Vous êtes sur la page 1sur 40

TRANSPORTATION LAW

PRELIMINARY CONSIDERATIONS:
A. Governing Laws
1. New Civil Code Primary law
2. Warsaw
Convention

for
international transportation by air
3. Code of Commerce governs
suppletorily; it governs maritime
transaction
4. Carriage of Goods by Sea Act for
transportation by sea; governs
suppletorily
5. Salvage Law
6. Public Service Act
7. Article XII Sec 11 on operation of
public convenience of the 1987
Philippine Constitution
B. Concept of Public Utility & public
service
Sec. 13 (b) of the Public Service
Act provides that: The term 'public
service' includes every person that
now or hereafter may own, operate,
manage, or control in the Philippines,
for hire or compensation, with general
or
limited
clientele,
whether
permanent, occasional or accidental,
and done for general business
purposes,
any
common
carrier,
railroad,
street
railway,
traction
railway, sub-way motor vehicle, either
for freight or passenger, or both with
or without fixed route and whatever
may be its classification, freight or
carrier service of any class, express
service, steamboat, or steamship line,
pontines, ferries, and water craft,
engaged in the transportation of
passengers
or
freight
or
both,
shipyard, marine railway, marine repair
shop, wharf or dock, ice plant, icerefrigeration plant, canal, irrigation
system, gas electric light, heat and
power, water supply and power,
petroleum, sewerage system, wire or
wireless communications system, wire
or wireless broadcasting stations and
other similar public services: Provided,
however, That a person engaged in
agriculture, not otherwise a public
service, who owns a motor vehicle and
uses it personally and/or enters into a
special contract whereby said motor
vehicle
is
offered
for
hire
or
compensation to a third party or third
engaged in agriculture, not itself or
themselves a public service, for
operation by the latter for a limited
time and for a specific purpose directly

connected with the cultivation of his or


their
farm,
the
transportation,
processing,
and
marketing
of
agricultural products of such third
party or third parties shall not be
considered as operating a public
service for the purposes of this Act.
Public utilities are privately owned
and operated business whose services
are essential to the general public.
Case:
National
Development
Company v CA
C. Constitutional
limitations
on
operation of public utilities
Sec. 11 of Article XII of the 1987
Constitution
states
that:
No
franchise, certificate, or any other form
of authorization for the operation of a
public utility shall be granted except to
citizens of the Philippines or to
corporations or associations organized
under the laws of the Philippines, at
least sixty per centum of whose capital
is owned by such citizens; nor shall
such
franchise,
certificate,
or
authorization be exclusive in character
or for a longer period than fifty years.
Neither shall any such franchise or
right be granted except under the
condition that it shall be subject to
amendment, alteration, or repeal by
the Congress when the common good
so requires. The State shall encourage
equity participation in public utilities
by the general public. The participation
of foreign investors in the governing
body of any public utility enterprise
shall be limited to their proportionate
share in its capital, and all the
executive and managing officers of
such corporation or association must
be citizens of the Philippines.
*The corporation must be a domestic
corporation and that 60% of the capital
must be owned by Filipino citizens.
Sec. 18 of Article XII of the 1987
Constitution provides that: The
State may, in the interest of national
welfare or defense, establish and
operate vital industries and, upon
payment
of
just
compensation,
transfer to public ownership utilities
and other private enterprises to be
operated by the Government.
Q: What are the bases/reasons for
regulation of public utilities?
A: Basis: Police Power
Justification: Common good
D. Regulatory agencies

1. Land Transportation Franchising


Regulatory Board (LTFRB) land
transportation
2. Land Transportation Office issue
license to drivers
3. Maritime
Industry
Authority
(MARINA) water transportation
4. National
Telecommunications
Commission

communication
utilities
and
services,
radio
communications systems, wire or
wireless telephone and telegraph
systems, radio and television
broadcasting systems and other
similar public utilities
5. Energy Regulatory Board electric
or power companies
6. National Water Resources Council
water resources
7. Civil Aeronautics Board air
transportation
Q: What conditions must concur in the
grant
of
certificate
of
public
convenience and necessity?
A: 1. The grantee must be a citizen of
the Philippines or a corporation or
entity 60% of which is owned by such
citizens; 2. The grantee must have
sufficient
financial
capability
to
undertake the service; and 3. The
service will promote public interest and
convenience in a proper and suitable
manner.
*In Tatad v Garcia, the SC held that
the controlling factor is the citizenship
of the person operating a common
carrier.
Guiding Principles:
1. Prior or Old Operator Rule the
first licensee will be protected in
his investment and will not be
subjected to ruinous competition.
*No
certificate
of
public
convenience and necessity will be
issued to other operator as long as
the prior operator still in operation
and can satisfy the public and that
it still has the capacity to do so.
2. Protection Investment Rule
protects from unfair competition
3. Prior Applicant Rule protects the
first applicant. Principle: all things
being equal
*Public interest is the first and
paramount consideration.
E. Concept
of
franchise
and
certificate of public convenience
Franchise is a grant or privilege from
the sovereign power.

Certificate of Public Convenience is


a form of regulation through an
administrative agency.
Q: Is a legislative franchise necessary
before a public utility can be allowed
to secure a certificate of public
convenience?
A: General Rule: NO.
Exception: If a pertinent law requires
such legislative franchise.
Factors:
1. Public interest
2. Public convenience
3. Public necessity
GENERAL CONCEPTS:
A. Contract
of
transportation
in
general
Transportation is a contract whereby
a person, natural or juridical, obligates
to transport persons, goods, or both,
from one place to another, by land, air,
or water, for a price or commission.
*Importance: For liability purposes
B. Perfection
There is a perfected contract when
there was a meeting of the minds as to
the subject matter and consideration.
C. Common Carrier
1. Statutory definition
Article 1732 of the New Civil
Code provides that: Common
carriers are persons, corporations,
firms or associations engaged in
the business of carrying or
transporting passengers or goods
or both, by land, water, or air, for
compensation,
offering
their
services to the public.
-

one that holds itself out as


ready
to
engage
in
the
transportation of goods for hire
as a public employment and not
as a casual occupation.
Implications being a common
carrier:
a. extraordinary diligence must be
exercised
b. in case of damage, presumption
of negligence on the part of the
common carrier
*It is the activity of the carrier that
is controlling.
Cases: A.F. Sanchez Brokerage,
Inc v CA; Asia Lighterage v CA;
De Guzman v CA

*The fact that there is no license at


1) purely arrastre services;
the time of the incident happen is
*comparable to that as warehouseman and
of no moment for liability purposes.
depositor
2. Distinguished
from
private
2) purely stevedoring services; and
carrier
3) purely towage services.
*In Crisostomo v CA, the SC held that the
Common Private
Carrier
Carrier
respondent being a travel agency is not a
As
to holds
himself Contracts
common carrier because the services offered
availability:
out
for
all with is not one that carries passenger from one
people
particular
place to another.
indiscriminately
individuals or
groups only 4. Tests to determine common
carrier
As
to Extraordinary
Ordinary
Tests:
required
diligence
is diligence
is
diligence:
required
required
a. He must engaged in the
As
to Subject to state Not
subject
business of carrying goods for
regulation:
regulation
to
state
others as a public employment
regulation
and must hold himself out as
Stipulation
Parties may not Parties may
ready
to
engage
in
the
limiting
agree
on limit
the
transportation of goods for
liability:
limiting
the carriers
person generally as a business
carriers liability liability,
and not as a casual occupation;
except
when provided it is
provided by law
not contrary
b. He must undertake to carry
to
law,
goods of the kind to which his
morals
or
business is confined;
good
c. He must undertake to carry by
customs
the method by which his
Exempting
Prove
Caso fortuito,
business is conducted and over
circumstance extraordinary
Article 1174
his established roads;
:
diligence
and NCC
Article
1734
d. The transportation must be for
NCC
hire
Presumption
There
is
a No
Case: First Philippine Industrial
of
presumption of presumption
Corporation v CA
Negligence:
fault
or of fault or
*Under Sec. 22 of the Electric
negligence
negligence
Power Distribution Reform Act,
Governing
Law on common Law
on
the
company
like
MERALCO
law:
carriers
obligations
and contracts
distributing electricity is a common
carrier.
3. Distinguished
from
towage,
5. Parties to the contract of
arrastre and stevedoring
carriage
Distinctions:
a. Carriage of passengers:
1. Common carrier
Towage
Arrastre
Stevedorin
2. Passengers
b. Carriage of goods:
1. Shipper
One vessel is The functions of The function
hired to bring an
arrastre of
2. Carrier
another vessel operator
has stevedores
to
another nothing to do involves D.
theRegistered owner rule and Kabit
place; refers to with the trade loading and
system
a
service and business of unloading of
General Rule: Registered owner rule
rendered to a navigation, nor coastwise
is applicable in this jurisdiction.
vessel
by to the use or vessels
towing for the operation
of calling at the Registered owner rule states that
mere purpose vessels. He is no port.
the person who is the registered owner
of expediting different
from
of a vehicle is liable for any damages
her
voyage that
of
a
caused by the negligent operation of
without
depositary
or
the vehicle although the same was
reference
to warehouseman.
already sold or conveyed to another
any
person at the time of the accident. The
circumstances
registered owner is liable to the injured
of danger.
*The SC held that the following services are
party subject to his right of recourse
not considered a common carrier:
against the transferee or the buyer.

Purpose
of
this
rule:
easy
identification of the owner to be sued
for liability.
Recourse: Registered owner may
bring the case to the court to sue the
buyer or operator of the vehicle at
fault.
Exception: in case of stolen vehicle
registered owner is not liable.
*In the case of Duavit v CA, the SC
held that the registered owner is not
liable if the vehicle was taken from his
garage without his knowledge or
consent. To hold the registered owner
liable would be absurd as it would be
holding liable the owner of a stolen
vehicle for an accident caused by the
person who stole such vehicle.
Kabit System is an arrangement
whereby a person who has been
granted
a
certificate
of
public
convenience allows other persons who
own motor vehicles to operate them
under his license, sometimes for a fee
or percentage of the earnings.
*Kabit system is invariably recognized
as being contrary to public policy and
therefore void and inexistent under
Article 1409 of the New Civil Code.
*If the registered owner and the buyer
entered into this transaction they are
In pari delicto thus, in case something
happen the court will not aid them.
The court will leave them as they were.
*This arrangement is a circumvention
of the requirement for license.
OBLIGATIONS OF THE COMMON CARRIER
IN A CONTRACT OF CARRIAGE OF GOODS:
A. Vigilance over the goods
1. Duty to exercise extraordinary
diligence Article 1733 of the
New Civil Code states that:
Common carriers, from the nature
of their business and for reasons of
public policy, are bound to observe
extraordinary diligence in the
vigilance over the goods and for
the safety of the passengers
transported by them, according to
all the circumstances of each case.
Such extraordinary diligence in the
vigilance over the goods is further
expressed in Articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while
the extraordinary diligence for the
safety of the passengers is further
set forth in Articles 1755 and
1756.

Reason: The nature of the


business is imbued with public
interest and public policy; because
of the exigencies of the business.
The public has no choice but to
trust on the skills of the employees
of the common carrier. The goods
and the life of the passenger are
placed in the hands of the common
carrier.
Article 363 of the Code of
Commerce provides that: Outside
of the cases mentioned in the
second paragraph of Article 361,
the carrier shall be obliged to
deliver the goods shipped in the
same condition in which, according
to the bill of lading, they were
found at the time they were
received, without any damage or
impairment, and failing to do so, to
pay the value which those not
delivered may have at the point
and at the time at which their
delivery should have been made. If
those not delivered form part of the
goods transported, the consignee
may refuse to receive the latter,
when he proves that he cannot
make use of them independently of
the others.
Article 364 of the Code of
Commerce provides that: If the
effect of the damage referred to in
Article 361 is merely a diminution
in the value of the gods, the
obligation of the carrier shall be
reduced to the payment of the
amount which, in the judgment of
experts, constitutes such difference
in value.
Article 365 of the Code of
Commerce provides that: If, in
consequence of the damage, the
goods are rendered useless for sale
and consumption for the purposes
for which they are properly
destined, the consignee shall not
be bound to receive them, and he
may have them in the hands of the
carrier, demanding of the latter
their value at the current price on
that day. If among the damaged
goods there should be some pieces
in good condition and without any
defect, the foregoing provision
shall be applicable with respect to
those damaged and the consignee
shall receive those which are
sound, this segregation to be made
by distinct and separate pieces and

without dividing a single object,


unless the consignee proves that
impossibility
of
conveniently
making use of them in this form.
The same rule shall be applied to
merchandise in bales or packages,
separating those parcels which
appear sound.
Presumption of negligence
Article 1735 of the New Civil
Code provides that: In all cases
other than those mentioned in Nos.
1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost,
destroyed or deteriorated, common
carriers are presumed to have been
at fault or to have acted
negligently, unless they prove that
they
observed
extraordinary
diligence as required in Article
1733.
2. Duration of liability
Article 1736 of the New Civil
Code
states
that:
The
extraordinary responsibility of the
common carrier lasts from the time
the goods are unconditionally
placed in the possession of, and
received
by
the
carrier
for
transportation until the same are
delivered,
actually
or
constructively, by the carrier to the
consignee, or to the person who
has a right to receive them, without
prejudice to the provisions of
Article 1738.
Article 1737 of the New Civil
Code states that: The common
carrier's
duty
to
observe
extraordinary diligence over the
goods remains in full force and
effect
even
when
they
are
temporarily unloaded or stored in
transit, unless the shipper or owner
has made use of the right of
stoppage in transitu.
Article 1738 of the New Civil
Code
provides
that:
The
extraordinary
liability
of
the
common carrier continues to be
operative even during the time the
goods are stored in a warehouse of
the carrier at the place of
destination, until the consignee has
been advised of the arrival of the
goods and has had reasonable
opportunity thereafter to remove
them or otherwise dispose of
them.
3. Defenses of common carriers

Article 1734 of the New Civil


Code provides that: Common
carriers are responsible for the loss,
destruction, or deterioration of the
goods, unless the same is due to
any of the following causes only:
(1) Flood, storm, earthquake,
lightning, or other natural disaster
or calamity;
(2) Act of the public enemy in war,
whether international or civil;
(3) Act of omission of the shipper or
owner of the goods;
(4) The character of the goods or
defects in the packing or in the
containers;
(5) Order or act of competent
public authority.
*The enumeration is exclusive or a
closed list.
General Rule: Common carriers
are responsible for the loss,
destruction or deterioration of the
goods.
Exceptions:
1. Flood, storm, earthquake,
lightning or other natural
disaster or calamity;
2. Act of the public enemy in
war whether international or
civil;
3. Act of omission of the
shipper or owner of the
goods;
4. The character of the goods
or defects in the packaging
or in the containers; and
5. Order
or
act
of
the
competent public authority
Article 1740 of the New Civil
Code states that: If the common
carrier negligently incurs in delay
in transporting the goods, a natural
disaster shall not free such carrier
from responsibility.
a. Fortuitous event
Article 1739 of the New Civil
Code provides that: In order
that the common carrier may
be
exempted
from
responsibility,
the
natural
disaster must have been the
proximate and only cause of the
loss. However, the common
carrier must exercise due
diligence
to
prevent
or
minimize loss before, during
and after the occurrence of
flood, storm or other natural
disaster in order that the
common
carrier
may
be
exempted from liability for the

loss,
destruction,
or
deterioration of the goods. The
same duty is incumbent upon
the common carrier in case of
an act of the public enemy
referred to in Article 1734, No.
2.
*Fire is not within the ambit of
natural disaster or calamity.
*Calamity
includes
thunderstorm.
*mechanical defect is not within
the ambit of the natural
disaster; it is within the control
of the common carrier.
Requisites:
1. Proximate cause is the
natural calamity
2. Absence of negligence on
the part of the common
carrier
3. The common carrier must
exercise due diligence to
prevent loss before, during
and after the occurrence of
the disaster
4. Free
from
unreasonable
delay by the common
carrier
or
unreasonable
deviation
b. Public enemy
Article 1739 of the New Civil
Code states that: In order that
the common carrier may be
exempted from responsibility,
the natural disaster must have
been the proximate and only
cause of the loss. However, the
common carrier must exercise
due diligence to prevent or
minimize loss before, during
and after the occurrence of
flood, storm or other natural
disaster in order that the
common
carrier
may
be
exempted from liability for the
loss,
destruction,
or
deterioration of the goods. The
same duty is incumbent upon
the common carrier in case of
an act of the public enemy
referred to in Article 1734, No.
2.
*Public enemy includes pirates
however it does not include
robbery and thief.
*Pirates are enemies of all
civilized nation.
General Rule: rebels and
insurreccion is not included.

Exception: If it they are cast of


and took allegiance a hostile
manner territory
*Existence of actual war is
imperative.
c. Act of omission on the part
of the shipper or owner of
the goods
*There must be no fault or
contributory negligence on the
part of the carrier.
*In Compania Maritima v CA,
the SC held that the common
carrier is also at fault; the
common carrier should have
exercise extraordinary diligence
by not relying solely on the
statement of the shipper; it
should have conducted its own
weighing. In this case the
common carrier is not totally
absolved from its liability.
d. Improper packing
Article 1742 of the New Civil
Code states that: Even if the
loss,
destruction,
or
deterioration of the goods
should be caused by the
character of the goods, or the
faulty nature of the packing or
of the containers, the common
carrier must exercise due
diligence to forestall or lessen
the loss.
*If the defect is apparent, the
carrier may refuse to accept the
goods for carriage; if the
shipper insists, the remedy is to
make a protestation; make a
foul bill of lading.
*In Iron Bulk v CA (Dec. 8,
2003), carrier issued pro forma
bill of lading stated where in
that it accepted goods in good
condition. The goods arrived
defective. The SC held that the
carrier is not exempt from
liability because it accepted the
goods without protestation.
*Foul Bill of Lading preserves
the right of the carrier to use
the excuse provided in 1734.
e. Order of public authority
Article 1743 of the New Civil
Code states that: If through
the order of public authority the
goods are seized or destroyed,
the common carrier is not
responsible,
provided
said

public authority had power to


issue the order.
*The important requisite is that
the public authority has the
power to issue an order.
Case: Ganzon v CA
4. Contributory negligence of the
shipper
Article 1741 of the New Civil
Code states that: If the shipper or
owner merely contributed to the
loss, destruction or deterioration of
the goods, the proximate cause
thereof being the negligence of the
common carrier, the latter shall be
liable in damages, which however,
shall be equitably reduced.
5. Stipulation limiting liability of
carrier
Article 1744 of the New Civil
Code states that: A stipulation
between the common carrier and
the shipper or owner limiting the
liability of the former for the loss,
destruction, or deterioration of the
goods to a degree less than
extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the shipper
or owner;
(2) Supported by a valuable
consideration
other
than
the
service rendered by the common
carrier; and
(3) Reasonable, just and not
contrary to public policy.
*This is for the benefit of the
carrier.
Consideration: Reduction of fare
*The stipulation must be in writing
for the purpose of preventing
abuse from the carrier.
Article 1748 of the New Civil
Code
provides
that:
An
agreement limiting the common
carrier's liability for delay on
account of strikes or riots is valid.
Article 1749 of the New Civil
Code states that: A stipulation
that the common carrier's liability
is limited to the value of the goods
appearing in the bill of lading,
unless the shipper or owner
declares a greater value, is
binding.
Article 1750 of the New Civil
Code provides that: A contract
fixing the sum that may be
recovered by the owner or shipper
for the loss, destruction, or
deterioration of the goods is valid,
if it is reasonable and just under

the circumstances, and has been


fairly and freely agreed upon.
a. Requisites
Article 1744 of the New Civil
Code states that: A stipulation
between the common carrier
and the shipper or owner
limiting the liability of the
former for the loss, destruction,
or deterioration of the goods to
a
degree
less
than
extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the
shipper or owner;
(2) Supported by a valuable
consideration other than the
service
rendered
by
the
common carrier; and
(3) Reasonable, just and not
contrary to public policy.
Article 1751 of the New Civil
Code provides that: The fact
that the common carrier has no
competitor along the line or
route, or a part thereof, to
which the contract refers shall
be taken into consideration on
the question of whether or not
a
stipulation
limiting
the
common carrier's liability is
reasonable,
just
and
in
consonance with public policy.
*Liability can be limited but
cannot be totally exempted.
*Stipulations reducing diligence
or limiting liability must be in
writing to be enforceable.
b. Invalid stipulations
Article 1745 of the New Civil
Code states that: Any of the
following or similar stipulations
shall
be
considered
unreasonable,
unjust
and
contrary to public policy:
(1)
That
the
goods
are
transported at the risk of the
owner or shipper;
(2) That the common carrier will
not be liable for any loss,
destruction, or deterioration of
the goods;
(3) That the common carrier
need not observe any diligence
in the custody of the goods;
(4) That the common carrier
shall exercise a degree of
diligence less than that of a
good father of a family, or of a
man of ordinary prudence in
the vigilance over the movables
transported;
(5)
That
the

common carrier shall not be


responsible for the acts or
omission
of
his
or
its
employees;
(6) That the common carrier's
liability for acts committed by
thieves, or of robbers who do
not act with grave or irresistible
threat, violence or force, is
dispensed with or diminished;
(7) That the common carrier is
not responsible for the loss,
destruction, or deterioration of
goods on account of the
defective condition of the car,
vehicle, ship, airplane or other
equipment used in the contract
of carriage.
*Even if they agreed with
regard to numbers 1,2 and 3,
the stipulation is void because
it is contrary to public policy
because all these stipulations
exempt the carrier from liability.
General Rule: The degree of
diligence may be lowered
Exception: Not lower than that
of a good father of a family.
General
Rule:
stipulations
exempting from liability acts
committed by robbers and
thieves who do not act with
grave threat or irresistible
threats are not valid.
Exception: In case the robbers
or thieves used grave threat or
irresistible threats.
*In this case, the presumption
of negligence is still applicable,
the stipulation only affects the
outcome of the case.
c. Effect of delay
Article 1747 of the New Civil
Code states that: If the
common carrier, without just
cause,
delays
the
transportation of the goods or
changes the stipulated or usual
route, the contract limiting the
common
carrier's
liability
cannot be availed of in case of
the
loss,
destruction,
or
deterioration of the goods.
*Delay will prevent the carrier
from raising natural disaster as
a
defense
and
that
the
agreement limiting its liability
cannot be raised as a defense.
d. Rule on presumption of
negligence
despite
stipulation

Article 1752 of the New Civil


Code states that: Even when
there is an agreement limiting
the liability of the common
carrier in the vigilance over the
goods, the common carrier is
disputably presumed to have
been negligent in case of their
loss,
destruction
or
deterioration.
B. Other obligations
1. Duty to accept goods
a. Grounds for valid refusal to
accept goods
i.
General
Rule:
Goods
sought to be transported
are dangerous objects or
substances
including
dynamite
and
other
explosives;
Exception: Carriers that
are permitted or allowed to
transport dangerous objects
or substances for the reason
that it is their function to do
so or it is their operation.
ii.
Goods
are
unfit
for
transportation;
*This can be found under
Article 356 of the Code of
Commerce
iii.
Acceptance would result in
overloading;
iv.
Contrabands
or
illegal
goods;
v.
Goods are injurious to
health;
vi.
Goods will be exposed to
untoward danger like flood,
capture by enemies and the
like;
vii.
Goods like livestock will be
exposed to disease;
viii.
Strike; and
ix.
Failure to tender goods on
time
2. Duty to deliver goods
a. Time of delivery
General
Rule:
It
is
by
stipulation
Exception: In the absence of
stipulation Code of Commerce
governs.
Article 358 of the Code of
Commerce provides that: If
there is no period fixed for the
delivery of the goods the carrier
shall be bound to forward them
in the first shipment of the
same or similar goods which he
may make to the point where
he must deliver them; and
should he not do so, the

damages caused by the delay


should be for his account.
*When
a
common
carrier
undertakes to convey goods,
the law implies a contract that
they shall be delivered at
destination within a reasonable
time, in the absence of any
agreement as to the time of
delivery.
*Mercantile usage or practice
With stipulation
Carrier is bound to
fulfil the contract
and is liable for
any
delay;
no
matter from what
cause it may have
arisen

Without stipulation
1. Within a reasonable
time.
2. Carrier is bound to
forward them in the
first shipment of the
same
or
similar
goods which he may
make to the point of
delivery

b. Consequences of delay
Article 1740 of the New Civil
Code provides that: If the
common
carrier negligently
incurs in delay in transporting
the goods, a natural disaster
shall not free such carrier from
responsibility.
Article 1747 of the New Civil
Code provides that: If the
common carrier, without just
cause,
delays
the
transportation of the goods or
changes the stipulated or usual
route, the contract limiting the
common
carrier's
liability
cannot be availed of in case of
the
loss,
destruction,
or
deterioration of the goods.
Article 370 of the Code of
Commerce provides that: If a
period has been fixed for the
delivery of the goods, it must
be made within such time, and,
for failure to do so, the carrier
shall
pay
the
indemnity
stipulated in the bill of lading,
neither the shipper nor the
consignee being entitled to
anything else. If no indemnity
has been stipulated and the
delay exceeds the time fixed in
the bill of lading, the carrier
shall be liable for the damages
which the delay may have
caused.
Article 371 of the Code of
Commerce provides that: In
case of delay through the fault

of the carrier, referred to in the


preceding
articles,
the
consignee may leave the goods
transported in the hands of the
former, advising him thereof in
writing before their arrival at
the point of destination. When
this abandonment takes place,
the carrier shall pay the full
value of the goods as if they
had been lost or mislaid. If the
abandonment is not made, the
indemnification for losses and
damages by reason of the delay
cannot exceed the current price
which the goods transported
would have had on the day and
at the place in which they
should have been delivered;
this same rule is to be observed
in all other cases in which this
indemnity may be due.
Article 372 of the Code of
Commerce states that: The
value of the goods which the
carrier must pay in cases of loss
or
misplacement
shall
be
determined in accordance with
that declared in the bill of
lading, the shipper not being
allowed to present proof that
among the goods declared
therein there were articles of
greater value and money.
Horses,
vehicles,
vessels,
equipment
and
all
other
principal and accessory means
of
transportation
shall
be
especially bound in favour of
the shipper, although with
respect to railroads said liability
shall be subordinated to the
provisions of the laws of
concession with respect to the
property, and to what this Code
established as to the manner
and form of effecting seizures
and attachments against said
companies.
Article 373 of the Code of
Commerce states that: The
carrier who makes the delivery
of the merchandise to the
consignee
by
virtue
of
combined
agreements
or
services with other carriers
shall assume the obligations of
those who preceded him in the
conveyance, reserving his right
to proceed against the latter if

he was not the party directly


responsible for the fault which
gave rise to the claim of the
shipper or consignee. The
carrier who makes the delivery
shall likewise acquire all the
actins and rights of those who
preceded
him
in
the
conveyance. The shipper and
the consignee shall have an
immediate right of action
against
the
carrier
who
executed the transportation
contract, or against the other
carriers who may have received
the goods transported without
reservation.
However,
the
reservation made by the latter
shall not relieve them from the
responsibilities which they may
have incurred by their own
acts.
Article 374 of the Code of
Commerce states that: The
consignees
to
whom
the
shipment was made may not
defer the payment of the
expenses and transportation
charges of the goods they
receive after the lapse of 24
hours following their delivery;
and in case of delay in this
payment, the carrier may
demand the judicial sale of the
goods transported in an amount
necessary to cover the cost of
transportation
and
the
expenses incurred.
Effects of delay:
1. Excusable delay in carriage
merely
suspends
and
generally
does
not
terminate the contract of
carriage. When the cause is
removed, the master must
proceed with the voyage
and make delivery;
2. Carrier remains duty bound
to exercise extraordinary
diligence;
3. Natural disaster shall not
free
the
carrier
from
responsibility;
4. If delay is without just
cause, the contract limiting
the
common
carriers
liability cannot be availed of
in
case
of
loss
or
deterioration of the goods.
c. Place of Delivery

Article 360 of the Code of


Commerce provides that: The
shipper, without changing the
place where the delivery is to
be made, may change the
consignment of the goods
which he delivered to the
carrier, provided that at the
time of ordering the change of
consignee the bill of lading
signed by the carrier, if one has
been issued, be returned to
him, in exchange for another
wherein the novation of the
contract appears. The expenses
which
this
change
of
consignment occasions shall be
for the account of the shipper.
d. To whom delivery shall be
made
Article 368 of the Code of
Commerce provides that: The
carrier must deliver to the
consignee, without any delay or
obstruction, the goods which he
may have received, by the
mere fact of being named in the
bill of lading to receive them;
and if he does not do so, he
shall be liable for the damages
which may be caused thereby.
Article 369 of the Code of
Commerce provides that: If
the consignee cannot be found
at the residence indicated in
the bill of lading, or if he
refuses
to
pay
the
transportation
charges
and
expenses, or if he refuses to
receive
the
goods,
the
municipal judge, where there is
none of the first instance, shall
provides for their deposit at the
disposal of the shipper, this
deposit producing all the effects
of delivery without prejudice to
third parties with a better
right.
OBLIGATIONS OF THE COMMON CARRIER
IN A CONTRACT OF CARRIAGE OF
PASSENGERS:
A. Safety of Passengers
1. Duty
to
observe
utmost
diligence
Article 1755 of the New Civil
Code provides that: A common
carrier is bound to carry the
passengers safely as far as human
care and foresight can provide,

using the utmost diligence of very


cautious persons, with a due regard
for all the circumstances.
*There are claims not really
focused on death, injuries, loss or
damage of goods but concentrates
on moral damages; and the SC said
that these claims can still prosper
in because there is still a breach of
contract of carriage.
*Behavior
of
the
employees
towards to passengers is also a
factor considered by the court to
rule against a common carrier.
*In CAL v PAL, the SC held that
hijacking
of
the
airplane
is
considered to be a force majeure
thus cannot held the carrier liable.
Case:
Singapore
Airline
v
Andion Fernandez
*In Japan Airlines v Asuncion
(January 28, 2005), the SC held
that the things invoked by the
respondent do not fall within the
ambit of extraordinary diligence.
Though it is the duty of the carrier
to check that travel documents are
with the passengers but it is not
under the obligation of the carrier
to check the veracity of the
information in the travel document;
it also held that the obligation of
the carrier is limited to endorsing
and not to influence. The issue of
whether or not an alien be
admitted entrance to a country is a
sovereign act and such cannot be
interfered by the petitioner.
2. Duration of liability
*The carrier is bound to exercise
utmost diligence with respect to
passengers the moment the person
who purchases the ticket or token
from the carrier presents himself at
the proper place and in a proper
manner to be transported. Such
person must have a bona fide
intention to use the facilities of the
carrier, possess sufficient fare with
which to pay for his passage, and
present himself to the carrier for
transportation in the place and
manner provided.
*In LRTA v Navidad, the SC held
the petitioner carrier liable for
breach of contract. The SC held
that Nicanor Navidad was a
passenger when he died after he
fell on the LRT tracks and was
struck by a moving train. He was
considered a passenger because he

entered the LRT station after


having purchased a token and he
fell while he was on the platform
waiting for a train. Thus, he was
where he was supposed to be with
the intention of boarding a train.
*Once created, the relationship will
not ordinarily terminate until the
passenger has, after reaching his
destination, safely alighted from
the carriers conveyance or has
had a reasonable opportunity to
leave the carriers premises. All
persons who remain on the
premises within a reasonable time
after leaving the conveyance are to
be deemed passengers, and what
is a reasonable time or a
reasonable delay within this rule is
to be determined from all the
circumstances,
and
includes
reasonable time to look after his
baggage and prepare for his
departure.
*In La Mallorca v CA, the SC held
that there was a breach of duty to
exercise extraordinary diligence
with respect to the 4 year old child
and the carrier is liable as a
consequence. The presence of
passengers near the bus was not
unreasonable and they were,
therefore, to be considered still as
passengers of the carrier, entitled
to the protection under their
contract.
*In
Aboitiz
Shipping
Corporation v CA, the SC held
that extraordinary diligence was
still owed to AV at the time of the
accident. It was ruled that AVs
presence in the premises was not
without cause. The victim had to
claim his baggage which was
possible only one hour after the
vessel arrived since it was the
standard procedure in the case of
petitioners
vessels
that
the
unloading operation shall start only
after that time.
*The differences between the La
Mallorca case and Aboitiz Shipping
Corporation are: 1. The business is
different from that of La Mallorca
case; and 2. The capacity of
passengers and baggages are
different
3. Presumption of negligence
Article 1756 of the New Civil
Code states that: In case of
death of or injuries to passengers,

common carriers are presumed to


have been at fault or to have acted
negligently, unless they prove that
they
observed
extraordinary
diligence as prescribed in Articles
1733 and 1755.
4. Liability for acts of employees
Article 1759 of the New Civil
Code provides that: Common
carriers are liable for the death of
or injuries to passengers through
the negligence or wilful acts of the
former's employees, although such
employees may have acted beyond
the scope of their authority or in
violation of the orders of the
common carriers.
This liability of the common
carriers does not cease upon proof
that they exercised all the diligence
of a good father of a family in the
selection and supervision of their
employees.
Case: Maranan v Perez
5. Liability for acts of strangers
Article 1763 of the New Civil
Code provides that: A common
carrier is responsible for injuries
suffered by a passenger on account
of the wilful acts or negligence of
other passengers or of strangers, if
the common carrier's employees
through the exercise of the
diligence of a good father of a
family could have prevented or
stopped the act or omission.
Case: Bachelor Express v CA
6. Effect of stipulation on liability
Article 1757 of the New Civil
Code
provides
that:
The
responsibility of a common carrier
for the safety of passengers as
required in Articles 1733 and 1755
cannot be dispensed with or
lessened by stipulation, by the
posting of notices, by statements
on tickets, or otherwise.
Article 1758 of the New Civil
Code provides that: When a
passenger is carried gratuitously, a
stipulation limiting the common
carrier's liability for negligence is
valid, but not for wilful acts or
gross negligence.
The reduction of fare does not
justify any limitation of the
common carrier's liability.
Article 1760 of the New Civil
Code states that: The common
carrier's responsibility prescribed in
the preceding article cannot be
eliminated or limited by stipulation,

by the posting of notices,


statements on the tickets
otherwise.

by
or

B. Passengers Baggages
Article 1754 of the New Civil Code
provides that: The provisions of
Articles 1733 to 1753 shall apply to the
passenger's baggage which is not in
his personal custody or in that of his
employee. As to other baggage, the
rules in Articles 1998 and 2000 to
2003 concerning the responsibility of
hotel-keepers shall be applicable.
Article 1998 of the New Civil Code
states that: The deposit of effects
made by the travellers in hotels or inns
shall also be regarded as necessary.
The keepers of hotels or inns shall be
responsible for them as depositaries,
provided that notice was given to
them, or to their employees, of the
effects brought by the guests and that,
on the part of the latter, they take the
precautions which said hotel-keepers
or their substitutes advised relative to
the care and vigilance of their effects.
Article 2000 of the New Civil Code
states that: The responsibility referred
to in the two preceding articles shall
include the loss of, or injury to the
personal property of the guests caused
by the servants or employees of the
keepers of hotels or inns as well as
strangers; but not that which may
proceed from any force majeure. The
fact that travellers are constrained to
rely on the vigilance of the keeper of
the hotels or inns shall be considered
in determining the degree of care
required of him.
Article 2001 of the New Civil Code
provides that: The act of a thief or
robber, who has entered the hotel is
not deemed force majeure, unless it is
done with the use of arms or through
an irresistible force.
Article 2002 of the New Civil Code
provides that: The hotel-keeper is not
liable for compensation if the loss is
due to the acts of the guest, his family,
servants or visitors, or if the loss arises
from the character of the things
brought into the hotel.
Article 2003 of the New Civil Code
provides that: The hotel-keeper
cannot free himself from responsibility
by posting notices to the effect that he
is not liable for the articles brought by
the guest. Any stipulation between the
hotel-keeper and the guest whereby

the responsibility of the former as set


forth in articles 1998 to 2001 is
suppressed or diminished shall be
void.
*The baggage in the personal custody
of the passenger or his employee in
that the baggage in transit will be
considered as necessary deposits. The
common carrier shall be responsible
for the baggage as depositaries,
provided that notice was given to them
or its employees, and the passenger
took the necessary precaution, which
the carrier has advised them relative
to the care and vigilance of their
baggage. In case of loss due to the
fault of the passenger the carrier will
not be liable.
*They are not absolutely responsible
as depository because the law requires
notice.
*It is also required to declare the value
of the baggage.
*The carrier who has in his custody the
baggage of the passenger to be
carried like any other goods is required
to observe extraordinary diligence. In
case of loss or damage the carrier is
presumed negligent.
OBLIGATIONS
OF
THE
CONSIGNEE AND PASSENGER:

SHIPPER,

A. Effect of negligence of shipper or


passenger Article 1741 of the New
Civil Code states that: If the shipper
or owner merely contributed to the
loss, destruction or deterioration of the
goods, the proximate cause thereof
being the negligence of the common
carrier, the latter shall be liable in
damages, which however, shall be
equitably reduced.
Article 1761 of the New Civil Code
provides that: The passenger must
observe the diligence of a good father
of a family to avoid injury to himself.
Article 1762 of the New Civil Code
states
that:
The
contributory
negligence of the passenger does not
bar recovery of damages for his death
or injuries, if the proximate cause
thereof is the negligence of the
common carrier, but the amount of
damages shall be equitably reduced.
*The shipper is also obliged to exercise
due diligence in avoiding damage or
injury.
*With
respect
to
carriage
of
passengers, the said passengers are
likewise bound to observe due
diligence to avoid injury.

*The contributory negligence on the


part of the passenger is not a defense
that will excuse the carrier from
liability. It will only mitigate such
liability.
*The carrier may be able to prove that
the only cause of the loss of the goods
is any of the following acts of the
shipper:
1. failure of the shipper to disclose the
nature of the goods;
2. improper marking or direction as to
destination; and
3. improper loading when he assumed
such responsibility.
*The shipper must likewise see to it
that the goods are properly packed;
otherwise, liability of the carrier may
be mitigated or barred depending on
the circumstances.
B. Payment of freight
Who will pay:
Shipper - before or at the time he
delivers the goods to the carrier for
shipment.
Consignee - if agreed upon by the
parties at the point of destination is
bound by such stipulation the moment
he accepts the goods.
Passengers - they are contractually
bound to pay the fare within such time
as prescribed by regulations or by the
carrier.
Time to pay:
Tickets are purchased in advance from
ticket outlets.
Consignees to whom the shipment was
made may not defer the payment of
the expenses and transportation
charges of the goods they receive after
the lapse of 24 hours following their
delivery.
*In case of delay in payment, the
carrier may demand the judicial sale of
the goods transported in an amount
necessary to cover the cost of
transportation and the expenses
incurred.
Article 374 of the Code of
Commerce provides that: The carrier
who makes the delivery of the
merchandise to the consignee by
virtue of combined agreements or
services with other carriers shall
assume the obligations of those who
preceded him in the conveyance,
reserving his right to proceed against
the latter if he was not the party
directly responsible for the fault which
gave rise to the claim of the shipper or
consignee. The carrier who makes the

delivery shall likewise acquire all the


actions and rights of those who
preceded him in the conveyance. The
shipper and the consignee shall have
an immediate right of action against
the
carrier
who
executed
the
transportation contract, or against the
other carriers who may have received
the
goods
transported
without
reservation. However, the reservation
made by the latter shall not relieve
them from the responsibilities which
they may have incurred by their own
acts.
Article 375 of the Code of
Commerce provides that: The goods
transported shall be especially bound
to answer for the cost of transportation
and for the expenses and fees incurred
for them during their conveyance and
until the moment of their delivery. This
special right shall prescribe 8 days
after the delivery has been made, and
once prescribed, the carrier shall have
no
other
action
than
that
corresponding to him as an ordinary
creditor.
C. Liability for demurrage
Demurrage is the compensation
provided for in the contract of
affreightment for the detention of the
vessel beyond the time agreed on for
loading and unloading. It is a claim for
damages for failure to accept delivery.
*Liability for demurrage exists only
when expressly stipulated in the
contract.
EXTRAORDINARY DILIGENCE:
A. Underlying reason
Reasons:
1. From the nature of the business
and for reasons of public policy;
2. Relationship of trust;
3. Business is impressed with a
special public duty;
4. Possession of the goods;
5. Preciousness of human life
B. Effect of Stipulation
Article 1744 of the New Civil
Code states that: A stipulation
between the common carrier and
the shipper or owner limiting the
liability of the former for the loss,
destruction, or deterioration of the
goods to a degree less than
extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the shipper
or owner;

(2) Supported by a valuable


consideration
other
than
the
service rendered by the common
carrier; and
(3) Reasonable, just and not
contrary to public policy.
Article 1757 of the New Civil
Code
states
that:
The
responsibility of a common carrier
for the safety of passengers as
required in Articles 1733 and 1755
cannot be dispensed with or
lessened by stipulation, by the
posting of notices, by statements
on tickets, or otherwise.
Article 1758 of the New Civil
Code states that: When a
passenger is carried gratuitously, a
stipulation limiting the common
carrier's liability for negligence is
valid, but not for wilful acts or
gross negligence.
The reduction of fare does not
justify any limitation of the
common carrier's liability.
Article 1760 of the New Civil
Code states that: The common
carrier's responsibility prescribed in
the preceding article cannot be
eliminated or limited by stipulation,
by the posting of notices, by
statements on the tickets or
otherwise.
C. Extraordinary
diligence
in
carriage by sea
1. Seaworthiness of the vessel
Sec. 3 [1] of the COGSA
provides that: The carrier shall
be bound before and at the
beginning of the voyage to
exercise due diligence to
(a) Make the ship seaworthy;
(b) Properly man,equip, and
supply the ship;
(c) Make
the
holds,
refrigerating
and
cooling
chambers, and all other parts of
the ship in which goods are
carried, fit and safe for their
reception,
carriage,
and
preservation.
Sec. 3 [2] of the COGSA
provides that: The carrier shall
properly and carefully load,
handle, stow, carry, keep, care
for, and discharge the goods
carried.
Sec. 116 of the IC
Sec. 119 of the IC
Article 609 of the Code of
Commerce
states
that:

Captains, masters or patrons


of vessels must be Filipinos,
have legal capacity to contract
in accordance with this code,
and prove the skill, capacity,
and qualifications necessary to
command and direct the vessel,
as established by marine or
navigation laws, ordinances, or
regulations, and must not be
disqualified according to the
same for the discharge of the
duties of the position. If the
owner of a vessel desires to be
the captain thereof, without
having the legal qualifications
therefor, he shall limit himself
to the financial administration
of the vessel, and shall intrust
the navigation to a person
possessing the qualifications
required by said ordinances and
regulations.
*Extraordinary
diligence
requires that the ship which will
transport the passengers and
goods is seaworthy.
*The carriers are deemed to
warrant
impliedly
the
seaworthiness of the ship. The
failure of a common carrier to
maintain in seaworthy condition
the vessel involved in its
contract of carriage is a clear
breach of its duty prescribed in
Article 1755 of the NCC.
*Shippers of goods are not
expected to inquire into the
vessels
seaworthiness
and
compliance with all maritime
laws.
*The unseaworthiness can be
established by the fact that it
did not withstand the natural
and inevitable action of the sea.
2. Overloading
*Duty to exercise due diligence
includes the duty to take
passengers or cargoes that are
within the carrying capacity of
the vessel.
3. Proper storage
*The ship must not be only
seaworthy but it must also be
cargoworthy. The ship must be
an efficient storehouse for her
cargo.
*The vessel must be adequately
equipped and properly manned.
4. Obligation of captain and
crew

*If the negligence of the


captain and crew can be traced
to the fact that they are really
incompetent,
the
Limited
Liability Rule cannot be invoked
because the ship owner may be
deemed negligent.
5. Rule
on
deviation
and
transhipment Deviation
*If route is stipulated upon by
the shipper and carrier, carrier
cant change unless due to
force majeure.
*Carrier shall be liable for all
losses suffered from any other
cause,
beside
the
sum
stipulated for such case.
*If due to said force majeure he
took another route and incurred
expenses by reason thereof, he
shall be reimbursed for such
increase upon formal proof
thereof (Art. 359, Code of
Commerce).
Transshipment is the act of
taking cargo out of one ship
and loading it in another.
*When done without legal
excuse, however competent
and safe the vessel into which
the transfer is made, is a
violation of the contract and an
infringement of the right of the
shipper and subjects the carrier
to liability if the freight is lost
even by a cause otherwise
excepted
(Magellan
Manufacturing Corp. v. CA).
Article 359 of the Code of
Commerce provides that: If
there is an agreement between
the shipper and the carrier as
to the road over which the
conveyance is to be made, the
carrier may not change the
route, unless it be by reason of
force majeure; and should he
do so without this cause, he
shall be liable for all the losses
which the goods he transports
may suffer from any other
cause, beside paying the sum
which
may
have
been
stipulated for such case. When
on account of said cause of
force majeure, the carrier had
to take another route which
produced
an
increase
in
transportation charges, he shall
be reimbursed for such increase
upon formal proof thereof.

D. Extraordinary
diligence
in
carriage by land
1. Vehicles condition
*Owners are required to make
sure that the vehicles they are
using are in good order and
condition.
2. Traffic rules (RA 4136)
*In cases involving breach of
contract of carriage, proof of
violation
of
traffic
rules
confirms that the carrier failed
to
exercise
extraordinary
diligence.
3. Obligation to Inspect
*in overland transportation,
common carrier is not bound
nor empowered to make an
examination of the contents of
packages or bags particularly
those hand carried.
Airline
companies are required to
inspect each and every cargo
brought into the aircraft (RA
6235).
E. Extraordinary
diligence
in
carriage by air
1. Airworthiness - an aircraft, its
engines, propellers and other
components and accessories are of
proper design and construction,
and are safe for air navigation
purposes,
such
design
and
construction being consistent with
accepted engineering practice and
in accordance with aerodynamic
laws and aircraft science (RA 779).
2. Competent and well trained
crew
3. To take the required and
prescribed route
4. Adverse weather conditions or
extreme climatic changes are some
of the perils involved in air travel
consequence
of
which
the
passenger must assume or expect.
5. RA 6235 (An Act Prohibiting
Certain Acts Inimical to Civil
Aviation and for Other Purposes) acts punishable:
a. to compel a change in the
course or destination of an aircraft
of Philippine registry; or
b. to seize or usurp control of the
aircraft while in flight.
ACTIONS IN CASE OF
CONTRACT OF CARRIAGE:

BREACH

OF

A. Causes
of
action
and
nature/extent of liability (culpa

contractual, culpa aquiliana


and culpa delictual)
Culpa contractual only the carrier
is primarily liable and not the
driver.
Reason: There is no privity
between the driver and the
passenger.
*The party to be impleaded is the
carrier itself.
Basis: Article 1759 of the New Civil
Code
Culpa
delictual/criminal
the
driver is primarily liable. The carrier
is subsidiarily liable only if the
driver is convicted and declared
insolvent.
Basis: Article 100 of the Revised
Penal Code
Culpa aquiliana the carrier and
the driver are solidarily liable as
joint tortfeasor.
Basis: Article 2180 of the New Civil
Code
B. Prescriptive
period
and
conditions precedent
1. Overland transportation of
goods
and
coastwise
shipping (Domestic)
Article 366 of the Code of
Commerce
provides
that:
Within the 24 hours following
the receipt of the merchandise,
the claim against the carrier for
damage or average which may
be found therein upon opening
the packages, may be made,
provided that the indications of
the damage or average which
gives rise to the claim cannot
be ascertained from the outside
part of such packages, in which
case
the
claim shall
be
admitted only at the time of
receipt.
After
the
periods
mentioned have elapsed, or the
transportation charges have
been paid, no claim shall be
admitted against the carrier
with regard to the condition in
which the goods transported
were delivered.
*Prior notice of claim does not
apply to misdelivery of goods.
Purpose of notice: To inform
the carrier that the shipment
has been damaged and that it
is
charged
with
liability
therefor, and to give it an
opportunity
to
make
an
investigation
and
fix

responsibility while the matter


is fresh.
*The filing of notice of claim is a
condition
precedent
for
recovery in case of damage
condition of the goods.
*Not provided by Article 366 of
the Code of Commerce. Thus, in
such absence, the New Civil
Code rules on prescription
apply.
Prescriptive period:
General Rule: If written, 10
years, if not written, 6 years
Exceptions:
1. COGSA 1 year
2. Warsaw Convention 2
years
Example: Q: In case of
pending extrajudicial claim,
does it suspend the one year
period?
A: NO
*One year period applies to
shipper,
assignee,
insurer,
subrogees, and successor in
interest.
*One year period does not
apply in cases of delay or
misdelivery.
International Carriage of
Goods by Sea Sec. 3 [6] of
the
COGSA substantially
provides that in case of patent
damage, the shipper should file
a claim with the carrier
immediately upon delivery. In
case of latent damage, the
shipper should file a claim with
the carrier within 3 days from
delivery. Action for loss or
damage to the cargo should be
brought within one year after:
delivery of the goods (delivered
but damaged goods); or the
date when the goods should
have been delivered (loss).
*The filing of a notice of claim is
not a condition precedent.
Recoverable Damages
The court may award the following
damages:
1. Actual/Compensatory Damages
2. Temperate Damages
3. Liquidated Damages
4. Exemplary Damages
5. Moral Damages
6. Nominal Damages

Actual/Compensatory damages are


those awarded to the aggrieved party
as adequate compensation only for
such pecuniary loss suffered by him as
he has alleged and duly proved.
Article 2199 of the Civil Code
states that: Except as provided by law
or by stipulation, one is entitled to an
adequate compensation only for such
pecuniary loss suffered by him as he
has duly proved. Such compensation is
referred to as actual or compensatory
damages.
*To claim this award, proving the
amount is necessary.
*Procedures
or
plastic
surgeries
performed to restore the part of the
body injured are included as a
component of actual damages.
Temperate damages or moderate
damages these are damages the
amount of which is left to the sound
discretion of the court, but it is
necessary that there be some injury or
pecuniary loss established, the exact
amount of which, could not be
determined by the plaintiff by reason
of the nature of the case.
Article 2224 of the New Civil Code
provides that: Temperate or moderate
damages, which are more than
nominal but less than compensatory
damages, may be recovered when the
court finds that some pecuniary loss
has been suffered but its amount can
not, from the nature of the case, be
provided with certainty.
*The court is convinced that there is
pecuniary loss.
*There is no actual certainty of the
actual amount loss. The court is
allowed to calculate the amount.
*This is in the form of actual damages
Liquidated
damages
are
fixed
damages previously agreed by the
parties to the contract and payable to
the innocent party in case of breach by
the other.
Article 2226 of the New Civil Code
provides that: Liquidated damages
are those agreed upon by the parties
to a contract, to be paid in case of
breach thereof.
*This is in the form of actual damages
but a stipulated one.
*Proving the amount is not necessary.
*In this kind of damages, estoppel
applies.
General Rule: The court cannot
change the amount.

Exception: If the amount stipulated is


excessive the court may disregard said
amount and may compute the actual
damages.
*The only thing to be proved is the fact
of loss.
Exemplary
damages
are
mere
accessories to other forms of damages
except nominal damages. They are
mere additions to actual, moral,
temperate and liquidated damages
which may or may not be granted at
all depending upon the necessity of
setting an example for the public good
as a form of deterrent to the repetition
of the same act by any one.
Article 2229 of the New Civil Code
provides that: Exemplary or corrective
damages are imposed, by way of
example or correction for the public
good, in addition to the moral,
temperate, liquidated or compensatory
damages.
*Awarded because of the wanton,
fraudulent, malevolent, oppressive
acts of the carrier.
*This is awarded to prevent other
carrier to commit oppressive acts.
*This cannot be awarded unless the
plaintiff is entitled to moral at the
same time actual or temperate
damages.
Article 2231 of the New Civil Code
states
that:
In
quasi-delicts,
exemplary damages may be granted if
the defendant acted with gross
negligence.
Article 2232 of the New Civil Code
states that: In contracts and quasicontracts, the court may award
exemplary damages if the defendant
acted in a wanton, fraudulent,
reckless, oppressive, or malevolent
manner.
Article 2233 of the New Civil Code
states that: Exemplary damages
cannot be recovered as a matter of
right; the court will decide whether or
not they should be adjudicated.
Article 2234 of the New Civil Code
states that: While the amount of the
exemplary damages need not be
proved, the plaintiff must show that he
is entitled to moral, temperate or
compensatory damages before the
court may consider the question of
whether or not exemplary damages
should be awarded In case liquidated
damages have been agreed upon,
although no proof of loss is necessary
in order that such liquidated damages

may be recovered, nevertheless,


before the court may consider the
question of granting exemplary in
addition to the liquidated damages,
the plaintiff must show that he would
be entitled to moral, temperate or
compensatory damages were it not for
the
stipulation
for
liquidated
damages.
Article 2235 of the New Civil Code
states that: A stipulation whereby
exemplary damages are renounced in
advance shall be null and void.
Nominal damages are not for
indemnification
of
loss
but
for
vindication of a right violated.
Article 2221 of the New Civil Code
provides that: Nominal damages are
adjudicated in order that a right of the
plaintiff, which has been violated or
invaded by the defendant, may be
vindicated or recognized, and not for
the purpose of indemnifying the
plaintiff for any loss suffered by him.
Article 2222 of the New Civil Code
states that: The court may award
nominal damages in every obligation
arising from any source enumerated in
Article 1157, or in every case where
any property right has been invaded.
Article 2223 of the New Civil Code
states that: The adjudication of
nominal
damages shall
preclude
further contest upon the right involved
and all accessory questions, as
between the parties to the suit, or their
respective heirs and assigns.
*In Japan Airlines v CA, JAL failed to
give the plaintiff the priority for the
first available flight. The SC awarded
nominal damages.
Moral damages are in the category of
an award designed to compensate the
claimant for actual injury suffered and
not to impose a penalty on the
wrongdoer.
Article 2217 of the New Civil Code
provides that: Moral damages include
physical suffering, mental anguish,
fright, serious anxiety, besmirched
reputation, wounded feelings, moral
shock, social humiliation, and similar
injury. Though incapable of pecuniary
computation, moral damages may be
recovered if they are the proximate
result of the defendant's wrongful act
for omission.
Q: When moral damages may be
awarded?
A: 1. Death of a passenger; 2. Carrier
is guilty of fraud, malice, bad faith

even if there is no death of a


passenger (Case: Lopez v PanAmerican); 3. In Air France case
MARITIME LAW:
Source: Code of Commerce
A. Concept of Maritime Law
Maritime Law is the system of laws
which particularly relates to the affairs
and business of the sea, to ships, their
crews and navigation, and to maritime
conveyance of persons and property.
*Apply only to maritime trade and sea
voyages.
B. Limited Liability Rule
1. Concept
The
exclusively
real
and
hypothecary nature of maritime
law operates to limit the liability of
the shipowner to the value of the
vessel, earned freightage and
proceeds of the insurance, if any.
NO VESSEL NO LIABILITY
expresses in a nutshell the limited
liability rule. The total destruction
of the vessel extinguishes maritime
lien as there is no longer any res to
which it can attach.
Q: Is this rule applies in the
handling of the passengers?
A: YES
Q: Whose liability is this?
A: Shipowner or Agents.
Article 586 2nd paragraph states
that: By ship agent is understood
the
person
entrusted
with
provisioning or representing the
vessel in the port in which it may
be found.
*Ship agent is the only person that
can be sued directly.
Reason: Article 618 of the Code of
Commerce provides so.
Article 618 1st paragraph states
that: The ship captain shall be
civilly liable to the ship agent, and
the latter to the third persons who
may have made contracts with the
former; x x x.
Q: What kind?
A: Maritime in nature; marine
transactions
connected
with
maritime law; maritime trade and
commerce
Purpose:
To
encourage
shipbuilding
and
maritime
transactions
Article 587 of the Code of
Commerce provides that: The
ship agent shall also be civilly liable

for the indemnities in favor of third


persons which may arise from the
conduct of the captain in the care
of the goods which he loaded on
the vessel; but he may exempt
himself therefrom by abandoning
the vessel with all her equipments
and the freight it may have earned
during the voyage.
Article 590 of the Code of
Commerce provides that: The coowners of a vessel shall be civilly
liable in the proportion of their
interests in the common fund, for
the results of the acts of the
captain, referred to in Article 587.
Each co-owner may exempt himself
from
this
liability
by
the
abandonment, before a notary, of
the part of the vessel belonging to
him.
Article 837 of the Code of
Commerce provides that: The
civil liability incurred by the
shipowners in the case prescribed
in this section, shall be understood
as limited to the value of the vessel
with all its appurtenances and
freightage earned during the
voyage.
When applicable:
The Code of Commerce sanctions
the application of the doctrine in
the following cases: 1. Civil liability
for indemnities in favor of third
persons which arise from the
conduct of the captain in the case
of the goods which the vessel
carried; 2. Civil liability arising from
collisions; 3. Unpaid wages of the
captain and the crew if the vessel
and its cargo are totally lost by
reason of capture of shipwreck.
2. Exceptions to the rule
Exceptions:
1. When the injury to or death of a
passenger is due either to the
fault of the shipowner, or to the
concurring negligence of the
shipowner and the captain;
2. When the vessel is insured to
the extent of the insurance
proceeds; and
*Freightage collectible
Q: How come insurance is an
exception?
A: Because there is no loss. The
loss was compensated by the
insurance company
3. In Workmens Compensation
claims
Q: Why is an exception?

A: Because not
nature

maritime in

*In Yangco v Laserna case,


the SC held that it covers
anything that is connected with
maritime transactions
3. Abandonment
Q: If theres partial loss can the
shipowner/agent be exempted from
liability?
A: YES. If there is abandonment.
Q: If there is total loss, is it
necessary to abandon?
A: NO. There is nothing to
abandon.
Case: Luzon Stevedoring
Article 587 of the Code of
Commerce states that: The ship
agent shall also be civilly liable for
the indemnities in favor of third
persons which may arise from the
conduct of the captain in the care
of the goods which he loaded on
the vessel; but he may exempt
himself therefrom by abandoning
the vessel with all her equipments
and the freight it may have earned
during the voyage.
Q: How claims are satisfied under
the Limited Liability Rule?
A: All claims should be collated
before they can be satisfied from
what remains of the insurance
proceeds and freightage at the
time of the loss. No claimant
should be given preference over
the
others
by
the
simple
expedience of having filed or
completed its action earlier than
the rest. Thus, the execution of
judgment in earlier completed
cases, even those already final and
executory, must be stayed pending
completion of all cases occasioned
by the subject sinking. Then and
only then can all such claims be
simultaneously
settled,
either
completely or pro-rata should the
insurance proceeds and freightage
be not enough to satisfy the claim.
Case: Aboitiz Shipping Co. v
General Accident Fire and Life
Insurance Corporation
C. Vessels
- Those engaged in navigation,
whether coastwise or on the
high seas, including floating
docks,
pontoons,
dredges,
scows and any other floating
apparatus destined for the

services of the industry or


maritime commerce. Excluded
are local and foreign military
vessels, bancas and other
watercrafts of less than 3 tons
gross
capacity
and
small
watercrafts engaged in river
and bay traffic.
1. Acquisition
a. By prescription
Article 573 of the Code of
Commerce
states
that:
Merchant vessels constitute
property
which
may
be
acquired and transferred by any
of the means recognized by law.
The acquisition of a vessel must
appear in a written instrument,
which shall not produce any
effect with respect to third
persons if not inscribed in the
registry
of
vessels.
The
ownership of a vessel shall
likewise
be
acquired
by
possession
in
good
faith,
continued for three years, with
a just title duly recorded. In the
absence of any of these
requisites,
continuous
possession for ten years shall
be necessary in order to
acquire ownership. A captain
may not acquire by prescription
the vessel of which he is in
command.
Requisites:
1. Acquisition must appear in a
written instrument
2. Such shall not produce any
effect to third persons if not
inscribed in the registry of
vessels
3. Shall
be
acquired
by
possession in good faith,
continued for 3 years
4. With a just title duly
recorded
5. In the absence of any of
there,
continuous
possession for 10 years
shall
be
necessary
to
acquire ownership
Q: Can the ship captain acquire
vessel by prescription?
A: NO. The character of
possession he has is not those
for acquisitive possession. The
requisite
for
acquisitive
possession is that possession as
an owner.

Article 575 of the Code of


Commerce states that: Coowners of vessels shall have
the right of repurchase and
redemption in sales made to
strangers,
but
they
may
exercise the same only within
the 9 days following the
inscription of the sale in the
registry, and by depositing the
price at the same time.
b. By sale
Article 576 of the Code of
Commerce states that: In the
sale of a vessel it shall always
be understood as included the
rigging, masts, stores and
engine
of
a
steamer
appurtenant thereto, which at
the time belongs to the vendor.
The arms, munitions of war,
provisions and fuel shall not be
considered as included in the
sale. The vendor shall be under
the obligation to deliver to the
purchaser a certified copy of
the record sheet of the vessel in
the registry up to the date of
sale.
Article 577 of the Code of
Commerce states that: If the
alienation of the vessel should
be made while it is on voyage,
the freightage which it earns
from the time it receives its last
cargo shall pertain entirely to
the
purchaser,
and
the
payment of the crew and other
persons who make up its
complement for the same
voyage shall be for his account.
If the sale is made after the
vessel has arrived at the port of
its destination, the freightage
shall pertain to the vendor, and
the payment of the crew and
other individuals who make up
its complement shall be for his
account, unless the contrary is
stipulated in either case.
*If made while it is on voyage,
the freightage which it earns
from the time it receives its last
cargo shall pertain entirely to
the
purchaser,
and
the
payment of the crew and other
persons who make up its
complement shall be for his
account.
*If made after vessel arrived at
port
of
its
destination,

freightage shall pertain to the


vendor, and the payment of the
crew and other individuals who
make up its complement shall
be for his account, unless the
contrary is stipulated in either
case.
Article 578 of the Code of
Commerce states that: If the
vessel being on a voyage or in
a foreign port, its owner or
owners
should
voluntarily
alienate it, either to Filipinos or
to foreigners domiciled in the
capital or in a port of another
country, the bill of sale shall be
executed before the consul of
the Republic of the Philippines
at the port where it terminates
its voyage and said instrument
shall produce no effect with
respect to third persons if it is
not inscribed in the registry of
the consulate. The consul shall
immediately forward a true
copy of the instrument of
purchase and sale of the vessel
to the registry of vessels of the
port where said vessel is
inscribed and registered. In
every case the alienation of the
vessel must be made to appear
with a statement of whether the
vendor receives its price in
whole or in part, or whether he
preserves in whole or in part
any claim on said vessel. In
case the sale is made to a
Filipino, this fact shall be stated
in the certificate of navigation.
When a vessel, being in a
voyage, shall be rendered
useless for navigation, the
captain shall apply to the
competent judge or court of the
port of arrival, should it be in
the Philippines; and should it be
in a foreign country, to the
consul of the Republic of the
Philippines, should there be
one, or, where there is none, to
the judge or court or to the
local authority; and the consul,
or the judge or court, shall
order an examination of the
vessel to be made. If the
consignee or the insurer should
reside at said port, or should
have representatives there,
they must be cited in order that

they may take part in the


proceedings
on
behalf
of
whoever may be concerned.
c. Registration
Section 810 of the Tariff and
Customs Code provides that:
The Bureau of Customs is
vested with exclusive authority
over
the
registration
and
documentation of Philippine
vessels. By it shall be kept and
preserved
the
records
of
registration and of transfers
and encumbrances of vessels;
and by it shall be issued all
certificates, licenses or other
documents
incident
to
registration and documentation,
or
otherwise
requisite
for
Philippine vessels.
*Through the MARINA
d. Ships manifest
Sec. 906 of the Tariff and
Customs Code provides that:
Manifests shall be required for
cargo
and
passengers
transported from one place or
port in the Philippines to
another only when one or both
of such places is a port of
entry.
*Declaration of the entire cargo.
The object is to furnish customs
officers with a list to check
against, to inform the revenue
officers what goods are brought
into a port of the country on a
vessel. Hence, the requirement
that a vessel must carry a
manifest is not complied with
even if a bill of lading can be
presented.
*A bill of lading is just a
declaration of a specific cargo
rather than the entire cargo. It
is issued as a matter of
convenience by virtue of a
contract.
D. Persons who take part in Maritime
Commerce
1. Shipowners and shipagents
Article 586 of the Code of
Commerce provides that: The
shipowner and the ship agent shall
be civilly liable for the acts of the
captain and for the obligations
contracted by the latter to repair,
equip, and provision the vessel,
provided the creditor proves that
the amount claimed was invested

for the benefit of the same. By ship


agent is understood the person
entrusted with provisioning or
representing the vessel in the port
in which it may be found.
Article 587 of the Code of
Commerce provides that: The
ship agent shall also be civilly liable
for the indemnities in favor of third
persons which may arise from the
conduct of the captain in the care
of the goods which he loaded on
the vessel; but he may exempt
himself thereform by abandoning
the vessel with all her equipments
and the freight it may have earned
during the voyage.
Article 588 of the Code of
Commerce provides that: Neither
the shipowner nor the ship agent
shall be liable for the obligations
contracted by the captain, if the
latter exceeds the powers and
privileges pertaining to him by
reason of his position or conferred
upon
him
by
the
former.
Nevertheless, if the
amounts
claimed were invested for the
benefit
of
the
vessel,
the
responsibility therefor shall devolve
upon its owner or agent.
a. Rules in case of part-owners
Article 589 of the Code of
Commerce provides that: If
two or more persons should be
part owners of a merchant
vessel, a partnership shall be
presumes as estrablished by
the co-owners. This partnership
shall be governed by the
resolution of the majority of the
members. If the part-owners
should not be more than two,
the disagreement of views, if
any, shall be decided by the
vote of the member having the
largest interest. If the interests
are equal, it should be decided
by lot. The person having the
smallest share in the ownership
shall have one vote; and
proportionately the other part
owners as many votes as they
have parts equal to the
smallest one. A vessel may not
be detained, attached or levied
upon in execution in its
entirety, for the private debts of
a
part
owner,
but
the
proceedings shall be limited to
the interest which the debtor

may have in the vessel, without


interfering with the navigation.
Article 590 of the Code of
Commerce provides that: The
co-owners of a vessel shall be
civilly liable in the proportion of
their interests in the common
fund, for the results of the acts
of the captain, referred to in
Article 587.
Article 591 of the Code of
Commerce provides that: All
the part owners shall be liable,
in proportion to their respective
ownership, for the expenses for
repairing the vessel, and for
other expenses which are
incurred
by
virtue
of
a
resolution of the majority. They
shall likewise be liable in the
same
proportion
for
the
expenses for the maintenance,
equipment, and provisioning of
the
vessel,
necessary
for
navigation.
Article 592 of the Code of
Commerce provides that: The
resolution of the majority with
regard to the repair, equipment,
and provisioning of the vessel
in the port of departure shall
bind the minority, unless the
minority members renounce
their interests, which must be
acquired by the other coowners,
after
a
judicial
appraisement of the value of
the
portion
or
portions
assigned. The resolutions of the
majority
relating
to
the
dissolution of the partnership
and sale of the vessel shall also
be binding on the minority. The
sale of the vessel must be
made at public auction, subject
to the provisions of the law of
civil procedure, unless the coowners
unanimously
agree
otherwise, saving always the
right
of
repurchase
and
redemption provided for in
Article 575.
Article 593 of the Code of
Commerce provides that: The
owners of a vessel shall have
preference in her charter over
other persons, under the same
conditions and price. If two or
more of them should claim this
right, the one having the
greater
interest
shall
be

preferred; and should they have


equal interests, the matter shall
be decided by lot.
Article 594 of the Code of
Commerce states that: The
co-owners
shall
elect
the
manager who is to represent
them in the capacity of ship
agent. The appointment of
director or ship agent shall be
revocable at the will of the
members.
b. Rules in case of shipagents
Article 595 of the Code of
Commerce states that: The
ship agent, whether he is at the
same time the owner of the
vessel, or a manager for an
owner or for an association of
co-owners, must have the
capacity to trade and must be
recorded in the merchants
registry of the province. The
ship agent shall represent the
ownership of the vessel, and
may, in his own name and in
such capacity, take judicial and
extrajudicial steps in matters
relating to commerce.
Article 596 of the Code of
Commerce provides that: The
ship agent may discharge the
duties of captain of the vessel,
subject in every case to the
provision of Article 609. If two
or more co-owners apply for the
position
of
captain,
the
disagreement shall be decided
by a vote of the members; and
if the vote should result in a tie,
it shall be decided in favor of
the co-owner having the larger
interest in the vessel. If the
interests of the applicants
should be equal, and there
should be a tie, the matter shall
be decided by lot.
Article 597 of the Code of
Commerce states that: The
ship agent shall designate and
come to terms with the captain,
and shall contract in the name
of the owners, who shall be
bound in all that refer to
repairs,
details
equipment,
armament, provisions of food
and fuel, and freight of the
vessel, and, in general, in all
that relate to the requirements
of navigation.

Article 598 of the Code of


Commerce states that: The
ship agent may not order a new
voyage, or make contracts for a
new charter, or insure the
vessel,
without
the
authorization of its owner or
resolution of the majority of the
co-owners, unless these powers
were granted him in the
certificate of his appointment. If
he insures the vessel without
authorization therefore, he is
subsidiarily
liable
for
the
solvency of the insurer.
Article 599 of the Code of
Commerce states that: The
ship agent managing for an
association shall render to his
associates an account of the
results of each voyage of the
vessel, without prejudice to
always having the books and
correspondence relating to the
vessel and to its voyages at
their disposal.
Article 600 of the Code of
Commerce states that: After
the account of the managing
agent has been approved by a
relative majority, the co-owners
shall pay the expenses in
proportion to their interest,
without prejudice to the civil or
criminal actions which the
minority may deem fit to
institute afterwards. In order to
enforce the payment, the
managing
agent
shall
be
entitled to an executor action
(accion ejecutiva), which shall
be instituted by virtue of a
resolution of the majority, and
without further proceedings
than the acknowledgment of
the signatures of the persons
who voted for the resolution.
Article 601 of the Code of
Commerce
states
that:
Should there be any profits,
the co-owners may demand of
the
managing
agent
the
amount corresponding to their
interests by means of an
executor
action
(accion
ejecutiva), without any other
requisite
than
the
acknowledgment
of
the
signatures on the instrument
approving the account.

Article 602 of the Code of


Commerce states that: The
ship agent shall indemnify the
captain for all the expenses he
may have incurred with funds
of his own or of others, for the
benefit of the vessel.
*The ship agent is entrusted
with the provisioning and
representing the vessel in the
port in which it may be found.
His liability to passengers and
cargo owners for loss or injury
is the same as the shipowner.
*He is solidarily liable with the
owner for such loss or damage
subject to his right to claim
reimbursement
from
the
shipowner.
*Only agent that can be sued
directly.
2. Captains
and
masters
of
vessels
a. Qualifications
Article 609 of the Code of
Commerce
states
that:
Captains, masters or patrons
of vessels must be Filipinos,
have legal capacity to contract
in accordance with this code,
and prove the skill, capacity,
and qualifications necessary to
command and direct the vessel,
as established by marine or
navigation laws, ordinances, or
regulations, and must not be
disqualified according to the
same for the discharge of the
duties of the position. If the
owner of a vessel desired to be
the captain thereof, without
having the legal qualifications
therefor, he shall limit himself
to the financial administration
of the vessel, and shall intrust
the navigation to a person
possessing the qualifications
required by said ordinances and
regulations.
b. Powers and functions
Article 610 of the Code of
Commerce states that: The
following
powers
shall
be
inherent in the position of
captain, master or patron of a
vessel: 1. To appoint or make
contracts with the crew in the
absence of the ship agent, and
to propose said crew, should
said agent be present; but the
ship agent may not employ any

member against the captains


express refusal; 2. To command
the crew and direct the vessel
to the port of its destination, in
accordance
with
the
instructions he may have
received from the ship agent; 3.
To impose, in accordance with
the contracts and with the laws
and regulations of the merchant
marine, and when on board the
vessel, correctional punishment
upon those who fail to comply
with his orders or are wanting in
discipline, holding a preliminary
hearing
on
the
crimes
committed on board the vessel
on the seas, which crimes shall
be
turned
over
to
the
authorities having jurisdiction
over the same at the first port
touched; 4. To make contracts
for the charter of the vessel in
the absence of the ship agent
or of its consignee, acting in
accordance
with
the
instructions
received
and
protecting the interests of the
owner with utmost care; 5. To
adopt all proper measures to
keep the vessel well supplied
and equipped, purchasing all
that may be necessary for the
purpose, provided there is no
time to request instruction from
the ship agent; and 6. To order,
in similar urgent cases while on
a voyage, the repairs on the
hull and engines of the vessel
and
in
its
rigging
and
equipment,
which
are
absolutely necessary to enable
it to continue and finish its
voyage; but if he should arrive
at a point where there is a
consignee of the vessel, he
shall act in concurrence with
the latter.
Article 611 of the Code of
Commerce states that: In
order to comply with the
obligations mentioned in the
preceding article, the captain,
when he has no funds and does
not expect to receive any from
the ship agent, shall obtain the
same in the successive order
stated below: 1. By requesting
said funds from the consignee
of the vessel or correspondents

of the ship agent; 2. By


applying to the consignees of
the cargo or to those interested
therein; 3. By drawing on the
ship agent; 4. By borrowing the
amount required by means of a
loan on bottomry; and 5. By
selling a sufficient amount of
the cargo to cover the sum
absolutely indispensable for the
repair of the vessel and to
enable it to continue its voyage.
In these two last cases he must
apply to the judicial authority of
the port, if in the Philippines,
and to the consul of the
Republic of the Philippines if in
a foreign country, and where
there is none, to the local
authority,
proceeding
in
accordance with the provisions
of Article 583, and with the
provisions of the law of civil
procedure.
Article 612 of the Code of
Commerce states that: The
following obligations shall be
inherent in the office of the
captain:
1. To have on board before
starting on a voyage a detailed
inventory of the hull, engines,
rigging, spare-masts, tackle,
and other equipment of the
vessel; the royal or the
navigation certificate; the roll of
the persons who make up the
crew of the vessel, and the
contracts entered into with
them; the lists of passengers;
the bill of health; the certificate
of the registry proving the
ownership of the vessel and all
the obligations which encumber
the same up to that date; the
charter parties or authenticated
copies thereof; the invoices or
manifests of the cargo, and the
memorandum of the visit or
inspection by experts, should it
have been made at the port of
departure;
2. To have a copy of this code
on board; 3. To have thee
folioed and stamped books,
placing at the beginning of
each one a memorandum of the
number of folios it contains,
signed
by
the
maritime
authority, and in his absence by
the competent authority. In the

first book, which shall be called


log book, he shall enter day
by day the condition of the
atmosphere,
the
prevailing
winds, the courses taken, the
rigging carried, the power of
the engines used in navigation,
the distances covered, the
maneuvers executed, and other
incidents of navigation; he shall
also enter the damage suffered
by the vessel in her hull,
engines, rigging, and tackle, no
matter what its cause may be,
as well as the impairment and
damage suffered by cargo, and
the effect and importance of
the jettison, should there be
any; and in cases of serious
decisions which require the
advice or a meeting of the
officers of the vessel, or even of
the crew and passengers, he
shall record the decisions
adopted. For the information
indicated he shall make use of
the binnacle book and of the
steam of engine book kept by
the engineer. In the second
book called the accounting
book, he shall record all the
amounts collected and paid for
the account of the vessel,
entering specifically the article
by article, the source of the
collection and the amounts
spent for provisions, repairs,
acquisitions of equipment or
goods,
fuel,
food,
outfits,
wages, and other expenses of
whatever nature they may be.
He shall furthermore enter
therein a list of all the members
of the crew, stating their
domiciles, their wages and
salaries, and the amounts they
may have received on account,
directly or by delivery to their
families. In the third book,
called freight book, he shall
record
the
loading
and
discharge of all the gods,
stating
their
marks
and
packages,
names
of
the
shippers and of the consignees,
ports of loading and unloading,
and the freightage they give. In
this same book he shall record
the names and places of sailing
of the passengers, the number

of packages in their baggage,


and the price of passage;
4. Before receiving cargo, to
make with the officers of the
crew and two experts, if
required by the shippers and
passengers, an examination of
the vessel, in order to ascertain
whether it is water-tight, with
the rigging and engines in good
condition,
and
with
the
equipment required for good
navigation, preserving under
his responsibility a certificate of
the
memorandum
of
his
inspection, signed by all those
who may have taken part
therein. The experts shall be
appointed, one by the captain
of the vessel and another by
those
who
request
its
examination, and in case of
disagreement a third shall be
appointed
by
the
marine
authority of the port or by the
authority
exercising
his
functions;
5. To remain constantly on
board the vessel with the crew
while the cargo is being taken
on board and to carefully watch
the stowage thereof; not to
consent to the loading of any
merchandise or matter of a
dangerous character, such as
inflammable
or
explosive
substances,
without
the
precautions
which
are
recommended for their packing,
handling and isolation; not to
permit the carriage on deck of
any cargo which by reason of
its arrangement, volume, or
weight makes the work of the
sailors difficult, and which
might endanger the safety of
the vessel; and if, on account of
the nature of the merchandise,
the special character of the
shipment, and principally the
favorable season in which it is
undertaken, merchandise may
be carried on deck, he must
hear the opinion of the officers
of the vessel and have the
consent of the shippers and of
the ship agent;
6. To demand a pilot at the
expense of the vessel whenever
required by the navigation, and
principally when he has to enter

a port, canal, or river, or has to


take a roadstead or anchoring
place with which neither he nor
the officers and crew are
acquainted;
7. To be on deck on reaching
land and to take command on
entering and leaving ports,
canals, roadsteads, and rivers,
unless there is a pilot on board
discharging his duties. He shall
not spend the night away from
the vessel except for serious
causes or by reason of official
business;
8. To present himself, when
making a port in distress, to the
maritime authority if in the
Philippines and to the consul of
the Republic of the Philippines if
in a foreign country, before 24
hours have elapsed, and to
make a statement of the name
registry, and port of departure
of the vessel, of its cargo, and
the cause of arrival which
declaration shall be visaed by
the authority or the consul, if
after examining the same it is
found to be acceptable, giving
the
captain
the
proper
certificate proving his arrival in
distress
and
the
reasons
therefor. In the absence of the
maritime authority or of the
consul, the declaration must be
made before the local authority;
9. To take the necessary steps
before the competent authority
in order to record in the
certificate of the vessel in the
registry
of
vessels
the
obligations which he may
contract in accordance with
Article 583;
10. To place under good care
and custody all the papers and
belongings of any members of
the crew who might die on the
vessel, drawing up a detailed
inventory, in the presence of
passengers,
or,
in
their
absence, of members of the
crew as witnesses;
11.
To
conduct
himself
according to the rules and
precepts contained in the
instructions of the ship agent,
being liable for all that which he
may do in violation thereof;

12. To inform the ship agent


from the port at which the
vessel arrives, of the reason of
his arrival, taking advantage of
the semaphore, telegraph, mail,
etc., as the case may be; to
notify him of the cargo he may
have received, stating the
names and domiciles of the
shippers, freightage earned,
and amounts borrowed on
bottomry loan; to advise him of
his departure, and of any
operation and date which may
be of interest to him;
13. To observe the rules with
respect to situation, lights and
maneuvers in order to avoid
collisions;
14. To remain on board, in case
the vessel is in danger, until all
hope to save it is lost, and
before abandoning it, to hear
the officers of the crew, abiding
by the decision of the majority;
and if the boats are to be taken
to, he shall take with him,
before anything else, the books
and papers, and then the
articles of most value, being
obliged to prove, in case of the
loss of the books and papers,
that he did all he could to save
them;
15. In case of wreck, to make
the proper protest in due form
at the first port of arrival,
before the competent authority
or the Philippine consul, within
24 hours, specifying therein all
the incidents of the wreck, in
accordance with subdivision 8
of this article;
16.
To
comply
with
the
obligations imposed by the laws
and regulations on navigation,
customs, health, and others.
c. Discretion powers
*A ships captain must be
accorded a reasonable measure
of discretionary authority to
decide what the safety of the
ship and of its crew and cargo
specifically
requires
on
a
stipulated ocean voyage.
Case:Inter-Orient Maritime
Enterprises Inc. v CA
3. Pilot
a. Concept
Pilot is a person duly qualified
and licensed to conduct a

4.
i.
ii.
iii.
iv.
5.

vessel into or out of ports or in


certain waters.
*Generally connotes a person
taken on board at a particular
place for the purpose of
conducting a ship through a
river, road or channel or from a
port.
*If he is in command, he
becomes the Master pro hac
vice.
*While exercising his functions
a pilot is in sole command of
the ship and supersedes the
master for the time being in the
command and navigation of the
ship; the master does not
surrender his vessel to the pilot
and the pilot is not the master.
There are occasions when the
master
may
and
should
interfere and even displace the
pilot, as when the pilot is
obviously
incompetent
or
intoxicated.
Case: Far Eastern Shipping
v CA
b. Relationship to master and
shipowner
Officers and crew of the vessel
Sailing mate/First mate
Second mate
Engineers marine engineers
Crew cabin boy; paramedics;
watchkeeper; radio officers
Supercargoes
person
who
discharges administrative duties
assigned to him by ship agent or
shippers, keeping an account and
record of transaction as required in
the accounting book of the captain.

E. Charter parties
1. Concept
Article 655 of the Code of
Commerce states that: Charter
parties executed by the captain in
the absence of the ship agent shall
be valid and effective, even though
in executing them he should have
acted in violation of the orders and
instructions of the ship agent or
shipowner; but the latter shall have
a right of action against the captain
for indemnification of damages.
Charter party is a lease contract
by which with the entire ship or
some principal part thereof is let by
the owner to another person for a
specified period of time or use.
2. Kinds; bareboat and contract of
affreightment

Kinds:
1. Bareboat or demise means
the whole vessel is lend to the
charterer which transfers to him
its
entire
command
and
possession and
consequent
control over its navigation,
including the master and crew
who are his servants. The
charterer is treated as owner
pro hac vice of the vessel. In
such case, a common carrier
becomes a private carrier.
*Charterer means the vessel
assumes all responsibilities of
navigation and provides his
own people.
*Shipowner is not liable to third
person; it is the charterer who
is liable to them.
General Rule: The charterer is
liable to the third person.
Exception: Shipowner may still
be held liable if the injury was
caused by unseaworthiness or
negligence of the shipowner
beyond before the demise or
bareboat took over.
2. Contract of affreightment
involves that use of shipping
space leased by the owner in
part or as a whole, to carry
goods for others.
*The shipowner retains the
possession,
command
and
navigation of the ship, the
charterer merely having use of
the space in the vessel in return
for his payment of the charter
hired.
*The shipowner is liable to third
person.
3. Persons qualified to make
charter
Q: Can the captain enter into a
charter contract?
A: YES provided that he is
authorized.
Q: Can the charterer enter into a
sub-charter contract?
A: YES provided it is not
prohibited. This is just like the rule
in lease.
4. Requisites of a valid charter
Article 652 of the Code of
Commerce states that: A charter
party must be drawn in duplicate
and signed by the contracting
parties, and when either does not
know how or is not able to do so,
by two witnesses at his request.

The charter party shall contain,


besides
the
conditions
freely
stipulated,
the
following
circumstances: 1. The kind, name,
and tonnage of the vessel; 2. Its
flag and port of registry; 3. The
name, surname, and domicile of
the captain; 4. The name, surname,
and domicile of the ship agent, if
the latter should make the charter
party; 5. The name, surname, and
domicile of the charterer; and if he
states that he is acting by
commission, that of the person for
whose account he makes the
contract; 6. The port of loading and
unloading; 7. The capacity, number
of
tons
or
the
weight
or
measurement
which
they
respectively bind themselves to
load and to transport, or whether
the charter party is total; 8. The
freightage to be paid, stating
whether it is to be a fixed amount
for the voyage or so much per
month, or for the space to be
occupied, or for the weight or
measure of the goods of which the
cargo consists, or in any other
manner whatsoever agreed upon;
9. The amount of primage to be
paid to the captain; 10. The days
agreed upon for loading and
unloading; 11. The lay days and
extra lay days to be allowed and
the demurrage to be paid for each
of them.
Requisites:
1. Consent of the contracting
parties
2. Existing vessel which should be
placed at the disposition of the
shipper
3. Freight
4. Compliance with Article 652 of
the Code of Commerce
5. Concept of and liability for
demurrage
Demurrage is the sum due, by
express contract, for the detention
of the vessel, in loading and
unloading,
beyond
the
time
allowed
in
the
contract
of
affreightment, and to any other
improper
detention
or
delay
beyond the time set for loading.
6. Rights
and
obligations
charter parties
Shipowner or Ship
agent

of
Charterer

If
the
vessel
is
chartered wholly, not
to accept cargo from
others
To observe represented
capacity
To
unload
cargo
clandestinely placed
To substitute another
vessel if load is less
than 3/5 of capacity
To leave the port if the
charterer
does
not
bring the cargo within
the lay days and extra
lay days allowed
To place in a vessel in a
condition to navigate;
to
bring
cargo
to
nearest neutral port in
case of war or blockade

To pay the
charter price

agreed

To pay freightage on
unboarded cargo
To pay losses to others
for
loading
uncontracted cargo or
illicit cargo
To wait if the vessel
needs repair
To pay expenses
deviation

for

F. Loans
on
Bottomry
and
Respondentia
1. Definition
Article 719 of the Code of
Commerce states that: A loan in
which
under
any
condition
whatever, the repayment of the
sum loaned and of the premium
stipulated depends upon the safe
arrival in port of the goods on
which it is made, or of the price
they may receive in case of
accident, shall be considered a loan
on bottomry or respondentia.
Bottomry is a loan secured by the
shipowner
or
ship
agent
guaranteed by the vessel itself and
payable only upon arrival of vessel
at destination.
*Captain may enter into bottomry
loan provided there is justification,
example of which is, for immediate
repairs.
Respondentia is a loan secured
by the owner of the cargo payable
upon safe arrival of cargo at
destination.
Barratry is an act of the captain or
crew for fraudulent purposes.
2. Distinguished from ordinary
loan
Ordinary Loan
With or without
collateral
Any
property
may be used as
collateral
Absolutely
payable
Obligation
to

Bottomry/Respondentia
Always with collateral
Property
is
vessel/cargo

limited

to

Conditionally payable
Loan is extinguished in the

was caused by damages suffered


by the vessel as a consequence of
being engaged in contraband, or if
it arose from having loaded the
Last lender is the first priority
merchandise on a vessel different
from that designated in the
Need to be in writing to be
contract, unless this change should
enforceable
have been made by reason of force
majeure. Proof of the loss as well as
3. Parties to the loan
of the existence of the vessel of the
Parties:
goods declared to the lender as the
1. Ship owner or ship agent
object of the loan is incumbent
2. Owner of the cargo
upon him who received the loan.
3. Lender
General Rule: If the property that
4. Formalities needed
was collateral was loss, the loan is
Article 720 of the Code of
extinguished.
Commerce states that: Loans on
Exceptions: 1. Perished due to
bottomry or respondentia may be
inherent defects; 2. Brought about
executed:
by malicious conduct of the
1. By means of a public instrument;
shipowner; 3. Barratry of the
2. By means of a policy signed by
captain; 4. Engaged in unlawful
the contracting parties and the
transaction; and 5. The cargo
broker taking part therein;
3. By means of a private
loaded on the vessel be different in
instrument.
from that agreed upon.
Under whichever of these forms the
*Commonality of all the exceptions
contract is executed, it shall be
is that the borrower is at fault.
6. Cases where loan is regarded
entered in the certificate of the
as simple loan
registry of the vessel and shall be
a. The loan must be made in
recorded in the registry of vessels,
connection with the maritime
without which requisites the credits
transaction otherwise the loan
of this kind shall not have, with
becomes a simple loan.
regard to other credits, the
b.
If the loan is bigger than the
preference which, according to
value of the collateral, the loan
their nature, they should have,
becomes a simple loan.
although the obligation shall be
pay still exists in
the event the
collateral
was
lost
First lender is
the first priority
Need not be in
writing to be
enforceable

event that the vessel/cargo


was lost

valid between the contracting


parties.
Formal Requirements: a. By
means of public instrument; b.
Policy signed by the contracting
parties and the broker taking part
therein; and c. by means of private
instrument.
Reason: Must be in writing to be
enforceable.
5. Effect of loss of on loan
Article 731 of the Code of
Commerce states that: The
actions pertaining to the lender
shall be extinguished by the
absolute loss of the goods on which
the loan was made, if it arose from
an accident of the sea at the time
and during the voyage designated
in the contract, and it is proven
that the cargo was on board; but
this shall not take place if the loss
was caused by the inherent defect
of the thing, or through the fault or
malice, of the borrower, or barratry
on the part of the captain, or if it

c. If the property is not exposed to


maritime peril.
Reason: To prevent abuse by the
borrower of the benefits of this
loan.
Article 726 of the Code of
Commerce states that: If the
lender should prove that he loaned
as amount larger than the value of
the object liable for the bottomry
loan, on account of fraudulent
measures
employed
by
the
borrower, the loan shall be valid
only for the amount at which said
object is appraised by experts. The
surplus principal shall be returned
with legal interests for the entire
time required for repayment.
Article 727 of the Code of
Commerce states that: If the full
amount of the loan contracted in
order to load the vessel should not
be used for the cargo, the balance
shall be returned before clearing.
The same procedure shall be

observed with regard to the goods


taken as loan, if they were not
loaded.
Article 728 of the Code of
Commerce states that: The loan
which the captain takes at the
point of residence of the owners of
the vessel shall only affect that
part thereof which belongs to the
captain, if the other owners or their
agents should not have given their
express authorization therefor or
should not have taken part in the
transaction. If one or more of the
owners should be requested to
furnish the amount necessary to
repair or provision the vessel, and
they should not do so within 24
hours, the interest which the
parties in default may have in the
vessel shall be liable for the loan in
the proper proportion. Outside of
the residence of the owners the
captain may contract loans in
accordance with the provisions of
Articles 583 and 611.
Article 729 of the Code of
Commerce provides that: Should
the goods on which money is taken
not be subjected to risk, the
contract shall be considered a
simple loan, with the obligation on
the part of the borrower to return
the principal and interest at the
legal rate, if that agreed upon
should not be lower.
G. Averages
1. Concept
Article 806 of the Code of
Commerce provides that: For the
purposes of this code the following
shall be considered averages: 1. All
extraordinary
or
accidental
expenses which may be incurred
during the voyage in order to
preserve the vessel, the cargo, or
both;
2.
Any
damages
or
deteriorations which the vessel
may suffer from the time it puts to
sea from the port of departure until
it casts anchor in the port of
destination, and those suffered by
the merchandise from the time
they are loaded in the port of
shipment until they are unloaded in
the port of their consignment.
2. Classes of average and the
persons liable
a. Simple average

Article 809 of the Code of


Commerce provides that: As a
general
rule,
simple
or
particular
averages
shall
include all the expenses and
damages caused to the vessel
or to her cargo which have not
inured to the common benefit
and profit of all the persons
interested in the vessel and her
cargo,
and
especially
the
following:
1. The losses suffered by the
cargo from the time of its
embarkation until it is
unloaded, either on account
of inherent defect of the
goods or by reason of an
accident of the sea or force
majeure, and the expenses
incurred to avoid and repair
the same;
2. The losses and expenses
suffered by the vessel in its
hull, rigging, arms, and
equipment, for the same
causes and reasons, from
the time it puts to sea from
the port of departure until it
anchors and lands in the
port of destination;
3. The losses suffered by the
merchandise
loaded
on
deck, except in coastwise
navigation, if the marine
ordinances allow it;
4. The wages and victuals of
the crew when the vessel is
detained or embargoed by
legitimate order or force
majeure, if the charter has
been contracted for a fixed
sum for the voyage;
5. The necessary expenses on
arrival at a port, in order to
make repairs or secure
provisions;
6. The lowest value of the
goods sold by the captain in
arrivals under stress for the
payment of provisions and
in order to save the crew, or
to meet any other need of
the vessel, against which
the proper amount shall be
charged;
7. The victuals and wages of
the crew while the vessel is
in quarantine;
8. The loss inflicted upon the
vessel or cargo by reason of

an impact or collision with


another, if it is accidental
and unavoidable. If the
accident
should
occur
through
the
fault
or
negligence of the captain,
the latter shall be liable for
all the losses caused;
9. Any loss suffered by the
cargo through the fault,
negligence, or barratry of
the captain or of the crew,
without prejudice to the
right of the owner to
recover the corresponding
indemnity from the captain,
the
vessel,
and
the
freightage.
General
Rule:
No
reimbursement
Principle: Loss will lie where it
falls
Reason:
There
was
no
common benefit
Exception: if there is insurance
Exception to the Exception:
Stipulated in the insurance
policy stating no liability on the
part of the insurer regarding
particular average.
Article 810 of the Code of
Commerce provides that: The
owner of the goods which gave
rise to the expense or suffered
the damage shall bear the
simple or particular averages.
Q: Who is liable?
A: Owner of the goods
b. General average
Article 811 of the Code of
Commerce provides that: As a
general rule, general or gross
averages shall include all the
damages and expenses which
are deliberately caused in order
to save the vessel, its cargo, or
both at the same time, from a
real and known risk, and
particularly the following:
1. The goods or cash invested
in the redemption of the
vessel or of the cargo
captured
by
enemies,
privateers, or pirates, and
the provisions, wages, and
expenses of the vessel
detained during the time
the
settlement
or
redemption is being made;
2. The goods jettisoned to
lighten the vessel, whether
they belong to the cargo, to

the vessel, or to the crew,


and the damage suffered
through said act by the
goods which are kept on
board;
3. The cables and masts which
are cut or rendered useless,
the anchors and the chains
which are abandoned, in
order to save the cargo, the
vessel, or both;
4. The expenses of removing
or transferring a portion of
the cargo in order to lighten
the vessel and place it in
condition to enter a port or
roadstead, and the damage
resulting therefrom to the
goods
removed
or
transferred;
5. The damage suffered by the
goods of the cargo by the
opening made in the vessel
in order to drain it and
prevent its sinking;
6. The expenses caused in
order to float a vessel
intentionally stranded for
the purpose of saving it;
7. The damage caused to the
vessel which had to be
opened, scuttled or broken
in order to save the cargo;
8. The
expenses
for
the
treatment and subsistence
of the members of the crew
who
may
have
been
wounded or crippled in
defending or saving the
vessel;
9. The wages of any member
of the crew held as hostage
by enemies, privateers, or
pirates, and the necessary
expenses which he may
incur in his imprisonment,
until he is returned to the
vessel or to his domicile,
should he prefer it;
10. The wages and victuals of
the crew of a vessel
chartered by the month,
during the time that it is
embargoed or detained by
force majeure or by order of
the government, or in order
to
repair
the
damage
caused for the common
benefit;
11. The depreciation resulting in
the value of the goods sold

at arrival under stress in


order to repair the vessel by
reason of gross average;
12. The
expenses
of
the
liquidation of the average.
Article 812 of the Code of
Commerce provides that: In
order to satisfy the amount of
the gross or general averages,
all the persons having an
interest in the vessel and cargo
therein at the time of the
occurrence of the average shall
contribute.
Article 813 of the Code of
Commerce provides that: In
order to incur the expenses and
cause
the
damages
corresponding to gross average,
there must be a resolution of
the captain, adopted after
deliberation with the sailing
mate and other officers of the
vessel, and after hearing the
persons interested in the cargo
who may be present. If the
latter shall object, and the
captain and officers or a
majority of them, or the
captain, if opposed to the
majority,
should
consider
certain measures necessary,
they may be executed under
his
responsibility,
without
prejudice to the right of the
shippers to proceed against the
captain before the competent
judge or court, if they can prove
that he acted with malice, lack
of skill, or negligence. If the
persons interested in the cargo,
being on board the vessel, have
not been heard, they shall not
contribute to the gross average,
their share being chargeable
against the captain, unless the
urgency of the case should be
such that the time necessary
for previous deliberations was
wanting.
Article 816 of the Code of
Commerce states that: In
order that the goods jettisoned
may be included in the gross
average and the owners thereof
be entitled to indemnity, it shall
be necessary insofar as the
cargo is concerned that their
existence on board be proven
by means of the bill of lading;
and with regard to those

belonging to the vessel, by


means
of
the
inventory
prepared before the departure
in accordance with the first
paragraph of Article 812.
Article 817 of the Code of
Commerce states that: if in
lightning a vessel on account of
a storm, in order to facilitate its
entry into a port or roadstead,
part of the cargo should be
transferred to lighters or barges
and be lost, the owner of said
part shall be entitled to
indemnity, as if the loss had
originated
from
a
gross
average, the amount thereof
being distributed between the
vessel and cargo from which it
came. If, on the contrary, the
merchandise transferred should
be saved and the vessel should
be lost, no liability may be
demanded of the salvage.
Article 818 of the Code of
Commerce states that: If, as a
necessary
measure
to
extinguish a fire in port,
roadstead, creek, or bay, it
should be decided to sink any
vessel, this loss shall be
considered gross average, to
which the vessels saved shall
contribute.
Article 732 of the Code of
Commerce
provides
that:
Lenders
on
bottomry
or
respondentia shall suffer, in
proportion to their respective
interest, the general average
which may take place in the
goods on which the loan is
made. In particular averages, in
the absence of an express
agreement
between
the
contracting parties, the lender
on bottomry or respondentia
shall
also
contribute
in
proportion to his respective
interest, should it not belong to
the kind of risks excepted in the
foregoing article.
Article 859 of the Code of
Commerce provides that: The
insurers of the vessel of the
freightage, and of the cargo
shall be obliged to pay for the
indemnification of the gross
average, insofar as is required
of each one of these objects
respectively.

Article 860 of the Code of


Commerce provides that: If,
notwithstanding the jettison of
merchandise,
breakage
of
masts, ropes, and equipment,
the vessel should be lost
running the same risk, no
contribution
whatsoever
by
reason of gross average shall
be proper. The owners of the
goods saved shall not be liable
for the indemnification of those
jettisoned, lost, or damaged.
Article 861 of the Code of
Commerce provides that: If,
after the vessel has been saved
from the risk which gave rise to
the jettison, it should be lost
through another accident taking
place during the voyage, the
goods saved and existing from
the first risk shall continue
liable to contribution by reason
of the gross average according
to their value in the condition in
which they may be found,
deducting
the
expenses
incurred in saving them.
Remedy: Reimbursement
General Rule: The sacrifice
made must be in the course of
the voyage.
Exceptions: General average
exists even if there is no
voyage yet: 1. Article 817 of the
Code of Commerce which
covers fire in the port; and 2.
Article 818 of the Code of
Commerce
which
covers
transfer of cargo to another
vessel for the necessity to enter
another port.
Requisites:
1. Exposure
to
common
danger to ship and the
cargo after it has been
loaded
whether
during
voyage or port of loading
and unloading;
2. That for the common safety
part of the vessel or the
cargo or both is sacrificed
deliberately;
3. That from the expenses or
damages caused follows the
successful saving of the
vessel and cargo;
4. That
the
expenses
or
damages should have been
incurred or inflicted after

taking legal steps and


authority
Formalities:
1. There must be a resolution
of the captain, adopted
after a deliberation with the
other officers of the vessel
and
after
hearing
all
persons interested in the
cargoes.
If
the
latter
disagree, the decision of the
captain should prevail but
they shall register their
objections.
2. The resolution must be
entered in the logbook,
stating the reasons and
motives for the dissent, and
the irresistible and urgent
causes if he acted in his
own accord. It must be
signed, in the first case, by
all persons present in the
hearing. In the second case,
by the captain and all the
officers of the vessel. The
minutes must also contain a
detail of all the goods
jettisoned and those injuries
caused to those on board.
H. Collisions
1. Definition
Collision is an impact of two
vessels both of which are moving.
Allision is an impact between a
moving vessel and a stationary
one.
Possible damage:
a. Damage to vessel
b. Loss/damage to cargo
c. Injury or death of passenger
Example:
Q: A and B collided, A was found to
be negligent, who bears the
consequential damages?
A: A shall be liable for the
consequential damages for she is
at fault.
Q: What if A and B were found to
be negligent, who bears the
consequential damages?
A: With regard to the vessel, each
vessel shall be liable for their own
losses. With regard to the cargoes
and passengers, they are solidarily
liable.
2. Zones in collision (Doctrine of
error in extremis)

*Knowing
these
zones
are
important for liability purposes.
1. First zone all time up to the
moment when risk of collision
begins
2. Second zone time between
moment when risk of collision
begins and moment it becomes
a practical certainty.
*It is in this period where
conduct of the vessels is
primordial. It is in this zone that
vessels must strictly observe
nautical
rules
unless
a
departure therefrom becomes
necessary to avoid imminent
danger.
3. Third zone time when collision
is certain and time of impact.
*An error in this zone would no
longer be legally consequential.
Doctrine of Error in Extremis is
a sudden movement made by a
faultless vessel during the third
zone of collision with another
vessel which is at fault during the
second zone. Even if such sudden
movement
is
wrong,
no
responsibility will fall on said
faultless vessel.
Doctrine of Last Clear Chance
provides
that
a
negligent
defendant is held liable to a
negligent plaintiff or even to a
plaintiff who has been grossly
negligent where he should have
been aware of it in the reasonable
exercise of due care, had in fact an
opportunity later than that of the
plaintiff to avoid an accident.
*In this doctrine, both parties are at
fault but only one party is liable.
Only the party who has the last
clear opportunity to avoid the
impact is held liable.
*This doctrine is inapplicable in the
following instances:
1. If the suit is between a parties of
contract of carriage; and
2. In case of collision of vessels
3. Rule on liability
Article 826 of the Code of
Commerce provides that: If a
vessel should collide with another,
through the fault, negligence, or
lack of skill of the captain, sailing
mate, or any other member of the
complement, the owner of the
vessel at fault shall indemnify the

losses and damages suffered, after


an expert appraisal.
Article 827 of the Code of
Commerce provides that: If the
collision is imputable to both
vessels, each one shall suffer its
own damages, and both shall be
solidarily responsible for the losses
and damages occasioned to their
cargoes.
*This is known as the Doctrine of
Inscrutable Fault.
Doctrine of Inscrutable Fault
provides that in case of collision
where it cannot be determined
which between the two vessels was
at fault, both vessels bear their
respective damage, but both
should be solidarily liable for
damage to the cargo of both
vessels.
Article 828 of the Code of
Commerce states that: The
provisions of the preceding article
are applicable to the use in which it
cannot be determined which of the
two vessels has caused the
collision.
Article 829 of the Code of
Commerce states that: In the
cases above mentioned the civil
action of the owner against the
person causing the injury as well as
the criminal liabilities, which may
be proper, are reserved.
Article 830 of the Code of
Commerce states that: If a vessel
should
collide
with
another,
through fortuitous event or force
majeure, each vessel and its cargo
shall bear its own damages.
Requisites:
1. The natural disaster must have
been the proximate and only
cause of the loss;
2. The common carrier must have
exercised due diligence to
prevent or minimize loss before,
during and after the occurrence
of the natural disaster;
3. The common carrier must not
have been guilty of delay; and
4. The captain must have made a
protest before the competent
authority at the first port he
touched within the 24 hours
following his arrival, and should
have ratified it within the same
period when he arrived at the
port of destination, proceeding

immediately with the proof of


the facts, without opening the
hatches until after this has
been done.
Article 831 of the Code of
Commerce provides that: If a
vessel should be forced by a third
vessel to collide with another, the
owner of the third vessel shall
indemnify the losses and damages
caused, the captain thereof being
civilly liable to said owner.
*This is known as the Doctrine of
Proximate Cause
Article 832 of the Code of
Commerce states that: If by
reason of a storm or other cause of
force majeure, a vessel which is
properly anchored and moored
should collide with those nearby,
causing them damages, the injury
occasioned shall be considered as
particular average of the vessel run
into.
4. Limited liability rule
*There must be no fault on the part
of the shipowner.
*The fault falls only with his crew.
Article 837 of the Code of
Commerce states that: The civil
liability incurred by the shipowners
in the case prescribed in this
section, shall be understood as
limited to the value of the vessel
with all its appurtenances and
freightage.
I.

Arrival under stress


1. Concept
The arrival of a vessel at the
nearest and most convenient port
instead of the port of destination, if
during the voyage the vessel
cannot continue the trip to the port
of destination.
Article 819 of the Code of
Commerce provides that: If
during the voyage the captain
should believe that the vessel can
not continue the trip to the port of
destination on account of the lack
provisions, well founded fear of
seizure, privateers, or pirates, or by
reason of any accident of the sea
disabling it to navigate, he shall
assemble the officers and shall
summon the persons interested in
the cargo who may be present, and
who may attend the meeting
without the right to vote; and if,
after examining the circumstances

of the case, the reason should be


considered
well-founded,
the
arrival at the nearest and most
convenient port shall be agreed
upon, drafting and entering the
proper minutes, which shall be
signed by all, in the log book. The
captain shall have the deciding
vote, and the persons interested in
the
cargo,
may
make
the
objections and protests they may
deem proper, which shall be
entered in the minutes in order
that they may make use thereof in
the manner they may consider
advisable.
2. When improper
Article 820 of the Code of
Commerce provides that: An
arrival shall not be considered
lawful in the following cases:
1. If the lack of provisions should
arise from the failure to take
the necessary provisions for the
voyage according to usage and
customs, or if they should have
been rendered useless or lost
through
bad
stowage
or
negligence in their care;
2. If
the
risk
of
enemies,
privateers, or pirates should not
have
been
well
known,
manifest, and based on positive
and provable facts;
3. If the defect of the vessel
should have arisen from the
fact that it was not repaired,
rigged, equipped, and prepared
in a manner suitable for the
voyage,
or
from
some
erroneous order of the captain;
4. When malice, negligence, want
of foresight, or lack of skill on
the part of the captain exists in
the act causing the damage.
3. Expenses
Article 821 of the Code of
Commerce provides that: The
expenses of an arrival under stress
shall always be for the account of
the shipowner or agent, but they
shall not be liable for the damages
which may be caused the shippers
by reason of the arrival, provided
the latter is legitimate. Otherwise,
the ship agent and the captain
shall be jointly liable.
Article 822 of the Code of
Commerce provides that: If in
order to make repairs to the vessel
or because there is danger that the

cargo may suffer, it should be


necessary to unload, the captain
must request the authorization
from the competent judge or court
for the removal, and carry it out
with the knowledge of the person
interested in the cargo, or his
representative, should there be
any. In a foreign port, it shall be the
duty of the Philippine Consul,
where there is one, to give the
authorization. In the first case, the
expenses shall be for the account
of the ship agent or owner, and in
the
second,
they
shall
be
chargeable against the owners of
the merchandise for whose benefit
the act was performed. If the
unloading should take place for
both reasons, the expenses shall
be divided proportionately between
the value of the vessel and that of
the cargo.
4. Custody of Cargo
Article 823 of the Code of
Commerce provides that: The
custody and preservation of the
cargo which has been unloaded
shall be intrusted to the captain,
who shall be responsible for the
same, except in cases of force
majeure.
Article 824 of the Code of
Commerce states that: If the
entire cargo or part thereof should
appear to be damaged, or there
should be imminent danger of its
being damaged, the captain may
request of the competent judge or
court, or of the consul in a proper
case, the sale of all or of part of the
former, and the person taking
cognizance of the matter shall
authorize it, after an examination
and
declaration
of
experts,
advertisements,
and
other
formalities required by the case,
and an entry in the book, in
accordance with the provisions of
Article 624. The captain shall, in
proper case, justify the legality of
his conduct, under the penalty of
answering to the shipper for the
price the merchandise would have
brought if they had arrived in good
condition
at
the
port
of
destination.
5. Captains liability
Article 825 of the Code of
Commerce states that: The
captain shall be responsible for the

damages caused by his delay, if


after the cause of the arrival under
stress has ceased, he should not
continue the voyage. If the cause
of arrival should have been the fear
of enemies, privateers, or pirates, a
deliberation and resolution in a
meeting of the officers of the
vessel and persons interested in
the cargo who may be present, in
accordance with the provisions
contained in Article 819, shall
precede the departure.
6. Rules in case of shipwreck
Shipwreck denotes all types of
loss/ wreck of a vessel at sea either
by being swallowed up by the
waves, by running against another
vessel or thing at sea or on coast
where the vessel is rendered
incapable of navigation.
Article 840 of the Code of
Commerce provides that: The
losses and deteriorations by a
vessel and her cargo by reason of
shipwreck or stranding shall be
individually for the account of the
owners, the part which may be
saved belonging to them in the
same proportion.
Article 841 of the Code of
Commerce states that: If the
wreck or stranding should be
caused by the malice, negligence,
or lack of skill of the captain, or
because the vessel put to sea was
insufficiently
repaired
and
equipped, the ship agent or the
shippers may demand indemnity of
the captain for the damages
caused to the vessel or to the
cargo
by
the
accident,
in
accordance with the provisions
contained in Articles 610, 612, 614,
and 621.
Article 842 of the Code of
Commerce states that: The
goods saved from the wreck shall
be specially bound for the payment
of the expenses of the respective
salvage, and the amount thereof
must be paid by the owners of the
former before they are delivered to
them, and with preference over any
other obligation if the merchandise
should be sold.
Article 843 of the Code of
Commerce states that: If several
vessels sail under convoy, and any
of them should be wrecked, the
cargo saved shall be distributed

among the rest in proportion to the


amount which each one is able to
take. If any captain should refuse,
without sufficient cause, to receive
what may correspond to him, the
captain of the wrecked vessel shall
enter a protest against him, before
two sea officials, of the losses and
damages
resulting
therefrom,
ratifying the protest within 24
hours after arrival at the first port,
and including it in the proceedings
he must institute in accordance
with the provisions contained in
Article 612. If it is not possible to
transfer to the other vessels the
entire cargo of the vessel wrecked,
the goods of the highest value and
smallest volume shall be saved
first, the designation thereof to be
made by the captain with the
concurrence of the officers of his
vessel.
Article 844 of the Code of
Commerce provides that: A
captain who may have taken on
board the goods saved from the
wreck shall continue his course to
the port of destination, and on
arrival shall deposit the same, with
judicial intervention, at the disposal
of their legitimate owners. In case
he changes his course, if he can
unload them at the port of which
they were consigned, the captain
may make said port if the shippers
or supercargoes present and the
officers and passengers of the
vessel consent thereto; but he may
not do so, even with said consent,
in time of war or when the port is
difficult and dangerous to make.
The owners of the cargo shall
defray all the expenses of this
arrival as well as the payment of
the freightage which, after taking
into
consideration
the
circumstances of the case, may be
fixed by agreement or by a judicial
decision.
Article 845 of the Code of
Commerce provides that: If on
the vessel there should be no
person interested in the cargo who
can
pay
the
expenses
and
freightage corresponding to the
salvage, the competent judge or
court may order the sale of the part
necessary to cover the same. This
shall also be done when its

preservation is dangerous, or when


in a period of one year it should not
have been possible to ascertain
who are its legitimate owners. In
both cases the proceedings shall
be
with
the
publicity
and
formalities prescribed in Article
579, and the net proceeds of the
sale shall be safely deposited, in
the discretion of the judge or court,
so that they may be delivered to
the legitimate owner thereof.
*It is the loss of the vessel at sea
as a consequence of its grounding,
or running against an object in sea
or on the coast. It occurs when the
vessel sustains injuries due to a
marine
peril
rendering
her
incapable of navigation.
*The rules on collision or allusion,
as may be pertinent, can equally
apply to shipwrecks.
J.

Salvage
1. Definition
Salvage - Compensation allowed
to persons by whose voluntary
assistance a ship at sea or her
cargo or both have been saved in
whole or in part from an impending
or
actual
peril,
shipwrecks,
derelicts or recapture
- Services one person render to the
owner of a ship or goods, by his
own labor, preserving the goods or
the ship which the owner or those
entrusted with the care of them
have either abandoned in distress
at sea, or are unable to protect or
secure.
2. Rights
and
obligations
of
salvors and owners (Salvage
Law)
Salvors
Entitled
to
compensation
for
services rendered
Acquires a lien upon
the property salvaged
until he is compensated

To all intents and


purposes, he is a joint
owner
and
if
the
property is lost he must
bear his share
Acquires the right of
possession of derelict

Owners
He does not renounce
his right to the derelict
Has a right to the
delivery of the vessel or
things saved after the
salvage
is
accomplished, provided
he pays or gives a bond
Should make a claim
within 3 months after
the publication of a
salvage
report,
otherwise the thing
saved shall be sold
Entitled to the salvage
reward for the use of

his vessel in rendering*Also called as round trip ticket.


salvage services High Contracting Party is one of the
original parties to the convention.
When inapplicable:
1. When public policy is contradicted;
2. If
the
requirement
under
the
Convention are not complied with
Transportation
Documents:
WARSAW CONVENTION:
a.
Passenger
passenger ticket
Warsaw Convention is an agreement
b. Checked-in baggage baggage check
among sovereign countries concerning the
c. Goods to be shipped airway bill
regulation in a uniform manner of the
Liability
of carrier for damages:
conditions of international transportation by
1. Death or injury of a passenger if the
air in respect of the documents used for such
accident causing it took place on board
transportation and of the liability of the
the aircraft or in the course of its
carrier.
operations
of
embarking
or
Signed on October 12, 1929 in Warsaw,
disembarking;
Poland.
2. Destruction, loss or damage to any
baggage or goods, if it took place
Purpose: To protect the emerging air
during the transportation by air; and
transportation industry and to secure the
3.
Delay
in
the
transportation
of
uniformity of recovery by the passengers.
passengers, baggage or goods.
Limit of Liability:
Applicability: The transportation must be:
1. Passenger:
1. International transportation
In case of death or injury, general
rule: 100,000 STR per passenger
2. Air transportation
*1.51 US Dollar
Exception: Agreement to a higher
3. Carriage of passengers, baggage or
limit
goods
In case of delay, 4150 STR per
*The Warsaw Convention shall also apply to
passenger
fortuitous events affecting transportation by
2. Checked in baggage:
aircraft performed by an air transportation
General Rule: 20 STR per kilogram
enterprise.
Exception:
In
case
of
special
*The Convention is likewise applicable to air
declaration of value and payment of a
transportation by legal entities constituted
supplementary sum by consignor,
under public law of the High Contracting
carrier is liable to not more than the
Parties.
declared sum unless it proves the sum
*The
Convention
does
not
apply
to
is greater than actual value.
transportation performed under the terms of
3. Hand carried baggage: 1000 STR per
any international postal convention.
passenger
International
Transportation
is
any
4. Goods to be shipped:
transportation in which the place of departure
General Rule: 17 STR per kilogram
and the place of destination are situated
Exception:
In
case
of
special
either:
declaration of value and payment of a
1. Within the territories of two High
supplementary sum by consignor,
Contracting Parties regardless of
carrier is liable to not more than the
whether or not there be a break in the
declared sum unless it proves the sum
transportation or transhipment; or
is greater than actual value.
Controlling: Two territories must be
Action for damages:
High Contracting Parties
1. Notice of claim
*Also called as one way ticket
2. Within the territory of a single High
*A written complaint must be made
Contracting Parties, if there is an
within: 3 days from receipt of
agreed stopping place within a
baggage; 7 days from receipt of
territory subject to the sovereignty,
goods; in case of delay, 14 days
mandate or authority of another
from receipt of baggage/goods.
power, even though that power is not a
party to the Convention.
*The complaint is a condition
Controlling: There must be a
precedent. Without the complaint,
stopping place in another territory.
for purposes of a
salvage claim
Entitled to half of the
deposit of the derelict
sold, if after the lapse
of 3 years no claim was
made

the action is barred except in case


of fraud on the part of the carrier.
2. Prescriptive period
*Action must be filed within 2 years
from:
a. The date of arrival at the
destination
*An
intermediate
place
where carriage may be
broken is not a place of
destination.
b. The date of expected arrival
c. The date on which
transportation stopped
Venue:

the

At the option of the plaintiff, the action for


damages may be filed in the:
1. Court of domicile of the carrier;
2. Court of its principal place of business;
3. Court where it has a place of business
through which the contract has been
made; or
4. Court of the place of destination.
*In Santos III v Northwest Airline, the SC
held that the forum of action is a matter of
jurisdiction rather than of venue.