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Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

Transportation
Law
Review
Based on the lectures of:
Atty. Melissa Romana
Suarez

who wants to avail of the services of transporting


persons or things.

Starring: Shyler, the cab beetle.

Q: To be a common carrier, must one be engaged in


the transport of goods/passengers primarily?

A: No. Still considered common carrier --APPLICABLE LAW


1.) De Guzman vs. CA - even if the carriage of
goods or pax is only an ancillary or sideline, that
person can still be considered a cc. Even if the
transportation is merely occasional, sporadic or
not on a regular basis. Even though the
transporation is offered only to a narrow segment
of the general population. And lastly, even if he
has not secured a certificate of public
convenience.

Art. 1766. In all matters not regulated by this Code,


the rights and obligations of common carriers shall be
governed by the Code of Commerce and by special
laws.
The primary law in transportation law is the civil code,
particularly the provisions on common carriers. The
suppletory laws are the Code of Commerce, and
special laws like the COGSA (Carriage of Goods by
Sea Act), Salvage Law, Warsaw Convention, Tariff
and Customs Code.
What is transportation?
It is a movement of things or persons from one place
to another; a carrying across.
What does transportation include?
1. Waiting time - just because a person is in the
airport waiting for the flight to board, does not mean
that transportation has not started.
2. Loading and unloading
transportation of goods

with

respect

to

3. Stopping in transit - when one takes a long flight,


transit stops are also included even if passenger is
required to disembark and take all his belongings with
him.
4. All other accessorial services in connection with the
loaded movement -- so it could be anything, like when
you are in HK, you are allowed to check-in the City,
the movement of your luggage from the city check in
to the airport is already included in the term
transportation.
DEFINITION OF COMMON CARRIER (CC)
Art. 1732. 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.
Elements:
1. must be a person, association, corporation, or firms
2. Engaged in a business
3. Transports persons or goods or both by land, water
or air
4. Offers service to the public
5. Accepts compensation for services
If one element is missing, then it is not a common
carrier.
National Steel vs. CA 283 SCRA 45 (True test of
Common carrier)
The carriage of goods and passengers provided it has
space for all who opt to avail themselves of its
transportation for a fee.
This means that if you are a carrier, you cannot
discriminate. You have to provide space for everyone

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Fx: Facts: Ernesto Cendaa, a junk dealer, was


engaged in buying up used bottles and scrap metal in
Pangasinan. Upon gathering sufficient quantities of
such scrap material, Cendaa would bring such
material to Manila for resale. He utilized 2 six-wheeler
trucks which he owned for hauling the material to
Manila. On the return trip to Pangasinan, Cendaa
would load his vehicles with cargo which various
merchants
wanted
delivered
to
differing
establishments in Pangasinan. For that service,
Cendaa charged
freight rates which were commonly lower than regular
commercial rates. Sometime in November 1970,
Pedro de Guzman, a merchant and authorized dealer
of General Milk Company (Philippines), Inc. in
Urdaneta, Pangasinan, contracted with Cendaa for
the hauling of 750 cartons of Liberty filled milk from a
warehouse of General Milk in Makati, Rizal, to de
Guzmans establishment in Urdaneta on or before 4
December 1970. Accordingly, on 1 December 1970,
Cendaa loaded in Makati the merchandise on to his
trucks: 150 cartons were loaded on a truck driven by
Cendaa himself; while 600 cartons were placed on
board the other truck which was driven by Manuel
Estrada, Cendaa s driver and employee. Only 150
boxes of Liberty filled milk were delivered to de
Guzman. The other 600 boxes never reached de
Guzman, since the truck which carried these boxes
was hijacked somewhere along the MacArthur
Highway in Paniqui, Tarlac, by armed men who took
with them the truck, its driver, his helper and the
cargo.
Held: Article 1732 of the Civil Code makes no
distinction between one whose principal business
activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary
activity (in local idiom, as a sideline). Article 1732
also carefully avoids making any distinction between
a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between
a carrier offering its services to the general public,
i.e., the general community or population, and one
who offers services or solicits business only from a
narrow segment of the general population. Article
1733 deliberately refrained from making such
distinctions.
Cendaa is properly characterized as a common
carrier even though he merely back-hauled goods
for other merchants from Manila to Pangasinan,
although such backhauling was done on a periodic or
occasional rather than regular or scheduled manner,

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

and even though Cendaas principal occupation was


not the carriage of goods for others. There is no
dispute that Cendaa charged his customers a fee for
hauling their goods; that fee frequently fell below
commercial freight rates is not relevant.

Held: No. Petitioner contends that respondent did not


observe the standard of care required of a common
carrier when it informed her wrongly of the flight
schedule. She could not be deemed more negligent
than respondent since the latter is required by law to
exercise extraordinary diligence in the fulfillment of its
obligation. If she were negligent at all, the same is
merely contributory and not the proximate cause of
the damage she suffered. Her loss could only be
attributed to respondent as it was the direct
consequence of its employees gross negligence.

A certificate of public convenience is not a requisite


for the incurring of liability under the Civil Code
provisions governing common carriers. That liability
arises the moment a person or firm acts as a common
carrier, without regard to whether or not such carrier
has also complied with the requirements of the
applicable regulatory statute and implementing
regulations and has been granted a certificate of
public convenience or other franchise.

Petitioners contention has no merit.


By definition, a contract of carriage or transportation is
one whereby a certain person or association of
persons obligate themselves to transport persons,
things, or news from one place to another for a fixed
price. Such person or association of persons are
regarded as carriers and are classified as private or
special carriers and common or public carriers. A
common carrier is defined under Article 1732 of the
Civil Code as 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.

2. FPIC vs. CA - still a common carrier even if the


mode of transportation is not a motor vehicle (in
this case, pipeline) for as long as all the
requisites/elements of a cc are present. Here, it is
not the pipeline that moves, it is the oil.
3. Asia Lighterage vs. CA (2003) -- even if it has no
fixed and publicly known route, maintains no
terminals and issues no tickets
4. Calvo vc. UCPB - even if it is not in the business
of public transportation; here, Calvo was a
customs broker.

It is obvious from the above definition that respondent


is not an entity engaged in the business of
transporting either passengers or goods and is
therefore, neither a private nor a common carrier.
Respondent did not undertake to transport petitioner
from one place to another since its covenant with its
customers is simply to make travel arrangements in
their behalf. Respondents services as a travel agency
include procuring tickets and facilitating travel permits
or visas as well as booking customers for tours.

5. Schmitz vs. TVI - even if the mode of transport is


not owned by him
6. Bascos vs. CA - even if the contract is not a
contract of carriage. Here, what was entered into
was a contract of lease of the truck. The goods were
lost and the defense was that what was entered into
was a lease contract. According to the SC, the name
of the contract does not matter, for as long as the
requisites are present, then that person is considered
a common carrier.

While petitioner concededly bought her plane ticket


through the efforts of respondent company, this does
not mean that the latter ipso facto is a common
carrier. At most, respondent acted merely as an agent
of the airline, with whom petitioner ultimately
contracted for her carriage to Europe. Respondents
obligation to petitioner in this regard was simply to
see to it that petitioner was properly booked with the
airline for the appointed date and time. Her transport
to the place of destination, meanwhile, pertained
directly to the airline.

WHO ARE NOT CONSIDERED COMMON


CARRIER?
FGU vs. Sarmiento (2002) - Truck owned by
Sarmiento carrying refrigerators belonging to shipper,
Concepcion Industries. Here, SC said that Sarmiento
was not a common carrier because it was the
exclusive hauler of Concepcion Industries.

The object of petitioners contractual relation with


respondent is the latters service of arranging and
facilitating petitioners booking, ticketing and
accommodation in the package tour. In contrast, the
object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the
contract between the parties in this case was an
ordinary one for services and not one of carriage.
Petitioners submission is premised on a wrong
assumption.

GPS, being an exclusive contractor and hauler of


Concepcion Industries, Inc., rendering or offering its
services to no other individual or entity, cannot be
considered a common carrier. 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 hire or
compensation, offering their services to the public,[8]
whether to the public in general or to a limited
clientele in particular, but never on an exclusive basis.
The true test of a common carrier is the carriage of
passengers or goods, providing space for those who
opt to avail themselves of its transportation service for
a fee.Given accepted standards, GPS scarcely falls
within the term common carrier. BUT GPS is still
liable based on the contract. However, there is no
presumption of negligence in case of loss.

DILIGENCE REQUIRED:
Art. 1733. 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.

2. Crisostomo vs. CA (2003) Is a travel agency a


common carrier?
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Such extraordinary diligence in the vigilance over the


goods is further expressed in Articles 1734, 1735, and

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

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.
Notes:
1. What is Extra Ordinary Diligence (XOD)? That
extreme measure of care and caution which persons
of which unusual prudence and circumspection use
for securing and preserving their own properties or
rights. (National Trucking and Forwarding Corp. vs.
Lorenzo Shipping (2005))
Facts: DOH and CARE signed an agreement where
CARE would acquire from the US donations to be
transported to the Philippines. To deliver the goods
within the Phil, DOH entered into a contract with
NTFC. NTFC shipped the goods through Lorenzo
Shipping. The consignee was A, NTFCs branch
manager. LS delivered the goods but when it
requested A to return the bills of ladings, A merely
returned certified true copies thereof. Every after
delivery, A and his subordinates signed a delivery
receipt. Despite delivery however, it was alleged that
the goods were never received.
LS invoked that it exercised XOD, and thus was not
liable for the loss.
Held: Is LS presumed to be at fault for the loss of the
goods?
No - Article 173 of the Civil Code demands that a
common carrier observe extraordinary diligence over
the goods transported by it. Extraordinary diligence is
that extreme measure of care and caution which
persons of unusual prudence and circumspection use
for securing and preserving their own property or
rights. This exacting standard imposed on common
carriers in a contract of carriage of goods is intended
to tilt the scales in favor of the shipper who is at the
mercy of the common carrier once the goods have
been lodged for shipment. Hence, in case of loss of
goods in transit, the common carrier is presumed
under the law to have been at fault or negligent.
However, the presumption of fault or negligence, may
be overturned by competent evidence showing that
the common carrier has observed extraordinary
diligence over the goods.
In the instant case, we agree with the court a quo that
the respondent adequately proved that it exercised
extraordinary diligence. Although the original bills of
lading remained with petitioner, respondents agents
demanded from Abdurahman the certified true copies
of the bills of lading. They also asked the latter and in
his absence, his designated subordinates, to sign the
cargo delivery receipts.
This practice, which respondents agents testified to
be their standard operating procedure, finds support
in Article 353 of the Code of Commerce. Conformably
with the aforecited provision, the surrender of the
original bill of lading is not a condition precedent for a
common carrier to be discharged of its contractual
obligation. If surrender of the original bill of lading is
not possible, acknowledgment of the delivery by
signing the delivery receipt suffices.
2. In PAL vs. CA 106 S 391 - SC said that the duty of
to exercise the duty of utmost diligence on the part of
the CC is for the safety of passengers, as well as
members of the crew.
If you are part of the crew, and you are injured, you
can sue the the CC and the CC cannot invoke that it is

not required to exercise XOD. So there is no


discrimination between crew and passengers.
The duty to exercise the utmost diligence on the part
of common carriers is for the safety of passengers as
well as for the members of the crew or the
complement operating the carrier, the airplane in the
present case. And this must be so for any omission,
lapse or neglect thereof will certainly result to the
damage, prejudice, nay injuries and even death to all
aboard the plane, passengers and crew members
alike.
3. Benedicto vs. IAC - The prevailing doctrine on
common carriers makes the registered owner liable
for consequences flowing from the operations of the
carrier, even though the specific vehicle involved may
already have been transferred to another person. This
doctrine rests upon the principle that in dealing with
vehicles registered under the Public Service Law, the
public has the right to assume that the registered
owner is the actual or lawful owner thereof It would be
very difficult and often impossible as a practical
matter, for members of the general public to enforce
the rights of action that they may have for injuries
inflicted by the vehicles being negligently operated if
they should be required to prove who the actual owner
is. The registered owner is not allowed to deny liability
by proving the identity of the alleged transferee. Thus,
contrary to petitioner's claim, private respondent is not
required to go beyond the vehicle's certificate of
registration to ascertain the owner of the carrier.
4. BA Finance vs. CA - the registered owner, the
defendant-appellant herein, is primarily responsible for
the damage caused to the vehicle of the plaintiffappellee, but he (defendant-appellant) has a right to
be indemnified by the real or actual owner of the
amount that he may be required to pay as damage for
the injury caused to the plaintiff-appellant. (File a 3rd
party complaint)
Reason: Were a registered owner allowed to evade
responsibility by proving who the supposed transferee
or owner is, it would be easy for him, by collusion with
others or otherwise, to escape said responsibility and
transfer the same to an indefinite person, or to one
who possesses no property with which to respond
financially for the damage or injury done. A victim of
recklessness on the public highways is usually
without means to discover or Identify the person
actually causing the injury or damage. He has no
means other then by a recourse to the registration in
the Motor Vehicles Office to determine who is the
owner. The protection that the law aims to extend to
him would become illusory were the registered owner
given the opportunity to escape liability by disproving
his ownership. If the policy of the law is to be enforced
and carried out, the registered owner should not be
allowed to prove the contrary to the prejudice of the
person injured, that is, to prove that a third person or
another has become the owner, so that he may
thereby be relieved of the responsibility to the injured
person.
STATE
REGULATION
CARRIER

OF

COMMON

Art. 1765. The Public Service Commission may, on its


own motion or on petition of any interested party, after
due hearing, cancel the certificate of public
convenience granted to any common carrier that

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

repeatedly fails to comply with his or its duty to


observe extraordinary diligence as prescribed in this
Section.

regulate the issuance of a license to operate domestic


air transport services
Distinctions
Carrier

Notes:
1. So the public service commission has been
replaced by the following bodies:
LTO - private vehicles
LTFRB- common carrier
Civil Aeronautics Board - public airplanes
ATO- private planes (according to Lyndon)
MARINA - common carriers for sea

3. Pantranco vs. Public Service Commission 70 P


221 - A certificate of public convenience constitutes
neither a franchise nor a contract. It confers no
property rights and is a mere license or privilege and
therefore can be subject to regulation founded on the
police power of the State.

A reading of Section 10 of the same reveals the clear


intent of Congress to delegate the authority to

2.
As
to
whom it may
contract

Bound to carry
all pax
who
choose
to
employ it
Observe XOD

Negligence
is
presumed if pax
or goods do not
reach
final
destination

CC

and

Private

Involves a single
undertaking
May
choose
person with whom
it may contract
GFOF

Person
who
alleges negligence
must prove the
same

Does not perform


public service; also
subject to State
regulation but not
too strict.

CC OF GOODS (CCOG)
Art. 1753. The law of the country to which the goods
are to be transported shall govern the liability of the
common carrier for their loss, destruction or
deterioration.

5. PAL vs. CAB 270 S 538 - PAL alleged that CAB


abused its discretion when it granted to Grand Air a
Temporary Operating Permit. Accdg. to PAL, Grand
Air has not been granted a legislative franchise to
operate.

There is nothing in the law nor in the Constitution,


which indicates that a legislative franchise is an
indispensable requirement for an entity to operate as
a domestic air transport operator. Although Section 11
of Article XII recognizes Congress' control over any
franchise, certificate or authority to operate a public
utility, it does not mean Congress has exclusive
authority to issue the same. Franchises issued by
Congress are not required before each and every
public utility may operate. In many instances,
Congress has seen it fit to delegate this function to
government agencies, specialized particularly in their
respective areas of public service.

Cf: Art. 1766

5. As to how
to
escape
liability
6.
As
to A CC performs
state
public
service
regulation
and is subject to
State regulation

4. Medina vs. Cresencia- The sale of CPC without


approval of the governing bodies is not binding
against the public. So there has to be approval first. It
is binding between the parties only. In contemplation
of the law, the grantee of record continues to be
responsible under the CPC in relation to the governing
body or the public.

Civil Aeronautics Board has the authority to issue a


Certificate of Public Convenience and Necessity, or
Temporary Operating Permit to a domestic air
transport operator, who, though not possessing a
legislative franchise, meets all the other requirements
prescribed by the law. Such requirements were
enumerated in Section 21 of R.A. 776.

between

1. Definition

3. Degree of
diligence
required
4.
As
to
presumption
of
negligence

2. Note: The cancellation of certificate of public


convenience cannot be done without hearing;
although these bodies have the power to initiate
hearing motu propio. Take note of the ground for
cancellation as provided under Art. 1765.

The issue in this petition is whether or not Congress,


in enacting Republic Act 776, has delegated the
authority to authorize the operation of domestic air
transport services to the respondent Board, such that
Congressional mandate for the approval of such
authority is no longer necessary.

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NOTES:
1. If foreign voyage or flight from foreign country
inbound to Phil - governed by Phil laws. If outbound,
carrier lands in US and there is complaint, can pax
sue CCOG here? Yes, apply conflicts of laws. (Saudia
Airlines case)
TEST TO DETERMINE IF ONE IS CCOG
a. He must be engaged in the business of carrying
goods for others as a public employment, and must
hold himself out as ready to engage in the
transportation of goods for person generally as a
business and not as a casual occupation;
b. He must undertake to carry goods of the kind to
which his business is confined;
c. He must undertake to carry by the method by which
his business is conducted and over his established
roads; and
d. The transportation must be for hire. (FPIC VS. CA)
Art. 1733. 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 X X X
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.
Notes:
What is XOD in the vigilance of goods?

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

Extraordinary diligence requires rendering service with


the greatest skill and foresight to avoid damage and
destruction to the goods entrusted for carriage and
delivery. (Leamer vs. Malayan, 2005)
Art. 1734. 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;
Notes:
1. Gen Rule is the first sentence; the exceptions are
the 5 cases enumerated.
2. Does it mean that if goods are lost, damaged or
destroyed, is the CCOG automatically responsible?
NO. There is no automatic liability or responsibility for
loss/deterioration/damage of goods. What arises is
AUTOMATIC PRESUMPTION of negligence.

that the loss was due to accident or some other


circumstance inconsistent with its liability.
7. What does it mean if the shipment is
'containarized'? (Bankers and Manufacturers vs.
CA)
It must be underscored that the shipment involved in
the case at bar was "containerized". The goods under
this arrangement are stuffed, packed, and loaded by
the shipper at a place of his choice, usually his own
warehouse, in the absence of the carrier. The
container is sealed by the shipper and thereafter
picked up by the carrier. Consequently, the recital of
the bill of lading for goods thus transported ordinarily
would declare "Said to Contain", "Shipper's Load and
Count", "Full Container Load", and the amount or
quantity of goods in the container in a particular
package is only prima facie evidence of the amount or
quantity which may be overthrown by parol evidence.

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A shipment under this arrangement is not inspected


or inventoried by the carrier whose duty is only to
transport and deliver the containers in the same
condition as when the carrier received and accepted
the containers for transport.

o
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3. How to rebut presumption/escape liability?


The CCOG must prove that it exercised XOD. (Note:
Do not say "by exercising XOD" because that is
different from proving CCOG exercised XOD.)
Art. 1735. 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.
4. If any of the 5 instances arises, the presumption of
negligence WILL NOT ARISE. The effect is that there
is no automatic presumption of negligence. What is
the effect? The effect is that the CCOG no longer
needs to prove that it exercised XOD.
5. Q: Is the CCOG automatically exempt from liability
in cases of the 5 instances mentioned in Art. 1734?
A: NO. The CCOG must still have to prove that it
complied with the requirements of Art. 1739, 1740,
1741, 1742.
6. YNCHAUSTI VS. DEXTER - What does the
shipper/consignee have to show in order to have a
prima facie case against the carrier?
1. Actual receipt of goods by the carrier;
2. Failure to deliver the goods in the same conditions
as it was received.

What is the requirement to hold the CCOG liable if


goods are damaged under this arrangement?
In order to hold the carrier liable for whatever loss,
damage or deterioration that happened on the goods
inside the container, it has to be opened in front of the
carrier and inspected. If the consignee receives the
container, does not check it, brings it to ihs warehouse
and complains days later, then that is no longer
allowed. The inspection should be done in front of the
carrier.
If the inspection is done upon arrival, there is a
presumption that the goods were received in good
order. The carrier then will have to prove that the
goods were received otherwise.
8. What is an arrastre operator?
Is an arrastre operator legally liable for the loss of a
shipment in its custody? If so, what is the extent of its
liability? (Summa Insurance vs. CA)
H: In the performance of its obligations, an arrastre
operator should observe the same degree of diligence
as that required of a common carrier and a
warehouseman as enunciated under Article 1733 of
the Civil Code and Section 3(8) of the Warehouse
Receipts Law, respectively. Being the custodian of the
goods discharged from a vessel, an arrastre
operator's duty is to take good care of the goods and
to turn them over to the party entitled to their
possession.

If these two are shown, the burden of proof is shifted


and it is incumbent upon the carrier, in order to
exonerate itself, to both allege and prove that the
injury was due to some circumstances.

Flood, storm, earthquake, lightning, or


other natural disaster or calamity -- in
relation to 1739 and 1740:

The mere proof of delivery of goods in good order to a


carrier, and of their arrival at the place of destination
in bad order, makes out a prima facie case against
the carrier, so that if no explanation is given as to how
the injury occurred, the carrier must be held
responsible. It is incumbent upon the carrier to prove

Art. 1739. 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

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Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

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.
Art. 1740. If the common carrier negligently incurs in
delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.
Notes:
1. CCOG need not prove it exercised XOD; however,
CCOG must prove that: (Philamgen vs. MCG Marine)
a. the natural calamity or disaster must have been the
proximate and only cause of the loss; and
b. the CCOG exercised due diligence to prevent or
minimize the loss and
c. CCOG did not incur delay in transporting the goods.
2. Is fire a natural calamity? (This was not clearly
answered by Atty. Suarez; In response to the
suggested answer that fire is considered natural
calamity if caused by lightning, the answer given by
Ma'am S was: When you say natural, it has to be
natural. Obviously if it was caused by something that
has some kind of human intervention, it cannot fall
under natural disaster.)

4. DSR Senator vs. Phoenix (2003) - same ruling as


Eastern Shipping that fire is not a natural calamity.
5. Illustration of Art. 1740: Philamgen vs. CA 222
SCRA 414 - Here, the goods arrived in port but
because of the heavy rains, they were not discharged
and so the goods were destroyed. The issue is did the
CCOG negligently incur in delay?
No, the cause of the delay was not the fault of the
carrier. The delay was caused by the decision of the
board (construction of catwalks, etc), customs of the
place and heavy, intermittent rains.
Other cases:
7. Schmitz Transport vs. Transventure: the natural
calamity was not the only and proximate cause of the
loss.
Act of the public enemy in war, whether
international or civil;
Requirements:
a. the natural act of public enemy must have been the
proximate and only cause of the loss; and
b. the CCOG exercised due diligence to prevent or
minimize the loss

EASTERN SHIPPING VS. IAC


As a general rule, fire is not a natural disaster.
Petitioner Carrier claims that the loss of the vessel by
fire exempts it from liability under the phrase "natural
disaster or calamity. " However, we are of the opinion
that fire may not be considered a natural disaster or
calamity. This must be so as it arises almost
invariably from some act of man or by human means.
It does not fall within the category of an act of God
unless caused by lightning or by other natural
disaster or calamity. It may even be caused by the
actual fault or privity of the carrier.
Of course the exception is unless it was naturally
caused, such as lightning, or if there was an
earthquake and suddenly the cement rubbed against
each other.
This was reiterated in Cokaliong vs. UCPB (2003)
Having originated from an unchecked crack in the fuel
oil service tank, the fire could not have been caused
by force majeure. Broadly speaking, force majeure
generally applies to a natural accident, such as that
caused by a lightning, an earthquake, a tempest or a
public enemy. Hence, fire is not considered a natural
disaster or calamity.
3. What about heavy rains, are they considered
natural disasters? NO. Vessels are built to withstand
heavy rains and seas.
Eastern Shipping vs. CA: The heavy seas and rains
referred to in the master's report were not caso
fortuito, but normal occurrences that an ocean-going
vessel, particularly in the month of September which,
in our area, is a month of rains and heavy seas would
encounter as a matter of routine. They are not
unforeseen nor unforeseeable. These are conditions
that ocean-going vessels would encounter and
provide for, in the ordinary course of a voyage.

Act of omission of the shipper or owner of


the goods in relation to:
Art. 1741. If the shipper or owner merely contributed
to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Notes:
1. In order to totally escape liability, the CCOG must
prove that the act/negligence of the shipper is the only
and proximate cause of the loss. Otherwise, Art. 1741
applies. If the CCOG is not able to prove that the only
and proximate cause of the loss is the act of the
shipper then, there will be an equitable reduction of
the liability.
2. COMPANIA MARITIMA VS. CA: Here, the shipper
stated the weight of the payloader was 2.5 tons when
it was 7.5 tons in reality. CCOG used a lifting
apparatus with a 5 ton capacity, so the payloader fell
and was damaged.
H: We are not persuaded by the proferred explanation
of petitioner alleged to be the proximate cause of the
fall of the payloader while it was being unloaded at
the Cagayan de Oro City pier. Petitioner seems to
have overlooked the extraordinary diligence required
of common carriers in the vigilance over the goods
transported by them by virtue of the nature of their
business, which is impressed with a special public
duty.
And circumstances clearly show that the fall of the
payloader could have been avoided by petitioner's
crew. Evidence on record sufficiently show that the
crew of petitioner had been negligent in the
performance of its obligation by reason of their having
failed to take the necessary precaution under the
circumstances which usage has established among
careful persons, more particularly its Chief Officer, Mr.
Felix Pisang, who is tasked with the over-all

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supervision of loading and unloading heavy cargoes


and upon whom rests the burden of deciding as to
what particular winch the unloading of the payloader
should be undertaken. While it was his duty to
determine the weight of heavy cargoes before
accepting them. Mr. Felix Pisang took the bill of lading
on its face value and presumed the same to be
correct by merely "seeing" it.

the goods are already defective, etc. And if the goods


arrived in the same condition as it was received, then
that can be used as an exception. If that happens, all
the carrier has to prove is Art. 1742 -- due diligence to
forestall or lessen the loss.

In that sense, therefore, private respondent's act of


furnishing petitioner with an inaccurate weight of the
payloader upon being asked by petitioner's collector,
cannot be used by said petitioner as an excuse to
avoid liability for the damage caused, as the same
could have been avoided had petitioner utilized the
"jumbo" lifting apparatus which has a capacity of
lifting 20 to 25 tons of heavy cargoes.

b. CALVO VS. UCPB: Calvo is a customs broker. The


vessel arrived in Manila. The cargo was loaded on the
truck of Calvo. Calvo as broker also volunteered to
deliver the goods to the warehouse of the shipper.
When the goods arrived, they were spoiled. Calvo
denied liability for the goods and alleged that the
spoilage took place while the goods were in the vessel
or while with the arrastre operator.

Act of omission of the shipper or owner of


the goods;

According to the SC, when did the consignee discover


the spoilage of the goods? When they were in the
possession of Calvo.

The character of the goods or defects in


the packing or in the containers;
ARTICLE 1742. Even if the loss, destruction, or
deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the
packing or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss.
Notes:
1. If there is a defect in the packaging or character of
the goods, for example in a case, grain was loaded
and they were already halfway to rotting, i.e. there
were already molds, then the requisite for CCOG to
escape liability is that it must prove that it exercised
due diligence to forsetall or lessen the loss. That is
under Art. 1742.
2. But a perusal of the cases will show that the SC is
saying that CCOG should do something more than
just Art. 1742:
a. Southern Lines vs. CA: Petitioner claims
exemption from liability by contending that the
shortage in the shipment of rice was due to such
factors as the shrinkage, leakage or spillage of the
rice on account of the bad condition of the sacks at
the time it received the same and the negligence of
the agents of respondent City of Iloilo in receiving the
shipment.
Held: The contention is untenable, for, if the fact of
improper packing is known to the carrier or his
servants, or apparent upon ordinary observation, but
it accepts the goods notwithstanding such condition, it
is not relieved of liability for loss or injury resulting
thereform.
Furthermore, according to the Court of Appeals,
"appellant (petitioner) itself frankly admitted that the
strings that tied the bags of rice were broken; some
bags were with holes and plenty of rice were spilled
inside the hull of the boat, and that the personnel of
the boat collected no less than 26 sacks of rice which
they had distributed among themselves." This finding,
which is binding upon this Court, shows that the
shortage resulted from the negligence of petitioner.
Therefore, if goods are delivered to the CCOG and
the defect in the goods/packaging is apparent, then
the CC may accept the goods with reservation or
exception. It must be indicated in the bill of lading that

Otherwise, the acceptance of CCOG without


exception, the CC cannot hide under this exception.

For this provision to apply, the rule is that if the


improper packing or, in this case, the defect/s in the
container, is/are known to the carrier or his
employees or apparent upon ordinary observation,
but he nevertheless accepts the same without protest
or exception notwithstanding such condition, he is not
relieved of liability for damage resulting therefrom. In
this case, petitioner accepted the cargo without
exception despite the apparent defects in some of the
container vans. Hence, for failure of petitioner to
prove that she exercised extraordinary diligence in the
carriage of goods in this case or that she is exempt
from liability, the presumption of negligence as
provided under Art. 1735 holds.
c. Iron bulk Shipping vs. Remington
Order or
authority.

act

of

competent

public

ARTICLE 1743. If through the order of public authority


the goods are seized or destroyed, the common
carrier is not responsible, provided said public
authority had power to issue the order
Note:
1. First requisite: Person issuing order must have
power to issue such.
2. Second requisite: The order must be lawful or
must have been issued under legal process or
authority
(Ganzon vs. CA - A,owner of the the CCOG was
unloading the iron. Mayor B demanded P5,000 and
when A refused, B shot A. After several days, the
unloading resumed and Acting Mayor C ordered X
and the crew of the vessel to dump the iron. The issue
is, can the CCOG be held liable for the loss of the
cargo?
Held: YES. We cannot sustain the theory of caso
fortuito. In the courts below, the petitioner's defense
was that the loss of the scraps was due to an "order
or act of competent public authority," and this
contention was correctly passed upon by the Court of
Appeals which ruled that:
... In the second place, before the appellee Ganzon
could be absolved from responsibility on the ground
that he was ordered by competent public authority to

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

unload the scrap iron, it must be shown that Acting


Mayor Basilio Rub had the power to issue the
disputed order, or that it was lawful, or that it was
issued under legal process of authority. The appellee
failed to establish this. Indeed, no authority or power
of the acting mayor to issue such an order was given
in evidence.

The authorities are to the effect that a bill of lading is


not indispensable for the creation of a contract of
carriage. As regards the form of the contract of
carriage it can be said that provided that there is a
meeting of the minds and from such meeting arise
rights and obligations, there should be no limitations
as to form. The bill of lading is juridically a
documentary proof of the stipulations and conditions
agreed upon by both parties.

The petitioner was not duty bound to obey the illegal


order to dump into the sea the scrap iron. Moreover,
there is absence of sufficient proof that the issuance
of the same order was attended with such force or
intimidation as to completely overpower the will of the
petitioner's employees. The mere difficulty in the
fullfilment of the obligation is not considered force
majeure.
DURATION OF LIABILITY (from what point
to what point is a carrier liable?)

The liability of the carrier as common carrier begins


with the actual delivery of the goods for
transportation, and not merely with the formal
execution of a receipt or bill of lading; the issuance of
a bill of lading is not necessary to complete delivery
and acceptance. Even where it is provided by statute
that liability commences with the issuance of the bill of
lading, actual delivery and acceptance are sufficient
to bind the carrier.

ARTICLE 1736. The extraordinary responsibility of the


common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the
same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a
right to receive them, without prejudice to the
provisions of article 1738.

The test as to whether the relation of shipper and


carrier had been established is, had the control and
possession of the cotton been completely
surrendered by the shipper to the shipper? Whenever
the control and possession of goods passes to the
carrier and nothing remains to be done by the
shipper, then it can be said with certainty that the
relation of shipper and carrier has been established.

ARTICLE 1737. The common carrier's duty to observe


extraordinary diligence in the vigilance 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.

2. In relation to Art. 1738, what if the goods are in the


customs warehouse and they get destroyed,
deteriorated or damaged because the processing of
papers take too long to process? Can the carrier be
held liable?
LU DO & LU YM CORP VS. BINAMIRA -- NO.

ARTICLE 1738. The extraordinary liability of the


common carrier continues to be operative even during
the time the goods are stored in a warehouse of the
carrier at the place 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.

H: It is true that, as a rule, a common carrier is


responsible for the loss, destruction or deterioration of
the goods it assumes to carry from one place to
another unless the same is due to any to any of the
causes mentioned in Article 1734 on the new Civil
Code, and that, if the goods are lost, destroyed or
deteriorated, for causes other that those mentioned,
the common carrier is presumed to have been at fault
or to have acted negligently, unless it proves that it
has observed extraordinary diligence in their care ,
and that this extraordinary liability lasts from the time
the goods are placed in the possession of the carrier
until they are delivered to the consignee, or "to the
person who has the right to receive them" , but these
provisions only apply when the loss, destruction or
deterioration takes place while the goods are in the
possession of the carrier, and not after it has lost
control of them.

Notes:
From when: from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation.
Not actually place on the ship, it is enough even if
custody is transferred to the office/receiving office of
the carrier.
It ends: When the goods 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.

The reason is obvious. While the goods are in its


possession, it is but fair that it exercise extraordinary
diligence in protecting them from damage, and if loss
occurs, the law presumes that it was due to its fault or
negligence. This is necessary to protect the interest
the interest of the owner who is at its mercy. The
situation changes after the goods are delivered to the
consignee.

1. Compania Maritima vs. Icna - Since the vessel of


CM was too large for the Sasa Warf, CM sent a lighter
to pick up the hemp. Before the hemp could be loaded
to the vessel, the lighter sank. CM alleged that it could
not be liable for the loss as the goods were not yet
loaded on the vessel. Besides, there was no bill of
lading yet issued to the shipper.
H: The claim that there can be no contract of
affreightment because the hemp was not actually
loaded on the ship that was to take it from Davao City
to Manila is of no moment, for the delivery of the
hemp to the carriers lighter is in line with the contract.

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While we agree with the Court of Appeals that while


delivery of the cargo to the consignee, or to the
person who has a right to receive them",
contemplated in Article 1736, because in such case
the goods are still in the hands of the Government
and the owner cannot exercise dominion over them,
we believe however that the parties may agree to limit
the liability of the carrier considering that the goods

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

have still to through the inspection of the customs


authorities before they are actually turned over to the
consignee. This is a situation where we may say that
the carrier losses control of the goods because of a
custom regulation and it is unfair that it be made
responsible for what may happen during the
interregnum. And this is precisely what was done by
the parties herein.

Held: No. When the carrier under the terms of the bill
of lading had delivered the goods at the port of
destination, at that point he merely becomes the agent
of consignee and ceases to be liable as carrier for
loss or damages of the goods transported.
Thereafter, loss of goods in its hand for causes
beyond its control without negligence being proved,
cannot sustain a claim for damage against the carrier.

So what can be done in cases such as this wherein


we have no exact provision under the law to govern
the same? In such case, the agreement of the parties
prevail.

There is no doubt that Art. 1738 finds no applicability


to the instant case. The said article contemplates a
situation where the goods had already reached their
place of destination and are stored in the warehouse
of the carrier. The subject goods were still awaiting
transshipment to their port of destination, and were
stored in the warehouse of a third party when last
seen and/or heard of. However, Article 1736 is
applicable to the instant suit. Under said article, the
carrier may be relieved of the responsibility for loss or
damage to the goods upon actual or constructive
delivery of the same by the carrier to the consignee,
or to the person who has a right to receive them. In
sales, actual delivery has been defined as the ceding
of corporeal possession by the seller, and the actual
apprehension of corporeal possession by the buyer or
by some person authorized by him to receive the
goods as his representative for the purpose of
custody or disposal. By the same token, there is
actual delivery in contracts for the transport of goods
when possession has been turned over to the
consignee or to his duly authorized agent and a
reasonable time is given him to remove the goods.
The court a quo found that there was actual delivery
to the consignee through its duly authorized agent,
the carrier.

3. SERVANDO VS. PHIL STEAM NAVIGATION CO


Here, the goods were delivered in good order in the
warehouse of the customs authority. At about 2:00 in
the afternoon of the same day, said warehouse was
razed by a fire of unknown origin, destroying
appellees' cargoes. Before the fire, however, appellee
Uy Bico was able to take delivery of 907 cavans of
rice. Is the carrier liable?
H: No. Article 1736 of the Civil Code imposes upon
common carriers the duty to observe extraordinary
diligence from the moment the goods are
unconditionally placed in their possession "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. "
The court a quo held that the delivery of the shipment
in question to the warehouse of the Bureau of
Customs is not the delivery contemplated by Article
1736; and since the burning of the warehouse
occurred before actual or constructive delivery of the
goods to the appellees, the loss is chargeable against
the appellant.
It should be pointed out, however, that in the bills of
lading issued for the cargoes in question, the parties
agreed to limit the responsibility of the carrier for the
loss or damage that may be caused to the shipment
by inserting therein the following stipulation:
Clause 14. Carrier shall not be responsible for loss or
damage to shipments billed 'owner's risk' unless such
loss or damage is due to negligence of carrier. Nor
shall carrier be responsible for loss or damage
caused by force majeure, dangers or accidents of the
sea or other waters; war; public enemies; . . . fire . ...
In the case at bar, the burning of the customs
warehouse was an extraordinary event which
happened independently of the will of the appellant.
The latter could not have foreseen the event.
So in this case, the burning of the customs warehouse
was considered as a fortuitous event in so far as the
carrier is concerned.
4. SAMAR MINING VS. NORDEUTCHER LLOYD
The bill of lading provided that it was effective only for
the transport of the goods for Germany to Manila.
From Manila, the goods were to be further transported
to Davao. The carrier had unloaded and delivered the
good in the bonded warehouse in Manila. They never
reached Davao. Is Nordeutcher Lloyd liable?

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It becomes necessary at this point to dissect the


complex relationship that had developed between
appellant and appellee in the course of the
transactions that gave birth to the present suit. Two
undertakings appeared embodied and/or provided for
in the Bill of Lading 19 in question. The first is FOR
THE TRANSPORT OF GOODS from Bremen,
Germany
to
Manila.
The
second,
THE
TRANSSHIPMENT OF THE SAME GOODS from
Manila to Davao, with appellant acting as agent of the
consignee.
At the hiatus between these two
undertakings of appellant which is the moment when
the subject goods are discharged in Manila, its
personality changes from that of carrier to that of
agent of the consignee. Thus, the character of
appellant's
possession
also
changes,
from
possession in its own name as carrier, into
possession in the name of consignee as the latter's
agent. Such being the case, there was, in effect,
actual delivery of the goods from appellant as carrier
to the same appellant as agent of the consignee.
Upon such delivery, the appellant, as erstwhile
carrier, ceases to be responsible for any loss or
damage that may befall the goods from that point
onwards. This is the full import of Article 1736, as
applied to the case before Us.
But even as agent of the consignee, the appellant
cannot be made answerable for the value of the
missing goods, It is true that the transshipment of the
goods, which was the object of the agency, was not
fully performed. However, appellant had commenced
said performance, the completion of which was
aborted by circumstances beyond its control. An
agent who carries out the orders and instructions of
the principal without being guilty of negligence, deceit

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

or fraud, cannot be held responsible for the failure of


the principal to accomplish the object of the agency.

(3)
Supported by a valuable consideration other
than the service rendered by the common carrier; and
(4)
Reasonable, just and not contrary to public
policy.

5. Macam vs. CA
Facts: Petitioner Macam exported watermelons and
mangoes to Hong Kong, Great Prospect Company is
the consignee. The bill of lading stated that one of the
bill must be presented by the Pakistan Bank as
consignee and GPC as the notify party. Upon arrival
in Hong Kong, the shipment was delivered by the
carrier directly to GPC and not to Pakistan Bank and
without surrendering the bill of lading. Was there a
proper delivery?

Can the parties stipulate that there shall be no


diligence to be excercised by the CCOG?
NO. Under Art. 1745, these are void stipulations
because they are against public policy.
ARTICLE 1745. Any of the following or similar
stipulations shall be considered unreasonable, unjust
and contrary to public policy:
(1)
That the goods are transported at the risk of
the owner or shipper;
(2)
That the common carrier will not be liable for
any loss, destruction, or deterioration of the goods;
(3)
That the common carrier need not observe
any diligence in the custody of the goods;
(4)
That the common carrier shall exercise a
degree of diligence less than that of a good father of a
family, or of a man of ordinary prudence in the
vigilance over the movables transported;
(5)
That the common carrier shall not be
responsible for the acts or omission of his or its
employees;
(6)
That the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished;
(7)
That the common carrier is not responsible for
the loss, destruction, or deterioration of goods on
account of the defective condition of the car, vehicle,
ship, airplane or other equipment used in the contract
of carriage.

Held: YES. Delivery to GPC is delivery to the


consignee. The extraordinary responsibility of
common carriers last until actual or constructive
delivery of the cargo to the consignee or his agent.
Pakistan was indicted as consignee and GPC was the
notify party. However, in the export invoice, GPC was
clearly named as buyer or importer.
Petitioner
referred to GPC as such in his demand letter to
respondent and his complaint before the court. This
premise brings into conclusion that the deliveries of
the cargo to GPC as buyer or importer is in conformity
with Art. 1736 of the Civil Code. Therefore, there was
a valid delivery.
So here, even if there was no delivery to the
consignee but there were instructions from the shipper
then the goods are deemed delivered and the CCOG
can no longer be held liable for the loss of the goods.
6. SCHMITZ TRANSPORT VS. TVI: The cargo was
on board MV Alexander that was parked outside the
breakwater. The goods were loaded on a barge that
was supposed to be pulled by the tugboat. According
to Schmitz, Black Sea, the owner of MV Alexander,
should be liable because the goods have not yet been
delivered to the consignee.

Notes:
1. De Guzman vs. CA: Cendana is not liable for the
loss of the goods because of the hijacking incident
because it fell under Art. 1745(6) . According to the
court,

H: No, because Shcmitz is an agent of the consignee.


And Black Sea already delivered the goods once the
same were transferred from the vessel MV Alexander
to the barge that was supposed to bring the goods to
the warehouse of Little Giant, the consignee. Thus
Black sea no longer had custody over the goods.
There was already actual delivery to the person who
had the right to receive them, Schmitz -- as an agent
of the consignee.

H: Applying the above-quoted Articles 1734 and 1735,


we note firstly that the specific cause alleged in the
instant case the hijacking of the carrier's truck does
not fall within any of the five (5) categories of
exempting causes listed in Article 1734. It would
follow, therefore, that the hijacking of the carrier's
vehicle must be dealt with under the provisions of
Article 1735, in other words, that the private
respondent as common carrier is presumed to have
been at fault or to have acted negligently. This
presumption, however, may be overthrown by proof of
extraordinary diligence on the part of private
respondent.

VALIDITY OF STIPULATIONS
Can the CCOG and the shipper agree that the CCOG
will not be required to exercise XOD?
YES. As to the diligence required,
General rule: the CCOG and the shipper may enter
into an agreement/stipulation which lessens the
diligence required, but there are requisites:
ARTICLE 1744. A stipulation between the common
carrier and the shipper or owner limiting the liability of
the former for the loss, destruction, or deterioration of
the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1)
(2)

In writing,
signed by the shipper or owner;

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Petitioner insists that private respondent had not


observed extraordinary diligence in the care of
petitioner's goods. Petitioner argues that in the
circumstances of this case, private respondent should
have hired a security guard presumably to ride with
the truck carrying the 600 cartons of Liberty filled milk.
We do not believe, however, that in the instant case,
the standard of extraordinary diligence required
private respondent to retain a security guard to ride
with the truck and to engage brigands in a firelight at
the risk of his own life and the lives of the driver and
his helper.
Under Article 1745 (6) above, a common carrier is
held responsible and will not be allowed to divest or

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to diminish such responsibility even for acts of


strangers like thieves or robbers, except where such
thieves or robbers in fact acted "with grave or
irresistible threat, violence or force." We believe and
so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a
robbery which is attended by "grave or irresistible
threat, violence or force."
Three (3) of the five (5) hold-uppers were armed with
firearms. The robbers not only took away the truck
and its cargo but also kidnapped the driver and his
helper, detaining them for several days and later
releasing them in another province (in Zambales). In
these circumstances, we hold that the occurrence of
the loss must reasonably be regarded as quite
beyond the control of the common carrier and
properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not
made absolute insurers against all risks of travel and
of transport of goods, and are not held liable for acts
or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the
rigorous standard of extraordinary diligence.
ARTICLE 1746. An agreement limiting the common
carrier's liability may be annulled by the shipper or
owner if the common carrier refused to carry the
goods unless the former agreed to such stipulation.
ARTICLE 1747. If the common carrier, without just
cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract
limiting the common carrier's liability cannot be availed
of in case of the loss, destruction, or deterioration of
the goods.
ARTICLE 1748. An agreement limiting the common
carrier's liability for delay on account of strikes or riots
is valid.
Stipulation
liability

lessening

the

amount

of

Valid: Provided follow the requisites under 1749 and


1750
ARTICLE 1749. A stipulation that the common
carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.

11

The 500-peso limitation is only applicable when the


shipper has not declared a higher value and paid a
higher freight.
A stipulation which exempts the carrier from any or all
liability from loss or damage occasioned by its own
negligence is not valid.
A stipulation which provides for an unqualified
limitations, like 10 pesos per kilo (only) and thus limits
liability to an agreed valuation is not valid. (Meaning,
wala yung stipulation that if the shipper pays a higher
freight, etc.)
(Heacock vs. Macondray) where the SC enumerated
the three kinds of stipulation:
1. No liability -- the carrier will not be liable at all for
the negligent acts of its crew and employees -- void
2. Limited Liability -- regardless of the value of the
cargo, the maximum liability of the carrier will by only
to a certain amount, i.e. 500 per kilo -- void.
3. Qualified liability- this is the only stipulation in a bill
of lading/ticket which can validly limit liability; here, the
carrier fixes a maximul liability in the event the shipper
doe snot delcare any value, or a value upto a certain
amount. Should shipper declare a higher value and
willing to pay higher freightage, the carrier shall
accordingly be liable for greater damage.
Other cases cited in ppt: Eastern vs. IAC (150 SCRA
463), Sea-Land Services vs. IAC (153 SCRA),
Cokaliong Shipping vs. UCPB (2003)
Art. 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the
common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods.
Even if there is any limitation limiting the liability of the
carrier, this cannot be availed of by the carrier if it
without just cause, delays the transportation of the
goods, or etc.
What if there is a stipulation limiting the liability and
the flight is from Davao to Manila. But because there
was a typhoon in Manila, it was unable to land there
so it landed in Cebu. Can the carrier avail of the
stipulation?

ARTICLE 1750. A contract fixing the sum that may be


recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been fairly and freely agreed upon.

Yes, because there was a just cause for the change of


flight. 1747 only applies if there is no reason.

Normally, when are these stipulations present?


1. In contracts of carriage by sea -- in the bill of lading;
(500 pesos per kilo)
2. In contracts of carriage by air -- in the ticket.
(normally $20 per kilo)

Art. 1749. A stipulation that the common carrier's


liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner
declares a greater value, is binding.

For the stipulation to be valid, it must not be just a


stipulation. It must contain a statement which says
that if the shipper agrees or has declared a higher
valuation and has paid for a higher price thereof, then
the 500 peso limitation is not applicable.

Art. 1748. An agreement limiting the common carrier's


liability for delay on account of strikes or riots is valid.

Art. 1750. A contract fixing the sum that may be


recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been fairly and freely agreed upon.
Art. 1751. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

consideration on the question of whether or not a


stipulation limiting the common carrier's liability is
reasonable, just and in consonance with public policy.
Art. 1752. Even when there is an agreement limiting
the liability of the common carrier in the vigilance over
the goods, the common carrier is disputably presumed
to have been negligent in case of their loss,
destruction or deterioration.
That presumption of negligence will still arise despite
the fact that there is an agreement. The carrier still
has to prove that it exercised EXOD to escape liability.
If the carrier does not want to prove it, it will just
accept the liability, then the carrier will be liable for the
amount stipulated in the agreement. Of course, unless
any of the circumstances like natural disaster, etc. are
present.

12

CARRIAGE OF PASSENGERS
Art. 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight
can provide, using the utmost diligence of very
cautious persons, with a due regard for all the
circumstances.
Art. 1756. 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.
Automatic presumption of negligence, rebutted by
proving that carrier excercised extraordinary diligence
for the safety of passengers according to the
circumstances of each case.

Baggage of passengers
With respect to baggage of passengers, we recognize
checked-in baggage and hand-carried baggages.
Passenger is responsible for his hand-carry
baggages.
Art. 1754. The provisions of Articles 1733 to 1753
shall apply to the passenger's baggage which is not in
his personal custody or in that of his employee. As to
other baggage, the rules in Articles 1998 and 2000 to
2003 concerning the responsibility of hotel-keepers
shall be applicable.
With respect to check in baggages, the applicable
provisions are the provisions we took up. However, if
the luggage is hand-carried, different provisions of the
CC will apply. (1998, 2000- 2003)
What is the summary for hand-carried items?
1. Art. 1998: The carrier shall be responsible for
hand-carried baggages as depositaries, provided that
notice was given to them, or to their employees, of the
effects brought by the passengers and that, on the
part of the latter, they take the precautions which said
carriers or their substitutes advised relative to the care
and vigilance of their effects.
2. Art. 2000. The responsibility referred to in the
preceding article shall include the loss of, or injury to
the personal property of the passenger caused by the
servants or employees of the carrier as well as
strangers; but not that which may proceed from any
force majeure.

Under the provisions of carriage of goods, in carriage


of passengers, there are no exceptions as to the
presumption of negligence. They will be automatically
presumed to be negligent under 1756, there are no
exceptions. So that is the first distinction between
COG and COP, but the presumption can be rebutted.
Take note that proving extraordinary diligence is not
the only way of escaping liability. We all know that
under the general provisions of the Civil Code, a
fortuitous event will always exempt the obligor from
liability, if the fortuitous event is the cause of the
death, injury of the passenger. Just memorize the
requisites of fortuitous events.
Issue: If A is a passenger of a taxi and taxi figured in
an accident. A sues the taxi for breach of contract of
carriage, does A have to prove that the taxi driver is at
fault for A to collect damages from the operator of the
taxi?
Answer: In an action based on a contract of carriage,
the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it
responsible to pay damages to the passenger.
Because of the automatic presumption of negligence,
the burden of proof is on the carrier. If the carrier
rebuts the presumption, then it is absolved. If it does
not rebut that presumption, there is no need for the
passenger or his heirs to prove negligence.
What kind of fortuitous event will exempt a carrier
from liability? Is a tire blow out a fortuitous event?

The fact that passengers are constrained to rely on


the vigilance of the carrier shall be considered in
determining the degree of care required of him.

It depends. Remember that even the SC did not


categorically state that a tire blow out is not a
fortuitous event. You always have to look at the
requisites.

3. Art. 2001. The act of a thief or robber, who has


entered the carrier is not deemed force majeure,
unless it is done with the use of arms or through an
irresistible force. (n)

In the cases (Yobido vs. CA, Necesito vs. Paras),


they were all cases of tire blow outs and the SC
always found a way to remove the tire blow out
situtation from coverage of fortuitous events.

Art. 2002. The carrier is not liable for compensation if


the loss is due to the acts of the passenger, his family,
servants or visitors, or if the loss arises from the
character of the things brought. (n)

In Necesito vs. Paras (1958), the SC said that


"defective parts of vehicles cannot be considered a
fortuitous event because the manufacturer of the
defective parts is considered in law the agent of the
carrier, and the good repute of the manufacturer will
not relieve the carrier from liability."

Art. 2003. The common carrier cannot free himself


from responsibility by posting notices to the effect that
he is not liable for the articles brought by the
passengers.

In Yobido, the court discovered that the driver was


driving too fast, so there was negligence and

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

participation on the part of the carrier in bringing the


accident.

have cautioned or taken steps to warn the rescuers


not to bring the lighted torch too near the bus. Said
negligence on the part of the agents of the carrier
come under the codal provisions above- reproduced,
particularly, Articles 1733, 1759 and 1763.

What about hi-jacking? Is it a fortuitous event?


As a general rule, hi-jacking of an airline cannot be a
fortuitous event because this is not unforseen, this is
expected. That is why security checks are conducted.
But in GACAL vs. PAL - this was considered a
fortuitous event because the inspection was done by
the military, and not PAL. This case is a special case.

2. La Mallorca vs. CA (the child of a Pax was run


over by the bus when she followed her father who was
getting their baggages. The bus was already moving
steadily after it had dropped off the Pax even though
the baggages were still on board the truck.)

But what if the hi-jack happened on a bus or a truck?


In De Guzman, the SC said that it was a fortuitous
event. Can you really expect that your bus will be
hijacked while you're traveling along the highway? No,
otherwise nobody will travel.

Held: here can be no controversy that as far as the


father is concerned, when he returned to the bus for
his bayong which was not unloaded, the relation of
passenger and carrier between him and the petitioner
remained subsisting. For, the relation of carrier and
passenger does not necessarily cease where the
latter, after alighting from the car, aids the carrier's
servant or employee in removing his baggage from
the car. The issue to be determined here is whether
as to the child, who was already led by the father to a
place about 5 meters away from the bus, the liability
of the carrier for her safety under the contract of
carriage also persisted.

PILAPIL VS. CA: It was held that a CC is not liable for


failure to install window grills on its buses to protect its
passengers from injuries hurled at the bus by lawless
elements.
FORTUNE EXPRESS VS. CA: The SC said that FE
was liable because there was an early warning
already. So the element of unforseeability was
missing.

It has been recognized as a rule that the (contractual)


relation of carrier and passenger does not cease at
the moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the point
of destination, but continues until the passenger has
had a reasonable time or a reasonable opportunity to
leave the carrier's premises. And, what is a
reasonable time or a reasonable delay within this rule
is to be determined from all the circumstances. So no
specific time or specific distance.

DURATION OF LIABILITY
No provision for CC of pax for the duration of liability;
only cases
1. Bataclan vs. Medina (overturned bus which leaked
gasoline and was set on fire when villagers who
wanted to help brought torches)
Held: CC is still liable even if the bus was no longer in
transit. In the present case and under the
circumstances obtaining in the same, we do not
hesitate to hold that the proximate cause of the death
of Bataclan was the overturning of the bus, this for the
reason that when the vehicle turned not only on its
side but completely on its back, the leaking of the
gasoline from the tank was not unnatural or
unexpected; that the coming of the men with a lighted
torch was in response to the call for help, made not
only by the passengers, but most probably, by the
driver and the conductor themselves, and that
because it was very dark (about 2:30 in the morning),
the rescuers had to carry a light with them; and
coming as they did from a rural area where lanterns
and flashlights were not available, they had to use a
torch, the most handy and available; and what was
more natural than that said rescuers should
innocently approach the overturned vehicle to extend
the aid and effect the rescue requested from them. In
other words, the coming of the men with the torch was
to be expected and was a natural sequence of the
overturning of the bus, the trapping of some of its
passengers and the call for outside help. What is
more, the burning of the bus can also in part be
attributed to the negligence of the carrier, through its
driver and its conductor. According to the witnesses,
the driver and the conductor were on the road walking
back and forth. They, or at least, the driver should and
must have known that in the position in which the
overturned bus was, gasoline could and must have
leaked from the gasoline tank and soaked the area in
and around the bus, this aside from the fact that
gasoline when spilled, specially over a large area, can
be smelt and detected even from a distance, and yet
neither the driver nor the conductor would appear to

13

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3. PAL vs. Zapatos: Even if the pax are in transit, this


will not terminate the contractual relations.
Held: Undisputably, PAL's diversion of its flight due to
inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate
PAL's contract with its passengers. Being in the
business of air carriage and the sole one to operate in
the country, PAL is deemed equipped to deal with
situations as in the case at bar. What we said in one
case once again must be stressed, i.e., the relation of
carrier and passenger continues until the latter has
been landed at the port of destination and has left the
carrier's premises. Hence, PAL necessarily would
still have to exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of
its stranded passengers until they have reached their
final destination.
DOCTRINE OF LAST CLEAR CHANCE:
This doctrine calls for application in suits between
owners of two colliding vehicles. It does not apply
where a pax demands responsibility from a carrier to
enforce its contractual obligations.
The principle of last clear chance is inapplicable in the
instant case, as it only applies in a suit between the
owners and drivers of two colliding vehicles. It does
not arise where a passenger demands responsibility
from the carrier to enforce its contractual obligations,
for it would be inequitable to exempt the negligent
driver and its owner on the ground that the other
driver was likewise guilty of negligence. The common
law notion of last clear chance permitted courts to

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

grant recovery to a plaintiff who has also been


negligent provided that the defendant had the last
clear chance to avoid the casualty and failed to do so.
Accordingly, it is difficult to see what role, if any, the
common law of last clear chance doctrine has to play
in a jurisdiction where the common law concept of
contributory negligence as an absolute bar to
recovery by the plaintiff, has itself been rejected, as it
has been in Article 2179 of the Civil Code. (Tiu vs.
Arriesgado)
VALIDITY OF STIPULATIONS
Two kinds:
1. As to the diligence required
2. As to the amount of liability
AS TO THE DILIGENCE REQUIRED
Art. 1757. 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.
Remember:
Diligence required: XOD
What kind of XOD: Utmost diligence of a very cautious
person
(1)

(2)

CC of Goods are allowed to lessened the


degree of diligence, but NOT do away
with the same completely.
CC of Pax CANNOT dispense with nor
lessen the degree of diligence.

AS TO AMOUNT OF LIABILITY
Art. 1758. 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.
General Rule: Cannot be limited
But under 1758, there are circumstances where this
liability is limited:
1. Pax carried gratuitously
2. Existence of stipulation limiting liability
3. Accident/Breach not caused by willful acts or gross
negligence.
Remember: Minimum amount that heirs of pax can
collect from CC is P 50,000 because this is indemnity
for death. CC is automatically liable for this minimum
amount; if it wants to lessen this amount, CC must
follow Art. 1758.
LIABILITY FOR ACTS OF EES
Art. 1759. 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

14

good father of a family in the selection and


supervision of their employees.
Notes:
1. There is no express provision in CC of Goods
exactly like Art. 1759. BUT, the absence of express
stipulation does not mean that CC of Goods not liable
for acts of ees. Under Art. 1775, par. 5, the CC cannot
stipulate that it shall not be responsible for the acts of
its ees. So this means that CC of goods still liable;
2. If driver is drunk and figures in an accident, CC
cannot say that it is not liable because driver violated
company rules of no drinking while driving.
3. Defense of Diligence of Good father of family is
available if the cause of action is culpa acquiliana (Art.
2176, 2180 of NCC), But if the cause of action is for
breach of contract of carriage, this defense of GFOF
cannot be invoked.
CONTRIBUTORY NEGLIGENCE
Art. 1761. The passenger must observe the diligence
of a good father of a family to avoid injury to himself.
Art. 1762. The contributory negligence of the
passenger does not bar recovery of damages for his
death or injuries, if the proximate cause thereof is the
negligence of the common carrier, but the amount of
damages shall be equitably reduced.
Notes:
1. Definition of Contributory Negligence: It is the
principle that negligence, no matter how slight, on the
part of the person injured which is one of the causes
proximately contributing to his negligence equitably
reduces the liability of the CC.
2. Estacion vs. Bernardo (2006): (Pax of Jeepney
was seated in extension seat initially but gave his seat
up to an old lady. A then hung/stood outside the
jeepney. When jeepney stopped at the curve, an isuzu
truck with a faulty break hit the jeepney causing injury
to A's leg which had to be amputated.)
Held: There was contributory negligence on the part
of A, and both truck and jeepney were found to be
negligent. Sharing of liability: 20-40-40. 20 to be
borne by A.
Contributory negligence is conduct on the part of
the injured party, contributing as a legal cause to the
harm he has suffered, which falls below the standard
to which he is required to conform for his own
protection.
When is one considered to have contributed to his
injuries: It has been held that to hold a person as
having contributed to his injuries, it must be shown
that he performed an act that brought about his
injuries in disregard of warning or signs of an
impending danger to health and body. Respondent
Noes act of hanging on the Fiera is definitely
dangerous to his life and limb.
3. CANGCO VS. MRR ( Jose Cangco, herein plaintiff,
was an employee of the defendant in this case, manila
Railroad Company. Upon the occasion in question,
plaintiff was returning home by rail from his daily
labors. As the train drew up to the station, plaintiff
arose from his seat. As the train slowed down,
plaintiff stepped off, but one or both of his feet came in

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

contact with a sack of watermelons. As a result, his


feet slipped from under him and he fell violently on the
platform.)
Held: The act of the plaintiff in stepping off the train
while it as yet slowly moving was not characterized by
imprudence so as to hold him guilty of contributory
negligence.
In arriving to such conclusion, the court used the best
of negligence enunciated in the case of Picart vs.
Smith (37 PHIL 809) which was stated as follow: Was
there anything in the circumstances surrounding the
plaintiff at the time he alighted from the train which
would have admitted a person of average prudence
that to get off the train under the conditions then
existing was dangerous? If so, the plaintiff should
have deserted from alighting; and his failure so to
desist was contributory negligence.
In the case at bar, the plaintiff was ignorant of the fact
that the obstruction which was caused by the sacks of
melds piled on the platform existed. Moreover, the
place was dark or dimly lighted. Thus, he was a
failure on the part of the defendant to afford to its
passengers facilities for safe egress from its trains.
It is not negligence per se for a traveler to alight from
a slowly moving train.
4. Del Prado vs. MRR
Held: Defendant should still be held liable for the
damages sustained by the plaintiff. The contributory
negligence upon the latter was not the proximate
cause of the injury. The proximate cause was the act
of the motorman in putting off on the power
prematurely. A person moving boarding a moving car
must be taken to assure the risk of injury from
boarding the car, but he cannot fairly be held to
assume the risk that the motorman will increase his
peril by accelerating the speed of the car before he is
planted on the platform. The motormans negligence
succeeded the negligence of herein plaintiff. Under
the doctrine of last clear chance, the contributory
negligence of the party injured will not defeat the
action if it be shown that the carrier might be the
exercise of reasonable care and prudence have
avoided the consequences of the negligence of the
injured party.
5. Brinas vs. People (old woman and her
granddaughter bound for Losacan. Conductor
announced their stop so the lola stood up and carried
her "apo" and went to exit. When train door opened,
before they could go down, the train picked up speed
and they both fell and died)
Held: It is a matter of common knowledge and
experience about common carriers like trains and
buses that before reaching a station or flagstop they
slow down and the conductor announces the name of
the place. It is also a matter of common experience
that as the train or bus slackens its speed, some
passengers usually stand and proceed to the nearest
exit, ready to disembark as the train or bus comes to
a full stop. This is especially true of a train because
passengers feel that if the train resumes its run before
they are able to disembark, there is no way to stop it
as a bus may be stopped.
It was negligence on the conductor's part to announce
the next flag stop when said stop was still a full three

15

minutes ahead. As the respondent Court of Appeals


correctly observed, "the appellant's announcement
was premature and erroneous and was the proximate
cause of the death of the victims. Any negligence of
the victims was at most contributory and does not
exculpate the accused from criminal liability.
6. Dangwa vs. CA - (There was no contributory
negligence on the part of the victim in this case)
Held: The foregoing testimonies show that the place
of the accident and the place where one of the
passengers alighted were both between Bunkhouses
53 and 54, hence the finding of the Court of Appeals
that the bus was at full stop when the victim boarded
the same is correct. They further confirm the
conclusion that the victim fell from the platform of the
bus when it suddenly accelerated forward and was
run over by the rear right tires of the vehicle, as
shown by the physical evidence on where he was
thereafter found in relation to the bus when it stopped.
Under such circumstances, it cannot be said that the
deceased was guilty of negligence. LLphil
The contention of petitioners that the driver and the
conductor had no knowledge that the victim would
ride on the bus, since the latter had supposedly not
manifested his intention to board the same, does not
merit consideration. When the bus is not in motion
there is no necessity for a person who wants to ride
the same to signal his intention to board. A public
utility bus, once it stops, is in effect making a
continuous offer to bus riders. Hence, it becomes the
duty of the driver and the conductor, every time the
bus stops, to do no act that would have the effect of
increasing the peril to a passenger while he was
attempting to board the same. The premature
acceleration of the bus in this case was a breach of
such duty.
It is the duty of common carriers of passengers,
including common carriers by railroad train, streetcar,
or motorbus, to stop their conveyances a reasonable
length of time in order to afford passengers an
opportunity to board and enter, and they are liable for
injuries suffered by boarding passengers resulting
from the sudden starting up or jerking of their
conveyances while they are doing so.
Further, even assuming that the bus was moving, the
act of the victim in boarding the same cannot be
considered negligent under the circumstances. As
clearly explained in the testimony of the aforestated
witness for petitioners, Virginia Abalos, the bus had
"just started" and "was still in slow motion" at the point
where the victim had boarded and was on its platform.
It is not negligence per se, or as a matter of law, for
one to attempt to board a train or streetcar which is
moving slowly. An ordinarily prudent person would
have made the attempt to board the moving
conveyance under the same or similar circumstances.
The fact that passengers board and alight from a
slowly moving vehicle is a matter of common
experience and both the driver and conductor in this
case could not have been unaware of such an
ordinary practice. The victim herein, by stepping and
standing on the platform of the bus, is already
considered a passenger and is entitled to all the rights
and protection pertaining to such a contractual
relation. Hence, it has been held that the duty which
the carrier of passengers owes to its patrons extends
to persons boarding the cars as well as to those
alighting therefrom.

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

7. Isaac vs. Al Ammen


Facts: Plaintiff boarded defendants bus as paying
passenger from Albay. The bus collided with a pickup truck which was coming from opposite direction
trying to swerve from a pile of gravel. As a result, his
left arm was completely severed. Plaintiff chose to
hold defendant liable on its contractual obligation.
Plaintiff brought an action for damages which the
lower court dismissed holding the driver of the pick-up
car negligent and not that of the bus.
Issue: Whether or not the common carrier is liable.

16

3. Fortune Express vs. CA- Fortune express cannot


invoke this provision.
As already stated, despite the report of PC agent
Generalao that the Maranaos were planning to burn
some of petitioners buses and the assurance of
petitioners operations manager (Diosdado Bravo)
that the necessary precautions would be taken,
nothing was really done by petitioner to protect the
safety of passengers.
Issue: Are there other causes for breach of contract of
carriage aside from Art. 1755 and 1756?
Answer: Yes.

Held: The bus was running at a moderate speed.


The driver of the bus upon the speeding pick-up truck
swerved the bus to the very extreme right of the road.
Said driver would not move the bus further without
endangering the safety of his passengers.
Notwithstanding all these efforts, the rear left side was
hit. This finding of the lower court was sustained.
Also, of the carriers employee is confronted with a
sudden emergency, he is not held to the same degree
of care he would otherwise, he required in the
absence of such emergency.
By placing his left arm on the window, he is guilty of
contributory negligence cannot relieve the carrier but
can only reduce its liability, this is a circumference
which further mistakes against plaintiffs position. It is
a prevailing rule that it is negligence per se for
passengers on a railroad to protrude any part of his
body and that no recovery can be had for an inquiry.
Responsibility for acts of strangers
Art. 1763. 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.
Notes:
1. This is one instance wherein the carrier need not
prove that it exercised XOD to escape liability. If the
injury/death of pax was caused by the act of a
stranger (somebody who is not an ee of the carrier)
the carrier need only prove that its ees exercised
diligence of GFOF to prevent or stop the act or
omission.
Why? It is not the responsibility of the CC of Pax to
ensure that no injury from outside forces will be
caused to the pax, i.e. when a bomb is thrown from
the roadside.
2. MRR vs. Ballesteros - Here, the driver of the bus
allowed a stranger to take the wheel of the bus. After
awhile, the driver struggled with him as the stranger
did not want to give the wheel back. The bus met an
accident. Can this provision be invoked?
What kind of diligence does the CC of Pax have to
prove here? XOD because by actually allowing a
stranger to drive the bus even if that person caused
the accident, but still the driver did not exercise the
diligence of GFOF to prevent or stop the act or
omission. (yan talaga sa lecture)

1. If a passenger is bumped off his flight and he


has a confirmed booking, that is a breach because
the carrier in the ticket ensured that it will deliver the
pax to its destination on the time and date stipulated.
2. Air France vs. Carrascoso Rebooked to a
lower class without pax consent. Pax seated in first
class from Mla to Bangkok. Upon arrival in Bangkok,
he was downgraded to economy to give way to a
"white man". There is a breach because his ticket
says first class, and by booking the pax to economy
class without his consent, what happens is that there
is no more consent in the contract.
3. Singson vs. Cathay Pacific - On 24 May 1988
CARLOS SINGSON and his cousin Crescentino
Tiongson bought from Cathay Pacific Airways, Ltd.
(CATHAY), at its Metro Manila ticket outlet two (2)
open-dated, identically routed, round trip plane tickets
for the purpose of spending their vacation in the
United States. Each ticket consisted of six (6) flight
coupons corresponding to this itinerary: flight coupon
no. 1 - Manila to Hongkong; flight coupon no. 2 Hongkong to San Francisco; flight coupon no. 3 - San
Francisco to Los Angeles; flight coupon no. 4 - Los
Angeles back to San Francisco; flight coupon no. 5 San Francisco to Hongkong; and, finally, flight coupon
no. 6 - Hongkong to Manila. The procedure was that
at the start of each leg of the trip a flight coupon
corresponding to the particular sector of the travel
would be removed from the ticket booklet so that at
the end of the trip no more coupon would be left in the
ticket booklet.
On 6 June 1988 CARLOS SINGSON and Crescentino
Tiongson left Manila on board CATHAYs Flight No.
902. They arrived safely in Los Angeles and after
staying there for about three (3) weeks they decided
to return to the Philippines. On 30 June 1988 they
arranged for their return flight at CATHAYs Los
Angeles Office and chose 1 July 1988, a Friday, for
their departure. While Tiongson easily got a booking
for the flight, SINGSON was not as lucky. It was
discovered that his ticket booklet did not have flight
coupon no. 5 corresponding to the San FranciscoHongkong leg of the trip. Instead, what was in his
ticket was flight coupon no. 3 - San Francisco to Los
Angeles - which was supposed to have been used
and removed from the ticket booklet. It was not until 6
July 1988 that CATHAY was finally able to arrange for
his return flight to Manila.
H: CATHAY undoubtedly committed a breach of
contract when it refused to confirm petitioner's
flight reservation back to the Philippines on
account of his missing flight coupon.
Its
contention that there was no contract of carriage that

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

was breached because petitioners ticket was opendated is untenable. To begin with, the round trip
ticket issued by the carrier to the passenger was in
itself a complete written contract by and between the
carrier and the passenger. It had all the elements of a
complete written contract, to wit: (a) the consent of
the contracting parties manifested by the fact that the
passenger agreed to be transported by the carrier to
and from Los Angeles via San Francisco and
Hongkong back to the Philippines, and the carriers
acceptance to bring him to his destination and then
back home; (b) cause or consideration, which was
the fare paid by the passenger as stated in his ticket;
and, (c) object, which was the transportation of the
passenger from the place of departure to the place of
destination and back, which are also stated in his
ticket.
Interestingly, it appears that CATHAY was
responsible for the loss of the ticket. One of two (2)
things may be surmised from the circumstances of
this case: first, US Air (CATHAYs agent) had
mistakenly detached the San Francisco-Hongkong
flight coupon thinking that it was the San FranciscoLos Angeles portion; or, second, petitioners booklet
of tickets did not from issuance include a San
Francisco-Hongkong flight coupon. In either case, the
loss of the coupon was attributable to the negligence
of CATHAYs agents and was the proximate cause of
the non-confirmation of petitioner's return flight on 1
July 1988.
With regard to the second issue, we are of the firm
view that the appellate court seriously erred in
disallowing moral and exemplary damages. Although
the rule is that moral damages predicated upon a
breach of contract of carriage may only be
recoverable in instances where the mishap results in
the death of a passenger, or where the carrier is guilty
of fraud or bad faith, there are situations where the
negligence of the carrier is so gross and reckless as
to virtually amount to bad faith, in which case, the
passenger likewise becomes entitled to recover moral
damages, such as in the instant case.
4. PAL vs. CA (Sept. 22, 2008)
unaccompanied minors were not able
plane because PAL was not able to
indemnity bond executed by the minors'
they were travelling unaccompanied.

- Here, two
to board the
produce the
parents since

Here, there was definitely a breach of contract even if


the flight that the minors were supposed to take is in
another airline. It was because of PAL's negligence
that they were not able board the other airline.
H: When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger has every
right to expect that he be transported on that flight
and on that date, and it becomes the airline's
obligation to carry him and his luggage safely to the
agreed destination without delay. If the passenger is
not so transported or if in the process of transporting,
he dies or is injured, the carrier may be held liable for
a breach of contract of carriage.
Private respondents and petitioner entered into a
contract of air carriage when the former purchased
two plane tickets from the latter. Under this contract,
petitioner obliged itself (1) to transport Deanna and
Nikolai, as unaccompanied minors, on 2 May 1980
from Manila to San Francisco through one of its

17

planes, Flight 106; and (2) upon the arrival of Deanna


and Nikolai in San Francisco Airport on 3 May 1980,
to transport them on that same day from San
Francisco to Los Angeles via a connecting flight on
United Airways 996. As it was, petitioner failed to
transport Deanna and Nikolai from San Francisco to
Los Angeles on the day of their arrival at San
Francisco. The staff of United Airways 996 refused to
take aboard Deanna and Nikolai for their connecting
flight to Los Angeles because petitioner's personnel in
San Francisco could not produce the indemnity bond
accomplished and submitted by private respondents.It
was established in the instant case that since Deanna
and Nikolai would travel as unaccompanied minors,
petitioner required private respondents to accomplish,
sign and submit to it an indemnity bond. Private
respondents complied with this requirement.
Petitioner gave a copy of the indemnity bond to one of
its personnel on Flight 106, since it was required for
the San Francisco-Los Angeles connecting flight of
Deanna and Nikolai. Petitioner's personnel lost the
indemnity bond during the stop-over of Flight 106 in
Honolulu, Hawaii. Thus, Deanna and Nikolai were not
allowed to take their connecting flight.
Evidently, petitioner was fully aware that Deanna and
Nikolai would travel as unaccompanied minors and,
therefore, should be specially taken care of
considering their tender age and delicate situation.
Petitioner also knew well that the indemnity bond was
required for Deanna and Nikolai to make a connecting
flight from San Francisco to Los Angeles, and that it
was its duty to produce the indemnity bond to the staff
of United Airways 996 so that Deanna and Nikolai
could board the connecting flight. Yet, despite
knowledge of the foregoing, it did not exercise utmost
care in handling the indemnity bond resulting in its
loss in Honolulu, Hawaii. This was the proximate
cause why Deanna and Nikolai were not allowed to
take the connecting flight and were thus stranded
overnight in San Francisco. Further, petitioner
discovered that the indemnity bond was lost only
when Flight 106 had already landed in San Francisco
Airport and when the staff of United Airways 996
demanded the indemnity bond. This only manifests
that petitioner did not check or verify if the indemnity
bond was in its custody before leaving Honolulu,
Hawaii for San Francisco.
The foregoing circumstances reflect petitioner's utter
lack of care for and inattention to the welfare of
Deanna and Nikolai as unaccompanied minor
passengers. They also indicate petitioner's failure to
exercise even slight care and diligence in handling the
indemnity bond. Clearly, the negligence of petitioner
was so gross and reckless that it amounted to bad
faith.
It is worth emphasizing that petitioner, as a common
carrier, is bound by law to exercise extraordinary
diligence and utmost care in ensuring for the safety
and welfare of its passengers with due regard for all
the circumstances.[19] The negligent acts of petitioner
signified more than inadvertence or inattention and
thus constituted a radical departure from the
extraordinary standard of care required of common
carriers.
Petitioner's claim that it cannot be entirely blamed for
the loss of the indemnity bond because it gave the
indemnity bond to the immigration office of Honolulu,
Hawaii, as a matter of procedure during the stop-over,
and the said immigration office failed to return the

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

18

indemnity bond to petitioner's personnel before Flight


106 left Honolulu, Hawaii, deserves scant
consideration. It was petitioner's obligation to ensure
that it had the indemnity bond in its custody before
leaving Honolulu, Hawaii for San Francisco. Petitioner
should have asked for the indemnity bond from the
immigration office during the stop-over instead of
partly blaming the said office later on for the loss of
the indemnity bond. Petitioner's insensitivity on this
matter indicates that it fell short of the extraordinary
care that the law requires of common carriers.

and which was designated in their boarding passes.


They clearly waived their priority or preference when
they asked that other passengers be given the
upgrade. It should not have been imposed on them
over their vehement objection. By insisting on the
upgrade, Cathay breached its contract of carriage
with the Vazquezes.

As we have earlier found, petitioner breached its


contract of carriage with private respondents, and it
acted recklessly and malevolently in transporting
Deanna and Nikolai as unaccompanied minors and in
handling their indemnity bond. We have also
ascertained that private respondents are entitled to
moral damages because they have sufficiently
established petitioner's gross negligence which
amounted to bad faith. This being the case, the award
of exemplary damages is warranted.

DISTINCTIONS BETWEEN CCOG AND


CCOP
Diligence
extraordinary
Utmost
required
diligence
diligence of very
cautious
person.
When
Loss,
death or injury
presumption of destruction
or and
nonnegligence
deterioration
fulfillment of the
arises
and non-arrival contract
of the goods at
destination and
negligent delay
When
in the five (5) NONE,
the
presumption of instances
presumption of
negligence
mentioned;
negligence will
does not arise natural calamity, ALWAYS arise
automatically
etc.
in
case
the
carriage of PAX
W/N degree of For both, it cannot be dispensed.
diligence can
be dispensed
with
W/N degree of yes, under the NO
diligence can requisites
be lessened
previously
discussed
W/N liability in yes, under Art. As a general
case of breach 1748, 1749 and rule, NO, unless
can
be 1750;
carried
lessened?
gratuitously;
stipulation but
only for simple
negligence.

5. Cathay Pacific vs. Vasquez- Is an involuntary


upgrading of an airline passengers accommodation
from one class to a more superior class at no extra
cost a breach of contract of carriage that would entitle
the passenger to an award of damages?
H: We resolve the first issue in the affirmative.
A contract is a meeting of minds between two persons
whereby one agrees to give something or render
some service to another for a consideration. There is
no contract unless the following requisites concur: (1)
consent of the contracting parties; (2) an object
certain which is the subject of the contract; and (3) the
cause of the obligation which is established.[4]
Undoubtedly, a contract of carriage existed between
Cathay and the Vazquezes. They voluntarily and
freely gave their consent to an agreement whose
object was the transportation of the Vazquezes from
Manila to Hong Kong and back to Manila, with seats
in the Business Class Section of the aircraft, and
whose cause or consideration was the fare paid by
the Vazquezes to Cathay.

So it is not only death or injury which causes breach


of contract of carriage of pax. Anything that is in
violation of a contract will constitute a breach.

The only problem is the legal effect of the upgrading


of the seat accommodation of the Vazquezes. Did it
constitute a breach of contract?
Breach of contract is defined as the failure without
legal reason to comply with the terms of a contract.
It is also defined as the [f]ailure, without legal excuse,
to perform any promise which forms the whole or part
of the contract.
The Vazquezes never denied that they were
members of Cathays Marco Polo Club. They knew
that as members of the Club, they had priority for
upgrading of their seat accommodation at no extra
cost when an opportunity arises. But, just like other
privileges, such priority could be waived.
The
Vazquezes should have been consulted first whether
they wanted to avail themselves of the privilege or
would consent to a change of seat accommodation
before their seat assignments were given to other
passengers. Normally, one would appreciate and
accept an upgrading, for it would mean a better
accommodation. But, whatever their reason was and
however odd it might be, the Vazquezes had every
right to decline the upgrade and insist on the
Business Class accommodation they had booked for

VIP: When we talk about transportation laws


we should not only focus on breach of
contract of carriage. We should also include
that there are other causes of action which
may arise.
Example: A car owned by E and driven by F was
speeding along JP Laurel hit a Taxi driven by D which
in turn hit C. B the passenger of the taxi was also
injured. The taxi is owned by A.
Question: How many causes of action are available to
B and to C? What are the defenses available to E, D
1
and F?
MARITIME COMMERCE
Applicable laws: Code of Commerce;
COGSA; Salvage Law
Governing body: Marina (Maritime Industry
Authority)

I did not include the Q and A already. Please see your UP


Bar.

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

Functions of Marina: CF PD 474


1. Issue certificate of public conveniece for the
operation of domestic and overseas water carriers;
2. Register and issue certificate, licenses,
documents necessary or incident thereto.

or

Q: What is the requirement for a carrier to operate


domestic sea voyages?
A: Certificate of Public Convenience (CPC)
Kinds of VESSELS (under PD 474)
"Vessels" or "Watercraft" Any barge, lighter, bulk
carrier, passenger ship freighter, tanker, container
ship, fishing boats or other artificial contrivance
utilizing any source of motive power, designed, used
or capable of being used as a means of water
transportation operating either as common contract
carrier, including fishing vessels covered under
Presidential Decree No. 43, except
(1)
those owned and/or operated by the
Armed Forces of the Philippines and by
foreign governments for military purposes,
and
(2)
bancas, sailboats and other waterborne
contrivance of less than three gross tons
capacity and not motorized.
HOW OWNERSHIP OF A VESSEL MAY BE
ACQUIRED
ARTICLE 573. Merchant vessels constitute property
which may be acquired and transferred by any of the
2
means recognized by law .
The acquisition of a vessel must be included in a
written instrument, which shall not produce any effect
with regard to third persons if not recorded in the
mercantile registry.

1. Must appear in a written instrument;


2. Recorded in the proper registry -- under EO 125,
transaction must be registered with the Marina
but now this is being conducted by the PPA.
3. Robiso vs. Rivera: It is undeniable that the
defendant Rivera acquired by purchase the pilot boat
Valentina on a date prior to that of the purchase and
adjudication made at public auction, by and on behalf
of the plaintiff Rubiso; but it is no less true that the
sale of the vessel by Sy Qui to Florentino E. Rivera,
on January 4, 1915, was entered in the customs
registry only on March 17, 1915, while its sale at
public auction to Fausto Rubiso on the 23d of January
of the same year, 1915, was recorded in the office of
the Collector of Customs on the 27th of the same
month, and in the commercial registry on the 4th of
March, following; that is, the sale on behalf of the
defendant Rivera was prior to that made at public
auction to Rubiso, but the registration of this latter
sale was prior by many days to the sale made to the
defendant.
The requisite of registration in the registry, of the
purchase of a vessel, is necessary and indispensable
in order that the purchaser's rights may be maintained
against a claim filed by a third person.
In view of said legal provisions, it is undeniable that
the defendant Florentino E. Rivera's rights cannot
prevail over those acquired by Fausto Rubiso in the
ownership of the pilot boat Valentina, inasmuch as,
though the latter's acquisition of the vessel at public
auction, on January 23, 1915, was subsequent to its
purchase by the defendant Rivera, nevertheless said
sale at public auction was antecedently recorded in
the office of the Collector of Customs, on January 27,
and entered in the commercial registry-an
unnecessary proceeding--on March 4th; while the
private and voluntary purchase made by Rivera on a
prior date was not recorded in the office of the
Collector of Customs until many days afterwards, that
is, not until March 17, 1915.

The ownership of a vessel shall also be acquired by


the possession thereof in good faith for three years,
with a good title duly recorded.
In the absence of any of these requisites,
uninterrupted possession for ten years shall be
necessary in order to acquire ownership.
A captain can not acquire by prescription the ship of
which he is in command.
Notes:
1. Q: Kind of property is a vessel?
A: Movable, but ownership must be evidenced by
certificate of ownership and transfers must be
registered in the proper registry to bind 3rd persons.
2. Requisites for Legal Acquisition of a Merchant
Vessel:

In relation to Art. 712 of the Civil Code:


a. Donation;
b. law
c. Testate or intestate succession;
d. As a consequence of certain contracts
e. By tradition
f.
By prescription (3 years if possession in good
faith, with just title duly recorded, otherwise, 10
years)

19

Repair and Maintenance of Vessel during


the Voyage (Art. 583)
ARTICLE 583. If the ship being on a voyage the
captain should find it necessary to contract one or
more of the obligations mentioned in Nos. 8 and 9 of
Article 580, he shall apply to the judge or court if he is
in Philippine territory, and otherwise to the Filipino
Consul should there be one, and, in his absence to
the judge or court or to the proper local authority,
presenting the certificate of the registry of the vessel
treated of in Article 612, and the instruments proving
the obligation contracted.
The judge or court, the consul or the local authority as
the case may be, in view of the result of the
proceedings instituted, shall make a temporary
memorandum in the certificate of their result, in order
that it may be recorded in the registry when the vessel
returns to the port of her registry, or so that it can be
admitted as a legal and preferred obligation in case of
sale before the return, by reason of the sale of the
vessel by virtue of a declaration of unseaworthiness.
The lack of this formality shall make the captain
personally liable to the creditors who may be
prejudiced through his fault.
Notes:

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09


3

1. Article 580 Nos. 8 and 9 = contract obligations for


the repair and equipment of the vessel and obtain
loans and bottomry.
2. Why are these formalities required for the captain?
Because omission to follow these requirements will
make the captain personally liable. He cannot ask for
a refund from the carrier.
Persons who
commerce

take

part

in

marine

I. SHIP OWNER
II. SHIP AGENT - By agent is understood the person
intrusted with the provisioning of a vessel, or who
represents her in the port in which she happens to be.
ARTICLE 586. The owner of a vessel and the 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 therein.
Notes:
1. Macondray vs. Provident (2004) - Canpotex,
shipper, shipped and loaded on board the vessel M/V
Trade Carrier, 5000 metric tons of Standard Grade
Muriate of Potash in bulk for transportation to and
delivery at the port of Sangi, Toledo City, Cebu, in
favor of ATLAS FERTILIZER CORPORATION,
Consignee. Upon arrival, it was discovered that the
shipment sustained losses.
MACONDRAY filed ANSWER, denying liability over
the losses, having NO absolute relation with
defendant TRADE AND TRANSPORT, the alleged
operator of the vessel who transported the subject
shipment; that accordingly, MACONDRAY is the local
representative of the SHIPPER; the charterer of M/V
TRADE CARRIER and not party to this case; that it
has no control over the acts of the captain and crew of
the Carrier and cannot be held responsible for any
damage arising from the fault or negligence of said
captain and crew.
The CA affirmed the trial courts finding that petitioner
was not the agent of Trade and Transport. The
appellate court ruled, however, that petitioner could
still be held liable for the shortages of the shipment,
because the latter was the ship agent of Canpotex
Shipping Services Ltd. -- the shipper and charterer of
the vessel M/V Trade Carrier.
H: In the present case, we find no compelling reason
to overturn the Court of Appeals in its categorical
finding that petitioner was the ship agent. Such
factual finding was not in conflict with the trial courts
ruling, which had merely stated that petitioner was not
the agent of Trade and Transport. Indeed, although it

Art. 580 (8) The part of the price which has not been
paid the last vendor, the credits pending for the payment
of material and work in the construction of the vessel,
when it has not navigated, and those arising from the
repair and equipment of the vessel and its provisioning
with victuals and fuel during its last voyage. x x x
(9) The amounts borrowed on bottomry bonds before the
departure of the vessel, proven by means of the contracts
executed according to law and recorded in the commercial
registry; the amounts borrowed during the voyage with the
authority mentioned in the foregoing subdivision, filling the
same requisites, and the insurance premium, proven by
the policy of the contract or certificate taken from the
books of the broker.

20

is not an agent of Trade and Transport, petitioner can


still be the ship agent of the vessel M/V Trade Carrier.
Article 586 of the Code of Commerce states that a
ship agent is the person entrusted with provisioning
or representing the vessel in the port in which it may
be found.
Hence, whether acting as agent of the owner of
the vessel or as agent of the charterer, petitioner
will be considered as the ship agent and may be
held liable as such, as long as the latter is the one
that provisions or represents the vessel.
The trial court found that petitioner was appointed as
local agent of the vessel, which duty includes
arrangement for the entrance and clearance of the
vessel. Further, the CA found and the evidence
shows that petitioner represented the vessel. The
latter prepared the Notice of Readiness, the
Statement of Facts, the Completion Notice, the
Sailing Notice and Customs Clearance. Petitioners
employees were present at Sangi, Toledo City, one
day before the arrival of the vessel, where they stayed
until it departed. They were also present during the
actual discharging of the cargo. Moreover, Mr. de la
Cruz, the representative of petitioner, also prepared
for the needs of the vessel, like money, provision,
water and fuel.
These acts all point to the conclusion that it was the
entity that represented the vessel in the Port of Manila
and was the ship agent within the meaning and
context of Article 586 of the Code of Commerce.
III. CAPTAIN- one who governs vessels and
navigates the high seas or of large dimension and
importance.
vs. Master- commands small ships and engages
exclusively in coastwide trade.
But For purposes of maritime commerce, captain,
master, patron, they all mean the same.
Qualifications of Captain
ARTICLE 609. Captains and masters of vessels must
be Filipino having legal capacity to bind themselves in
accordance with this Code, and must prove that they
have the skill, capacity, and qualifications required to
command and direct the vessel, as established by
marine laws, ordinances, or regulations, or by those of
navigation, and that they are not disqualified
according to the same for the discharge of the duties
of that position.
If the owner of a vessel desires to be the captain
thereof and does not have the legal qualifications
therefor, he shall limit himself to the financial
administration of the vessel, and shall intrust her
navigation to a person possessing the
qualifications required by said ordinances and
regulations.
Notes:
1. Coastwise Lighterage vs. CA - Here, the patron of
the lighter admitted that he was not licensed.
H: Clearly, petitioner Coastwise Lighterage's
embarking on a voyage with an unlicensed patron
violates Art. 609. It cannot safely claim to have

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

exercised extraordinary diligence, by placing a person


whose navigational skills are questionable, at the
helm of the vessel which eventually met the fateful
accident. It may also logically, follow that a person
without license to navigate, lacks not just the skill to
do so, but also the utmost familiarity with the usual
and safe routes taken by seasoned and legally
authorized ones. Had the patron been licensed, he
could be presumed to have both the skill and the
knowledge that would have prevented the vessel's
hitting the sunken derelict ship that lay on their way to
Pier 18.
As a common carrier, petitioner is liable for breach of
the contract of carriage, having failed to overcome the
presumption of negligence with the loss and
destruction of goods it transported, by proof of its
exercise of extraordinary diligence.
General Functions of a Captain:
ARTICLE 610. The following powers are inherent
in the position of captain or master of a vessel:
1.
To appoint or make contracts with the
crew in the absence of the agent and propose said
crew, should said agent be present; but the agent
shall not be permitted to employ any member
against the captain's express refusal.
2.
To command the crew and direct the
vessel to the port of its destination, in accordance
with the instructions he may have received from
the agent.
3.
To impose, in accordance with the
agreements and the laws and regulations of the
merchants marine, on board the vessel,
correctional punishment upon those who do not
comply with his orders or who conduct
themselves
against
discipline,
holding
a
preliminary investigation on the crimes committed
on board the vessel on the high seas, which shall
be turned over to the authorities, who are to take
cognizance thereof, at the first port touched.
4.
To make contracts for the charter of the
vessel in the absence of the agent or of her
consignee, acting in accordance with the
instructions received and protecting the interests
of the owner most carefully.
5.
To adopt all the measures which may be
necessary to keep the vessel well supplied and
equipped, purchasing for the purpose all that may
be necessary,
provided there is no time to
request instructions of the agent.
6.
To make, in similar urgent cases and on a
voyage, the repairs to the hull and engines of the
vessel and to her rigging and equipment which are
absolutely necessary in order for her to be able to
continue and conclude her voyage; but if she
should arrive at a point where there is a consignee
of the vessel, he shall act in concurrence with the
latter.
Notes:
1. Inter-orient Maritime vs. NLRC- Here, the captain
refused to leave the port, contrary to the ship agent's
instructions, until the supplies he requested necessary
for the welding-repair of the turbo-charger and the
economizer were delivered. Subsequently, the captain
was dismissed. Issue: Was the captain remiss of his
duties?
H: NO. The captain has the authority to decide. The
captain of a vessel is a confidential and managerial
employee within the meaning of the above doctrine. A

21

master or captain, for purposes of maritime


commerce, is one who has command of a vessel. A
captain commonly performs three (3) distinct roles: (1)
he is a general agent of the shipowner; (2) he is also
commander and technical director of the vessel; and
(3) he is a representative of the country under whose
flag he navigates. Of these roles, by far the most
important is the role performed by the captain as
commander of the vessel; for such role (which, to our
mind, is analogous to that of "Chief Executive Officer"
[CEO] of a present-day corporate enterprise) has to
do with the operation and preservation of the vessel
during its voyage and the protection of the
passengers (if any) and crew and cargo. In his role as
general agent of the shipowner, the captain has
authority to sign bills of lading, carry goods aboard
and deal with the freight earned, agree upon rates
and decide whether to take cargo. The ship captain,
as agent of the shipowner, has legal authority to enter
into contracts with respect to the vessel and the
trading of the vessel, subject to applicable limitations
established by statute, contract or instructions and
regulations of the shipowner. 17 To the captain is
committed the governance, care and management of
the vessel. Clearly, the captain is vested with both
management and fiduciary functions.
More importantly, a ship's captain must be accorded a
reasonable measure of discretionary authority to
decide what the safety of the ship and of its crew and
cargo specifically requires on a stipulated ocean
voyage. The captain is held responsible, and properly
so, for such safety. He is right there on the vessel, in
command of it and (it must be presumed)
knowledgeable as to the specific requirements of
seaworthiness and the particular risks and perils of
the voyage he is to embark upon. The applicable
principle is that the captain has control of all
departments of service in the vessel, and reasonable
discretion as to its navigation. It is the right and duty
of the captain, in the exercise of sound discretion and
in good faith, to do all things with respect to the vessel
and its equipment and conduct of the voyage which
are reasonably necessary for the protection and
preservation of the interests under his charge,
whether those be of the shipowners, charterers, cargo
owners or of underwriters. It is a basic principle of
admiralty law that in navigating a merchantman, the
master must be left free to exercise his own best
judgment. The requirements of safe navigation
compel us to reject any suggestion that the judgment
and discretion of the captain of a vessel may be
confined within a straitjacket, even in this age of
electronic communications.
2. Far Eastern Shipping vs. CA- There was a
Russian vessel that arrived in Manila, owned by Far
Eastern Shipping. It was assigned berth no. 4. There
is such a thing as compulsory pilotage -- there is a
pilot assigned to pilot the vessel outside the break
water until it reaches its birth. In this case, A was
assigned to the vessel. The captain of the vessel was
beside A. Under the rules of compulsory pilotage,
once a pilot takes over the helm, the captain will have
to stand aside and surrender all his authority to the
pilot who is more familiar with the docking maneuvers.
Now, A hit the pier. PPA filed a complaint against Far
Eastern Shipping. Issue: Can the captain of the vessel
be considered negligent in this case? Because the
only way that Far Eastern shipping can be held liable
is for the courts to declare the captain negligent.
HELD: YES.

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

A pilot, in maritime law, is a person duly qualified, and


licensed, to conduct a vessel into or out of ports, or in
certain waters. In a broad sense, the term "pilot"
includes both (1) those whose duty it is to guide
vessels into or out of ports, or in particular waters and
(2) those entrusted with the navigation of vessels on
the high seas. However, the term "pilot" is more
generally understood as 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.
Under English and American authorities, generally
speaking, the pilot supersedes the master for the time
being in the command and navigation of the ship, and
his orders must be obeyed in all matters connected
with her navigation. He becomes the master pro hac
vice and should give all directions as to speed,
course, stopping and reversing, anchoring, towing
and the like. And when a licensed pilot is employed in
a place where pilotage is compulsory, it is his duty to
insist on having effective control of the vessel, or to
decline to act as pilot. Under certain systems of
foreign law, the pilot does not take entire charge of
the vessel, but is deemed merely the adviser of the
master, who retains command and control of the
navigation even on localities where pilotage is
compulsory.
While it is indubitable that in exercising his functions a
pilot-is in sole command of the ship[69] and
supersedes the master for the time being in the
command and navigation of a ship and that he
becomes master pro hac vice of a vessel piloted by
him,[70] there is overwhelming authority to the effect
that the master does not surrender his vessel to the
pilot and the pilot is not the master. The master is still
in command of the vessel notwithstanding the
presence of a pilot. There are occasions when the
master may and should interfere and even displace
the pilot, as when the pilot is obviously incompetent or
intoxicated and the circumstances may require the
master to displace a compulsory pilot because of
incompetency or physical incapacity. If, however, the
master does not observe that a compulsory pilot is
incompetent or physically incapacitated, the master is
justified in relying on the pilot, but not blindly.
The master is not wholly absolved from his duties
while a pilot is on board his vessel, and may advise
with or offer suggestions to him. He is still in
command of the vessel, except so far as her
navigation is concerned, and must cause the ordinary
work of the vessel to be properly carried on and the
usual precaution taken. Thus, in particular, he is
bound to see that there is sufficient watch on deck,
and that the men are attentive to their duties, also that
engines are stopped, towlines cast off, and the
anchors clear and ready to go at the pilot's order.
A perusal of Capt. Kabankov's testimony makes it
apparent that he was remiss in the discharge of his
duties as master of the ship, leaving the entire
docking procedure up to the pilot, instead of
maintaining watchful vigilance over this risky
maneuver.
In sum, where a compulsory pilot is in charge of a
ship, the master being required to permit him to
navigate it, if the master observes that the pilot is
incompetent or physically incapable, then it is the duty
of the master to refuse to permit the pilot to act. But if
no such reasons are present, then the master is

22

justified in relying upon the pilot, but not blindly. Under


the circumstances of this case, if a situation arose
where the master, exercising that reasonable
vigilance which the master of a ship should exercise,
observed, or should have observed, that the pilot was
so navigating the vessel that she was going, or was
likely to go, into danger, and there was in the exercise
of reasonable care and vigilance an opportunity for
the master to intervene so as to save the ship from
danger, the master should have acted accordingly.
The master of a vessel must exercise a degree of
vigilance commensurate with the circumstances.
In general, a pilot is personally liable for damages
caused by his own negligence or default to the
owners of the vessel, and to third parties for damages
sustained in a collision. Such negligence of the pilot
in the performance of duty constitutes a maritime tort.
At common law, a shipowner is not liable for injuries
inflicted exclusively by the negligence of a pilot
accepted by a vessel compulsorily.The exemption
from liability for such negligence shall apply if the pilot
is actually in charge and solely in fault. Since, a pilot
is responsible only for his own personal negligence,
he cannot be held accountable for damages
proximately caused by the default of others, or, if
there be anything which concurred with the fault of the
pilot in producing the accident, the vessel master and
owners are liable.
3. WILDVALLEY SHIPPING VS. CA - Almost same
facts, except in this case the vessel was Filipino
owned and it arrived in Velenzuela. There was a
compulsory pilotage. When the pilot boarded the
vessel, the captain left the bridge. When it entered the
Venezuelan channel, the vessel experienced some
vibration and the pilot assured the captain that the
vibrations were normal - the result of the shallowness
of the channel. But the vessel ran aground thereafter.
Held: The captain in this case was not negligent.
We find that the grounding of the vessel is attributable
to the pilot. When the vibrations were first felt the
watch officer asked him what was going on, and pilot
Vasquez replied that "(they) were in the middle of the
channel and that the vibration was as (sic) a result of
the shallowness of the channel.
The law does provide that the master can
countermand or overrule the order or command of the
harbor pilot on board. The master of the Philippine
Roxas deemed it best not to order him (the pilot) to
stop the vessel. The master of the Philippine Roxas
deemed it best not to order him (the pilot) to stop the
vessel, mayhap, because the latter had assured him
that they were navigating normally before the
grounding of the vessel. Based on these declarations,
it comes as no surprise to us that the master chose
not to regain control of the ship. Admitting his limited
knowledge of the Orinoco River, Captain Colon relied
on the knowledge and experience of pilot Vasquez to
guide the vessel safely.
So the SC gave conflicting decisions, but if you look at
it, the SC ruled in these ways only for one reason -ruling in favor of Filipinos. (Very good, Lyndon!:D)
Books to be carried by the captain
ARTICLE 612. The following obligations are inherent
in the office of captain: x x x

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

3.
To have three folioed and stamped books,
placing at the beginning of each one a note of the
number of folios it contains, signed by the maritime
official, and in his absence by the competent authority.
In the first book, which shall be called "log book," he
shall enter every day the condition of the atmosphere,
the prevailing winds, the course sailed, the rigging
carried, the horsepower of the engines, the distance
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 is its cause, as well as the
imperfections and averages of the cargo, and the
effects and consequence of the jettison, should there
be any; and in cases of grave resolutions which
require the advice or a meeting of the officers of the
vessel, or even of the passengers and crew, he shall
record the decision adopted. For the informations
indicated he shall make use of the binnacle book, and
of the steam or engine book kept by the engineer.
In the second book, called the "accounting book," he
shall enter all the amounts collected and paid for the
account of the vessel, entering specifically article by
article, the sources of the collection, and the amounts
invested in provisions, repairs, acquisition of rigging or
goods, fuel, outfits, wages, and all other expenses. 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, either directly or by delivery to
their families.
In the third book, called "freight book," he shall
record the entry and exit of all the goods, stating their
marks and packages, names of the shippers and of
the consignees, ports of loading and unloading, and
the freight earned. In the same book he shall record
the names and places of sailing of the passengers
and the number of packages of which their baggage
consists, and the price of the passage.
Notes:
1. Of the three books, the log book is the most
important;
2. Haverton Shipping vs. NLRC - What is the
probative value of the entries in the logbook? Can you
use the log book as evidence? YES. It is an official
record of entries made by a person in the
performance of his duty required by law and are prima
facie evidence of the facts entered therein.
But in:
3. Centennial vs. Dela Cruz: In Wallem Maritime
Services, Inc. v. National Labor Relations
Commission, citing Haverton Shipping Ltd. v. National
Labor Relations Commission, the Court ruled that a
copy of an official entry in the logbook is legally
binding and serves as an exception to the hearsay
rule. In the said case, however, there was no
controversy as to the genuineness of the said entry
and the authenticity of the copy presented in
evidence.
In the instant case, respondent has consistently
assailed the genuineness of the purported entry and
the authenticity of such copy. He alleged that before
his repatriation, there was no entry in the ship's official
logbook regarding any incident that might have
caused his relief; that Captain Kowalewski's signature

23

in such purported entry was forged. In support of his


allegations, respondent submitted three official
documents bearing the signature of Capt. Sczepan
Kowalewski which is different from the one appearing
in Annex E. Thus, it was incumbent upon petitioners
to prove the authenticity of Annex E, which they failed
to do.
Likewise, the purported report of Capt.
Kowalewski dated September 1, 2000 and the
statements of Safety Officer Khaldun Nacem Faridi
and Chief Officer Josip Milin also cannot be given
weight for lack of authentication.
Although technical rules of evidence do not strictly
apply to labor proceedings, however, in the instant
case, authentication of the above-mentioned
documents is necessary because their genuineness is
being assailed, and since petitioners offered no
corroborating evidence. These documents and their
contents have to be duly identified and authenticated
lest an injustice would result from a blind adoption of
such contents. Thus, the unauthenticated documents
relied upon by petitioners are mere self-serving
statements of their own officers and were correctly
disregarded by the Court of Appeals.
DURATION OF LIABILITY of Captain
Do not forget the duration of liability under the Civil
Code, Art. 1736.
With respect to the captain:
ARTICLE 619. The captain shall be liable for the
cargo from the time it is turned over to him at the
dock, or afloat alongside the ship, at the port of
loading until he delivers it on the shores or on the
discharging wharf, of the port of unloading unless
the contrary has been expressly agreed upon.
Notes:
1. If the goods are delivered to Aboitiz in the
warehouse, does the liability of Aboitiz start? Yes,
because the goods are transferred already to Aboitize.
Does the liability of the captain start? NO. Only once
the goods are at the dock and until the goods are
delivered to the shore. So the captain has a shorter
period of responsibility as compared to the carrier. Of
course, unless is a stipulation to the contrary.
MARITIME PROTEST
Definition: This has to be done by the captain if the
vessel/cargo is lost or injured. It is a written statement
under oath, made by the captain or master of the
vessel after the occurrence of an accident or disaster
in which the vessel or cargo is lost or injured with
respect to circumstances attending such ocurrence.
Purpose: It is usually intended to show that the loss
or damge resulted from a peril of the sea or some
other cause for shich neither the master or owner was
responsible. It concludes with the protestation against
any liablity of the owner for such loss or damage.
ARTICLE 624. A captain whose vessel has gone
through a hurricane or who believes that the cargo
has suffered damages or averages, shall make a
protest thereon before the competent authority at
the first port he touches within the twenty-four
hours following his arrival, and shall ratify it within
the same period when he arrives at the place of
his destination, immediately proceeding with the

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

proof of the facts, it not being permitted to open


the hatches until this has been done.
The captain shall proceed in the same manner if,
the vessel having been wrecked, he is saved alone
or with part of his crew, in which case he shall
appear before the nearest authority, and make a
sworn statement of the facts.
The authority or the consul abroad shall verify the
said facts, receiving a sworn statement of the
members of the crew and passengers who may
have been saved, and taking the other steps which
may assist in arriving at the facts, drafting a
certificate of the result of the proceedings in the
log book and in that of the sailing mate, and shall
deliver the original records of the proceedings to
the captain, stamped and folioed, with a
memorandum of the folios, which he must
rubricate, for their presentation to the judge or
court of the port of destination.
The statement of the captain shall be believed if it
is in accordance with those of the crew and
passengers; if they disagree, the latter shall be
accepted, unless there is proof to the contrary
Procedure:
1. Protest must be made with a competent
authority at first port he touches;
2. within 24 hours following his arrival
3. Captain must ratify it within 24 hours when he
arrives at the place of destination where he
must proceed immediately with the proof of
the facts
4. He must not open the hatches until all of the
above are done.

24

Chief Mate is a managerial employee because the


said officer performed the functions of an executive
officer next in command to the captain; that in the
performance of such functions, he is vested with
powers or prerogatives to lay down and execute
management policies.
The exercise of discretion and judgment in directing a
ship's course is as much managerial in nature as
decisions arrived at in the confines of the more
conventional board room or executive office.
Important functions pertaining to the navigation of the
vessel like assessing risks and evaluating the vessel's
situation are managerial in nature. Thus, respondent,
as Chief Officer, is a managerial employee; hence,
petitioners need to show by substantial evidence the
basis for their claim that respondent has breached
their trust and confidence.
Petitioners' basis for dismissing respondent was the
alleged entry by Captain Kowalewski in the ship's
logbook regarding respondent's inexperience and
inefficiency. A ship's log/logbook is the official record
of a ship's voyage which its captain is obligated by
law to keep wherein he records the decisions he has
adopted, a summary of the performance of the vessel,
and other daily events. A logbook is a respectable
record that can be relied upon when the entries
therein are presented in evidence. (Connect with
page 16)
SECOND MATE (which is actually the 3rd mate
since the sailing mate is the 2nd mate)
In case of disability, disqualification of the captain and
the sailing mate, he takes over. Relevant provisions:
Art 632-633, Code of Commerce

IV. OFFICERS AND CREW OF THE VESSEL


SAILING MATE - He is the 2nd chief of the
vessel; takes place of the captain and assumes all
his duties and powers in case of absence,
sickness or death.
ARTICLE 627. The sailing mate, as the second
chief of the vessel and unless the agent orders
otherwise, shall take the place of the captain in
cases of absence, sickness, or death, and shall
then assume all his powers, obligations, and
responsibilities.
Notes:
1. Centennial vs. Dela Cruz, supra. (2008) Petitioners allege loss of trust and confidence due to
incompetence as the ground for respondent's
dismissal. Loss of trust and confidence is premised
on the fact that the employee holds a position whose
functions may only be performed by someone who
has the confidence of management. Such employee
may be managerial or rank-and-file, but the nature of
his position determines the requirements for a valid
dismissal.
Article 627 of the Code of Commerce defines the
Chief Mate, also called Chief Officer or Sailing Mate,
as "the second chief of the vessel, and unless the
agent orders otherwise, shall take the place of the
captain in cases of absence, sickness, or death, and
shall then assume all his powers, duties, and
responsibilities." A Chief Officer, therefore, is second
in command, next only to the captain of the vessel.

CREW OR SAILORS - Under the Code of


Commerce, they are enlisted by the captain in
such number he may deem proper. But I think at
present the captain has no business with the crew
as they are hired by the carrier. Relevant
provisions: Art. 634-637
DISCHARGE:

Who can discharge? The shipowner or the captain


can discharge the crew (Art. 637)
What is the effect if the captain or the crew is
discharged during the voyage? Example, voyage
from Manila to San Francisco and en route to SF
they are discharged:
ARTICLE 604. If the captain or any other member
of the crew should be discharged during the
voyage, they shall receive their salary until the
return to the place where the contract was made,
unless there are good reasons for the discharge,
all in accordance with Articles 636 et seq. of this
Code.
Gen Rule: They shall continue to receive their
salaries until their return to the port where the contract
was made. They have to be paid the full round trip.
Except: If there is a just cause or just motive.
Rule in case of discharge if the contract is for a
definite period or voyage:

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

ARTICLE 605. If the contracts of the captain and


members of the crew with the agent should be for
a definite period or voyage, they can not be
discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious
matters, robbery, theft, habitual drunkenness, and
damage caused to the vessel or to its cargo by
malice or manifest or proven negligence.
Notes:
1. Madrigal vs. Ogilvie - The services of Jesus G.
Ogilvie, Salvador Ortile, Antonio C. Militar and Miguel
M. Fermin were engaged by Manuel Mascuana,
master or captain employed by the petitioner Madrigal
Shipping Company, Inc., to man and fetch the vessel
"S.S. Bridge" from Sasebu, Japan. Pursuant thereto
the respondents were flown to Sasebu, Japan, and
they manned the vessel out of the port of Sasebu. On
16 March 1948, when the vessel reached Hongkong,
the respondents were dismissed and replaced by a
crew of Chinese nationality. The respondents were
flown back to Manila and paid their respective salaries
up to the date of their dismissal.(So they were only
paid from Japan to Hongkong)
H:The services of the respondents were engaged by
the petitioner to man its vessel for a determinate time
or voyage, with an express stipulation that "this
contract expires on the arrival of this boat at the port
of Manila." Not having been discharged for any of the
causes enumerated in the Art. 605, the respondents
are entitled to the amounts they respectively seek to
collect from the petitioner.
2. Wallem vs. Minister of Labor: Wallem hired X and
Y as seamen for 10 months. For instigating the
International Transport Federation (ITF) Chapter to
demand higher wages they were dismissed. Was the
dismissal proper?
No, the seamen cannot be dismissed without legal
cause because the contract was for a definite period
of 10 months. What X and Y did was not a legal cause
under Art. 605 but an exercise of the rights of all
workmen to seek better rights and higher benefits x x
x
Grounds if captain discharges crew:(of course, the
captain cannot discharge himself!)
ARTICLE 636. Should a fixed period for which a
sailor has signed not be stated, he can not be
discharged until the end of the return voyage to
the port where he enrolled.
ARTICLE 637. Neither can the captain discharge a
sailor during the time of his contract except for
sufficient cause, the following being considered
as such:
1. The perpetration of a crime which disturbs
order on the vessel.
2. Repeated offenses of insubordination, against
discipline, or against the fulfillment of the service.
3. Repeated incapacity or negligence in the
fulfillment of the service to be rendered.
4. Habitual drunkenness.
5. Any occurrence which incapacitates the sailor
to carry out the work under his charge, with the
exception of the provisions contained in Article
644.
6. Desertion.

25

ARTICLE 644. A sailor who falls sick shall not


lose his right to wages during the voyage, unless
the sickness is the result of his own fault. At any
rate, the costs of the attendance and cure shall be
defrayed from the common funds, in the form of a
loan.
If the sickness should be caused by an injury
received in the service or defense of the vessel
the sailor shall be attended and cured from the
common funds, there being deducted before
anything else from the proceeds of the freight, the
cost of the attendance and cure.
WHAT IS A SUPERCARGO?
A
person specially employed by the owner of a cargo to
take charge of and sell to the best advantage
merchandise which has been shipped, and to
purchase returning cargoes and to receive freight, as
he may be authorized.
ARTICLE 649. Supercargoes shall discharge on
board the vessel the administrative duties which
the agent or shippers may have assigned them;
they shall keep an account and record of their
transactions in a book which shall have the same
conditions and requisites as required for the
accounting book of the captain, and shall respect
the latter in his duties as chief of the vessel.
The powers and liabilities of the captain shall
cease, when there is a supercargo, with regard to
that part of the administration legitimately
conferred upon the latter, but shall continue in
force for all acts which are inseparable from his
authority and office.
ARTICLE 650. All the provisions contained in the
second section of Title III, Book II, with regard to
qualifications, manner of making contracts, and
liabilities of factors shall be applicable to
supercargoes.
ARTICLE 651. Supercargoes can not, without
special authorization or agreement, make any
transaction for their own account during the
voyage, with the exception of the ventures which,
in accordance with the custom of the port of
destination, they are permitted to do.
Neither shall they be permitted to invest in the
return trip more than the profits from the ventures,
unless there is a special authorization thereto
from the principals.
ABANDONMENT/DOCTRINE OF LIMITED
LIABILITY IN MARINE TRANSPORTATION
As already discussed, the CCOG can limit its liability
by stipulation. (Art. 1749-1750) For CCOP, liability can
only be limited when Pax is carried for free and there
is a stipulation. Under Maritime Commerce, there is a
way for a CC to limits its liability even without a
stipulation because it is the law itself which proves for
this liability.
Recall: ARTICLE 586 and 583 (SO/SA civilly liable for
acts of captain and obligations contracted)
ARTICLE 587. The agent shall also be civilly liable
for the indemnities in favor of third persons which
arise from the conduct of the captain in the care of the
goods which the vessel carried; but he may exempt
himself therefrom by abandoning the vessel with

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

all her equipments and the freight he may have


earned during the voyage.

26

1. When the vessel is properly insured - the insurance


will take care of the liability, the value of which may be
more than the value of the vessel, freight, etc.

Other provisions providing for abandonment:


ARTICLE 590. The owners of a vessel shall be civilly
liable in the proportion of their contribution to the
common fund, for the results of the acts of the
captain, referred to in Article 587. Each part owner
may exempt himself from this liability by the
abandonment before a notary of the part of the vessel
belonging to him.
And in cases of collision if the same is caused by the
captain alone, under
Art. 837: The civil liability contracted by the
shipowners in the cases prescribed in this section,
shall be understood as limited to the value of the
vessel with all her appurtenances and all the freight
earned during the voyage.
Notes:
1. What is abandonment? It is equivalent to an offer
of the value of the vessel, her equipment and freigth
earne in return for an exemption from liability.
So if the vessel sank and the sinking of the vessel
was caused entirely by the negligence of the captain,
the SO or SA can be held liable. But if SO or SA
abandons the vessel, then the liability will only be
limited to the value of the vessel, the freightage and
the equipment.
2. The real and hypothecary nature of maritime law,
therefore, distinguishes it from Civil law and
commercial law because of this doctrine. A shipping
transportation contract is "real and hypothecary" in
nature under Art. 587 which accord/issue a
shipowner/agent the right of abandonment and by
necessary implication, his liability is confined to that to
which he is entitled as of right to abandon, meaning
the vessel and all her equipment and the freight she
may have earned during the voyage.
Read: Yangco vs. Laserna for history of right of
abandonment.
3. Reasons why SO/SA are given the right to
abandonment (Heirs of Amparo vs. delos Santos)
a. To offset against the innumerable hazards and
perils of the sea;
b. To encourage ship building and marine commerce
4. Note that when abandonment is made in the
instances provided by law, it cannot be refused.
5. Can a charterer make an abandonment? NO,
because he cannot be considered in place of the
owner or the shipagent in matters regarding to the
reponsibility pertaining to ownership and possession
of the vessel. Even if the charter is a bareboat or
demise charter.
EXCEPTIONS
TO
RIGHT
OF
ABANDONMENT (meaning even if the right
to abandonment exists, the SO/SA will still
pay for more than the value of the vessel)

2. When the liability for repairs of the vessel was


incureed before the loss of such vessel (favorite BQ)
3. When the liability is one which arises from the
provisions of the labor code.
When abandonment CANNOT BE MADE
1. When the voyage is not maritime, but only in a
river, bay, or gulf
2. When the vessel is not acting as a common carrier
but a private carrier.
3. When the SO/SA is at fault, i.e. when there is lack
of proper equipment, lack of technical training of the
crew, unlicensed crew members, captain. So any kind
of negligence, no matter how minute will remove the
right of abandonment.
cases:
a. Heirs of Amparo delos Santos vs. CA: The
vessel left late because the carrier decided to load
more unmanifested passengers and cargo. Because
the vessel left late, it encountered a typhoon and the
vessel sank. According to the Board of Marine Inquiry
(BMI) the sinking was caused by the fault of the
captain and its officers in operating the vessel. The
SO/SA claimed the right to abandon, but the SC said
that the doctrine of limited liability cannot be invoked
in this case because there was fault or negligence on
the part of the carrier because it overloaded the
vessel even if it was cleared to leave. And everytime it
is discovered that a vessel is overloaded with
cargo/pax, goodbye abandonment.
It must be stressed at this point that Article 587
speaks only of situations where the fault or
negligence is committed solely by the captain. In
cases where the shipowner is likewise to be blamed,
Article 587 does not apply. Such a situation will be
covered by the provisions of the New Civil Code on
Common Carriers. Owing to the nature of their
business and for reasons of public policy, common
carriers are tasked to observe extraordinary diligence
in the vigilance over the goods and for the safety of its
passengers (Article 1733, New Civil Code). Further,
they are 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 (Article 1755, New
Civil Code). Whenever death or injury to a passenger
occurs, common carriers are presumed to have been
at fault or to have acted negligently unless they prove
that they observed extraordinary diligence as
prescribed by Articles 1733 and 1755
b. PHILAMGEN VS. CA- According to the SC, despite
the fact that the vessel was sea worthy, it was not
cargo worthy. The cases and cases of coca-cola
bottles were loaded on deck and the vessel was top
heavy making it easy to tilt in case of strong winds.
Q: What if the sinking of the vessel is caused by
fortuitous event, is the right of abandonment present?
A: No, the SO or SA will be exempt from liability.
Other important cases:

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

1. Aboitiz Shipping v. General Accident (1993)- The


sinking of this vessel caused a lot of cases to be filed
against aboitiz. In this case, the SC applied the
findings of the BMI where it was found that the sinking
of the vessel was caused by a fortuitous event. The
SC even exonerated the captain and crew so nothing
could be collected from Aboitiz
2. Monarch Insurance vs. CA (2000)- It was
discovered that Aboitiz was negligent. So the sinking
of the ship was not caused by fortuitous event and it
was not also caused by the captain of the ship. So
therefore the right of abandonment does not exist as
there was fault or negligence on the part of the CC.
BUT in this case, there was so many claimants, about
110 claimants, the claim amounting to about 43 Million
and the insurance proceeds were only 14 million. The
SC said that the claimants cannot get their 43 million
claims. They have to share pro-rata the proceeds of
the insurance. There is no preference of credit.
In the instant case, there is, therefore, a need to
collate all claims preparatory to their satisfaction from
the insurance proceeds on the vessel M/V P. Aboitiz
and its pending freightage at the time of its loss. No
claimant can be given precedence over the others by
the simple expedience of having completed its action
earlier than the rest. Thus, execution of judgment in
earlier completed cases, even these 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 all claims.
3. Aboitiz Shipping vs. New India (2006) - The SC
changed its mind again.
Our ruling in Monarch may appear inconsistent with
the exception of the limited liability doctrine, as
explicitly stated in the earlier part of the Monarch
decision. An exception to the limited liability doctrine
is when the damage is due to the fault of the
shipowner or to the concurrent negligence of the
shipowner and the captain. In which case, the
shipowner shall be liable to the full-extent of the
damage. We thus find it necessary to clarify now the
applicability here of the decision in Monarch. Where
the shipowner fails to overcome the presumption of
negligence, the doctrine of limited liability cannot be
applied. Therefore, we agree with the appellate court
in sustaining the trial court's ruling that petitioner is
liable for the total value of the lost cargo.
4. Aboitiz Shipping vs. Equitable (2008) which
affirmed the New India ruling. Here, the SC traced
the history starting from GAFLAC to New India. So no
pro-rata sharing of the insurance proceeds.
The Court declared in the 1993 GAFLAC case that
claims against Aboitiz arising from the sinking of M/V
P. Aboitiz should be limited only to the extent of the
value of the vessel. Thus, the Court held that the
execution of judgments in cases already resolved with
finality must be stayed pending the resolution of all
the other similar claims arising from the sinking of M/V
P. Aboitiz. Considering that the claims against Aboitiz
had reached more than 100, the Court found it
necessary to collate all these claims before their
payment from the insurance proceeds of the vessel
and its pending freightage. As a result, the Court

27

exhorted the trial courts before whom similar cases


remained pending to proceed with trial and adjudicate
these claims so that the pro-rated share of each claim
could be determined after all the cases shall have
been decided.
In Monarch Insurance, the Court deemed it fit to settle
once and for all this factual issue by declaring that the
sinking of M/V P. Aboitiz was caused by the
concurrence of the unseaworthiness of the vessel and
the negligence of both Aboitiz and the vessel's crew
and master and not because of force majeure.
Notwithstanding this finding, the Court did not reverse
but reiterated instead the pronouncement in GAFLAC
to the effect that the claimants be treated as "creditors
in an insolvent corporation whose assets are not
enough to satisfy the totality of claims against it."
However, on 02 May 2006, the Court rendered a
decision in Aboitiz Shipping Corporation v. New India
Assurance Company, Ltd. (New India), reiterating the
well-settled principle that the exception to the limited
liability doctrine applies when the damage is due to
the fault of the shipowner or to the concurrent
negligence of the shipowner and the captain. Where
the shipowner fails to overcome the presumption of
negligence, the doctrine of limited liability cannot be
applied. In New India, the Court clarified that the
earlier pronouncement in Monarch Insurance was not
an abandonment of the doctrine of limited liability and
that the circumstances therein still made the doctrine
applicable.
In New India, the Court declared that Aboitiz failed to
discharge its burden of showing that it exercised
extraordinary diligence in the transport of the goods it
had on board in order to invoke the limited liability
doctrine. Thus, the Court rejected Aboitiz's argument
that the award of damages to respondent therein
should be limited to its pro rata share in the insurance
proceeds from the sinking of M/V P. Aboitiz.
The instant petitions provide another occasion for the
Court to reiterate the well-settled doctrine of the real
and hypothecary nature of maritime law. As a general
rule, a ship owner's liability is merely co-extensive
with his interest in the vessel, except where actual
fault is attributable to the shipowner. Thus, as an
exception to the limited liability doctrine, a shipowner
or ship agent may be held liable for damages when
the sinking of the vessel is attributable to the actual
fault or negligence of the shipowner or its failure to
ensure the seaworthiness of the vessel. The instant
petitions cannot be spared from the application of the
exception to the doctrine of limited liability in view of
the unanimous findings of the courts below that both
Aboitiz and the crew failed to ensure the
seaworthiness of the M/V P. Aboitiz.
SPECIAL CONTRACTS IN MARITIME
COMMERCE: (Charter party, bill of lading,
loans on bottomry and respondentia)
1. CHARTER PARTY - a contract wherein the entire
ship or some principal part thereof is let by the owner
to another person for a specified time or use, in
consideration of the payment of a fee.
Two kinds of C/P: a. Contract of Affreightment here the owner retains control of the vessel, he
provides the crew, what is being leased is only the
space of the vessel. A contract of affreightment can
be a time charter or a voyage charter. b.

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

28

Bareboat/Demise Charter wherein the owner of the


vessel gives up the control and full possession of the
vessel to the charterer who becomes the owner pro
hac vice.

3.If the vessel should not be placed at the disposal of


the charterer within the period and in the manner
agreed upon. (non placement at disposal of the
charterer)

If Voyage or time charter = common carrier retains its


nature as a common carrier; but if it is bareboat
charter, the common carrier becomes a private carrier
for that particular charter only.

4.If, after the vessel has put to sea, she should return
to the port of departure, on account of risk of
pirates, enemies, or bad weather, and the
freighters should agree to unload her. (charterer
must pay owner for the voyage out, meaning one way)

Formal/Substantial requirements:
ARTICLE 652. A charter party must be drawn in
duplicate and signed by the contracting parties, and
when either does not know how or can not do so, by
two witnesses at their request.
The charter party shall include, besides the conditions
unrestrictedly stipulated, the following statements:
1.The kind, name, and tonnage of the vessel.
2.Her flag and port of registry.
3.The name, surname, and domicile of the captain.
4.The name, surname, and domicile of the 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 weight, or
measure which they respectively bind themselves to
load and transport, or whether it is the total cargo.
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.
(PRIMAGE- a small allowance or compensation
payable to the master or owner of the vessel for the
use of its cables to load and unload the goods and to
the mariners for lading and unlading in port. So what
you pay those who load;
DEMURRAGE - an amount stipulated in the charter
party to be paid by the charter/shipper to the ship
owner for any delay. )
9.The amount of primage to be paid to the captain.
10.The days agreed upon for loading and
unloading. (laydays- no. of days between unloading
and departure)
11.The lay days and extra lay days to be allowed
and the rate of demurrage.
WHO CAN RESCIND A CHARTER PARTY:
Either party

In the second and third cases the person from whom


the vessel was chartered shall indemnify the charterer
for the losses he may suffer. In the fourth case the
person from whom the vessel was chartered shall
have a right to the freightage in full for the voyage out.
If the charter should have been made by the months,
the charterers shall pay the full freightage for one
month, if the voyage were to a port in the same
waters, and two months, if the voyage were to a port
in different waters. From one port to another of the
Peninsula and adjacent islands, the freightage for one
month only shall be paid.
5.If a vessel should make a port during the voyage in
order to make urgent repairs and the freighters
should prefer to dispose of the merchandise.(pay for
voyage out)
When the delay does not exceed thirty days, the
freighters shall pay the full freight for the voyage out.
Should the delay exceed thirty days, they shall only
pay the freight in proportion to the distance covered
by the vessel.
ARTICLE 689. At the request of the person from
whom the vessel is chartered the charter party may
be rescinded:
1.If the charterer at the termination of the extra lay
days does not place the cargo alongside the vessel.
In such case the charterer must pay half the freight
stipulated besides the demurrage for the lay days and
extra lay days elapsed.
2.If the person from whom the vessel was chartered
should sell her before the charterer has begun to load
her and the purchaser should load her for his own
account. In such case the vendor shall indemnify the
charterer for the losses he may suffer.
If the new owner of the vessel should not load her for
his own account the charter party shall be respected
(in such case, the charter party is not rescinded) and
the vendor shall indemnify the purchaser if the
former did not inform him of the charter pending at
the time of making the sale. Otherwise, if he informed
him, then no need to indemnify.

ARTICLE 688. A charter party may be annulled at


the request of the charterer:

Charter Party

1.If before loading the vessel he should abandon the


charter, paying half of the freightage agreed upon.
(abandonment of charter before loading; pay 1/2
of the freight)

Period

2.If the capacity of the vessel should not agree


with that stated in the certificate of the tonnage, or
if there is an error in the statement of the flag
under which she sails. (Charterer will be indemnified
by the owner)

Effect
of sale
rd
to 3
person

If for definite period,


the charterer may
rescind the charter
party by paying half
of the freightage
New owner cannot
be compelled to
respect the charter
party.

Ordinary
Lease
Contract
If the lease is for a
definite period, the
lessee
cannot
terminate the contract
If the leased property
is sold to one who
knows
of
the
existence of the lease
contract, the new
owner must respect
the lease

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

Case:
Santiago Lighterage vs. CA: Seaworthiness cannot
be agreed to between the parties (parang jurisdiction
of the court) because it is a fact which has to be
proven.
Fx: In this case two charter parties were entered into.
The owner of the vessel was Santiago. He chartered
the vessel to B (bareboat charter). B chartered the
vessel to C (voyage charter). The vessel was
supposed to carry an ore to South Korea. On the way
to pick up the ore from Manila to Zambales, the
vessel had to undergo repairs. In short it never
reached Korea.
The pertinent provisions of the contract between
Santiago and B reads: "3.
Delivery The VESSEL
shall be delivered and taken over by the
CHARTERERS at the port of the City of Manila, in
such ready berth as the CHARTERERS may direct.
The OWNER shall before and at the time of delivery
exercise due diligence to make the VESSEL
seaworthy and in every respect ready in hull,
machinery and equipment for service hereunder. The
VESSEL shall be properly documented at time of
delivery.
The delivery to the CHARTERERS of the VESSEL
and the taking over of the VESSEL by the
CHARTERERS shall constitute a full performance by
the OWNER of all the OWNERS obligations
hereunder, and thereafter the CHARTERERS shall
not be entitled to make or assert any claim against the
OWNER on account of the representations or
warranties expressed or implied with respect to the
VESSEL but the OWNER shall be responsible for
repairs or renewals occasioned by latent defects in
the VESSEL, her machinery or appurtenances
existing at the time of delivery under this Agreement,
provided such defects have manifested before turnover."
What is the liability of Santiago as the owner?
Held: The mere physical transfer of MV Christine Gay
from petitioner to Pelaez does not constitute full
performance of its obligation under their bareboat
charter agreement.
Neither is it considered a
delivery. Under the agreement, physical transfer of a
seaworthy vessel is necessary to satisfy delivery.
Seaworthiness is a relative term. The degree of
seaworthiness varies in relation to the contemplated
voyage.
To be seaworthy, a vessel must have that degree of
fitness which an ordinary, careful and prudent owner
would require his vessel to have at the
commencement of her voyage, having regard to all
the probable circumstances of it. Thus the degree of
seaworthiness varies in relation to the contemplated
voyage. Crossing the Atlantic calls for stronger
equipment than sailing across the Visayan Sea. It is
essential to consider that once the necessary degree
of seaworthiness has been ascertained, this
obligation is an absolute one, i.e. the undertaking is
that the vessel actually is seaworthy. It is no excuse
that the shipowner took every possible precaution to
make her so, if in fact he failed.

29

In examining what is meant by seaworthiness we


must bear in mind the dual nature of the carriers
obligations under a contract of affreightment. To
satisfy these duties the vessel must (a) be efficient as
an instrument of transport and (b) as a storehouse for
her cargo.
The latter part of the obligation is
sometimes referred to as cargoworthiness.
A ship is efficient as an instrument of transport if its
hull, tackle and machinery are in a state of good
repair, if she is sufficiently provided with fuel and
ballast, and is manned by an efficient crew.
And a vessel is cargoworthy if it is sufficiently strong
and equipped to carry the particular kind of cargo
which she has contracted to carry, and her cargo
must be so loaded that it is safe for her to proceed on
her voyage. A mere right given to the charterer to
inspect the vessel before loading and to satisfy
himself that she was fit for the contracted cargo does
not free the shipowner from his obligation to provide a
cargoworthy ship.
BILLS OF LADING (CF: ART. 356, 357, 709,
718)
An intstrument in writing signed by the carrier or his
agent, describing the freight so as to identify it, staing
the name of the consigor, the terms of the contract of
carriage and agreeing or directing that the freight be
delivered to the order or assigns of a specified person
at a specified place.
Two fold nature: Serves as a receipt as well as
evidence of a contract. BUT it is not important for a
contract of carriage to exist between the shipper/pax
and the common carrier. It is merely an evidence.
What is the effect of the issuance by a
carrier of an unsigned bill of lading when
accepted by the shipper or the consignee?
A: Keng Hua Paper Products Co, Inc. vs. CA: A "bill
of lading delivered and accepted constitutes the
contract of carriage even though not signed,"
because the "(a)cceptance of a paper containing the
terms of a proposed contract generally constitutes an
acceptance of the contract and of all of its terms and
conditions of which the acceptor has actual or
constructive notice." In a nutshell, the acceptance of
a bill of lading by the shipper and the consignee, with
full knowledge of its contents, gives rise to the
presumption that the same was a perfected and
binding contract.
What must be done to the bill of lading
upon fulfillment of the contract?
ARTICLE 353. The legal basis of the contract
between the shipper and the carrier shall be the bills
of lading, by the contents of which all disputes which
may arise with regard to their execution and fulfillment
shall be decided without admission of other
exceptions than forgery or material errors in the
drafting thereof.
After the contract has been complied with the bill of
lading issued by the carrier shall be returned to him,
and by virtue of the exchange of this certificate for the
article transported, the respective obligations and
actions shall be considered as canceled, unless in the
same act the claims which the contracting parties

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

30

desired to reserve are reduced to writing, exception


being made of the provisions of Article 366.

apparent, file a claim, which may be verbal,


immediately upon receipt)

If in case of loss or for any other reason whatsoever,


the consignee can not return upon receiving the
merchandise the bill of lading subscribed by the
carrier, he shall give said carrier a receipt for the
goods delivered, this receipt producing the same
effects as the return of the bill of lading.

After the periods mentioned have elapsed, or after


the transportation charges have been paid, no
claim whatsoever shall be admitted against the
carrier with regard to the condition in which the
goods transported were delivered.

AFter the contract has been complied with, the bill of


lading shall be returend to the carrier who may have
issued it and it (the surrender) is proof that the goods
have been delivered.
And after the deliverey or return of the bill of lading,
the respective obligations and actions between the
parties shall be considered as cancelled.
In case the consignee cannot return upon receive
the merchandise the bill of lading, he must give the
said carrier a receipt for the goods delivered, this
receipt producing the same effects as the return of the
bill of lading. (Art. 353)
What is the presumption if the carrier does not
hold the bill of lading after the fulfillment of the
contract of transportation?
The presumption is that the carrier did not deliver the
goods.
Who may change the consignee?
ARTICLE 360. The shipper may, without changing
the place where the delivery is to be made, change
the consignment of the goods delivered to the carrier,
and the latter shall comply with his orders, provided
that at the time of making the change of the consignee
the bill of lading subscribed by the carrier be returned
to him, if one were issued, exchanging it for another
containing the novation of the contract.
The expenses arising from the change of consignment
shall be defrayed by the shipper.
TRANSSHIPMENT - It is the act of taking
cargo from one ship and loading it into
another. Transshipment cannot be made if the
shipper does not consent because it is
dangerous.. it will expose the goods to
breakage, etc. So the effect if there was
transshipment without consent is that there is
a breach in the contract of carriage. And the
carrier is liable to the shipper in case of loss,
even for an otherwise excepted cause.
BRINGING AN ACTION/CLAIM AGAINST
THE CARRIER
Under Art. 366, this does not cover loss because it
says upon receipt of the goods or merchandise.
ARTICLE 366. Within the twenty-four hours following
the receipt of the merchandise a claim may be
brought against the carrier on account of damage or
average found therein on opening the packages,
provided that the indications of the damage or
average giving rise to the claim can not be
ascertained from the exterior of said packages, in
which case said claim would only be admitted on the
receipt of the packages. (So if the damage is

When does the 24 hour period begin to run? When


the goods are actually received.
Case: New Zealand vs. Chua Joy - Held: In order that
the condition provided in Article 366 of the Code of
Commerce may be demanded there should be a
consignment of goods, through a common carrier, by
a consignor in one place to a consignee in another
place. And said article provides that the claim for
damages must be made within twenty-four hours
following the receipt of the merchandise by the
consignee from the carrier. In other words, there must
be delivery of the merchandise by the carrier to the
consignee at the place of destination.
The cargo never reached Manila, its destination, nor
was it ever delivered to the consignee, the office of
the shipper in Manila, because the ship ran aground
upon entering Laoang bay, Samar on the same day of
the shipment. Such being the case, it follows that the
cargo was never received by the consignee.
Did the Civil Code repeal the prescriptive
period to file a claim under the Code of
Commerce?
No, the limitations of actions mentioned in the Civil
Code are without prejudice to those specified in teh
Code of Commerce.
Period to file for recovery of undelivered/lost
cargo in the courts:(note that under the Code of
commerce, it does not cover loss/non delivery of
cargo)
If there is a bill of lading, 10 years, otherwise, 6 years.
If it involves overseas trading, 1 year from date when
it was supposed to be received.
LOANS
ON
RESPONDENTIA

BOTTOMRY

AND

ARTICLE 719. A loan on bottomry or respondentia


shall be considered that which the repayment of the
sum loaned and the premium stipulated, under any
condition whatsoever, depends on the safe arrival in
port of the goods on which it is made, or of their value
in case of accident.
Notes:
1. If the collateral is the vessel = bottomry; if
collateral is goods = respondentia.
Ex. Loan for 5 Million, en route to San Francisco, the
vessel sinks. The loan is extinguished because the
collateral is lost.
2. Characteristics of a loan on Bottomry: It is a loan
the security of which is the vessel itself and
conditioned on the safe arrival at the port of
destination. Also the vessel must be exposed to
maritime peril. (So it must be destroyed during its
voyage)

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

3. Who may contract such loan? On bottomry: The


owner of the vessel or the captain (see previous
discussion, Art. 580); on respondentia: owner of the
cargo.
Ordinary Loan
May or may not have
collateral
Collateral may be
real or personal
property
Absolutely repayable

Need not be in
writing
rd
To be binding on 3
persons, need not
be registered
Loss of collateral, if
any
does
not
extinguish the loan

Loan
on
Bottomry/respondentia
Must always have collateral
Collateral must be a vessel or
a cargo subject to maritime
risk
Payment depends on the safe
arrival by the collateral at the
port of the loan
Must be in writing
Must be registered in the
registry of vessels
Loss of collateral extinguishes
the loan.

Effect of loss of collateral:


Gen Rule: Extinguishes the loan
requirements of Art. 731 are complied with.

31

ARTICLE 807. The petty and ordinary expenses of


navigation, such as pilotage of coasts and ports,
lighterage and towage, anchorage dues, inspection,
health, quarantine, lazaretto, and other so-called port
expenses, costs of barges, and unloading, until the
merchandise is placed on the wharf, and any other
expenses common to navigation shall be considered
ordinary expenses to be defrayed by the shipowner,
unless there is a special agreement to the contrary.
ARTICLE 808. Averages shall be:
1.Simple or particular.
2.General or gross.
PARTICULAR AVERAGE: Simple or particular
averages shall be, as a general rule, all the expenses
and damages caused to the vessel or to her cargo
which have not redounded to the benefit and common
profit of all the persons interested in the vessel and
her cargo x x x (Art. 809)
Who bears the loss in P/A? The owner of the goods
which gave rise to the expense or suffered the
damage shall bear the simple or particular average
(Art. 810)

provided

ARTICLE 731. The actions which may be brought by


the lender shall be extinguished by the absolute loss
of the goods on which the loan was made, if said loss
arose from an accident of the sea at the time and
during the voyage designated in the contract, and
should it be proven that the cargo was on board;
EXCEPTIONS:
but this shall not take place if the loss were caused by
the inherent defect of the thing;
or through the fault or malice of the borrower,
or through barratry on the part of the captain, or
if it were caused by damages suffered by the vessel
as a consequence of being engaged in contraband, or
if it arose through loading the merchandise on a
vessel other than that designated in the contract,
unless this change should have been made by reason
of force majeure.
The proof of the loss is incumbent upon the person
who received the loan, as well as the proof of the
existence in the vessel of the goods declared to the
lender as the object thereof.
RISKS, DAMAGES AND ACCIDENTS OF
MARITIME COMMERCE
ARTICLE 806. For the purposes of this Code the
following shall be considered averages:
1. All extraordinary or accidental expenses which may
be incurred during the navigation for the preservation
of the vessel or cargo, or both.
2. All damages or deterioration the vessel may suffer
from the time she puts to sea from the port of
departure until she casts anchor in the port of
destination, and those suffered by the merchandise
from the time it is loaded in the port of shipment until it
is unloaded in the port of consignment.
What are NOT averages? Petty expenses under
Art. 807

Examples of P/A:
1. The damages suffered by the cargo from the time
of its embarkation until it is unloaded, either on
account of the nature of the goods or by reason of an
accident at sea or force majeure, and the expenses
incurred to avoid and repair the same.
2.The damages suffered by the vessel in her hull,
rigging, arms, and equipment, for the same causes
and reasons, from the time she puts to sea from the
port of departure until she anchored in the port of
destination.
3.The damages 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
should be detained or embargoed by a legitimate
order or force majeure, if the charter should have
been 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 cover any other
requirement of the vessel against which the proper
amount shall be charged.
7.The victuals and wages of the crew during the time
the vessel is in quarantine.
8.The damage suffered by the vessel or cargo by
reason of an impact or collision with another, if it were
accidental and unavoidable. If the accident should
occur through the fault or negligence of the captain,
the latter shall be liable for all the damage caused.
9.Any damage suffered by the cargo through the
faults, 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 freight.

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32

GENERAL AVERAGE: all the damages and


expenses which are deliberately caused in order to
save the vessel, her cargo, or both at the same time,
from a real and known risk (Art. 811)

2. For the common safety or for the purposes of


avoiding imminent peril, part of the cargo or
vessel on board is sacrificed deliberately (part of
the crew, pwede? hehe)

Who bears the loss? ARTICLE 812. 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.

3. There must be attempt to avoid the imminent


peril must be successful in a sense that the vessel
and some of the cargo are saved;
4. Damages or expenses were incurred after
taking the proper legal steps.

Example of General Ave:


1. The goods or cash invested in the redemption of
the vessel or cargo captured by enemies, privateers,
or pirates, and the provisions, wages, and expenses
of the vessel detained during the time the
arrangement or redemption is taking place.
2. The goods jettisoned to lighten the vessel, whether
they belong to the vessel, to the cargo, or to the crew,
and the damage suffered through said act by the
goods kept.
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
her 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
through the opening made in the vessel in order to
drain her and prevent her sinking.
6.The expenses caused through floating a vessel
intentionally stranded for the purpose of saving her.
7.The damage caused to the vessel which it is
necessary to break open, scuttle, or smash in order to
save the cargo.
8.The expenses of curing and maintaining 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 detained 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 it should be
embargoed or detained by force majeure or by order
of the Government, or in order to repair the damage
caused for the common good.
11.The loss suffered in the value of the goods sold at
arrivals under stress in order to repair the vessel
because of gross average.
12.The expenses of the liquidation of the average.
REQUISITES FOR GENERAL AVERAGE:
1. There must be a COMMON DANGER, a danger
in which the ship, cargo and crew all participate;

Cases:
1. Magsaysay vs. Agan
Facts: The S S San Antonio, a vessel owned and
operated by A. Magsaysay Inc., left Manila on 6
October 1949, bound for Basco, Batanes, via Aparri,
Cagayan, with general cargo belonging to different
shippers, among them Anastacio Agan. The vessel
reached Aparri on the 10th of that month, and after a
days stopover in that port, weighed anchor to
proceed to Basco. But while still in port, it ran aground
at the mouth of the Cagayan river, and, attempts to
refloat it under its own power having failed,
Magsaysay had it refloated by the Luzon Stevedoring
Co. at an agreed compensation. The stranding of
Magsaysays vessel was due to the sudden shifting of
the sandbars at the mouth of the river which the port
pilot did not anticipate. Once afloat, the vessel
returned to Manila to refuel and then proceeded to
Basco, the port of destination. There the cargoes
were delivered to their respective owners or
consignees, who, with the exception of Agan, made a
deposit or signed a bond to answer for their
contribution to the average.
On the theory that the expenses incurred in floating
the vessel constitute general average to which both
ship and cargo should contribute, Magsaysay brought
the action in the CFI of Manila to make Agan pay his
contribution, which, as determined by the average
adjuster, amounts to P841.40. Agan, in his answer,
denies liability for this amount, alleging, among other
things, that the stranding of the vessel was due to the
fault, negligence and lack of skill of its master, that the
expenses incurred in putting it afloat did not constitute
general average, and that the liquidation of the
average was not made in accordance with law. After
trial, the lower court found for Magsaysay and
rendered judgment against Agan for the amount of
the claim, with legal interests. From this judgment,
Agan has appealed directly to the Supreme Court.
The Supreme Court reversed the decision appealed
from, and dismissed Magsaysays complaint.
Held: Herein, while the expenses incurred in putting
Magsaysays vessel afloat may well come under
number 2 of article 809 which refers to expenses
suffered by the vessel by reason of an accident of
the sea or force majeure and should therefore be
classified as particular average, the said expenses do
not fit into any of the specific cases of general
average enumerated in article 811. Number 6 of
Article 811 does mention expenses caused in order
to float a vessel, but it specifically refers to a vessel
intentionally stranded for the purpose of saving it and
would have no application where, as in the present
case, the stranding was not intentional.
With respect to Requisites of General average:

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

1. With respect to the first requisite, the evidence


does not disclose that the expenses sought to be
recovered from defendant were incurred to save
vessel and cargo from a common danger. The vessel
ran aground in fine weather inside the port at the
mouth of a river, a place described as very shallow.
It would thus appear that vessel and cargo were at
the time in no imminent danger or a danger which
might rationally be sought to be certain and
imminent.
2. As to the second requisite, the expenses in
question were not incurred for the common safety of
vessel and cargo, since they, or at least the cargo,
were not in imminent peril. The cargo could, without
need of expensive salvage operation, have been
unloaded by the owners if they had been required to
do so.
3. With respect to the third requisite, the salvage
operation was a success; however, as the sacrifice
was for the benefit of the vessel to enable it to
proceed to destination and not for the purpose of
saving the cargo, the cargo owners are not in law
bound to contribute to the expenses.

33

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

cases on Art. 366


1. Lorenzo Shipping vs. Chubb (2004): Steel pipes
were loaded on MV A for shipment from Manila to
Dvo. L/S issued a clean bill of lading for the account
of the consignee X, a corporation in San Francisco.
So the voyage is Mla-Dvo-SF, USA. MV A arrived in
Sasa warf in Dec. 2, 1987. Trans Marine Carrier
received the shipment in Davao. When TMC received
the shipment in Dvo, it discovered that sea water was
in the vessel and the steel pipes were submerged in
water. So X hired a surveyor and it was found that the
cargo was no longer suitable and that the cargo hold
of MV A was flooded w/ sea water. The rusty condition
of the cargo was noted on the mate's receipts and the
checker of M/V A signed his conforme thereon. After
the survey, respondent Gearbulk loaded the shipment
on board its vessel M/V San Mateo Victory, for
carriage to the United States. It issued Bills of Lading
covering 364 bundles of steel pipes to be discharged
at Oakland, U.S.A. All bills of lading were marked
"ALL UNITS HEAVILY RUSTED."
While the cargo was in transit from Davao City to the
U.S.A., consignee Sumitomo sent a letter of intent
dated December 7, 1987, to petitioner Lorenzo
Shipping, which the latter received on December 9,
1987.
Sumitomo informed petitioner Lorenzo
Shipping that it will be filing a claim based on the
damaged cargo once such damage had been
ascertained.
On January 17, 1988, M/V San Mateo Victory arrived
at Oakland, California, U.S.A. Due to its heavily rusted
condition, the consignee X rejected the damaged steel
pipes and declared them unfit for the purpose they
were intended.
On December 2, 1988, respondent Chubb and Sons,
Inc. filed a complaint for collection of a sum of money,
against respondents Lorenzo Shipping.
Issue: Was there a valid notice of claim made by X?
Held: YES. The twenty-four-hour period prescribed by
Art. 366 of the Code of Commerce within which claims
must be presented does not begin to run until the
consignee has received such possession of the
merchandise that he may exercise over it the ordinary
control pertinent to ownership. In other words, there
must be delivery of the cargo by the carrier to the
consignee at the place of destination. In the case at
bar, consignee Sumitomo has not received
possession of the cargo, and has not physically
inspected the same at the time the shipment was
discharged from M/V Lorcon IV in Davao City.
Petitioner Lorenzo Shipping failed to establish that an
authorized agent of the consignee Sumitomo received
the cargo at Sasa Wharf in Davao City. Respondent
Transmarine Carriers as agent of respondent
Gearbulk, Ltd., which carried the goods from Davao
City to the United States, and the principal,
respondent Gearbulk, Ltd. itself, are not the
authorized agents as contemplated by law. What is
clear from the evidence is that the consignee received
and took possession of the entire shipment only when
the latter reached the United States' shore. Only then
was delivery made and completed. And only then did
the 24-hour prescriptive period start to run.
2. Phil. Charter vs. Chemoil (June 2005) and
compare this with Aboitiz vs. ICNA (2008)

34

On the matter concerning the giving of the notice of


claim as required by Article 366 of the Code of
Commerce, the finding of fact of the Court of Appeals
does not actually contradict the finding of fact of the
trial court. Both courts held that, indeed, a telephone
call was made by Alfredo Chan to Encarnacion
Abastillas, informing the latter of the contamination.
However, nothing in the trial court's decision stated
that the notice of claim was relayed or filed with the
respondent-carrier immediately or within a period of
twenty-four hours from the time the goods were
received. The Court of Appeals made the same
finding. Having examined the entire records of the
case, we cannot find a shred of evidence that will
precisely and ultimately point to the conclusion that
the notice of claim was timely relayed or filed.
The allegation of the petitioner that not only the Vice
President of the respondent was informed, but also its
drivers, as testified by Alfredo Chan, during the time
that the delivery was actually being made, cannot be
given great weight as no driver was presented to the
witness stand to prove this.
The object sought to be attained by the requirement of
the submission of claims in pursuance of this article is
to compel the consignee of goods entrusted to a
carrier to make prompt demand for settlement of
alleged damages suffered by the goods while in
transport, so that the carrier will be enabled to verify
all such claims at the time of delivery or within twentyfour hours thereafter, and if necessary fix
responsibility and secure evidence as to the nature
and extent of the alleged damages to the goods while
the matter is still fresh in the minds of the parties.
The filing of a claim with the carrier within the time
limitation therefore actually constitutes a condition
precedent to the accrual of a right of action against a
carrier for loss of, or damage to, the goods. The
shipper or consignee must allege and prove the
fulfillment of the condition. If it fails to do so, no right
of action against the carrier can accrue in favor of the
former.
The aforementioned requirement is a
reasonable condition precedent; it does not constitute
a limitation of action.
The second paragraph of Article 366 of the Code of
Commerce is also edifying. It is not only when the
period to make a claim has elapsed that no claim
whatsoever shall be admitted, as no claim may
similarly be admitted after the transportation
charges have been paid. In this case, there is no
question that the transportation charges have
been paid, as admitted by the petitioner, and the
corresponding official receipt
Aboitiz Ruling: Under the Code of Commerce, the
notice of claim must be made within twenty four (24)
hours from receipt of the cargo if the damage is not
apparent from the outside of the package. For
damages that are visible from the outside of the
package, the claim must be made immediately.
The periods , as well as the manner of giving notice
may be modified in the terms of the bill of lading,
which is the contract between the parties. Notably,
neither of the parties in this case presented the terms
for giving notices of claim under the bill of lading
issued by petitioner for the goods.
The shipment was delivered on August 11, 1993.
Although the letter informing the carrier of the damage

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

was dated August 15, 1993, that letter, together with


the notice of claim, was received by petitioner only on
September 21, 1993. But petitioner admits that even
before it received the written notice of claim, Mr. Mayo
B. Perez, Claims Head of the company, was informed
by telephone sometime in August 13, 1993. Mr. Perez
then immediately went to the warehouse and to the
delivery site to inspect the goods in behalf of
petitioner.
In the case of Philippine Charter Insurance
Corporation
(PCIC)
v.
Chemoil
Lighterage
Corporation, the notice was allegedly made by the
consignee through telephone. The claim for damages
was denied. This Court ruled that such a notice did
not comply with the notice requirement under the law.
There was no evidence presented that the notice was
timely given. Neither was there evidence presented
that the notice was relayed to the responsible
authority of the carrier.
The call to petitioner was made two days from
delivery, a reasonable period considering that the
goods could not have corroded instantly overnight
such that it could only have sustained the damage
during transit. Moreover, petitioner was able to
immediately inspect the damage while the matter was
still fresh. In so doing, the main objective of the
prescribed time period was fulfilled. Thus, there was
substantial compliance with the notice requirement in
this case.
Cases on Averages:
1. Standard Oil vs. Castelo - A and B entered into a
time charter voyage agreement. While the vessel was
on its voyage, a typhoon came and the captain was
forced to jettison some barrels of petroleum on deck.
A brought an action to recover the petroleum from B.
Is this an average?
Ordinarily the loss of cargo carried on deck shall not
be considered a general average loss. This is clearly
expressed in Rule I of the York-Antwerp Rules, as
follows: "No jettison of deck cargo shall be made good
as general average." The reason for this rule is found
in the fact that deck cargo is in an extra-hazardous
position and, if on a sailing vessel, its presence is
likely to obstruct the free action of the crew in
managing the ship. Moreover, especially in the case
of small vessels, it renders the boat top-heavy and
thus may have to be cast overboard sooner than
would be necessary if it were in the hold; and naturally
it is always the first cargo to go over in case of
emergency. Indeed, in subsection 1 of article 815 of
the Code of Commerce, it is expressly declared that
deck cargo shall be cast overboard before cargo
stowed in the hold.
But this rule, denying deck cargo the right to
contribution by way of general average in case of
jettison, was first mad in the days of sailing vessels;
and with the advent of the steamship as the principal
conveyer of cargo by sea, it has been felt that the
reason for the rule has become less weighty,
especially with reference to coastwise trade; and it is
now generally held that jettisoned goods carried on
deck, according to the custom of trade, by steam
vessels navigating coastwise and inland waters, are
entitled to contribution as a general average loss.

35

From what has been said it is evident that the loss of


this petroleum is a general and not a special average,
with the result that the plaintiff is entitled to recover in
some way and from somebody an amount bearing
such proportion to its total loss as the value of both
the ship and the saved cargo bears to the value of the
ship and entire cargo before the jettison was effected.
What is Jason Clause: Part of the York-Antwerp
Rules (Rule D):
Right to contribution in general average shall not be
affected, though the even which gave rise to the
sacrifice or expenditure may have been due to the
fault of one of the parties to the adventure, BUT this
shall not prejudice any remedies which may be open
against that party for such cause.
Bar Q: What is the liability of the goods/cargo for
general average?
ARTICLE 665. The cargo shall be specially liable for
the payment of the freight expenses, and duties
arising therefrom, which must be reimbursed by the
shippers, as well as for the part of the general
average which may be due, but it shall not be legal for
the captain to delay unloading on account of delay in
complying with this obligation.
Should there be reasons for distrust, the judge or
court, at the instance of the captain, may order the
deposit of the merchandise until he has been paid in
full.
Gen Average vs. Particular Ave
General Ave - Deliberately caused; inures to the
benefit of those interested in the vessel or cargo;
contribution to general average shall be contributed to
by all the persons benefited and distributed to all
those who suffered the loss;
Particular Ave- may be due to other causes other
than a deliberate act; does not inure to the benefit of
those interested in vessel/cargo; owner bears the loss
EFFECTS OF DECLARATION OF WAR/BLOCKADE
IF THERE IS CHARTER PARTY
ARTICLE 677. The charter party shall be enforced if
the captain should not have any instructions from the
charterer, and a declaration of war or a blockade
should take place during the voyage.
In such case the captain shall be obliged to make the
nearest safe and neutral port, and request and await
orders from the freighter; and the expenses incurred
and salaries earned during the detention shall be
paid as general average.
If, by orders of the freighter, the cargo should be
discharged at the port of arrival, the freight for the
voyage out shall be paid in full.
CASES:
1. International Harvester vs. Hamburg American
Line: Vessel was German; Goods/Cargo were
French. There was a declaration of war between
Germany and France. Vessel was in Saigon when the
war was announce, vessel left and landed in Manila
(neutral port). Owner of vessel tried to claim from
French general averages.
Held: There can be no recovery. There was no
general average in the case because requisite no. 1
was missing. There was no common danger

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

shared/participated in by cargo and crew. There was


no danger to the French cargo.
2. Campagnie de Commerce vs. Hamburge
American Line: While vessel was in voyage, war brok
out between Germany and Russia. The vessel was
carrying american cargo. Because of the war, the ship
landed in Manila. Again, there is no general average.
Cargo was American, only German vessel was at risk,
not the amercian cargo.
LIABILITY OF LENDERS ON BOTTOMRY OR
RESPONDENTIA FOR GEN. AVE OR PARTICULAR
AVE. IN TEH THINGS ON WHICH THE LOAN WAS
MADE:
ARTICLE 732.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 was 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.
So:
1. General Average: suffer in proportion to their
interest
2. Particular Average: Contribute in proportion to their
respective interest
Provided that they do not fall under the exceptions
under Art. 731.
ARTICLE 731. The actions which may be brought by
the lender shall be extinguished by the absolute loss
of the goods on which the loan was made, if said loss
arose from an accident of the sea at the time and
during the voyage designated in the contract, and
should it be proven that the cargo was on board; but
this shall not take place if the loss were caused by the
inherent defect of the thing or through the fault or
malice of the borrower, or through barratry on the part
of the captain, or if it were caused by damages
suffered by the vessel as a consequence of being
engaged in contraband, or if it arose through loading
the merchandise on a vessel other than that
designated in the contract, unless this change should
have been made by reason of force majeure.
Application:
A- Borrower
B- Lender
Loan on Respondentia = P1M
Security - Cargo of A worth 1.5M
Facts: Vessel met a typhoon, to lighten the load,
other cargoes were thrown overboard; A's cargo and
the vessel were saved. It was determined that A's
contribution to the average was P300,000.
Determine the Interest of the parties in P1.5M
worth of cargo/ Extent of share in the P300,000
contribution
A: 1/3 (amount not loaned or P500,00 ) = 100,000
B: 2/3 (amount of loan or P1M) = 200,000
2. Suppose A's cargo was damaged to the extent
of P1.2 M and the same was a particular average?

36

1/3 of 1.2 = 400,000


2/3 of 1.2 = 800,000

ARRIVAL UNDER STRESS


Arrival of the vessel at the nearest and most
convenient port because the vessel cannot continue
the trip to the port of destination on the following
grounds:
1. lack of provisions;
2. well founded fear of seizure, privateers
or pirates;
3. by reason of any accident of the sea
disabling the vessel to navigate. (Art. 819)
LACK OF PROVISION -note that the arrival under
stress is NOT lawful If the lack of provisions should
arise from the failure to take the necessary provisions
for the voyage, according to usage and custom, or if
they should have been rendered useless or lost
through bad stowage or negligence in their care.
WELL FOUNDED FEAR X X X - not lawful If the risk
of enemies, privateers, or pirates should not have
been well known, manifest, and based on positive and
justifiable facts.
ACCIDENT OF SEA X X X - not lawful if the vessel
was unseaworthy or if it is the result of some
erroneous order of the captain.
Whenever malice, negligence, want of foresight, or
lack of skill on the part of the captain is the reason for
the act causing the damage, the arrival under stress is
NOT lawful.
Effect if arrival under stress is lawful: losses are
considered as particular average and damages need
not be paid to the shipper. (Art. 821)
If not lawful: Damages must be paid to the shipper.
(Jointly liable S/A, S/O and captain)
COLLISIONS
It is the impact of two moving vessels. Includes
allision in a broad sense. (ALLISION - striking of a
moving vessel against one which is not moving.)
Gen Rule: Guilty vessel must pay
What if:
1. ONE VESSEL AT FAULT: Said vessel is liable for
the damage caused to the innocent vessel and for
damages suffered by the owners of the cargo of the
innocent vessel and the owners of the cargoes of its
own vessel. Take note that the owners of the cargo of
the innocent vessel can still sue the innocent vessel
for breach of contract.
2. BOTH VESSELS AT FAULT or IT CANNOT BE
DETERMINED WHICH ONE IS AT FAULT: Each
vessel must bear its own loss; both ship owners are
solidarily liable to the shippers for the damages
occasioned to the cargo (Art. 827, 828)
3. 3RD VESSEL IS AT FAULT - Third vessel liable for
everything (Art. 831)
4. COLLISION CAUSED BY FORTUITOUS EVENT everybody must bear his/her own loss. (Art. 840)

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

Case:
1. Manila Steamship vs. Abdulhaman: Can
shipowner raise the defense of GFOF in case of
collision?
This defense is untenable. While it is true that
plaintiff's action against petitioner is based on a tort or
quasi-delict, the tort in question is not a civil tort under
the Civil Code but a maritime tort resulting in a
collision at sea, governed by Articles 826-939 of the
Code of Commerce. Under Article 827 of the Code of
Commerce, in case of collision between two vessels
imputable to both of them, each vessel shall suffer her
own damage and both shall be solidarily liable for the
damages occasioned to their cargoes. The
characteristic language of the law in making the
"vessels" solidarily liable for the damages due to the
maritime collision emphasizes the direct nature of the
responsibilities on account of the collision incurred by
the shipowner under maritime law, as distinguished
from the civil law and mercantile law in general. This
direct responsibility is recognized in Article 618 of the
Code of Commerce under which the captain shall be
civilly liable to the ship agent, and the latter is the one
liable to third persons.
Other issue: Can the doctrine of limited liability be
invoked? No, because there was fault on the part of
both the vessels.
We agree, however, with petitioner-appellant, that the
Court of Appeals was in error in declaring the
respondent Lim Hong To, owner of the M/L "Consuelo
V", exempt from liability to the original plaintiff,
Abdulhaman, in view of the total loss of his own
vessel, that sank as a result of the collision. It is to be
noted that both the master and the engineer of the
motor launch "Consuelo V" were not duly licensed.
ARTICLE 826. 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. aisadc
ARTICLE 827. If both vessels may be blamed for the
collision, each one shall be liable for his own
damages, and both shall be jointly responsible for the
losses and damages suffered by their cargoes.
ARTICLE 828. The provisions of the foregoing article
are applicable to the case in which it can not be
decided which of the two vessels was the cause of the
collision.
ARTICLE 829. In the cases above mentioned the
civil action of the owner against the person liable for
the damage is reserved, as well as the criminal
liabilities which may be proper.
ARTICLE 830. If a vessel should collide with another
by reason of an accident or through force majeure,
each vessel and her cargo shall be liable for their own
damage.
ARTICLE 831. If a vessel should be forced to collide
with another one by a third vessel, the owner of the
third vessel shall indemnify for the losses and
damages caused, the captain thereof being civilly
liable to said owner.
ARTICLE 832. If, by reason of a storm or other cause
of force majeure, a vessel which is properly anchored
and moored should collide with those in her
immediate vicinity, causing them damage, the injury
occasioned shall be looked upon as particular
average to the vessel run into. 2005letcd

37

ARTICLE 833. A vessel shall be presumed as lost


thru a collision which, upon being run into, sinks
immediately, and also any vessel which is obliged to
make a port to repair the damages caused by the
collision should be lost during the voyage, or should
be obliged to be stranded in order to be saved.
iatdc2005
ARTICLE 834. If the vessels colliding should have
pilots on board discharging their duties at the time of
the collision, their presence shall not exempt the
captains from the liabilities they incur; but the latter
shall have the right to be indemnified by the pilots
without prejudice to the criminal liability which the
latter may incur.
ARTICLE 835. The action for the recovery of losses
and damages arising from collisions can not be
admitted if a protest or declaration is not presented
within twenty-four hours to the competent authority of
the point where the collision took place, or that of the
first port of arrival of the vessel, if in Spain, * and to
the consul of Spain * if it should have occurred in a
foreign country.
ARTICLE 836. In so far as the damages caused to
persons or to the cargo are concerned, the absence of
a protest can not prejudice the persons interested
who were not on board or were not in a condition to
make known their wishes.
ARTICLE 837. The civil liability contracted by the
shipowners in the cases prescribed in this section,
shall be understood as limited to the value of the
vessel with all her appurtenances and all the freight
earned during the voyage.
ARTICLE 838. When the value of the vessel and her
appurtenances should not be sufficient to cover all the
liabilities, the indemnity due by reason of the death or
injury of persons shall have preference.
Error in Extremis - Where a navigator, suddenly
realizing that a collision is imminent by no fault of his
own, in confusion and excitement of the moment does
something which contributes to the collision or omits
to do something by which the collision might be
avoided, such act or omission is ordinarily considered
to be in extremis and the ordinary rules of strict
accountability will not apply.
When will the rule of error in extremis apply?
It must appear that there was an imminent danger
since the error of judgment is excusable only if it was
committed during such peril.
It is the actual risk of danger and not apprehension
merely that determines the question whether the error
is one extremis.
Example:
A stepped on the gas instead of stepping on the brake
and there is a collision, then that is an error in
extremis. What applies depends on the facts, but not
the rules of collision.
DOCTRINE OF INSCRUTABLE FAULT
Means that the court can see that a fault has been
committed, but is unable, from the conflict of
testimony or otherwise to locate it. Hence, when it is
impossible to determine to what direct and specific
acts the collision is attributable, it is a case of damage
arising for
a cause that is inscrutable. (Perez,
Transpo Reviewer)

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

38

CAN A SHIPOWNER RAISE THE DEFENSE OF


GOOD FATHER OF A FAMILY?
A. if culpa contractual - NO
b. If culpa acquiliana - Yes, except in cases of
collision when both parties/vessel are at fault (Art.
827)
c. If culpa criminal - No.

COGSA

SHIPWRECK- the demolition or shattering of a vessel


caused by her driving ashore or on rocks and shoals
in teh midseas or by the violence of winds and waves
in tempest.

cases:
1. American Insurance vs. Compania Maritimavoyage was from NY to Mla to Cebu; the bill of lading
states the freight was prepaid all the way to Cebu.
From NY to Mla, the vessel was MV X. From Mla to
Cebu, MV Y, so there was transshipment.

Who bears the damage? Gen rule: borne individually


by the respective owners, exceptions:
a. captain shall be liable for the damage of the
shipwreck in case of malice, negligence, or lack of
skill, or
b. because the vessel was put to sea was
insufficienlty repaired and equipped (Art. 841, Code of
Commerce)
OBSOLETE ARTICLES IN THE
COMMERCE
608, 613, 635, 642, 645, 649, 650, 651

CODE

OF

SALVAGE LAW (ACT 2616)


WHAT IS SALVAGE - Salvage is a service which one
person renders to the owner of a ship or goods by his
own labor, preserving the goods or ship the owner or
those entrusted with the care of them eithr abandoned
in distress or at sea or are unable to protect and
secure.
Performed by the salvagor.
The Salvage law provides for a compulsory reward to
those who brave the perils of the sea to save the
cargo or the vessel.
If the salvage is successful, the owner of the
vessel/cargo has to give a 50% (of the value of the
property saved) reward to the salvagor. This is the
maximum.
REQUISITES:
1. There must be a valid object to salvage;
2. The subject to be salvaged must have been
exposed to a marine peril
3. The salvage service must be rendered voluntarily
and must not arise from a pre-existing duty or from
special contract (so it must be rendered by a 3rd
party, not the ees)
4. The efforts must be successful.

Only refers to goods; does not refer to passenger


liners.
This is a US law.
This applies only to foreign trade; does not apply in
domestic trade.

Something happened to the cargo between Manila


and Cebu. Does the COGSA apply?
Held: YES, the fact that the transshipment was made
by an inter-island vessel did not operate to remove the
transaction from the operation of the COGSA. Such
transshipment was not a separate transaction from
the one originally entered into. The contract of
carriage was from New York to Cebu; it was one
undivided contract for which the corresponding freight
has been pre-paid.
WHAT IS THE EFFECT OF COGSA ON OUR
MARITIME LAW AND CIVIL CODE?
It shall not repeal any existing provision of the code of
commerce which are now in force nor does it limit the
application of the code of commerce.
FILING OF CLAIM (Sec. 3.6)
(6) Unless notice or loss or damage and the
general nature of such loss or damage by given in
writing to the carrier or his agent at the port of
discharge or at the time of the removal of the goods
into the custody of the person entitled to delivery
thereof under the contract of carriage, such removal
shall be prima facie evidence of the delivery by the
carrier of the goods as described in the bill of lading.
If the loss or damage is not apparent, the notice
must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon
the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state
of the goods has at the time of their receipt been
the subject of joint survey or inspection.

Towage is made to take the vessel from one place to


another.

In any event the carrier and the ship shall be


discharged from all liability in respect of loss or
damage unless suit is brought within one year
after delivery of the goods or the date when the
goods should have been delivered: Provided, that,
if a notice of loss or damage, either apparent or
concealed, is not given as provided for in this section,
that fact shall not affect or prejudice the right of the
shipper to bring suit within one year after the delivery
of the goods or the date when the goods should have
been delivered.

For salvage, the captain and crew are entitled to a


share in the reward. In towage, the captain and crew
are not entitled to a share in the towage service
payment.

In the case of any actual or apprehended loss or


damage, the carrier and the receiver shall give all
reasonable facilities to each other for inspecting and
tallying the goods.

Salvage vs. Towage


Towage is when a tugboat pulls a barge. There is
salvage when a vessel, by towing, is aided to escape
present or prospective danger. So even if the vessel
being salvaged is not a wreck, and it is towed to
escape danger, then that is still considered salvage.

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

39

Note:
1. The prescpriptive period for filing an action in court
is 1 year after the delivery of the goods if the goods
are destroyed or damaged or 1 year after the date
when the goods should have been delivered if they
are lost.
2. What is the effect if you do not file a notice of loss?
In E.E. Elser vs. CA, the SC held that it shall NOT
prejudice the right of the shipper to bring the suit
within the one year period.
So even if 3.6 requires a notice of claim to be filed
with the carrier, according to the SC, under the
COGSA, it is not jurisdictional.
Unlike the Code of Commerce which does not have a
prescriptive period for filing a complaint in court, follow
the Civil Code provision (10 years or 6 years)
3. What is the effect if you do not file a case in court
within the one year period? The carrier and the ship
shall be discharged from liability.
4. Chua Kay vs. Everett Steamship: The cargo was
received on Feb 26, 1947; the case was filed on May
7, 1948 - obviously, the case has prescribed.
5.Maritime Agencies vs. CA - Oct. 20,1979 the last
item was shipped and delivered to the consignee. An
action was filed against the carriery by the consignee
on December 19, 1980. In april 20, 1981, an action
was filed against the ship agent.
Against the carrier, it has not prescribed because it
was filed within the one year period (huh?check the
facts na lang) but against the ship agent, the same
has prescribed because it was outside the one year
period already.
WHAT LAW PREVAILS WITH RESPECT TO THE
PRESCRIPTIVE PERIOD?
The SC said that the Civil Code did not impliedly
repeal the prescriptive period of the Cogsa. Because
the COGSA is a special law, the one year period shall
prevail for foreign trade of goods by sea.
DOLE VS. MARITIME (BAR Q) - Cargo was
discharged to the custody of the consignee on Dec.
18, 1971. Dole filed a notice of claim with the carrier
on May 5, 1972, 5 months after. The complaint in
court was on June 11, 1973, 1 1/2 year from
discharge. Has the action prescribed ?
YES. 1) an extra judicial demand does not interrupt
the running of the prescriptive period (of one year). 2)
even if it does interrupt, the case was still filed 1 year
and 1 month from filing of claim.
Doctrine: Only the filing in court will interrupt the
running of the period.

UNIVERSAL SHIPPING VS. IAC - What if it is stated


in the bill of lading that the prescriptive period is 2
years? Or that an extra judicial demand shall interrupt
the prescriptive period? Valid agreements.
AETNA VS. LUZON STEVEDORING - cargo was
delivered Feb. 25, 1964. An action was filed against X
ShipLines on Feb. 22, 1965. The complaint was
dismissed on the ground that X shiplines was not the
real party in interest but it was XY Services.
Has the action against XY Services prescribe? YES,
for the judicial demand to interrup the prescriptive
period, it must be filed against the correct parties.
From what point should the one year period be
counted?
INSURANCE VS. PHILIPPINE PORTS AUTHORITY
(BAR Q, 2x) - Consignee A sued arrastre operator X
for failure to deliver goods from abroad which X
received from the carrier for delivery to the Consignee
A. The action was brought within 4 years, but after the
lapse of 1 year. The case was dismissed on the
ground of prescription.
Has the action prescribe? No, because the one year
period will only apply to foreign trade of goods by sea.
The arrastre operator is no longer foreign transport of
goods by sea. The prescriptive period in this case is 4
years because there is no written contract.
ANG VS. AMERICAN STEAMSHIP - X, consignee
and Y, shipper. Carrier is AMS. Y agreed to sell to X
steel sheets. X was supposed to pay to Y a bank draft
upon arrival of the goods at port. If the Y receives the
bank draft, then the bill of lading would be delivered to
AMS. And AMs has to issue a permit to deliver to be
presented to the customs warehouse.
But X did not issue the bank draft. So Y decided to
change the consignee to Ang. But X obtained a bank
guarantee in favor of AMS. AMS in turn issued a
permit to deliver to X and therefore X was able to
retrieve the goods. So when Ang got there, the goods
were no longer there.
Ang filed a complaint against AMS for wrongful
delivery. AMS filed a motion to dismiss on the ground
of prescription because more than one year has
prescribed since the goods were delivered to X.
Has the action prescribed? No, delivery should be
made to the correct consignee. Where the imported
goods are delivered to the wrong person, the 1
year limitation under the COGSA which refers to
loss or damage does not apply. The applicable rule
on prescription is found in the Civil Code.
Is the one year period in Cogsa applicable to
misdelivery or conversion? NO.

STEVENS VS. NORDEUTCHER - an action against


the carrier was filed within the 1 year prescriptive
period. But the case was dismissed on a technicality.
So the action was re-filed. The re-filing was done
more than one year from receipt of the goods.

What do you mean by LOSS? Mitsui vs. CA - A


undertook to deliver goods loaded by B to France.
The goods were bathing suits, etc. The commitment of
A, the carrier, was to deliver the goods within 28 days
from loading. Long story short, A was unable to ship
the goods within the stipulated date.

Has the action prescribed? No, because the judicial


demand (filing of case in court) already interrupted the
running of the prescriptive period.

So the consignee in France paid half the value of the


goods on the ground that they arrived off season.
(bathing suits arrived on December! winter!)

Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 08-09

The remaining half of the value of the goods were


charged by the shipper to A. A denied liability. B filed
a case in the RTC on April 14, 1992. A filed a motion
to dismiss alleging that the claim against it has
prescribed under the COGSA.
Has the action prescribed? No, even if the case was
filed more than one year after delivery. The loss was
not a physical loss, but loss of income. Loss of income
is not the loss contemplated under COGSA. The
goods here were not deteriorated or damaged, either.
Loss refers to the deterioration or disappearance of
goods.
As defined in the Civil Code and as applied to Section
3(6), paragraph 4 of the Carriage of Goods by Sea
Act, loss contemplates merely a situation where no
delivery at all was made by the shipper of the goods
because the same had perished, gone out of
commerce, or disappeared in such a way that their
existence is unknown or they cannot be recovered.
Conformably with this concept of what constitutes
loss or damage, this Court held in another case
that the deterioration of goods due to delay in their
transportation constitutes loss or damage within
the meaning of 3(6), so that as suit was not brought
within one year the action was barred
Said one-year period of limitation is designed to meet
the exigencies of maritime hazards. In a case where
the goods shipped were neither lost nor damaged in
transit but were, on the contrary, delivered in port to
someone who claimed to be entitled thereto, the
situation is different, and the special need for the short
period of limitation in cases of loss or damage caused
by maritime perils does not obtain.
In the case at bar, there is neither deterioration nor
disappearance nor destruction of goods caused by the
carriers breach of contract. Whatever reduction there
may have been in the value of the goods is not due to
their deterioration or disappearance because they had
been damaged in transit.
So apply Civil Code provisions on prescription.
Effect of prescriptive period on liability of insurerWhat if the goods were insured and the insurance
company paid the consignee if the goods were lost, or
damaged or destroyed? So there is subrogation.
Note that it says in 3.6 that only the carrier's liability is
extinguished if no suit is brought within 1 year from
delivery of the goods. But the liability of the insurer is
not extinguished because insurers are governed by
insurance code (not less than 1 year if there is
stipulation, or 10 years)
BUT the insurance company cannot bring an action
against the carrier beyond the one year prescriptive
period.
Sec. 4.5 of COGSA -- note that under the COGSA,
there is no need to provide for a stipulation limiting
liability.
(5) Neither the carrier nor the ship shall in any event
be or become liable for any loss or damage to or in
connection with the transportation of goods in an
amount exceeding $500 per package of lawful money
of the United States, or in case of goods not shipped

40

in packages, per customary freight unit, or the


equivalent of that sum in other currency, unless the
nature and value of such goods have been declared
by the shipper before shipment and inserted in the bill
of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
By agreement between the carrier, master or agent of
the carrier, and the shipper another maximum amount
than that mentioned in this paragraph may be fixed:
Provided, that such maximum shall not be less than
the figure above named. In no event shall the carrier
be liable for more than the amount of damage actually
sustained.
Neither the carrier nor the ship shall be responsible in
any event for loss damage to or in connection with the
transportation of the goods if the nature or value
thereof has been knowingly and fraudulently
misstated by the shipper in the bill of lading.
Eastern Shipping vs. IAC - There was no provision
on limitation of liability.. can Eastern Shipping limit its
liability to $500? YES, the provisions of COGSA on
limited liability are as much a part of the bill of lading
as though placed in it by agreement of the parties.