitioner in Cebu City. They were to shall be civilly liable for the acts of the captain under
board petitioner's vessel M/V Sweet Grace, bound for Art. 586 of the Code of Commerce.
Catbalogan, Western Samar. Instead of departing at
the scheduled hour of about midnight, the vessel The passengers are also entitled to moral
sailed at around 3 A.M. only to be towed back to Cebu damages on account of the BF on the part of the
due to engine trouble, arriving back at Cebu at about 4 carrier. They did not give notice of the change of
PM. After repairs, the vessel was only able to leave schedule. Knowing fully well that it would take 15
around 8 A.M. of the next day. hours to repair the vessel, they informed the
Instead of docking at Catbalogan, which was passengers that it would take only a few hours. They
the first port of call, the vessel proceeded directly to did not offer to refund the tickets of the passengers
Tacloban. Private respondents had no recourse but to nor provide them transportation from Bacolod City to
disembark and board a ferryboat to Catbalogan. Hence Catbalogan.
this suit for damages for breach of contract of
carriage. The TC and CA decided in favor of plaintiffs.
4. Responsibilities of Captain
Issue: WON defendant is liable.
Held: The governing provisions are found in the Code Art. 701. The convenience or the interest
of Commerce. Art. 614 provides that a captain who of the passengers shall not obligate nor
agreed to make a voyage and who fails to fulfill his empower the captain to stand in-shore or enter
undertaking, without being prevented by fortuitous places which may take the vessel out of her
event or force majeure, shall indemnify all the losses course, nor to remain in the ports he must or is
which his failure may cause, without prejudice to under the necessity of touching for a period
criminal penalties which may prosper. Art. 698 also longer than that required by the needs of
provides for the captain's liability. navigation.
The crucial factor then is the existence of a
fortuitous event or force majeure. Without it, the right
to damages and indemnity exists against a captain Art. 702. In the absence of an agreement
who fails to fulfill his undertaking or where the to the contrary, the subsistence of the
interruption has been caused by the captain passengers during the voyage shall be deemed
exclusively. included in the price of the passage; but should
As found by both courts below, there was no it be for their account, the captain shall be
fortuitous event or force majeure which prevented the under the obligation, in case of necessity, to
vessel from fulfilling its undertaking of taking private supply the food necessary for their sustenance
respondents to Catbalogan. Mechanical defects in the at a reasonable price.
CC are not considered caso fortuito that exempts the
CC from responsibility. Even granting that the engine
failure was a fortuitous event, it accounted only for the Art. 705. In case of the death of a
delay in the departure. When the vessel left Cebu, passenger during the voyage the captain shall
there was no longer any force majeure that justified be authorized, with respect to the body, to take
the by-passing a port of call. The vessel was the steps required by the circumstances, and
completely repaired when it left Cebu for Samar and shall carefully take care of the papers and
Leyte. In fact, after docking at Tacloban City, the goods of said passenger which may be on board,
vessel left for Manila to complete its voyage. complying with the provisions of case No. 10 of
Petitioner cannot rely on the conditions in Article 612 with regard to members of the crew.
small bold print at the back of the ticket reading: "The
passenger's acceptance of this ticket shall be
considered as an acceptance of the ff. conditions: Art. 612. The following duties are
3. In case the vessel cannot continue or inherent in the office of captain:
complete the trip for any cause whatsoever, the 1. To have on board before starting on a
carrier reserves the right to bring the passenger to voyage a detailed inventory of the hull, engines,
his/her destination at the expense of the carrier or to rigging, tackle, stores, and other equipments of
cancel the tickets and refund the passenger the value the vessel; the navigation certificate; the roll of
of his/her ticket. the persons who make up the crew of the
11. The sailing schedule of the vessel xxx is vessel, and the contracts entered into with the
subject to change without previous notice." crew; the list of passengers; the health
certificate; the certificate of the registry
Even assuming that those conditions are proving the ownership of the vessel; and all the
applicable to case at bar, petitioner did not comply obligations which encumber the same up to that
with the same. It did not cancel the ticket nor did it date; the charters or authenticated copies
refund the value of the tickets to private respondents. thereof; the invoices or manifest of the cargo,
Besides, it was not the vessels' sailing schedule that and the instrument of the expert visit or
was involved. The complaint is directed not at the inspection, should it have been made at the port
delayed departure the next day but at the by-passing of departure.
of Catbalogan, their destination. Had petitioner 2. To have a copy of this Code on board.
PAGE 97
TRANSPORTATION AND MARITIME LAW
- Laws applicable to a contract for the carriage of Sec. 2. Subject to the provisions of
goods by sea: Section 6, under every contract of carriage of
goods by sea, the carrier in relation to the
1. Distinguish - common carrier (Civil Code) loading, handling, stowage, carriage, custody,
- private carrier care, and discharge of such goods shall be
2. Where is the vessel going? subject to the responsibilities and liabilities and
a. Common carrier coming to the Phils. = what law entitled to the rights and immunities
applies? hereinafter set forth.
1st: Civil Code
2nd: COGSA (it's more specific than Code of
Commerce)
- in foreign trade RESPONSIBILITIES AND LIABILITIES
3rd: Code of Commerce
Sec. 3. (1) The carrier shall be bound
b. Private carrier coming to the Phils. in foreign trade before and at the beginning of the voyage to
1st: COGSA (because it's more specific) exercise due diligence to-
2nd: Code of Commerce
3rd: Civil Code (provisions not on common carriers (a) Make the ship
e.g. torts, contracts) seaworthy;
(b) Properly man, equip,
c. From the Phils. to a foreign country: apply laws of and supply the ship;
such foreign country (Art. 1753) (c) Make the holds,
refrigerating and cooling
- with respect to vessels destined for foreign ports, the chambers, and all other parts of
COGSA doesn't apply unless parties make it the ship in which goods are
applicable. carried, fit and safe for their
reception, carriage, and
Q: In what situations does COGSA primarily apply? preservation
A: Where the parties expressly stipulate that COGSA
shall govern their respective rights and obligations. (2) The carrier shall properly and
carefully load, handle, stow, carry, keep, care
Q: Can the COGSA apply in domestic shipping? for, and discharge the goods carried.
A: Generally, NO.
(3) After receiving the goods into his
EXCEPTION: when parties agree to make it apply. charge the carrier, or the master or agent of the
PAGE 99
TRANSPORTATION AND MARITIME LAW
carrier, shall, on demand of the shipper, issue to within one year after the deliver of the goods or
the shipper a bill of lading showing among other the date when the goods should have been
things- delivered.
(a) The loading marks necessary In the case of any actual or apprehended
for identification of the goods as loss or damage, the carrier and the receiver shall
the same are furnished in writing give all reasonable facilities to each other for
by the shipper before the loading inspecting and tallying the goods
of such goods starts, provided
such marks are stamped or (7) After the goods are loaded the bill of
otherwise shown clearly upon the lading to be issued by the carrier, master, or
goods if uncovered, in such a agent of the carrier to the shipper shall if the
manner as should ordinarily shipper so demands, be a "shipped" bill of lading:
remain legible until the end of the Provided, that if the shipper shall have previously
voyage. taken up any document of title to such goods, he
(b) Either the number of packages shall surrender the same as against the issue of
or pieces, or the quantity or the "shipped" bill of lading, but at the option of
weight, as the case may be, as the carrier such document of title may be noted
furnished in writing by the at the port of shipment by the carrier, master, or
shipper. agent with the name or names of the ship or
(c) The apparent order and conditions of ships upon which the goods have been shipped
the goods: Provided, that no carrier, and the date or dates of shipment, and when so
master, or agent of the carrier, shall be noted the same shall for the purpose of this
bound to state or show in the bill of lading section be deemed to constitute a "shipped" bill
any marks, number, quantity, or weight of lading.
which he has reasonable ground for
suspecting not accurately to represent the (8) Any clause, covenant, or agreement in
goods actually received or which he has a contract of carriage relieving the carrier of the
had no reasonable means of checking. ship from liability for loss or damage to or in
connection with the goods, arising from
(4) Such a bill of lading shall be prima negligence, fault, or failure in the duties and
facie evidence of the receipt by the carrier of the obligations provided in this section, or lessening
goods as therein described in accordance with such liability otherwise than as provided in this
paragraphs (3) (a), and (c), of this section: (The Act, shall be null and void and of no effect. A
rest of the provision is not applicable to the benefit of insurance in favor of the carrier, or
Philippines). similar clause, shall be deemed to be a clause
relieving the carrier from liability.
(5) The shipper shall be deemed to have
guaranteed to the carrier the accuracy at the Notes: Prescriptive period under Section 3(6). - the
time of shipment of the marks, number, quantity, carrier and the agent shall be discharged form liability
and weight, as furnished by him; and the shipper in respect of loss or damage unless suit is brought
shall indemnify the carrier against all loss, within 1 year from:
damages, and expenses arising or resulting from (1) in case of damaged goods: from the time
inaccuracies in such particulars. The right of the delivery of the goods was made
carrier to such indemnity shall in no way limit his (2) in case of non-delivery (i.e., lost goods):
responsibility and liability under the contract of from the date the goods should have been delivered
carriage to any person other than the shipper.
Cases of misdelivery or conversion not covered.
(6) Unless notice of loss or damage and 1 year-prescriptive period in Sec. 3 (6) applies only
the general nature of such loss or damage be where there is loss or damage.
given in writing to the carrier or his agent at the
port of discharge or at the time of the removal of Loss contemplates only where no delivery at all was
the goods into the custody of the person entitled made by the carrier of the goods because the same had
to delivery thereof under the contract of carriage, perished, gone out of commerce, or disappeared in such
such removal shall be prima facie evidence of the a way that their existence is unknown or they cannot be
delivery by the carrier of the goods as described recovered
in the bill of lading. If the loss or damage is not
apparent, the notice must be given within three Hence, in case of misdelivery (delivery to wrong person)
days of the delivery. or conversion of the goods, the rules on prescription
found in the Civil Code shall apply (10 years for
Said notice of loss or damage may be contracts; 4 years for tortious obligations)
endorsed upon the receipt for the goods given by
the person taking delivery thereof. Shipper, consignee or legal holder of B/L may invoke the
prescriptive period and have the right to file suit within
The notice in writing need not be given if one year after delivery of the goods or failure to deliver.
the state of the goods has at the time of their
receipt been the subject of joint survey or Mere proposal for arbitration or fact that there have
inspection. been initial negotiations does not suspend the running
of the period for prescription
In any event the carrier and the ship shall
be discharged from all liability in respect of loss NOTE: Prof. Quimbo does not agree with this SC ruling.
or damage unless suit is brought within one year If there is a misdelivery or conversion, there is a case of
after delivery of the goods or the date when the loss from the point of view of the consignee or shipper.
goods should have been delivered: Provided,
that, if a notice of loss or damage, either Q: Is the prescriptive period under the COGSA
apparent or concealed, is not given as provided interrupted from the time of the making of extra-judicial
for in this section, that fact shall not affect or demand or filing of judicial action as provided in Art.
prejudice the right of the shipper to bring suit 1155, NCC?
PAGE 100
TRANSPORTATION AND MARITIME LAW
A: No. 1 year period is a special prescriptive period, (a) Act, neglect, or default of the
uniform worldwide master, mariner, pilot, or the
servants of the carrier in the
Rationale behind the 3-day notice and relatively short navigation or in the management
prescriptive period: of the ship;
- to provide carrier an opportunity to look for (b) Fire, unless caused by the
the lost goods actual fault or privity of the
- to discover who was at fault carrier;
- in case of transshipment, to determine, when (c) Perils, dangers, and accidents
and where damage occurred of the sea or other navigable
water;
Shipper, consignee or legal holder of bill may invoke (d) Act of God;
prescriptive period although the proviso in Sec. 3 (6) (e) Act of war;
gives the impression that it is the shipper alone who can (f) Act of public enemies;
invoke the same. (g) Arrest or restraint of princes,
rulers, or people, or seizure under
But prescriptive period does not apply to the action by legal process;
an insurer as subrogee of the consignee. (h) Quarantine restrictions;
(i) Act or omission of the shipper
Stipulation in bill limiting carrier's liability contrary to or owner of the goods, his agent
sec. 3(8) is void; e.g. provision in the bill excepting th or representative;;
owner form liability for loss or damage of cargo unless (j) Strikes or lockouts or stoppage
written notice is thereof was given to the carrier within or restraint of labor from
30 days; such a provision is contrary to a provision of whatever cause, whether partial
the COGSA since Sec. 3 provides that even if a notice of or general: Provided, that nothing
loss or damage is not given as required, that fact shall herein contained shall be
not prejudice the right of the shipper to bring suit within construed to relive a carrier from
1 year after delivery of the goods. responsibility for the carrier's own
acts:
Notice requirements: (k) Riots and civil commotions;
COGSA: Sec. 3(6) (l) Saving or attempting to save
If loss or damage is apparent - protest as soon as life or property at sea;
receipt of goods (m) Wastage in bulk or weight or
If not apparent -> within 3 days of delivery any other loss or damage arising
from inherent defect, quality, or
Code of Commerce: Art. 366 vice of the goods;
apparent - protest at time of receipt (n) Insufficiency of packing;
non-apparent - within 24 hours after receipt (o) Insufficiency or inadequacy of
WARSAW: Art. 26 marks;
in case of damage: (p) Latent defects not
of baggage - within 3 days from receipt discoverable by due diligence; and
of goods - within 7 days (q) Any other cause arising
without the actual fault and
in case of delay: within 14 days from receipt privity of the carrier and without
the fault or neglect of the agents
failure to comply with the 3-days notice requirement or servants of the carrier, but the
under COGSA does not affect the right of the shipper to burden of proof shall be on the
bring action provided he brings the same within 1 year person claiming the benefit of this
exception to show that neither the
To be distinguished from the notice requirement actual fault or privity of the carri-
in the WARSAW convention and Code of Commerce, er not the fault or neglect of the
where the notice requirement is a condition precedent agents or servants of the carrier
for the right of action against the shipowner to accrue. contributed to the loss or damage.
equivalent of that sum in other currency, unless Act. Nothing in this Act shall be held to prevent
the nature and value of such goods have been the insertion in a bill of lading of any lawful
declared by the shipper before shipment and provisions regarding general average.
inserted in the bill of lading. This declaration, if
embodied in the bill of lading, shall be prima facie
evidence, but shall not be conclusive on the SPECIAL CONDITIONS
carrier.
Sec. 6. Notwithstanding the provisions of
By agreement between the carrier, master the preceding section, a carrier, master or agent
or agent of the carrier, and the shipper another of the carrier, and a shipper shall, in regard to
maximum amount than that mentioned in this any particular goods be at liberty to enter into
paragraph may be fixed: Provided, that such any agreement in any terms as to the
maximum shall not be less than the figure above responsibility and liability of the carrier for such
named. In no event shall the carrier be liable for goods, and as to the rights and immunities of the
more than the amount of damage actually carrier in respect to such goods, or his obligation
sustained. as to seaworthiness, (so far as the stipulation
regarding seaworthiness is not contrary to public
Neither the carrier nor the ship shall be policy), or the care or diligence of his servants or
responsible in any event for loss or damage to or agents in regard to the loading, handling,
in connection with the transportation of the stowage, carriage, custody, care and discharge of
goods if the nature or value thereof has been the goods carried by sea; provided, that in this
knowingly and fraudulently mis-stated by the case no bill of lading has been or shall be issued
shipper in the bill of lading. and that the terms agreed shall be embodied in a
receipt which shall be a non-negotiable document
(6) Goods of an inflammable, explosive, or and shall be marked as such.
dangerous nature to the shipment whereof, the Any agreement so entered into shall have
carrier, master or agent of the carrier, has not full legal effect: Provided, that this section shall
consented with knowledge of their nature and not apply to ordinary commercial shipments
character, may at any time before discharge be made in the ordinary course of trade but only to
landed at any place or destroyed or rendered other shipments where the character or condition
innocuous by the carrier without compensation, of the property to be carried or the
and the shipper of such goods shall be liable for circumstances, terms and conditions under which
all damages and expenses directly or indirectly the carriage is to be performed are such as
arising out of or resulting from such shipment. If reasonable to justify a special agreement.
any such goods shipped with such knowledge and
consent shall become a danger to the ship or
cargo, they may in like manner be landed at any Sec. 7. Nothing contained in this Act shall
place, or destroyed or rendered innocuous by the prevent a carrier or a shipper from entering into
carrier without liability on the part of the carrier any agreement, stipulation, condition,
except to general average if any. reservation, or exemption as to the responsibility
and liability of the carrier or the ship for the loss
or damage to or in connection with the custody
Notes: Amount recoverable in case of loss: and care and handling of goods prior to the
$500/package, even if not stipulated loading on and subsequent to the discharge from
the ship on which the goods are carried by sea.
The plaintiff cannot dispute said limitation on the
ground that it was not freely and fairly agreed upon or
that it is against public policy, since the LAW ITSELF Sec. 8. The provisions of this Act shall not
PROVIDES FOR SAID LIMITATION; THE SAME IS DEEMED affect the rights and obligations of the carrier
READ INTO THEIR CONTRACT under the provisions of the Shipping Act, 1916, or
under the provisions of Section 4281 to 4292,
Package - means individual packaging of the goods inclusive, of the Revised Statutes of the United
- does not cover 1 container van States, or of any amendments thereto, or under
the provisions of any other enactment for the
Parties may agree to amount of liability less than $500 time being in force relating to the limitation of
under Sec. 4(5). By providing that $500 is the the liability of the owners of seagoing vessels.
maximum liability, the law does not disallow an
agreement for liability at a lesser amount. Moreover,
Art. 1749 of the NCC expressly allows th limitation of the TITLE II
carrier's liability. (Eastern v. Great American)
Sec. 9. Nothing contained in this Act shall
be construed as permitting a common carrier by
SURRENDER OF RIGHTS AND IMMUNITIES AND water to discriminate between competing
INCREASE OF RESPONSIBILITIES AND LIABILITIES shippers similarly placed in time and
circumstances, either
(a) with respect to their right to demand
Sec. 5. A carrier shall be at liberty to and receive bills of lading subject to the
surrender in whole or in part all or any of his provisions of this Act; or
rights and immunities or to increase any of his (b) when issuing such bills of lading either
responsibilities and liabilities under this Act, in the surrender of any of the carrier's rights and
provided such surrender or increase shall be immunities or in the increase of any of the
embodied in the bill of lading issued to the carrier's responsibilities and liabilities pursuant
shipper. to Section 5, Title I, of this Act;
(c) in any other way prohibited by the
The provisions of this Act shall not be Shipping Act, 1916, as amended.
applicable to charter parties; but if bills of lading
are issued in the case of a ship under a charter
party, they shall comply with the terms of this
PAGE 102
TRANSPORTATION AND MARITIME LAW
Sec. 10. (Not applicable to the any such suspension shall take effect on the date
Philippines.) named therein, which date shall be not less than
ten days from the issue of the proclamation.
Any contract for the carriage of goods by
Sec. 11. When under the custom of any sea, subject to the provisions of this Act,
trade the weight of any bulk cargo inserted in the effective during any period when Title I hereof, or
bill of lading is a weight ascertained or accepted any part thereof, is suspended, shall be subject
by a third party other than the carrier or the to all provisions of law now or hereafter
shipper and the fact that the weight as applicable to that part of Title I which may have
ascertained or accepted is stated in the bill of thus been suspended.
lading, then notwithstanding anything in this Act,
the bill of lading shall not be deemed to be prima
facie evidence against the carrier of the receipt Sec. 15, COGSA. This Act shall take effect ninety
of goods of the weight so inserted in the bill of days after the date of its approval; but nothing in
lading, and the accuracy thereof at the time of this Act shall apply during a period not to exceed
shipment shall not be deemed to have been one year following its approval to any contract
guaranteed by the shipper. for the carriage of goods by sea, made before the
date on which this Act is approved nor to any bill
of lading or similar document of title issued,
Sec. 12. (Not applicable to the whether before or after such date of approval in
Philippines.) pursuance of any such contract as aforesaid.
Sec. 13. This act shall apply to all Sec. 16, COGSA. This Act may be cited as the
contracts for carriage of goods by sea to or from "Carriage of Goods by Sea Act."
ports of the United States in foreign trade. As
used in this Act the term "United States" includes Approved, April 16, 1936.
its districts, territories, and possessions:
Provided, however, that the Philippine Legislature
may by law exclude its application to
transportation to or from ports of the Philippine
Islands. The term "foreign trade" means the
transportation of goods between the ports of the
United States and ports of foreign countries.
Nothing in this Act shall be held to apply to con-
tracts for carriage of goods by sea between any
port of the United States or its possession:
Provided, however, that any bill of lading or
similar document of the title which is evidence of
a contract for the carriage of goods by sea V. International Air Transport
between such ports, containing an express
statement that it shall be subject to the A. The Warsaw Convention, 51 O.G. 5084 (October
provisions of this Act, shall be subjected hereto 1955);
as fully as if subject hereto by the express
provisions of this Act: Provided, further, that Presidential Proclamation No. 201, 51 O.G. 4933
every bill of lading or similar document of title (October 1955)
which is evidence of a contract for the carriage of
goods by sea from ports of the United States in MAKING PUBLIC THE ADHERENCE OF THE R.P. TO
foreign trade, shall contain a statement that it THE CONVENTION FOR THE UNIFICATION OF
shall have effect subject to the provisions of this CERTAIN RULES RELATING TO INTL.
Act. TRANSPORTATION BY AIR AND THE ADDITIONAL
PROTOCOL THERETO, 1929
Notes: American Insurance vs Cia Maritima : contract of
carriage from NY with final destination in Cebu. COGSA WHEREAS, a Convention for the Unification
is applicable despite the fact that from Manila to Cebu, of Certain Rules Relating to International
the goods were transshipped on an interisland vessel. Transportation by Air & an Additional Protocol
Transshipment was not a separate transaction from that thereto relating to Article 2 of the Convention
originally entered into by the parties but was part of the were signed at Warsaw by the plenipotentiaries
carrier's contractual obligation. of 32 countries;
international transportation that may be assumed by the Philippine Government and as such, has
performed by the Republic of the Philippines; the force and effect of law. The presumption is that this
joint legislative-executive act was first carefully studied
WHEREAS, the Republic of the Philippines and determined to be constitutional before it was
Government has formally adhered to the said adopted. Petitioner's allegation have not overcome this
Convention its Additional Protocol, & the presumption. Moreover, the treaty since 1950 has not
Government of the Republic of Poland was been rejected by the Philippine Government.
notified of said adherence on November 9, 1950,
when the instrument of adherence was registered SECOND ISSUE: W/NOT THE WC SHOULD BE RENDERED
in accordance with Article 38 (2) of said Conven- IRRELEVANT BY THE DOCTRINE OF REBUS SIC
tion; and, STANTIBUS?
WHEREAS, the adherence of the Republic HELD: No. The circumstance that the airline industry
of the Philippines Government, pursuant to Art. was still in infancy when the Convention was made,
38(3) of said Convention, took effect as from the alone, is not sufficient justification for the rejection of
90th day after November 9, 1950. the treaty at this time. The changes recited by petitioner
were not entirely unforeseen although they were
NOW, THEREFORE, be it known that I, expected in a general sense only. (Check Art.41).
Ramon Magsaysay, Republic of the Philippines
President, in pursuance of the aforesaid THIRD ISSUE: W/NOT THE REQUISITS OF THE WC IS
concurrence of the Senate of the Congress of the MERELY A MATTER OF VENUE OR JURISDICTION?
Philippines, and subject to the reservation as
provided in the Additional Protocol that the First HELD: Jurisdiction
paragraph of Art.2 of the Convention shall not (1) The wording of Art. 32, which indicates the places
apply to international transportation that may be where the action for damages "must" be brought,
performed by the Republic of the Philippines, do underscores the mandatory nature of Art. 28 (1).
hereby proclaim and make public the said (2) This characterization is consistent with one of the
Convention and said Protocol, a copy of which is objectives of the convention, which is to regulate in a
hereto attached, to the end that the same and uniform manner the conditions of international
every article and clause thereof may be observed transportation by air.
& fulfilled with good faith by the Republic of the
Philippines and the citizens thereof. FOURT ISSUE: W/NOT PHILIPPIN COURTS HAVE
JURISDICTION OVER THIS CASE?
Notes: If common carrier, Civil Code first applies, then
Warsaw Convention. HELD: No. Art. 28 (1) provides that an action for
damage must be brought at the option of the plaintiff:
Situations where Warsaw is applicable is in private (a) before the court of the domicile of the carrier;
carriers. (b) the court of its principal place of business;
(c) the court where it has a place of business thru w/c
The only criterion for the Warsaw Convention to be the contract had been made;
applicable is: it is applicable to ALL international (d) the court of the place of destination.
transportation of persons, baggage, or goods performed
by aircraft for hire. In this case, the ff. were not followed, and hence
the Philippines, not being one of the courts mentioned
International transport: where there's transport by AIR & in Art.28 (1), does not have jurisdiction over the case.
there is a point of contact in 2 high contracting parties (1) court of domicile is Minnesota, U.S.A;
(countries which have acceded to the Convention). (2) principal place of business of carrier is also U.S.A;
(3) place of business where contract was made was in
E.g. transportation by PAL from Manila to San Francisco San Francisco;
Federal Express - transporation of goods (4) place of destination is also San Francisco, Santos
having purchased a round trip-ticket from SFO-TYO-MNL,
then back to TYO- SFO. The "ultimate destination" being
B. Constitutionality San Francisco.
SANTOS V. NORTHWEST AIRLINES [210 S 256 The court called upon to determine the
(1992)] applicability of the limitation provision must first be
vested with the appropriate jurisdiction. If the carrier is
F: 1. A Filipino minor was informed by Northwest indeed is indeed not guilty of WILLFUL MISCONDUCT, it
that he had no reservations for his flights, and had to be can avail itself of the limitations set forth in this article.
waitlisted, despite a previous confirmation. He sued for But it can be done only if the action has first been
damages. Northwest moved to dismiss on the ground of commenced properly under the rules set forth in Art.28
lack of jurisdiction based on Art.28 (1) of the Warsaw (1).
Convention, where the complaint could be instituted in
the territory of one of the contracting parties before the Notes: The enumeration of the causes of action in the
court of the WC is not an exclusive list. You can have a cause of
(1) domicile of the carrier; action even if it is not:
(2) principal place of business; (a) death or wounding of passenger;
(3) where it has a place of business through which the (b) damage or loss or destruction of checked baggage;
contract had been made; and (c) delay in transportation of passengers, luggage and
(4) place of destination. goods.
FIRST ISSUE: W/NOT THE WARSAW CONVENTION IS The case of Northwest is actually overbooking. Delay
UNCONSTITUTIONAL? still a cause of action under WC.
HELD: No. Art. 28 (1) of Warsaw Con. is constitutional. Note however, that the limitations of liability in the
Although the case can be decided on other grounds Convention favors the carrier.
without resolving the constitutional question, the
Warsaw Convention is a treaty commitment voluntarily
PAGE 104
TRANSPORTATION AND MARITIME LAW
Art. 18. (1) The carrier shall be liable for Under the WC, an air carrier is made liable for
damage sustained in the event of the destruction damages for delay in the transportation by air of
or loss of, or of damage to, any checked baggage, passengers, luggage or goods. The WC also limits the
or any goods, if the occurrence which caused liability of the carrier to 250 francs per kilo of the total
the damage so sustained took place during the weight of the package. The WC denies to the carrier
transportation by air. availment of the provisions which exclude or limit his
(2) The transportation by air within the liability, if the damage is caused by his willful
meaning of the proceeding paragraph shall misconduct or by such default on his part as, in
comprise the period during which the baggage or accordance with the law of the court seized of the case,
the goods are in charge of the carrier, whether in is considered as willful misconduct, or if the damage is
an airport or on board an aircraft, or in the case caused by any agent of the carrier acting w/in the
of a landing outside an airport, in any place scope of his employment.
whatsoever.
(3) The period of the transportation by air 2. The WC does not regulate or exclude liability for other
shall not extend to any transportation by land, by breaches of contract by the carrier or misconduct of its
sea, or by river performed outside of an airport. If officers and employees or for some particular or
however, such transportation takes place in the exceptional damage. The WC has been held inapplicable
performance of a contract for transportation by where there was proof of malice or bad faith attributable
PAGE 105
TRANSPORTATION AND MARITIME LAW
to its officers and employees. Here, however, there was for P83,000 for actual damages. PanAm contended that
no bad faith on the part of the employees. such award was beyond the limitation of liability set
Nominal damages however, was awarded because of forth in the Warsaw Con., the provisions of such being
the presence of some special species of injury caused to found at the back of the ticket.
Dr. Pablo.
ISSUE: WON Pangan is bound by such Warsaw
provisions & hence is entitled only to $600 ($20
standard X 30 kilos) ---- YES.
E. Limitations on Liability Such provisions have been held to be a part of
the contract of carriage, & is valid & binding upon the
RE: PASSENGERS passenger regardless of the latter's lack of knowledge or
assent to the regulation.
Art.22. (1) In the transportation of A contract limiting liability upon an agreed
passengers the liability of the carrier for each valuation does not offend against the policy of the law
passenger shall be limited to the sum of 125,000 forbidding one from contracting against his own
francs. (Now $100,000) Where, in accordance w/ negligence. Inasmuch as Pangan failed to declare any
the law of the court to w/c the case is submitted, higher value for his luggage & to pay add'l charges,
damages may be awarded in the form of PanAm's liability is limited to $600, as stipulated at the
periodical payments, the equivalent capital value back of the ticket.
of the said payments shall not be exceed 125,000
francs. Nevertheless, by special contract, the
carrier and the passenger may agree to a higher FELICIANO v. PAN AM (CA CASE)
limit of liability.
F: Feliciano, & her Co. asked P182,000 for the
RE: BAGGAGE/GOODS value of the contents of her lost luggage (including
loss of possible opportunities). PanAm contends its
(2) In the transportation of checked liability if limited by the Warsaw Con. to not more than
baggage and of goods, the liability of the carrier $20 per kilo. TC held that there was no issue of fact
shall be limited to a sum of 250 francs per except as to amount& awarded $600 ($20 X 30 kgs).
kilogram (Now $20 per kilo), unless the consignor
has made, at the time when the package was Was TC correct? --- YES.
handed over to the carrier, a special declaration Indeed, SC has granted damages on the ground
of the value of the delivery and has paid a of fraud or bad faith due to the personal misconduct of
supplementary sum if the case so requires. In airline employees. This case, however, the contract of
that case, the carrier will be liable to pay a sum carriage of PET's baggage is based on the conditions in
not exceeding the declared sun, unless he proves the airline. Such contract is governed by Art.22(2). Since
that the sum is grater that the actual value to the there is no evidence that PET had declared a higher
consignor at delivery. value for her lost luggage for w/c the corresponding
value, the Warsaw Con. should apply.
(3) As regards objects of w/c the
passenger takes charge himself, the liability of
the carrier shall be limited to 5,000 francs per F. When limitations unavailable
passenger.
Art. 3. (1) For the transpo. of passengers
(4) The sums mentioned above shall be the carrier must deliver a passenger ticket w/c
deemed to refer to the French franc consisting of shall contain the ff. particulars:
65 1/2 milligrams of gold at the standard of
fineness of nine hundred thousandths. These (a) The place & date of issue;
sums may be converted into any national (b) The place of departure & of
currency in round figures. destination;
(c) The agreed stopping places,
Art. 23. Any provision tending to relieve provided that the carrier may
the carrier of liability or to fix a lower limit that reserve the right to alter the
which is laid down in this convention shall be null stopping places in case of neces-
and void, but the nullity of any such provision sity, and that if he exercises that
shall not involve the nullity of the whole contract, right, the alteration shall not have
which shall remain subject to the provisions of the effect of depriving the
this convention. transportation of its intl.
character;
Art. 24. (1) In the cases covered by (d) The name & address of the
Arts.18 & 19 any action for damages, HOWEVER carrier/s;
FOUNDED, can only be brought subject to the (e) A statement that the transpo.
conditions and limit set out in this convention. is subject to the rules relating to
(2) In the case covered by Art.17, the liability established by this
provisions of the preceding paragraph shall also convention.
apply,w/o prejudice to the question as to who are
the persons who have the right to bring suit and (2) The absence, irregularity, or loss of
what are their respective rights. the passenger ticket shall not affect the
existence or the validity of the contract of
NOTES: Even if you base your claim on quasi-delict, you transportation, w/c shall none the less be subject
can still sue under Warsaw, invoking Art.24 (1). to the rules of this convention. Nevertheless, if
the carrier accepts a passenger w/o a passenger
ticket having been delivered he shall not be
PAN AM v. IAC (164 SCRA) entitled to avail himself of those provisions of
this Convention w/c exclude or limit his liability.
F: Pangan's luggages didn't arrive w/ his flight. As
a consequence the film exhibitions he set up & Art.25. (1) The carrier shall not be entitled
promoted for, was cancelled. CFI ordered PanAm to pay to avail himself of the provisions of this
PAGE 106
TRANSPORTATION AND MARITIME LAW
ISSUE: WON Warsaw Con. limit on liability can be In this case, the ff. were not followed, and hence
availed of --- NO. the Phils., not being one of the courts mentioned in
There was obvious discrimination & humiliation Art.28 (1), does not have jurisdiction over the case.
to w/c Vinluan was subjected. Such inattention & lack of (1) court of domicile is U.S., Minnesota;
care for interest of its passengers amount to bad faith (2) principal place of business of carrier is also US;
w/c entitles passenger to moral damages. (3) place of business where contract was made was in
San Francisco;
NOTES: His entire trip, even though he availed of the (4) place of destination is also San Francisco, Santos
services of other airlines, is equal to one transport. having purchased a round trip-ticket from SFO-TYO-MNL,
E.g. MNL-SFO via PAL } one continuing then back to TYO- SFO. The "ultimate destination" being
SFO-NYK via United } ticket San Francisco.
Hence, if injury appears in SFO-NYK, Warsaw can be
applied.
Art. 32. Any clause contained in the
contract an all special agreements entered into
F. Conditions of Liability before the damage occurred by which the parties
PAGE 107
TRANSPORTATION AND MARITIME LAW
PAGE 108