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NOTES ON LAW ON TRANSPORTATION

Kenneth & King Hizon (2A)- UST Faculty of Civil Law

UNIVERSITY OF SANTO TOMAS


Faculty of Civil Law
A.Y. 2011-2012
Second Semester

LAW ON TRANSPORTATION

SOURCES OF LAW ON TRANSPORTATION UNDER PHILIPPINE c. Shipper- the owner of the goods
JURISDICTION
Characteristics of Bill of Lading
Q: What are the different sources of transportation laws in
the Philippines? Q: What are the 3 characteristics of Bill of Lading?

A: A:

1. Civil Code provisions on common carriers (Art. 1732- 1. Good evidence of contract of carriage
1764) 2. Evidence of receipt
2. Code of Commerce on Common Carriers 3. Evidence title to the goods by the shipper
3. Carriage of Goods by Sea Act (COGSA) Ship Mortgage
Decree of 1521 § It is not really a contract of carriage, only a good
4. Salvage law evidence of such contract
5. Public Service Act as amended
6. Warshaw Convention KINDS OF BILL OF LADING

INTRODUCTORY MATTER: Q: What are the different kinds of Bill of Lading?


IMPORTANT TERMS AND CONCEPTS
A:
I. BILL OF LADING
1. Ordinary Bill of Lading- document issued by a carrier
Q: What is a “bill of lading”? or shipping line to shipper of the goods prior the
loading of goods on board the carrier; it is issued by
A: It is a document that is prepared by the sea carrier which is the shipping line to shipper. Shipping line may have
to be concurred by the shipper of the goods. Under the bill of stored the goods. The goods are in possession of the
lading, the carrier assumes responsibility to transport goods shipping line but not necessarily loaded on board.
for compensation from port of loading to port of destination. 2. Ship Bill of Lading- designates the fact that the
goods have been loaded on board the carrier; once
§ Contract issued by carrier to shipper of goods with issued, it means the cargo has been shipped on
provision that the carriage shall be transmitted board.
§ There is a freight to be paid, essentially 3. True of Bill of Lading or Transshipment Bill of Lading
§ It is not indispensable for the creation of a contract of – issued at a foreign port for transport of goods to
carriage. (Compania Maritima vs. Insurance Company of our local port-à alternative port. It may contain
North America, 12 SCRA 213) provision that the goods has to be loaded at the
territory without our jurisdiction (delivered in an
Parties to a BOL alternative route).

Q: Who are the essential parties to a bill of lading? Ex: New Yorrkà Manila à Cebu

A: *Inter-Island- Domestic Bill of Lading -receipt of goods and


a. Consignee- the party who will receive the goods at evidence of title but not the real contract of carriage
the port of destination
b. Carrier- the party who will transport the goods

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
§ In this case, there is a temporary transfer of ownership
II. MATES RECEIPT § In the event of maritime disaster, the party liable for the
incident is the pro hac owner who is the bare-boat
Q: What is “mates receipt”? owner;
§ In this case, there is a change in the character of the
A: It is a document issued by master of vessel to the shipper vessel from common carrier to private carrier
of the goods prior to the transfer. It is an evidence that the § Bareboat is use by the Americans while Demise is use by
master of vessel has received goods for purpose of the British
transportation. It is not an evidence that the goods have been § The charterer becomes the owner of the vessel pro hac
loaded vice, just for that one particular purpose only. Because
the charterer is treated as owner pro hac vice, the
Q: What is the counterpart of the bill of lading? charterer assumes the customary rights and liabilities of
the shipowner to third persons and is held liable for the
A: Charter party. expense of the voyage and the wages of the seamen.
§ Demise Charter is an exception to Art. 1745
III. CHARTER PARTY (enumerating different void stipulations) because in this
case, there is no public interest involved.
Q: What is a “charter party”? § Time & Voyage Charter Party- Contracts of Affreightment

A: It is a document of lease of a particular vessel executed NOTE: Contract of affreightment- a common carrier is always
between the owner of the vessel and the charterer. It is a involved (Home Insurance & Planters Product cases)
contract of lease of the vessel.
Q: Compare the 3 kinds of charter party.
Q: What is the purpose of charter party?
A:
A: The purpose is to indicate that the carrier is under charter
to the charterer for the purpose of transporting the goods. TIME VOYAGE BAREBOAT
The vessel is The charterer The charterer
A contract by which an entire ship, or some principal part hired for a specific hires the vessel takes
thereof is let/leased by the owner to another person for a
amount of time. for a single responsibility for
specified time or use. (Planters Products, Inc. vs. CA, 226 SCRA
476) Also, owner still voyage the crewing and
manages the maintenance of
Q: Who are the parties in a charter-party? vessel but the the ship during
charterer gives the time of the
A: orders for the charter, assuming
a. Ship owner or ship agent
employment of the legal
b. Charterer
the vessel, and responsibilities of
THREE FORMS OF CHARTER PARTY may sub-charter the owner and is
the vessel on a known as a
Q: What are the 3 forms of Charter Party? time charter or disponent owner.
voyage charter
A: basis

1. Time – transport of goods though the charter vessel


is for particular period of time agreed upon by the
parties
2. Voyage – the period is based on the voyage to be
undertaken
3. Demise Charter Party or Bareboat Charter Party –
there is a pro hac transfer of ownership from the
owner of the vessel to the charterer.

§ There is yet no crew, no provisions or banker fuel to


operate the vessel.
§ The vessel is bear on board without the banker fuel.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
IV. PARAMOUNT CLAUSE
Q: What is “Primage”?
Q: What is a “Paramount Clause”?
A: It is the amount stipulated as reward for taking good care
A: It is a stipulation or clause either on the bill of lading or of the cargo on board the vessel. It is a Reward for having let
charter party stipulating the laws that the parties agreed to the cargo be on the same condition it arrived.
be used of that particular transport. In the event that there
will be a breach, parties shall follow the law stipulated in the VIII. SHIP AGENT
paramount clause.
Q: Who is a “ship agent”?
Q: What is the limitation to a paramount clause?
A: A party who is actually designated by the owner of the
A: As long as it is not contrary to laws, it is reasonable, fair, vessel to take good care of the vessel. In our jurisdiction,
and not against public policy. under Art. 586 of the Code of Commerce, he is solidarily
liable with the ship owner for any damage or loss to the cargo
§ In our jurisdiction, the party should prove first that the or injuries caused to the passengers or death of passengers.
law is valid and reasonable.
The owner of a vessel and the agent shall be civilly liable for
V. DEMURRAGE the acts of the captain and for the obligations contracted by
the latter to repair, equip, and provision the vessel, provided
Q: What is “demurrage”? the creditor proves that the amount claimed was invested
therein.
A: It is a penalty imposed on carrier, shipper, or consignee of
goods as stipulated in the bill of lading or charter party for By agent is understood the person entrusted with the
not being able to load or unload on the vessel the goods. It provisioning of a vessel or who represents her in the port in
usually involves a huge amount which she happens to be. (Art. 586.)

Ex: $10,000 per day IX. MARITIME PROTEST

VI. LAY-TIME PERIOD v. EXTRA-LAY PERIOD Q: What is a “Maritime protest”?

Q: What is “Lay time period”? A: It is a requirement under Art. 835 of the Code of
Commerce in case of collision which compels the filing of
A: The free time which allows the shipper to load within the protest within the period of 24 hours when the vessel enters
period without any worry that he will be penalized or any on a port, domestic or foreign. A disclaimer of liability. It is to
penalty for demurrage claim that the collision did not happen because of the
negligence of the master of the ship. Condition precedent or
Q: What is “Extra-lay Period”? prerequisite to recovery of damages arising from collisions
and other maritime accidents.
A: Additional time. Days which follow after the lay days have
elapsed The action for the recovery of loss and damages arising from
collisions can not be admitted if a sworn statement or
VII. DISPATCH MONEY v. PRIMAGE declaration is not presented within twenty-four hours to
competent authority of the point where the collision took
Q: What is “Dispatch money”? place, or that of the first port of arrival of the vessel." (Art.
835)
A: Sum of money stipulated in the bill of lading or charter
party which provides that the amount is given as a reward to § If no protest is filed, despite collision, there could be no
the master of the ship for loading or unloading the cargo right on the part of the owner to recover “collision
within the terms of the contract. damage” from the other party
§ The non-filing may also cause the dismissal of actions
§ A condition sine qua non to recover the so-called
collision damage

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law

HIERARCHY OF LAWS ON TRANSPORTATION A: If the vessel is built sufficiently and equipped to carry a
particular kind of cargo which it contracted to carry and the
Q: State the hierarchy of laws on transportation. same is loaded safely.

A: NOTE: The rule is: a common carrier must always be sea-


worthy and cargo-worthy.
1. Provisions of the Civil Code
2. Code of Commerce Q: What are the instances when a common carrier may
refuse the service?
Q: What are the other special laws applicable?
A:
A:
1. No space in the vessel
1. Tariffs and Customs Code 2. No capacity to carry the cargo
2. Civil Aeronautics Act
3. Public Service Act COMMON CARRIER
4. COGSA
Q: What or who is a common carrier?
APPLICABLE LAWS
A: Persons, corporations, firms or associations engaged in the
Q: What provision of law applies in the event of transport of business of carrying or transporting passengers or goods or
goods from foreign port to the Philippines? both, by land, water, or air, for compensation, offering their
services to the public (Art. 1732, Civil Code).
A:
Art. 1732 of the New Civil Code avoids any distinction
Art. 1753. The law of the country to which the goods are to between one whose principal business activity is the carrying
be transported shall govern the liability of the common of persons or goods or both and one who does such carrying
carrier for their loss, destruction or deterioration. only as an ancillary activity (sideline).

Q: What specific provision under the Civil Code dictates that It also avoids a distinction between a person or enterprise
it is the provisions of the civil code that will apply, or in its offering transportation service on a regular or scheduled
absence, the code of commerce, special laws, and COGSA in basis and one offering such service on an occasional, episodic
suppletory character? or unscheduled basis.

A: Neither does the law distinguish between a carrier offering its


services to the general public that is the general community
Art. 1766. In all matters not regulated by this Code, the or population and one who offers services or solicits business
rights and obligations of common carriers shall be governed only from a narrow segment of the general population.
by the Code of Commerce and by special laws.
A person or entity is a common carrier even if he did not
X. SEA-WORTHINESS secure a Certificate of Public Convenience

Sea-worthy The law makes no distinction as to the means of transporting,


as long as it is by land, water or air. It does not provide that
Q: What do you mean by “Sea-worthy?” the transportation should be by motor vehicle.

A: It refers to a vessel that has a degree of fitness which an One is a common carrier even if he has no fixed and publicly
ordinary, careful, and prudent man/owner would require to known route, maintains no terminals, and issues no tickets
have at the commencement of the voyage having regard to (Asia Lighterage Shipping, Inc. vs. CA).
all probable circumstances of it.
Q: What are the characteristics of a common carrier?
It is the fitness adjudged by an ordinary prudent man.
A:
Cargo-worthy
1. Undertakes to carry for all people indifferently and
Q: What is “Cargo-worthy”? thus is liable for refusal without sufficient reason

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
2. Cannot lawfully decline to accept a particular class of Exempting circumstance
goods for carriage to the prejudice of the traffic in Prove extraordinary caso fortuito, Art. 1174
these goods; diligence and Art. 1733, NCC
3. No monopoly is favored NCC
4. Provides public convenience.
Presumption of negligence
Private Carrier There is a presumption of No presumption of fault
fault or negligence or negligence
Q: Who or what is a “Private Carrier”? Governing law
Law on common carriers Law on obligations and
A: One which, without being engaged in the business of contracts
carrying as a public employment, undertakes to deliver goods
or passengers for compensation. (Home Insurance Co. vs. CIVIL CODE PROVISIONS ON COMMON CARRIER
American Steamship Agency, 23 SCRA 24) Articles 1733 to 1766

TESTS WHETHER CARRIER IS COMMON OR PRIVATE REQUIREMENT OF EXTRAORDINARY DILIGENCE

1. It must be engaged in the business of carrying goods for Q: What is the rationale behind the “extra-ordinary
others as a public employment and must hold itself out diligence?”
as ready to engage in the transportation of goods
generally as a business and not as a casual occupation; A:
2. It must undertake to carry goods of the kind to which its 1. From the nature of the business and for reasons of
business in confined; public policy (Art. 1733)
3. It must undertake to carry by the method by which his 2. Relationship of trust
business is conducted and over its established roads; and 3. Business is impressed with a special public duty
4. The transportation must be for hire. 4. Possession of the goods
5. Preciousness of human life
The SC held that the true test of a common carrier is the
carriage of goods or passengers provided it has space for all NOTE: A common carrier is not an absolute insurer of all risks
who opt to avail themselves of its transportation for a fee. of travel.

COMMON CARRIER v. PRIVATE CARRIER Q: What is the coverage of the requirement of extra-
ordinary diligence?
Q: Give the distinctions between common and private
carrier. A:

A: 1. Vigilance over goods (Arts. 1734-1754); and


2. Safety of passengers (Arts. 1755-1763).

COMMON CARRIER PRIVATE CARRIER Q: What are the reasons for the exercise of extra-ordinary
As to availability diligence?
Holds himself out for all Contracts with particular
people indiscriminately individuals or groups only A:

As to required diligence 1. Nature of the business of common carrier which is


Extraordinary diligence is Ordinary diligence is public service
required required 2. Public policy, the common carriers are supposed to
As to regulation serve the public interest and therefore, they have to
exercise extra-ordinary diligence.
Subject to State regulation Not subject to State
regulation PASSENGER
Stipulation limiting liability
Parties may not agree on Parties may limit the Q: Who is a “passenger”?
limiting the carrier’s carrier’s liability, provided
liability except when it is not contrary to law, A: A person who has entered into a contract of carriage,
provided by law morals or good customs express or implied, with the carrier. They are entitled to
extraordinary diligence from the common carrier.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
GOODS PASSENGERS
The following are not considered passengers, and are entitled When goods were placed in In case of death of
to ordinary diligence only: good order condition but was passengers, upon
received in bad order presentation of a death
1. One who has not yet boarded any part of a vehicle certificate
regardless of whether or not he has purchased a
ticket; DEFENSES OF COMMON CARRIER IN CASE OF CARRIAGE OF
2. One who remains on a carrier for an unreasonable GOODS
length of time after he has been afforded every safe
opportunity to alight; Q: What are the defenses of a common carrier in case of
3. One who has boarded by fraud, stealth, or deceit; carriage of goods?
4. One who attempts to board a moving vehicle,
although he has a ticket, unless the attempt be with A:
the knowledge and consent of the carrier;
5. One who has boarded a wrong vehicle, has been 1. Fortuitous event (Art. 1734), natural disaster
properly informed of such fact, and on alighting, is 2. Exercise of extra-ordinary diligence
injured by the carrier; 3. There was a valid stipulation
6. Invited guests and accommodation passengers.
7. One who rides any part of the vehicle which is NOTE: Civil Code provisions on common carrier should not
unsuitable or dangerous or which he knows is not apply where the common carrier is not acting as such but as a
designed or intended for passengers. private carrrier. As a private carrier a stipulation exempting
the owner from liability for negligence of its agent is valid for
Q: What do you mean by the statement “unconditionally it is not contrary to public policy since the public is not
placed in the possession of and received by the common involved.
carrier”?
Q: Why did the Code Commission and the Congress
A: The shipper has already made up his mind, and there are incorporated the duty of the common carrier to observe
no conditions attached. extra-ordinary diligence?

Q: When will the shipper or charterer pay the total amount A: Due to the recklessness of their drivers which is the
of goods? common sight even in crowded areas, and particularly, on the
highways throughout the country.
A:
Q: What are the 3 options of the common carrier in case the
1. Declaration of value on the face of the bill of defect is apparent in the packing of goods?
exchange
2. Payment of additional freight if carrier so demands A:

PRESUMPTIONS APPLICABLE TO COMMON CARRIERS 1. Inform the shipper to preparew the packing of the
goods
Q: What are the “deterrence or presumptions” applicable to 2. Pack the goods itself and ask the shipper for
common carriers? payment
3. Refuse to accept package
A:
SUBSECTION 2. - VIGILANCE OVER GOODS
1. Exercise of Extra-ordinary diligence
2. In cases of lost, destruction, and deterioration of the Q: What are the exemptions on liability of common carrier?
goods and that the passengers were not safely
transported, the common carrier is presumed to be A:
at fault or negligent.
Art. 1734. Common carriers are responsible for the loss,
NOTE: These presumptions are rebuttable. destruction, or deterioration of the goods, unless the same
is due to any of the following causes only:
Q: What are the evidence of negligence?
(1) Flood, storm, earthquake, lightning, or other
A: natural disaster or calamity;

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
(2) Act of the public enemy in war, whether The carrier which, knowing the fact of improper packing of
international or civil; the goods upon ordinary observation, still accepts the goods
(3) Act of omission of the shipper or owner of the notwithstanding such condition, is not relieved of liability or
goods; loss or injury resulting therefrom.
(4) The character of the goods or defects in the packing
or in the containers; ORDER OR ACT OF PUBLIC AUTHORITY
(5) Order or act of competent public authority
Said public authority must have the power to issue the order
CASO FORTUITO/FORCE MAJEURE (Art. 1743). Consequently, where the officer acts without
legal process, the common carrier will be held liable.
Q: What are the requisites for a fortuitous event to be
considered as such? Even if the carrier is in good faith, that the public authority
has the power to issue such order and it resulted to loss or
A: destruction of the goods, the common carrier is still liable (no
mitigation) for he must have fully exercise extra-ordinary
1. Must be the proximate and diligence.
2. only cause of the loss
3. Exercise of due diligence to prevent or minimize the Diligence in the selection and supervision of employees under
loss before, during or after the occurrence of the Article 2180 of the Civil Code cannot be interposed as a
disaster (Art. 1739) defense by the common carrier because the liability of the
4. Carrier has not negligently incurred in delay in carriers arises from the breach of the contract of carriage.
transporting the goods (Art. 1740) The defense under said articles is applicable to negligence in
quasi-delicts under Art. 2176.
§ Fire is not considered a natural disaster or calamity as it
arises almost invariably from some act of man. (Eastern Q: What if the goods arrived in damage condition, what is
Shipping Lines Inc. vs. IAC) the consequence under Art. 1735?
§ Mechanical defects are not force majeure if the same
was discoverable by regular and adequate inspections. A:

ACTS OF PUBLIC ENEMY 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,
Q: What are the requisites under this defense? destroyed or deteriorated, common carriers are presumed
to have been at fault or to have acted negligently, unless
A: they prove that they observed extraordinary diligence as
required in Article 1733.
1. Must be the proximate and only cause of the loss
2. Exercise of due diligence to prevent or minimize the The presumption of negligence on the part of the common
loss before, during or after the act causing the loss, carrier in cases of loss, destruction, or deterioration of the
deterioration or destruction of the goods (Art. 1739) goods that the common carrier failed to exercise extra-
ordinary diligence, thus, he is held liable for damages.
NEGLIGENCE OF THE SHIPPER OR OWNER
Q: What are the 2 provisions which are preventive measures
Q: What are the requisites under this defense? recommended by the Code Commission to Congress to be
passed to curbe the negligent acts of common carriers?
A:
A:
a. Sole and proximate cause: absolute defense
b. Contributory: partial defense. (Art. 1741) 1. Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
CHARACTER OF THE GOODS OR DEFECTS IN THE PACKING observe extraordinary diligence in the vigilance over the
OR IN THE CONTAINER goods and for the safety of the passengers transported
by them, according to all the circumstances of each
Even if the damage should be caused by the inherent case.
defect/character of the goods, the common carrier must
exercise due diligence to forestall or lessen the loss. (Art. Such extraordinary diligence in the vigilance over the
1742); goods is further expressed in Articles 1734, 1735, and
1745, Nos. 5, 6, and 7, while the extraordinary diligence

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
for the safety of the passengers is further set forth in Q: Who declares the condition of the cargo?
Articles 1755 and 1756.
A: The shipper
2. Art. 1735. In all cases other than those mentioned in
Nos. 1, 2, 3, 4, and 5 of the preceding article, if the Q: Who determines that the condition was true as declared
goods are lost, destroyed or deteriorated, common by the shipper?
carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed A: The carrier
extraordinary diligence as required in Article 1733.
Q: What would the common carrier issue to the shipper if he
Q: If a common carrier is given Certificate of Public determines that the goods were in that good order
Convenience to operate on a particular line, can that be condition?
interfered with by another common carrier?
A: Through the contract of carriage.
A: No.
Q: What is the period of responsibility of the common
CHARACTERISTICS OF A COMMON CARRIER carrier if he issued the bill of lading? When is he supposed
to maintain that condition? When does the responsibility
Q: What are the characteristics or elements of a common begin and when does it end?
carrier (According to Atty. Palacios)?
A:
A:
Art. 1736. The extraordinary responsibility of the common
1. It has been serving public interest. The Certificate of carrier lasts from the time the goods are unconditionally
Public Convenience has been issued so that it can serve placed in the possession of, and received by the carrier for
public interest. transportation until the same are delivered, actually or
2. There must be public necessity to be observed by the constructively, by the carrier to the consignee, or to the
common carrier person who has a right to receive them, without prejudice
3. No complaint coming from the public questioning that to the provisions of Article 1738.
service coming from the common carrier.
Q: Can it be conditional?
Q: If there is a complaint, could that be a ground for a
competitior to come in and operate on the line already A: No.
served by the first common carrier?
EXTENT OF RESPONSIBILITY
A: Yes. (CIVIL CODE V. COGSA)

RUINOUS COMPETITION CIVIL CODE PROVISIONS COGSA


The responsibility of the The responsibility of the
Q: What is “ruinous competition”? common carrier begins from carrier does not begin from
the time it was delivered to a the time when the goods are
A: shipping line. delivered, for purposes of
transport, but when the
Q: Has the common carrier have the right to open boxes, the goods have crossed the side
luggage of the passengers? of the vessel

A: No, generally. The common carrier has no right as a Also known as the “Tackle-
general rule. They can only inquire. to-tackle Principle”

Q: What is the exception? SHIPPING LINE COMMON CARRIER BY SEA


The obligation is to transport The responsibility of the
A: If it has serious ground to suspect that the contents are the goods in accordance with commin carrier by sea will
against the interest of the passesngers and the cargoes on the instruction to transport not run unitl the goods have
board as well as the interest of the common carrier. They made by shipper crossed one side of the
must pose danger to the passengers and to the common vessel for purposes of
carrier. loading up to the time that
the goods have crossed the

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
other side of the port of
discharge. A:

VOID STIPULATIONS IN THE BILL OF LADING 1. 1 Charterer


2. 1 shipment belonging to the charterer
Q: If the bill of lading contains a provision excluding libility
on the part of the common carrier, if the goods would suffer DEMISE OR BAREBOAT CHARTER
loss or damage due to the fault of the crew members or
agents of the common carrier. Is this valid? Q: Who is supposed to appoint the crew?

A: As a rule, that is unjust, against public policy, and it is null A: The charterer
and void. (Art. 1745)
Q: Who is supposed to navigate the vessel?
Art. 1745. Any of the following or similar stipulations shall
be considered unreasonable, unjust and contrary to public A: The charterer
policy:
Q: Who is supposed to furnish the fuel, and provisions to
(1) That the goods are transported at the risk of the the vessel?
owner or shipper;
(2) That the common carrier will not be liable for any A: The charterer
loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any Q: Who has the full control and supervision of the vessel?
diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of A: Charterer
diligence less than that of a good father of a family,
or of a man of ordinary prudence in the vigilance Q: If there will be loss, destruction, or damage caused by the
over the movables transported; navigation of the vessel by the charterer, who is liable?
(5) That the common carrier shall not be responsible
for the acts or omission of his or its employees; A: Charterer
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act Q: In case of bareboat or demise charter, what kind of
with grave or irresistible threat, violence or force, is diligence must it exercise?
dispensed with or diminished;
(7) That the common carrier is not responsible for the A: Ordinary diligence
loss, destruction, or deterioration of goods on
account of the defective condition of the car, Q: Does the princple of presumption of fault or negligence
vehicle, ship, airplane or other equipment used in apply in this case?
the contract of carriage.
A: No. The presumption under Art. 1736 applies only to
Q: What is the exception? common carriers. The moment you convert or change the
complexion, the presumption will no longer apply.
A: If the common carrier acts as a private carrier (in case of
bareboats. Q: What are the 2 sides of the carrier vessel?

Q: What is the excpetion to the exception? A:

A: When there are several shippers and consignees. Thus, it 1. Port side of the vessel which is the left side
returns to the complexion of a common carrier. 2. Star board side which is the right side

Q: Why? RIGHT OF STOPPAGE IN TRANSITU

A: There is a pro hac vice transfer in case of a demise charter. Art. 1737. The common carrier's duty to observe
The owner is no longer the common carrier. There is already extraordinary diligence over the goods remains in full force
a change of complexion as enunciated in the Planters case and effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner has made use
Q: What are the 2 conditions apparent in the Home of the right of stoppage in transitu.
Insurance case?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: Suppose the cargo was damaged in the possession of the destination, until the consignee has been advised of the
warehouseman, placed by the carrier, while the repair of arrival of the goods and has had reasonable opportunity
the carriage was going on, will that hold the common carrier thereafter to remove them or otherwise dispose of them.
liable?
Q: Even if the goods had been kept in a bonded warehouse
A: Yes. chosen by the carrier?

Q: What is the exception? A: Yes.

A: The shipper or owner has made use of the right of Q: Is limiting the performance of extra-ordinary diligence of
stoppage in transitu. common carrier for loss, destruction or damage, valid?

Q: Why did the shipper instruct the carrier to stop? A: Yes., subject to the conditions of Art. 1744:

A: The buyer becomes insolvent. Art. 1744. A stipulation between the common carrier and
the shipper or owner limiting the liability of the former for
Art. 1530. Subject to the provisions of this Title, when the the loss, destruction, or deterioration of the goods to a
buyer of goods is or becomes insolvent, the unpaid seller degree less than extraordinary diligence shall be valid,
who has parted with the possession of the goods has the provided it be:
right of stopping them in transitu, that is to say, he may
resume possession of the goods at any time while they are (1) In writing, signed by the shipper or owner;
in transit, and he will then become entitled to the same (2) Supported by a valuable consideration other than
rights in regard to the goods as he would have had if he had the service rendered by the common carrier; and
never parted with the possession. (n) (3) Reasonable, just and not contrary to public policy.

Q: What is the legal effect of the instruction of stoppage? Q: Who gives a valuable consideration?

A: It terminates the contract of carriage between the carrier A: The common carrier.
and the shipper. The carrier becomes a
warehouseman/bailee Example: reduction of fair in exchange for the exercise of
lesser diligence to that which is required
Q: How is it exercised?
Q: State the stipulations that are null and void.
A: By giving notice to the captain. Or, if by land, instruction
must be given to the office then to the common carrier. A:

Q: What are the elements of the right of stoppage in Art. 1745. Any of the following or similar stipulations shall
transitu? be considered unreasonable, unjust and contrary to public
policy:
A:
(1) That the goods are transported at the risk of the
1. Notice to the common carrier that there is a owner or shipper;
stoppage because the consignee is insolvent; (2) That the common carrier will not be liable for any
2. Contract of carriage ceases upon acceptance of loss, destruction, or deterioration of the goods;
notice; (3) That the common carrier need not observe any
3. At the time of the notice, the goods must still be in diligence in the custody of the goods;
the possession of the carrier and not yet delivered to (4) That the common carrier shall exercise a degree of
the consignee. diligence less than that of a good father of a family,
or of a man of ordinary prudence in the vigilance
Q: Is there a liability on the part of the carrier prior to the over the movables transported;
notice to the consignee that the goods have arrived? (5) That the common carrier shall not be responsible
for the acts or omission of his or its employees;
A: Yes, by express provision of the law (6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act
Art. 1738. The extraordinary liability of the common carrier with grave or irresistible threat, violence or force, is
continues to be operative even during the time the goods dispensed with or diminished;
are stored in a warehouse of the carrier at the place of

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
(7) That the common carrier is not responsible for the 2. Payment of damage to its full value.
loss, destruction, or deterioration of goods on
account of the defective condition of the car, Art. 1746. An agreement limiting the common carrier's
vehicle, ship, airplane or other equipment used in liability may be annulled by the shipper or owner if the
the contract of carriage. common carrier refused to carry the goods unless the
former agreed to such stipulation.
Q: Can the parties limit the liability of common carrier?
Under what instances? Under Art. 1746, when the common carriage refuses to carry
the goods, the shipper should first annul the contract before
A: he can sue. If he does not annul, he cannot sue and ask for
1. In case of riots or strikes damages and the validity of the contract is still presumed.
2. Shipper declares a greater value of the goods and pays
additional amount of freight
3. Parties fix the sum or amount of liability equivalent to When the carrier refuses to transport or carry the goods, it is
the value of the goods tantamount to BREACH OF CONTRACT OF CARRIAGE

Pertinent Provisions Q: What are the proofs needed?

Art. 1746. An agreement limiting the common carrier's A:


liability may be annulled by the shipper or owner if the
common carrier refused to carry the goods unless the 1. Ticket
former agreed to such stipulation. 2. Death certificate

Art. 1748. An agreement limiting the common carrier's SUBSECTION 3. - SAFETY OF PASSENGERS
liability for delay on account of strikes or riots is valid.
Art. 1755. A common carrier is bound to carry the
Art. 1749. A stipulation that the common carrier's liability is passengers safely as far as human care and foresight can
limited to the value of the goods appearing in the bill of provide, using the utmost diligence of very cautious
lading, unless the shipper or owner declares a greater value, persons, with a due regard for all the circumstances.
is binding.
Q: What are the principles governing the liability of the
Art. 1750. A contract fixing the sum that may be recovered. common carriage?
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just A:
under the circumstances, and has been fairly and freely
agreed upon. (1) The liability of the common-carrier is contractual
and arises upon the breach of its obligations and
Q: How can the 3 limitations be frustrated? there is breach if it fails to exercise extraordinary
diligence according to all the circumstances of each
A: case.
(2) A carrier is obliges to carry its passengers with
1. If the common carrier incurred UNJUST DELAY in utmost diligence of very cautious persons, having
shipping of goods due regard for all the circumstances.
2. When it changes the stipulated usual route of the (3) A carrier is presumed to be at fault or have acted
common carrier and it results to the loss of the negligently in case if death of, or injury to
goods. passengers, it being its duty to prove that it
exercised extra-ordinary diligence.
Art. 1747. If the common carrier, without just cause, delays (4) A carrier is not an insurer of all risks of travel
the transportation of the goods or changes the stipulated or because the common-carrier’s liability rests on
usual route, the contract limiting the common carrier's negligence only.
liability cannot be availed of in case of the loss, destruction, (5) The carrier is not responsible for events which could
or deterioration of the goods. not be foreseen, or which, though foreseen, are
inevitable.
Q: What are the effects of the 2 events?
If the proximate cause is the negligence of the shipper and
A: the contributory negligence was made by the common
1. Cannot avail of the limitations stipulated carrier, the shipper cannot recover damages because the law

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
raises a presumption that the common carrier has exercised diligence of a good father of a family could have prevented
extra-ordinary diligence. or stopped the act or omission.

Q: What is the effect of fortuitous event? LIABILITY OF A COMMON CARRIER for


DEATH OR INJURIES TO PASSENGERS DUE TO ACTS OF ITS
A: Then the common-carrier cannot be held liable when it is EMPLOYEES AND OTHER PASSENGERS OR STRANGERS
the primary result for it prevented the former from
performing his normal duty. FOR ACTS OF OTHER
FOR ACTS OF ITS PASSENGERS OR
Art. 1756. In case of death of or injuries to passengers, EMPLOYEES STRANGERS
common carriers are presumed to have been at fault or to Required diligence and defense
have acted negligently, unless they prove that they Extraordinary diligence Ordinary diligence
observed extraordinary diligence as prescribed in Articles
1733 and 1755. Nature of liability
Tort; however, Not absolute; limited by
Art. 1757. The responsibility of a common carrier for the The employee must be on Art. 1763
safety of passengers as required in Articles 1733 and 1755 duty at the time of the
cannot be dispensed with or lessened by stipulation, by the act. (Maranan v. Perez)
posting of notices, by statements on tickets, or otherwise.
The carrier is liable when its personnel allowed a passenger
Art. 1758. When a passenger is carried gratuitously, a to drive the vehicle causing it to collide with another vehicle
stipulation limiting the common carrier's liability for resulting to the injuries suffered by the other passengers.
negligence is valid, but not for willful acts or gross
negligence. SUBSECTION 4. - COMMON PROVISIONS

The reduction of fare does not justify any limitation of the Art. 1764. Damages in cases comprised in this Section shall
common carrier's liability. be awarded in accordance with Title XVIII of this Book,
concerning Damages. Article 2206 shall also apply to the
Art. 1759. Common carriers are liable for the death of or death of a passenger caused by the breach of contract by a
injuries to passengers through the negligence or willful acts common carrier.
of the former's employees, although such employees may
have acted beyond the scope of their authority or in Art. 1765. The Public Service Commission may, on its own
violation of the orders of the common carriers. motion or on petition of any interested party, after due
hearing, cancel the certificate of public convenience granted
This liability of the common carriers does not cease upon to any common carrier that repeatedly fails to comply with
proof that they exercised all the diligence of a good father his or its duty to observe extraordinary diligence as
of a family in the selection and supervision of their prescribed in this Section.
employees.
Art. 1766. In all matters not regulated by this Code, the
Art. 1760. The common carrier's responsibility prescribed in rights and obligations of common carriers shall be governed
the preceding article cannot be eliminated or limited by by the Code of Commerce and by special laws.
stipulation, by the posting of notices, by statements on the
tickets or otherwise. RULES ON PASSENGERS’ BAGGAGE

Art. 1761. The passenger must observe the diligence of a IN THE CUSTODY OF THE IN THE CUSTODY OF THE
good father of a family to avoid injury to himself. PASSENGERS COMMON CARRIER
(HAND-CARRIED) (CHECKED-IN)
Art. 1762. The contributory negligence of the passenger Legal nature of the baggage
does not bar recovery of damages for his death or injuries, if Necessary deposit Considered as “goods”
the proximate cause thereof is the negligence of the
common carrier, but the amount of damages shall be Required diligence by the common carrier
equitably reduced. Diligence of a depositary Extraordinary diligence
(ordinary diligence)
Art. 1763. A common carrier is responsible for injuries Applicable rules
suffered by a passenger on account of the wilful acts or
Arts. 1998 and 2000-2003 Arts. 1733-1753
negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
DECISIVE CASE OF LA MALLORCA
CHARTER PARTY BILL OF LADING
Q: According to the La Mallorca case, what are the elements An entire or complete More like a private receipt
in order to consider that the passesnger has been delivered contract. which the captain gives to
safely to his place of destination? accredit goods received
from persons
A:

(1) When the carrier had reached the point of Consensual contract Real contract
destination
(2) Passenger has alighted safely, upon direction by the BAREBOAT v. CONTRACT OF AFREIGHTMENT
conductor to alight, from the carrier
(3) The engine should be stopped Q: Differentiate Bareboat from Contract of Affreightment
(4) Safe distance from the common carrier (Time and Voyage charter).

The complainants, in case of a collision, should be the A:


passengers of the common carrier, not the heirs. Police
report will establish the accident. BAREBOAT OR DEMISE CONTRACT OF
CHARTER AFFREIGHTMENT (TIME OR
Q: In case of death? VOYAGE CHARTER)
Charterer becomes liable to Owner remains liable as
A: The passenger or his heirs must present:
others caused by its carrier and must answer for
negligence any breach of duty
1. Ticket
2. Police report
3. Death certificate Charterer regarded as Charterer is not regarded as
owner pro hac vice for the owner.
Q: In case of culpa contractual, will the defense of exercise voyage
of due diligence apply? Owner of vessel The vessel owner retains
relinquishes possession, possession, command and
A: No. command and navigation to navigation of the ship
charterer
Q: In case of culpa aquiliana or quasi-delict? Common carrier is Common carrier is not
converted to private carrier. converted to a private
A: Yes. carrier.

Q: What is a Charter Party? Q: What law will apply in case the passenger’s baggage is
NOT in his personal custody?
A: A contract by virtue of which the owner or agent binds
himself to transport merchandise or persons for a fixed price. A: Arts. 1733 to 1753 shall apply. Thus, Arts. 1733-1753 shall
A contract by which an entire ship, or some principal part apply to baggage not in the possession of the passenger.
thereof is let/leased by the owner to another person for a
specified time or use. (Planters Products, Inc. vs. CA, 226 SCRA Otherwise, the Civil Code provisions on Common Carriage
476) shall not apply but Arts. 1998, 200 to 2003.

Q: Who are the essential parties in a charter party? In his of baggage and personal effects with the passenger, the
latter must follow instructions from the common carrier to
A: prevent loss and to protect his personal effects, otherwise, he
will not be able to recover. The so-called Rule on Necessary
1. Ship owner or ship agent Deposit shall apply in this case.
2. Charterer
RULE ON NECESSARY DEPOSIT
CHARTER PARTY v. BILL OF LADING
Art. 1998. The deposit of effects made by the travellers in
Q: Differentiate Charter party from Bill of lading. hotels or inns shall also be regarded as necessary. The
keepers of hotels or inns shall be responsible for them as
A: depositaries, provided that notice was given to them, or to
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
their employees, of the effects brought by the guests and A: It is based on the contract since there exists a contractual
that, on the part of the latter, they take the precautions relation. Thus, there is a breach of contract.
which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects. (1783) Q: However, it is said that there is a demarcation line as to
the liability. What is it?
Art. 2000. The responsibility referred to in the two
preceding articles shall include the loss of, or injury to the A: The common carrier is not considered as insurer of all
personal property of the guests caused by the servants or risks.
employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force FORTUITOUS EVENT
majeure. The fact that travellers are constrained to rely on
the vigilance of the keeper of the hotels or inns shall be Q: What is fortuitous event?
considered in determining the degree of care required of
him. (1784a) A: That which could not be foreseen, or which though
foreseen, is inevitable (Civil Code, Art. 1174).
Art. 2001. The act of a thief or robber, who has entered the
hotel is not deemed force majeure, unless it is done with An event is considered fortuitous if the following elements
the use of arms or through an irresistible force. (n) concur:

Art. 2002. The hotel-keeper is not liable for compensation if (a) the cause of the unforeseen and unexpected
the loss is due to the acts of the guest, his family, servants occurrence, or the failure of the debtor to comply
or visitors, or if the loss arises from the character of the with his obligations, must be independent of human
things brought into the hotel. (n) will;
(b) it must be impossible to foresee the event which
Art. 2003. The hotel-keeper cannot free himself from constitutes the caso fortuito, or if it can be foreseen,
responsibility by posting notices to the effect that he is not it must be impossible to avoid;
liable for the articles brought by the guest. Any stipulation (c) the occurrence must be such as to render it
between the hotel-keeper and the guest whereby the impossible for the debtor to fulfill his obligation in a
responsibility of the former as set forth in articles 1998 to normal manner; and
2001 is suppressed or diminished shall be void. (n) (d) the obligor must be free from any participation in
the aggravation of the injury resulting to the
TRANSPORT OF PASSENGERS creditor.

Q: How is the common carrier supposed to transport Q: What is the effect when a passenger is carried
passengers? gratuitously?

A: With HUMAN CARE and FORESIGHT. The presumption of A:


fault or negligence usually is the basis of the court in holding
the common carrier liable. This presumption applies to both: Art. 1758. When a passenger is carried gratuitously, a
stipulation limiting the common carrier's liability for
a. Passengers negligence is valid, but not for wilful acts or gross
b. Cargoes negligence.

Q: What is the effect of absolute liability for the defect of The reduction of fare does not justify any limitation of the
the parts of the engines of the common carrier? common carrier's liability.

A: The common carrier will still be held liable Q: What is the effect if there is a stipulation that there will
be non-liability in case of damage not caused by the gross
Q: How about negligence of the manufacturer? negligent act of the common carrier?

A: In that case, the manufacturer will be considered as the A: The stipulation is valid if the damage is not due to the
agent of the common carrier, thus, he will still be held liable. willful act of the common carrier.
This is in the light of the Doctrine of Respondeat Superior.
The user of the object is held liable. Art. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or wilful acts
Q: What is the basis of the liability of the common carrier? of the former's employees, although such employees may

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
have acted beyond the scope of their authority or in which case what is provided in Article 2176 shall be
violation of the orders of the common carriers. applicable.

This liability of the common carriers does not cease upon Lastly, teachers or heads of establishments of arts and
proof that they exercised all the diligence of a good father trades shall be liable for damages caused by their pupils and
of a family in the selection and supervision of their students or apprentices, so long as they remain in their
employees. custody.

The common carrier will still be held liable to the passenger if The responsibility treated of in this article shall cease when
the act of the employee was done within the course of the the persons herein mentioned prove that they observed all
employment because the common carrier is bound by its the diligence of a good father of a family to prevent
contractual obligation. damage. (1903a)

If it was done outside, it cannot be held liable. LIABILITY OF COMMON CARRIER FOR AN EMPLOYEE WHO
Ex: A, driver of a bus, after delivering the bus to the ACTED BEYOND THE SCOPE
station/garage, he stabbed B, a passenger. Note that the bus
is already placed in the garage. Thus, the common carrier can Q: What is the liability of a common carrier acting beyond
no longer be held liable since the damage was made outside the scope?
the course of the employment.
A: It depends:
It is said that Art. 1759 is dependent highly on evidence.
1. If the act occurred prior to the new civil code, he is
Q: What if the common carrier bumped with a private not liable. The act of employee is considered as a
carrier? What is his best defense? fortuitous event
2. If after the new civil code, he is liable.
A: His principal defense can be the exercise of due diligence.
To be able to avoid liability, there should be a good quantum NOTE: "Last clear chance" rule not applicable to contracts of
of evidence. carriage.-- The principle of last clear chance applies only in a
suit between the owners and drivers of two colliding vehicles;
This is also related to Art. 2180 it does not apply where a passenger demands responsibility
from the common carrier to enforce its contractual
Art. 2180. The obligation imposed by Article 2176 is obligation; it would be iniquitous to exempt the driver and his
demandable not only for one's own acts or omissions, but employer on the ground that the other driver was also
also for those of persons for whom one is responsible. negligent.

The father and, in case of his death or incapacity, the TERMINATION OF CARRIER-PASSENGER RELATIONSHIP
mother, are responsible for the damages caused by the
minor children who live in their company. Q: When relationship of carrier and passenger terminates?

Guardians are liable for damages caused by the minors or A: The relation of common carrier and passenger does not
incapacitated persons who are under their authority and cease at the moment that the passenger alights from the
live in their company. common carrier's vehicle at a place selected by the common
carrier at the point of destination, but continues until the
The owners and managers of an establishment or enterprise passenger had reasonable time or a reasonable opportunity
are likewise responsible for damages caused by their to leave the common carrier's premises. What is a
employees in the service of the branches in which the latter reasonable time or a reasonable delay within this rule is to be
are employed or on the occasion of their functions. determined from all the circumstances

Employers shall be liable for the damages caused by their ACCOMODATION PASSENGER
employees and household helpers acting within the scope of
their assigned tasks, even though the former are not Q: Who are “accommodation passengers”?
engaged in any business or industry.
A: They are passengers who are normally given the privilege
The State is responsible in like manner when it acts through of ride by a private vehicle and the latter will not be held
a special agent; but not when the damage has been caused liable. However, the act should not be due to the willful act in
by the official to whom the task done properly pertains, in order to avoid liability.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
NOTE: The common carrier is still liable whether the 2. Whenever he has exploded or attempted to explode
accommodation passenger paid or not since there is no any bomb or explosive to destroy the aircraft; or
distinction between a regular passenger and an
accommodation passenger as to responsibility. There exists a 3. Whenever the crime is accompanied by murder,
contractual obligation homicide, serious physical injuries or rape.

Q: What is the liability of the common carrier in case of acts Section 3. It shall be unlawful for any person, natural or
of a co-passenger or stranger? juridical, to ship, load or carry in any passenger aircraft
operating as a public utility within the Philippines, and
A: There is always liability if the common carrier could have explosive, flammable, corrosive or poisonous substance or
exercised due diligence to prevent the occurrence. material.

Q: What if a force majeure prevented him against the act of Sec. 4. The shipping, loading or carrying of any substance or
the passenger? material mentioned in the preceding section in any cargo
aircraft operating as a public utility within the Philippines
A: He will not be liable according to Art. 1763. shall be in accordance with regulations issued by the Civil
Aeronautics Administration.
Art. 1763. A common carrier is responsible for injuries
suffered by a passenger on account of the wilful acts or Sec. 5. As used in this Act
negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the (1) "Explosive" shall mean any substance, either solid or
diligence of a good father of a family could have prevented liquid, mixture or single compound, which by chemical
or stopped the act or omission. reaction liberates heat and gas at high speed and causes
tremendous pressure resulting in explosion. The term shall
include but not limited to dynamites, firecrackers, blasting
REPUBLIC ACT NO. 6235 caps, black powders, bursters, percussions, cartridges and
AN ACT PROHIBITING CERTAIN ACTS INIMICAL TO CIVIL other explosive materials, except bullets for firearm.
AVIATION, AND FOR OTHER PURPOSES.
(2) "Flammable" is any substance or material that is highly
combustible and self-igniting by chemical reaction and shall
Section 1. It shall be unlawful for any person to compel a include but not limited to acrolein, allene, aluminum dyethyl
change in the course or destination of an aircraft of Philippine monochloride, and other aluminum compounds, ammonium
registry, or to seize or usurp the control thereof, while it is in chlorate and other ammonium mixtures and other similar
flight. An aircraft is in flight from the moment all its external substances or materials.
doors are closed following embarkation until any of such
doors is opened for disembarkation. (3) "Corrosive" is any substance or material, either liquid,
solid or gaseous, which through chemical reaction wears
It shall likewise be unlawful for any person to compel an away, impairs or consumes any object. It shall include but not
aircraft of foreign registry to land in Philippine territory or to limited to alkaline battery fluid packed with empty storage
seize or usurp the control thereof while it is within the said battery, allyl chloroformate, allytrichlorosilane, ammonium
territory. dinitro-orthocresolate and other similar materials and
substances.
Sec. 2. Any person violating any provision of the foregoing
section shall be punished by an imprisonment of not less than (4) "Poisonous" is any substance or materials, except
twelve years but not more than twenty years, or by a fine of medicinal drug, either liquid, solid or gaseous, which through
not less than twenty thousand pesos but not more than forty chemical reactions kills, injuries or impairs a living organism
thousand pesos. or person, and shall include but not limited to allyl
isothiocyanate, ammunition (chemical, non-explosive but
The penalty of imprisonment of fifteen years to death, or a containing Class A, B or poison), aniline oil, arsine,
fine of not less than twenty-five thousand pesos but not more bromobenzyle cyanide, bromoacetone and other similar
than fifty thousand pesos shall be imposed upon any person substances or materials.
committing such violation under any of the following
circumstances: Sec. 6. Any violation of Sec. three hereof shall be punishable
by an imprisonment of at least five years but not more than
1. Whenever he has fired upon the pilot, member of ten years or by a fine of not less than ten thousand pesos but
the crew or passenger of the aircraft; not more than twenty thousand pesos: Provided, That if the
violation is committed by a juridical person, the penalty shall

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
be imposed upon the manager, representative, director, Q: What is the effect of passenger's contributory negligence?
agent or employee who violated, or caused, directed,
cooperated or participated in the violation thereof: Provided, A: Contributory negligence on the part of the passenger does
further, That in case the violation is committed in the interest not justify the CC's exemption from liability. Where it is not
of a foreign corporation legally doing business in the the proximate cause of the death or injury, he or his heirs are
Philippines, the penalty shall be imposed upon its resident not barred from recovery of damages, provided of course
agent, manager, representative or director responsible for that the CC is the proximate cause of his death or injury
such violation and in addition thereto, the license of said
corporation to do business in the Philippines shall be revoked. Art. 2197. Damages may be:

Any violation of Sec. four hereof shall be an offense (1) Actual or compensatory;
punishable with the minimum of the penalty provided in the (2) Moral;
next preceding paragraph. (3) Nominal;
(4) Temperate or moderate;
Sec. 7. For any death or injury to persons or damage to (5) Liquidated;
property resulting from a violation of Sections three and four (6) Exemplary or corrective.
hereof, the person responsible therefor may be held liable in
accordance with the applicable provisions of the Revised 2 KINDS OF AIRCRAFT UNDER ART. 6235
Penal Code.
Q: What are the 2 kinds of aircrafts referred to by Act. 6235?
Sec. 8. Aircraft companies which operate as public utilities or
operators of aircraft which are for hire are authorized to open A:
and investigate suspicious packages and cargoes in the
presence of the owner or shipper, or his authorized 1. Philippine-Registered aircraft
representatives if present; in order to help the authorities in 2. Foreign-Registered aircraft
the enforcement of the provisions of this Act: Provided, That
if the owner, shipper or his representative refuses to have the UNLAWFUL ACTS CONCERNING
same opened and inspected, the airline or air carrier is A PHIL-REGISTERED AIRCRAFT
authorized to refuse the loading thereof.
Q: What are the unlawful acts concerning Philippine-
Sec. 9. Every ticket issued to a passenger by the airline or air Registered aircraft?
carrier concerned shall contain among others the following
condition printed thereon: "Holder hereof and his hand- A:
carried luggage(s) are subject to search for, and seizure of,
prohibited materials or substances. Holder refusing to be 1. Any act of a person to compel the aircraft to change
searched shall not be allowed to board the aircraft," which its course or destination
shall constitute a part of the contract between the passenger 2. To seize or usurp control thereof while in flight
and the air carrier.
Q: What do you mean by “while in flight”?
Sec. 10. The Civil Aeronautics Administration is hereby
directed to promulgate within one month after the approval A: An aircraft is in flight from the moment all its external
of this Act such regulations as are provided in Sec. four hereof doors are closed following embarkation until any of such
and cause the publication of such rules and regulations in the doors is opened for disembarkation.
Official Gazette and in a newspaper of national circulation for
at least once a week for three consecutive weeks. Such If the aircraft was intentionally closed for particular
regulations shall take effect fifteen days after publication in passengers, it is not considered in flight.
the Official Gazette.
The aircraft will be considered closed from the time all its
Sec. 11. This Act shall take effect after the publication external doors are closed following embarkation despite the
mentioned in the preceding section. fact that it had not left the tarmac.

Q: What is the effect of negligence of passenger? UNLAWFUL ACTS CONCERNING


A FOREIGN-REGISTERED AIRCRAFT
A: Where the proximate cause of the death of or injury to the
passenger is his own negligence, and not that of the CC, the Q: How about in case of a Foreign-Registered aircraft?
CC is exempted from liability
A:

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A: The presumption of negligence shall work against them
(1) to compel an aircraft of foreign registry to land in since there was a failure to search and confiscate the object.
Philippine territory or absence of extraordinary diligence
(2) to seize or usurp the control thereof while it is within DECISIVE CASE: NOCUM V. LAGUNA TAYABAS BUS CO.
the said territory (GR L-23733, 31 October 1969)

Q: Why is there a difference in case of a Philippine- “Before the box containing the firecrackers were allowed to
Registered aircraft and a Foreign-Registered aircraft be loaded in the bus by the conductor, inquiry was made with
regarding the “in flight” requirement? the passenger carrying the same as to what was in it, since its
“opening was folded and tied with abaca.” According to the
A: There is emphasis to protect the safety of the aircraft and judge of the lower court, “if proper and rigid inspection were
the passengers in case of Philippine-Registered aircraft observed by the defendant, the contents of the box could
against: have been discovered and the accident avoided. Refusal by
the passenger to have the package opened was no excuse
(1) change in the course or destination of an because, as stated by Dispatcher Cornista, employees should
aircraft of Philippine registry, call the police if there were packages containing articles
(2) seizing or usurpation the control thereof against company regulations.” Even it that may be true, the
law does not require as much. Article 1733 is not as
In case of Philippine-Registered aircraft, the Act is supposed unbending, for it reasonably qualifies the extraordinary
to protect the Philippine properties in its jurisdiction. diligence required of common carriers for the safety of the
passengers transported by them to be “according to all the
AGGRAVATING CIRCUMSTANCES circumstances of each case.” “In fact, Article 1755 repeats
this same qualification: “A common carrier is bound to carry
Q: What are the acts considered as aggravating the passengers safely as far as human care and foresight can
circumstances under Act. 6235? provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances.”
A:
Q: What are the options of the aircraft if the passenger
1. Whenever he has fired upon the pilot, member of refuses to allow his luggage to be searched?
the crew or passenger of the aircraft;
2. Whenever he has exploded or attempted to explode A:
any bomb or explosive to destroy the aircraft; or 1. Prevent or refuse to board such passenger
3. Whenever the crime is accompanied by murder, 2. Allow the passenger board but will leave the
homicide, serious physical injuries or rape. package in the custody of the carrier.

Sec. 9. Every ticket issued to a passenger by the airline or air


carrier concerned shall contain among others the following REPUBLIC ACT NO. 521
condition printed thereon: "Holder hereof and his hand- CARRIAGE OF GOODS BY SEA ACT
carried luggage(s) are subject to search for, and seizure of,
prohibited materials or substances. Holder refusing to be
searched shall not be allowed to board the aircraft," which Section 1. That the provisions of Public Act No. 521 of the
shall constitute a part of the contract between the 7th Congress of the United States, approved on April 16,
passenger and the air carrier. 1936, be accepted, as it is hereby accepted to be made
applicable to all contracts for the carriage of goods by sea to
This provision authorizes the common carrier to demand the and from Philippine ports in foreign trade: Provided, that
opening of the baggage before the loading to the aircraft to nothing in this Act shall be construed as repealing any existing
check for any item which can be confiscated and seized. provision of the Code of Commerce which is now in force, or
as limiting its application.
This provision applies only in case of aircrafts and not on land
or sea carriers. Sec. 2. This Act shall take effect upon its approval. (Approved
October 22, 1936).
This shall appear on the ticket as a notice to the passenger.
TITLE I
Q: What is the consequence of an aircraft which exploded
and upon the investigation, it was found out that it was due Sec. 1. When used in this Act —. (a) The term "carrier"
to an object which was brought on board? includes the owner or the charterer who enters into a
need to be proven! contract of carriage with a shipper.
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law

(b) The term "contract of carriage" applies only to contracts (a) Make the ship seaworthy;
of carriage by covered by a bill of lading or any similar (b) Properly man,equip, and supply the ship;
document of title, insofar as such document relates to the (c) Make the holds, refrigerating and cooling chambers,
carriage of goods by sea, including any bill of lading or any and all other parts of the ship in which goods are
similar document as aforesaid issued under or pursuant to a carried, fit and safe for their reception, carriage, and
character party from the moment at which such bill of lading preservation.
or similar document of title regulates the relations between a
carrier and a holder of the same. . (2) The carrier shall properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods carried.
(c) The term "goods" includes goods, wares, merchandise, (3) After receiving the goods into his carrier, or the master or
and articles of every kind whatsoever, except live animals and agent of the carrier, shall, on demand of the shipper, issue to
cargo which by the contract of carriage is stated as being the shipper a bill of lading showing among other things —
carried on deck and is so carried..
(a) The loading marks necessary for identification of the
(d) The term "ship" means any vessel used for the carriage of goods as the same are furnished in writing by the
goods by sea. shipper before the loading of such goods starts,
provided such marksare stamped or otherwise
(e) The term "carriage of goods" covers the period from the shown clearly upon the goods if uncovered,in such a
time when the goods are loaded to the time when they manner as should ordinarily remain legible until the
are discharged from the ship. end of the voyage.
(b) Either the number of packages or pieces, or the
BACKGROUND OF THE ACT quantity or weight, as the casemay be, as furnished
in writing by the shipper.
This act was enacted when the Philippines was still a territory (c) The apparent order and conditions of the goods:
of the United States. Provided, that no carrier, master, or agent of the
carrier, shall be bound to state or show in the bill of
Q: To what contracts of carriage is COGSA applicable? lading any marks, number, quantity, or weight
which he has reasonable ground for suspecting not
A: It is applicable to all contracts for carriage of goods by sea accurately to represent the good actually received
to and from Philippine ports in foreign trade. or which he has had no reasonable means of
checking.
§ It does not however repeal or limit any provision of the
Code of Commerce; it is only a suppletory law to the (4) Such a bill of lading shall be prima facie evidence of the
Code of Commerce. receipt by the carrier of the goods as therein described in
§ Art. 1753 accordance with paragraphs (3) (a), (b), and (c), of this
§ Art.1766 section: (The rest of the provision is not applicable to the
§ Hence, the rights and obligations of carriers in all Philippines).
contracts for the carriage of goods by sea to the
Philippine ports shall be governed by the provisions of (5) The shipper shall be deemed to have guaranteed to the
the NCC, in default of such provisions, by that of the carrier the accuracy at the time of shipment of the marks,
Code of Commerce and other special laws, and in the number, quantity, and weight, as furnished by him; and the
absence of both, by that of the COGSA. shipper shall indemnify the carrier against all loss, damages,
and expenses arising or resulting from inaccuracies in such
RISKS particulars. The right of the carrier to such indemnity shall in
no way limit his responsibility and liability under the contract
Sec. 2. Subject to the provisions of Section 6, under every of carriage to any person other than the shipper..
contract of carriage of goods by sea, the carrier in relation to
the loading, handling, stowage, carriage, custody, care, and (6) Unless notice or loss or damage and the general nature of
discharge of such goods shall be subject to the such loss or damage by given in writing to the carrier or his
responsibilities and liabilities and entitled to the rights and agent at the port of discharge or at the time of the removal of
immunities hereinafter set forth. the goods into the custody of the person entitled to delivery
thereof under the contract of carriage, such removal shall be
RESPONSIBILITIES AND LIABILITIES prima facie evidence of the delivery by the carrier of the
goods as described in the bill of lading. If the loss or damage
Sec. 3. (1) The carrier shall be bound before and at the is not apparent, the notice must be given within three days of
beginning of the voyage to exercise due diligence to — the delivery..

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
An action for recovery of loss or damage in connection with
Said notice of loss or damage may be endorsed upon the certain cargo can only be brought against the carrier within 1
receipt for the goods given by the person taking delivery year after delivery to the said cargo, or the date when the
thereof. goods should have been delivered.

The notice in writing need not be given if the state of the Q: On Feb.22, 1965 the insurer filed the complaint against
goods has at the time of their receipt been the subject of Luzon Stevedoring Corp. and Barber Lines, Inc. for recovery
joint survey or inspection. of damages caused to cargo shipped to the consignee, the
cargo being delivered on Feb 25, 1964. The complaint was
In any event the carrier and the ship shall be discharged from amended and filed on April 7, 1965. Has the action against
all liability in respect of loss or damage unless suit is brought the new defendant prescribed?
within one year after delivery of the goods or the date when
the goods should have been delivered: Provided, that, if a A: Yes, the one-year statutory and contractual prescriptive
notice of loss or damage, either apparent or concealed, is not period had already expired when the insurance company filed
given as provided for in this section, that fact shall not affect on April 7 its action against Barber.
or prejudice the right of the shipper to bring suit within one
year after the delivery of the goods or the date when the Q: A certain cargo was shipped in New York aboard M/S
goods should have been delivered. Toreador of which the general agent in the Philippines is
Macondray, with freight prepaid to Cebu City pursuant to
In the case of any actual or apprehended loss or damage, the the Bill of lading. However, the carrier transshipped the
carrier and the receiver shall give all reasonable facilities to cargo after its discharge in Manila aboard the S/S Siquijor,
each other for inspecting and tallying the goods. an inter-island vessel. The shipment was finally discharged
in Cebu City, short of 2 pieces of the cargo. Macondray
(7) After the goods are loaded the bill of lading to be issued alleged that the complaint should be dismissed on the
by the carrier, master, or agent of the carrier to the shipper ground that the action has already prescribed. Will COGSA
shall if the shipper so demands, be a "shipped" bill of lading: apply?
Provided, that if the shipper shall have previously taken up
any document of title to such goods, he shall surrender the A: The action is based on the contract of carriage up to the
same as against the issue of the "shipped" bill of lading, but final port of destination, which was Cebu for which the
at the option of the carrier such document of title may be corresponding freight had been prepaid. The transshipment
noted at the port of shipment by the carrier, master, or agent of the cargo from Manila to Cebu was not a separate
with the name or names of the ship or ships upon which the transaction from that originally entered into by Macondray as
goods have been shipped and the date or dates of shipment, the agent of Toreador. The fact that the transshipment was
and when so noted the same shall for the purpose of this made via an interisland vessel did not operate as to remove
section be deemed to constitute a "shipped" bill of lading. the transaction from the operation of the COGSA.

(8) Any clause, covenant, or agreement in a contract of The provision applies to both damages and losses. It
carriage relieving the carrier of the ship from liability for loss anticipates 2 possibilities:
or damage to or in connection with the goods, arising from
negligence, fault, or failure in the duties and obligations (a) That the delivery has been made—the action should
provide in this section or lessening such liability otherwise be brought within 1 year after delivery of the goods;
than as provided in this Act, shall be null and void and of no (b) If no delivery is made—the period should be
effect. A benefit of insurance in favor of the carrier, or similar computed from the date when the goods should
clause, shall be deemed to be a clause relieving the carrier have been delivered.
from liability.
If the carrier arrived on Nov. 2, 1962, and left on Nov.4,
PRESCRIPTION OF ACTION 1962—it was on the latter date that the carrier had the last
opportunity to deliver goods. The period of 1 year within
Q: When a cargo from USA was unloaded at the port of which the carrier should be sued shall commenced to run
Manila on February 26, 1947, a shortage was discovered from Nov. 5 and expired on Nov. 4, 163.
prompting the consignee to make a written notice to the
carrier. The action was commenced only on May 7, 1948. COMMENCEMENT OF ACTION IF DELIVERY WAS MADE TO
Has the action prescribed? ARRASTRE OPERATOR

A: Yes, it has already prescribed since it was commenced only Q: When should the 1 year period within which the carrier
after the lapse of 1 year, 2 months and 9 days. should sue the carrier start to run, from delivery of the
goods to consignee or to arrastre operator?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
time limited for the commencement of such action has, at the
A: It should be computed from the time of delivery to the date of such failure, expired, the plaintiff may commence a
arrastre operator. To use as basis for computing the 1 year new action within 1 year after such date.
period the delivery to the consignee would be unrealistic and
might generate confusion between the loss or damage The action commenced on April 27, 1960 was dismissed on
sustained by the goods while in the carrier’s custody and June 13, 1960, or over 20 days after the expiration of the
those occurring while in the arrastre operator’s possession. period of 1 year, beginning from May 21, 1959, within which
plaintiff’s action could be brought. The period within which
Q: Does the period also include or apply to the insurer of the plaintiff could initiate the present case was renewed for
goods? another year beginning from June 24, 1960.

A: Yes. Otherwise, what the Act prohibits after the lapse of The provisions of the NCC on prescription should not be
the 1 year prescriptive period can be done indirectly by the made to apply in a case governed by the COGSA.
shipper or owner of the goods by simply filing a claim against
the insurer even after the lapse of 1 year. As such, the 1 year Q: Who are the persons who can give notice to and bring
limitation will be practically useless. suit against the carrier?

Q: What does “loss” mean? A: The notice in writing can be given to and the suit can be
brought against the carrier by:
A: It contemplates merely a situation where no delivery at all
was made by the shipper of the goods because the same had a. Shipper; or
perished, gone out of commerce, or disappeared in such a b. Consignee; or
way that their existence is unknown, or they cannot be c. Any legal holder of the bill of lading like the indorsee
recovered. It does not include a situation where there was or the subrogee (the insurer of the goods)
indeed delivery but the same is made to the wrong person, or
a misdelivery. Q: Certain goods were shipped from US to Manila and were
received by the consignee, except one case which was
NOTE: The 1 year period of prescription is not applicable to missing. The consignee failed to give notice of claim within
misdelivery or conversion of goods. 30 days after receipt of the cargo but brought suit against
the carrier within 1 year after delivery of the shipment. Was
Q: What is the period of prescription in case of misdelivery the suit been properly brought notwithstanding the
or conversion of goods? consignee’s failure to give notice as required by the bill of
lading?
A: The applicable rule on prescription found in the NCC and
not the rule under COGSA: A: The said clause in the bill of lading is null and void.
According to COGSA, regardless of whether notice of loss or
1. 10 years-breach of a written contract; damage has been given, the shipper can still bring an action
2. 4 years- for quasi-delict to recover said loss or damage within 1 year after the delivery
of the goods.
Q: Does a written claim for loss or damage interrupt the
period of prescription? The obligation of the carrier to carry the goods includes the
duty not to delay their transportation, so that if the goods are
A: No, in the case of Yek Tong Lin Fire and Maritime lost or damaged by reason of an unjustified delay, the carrier
Insurance v. American President Lines, the Court has already is liable therefor; and the action is still basically one for
rejected the contention that an extra-judicial demand tolled damage to the goods and must be filed within the period of 1
the prescriptive period provided for in the COGSA. year from delivery of the goods or the date when the goods
would have been delivered.
The pendency of an extra-judicial claim for damages field
with the carrier does not suspend the running if the Q: Does COGSA apply to an arrastre operator?
prescriptive period of 1 year.
A: No, it does not apply.
Q: When is the period of prescription suspended by law?
RIGHTS AND IMMUNITIES
A: Art. 1155 of NCC provides that prescription of actions is
interrupted when they are filed before the court and Sec 49 Sec. 4. (1) Neither the carrier nor the ship shall be liable for
of Act No. 190 provides that if, in an action filed in due time, loss or damage arising or resulting from unseaworthiness
the plaintiff fails otherwise that upon the merits, and the unless caused by want of due diligence on the part of the

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
carrier to make the ship seaworthy and to secure that the deemed to be an infringement or breach or this Act or of the
ship is properly manned, equipped, and supplied, and to contract of carriage, and carrier shall not be liable for any loss
make the holds, refrigerating and cooling chambers, and all or damage resulting therefrom: Provided, however, that if the
other parts of the ship in which goods are carried fit and safe deviation is for the purpose of loading or unloading cargo or
for their reception, carriage, and preservation, in accordance passengers it shall, prima facie, be regarded as
with the provisions of paragraph (1) of Section (3). Whenever unreasonable..
loss or damage has resulted from unseaworthiness, the
burden of proving the exercise of due diligence shall be on (5) Neither the carrier nor the ship shall in any event be or
the carrier or other person claiming exemption under this become liable for any loss or damage to or in connection with
section.. the transportation of goods in an amount exceeding $500 per
(2) Neither the carrier nor the ship shall be responsible for package of lawful money of the United States, or in case of
loss or damage arising or resulting from — goods not shipped in packages, per customary freight unit, or
the equivalent of that sum in other currency, unless the
(a) Act, neglect, or default of the master, mariner, pilot, nature and value of such goods have been declared by the
or the servants of the carrier in the navigation or in shipper before shipment and inserted in the bill of lading.
the management of the ship; This declaration, if embodied in the bill of lading, shall be
(b) Fire, unless caused by the actual fault or privity of prima facie evidence, but shall not be conclusive on the
the carrier;. carrier
(c) Perils, dangers, and accidents of the sea or other
navigable water;. (d) Act of God;. By agreement between the carrier, master or agent of the
(d) Act of war;. carrier, and the shipper another maximum amount than that
(e) Act of public enemies; mentioned in this paragraph may be fixed: Provided, that
(f) Arrest or restraint of princes, rulers, or people, or such maximum shall not be less than the figure above named.
seizure under legal process; In no event shall the carrier be liable for more than the
(g) Quarantine restrictions;. amount of damage actually sustained..
(h) Act or omission of the shipper or owner of the
goods, his agent or representative;. Neither the carrier nor the ship shall be responsible in any
(i) Strikes or lockouts or stoppage or restraint of labor event for loss damage to or in connection with the
from whatever cause, whether partial or general: transportation of the goods if the nature or value thereof has
Provided, that nothing herein contained shall be been knowingly and fraudulently misstated by the shipper in
construed to relieve a carrier from responsibility for the bill of lading..
the carrier's own acts;.
(j) Riotsand civil commotions;. (6) Goods of an inflammable, explosive, or dangerous nature
(k) Saving or attempting to save life or property at sea;. to the shipment whereof, the carrier, master or agent of the
(l) Wastage in bulk or weight or any other loss or carrier, has not consented with knowledge of their nature
damage arising from inherent defect, quality, or vice and character, may at any time before discharge be landed at
of the goods; any place or destroyed or rendered innocuous by the carrier
(m) Insufficiency or packing; without compensation, and the shipper of such goods shall
(n) Insufficiency or inadequacy of marks;. be liable for all damages and expenses directly or indirectly
(o) Latent defects not discoverable by due diligence; arising out of or resulting from such shipment. If any such
and goods shipped with such knowledge and consent shall
(p) Any other cause arising without the actual fault and become a danger to the ship or cargo, they may in like
privity of the carrier and without the fault or neglect manner be landed at any place, or destroyed or rendered
of the agents or servants of the carrier, but the innocuous by the carrier without liability on the part of the
burden of proof shall be on the person claiming the carrier except to general average if any
benefit of this exception to show that neither the
actual fault or privity of the carrier nor the fault or Q: Is a clause limiting the liability of the carrier for the loss
neglect of the agents or servants of the carrier of it to not more than 100 Sterling or its peso equivalent of P
contributed to the loss or damage. 1, 544.40 valid although the insurance company paid the
consignee the amount of P 35,921.81? Can the subrogee
(3) The shipper shall not be responsible for loss or damage recover from the carrier?
sustained by the carrier or the ship arising or resulting from
any cause without the act, or neglect of the shipper, his A: Sec 4 (5) Neither the carrier nor the ship shall in any event
agents, or his servants.. be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount
(4) Any deviation in saving or attempting to save life or exceeding $500 per package of lawful money of the United
property at sea, or any reasonable deviation shall not be States, or in case of goods not shipped in packages, per

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
customary freight unit, or the equivalent of that sum in other Any agreement so entered into shall have full legal effect:
currency, unless the nature and value of such goods have Provided, that this section shall not apply to ordinary
been declared by the shipper before shipment and inserted in commercial shipments made in the ordinary course of trade
the bill of lading. This declaration, if embodied in the bill of but only to other shipments where the character or condition
lading, shall be prima facie evidence, but shall not be of the property to be carried or the circumstances, terms and
conclusive on the carrier. conditions under which the carriage is to be performed are
such as reasonably to justify a special agreement.
NOTE: This provision merely limits the maximum amount that
may be recovered by the shipper in the absence of an Sec. 7. Nothing contained in this Act shall prevent a carrier
agreement as to the nature and value of the goods shipped. or a shipper from entering into any agreement, stipulation,
Both the COGSA and the limitation in the bill of lading allow condition, reservation, or exemption as to the responsibility
the payment beyond the respective maximum limit imposed and liability of the carrier or the ship for the loss or damage
therein, provided that the value of the goods have been to or in connection with the custody and care and handling of
declared in the Bill of Lading. goods prior to the loading on and subsequent to the
discharge from the ship on which the goods are carried by
By providing that $500.00 is the maximum liability, the law sea..
does not disallow an agreement for liability at a lesser
amount. Sec. 8. The provisions of this Act shall not affect the rights
and obligations of the carrier under the provisions of the
Eastern Shipping Lines v. IAC Shipping Act, 1916, or under the provisions of Sections 4281
to 4292, inclusive, of the Revised Statutes of the United
Under COGSA, the carrier’s liability will not exceed $500 per States, or of any amendments thereto, or under the
package or its peso equivalent, but in no case more than the provisions of any other enactment for the time being in force
amount of damage actually sustained. relating to the limitation of the liability of the owners of
seagoing vessels..
SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF
RESPONSIBILITIES AND LIABILITIES TITLE II

Sec. 5. A carrier shall be at liberty to surrender in whole or in Sec. 9. Nothing contained in this Act shall be construed as
part all or any of his rights and immunities or to increase any permitting a common carrier by water to discriminate
of his responsibilities and liabilities under this Act, provided between competing shippers similarly placed in time and
such surrender or increase shall be embodied in the bill of circumstances, either (a) with respect to their right to
lading issued to the shipper. demand and receive bills of lading subject to the provisions of
The provisions of this Act shall not be applicable to charter this Act; or (b) when issuing such bills of lading either in the
parties; but if bills of lading are issued in the case of a ship surrender of any of the carrier's rights and immunities or in
under a charter party, they shall comply with the terms of the increase of any of the carrier's responsibilities and
this Act. Nothing in this Act shall be held to prevent the liabilities pursuant to Section 5, Title I, of this Act; (c) in any
insertion in a bill of lading of any lawful provisions regarding other way prohibited by the Shipping Act, 1916, as
general average..chan robles virtual law library amended..chan robles virtual law library

SPECIAL CONDITIONS Sec. 10. (Not applicable to the Philippines.).

Sec. 6. Notwithstanding the provisions of the preceding Sec. 11. When under the custom of any trade the weight of
section, a carrier, master or agent of the carrier, and a any bulk cargo inserted in the bill of lading is a weight
shipper shall, in regard to any particular goods be at liberty to ascertained or accepted by a third party other than the
enter into any agreement in any terms as to the responsibility carrier or the shipper and the fact that the weight as
and liability of the carrier for such goods, and as to the rights ascertained or accepted is stated in the bill of lading, then
and immunities of the carrier in respect to such goods, or his notwithstanding anything in this Act, the bill of lading shall
obligation to seaworthiness, (so far as the stipulation not be deemed to be prima facie evidence against the carrier
regarding seaworthiness is contrary to public policy), or the of the receipt of goods of the weight so inserted in the bills of
care or diligence of his servants or agents in regard to the lading, and the accuracy thereof at the time of shipment shall
loading, handling, stowage, carriage, custody, care and not be deemed to have been guaranteed by the shipper..
discharge of the goods carried by sea; provided, that in this
case no bill of lading has been or shall be issued and that the Sec. 12. (Not applicable to the Philippines.).
terms agreed shall be a non-negotiable document and shall
be marked as such. Sec. 13. This Act shall apply to all contracts for carriage of
goods by seas to or from ports of the United States in foreign

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
trade. As used in this Act the term "United States" includes its
districts, territories, and possessions: Provided, however, that Approved: April 16, 1936
the Philippine Legislature may by law exclude its application
to transportation to or from ports of the Philippine Islands. NOTES FROM LECTURE OF DR. PALACIOS
The term "foreign trade" means the transportation of goods
between the ports of the United States and ports of foreign HISTORY OF COGSA
countries. Nothing in this Act shall be held to apply to
contracts for carriage of goods by sea between any port of The COGSA of 1924 was enacted through Commonwealth Act
the United States or its possessions and any other port of the 65. Under CA 65, the COGSA is introduced in our jurisdiction
United States or its possessions: Provided, however, that any to cover foreign trade. It covers foreign trades of goods that
bill of lading or similar document of the title which is are brought into the country from foreign jursidiction and the
evidence of a contract for the carriage of goods by sea goods that are brought out of the country to a foreign
between such ports, containing an express statement that it destination.
shall be subject to the provisions of this Act; shall be
subjected hereto as fully as if subject hereto by the express Q: What is the applicability of the Commonwealth Act 65
provisions of this Act: Provided, further, that every bill of (COGSA)?
lading or similar document of title which is evidence of a
contract for the carriage of goods by sea from ports of the A: The transportation must be:
United States in foreign trade, shall contain a statement that
it shall have effect subject to the provisions of this Act. . (a) Water/maritime transportation;
(b) for the carriage of goods; and
Sec. 14. Upon the certification of the Secretary of Commerce (c) overseas/international/foreign (from foreign port to
that the foreign commerce of the United States in its Philippine port).
competition with that of foreign nations is prejudiced by the
provisions, or any of them, of the Title I of this Act, or by the It can be applied in domestic sea transportation if agreed
laws of any foreign country or countries relating to the upon by the parties in case of Clause paramount or
carriage of goods by sea, the President of the United States paramount clause. This stipulation is valid since the parties
may, from time to time by proclamation, suspend any or all agreed thereto. In this case the COGSA will apply as a matter
provisions of Title I of this Act for such periods of time or of contract and not as a matter of law.
indefinitely as may be designated in the proclamation. The
President may at any time rescind such suspension of Title I NON-APPLICABILITY TO DOMESTIC SHIPPING
hereof, and any provisions thereof which may have been
suspended shall thereby be reinstated and again apply to Q: Can the COGSA apply in domestic shipping?
contracts thereafter made for carriage of goods by sea. Any
proclamation of suspension or rescission of any such A: Generally, NO.
suspension shall take effect on the date named therein,
which date shall be not less than ten days from the issue of XPN: when parties agree to make it apply known as the
the proclamation. Paramount Clause.

Any contract for the carriage of goods by sea, subject to the Q: So what are the exceptions in the application of COGSA
provisions of this Act, effective during any period when Title I to our domestic trade?
hereof, or any part thereof, is suspended, shall be subject to
all provisions of law now or hereafter applicable to that part A:
of Title I which may have thus been suspended..chan robles
virtual law library (a) In the event that there is a Paramount Clause in the
contract of carriage
Sec. 15. This Act shall take effect ninety days after the date (b) In the application of the Hierarchy of Laws in our
of its approval; but nothing in this Act shall apply during a jurisdiction
period not to exceed one year following its approval to any
contract for the carriage of goods by sea, made before the Q: What laws shall apply in case of domestic trade?
date on which this Act is approved nor to any bill of lading or
similar document of title issued, whether before or after such A:
date of approval in pursuance of any such contract as
aforesaid..chan robles virtual law library 1. Civil Code
2. Code of Commerce
Sec. 16. This Act may be cited as the "Carriage of Goods by
Sea Act.".chan robles virtual law library

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: What application does COGSA have in carriage of A: The contract of carriage under COGSA refers to contract
passengers? for the carriage of goods by sea. COGSA specifies that the
contract of carriage must always be evidenced by a Bill of
A: None. Applies only to carriage of goods. Lading or a similar document of title. Hence, if there is no bill
of lading, that will not attract the application of the COGSA.
IMPORTANT FEATURES OF COGSA
Q: What are the elements?
1. Amount of carrier’s liability
2. Notice of damage A:
3. Prescriptive period
(a) A contract for the carriage of goods by sea
CARRIER (b) It must be goods
(c) The goods are being carried by sea
Q: Who is a carrier? (d) It must be covered by a Bill of Lading or a similar
document
A: It refers to the owner of a common carrier or the charterer
of that carrier. Q: In a charter party, what are the roles of a bill of lading?

Company that transports goods and/or people by air, land, or A:


sea, in its own or chartered vessels orequipment, and is (a) Only an evidence of the title of the goods, and
named as the carrier in the contract of carriage. (b) Evidence of the receipt of the goods

Thus, there are 2 parties: § It is not a contract because the contract is the CHARTER
PARTY itself.
rd
1. Owner § However, if the said bill of lading is issued to a 3 party
2. Charterer who is not a party in the charter party, the said bill of
lading shall now become an evidence of the contract of
If there is no owner or there is no charterer, that carrier carriage. From then, COGSA shall apply.
cannot be classified as CARRIER under COGSA. It must be § As long as there is a promise to issue the BOL and
owned by real owner, who may be registered owner or a nothing is issued, COGSA still applies.
charterer.
Q: The goods have been delivered to an inter-island vessel
Q: Who is a charterer? at the port of Manila for delivery to Cebu or the goods were
delivered to a vessel at the port of Manila for the delivery to
A: It refers to a bareboat or demise where there is transfer of another jurisdiction. The goods were received by carrier
ownership, hence, it becomes a private carrier (Planters’ without issuing a BOL or similar document. The goods
Products case). arrived at damage condition.

A person or firm who enters into a contract with a shipowner A: The carrier could not be sued under COGSA. The remedy is
for the transportation of cargo or passengers for a stipulated to sue under the Civil Code or the Code of Commerce.
period of time, i.e. a shipowner's customer.
The bill of lading is the principal document for the basis of the
Q: What is a Contract of Carriage? action of the consignee while the charter party is the
document is the document for the owner’s basis of action.
A: It refers to a contract where a bill of lading on a similar
document or title is involved. The charter party is a contract between the owner and the
charterer as evidence of their contract of carriage. It is issued
Refers to a bill of lading to a similar document of title insofar only upon demand of the shipper
as such document relates to the carriage of goods by sea,
may be a contract of sale, including any bill of lading or any Q: Again, the rule is in the event of loss or damage, the basis
similar document as aforesaid issued under or pursuant to a will be the charter party agreement and not the bill of
charter party from the moment at which such bill of lading or lading. When will the bill of lading be held as a separate
similar document of title regulates the relations between a contract?
carrier and a holder of the same.
A: When the charter is endorsed the title to a third party, it
Q: Explain the contract of carriage under COGSA? now becomes a contract of sale.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
§ In case of breach, there is joint liability. CIVIL CODE COGSA
Art. 1736. The extraordinary The liability of the carrier is
Q: What if vessel V which was chartered by A to Y to responsibility of the common different from the shipping
transport some goods to X, in case the goods arrived in carrier lasts from the time line.
damage condition, what is the remedy of Y? the goods are
unconditionally placed in the CARRIER- the goods must
A: Y must file against A as charter party. possession of, and received have crossed one side of the
by the carrier for vessel until the crossing of
Q: What is the role of the bill of lading issued by A to Y? transportation until the same the other side of the vessel
are delivered, actually or where the liability is
A: constructively, by the carrier terminated
to the consignee, or to the
(a) Only an evidence of the title of the goods, and person who has a right to
(b) Evidence of the receipt of the goods receive them, without
prejudice to the provisions of
The primary contract is the charter party and should be the Article 1738
basis of action of A and Y. Both of them entered into a charter
party. Y is the owner of the carrier which he chartered to A. A The right side of the vessel is also known as the star board
is the owner of the goods that he shipped on board the vessel side, while the left side is the port side. Either sides can be
chartered to Y. If the goods of A arrived in damaged the loading side under the Tackle-to-Tackle principle.
condition, or not delivered at all, he could only sue Y on the
basis of charter party. But A can demand the issuance of bill Q: What if the shipper and the owner is the same?
of lading. Thus, if the goods arrived at damages condition, A
may sue Y on the basis of bill of lading. A:

Q: Since Y indorsed the bill of lading to X and sold the goods 1. Carrier is liable when the goods have crossed the
to the latter, it signifies the transfer of ownership. What is side of the ship (port side)
the consequence of such? 2. Shipper is liable over the loss of the goods already
on board
A: The bill of lading now operates as a separate contract of
carriage between Y and X. X, can sue on the basis of that new THINGS NOT CONSIDERED AS GOODS UNDER COGSA
contract. X cannot sue on the basis of the charter party
between A and Y since he is not a privy to it. Q: What are the things not considered as “goods” under
COGSA?
The owner of the goods may endorse the bill of lading to a
buyer of the goods since it is a negotiable instrument. The A:
moment the BOL is endorsed, the BOL becomes a contract
between: 1. Live animals (they would die if not put on deck)
2. Deck cargo which should be
(a) Owner of the goods a. Agreed to be carried on deck
(b) Buyer of the goods b. Actually carried on deck

Q: If X wanted to recover damages against Y who sold the Q: If live animals and deck cargo arrived at the port in
goods to M, what is his remedy? damaged condition or lost, can you sue under COGSA?

A: If the proximate cause is negligence of the carrier, Y must A: No, it is not covered by the goods that could be litigated
file a third party complaint… under COGSA. They are exempted.

PERIOD OF RESPONSIBILITY The provision that should govern the liability of the common
CIVIL CODE v. COGSA carrier in that respect would be the provisions of the Civil
Code and Code of Commerce.
Q: What is the period of responsibility of carrier under
COGSA? Q: What if the cargo is not carried on deck?

A: The period is different from the Civil Code provision Art. A: If not carried on deck even though there’s an agreement to
1736. such, common carriage is liable for it constitutes a breach of
contract.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: What kind of diligence is required under COGSA?
Q: What are the reasons for the carrier not to issue a bill of
lading without the loading or identify marks or statement of A: The COGSA says due diligence, this due diligence is extra-
the conditions of the goods? ordinary diligence in accordance with the hierarchy of laws.

A: Under COGSA, as a rule, when the goods are loaded on board


the common carrier by shipper or owner of the goods, the
1. Reasonable ground for suspecting inaccuracies made carrier is not mandatorily required to issue BOL, despite the
by the shipper request. But if the shipper requests, the carrier is mandatorily
2. When he has no reasonable means of checking required to issue BOL.

Q: Why does the law does not compel the carrier to issue a Q: When the shipper requests for a BOL, what should the
bill of lading under the 2 circumstances? BOL contain?

A: When the 2 circumstances are present, the law protects A: The BOL must show all the identifying marks of the
the carrier for it will be held liable for issuing an inaccurate shipment supplied to him in writing by the shipper which
bill of lading. would refer to:

When the inaccuracies have caused the damage, the carrier 1. Marks
can limit its liability to the shipper as a consequence of the 2. Quantity
inaccuracies 3. Weight
4. Apparent good order condition of the shipment
RISKS ASSUMED BY THE CARRIER
Q: What is the evidentiary value of BOL issued by carrier to
Q: What are the risks that are supposed to be assumed by shipper containing those identifying marks?
the carrier if it would transfer the goods of the shipper?
A: Under COGSA, they simply establish prima facie the fact
A: Any risk that would arise in the loading which includes: that those shipments were loaded on board together with
identifying marks supplied by shipper to the carrier.
1. Loading- when the goods have been loaded and they
are damaged, there is responsibility on the part of Q: Is there a possibility to issue a BOL without necessarily
the carrier especially when the goods have crossed stating the identifying marks?
the side of the vessel
2. Handling- there is responsibility on the part of the A: Yes, under COGSA:
carrier if the goods are damaged on board in the
handling of the cargo 1. If it has reasonable grounds for suspecting
3. Stowage- when the goods are on board and they are inaccuracies made by the shipper
placed in one side on board not properly protected, 2. When he has no reasonable means of checking
there is stowage and therefore, there is liability on
the part of the carrier Q: What is the consequence if the shipper supplied the
4. Carriage- when during the carriage of goods on carrier with those identifying marks of his shipment in
board, the goods were rained on and they are not writing?
protected, there is responsibility
5. Custody- when there is custody on board by carrier, A: The shipper is deemed to have guaranteed the
any loss or damage to cargo, while the cargo is in the truthfulness of those information. There is a guarantee of the
custody of the carrier on board, there is shipper and if they turn out to be untrue, and they caused
responsibility on the part of carrier. damage to the carrier, the carrier has right of action against
6. Care- if the goods are supposed to be kept in the the shipper on the basis of breach of warranty.
holds, and refrigerated but they were stored on deck
and they suffer damage, there is responsibility on If the goods arrived in damage condition, and the carrier
the part of the carrier due to deficient care being could prove that the damaged condition of cargo emanated
given to the cargo from inaccurate description of the goods, the carrier can limit
7. Discharge of goods- when the goods are being its liability to the owner of the shipment corresponding to the
discharged from carrier to the port docked, the true value of the goods that have been guaranteed by
goods are damaged, there is full responsibility on the shipper.
part of carrier.
Q: Thus, what does the shipper warrant?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Sec. 3. (1) The carrier shall be bound before and at the
A: beginning of the voyage to exercise due diligence to —
1. Truthfulness of the identifying marks and the
condition of the goods that have been turned over (a) Make the ship seaworthy;
to the shipper (b) Properly man,equip, and supply the ship;
2. Right (on the part of carrier) to limit the liability in (c) Make the holds, refrigerating and cooling chambers,
the event the information was the proximate reason and all other parts of the ship in which goods are
for any loss or damage to the cargo. carried, fit and safe for their reception, carriage, and
preservation.
NOTICE OF LOSS
ARTICLE 366 v. SEC. 3, COGSA
Q: When should the consignee give notice to the carrier in
case of loss? ARTICLE 366 COGSA Sec.3 (6)

A: It depends. Applicability
1. Domestic/inter- 1. International/
1. Upon receipt- when the loss is apparent (visible) island/coastwise overseas/foreign (from
2. Within 3 days from receipt- not apparent loss transportation foreign country to Phils.)
2. Land, water, air Note: subject to the rule
Q: What is the conseqence of failure to give notice to the transportation on Paramount Clause
carrier? 3. Carriage of goods 2. Water/maritime
transportation
A: There is presumption that the goods have been delieverd 3. Carriage of goods
and were delivered in good order condition to the consignee,
but when the goods are delivered in damage condition, the Notice of damage
presumption can be rebutted by presenting evidence proving 1. Condition precedent 1. Not a condition
the damage. 2. 24-hour period for precedent
claiming latent damage 2. 3-day period for
Q: Can the consignee or shipper still file an action against claiming latent damage
the common carrier for damages owing to the damaged *without this, claim is
condition of the goods that he received or the goods were barred automatically *not barred, but the
not all delivered to him? shipper shall have the
defense because of the
A: Yes, despite the fact that there is no notice of loss or failure to give notice
damage under COGSA, the consignee or owner still has the Notice should be in
right to file an action for recovery of damages against the writing
carrier. The right is not removed from the shipper, this is the
Prescriptive period
best part of the COGSA. The failure will only raise
None provided; Civil Code One year from the date of
presumption that the goods have been delieverd and were
delivered in good order condition to the consignee. applies. delivery (delivered but
damaged goods), or date
Pertinent laws when the vessel left port
or from the date of
ARTICLE 366. Within the twenty-four hours following the delivery to the arrastre
receipt of the merchandise, the claim against the carrier for
(non-delivery or loss).
damage or average be found therein upon opening the
packages, may be made, provided that the indications of the
*the 1 year period may be
damage or average which gives rise to the claim cannot be
ascertained from the outside part of such packages, in which extended upon express
case the claim shall be admitted only at the time of receipt. agreement for a
reasonable period
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim shall be
admitted against the carrier with regard to the condition in Q: What if the carrier stops 5 times and commences voyage
which the goods transported were delivered. for 5 times?

A: Since it stops 5 times, it presupposes that it will likewise

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
observe due diligence after said stopover and every hours from delivery.
commencement of the voyage. The carrier should exercise 2. For paying the transportation charges and expenses
diligence 5 times. despite the filing of notice.

NOTICE OF LOSS NOT REQUIRED Q: What is the difference under COGSA?

Q: In what instances notice is NOT needed? A: If the consignee did not file notice the only result is the
presumption that the goods were delivered in the condition
A: that they were received on board. And he can still file an
action at all times. He could file action anytime for as long as
1. No loss or damage to the goods the action is filed within the prescriptive period.
2. Delay of delivery of the goods
3. Misdelivery Q: When will the issue of paying the transportation charges
4. Joint survey or inspection and expenses not apply under Art. 366?

INSTANCES WHEN CONSIGNEE IS BARRED FROM A: If the transportation charges and expenses were PREPAID
PRESENTING CLAIM FOR DAMAGES by the shipper or the consignee at the port of loading of the
cargo, the pre-payment of transportation charges and
Q: What are the instances when consignee is barred from expenses will not preclude the consignee or the shipper from
presenting any claim or recover damages? availing of the action against the carrier.

A: Q: Why is he not precluded in such instance?

1. Failing to file notice A: Art. 366 requires the consignee to view the condition of
2. Payment of freight charges after filing of notice the goods before he pays the transportation charges. If they
were prepaid, there was no occasion for the consignee to
The consignee must have known of the condition of the view the condition of the goods at the port of discharge.
goods to see whether it is in good order or condition or not.
Law says that the filing of notice should be made on the last Under Art. 366, it speaks only of damage to cargo or
opportunity that the vessel should have delivered the goods condition of the goods. It does not extend to losses. COGSA,
on the other hand, extends to both damage and losses.
Q: Who are the persons who can give notice or file notice?
Q: What if the freight was paid first before the filing of
A: notice?

1. Shipper A: It will not be barred from claiming damage. The consignee


2. Consignee should know the condition of the goods or there should be
3. Holder of the bill of lading consignment first before he should pay the transportation
charges and expenses.
ARTICLE 366 v. SEC. 3, COGSA
Q: What if there is already pre-payment of transportation
Q: What is the consequence if after the filing of the required charges and expenses of freight?
notices under Art. 366, the consignee paid the
transportation charges and expenses to the carrier? A: Art. 366 will not apply because the consignee was not
given the time to check the condition of the goods. There
A: If the transportation charges and expenses were paid, that should first be consignment
would foreclose the right of consignee to file actions against
the carrier. The shipper or the consignee is deemed to have Q: Again, when is the consignee or shipper not obligated to
abandoned his intent to file an action against the carrier file notice under the COGSA?
despite the damages and the losses he suffered
A:
Q: So, under Art. 366, the consignee is penalized and barred
from filing action against the carrier for loss or damage in 1. When there is joint survey or inspection- if the goods
what instances? are discharged and the conditions are surveyed by
the carrier, in the presence of consignee, that is a
A: joint survey, there is no need of notice anymore
1. For not filing the notice immediately and within 24 because both parties have seen the conditions of the

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
goods A:
2. In case of delay
3. Misdelivery 1. loss or damage arising or resulting from
unseaworthiness.
Q: What if the ship left Manila in January 1, and it sank after
2 days, when will the 1 year period be counted from? Usually, unseaworthiness of the vessel is the liability of
the owner of the vessel. The exception is under the
A: Jan. 1, because this is the time that the ship could have the COGSA. However, the carrier is still obliged to exercise
opportunity to deliver the goods. due diligence otherwise, unseaworthiness is not a
defense.
NOTE: The rule is that the 1 year period cannot be extended.
Art. 1155 will not apply unless the parties agree thereto. 2. Neither the carrier nor the ship shall be responsible for
loss or damage arising or resulting from —
Art. 1155. The prescription of actions is interrupted when
they are filed before the court, when there is a written (a) Act, neglect, or default of the master, mariner, pilot, or
extrajudicial demand by the creditors, and when there is the servants of the carrier in the navigation or in the
any written acknowledgment of the debt by the debtor. management of the ship;
(1973a)
The law provides that the act may either be on the navigation
NOTE: Extra-judicial demand shall not suspend the period of or management of the ship.
1 year only the agreement of the parties can do so.
The rule is that the carrier is not liable for the negligence of
Q: What events will not interrupt the period? the crew when it is on voyage. However, this does not apply
in the jurisdiction of the Philippines for being against public
A: policy.
rd
1. 3 party complaint after an original complaint When it is a transshipment, the carrier is liable the reason
was filed; being that he is no longer in control of the acts of the crew.
2. Amended complaint; and The exception to this is when said agreement is included in
3. Subrogees, insurance companies. the bareboat or charter party because no public policy is
involved, and the parties are free to agree for there is no
Q: Is the prescriptive period under the COGSA interrupted public policy to consider.
from the time of the making of extra-judicial demand or filing
of judicial action as provided in Art. 1155, NCC? (b) Fire, unless caused by the actual fault or privity of the
carrier;
A: No. 1 year period is a special prescriptive period, uniform
worldwide When the owner is not in privity with the cause of fire, it is an
exempting circumstance
Q: What is the rationale behind the 3-day notice and
relatively short prescriptive period?
However, it will be held liable when it failed to exercise extra-
A: ordinary diligence.

1. to provide carrier an opportunity to look for the lost (c) Perils, dangers, and accidents of the sea or other
goods navigable water;
2. to discover who was at fault (d) Act of God;.
3. in case of transshipment, to determine, when and (e) Act of war;.
where damage occurred (f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or
IMMUNITIES AVAILABLE UNDER COGSA seizure under legal process;
(h) Quarantine restrictions;.
Q: What is the importance of Sec. 4 of COGSA? (i) Act or omission of the shipper or owner of the goods, his
agent or representative;.
A: It contains policy-based defenses in order to avoid liability. (j) Strikes or lockouts or stoppage or restraint of labor from
whatever cause, whether partial or general: Provided, that
Q: Enumerate the immunities. nothing herein contained shall be construed to relieve a
carrier from responsibility for the carrier's own acts;.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A: As a general rule, yes. The exception is when it is
Q:How do you classify Strikes or lock-outs? reasonable.

A: They may either be: 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
1. legal the transportation of goods in an amount exceeding $500 per
2. illegal package of lawful money of the United States, or in case of
3. due to the fault of the carrier goods not shipped in packages, per customary freight unit, or
the equivalent of that sum in other currency, unless the
(k) Riots and civil commotions;. nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading.
(l) Saving or attempting to save life or property at sea; This declaration, if embodied in the bill of lading, shall be
prima facie evidence, but shall not be conclusive on the
RATIO: The lives of the people are more important than the carrier
goods on board.
By agreement between the carrier, master or agent of the
(m) Wastage in bulk or weight or any other loss or damage carrier, and the shipper another maximum amount than that
arising from inherent defect, quality, or vice of the goods; mentioned in this paragraph may be fixed: Provided, that
such maximum shall not be less than the figure above named.
(n) Insufficiency of packing; In no event shall the carrier be liable for more than the
amount of damage actually sustained..
Q: What are the options of carrier in case of insufficiency of
packing? Neither the carrier nor the ship shall be responsible in any
event for loss damage to or in connection with the
A: transportation of the goods if the nature or value thereof has
been knowingly and fraudulently misstated by the shipper in
1. accept and reject the bill of lading..
2. reject and ask the shipper to repack
3. if there is apparent damage, yet the carrier accepts, 6. Goods of an inflammable, explosive, or dangerous nature
he is liable to the shipment whereof, the carrier, master or agent of the
carrier, has not consented with knowledge of their nature
(o) Insufficiency or inadequacy of marks;. and character, may at any time before discharge be landed at
(p) Latent defects not discoverable by due diligence; and any place or destroyed or rendered innocuous by the carrier
(q) Any other cause arising without the actual fault and without compensation, and the shipper of such goods shall
privity of the carrier and without the fault or neglect of the be liable for all damages and expenses directly or indirectly
agents or servants of the carrier, but the burden of proof arising out of or resulting from such shipment. If any such
shall be on the person claiming the benefit of this exception goods shipped with such knowledge and consent shall
to show that neither the actual fault or privity of the carrier become a danger to the ship or cargo, they may in like
nor the fault or neglect of the agents or servants of the manner be landed at any place, or destroyed or rendered
carrier contributed to the loss or damage. innocuous by the carrier without liability on the part of the
carrier except to general average if any (transport of
3. The shipper shall not be responsible for loss or damage dangerous goods and cargoes)
sustained by the carrier or the ship arising or resulting from
any cause without the act, or neglect of the shipper, his Q: What is the extent of liability of carrier?
agents, or his servants.
A: As to the value of damages or general average
4. Any deviation in saving or attempting to save life or
property at sea, or any reasonable deviation shall not be INSTANCES OF REASONABLE DEVIATION
deemed to be an infringement or breach or this Act or of the
contract of carriage, and carrier shall not be liable for any loss Q: Give instances of reasonable deviation.
or damage resulting therefrom: Provided, however, that if the
deviation is for the purpose of loading or unloading cargo or A:
passengers it shall, prima facie, be regarded as unreasonable. 1. to save life
(reasonable deviation) 2. to avoid an arrest from the port
3. by reason of liberty to deviate under the provisions
Q: Is deviation a breach of contract? or stipulations in the contract (must be done for a
valid purpose)

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
4. by reason of existence of blockade or confirmed NOTE: Vessels which are licensed to engage in maritime
epidemic or interdiction of commerce commerce, or commerce by sea, whether in foreign or in
coastwise trade, are no doubt regulated by Book III.
§ In such case where it is declared that commerce is
prohibited as a matter between the country of Q: When the Mercantile Codes speak of “vessels” what does
destination and country of carrier it cover?

Q: Thus, what are the possible defenses of carrier in the A: They refer solely and exclusively to those merchant ships
event of an action for recovery of loss or damage under which are engaged in the transportation of passengers and
COGSA? freight from one port to another or from one place to
another.
A:
1. Exercise of due diligence Q: Is a minor craft used for the transportation of
2. The 18 immunities merchandise by sea and to make voyages from one port to
another of these Islands, equipped and victualed for this
purpose by its owner considered a vessel?
BOOK III
MARITIME COMMERCE A: Yes.
TITLE I
REQUISITES TO BE A MARITIME VESSEL

VESSELS Q: What are the requisites in order to be a “maritime” or


“merchant” vessel?
Q: What is a common carrier under this title?
A:
A: A general ship carrying goods for hire, whether employed
in internal, in coasting, or in foreign commerce is a common 1. The vessel being not an accessory to another vessel
carrier. Thus, it includes even those engaged in maritime 2. Must be licensed to engage in the transportation of
commerce; hence, all matters not regulated by the new Civil passengers and/or freight
Code, the rights and obligations of common carriers shall be 3. By sea (not merely in rivers, inlets, lakes, coves or
governed by the Code of Commerce and by special laws bays), whether in foreign or in coastwise trade

ARTICLE 573 Merchant vessels constitute property which NON-INCLUSION FROM WORD VESSEL
may be acquired and transferred by any of the means
recognized by law. The acquisition of a vessel must be Q: What are not included in the term “vessels” under the
included in a written instrument, which shall not produce Code of Commerce?
any effect with regard to third persons if not recorded in the
registry of vessels. The ownership of a vessel shall A:
also be acquired by the possession thereof in good faith for
three years, with a good title duly recorded. 1. Warships
2. Those accessory to another as in the kinds of
In the absence of any of these requisites, uninterrupted lifeboats, launches, etc.
possession for ten years shall be necessary in order to 3. Pleasure crafts
acquire ownership. 4. Pontoons (flat-bottomed boat)
5. Health service and harbor police vessels
A captain cannot acquire by prescription the ship of which 6. Floating storehouse, warships, or patrol vessels
he is in command. 7. Coastguard vessels
8. Fishing vessels
PURPOSE OF BOOK 3 OF CODE OF COMMERCE 9. Tow boats
10. Any other aircraft destined to other causes:
Q: What is the purpose of Book 3 of the Code of Commerce? a. Coast and geodetic survey
b. Scientific research and exploration
A: It is intended to define the law relative to vessels, and the c. Craft engaged in loading and discharge of
vessels, and the vessels intended in that book are as such as vessels from ship to shore or docks or in
the run by masters having special training, with the elaborate transshipment
apparatus of crew and equipment indicated in the Code.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
d. Small crafts which in harbors, along shore, bays, It is essential that a record of
inlets, coves, and anchorages are engaged in documents affecting title to a
trasnporting passengers and baggages vessel be entered in the
record of the Collector
Q: What is the Spanish term for “vessel”? Customs at the port of entry

A: “buque” NOTE: The Chattel Mortgage Law requires an affidavit of


good faith appended to the mortgage and recorded
Q: Does it include ships, crafts or floating structures of therewith.
minor craft engaged only in river or bay traffic, or other
vessels of minor nature not engaged in maritime Q: What if there is no affidavit?
commerce?
A: It vitiates a mortgage as against creditors and subsequent
A: No. encumbrances. Thus, the chattel mortgage of a vessel,
wherein the affidavit of good faith required by Chattel
Q: What does “vessels” mean for purposes of registration Mortgage Law is lacking, is unenforceable against third
under the Tariff and Customs Code”? persons.

A: Vessels include every sort of boat, or other artificial Q: What is the force of certificate of ownership of vessels?
contriviance used, or capable of being used, as means of
transportation on water. A: The person in whose name a vessel is registered and to
whom is issued a certificate of ownership is presumed to
Q: What is the requisite in order to acquire vessel on 3 years have the legal title thereto but said documents issued relating
possession? to the proprietorship of a vessel are not conclusive proof
against the real owner. They are mere prima facie evidence.
A:
RULE ON SALE OF VESSEL
1. The ownership of vessel may be acquired by the
continuous possession thereof for 3 years Q: What is the rule on sale of vessel?
2. Possession must be based upon good faith
A: In absence of stipulation to the contrary, the ownership of
Q: What kind of property are vessels? the thing sold passes to the vendee upon actual or
constructive delivery thereof.
A: Although vessels or ships, whether moved by steam or by
sail, partake to a certain extent of the nature and conditions NOTE: There is nothing in the law that prohibits the parties
of real property, on account of their value and importance in from entering into an agreement that violation of the terms
world of commerce, yet vessels shall be considered as of the contract would cause cancellation thereof, even
personal property under the Civil Code and the common law. without court intervention.

Q: Are vessels required to be registered under the Tariff and IMPORTANCE OF REGISTRATION
Customs Code?
Q: Why is registration in the registry important?
A: Since vessels are considered personal property, they are
subject to mortgage agreeably to the provisions of the A: It is indispensable in order that the purchaser’s right may
rd
Chattel Mortgage Law. be maintained against a claim filed by 3 person. In other
words, it is important to determine the conflicting rigths over
Q: What is the difference between chattel mortgage of a the vessel.
vessel and chattel mortgage of other personalty?
Q: Why can’t the captain acquire the vessel by prescription?
A:
A: Because of the nature of possession of the captain is such
Chattel mortgage of a vessel Chattel mortgage of other that he is only an agent of the owner, a depositary of the
personalty vessel, and a depositary can never acquire the thing
It is not necessary for a deposited by prescription.
chattel mortgage of a vessel
to be noted in the Register of
Deeds

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
The vendor shall be under the obligation to deliver to the
MODES OF ACQUISITION purchaser a certified copy of the record sheet of the vessel
in the registry up to the date of sale.
Q: What are the modes of acquisition?
ART. 577 If the sale of the vessel should take place while she
A: is on voyage, all the freightage she earns from the time it
receives its last cargo shall belong to the buyer, and the
1. purchase and sale, latter shall pay of the crew and other persons who go to
2. prescription, make up its complement for the said voyage.
3. construction,
4. capture, If the sale should take place after the arrival of the vessel at
5. donation, the port of her destination, the freightage shall belong to
6. succession, and the seller, and the latter shall pay the crew and other
7. other means, such as barter persons who go to make up her complement, unless there is
an agreement to the contrary in either case.
NOTE: Possession in GF will ripen into ownership in 3 years; if
the possession is otherwise, it will ripen into ownership in 10 ART. 578 If the vessel while on a voyage or in a foreign port,
years. her owner or owners should voluntarily sell her, either to
Filipinos or to foreigners domiciled in the capital or in a port
The acquisition of a vessel must appear in a written of another country, the bill of sale shall be executed before
instrument and such instrument must be registered in order the consul of the Philippines at the port where she
that the transfer may affect third persons terminates her voyage and said instrument shall have no
effect with respect to third persons if it is not registered in
the registry of the consulate. The consul shall immediately
Art. 574. Builders of vessels may employ the material and forward a true copy of the instrument of purchase and sale
follow with regard to their construction and rigging the of the vessel to the registry of vessels of the port where said
systems most suitable to their interest. Ship owners and vessel is entered and registered.
seamen shall be subject to the provisions of the laws and
regulations of the public administration on navigation, In every case the sale of the vessel must be made to appear
customs, health, safety of vessels, and other similar matters. with a statement of whether the seller receives the full price
or part thereof, or whether he retains any interest in said
NOTE: The business of constructing and repairing vessels or vessel in whole or in part. In case the sale is made to a
parts thereof shall not be considered a public utility and no Filipino, this fact shall be stated in the certificate of
CPC shall be required thereof navigation.

This has been amended by R.A. 1407 and R.A. 6106. When a vessel, while in a voyage, should become useless for
navigation, the captain shall report the matter to the judge
ART. 575 Part owners of the vessels shall enjoy the right of or court of competent jurisdiction of the port of arrival,
preemption and redemption in sales made to strangers, but should she be in the Philippines; and should she be in a
they can only exercise it within the 90 days following the foreign port, to the Filipino consul should there be one, or to
registration of the sale in the registry and by delivering the the judge or court or local authority in the absence of the
price at once. former; and the consul, or the judge or court, or in their
absence, the local authority shall order an examination of
Q: What if the documents are not recorded in the registry? the vessel to be made.
rd
A: They do not produce any legal effect against 3 persons; If the consignee or the insurer should reside at said port, or
hence, the time does not run except from the same date in should have representatives there, they must be cited in
which the corresponding inscription is made. order to take part in the proceedings on account of whom it
may concern.
ART. 576 The rigging, masts, stores and engine of a steamer
of the vessel shall always be understood as included in the Q: Give the instance where the sale can be made by the
sale thereof if at the time of the sale, they are owned by the captain.
vendor.
A: The sale of the vessel solicited by the captain must not be
The arms, munitions of war, provisions and fuel shall not be affected or consented to, unless the said vessel is in the
considered as included in the sale. condition of being useless for navigation, nor can it be sold in
an amount less than ¾ of its approved value.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
been paid or to be due by virrue of a true account
Q: What if the vessel while on voyage becomes useless for approved by the judge or court
navigation but there is a possibility of her being repaired, 5. The rent of the warehouse where the rigging and
shall the judicial sale of said vessel if solicited by her captain stores of the vessel have been taken cared of,
be granted? according to contract
6. The salaries due to the captain and crew during
A: No, the damage of the vessel and the impossibility of her their last voyage, which shall be verified by means
being repaired in order to continue the voyage must be of the liquidation based on the rolls of the crew and
proven. the account books of the vessel, approved by the
chief of the bureau of merchant marine where
Q: Supposing that a vessel is judicially sold was appraised at there is one, and in his absence, by the consul,
P400,000, may she be sold for P250,000? judge, or court.
7. The reimnursement for the goods transported
A: No, the vessel cannot be sold in the amount of less than ¾ which the captain may have sold in order to repair
of her appraised value. the vessel, provided the sale has been ordered by a
judicial instrument executed with the formalities
ART. 579 After the damage of the vessel and the required in such cases, and recorded in the
impossibility of her being repaired, in order to continue the certificate of the registry of the vessel.
voyage, having been proven,her sale at public auction shall 8. The part of the price which has not been paid to the
be ord, subject to the following rules: last seller, the credits pending for the payment of
1. The hull of the vessel, her rigging, engines, stores, and materials and work in the construction of the vessel
other articles shall be appraised by means of an inventory, when she has not navigated, and those arising from
said proceedings being brought to the notice of the persons the repair and equipment of the vessel and her
who may wish to take part in the auction. provisioning with victuals and fuel during her last
2. The order or decree ordering the public auction shall be voyage.
posted in the usual places, and shall be advertised in the
newspapers of the port where the auction is to be held, In order that said credits may enjoy the preference
should there be any, and in other newspapers which the provided for in this subdivision, they must appear by means
court may determine. of contracts recorded in the registry of vessels, or if they
were contracted for the vessel while on voyage and said
The period which may be fixed for the auction shall not be vessel has not returned to the port of her registry, they must
less than 20 days be made under the authority required for such cases and
entered in the certificate of the record of the vessel.
3. These advertisements shall be repeated every ten days,
and their publication shall be recorded in the proceedings. 9. The amounts borrowed on bottomry loans before
4. The auction shall be held on the day fixed, with the the departure of the vessel, proven by means of the
formalities prescribed in the common law for judicial sales. contracts executed according to law and recorded
5. If the sale should take place when the vessel is in a in the registry of vessels, the amounts borrowed
foreign country, the special provisions governing such cases during the voyage with the authority mentioned in
shall be observed. the foregoing subdivision, complying with the same
requisites, and the insurance premium, proven by
ART. 580 [In all judicial sales of vessels for the payment of the policy of the contract or certificate taken from
creditors, the following shall be preferred in the order the books of the broker.
named: 10. The indemnity due to the shippers for value of the
1. The credits in favor of the public treasury proven by goods transported which were not delivered to the
means of an official certificate of the competent consignee, or for averages suffered for which the
authority vessel is liable, provided either shall appear in a
2. The judicial costs of the proceedings according to judicial or arbitration decision.
an appraisement approved by the judge or court.
3. The pilotage charge, tonnage dues, and the other NOTE: Repealed by R.A. 6106.
sea or port charges, proven by means of proper
certificates of the officers entrusted with the
collection.
4. The salaries of the caretakes and watchmen of the
vessel and any other expenses connected with the
preservation of said vessel, from the time of arrival
in the port until her sale, which appear to have

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
REPUBLIC ACT NO. 6106 5. Costs of repair and equipment of the vessel, and
REPUBLIC ACT NO. 6106 - AN ACT AMENDING REPUBLIC provisioning of food, supplies and fuel during the last voyage;
ACT NUMBERED ONE THOUSAND FOUR HUNDRED SEVEN, and
AS AMENDED, TO PRESCRIBE THE RULES FOR FINANCING 6. Preferred mortgages registered prior in time.
THE ACQUISITION OR CONSTRUCTION OF VESSELS TO BE
USED FOR OVERSEAS SHIPPING, TO ALLOW THE CREATION "e. The lien of a preferred mortgage may be enforced by
OF A MARITIME LIEN THEREON, AND FOR OTHER PURPOSES suit in term or otherwise in the Philippines, or in any foreign
country in which the vessel shall be found pursuant to the
SECTION 1. Republic Act Numbered One thousand four procedure of said country for the enforcement of ship
hundred seven, as amended, is hereby further amended to mortgages constituting maritime liens on vessels
include a new provision known as Section 11 ½, which shall documented under the laws of said country.
read as follows: "f. After the bill of judicial sale at public auction has been
executed, all claims against the vessel in favor of the creditors
"Sec. 11 ½. a. Any citizen of the Philippines, or any shall be considered extinguished, and such claim shall
association or corporation organized under the laws of the thereafter attach, in like amount and in accordance with their
Philippines, at least seventy-five per cent of the capital of respective priorities to the proceeds of the sale.f the
which is owned by citizens of the Philippines, engaged or proceeds of the judicial sale should not be sufficient to pay all
which shall engage exclusively in the overseas shipping the creditors included in one number or grade, the residue
business, may, for the purpose of financing the construction, shall be divided among them pro rata. All credits not paid,
acquisition or purchase of vessels for use in overseas whether fully or partially, shall subsist as ordinary credits
shipping, freely constitute a mortgage or any other lien or enforceable by personal action against the debtor. The record
encumbrance on such vessels and its equipment with any of the judicial sale shall be inscribed in the registry of
bank or other financial institutions, domestic or foreign. vessels."

"b. The instrument of mortgage, lien or encumbrance shall SECTION 2. The provisions of Commonwealth Act
be recorded in the registry of vessels in the order of their Numbered Six hundred six, as amended by Republic Act
reception and shall show: Numbered Nine hundred thirteen; the Code of Commerce,
particularly Articles 580 and 584 thereof; and all other Acts,
1. The name of the vessels; Executive Orders and regulations inconsistent herewith are
2. The name of the parties; hereby repealed or modified accordingly.
3. The time and date of reception of the instrument;
4. The interest in the vessel transferred or affected; and
5. The amount and date of maturity of any mortgage.
ART. 581. If the proceeds of the sale are not sufficient to pay
A copy of the instrument of mortgage shall be furnished the all the creditors included in one number or grade, the
Central Bank of the Philippines. amount shall be divided among them pro rata.

"c. Any mortgage, lien or encumbrance constituted in ART. 582. After the bill of judicial sale at public auction has
accordance with this Act is a preferred mortgage and shall been executed and recorded in the registry of vessels, all
constitute a maritime lien upon the mortgaged vessel in the other liabilities of the vessel in favor of the creditors shall be
amount of the outstanding mortgage indebtedness secured considered cancelled.
by such vessel.
But if the sale should have been voluntary, and made while
"d. A preferred mortgage shall have priority over all claims the vessel was on voyage, the creditors shall retain their
against the vessel, except the following preferences in the rights againts the vessels until her return to the port of her
order stated: registry, and 3 months after the record sale in the registry of
vessels, or after her arrival.
1. Judicial costs of the proceedings;
2. Taxes due the Philippine Government; Art. 583. If the ship being on a voyage the captain should
3. Salaries and wages of the Captain and Crew of the vessel find it necessary to contract one or more of the obligations
during its last voyage; mentioned in subdivisions 8 and 9 of article 580, he shall
4. General average or salvage including contract salvage; apply to the judge or court if he is in the Philippine territory,
bottomry loans; and indemnity due shippers for the value of and otherwise to the Filipino consul, should there be one,
goods transported but which were not delivered to the and in his absence, to the judge or court or proper local
consignee; authority, presenting the certificate of the registry of the
vessel by virtue of a declaration of unseaworthiness.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
NOTE: However, an action brought against the captain and
The judge or court, the consul, or the local authority, as the the vessel at the same time may be maintained, but not
case may be, in view of the result of the proceedings againts the vessel alone as defendant. Although in an action
instituted, shall make a temporary memorandum in the against the ship, the owner happened to procure its release
certificate of their result, in order that it may be recorded in from an order of seizure by giving bond, he did not thereby
the registry when the vessel returns to the port of her waive his right to object to the irregular procedure followed
registry, or so that it can be admitted as a legal and in instituting the action and obtaining the order of seizure.
preferred obligation in case of sale before its return, by
reason of the sale of the vessel by virtue of a declaration of ART. 585. For all purposes of law not modified or restricted
unseaworthiness. by the provisions of this Code, vessels shall continue to be
considered personal property.
The omission of this formality shall make the captain
personally liable for the credits prejudiced through his fault. Ssimilarities between vessels and real properties

Q: What is the reason of the law under this provision? Q: What are the similarities between vessels and real
properties?
A: Generally, the captain of the vessel is not its real owner,
but a person of confidence of the shipowner, possessing A:
further the technical requisites in which in his duties are
required. The captain, once in a voyage, is the supreme chief 1. That the ownership of both is evidenced by a
of the embarkation, and for this reason he would be certificate of ownership
prejudicing seriously the creditors of the vessel should he 2. That any conveyance of both, to be effective against
incur unjustifiable indebtedness. In order that this abuse may third persons, must be registered in their respective
be avoided, the Code establishes the limitation in the above property registry.
article
PERSONS WHO TAKE PART IN MARITIME COMMERCE
ART. 584. The vessels subject to the liability for the credits
mentioned in Art. 580 may be attached and judicially sold in Art. 586. The owner of a vessel and ship agent shall be
the manner prescribed in Art. 579, in the port in which they civilly liable for the acts of the captain and for the
may be found, at the instance of any of the creditors; but if obligations contracted by the latter to repair, equip, and
they should be loaded and ready to sail, the attachment provision the vessel, provided the creditors proves that the
cannot take place except for debts contracted by reason of amount claimed was invested therein.
the preparation and provisioning of the vessel for the
voyage, and even then the attachment shall be dissolved if By agent is understood the person entrusted with the
any person interested in her sailing should give bond for the provisioning of a vessel, or who represents her in the port in
return of the vessel within the period fixed in the certificate which she happens to be.
of navigation, binding himself to pay the debt, in so far as it
may be legal, should the vessel fail to do so, even if his Q: Who are the persons who participate in the Code of
failure may have been caused by fortuitous events. Commerce?

For debts of any other kind whatsoever not included in the A:


said Art. 580, the vessel may only be attached in the port of
her registry. 1. Shipowners- “propietario” in Spanish but sometimes
comprehended in the term “naviero”
NOTE: This has been repealed by R.A. 6106. 2. Ship-agent- “naviero” in Spanish
3. Captain of master of the vessel
Q: Can an action be brought against the ship? 4. Officers other than the captain or master of the
vessel
A: No, the ship being neither a natural nor a juridical person. a. Sailing or first mate
It was absolutely indispensable for the maintenance of b. Quartermaster or second mate
contentious action in the courts of justice to have as c. Engineers
defendant some natural or juridical person. A suit against 5. Seamen or sailors or crew
the ship, such as is permitted in thw English and American 6. Other persons who make up the complement of the
Admiralty Courts, was unknown to the Spanish Law. The vessels, including the stockers and supercargoes.
Rules of Court does not authorize such action.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
The father and, in case of his death or incapacity, the
Naviero or ship agent mother, are responsible for the damages caused by the
minor children who live in their company.
Q: Who is a Naviero or ship agent?
Guardians are liable for damages caused by the minors or
A: Art. 586 provides that both the owner of the vessel incapacitated persons who are under their authority and
(propietario) and the naviero or characterer shall be civilly live in their company.
liable for the act of the master. It refers to the person
undertaking the voyage who is in one case may be the owner The owners and managers of an establishment or enterprise
and in another the charterer. are likewise responsible for damages caused by their
employees in the service of the branches in which the latter
Q: What is the liability of a ship owner and ship agent for are employed or on the occasion of their functions.
acts of the captain in culpa contractual?
Employers shall be liable for the damages caused by their
A: Both the owner of the vessel and the naviero or charterer employees and household helpers acting within the scope of
shall be civilly liable for acts of the master. Hence, any person their assigned tasks, even though the former are not
whose property has been cast overboard by order of the engaged in any business or industry.
captain should have a right of action directly against the ship
owner for the breach of any duty which the law may have The State is responsible in like manner when it acts through
imposed on the captain with respect to such cargo. a special agent; but not when the damage has been caused
by the official to whom the task done properly pertains, in
NOTE: which case what is provided in Article 2176 shall be
applicable.
a. Similarly, they will be liable for the acts of the
captain who without any cause or reason and Lastly, teachers or heads of establishments of arts and
without any unforeseen accident or stress of trades shall be liable for damages caused by their pupils and
weather, willfully abandoned the lorcha under students or apprentices, so long as they remain in their
contract of towage from Manila to Iloilo; or custody.
b. For the loss occasioned by the gross negligence of
the captain with respect to the care of the potatoes The responsibility treated of in this article shall cease when
on board the lorcha; or the persons herein mentioned prove that they observed all
c. In case of voyage to a particular place which was the diligence of a good father of a family to prevent
interrupted by the captain, said interruption was not damage. (1903a)
due to fortuitous event or force majeure, not to
disability of the vessel. Hence, being caused by the Q: In such case, what is the defense which the owner may
captain, the passenger’s right to indemnify is raise to avoid liability?
evident. The owner of the vessel and the ship agent
shall be civilly liable for the acts of the captain. A: The defense that the owner exercised the care and
diligence as a good father of a family in selecting the captain.
Q: What is the liability of the ship owner and the ship agent
for acts of the captain in culpa aquiliana or tort? Q: What is the liability of the ship-owner and ship agent for
obligations contracted by the captain?
A: It shall be govern by Arts. 2176 and 2180.
A: The owner of the vessel and the agent shall be civilly liable
Art. 2176. Whoever by act or omission causes damage to for the obligations contracted by the captain to repair, equip,
another, there being fault or negligence, is obliged to pay and provision the vessel, although he contracted it in his own
for the damage done. Such fault or negligence, if there is no name.
pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of this G.R.: When the agents buy in their own names, but really for
Chapter. (1902a) the account of their principal, the seller has an option to look
either for payment.
Art. 2180. The obligation imposed by Article 2176 is
demandable not only for one's own acts or omissions, but EXPNS:
also for those of persons for whom one is responsible.
1. Unless he trusted the agent exclusively; or
2. Unless by the usage and understanding of the
business, the agent only is held; or

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
3. Unless the special circumstances of the case show Q: What is the liability of the owner or agent of the vessel
that only the agent was intended to be bound and for the breach of contract of marine transportation by the
the seller knew it or was chargeable with knowledge acts of the captain?
of it;
A: Although Art. 587 appears to deal only with the limitation
Q: Is the destruction of the vessel a valid defense? of ship owner’s or agent for damages arising from the
misconduct of the captain in the care of the goods which the
A: It is not a defense that the vessel has been totally vessel carries, the consensus of authority is to the effect that
destroyed. Naturally, the total destruction of the vessel notwithstanding the language of the aforequoted provision,
extinguishes a maritime lien, as there is no longer any res to the benefit of the limited liability therein provided for applies
which it can attach. Yet, the total destruction of the vessel in all cases wherein the said owner or ship agent can be
does not affect the liability of the owners for the repairs on properly held liable for negligent or illicit acts of action.
the vessel completed before its loss. Yet, the liability of the Hence, said owner or agent is liable for the loss of life of
owner for damages arising out of a collision is extinguished by passengers for the negligent acts of the captain.
the loss of the vessel.
Q: Are the Civil Code provisions on common carriers and Art.
Q: Is the ship-agent solidarily liable with the ship owner in 587 of Code of Commerce applicable to common carrier
case of insolvency of the latter? where the latter acted as private carrier?

A: The ship agent is solidarily liable with its principal. A: No. Under American jurisprudence, from which our Civil
Insolvency of the principal has no bearing on the liability of Code provisions on common carriers are taken, a common
the ship agent. But abandonment is allowed. The ship agent carrier undertaking to carry a special cargo or chartered to a
may exempt itself by abandoning the vessel with all the special person only, becomes a private carrier. As a private
equipment and freightage earned during the voyage. carrier, a stipulation exempting the owner from liability for
the negligence of its agent is not against public policy and is
Concept of a husbanding agent deemed valid.

Q: Explain the concept of a “husbanding agent.” LIMITATION OF LIABILITY;


ABANDONMENT
A: It is the general agent of the owner in relation to the ship
with powers to engage the vessel for general freight and the Q: What is necessary in order to limit the liability of the
usual conditions, and settles for freight and adjusts averages agent or owner of the vessel?
with the merchant.
A: By the express provision of this Code, the owner of the
Q: What is its liability for the tax on transportation business vessel is civilly liable for the acts of the captain, and he can
of its principal? only escape from this civil liability by abandoning his property
in the ship and any freight that he may have earned on the
A: A shipping company that holds itself to the public and to voyage; this abandonment would have had amounted to an
the government as the ship owner’s local agent, and in fact offer of the value of the vessel, of her equipment and freight
renders services as such, is under obligation to pay, for and in money earned. And could not have been refused.
behalf of its principal, whatever tax is due from the latter,
especially where the principal is a nonresident corporation NOTE: The shipowner’s liability is co-extensive with his
beyond the jurisdiction of the Philippines. interest in the vessel and its freight, and ceases by his
abandonment and surrender of these to the parties
Art. 587. The ship agent shall also be civilly liable for the sustaining loss, and if no abandonment is made, the liability
indemnities in favor of third persons which arise from the of the owner or agent is not limited nor extinguished.
conduct of the captain in the care of the goods which the
vessel carried; but he may exempt himself therefrom by Q: Who can make the abandonment?
abandoning the vessel with all her equipments and the
freightage he may have earned during the voyage. A: Only the shipper and the ship-agent can make
abandonment of a vessel, but in cases of co-ownership of a
There is a discrepancy between the meaning of naviero in Art. vessel, its part owner may exempt himself from liability by
586 of the Code of Commerce, where the word is used in the abandonment of the part of the vessel belonging to him.
contradistinction to the tern “owner of the vessel” and in Art. However, an abandonment cannot be made by the charterer
587 where is used alone, and apparently in a sense broad of the ship who has only the right to indicate the ports or
enough to include the owner. places to which the ship shall call or enter but who has no
jurisdiction or control over the acts of the captain since said

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
rd
charterer can at no time be regarded by the 3 parties as with losses related to maritime contracts is confined to the
being in the place of the owners or agents in matters relating vessel, which stands as the guaranty for their settlement.
to the responsibility pertaining to the ownership and
possession of the vessel. REAL AND HYPOTHECARY RULE IN MARITIME LAW

INSTANCES OF VALID ABANDONMENT Q: Explain the real and hypothecary rule in Maritime law.

Q: What are the instances in which abandonment is A: To offset against the innumerable hazards and perils in sea
allowed? voyages and to encourage ship building and marine
commerce, it was deemed necessary to confine the liability of
A: The Principle of Limited Liability of a shipowner or ship- the owner or agent arising from the operation of the ship to
agent is provided for in but 3 articles of the Code of the vessel, equipment and freight, or insurance if any, so that
Commerce: if shipowner or agent abandon the ship, equipment and
freight, his liability would be extinguished. By abandonment,
a. Art. 587-civil liability for the indemnities in favor of the the agent or owner exempts himself from liability, thus,
captain in the vigilance over the goods and for the safety avoiding the possibility of risking his whole fortune in the
of the passengers in maritime transportation. business.
b. Art. 590- civil liability of the co-owners of the vessel in
the proportion of their contribution to the common fund Q: The liability of shipowner and ship agent is limited to the
for the results of the acts of the captain in the vigilance amount of interest in said vessel such that where vessel is
over the goods and for the safety of passengers in entirely lost, the obligation is extinguished. The interest
maritime transportation. extends to what object?
c. Art. 837- civil liability incurred by the shipowners in cases
of maritime collisions. A:

MARITIME OR ADMIRALTY LAW a. the vessel itself;


b. equipments;
Q: What is maritime/admiralty law? c. freightage; and
d. insurance proceeds
A: It is the system of laws which particularly relates to the
affairs and business of the sea, to ships, their crews and Q: Explain: the shipowner or agent has the right of
navigation, and to maritime conveyance of persons and abandonment.
property. Maritime laws apply only to maritime trade and sea
voyages. A: By implication, his liability is confined to that to which he is
entitled as of a right to abandon—“the vessel with all her
NOTE: Arrastre service is not maritime in character. It refers equipments and the freight it may have earned during the
to a contract for the unloading of goods from a vessel. voyage,”—and if they are lost, it suffices for his discharge to
surrender all claims in respect of the ship and its freight, such
CHARACTERISTICS OF MARITIME TRANSACTION as insurance, etc., and any act of abandonment of the vessel
would be an idle ceremony, since whether the abandonment
Q: What are the characteristics of maritime transaction? of the vessel was in accordance with law or not is immaterial
in such a case.
1. Real - similar to transactions over real property with
respect to effectively against third persons which is done NOTE: The total destruction of the vessel extinguishes a
through registration. maritime lien as there is no longer any res to which it can
The evidence of real nature is shown by: attach.
1) The limitation of the liability of the agents to the
actual value of the vessel and the freight money; and Q: What are the exceptions to the real and hypothecary
2) The right to retain the cargo and embargo and rule?
detention of the vessel
2. Hypothecary - the liability of the owner of the value of A:
the vessel is limited to the vessel itself (Doctrine of
Limited Liability). 1. In case the voyage is not maritime, but only in river,
bay or gulf
NOTE: The real and hypothecary nature of maritime law 2. In the case of the expenses for equipping, repairing,
simply means that the liability of the carrier in connection or provisioning of the vessel

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
3. In case the vessel is not a common, but special the notice be done orally, a written notice of such
carrier abandonment shall be submitted within 7 days from
4. In case the vessel would totally sink or be a total such oral notices
loss, due to shipowner’s or shipagent’s own fault.
Art. 588. Neither the owner of the vessel nor the agent shall
ABANDONMENT IN MARITIME COMMERCE v. be liable for the obligations contracted by the captain if the
ABANDONMENT IN MARINE INSURANCE latter exceeds his powers and privileges inherent in his
position or those which may have been conferred upon him
Q: Distinguish abandonment in maritime commerce and by the former.
abandonment in marine insurance.
However, if the amounts claimed were made use of for the
A: benefit of the vessel, the owner or agent shall be liable.

ABANDONMENT IN ABANDONMENT IN MARINE NOTE: Under 588, the shipowner and the shipagent are not
MARITIME COMMERCE INSURANCE liable for the obligations contracted by the captain if he
Who makes the abandonment exceeds his authority, unless the amounts claimed were
Abandonment is made by the Abandonment is made by the invested for the benefit of the vessel. However, under Art.
shipowner or ship agent insured, not necessarily the 1759, NCC, the ship owner is liable for the death of or injuries
shipowner or ship agent to the passengers which are caused by the negligence or
What is abandoned? willful acts of his EEs although such EEs may have acted
The thing abandoned is the The things insured, not beyond the scope of their authority or in violation of the
vessel, with her necessarily the vessel are orders of the shipowner
appurtenances and freight abandoned
Basis of the breach of maritime contract Art. 589. If two or more persons should be part owners of a
The basis of the breach of Constructive total loss in merchant vessel, an association shall be presumed as
maritime contract arising which the loss, injury, established by the part owners.
from the conduct of the expenses to be suffered
captain in the vigilance over more than ¾ of the value of This association shall be governed by the resolutions of a
the goods and for the safety the thing insured which is majority of the members.
of passengers abandoned
Purpose A majority shall be the relative majority of the voting
To limit the civil liability of To recover from the insurer members.
the shipowner or ship agent indemnity for a total loss,
rd
to 3 persons to the value of although the thing insured If there should be only two part owners, in case of
the vessel with her does not suffer actual total disagreement the vote of the member having the largest
appurtenances and freight loss interest shall be decisive. If the interests are equal, it shall
be decided by lot.
Requisites in abandonment in marine insurance
The representation of the smallest part in the ownership
shall have one vote; and proportionately the other part
Q: What are the requisites in abandonment in marine
owners as many votes as they have parts equal to the
insurance?
smallest one.
A:
A vessel cannot be detained, attached or levied upon execu-
tion in her entirety for the private debts of a part owner, but
1. There must be an actual relinquishment of claim of
ownership of the thing abandoned the proceedings shall be limited to the interest the debtor
may have in the vessel, without interfering with her
2. There must be constructive total loss, in which the
navigation.
loss, injury or expenses to be suffered be more than
¾ of the value of the thing abandoned
3. Abandonment must be neither partial nor NOTE: If there should be only 2 part owners whose interest
are equal, in case of disagreement, the management of a
conditional
merchant ship shall be decided by lot. But if one owns ¼
4. Abandonment must be made within reasonable time
after receipt of reliable information of constructive interest and the other ¾ interest in the vessel, then the vote
total loss of the member having the largest interest shall be decisive.
5. Notice of abandonment to insurer, whether oral or
Art. 590. The co-owners of a vessel shall be civilly liable, in
in writing, must be explicit, and must specify the
particular cause of abandonment; provided that if the proportion of their contribution to the common fund,

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
for the results of the acts of the captain, referred to in Arti-
cle 587. The resolutions of the majority relating to the dissolution of
the association and sale of the vessel shall also be binding
Each part owner may exempt himself from this liability by on the minority.
the abandonment before a notary of the part of the vessel
belonging to him. The sale of the vessel shall be made at a public auction,
subject to the provisions of the law of civil procedure unless
Q: Explain the effect of this provision. the part owners unanimously agree otherwise, subject
always to the right of pre-emption and redemption
A: The liability of the owner or agent of the vessel extends for mentioned in Article 575.
breach of contracr of maritime transportation by the acts of
the captain, and in collision of vessels, but to limit the liability RIGHT OF MAJORITY
of the agent or the ship owner, abandonment of the vessel is
necessary; however, the loss of the vessel would extinguish Q: Is the right of the majority sanctioned by this article?
the liability of the owner or agent, except when the insurance
is collected by the owner, the insurance susbtitutes the vessel A: Yes. The right of the majority is sanctioned by this article to
and the owner becomes responsible to the extent of the impose upon the minority a resolution with regard to the
insurance collected. repair, equipment, and provisioning of the vessel, dissolution
of the partnership, and sale of the vessel.
Art. 591. All the part owners shall be liable, in proportion to
their respective ownership, for the expenses which are Art. 593. The owners of a vessel shall have preference in her
incurred by virtue of a resolution of the majority. charter over other persons, offering equal conditions and
price. If two or more of the former should claim said right
They shall likewise be liable in the same proportion for the the one having greater interest shall be preferred, and
expenses of maintenance, equipment, and provisioning of should they have an equal interest it shall be decided by lot.
the vessel, necessary for navigation.
Art. 594. The part owners shall elect the manager who is to
Q: Can the abandonment or loss of the vessel limit or represent them in the capacity of agent.
extinguish the liability of the owners? The appointment of director or agent shall be revocable at
the will of the partners.
A: No. From the language of this provision, there is nothing to
denote that the liability of the owners of a vessel is wiped out Art. 595. The agent, be he at the same time an owner of a
by the loss of the vessel. vessel or a manager for an owner or for an association of co-
owners, must be qualified to trade and must be recorded in
Q: Why? the merchant's registry of the province.

A: The liabilities under this article is essentially contractual in The agent shall represent the ownership of the vessel, and
character incurred by virtue of a resolution of the majority of may in his own name and in such capacity take judicial and
the co-owners and different from those incurred under Art. extrajudicial steps in all that relates to commerce.
590. which are considered as maritime liens, thus, it cannot
be considered limited by the abandonment of the vessel nor REQUISITES TO BE A SHIP AGENT
are extinguished by the loss of the ship.
Q: What are the conditions in order that a person may
NOTE: As a general rule, the owners of the vessel and the discharge the duty of a ship agent?
vessel itself are liable for the necessary repairs. Naturally the
total destruction of the vessel extinguishes the maritime A:
liens, as there is no longer any res to which it can attach. But
the total destruction of the vessel does not affect the liability 1. To possess legal capacity to engage in commerce
of the owners for repairs on the vessel completed before its 2. To be recorded in the commercial registry of the
loss. province

Art. 592. The resolutions of the majority with regard to the NOTE: His representation is limited and cannot be transferred
repair, equipment, and provisioning of the vessel in the port to other persons nor his powers to exceed those conferred
of departure shall bind the minority, unless they renounce upon him.
their participation therein, which must be acquired by the
other part owners after a judicial appraisement of the value When powers are assumed without due authorization, he
of the portion or portions assigned. must be liable for the damage which may have occurred.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
5. Supply, equip, and provision the vessel; and
Art. 596. The agent may discharge the duties of captain of 6. Order repair of vessel to enable it to continue its
the vessel, subject, in every case, to the provisions voyage. (Art. 610)
contained in Article 609.
Art. 597. The agent shall select and enter into an agreement
If two or more co-owners request the position of captain, with the captain, and shall contract in the name of the
the disagreement shall be decided by a vote of the owners, who shall be bound in all that refers to repairs,
members; and if the vote should result in a tie, the position details of equipment, armament, provisions, fuel, and
shall be given to the part owner having the larger interest in freight of the vessel, and, in general, in all that relates to the
the vessel. requirements of navigation.

If the interest of the petitioners should be the same, and Art. 598. The agent cannot order a new voyage, nor make
there should be a tie, the matter shall be decided by lot. contracts for a new charter, nor insure the vessel, without
the authority of her owner or by virtue of a resolution of the
QUALIFICATIONS OF A SHIP CAPTAIN majority of the co-owners, unless these powers were
granted him in the certificate of his appointment.
Q: What are the qualifications of a captain of a vessel?
If he should insure the vessel without authority therefor he
A: shall be subsidiarily liable for the solvency of the
underwriter.
1. Filipino citizen;
2. Legal capacity to contract; Art. 599. The managing agent of an association, shall give
3. Must have passed the required physical and mental his co-owners an account of the results of each voyage of
examinations required for licensing him as such. (Art. the vessel, without prejudice to always having the books
609) and correspondence relating to the vessel and to its voyages
at their disposal.
NOTE: If the ship agent possesses such qualifications, he may
perform the duties of both ship agent and captain Art. 600. After the account of the managing agent has been
simultaneously. As to the co-owners applying for the position approved by a relative majority, the co-owners shall satisfy
of captain, it is perfectly understood that the candidates must the expenses in proportion to their interest, without
possess the qualifications required of a captain. prejudice to the civil or criminal actions which the minority
may deem fit to institute afterwards.
THREEFOLD CHARACTER OF THE CAPTAIN
In order to enforce the payment, the managing agents shall
Q: What is the nature of position or the 3-fold character? be entitled to an executory action, which shall be instituted
by virtue of a resolution of the majority, and without further
A: proceedings than the acknowledgment of the signatures of
the persons who voted for the resolution.
1. General agent of the shipowner;
2. Technical director of the vessel; Q: What is the effect of the Rules of Court in this provision?
3. Representative of the government of the country
under whose flag he navigates. A: The executory action (accion ejecutiva) has been rendered
obsolete by the Civil Procedure and by the Rules of Court.
INHERENT POWERS OF A CAPTAIN
Art. 601. Should there be any profits, the co-owners may
Q: What are his inherent powers? demand of the managing agent the amount due them, by
means of an executory action without further requisite than
A: the acknowledgment of the signatures in the instrument
approving the account.
1. Appoint crew in the absence of ship agent;
2. Command the crew and direct the vessel to its port Art. 602. The agent shall indemnify the captain for all the
of destination; expenses he may have made from his own funds or from
3. Impose correctional punishment on those who, those of other persons, for the benefit of the vessel.
while on board vessel, fail to comply with his orders
or are wanting in discipline; Q: In order that expenses may be reimbursed, what must be
4. Make contracts for the charter of vessel in the done?
absence of ship agent.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A: They must be recorded in the account of the voyage. experts appointed in the manner established in the law of
civil procedure.
Art. 603. Before a vessel goes out to sea the agent may at
his discretion, discharge the captain and members of the Art. 607. If the captain who is a part owners should have
crew whose contract did not state a definite period nor a obtained the command of the vessel by virtue of a special
definite voyage, paying them the salaries earned according agreement contained in the articles of copartnership, he
to their contracts, and without any indemnity whatsoever, cannot be deprived thereof except for the reasons
unless there is an expressed and specific agreement in mentioned in Article 605.
respect thereto.
Q: A, a part owner and who at the same time is the captain
WHEN SHIP AGENT MAY DISCHARGE HIS CAPTAIN of the vessel, by virtue of a special agreement in the Articles
of Co-partnership, was discharged for insubordination in
Q: May the ship agent discharge his ship captain? serious matters.

A: The ship agent may at his discretion discharge the captain Is this discharge lawful?
provided, however, that the contract for services of the
captain did not state fixed period or voyage. The ship agent is A: Yes. Under Art. 607, he will not be deprived of his office as
liable to pay the salaries earned according to their contract, captain except for such causes as are comprised under Art.
but without indemnity whatsoever. 605. in mentioning the causes for the lawful discharge
includes insubordination in serious matters.
The captain shall continue to receive his salary until his return
to the port where the contract was made unless there should What right can he demand from the ship agent before being
be just motive for the discharge. discharged?

Art. 604. If the captain or any other member of the crew A: A, being a part owner, may not be discharged without the
should be discharged during the voyage, they shall receive ship agent returning to him the amount of his interest
their salary until their return to the place where the contract therein.
was made, unless there are good reasons for the discharge,
all in accordance with Art. 636 et seq. of this Code. Q: How shall his right be appraised in the absence of an
agreement?
A captain of a steamer, discharged without legal cause at a
port other than that in which his services were contracted A: In the absence of any agreement by the parties, the
for, may recover salary up to the latter place. amount of interest which A may demand to be returned to
him by the ship agent, shall be appraised by the experts
Art. 605. If the contracts of the captain and members of the appointed in the manner established in the Rules of Court.
crew with the agent should be for a definite period or
voyage, they cannot be discharged until the fulfillment of Art. 608. In case of the voluntary sale of the vessel, all
their contracts, except for reasons of insubordination in contracts between the agent and captain shall terminate,
serious matters, robbery, theft, habitual drunkenness, and reserving to the latter his right to the indemnity which may
damage caused to the vessel or to its cargo by malice or be proper, according to the agreements made with the
manifest or proven negligence. agent.

Where a contract is for a definite period or voyage, the The vessel sold shall remain subject to the security of the
members of the crew may not be discharged until after the payment of said indemnity if, after the action against the
fulfillment of their contract, except: vendor has been instituted, the latter should be insolvent.

a. For reasons of insubordination in serious matters RULES ON VOLUNTARY SALE OF VESSEL


b. Robbery
c. Theft a. One of the liens, tacit or legal, which may exist
d. Habitual drunkenness upon the vessel and which a purchaser of the same
e. Damage caused to vessel or to her cargo by malice or would be obligated to respect and recognize is the
manifest or proven negligence indemnification due to the captain of the vessel in
case his contract is terminated on account of the
Art. 606. If the captain should be a part owner in the vessel, voluntary sale of the ship and the insolvency of the
he may not be discharged unless the agent returns to him owner.
the amount of his interest therein, which, in the absence of b. In case of voluntary sale of the vessel, all contracts
an agreement between the parties, shall be appraised by between the ship agent and captain shall terminate,

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
the right to proper indemnity being reserved in
favor of the captain, according to the agreement 1. To appoint or make contracts with the crew in the
made with the ship agent absence of the ship agent and propose said crew,
c. If after the action against the seller has been should said agent be present; but the agent may not
instituted, the latter should be insolvent, the vessel employ any member against the captain's express
sold shall remain subject to the securing of the refusal.
payment of said indemnity, although the vessel is 2. To command the crew and direct the vessel to the
already in the possession of the buyer. port to its destination, in accordance with the
instructions he may have received from the ship
Art. 609. Captains, masters or patrons of vessels must be agent.
Filipinos, have legal capacity to contract in accordance with 3. To impose, in accordance with the contracts and the
this code, and prove the skill, capacity, and qualifications laws and regulations of the merchants marine, on
necessary to command and direct the vessel, as established board the vessel, correctional punishment upon
by marine or navigation laws, ordinances, or regulations, those who do not comply with his orders or who
and must not be disqualified according to the same for the conduct themselves against discipline, holding a
discharge of the duties of the position. If the owner of a preliminary investigation on the crimes committed
vessel desires to be the captain thereof, without having the on board the vessel on the high seas, which he shall
legal qualifications therefor, he shall limit himself to the turn over to the authorities, who are to take
financial administration of the vessel, and shall intrust the cognizance thereof, at the first port touched.
navigation to a person possessing the qualifications required 4. To make contracts for the charter of the vessel in the
by said ordinances and regulations. absence of the ship agent or of the consignee, acting
in accordance with the instructions received and
Q: What are the qualifications of an applicant for certificate protecting the interests of the owner with utmost
or license as master, mate or patron? care.
5. To adopt all the measures which may be necessary to
A: keep the vessel well supplied and equipped,
purchasing all that may be necessary for the purpose,
1. Citizen of the Philippines provided there is no time to request instructions of
2. Applicant shall be examined physically the agent.
3. Examination into moral and technical qualifications 6. To provide in similar urgent cases and on a voyage,
for the repairs to the hull and engines of the vessel
CAPTAIN v. MASTER and to her rigging and equipment which are
absolutely necessary in order for her to be able to
Q: What is the difference between “captain” and “master”? continue and conclude her voyage; but if she should
arrive at a point where there is a consignee of the
A: The name of “captain” or “master” is given according to vessel, he shall act in concurrence with the latter.
the kind of vessel, to the person in charge of it.
INHERENT POWERS OF CAPTAINS
CAPTAIN MASTER
Applied to those who govern Those who command smaller Q: What are the Inherent powers of captains and masters?
vessels that navigate the high ships engaged exclusively in
seas or ships of large the coastwise commerce A:
dimensions and importance,
although they be engaged in 1. Appoint crew in the absence of ship agent;
coastwise trading 2. Command the crew and direct the vessel to its port
The chiefs or commanders of ships of destination;
3. Impose correctional punishment on those who,
Q: What are the triple characteristics of a captain’s position? while on board vessel, fail to comply with his orders
or are wanting in discipline;
A: 4. Make contracts for the charter of vessel in the
1. As a general agent of the shipowner absence of ship agent.
2. As technical director of the vessel 5. Supply, equip, and provision the vessel; and
3. As representative of the government of the country 6. Order repair of vessel to enable it to continue its
under whose flag he navigates voyage. (Art. 610)

Art. 610. The following powers are inherent in the position of Art. 611. In order to comply with the obligations mentioned
captain or master of a vessel: in the foregoing article, and when he has no funds and does

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
not expect to receive any from the agent, the captain shall atmosphere, the prevailing winds, the course sailed,
procure the same in the successive order stated below: the rigging carried, the horsepower of the engines,
the distance covered, the maneuvers executed, and
1. By requesting said funds of the consignees of the other incidents of navigation. He shall also enter the
vessel or the correspondents of the ship agent. damage suffered by the vessel in her hull engines,
2. By applying to the consignees of the cargo or to the rigging, and tackle, no matter what is its cause, as
persons interested therein. well as the imperfections and averages of the cargo,
3. By drawing on the ship agent. and the effects and consequence of the jettison,
4. By borrowing the amount required by means of a should there be any; and in cases of grave resolutions
bottomry loan. which require the advice or a meeting of the officers
5. By selling a sufficient amount of the cargo to cover of the vessel, or even of the passengers and crew, he
the amount absolutely necessary to repair the vessel shall record the decision adopted. For the
and to equip her to pursue the voyage. informations indicated he shall make use of the
binnacle book, and of the steam or engine book kept
In the two last cases he must apply to the judicial authority by the engineer.
of the port, if in the Philippines and to the Filipino consul, if b. In the second book, called the "accounting book", he
in a foreign country; and where there should be none, to the shall enter all the amounts collected and paid for the
local authority, proceeding in accordance with the account of the vessel, entering specifically article by
prescriptions of Article 583, and with the provisions of the article, the sources of the collection, and the
law of civil procedure. amounts invested in provisions, repairs, acquisition
of rigging or goods, fuel, outfits, wages, and all other
SOURCES OF FUNDS expenses. He shall furthermore enter therein a list of
all the members of the crew, stating their domiciles,
Q: What are the sources of funds to comply with the their wages and salaries, and the amounts they may
inherent powers of the captain (in successive order)? have received on accounts, either directly or by
delivery to their families.
A: c. In the third book, called "freight book," he shall
record the entry and exit of all the goods, stating
1. From the consignee of the vessel; their marks and packages, names of the shippers and
2. From the consignee of the cargo; of the consignees, ports of loading and unloading,
3. By drawing on the ship agent; and the freight earned. In the same book he shall
4. By a loan on bottomry; record the names and places of sailing of the
5. By sale of part of the cargo. (Art. 611) passengers and the number of packages of which
their baggage consists, and the price of the passage.
Art. 612. The following duties are inherent in the office of 4. To make, before receiving the freight, with the
captain: officers of the crew, and the two experts, if required
1. To have on board before starting on a voyage a by the shippers and passengers, an examination of
detailed inventory of the hull, engines, rigging, the vessel, in order to ascertain whether she is
tackle, stores, and other equipments of the vessel; watertight, and whether the rigging and engines are
the navigation certificate; the roll of the persons who in good condition; and if she has the equipment
make up the crew of the vessel, and the contracts required for good navigation, preserving a certificate
entered into with the crew; the list of passengers; the of the memorandum of this inspection, signed by all
health certificate; the certificate of the registry the persons who may have taken part therein, under
proving the ownership of the vessel; and all the their liability.
obligations which encumber the same up to that d. The experts shall be appointed one by the captain of
date; the charters or authenticated copies thereof; the vessel and the other one by the persons who
the invoices or manifest of the cargo, and the request the examination, and in case of
instrument of the expert visit or inspection, should it disagreement a third shall be appointed by the
have been made at the port of departure. marine authority of the port.
2. To have a copy of this Code on board. 5. To remain constantly on board the vessel with the
3. To have three folioed and stamped books, placing at crew during the time the freight is taken on board
the beginning of each one a note of the number of and carefully watch the stowage thereof; not to
folios it contains, signed by the marine official, and in consent to any merchandise or goods of a dangerous
his absence by the competent authority. character to be taken on, such as inflammable or
explosive substances, without the precautions which
a. In the first book, which shall be called "log book," he are recommended for their packing, management
shall enter every day the condition of the and isolation; not to permit that any freight be

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
carried on deck which by reason of its disposition, 13. To observe the rules on the situation of lights and
volume, or weight makes the work of the sailors diffi- evolutions to prevent collisions.
cult, and which might endanger the safety of the 14. To remain on board in case of danger to the vessel,
vessel; and if, on account of the nature of the until all hope to save her is lost, and before
merchandise, the special character of the shipment, abandoning her to hear the officers of the crew,
and principally the favorable season it takes place, he abiding by the decision of the majority; and if he
allows merchandise to be carried on deck, he must should have to take a boat he shall take with him,
hear the opinion of the officers of the vessel, and before anything else, the books and papers, and then
have the consent of the shippers and of the agent. the articles of most value, being obliged to prove in
6. To demand a pilot at the expense of the vessel case of the loss of the books and papers that he did
whenever required by navigation, and principally all he could to save them.
when a port, canal, or river, or a roadstead or 15. In case of wreck he shall make the proper protest in
anchoring place is to be entered with which neither due form at the first port reached, before the
he, the officers nor the crew are acquainted. competent authority or Filipino consul, within
7. To be on deck at the time of sighting land and to take twenty-four hours, stating therein all the incidents of
command on entering and leaving ports, canals, the wreck, in accordance with case 8 of this article.
roadsteads, and rivers, unless there is a pilot on 16. To comply with the obligations imposed by the laws
board discharging his duties. He shall not spend the and rules of navigation, customs, health, and others.
night away from the vessel except for serious causes
or by reason of official business. NOTE: Although the duties in Art. 612 are inherent in the
8. To present himself, when making a port in distress, to captain, the civil liability arising from the non-fulfillment
the maritime authority if in the Philippines and to the thereof is not limited to the captain, since while the captain is
Filipino consul if in a foreign country, before twenty- liable to the shipagent, the shipagent is liable to third persons
four hours have elapsed, and make a statement of (Art. 618).
the name, registry, and port of departure of the
vessel, of its cargo, and reason of arrival, which INHERENT DUTIES OF CAPTAIN
declaration shall be vised by the authority of by the
consul if after examining the same it is found to be Q: What are the duties of a captain or master?
acceptable, giving the captain the proper certificate
in order to show his arrival under stress and the A:
reasons therefore. In the absence of marine officials
or of the consul, the declaration must be made 1. Bring on board the proper certificate and documents
before the local authority. and a copy of the Code of Commerce;
9. To take the steps necessary before the competent 2. Keep a Log Book, Accounting Book and Freight Book;
authority in order to enter in the certificate of the 3. Examine the ship before the voyage;
vessel in the registry of the vessels, the obligations 4. Stay on board during the loading and unloading of
which he may contract in accordance with Article the cargo;
583. 5. Be on deck while leaving or entering the port;
10. To put in a safe place and keep all the papers and 6. Protest arrivals under stress and in case of
belongings of any members of the crew who might shipwreck;
die on the vessel, drawing up a detailed inventory, in 7. Follow instructions of and render an accounting to
the presence of passengers as witnesses, and, in their the ship agent;
absence, of members of the crew. 8. Leave the vessel last in case of wreck;
11. To conduct himself according to the rules and 9. Hold in custody properties left by deceased
precepts contained in the instructions of the agent, passengers and crew members;
being liable for all that he may do in violation 10. Comply with the requirements of customs, health,
thereof. etc. at the port of arrival;
12. To give an account to the agent from the port where 11. Observe rules to avoid collision;
the vessel arrives, of the reason therefore, taking 12. Demand a pilot while entering or leaving a port. (Art.
advantage of the semaphore, telegraph, mail, etc., 612)
according to the cases; notify him the freight he may
have received, stating the name and domicile of the A ship’s captain must be accorded a reasonable measure of
shippers, freight earned, and amounts borrowed on discretionary authority to decide what the safety of the ship
bottomry bond, advise him of his departure, and give and of its crew and cargo specifically requires on a stipulated
him any information and date which may be of ocean voyage.
interest.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: What is the purpose of the law under this provision?
Maritime Protest
A: It is that in these cases the captain should be prohibited to
Q: What is a maritime protest? make any separate business which will surely produce
something to the prejudice of others.
A: It is a written statement by the master of the vessel,
attested by a proper judicial officer or a notary, to the effect Art. 614. A captain who, having agreed to make a voyage,
that damage suffered by the ship on her voyage was caused fails to fulfill his undertaking, without being prevented by
by storms or other perils of the sea, without any negligence fortuitous event or force majeure, shall indemnify all the
or misconduct on his part. losses which his failure may cause, without prejudice to
criminal penalties which may be proper.
Q: What is the probative value of the logbook?
Q: What is the purpose of the law under this provision?
A: It is a prima facie evidence of the facts stated therein. The
veseel’s logbook is an official record and entries made by a A: The captain cannot be compelled to discharge his duties
person in the person in the performance of a duty required against his will. It is not wise, knowing the too delicate duty
by law are prima facie evidence of facts stated therein. as that of captain of a vessel, to compel him to continue
discharging the duties of a captain against his will; for this
Q: What is the extent of the application of the Tariff and reason, the Code does not impose upon him such exigency,
Customs Laws of the Philippines? but it compels him to indemnify all damages which may
occur, without prejudice to criminal penalties which may be
A: The Tariff and Customs Laws of the Philippines applies proper.
suppletorily, for administrative purposes, regarding the duty
of the Insular Collector of Custom to cause adequate Art. 615. Without the consent of the ship agent, the captain
technical inspection of the hulls, engines, boilers, and other may not have himself substituted by another person; and
mechanical and constructural features of all Philippine should he do so, besides being liable for all the acts of the
vessels. substitute and bound to pay the indemnities mentioned in the
foregoing article, the substitute as well as the captain may be
Q: Discuss the civil liability of the ship agent towards third discharged by the ship agent.
personsn for nun-fulfillment of the inherent duties of the
master of a ship? Q: What is the purpose of the law under this provision?

A: Although the duties of enumerated in Art. 612 of the Code A: The duties of a captain of the vessel is essentially personal
of Commerce are inherent in the master, the civil liability due to the confidence given to him arising from the fact that
arising from the non-fulfillment thereof is not limited to him, he possesses the required technical ability and that he is the
since while the master is responsible to ship agent, the latter, man worthy of the trust of the shipowner.
in turn, is liable to third persons, as clearly provided in Art.
618 of the said Code expressly mentions such duties Art. 616. If the provisions and the fuel of the vessel are
enumerated in Art. 612. consumed before arriving at the port of destination, the
captain shall order, with the consent of the offficers of the
RESPONSIBILITY OF MASTER WHEN THERE ARE PILOTS same, to make the nearest port to get a supply of either, but
if there are persons on board who gave provisions of their
Q: What is the extent of the responsibility of the master of a own, he may compel them to turn over said provisions for
vessel when there are pilots? the common consumption of all persons on board, paying
the price thereof at the same time, or, at the latest, at the
A: Pilots are responsible for full knowledge of the channel first port where the vessel may arrive.
and of the navigation only so far as they can accomplish it
through the officers and crew of the ship and cannot be held Art. 617. The captain may not contract loans on respondentia
responsible for damage when the evidence shows that the secured by the cargo, and should he do so the contract shall
officers and crew of the ship failed to obey their orders. be void.

Art. 613. A captain who navigates for freight in common or Neither may he borrow money on bottomry for his own
on shares may not make any separate transaction for his own transactions, except on the portion of the vessel he owns,
account, and should he do so the profits shall belong to the provided no money has been previously borrowed on the
other persons interested, and the losses shall be borne by him whole vessel, and provided there does not exist any other
alone. kind of lien or obligation chargeable against the vessel. When

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
he is permitted to do so, he must necessarily state what NOTE: Art. 618 provides for the direct responsibility of the
interest he has in the vessel. shipowner and shipagent to third persons; the captain shall
be civilly liable to the ship agent and the latter is the one
In case of violation of this article the principal, interest, and liable to third persons. This article applies to:
costs shall be charged to the private account of the captain,
and the ship agent may furthermore discharge him. a. breaches of contract and
b. tortious negligence of the captain
Q: What is the reason of the law under this provision?
Q: What is the effect if the vessel is under a charter?
A: The reason is that the vessel is not the property of the
captain, neither does the cargo belong to him. A: But where the vessel is totally chartered for use of a single
party, the ship owner and that party may validly stipulate that
DIRECT CIVIL LIABILITY OF SHIP CAPTAIN the latter shall be exempt from liability for the negligence of
TO SHIP AGENT the captain and crew

Art. 618. The captain shall be civilly liable to the ship agent Q: Is the ship owner liable for crimes and quasi-crimes?
and the latter to the third persons who may have made
contracts with the former - A: It is well and good that the shipowner be not held
criminally liable for such crimes or quasi-crimes. However, he
1. For all the damages suffered by the vessel and its cannot be excused from liability for the damage and harm
cargo by reason of want of skill or negligence on his which, in consequence of those acts, may be suffered by the
rd
part. If a misdemeanor or crime has been 3 parties who contracted with the captain, in his double
committed he shall be liable in accordance with the capacity agent and subordinate of the ship owner himself.
Penal Code.
2. For all the thefts and robberies committed by the Q: What is the reason for imposition of liability on owner for
crew, reserving his right of action against the guilty damages suffered by third persons occasioned by the acts of
parties. the captain?
3. For the losses, fines, and confiscations imposed on
account of violation of the laws and regulations of A: To place the primary liability upon the person who has
customs, police, health, and navigation. actual control over the conduct of the voyage and who has
4. For the losses and damages caused by mutinies on the most capital embarked in the venture, namely, the owner
board the vessel, or by reason of faults committed of the ship, leaving him to obtain recourse, from other
by the crew in the service and defense of the same, individuals who have been drawn into the venture as
if he does not prove that he made full use of his shippers. The shippers and passengers in making contracts
authority to prevent or avoid them. with the captain do so through the confidence they have in
5. For those arising by reason of a misuse of powers the shipowner who appointed him. They presume that the
and nonfulfillment of the duties which pertain to owner made a most careful investigation before appointing
him in accordance with Articles 610 and 612. him. Besides, they could not obtain complete security,
6. For those arising by reason of his going out of his inasmuch as the shipowner can, whenever he sees fit,
course or taking a course which, in the opinion of appoint another captain instead.
the officers of the vessel, at a meeting attended by
the shippers or supercargoes who may be on board, Q: State the distinction between liability for lawful and
he should not have taken without sufficient cause. unlawful acts?

No exception whatsoever shall exempt him from A: The lawful acts and obligations of the captain beneficial to
his obligation. the vessel may be enforced as against the agent/owner for
the reason that such obligations arise from the contract of
7. For those arising by reason of his voluntarily agency (provided that the captain does not exceed his
entering a port other than his destination, with the authority). On the other hand, as to any liability incurred by
exception of the cases or without the formalities the captain through his unlawful acts, the ship agent is simply
referred to in Article 612. subsidiarily liable.
8. For those arising by reason of the nonobservance of
the provisions contained in the regulations for EXTENT OF LIABILITY OF CAPTAIN
lights and maneuvers for the purpose of preventing
collisions. Q: Explain the extent of the liabilities of captain.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A: The responsibility of the captain extends to every
fraudulent or negligent act of any person in the complement, Art. 1737. The common carrier's duty to observe extra-
in the execution of his employment. ordinary diligence in the vigilance over the goods remains in
full force and effect even when they are temporarily
He does not respond for personal injuries of the crew arising unloaded or stored in transit, unless the shipper or owner
from personal quarrels but he is liable for damages to has made use of the right of stoppage in transitu.
persons or property occasioned by:
Art. 1738. The extra-ordinary liability of the common carrier
a. a maneuvering of the vessel, continues to be operative even during the time the goods
b. for failure to follow international rules and are stored in a warehouse of the carrier at the place of
regulations, destination until the consignee has been advised of the
c. for failure to take the precautions to prevent every arrival of the goods and has reasonable opportunity
damage possible to the vessel which has suffered an thereafter to remove them or otherwise dispose of them.
average
TERMINATION OF CAPTAIN’S LIABILITY
The master liable to the ship agent and the latter towards
rd
3 persons for damages resulting from non-fulfillment of Q: When is the liability of the captain terminated?
the duties
A: It is the delivery of the cargo at the port of discharge that
Although the duties of enumerated in Art. 612 of the Code of terminates the captain’s responsibility as to the cargo. When
Commerce are inherent in the master, the civil liability arising the merchandise is lost on account of sinking of the dock, it
from the non-fulfillment thereof is not limited to him, since had not yet been delivered and consequently, it was under
while the master is responsible to ship agent, the latter, in the responsibility of the captain.
turn, is liable to third persons, as clearly provided in Art. 618
of the said Code expressly mentions such duties enumerated Q: What is the extent of the applicability of Art. 366?
in Art. 612.
A: Art. 366 of the Code of Commerce applies not only to river
Thus, the captain is responsible to the agent, who in turn is and land transportation, but also maritime transportation.
rd
responsible to 3 party prejudiced or damaged for:
Art. 620. The captain shall not be liable for the damage
a. the loss or damage occasioned by the lack of skill, caused to the vessel or to the cargo by reason of force
negligence, fault, either of the captain or the crew majeure, but shall always be so—no agreement to the
b. for theft on board which does not seem to appear to contrary being valid—for those arising through his own
have been committed by a person not belonging to fault.
the craft
c. for administrative for the violation of the customs- Neither shall he be personally liable for the obligation he
revenue laws may have contracted for the repair, equipment, and
d. for improper navigation of the vessel resulting to the provisioning of the vessel, which shall be incurred by the
loss of life, injury to persons, or damage to property. ship agent, unless the former has expressly bound himself
e. For unlawful refusal of the master of a ship to deliver personally or signed a bill of exchange or promissory note in
the cargo to the owner. his name.

Art. 619. The captain shall be liable for the cargo from the NOTE: Amended by Arts. 1733-1763
time it is turned over to him at the dock or afloat alongside
the vessel at the port of loading, until he delivers it on the PRESUMPTION OF NEGLIGENCE ON THE PART OF COMMON
shore or on the discharging wharf at the port of unloading, CARRIERS
unless otherwise expressly agreed on.
Q: When are the common carriers presumed to be
This has been amended by: negligent?

Art. 1736. The extraordinary responsibility of the common A:


carrier lasts from the time the goods are unconditionally
placed in the possession of, and received by the carrier for Art. 1735. In all cases other than those mentioned in Nos. 1,
transportation until the same are delivered, actually or 2, 3, 4, and 5 of the preceding article, if the goods are lost,
constructively, by the carrier to the consignee, or to the destroyed or deteriorated, common carriers are presumed
person who has a right to receive them, without prejudice to have been at fault or to have acted negligently, unless
to the provisions of Art. 1738.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
they prove that they observed extraordinary diligence as
required in Article 1733. 1. Until the time or receipt of the goods if delivered
uncovered or in packages of its freight charges;
Art. 1756. In case of death of or injuries to passengers, 2. During the 24 hours following the delivery of the
common carriers are presumed to have been at fault or to goods if the average or damage can only be
have acted negligently, unless they prove that they ascertained by opening the packages.
observed extraordinary diligence as prescribed in Articles
1733 and 1755 VENUE OF ACTION

FORCE MAJEURE Q: Where should the action be brought?

Q: What is force majeure? A: Irrespective of the amount of damages involved, the action
must be filed in the Court of First Instance since this is an
A: Broadly speaking, it applies to natural accidents, such as admiralty case in which the Justice of the Peace of Court or
those caused by lightning, earthquake, tempests, public the Municipal Court has no jurisdiction.
enemy, etc.
Art. 621. A captain who borrows money on the hull, engine,
§ Winds of 11 miles per hour, although stronger than the rigging, or tackle of the vessel, or who pledges or sells
average 4-6 miles per hour then prevailing in the port merchandise or provisions outside of the cases and without
where the lighter sank on the night in question, cannot the formalities prescribed in this Code, shall be liable for the
be classified as storm. principal, interest, and costs, and shall indemnify for the
§ Accoriding to PAG-ASA, the winds should have a velocity damages he may cause.
from 55 to 74 miles per hour
He who commits fraud in his accounts shall reimburse the
Q: What are the requisites for force majeure be an amount defrauded, and shall be subject to the provisions of
exempting circumstance? the Penal Code.

A: Art. 622. If when on a voyage the captain should receive


news of the appearance of privateers or men of war against
1. That the natural disaster must have been the proximate his flag, he shall be obliged to make the nearest neutral port,
and only cause of the loss inform his agents or shippers, and await an occasion to sail
under convoy or until the danger is over or to receive final
NOTE: The carrier must have provided the vessel in all orders from the ship agent or shippers.
respects adequate for the purpose, with a captain and crew
of required skill and ability, otherwise failing in these NOTE: This has been amended:
particulars, though the loss be occassioned by an act of God,
the carrier may not set up force majeure to protect himself Article 1734 of the New Civil Code provides that: “Common
against what may have arisen due to lack of proper carriers are responsible for the loss, destruction, or
equipment of the boat or lack of proper equipment of the deterioration of the goods, unless the same is due to any of
boat or lack of due skill and diligence by the patron and crew the following causes only:

2. The common carrier must have exercised due diligence (2) Act of the public enemy in war, whether international or
to prevent or minimize loss before, duiring and after the civil;
occurrence of a natural disaster
3. The common carrier must have not negligently incurred Article 1739. “In order that the common carrier may be
delay in the transportation. exempted from responsibility, the natural disaster must
4. The captain must have made a protest before the have been the proximate and only cause of the loss.
competent authority at the first port he touched within However, the common carrier must exercise due diligence
the 24 hours following his arrival, and should have to prevent or minimize loss before, during and after the
ratified it within the same period when he arrived at the occurrence of flood, storm or other natural disaster in order
point of her destination, proceeding immediately with that the common carrier may be exempted from liability for
the proof of the facts without opening the hatches not the loss, destruction, or deterioration of the goods. The
until after this has been done. same duty is incumbent upon the common carrier in case of
an act of the public enemy referred to in Article 1734, No.
Q: When should the claims be made? 2.”

A: LIABILITY OF CAPTAIN IN CASE OF WAR

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: What should the captain do during the voyage?
Q: What is the liability of the captain in case of war?
A: In cases where an unforeseen accident or stress of weather
A: The outbreak of war absolves the ship from its obligation to is alleged as constituting an exemption in favor of the party
carry the cargo to the port absolves the ship from its obligation responsible for the property, it is his duty to prove the
to carry the cargo to the port of destination. However, it was existence of such circumstances, Art. 624 imposes on a captain,
nevertheless liable for the cost of forwarding the cargo by in case he has been wrecked or the cargo of his vessel
another line, if the full freight had been received by the ship at damaged, the duty of making the corresponding protest before
the commencement of the voyage. the proper authority at the first port where the vessel touches
within 24 hours following his arrival.
Art. 623. If he should be attacked by a corsair and after having
tried to avoid the encounter and having resisted the delivery Q: What are the required actions to be taken by any
of the effects of the vessel or of her cargo, they should be Philippine vessel in case of injuries or accidents?
forcibly taken away from him, or he should be obliged to
deliver them, he shall make an entry of that fact in his freight A: The managing owner, agent, or master of such vessel shall
book and shall prove it before the competent authority at the by the first available mail send to the Collector of the district
first port he touches. within which such vessel belongs to or of that which such
accident or damage occurred, a report thereof, stating the
After the force majeure has been proven, he shall be name of the vessel, the port to which she belongs and the place
exempted from liability. where she was, the nature and probable occasion of the
casualty, the number and names of those lost, and the
NOTE: This has been amended by Art. 1732 (2) and Art. 1739 of estimated amount of the loss or damage to the vessel or cargo;
the New Civil Code. and shall furnish such other information as shall be called for.

Art. 624. A captain whose vessel has gone through a Q: What if the managing owner has reason to believe that it
hurricane or who believes that the cargo has suffered has been lost?
damages or averages, shall make a protest thereon before the
competent authority at the first port he touches within the A: He shall promptly send notice in writing to the Collector of
twenty-four hours following his arrival, and shall ratify it her home port giving advice of such loss and the probable
within the same period when he arrives at the place of his occasion therefor, stating the name of the vessel and the
destination, immediately proceeding with the proof of the names of all the persons on board, so far as the same can be
facts, it not being permitted to open the hatches until after ascertained, and shall furnish, upon request of the collector,
this has been done. such additional information shall be required.

The captain shall proceed in the same manner if, the vessel Art. 625. Upon arrival at the port of destination, the captain
having been wrecked, he is saved alone or with part of his shall, under his personal liability, turn over the cargo, without
crew, in which case he shall appear before the nearest any defalcation, to the consignees, and, in a proper case, the
authority, and make a sworn statement of the facts. vessel, rigging, and freights to the agent, after having
obtained the necessary permission from the health and
The authority or the consul abroad shall verify the said facts, customs officers and fulfilled the other formalities required by
receiving sworn statements of the members of the crew and the regulations of the administration.
passengers who may have been saved, and taking such other
steps as may help in arriving at the facts, he shall make a [If, by reason of the absence of the consignee or on account of
statement of the result of the proceedings in the log book and the nonappearance of a legal holder of the invoices, the
in that of the sailing mate, and shall deliver the original captain does not know to whom he is to make the legal
records of the proceedings to the captain, stamped and delivery of the cargo, he shall place it at the disposal of the
folioed, with a memorandum of the folios, which he must proper judge or court or authority, in order that he may
rubricate, for their presentation to the judge or court of the decide with regard to its deposit, preservation, and custody.]
port of destination.
NOTE: The first paragraph has been amended by Arts. 1736-
The statement of the captain shall be believed if it is in 1738, and 1753 of the Civil Code. The second paragraph is
accordance with those of the crew and passengers; if they repealed by the Rules of Court.
disagreed, the latter shall be accepted, unless there is proof to
the contrary. MANIFEST

DUTY OF CAPTAIN DURING VOYAGE Q: What is manifest?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A: All vessels whether private or government owned, including
ships of the Philippines navy, coming from a foreign port, with A: Yes. The imposition of wharfage dues on goods loaded or
the possible exception of war vessels or vessels employed by unloaded at private wharves has been resolved in the
any foreign government, not engaged in the transportation of affirmative by the Court.
merchandise in the way of trade, are required to prepare and
present a manifest to the customs authorities upon arrival at Q: May wharfage dues be collected even though no wharf is
any Philippine port. used?

HARBOR FEES A: Yes, such as when the loading or unloading takes place off-
shore or in midstream by using ligfhters (meaning shipside).
Q: What are harbor fees?
WHARFAGE v. BERTHING CHARGES
A: They are paid for the entrance into or departure from a port
of entry. Q: Distinguish wharfage from berthing charges.

TONNAGE FEES A:

Q: What are tonnage fees? WHARFAGE BERTHING


Assessed against the cargo Assessed against a vessel for
A: They are paid for coming into the Philippines from a foreign mooring or berthing at a
port or for going to a foreign port from the Philippines pier, wharf, bulkhead wharf,
river or channel, marginal
WHARFAGE DUES wharf, or making fast to a
vessel bethed; or coming or
Q: What are wharfage dues? mooring within any slip,
channel, basin, river, or
A: They are dues assessed against the cargo discharged by the canal under the jurisdiction
vessel engaged in foreign trade. of any port of the Philippines
Imposed upon the wharf regardless of the ownership thereof
BERTHING CHARGES
Q: What is the basis for the government’s right to collect
Q: What are berthing charges? berthing charges?

A: They are levied on a vessel coming or mooring within A: It is not planted upon the condition that the pier be publicly
specified places or waters of a port owned. The charge is based on the fact that port facilities
afford benefits to the vessels and the maintenance and
Q: What are the reasons for the charges levied on the vessels development of the port, and the purchase, conditioning, and
and cargoes? replacement of the equipment thereof--all to enable such
vessels to make use of pier of wharfage the concern of the
A: A vessel ordinarily enters a harbor and lays anchor or moors government.
in a port to load, or unload or both. In doing so, the vessel
derives benefit from port facilities provided and maintained by CUSTOMS HAS JURISDICTION OVER SMUGGLING
the government.
Q: Who has jurisdiction over smuggling cases?
A vessel that anchors at Manila Bay to seek protection from a
storm is not charged with wharfage dues by the Bureau of A: It is the Collector of Customs, not the Regional Trial Court.
Customs. It is well-settled that the exclusive jurisdiction over seizure
and forfeiture cases vested in the Collector of Customs
But when a vessel anchors in the Bay and discharges or unloads precludes the RTC from assuming cognizance over such cases.
cargo, wharfage dues are forthwith collected.
Forfeiture proceedings are in the nature of proceedings in rem
Wharfage dues assessment are based on the quantity, weight, and are directed against the res. The fact that private
measure of the cargo received by the importer and/or respondent allegedly has no actually knowledge that the vessel
discharged by such vessel. was used illegally does not render the vessel immune from
forfeiture.
Q: May wharfages be collected even though the government
pier is not used?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: Who has jurisdiction in case a tourist accused of bringing
foreign currency into the country illegally? A: The pilot who was in command and had complete control of
a vessel, not the owner was held liable for an accident which
A: The jurisdiction is vested with the Regional Trial Court judge was solely the result of the mistake of the pilot in not giving
who may order the return to the tourist of the seiezed foreign proper orders, and which did not result from the failure of the
currency. owners to equip the vessel with the most modern and
improved machinery
Q: In case of corporations, partnerships and associations, who
shall suffer the penalties? Art. 628. The sailing mate must provide himself with charts
of the seas on which he will navigate, with the maps and
A: The President, General Manager, or any other official in quadrants or sextants which are in use and necessary for the
charge of the management thereof, as the case may be. If such discharge of his duties, being liable for the accidents which
officer is an alien, in addition to the penalty herein prescribed, may arise by reason of his omission in this matter.
he shall be deported without further proceedings on the part of
the Commissioner of Immigration and Deportation. Art. 629. The sailing mate shall particularly and personally
keep a book folioed and stamped on all its pages,
Art. 626. In order to be a sailing mate, it shall be necessary: denominated “Binnacle Book,” with a memorandum at the
beginning stating the number of folios it contains, signed by
1. To possess the qualifications required by the marine the competent authority, and shall enter therein daily the
or navigation laws or regulations distance and course traveled, the variations of the needle,
2. Not to be disqualified in accordance therewith for the leeway, the direction and force of the wind, the
the discharge of the position. condition of the atmosphere and the sea, the rigging set, the
lattitude and longitude observed, the number of furnaces
Art. 627. The sailing mate, as the second chief of the vessel with fire, the steam pressure, the number of revolutions,
and unless the ship agent does not order otherwise, shall take and under the name “Incidents,” the maneuvers made, the
the place of the captain in case of absence, sickness or death, meetings with other vessels, and all the particular events
and shall then assume all his powers, obligations and and accidents which may occur during the navigation
liabilities.
Art. 630. In order to change the course and to take the one
SAILING MATE most convenient for the good voyage of the vessel, the
sailing mate shall come to an agreement with the captain.
Q: Who is a Sailing Mate/First Mate? Should the latter oppose, the sailing mate shall explain to
him his proper observations in the presence of other sea
A: He is the second chief of the vessel who takes the place of officers. Should the captain still insist in his negative
the captain in case of absence, sickness, or death and shall decision, the sailing mate shall make the proper protest,
assume all of his duties, powers and responsibilities. (Art. signed by him and by other one of the officers in the Log
627). book, and shall obey the captain who alone shall be liable
for the consequences of his decision.
Q: What are the duties of a sailing mate?
Q: How is the conflict between the captain and the sailing
A: mate is solved?

a. Provide himself with maps and charts with A: The captain may at conserve all times his authority on
astronomical tables necessary for the discharge of board, and the sailing mate may evade the consequences
his duties; which the orders may bring, by making the proper protest.
b. Keep the Binnacle Book;
c. Change the course of the voyage on consultation Art. 631. The sailing mate shall be liable for all the damage
with the captain and the officers of the boat, caused to the vessel and cargo by reason of his negligence
following the decision of the captain in case of or want of skill, without prejudice to the criminal liability
disagreement; which may arise, if a felony or misdemeanor has been
d. Responsible for all the damages caused to the vessel committed.
and the cargo by reason of his negligence. (Arts. 628
- 631) Q: What is the liability of the sailing mate or pilot?

LIABILITY OF PILOTS A: The damage caused on account of carelessness and want


of skill of the sailing mate shall always be imputable to him;
Q: When are pilots liable and not the shipowner? however, a pilot is responsible for a full knowledge of the

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
channel and of navigation only so far as he can accomplish it 5. Keep an Engine Book;
through the officers and crew of the ship and cannot be held 6. Supervise all personnel maintaining the engine. (Art.
responsible for damage when the evidence shows that the 632)
officers and crew of the ship failed to obey his orders.
The Revised Administrative Code and Tariff and Customs
Art. 632. Code of the Philippines now govern the qualifications and
licensing of engineers and other officers of the vessel in the
SECOND MATE Philippines.

Q: Who is a second mate? Art. 633. The second mate shall take the command of the
vessel in case of the inability or disqualification of the
A: He takes command of the vessel in case of the inability or captain and sailing mate, assuming therefore their powers
disqualification of the captain and the sailing mate, assuming and responsibilities.
in such case their powers and responsibilities. Thus, he is
third in command. Art. 634. The captain may make up his crew with the number
he may consider advisable, and in the absence of Filipino
Q: What are the duties of a second mate? sailors he may ship foreigners residing in the country, the
number thereof not to exceed one-fifth of the total crew. If in
A: foreign ports the captain should not find a sufficient number
of Filipino sailors, he may make up the crew with foreigners,
1. Preserve the hull and rigging of the vessel; with the consent of the consul or marine authorities.
2. Arrange well the cargo;
3. Discipline the crew; The agreements which the captain may make with the
4. Assign work to crew members; members of the crew and others who go to make up the
5. Inventory the rigging and equipment of the vessel, if complement of the vessels, to which reference is made in
laid up. (Art. 632) Article 612 (obligations inherent in the office of captain) must
be reduced to writing in the account book without the
ENGINEERS intervention of a notary public or clerk of court, signed by the
parties thereto, and vised by the marine authority if they are
Q: Who are engineers? executed in Filipino territory, or by the consuls or consular
agents of the Philippines if executed abroad, stating therein
A: They are officers of the vessel but have no authority except all the obligations which each one contracts and all the rights
in matters referring to the motor apparatus. When two or they acquire, said authorities taking care that these
more are hired, one of them shall be the chief engineer. obligations and rights are recorded in a concise and clear
manner, which will not give rise to doubts or claims.
They are officers of the vessel and they can give orders and
intervene only in cases pertaining to the engine motor The captain shall take care to read to them the articles of this
apparatus of the vessel. Code which concern them, stating in the said document that
they were read.
Where the chief engineer on a steamer plying the Philippine
waters, caused the manhole plate of the vessel’s boiler to be If the book includes the requisites prescribed in Article 612,
removed under his supervision was performed in the manner and there should not appear any signs of alterations in its
customary upon such vessels and with reasonable care, he is entries, it shall be admitted as evidence in questions which
not guilty of reckless negligence for the death of a man who may arise between the captain and the crew with regard to
was scalded by water which splashed from the boiler through the agreements contained therein and the amounts paid on
the said manhole. account of the same.

Q: What are the duties of an engineer? Every member of the crew may demand of the captain a copy,
signed by the latter, of the agreement and of the liquidation
A: of his wages, as they appear in the book.
1. In charge of the motor apparatus, spare parts, and
other instruments pertaining to the engines; NOTE: The contract with a seaman has the nature of a lease of
2. Keep the engines and boilers in good condition; service, in virtue of which one person binds himself to perform
3. Not to change or repair the engine without authority or to do the services or works for which he has signed himself
of the captain; in the vessel in consideration of the compensation stipulated
4. Inform the captain of any damage to the motor
apparatus; Q: What is a Crew?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A captain who, knowing that a sailor is in the service of
A: It is the aggregate of seamen who man a ship, or the ship’s another vessel, should have made a new agreement with him,
company, including the master of the officers, or it may mean without having requested the permission referred to in the
the ship’s company, exclusive of the master, or exclusive of foregoing paragraphs, shall be personally liable to the captain
the master and all other officers. of the vessel to which the sailor first belonged for that part of
the indemnity, referred to in the third paragraph of this
He is hired by the ship agent, where he is present and in his article, which the sailor may not be able to pay.
absence, the captain hires them, preferring Filipinos, and in
their absence, he may take in foreigners, but not exceeding Art. 636. Should there be no fixed period for which a sailor
1/5 of the crew. (Art. 634). has been contracted, he cannot be discharged until the end of
the return voyage to the port where he enlisted.
CONTRACTS OF THE CREW
Art. 637. Neither may the captain discharge a sailor during
Q: What are the kinds of contract of the crew? the time of his contract except for just cause, the following
being considered as such:
A:
1. The perpetration of a crime which disturbs order on
1. For each voyage- the compensation is fixed to a the vessel.
certain sum for the entire voyage whatever may be 2. Repeated insubordination, want of discipline, or non-
its duration fulfillment of the service.
2. By the month- compensation is fixed to a certain 3. Incapacity and repeated negligence in the fulfillment
sum of each month, during so many months the of the service which he should render.
voyage may take. 4. Habitual drunkenness.
3. On shares- the seaman is promised to be paid a part 5. Any occurrence which incapacitates the sailor to
of the resultant profits of the voyage perform the work entrusted to him, with the
4. On freight- compensation is determined by a part of exception of that provided in Article 644.
the profits to be obtained from the obtained from
the transportation of passengers and cargo. Art. 644. A seaman who falls sick
shall not lose his right to wages during the
CITIZENSHIP REQUIREMENT voyage, unless the sickness is the result of
his own fault. At any rate, the costs of the
Q: State the citizenship requirement of personnel on board attendance and cure shall be defrayed
vessels. from the common funds, in the form of a
loan.
A: No Philippine vessel operating in the coastwise trade or on
high seas shall employ any officer or any member of the crew If the sickness should comee from
who is not a citizen of the Philippines. an injury received in the service or defense
of the vessel, the seaman shall be attended
Art. 635. A sailor who has been contracted to serve on a and cured at the expense of the common
vessel cannot rescind his contract nor fail to comply therewith funds deducting, before anything else,
except by reason of a legitimate impediment which may have from the proceeds of the freightage the
occurred. cost of the attendance and cure.

Neither can he pass from the service of one vessel to another 6. Desertion.
without obtaining the written consent of the vessel on which
he may be. The captain may, however, before setting out on a voyage
and without giving any reason whatsoever, refuse to permit a
If, without obtaining said permission, the sailor who has sailor whom he may have engaged to go on board, and may
signed for one vessel should sign for another one, the second leave him on land, in which case his wages have to be paid as
contract shall be void, and the captain may choose between if he had rendered services.
forcing him to fulfill the service to which he first bound
himself or look for a person to substitute him at his expense. The indemnity shall be paid from the funds of the vessel if the
Said sailor shall furthermore lose the wages earned on his first captain should have acted for reasons of prudence and in the
contract to the benefit of the vessel for which he may have interest of the safety and good service of the vessel. Should
signed. this not be the case, it shall be paid by the captain personally.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
After the voyage has begun, and during the same and until month, the indemnity shall be fixed at fifteen days,
the conclusion thereof, the captain may not abandon any discounting in all cases the sums advanced.
member of his crew on land or on the sea, unless, as the 3. If the revocation should take place after the vessel
accused of a crime, his imprisonment and delivery to the has put to sea, the sailors engaged for a fixed amount
competent authority in the first port touched should be for the voyage shall receive the entire salary which
proper, which shall be obligatory to the captain. may have been offered them if the voyage had
terminated; and those engaged by the month shall
JUST CAUSES FOR THE DISCHARGE OF SEAMAN DURING receive the amount corresponding to the time they
CONTRACT SUBSISTENCE might have been on board and to the time they may
require to arrive at the port of destination, the
Q: What are the just Causes for the Discharge of Seaman captain being obliged, furthermore, to pay said
While Contract Subsists? sailors in both cases the passage to the said port or to
the port of sailing of the vessel, as may be convenient
A: for them.
4. If the ship agent or the charterers of the vessel
1. Perpetration of a crime; should give it a destination different from that fixed
2. Repeated insubordination, want of discipline; in the agreement, and the members of the crew
3. Repeated incapacity and negligence; should not agree thereto, they shall be given by way
4. Habitual drunkenness; of indemnity half the amount fixed in the first case,
5. Physical incapacity; in addition to what may be due them for the part of
6. Desertion. (Art. 637) the monthly wages corresponding to the days which
may have elapsed from the date of their agreements.
PRODUCTION OF PHILIPPINE CREW
If they accept the change, and the voyage, on account of
The master of a Philippine vessel returning from abroad shall greater distance or of other reasons, should give rise to an
produce the entire crew listed in the vessel’s shipping articles; increase of wages, the latter shall be adjusted privately, or
and if any member be missing, the master shall produce proof through friendly adjusters in case of disagreement. Even if
satisfactory to the Collector that such member has died, the voyage should be shortened to a nearer point, this shall
absconded, has been forcibly impressed into other service, or not give rise to a reduction in the wages agreed upon.
has been discharged; and in case of discharge in a foreign
country, he shall produce a certificate from the consul, vice- Should the revocation or change of the voyage originate from
consul or consular agent of the Philippines there residing, the shippers or charterers, the ship agent shall have a right to
showing that such discharge was effected with the consent of demand of them the indemnity which may be justly due.
the representative of the Philippines aforesaid.
Art. 639. Should the revocation of the voyage arise from a
Art. 638. If, after the crew has been engaged, the voyage is just cause independent of the will of the ship agent and the
revoked by the will of the ship agent or of the charterers, charterers, and the vessel should not have left the port, the
before or after the vessel has put to sea, or if the vessel is for members of the crew shall no other right than to collect the
the same reason given a different destination from that fixed wages earned up to the day the revocation was made.
in the agreement with the crew, the latter shall be
indemnified on account of the rescission of the contract, Art. 640. The following shall be just causes for the revocation
according to the following cases: of the voyage:

1. If the revocation of the voyage should be decided 1. A declaration of war or interdiction of commerce
before departure of the vessel from the port, each with the power to whose territory the vessel was
sailor engaged shall be given one month's salary, bound.
besides what may be due him, in accordance with his 2. The blockade of the port of its destination or the
contract, for the services rendered to the vessel up to breaking out of an epidemic after the agreement.
the date of the revocation. 3. The prohibition to receive in said port the goods
2. If the agreement should have been for a fixed which make up the cargo of the vessel.
amount for the whole voyage, what may be due for 4. The detention or embargo of the same by order of
said month and days shall be determined in the government, or for any other reason
proportion to the approximate duration of the independent of the will of the agent.
voyage, in the judgment of the experts, in the 5. The inability of the vessel to navigate.
manner established by the law of civil procedure; and
if the proposed voyage should be of such short
duration that it is calculated at approximately one

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
INTERDICTION OF COMMERCE
Art. 642. If the crew has been engaged on shares it shall not
Q: What is interdiction of commerce? be entitled, by reason of the revocation, delay, or greater
extension of the voyage, to anything but the proportionate
A: Also known as interdiction of commercial intercourse part of the indemnity which may be paid to the common
between two countries. It is a governmental prohibition of funds by the persons responsible for said occurrences.
commercial intercourse, intended to bring about an entire
cessation for the time being of all trade whatever. Q: What is the reason for the law under this provision?

BLOCKADE A: The crew and the shipowner form a sort of partnership in


which one shall share on the profits or losses of the business.
Q: What is blockade?
Art. 643. If the vessel and her cargo should be totally lost by
A: It is a sort of circumvallation around a place by which all reason of capture or shipwreck, all rights shall be
foreign connection and correspondence is, as far as human extinguished, both as regards the right of the crew to demand
power can affect it, to be cut off. The actual investment of a any wages and as regards the right of the ship agent to
port or place by hostile force fully competent, under ordinary recover the advances made.
circumstances, to cut off all communication therewith, so
arranged or disposed as to be able to apply its force to every If a portion of the vessel or of the cargo, or of both, should be
point of practicable access or approach to the port or place so saved, the crew engaged on wages, including the captain,
invested. shall retain their rights on the salvage, as far as possible, on
the remainder of the vessel as well as on the value of the
Art. 641. If, after a voyage has been begun, and any of the freightage or the cargo saved; but sailors who are engaged on
first three causes mentioned in the foregoing article should shares shall have no right on the salvage of the hull, but only
occur, the sailors shall be paid at the port which the captain on the portion of the freightage saved. (If they should have
may deem advisable to make for the benefit of the vessel and worked to recover the remainder of the shipwrecked vessel,
cargo, according to the time they may have served thereon; they shall be given from the amount of the salvage an award
but if the vessel is to continue its voyage, the captain and the in proportion to the efforts made and to the risks
crew may mutually demand the enforcement of the contract. encountered in order to accomplish the salvage.)

In case of the occurrence of the fourth cause, the crew shall TOTAL LOSS OF VESSEL
continue to be paid half wages, if the agreement is by month;
but if the detention should exceed three months, the contract Q: What is the effect of the total loss of the vessel?
shall be rescinded and the crew shall be paid what they
should have earned according to the contact, as if the voyage A: The total loss of the vessel, by reason of capture or wreck,
had been made. And if the agreement should be for a fixed extinguishes all contractual relations between the seamen and
sum for the voyage, the contract must be complied with in the the owner of the vessel or the person who contracted for their
terms agreed upon. services. The seamen in such case have not even the right to
demand the payment of the wages earned as in the case of
In the fifth case, the crew shall have no other right than to inability of the vessel to navigate; and likewise, the agent or
collect the wages earned; but if the disability of the vessel charterer who contracted for the services of the seamen is not
should have been caused by the negligence or lack of skill of entitled to the recovery of the advances made by him.
the captain, engineer, or sailing mate, they shall indemnify
the crew for the damages suffered, always without prejudice EFFECT OF WORKMEN’S COMPENSATION ACT
to the criminal liability which may be proper.
Q: Does total loss of the vessel and her cargo have any effect
EARNINGS OF CREW on the Workmen’s Compensation Act (Act No. 3428)?

Q: To what extent the crew is entitled for their earnings in A: No. Thus, if an accident is compensable under the Act No.
case of inability of the vessel to navigate? 3428, it must be compensated even the when workman’s right
is not recognized by other provisions of the Code of Commerce.
A: In case of the inability of the vessel to navigate, the crew is The reason behind this is that the Act No. 3428 was enacted by
only entitled to recover the wages earned. The law does not the legislature in abrogation of other existing laws
compel the owner or the charterer of the vessel who has
entered into contract for the services of the seamen to provide Art. 644. A sailor who falls sick shall not lose his right to
for the maintenance of the latter and their expenses necessary wages during the voyage, unless his sickness is the result of
to the port of sailing of the vessel. his own fault. At any rate, the costs of medical attendance

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
and treatment shall be defrayed from the common funds, in ture of the vessel from the port, the heirs shall not be entitled
the form of a loan. to claim anything.
If death occurred in the defense of the vessel, the sailor shall
If the sickness should be caused by an injury received in the be considered as living, and his heirs shall be paid, at the end
service or defense of the vessel, the sailor shall be attended of the voyage, the full amount of wages or the entire part of
and treated at the expense of the common funds, deducting, the profits which may be due him as others of his class.
before anything else, from the proceeds of the freightage, the
cost of the attendance and treatment. The sailor shall likewise be considered as present if he was
captured while defending the vessel, in order to enjoy the
When an employee suffers personal injury from any accident benefits as the rest; but should he have been captured on
arising out of or in the course of his employment, or contracts account of carelessness or other accident not related to the
tuberculosis or other illness, directly caused by such service, he shall only receive the wages due up to the day of
employment or either aggravated by or the result of the nature his capture.
of such employment.
RULES IN CASE OF DEATH OF A SEAMAN
The right to compensation shall not be defeated or impaired on
the ground that death, injury or disease was due to the Q: Discuss the Rules in case of Death of a Seaman.
negligence of a fellow servant or employee, without prejudice
to the right of the employer to proceed against the negligent A: The seaman’s heirs are entitled to payment as follows:
employee.
1. If death is natural:
Q: When is compensation not allowed?
a. compensation up to time of death if engaged on
A: Compensation shall not be allowed for injuries caused: wage
b. if by voyage - half of amount if death occurs on
a. By the voluntary intent of the employee to inflict such voyage out; and full, if on voyage in
injury upon himself or another person. c. if by shares - none, if before departure; full, if
b. By drunkenness on the part of the laborer who had after departure
accident;
c. By notorious negligence of the same 2. if death is due to defense of vessel - full payment;
3. if captured in defense of vessel - full payment;
Q: What is the effect of Workmen’s Compensation Act on the 4. if captured due to carelessness - wages up to the
provisions of the Code of Commerce? date of the capture. (Art. 645)

A: If an accident is compensable under the Act No. 3428, it Art. 646. The vessel with her engines, rigging, equipment, and
must be compensated even the when workman’s right is not freightage shall be liable for the wages earned by the crew
recognized by other provisions of the Code of Commerce. The engaged per month or for the trip, the liquidation and
reason behind this is that the Act No. 3428 was enacted by the payment to take place between one voyage and the other.
legislature in abrogation of other existing laws. After a new voyage has been undertaken, credits of such kind
pertaining to the preceding voyage shall lose the preference.
Art. 645. If a sailor should die during the voyage, his heirs
shall be given the wages earned and not received, according LIENS IN FAVOR OF THE CREW SUPERIOR TO SUBSEQUENT
to his contract and the cause of his death, namely --- MORTGAGE OR SALE OF THE VESSEL

If he died a natural death and was engaged on wages, that This article creates a lien upon a ship in favor of the crew
which may have been earned up to the date of his death shall engaged in the operation of the same and this lien in favor of
be paid. the crew takes certain preference in accordance with Art. 580.

If the contract was for a fixed sum for the whole voyage, half The crew, therefore, for their wages, etc, for the last voyage
the amount earned shall be paid if the sailor died on the have prior lien upon ship, to the lien created in the present
voyage out, and the whole amount if he died on the return case by the chattel mortgage.
voyage.
Art. 647. The officers and the crew of the vessel shall be
And if the contract was on shares and the death occurred exempted from all obligations contracted, if they deem if
after the voyage was begun, the heirs shall be paid the entire proper, in the following cases:
portion due the sailor; but if the latter died before the depar-

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
1. If, before the beginning of the voyage, the captain brought back on the return voyage of the ship, and comes
attempts to change it, or there occurs a naval war home with it
with the power to which the vessel was destined.
2. If a disease should break out and be officially Art. 650. All the provisions contained in the second section of
declared epidemic in the port of destination. Title III, Book II, with regard to qualifications, manner of
3. If the vessel should change owner or captain. making contracts, and liabilities of factors shall be applicable
4. Supercargoes to supercargoes.

RESCISSION NOTE: Now governed by the provisions on agency

Q: When is rescission allowed? Art. 2270. The following laws and regulations are hereby
repealed:
A: It is understood that rescission in any of the foregoing cases
is allowable if the voyage has not yet started; after the voyage (1) Those parts and provisions of the Civil Code of 1889
has commenced, the contract can no longer be rescinded. which are in force on the date when this new Civil
Code becomes effective:
Art. 648. By the complement of a vessel shall be understood (2) The provisions of the Code of Commerce governing
all the persons embarked, from the captain to the cabin boy, sales, partnership, agency, loan, deposit and
necessary for the management, maneuvers, and service and guaranty;
therefore, in the complement shall be included the crew, (3) The provisions of the Code of Civil Procedure on
sailing mates, engineers, stockers, and others working on prescription as far as inconsistent with this Code; and
board not having specific names; but it shall not include the (4) All laws, Acts, parts of Acts, rules of court, executive
passengers or the persons whom the vessel is only orders, and administrative regulations which are
transporting. inconsistent with this Code. (n)

COMPLEMENT OF THE VESSEL Art. 651. Supercargoes cannot, without special authorization
or agreement, make any transaction for their own account
Q: Who constitutes the Complement of the Vessel? during the voyage, with the exception of the ventures which,
in accordance with the custom of the port of destination, they
A: All persons on board, from the captain to the cabin boy, are permitted to do.
necessary for the management, maneuvers, and service, thus
including the crew, the sailing mates, engineers, stokers and Neither shall they be permitted to invest in the return trip
other employees on board not having specific designations. It more than the profits from the ventures, unless there is a spe-
does not include the passengers or the persons whom the cial authorization therefor from the principals.
vessel is transporting.
Q: May supercargoes make any transaction of their own
Art. 649. Supercargoes shall discharge on board the vessel account in the outgoing voyage?
the administrative duties which the agent or shippers may
have assigned them; they shall keep an account and record of A: As a rule, supercargoes cannot make transactions for their
their transactions in a book which shall have the same own account during the voyage.
conditions and requisites as required for the accounting book
of the captain, and shall respect the latter in his duties as Q: What are the exceptions?
chief of the vessel.
A:
The powers and liabilities of the captain shall cease, when
there is a supercargo, with regard to that part of the adminis- 1. If there is authorization or expressed agreement
tration legitimately conferred upon the latter, but shall permitting supercargoes to make transactions for their
continue in force for all acts which are inseparable from his own account
authority and office. 2. If they make such kind of transactions involving
ventures which in accordance with the custom of the
SUPERCARGO port of destination they are permitted to do

Q: What is a Supercargo? Q: May supercargoes invest in the return voyage?

A: An agent of the owner of the goods shipped as cargo on a A: Yes, they can invest in the return voyage but not more than
vessel, who has charge of the cargo on board, sells the same to the profit of the venture, unless there is an expressed
the best advantage in the foreign markets, buys cargo to be authorization from the principal.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law

TITLE III REQUISITES FOR A CHARTER PARTY


SPECIAL CONTRACTS OF MARITIME COMMERCE
Q: What are the requisites for a charter party?
Q: What are the special contracts of maritime commerce?
A:
A:
(a) Consent of the contracting parties;
1. Charter parties, bills of lading, and contracts of (b) Existence of the vessel which will be placed at the
transportation of passengers on sea voyages; disposition of the shipper for the object of
2. Loans on bottomry and respondentia; and transportation;
3. Marine insurance. (c) The freight;
(d) Requisites mentioned in Art. 652.
Section 1
CHARTER PARTIES Yet the omission of some of the requisites in Art. 652 which
may not give rise to the doubts as to the nature and scope of
I. Forms and Effects of Charter Parties the contract will not invalidate the charter party.

Art. 652 A charter party must be drawn in duplicate and CLASSIFICATION OF CHARTER PARTY
signed by the contracting parties, and when either does not
know how or is not able to do so, by two witnesses at his Q: What are the classes of charter party?
request.
A:
The charter party shall include, besides the condition
stipulated, the following circumstances: 1. As to capacity of the vessel:

1. The kind, name, and tonnage of the vessel. a. Total-when the whole vessel is chartered;
2. Her flag and port or registry. b. Partial-when only a portion of it.
3. The name, surname, and domicile of the captain.
4. The name, surname, and domicile of the agent, if 2. As regards the time:
the latter should make the charter party.
5. The name, surname, and domicile of the charterer, a. It may last up to a fixed day or for a determined
and if he states that he is acting by commission, number of days or months; or
that of the person for whose account he makes the b. For a voyage, either an outward or return or a
contract. round trip.
6. The port of loading and unloading.
7. The capacity, number of tons or weight, or 3. As to the freight-it is entered for while voyage or so
measure which they respectively bind themselves much per month during the period of navigation:
to load and transport, or whether it is the total
cargo. a. For a single amount for the whole cargo; or
8. The freightage to be paid, stating whether it is b. So much ton or volume.
to be a fixed amount for the voyage or so much per
month, or for the space to be occupied, or for the Q: Can the captain enter into a charter contract?
weight or measure of the goods of which the cargo
consists, or in any other manner whatsoever agreed A: YES provided that he is authorized.
upon.
9. The amount of primage to be paid the captain. Q: Can the charterer enter into a sub-charter contract?
10. The days agreed upon for loading and unloading.
11. The lay days and extra lay days to be allowed A: YES provided it is not prohibited. This is just like the rule in
and the rate of demurrage. lease.

Q: What is a charter party? KINDS OF CHARTER PARTY

A: It is a contract by virtue of which the owner or the agent of Q: What are the kinds of charter party?
the vessel leases for a certain price of the whole or a portion
of the vessel for the transportation of goods or persons from A:
one port to another.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
1. Bareboat or demise means the whole vessel is lend to
the charterer which transfers to him its entire command PRIMAGE
and possession and consequent control over its
navigation, including the master and crew who are his Q: What is a primage?
servants. The charterer is treated as owner pro hac vice
of the vessel. In such case, a common carrier becomes a A: It is an amount stipulated in the charter party to be paid by
private carrier. the charter or shipper as compensation to the captain or
master for his particular care of the goods.
Charterer means the vessel assumes all responsibilities of
navigation and provides his own people. The law leaves to the discretion of the contracting parties to
provide for the conditions of the charter.
Shipowner is not liable to third person; it is the charterer who
is liable to them. The manner in which the freight is to be paid as well as the
person who is bound to unload the cargo at the port of the
GR: The charterer is liable to the third person. destination for delivery to the consignee are also left to the
stipulation by the ship owner or his representative, captain,
XPN: Shipowner may still be held liable if the injury was and the charterer.
caused by unseaworthiness or negligence of the shipowner
beyond before the demise or bareboat took over. CONTRACT OF TOWAGE

2. Contract of affreightment involves that use of shipping Q: What is a contract of towage?


space leased by the owner in part or as a whole, to carry
goods for others. The shipowner retains the possession, A: It is contract for the hire of services by virtue of which a
command and navigation of the ship, the charterer steamer is engaged to tow it from one port another for
merely having use of the space in the vessel in return for consideration.
his payment of the charter hired. The shipowner is liable
to third person. It is neither a contract for the carriage of goods nor a charter
party. It is a contract of services.
LAY DAYS
TUGBOAT
Q: What are lay days?
Q: What is a tug or tugboat?
A: They are days of detention or delay suffered by a vessel in
a given port while waiting for the loading of the cargo. It A: It refers to the towing vessel.
refers to the days allowed to charter parties for loading and
unloading the cargo TOW

Q: What are extra lay days? Q: What is a tow?

A: They are days which follow after the lay days have elapsed. A: It refers to the vessel towed or pulled.

DEMURRAGE If the affreigtment was partial and not the charter of the
entire vessel, the charterer does not acquire the right to fix
Q: What is a demurrage? the date for the departure of the vessel, unless stipulated in
the contract.
A: It is the amount stipulated in the charter party to be paid
by the charterer or shipper to the ship owner for any delay in Art. 653. If the freight should be received without the
the sailing of his ship. Sum which is fixed by the contract of charter party having been signed, the contract shall be
carriage, or which is allowed, as remuneration to the owner understood as executed in accordance with what appears in
of a ship for the detention of his vessel beyond the number of the bill of lading, which shall be the only instrument with
days allowed by the charter party for loading and unloading regard to the freight to determine the rights and obligations
or for sailing; it is an extended freight or reward to the vessel of the ship agent, of the captain, and of the charterer.
in compensation for the earnings she is improperly caused to
lose CHARTER PARTY v. BILL OF LADING

Q: What are the differences between the charter party and


bill of lading?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
lay days and extra lay days which may have elapsed in
A: Charter party has for its object the fixing of the conditions loading and unloading.
for the lease of the vessel, while the bill of lading serves only
to indicate the goods loaded for transportation and make the Art. 657. If during the voyage the vessel should be rendered
captain responsible for the objects he has received. unseaworthy the captain shall be obliged to charter at his
expense another one in good condition, to carry the cargo to
Art. 654 The charter parties executed with the intervention its destination, for which purpose he shall be obliged to look
of a broker, who certifies to the authenticity of the for a vessel not only at the port of arrival but also in the
signatures of the contracting parties made in his presence, neighboring ports within a distance of 150 kilometers.
shall be full evidence in court; and, if they should be
conflicting, that which agrees with the one which the broker If the captain, through indolence or malice, should not
must keep in his registry, if kept in accordance with law, furnish a vessel to take the cargo to its destination, the ship-
shall govern. pers, after requesting the captain to charter a vessel within
an unextendible period, may charter one and apply to the
The contracts shall also be admitted as evidence, even judicial authority for the summary approval of the charter
though a broker has not taken part therein, if the party which they may have made.
contracting parties acknowledge the signatures of the same
as their own. The same authority shall judicially compel the captain to
carry out for his account and under his responsibility the
Should no broker have taken part in the charter party and charter made by the shippers.
the signatures be not acknowledged, doubts shall be
decided by what is provided for in the bill of lading, and, in If the captain, notwithstanding his diligence, should not find
the absence thereof, by the proofs submitted by the parties. a vessel to charter, he shall deposit the cargo at the disposal
of the shippers, to whom he shall communicate the facts on
Art. 655. Charter parties executed by the captain in the the first opportunity, the freight being adjusted in such
absence of the ship agent shall be valid and effective, even cases by the distance covered by the vessel, with no right to
though in executing them he should have acted in violation any indemnification whatsoever.
of the orders and instructions of the agent or shipowner;
but the latter shall have a right of action against the captain NOTE: Articles 659 to 664 : Some of the goods being
to recover damages. transported may : (1) be sold by the captain to pay for
necessary repairs; (2) be jettisoned for the common safety;
Q: Suppose that the captain in the absence of the ship agent (3) be lost by reason of shipwreck or stranding; (4) be seized
executes charter parties. by pirates or enemies; (5) suffer deteriorations or
dimunitions; or (6) increase by natural cause in weight or size
1. What is the effect of such contract?
2. How about the case where the captain acted in GOODS EXEMPTED FROM FREIGHTAGE
contravention of the orders and instructions of the
ship agent or ship owner? Q: What are the goods that shall not pay freightage?
3. In such case, for what may the captain be liable?
A:
A:
1. Art. 660 - goods jettisoned for the common safety
1. Charter parties executed by the captain shall be valid but the amount of freightage that should have been
and effective. paid shall be considered as a general average and
2. Such charter parties are nevertheless valid and shall be computed in proportion to the distance
effective. covered when they were jettisoned.
3. The ship owner and ship agent shall have a right of 2. Art. 661 - merchandise lost by reason of shipwreck
action against the captain for damages. or stranding; if freight had been paid in advance, it
shall be returned.
Art. 656. If in the charter party the time in which the 3. Art. 661 - goods seized by pirates or enemies; freight
loading and unloading are to take place is not stated, the paid in advance shall be returned
usages of the port where these acts take place shall be
observed. After the stipulated or customary period has GOODS REQUIRED TO PAY FREIGHTAGE
passed, and should there not be in the freight contract an
express provision fixing the indemnification for the delay, Q: What are the goods required to pay freightage?
the captain shall be entitled to demand demurrage for the
A:

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
a. Should the vessel arrive safely at the port of
1. Art. 659 - goods sold by the captain to pay for the destination, the captain shall pay the price which
necessary repairs to the hull, machinery or the sale of goods of the same kind brings at the
equipment or for unavoidable and urgent needs --> port.
but the freight may not be required to be paid in full. b. Should the vessel be lost, the captain shall pay the
2. Art. 663 - goods which suffer deterioration or price said goods would have brought in the sale.
dimunition on account of (a) inherent defects or bad
quality of packing, or of (b) fortuitous event. The same rule shall be observed in the payment of the
3. Art. 644 - goods that increase in size or weight by freight which shall be in full if the vessel should reach her
natural cause. port of destination, and in proportion to the distance
covered if she should be lost before arrival.
EFFECT OF FAILURE TO CARRY GOODS TO DESTINATION ON
THE PAYMENT OF FREIGHT Art. 660 Goods jettisoned for the common safety, shall not
pay freight; but its latter amount (freight lost) shall be
Q: What is the effect of failure to carry goods to destination considered as general average, computing the same in
on the payment of freight? proportion to the distance covered when they (goods) were
jettisoned.
A: Where a master relinquishes the attempts either to carry
on the goods on his own ship or to send them to their Art. 661 Neither the goods lost by reason of shipwreck or
destination in another ship, he therby wholly abandons any standing, not those seized by pirates or enemies shall pay
claim for freight on respect to them, unless it has been made freight.
payable in advance or irrespective of delivery; where freight
is only payable on delivery, no part is earned until it is Q: What are the instances in which goods carried on a vessel
delivered. are not liable to pay the freight?

Q: What is the effect of war on the obligation of the ship? A:

A: While the outbreak of war absolved the ship carrying the a. Goods jettisoned for the common safety and never
flag of a belligerent nation from its obligation to carry the recovered;
cargo belonging to a subject of a neutral power to the port of b. Goods lost by reason of shipwreck or stranding;
another belligerent nation, it was nevertheless liable for the c. Goods seized by pirates or enemies.
cost of forwarding the cargo to another line, if the full freight
had been received by the ship at the commencement of the Art. 662 Should the vessel or the goods be recovered or the
voyage. effects of the shipwreck be salvaged, the freight
corresponding to the distance covered by the vessel
Art. 658 The freight shall accrue to the conditions stipulated transporting the cargo shall be paid; and if the vessel, after
in the contract, and should they not be expressed, or should being repaired, should transport the said cargo to the port
they be ambiguous, the ff. rules shall be observed: of destination, the full freight shall be paid, without
prejudice to what may be due by reason of the average.
a. Should the vessel have been chartered by months
or by days, the freight shall begin to run from the Art. 663 The goods which suffer deterioration or damage
day the loading of the vessel is begun. caused by inherent defects or bad quality and condition of
b. In charters made for a fixed period, the freight shall the packing, or fortuitous event, shall pay freight in full and
begin from that very day. as stipulated in charter party.
c. If the freight is charged according to weight, the
payment shall be made according to gross weight, Art. 664 The natural increase in weight or in size of the
including the containers, such as barrels or any goods loaded on the vessel, shall accrue to the benefit of
other objects in which the cargo is contained the owner and shall pay the corresponding freight fixed in
the contract for the same.
Art. 659 The goods sold by the captain to pay for the
necessary repairs of the hull, machinery or equipment, or Art. 665 The cargo shall be especially liable for the payment
for unavoidable and urgent needs, shall pay freight. of freight, for expenses and duties arising therefrom which
must be reimbursed by the shippers, as well as for the part
The price of these goods shall be fixed according to the of the general average which may correspond to it; but it
result of the voyage, namely: shall not be legal for the captain to delay the unloading by
reason of fear that the said obligation may not be complied
with.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
the contract and incidental expenses, until their delivery
EXPENDITURES FOR WHICH THE CARGO IS LIABLE and for 30 days thereafter.

Q: What are the expenditures for which the cargo is liable? Art. 668 Should the consignee be not found or should refuse
to receive the cargo, the judge or court, at the instance of
A: the captain, must order its deposit and the sale of what may
be necessary to pay the freight and other expenses on the
a. Payment of freight; same.
b. For expenses and duties arising there from which
must be reimbursed by the shippers; and The sale should likewise take place when the goods
c. For the part of the general average which they deposited run the risk of deteriorating or, on account of
correspond to it. their condition or for other reasons, the expenses of the
preservation and custody should be disproportionate to the
Q: A shipment of rice arrives in Manila from Thailand. The value thereof.
agreement between the supper and ship owner is that
freight was to be paid upon the discharge of the cargo. SALE OF CARGO BY THE CAPTAIN
Shipper however does not pay the freight but instead, offers
a bond. Yet, the owner of the vessel refuses to deliver the Q: What are the cases where the captain may request the
rice. May the charterer be ordered to deliver the rice upon sale of the cargo?
furnishing of the bond by the shipper.
A:
A: No, the fact that a bond has been given for the payment of
such freight does not make it compulsory for the carrier to 1. To pay the freight;
deliver the cargo before freight has actually been paid. 2. To pay the expenses and duties due to the cargo;
3. To pay the expenses and averages due to the cargo;
The fact that the freight was already included in the purchase 4. When the goods deposited run the risk of
price of the goods did not free the cargo of rice from the deteriorating or an account of their condition or for
carrier’s lien, if the freight has not yet been fully paid by the other reasons, the expenses of preservation and
charterer. custody should be disproportionate to the value
thereof;
STEVEDORING 5. Should the consignee be not found or should refuse
to receive the cargo, in which case the judge or court
Q: What is a stevedoring? at the instance of the captain, must order its deposit
and the sale of what may be necessary to pay freight
A: It refers to the carriage of goods from the warehouse or and other expenses on the sale.
pier to the holds of the vessel.
II. Rights and obligations of owners
Art. 666 The captain may request the sale of the cargo to
the amount necessary to pay the freight, expenses, and Art. 669. The shipowner of the captain shall observe in
averages due him, reserving the right to demand the charter parties the capacity of the vessel or that expressly
balance due him therefor, if the proceeds of the sale should designated in its registry, a difference greater than 2 per
not be enough to cover his credit. cent between that registered and her true capacity not
being permissible.
Art. 667 The goods loaded shall be liable in the first place for
the freight and expenses thereof during 20 days, to be If the shipowner or the captain should contract to carry a
counted from the date of their delivery or deposit. During greater amount of cargo than the vessel can carry, in view of
this period, the sale of the same may be requested, even her tonnage, they shall indemnify the shippers whose
though there should be other creditors and the case of contracts they do not fulfill for the losses they may have
insolvency of the shipper or consignee should occur. caused them by reason of their default, according to the
cases, viz:
The right, however, cannot be made use of on the goods
rd
which, after being delivered were turned over to a 3 If the vessel has been chartered by one shipper only, and
person without malice on the part of the latter by onerous there should appear to be an error or fraud in her capacity,
title. and the charterer should not wish to rescind the contract,
when he has a right to do so, the freightage shall be reduced
Amended by Art. 2241 of Civil Code which provides: Credits in proportion to the cargo the vessel cannot receive, the
for transportation upon the goods carried, for the price of person from whom the vessel is chartered being

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
furthermore obliged to indemnify the charterer for the requested to put to sea at the proper time through a notary
losses he may have caused him. or judicially.

If, on the contrary, there should be several charter parties, Art. 674. If the charterer should carry to the vessel more
and by reason of the want of space all the cargo contracted cargo than that contracted for, the excess may be admitted
for cannot be received, and none of the charterers desires to in accordance with the price stipulated in the contract if it
rescind the contract, preference shall be given to the person can be well stowed without incurring the other shippers, but
who has already loaded and arranged the cargo in the if in order to stow said cargo it should be necessary to stow
vessel, and the rest shall take the place corresponding to it in such manner as to throw the vessel out of trim the
them in the order of the dates of their contracts. captain must refuse it or unload it at the expense of its
owner.
Should there be no priority, the charterers may load, if they
wish, in proportion to the weight or space they may have The captain may likewise, before leaving the port, unload
engaged, and the person from whom the vessel was the merchandise clandestinely placed on board, or transport
chartered shall be obliged to indemnify them for losses and it, it he can do so and keep the vessel in trim, demanding by
damages. way of freightage the highest price which may have been
stipulated for said voyage.
Art. 670. If the person from whom the vessel is chartered,
after receiving a part of the cargo, should not find sufficient Art. 675. If the vessel has been chartered to receive the
to make up at least three fifths of the amount the vessel can cargo in another port, the captain shall appear before the
hold, at the price he may have fixed, he may substitute for consignee designated in the charter party, and should the
that transportation another vessel inspected and declared latter not deliver the cargo to him, he shall inform the
suitable for the same voyage, the expenses of transfer, and charterer and await his instructions, the lay days agreed
the increase in the price of the charter, should there be any, upon, or those allowed by custom in the port, beginning to
being for his account. Should he not be able to make this run in the meantime, unless there is an express agreement
change, the voyage shall be undertaken at the time agreed to the contrary.
upon; and should no time have been fixed, within fifteen
days from the time the loading began, should nothing to the Should the captain not receive an answer within the time
contrary have been stipulated. necessary therefore, he shall make efforts to find cargo; and
should he not find any after the lay days and extra lay days
If the owner of the part of the cargo already loaded should have elapsed, he shall make a protest and return to the port
procure some more at the same price and under similar or where the charter was made.
proportionate conditions to those accepted for the freight
received, the person from whom the vessel is chartered or The charterer shall pay the freightage in full, discounting
the captain may not refuse to accept the rest of the cargo; that which may have been earned on the merchandise
and should he do so, the charterer shall have a right to which may have been carried on the voyage out or on the
demand that the vessel put to sea with the cargo she may return trip, if carried for the account of third persons.
have on board.
The same shall be done if a vessel, having been chartered
Art. 671. After three-fifths of the vessel is loaded, the for the round trip, should not be given any cargo for her
person from whom she is chartered may not, without the return.
consent of the charterers or shippers, substitute the vessel
designated in the charter party with another one, under the Art. 676. The captain shall lose the freightage and shall
penalty of making himself thereby liable for all the losses indemnify the charterers if the latter should prove, even
and damages occurring during the voyage to the cargo of against the certificate of inspection, if one has been made at
those who did not consent to the change. the port of departure, that the vessel was not in a condition
to navigate at the time of receiving the cargo.
Art. 672. If the vessel has been chartered in whole, the
captain may not, without the consent of the person Art. 677. The charter party shall subsist if the captain should
chartering her, accept cargo from any other person; and not have any instructions from the charterer, and a decla-
should he do so, said charterer may oblige him to unload it ration of war or a blockade should take place during the
and to indemnify him for the losses suffered thereby. voyage.

Art. 673. The person from whom the vessel is chartered In such case the captain must proceed to the nearest safe
shall be liable for all the losses caused the charterer by and neutral port, requesting and awaiting orders from the
reason of the voluntary delay of the captain in putting to shipper; and the expenses and salaries accruing during the
sea, according to the rules prescribed, provided he has been detention shall be paid as general average.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
captain to proceed to the nearest safe and neutral
If, by orders of the shipper, the cargo should be discharged port, requesting and awaiting orders from the
at the port of arrival, the freightage for the voyage out shall shippers.
be paid in full.
RIGHTS OF SHIPOWNER
Agricultural machinery on board a merchant vessel carrying
the flag of a belligerent nation, and belonging to a subject of Q: What are the Rights of Ship owner?
a neutral power is not subject of general average to satisfy
the costs and expenses, incident to the internment of the A:
ship in a neutral port.
1. Art. 670 - where the cargo is not sufficient to make
In such case, there is no common danger to vessel and cargo, up at least 3/5 of the amount which the vessel may
and hence no case for general average. hold, he may substitute anohter vessel inspected
and declared suitable for the voyage --> expenses of
Art. 678. If the time necessary, in the opinion of the judge transfer and increase in price of the charter shall be
or court, to receive orders from the shippers should have paid by him;
elapsed without the captain having received any 2. Art. 674 - to collect the freight in accordance with
instructions, the cargo shall be deposited, and it shall be the price stipulated for cargo in excess of that
liable for the payment of the freightage and expenses agreed upon is such excess can be properly stowed;
incurred by reason of the delay, which shall be paid from 3. Art. 674 - to refuse and unload at the expense of the
the proceeds of the part first sold. owner excess cargo that cannot be properly stowed;
4. Art. 674 - to unload merchandise clandestinely
OBLIGATIONS OF SHIP OWNER placed on board, or to transport them if he can do
so, demanding the highest freightage;
Q: What are the obligations of ship owner? 5. Art. 675- to find freight to take place of freight not
received, if the vessel has been chartered to receive
A: cargo in another port, after he receives no cargo
from the consignee and after he receives no answer
1. Art. 669 - to observe in the charter parties, the from the charterer;
capacity of the vessel, and to indemnify the shippers 6. Art. 675 - to receive freight in full, discounting that
whose contracts are not fulfilled for the losses they which may have been earned on the merchandise
may have suffered by the failure of the shipowner to carried as substitute;
observe the capacity of the vessel; 7. Art. 677 - to have the charter party subsist
2. Art. 670 - to undertake a voyage at the time agreed notwithstanding the declaration of war or a
upon or within 15 days from loading if no time is blockade during the voyage, and to receive in such
stipulated, even if the shipowner should not find cases, the freightage in full where the shipper orders
cargo sufficient to make up at least 3/5 of the that the cargo should be discharged at the port of
amount which the vessel may hold, where he fails to arrival.
exercise his right to change vessel;
3. Art. 670 - where the shipowner should not find cargo III. Obligations of Charterers
sufficient to make up at least 3/5 of the amount
which the vessel may hold, to accept other cargo Art. 679. The charterer of an entire vessel may subcharter
procured by the owner of the freight already loaded the whole or part thereof for the amounts he may consider
under the same price and conditions; most convenient, the captain not being allowed to refuse to
4. Art. 671- not to change the vessel after 3/5 of the receive on board the cargo delivered by the second
vessel has been loaded, without the consent of the charterers, provided the conditions of the first charter are
charterers or shippers; not changed, and that the price agreed upon is paid in full,
5. Art. 672 - if the vessel has been chartered in whole, even though the full cargo is not loaded, with the limitation
not to accept cargo from any other person without established in the next article.
the consent of the charterer;
6. Art. 673 - to answer for losses arising from delay in Art. 680. A charterer who does not complete the full cargo
putting to sea; he bound himself to ship shall pay the freightage of the
7. Art. 676 - to have the vessel in a condition to amount he fails to load, if the captain does not take other
navigate at the time of receiving the cargo; freight to complete the load of the vessel, in which case he
8. Art. 677 - in case of declaration of war or blockade shall pay the first charterer the difference should there be
during the voyage, where the captain has not any.
received any instructions from the charterer, for the

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Art. 681. If the charterer should ship goods different from 4. Art. 682 - in case of making a port to repair the hull,
those indicated at the time of executing the charter party, machinery or equipment of the vessel, to wait until
without the knowledge of the person from whom the vessel the vessel is repaired or to pay for the expenses of
was chartered or of the captain, and should thereby give unloading should the charterer choose to unload;
rise to losses, by reason of confiscation, embargo, 5. Art. 684 - where the charterer unloads goods before
detention, or other causes, to the person from whom the arriving at port of destination without any force
vessel was chartered or to the shippers, the person giving majeure occurring, to pay (1) expenses of arrival, (2)
rise thereto shall be liable with the value of his shipment full freight and (3) for the damages and losses
and furthermore with his property, for the full indemnity to caused to other shippers, if any;
all those injured through his fault. 6. Art. 685 - where the charterer unloads before the
beginning of the voyage, (1) to pay 1/2 of the freight,
Art. 682. If the merchandise should have been shipped for (2) to pay for the expenses of stowing and restowing
the purpose of illicit commerce, and was taken on board the cargo, (3) to pay any other damage which he
with the knowledge of the person from whom the vessel may have caused other shippers;
was chartered or of the captain, the latter, jointly with the 7. Art. 686 - to pay for freight, other expenses and the
owner of the merchandise, shall be liable for all the losses primage after the vessel has been unloaded and the
which may be caused to other shippers, and even though it cargo placed at the disposal of the consignee;
may have been agreed, they cannot demand any indemnity 8. Art. 687 - not to abandon merchandise damaged
whatsoever from the charterer for the damage caused the on account of inherent defect or fortuitous event,
vessel. for the payment of the freight and other expenses
Art. 683. In case of making a port to repair the hull,
machinery, or equipment of the vessel, the shippers must OBLIGATIONS OF SHIPOWNER or SHIP AGENT v.
wait until the vessel is repaired, being permitted to unload OBLIGATIONS OF CHARTERER
her at their own expense should they deem it advisable. If, for the benefit of cargo which runs the risk of deterioration, the shippers or
Shipowner or Ship agent Charterer
Art. 684. If the charterer, without the occurrence of any of If the vessel is chartered To pay the agreed charter
the cases of force majeure mentioned in the foregoing wholly, not to accept cargo price
article, should wish to unload his merchandise before from others
arriving at the port of destination, he shall pay the full To observe represented To pay freightage on
freightage, the expenses of the arrival made at his request, capacity unboarded cargo
and the losses and damages caused the other shippers, To unload cargo To pay losses to others for
should there be any. clandestinely placed loading uncontracted cargo
or illicit cargo
Art. 685. In charters for transportation of general freight
To substitute another vessel To wait if the vessel needs
any of the shippers may unload the merchandise before the if load is less than 3/5 of repair
beginning of the voyage, paying one half the freightage, the
capacity
expense of stowing and restoring the cargo, and any other
To leave the port if the To pay expenses for
damage which may be caused the other shippers.
charterer does not bring the deviation
cargo within the lay days and
Q: What are the obligations of the charterer?
extra lay days allowed
To place in a vessel in a
A:
condition to navigate; to
bring cargo to nearest
1. Art. 680 - to pay the freight in full even if the
neutral port in case of war or
charterer does not complete the full cargo he bound
blockade
himself to ship;
2. Art. 681- to answer with the value of his shipment
and other property for the losses suffered by the Q: What is the status of a contract made in foreign lands?
shipowner, captain or other shippers arising from
confiscation, embargo, detention, or other causes, A: It will be enforceable in the Philippines provided hat it is
where the charterer loads goods different from not in violation of our law or public policy.
those stated at the time of the execution of the
charter party; A contract made in Hong Kong will be construed according to
3. Art. 682 - to be jointly liable with the captain for its law, provided it is not in violation of a law or public policy
losses which may be caused to the other shippers in the Philippines.
where the charterer ships goods for illicit commerce
with the knowledge of the shipowner or captain; But when it is proposed to invoke the laws of a foreign
country as supplying the proper rules for the interpretation of
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
a contract, the law upon which reliance is placed must be (From one port to another of the Peninsula (Philippines) and
pleaded and proved. Otherwise, it will be presumed that the adjacent islands, the freightage for one month only shall be
law prevailing in the foreign country is the same as that which paid.)
prevail in this jurisdiction.
If a vessel should make a port during the voyage in order to
Art. 686. After the vessel has been unloaded and the cargo make urgent repairs and the charterers should prefer to
placed at the disposal of the consignee, the latter must dispose of the merchandise.
immediately pay the captain the freightage due and the
other expenses for which the cargo may be liable. When the delay does not exceed thirty days, the shippers
shall pay the full freightage for the voyage out.
The primage must be paid in the same proportion and at the
same time as the freightage, all the changes and Should the delay exceed thirty days, they shall pay the
modifications to which the latter should be subject also freight in proportion to the distance covered by the vessel.
governing the former.
Art. 689. At the request of the person from whom the
Art. 687. The charterers and shippers may not abandon vessel is chartered the charter party may be rescinded:
merchandise damaged on account of its own inherent
defect or of fortuitous event for the payment of the 1. If the charterer at the termination of the extra lay
freightage and other expenses. days does not place the cargo alongside the vessel.
2. In such case the charterer must pay half of the
The abandonment shall be proper, however, if the cargo freightage stipulated besides the demurrage due
should consist of liquids which may have leaked out, there for the lay days and extra lay days.
remaining in the containers not more than one-fourth of 3. If the person from whom the vessel was chartered
their contents. should sell it before the charterer has begun to load
it and the purchaser should load it for his own
IV. Total and Partial Rescissions of Charter parties account

Art. 688. A charter party may be annulled at the request of In such case the vendor shall indemnify the charterer for the
the charterer: losses he may suffer.

1. If before loading the vessel he should abandon the If the new owner of the vessel should not load it for his own
charter, paying half the freightage agreed upon; account the charter party shall be respected, and the vendor
2. If the capacity of the vessel should not agree with shall indemnify the purchaser if the former did not inform
that stated in the certificate of tonnage, or if there him of the charter pending at the time of making the sale.
be an error in the statement of the flag under
which she sails; Art. 690. The charter party shall be rescinded and all action
3. If the vessel should not be placed at the disposal of arising therefrom shall be extinguished if, before the vessel
the charterer within the period and in the manner puts to sea from the port of departure, any of the following
agreed upon; cases should occur:
4. If, after the vessel has put to sea, she should return
to the port of departure, on account of risk from 1. A declaration of war or interdiction of commerce
pirates, enemies, or bad weather, and the shippers with the power to whose ports the vessel was to
should agree to unload her. make its voyage.
2. A condition of blockage of the port of destination of
In the second and third cases the person from whom the said vessel, or the breaking out of an epidemic after
vessel was chartered shall indemnify the charterer for the the contract was executed.
losses he may suffer. 3. The prohibition to receive at the said port the mer-
chandise constituting the cargo of the vessel.
In the fourth case the person from whom the vessel was 4. An indefinite detention, by reason of an embargo
chartered shall have a right to the freightage in full for the of the vessel by order of the government, or for any
voyage out. other reason independent of the will of the ship
agent.
If the charter should have been made by the month, the 5. The inability of the vessel to navigate, without fault
charterers shall pay the full freightage for one month, if the of the captain or ship agent.
voyage is for a port in the same waters; and two months, if
for a port in different waters. The unloading shall be made for the account of the charter-
er.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
passengers shall only be entitled to the return of the
Art. 691. If the vessel cannot put to sea on account of the passage fare.
closing of the port of departure, or any other temporary
cause, the charter shall remain in force without right of Art. 698 In case of interruption of a voyage already begun,
either of the contracting parties to claim damages. the passengers shall only be obliged to pay for the fare in
proportion to the distance covered, without right to recover
The subsistence and wages of the crew shall be considered damages, if the interruption is due to fortuitous event or
as general average. force majeure, but with a right to indemnity, if the
interruption should have been caused by the disability of
During the interruption the charterer may, at the proper the vessel, and the passenger should agree to wait for her
timer and for his own account, unload and load the repairs, he may not be required to pay any increased fare of
merchandise, paying demurrage if the reloading should passage, but his living expenses during the delay shall be for
continue after the cause for the detention has ceased. his own account.

Art. 692. A charter party shall be partially rescinded, unless In case of delay in the departure of the vessel, the
there is an agreement to the contrary, and the captain shall passengers have the right to remain on board and to be
only be entitled to the freightage for the voyage out, if, by furnished with food for the account of the vessel, unless the
reason of a declaration of war, closing of ports, or delay is due to fortuitous event or to force majeure. If the
interdiction of commercial relations during the voyage, the delay should exceed 10 days, the passengers have the right
vessel should make the port designated for such a case in to request the return of the fare, and if it is due to the
the instructions of the charterer. captain or ship agent exclusively, they may also demand
indemnity for damages.
V. Passengers on Sea voyages
A vessel exclusively devoted to the transportation of
Art. 693 Should the passage fare have not been agreed passengers must carry them directly to the ports or ports of
upon, the judge or court shall summarily fix it, after a destination, no matter what the number of passengers may
declaration of experts. be, making all the stops indicated in their itinerary.

Art. 694 Should the passenger not arrive on board at the PUBLICATION OF SCHEDULE OF ARRIVALS
time previously fixed, or should leave the vessel without AND DEPARTURES
permission from the captain when she is ready to leave the
port, the captain may continue the voyage and demand the Q: Is the ship owner required to publish schedule of arrivals
full passage fare. and departures of the vessel?

Art. 695 The right of passage, if issued to a specified person, A: There is no law which requires ship owners to publish a
may not be transferred without the consent of the captain schedule of the arrivals and departures of their vessels in the
or consignee different port of calls, and holds them liable for damages to
passengers for any deviation from said schedule.
Art. 696 If, before starting the voyage, the passenger should
die, his heirs shall be obliged only to pay half of the fare Although the Public Service Commission has no authority to
agreed upon. require steamship boats, motorboats, or motor vessels to
obtain certificates of public convenience or prescribe their
If, in the fare stipulated, the expenses of subsistence should definite route or line, the PSC has authority to prescribe the
be included, the judge or court, after hearing the experts if schedule of trips and the rates to be charged.
he considers it necessary, shall fix the amount to be left for
the benefit of the vessels. Art. 699Should the contract be rescinded before or after
starting the voyage, the captain shall have right to claim
Should another passenger be received in the place of the payment for what he may have furnished to the passengers.
deceased, no payment shall be made by the said heirs.
Art. 700 In all that relates to the preservation of order and
Art. 697 If before starting the voyage it should be suspended discipline on board the vessel, the passengers shall be under
through the exclusive fault of the captain or ship agent, the the control of the captain, without any distinction
passengers shall have the right to a refund of their fares and whatsoever.
to recover damages; but if the suspension is due to
fortuitous event, or to force majeure, or to any other cause Art. 701The convenience or the interest of the passengers
beyond the control of the captain or ship agent, the shall not obligate or empower the captain to stand in shore
or enter places which may take the vessel out of her course,

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
or to remain in ports which he must or is under necessity to The bill of lading may be issued to bearer, to order, or in the
touch for a period longer than that required by the needs of name of a specified person, and must be signed within
navigation. twenty- four hours after the cargo has been received on
board, the shipper being entitled to demand the unloading
Art. 702 In the absence of agreement to the contrary, the at the expense of the captain should the latter not sign it,
subsistence of the passengers during the voyage shall be and, in any case, the losses and damages suffered thereby.
considered included in the transportation fare; but should it
be for the account of the passengers, the captain shall be Bill of Lading
under obligation, in case of necessity, to supply the food
necessary for their subsistence at a reasonable price. Q: What is a Bill of Lading?

Art. 703A passenger shall be considered a shipper as to the A: B/L operates both as a receipt and as a contract; it is a
effect which he carries on board, and the captain shall not receipt for the goods shipped and a contract to transport and
be liable for what the former may keep under his immediate deliver the same as stipulated
and special custody, unless the damage arises from the act
of the captain or of the crew. A stipulation that a CC's liability is limited to the value of the
goods appearing in the B/L, unless the owner declares a
Art. 704 The captain, in order to collect the transportation greater value, is valid and binding
fares and expenses of sustenance, may retain the effects
belonging to the passenger, and in case of their sale, he shall BILL OF LADING v. CHARTER PARTY
be given preference over the other creditors, acting in the
same way in the collection of the freight. Q: State the difference between a Bill of Lading and a
Charter party?
Art. 705 In case of the death of a passenger during the
voyage, the captain shall be authorized, with regard to the A:
body, to take steps required by the circumstances, and shall
carefully take care of the papers and effects which may be Bill of Lading Charter Party
found on board belonging to the deceased, observing the Private receipt which the Entire or complete contract
previsions of case No. 10 of Art. 612 with regard to captain gives to accredit that
members of the crew. such goods belong to such
persons;
Art. 612. The following duties are inherent in the office of It is a real contract; it exists It is a consensual contract
captain: only after delivery of the which can be dissolved by
xxx goods to be transported is means of indemnity for
10. To put in a safe place and keep all the papers and made losses and damages
belongings of any members of the crew who might die on the
vessel, drawing up a detailed inventory, in the presence of 1. Each bill of lading is a contract and the parties
passengers as witnesses, and, in their absence, of members of thereto are bound by its terms but subject to the
the crew. provisions of Art. 1733 to 1759 of the new civil code.
xxxx 2. The shipper has the sole responsibility for the
quantity, description and condition of the cargoes
VI. Bills of Lading shipped in container vans, each container van
considered as a unit of transport. Containerization is
Art. 706. The captain and the shipper shall have the in line with the government policy, resulting in the
obligation of drawing up the bill of lading, in which shall be laudable decongestion of ports of entry.
stated: 3. Containerization was devised to facilitate the
expeditious and economic loading, carriage, and
1. The name, registry, and tonnage of the vessel. unloading of cargoes. Under this system, the shipper
2. The name of the captain and his domicile. loads his cargoes in a specially designed container,
3. The port of loading and that of unloading. seals the container and delivers it to the carrier for
4. The name of the shipper. transportation. The carrier does not participate in
5. The name of the consignee, if the bill of lading is the counting of the merchandise for loading into the
issued in the name of a specified person. container, the actual loading thereof nor the sealing
6. The quantity, quality, number of packages, and of the container. Having no actual knowledge of the
marks of the merchandise. kind, quantity or condition of the contents of the
7. The freightage and the primage stipulated. container, the carrier issues the corresponding bill of
lading based on the declaration of the shipper.
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
4. The bill of lading describes the cargo as a container whether executed or still to be performed. As long
simply and states the contents of the container as the subject matter thereof is maritime service or a
either as advised by the shipper or prefaced by the maritime transaction, then it is embraced within
phrase “said container.” such a concept.
f. An action based upon an oral contract for the
Q: What is the status of a stipulation that the carrier’s transportation of goods by water, the same is an
liability for loss or damage from any cause or for any reason action in admiralty which comes within the original
is limited to a specified sum? jurisdiction of the CFI irrespective of the value of the
cargo. Admiralty jurisdiction extends to all maritime
A: It is invalid being contrary to public policy unless the torts.
carrier could prove that it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon. Q: Is an action based on oral contract of transportation of
goods by sea an action on admiralty, under the jurisdiction
Q: Can a defective and irregular bill of lading be cured by of the CFI or RTC?
other complementary documents?
A: It is an action in admiralty which comes under the original
A: If the bill of lading was defective and irregular upon its face and exclusive jurisdiction of the RTC irrespective of the value
in that it did not describe the weight or measurement of the of the cargo.
merchandise covered by it, such deficiency or defect was
cured by the insurance policy and the commercial invoice Q: Is an action brought for the enforcement of a maritime
wherein the missing details appeared with exactness, it being lien, on cargoes due to non-payment of a charter hire fee an
understood that such documents formed a group of action “quasi in rem”?
complementary documents, that defect of one of which being
deemed supplied by the other. A: Since the action is brought principally for the enforcement
of maritime lien against the property of defendants, in the
Q: What is the status of a stipulation limiting jurisdiction of nature and character of a proceeding “quasi in rem,”
courts of the Philippines? jurisdiction over one of the defendants is not essential. As
such, properties allegedly owned by him are primarily made
A: A stipulation in a BOL emitted in a foreign country to the liable.
effect that all disposition arising under the contract shall be
decided exclusively in the courts of the country wherein the WHEN ACTION NOT IN ADMIRALTY
contract is made cannot have the effect of defeating the
jurisdiction of the courts of the Philippines. Q: When is an action not admiralty?

a. A breach of contract of affreightment, whether A: A suit to recover amount not exceeding P2000 on account
evidenced by a bill of lading or a charter party is a of shortages and damages alleged to have arisen after the
case of admiralty. Admiralty has jurisdiction over all goods, which were shipped to the Philippines from the US,
maritime contracts, in whatever form, wherever, has been unloaded at the port, does not involve admiralty
they were executed or are to be performed, but not jurisdiction of the CFI.
over non-maritime contracts.
b. Cases of admiralty falls within the original A shipper may be held liable for freightage on BOL signed by
jurisdiction of the CFI to which the jurisdiction of the another person where the shipper appears as shipper or
justice of peace courts (including municipal courts) consignee, BOL where persons other than the former appear
does not extend and if the latter courts take as shipper, and bills of lading not signed by the shipper where
cognizance of such cases, they may be restrained by the testimonial evidence shows that the goods shipped
the writ of prohibition. actually belong to him as shipper.
c. All admiralty and maritime actions, where the
demand or claim exceeds P20,000.00 shall be under Art. 707 Four true copies of the original bill of lading shall
the exclusive original jurisdiction of the RTC. be made, and all of them shall be signed by the captain and
d. To give admiralty jurisdiction over a contract as by the shipper. Of these copies the shipper shall keep one
maritime, such contract must relate to the trade and and send another to the consignee; the captain shall take
business of the sea, it must be essentially and fully two, one for himself and the other for the ship agent.
maritime in its character; it must provide for
maritime services, maritime transactions or There may also be drawn as many copies of the bill of lading
maritime casualties. as may be considered necessary by the parties; but, when
e. The admiralty jurisdiction of a CFI extend over all they are issued to order or to bearer, there shall be stated in
maritime contracts in whatever form entered into, all the copies, be they the first four or the subsequent ones,

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
the destination of each one, stating whether it is for the ship a. A BOL is nothing more than the contract between
agent, for the captain, for the shipper, or for the consignee. the parties and prima facie evidence of the receipt of
If the copy sent to the latter should have a duplicate, this the merchandise by carrier or his agent.
circumstance and the fact that it is not valid except in b. B/L - proof of the agreement between the parties;
default of the first one must be stated therein. c. Issuance of B/L is merely prima facie evidence of the
receipt of the merchandise by the carrier or his
Art. 708 Bills of lading issued to bearer and sent to the agent; not conclusive evidence;
consignee shall be transferable by actual delivery of the d. Defective and irregular B/L may be cured by other
instrument; and those issued to order, by virtue of an complementary documents
indorsement.
Art. 711 The legitimate holder of a bill of lading, who fails to
In either case, the person to whom the bill of lading is present it to the captain of the vessel before the unloading,
transferred shall acquire all the rights and actions of the obliging the latter by such omission to unload the cargo and
transferor or indorser with regard to the goods mentioned place it in deposit, shall be responsible for the expenses of
in the same. the warehousing and other expenses arising therefrom.

Q: Is a BOL issued to a specified person negotiable? Can it be The above article refers to the duty of the holder of the BOL
negotiated by indorsement? to present it to the captain before the unloading of the cargo
commenced.
A: Title to the goods described in the BOL running to the Art. 707 and 711 authorize the inference that the carrier is
consignee and not to his order nor to bearer cannot be not expected to give notice of the arrival of the goods
transferred by means of a mere indorsement by the because:
consignee directing a delivery of the goods and not
purporting to convey the property but may be transferred by 1. Requiring the shipper to send to the consignee a
the holder by delivery to a purchaser or done subject to the copy of a BOL, implies that notice of the shipment
provisions of Art. 1514 of NCC. shall come that way to the latter;
2. Presuming that the consignee has been so notified
The rightful holder of BOL drawn to the order of the shipper, tacitly, imposes on him the duty to watch for the
with drafts attached for collection, all of them properly arrival of the goods and compels him to take delivery
indorsed, has the legal title to the shipment covered by the therof before are unloaded under the penalty of
said documents and is entitled to maintain an action as real having to pay storage charges.
party in interest to recover the same.
Art. 706, specifying the data to be written on the BOL, does
C.I.F. PRICE not require the address of the consignee to be set further
therein. Hence, it would be absurd to impose the obligation
Q: Explain a C.I.F. price to notify where the address of the person to be notified is not
known but not until the consignee has been advised of the
A: Under an ordinary C.I.F. agreement, delivery to the buyer arrival of the goods and has had reasonable opportunity
is complete upon delivery of the goods to the carrier and thereafter to remove them or otherwise dispose of them, the
tender of the shipping and other documents required by the extraordinary liability of the common carrier continues to be
contract and the insurance policy taken in the buyer’s behalf. operative even during the time the goods are stored in a
warehouse of the carrier at the place of destination.
Art. 709 A bill of lading drawn up in accordance with the
provisions of this title shall be proof as between those inter- Art. 712 The captain may not himself change the destination
ested in the cargo and between the latter and the insurers, of the goods. In admitting this change at the instance of the
evidence to the contrary being reserved by the latter. shipper he must first take up the bills of lading he may have
issued, under penalty of being liable for the cargo to the
Art. 710 If the bills of lading do not agree, and no change or legitimate holder of the same.
erasure appears in any of them, those in the possession of
the shipper or consignee signed by the captain shall be The article has for its objection the prevention of frauds
proof against the latter or ship agent in favor of the which the captain of the vessel may commit by changing the
consignee or the shipper; and those possessed by the destination of the goods.
captain or ship agent signed by the shipper shall be proof
against the shipper or consignee in favor of the captain or CHANGE OF DESTINATION OF GOODS
ship agent.
Q: Can the destination of the goods be changed without
surrendering all the copies of the BOL to the captain?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law

A: The destination of the goods cannot be changed without Art. 718 After the cargo has been delivered, the bills of
the shipper returning to the captain all the copies signed by lading signed by the captain, or at least the copy under
him, otherwise the latter will be liable for the goods to the which the delivery is made, shall be returned to him with
legitimate holder of the BOL. the receipt for the goods mentioned therein.

Art. 713 If before the delivery of the cargo a new bill of The delay on the party of the consignee shall make him
lading should be demanded of the captain, on the allegation liable for damages which such delay may cause the captain.
that the failure to present the previous ones is on account of
their loss or for any other just cause, he shall be obliged to In as much as it is not easy to collect all the copies of the BOL
issue it, provided that security for the value of the cargo is issued and to avoid this inconvenience, it will be sufficient to
given to his satisfaction; but without changing the return to the captain only one of the copies thereof but with
consignment and stating therein the circumstances receipt for the goods made by the consignee.
prescribed in the last paragraph of Article 707, when dealing
with the bills of lading referred to therein, under penalty, Section I
should he not do so, of being liable for said cargo if LOANS ON BOTTOMRY AND RESPONDENTIA
improperly delivered through his fault.
Art. 719. A loan in which, under any condition whatever,
Art. 714 If before the vessel puts to sea the captain should the repayment of the sum loaned and of the premium
die or should cease to hold his position through any cause, stipulated depends upon the safe arrival in port of the goods
the shipper shall have the right to demand of the new on which it is made, or of the price they may receive in case
captain the ratification of the first bills of lading, and the of accident, shall be considered a loan on bottomry or
latter must do so, provided that all the copies previously respondentia.
issued be presented or returned to him, and it should
appear from an examination of the cargo that they are loan on bottomry
correct.
Q: What is a loan on bottomry?
The expenses arising from the examination of the cargo
shall be for the account of the ship agent, without prejudice A: A contract in the nature of a mortgage, by which the
to his right of action against the first captain, if he ceased to owner of the ship borrows money for the use, equipment and
be such through his own fault. Should said examination not repair of the vessel and for a definite term, and pledges the
be made, it shall be understood that the new captain ship (or the keel or bottom of the ship) as a security for its
accepts the cargo as it appears from the bills of lading. repayment, with maritime or extraordinary interest on
account of the maritime risks to be borne by the lender, it
Art. 715 Bills of lading will give rise to a most summary being stipulated that if the ship be lost in the course of the
action or judicial compulsion, according to the case, for the specific voyage or during the limited time, by any of the perils
delivery of the cargo and the payment of the freight and the enumerated in the contract, the lender shall also lose his
expenses thereby incurred. money.

Art. 716 If several persons should present bills of lading loan on respondentia
issued to bearer or to order, indorsed in their favor,
demanding the same goods, the captain shall prefer, in Q: What is a loan on respondentia?
making delivery, the person presenting the copy first issued,
except when the subsequent one was issued on proof of the A: When the loan is not made upon the ship, but on the
loss of the first one, and both are presented by different goods laden on board, and which are to be sold, or exhanged
persons. in the course of the voyage, the borrower’s personal
responsibilty is deemed the principal security for the
In such case, as well as when only second or subsequent performance of the contract which is therefore called
copies, issued without that proof, are presented, the captain respondentia. And in a loan upon respondentia, the lender
shall apply to the judge or court, so that he may order the must be paid his principal and interest, thought the ship
deposit of the goods, and their delivery, through his perishes, provided that the goods are saved. In most other
mediation, to the proper person. respects, the contracts of bottomry and of respondentia
stand substantially upon the same footing.
Art. 717 The delivery of the bill of lading shall produce the
cancellation of all the provisional receipts of prior date LOAN ON BOTTOMRY v. LOAN ON RESPONDENTIA
issued by the captain or his subordinates for partial
deliveries of the cargo which may have been made.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
the value of the loss or upon shall not be paid by
Q: Distinguish between loan on bottomry and loan on damage of subject matter as borrower to lender
respondentia. insured is to be paid by the
insurer to the assured
A: Indemnity is paid after the Indemnity is paid in advance
loss has occurred by way of a loan
LOAN ON BOTTOMRY LOAN ON RESPONDENTIA
Definition Q: Are the premiums or ineterest on bottomry and
Loan made by shipowner or Loan taken on security of the respondentia loans subject to usury law?
ship agent guaranteed by cargo laden on a vessel, and
vessel itself and repayable repayable upon safe arrival A: No. In usury law, being intended to prohibit certain
upon arrival of vessel at extortionate gains from the lending of money, it is essential
of cargo at destination. (Art.
destination. (Art. 719) to constitute usury that the sum be repayable absolutely and
719) at all events. Therefore, usury statute has no application to
those uncertain transactions in which the amount repayable
Who may contract is contingent upon conditions beyond the control of the
Shipowner or ship agent. Shipowner or ship agent. parties since the person who furnishes the money incurs the
Outside of the residence of Outside of the residence of risk of losing in whole or in part of the principal sum loaned
the owners - the captain. the owners - the captain. thus, the perils of marine navigation have always been always
considered sufficient to take bottomry bonds and
Common elements: respondentia loans out of the ordinary usury laws. In such
cases, there is a real risk of the principal and more than the
1. Exposure of security to marine peril; ordinary legal rate of interest may be lawfully charges.
2. Obligation of the debtor conditioned only upon safe
arrival of the security at the point of destination. LOAN ON BOTTOMRY AND RESPONDENTIA v.
Forms: SIMPLE LOANS

1. Public instrument Q: Distinguish loan on bottomry or respodentia and simple


2. Policy signed by the contracting parties and the broker loans.
taking part therein
3. Private instrument (Art. 720 A:
Contents:
LOAN ON BOTTOMRY OR SIMPLE LOANS
1. Kind, name and registry of the vessel; RESPONDENTIA
2. Name, surname and domicile of the captain; The rate of interest although The rate of interest is subject
3. Names, surnames and domiciles of the borrower and the beyond the lawful rate of to Usury law
lender; interest is not subject to
4. Amount of the loan and the premium stipulated; usury law
5. Time for repayment; There must necessarily exist The existence of a marine
6. Goods pledged to secure repayment; a bona fide marine risk risk or uncertainty of
7. Voyage during which the risk is run (Art.721) transactions is not necessary
When the loan is made The prior lender has a right
MARINE INSURANCE v. LOAN ON BOTTOMRY AND during the voyage the lender of preference on the security
RESPONDENTIA has preference over the over the subsequent ones
previous one: the reason for
Q: Distinguish marine insurance from loan on bottomry or this exception is that the last
respondentia. loan contributes in the
preservation of the things
A: pledged
The contarct must be The said requisite is not
MARINE INSURANCE LOANS ON BOTTOMRY OR reduced at least to writing to always necessary
RESPONDENTIA give rise to judicial action
Consensual contract Real contract: not perfected The action pertaining to the Not extinguished; the lender
unless the money loaned is lender is extinguished by the being reduced merely to
delivered to the borrower absolute loss of the effects unsecured creditor
If the marine perils to be The amount loaned with the on which the loan is made
avoided should take place, interest or premium agreed The loan should be recorded Registration is not necesary
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
in the Registry of Vessels to 4. The amount of the loan and the premium
be effective to third persons stipulated.
5. The time for repayment.
Art. 720. Loans on bottomry or respondentia may be 6. The goods pledged to secure repayment.
executed: 7. The voyage during which the risk is run.

1. By means of a public instrument. The majority of the commentators opine that the requisites
2. By means of a policy signed by the contracting mentioned in the above article are indispensable under
parties and the broker taking part therein. penalty of being void, excepting those indicated in Nos. 1 and
3. By means of a private instrument. 5, as to them the opinions are divided.

Under whichever of these forms the contract is executed, it But the doubts would have been avoided, if in the article
shall be entered in the certificate of the registry of the another paragraph is added providing that the instrument
vessel and shall be recorded in the registry of vessels, lacking any of those requisites will be considered a simple
without which requisites the credits of this kind shall not loan of money with the current interest, without any lien on
have, with regard to other credits, the preference which, the effects for which it is given.
according to their nature, they should have, although the
obligation shall be valid between the contracting parties. Art. 722. The contracts may be made to order, in which case
they shall be transferable by indorsement, and the indorsee
The contracts made during a voyage shall be governed by shall acquire all the rights and shall incur all the risks
the provisions of Articles 583 and 611, and shall be effective corresponding to the indorser.
with regard to third persons from the date of their
execution, if they should be recorded in the registry of Art. 723. Loans may be made in effects and in goods, by
vessels of the port of registry of the vessel before the lapse fixing their value in order to determine the principal of the
of eight days following its arrival. If said eight days should loan.
elapse without the record having been made in the registry
of vessels, the contracts made during the voyage of a vessel Art. 724. The loans may be constituted jointly or separately:
shall produce no effect with regard to third persons, except
from the day and date of their inscription. 1. On the hull of the vessel.
2. On the rigging.
In order that the policy of the contracts executed in accor- 3. On the equipment, provisions, and fuel.
dance with No.2 may have binding force, they must conform 4. On the engine, if the vessel is a steamer.
to the registry of the broker who took part therein. With 5. On the merchandise loaded.
respect to those executed in accordance with No. 3 the
acknowledgment of the signature shall be required. If the loan is constituted on the hull of the vessel, the
rigging, equipment and other goods, provisions, fuel, steam
Contracts which are not reduced in writing shall not give rise engines, and the freightage earned during the voyage on
to judicial action. which the loan is made, shall also be considered as included
in the liability for the loan.
Q: What are the effects of registration?
If the loan is made on the cargo, all that which constitutes
A: the same shall be subject to the repayment; and if on a
particular object of the vessel or of the cargo, only the
1. the loan shall have, with regard to other credits, object concretely and specifically mentioned shall be liable.
the preference which, according to its nature, it
should have (Art. 580 - 8th in the order of Art. 725. No loans on bottomry may be made on the
preference) salaries of the crew or on the profits expected.
2. effective against third persons from the time of
execution/registration Q: What is the reason for the above rule?

Art. 721. In a contract on bottomry or respondentia the A: The salaries of the crew are not capital of the shipowner,
following must be stated: nor are future profits commercial effects.
ject
1. The kind, name, and registry of the vessel. Art. 726. If the lender should prove that he loaned an
2. The name, surname, and domicile of the captain. amount larger than the value of the object liable for the
3. The names, surnames, and domiciles of the person bottomry loan, on account of fraudulent measures
giving and the person receiving the loan.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
employed by the borrower, the loan shall be valid only for return the principal and interest at the legal rate, if that
the amount at which said object is appraised by experts. agreed upon should not be lower.

The surplus principal shall be returned with legal interest for INSTANCES WHEN LOAN ON BOTTOMRY OR RESPONDENTIA
the entire time required for repayment. IS CONSIDERED AS SIMPLE LOAN

Q: A, shipowner, entered into a contract of loan on Q: What are the instances in which a loan on bottomry or
bottomry, with B for the amount of P500,000.00. It was respondentia may be considered a simple loan only?
proven by B that the value of the lost vessel is P300,000.00
on appraisal by experts and A employed fraudulent means A:
in borrowing money. Is the contract of bottomry valid? May
B still recover from A in spite of the total loss of the vessel? a. If the amount loaned is proved to be a larger
than the value of the object liable for the loan
A: Yes, the contract of loan on bottomry is valid but only for on account of fraudulent means employed by
the amount of P300,000.00 which is the appraised value of the borrower, the surplus principal is considered
the vessel loan. as simple loan to be returned with legal interest.
b. If the full amount of the loan given in order to
B can still recover the amount of P200,000.00, the surplus load the vessel should not be used for the cargo,
principal from A, with legal interest for the entire time or given on the goods if all of them could not
required for the payment. have been loaded, the balance is considered as
simple loan to be returned before starting the
Art. 727. If the full amount of the loan contracted in order voyage.
to load the vessel should not be used for the cargo, the c. It the effects on which the loan is taken be not
balance shall be returned before clearing. subjected to risk, the principal shall be
considered loan to be returned with legal
The same procedure shall be observed with regard to the interest.
goods taken as loan, if they were not loaded.
Art. 730. Loans made during the voyage shall have prefer-
Q: What is the reason for the law? ence over those made before the clearing of the vessel, and
they shall be graduated in the inverse order of their dates.
A: The rule of this article is reasonable because the amount
to which it refers has not been applied, voluntarily or The loans for the last voyage shall have preference over
involuntarily, for the purpose of the contract, and because by prior ones.
this way other contracts of different nature are avoided in
being included under the name of loan on bottomry. Should several loans have been made at the same port of
arrival under stress and for the same purpose, all of them
Art. 728. The loan which the captain takes at the point of shall be paid pro rata.
residence of the owners of the vessel shall only affect that
part thereof which belongs to the captain, if the other Q: What is the reason for the rule?
owners or their agents should not have given their express
authorization therefor or should not have taken part in the A: By virtue of these subsequent loans, the provisions ones
transaction. could exist and subsist, and without the former, the loans
with the vessel and its effects would have gone into the
If one or more of the owners should be requested to furnish bottom of the sea.
the amount necessary to repair or provision the vessel, and
they should not do so within twenty-four hours, the interest Q: The shipagent of S/S “Panay” which is making voyage
which the parties in default may have in the vessel shall be from Manila to Zamboanga contracted loan on the ship in
liable for the loan in the proper proportion. the ff. order: at Manila before clearing the vessel,
P20,000.00; Iloilo, the next port of embarkation, P10,000; at
Outside of the residence of the owners, the captain may Cebu, the port of embarkation preceding the final
contract loans in accordance with the provisions of Articles destination of the vessel, P100,000.00, form A,B, and C for
583 and 611. repair of the vessel to continue its voyage. Upon arrival at
Zamboanga, the vessel which was badly damaged and
Art. 729. Should the goods on which money is taken not be unable to make return was sold for P110,000.00. State the
subjected to risk, the contract shall be considered a simple disposition of the proceeds of the sale.
loan, with the obligation on the part of the borrower to

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A: Out of the proceeds of the sale of the vessel after
expenses have been deducted, the P100,000.00 will be paid Art. 732. Lenders on bottomry or respondentia shall suffer,
to A,B, and C in full satisfaction of the loan, and whatever in proportion to their respective interest, the general
may be left will be paid to the lender in Iloilo. The lender at average which may take place in the goods on which the
Manila gets nothing out of the proceeds of the sale. The Code loan is made.
of Commerce provides that the loans made during the voyage
shall have preference over those made before the clearing of In particular averages, in the absence of an express
the vessel, and they shall be graduated by the inverse order agreement between the contracting parties, the lender on
to their dates. The loans for the last voyage shall have bottomry or respondentia shall also contribute in
preference over prior loans. Should several loans have been proportion to his respective interest, should it not belong to
made at a port made under stress and for the same purpose, the kind of risks excepted in the foregoing article.
all of them shall be paid pro rata.
Art. 733. Should the period during which the lender shall run
Q: The S/S “Pimen” of Manila, leaves this port of Jolo, the risk not have been stated in the contract, it shall last,
calling in several others. On arriving at Romblon, the captain with regard to the vessel, engines, rigging, and equipment,
gets a bottomry loan on the merchandise on board. On from the moment said vessel puts to sea until she drops
arriving in Iloilo, he gets another one on the hull of the anchor in the port of destination; and with regard to the
vessel; and finally another one on the engine in Zamboanga. goods, from the time they are loaded on the shore or wharf
What shall be the order of the preference in these of the port of shipment, until they are unloaded in the port
contracts? of consignment.

A: The bottomry taken at Zamboanga shall have priority of Art. 734. In case of shipwreck, the amount for the payment
preference of loans made during the voyage shall be of the loan shall be reduced to the reduced to the proceeds
graudated, in the inverse order of their dates. But the loan of the effects saved, after deducting the costs of the salvage
taken at Romblon on merchandise although named bottomry
loan is not in fact a loan bottomry but a loan on If the loan should be on the vessel or any of her parts, the
respondentia, and it stands on its sole preferential right on freight earned during the voyage for which said loan was
the merchandise independent of the bottomry loans taken at contracted shall also be liable for its payment, as far as it
Zamboanga and Iloilo. In the contract made in Iloilo, being may reach.
constituted on the hull of the loan, rigging, equipment, and
other effects, provisions, fuel, steam engines, and the freight Art. 735. If the same vessel or cargo should be the object of
earned during the voyage on which the loan is made. a loan on bottomry or respondentia and marine insurance,
the value of what may be saved in case of shipwreck shall be
Art. 731. The actions pertaining to the lender shall be divided between the lender and the insurerm in proportion
extinguished by the absolute loss of the goods on which the to the legitimate interest of each one, taking into
loan was made, if it arose from an accident of the sea at the consideration, for this purpose only, the principal with
time and during the voyage designated in the contract, and respect to the loan, and without prejudice to the right of
it is proven that the cargo was on board; but this shall not preference of other creditors in accordance with Art. 580.
take place if the loss was caused by the inherent defect of
the thing, or through the fault or malice, of the borrower, or Art. 736. If there should be delay in the repayment of the
barratry on the part of the captain, or if it was caused by principal and premiums of the loan, only the former shall
damages suffered by the vessel as a consequence of being bear legal interest.
engaged in contraband, or if it arose from having loaded the
merchandise on a vessel different from that designated in SECTION III
the contract, unless this change should have been made by MARINE INSURANCE
reason of force majeure. Proof of the loss as well as of the
existence of the vessel of the goods declared to the lender NOTE: Arts. 737 to 805 of the Code of Commerce have been
as the object of the loan is incumbent upon him who repealed by the “Insurance Act.”
received the loan.

Q: What is the reason for the law?

A: Under this article, the money lender has agreed to run the
proper risks of the sea, but not those caused by the captain
or by the crew. The simple barratry of the captain having
been not distinguished from the fraudulent one, it must be
understood that the exception includes both of them.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
TITLE IV
RISKS, DAMAGES, AND ACCIDENTS OF MARITIME 1. The losses suffered by the cargo from the time of its
COMMERCE embarkation until it is unloaded, either on account
of the inherent defect of the goods or by reason of
Q: What are the risks, damages, and accidents of maritime a marine accident or force majeure, and the
commerce? expenses incurred to avoid and repair the same.
2. The losses and expenses suffered by the vessel in
A: its hull, rigging, arms, and equipments, for the same
causes and reasons, from the time it puts to sea
1. Averages from the port of departure until it anchors in the
2. Arrivals under stress port of destination.
3. Collisions 3. The losses suffered by the merchandise loaded on
4. Shiprecks deck, except in coastwise navigation, if the marine
ordinances allow it.
Section I 4. The wages and victuals of the crew when the vessel
AVERAGES is detained or embargoed by a legitimate order or
force majeure, if the charter has been contracted
Art. 806. For the purposes of this Code the following shall for a fixed sum for the voyage.
be considered averages: 5. The necessary expenses on arrival at port, in order
to make repairs or secure provisions.
1. All extraordinary or accidental expenses which may 6. The lowest value of the goods sold by the captain in
be incurred during the voyage for the preservation arrivals under stress for the payment of provisions
of the vessel or cargo, or both. and to save the crew, to meet any other need of
2. All damages or deterioration which the vessel may the vessel against which the proper amount shall
suffer from the time it puts to sea at the port of be charged.
departure until it casts anchor at the port of 7. The victuals and wages of the crew while the vessel
destination, and those suffered by the merchandise is in quarantine.
from the time they are loaded in the port of 8. The loss inflicted upon the vessel or cargo by
shipment until they are unloaded in the port of reason of an impact or collision with another, if it is
their consignment. accidental and unavoidable. If the accident should
occur through the fault or negligence of the
Art. 807. The petty and ordinary expenses incident to captain, the latter shall be liable for all the damage
navigation, such as those of pilotage of coasts and ports, caused.
lighterage and towage, anchorage, inspection, health, 9. Any loss suffered by the cargo through the faults,
quarantine lazaretto, and other so-called port expenses, negligence, or barratry of the captain or of the
costs of barges, and unloading, until the merchandise is crew, without prejudice to the right of the owner to
placed on the wharf, and other usual expenses of navigation recover the corresponding indemnity from the
shall be considered ordinary expenses to be defrayed by the captain, the vessel, and the freight.
shipowner, unless there is an express agreement to the
contrary. AVERAGE

Exception Q: What is an average?

The foregoing enumerated expenses may be considered also A: An extraordinary or accidental expense incurred during the
as averages when there is an express agreement including voyage in order to preserve the cargo, vessel or both, and all
them as averages damages or deterioration suffered by the vessel from
departure to the port of destination, and to the cargo from
Art. 808. Averages shall be: the port of loading to the port of consignment.

1. Simple or particular. SIMPLE v. GROSS AVERAGE


2. General or gross.
Q: Distinguish simple or particular average from gross or
Art. 809. As a general rule, simple or particular averages general average.
include all the expenses and damages caused to the vessel
or to her cargo which have not inured to the common A:
benefit and profit of all the persons interested in the vessel
and her cargo, especially the following:

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
PARTICULAR OR SIMPLE GROSS OR GENERAL authority of the first
Definition port, within 24 hours
Damages or expenses caused Damages or expenses from arrival,
to the vessel or cargo that did deliberately caused in 5. Ratification by
not inure to the common order to save the captain under oath.
benefit, and borne by vessel, its cargo or (Arts. 813-814)
respective owners. (Art. 809) both from real and
known risk. (Art. 811) Q: Upon whom does the loss fall, if a box of merchandise,
Requisites constituting a part of the cargo of a merchant ship, is wet by
1. common danger; sea water, so that the merchandise is damaged to the
2. deliberate extent of 2/3 of its value?
sacrifice;
3. success; A: The loss falls upon the owner of the goods damaged. The
4. proper formalities owner of the goods which suffered the damage shall bear the
and legal steps. simple or particular because it is a damage caused to the
Liability cargo, not redounding to the benefit and the common profit
of all the persons interested in the vessel and her cargo.
The owner of the goods All the persons having
which gave rise to the an interest in the
expense or suffered the vessel and the cargo A vessel which upon the outbreak if a war took refuge in a
damage shall bear this therein at the time of neutral port, it appearing that her cargo was aggriculutural
average. (Art. 810) the occurrence of the machinery belonging to the subject of a neutral power is
average shall absolutely secure from danger of or confiscation in the event
contribute to satisfy of capture by the enemies of ship’s flag, and flight of the
vessel is a measure of precaution adopted solely and
this average. (Art. 812)
-The insurers (Art.859) exclusively for the preservation of the vessel, and therefore,
and lenders on the resultant damages and expenses incurred by the ship do
bottomry and not constitute a general average to which the cargo is liable,
but a particular average to be borne by the vessel alone.
respondentia shall
likewise contribute.
(Art.732). Expenses or damages incurred not for common safety of the
ship and cargo constitute a particular and not general
Number of interests involved
average.
Only one interest involved Several interests
involved
Art. 810. The owner of the goods which gave rise to the
Share in the damage or expense
expense or suffered the damage shall bear the simple or
100% share In proportion to the
particular averages.
value of the owner’s
property saved Art. 811. As a general rule, general or gross averages shall
include all the damages and expenses which are deliberately
Right to recover caused in order to save the vessel, its cargo, or both at the
No reimbursement There may be same time, from a real and known risk, and particularly the
reimbursement following:
Kinds (not exclusive)
Art. 809 Art. 811 1. The goods or cash invested in the redemption of
Procedure for recovery the vessel or of the cargo captured by enemies,
1. Assembly and privateers, or pirates, and the provisions, wages,
deliberation and expenses of the vessel detained during the
2. Resolution of the time the settlement or redemption is being made.
captain 2. The goods jettisoned to lighten the vessel, whether
they belong to the cargo, to the vessel, or to the
Entry of the resolution crew, and the damage suffered through said act by
in the logbook the goods which are kept on board.
3. The cables and masts which are cut or rendered
3. Detailed minutes useless, the anchors and the chains which are
4. Delivery of the abandoned, in order to save the cargo, the vessel,
minutes to the or both.
maritime judicial
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
4. The expenses of removing or transferring a portion another shipping company at a compensation of P2,000.00.
of the cargo in order to lighten the vessel and place Does this expenditure constitute general average?
it in condition to enter a port or roadstead, and the
damage resulting therefrom to the goods removed A: No, said expenditure does not constitute a general
or transferred. average, the same not having any or all of the requisites of a
5. The damage suffered by the goods of the cargo by general average.
the opening made in the vessel in order to drain it
and prevent its sinking. Q: What kind of average are the wages and victuals of the
6. The expenses caused in order to float a vessel crew during the time she should be embargoed or detained
intentionally stranded for the purpose of saving it. by force majeure or by order of the Government?
7. The damage caused to the vessel which had to be
opened, scuttled or broken in order to save the A: If the vessel is chartered by the month, the wages and
cargo. victuals of the crew during the time the vessel should be
8. The expenses for the treatment and subsistence of embargoed or detained, are general or gross averages but if
the members of the crew who may have been the vessel is chartered for a fixed sum of the voyage, they are
wounded or crippled in defending or saving the simple or particular averages.
vessel.
9. The wages of any member of the crew held as Q: Give instances of gross or general averages.
hostage by enemies, privateers, or pirates, and the
necessary expenses which he may incur in his A:
imprisonment, until he is returned to the vessel or
to his domicile, should he prefer it. 1. The expenses directly incurred in the salvage of a
10. The wages and victuals of the crew of a vessel char- vessel and cargo from a real or known risk
tered by the month, during the time that it is 2. When in conformity of the maritime regulations
embargoed or detained by force majeure or by cargo is carried on the deck of a steamer engaged in
order of the Government, or in order to repair the coastwise trade, the jettison of the cargo upon
damage caused for the common benefit. occasion of peril
11. The depreciation resulting in the value of the goods 3. When a ship shall have entered a port or refuge in
sold at arrivals under stress in order to repair the consequence of accident, sacrifice, or other extra-
vessel by reason of gross average. ordinary circumstance which renders that necessary
12. The expenses of the liquidation of the average for common safety, the expense of entering such
port shall be admitted as general average.
REQUISITES FOR GENERAL AVERAGE
Art. 812. In order to satisfy the amount of the gross or
Q: What are the requisites for general average? general averages, all the persons having an interest in the
vessel and cargo therein at the time of the occurrence of the
A: average shall contribute.

1. There must be a common danger- both the ship and Q: The steamer X en route from Masbate runs into a storm
cargo are subject to the same danger whether and the captain, as a measure of urgent necessity, jettisons
during the voyage, or in the port of loading or a part of cargo to lighten the vessel. What kind of average is
unloading; that the danger arises from accidents of this?
the sea, dispositions of the authority, or faults of
men A: This is a kind of general or gross average. All the persons
2. For the common safety, part of the vessel or cargo having an interest in the vessel and her cargo at the time of
or both is sacrificed deliberately the occurrence of the average shall contribute.
3. From the expenses or damages caused follows the
successful saving of the vessel and cargo. PROCEDURE FOR GROSS AVERAGE
4. The expenses or damages should have been incurred
or inflicted after taking proper legal steps and Art. 813. In order to incur the expenses and cause the
authority. damages corresponding to gross average, there must be a
resolution of the captain, adopted after deliberation with
Q: The vessel S/S Oriental left Manila bound for Cebu, with the sailing mate and other officers of the vessel, and after
stop-over at Tacloban. Upon leaving the latter port but still hearing the persons interested in the cargo who may be
within its waters, the ship ran aground and could not move present.
by its own power; hence, the shipowner had it refloated by

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
If the latter should object, and the captain and officers or a
majority of them, or the captain, if opposed to the majority, GENERAL OR SIMPLE SIMPLE OR GROSS AVERAGE
should consider certain measures necessary, they may be AVERAGE
executed under his responsibility, without prejudice to the Both the ship and the cargo There is no such common
right of the shippers to proceed against the captain before are subject to the same danger to both the vessel
the competent judge or court, if they can prove that he danger which is real and and the cargo
acted with malice, lack of skill, or negligence. known
Part of the vessel or the The expenses and damage
If the persons interested in the cargo, being on board the cargo is sacrificed caused to the vessel of her
vessel, have not been heard, they shall not contribute to the deliberately cargo are neither deliberately
gross average, their share being chargeable against the made nor subject to any legal
captain, unless the urgency of the case should be such that step or authority
the time necessary for previous deliberation was wanting. From the expenses or The expenses or damage
damage caused follows the suffered have not inured to
Art. 814. The resolution adopted to cause the damages successful saving of the such common benefit
which constitute general average must necessarily be vessel or her cargo
entered in the log book, stating the motives and reasons on All the persons having an The owner of the things
which it is based, the votes against it and the reason for the interest in the vessel and which give rise to the
dissent, should there be any, and the irresistible and urgent cargo saved shall contribute expenses or suffered the
causes which impelled the captain if he acted of his own to indemnify the expenses damages shall bear the same.
accord. and damage caused

In the first case the minutes shall be signed by all the Art. 816. In order that the goods jettisoned may be included
persons present who could do so before taking action, if in the gross average and the owners thereof be entitled to
possible; and if not, at the first opportunity. In the second indemnity, it shall be necessary in so far as the cargo is con-
case, it shall be signed by the captain and by the officers of cerned that their existence on board be proven by means of
the vessel. the bill of lading; and with regard to those belonging to the
vessel, by means of the inventory prepared before the
In the minutes, and after the resolution, shall be stated in departure, in accordance with the first paragraph of Article
detail all the goods jettisoned, and mention shall be made 612.
of the injuries caused to those kept on board. The captain
shall be obliged to deliver one copy of these minutes to the Art. 816. In order that the goods jettisoned may be included
maritime judicial authority of the first port he may make, in the gross average and the owners thereof be entitled to
within twenty- four hours after his arrival, and to ratify it indemnity, it shall be necessary in so far as the cargo is con-
immediately under oath. cerned that their existence on board be proven by means of
the bill of lading; and with regard to those belonging to the
Art. 815. The captain shall direct the jettison, and shall vessel, by means of the inventory prepared before the
order the goods cast overboard in the following order: departure, in accordance with the first paragraph of Article
612.
1. Those which are on deck, beginning with those
which embarrass the maneuver or damage the Art. 817. If in the lightening a vessel on account of a storm,
vessel, preferring, if possible, the heaviest ones in order to facilitate its entry into a port or roadstead, part
with the least utility and value. of her cargo should be transferred to lighters or barges and
2. Those which are below the upper deck, always be lost, the owner of said part shall be entitled to
beginning with those of the greatest weight and indemnity, as if the loss had originated from a gross
smallest value, to the amount and number average, the amount thereof being distributed between the
absolutely indispensable. vessel and cargo from which it came.
If, on the contrary, the merchandise transferred should be
SIMPLE v. GROSS AVERAGE saved and the vessel should be lost, no liability may be
demanded of the salvage.
Q: Distinguish general average and simple or particular
average. Art. 818. If, as a necessary measure to extinguish a fire in
port, roadstead, creek, or bay, it should be decided to sink
A: any vessel, this loss shall be considered gross average, to
which the vessels saved shall contribute.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law

Section II A:
ARRIVALS UNDER STRESS
1. Captain should determine during the voyage if
Art. 819. If during the voyage the captain should believe there is well founded fear of seizure, privateers
that the vessel cannot continue the trip to the port of and other valid grounds;
destination on account of the lack of provisions, well- 2. Captain shall assemble the officers and summon
founded fear of seizure, privateers, or pirates, or by reason the persons interested in the cargo who may
of any accident of the sea disabling it to navigate, he shall attend the meeting but without a right to vote;
assemble the officers and shall summon the persons 3. The officers shall determine and agree if there is
interested in the cargo who may be present, and who may well-founded reason after examining the
attend the meeting without the right to vote; and if, after circumstances. The captain shall have the
examining the circumstances of the case, the reason should deciding vote;
be considered well-founded, the arrival at the nearest and 4. The agreement shall be drafted and the proper
most convenient port shall be agreed upon, drafting and minutes shall be signed and entered in the log
entering the proper minutes, which shall be signed by all, in book;
the log book. 5. Objections and protests shall likewise be
entered in the minutes.
The captain shall have the deciding vote, and the persons
interested in the cargo may make the objections and LAWFUL ARRIVAL UNDER STRESS
protests they may deem proper, which shall be entered in
the minutes in order that they may make use thereof in the Art. 820. An arrival shall not be considered lawful in the
manner they may consider advisable. following cases:

Arrival under stress 1. If the lack of provisions should arise from the
failure to take the necessary provisions for the
Q: What is arrival under stress? voyage according to usage and custom, or if they
should have been rendered useless or lost through
A: Also known as “ARRIBADA.” It is the arrival of a vessel at bad stowage or negligence in their care.
the nearest and most convenient port, if during the voyage 2. If the risk of enemies, privateers, or pirates should
the vessel cannot continue the trip to the port of destination not have been well known, manifest, and based on
on account of lack of provisions, well-founded fear of seizure, positive and provable facts.
privateers or pirates, or by reason of any accident of the sea 3. If the defector the vessel should have arisen from
disabling it to navigate. the fact that it was not repaired, rigged, equipped,
and prepared in a manner suitable for the voyage,
Q: What are the legitimate causes for such arrival? or from some erroneous order of the captain.
4. Whenever malice, negligence, want of foresight, or
A: lack of skill on the part of the captain exists in the
act causing the damage.
1. Lack of provisions
2. Well-founded fear of seizure, privateers or pirate NOTE: This article enumerates the instances when arrival
3. By reason of any accident of the sea disabling it to under stress is improper.
navigate

NOTE: The protest to be made by the captain should be made


within 24 hours before maritime authority or Filipino consul
in case of a foreign country

It is the duty of the captain to continue the voyage without


delay after the cause of the arrival under stress has ceased
failing in such duty renders him liable. However, in case the
cause has been risk of enemies, there must first be an
assembly before departure. (Art. 825)

PROCEDURE FOR ARRIVAL UNDER STRESS

Q: What are the procedural steps for an arrival under stress?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
A:
LAWFUL v. UNLAWFUL ARRIVAL UNDER STRESS 1. The unloading must be necessary to make repairs or
there must be danger that the cargo may suffer damage
When lawful When unlawful Who bears 2. The captain must be authorized by either a competent
expenses: court or the Phil. consul, depending on the port of
arrival
The inability to Lack of provisions The shipowner or
continue voyage due to negligence ship agent is Art. 823. The custody and preservation of the cargo which
is due to lack of to carry according liable in case of has been unloaded shall be entrusted to the captain, who
provisions, well- to usage and unlawful arrival shall be responsible for the same, except in cases of force
founded fear of customs; under stress. But majeure.
seizure, Risk of enemy not they shall not be
privateers, well known or liable for the Art. 824. If the entire cargo or part thereof should appear to
pirates, or manifest damages caused be damaged, or there should be imminent danger of its
accidents of the Defect of vessel by reason of a being damaged, the captain may request of the competent
sea disabling it to due to improper lawful arrival. judge or court, or of the consul in a proper case, the sale of
navigate. (Art. repair; and (Art. 821) all or of part of the former, and the person taking
819) Malice, negligence, cognizance of the matter shall authorize it, after an
lack of foresight or examination and declaration of experts, advertisements,
skill of captain. and other formalities required by the case, and an entry in
(Art. 820) the book, in accordance with the provisions of Article 624.

The captain shall, in a proper case, justify the legality of his


Art. 821. The expenses of an arrival under stress shall always conduct, under the penalty of answering to the shipper for
be for the account of the shipowner or agent, but they shall the price the merchandise would have brought if it had
not be liable for the damages which may be caused the arrived in good condition at the port of destination.
shippers by reason of the arrival, provided the latter is
legitimate. Art. 825. The captain shall be responsible for the damages
caused by his delay, if after the cause of the arrival under
Otherwise, the ship agent and the captain shall be jointly stress has ceased, he should not continue the voyage.
liable.
If the cause of the arrival should have been the fear of
Art. 822. If in order to make repairs to the vessel or because enemies, privateers, or pirates, a deliberation and
there is danger that the cargo may suffer damage, it should resolution in a meeting of the officers of the vessel and
be necessary to unload, the captain must request persons interested in the cargo who may be present, in
authorization from the competent judge or court for the accordance with the provisions contained in Article 819,
removal, and carry it out with the knowledge of the person shall precede the departure.
interested in the cargo, or his representative, should there
be any.

In a foreign port, it shall be the duty of the Filipino consul, SECTION III
where there is one, to give the authorization. COLLISIONS

In the first case, the expenses shall be for the account of the Art. 826. If a vessel should collide with another, through the
ship agent or owner, and in the second, they shall be fault, negligence, or lack of skill of the captain, sailing mate,
chargeable against the owners of the merchandise for or any other member of the complement, the owner of the
whose benefit the act was performed. vessel at fault shall indemnify the losses and damages
suffered, after an expert appraisal.
If the unloading should take place for both reasons, the
expenses shall be divided proportionately between the Q: What is collision?
value of the vessel and that of the cargo.
A: In its strict sense, collision means the impact of 2 vessels
REQUISITES FOR UNLOADING OF CARGO both moving and is distinguished from allusion, which
designates the striking of a moving vessel against one that is
Q: What are the requisites for the captain to unload the stationary.
cargo arriving under stress?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
But collision is used in a broad sense to include allusion, and the highest degree of diligence her course and
perhaps another species of encounters between vessels. movements so as to be able to adopt such timely
means of precaution as will prevent the 2 boats from
COLLUSION v. ALLUSION coming into contact.
3. The third division covers the time between the
Q: Distinguish collision from allusion. moment when collision has become a practical
certainty and the moment of actual contract. The
A: vessel which has forced the privileged vessel into
danger is responsible even if the privileged vessel
COLLISION ALLUSION has committed an error within that zone.
Impact of two vessels both of Impact between a moving
which are moving. vessel and a stationary one. Thus, the fault on the part of the sailing vessel at the
rd
moment preceding a collision, that is during the 3
division of time, does not absolve the steamship
VESSEL; NAVIERO which has suffered herself and a sailing vessel to get
into such dangerous proximity as to cause inevitable
Q: What does the word “vessel” under this section mean? alarm and confusion and a collision results as
consequence.
A: The word “vessel” means “maritime” vessel, and in order
to be such, the vessel being not an accessory to another Q: What is the effect of fault of privileged vessel during third
vessel, must be licensed to engage in the transportation of zone?
passengers and/or freight by sea (not merely in rivers, inlets,
covers or bays), whether in foreign or in coastwise trade. A: If a vessel having a right of way suddenly changes its
course during the third zone, in an effort to avoid an
Q: How about “naviero”? imminent collision due to the fault of another vessel, such act
may be said to be done in extremis, and even if wrong,
A: It means the owner and is further to be inferred from Art. cannot create responsibility on the part of said vessel with
837, which limits the civil liability expressed in Art. 826 to the the right of way. Thus, it has been held that fault on the part
value of the vessel with all her appurtenances and all the of the sailing vessel at the moment preceding a collission,
freight earned during voyage. There would have been no that is, during the third division of time, does not absolve the
propriety in limiting the liability of the vessel unless the steamship which has suffered herself and a sailing vessel to
owner were understood to be the person liable. get into such dangerous proximity as to cause inevitable harm
and confusion, and a collision results as a consequence. The
In the term naviero, both the shipowner and the ship agent steamer having a far greater fault in allowing such proximity
are liable solidarily for collisions, being tortuous act. We are to be brought about is chargeable with all the damages
of the opinion that both owner and agent can be held liable resulting from the collission; and the act of the sailing vessel
where both are impleaded together. having been done in extremis and even wrong, is not
responsible for the result.
ZONES OF TIME IN COLLISION
ERROR IN EXTREMIS
Q: What are the zones of time in collision of vessels?
Q: What is an error in extermis?
A:
A: A vessel must not approach so near a privileged vessel and
1. The first division covers all the time up to the in such a course as to alarm a man of ordinary skill and
moment when the risk of collision may be said to prudence. If the man on the privileged vessel makes an
have begun. Each vessel is free to direct its course as improper maneuver, he is not responsible.
it deems best without reference to the movements
of the other vessel. Q: What are the instances where the evidence of negligence
2. The second division covers the time between the is not sufficient?
moment when the risk of collision begins and the
moment when it has become a practicable certainty. A: The opinion of a witness that the accident was caused by
The burden is on the vessel required to keep away the negligence of defendant, when he does not testify to any
and avoid the danger. Thus, where a steamship and facts upon which such opinion is bases, does not prove such
sailing vessel are approaching each other from negligence
opposite directions, the steamship, from the
moment the sailing vessel is seen shall watch with
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Q: Can a foreign corp. not engaged in business or not 1. If A and B collided with each other and is not shown by
registered in the Philippines maintain action for damages on proof which of the 2 is blame-worthy, each owner of the
collision? respective vessel shall suffer his own damage but both
shall be solidarily liable for the damage occasioned to
A: Yes. their cargoes. This case is deemed as if the collision is
imputable to both vessels, since it cannot be
Q: Are the passengers allowed to intervene in action determined which one of the 2 vessels was the cause of
between vessels in collision? the collision.
2. Under the 2 preceding articles combined, the rule of
A: No. He has no legal interest in the matter in litigation, or in liability announced in Art. 827 is applicable not only to
the success of either of the parties, or an interest against the case where both vessels may be shown to be
both. actually blame-worthy but also to case where it is
obvious that only one was at fault but the proof does
LIABILITY OF SHIP-OWNER AND SHIP AGENT not show it.
FOR ACTS OF CAPTAIN 3. Thus, under Arts. 827 and 828, in case of collision
between 2 vessels at sea, both are solidarily liable for
Q: When is the shipowner and ship-agent liable for the acts the loss of cargo carried by either to the full extent of
of the captain? the value thereof, not only in the case where both
vessels may be shown to be actually blame-worthy but
A: also in the case where it is obvious that only one was at
fault but the proof does not show it.
1. For the obligation contracted by the captain to
repair, equip, and provision the vessel, provided the DOCTRINES OF LAST CLEAR CHANCE AND CONTRIBUTORY
creditor proves that the amount claimed was NEGLIGENCE NOT APPLICABLE
invested therein
2. For damages arising from the conduct of the captain Q: Is the doctrine of last clear chance applicable in collision
and for safety of passengers, transported by the of vessels?
vessel
3. For those enumerated in Art. 618 of the Code of A: The doctrine of last clear chance does not apply in collision
Commerce, including the captain’s misuse of powers of vessels.
and non-fulfillment of his duties
4. For damages to third persons for culpa aquiliana or Q: How about doctrine of contributory negligence?
tort committed by the captain except collision with
another vessel, unless the shipowner or ship-agent A: It is also not applicable to collision of vessels at sea under
proved that they observed all diligence of a good the Code of Commerce, hence, such case is deemed as if the
father of a family to prevent damage. collision is imputable to both vessels.
5. For damages if the vessel should collide with
another, through fault, negligence, or want of skill of Art. 829. In the cases above mentioned the civil action of
the captain, sailing mate, or other member of the the owner against the person causing the injury as well as
complement. the criminal liabilities, which may be proper, are reserved.

WHEN COLLISION IMPUTABLE TO BOTH VESSELS COLLISION DUE TO FORTUITOUS EVENT

Art. 827. If the collision is imputable to both vessels, each Art. 830. If a vessel should collide with another through
one shall suffer its own damages, and both shall be fortuitous event or force majeure, each vessel and its cargo
solidarily responsible for the losses and damages occasioned shall bear its own damages.
to their cargoes.
If A collided with B because of strong hurricane which caused
If vessels A and B collided with each other through the fault the collision, each owner of the respective vessel and his
of their respective captains, each owner of the respective cargo shall suffer their respective damage
vessel shall suffer his own damage but both shall be solidarily
liable for the damage occasioned to their cargoes Art.831. If a vessel should be forced by a third vessel to
collide with another, the owner of the third vessel shall
Art. 828. The provisions of the preceding article are indemnify the losses and damages caused, the captain
applicable to the case in which it cannot be determined thereof being civilly liable to said owner.
which of the two vessels has caused the collision.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
If A collided with B through the fault of the captain of vessel 1. It is not necessary to preserve the rights of a person
rd
C, the shipowner of the 3 vessesl C shall indemnify the aboard a motor boat engaged in conveying passengers
rd
damage caused. The captain of the 3 vessel shall be civilly between ship and shore who is injured in a collision
liable to the owner thereof. between the motor boat and the larger vessel.
2. Recovery of damages suffered by a group of fisherman
Art. 832. If, by reasons of a storm or other cause of force as a result of collision between the boats manned by
majeure, a vessel which is propely anchored and moored them and a steamer, occasioned by the negligence of
should collide with those nearby, causing them damages, the latter.
the injury occasioned shall be considered as particular 3. Maintenance of civil action under Arts. 2176 and 2180
average of the vessel run into. of the Civil Code to recover damages for tort.

If A which was properly anchored at the port collided with COMPETENT PERSONS WHO CAN ADMIT THE PROTEST
and caused damage to vessel B, because of storm or force
majeure, vessels A and B shall suffer their own respective Q: Who are the competent persons who can admit protest?
damage. The injury occasioned in this case shall be
considered as a particular average of the vessel run into. A:
1. Justice of Peace, and in his absence
Art. 833. A vessel which, upon being run into, sinks 2. Auxiliary justice of peace
immediately, as well as that which, having been obliged to
make a port to repair the damages caused by the collision, is In case of an auxiliary justice of peace the ff. are the
lost during the voyage or is obliged to be stranded in order presumptions:
to be saved, shall be presumed as lost by reason of collision.
a. The justice of peace was absent
Art. 834. If the vessels colliding with each other should have b. Auxillary had authority to act
pilots on board discharging their duties at the time of the
collision, their presence shall not exempt the captains from Art. 836. With respect to damages caused to persons or to
the liabilities they incur, but the latter shall have the right to the cargo, the absence of a protest may not prejudice the
be indemnified by the pilots, without prejudice to the persons interested who were not on board or were not in a
criminal liability which the latter may incur. condition to make known their wishes.

Art. 835. The action for the recovery of losses and damages EXCUSABLE CONDITION OF A PERSON FOR MAKING
arising from collisions cannot be admitted if a protest or PROTEST
declaration is not presented within twenty-four hours
before the competent authority of the point where the A person who on account of a collision has suffered physical
collision took place, or that of the first port of arrival of the injuries sufficient to keep him in a hospital for many months
vessel, if in Philippine territory and to the consul of the is excused from the requirement to make protest within 24
Philippines, if it occurred in a foreign country. hours from collision.

WHEN PROTEST IS A CONDITION PRECEDENT Art. 837. The civil liability incurred by the shipowners in the
cases prescribed in this section, shall be understood as
Q: What are the cases where protest within 24 hours is limited to the value of the vessel with all its appurtenances
required as condition precedent? and freightage earned during the voyage.

A: Q: What are the instances in which the total loss of vessel


will exempt shipowner or agent from civil liability?
1. When the vessel makes arrival under stress
2. In case of shipwreck A:
3. In case the vessel has gone through a hurricane or
when the captain believes that the cargo has a. Extinction of civil liability for the indemnities which
suffered damages or averages arises from the conduct of the captain in te vigilance
4. Maritime collisions of vessels. over the goods and for the safety of passengers in
maritime transportation
Q: When is it not required? b. Extinction of rights both as regards the right of the
crew including the captain to demand wages and the
A: right of the shipowner or agent to recover advances
made, if the vessel and her cargo should be totally
lost by reason of capture or shipwreck

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
c. Extinction of civil liability incurred by the shipowner A: The international rule is to the effect that the right of
or agent in cases of maritime collisions. abandonment of vessels, as a legal limitation of shipowner’s
liability does not apply to cases where the injury or the
Q: Is these rules where the total loss of the vessel with all average is due to the shipowner’s own fault.
her equipment and the freight which will exempt the
shipowner or the agent from civil liability applicable to river WORKMEN’S COMPENSATION ACT
and bay traffic?
Q: Explain: The shipowner or the ship-agent may still be
A: No because: held liable under the Workmen’s Compensation Act inspite
loss of vessel.
a. They are provisions found only under the Maritime
Commerce of the Code A: It has been repeatedly stated that the Workmen’s
b. They were adopted to offset the adverse conditions Compensation Act was enacted to abrogate the common law
of innumerable hazards and perils attending and our Civil Code upon culpable acts and omissions, and that
maritime trade and sea voyage which conditions are the employer need not be guilty or neglect or fault, in order
not present under river and bay traffic. that responsibility may attach to him; and the shipowner was
liable to pay compensation provided for in the Workman’s
LIMITED LIABILITY OF THE SHIPOWNER OR SHIP-AGENT Compensation Act, notwithstanding the fact the motorboat
was totally lost.
They are not liable beyond the vessel itself causing the
collision and other things pertaining thereto. If an accident is compensable under the Workman’s
Compensation Act, it must be compensated even when the
EFFECT OF LOSS OF THE VESSEL WITH REGARD TO LIABILITY workman’s right is not recognized by or is in conflict with
IF NO INSURANCE OR FREIGHT other provisions of the Civil Code or Code of Commerce. The
reason for this rule is that the Workmen’s Compensation Act
Q: What is the effect of loss of the vessel with regard to was enacted by the legislature in abrogation of the existing
liability if no insurance or freight. laws.

A: The responsibility of the owner or agent of a vessel for the Art. 838. When the value of the vessel and her
damage caused by collision is extinguished where the said appurtenances should not be sufficient to cover all the
vessel is sunk and totally lost by reason of the collusion. liabilities, the indemnity due by reason of the death or
Where, however, such vessel is insured and the insurance is injury of persons shall have preference.
collected by the owner, the insurance substitutes the vessel
and the owner becomes responsible for the injuries caused to
the extent of the insurance collected. If the vessel was not Art. 839. If the collision should take place between
insured, then the freights earned shall answer for the civil Philippine vessels in foreign waters, of if having taken place
liability of the ship-owner. in the open seas, and the vessels should make a foreign
port, the Filipino consul in said port shall hold a summary
Q: If the vessel at fault has been sunk and its owner investigation of the accident, forwarding the proceedings to
collected insurance thereron, would this fact make any the Secretary of the Department of Foreign Affairs for
difference in his liability? continuation and conclusion.

A: No. The insurance substitutes the vessel and the owner


becomes responsible to the extent of the insurance collected.
SECTION IV
Q: Explain the liability of the shipowner or shipagent for SHIPWRECKS
collision in connection with their contract of carriage.
Q: What is shipwreck?
A: If the shipowner or agent may in any way be held civilly
liable at all for injury to or death of passengers arising from A: In its popular sense, it means a ship which has received
negligence of the captain in cases of collisions or shipwrecks, injuries rendering her incapable of navigation. It is also
his liability is merely co-existent with his interest in the vessel defined as the loss of a vessel at sea, either by being
such that a total loss thereof results in its extinction. swallowed up by the waves, by running against a thing at sea,
or on the coast.
Q: What is the exception to the above rule?
Art. 840. The losses and deteriorations suffered by a vessel
and her cargo by reason of shipwreck or stranding shall be

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
individually for the account of the owners, the part which shipwreck shall be divided between the lender and
may be saved belonging to them in the same proportion. the insurer, in proportion to the legitimate interest
of each one, taking into consideration for this
Art. 841. If the wreck or standing should be caused by the purpose only, the principal with respect to te loan
malice,e negligence, or lack of skill of the captain, or and without prejudice to the right of preference of
because the vessel put to sea insufficiently repaired and other creditors in accordance with Art. 580.
equipped, the ship agent or the shippers may demand
indemnity of the captain for the damages caused to the Art. 842. The goods saved from the wreck shall be specially
vessel or to the cargo by the accident, in accordance with bound for the payment of the expenses of the respective
the provisions contained in Articles 610, 612, 614, and 621. salvage, and the amount thereof must be paid by the
owners of the former before they are delivered to them,
WHO BEARS THE LOSSES IN SHIPWRECK and with preference over any other obligation if the
merchandise should be sold.
Q: Who bears the losses in shipwreck?
Q: What are the respective obligations of the ship and cargo
A: The loss of a ship or cargo in wreck due to accident or as to the salvage expenses?
force majeure must, as a general rule, fall upon their
respective owners, except in cases where the wrecking or A: Where a ship and her cargo are saved together, the
standing of the vessel occurred through: salvage allowance should be charged against the ship and
cargo in the proportion of their respective values, the same
a. Malice as in the case of general average; and neither is liable for the
b. Carelessness or lack of skill on the part of the captain salvage due from the other. Therefore, where a personal
c. Art. 841 of Code of Commerce action is brought by the salvor against the owner of the ship,
the liability of the latter is limited to such part of the salvage
Under which the captain shall be responsible for the wreck or compensation due for the entire service as is proportionate
strading of the vessel, and there is in said article no provision to the value of the ship.
whatever by which the agent or shipowner is made
responsible. Art. 843. If several vessels sail under convoy, and any of
them should be wrecked, the cargos saved shall be
OTHER EFFECTS OF SHIPWRECK distributed among the rest in proportion to the amount
which each one is able to take.
Q: What are the other effects of shipwreck?
If any captain should refuse, without sufficient cause, to
A: receive what may correspond to him, the captain of the
wrecked vessels shall enter a protest against him, before
a. The captain shall make the proper protest in due two sea officials, of the losses and damages resulting
form at the first port reached before the competent therefrom, ratifying the protest within twenty-four hours
authority or Filipino consul within 24 hours, after arrival at the first port, and including it in the
specifying therein all incidents of the wreck proceedings he must institute in accordance with the
b. If the vessel and her cargo should be totally lost, by provisions contained in Article 612.
reason of capture, or shipwreck, all rights shall be
extinguished both as regards the right of the crew to If it is not possible to transfer to the other vessels the entire
demand wages and the right of the shipowner ot cargo of the vessel wrecked, the goods of the highest value
agent of the shipowner or agent to recover advances and smallest volume shall be saved first, the designation
made. thereof to be made by the captain with the concurrence of
c. Neither the goods lost by reason of shipwreck or the officers of his vessel.
stranding or seized by pirates or enemies, shall pay
freight, if the freight should have been paid in Art. 844. A captain who may have taken on board the goods
advance, it shall be returned, unless there is an saved from the wreck shall continue his course to the port
agreement to the contrary. of destination, and on arrival shall deposit the same, with
d. The amount liable for the payment of the loan judicial intervention, at the disposal of their legitimate
(bottomry or respondentia) shall be reduced to the owners.
proceeds or the effects saved, after deducting the
costs of the salvage. In case he changes his course, if he can unload them at the
e. If the same vessel or cargo should be the object of a port of which they were consigned, the captain may make
loan on bottomry or respondentia and marine said port if the shippers or supercargoes present and the
insurance, the value of what may be saved in case of officers and passengers of the vessel consent thereto; but

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
he may not do so, even with said consent, in time of war or shall be cited and heard, should they not have renounced
when the port is difficult and dangerous to make. this right.

The owners of the cargo shall defray all the expenses of this Should they not be present or should they have no legal
arrival as well as the payment of the freightage which, after representative, the liquidation shall be made by the consul
taking into consideration the circumstances of the case, may in a foreign port, and where there is none, by the competent
be fixed by agreement or by a judicial decision. judge or court, according to the laws of the country and for
the account of the proper party.
Art. 845. If on the vessel there should be no person
interested in the cargo who can pay the expenses and When the representative is a person well known in the place
freightage corresponding to the salvage, the competent where the liquidation is made, his intervention shall be
judge or court may order the sale of the part necessary to admitted and shall produce legal effects, even though he be
cover the same. This shall also be done when its authorized only by a letter of the ship agent, the shipper, or
preservation is dangerous, or when in a period of one year it the insurer.
should not have been possible to ascertain who are its
legitimate owners. Art. 848. Claims for averages shall not be admitted if they
do not exceed 5 per cent of the interest which the claimant
In both cases the proceedings shall be with the publicity and may have in the vessel or in the cargo if it be gross average,
formalities prescribed in Article 579, and the net proceeds of and 1 per cent of the goods damaged if particular average,
the sale shall be safely deposited, in the discretion of the deducting in both cases the expenses of appraisal, unless
judge or court, so that they may be delivered to the there is an agreement to the contrary.
legitimate owner thereof.
Art. 849. The damages, averages, loans on bottomry and
TITLE V respondentia and their premiums, and any other losses,
PROVISIONS COMMON TO ALL KINDS OF AVERAGES shall not earn interest by reason of delay until after the
lapse of the period of 3 days, to be counted from the day on
SECTION I which the liquidation may have been concluded and
PROOF OF LIQIIDATION OF AVERAGES communicated to the persons interested in the vessel, in the
cargo, or in both at the same time.
Art. 846. Those interested in the proof and liquidation of
averages may mutually agree and bind themselves at any Art. 850. If by reason of one or more accidents of the sea,
time with regard to the liability, liquidation and payment particular and gross averages of the vessel, of the cargo, or
thereof: of both, should take place on the same voyage, the
expenses and damages corresponding to each average shall
In the absence of agreements, the following rules shall be be determined separately in the port where the repairs are
observed: made, or where the merchandise is discharged, sold, or
utilized.
1. The proof of the average shall take place in the port
where the repairs are made, should any be For this purpose the captains shall be obliged to demand of
necessary, or in the port of unloading. the expert appraisers and of the contractors making the
2. The liquidation shall be made in the port of repairs, as well as of those appraising and taking part in the
unloading, if it is a Philippine port. unloading, repair, sale, or utilization of the merchandise,
3. If the average occurred outside of the jurisdictional that in their appraisements or estimates and accounts they
waters of the Philippines, or the cargo has been set down separately and accurately the expenses and
sold in a foreign port by reason of an arrival under damages pertaining to each average, and in those of each
stress, the liquidation shall be made in the port of average those corresponding to the vessel and to the cargo,
arrival. also stating separately whether or not there are damages
4. If the average has occurred near the port of proceeding from inherent defect of the thing and not from
destination, so that said port can be made, the accident of the sea; and in case there should be expenses
proceedings mentioned in rules 1 and 2 shall be common to the different averages and to the vessel and its
held there. cargo, the amount corresponding to each must be estimated
and stated distinctly.
Art. 847. In the case where the liquidation of the averages is
made privately by virtue of agreement, as well as when a
judicial authority intervenes at the request of any of the
parties interested who do not agree thereto, all of them

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UNIVERSITY OF SANTO TOMAS
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Kenneth & King Hizon (2A)- UST Faculty of Civil Law
means involve the suppression of the right of action which is
SECTION II elsewhere recognized in the shipper against the shipowner.
LIQUIDATION OF GROSS AVERAGES
WHEN SHIPOWNER OR SHIP-AGENT NOT LIABLE FOR THE
Art. 851. At the instance of the captain, the adjustment, ACTS OF THE CAPTAIN
liquidation, and distribution of gross averages shall be held
privately, with the consent of all the parties in interest. Q: What are the cases in maritime transportation where the
shipowner or ship-agent will not be liable for the acts of the
For this purpose, within forty-eight hours, following the captain?
arrival of the vessel at the port, the captain shall convene all
the persons interested in order that they may decide as to A:
whether the adjustment or liquidation of the gross average
is to be made by experts and liquidators appointed by 1. For the damage caused to the vessel or to the cargo
themselves, in which case did shall be so done if the due to shipwreck or stranding of the vessel caused
interested parties agree. by the malice, negligence, or lack of skill of the
captain, or because the vessel put to sea was
If an agreement is not possible, the captain shall apply to insufficiently repaired and equipped.
the competent judge or court, who shall be the one in the 2. For the contracts made during the voyage referring
port where these proceedings are to be held in accordance to one or more of the obligations mentioned in nos.
with the provisions of this Code, or to the consul of the 8 and 9 of Art. 580 of the Code of Commerce, the
Philippines should there be one, and should there be none, omission of the captain to take the formality of
to the local authority when they are to be held in a foreign applying to the judge or court if he is in Philippine
port. territory and otherwise to the Filipino consul, should
there be any, and his absence to the judge or court,
REQUIREMENTS UNDER SEC. 851 or to the proper local authority, shall make the
captain personally liable to the creditors who may be
Q: What is the requirement under Sec. 851? prejudiced through his fault.
3. For his obligations contracted by the captain if the
A: The captain is required to initiate the proceeding for latter exceeds his powers and privileges pertaining
adjustment, liquidation, and distribution of any gross average to him by reason of his position or conferred upon
to which the circumstances of the voyage may have given him by the shipowner or shio-agent and the
origin; and it is therefore his duty to take the proper steps to amounts claimed are not used for the benefit of the
protect any shipper whose goods may have been jettisoned vessel.
for the general safety. 4. For the subsidiarily liability of the captains who
knowing that a sailor is in the service of another
Art. 852. If the captain does not comply with the provisions vessel, should have made a new agreement with
of the preceding article, the ship agent or the shippers shall him, without requiring of him the written permission
demand the liquidation, without prejudice to the action of the captain of the other vessel in which he may
they may bring to demand indemnity from him. be, for that part of the indemnity which the sailor
could not pay.
PURPOSE OF ARTS. 851 AND 852 5. For the loan which the captain takes at the point or
residence of the owners of the vessel and which
Q: State the purpose of Arts. 851 and 852. shall only affect that part of the vessel which belongs
to the captain, if the owners or their agents should
A: They are intended to supply the shipowner, acting of not have given their express authorization thereto or
course in the person of the captain, with a means whereby he should not have taken part in the transaction
may escape bearing the entire burden of the loss and may
distribute it among all the persons who ought to participate Art. 853. After the experts have been appointed by the
in sharing it; but the making of the liquidation is not a persons interested, or by the court, and after the
condition precedent to the liability of the shipowner to the acceptance, they shall proceed to the examination of the
shipper whose property has been jettisoned. If the captain vessel and of the repairs required and to the appraisal of
does not comply with the article relating to the adjustment, their cost, separating these losses and damages from those
liquidation and distribution of the general average, the next arising from the inherent defect of the things.
article (852), gives to those concerned the right to maintain
an action against the captain for indemnification for the loss, The experts shall also declare whether the repairs may be
but the recognition of this right of action does not by any made immediately, or whether it is necessary to unload the
vessel in order to examine and repair it.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Art. 855. The merchandise loaded on the upper deck of the
With regard to the merchandise, if the average should be vessel shall contribute to the gross average should it be
visible at a mere glance, the examination thereof must be saved; but there shall be no right to indemnify if it should be
made before they are delivered. Should it not be visible at lost by reason of having been jettisoned for common safety,
the time of unloading, said examination may be made after except when the marine ordinances allow its shipment in
the delivery, provided that it is done within forty-eight this manner in coastwise navigation.
hours from the unloading, and without prejudice to the
other proofs which the experts may deem proper. The same shall take place with that which is on board and is
not included in the bills of lading or inventories, according
Art. 854. The valuation of the objects which are to to the cases.
contribute to the gross average, and that of those which
constitute the average, shall be subject to the following In any case the shipowner and the captain shall be liable to
rules: the shippers for the damages from the jettison, if the
storage on the upper deck was made without the consent of
1. The merchandise saved which is to contribute to the latter.
the payment of the gross average shall be valued at
the current price at the port of unloading, RULES AS TO LOSS OR DAMAGE OF
deducting the freightage, customs duties, and CARGOES ON UPPER DECK
expenses of unloading, as may appear from a
material inspection of the same, without taking the Q: What are the rules as to loss or damage of cargoes on
bills of lading into consideration, unless there is an upper deck?
agreement to the contrary.
2. If the liquidation is to be made in the port of A: As to the liability for the loss or damage of the cargoes
departure, the value of the merchandise loaded loaded on the upper deck of the vessel, distinction shall be
shall be determined by the purchase price, made between the case of sea-going vessels or ocean borne
including the expenses until they are placed on traffic, and the coastwise or interisland vessels, as hereunder
board, the insurance premium excluded. explained.
3. If the merchandise should be damaged, it shall be
appraised at its true value. Q: Rules in the case of sea-going vessels or ocean borne
4. If the voyage having been interrupted, the traffic?
merchandise should have been sold in a foreign
port, and the average cannot be estimated, the A: There are 2 rules apply:
value of the merchandise in the port of arrival, or
the net proceeds obtained at the sale thereof, shall a. The rule as to the storage of goods on the upper
be taken as the contributing capital. deck made without the consent of the shipper and
5. Merchandise lost, which constitutes the gross -In this case, the master who carries goods on deck without
average, shall be appraised at the value which the consent of the shipper does it at its own risk; if they are
merchandise of its kind may have in the port of damaged or loss in consequence of their being thus exposed,
unloading, provided that its kind and quality appear he cannot protect himself from responsibility by showing that
in the bill of lading; and should they not appear, the they are damaged or lost by the dangers of the sea.
value shall be that stated in the invoices of the
purchase issued in the port of shipment, adding b. The rule with the consent of the shpper
thereto the expenses and freightage subsequently -when the shipper consents to his goods being carried on
arising. deck, he takes the risk upon himself of these peculiar perls;
6. The masts cut down, the sails, cables, and other any damage, such as those caused by rain or splashing aboard
equipment of the vessel rendered useless for the of sea water, or where said goods were jettisoned or lost
purpose of saving it, shall be appraised at the during storm at sea, will be borne by the owner of the goods,
current value, deducting one-third by reason of the and will be considered as particular average.
difference between new and old.
RULES IN THE CASE OF COASTWISE
This deduction shall not be made with respect to OR INTERISLAND VESSELS
anchors and chains.
7. The vessel shall be appraised at its true value in the Q: What are the rules in the case of coastwise or interisland
condition in which it is found. vessels?
8. The freightage shall represent 50 per cent by way of
contributing capital. A: There are 2 rules applicable:

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
a. The rule as to storage of goods on the upper deck 2. That of the vessel in her actual condition, according
withoout the consent of the shipper and to a statement of experts
- the master who carries goods on deck without the consent 3. The 50 per cent of the amount of the freight,
of the shipper does it at its own risk; if they are damaged or deducting the remaining 50 per cent for wages and
loss in consequence of their being thus exposed, he cannot maintenance of the crew
protect himself from responsibility by showing that they are
damaged or lost by the dangers of the sea. After the amount of the gross average has been determined
in accordance with the provisions of this code, it shall be
b. The rule with the consent of the shipper distributed pro rata among the goods which are to cover the
- if the marine ordinances allow the cargo to be laden on deck same.
in coastwise navigation, then the loss or damage sufferred by
such goods will be dealt with as general average, and if Art. 859. The insurers of the vessel, of the freight, and of the
otherwise, said loss or damage will be considered as cargo shall be obliged to pay for the indemnification of the
particular average only. gross average, in so far as is required of each one of these
objects respectively
Art. 856. Provisions and ammunitions of war which the
vessel may have on board, and the clothing used by the Q: What is precisely the character of this article?
captain, officers, and crew, shall not contribute to the gross
average. A: It is mandatory in its terms, and the insurer, whether for
the vessel or for the freight or for the cargo, are bound to
The clothing used by the shippers, supercargoes, and contribute to the indemnity of the general average. This
passengers who may be on board at the time of the jettison provision simply places the insurer on the same footing as
shall also be excepted. other persons who have interest in the vessel, or the cargo
therein, at the time of the occurrence of the general average
Neither shall the goods jettisoned contribute to the and who are compelled to contribute.
payment of the gross averages which may occur to the
goods saved in a different and subsequent risk Art. 860. If notwithstanding the jettison of goods, breakage
of masts, ropes and equipment, the vessels should be lost
Art. 857. After the appraisement of the goods saved and of running the same risk, no contribution whatsoever by
those lost which constitute the gross average, has been reason of gross average shall be proper.
concluded by the experts, the repairs, if any, made on the
vessel, and in this case, the accounts of the same approved Art. 861. If after the vessel has been saved from the risj
by the persons interested or by the judge or court, the which gave rise to the jettison, she should be lost through
entire record shall be turned over to the liquidator another accident taking place during the voyage, the goods
appointed, in order that he may proceed with the saved and existing from the first risk shall continue liable to
distribution of the average. contribution by reason of the gross average according to
their value in the condition in which they may be found,
Art. 858. In order to effect the liquidation, the liquidator deducting the expenses incurred in saving them.
shall examine the protest of the captain, comparing it, if
necessary, with the logbook, and all the contracts which Art. 862. If in spite of having saved the vessel and the cargo
may have been made among the persons interested in the in consequence of the cutting down of masts or of any
average, the appraisement, expert examinations, and damage deliberately done to the vessel for said purpose, the
accounts of repairs made. If as a result of this examination, goods should subsequently be lost or stolen, the captain
he should find any defect in the procedure which might cannot demand of the shippers or consignees that they
injure the rights of the persons interested or affect the contribute to the indemnity for the average, unless the loss
liability of the captain, he shall call attention thereto in should occur by reason of an act of the owner or consignee
order it may be corrected, if possible, and otherwise he shall himself.
include it in the exordial of the liquidation.
Art. 863. If the owner of the jettisoned goods should recover
Immediately thereafter he shall proceed with the them after having received the indemnity for gross average,
distribution of the amount of the average, for which he shall be obliged to return to the captain and to the other
purpose he shall fix: persons interested in the cargo the amount he may have
received, deducting the amount of the damage caused by
1. The contributing capital, which shall be determined the jettison and of the expenses incurred in their recovery.
by the value of the cargo, in accordance with the In this case, the amount returned shall be
rules established in Art. 854. distributed among the vessel and the persons interested in

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
the cargo in the same proportion in which they contributed reward. It applies equally to gratuitous carriage by
to the payment of the average. aircraft performed by an air transport undertaking.
2. For the purposes of this Convention the expression
Art. 864. If the owner of the goods jettisoned should recover "international carriage" means any carriage in which,
them without having demanded any indemnity, he shall not according to the contract made by the parties, the place
be obliged to contribute to the payment of the gross of departure and the place of destination, whether or not
average which may have been suffered by the rest of the there be a break in the carriage or a transhipment, are
cargo after the jettison. situated either within the territories of two High
Contracting Parties, or within the territory of a single
Art. 865. The distribution of the gross average shall not be High Contracting Party, if there is an agreed stopping
final until it has been agreed to, or in the absence thereof, place within a territory subject to the sovereignty,
until it has been approved by the judge or court, after an suzerainty, mandate or authority of another Power, even
examination of the liquidation and a hearing of the persons though that Power is not a party to this Convention. A
interested who may be present or of their representatives carriage without such an agreed stopping place between
territories subject to the sovereignty, suzerainty,
Art. 866. After the liquidation has been approved, it shall be mandate or authority of the same High Contracting Party
the duty of the captain to collect the amount of the is not deemed to be international for the purposes of this
contribution, and he shall be liable to the owners of the Convention.
goods averaged for the damage they may suffer through his 3. A carriage to be performed by several successive air
delay or negligence. carriers is deemed, for the purposes of this Convention,
to be one undivided carriage, if it has been regarded by
Art. 867. If the persons contributing should not pay the the parties as a single operation, whether it had been
rd
amount of the contribution at the end of the 3 day after agreed upon under the form of a single contract or of a
having been required to do so, the goods saved shall be series of contracts, and it does not lose its international
proceded against, at the request of the captain, until character merely because one contract or a series of
payment has been made from their proceeds. contracts is to be performed entirely within a territory
subject to the sovereignty, suzerainty, mandate or
authority of the same High Contracting Party.
Art. 868. If the person interested in receiving the goods
saved should not give security sufficient to answer for the Article 2
amount corresponding to the gross average, the captain
may defer the delivery thereof until payment has been 1. This Convention applies to carriage performed by the
made. State or by legally constituted public bodies provided it
falls within the conditions laid down in Article 1.
Section III 2. This Convention does not apply to carriage performed
LIQUIDATION OF ORDINARY AVERAGES under theterms of any international postal Convention.

Art. 869. The experts whom the court or the persons CHAPTER II
interested may appoint, as the case may be, shall proceed DOCUMENTS OF CARRIAGE
with the examination and appraisement of the averages in Section I - Passenger Ticket
the manner prescribed in Arts. 853 and 854, Rules 2 to 7, Article 3
insofar as they are applicable.
1. For the carriage of passengers the carrier must deliver an
passenger ticket which shall contain the following
CONVENTION FOR THE UNIFICATION OF CERTAIN RULES particulars:-
RELATING TO INTERNATIONAL CARRIAGE BY AIR, SIGNED AT
WARSAW ON 12 OCTOBER 1929 (a) the place and date of issue;
(WARSAW CONVENTION) (b) the place of departure and of destination;(c) the
agreed stopping places, provided that the carrier
may reserve the right to alter the stopping places in
CHAPTER I case of necessity, and that if he exercises that right,
SCOPE – DEFINITIONS the alteration shall not have the effect of depriving
Article 1 the carriage of its international character;
(c) the name and address of the carrier or carriers;
1. This Convention applies to all international carriage of (d) a statement that the carriage is subject to the rules
persons, luggage or goods performed by aircraft for relating to liability established by this Convention.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
2. The absence, irregularity or loss of the passenger ticket
does not affect the existence or the validity of the contract of Article 6
carriage, which shall none the less be subject to the rules of
this Convention. Nevertheless, if the carrier accepts a 1. The air consignment note shall be made out by the
passenger without a passenger ticket having been delivered consignor in three original parts and be handed over with
he shall not be entitled to avail himself of those provisions of the goods.
this Convention which exclude or limit his liability. 2. The first part shall be marked "for the carrier," and shall
be signed by the consignor. The second part shall be
Section II - Luggage Ticket marked "for the consignee"; it shall be signed by the
Article 4 consignor and by the carrier and shall accompany the
goods. The third part shall be signed by the carrier and
1. For the carriage of luggage, other than small personal handed by him to the consignor after the goods have been
objects of which the passenger takes charge himself, the accepted.
carrier must deliver a luggage ticket. 3. The carrier shall sign on acceptance of the goods.
2. The luggage ticket shall be made out in duplicate, one 4. The signature of the carrier may be stamped; that of the
part for the passenger and the other part for the carrier. consignor may be printed or stamped.
3. The luggage ticket shall contain the following 5. If, at the request of the consignor, the carrier makes out
particulars:- the air consignment note, he shall be deemed, subject to
proof to the contrary, to have done so on behalf of the
(a) the place and date of issue; consignor.
(b) the place of departure and of destination;
(c) the name and address of the carrier or carriers; Article 7
(d) the number of the passenger ticket;
(e) a statement that delivery of the luggage will be The carrier of goods has the right to require the consignor to
made to the bearer of the luggage ticket; make out separate consignment notes when there is more
(f) the number and weight of the packages; than one package.
(g) the amount of the value declared in accordance with
Article 22(2); Article 8
(h) a statement that the carriage is subject to the rules
relating to liability established by this Convention. The air consignment note shall contain the following
4. The absence, irregularity or loss of the luggage ticket particulars:-
does not affect the existence or the validity of the
contract of carriage, which shall none the less be subject (a) the place and date of its execution;
to the rules of this Convention. Nevertheless, if the (b) the place of departure and of destination;
carrier accepts luggage without a luggage ticket having (c) the agreed stopping places, provided that the carrier
been delivered, or if the luggage ticket does not contain may reserve the right to alter the stopping places in
the particulars set out at (d), (f) and (h) above, the carrier case of necessity, and that if he exercises that right
shall not be entitled to avail himself of those provisions the alteration shall not have the effect of depriving
of the Convention which exclude or limit his liability. the carriage of its international character;
(d) the name and address of the consignor;
Section III - Air Consignment Note (e) the name and address of the first carrier;
Article 5 (f) the name and address of the consignee, if the case
so requires;
1. Every carrier of goods has the right to require the (g) the nature of the goods;
consignor to make out and hand over to him a (h) the number of the packages, the method of packing
document called an "air consignment note"; every and the particular marks or numbers upon them;
consignor has the right to require the carrier to accept (i) the weight, the quantity and the volume or
this document. dimensions of the goods;
2. The absence, irregularity or loss of this document does (j) the apparent condition of the goods and of the
not affect the existence or the validity of the contract of packing;
carriage which shall, subject to the provisions of Article 9, (k) the freight, if it has been agreed upon, the date and
be none the less governed by the rules of this place of payment, and the person who is to pay it;
Convention. (l) if the goods are sent for payment on delivery, the
price of the goods, and, if the case so requires, the
amount of the expenses incurred;
(m) the amount of the value declared in accordance with
Article 22 (2);

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UNIVERSITY OF SANTO TOMAS
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Kenneth & King Hizon (2A)- UST Faculty of Civil Law
(n) the number of parts of the air consignment note; other consignors and he must repay any expenses
(o) the documents handed to the carrier to accompany occasioned by the exercise of this right.
the air consignment note; 2. If it is impossible to carry out the orders of the consignor
(p) the time fixed for the completion of the carriage and the carrier must so inform him forthwith.
a brief note of the route to be followed, if these 3. If the carrier obeys the orders of the consignor for the
matters have been agreed upon; disposition of the goods without requiring the production
(q) a statement that the carriage is subject to the rules of the part of the air consignment note delivered to the
relating to liability established by this Convention. latter, he will be liable, without prejudice to his right of
recovery from the consignor, for any damage which may
Article 9 be caused thereby to any person who is lawfully in
possession of that part of the air consignment note.
If the carrier accepts goods without an air consignment note 4. The right conferred on the consignor ceases at the
having been made out, or if the air consignment note does moment when that of the consignee begins in
not contain all the particulars set out in Article 8(a) to (i) accordance with Article 13. Nevertheless, if the
inclusive and (q), the carrier shall not be entitled to avail consignee declines to accept the consignment note or
himself of the provisions of this Convention which exclude or the goods, or if he cannot be communicated with, the
limit his liability. consignor resumes his right of disposition.

Article 10 Article 13

1. The consignor is responsible for the correctness of the 1. Except in the circumstances set out in the preceding
particulars and statements relating to the goods which Article, the consignee is entitled, on arrival of the goods
he inserts in the air consignment note. at the place of destination, to require the carrier to hand
2. The consignor will be liable for all damage suffered by over to him the air consignment note and to deliver the
the carrier or any other person by reason of the goods to him, on payment of the charges due and on
irregularity, incorrectness or incompleteness of the said complying with the conditions of carriage set out in the
particulars and statements. air consignment note.
2. Unless it is otherwise agreed, it is the duty of the carrier
Article 11 to give notice to the consignee as soon as the goods
arrive.
1. The air consignment note is prima facie evidence of the 3. If the carrier admits the loss of the goods, or if the goods
conclusion of the contract, of the receipt of the goods have not arrived at the expiration of seven days after the
and of the conditions of carriage. date on which they ought to have arrived, the consignee
2. The statements in the air consignment note relating to is entitled to put into force against the carrier the rights
the weight, dimensions and packing of the goods, as well which flow from the contract of carriage.
as those relating to the number of packages, are prima
facie evidence of the facts stated; those relating to the Article 14
quantity, volume and condition of the goods do not
constitute evidence against the carrier except so far as The consignor and the consignee can respectively enforce
they both have been, and are stated in the air all the rights given them by Articles 12 and 13, each in his
consignment note to have been, checked by him in the own name, whether he is acting in his own interest or in the
presence of the consignor, or relate to the apparent interest of another, provided that he carries out the
condition of the goods. obligations imposed by the contract.

Article 12 Article 15

1. Subject to his liability to carry out all his obligations 1. Articles 12, 13 and 14 do not affect either the relations of
under the contract of carriage, the consignor has the theconsignor or the consignee with each other or the
right to dispose of the goods by withdrawing them at the mutual relations of third parties whose rights are derived
aerodrome of departure or destination, or by stopping either from the consignor or from the consignee.
them in the course of the journey on any landing, or by 2. The provisions of Articles 12, 13 and 14 can only be
calling for them to be delivered at the place of varied byexpress provision in the air consignment note.
destination or in the course of the journey to a person
other than the consignee named in the air consignment Article 16
note, or by requiring them to be returned to the
aerodrome of departure. He must not exercise this right 1. The consignor must furnish such information and
of disposition in such a way as to prejudice the carrier or attach to theair consignment note such documents as

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
are necessary to meet the formalities of customs, and his agents have taken all necessary measures to
octroi or police before the goods can be delivered to avoid the damage.
the consignee. The consignor is liable to the carrier for
any damage occasioned by the absence, insufficiency Article 21
or irregularity of any such information or documents,
unless the damage is due to the fault of the carrier or If the carrier proves that the damage was caused by or
his agents. contributed to by the negligence of the injured person the
2. The carrier is under no obligation to enquire into the Court may, in accordance with the provisions of its own law,
correctness or sufficiency of such information or exonerate the carrier wholly or partly from his liability.
documents.
Article 22
CHAPTER III
LIABILITY OF THE CARRIER 1. In the carriage of passengers the liability of the carrier for
each passenger is limited to the sum of 125,000 francs.
Article 17 Where, in accordance with the law of the Court seised of
the case, damages may be awarded in the form of
The carrier is liable for damage sustained in the event of the periodical payments, the equivalent capital value of the
death or wounding of a passenger or any other bodily injury said payments shall not exceed 125,000 francs.
suffered by a passenger, if the accident which caused the Nevertheless, by special contract, the carrier and the
damage so sustained took place on board the aircraft or in passenger may agree to a higher limit of liability.
the course of any of the operations of embarking or 2. In the carriage of registered luggage and of goods, the
disembarking. liability of the carrier is limited to a sum of 250 francs per
kilogram, unless the consignor has made, at the time
Article 18 when the package was handed over to the carrier, a
special declaration of the value at delivery and has paid a
1. The carrier is liable for damage sustained in the event of supplementary sum if the case so requires. In that case
the destruction or loss of, or of damage to, any registered the carrier will be liable to pay a sum not exceeding the
luggage or any goods, if the occurrence which caused the declared sum, unless he proves that that sum is greater
damage so sustained took place during the carriage by air. than the actual value to the consignor at delivery.
2. The carriage by air within the meaning of the preceding 3. As regards objects of which the passenger takes charge
paragraph comprises the period during which the luggage or himself the liability of the carrier is limited to 5,000
goods are in charge of the carrier, whether in an aerodrome francs per passenger.
or on board an aircraft, or, in the case of a landing outside an 4. The sums mentioned above shall be deemed to refer to
aerodrome, in any place whatsoever. the French franc consisting of 65 ½ milligrams gold of
3. The period of the carriage by air does not extend to any millesimal fineness 900. These sums may be converted
carriage by land, by sea or by river performed outside an into any national currency in round figures.
aerodrome. If, however, such a carriage takes place in the
performance of a contract for carriage by air, for the purpose Article 23
of loading, delivery or transshipment, any damage is
presumed, subject to proof to the contrary, to have been the Any provision tending to relieve the carrier of liability or to fix
result of an event which took place during the carriage by air. a lower limit than that which is laid down in this Convention
shall be null and void, but the nullity of any such provision
Article 19 does not involve the nullity of the whole contract, which shall
remain subject to the provisions of this Convention.
The carrier is liable for damage occasioned by delay in the
carriage by air of passengers, luggage or goods. Article 24

Article 20 1. In the cases covered by Articles 18 and 19 any action for


damages, however founded, can only be brought subject
1. The carrier is not liable if he proves that he and his to the conditions and limits set out in this Convention.
agents havetaken all necessary measures to avoid the 2. In the cases covered by Article 17 the provisions of the
damage or that it was impossible for him or them to take preceding paragraph also apply, without prejudice to the
such measures. questions as to who are the persons who have the right
2. In the carriage of goods and luggage the carrier is not to bring suit and what are their respective rights.
liable ifhe proves that the damage was occasioned by
negligent pilotage or negligence in the handling of the
aircraft or in navigation and that, in all other respects, he

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
arrival at the destination, or from the date on which the
Article 25 aircraft ought to have arrived, or from the date on which
the carriage stopped.
1. The carrier shall not be entitled to avail himself of the
provisions of this Convention which exclude or limit his 2. The method of calculating the period of limitation shall
liability, if the damage is caused by his wilful misconduct bedetermined by the law of the Court seised of the case.
or by such default on his part as, in accordance with the
law of the Court seised of the case, is considered to be Article 30
equivalent to wilful misconduct.
2. Similarly the carrier shall not be entitled to avail himself 1. In the case of carriage to be performed by various
of thesaid provisions, if the damage is caused as successive carriers and falling within the definition set
aforesaid by any agent of the carrier acting within the out in the third paragraph of Article 1, each carrier who
scope of his employment. accepts passengers, luggage or goods is subjected to the
rules set out in this Convention, and is deemed to be one
Article 26 of the contracting parties to the contract of carriage in so
far as the contract deals with that part of the carriage
1. Receipt by the person entitled to delivery of luggage or which is performed under his supervision.
goods without complaint is prima facie evidence that the 2. In the case of carriage of this nature, the passenger or his
same have been delivered in good condition and in representative can take action only against the carrier
accordance with the document of carriage. who performed the carriage during which the accident or
2. In the case of damage, the person entitled to delivery the delay occurred, save in the case where, by express
mustcomplain to the carrier forthwith after the discovery agreement, the first carrier has assumed liability for the
of the damage, and, at the latest, within three days from whole journey.
the date of receipt in the case of luggage and seven days 3. As regards luggage or goods, the passenger or consignor
from the date of receipt in the case of goods. In the case will have a right of action against the first carrier, and the
of delay the complaint must be made at the latest within passenger or consignee who is entitled to delivery will
fourteen days from the date on which the luggage or have a right of action against the last carrier, and further,
goods have been placed at his disposal. each may take action against the carrier who performed
3. Every complaint must be made in writing upon the the carriage during which the destruction, loss, damage
document of carriage or by separate notice in writing or delay took place. These carriers will be jointly and
despatched within the times aforesaid. severally liable to the passenger or to the consignor or
4. Failing complaint within the times aforesaid, no action consignee.
shall lieagainst the carrier, save in the case of fraud on
his part. CHAPTER IV
PROVISIONS RELATING TO COMBINED CARRIAGE
Article 27
Article 31
In the case of the death of the person liable, an action for
damages lies in accordance with the terms of this Convention 1. In the case of combined carriage performed partly by air
against those legally representing his estate. andpartly by any other mode of carriage, the provisions
of this Convention apply only to the carriage by air,
Article 28 provided that the carriage by air falls within the terms of
Article 1.
1. An action for damages must be brought, at the option of 2. Nothing in this Convention shall prevent the parties in
the plaintiff, in the territory of one of the High the case of combined carriage from inserting in the
Contracting Parties, either before the Court having document of air carriage conditions relating to other
jurisdiction where the carrier is ordinarily resident, or has modes of carriage, provided that the provisions of this
his principal place of business, or has an establishment Convention are observed as regards the carriage by air.
by which the contract has been made or before the Court
having jurisdiction at the place of destination. CHAPTER V
2. Questions of procedure shall be governed by the law of GENERAL AND FINAL PROVISIONS
the Court seised of the case.
Article 32
Article 29
Any clause contained in the contract and all special
1. The right to damages shall be extinguished if an action is agreements entered into before the damage occurred by
not brought within two years, reckoned from the date of which the parties purport to infringe the rules laid down by

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
this Convention, whether by deciding the law to be applied, Article 38
or by altering the rules as to jurisdiction, shall be null and
void. Nevertheless for the carriage of goods arbitration 1. This Convention shall, after it has come into force,
clauses are allowed, subject to this Convention, if the remain open for accession by any State.
arbitration is to take place within one of the jurisdictions 2. The accession shall be effected by a notification
referred to in the first paragraph of Article 28. addressed to the Government of the Republic of Poland,
which will inform the Government of each of the High
Article 33 Contracting Parties thereof.
3. The accession shall take effect as from the ninetieth day
Nothing contained in this Convention shall prevent the carrier after the notification made to the Government of the
either from refusing to enter into any contract of carriage, or Republic of Poland.
from making regulations which do not conflict with the
provisions of this Convention. Article 39

Article 34 1. Any one of the High Contracting Parties may denounce


this Convention by a notification addressed to the
This Convention does not apply to international carriage by Government of the Republic of Poland, which will at once
air performed by way of experimental trial by air navigation inform the Government of each of the High Contracting
undertakings with the view to the establishment of a regular Parties.
line of air navigation, nor does it apply to carriage performed 2. Denunciation shall take effect six months after the
in extraordinary circumstances outside the normal scope of notification of denunciation, and shall operate only as
an air carrier's business. regards the Party who shall have proceeded to
denunciation.
Article 35
Article 40
The expression "days" when used in this Convention means
current days not working days. 1. Any High Contracting Party may, at the time of signature
or ofdeposit of ratification or of accession declare that
Article 36 the acceptance which he gives to this Convention does
not apply to all or any of his colonies, protectorates,
The Convention is drawn up in French in a single copy which territories under mandate, or any other territory subject
shall remain deposited in the archives of the Ministry for to his sovereignty or his authority, or any territory under
Foreign Affairs of Poland and of which one duly certified copy his suzerainty.
shall be sent by the Polish Government to the Government of 2. Accordingly any High Contracting Party may
each of the High Contracting Parties. subsequently accede separately in the name of all or any
of his colonies, protectorates, territories under mandate
Article 37 or any other territory subject to his sovereignty or to his
authority or any territory under his suzerainty which has
1. This Convention shall be ratified. The instruments of been thus excluded by his original declaration.
ratification shall be deposited in the archives of the 3. Any High Contracting Party may denounce this
Ministry for Foreign Affairs of Poland, which will notify Convention, in accordance with its provisions, separately
the deposit to the Government of each of the High or for all or any of his colonies, protectorates, territories
Contracting Parties. under mandate or any other territory subject to his
2. As soon as this Convention shall have been ratified by sovereignty or to his authority, or any other territory
five of the High Contracting Parties it shall come into under his suzerainty.
force as between them on the ninetieth day after the
deposit of the fifth ratification. Thereafter it shall come Article 41
into force between the High Contracting Parties who
shall have ratified and the High Contracting Party who Any High Contracting Party shall be entitled not earlier than
deposits his instrument of ratification on the ninetieth two years after the coming into force of this Convention to
day after the deposit. call for the assembling of a new international Conference in
3. It shall be the duty of the Government of the Republic of order to consider any improvements which may be made in
Poland to notify to the Government of each of the High this Convention. To this end he will communicate with the
Contracting Parties the date on which this Convention Government of the French Republic which will take the
comes into force as well as the date of the deposit of necessary measures to make preparations for such
each ratification. Conference.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
This Convention done at Warsaw on the 12th October, 1929, 2. Loss or damage to any check baggage or goods
shall remain open for signature until the 31st January, 1930. sustained during the transport by air 3. Delay in the
transport by air of passengers, baggage, or goods
ADDITIONAL PROTOCOL
(With reference to Article 2) Enumeration of causes of action as abovestated is not an
exclusive list.
The High Contracting Parties reserve to themselves the right
to declare at the time of ratification or of accession that the Transportation to be performed by several successive air
first paragraph of Article 2 of this Convention shall not apply carriers shall be deemed to be one undivided transportation,
to international carriage by air performed directly by the if it has been regarded by the parties as a single operation,
State, its colonies, protectorates or mandated territories or whether it has been agreed upon under the form of a single
by any other territory under its sovereignty, suzerainty or contract or of a series of contracts, and it shall not lose its
authority." international character merely because one contract or a
series of contracts is to be performed entirely within a
PURPOSE OF THE WARSAW CONVENTION territory subject to the sovereignty, suzerainty, mandate, or
authority of the same High Contracting Party. (Art. 1 Sec.3)
To protect the emerging air transportation industry and to
secure the uniformity of recovery by the passengers. TRANSPORT BY AIR

APPLICATION OF WARSAW It is the period during which the baggage or goods are in the
charge of the carrier, whether in an airport or on board an
Q: WHEN IS THE WARSAW CONVENTION APPLICABLE? aircraft, or in the case of landing outside an airport, in any
place whatsoever
The Convention is applicable to:
1. International transport by air PERIOD FOR CLAIM FOR DAMAGES
2. Transport of persons, baggage, or goods
Q: When must an Action for damages be brought at the
§ The WC shall also apply to fortuitous transportation by option of the plaintiff?
aircraft performed by an air transportation enterprise.
A: It must be brought, either:
“INTERNATIONAL TRANSPORTATION BY AIR” UNDER THE
WARSAW CONVENTION 1. Before the court of the domicile of the carrier;
2. Court of principal place of business of carrier;
Under the Warsaw Convention, there are two categories of 3. Court where he has a place of business through
“international transportation by air”: which the contract has been made;
4. Before the court at the place of destination
1. That where the place of departure and the place of
destination are situated within the territories of two High LIMITATIONS IN LIABILITY UNDER THE
Contracting Parties regardless of whether or not there be CONVENTION
a break in the transportation or a transshipment; and
2. That where the place of departure and the place of The Convention provides for a limitation of liability:
destination are within the territory of a single High
Contracting Party if there is an agreed stopping place 1. For each passenger - limited to 250,000 francs
within a territory subject to the sovereignty, mandate or 2. For goods and checked in baggage – limited to 250
authority of another power, even though the power is francs per kilogram
not a party to the Convention. 3. For hand carry - limited to 5,000 francs per
passenger
LIABILITIES UNDER THE CONVENTION
Q: When can a common carrier not avail of this limitation?
Q: What are the liabilities under the convention?
A:
A: The liabilities are:
1. Willful misconduct
1. Damage sustained in the event of the death or 2. Default amounting to willful misconduct
wounding of a passenger taking place on board the 3. Accepting passengers without ticket
aircraft or in the course of any of the operations of 4. Accepting goods without airway bill or baggage
embarking or disembarking without baggage check

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law

Q: When is a Right to Damages extinguished? PASSENGER TICKET BAGGAGE AIR WAYBILL


CHECK
A: The right to damages shall be extinguished if an action is Passenger Checked-in Goods to be
not brought within 2 years from the date of arrival at the baggage shipped
destination, or from the date on which the aircraft ought to
have arrived, or from the date on which the transportation
stopped. LIABILITY OF CARRIER FOR DAMAGES

NOTICE REQUIREMENT 1. Death or injury of a passenger if the accident causing it


took place on board the aircraft or in the course of its
Q: What is the Notice requirement? operations of embarking or disembarking; (Art. 17)
2. Destruction, loss or damage to any baggage or goods, if it
A: took place during the “transportation by air”; (Art. 18) and

a. damage to baggage: within 3 days from receipt TRANSPORTATION BY AIR


b. damage to goods: within 7 days from receipt
c. delay: within 21 days from receipt Q: What is transportation by air?

Failure to file written notice, no action shall lie against the A: The period during which the baggage or goods are in the
carrier, save in the case of fraud on his part. charge of the carrier, whether in an airport or on board an
aircraft, or, in case of a landing outside an airport, in any
The Warsaw Convention has the force and effect of a law in place whatsoever.
the Philippines, being a treaty commitment assumed by the
Philippine government. However, said convention does not It includes any transportation by land or water outside an
operate as an exclusive enumeration of the instances for airport if such takes place in the performance of a contract
declaring a carrier liable for breach of contract of carriage or for transportation by air, for the purpose of loading, delivery,
as an absolute limit of the extent of that liability. Even the or transshipment.
Warsaw Convention declares the carrier liable for damages in
the enumerated cases and certain conditions. It must not be 3. Delay in the transportation of passengers, baggage or
construed to preclude the operation of the Civil Code and goods. (Art. 19)
other pertinent laws.
EFFECT OF HAGUE PROTOCOL
It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of the passengers The Hague Protocol amended the WC by removing the
under the contract of carriage, especially if willful misconduct provision that if the airline took all necessary steps to avoid
on the part of the carrier’s employees is found or established. the damage, it could exculpate itself completely (Art. 20(1)).
(Alitalia vs. IAC, 192 SCRA 9)
NOTE: COGSA/ Warsaw- applies to foreign vessels or air
plane/ international travel. LIMIT OF LIABILITY (Art. 22, as amended by Guatemala
§ Code of Commerce – applies to inter-island /domestic Protocol, 1971; Alitalia vs. IAC)
travel
1. Passengers
GENERAL RULE: $100,000 per passenger
IMPORTANT CONCEPTS: EXCEPTION: Agreement to a higher limit

1. Transportation documents 2. Checked-in baggage


a. Passenger ticket GENERAL RULE: $20 per kilogram
b. Baggage check EXCEPTION: In case of special declaration of value and
c. Air way bill payment of a supplementary sum by consignor, carrier is
2. Liability of the carrier for damages liable to not more than the declared sum unless it proves the
a. Death or injury to passengers sum is greater than actual value.
b. Loss or damage to baggage or goods
c. Delay 3. Hand-carried baggage
3. Successive carrier agreement § $1000/passenger
4. Jurisdiction
5. Combined transportation agreement 4. Goods to be shipped

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
GENERAL RULE: $20 per kilogram RULE IN CASE OF VARIOUS SUCCESSIVE CARRIERS
EXCEPTION: In case of special declaration of value and
payment of a supplementary sum by consignor, carrier is 1. Carriage of passengers
liable to not more than the declared sum unless it proves the
sum is greater than actual value. GENERAL RULE: Action is filed only against the carrier in
which the accident or delay occurred.
a. An agreement relieving the carrier from liability or
fixing a lower limit is null and void. (Art. 23) EXCEPTION: Agreement or contract whereby the first carrier
b. Carrier is not entitled to the foregoing limit if the assumed liability for the whole journey.
damage is caused by willful misconduct or default on
its part. (Art. 25) 2. Carriage of baggage or goods:
c. Thus, the WC does not operate as an exclusive
enumeration of the instances of an absolute limit of a. Passenger or consignor can file an action against
the extent of liability. It does not preclude the the first carrier and the carrier in which the
application of the Civil Code and other pertinent damage occurred
local laws. It does not regulate or exclude liability b. Passenger or consignee can file an action against
for other breaches of contract by the carrier, or the last carrier and the carrier in which the
misconduct of its employees, or for some particular damage occurred.
or exceptional type of damage. (Alitalia vs. CA)
d. In PanAm v. IAC, the WC was applied as regards the These carriers are jointly and severally liable. (Art. 30)
limitation on the carrier’s liability, there being a
simple loss of baggage without any improper A contract of international carriage by air, although
conduct on the part of the officials or employees of performed by different carriers under a series of airline
the airline or other special injury sustained by the tickets constitutes a single operation. Members of the
passenger. International Air Transportation Association (IATA) are
e. In KLM Royal v. Tuller, the WC has invariably been under a general pool partnership agreement wherein they act
held inapplicable, or as not restrictive of the carrier’s as agent of each other in the issuance of tickets to contracted
liability, where there was satisfactory evidence of passengers to boost ticket sales worldwide and at the same
malice or bad faith attributable to its officers and time provide passengers easy access to airlines which are
employees. otherwise inaccessible in some parts of the world.

ACTION FOR DAMAGES Under a general pool partnership agreement, the ticket-
issuing airline is the principal in a contract of carriage while
Notice of Claim the endorsee-airline is the agent. The obligation of the
former remained and did not cease even when the breach
1. Notice of claim- A written complaint must me made occurred not on its own flight but on that of another airline
within: which had undertaken to carry the passengers to one of their
destinations.
a. 3 days from receipt of baggage
b. 7 days from receipt of goods JURISDICTION
c. In case of delay, 14 days from receipt of
baggage/goods Q: Which court has jurisdiction over actions for damages?

NOTE: The complaint is a condition precedent. Without the A: At the option of the plaintiff, the action for damages may
complaint, the action is barred except in case of fraud on the be filed in the:
part of the carrier. (Art. 26)
a. Court of domicile of the carrier;
Prescriptive Period b. Court of its principal place of business;
c. Court where it has a place of business through which
2. Prescriptive period- Action must be filed within 2 the contract has been made; or
years from: d. Court of the place of destination. (Art. 28(1))

a. date of arrival at the destination § It is the passenger’s “ultimate destination” not “an
b. date of expected arrival agreed stopping place” that determines the country
c. date on which the transportation stopped. where suit is to be filed.
(Art. 29) § The forum of action provided in Art. 28(1) is a matter of
jurisdiction rather than of venue. (Santos III vs.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Northwest; 2A C.J.S.) as of the date of recordation, the preferred status
given by the provisions of Section 17 hereof, if
1. The mortgage is recorded as provided in
PRESIDENTIAL DECREE No. 1521 Section 3 hereof;
THE SHIP MORTGAGE DECREE OF 1978 2. An affidavit is filed with the record of
such mortgage to the effect that the
mortgage is made in good faith and
Section 1. Title. This Decree shall be known as "The Ship without any design to hinder, delay, or
Mortgage Decree of 1978." defraud any existing or future creditor of
the mortgagor or any lien or of the
Section 2. Who may Constitute a Ship Mortgage. Any citizen mortgaged vessel;
of the Philippines, or any association or corporation 3. The mortgage does not stipulate that
organized under the laws of the Philippines, at least sixty the mortgagee waives the preferred status
per cent of the capital of which is owned by citizens of the thereof;
Philippines may, for the purpose of financing the (b) Any mortgage which complies with the above
construction, acquisition, purchase of vessels or initial conditions is hereafter called a "preferred
operation of vessels, freely constitute a mortgage or any mortgage". For purposes of this Decree, a vessel
other lien or encumbrance on his or its vessels and its holding a Provisional Certificate of Philippine
equipment with any bank or other financial institutions, Registry is considered a vessel of domestic
domestic or foreign. ownership such that it can be subject of preferred
mortgage. The Philippine Coast Guard is hereby
Section 3. Mortgage of Vessel of Domestic Ownership; authorized to enter a vessel holding a Provisional
records. Certificate of Philippine Registry in the Registry of
Vessels and to record any mortgage executed
(a) No mortgage, which at the time such mortgage thereon. Such mortgage shall have the preferred
is made includes a vessel of domestic ownership as status as of the date of recordation upon
this term is defined in Presidential Decree No. 761, compliance with the above conditions.
or any portion thereof, as the whole or any part of (c) There shall be endorsed upon the documents of
the property mortgaged, shall be valid, in respect to a vessel covered by a preferred mortgage
such vessel, against any person other than the 1. The names of the mortgagor and
mortgagor, his heir or assign, and a person having mortgagee;
actual notice thereof, until such mortgage is 2. The time and date the endorsement is
recorded in the office of the Philippine Coast Guard made;
of the port of documentation of such vessel. 3. The amount and date of maturity of the
(b) The Coast Guard District or Station Commander mortgage; and
shall record mortgages delivered to him, in the 4. Any amount required to be endorsed by
order of their reception, in books to be kept for the provisions of paragraphs (e) or (f) of
that purpose and indexed to show this Section.
1. The name of the vessel; (d) Such endorsement shall be made (1) by the
2. The names of the parties tot he Coast Guard District or Station Commander of the
mortgage; port of documentation of the mortgaged vessel, or
3. The time and date of reception of the (2) by the Coast Guard District or Station
instrument; Commander of any port in which the vessel is
4. The interest in the vessel so mortgaged; found, if such Coast Guard District or Station
5. The amount and date of maturity of the Commander is directed to make the endorsement
mortgage; by the Coast Guard District or Station Commander
6. Name, citizenship, nationality and of the port of documentation. The Coast Guard
residence of owner, and District or Station Commander of the port of
7. Any material change of condition in documentation shall give such direction by wire of
respect to any of the preceding items. letter at the request of the mortgagee and upon the
A copy of the instrument or mortgage shall be furnished the tender of the cost of communication of such
Central Bank of the Philippines. direction. Whenever any new document is issued
for the vessel, such endorsement shall be
Section 4. Preferred Mortgages transferred to and endorsed upon the new
(a) A valid mortgage which at the time it is made document by the Coast Guard District or Station
includes the whole of any vessel of domestic Commander.
ownership shall have, in respect to such vessel and
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
In the case of a vessel holding a provincial
certificate of Philippine Registry, the endorsement Section 6. Prior and Subsequent Maritime Liens on
shall be made by the Philippine consul abroad upon Mortgaged Vessel. The mortgagor (1) shall, upon request of
direction by wire or letter from the Maritime the mortgagee, disclose in writing to him prior to the
Industry Authority at the request of the mortgagee execution of any preferred mortgage, the existence of any
and upon tender of the cost of communication of maritime lien, prior mortgage, or other obligation or liability
such direction. A certificate of such endorsement, upon the vessel to be mortgaged, that is known to the
giving the place, time and description of the mortgagor, and (2) without the consent of the mortgagee,
endorsement, shall be recorded with the records of shall not incur, after the execution of such mortgage and
registration to be maintained at the Philippine before the mortgagee has had a reasonable time in which to
Consulate. record the mortgage and have indorsements in respect
(e) A mortgage which includes property other than thereto made upon the documents of the vessel, any
a vessel shall not be held a preferred mortgage contractual obligation creating a lien upon the vessel other
unless the mortgage provides for the separate than a lien for wages of stevedores when employed directly
discharge of such property by the payment of a by the owner, operator, master, ship's husband, or agent of
specified portion of the mortgage indebtedness. If a the vessel, for wages of the crew of the vessel, for general
preferred mortgage so provides for the separate average, or for salvage, including contract salvage, in
discharge, the amount of the portion of such respect to the vessel, tonnage dues and all other charges
payment shall be endorsed upon the documents of (not to exceed P20,000) of the Philippine Government in
the vessel. respect to the vessel.
(f) A preferred mortgage includes more than one A mortgagor, who, with intent to defraud, violates the
vessel and provides for the separate discharge of above provision and if the mortgagor is a corporation or
each vessel by the payment of a portion of association, the president or other principal executive
mortgage indebtedness, the amount of such officer of the corporation or association, shall be punished
portion of such payment shall be endorsed upon by a fine of not, more than P5,000 or imprisonment of not
the documents of the vessel. In case such mortgage more than two years, or both. The mortgage indebtedness
does not provide for the separate discharge of a shall thereupon become immediately due and payable at
vessel and the vessel is to be sold upon the order of the election of the mortgagee.
a district court of the Philippines in a suit in rem in
admiralty, the court shall determine the portion of Section 7. Record of Notice of Claim of Lien on Mortgaged
the mortgage indebtedness increased by 20 per Vessel; discharge of lien
centum (1) which, in the opinion of the court, the (a) The Coast Guard District or Station Commander
approximate value of all the vessels covered by the of the port of documentation shall, upon the
mortgage, and (2) upon the payment of which the request of any person, record notice of his claim of
vessel shall be discharged from the mortgage. a lien upon a vessel covered by a preferred
mortgage, together with the nature, date of
Section 5. Certified Copies of Mortgage; exhibition. The creation, and amount of the lien, and the name and
Coast Guard District or Station Commander upon the address of the person. Any person who has caused
recording of a preferred mortgage shall deliver two certified notice of his claim of lien to be so recorded shall,
copies thereof to the mortgagor who shall place, and use upon a discharge in whole or in part of the
due diligence to retain, one copy on board the mortgaged indebtedness, forthwith file with the Coast Guard
vessel notice of which shall be posted in a conspicuous place District or Station Commander a certificate of such
thereat and cause such copy and the documents of the discharge. The Coast Guard District or Station
vessel to be exhibited by the master to any person having Commander shall thereupon record the certificate.
business with the vessel, which give rise to a maritime lien (b) The mortgagor upon a discharge in whole or in
upon the vessel or to the sale, conveyance, or mortgage part of the mortgage indebtedness, shall forthwith
thereof. The master of the vessel shall upon the request of file with the Coast Guard District or Station
any such person, exhibit to him the documents of the vessel Commander for the port of documentation of the
placed on board thereof. The requirement of this Section vessel, a certificate of such discharge duly executed
that a copy of a preferred mortgage be placed and retained by the mortgagee. Such Coast Guard District or
on board the mortgaged vessel shall not apply in the case of Station Commander shall there upon record the
a mortgaged vessel which is not self-propelled (including but certificate. In case of a vessel covered by a
not limited to, barges, scors, lighters, and car floats). preferred mortgage, the Coast Guard District or
If the master of the vessel willfully fails to exhibit the Station Commander at the port of documentation
documents of the vessel or the copy of any preferred shall endorse upon the documents of the vessel, or
mortgage thereof, the Philippine Coast Guard may suspend direct the Coast Guard District or Station
or cancel the master's license.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
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Commander at any port in which the vessel is of the outstanding mortgage indebtedness secured by such
found, to so endorse, the fact of such discharge. vessel. Upon the default of any term or condition of the
A certificate of such endorsement, giving the time, place and mortgage such lien may be enforced by the mortgagee by
description of the endorsement, shall be recorded with the suit in remaining admiralty, wherein the vessel itself may be
Philippine Coast Guard. Where the endorsement is made by made a partly defendant and be arrested in the manner as
a person other than the Coast Guard District or Station provided in Section 11 hereof. Original jurisdiction of all
Commander such certificate shall be promptly forwarded to such suits is granted to the Court of First Instance of the
the Philippine Coast Guard. Philippines exclusively. In addition to any notice by
publication, actual notice of commencement of any such
Section 8. Conditions Precedent to Record; interest on suit shall direct, to (1) the master, other ranking officer, or
Preferred Mortgage caretaker of the vessel, and (2) any person who has
(a) No mortgage shall be recorded unless it states recorded a notice of claim of an undischarged lien upon the
the interest of the mortgagor in the vessel, and the vessel, as provided in Section 7 hereof, unless after search
interest so mortgaged. by the mortgage satisfactory to the court, such mortgagor,
(b) No mortgage, notice of claim of lien, or master, other ranking officer, caretaker, or claimant is not
certificate of discharge thereof, shall be recorded found within the Philippines. Failure to give notice to any
unless previously acknowledged before the Coast such person, as required by this Section, shall be liable to
Guard District or Station Commander of the port of such person for damages in the amount of his interest in the
documentation or a notary public or other officer vessel terminated by the suit.
authorized by a law of the Philippines to take In case of judicial foreclosure as provided herein, the
acknowledgment of deeds or before a Philippine provisions of Rule 68 of the New Rules of Court, if not
consul or consular agent. inconsistent herewith, shall apply.
(c) In case of a change in the port of documentation The lien of a preferred ship mortgage may also be enforced
of a vessel of the Philippines, no mortgage shall be by a suit in rem in admiralty or otherwise in any foreign
recorded at the new port of documentation unless country in which the vessel may be found pursuant to the
there is furnished to the Coast Guard District or procedure of said country for the enforcement of ship
Station Commander of such port, together with the mortgages constituting maritime liens on vessels
copy of the mortgage to be recorded, a certified documented under the laws of said country.
copy of the record of the vessel at the former port
of documentation furnished by the Coast Guard Section 11. Arrest of Vessels Upon the filing of the petition
District or Station Commander of such port. The for the judicial foreclosure of a Preferred Ship Mortgage, or
Coast Guard District or Station Commander at the immediately thereafter, the applicant may apply ex-parte
new port of documentation is authorized and for an order for the arrest of the mortgaged vessel or vessels
directed to record such certified copy. and the judge shall immediately issue the same, provided
that it is made to appear by affidavit of the applicant, or of
Section 9. Inspection of the Copies for Records; fees. Each some other person who personally knows the facts that a
Coast Guard District or Station Commander shall permit default in the mortgage has occurred and that applicant files
records made under the provisions of this decree to be a bond executed to the adverse party in an amount to be
inspected during office hours, under such reasonable fixed by the judge, not exceeding the applicant's claim,
regulation as the Philippine Coast Guard may establish. conditioned that the latter will pay all the costs which may
Upon the request of any person the Coast Guard District or be adjudged to the adverse party and all damages which he
Station Commander shall furnish him from the records of may sustain by reason of such arrest, if the court shall finally
the Coast Guard's office (1) a certificate setting forth the adjudge that the applicant was not entitled thereto.
names of the owners of any vessel, the interest held by each
owner, and the material facts as to any mortgage covering, Section 12. Discharge of Order of Arrest; Counterbond At
or any lien or other encumbrance upon, a specified vessel, any time after an order of arrest has been granted, the party
(2) a certified copy of any mortgage, notice of claim of lien, whose vessel or vessels had been arrested, or the person
or certified copy discharge in respect to such vessel, or (3) a appearing in his behalf, may, upon reasonable notice to the
certified copy as required by subsection (c) of Section 8 applicant, apply to the judge who granted the order, or to
hereof. The Philippine Coast Guard shall collect the fees as the judge of the court in which the action is pending, for an
provided for under existing laws and regulations for any order discharging the order of arrest. That judge shall order
mortgage recorded, or any certificate or certified copy the discharge of the arrest if a cash deposit is made, or
furnished by it. counterbond executed to the creditor is filed, on behalf of
the adverse party, with the clerk or judge of the court where
Section 10. Lien of preferred Mortgage; foreclosure; the application is made in an amount double the value of
jurisdiction; procedure A preferred mortgage shall the claim to secure the payment of any judgment that the
constitute a lien upon the mortgaged vessel in the amount creditor may recover in the action. Upon the filing of such

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
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counterbond, copy thereof shall forthwith be served on the or other necessaries, performed or supplied in the
creditor or his lawyer. Upon discharge of the order of arrest, Philippines.
the property arrested or seized shall be delivered to the
party making the deposit or giving the counterbond, or the Section 16. Receiver in Foreclosure; possession by sheriff In
person appearing in his behalf, the deposit or counterbond any suit in rem in admiralty for the enforcement of the
aforesaid standing in place of the vessel or vessels released. preferred mortgage lien, the court may appoint a receiver
Should such deposit or counterbond for any reason be and, in its discretion, authorize the receiver to operate the
found to be, or become insufficient, and the party furnishing mortgaged vessel. The sheriff may be authorized and
the same fails to file an additional co-counterbond, the directed by the court to take possession of the mortgaged
attaching creditor may apply for a new order of arrest or vessel notwithstanding the fact that the vessel is in the
seizure. possession or under the control of any person claiming a
possessory common law lien.
Section 13. Discharge of Order of Arrest for Improper or
Irregular Issuance The party whose vessel/s has been Section 17. Preferred Maritime Lien, Priorities, Other Liens
arrested may also, at any time either before or after the (a) Upon the sale of any mortgaged vessel in any extra-
release of the arrested vessel, or before any arrest or judicial sale or by order of a district court of the Philippines
seizure has been effected, upon reasonable notice to the in any suit in rem in admiralty for the enforcement of a
creditor, apply to the judge who granted the order, or to the preferred mortgage lien thereon, all pre-existing claims in
judge of the court in which the action is pending, for an the vessel, including any possessory common-law lien of
order to discharge the order of arrest or seizure on the which a lienor is deprived under the provisions of Section 16
ground that the same improperly or irregularly issued. After of this Decree, shall be held terminated and shall thereafter
hearing, the judge shall order the discharge of the order of attach in like amount and in accordance with the priorities
arrest or seizure if it appears that it was improperly or established herein to the proceeds of the sale. The preferred
irregularly issued and the defect is not cured forthwith. mortgage lien shall have priority over all claims against the
vessel, except the following claims in the order stated: (1)
Section 14. Extrajudicial Foreclosure The provisions of the expenses and fees allowed and costs taxed by the court and
Chattel Mortgage Law on the remedy of extra-judicial taxes due to the Government; (2) crew's wages; (3) general
foreclosure of mortgages in so far as they are not average; (4) salvage; including contract salvage; (5) maritime
inconsistent herewith shall still apply. For the purpose of liens arising prior in time to the recording of the preferred
taking possession of the vessel or vessels, the foreclosing mortgage; (6) damages arising out of tort; and (7) preferred
creditor may secure from a judge of the Court of First mortgage registered prior in time.
Instance of the province where the vessel may be found or (b) If the proceeds of the sale should not be
where the creditor or debtor resides an order for the arrest sufficient to pay all creditors included in one
or seizure of the vessel. Upon such order of seizure or arrest number or grade, the residue shall be divided
being issued, the sheriff shall immediately take possession among them pro rata. All credits not paid, whether
of the vessel or vessels for the purpose of foreclosure and fully or partially shall subsist as ordinary credits
sale. The vessel may only be released in accordance with the enforceable by personal action against the debtor.
provisions of Section 13 of this Act, or when the debtor pays The record of judicial sale or sale by public auction
the outstanding obligation. shall be recorded in the Record of Transfers and
Encumbrances of Vessels in the port of
Section 15. Foreign Ship Mortgages As used in Sections 10 to documentation.
18 hereof, the term "preferred mortgage" shall include, in
addition to a preferred mortgage made pursuant to the Section 18. Suit in Personam in Admiralty on Default
provisions of this Decree, any mortgage, hypothecation, or (a) Upon the default of any term or condition of a
similar charge created as security upon any documented preferred mortgage upon a vessel, the mortgagee
foreign vessel if such mortgage, hypothecation, or similar may, in addition to all other remedies granted by
charge has been duly and validly executed in accordance this Decree, bring suit in personal in admiralty in a
with the laws of the foreign nation under the laws of which district court of the Philippines, against the
the vessel is documented and has been duly registered in mortgagor for the amount of the outstanding
accordance with such laws in a public register either at the mortgage indebtedness secured by such vessel or
port of registry of the vessel or at a central office; and the any deficiency in the full payment thereof.
term "preferred mortgage lien" shall also include the lien of (b) This Decree shall not be construed, in the case
such mortgage, hypothecation, or similar charge: Provided, of a mortgage covering, in addition to vessels,
however, That such "preferred mortgage lien" in the case of realty or personality other than vessels, or both, to
a foreign vessel shall be subordinate to maritime liens for authorize the enforcement by suit in rem in
repairs, supplies, towage, use of drydock or marine railway, admiralty of the rights of the mortgage in respect
to such realty or personality other than vessels.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Section 20. Who May Bid in the Foreclosure Sale The
Section 19. Surrender of Documents; termination of following persons are qualified to bid in the foreclosure sale
mortgagee's interest; sale of mortgaged vessel of the mortgaged vessel:
(a) The documents of a vessel of the Philippines (a) Citizens of the Philippines or corporations 60%
covered by a preferred mortgaged may not be of the capital of which is owned by Filipino citizens.
surrendered (except in the case of the forfeiture of (b) A foreign mortgagee or foreign national whose
the vessel or its sale by the order of any court of country has diplomatic relations with the
the Philippines or any foreign country) without the Philippines or whose country grants reciprocal
approval of the Maritime Industry Authority. The rights to Filipino citizens.
Administrator shall not grant such approval without In case the purchaser is a foreign individual or entity, the
the mortgagee's consent. Philippine Coast Guard shall, upon presentation of the
(b) The interest of the mortgage in a vessel of the certificate of sale, cancel the registration of the vessel and
Philippines covered by a mortgage, shall not be issue a certificate to that effect upon request.
terminated by the forfeiture of the vessel for a
violation of any law of the Philippines, unless the Section 21. Maritime Lien for Necessaries; persons entitled
mortgage authorized, consented, or conspired to to such lien Any person furnishing repairs, supplies, towage,
effect the illegal act, failure, or omission which use of dry dock or marine railway, or other necessaries to
constituted such violation. Neither shall the chance any vessel, whether foreign or domestic, upon the order of
by the shipowner in the use or character of the the owner of such vessel, or of a person authorized by the
vessel or in the business of the mortgagor, without owner, shall have a maritime lien on the vessel, which may
the consent of the mortgagee, nor the failure by be enforced by suit in rem, and it shall be necessary to
the mortgagor to comply with the provisions of allege or prove that credit was given to the vessel.
Section 5 hereof affect the validity or preference of
the preferred ship mortgage as against third Section 22. Persons Authorized to Procure Repairs, Supplies,
persons. and Necessaries The following persons shall be presumed to
(c) Upon the sale of any vessel of the Philippines have authority from the owner to procure repairs, supplies,
covered by a preferred mortgage in any towage, use of dry dock or marine railway, and other
extrajudicial sale or by order of a district court of necessaries for the vessel: The managing owner, ship's
the Philippines in any suit in rem in admiralty for husband, master or any person to whom the management
the enforcement of a maritime lien other than a of the vessel at the port of supply is entrusted. No person
preferred maritime lien, the vessel shall be sold tortuously or unlawfully in possession or charge of a vessel
free from all pre-existing claims thereon; but the shall have authority to bind the vessel.
court shall, upon the request of the mortgagee, the
plaintiff, or any intervenor, require the purchase at Section 23. Notice to Person Furnishing Repairs, Supplies,
such sale to give and the mortgagee to accept a and Necessaries The officers and agents of a vessel specified
new mortgage of the vessel for the balance of the in Section 22 of this Decree shall be taken to include such
term of the original mortgage. The conditions of officers and agents when appointed by a character, by an
such new mortgage shall be the same, so far as owner pro hac vice, or by an agreed purchaser in possession
practicable, as those of the original mortgage and of the vessel; but nothing in this Decree shall be construed
shall be subject to the approval of the court. If such to confer a lien when the furnisher know, or by exercise of
new mortgage is given, the mortgagee shall not be reasonable diligence could have ascertained, that because
paid from the proceeds of the sale and the amount of the terms of a charter party, agreement for sale of the
payable as the purchase price shall be held vessel, or for any other reason, the person ordering the
diminished in the amount of the new mortgage repairs, supplies, or other necessaries was without authority
indebtedness. to bind the vessel therefor.
(d) No vessel of domestic ownership shall be
mortgaged, nor, any rights under said mortgage Section 24. Waiver of Right to Lien Nothing in this Decree
shall be assigned, to any person not a citizen of the shall be construed to prevent the furnisher of repairs,
Philippines without the approval of the Maritime supplies, towage, use of dry dock or marine railway, or
Industry Authority. The penalties and sanctions other necessaries, or the mortgagee, from waiving his right
provided for under Commonwealth Act No. 606 to a lien, or in the case of a preferred mortgage lien, to the
shall apply in case of any violation hereof. preferred status of such lien, at any time by agreement or
(e) The foreclosure sale of vessels mortgaged under otherwise.
the provisions of this Decree, whether judicially or
extra- judicially, shall not require the approval of Section 25. Existing Mortgages Not Affected; exception This
the Maritime Industry Authority. Decree shall not apply (1) to any existing mortgage, or (2) to
any mortgage hereafter placed at any vessel under an

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
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existing mortgage, so long as such existing mortgage A: They are vessels which are registered under the Philippine
remains undischarged. The Decree shall, however, apply to law.
mortgages executed pursuant to Presidential Decree No.
214, provided, that no vested rights of third parties are Q: What is the purpose of P.D. 1521?
affected thereby.
A: To assist in the development of the maritime industry in
Section 26. Rules and Regulations by Philippine Coast Guard the country by granting loan (Sec. 3). Its purpose is to allow
and the Maritime Industry Authority The Philippine Coast any registered owner of vessel, whether he is domestic or
Guard and the Maritime Industry Authority are hereby foreign, to acquire a loan on that vessel registered under his
authorized to make such rules and regulations within their name in order to be able to use the amount for purposes of
respective spheres of jurisdiction, as they may deem acquiring another vessel, for purposes of constructing a
necessary for the efficient execution of the provisions of this vessel, for purposes of managing a vessel, or for purposes of
Decree. managing a shipping line.

Section 27. Port of Documentation Whenever in the Ship The purposes of PD 1521 are to accelerate the growth and
Mortgage Decree of 1978 the words "port of development of the shipping industry in the Philippines and
documentation" are used, they shall be deemed to mean to finance the acquisition, construction, purchase or initial
the port of registry of the vessel. operation of vessels.

Section 28. Instruments and Acts Validated All mortgages of Q: Who can be granted this assistance?
any vessel of any part thereof, and all documentations,
recordations, indorsements and indexing thereof, and A:
proceedings incidental thereto made or done, prior to the
effectivity of this Decree are declared valid to the extent 1. Filipino citizen
they would have been valid if the port or ports at which it 2. Corporate entity, 60% of which belongs to Filipinos
should have been documented in accordance with law; and
this Section is declared retroactive so as to accomplish such Q: What is the requirement of the law in order to obtain a
validations: Provided, That nothing herein contained shall loan from a local bank?
be construed to deprive any person of any vested right.
A:
Section 29. Repealing Clause The provisions of the New Civil
Code, the Code of Commerce, the Chattel Mortgage Law, 1. Natural person who is the owner of that vessel
the Revised Rules of Court and of such other laws, decrees, 2. Juridical entity like a shipping line registered as a
executive orders, rules and regulations which are in conflict corporation, in which case, 60% of the ownership
or inconsistent with the provisions of this Decree are hereby must belong to a Filipino
repealed, amended or modified accordingly. If for any
reason, any section, subsection, sentence, clauses or term of PURPOSES FOR OBTAINING A LOAN
this Decree is held to be unconstitutional such decision shall
not affect the validity of the other provisions of this Decree. Q: Again, what may be the purpose for obtaining a loan?
Section 30. Effectivity This Decree shall take a effect upon its
approval. A:

Done in the City of Manila, this 11th day of June, in the year 1. Purchasing another vessel
of Our Lord, nineteen hundred and seventy-eight. 2. To acquire another vessel
3. To construct another vessel
4. To manage or operate a shipping line

NATURE AND PURPOSE OF Q: What if the amount loaned was used for another
THE SHIP MORTGAGE DECREE OF 1978 purpose?

Q: What is the nature of this law? A: It will not fall under the Ship Mortgage Decree. It becomes
a simple loan even if the vessel on which that loan was
A: It is law on an action in rem in admiralty cases. obtained was a registered commercial vessel. It is the
purpose of the loan that determines the application of the
Q: What are Philippine Domestic vessels? ship mortgage decree.

Q: What are the salient features of P.D. 1521?

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UNIVERSITY OF SANTO TOMAS
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A: PD 1521 recognizes the creation of preferred mortgage A: A preferred mortgage lien is one constituted for the
that must be satisfied prior to all other claims and it allows financing of the acquisition, purchase, construction and initial
for the arrest of the vessel which in effect treats the vessel operation of vessels under the provisions of PD 1521, and
itself as the defendant in an action. which complies with the following requisites:

Q: What if the vessel was subjected to a loan acquired under 1. It is recorded in the MARINA/COASTGUARD
Sec. 1? 2. Affidavit of good faith with the record of such good
faith and without any design to hinder, delay, or defraud
A: The vessel is deemed to be covered by a mortgage any existing future creditor of the mortgagor or any lien or
the mortgaged vessel; and
Q: What kind of mortgage? 3. The mortgagee does not stipulate the waiver of the
preferred status of his claim.
A: Being a personal property, it becomes a chattel mortgage 4. The mortgage must be valid.
but chattel mortgage of a ship. However, if the chattel 5. The mortgage includes the whole vessel of domestic
mortgage is registered with the Registry of Property or ownership.
Registry of Record, it becomes a preferred mortgage under
P.D. 1521 meaning, the preferred mortgage has the right to It enjoys the preference in the recovery of mortgage.
be respected and paid for with all priorities against all other It is the recording which makes it a preferred mortgage
claims against the vessel provided it is a registered mortgage
subject under the line of preference or preference of credits Q: What is a lien?
under Sec. 17.
A: It is an advantage.
ARREST OF VESSEL
Q: What are the requirements to qualify an action to be able
Q: What will happen once the loan is obtained and the to obtain an order of arrest from the court? What court has
vessel qualifies to have a preferred mortgage of her since jurisdiction?
the mortgage has been registered?
A: If the vessel is found, whether domestic or foreign, in
A: The owner of the vessel is protected under P.D. 1521 if it is Manila, then the motion for the arrest of the vessel must be
registered and becomes a preffered mortgage that particular filed in the RTC of Manila.
vessel may be arrested and sold at public auction so the
obligation of the vessel is paid off to the mortgagee. If the vessel could not be found at the moment when the
action is filed, then the action may be filed at the place of the
NOTE: plaintiff with the RTC or at the place of the defendant, if the
vessel is represented by a shipping line.
1. The vessel may be arrested, then
2. The vessel can be sold Q: Who has the preference?

Q: What is the rule on the arrest of a vessel? A: The plaintiff

A: If the vessel is protected under P.D. 1521 and becomes a Q: What are the 2 grounds under which you can file an
preferred mortgage, and the terms and conditions of the action in rem against the vessel?
preferred mortgage have been violated, the mortgage may
come to court by filing an action for the arrest of the vessel A:
known as an ACTION IN REM
1. Section 4- violation of the terms of the preferred
ACTION IN REM mortgage
2. Non-payment of necessaries that were supplied to
Q: What is an action in rem? the vessel under Section 21.

A: It is an action filed against the vessel only, it does not NOTE: This enumeration is exclusive
include the owner of the vessel for the comvenience of the
creditor. A maritime lien for necessaries

Q: What is a preferred mortgage lien? What are its Q: What is a maritime lien for necessaries?
requisites?

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
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A: Any person furnishing repairs, supplies, towage, use of dry Q: Can there be foreclosure without the order of arrest?
dock, of marine railway, or other necessaries to any vessel,
whether foreign or domestic upon the order of the owner of A: The order of arrest is not essential. It can be foreclosed
such vessel or of a person authorized by owner, shall have a without the order of arrest because the vessel may not be
maritime lien on the vessel which may be enforced by suit in found.
rem, and it shall be necessary to allege or prove that credit
was given to the vessel. Q: Who can request the discharge of the order of arrest?

Q: Give examples of “necessaries” A: The mortgagor, the owner of the vessel

A: NOTE: He can file a petition for the discharge of the order of


arrest prior to the sale by posting a bond double the value of
1. Supplies the claim
2. Fuels
3. Goods

REMEDIES WHEM GROUNDS ARE VIOLATED GROUNDS FOR THE DISCHARGE OF ORDER OF ARREST

Q: What may be done if any of the grounds is violated? Q: What are the grounds for the discharge of the order of
arrest?
A:
A:
1. An action may be filed for judicial foreclosure of the
preferred mortgage a. If properly arrested but you post a counterbond or cash
2. Action for the recovery of the maritime liens deposit (double the amount)
3. Action for the arrest of the vessel for it to be sold b. The order of arrest was improperly or irregularly issued-
and such proceeds be applied to it. this time there is no counterbond that is necessary
because the vessel is not deemed to have been arrested
Q: Under the 2 grounds, what are the procedures to be c. There is no violation- in case the mortgagor can prove
fulfilled? that he has not violated the terms and conditions of the
mortgage
A:
Q: What is the purpose of the counterbond?
1. Filed a petition for the judicial foreclosure of a
Preferred Ship Mortgage. This is an action in rem in A: To furnish another security other than vessel. This takes
admiralty which is an action against the vessel itself the place of the vessel.
2. Applicant may then apply ex parte for an order for
the arrest of the mortgaged vessel or vessels If it was posted by a fake insurance company, the vessel will
3. Attach affidavits that the preferred mortgage or be arrested.
maritime liens were violated or unpaid and should
also file a bond subject to the discretion of the court If it is insufficient to cover the amount, the mortgagor must
but not beyond the claimed amount. be ordered to correct the deficiencies.
4. The court will issue an order of arrest against the
vessel only Q: Can it be sold on public auction to any buyer?

Q: What are the 2 kinds of bonds allowed to be posted? A: Yes, it could be a Filipino resident or a foreign buyer and
the sale to any of them would be considered a valid sale and
A: if the purchaser acquires the property free from all liens and
encumbrances.
1. Cash bond
2. Security bond NOTE: If there are pre-existing claims against the vessel,
under Sec. 17, it is provided that the pre-existing claims now
Q: Is arrest limited to Filipino vessels only? are removed from the vessel.

A: No, the arrest may include foreign domestic vessels as long Q: Who can bind in the foreclosure sale?
as it violated any of the 2 grounds.
A:

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UNIVERSITY OF SANTO TOMAS
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A:
a. Citizens of the Philippines or corporations 60% of capital
of which is owned by Filipino citizens (1) The mortgage, hypothecation or similar charge has
b. A foreign mortgagee or foreign national whose country been duly and validly executed in accordance with
grants reciprocal rights to Filipino citizens the laws of the country under which the vessel is
documented
Q: What do you mean by “remove”? (2) The mortgage, hypothecation or similar charge has
been duly registered in accordance with such laws in
A: Under P.D. 1521, those pre-existing claims are considered a public register – either at the port of registry of the
to be attached to the vessel as maritime liens. So upon sale, vessel or at a central office.
the existing pre-existing claims against the vessel are
removed from the vessel and transferred to the proceeds and PREFERRED CLAIMS OVER A
the provisions of Sec. 17 will operate. PREFERRED MORTGAGE LIEN

Q: What will happen after the sale of that vessel if the pre- Q: What are the claims preferred over a preferred mortgage
existing claims have been satisfied? lien?

A: All those pre-existing claims will be considered paid off A: The following claims are preferred over a preferred
and terminated. mortgage lien:

If they are not satisfied because the amount that resulted 1. Taxes (expenses and fees allowed and cost taxed by
from the sale is not sufficient to pay all of them, if all of them the court and taxes due to the government)
fall under the same category, then they are going to be paid 2. Crew’s wages
equally. 3. General average
4. Salvage, including contract salvage
If the claims are of different dates, the others will be paid in 5. Prior maritime liens (maritime liens arising prior in
accordance with preference under Sec. 17. time to the recording of the preferred mortgage
6. Damages arising from tort
Q: There are only 2 grounds for the order of arrest, can you 7. Prior preferred mortgage lien (preferred mortgage
arrest the vessel for any other ground? prior in time)

A: No, if not, you will have to attach the vessel in accordance The preferred mortgage lien or the amount of the mortgage
with the provision of the Rules of Court on Attachment. will then be paid after the above items have already been
complied with.
Q: If the claim is not fully paid, what happens to the
balance? If the proceeds of the sale should not be sufficient to pay all
creditors included in one number or grade the residue shall
A: The balance will now qualify as personal claim against the be divided among them pro rata.
owner of the vessel who owed you some money and this
should be known as Maritime Action in Personam against the All credits not paid, whether fully or partially shall subsist as
owner of the vessel that was sold on public auction after the ordinary credits enforceable by personal action against the
arrest of the vessel. debtor.

Q: Is there a security for that?

A: None since the vessel has been sold. The only possibility of COMMONWEALTH ACT NO. 146
recovery is the direct payment of claim THE PUBLIC SERVICE LAW
(As amended, and as modified particularly by
Q: Can you re-attach the vessel? PD No. 1, Integrated Reorganization Plan and EO 546)

A: No.
CHAPTER I
RECOGNITION OF A FOREIGN VESSEL ORGANIZATION

Q: For a foreign vessel to be recognized, what are the Section 1. This Act shall be known as the "Public Service
requisites? Act."

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Sec. 2. There is created under the Department of Justice a banc and two Commissioners shall constitute a quorum for
commission which shall be designated and known as the the sessions of a division. In the absence of a quorum, the
Public Service Commission, composed of one Public Service session shall be adjourned until the requisite number is
Commissioner and five Associate Commissioners, and which present.
shall be vested with the powers and duties hereafter
specified. Whenever the word "Commission" is used in this All the powers herein vested upon the Commission shall be
Act, it shall be held to mean the Public Service Commission, considered vested upon any of the Commissioners, acting
and whenever the word "Commissioner" is used in this Act either individually or jointly as hereinafter provided. The
it shall be held to mean the Public Service Commissioner or Commissioners shall equitably divide among themselves all
anyone of the Associate Commissioners. The Public Service pending cases and those that may hereafter be submitted to
Commissioner and the Associate Public Service the Commissioner, in such manner and form as they may
Commissioners shall be natural born citizens and residents determine, and shall proceed to hear and determine the
of the Philippines, not under thirty years of age; members of case assigned to each or to their respective divisions, or to
the Bar of the Philippines, with at least five years of law the Commission en banc as follows: uncontested cases,
practice or five years of employment in the government except those pertaining to the fixing of rates, shall be
service requiring a lawyer's diploma; and shall be appointed decided by one Commissioner; contested cases and all cases
by the President of the Philippines, with the consent of the involving the fixing of rates shall be decided by the
Commission on Appointments of the Congress of the Commission in division and the concurrence of at least two
Philippines: Provided, however, That the present Commissioners in the division shall be necessary for the
Commissioner and the personnel of the Commission shall promulgation of a decision or non-interlocutory order in
continue in office without the necessity of re-appointment. these cases: Provided, however, That any motion for
The Commissioners shall have the rank and privilege of reconsideration of a decision or non-interlocutory order of
retirement of Judges of the Courts of First Instance. (As any Commissioner or division shall be heard directly by the
amended by Republic Act Nos. 178 and 2677) Commission en banc and the concurrence of at least four
Commissioners shall be necessary for the promulgation of a
Sec. 3. The Commissioner and Associate Commissioners final decision or order resolving such motion for
shall hold office until they reach the age of seventy years, or reconsideration. (As amended by Republic Act Nos. 723 and
until removed in accordance with the procedures prescribed 2677)
in section one hundred and seventy-three of Act Numbered
Twenty-seven hundred and eleven, known as the Revised Sec. 4. The Public Service Commissioner shall receive an
Administrative Code: Provided, however, That upon annual compensation of thirteen thousand pesos; and each
retirement any Commissioner of Associate Commissioner of the Associate Commissioners an annual compensation of
shall be entitled to all retirement benefits and privileges for twelve thousand pesos. The Commissioners shall be assisted
Judges of the Courts of First Instance or under the by one chief attorney, one finance and rate regulation
retirement law to which he may be entitled on the date of officer, one chief utilities regulation engineer, one chief
his retirement. In case of the absence, for any reason, of the accountant, one transportation regulation chief, one
Public Service Commissioner, the Associate Commissioner secretary of the Public Service Commission, and three public
with seniority of appointment shall act as Commissioner. If utilities advisers who shall receive an annual compensation
on account of absence, illness, or incapacity of any of three of not less than ten thousand eight hundred pesos each; five
Commissioners, or whenever by reason of temporary assistant chiefs of division who shall receive an annual
disability of any Commissioner or of a vacancy occurring compensation of not less than nine thousand six hundred
therein, the requisite number of Commissioners necessary pesos each; twelve attorneys who shall receive an annual
to render a decision or issue an order in any case is not compensation of not less than nine thousand pesos each;
present, or in the event of a tie vote among the and a technical and confidential staff to be composed of two
Commissioners, the Secretary of Justice may designate such certified public accounts, two electrical engineers, two
number of Judges of the Courts of First Instance, or such mechanical or communication engineers, and two special
number of attorneys of the legal division of the Commission, assistants who shall receive an annual compensation of not
as may be necessary to sit temporarily as Commissioners in less than seven thousand two hundred pesos each. (As
the Public Service Commission. amended by Republic Act Nos. 723, 2677 and 3792)

The Public Service Commission shall sit individually or as a Sec. 5. The Public Service Commissioner, the Associate
body en banc or in two divisions of three Commissioners Public Service Commissioners, and all other officers and
each. The Public Service Commissioner shall preside when employees of the Public Service Commission shall enjoy the
the Commission sits en banc and in one division. In the same privileges and rights as the officer and employees of
other division, the Associate Commissioner with seniority of the classified civil service of the Government of the
appointment in that division shall preside. Five Philippines. They shall also be entitled to receive from the
Commissioners shall constitute a quorum for sessions en Government of the Philippines their necessary traveling

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
expenses while traveling on the business of the Commission, Sec. 9. No member or employee of the Commission shall
which shall be paid on proper voucher therefor, approved have any official or professional relation with any public
by the Secretary of Justice, out of funds appropriated for the service as herein defined, or hold any office of profit or trust
contingent expenses of the Commission. with the Government of the Philippines.

When the exigency of the service so requires and with the Sec. 10. The Commission shall have its office in the City of
approval of the Secretary of Justice, and subject to the Manila or at such other place as may be designated, and
provisions of Commonwealth Act Numbered Two hundred may hold hearings on any proceedings at such times and
forty-six, as amended, funds may be set aside from the places, within the Philippines, as it may provide by order in
appropriations provided for the Commission and/or from writing: Provided, That during the months of April and May
the fees collected under Section forty of this Act to defray of each year, at least three Commissioners shall be on
the expenses to be incurred by the Public Service vacation in such manner that once every two years at least
Commissioner or any of the Associate Commissioners, three of them shall be on duty during April and May:
officers or employees of the Commission to be designated Provided, however, That in the interest of public service, the
by the Commissioner, with the approval of the Secretary of Secretary of Justice may require any or all the
Justice, in the study of modern trends in supervision and Commissioners not on duty to render services and perform
regulation of public services. (As amended by Republic Act their duties during the vacation months. (As amended by
No. 3792) Republic Act Nos. 176 and 3792)

Sec. 6. The Secretary of Justice, upon recommendation of Sec. 11. The Commission shall have the power to make
the Public Service Commissioner, shall appoint all needful rules for its Government and other proceedings not
subordinate officers and employees of the Commission as inconsistent with this Act and shall adopt a common seal,
may be provided in the Appropriation Act. The Public and judicial notice shall be taken for such seal. True copies
Service Commissioner shall have general executive control, of said rules and other amendments shall be promptly
direction, and supervision over the work of the Commission furnished to the Bureau of Printing and shall be forthwith
and of its members, body and personnel, and over all published in the Official Gazette.
administrative business. (As amended by Republic Act Nos.
178 and 3792) Approved: November 07, 1936

Sec. 7. The Secretary of the Commission, under the


direction of the Commissioner, shall have charge of the
administrative business of the Commission and shall PURPOSES OF THE PUBLIC SERVICE LAW
perform such other duties as may be required of him. He
shall be the recorder and official reporter of the proceedings Q: WHAT ARE THE PURPOSES OF C.A. 146?
of the Commission and shall have authority to administer
oaths in all matters coming under the jurisdiction of the A:
Commission. He shall be the custodian of the records, maps,
profiles, tariffs, itineraries, reports, and any other a. To secure adequate, sustained service for the public at
documents and papers filed with the Commission or the least possible cost;
entrusted to his care and shall be responsible therefor to b. To protect the public against unreasonable charges and
the Commission. He shall have authority to designate from poor, inefficient service;
time to time any of his delegates to perform the duties of c. To protect and secure investments in public services;
Deputy Secretary with any of the Commissioners. d. To prevent ruinous competition.

Sec. 8. The Commission shall furnish the Secretary such of AUTHORITY TO OPERATE PUBLIC SERVICES
its findings and decisions as in its judgment may be of
general public interest; the Secretary shall compile the same GR: No public service shall operate without having been
for the purpose of publication in a series of volumes to be issued a certificate of public convenience or a certificate of
designated "Reports of the Public Service Commission of the public convenience and necessity.
Philippines," which shall be published in such form and
manner as may be best adapted for public information and XPNS:
use, and such authorized publications shall be competent
evidence of the reports and decisions of the Commission a. Warehouses;
therein contained without any further proof or b. Animal drawn vehicles and bancas moved by oar or
authentication thereof. sail;
c. Airships, except for the fixing of maximum rates for
fare and freight;

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
d. Radio companies, except for rates fixing; 408)
e. Public services owned or operated by the
government, except as to rates fixing; It is a “property” and has a considerable value and can be the
f. Ice plants; and subject of sale or attachment. (Cogeo-Cubao Operators and
g. Public markets. Drivers Assn. vs. CA, 207 SCRA 343, Raymundo vs. Luneta
Motor Co.)
PUBLIC SERVICE
THE REQUREMENTS FOR GRANTING CPC OR CPCN
Q: WHAT IS PUBLIC SERVICE?
Q: WHAT ARE THE REQUREMENTS FOR GRANTING CPC OR
A: A person who owns, operates, manages or controls in the CPCN?
Philippines for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and A:
done for general business purposes, any common carrier or
public utility, ice plants, power and water supplies, a. Applicant must be a citizen of the Philippines or a
communication and similar public services. (Sec. 13b, CA 146) corporation or entity 60% of the capital of which is
owned by such citizens;
A casual or incidental service devoid of public character and b. Applicant must prove public necessity;
interest is not brought within the category. The question c. Applicant must prove that the operation of the
depends on such factors as the extent of services, whether public service proposed and the authorization to do
such person or company has held himself or itself out as business will promote the public interest on a proper
ready to serve the public or a portion of the public generally. and suitable manner;
(Luzon Stevedoring vs. PSC) d. Applicant must have sufficient financial capability to
undertake the proposed services and meeting the
The Public Service Commission created under the Public responsibilities incident to its operation.
Service Law has already been abolished under P.D. No. 1 and
other issuances. It has been replaced by the following
government agencies: LTO; LTFRB; ATO; BOE; NTC; NEA; ERB;
NWRC; CAB; and MIA.

CERTIFICATE OF PUBLIC CONVENIENCE v. CER CERTIFICATE


OF PUBLIC CONVENIENCE AND NECESSITY

CERTIFICATE OF PUBLIC CERTIFICATE OF PUBLIC


CONVENIENCE (CPC) CONVENIENCE AND
NECESSITY (CPCN)

An authorization issued by An authorization issued by


the appropriate the appropriate
government agency for the government agency for the
operation of public services operation of public service
for which no franchise, for which a prior franchise
either municipal or is required by law; e.g.
legislative, is required by telephone and other
law, e.g., common carriers. services.

A CPC or a CPCN constitutes neither a franchise nor a


contract, confers no property right, and is a mere license or a
privilege. The holder of said certificate does not acquire a
property right in the route covered thereby. Nor does it
confer upon the holder any proprietary right or interest or
franchise in the public highways. Revocation of this certificate
deprives him of no vested right. New and additional burdens,
alteration of the certificate, or even revocation or annulment
thereof is reserved to the State. (Luque vs. Villegas, 30 SCRA
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
POWERS REQUIRING POWERS EXERCISABLE A:
PRIOR NOTICE AND WITHOUT PRIOR NOTICE
HEARING AND HEARING a. Establish and maintain individual or joint rates;
b. Establish and operate new units;
c. Issue free tickets;
1. Issuance of CPC or 1. Investigation any d. Issue any stock or stock certificates representing an
CPCN; matter concerning public increase of capital;
2. Fixing of rates, tolls, service; e. Capitalize any franchise in excess of the amount
and charges; 2. Requiring operators to actually paid to the Government;
3. Setting up of furnish safe, adequate, and f. Sell, alienate, mortgage or lease property,
standards and proper service; certificates or franchise.
classifications; 3. Requiring public
4. Establishment of services to pay expenses of Under Sec. 20(g) of C.A. No. 146, the sale, etc. may be
rules to secure accuracy investigation; negotiated and completed before the approval by the proper
of all meters and all 4. Valuation of properties authority. Its approval is not a condition precedent to the
measuring appliances; of public utilities; validity of the contract. The approval is necessary only to
5. Issuance of orders 5. Examination and test protect public interest.
requiring establishment of measuring appliances;
or maintenance of 6. Grant of special PRIOR OPERATOR OR OLD OPERATOR RULE
extension of facilities; permits to make extra or
6. Revocation, or special trips in territories Q: EXPLAIN THE PRIOR OPERATOR/OLD OPERATOR RULE?
modification of CPC or specified in the certificate;
CPCN; 7. Uniform accounting A: The rule allowing an existing franchised operator to invoke
7. Suspension of CPC or system and furnishing of a preferential right within the authorized territory as long as
CPCN, except when it is annual reports; he renders satisfactory and economical service.
necessary to avoid serious 8. Compelling compliance
and irreparable damage with the laws and The policy is not to issue a certificate to a second operator to
or inconvenience to the regulations. cover the same field and in competition with a first operator
public or private interest, who is rendering sufficient, adequate and satisfactory service.
in which case, a The prior operator must first be given an opportunity to
suspension not more than improve its service, if inadequate or deficient.
30 days may be ordered,
prior to the hearing. Q: What is the purpose of the rule?
(Soriano v. Medina, 164
SCRA 36) A: To prevent ruinous and wasteful competition in order that
the interests of the public would be conserved and preserved.
UNLAWFUL ACTS OF PUBLIC UTILITY
It subordinates the prior applicant rule which gives the first
Q: WHAT ARE THE UNLAWFUL ACTS OF PUBLIC UTILITY applicant priority only if things and circumstances are equal.
COMPANIES?
Where the operator either fails or neglects to make the
A: improvement or effect the increase in services, especially
when given the opportunity, new operators should be given
a. Engagement in public service business without first the chance to give the services needed by the public.
securing the proper certificate;
b. Providing or maintaining unsafe, improper or PRIOR APPLICANT RULE
inadequate service as determined by the proper
authority; Q: EXPLAIN THE PRIOR APPLICANT RULE?
c. Committing any act of unreasonable and unjust
preferential treatment to any particular person, A: Presupposes a situation when two interested persons
corporation or entity as determined by the proper apply for a certificate to operate a public utility in the same
authority; community over which no person has as yet granted any
d. Refusing or neglecting to carry public mail upon certificate. If it turns out, after the hearing, that the
request. (Secs. 18 and 19) circumstances between the two applicants are more or less
equal, then the applicant who applied ahead of the other, will
Q: WHAT ARE THE ACTS REQUIRING PRIOR APPROVAL? be granted the certificate.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
RATE-FIXING POWER The public has the right to assume that the registered owner
is the actual or lawful owner thereof. It would be very difficult
Q: What is the rule regarding RATE-FIXING POWER? and often impossible, as a practical matter, for the public to
enforce their rights of action that they may have for injuries
A: The rate to be fixed must be just, founded upon conditions inflicted by the vehicle if they should be required to prove
which are fair and reasonable to both the owner and the who the actual owner is.
public.
a. The thrust of the law in enjoining the kabit system is
Q: When is a rate just and reasonable? to identify the person upon whom responsibility may
be fixed with the end in view of protecting the riding
A: A rate is just and reasonable if it conforms to the following public
requirements:
b. The registered owner cannot recover from the actual
a. One which yields to the carrier a fair return upon the owner and the latter cannot obtain transfer of the
value of the property employed in performing the vehicle to himself, both being in pari delicto.
service; and
b. One which is fair to the public for the service rendered. c. For the better protection of the public, both the
registered owner and the actual owner are jointly
REGISTERED OWNER RULE and severally liable with the driver.

Q: What is the REGISTERED OWNER RULE?


ACT NO. 2616
A: The registered owner of a certificate of public convenience ACT NO. 2616 - THE SALVAGE LAW
is liable to the public for the injuries or damages suffered by
third persons caused by the operation of said vehicle, even Q: What is salvage?
though the same had been transferred to a third person.
A: A service which one person renders to the owner of a ship
The registered owner is not allowed to escape responsibility or goods by his own labor, preserving the goods or ship which
by proving that a third person is the actual and real owner the owner or those entrusted with the care of them either
Reason: It would be easy for him, by collusion with others or abandoned in distress at sea or are unable to protect and
otherwise, to transfer the responsibility to an indefinite secure.
person, or to one who possesses no property with which to
respond financially for the damage or injury done. A compensation allowed to persons by whose assistance a
ship or its cargo has been saved, in whole or in part, from
KABIT SYSTEM impending danger, or recovered from actual loss, in cases of
shipwreck, derelict, or recapture.
Q: What is the KABIT SYSTEM?
TWO CONCEPTS UNDER LAW ON SALVAGE
A: A system whereby a person who has been granted a
certificate of public convenience allows other persons who Q: What are the two concepts under this law?
own motor vehicles to operate under such license, for a fee
or percentage of such earnings. It is void and inexistent under A:
Art. 1409, Civil Code.
1. Services one person renders to the owner of a ship
Q: What are the effects of a kabit system? or goods, by his own labor, preserving the goods or
the ship which the owner or those entrusted with
A: the care of them have either abandoned in distress
at sea, or are unable to protect or secure.
a. The transfer, sale, lease or assignment of the 2. Compensation allowed to persons by whose
privilege granted is valid between the contracting voluntary assistance a ship at sea or her cargo or
parties but not upon the public or third persons. both have been saved in whole or in part from
impending sea peril, or such property recovered
b. The registered owner is primarily liable for all the from actual peril or loss, as in cases of shipwreck,
consequences flowing from the operations of the derelict or recapture.
carrier.
Section 1. When in case of shipwreck, the vessel or its cargo
shall be beyond the control of the crew, or shall have been
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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
abandoned by them, and picked up and conveyed to a safe simple towage
place by other persons, the latter shall be entitled to a
reward for the salvage. Q: What are the 3 elements of valid salvage claim?

Those who, not being included in the above paragraph, A:


assist in saving a vessel or its cargo from shipwreck, shall be
entitled to a like reward. a. Maritime peril
b. Service voluntarily rendered when not required as
SHIPWRECK an existing duty or from special contract
c. Success, in whole or in part, or that the services
Q: What is shipwreck? rendered contributed to success.

A: It means a ship which has received injuries rendering her Q: What are the requisites?
incapable by navigation.
A:
Or, it is also defined as loss of a vessel at sea, either by being
swallowed up by the waves, running against a thing at sea, or a. Valid object of salvage;
on the coast. b. Object must have been exposed to marine peril (not
perils of the ship);
DERELICT c. Services rendered voluntarily (neither an existing
duty nor out of a pre-existing contract);
Q: What is derelict? d. Services are successful, total or partial.

A: A ship or her cargo which is abandoned and deserted at Sec. 2. If the captain of the vessel, or the person acting in his
sea by those who are in charge of it, without any hope of stead, is present, no one shall take from the sea, or from the
recovering it, or without any intention of returning to it. If shores or coast merchandise or effects proceeding from a
those in charge of the property left it with the intention of shipwreck or proceed to the salvage of the vessel, without
finally leaving it, it is a derelict and the change of their the consent of such captain or person acting in his stead.
intention and an attempt to return to it will not change its
nature EFFECTS OF SHIPWRECK

Example: a schooner which has capsized in the high seas, Q: What are the effects proceeding from a shipwreck?
deserted by her captain with no intention to return, is a
derelict A:

Q: What is the rule in case the vessel or its cargo is beyond Jetsam- goods which are cast into the sea and there sink and
the control of the crew? remain under water
Flotsam or flotsam- goods which float upon the sea when
A: A vessel though not abandoned, may be the subject of cast overboard;
salvage, if at the time the services were rendered there was a Ligan or Lagan – goods cast into the sea tied to a buoy, so
probable, threatening danger to the vessel or its cargo. If a that they may be found again by the owners
vessel towed is by this means aided in escaping present or
prospective danger, the service will be regarded as one of Q: What are the subjects of Salvage?
salvage, and the towage as merely incidental.
A:
SERVICE OF TOWAGE v. SERVICE OF SALVAGE
1. Ship itself;
Q: Distinguish service of towage and service of salvage. 2. Jetsam – goods which are cast into the sea, and
there sink and remain under water;
A: 3. Floatsam or Flotsam – goods which float upon the
SERVICE OF TOWAGE SERVICE OF SALVAGE sea when cast overboard;
If the towage is made not for If a vessel is aided by towing 4. Ligan or Lagan – goods cast into the sea tied to a
the purpose of aiding the to escape present or buoy, so that they may be found again by the
vessel from escaping present prospective danger, the owners (p.173, Judge Diaz).
or prospective danger but service shall be regarded as
taking it to some other place, one of salvage and, the Sec. 3. He who shall save or pick up a vessel or merchandise
then the service is one of towage is merely incidental at sea, in the absence of the captain of the vessel, owner, or

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
a representative of either of them, they being unknown, OFFER TO PAY EXPENSES AND SALVAGES WITH AN
shall convey and deliver such vessel or merchandise, as soon IMPOSSIBLE CONDITION ATTACHED
as possible, to the Collector of Customs, if the port has a PRODUCES NO EFFECT
collector, and otherwise to the provincial treasurer or
municipal mayor. A demand made on the salvors for the possession of such
vessel together with an offer to pay all expenses and the
Sec. 4. After the salvage is accomplished, the owner or his salvage earned up to the time of the demand, to which a
representative shall have a right to the delivery of the vessel condition is attached with which it is impossible to comply
or things saved, provided that he pays, or gives a bond to produces no legal result.
secure, the expenses and the proper reward.
Sec. 5. The Collector of Customs, provincial treasurer, or
The amount and sufficiency of the bond, in the absence of municipal mayor, to whom a salvage is reported, shall order:
agreement, shall be determined by the Collector of Customs
or by the Judge of the Court of First Instance of the province a. That the things saved be safeguard and inventoried.
in which the things saved may be found. b. The sale at public auction of the things saved which
may be in danger of immediate loss or of those
SALVOR HAS LIEN ON PROPERTY SALVAGED whose conservation is evidently prejudicial to the
interests of the owner, when no objection is made
The owner does abandon, temporarily his right of possession, to such sale.
which is transferred to the finder who becomes bound to c. The advertisement within the thirty days
preserve the property with good faith and bring it to a place subsequent to the salvage, in one of the local
of safety for the owner’s use; and he acquires a right to be newspapers or in the nearest newspaper published,
paid for his services a reasonable and proper compensation of all the details of the disaster, with a statement of
out of the property itself. He is not bound to part with the the mark and number of the effects requesting all
possession out of the property itself. He is not bound to part interested persons to make their claims.
with the possession until it is paid, or the property is taken
into the possession of the law preparatory to the amount of Sec. 6. If, while the vessel or things saved are at the
salvage being legally ascertained. disposition of the authorities, the owner or his
representative shall claim them, such authorities shall order
A salvor has an interest in the property; this is called a lien, their delivery to such owner or his representative, provided
but it never goes in the absence of a contract expressly made, that there is no controversy over their value, and a bond is
upon the idea of a debt due by the owner to the salvor for given by the owner or his representative to secure the
services rendered, but upon the principle that the service payment of the expenses and the proper reward. Otherwise,
creates a property in the thing saved. He is, at all intents and the delivery shall nor be made until the matter is decided by
purposes, a joint owner and if the property is lost he must the Court of First Instance of the province.
bear his share like the other joint owners.
Sec. 7. No claim being presented in the three months
SALVAGE COMPENSATION DIVISIBLE AMONG AND subsequent to the publication of the advertisement
PROPORTIONATE TO RESPECTIVE VALUES OF PROPERTY prescribed in sub-section (c) of Section five, the things save
SAVED shall be sold at public auction, and their proceeds, after
deducting the expenses and the proper reward shall be
When a ship and its cargo are saved together, the salvage deposited in the insular treasury. If three years shall pass
allowance should be charged against the ship and the cargo without anyone claiming it, one-half of the deposit shall be
in the proportion of their respective values, the same as in adjudged to him who saved the things, and the other half to
the case of general average; and neither is liable for the the insular government.
salvage due from the other.
Sec. 8. The following shall have no right to a reward for
Not only is the salvage charge a separate and divisible burden salvage or assistance:
as between ship and cargo, but also as between portions of
the cargo belonging to different owners. a. The crew of the vessel shipwrecked or which was is
danger of shipwreck;
Thus, the value of the compensation to be paid is in b. He who shall have commenced the salvage in spite
proportion to the value of the vessel and the value of the of opposition of the captain or his representative;
cargo saved and
c. He who shall have failed to comply with the
provisions of Section three.

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
THE SALVOR MUST BE OTHER PERSON WITHOUT exorbitant, in view of the anticipated service and risk, and
RELATION TO A SHIP IN DISTRESS was agreed to only under circumstances amounting to
compulion.
The salvor shall be a person, who, without any particular
relation to a ship in distress, proffers useful service and gives Sec. 10. In a case coming under the last preceding section, as
it as a volunteer adventurer without any preexisting covenant well as in the absence of an agreement, the reward for
that connected him with the duty of employing himself for salvage or assistance shall be fixed by the Court of First
the preservation of that ship. Instance of the province where the things salvaged are
found, taking into account principally the expenditures
Q: Who are the persons who have no right to a reward for made to recover or save the vessel or the cargo or both, the
salvage? zeal demonstrated, the time employed, the services
rendered, the excessive express occasioned the number of
A: persons who aided, the danger to which they and their
vessels were exposed as well as that which menaced the
1. Crew of the vessel saved; things recovered or salvaged, and the value of such things
2. Person who commenced Salvage in spite of after deducting the expenses.
opposition of the Captain or his representative;
3. In accordance with Sec. 3 of the Salvage Law, a LIBERAL COMPENSATION IN SALVAGE
person who fails to deliver a salvaged vessel or cargo
to the Collector of Customs. Q: What is the purpose of liberal compensation in salvage?

Sec. 9. If, during the danger, an agreement is entered into A: Public policy encourages the hardy and adventurous
concerning the amount of the reward for salvage or mariner to engage in these laborious and sometimes
assistance, its validity may be impugned because it is dangerous enterprises, and with a view to withdraw from him
excessive, and it may be required to be reduced to an every temptation to embezzlement and dishonesty, the law
amount proportionate to the circumstances. allows him, in case he is successful, a liberal compensation.

KINDS OF SALVAGE CIRCUMSTANCES TO BE TAKEN TO DETERMINE THE


AMOUNT OF THE COMPENSATION
Q: What are the kinds of salvage?
Q: What are the circumstances to be taken to determine the
A: amount of the compensation?
a. Voluntary- the compensation is dependent upon
succes. this is the most ancient class which comprises A:
the cases of pure salvage
b. Rendered upon a contract for a per dien or per a. The labor expended by the salvors in rendering the
horam wage, payable at all events- the most salvage
common upon the Great Lakes b. The promptitude, skill and energy displayed in
c. Under a contract for a compensation payable only in rendering the service and saving the property
case of success c. The value of the property employed by the salvors
rendering the service and the danger to which the
Where the stipulated compensation is dependent upon property was exposed.
success, and particularly of success within the limited time, it d. The risk incurred by the salvors in securing the
may be very much larger than a mere quontum meruit. Such property from the impending peril
contracts will not be set aside unless corruptly entered into, e. The value of the property saved
or made under fraudulent representations, a clear mistake or f. The degree of danger from which the property was
suppression of important facts, in immediate danger to the rescued
ship, or under the circumstances amounting to compulsion,
or with their enforcement would be contrary to equity and Compensation as salvage is not viewed by the admiralty
good conscience. courts merely as pay, on the principle of quantum meruit, or
as renumeration pro opera et labore, but as a reward given
INEQUITTABLE CONTRACT ENTERED INTO UNDER for the perilous services, voluntarily agreed and as an
CIRCUMSTANCES AMOUNTING TO COMPULSION, inducement to mariners to embark on such dangerous
NOT ENFORCEABLE enterprise to save lives and property. The amount should be
liberal enough to cover the expenses and to give an extra sum
While a contract for salvage services is presumable valid, it as a reward for the services rendered.
will notbe enforced, where the compensation is clearly

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UNIVERSITY OF SANTO TOMAS
NOTES ON LAW ON TRANSPORTATION
Kenneth & King Hizon (2A)- UST Faculty of Civil Law
Sec. 11. From the proceeds of the sale of the things saved neglect or refusal benefit the libellants by giving them any
shall be deducted, first, the expenses of their custody, claim to a larger compensation, as the non-prosecution by
conservation, advertisement, and auction, as well as one set of salvor inures not to the libellants prosecuting the
whatever taxes or duties they should pay for their entrance; claim, but the owners of the property saved.
then there shall be deducted the expenses of salvage; and
from the net amount remaining shall be taken the reward Sec. 13. If a vessel or its cargo shall have been assisted or
for the salvage or assistance which shall not exceed fifty per saved, entirely or partially, by another vessel, the reward for
cent of such amount remaining. salvage or for assistance shall be divided between the
owner, the captain, and the remainder of the crew of the
EXPENSES INCURRED MUST BE NECESSARY latter vessel, so as to give the owner a half, the captain a
AND REASONABLE fourth, and all the remainder of the crew the other fourth of
the reward, in proportion to their respective salaries, in the
The expenses incurred must be shown to be necessary and absence of an agreement to the contrary. The express of
reasonable in amount before they will be allowed to the salvage, as well as the reward for salvage or assistance, shall
salvors. be a charge on the things salvaged on their value.

Sec. 12. If in the salvage or in the rendering of assistance Q: Are owners of the salving vessels entitled to salvage
different persons shall have intervened the reward shall be reward?
divided between them in proportion to the services which
each one may have rendered, and, in case of doubt, in equal A: The owners of the salving vessel has always been
parts. considered as entitled to salvage reward for the use of the
vessel in rendering salvage vessels, though he was not
Those who, in order to save persons, shall have been present when the salvage service was rendered.
exposed to the same dangers shall also have a right to Remuneration for salvage service is awarded to the owners of
participation in the reward. vessels, not because they are present or supposed to be
present when the service is rendered but on account of the
HOW TO ADJUST CONFLICTING RIGHTS OF DIFFERENT danger to which the service exposes their property and the
PARTIES OF SALVORS risk which they run of loss in suffering their vessels engaged
in such perilous undertaking.
Parties taking possession of an abandoned vessel or cargo
have a right to retain it until the salvage is completed, and no IN QUASI-CONTRACT OF TOWAGE THE
other person has the right to interfere with them provided CAPTAIN NOT ENTITLED TO PARTICIPATE IN THE
they are able to effect the salvage and are conducting the TOWAGE SERVICE PAYMENT
business with fidelity and vigor.
If there was no marine peril and the vessel was not a quasi-
But if their own means are inadequate they are bound to derelict, as to warrant a valid salvage claim for towing the
accept additional assistance, if offered. Those beginning a vessel. The plaintiff’s service to defendant in consenting to
salvage service, and in the successful prosecution of it, are plaintiff’s offer to tow the vessel, defendant thereby
entitled to be regarded as meritorious salvors of whatever is impliedly entered into a juridical relation to towage with the
preserved, when wrongfully interrupted in the work by others owner of the towing vessel, captained by plaintiff.
who complete the salvage.
Where the contract is one for towage, only the owner of the
WHEN SALVORS HAVE A RIGHT TO REWARD towing vessel, to the exclusion of the crew of said vessel may
IN SAVING PERSONS be entitled to renumeration. As the vessel owner had
expressly waived its claim for compensation, for the towage
Taking passengers from a sinking ship, without rendering any service rendered to defendant, it is clear that plaintiff, whose
service in rescuing the vessel, is not a salvage service being a right if at all depends upon and not separate from interest of
duty to humanity and not for reward. his employer is not entitled to payment for such towage
service.
The Salvage Act contemplates a divided services were
simultaneously imperiled and both are rescued about the Sec. 14. This Act shall take effect on its passage.
same time.
Enacted: February 4, 1916
Q: Will the refusal of salvors to sue affect the co-salvors?

A: Salvors are not deprived of a remedy because another set


of salvors neglect or refuse to join in the suit, nor will such

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UNIVERSITY OF SANTO TOMAS

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