TRANSPORTATION LAW
11 of Article XII of the 1987 Constitution states that:
PRELIMINARY CONSIDERATIONS:
A. Governing Laws
1. New Civil Code Primary law
2. Warsaw Convention for international transportation
by air
3. Code of Commerce governs suppletorily; it governs
maritime transaction
4. Carriage of Goods by Sea Act for transportation by
sea; governs suppletorily
5. Salvage Law
6. Public Service Act
7. Article XII Sec 11 on operation of public convenience
of the 1987 Philippine Constitution
B. Concept of Public Utility & public service
Sec. 13 (b) of the Public Service Act provides that: The
term 'public service' includes every person that now or
hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway,
sub-way motor vehicle, either for freight or passenger, or
both with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries,
and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine railway,
marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas electric
light, heat and power, water supply and power,
petroleum, sewerage system, wire or wireless
communications system, wire or wireless broadcasting
stations and other similar public services: Provided,
however, That a person engaged in agriculture, not
otherwise a public service, who owns a motor vehicle and
uses it personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or
compensation to a third party or third engaged in
agriculture, not itself or themselves a public service, for
operation by the latter for a limited time and for a specific
purpose directly connected with the cultivation of his or
their farm, the transportation, processing, and marketing
of agricultural products of such third party or third parties
shall not be considered as operating a public service for
the purposes of this Act.
Public utilities are privately owned and operated business
whose services are essential to the general public.
Case: National Development Company v CA
C. Constitutional limitations on operation of public utilities
Sec.
No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to
corporations or associations organized under the laws of
the Philippines, at least sixty per centum of whose capital
is owned by such citizens; nor shall such franchise,
certificate, or authorization be exclusive in character or for
a longer period than fifty years. Neither shall any such
franchise or right be granted except under the condition
that it shall be subject to amendment, alteration, or repeal
by the Congress when the common good so requires. The
State shall encourage equity participation in public utilities
by the general public. The participation of foreign
investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in
its capital, and all the executive and managing officers of
such corporation or association must be citizens of the
Philippines.
*The corporation must be a domestic corporation and that
60% of the capital must be owned by Filipino citizens.
Sec. 18 of Article XII of the 1987 Constitution provides
that: The State may, in the interest of national welfare or
defense, establish and operate vital industries and, upon
payment of just compensation, transfer to public
ownership utilities and other private enterprises to be
operated by the Government.
Q: What are the bases/reasons for regulation of public
utilities?
A: Basis: Police Power
Justification: Common good
D. Regulatory agencies
1. Land Transportation Franchising Regulatory Board
(LTFRB) land transportation
2. Land Transportation Office issue license to drivers
3. Maritime Industry Authority (MARINA) water
transportation
4. National Telecommunications Commission
communication utilities and services, radio
communications systems, wire or wireless telephone
and telegraph systems, radio and television
broadcasting systems and other similar public utilities
5. Energy Regulatory Board electric or power
companies
6. National Water Resources Council water resources
7. Civil Aeronautics Board air transportation
Q: What conditions must concur in the grant of certificate
of public convenience and necessity?
A: 1. The grantee must be a citizen of the Philippines or a
corporation or entity 60% of which is owned by such
citizens; 2. The grantee must have sufficient financial
capability to undertake the service; and 3. The service will
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 promote public interest and convenience in a proper and water, or air, for compensation, offering their services
suitable manner. to the public.
*In Tatad v Garcia, the SC held that the controlling factor - one that holds itself out as ready to engage in
is the citizenship of the person operating a common the transportation of goods for hire as a public
carrier. employment and not as a casual occupation.
Guiding Principles: Implications being a common carrier:
1. Prior or Old Operator Rule the first licensee will be a. extraordinary diligence must be exercised
protected in his investment and will not be subjected b. in case of damage, presumption of negligence on
to ruinous competition. the part of the common carrier
*No certificate of public convenience and necessity *It is the activity of the carrier that is controlling.
will be issued to other operator as long as the prior Cases: A.F. Sanchez Brokerage, Inc v CA; Asia
operator still in operation and can satisfy the public Lighterage v CA; De Guzman v CA
and that it still has the capacity to do so. *The fact that there is no license at the time of the
2. Protection Investment Rule protects from unfair incident happen is of no moment for liability
competition purposes.
3. Prior Applicant Rule protects the first applicant. 2. Distinguished from private carrier
Principle: all things being equal Common Private Carrier
*Public interest is the first and paramount consideration. Carrier
As to holds himself Contracts with
E. Concept of franchise and certificate of public convenience availability: out for all people particular
indiscriminately individuals or
Franchise is a grant or privilege from the sovereign power.
groups only
Certificate of Public Convenience is a form of regulation As to required Extraordinary Ordinary
through an administrative agency. diligence: diligence is diligence is
Q: Is a legislative franchise necessary before a public utility required required
can be allowed to secure a certificate of public As to Subject to state Not subject to
convenience? regulation: regulation state
A: General Rule: NO. regulation
Stipulation Parties may not Parties may
Exception: If a pertinent law requires such legislative
limiting agree on limiting limit the
franchise.
liability: the carriers carriers
Factors: liability except liability,
1. Public interest when provided provided it is
2. Public convenience by law not contrary
3. Public necessity to law, morals
or good
customs
GENERAL CONCEPTS:
Exempting Prove Caso fortuito,
circumstance: extraordinary Article 1174
A. Contract of transportation in general diligence and NCC
Transportation is a contract whereby a person, natural or Article 1734 NCC
juridical, obligates to transport persons, goods, or both, Presumption of There is a No
from one place to another, by land, air, or water, for a Negligence: presumption of presumption
price or commission. fault or of fault or
negligence negligence
*Importance: For liability purposes
Governing law: Law on common Law on
carriers obligations
B. Perfection and contracts
There is a perfected contract when there was a meeting of
the minds as to the subject matter and consideration. 3. Distinguished from towage, arrastre and stevedoring
Distinctions:
C. Common Carrier Towage Arrastre Stevedoring
1. Statutory definition The functions of The function
Article 1732 of the New Civil Code provides that: One vessel is an arrastre of stevedores
Common carriers are persons, corporations, firms or hired to bring operator has involves the
associations engaged in the business of carrying or another vessel nothing to do loading and
transporting passengers or goods or both, by land, to another with the trade unloading of
place; refers to and business of coastwise
a service navigation, nor vessels calling

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 rendered to a to the use or at the port.
vessel by operation of
towing for the vessels. He is no
mere purpose different from
of expediting that of a
her voyage depositary or
without warehouseman.
reference to
any
circumstances
of danger.
*The SC held that the following services are not considered a
common carrier:
1) purely arrastre services;
*comparable to that as warehouseman and depositor
2) purely stevedoring services; and
3) purely towage services.
*In Crisostomo v CA, the SC held that the respondent being a travel
agency is not a common carrier because the services offered is not
one that carries passenger from one place to another.
4. Tests to determine common carrier
Tests:
a. He must engaged in the business of carrying
goods for others as a public employment and
must hold himself out as ready to engage in the
transportation of goods for person generally as a
business and not as a casual occupation;
b. He must undertake to carry goods of the kind to
which his business is confined;
c. He must undertake to carry by the method by
which his business is conducted and over his
established roads;
d. The transportation must be for hire
Case: First Philippine Industrial Corporation v CA
*Under Sec. 22 of the Electric Power Distribution
Reform Act, the company like MERALCO distributing
electricity is a common carrier.
5. Parties to the contract of carriage
a. Carriage of passengers:
1. Common carrier
2. Passengers
b. Carriage of goods:
1. Shipper
2. Carrier
D. Registered owner rule and Kabit system
General Rule: Registered owner rule is applicable in this
jurisdiction.
Registered owner rule states that the person who is the
registered owner of a vehicle is liable for any damages
caused by the negligent operation of the vehicle although
the same was already sold or conveyed to another person
at the time of the accident. The registered owner is liable
to the injured party subject to his right of recourse against
the transferee or the buyer.
Purpose of this rule: easy identification of the owner to be
sued for liability.
Recourse: Registered owner may bring the case to the
court to sue the buyer or operator of the vehicle at fault.
Exception: in case of stolen vehicle registered owner is
not liable.
*In the case of Duavit v CA, the SC held that the registered
owner is not liable if the vehicle was taken from his garage
without his knowledge or consent. To hold the registered
owner liable would be absurd as it would be holding liable
the owner of a stolen vehicle for an accident caused by the
person who stole such vehicle.
Kabit System is an arrangement whereby a person who
has been granted a certificate of public convenience allows
other persons who own motor vehicles to operate them
under his license, sometimes for a fee or percentage of the
earnings.
*Kabit system is invariably recognized as being contrary to
public policy and therefore void and inexistent under
Article 1409 of the New Civil Code.
*If the registered owner and the buyer entered into this
transaction they are In pari delicto thus, in case something
happen the court will not aid them. The court will leave
them as they were.
*This arrangement is a circumvention of the requirement
for license.
OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF
CARRIAGE OF GOODS:
A. Vigilance over the goods
1. Duty to exercise extraordinary diligence Article 1733
of the New Civil Code states that: Common carriers,
from the nature of their business and for reasons of
public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the
safety of the passengers transported by them,
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the
goods is further expressed in Articles 1734, 1735, and
1745, Nos. 5, 6, and 7, while the extraordinary
diligence for the safety of the passengers is further
set forth in Articles 1755 and 1756.
Reason: The nature of the business is imbued with
public interest and public policy; because of the
exigencies of the business. The public has no choice
but to trust on the skills of the employees of the
common carrier. The goods and the life of the
passenger are placed in the hands of the common
carrier.
Article 363 of the Code of Commerce provides that:
Outside of the cases mentioned in the second
paragraph of Article 361, the carrier shall be obliged
to deliver the goods shipped in the same condition in
which, according to the bill of lading, they were found
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 at the time they were received, without any damage
or impairment, and failing to do so, to pay the value
which those not delivered may have at the point and
at the time at which their delivery should have been
made. If those not delivered form part of the goods
transported, the consignee may refuse to receive the
latter, when he proves that he cannot make use of
them independently of the others.
Article 364 of the Code of Commerce provides that:
If the effect of the damage referred to in Article 361
is merely a diminution in the value of the gods, the
obligation of the carrier shall be reduced to the
payment of the amount which, in the judgment of
experts, constitutes such difference in value.
Article 365 of the Code of Commerce provides that:
If, in consequence of the damage, the goods are
rendered useless for sale and consumption for the
purposes for which they are properly destined, the
consignee shall not be bound to receive them, and he
may have them in the hands of the carrier,
demanding of the latter their value at the current
price on that day. If among the damaged goods there
should be some pieces in good condition and without
any defect, the foregoing provision shall be applicable
with respect to those damaged and the consignee
shall receive those which are sound, this segregation
to be made by distinct and separate pieces and
without dividing a single object, unless the consignee
proves that impossibility of conveniently making use
of them in this form. The same rule shall be applied to
merchandise in bales or packages, separating those
parcels which appear sound.
Presumption of negligence
Article 1735 of the New Civil Code provides that: In
all cases other than those mentioned in Nos. 1, 2, 3,
4, and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733.
2. Duration of liability
Article 1736 of the New Civil Code states that: The
extraordinary responsibility of the common carrier
lasts from the time the goods are unconditionally
placed in the possession of, and received by the
carrier for transportation until the same are
delivered, actually or constructively, by the carrier to
the consignee, or to the person who has a right to
receive them, without prejudice to the provisions of
Article 1738.
Article 1737 of the New Civil Code states that: The
common carrier's duty to observe extraordinary
diligence over the goods remains in full force and
effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner has
made use of the right of stoppage in transitu.
Article 1738 of the New Civil Code provides that:
The extraordinary liability of the common carrier
continues to be operative even during the time the
goods are stored in a warehouse of the carrier at the
place of destination, until the consignee has been
advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or
otherwise dispose of them.
3. Defenses of common carriers
Article 1734 of the New Civil Code provides that:
Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the
same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act of omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.
*The enumeration is exclusive or a closed list.
General Rule: Common carriers are responsible for
the loss, destruction or deterioration of the goods.
Exceptions:
1. Flood, storm, earthquake, lightning or other
natural disaster or calamity;
2. Act of the public enemy in war whether
international or civil;
3. Act of omission of the shipper or owner of
the goods;
4. The character of the goods or defects in the
packaging or in the containers; and
5. Order or act of the competent public
authority
Article 1740 of the New Civil Code states that: If the
common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not
free such carrier from responsibility.
a. Fortuitous event
Article 1739 of the New Civil Code provides that:
In order that the common carrier may be
exempted from responsibility, the natural
disaster must have been the proximate and only
cause of the loss. However, the common carrier
must exercise due diligence to prevent or
minimize loss before, during and after the
occurrence of flood, storm or other natural
disaster in order that the common carrier may
be exempted from liability for the loss,
destruction, or deterioration of the goods. The
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 same duty is incumbent upon the common
carrier in case of an act of the public enemy
referred to in Article 1734, No. 2.
*Fire is not within the ambit of natural disaster
or calamity.
*Calamity includes thunderstorm.
*mechanical defect is not within the ambit of the
natural disaster; it is within the control of the
common carrier.
Requisites:
1. Proximate cause is the natural calamity
2. Absence of negligence on the part of the
common carrier
3. The common carrier must exercise due
diligence to prevent loss before, during and
after the occurrence of the disaster
4. Free from unreasonable delay by the
common carrier or unreasonable deviation
b. Public enemy
Article 1739 of the New Civil Code states that:
In order that the common carrier may be
exempted from responsibility, the natural
disaster must have been the proximate and only
cause of the loss. However, the common carrier
must exercise due diligence to prevent or
minimize loss before, during and after the
occurrence of flood, storm or other natural
disaster in order that the common carrier may
be exempted from liability for the loss,
destruction, or deterioration of the goods. The
same duty is incumbent upon the common
carrier in case of an act of the public enemy
referred to in Article 1734, No. 2.
*Public enemy includes pirates however it does
not include robbery and thief.
*Pirates are enemies of all civilized nation.
General Rule: rebels and insurreccion is not
included.
Exception: If it they are cast of and took
allegiance a hostile manner territory
*Existence of actual war is imperative.
c. Act of omission on the part of the shipper or
owner of the goods
*There must be no fault or contributory
negligence on the part of the carrier.
*In Compania Maritima v CA, the SC held that
the common carrier is also at fault; the common
carrier should have exercise extraordinary
diligence by not relying solely on the statement
of the shipper; it should have conducted its own
weighing. In this case the common carrier is not
totally absolved from its liability.
d. Improper packing
Article 1742 of the New Civil Code states that:
Even if the loss, destruction, or deterioration of
the goods should be caused by the character of
the goods, or the faulty nature of the packing or
of the containers, the common carrier must
exercise due diligence to forestall or lessen the
loss.
*If the defect is apparent, the carrier may refuse
to accept the goods for carriage; if the shipper
insists, the remedy is to make a protestation;
make a foul bill of lading.
*In Iron Bulk v CA (Dec. 8, 2003), carrier issued
pro forma bill of lading stated where in that it
accepted goods in good condition. The goods
arrived defective. The SC held that the carrier is
not exempt from liability because it accepted the
goods without protestation.
*Foul Bill of Lading preserves the right of the
carrier to use the excuse provided in 1734.
e. Order of public authority
Article 1743 of the New Civil Code states that:
If through the order of public authority the
goods are seized or destroyed, the common
carrier is not responsible, provided said public
authority had power to issue the order.
*The important requisite is that the public
authority has the power to issue an order.
Case: Ganzon v CA
4. Contributory negligence of the shipper
Article 1741 of the New Civil Code states that: If the
shipper or owner merely contributed to the loss,
destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages,
which however, shall be equitably reduced.
5. Stipulation limiting liability of carrier
Article 1744 of the New Civil Code states that: A
stipulation between the common carrier and the
shipper or owner limiting the liability of the former
for the loss, destruction, or deterioration of the goods
to a degree less than extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than
the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public
policy.
*This is for the benefit of the carrier.
Consideration: Reduction of fare
*The stipulation must be in writing for the purpose of
preventing abuse from the carrier.
Article 1748 of the New Civil Code provides that: An
agreement limiting the common carrier's liability for
delay on account of strikes or riots is valid.
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Article 1749 of the New Civil Code states that: A
stipulation that the common carrier's liability is
limited to the value of the goods appearing in the bill
of lading, unless the shipper or owner declares a
greater value, is binding.
Article 1750 of the New Civil Code provides that: A
contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable
and just under the circumstances, and has been fairly
and freely agreed upon.
a. Requisites
Article 1744 of the New Civil Code states that:
A stipulation between the common carrier and
the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration
of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other
than the service rendered by the common
carrier; and
(3) Reasonable, just and not contrary to public
policy.
Article 1751 of the New Civil Code provides that:
The fact that the common carrier has no
competitor along the line or route, or a part
thereof, to which the contract refers shall be
taken into consideration on the question of
whether or not a stipulation limiting the
common carrier's liability is reasonable, just and
in consonance with public policy.
*Liability can be limited but cannot be totally
exempted.
*Stipulations reducing diligence or limiting
liability must be in writing to be enforceable.
b. Invalid stipulations
Article 1745 of the New Civil Code states that:
Any of the following or similar stipulations shall
be considered unreasonable, unjust and contrary
to public policy:
(1) That the goods are transported at the risk of
the owner or shipper;
(2) That the common carrier will not be liable for
any loss, destruction, or deterioration of the
goods;
(3) That the common carrier need not observe
any diligence in the custody of the goods;
(4) That the common carrier shall exercise a
degree of diligence less than that of a good
father of a family, or of a man of ordinary
prudence in the vigilance over the movables
transported; (5) That the common carrier shall
not be responsible for the acts or omission of his
or its employees;
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not
act with grave or irresistible threat, violence or
force, is dispensed with or diminished;
(7) That the common carrier is not responsible
for the loss, destruction, or deterioration of
goods on account of the defective condition of
the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
*Even if they agreed with regard to numbers 1,2
and 3, the stipulation is void because it is
contrary to public policy because all these
stipulations exempt the carrier from liability.
General Rule: The degree of diligence may be
lowered
Exception: Not lower than that of a good father
of a family.
General Rule: stipulations exempting from
liability acts committed by robbers and thieves
who do not act with grave threat or irresistible
threats are not valid.
Exception: In case the robbers or thieves used
grave threat or irresistible threats.
*In this case, the presumption of negligence is
still applicable, the stipulation only affects the
outcome of the case.
c. Effect of delay
Article 1747 of the New Civil Code states that:
If the common carrier, without just cause,
delays the transportation of the goods or
changes the stipulated or usual route, the
contract limiting the common carrier's liability
cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
*Delay will prevent the carrier from raising
natural disaster as a defense and that the
agreement limiting its liability cannot be raised
as a defense.
d. Rule on presumption of negligence despite
stipulation
Article 1752 of the New Civil Code states that:
Even when there is an agreement limiting the
liability of the common carrier in the vigilance
over the goods, the common carrier is disputably
presumed to have been negligent in case of their
loss, destruction or deterioration.
B. Other obligations
1. Duty to accept goods
a. Grounds for valid refusal to accept goods
i. General Rule: Goods sought to be
transported are dangerous objects or
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 substances including dynamite and other disaster shall not free such carrier from
explosives; responsibility.
Exception: Carriers that are permitted or Article 1747 of the New Civil Code provides that:
allowed to transport dangerous objects or If the common carrier, without just cause,
substances for the reason that it is their delays the transportation of the goods or
function to do so or it is their operation. changes the stipulated or usual route, the
ii. Goods are unfit for transportation; contract limiting the common carrier's liability
*This can be found under Article 356 of the cannot be availed of in case of the loss,
Code of Commerce destruction, or deterioration of the goods.
iii. Acceptance would result in overloading; Article 370 of the Code of Commerce provides
iv. Contrabands or illegal goods; that: If a period has been fixed for the delivery
v. Goods are injurious to health; of the goods, it must be made within such time,
vi. Goods will be exposed to untoward danger and, for failure to do so, the carrier shall pay the
like flood, capture by enemies and the like; indemnity stipulated in the bill of lading, neither
vii. Goods like livestock will be exposed to the shipper nor the consignee being entitled to
disease; anything else. If no indemnity has been
viii. Strike; and stipulated and the delay exceeds the time fixed
ix. Failure to tender goods on time in the bill of lading, the carrier shall be liable for
2. Duty to deliver goods the damages which the delay may have caused.
a. Time of delivery Article 371 of the Code of Commerce provides
General Rule: It is by stipulation that: In case of delay through the fault of the
Exception: In the absence of stipulation Code of carrier, referred to in the preceding articles, the
Commerce governs. consignee may leave the goods transported in
Article 358 of the Code of Commerce provides the hands of the former, advising him thereof in
that: If there is no period fixed for the delivery writing before their arrival at the point of
of the goods the carrier shall be bound to destination. When this abandonment takes
forward them in the first shipment of the same place, the carrier shall pay the full value of the
or similar goods which he may make to the point goods as if they had been lost or mislaid. If the
where he must deliver them; and should he not abandonment is not made, the indemnification
do so, the damages caused by the delay should for losses and damages by reason of the delay
be for his account. cannot exceed the current price which the goods
*When a common carrier undertakes to convey transported would have had on the day and at
goods, the law implies a contract that they shall the place in which they should have been
be delivered at destination within a reasonable delivered; this same rule is to be observed in all
time, in the absence of any agreement as to the other cases in which this indemnity may be due.
time of delivery. Article 372 of the Code of Commerce states
*Mercantile usage or practice that: The value of the goods which the carrier
With stipulation Without stipulation must pay in cases of loss or misplacement shall
Carrier is bound to 1. Within a be determined in accordance with that declared
fulfil the contract reasonable in the bill of lading, the shipper not being
and is liable for any time. allowed to present proof that among the goods
delay; no matter 2. Carrier is bound
declared therein there were articles of greater
from what cause it to forward
may have arisen them in the first value and money. Horses, vehicles, vessels,
shipment of the equipment and all other principal and accessory
same or similar means of transportation shall be especially
goods which he bound in favour of the shipper, although with
may make to respect to railroads said liability shall be
the point of subordinated to the provisions of the laws of
delivery
concession with respect to the property, and to
what this Code established as to the manner and
b. Consequences of delay
form of effecting seizures and attachments
Article 1740 of the New Civil Code provides that:
against said companies.
If the common carrier negligently incurs in
Article 373 of the Code of Commerce states
delay in transporting the goods, a natural
that: The carrier who makes the delivery of the

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 merchandise to the consignee by virtue of
combined agreements or services with other
carriers shall assume the obligations of those
who preceded him in the conveyance, reserving
his right to proceed against the latter if he was
not the party directly responsible for the fault
which gave rise to the claim of the shipper or
consignee. The carrier who makes the delivery
shall likewise acquire all the actins and rights of
those who preceded him in the conveyance. The
shipper and the consignee shall have an
immediate right of action against the carrier who
executed the transportation contract, or against
the other carriers who may have received the
goods transported without reservation.
However, the reservation made by the latter
shall not relieve them from the responsibilities
which they may have incurred by their own
acts.
Article 374 of the Code of Commerce states
that: The consignees to whom the shipment
was made may not defer the payment of the
expenses and transportation charges of the
goods they receive after the lapse of 24 hours
following their delivery; and in case of delay in
this payment, the carrier may demand the
judicial sale of the goods transported in an
amount necessary to cover the cost of
transportation and the expenses incurred.
Effects of delay:
1. Excusable delay in carriage merely suspends
and generally does not terminate the
contract of carriage. When the cause is
removed, the master must proceed with
the voyage and make delivery;
2. Carrier remains duty bound to exercise
extraordinary diligence;
3. Natural disaster shall not free the carrier
from responsibility;
4. If delay is without just cause, the contract
limiting the common carriers liability
cannot be availed of in case of loss or
deterioration of the goods.
c. Place of Delivery
Article 360 of the Code of Commerce provides
that: The shipper, without changing the place
where the delivery is to be made, may change
the consignment of the goods which he
delivered to the carrier, provided that at the
time of ordering the change of consignee the bill
of lading signed by the carrier, if one has been
issued, be returned to him, in exchange for
another wherein the novation of the contract
appears. The expenses which this change of
consignment occasions shall be for the account
of the shipper.
d. To whom delivery shall be made
Article 368 of the Code of Commerce provides
that: The carrier must deliver to the consignee,
without any delay or obstruction, the goods
which he may have received, by the mere fact of
being named in the bill of lading to receive them;
and if he does not do so, he shall be liable for the
damages which may be caused thereby.
Article 369 of the Code of Commerce provides
that: If the consignee cannot be found at the
residence indicated in the bill of lading, or if he
refuses to pay the transportation charges and
expenses, or if he refuses to receive the goods,
the municipal judge, where there is none of the
first instance, shall provides for their deposit at
the disposal of the shipper, this deposit
producing all the effects of delivery without
prejudice to third parties with a better right.
OBLIGATIONS OF THE COMMON CARRIER IN A CONTRACT OF
CARRIAGE OF PASSENGERS:
A. Safety of Passengers
1. Duty to observe utmost diligence
Article 1755 of the New Civil Code provides that: A
common carrier is bound to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons,
with a due regard for all the circumstances.
*There are claims not really focused on death,
injuries, loss or damage of goods but concentrates on
moral damages; and the SC said that these claims can
still prosper in because there is still a breach of
contract of carriage.
*Behavior of the employees towards to passengers is
also a factor considered by the court to rule against a
common carrier.
*In CAL v PAL, the SC held that hijacking of the
airplane is considered to be a force majeure thus
cannot held the carrier liable.
Case: Singapore Airline v Andion Fernandez
*In Japan Airlines v Asuncion (January 28, 2005), the
SC held that the things invoked by the respondent do
not fall within the ambit of extraordinary diligence.
Though it is the duty of the carrier to check that travel
documents are with the passengers but it is not under
the obligation of the carrier to check the veracity of
the information in the travel document; it also held
that the obligation of the carrier is limited to
endorsing and not to influence. The issue of whether
or not an alien be admitted entrance to a country is a
sovereign act and such cannot be interfered by the
petitioner.
8
2. Duration of liability
*The carrier is bound to exercise utmost diligence
with respect to passengers the moment the person
who purchases the ticket or token from the carrier
presents himself at the proper place and in a proper
manner to be transported. Such person must have a
bona fide intention to use the facilities of the carrier,
possess sufficient fare with which to pay for his
passage, and present himself to the carrier for
transportation in the place and manner provided.
*In LRTA v Navidad, the SC held the petitioner carrier
liable for breach of contract. The SC held that Nicanor
Navidad was a passenger when he died after he fell
on the LRT tracks and was struck by a moving train.
He was considered a passenger because he entered
the LRT station after having purchased a token and he
fell while he was on the platform waiting for a train.
Thus, he was where he was supposed to be with the
intention of boarding a train.
*Once created, the relationship will not ordinarily
terminate until the passenger has, after reaching his
destination, safely alighted from the carriers
conveyance or has had a reasonable opportunity to
leave the carriers premises. All persons who remain
on the premises within a reasonable time after
leaving the conveyance are to be deemed passengers,
and what is a reasonable time or a reasonable delay
within this rule is to be determined from all the
circumstances, and includes reasonable time to look
after his baggage and prepare for his departure.
*In La Mallorca v CA, the SC held that there was a
breach of duty to exercise extraordinary diligence
with respect to the 4 year old child and the carrier is
liable as a consequence. The presence of passengers
near the bus was not unreasonable and they were,
therefore, to be considered still as passengers of the
carrier, entitled to the protection under their
contract.
*In Aboitiz Shipping Corporation v CA, the SC held
that extraordinary diligence was still owed to AV at
the time of the accident. It was ruled that AVs
presence in the premises was not without cause. The
victim had to claim his baggage which was possible
only one hour after the vessel arrived since it was the
standard procedure in the case of petitioners vessels
that the unloading operation shall start only after that
time.
*The differences between the La Mallorca case and
Aboitiz Shipping Corporation are: 1. The business is
different from that of La Mallorca case; and 2. The
capacity of passengers and baggages are different
3. Presumption of negligence
Article 1756 of the New Civil Code states that: In
case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in
Articles 1733 and 1755.
4. Liability for acts of employees
Article 1759 of the New Civil Code provides that:
Common carriers are liable for the death of or
injuries to passengers through the negligence or
wilful acts of the former's employees, although such
employees may have acted beyond the scope of their
authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease
upon proof that they exercised all the diligence of a
good father of a family in the selection and
supervision of their employees.
Case: Maranan v Perez
5. Liability for acts of strangers
Article 1763 of the New Civil Code provides that: A
common carrier is responsible for injuries suffered by
a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of
the diligence of a good father of a family could have
prevented or stopped the act or omission.
Case: Bachelor Express v CA
6. Effect of stipulation on liability
Article 1757 of the New Civil Code provides that:
The responsibility of a common carrier for the safety
of passengers as required in Articles 1733 and 1755
cannot be dispensed with or lessened by stipulation,
by the posting of notices, by statements on tickets, or
otherwise.
Article 1758 of the New Civil Code provides that:
When a passenger is carried gratuitously, a
stipulation limiting the common carrier's liability for
negligence is valid, but not for wilful acts or gross
negligence.
The reduction of fare does not justify any limitation of
the common carrier's liability.
Article 1760 of the New Civil Code states that: The
common carrier's responsibility prescribed in the
preceding article cannot be eliminated or limited by
stipulation, by the posting of notices, by statements
on the tickets or otherwise.
B. Passengers Baggages
Article 1754 of the New Civil Code provides that: The
provisions of Articles 1733 to 1753 shall apply to the
passenger's baggage which is not in his personal custody
or in that of his employee. As to other baggage, the rules
in Articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be applicable.
9
 Article 1998 of the New Civil Code states that: The
deposit of effects made by the travellers in hotels or inns
shall also be regarded as necessary. The keepers of hotels
or inns shall be responsible for them as depositaries,
provided that notice was given to them, or to their
employees, of the effects brought by the guests and that,
on the part of the latter, they take the precautions which
said hotel-keepers or their substitutes advised relative to
the care and vigilance of their effects.
Article 2000 of the New Civil Code states that: The
responsibility referred to in the two preceding articles shall
include the loss of, or injury to the personal property of
the guests caused by the servants or employees of the
keepers of hotels or inns as well as strangers; but not that
which may proceed from any force majeure. The fact that
travellers are constrained to rely on the vigilance of the
keeper of the hotels or inns shall be considered in
determining the degree of care required of him.
Article 2001 of the New Civil Code provides that: The act
of a thief or robber, who has entered the hotel is not
deemed force majeure, unless it is done with the use of
arms or through an irresistible force.
Article 2002 of the New Civil Code provides that: The
hotel-keeper is not liable for compensation if the loss is
due to the acts of the guest, his family, servants or visitors,
or if the loss arises from the character of the things
brought into the hotel.
Article 2003 of the New Civil Code provides that: The
hotel-keeper cannot free himself from responsibility by
posting notices to the effect that he is not liable for the
articles brought by the guest. Any stipulation between the
hotel-keeper and the guest whereby the responsibility of
the former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void.
*The baggage in the personal custody of the passenger or
his employee in that the baggage in transit will be
considered as necessary deposits. The common carrier
shall be responsible for the baggage as depositaries,
provided that notice was given to them or its employees,
and the passenger took the necessary precaution, which
the carrier has advised them relative to the care and
vigilance of their baggage. In case of loss due to the fault
of the passenger the carrier will not be liable.
*They are not absolutely responsible as depository
because the law requires notice.
*It is also required to declare the value of the baggage.
*The carrier who has in his custody the baggage of the
passenger to be carried like any other goods is required to
observe extraordinary diligence. In case of loss or damage
the carrier is presumed negligent.
OBLIGATIONS OF THE SHIPPER, CONSIGNEE AND PASSENGER:
A. Effect of negligence of shipper or passenger Article 1741
of the New Civil Code states that: If the shipper or owner
merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof
being the negligence of the common carrier, the latter
shall be liable in damages, which however, shall be
equitably reduced.
Article 1761 of the New Civil Code provides that: The
passenger must observe the diligence of a good father of a
family to avoid injury to himself.
Article 1762 of the New Civil Code states that: The
contributory negligence of the passenger does not bar
recovery of damages for his death or injuries, if the
proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably
reduced.
*The shipper is also obliged to exercise due diligence in
avoiding damage or injury.
*With respect to carriage of passengers, the said
passengers are likewise bound to observe due diligence to
avoid injury.
*The contributory negligence on the part of the passenger
is not a defense that will excuse the carrier from liability. It
will only mitigate such liability.
*The carrier may be able to prove that the only cause of
the loss of the goods is any of the following acts of the
shipper:
1. failure of the shipper to disclose the nature of the
goods;
2. improper marking or direction as to destination; and
3. improper loading when he assumed such responsibility.
*The shipper must likewise see to it that the goods are
properly packed; otherwise, liability of the carrier may be
mitigated or barred depending on the circumstances.
B. Payment of freight
Who will pay:
Shipper - before or at the time he delivers the goods to the
carrier for shipment.
Consignee - if agreed upon by the parties at the point of
destination is bound by such stipulation the moment he
accepts the goods.
Passengers - they are contractually bound to pay the fare
within such time as prescribed by regulations or by the
carrier.
Time to pay:
Tickets are purchased in advance from ticket outlets.
Consignees to whom the shipment was made may not
defer the payment of the expenses and transportation
charges of the goods they receive after the lapse of 24
hours following their delivery.
*In case of delay in payment, the carrier may demand the
judicial sale of the goods transported in an amount
necessary to cover the cost of transportation and the
expenses incurred.
10
 Article 374 of the Code of Commerce provides that: The
carrier who makes the delivery of the merchandise to the
consignee by virtue of combined agreements or services
with other carriers shall assume the obligations of those
who preceded him in the conveyance, reserving his right
to proceed against the latter if he was not the party
directly responsible for the fault which gave rise to the
claim of the shipper or consignee. The carrier who makes
the delivery shall likewise acquire all the actions and rights
of those who preceded him in the conveyance. The
shipper and the consignee shall have an immediate right of
action against the carrier who executed the transportation
contract, or against the other carriers who may have
received the goods transported without reservation.
However, the reservation made by the latter shall not
relieve them from the responsibilities which they may
have incurred by their own acts.
Article 375 of the Code of Commerce provides that: The
goods transported shall be especially bound to answer for
the cost of transportation and for the expenses and fees
incurred for them during their conveyance and until the
moment of their delivery. This special right shall prescribe
8 days after the delivery has been made, and once
prescribed, the carrier shall have no other action than that
corresponding to him as an ordinary creditor.
C. Liability for demurrage
Demurrage is the compensation provided for in the
contract of affreightment for the detention of the vessel
beyond the time agreed on for loading and unloading. It is
a claim for damages for failure to accept delivery.
*Liability for demurrage exists only when expressly
stipulated in the contract.
EXTRAORDINARY DILIGENCE:
A. Underlying reason
Reasons:
1. From the nature of the business and for reasons
of public policy;
2. Relationship of trust;
3. Business is impressed with a special public duty;
4. Possession of the goods;
5. Preciousness of human life
B. Effect of Stipulation
Article 1744 of the New Civil Code states that: A
stipulation between the common carrier and the
shipper or owner limiting the liability of the former
for the loss, destruction, or deterioration of the goods
to a degree less than extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than
the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public
policy.
Article 1757 of the New Civil Code states that: The
responsibility of a common carrier for the safety of
passengers as required in Articles 1733 and 1755
cannot be dispensed with or lessened by stipulation,
by the posting of notices, by statements on tickets, or
otherwise.
Article 1758 of the New Civil Code states that:
When a passenger is carried gratuitously, a
stipulation limiting the common carrier's liability for
negligence is valid, but not for wilful acts or gross
negligence.
The reduction of fare does not justify any limitation of
the common carrier's liability.
Article 1760 of the New Civil Code states that: The
common carrier's responsibility prescribed in the
preceding article cannot be eliminated or limited by
stipulation, by the posting of notices, by statements
on the tickets or otherwise.
C. Extraordinary diligence in carriage by sea
1. Seaworthiness of the vessel
Sec. 3 [1] of the COGSA provides that: The
carrier shall be bound before and at the
beginning of the voyage to exercise due
diligence to
(a) Make the ship seaworthy;
(b) Properly man,equip, and supply the ship;
(c) Make the holds, refrigerating and cooling
chambers, and all other parts of the ship in
which goods are carried, fit and safe for their
reception, carriage, and preservation.
Sec. 3 [2] of the COGSA provides that: The
carrier shall properly and carefully load, handle,
stow, carry, keep, care for, and discharge the
goods carried.
Sec. 116 of the IC
Sec. 119 of the IC
Article 609 of the Code of Commerce states
that: Captains, masters or patrons of vessels
must be Filipinos, have legal capacity to contract
in accordance with this code, and prove the skill,
capacity, and qualifications necessary to
command and direct the vessel, as established
by marine or navigation laws, ordinances, or
regulations, and must not be disqualified
according to the same for the discharge of the
duties of the position. If the owner of a vessel
desires to be the captain thereof, without having
the legal qualifications therefor, he shall limit
himself to the financial administration of the
vessel, and shall intrust the navigation to a
11
 person possessing the qualifications required by
said ordinances and regulations.
*Extraordinary diligence requires that the ship
which will transport the passengers and goods is
seaworthy.
*The carriers are deemed to warrant impliedly
the seaworthiness of the ship. The failure of a
common carrier to maintain in seaworthy
condition the vessel involved in its contract of
carriage is a clear breach of its duty prescribed in
Article 1755 of the NCC.
*Shippers of goods are not expected to inquire
into the vessels seaworthiness and compliance
with all maritime laws.
*The unseaworthiness can be established by the
fact that it did not withstand the natural and
inevitable action of the sea.
2. Overloading
*Duty to exercise due diligence includes the duty
to take passengers or cargoes that are within the
carrying capacity of the vessel.
3. Proper storage
*The ship must not be only seaworthy but it
must also be cargoworthy. The ship must be an
efficient storehouse for her cargo.
*The vessel must be adequately equipped and
properly manned.
4. Obligation of captain and crew
*If the negligence of the captain and crew can be
traced to the fact that they are really
incompetent, the Limited Liability Rule cannot be
invoked because the ship owner may be deemed
negligent.
5. Rule on deviation and transhipment Deviation
*If route is stipulated upon by the shipper and
carrier, carrier cant change unless due to force
majeure.
*Carrier shall be liable for all losses suffered
from any other cause, beside the sum stipulated
for such case.
*If due to said force majeure he took another
route and incurred expenses by reason thereof,
he shall be reimbursed for such increase upon
formal proof thereof (Art. 359, Code of
Commerce).
Transshipment is the act of taking cargo out of
one ship and loading it in another.
*When done without legal excuse, however
competent and safe the vessel into which the
transfer is made, is a violation of the contract
and an infringement of the right of the shipper
and subjects the carrier to liability if the freight is
lost even by a cause otherwise excepted
(Magellan Manufacturing Corp. v. CA).
Article 359 of the Code of Commerce provides
that: If there is an agreement between the
shipper and the carrier as to the road over which
the conveyance is to be made, the carrier may
not change the route, unless it be by reason of
force majeure; and should he do so without this
cause, he shall be liable for all the losses which
the goods he transports may suffer from any
other cause, beside paying the sum which may
have been stipulated for such case. When on
account of said cause of force majeure, the
carrier had to take another route which
produced an increase in transportation charges,
he shall be reimbursed for such increase upon
formal proof thereof.
D. Extraordinary diligence in carriage by land
1. Vehicles condition
*Owners are required to make sure that the
vehicles they are using are in good order and
condition.
2. Traffic rules (RA 4136)
*In cases involving breach of contract of
carriage, proof of violation of traffic rules
confirms that the carrier failed to exercise
extraordinary diligence.
3. Obligation to Inspect
*in overland transportation, common carrier is
not bound nor empowered to make an
examination of the contents of packages or bags
particularly those hand carried. Airline
companies are required to inspect each and
every cargo brought into the aircraft (RA 6235).
E. Extraordinary diligence in carriage by air
1. Airworthiness - an aircraft, its engines, propellers
and other components and accessories are of proper
design and construction, and are safe for air
navigation purposes, such design and construction
being consistent with accepted engineering practice
and in accordance with aerodynamic laws and aircraft
science (RA 779).
2. Competent and well trained crew
3. To take the required and prescribed route
4. Adverse weather conditions or extreme climatic
changes are some of the perils involved in air travel
consequence of which the passenger must assume or
expect.
5. RA 6235 (An Act Prohibiting Certain Acts Inimical
to Civil Aviation and for Other Purposes) - acts
punishable:
a. to compel a change in the course or destination
of an aircraft of Philippine registry; or
b. to seize or usurp control of the aircraft while in
flight.
12
ACTIONS IN CASE OF BREACH OF CONTRACT OF CARRIAGE:
A. Causes of action and nature/extent of liability (culpa
contractual, culpa aquiliana and culpa delictual)
Culpa contractual only the carrier is primarily liable
and not the driver.
Reason: There is no privity between the driver and
the passenger.
*The party to be impleaded is the carrier itself.
Basis: Article 1759 of the New Civil Code
Culpa delictual/criminal the driver is primarily liable.
The carrier is subsidiarily liable only if the driver is
convicted and declared insolvent.
Basis: Article 100 of the Revised Penal Code
Culpa aquiliana the carrier and the driver are
solidarily liable as joint tortfeasor.
Basis: Article 2180 of the New Civil Code
B. Prescriptive period and conditions precedent
1. Overland transportation of goods and
coastwise shipping (Domestic)
Article 366 of the Code of Commerce provides
that: Within the 24 hours following the receipt
of the merchandise, the claim against the carrier
for damage or average which may be found
therein upon opening the packages, may be
made, provided that the indications of the
damage or average which gives rise to the claim
cannot be ascertained from the outside part of
such packages, in which case the claim shall be
admitted only at the time of receipt. After the
periods mentioned have elapsed, or the
transportation charges have been paid, no claim
shall be admitted against the carrier with regard
to the condition in which the goods transported
were delivered.
*Prior notice of claim does not apply to
misdelivery of goods.
Purpose of notice: To inform the carrier that the
shipment has been damaged and that it is
charged with liability therefor, and to give it an
opportunity to make an investigation and fix
responsibility while the matter is fresh.
*The filing of notice of claim is a condition
precedent for recovery in case of damage
condition of the goods.
*Not provided by Article 366 of the Code of
Commerce. Thus, in such absence, the New Civil
Code rules on prescription apply.
Prescriptive period:
General Rule: If written, 10 years, if not written,
6 years
Exceptions:
1. COGSA 1 year
2. Warsaw Convention 2 years
Example: Q: In case of pending extrajudicial
claim, does it suspend the one year period?
A: NO
*One year period applies to shipper, assignee,
insurer, subrogees, and successor in interest.
*One year period does not apply in cases of
delay or misdelivery.
International Carriage of Goods by Sea Sec. 3
[6] of the COGSA substantially provides that in
case of patent damage, the shipper should file a
claim with the carrier immediately upon
delivery. In case of latent damage, the shipper
should file a claim with the carrier within 3 days
from delivery. Action for loss or damage to the
cargo should be brought within one year after:
delivery of the goods (delivered but damaged
goods); or the date when the goods should have
been delivered (loss).
*The filing of a notice of claim is not a condition
precedent.
Recoverable Damages
The court may award the following damages:
1. Actual/Compensatory Damages
2. Temperate Damages
3. Liquidated Damages
4. Exemplary Damages
5. Moral Damages
6. Nominal Damages
Actual/Compensatory damages are those awarded to the
aggrieved party as adequate compensation only for such
pecuniary loss suffered by him as he has alleged and duly
proved.
Article 2199 of the Civil Code states that: Except as
provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Such compensation
is referred to as actual or compensatory damages.
*To claim this award, proving the amount is necessary.
*Procedures or plastic surgeries performed to restore the
part of the body injured are included as a component of
actual damages.
Temperate damages or moderate damages these are
damages the amount of which is left to the sound
discretion of the court, but it is necessary that there be
some injury or pecuniary loss established, the exact
amount of which, could not be determined by the plaintiff
by reason of the nature of the case.
Article 2224 of the New Civil Code provides that:
Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss
13
has been suffered but its amount can not, from the nature
of the case, be provided with certainty.
*The court is convinced that there is pecuniary loss.
*There is no actual certainty of the actual amount loss.
The court is allowed to calculate the amount.
*This is in the form of actual damages
Liquidated damages are fixed damages previously agreed
by the parties to the contract and payable to the innocent
party in case of breach by the other.
Article 2226 of the New Civil Code provides that:
Liquidated damages are those agreed upon by the parties
to a contract, to be paid in case of breach thereof.
*This is in the form of actual damages but a stipulated
one.
*Proving the amount is not necessary.
*In this kind of damages, estoppel applies.
General Rule: The court cannot change the amount.
Exception: If the amount stipulated is excessive the court
may disregard said amount and may compute the actual
damages.
*The only thing to be proved is the fact of loss.
Exemplary damages are mere accessories to other forms
of damages except nominal damages. They are mere
additions to actual, moral, temperate and liquidated
damages which may or may not be granted at all
depending upon the necessity of setting an example for
the public good as a form of deterrent to the repetition of
the same act by any one.
Article 2229 of the New Civil Code provides that:
Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to
the moral, temperate, liquidated or compensatory
damages.
*Awarded because of the wanton, fraudulent, malevolent,
oppressive acts of the carrier.
*This is awarded to prevent other carrier to commit
oppressive acts.
*This cannot be awarded unless the plaintiff is entitled to
moral at the same time actual or temperate damages.
Article 2231 of the New Civil Code states that: In quasi-
delicts, exemplary damages may be granted if the
defendant acted with gross negligence.
Article 2232 of the New Civil Code states that: In
contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.
Article 2233 of the New Civil Code states that: Exemplary
damages cannot be recovered as a matter of right; the
court will decide whether or not they should be
adjudicated.
Article 2234 of the New Civil Code states that: While the
amount of the exemplary damages need not be proved,
the plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the court
may consider the question of whether or not exemplary
damages should be awarded In case liquidated damages
have been agreed upon, although no proof of loss is
necessary in order that such liquidated damages may be
recovered, nevertheless, before the court may consider
the question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he would
be entitled to moral, temperate or compensatory damages
were it not for the stipulation for liquidated damages.
Article 2235 of the New Civil Code states that: A
stipulation whereby exemplary damages are renounced in
advance shall be null and void.
Nominal damages are not for indemnification of loss but
for vindication of a right violated.
Article 2221 of the New Civil Code provides that:
Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss
suffered by him.
Article 2222 of the New Civil Code states that: The court
may award nominal damages in every obligation arising
from any source enumerated in Article 1157, or in every
case where any property right has been invaded.
Article 2223 of the New Civil Code states that: The
adjudication of nominal damages shall preclude further
contest upon the right involved and all accessory
questions, as between the parties to the suit, or their
respective heirs and assigns.
*In Japan Airlines v CA, JAL failed to give the plaintiff the
priority for the first available flight. The SC awarded
nominal damages.
Moral damages are in the category of an award designed
to compensate the claimant for actual injury suffered and
not to impose a penalty on the wrongdoer.
Article 2217 of the New Civil Code provides that: Moral
damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury. Though
incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the
defendant's wrongful act for omission.
Q: When moral damages may be awarded?
A: 1. Death of a passenger; 2. Carrier is guilty of fraud,
malice, bad faith even if there is no death of a passenger
(Case: Lopez v Pan-American); 3. In Air France case
MARITIME LAW:
Source: Code of Commerce
A. Concept of Maritime Law
Maritime Law is the system of laws which particularly
relates to the affairs and business of the sea, to ships, their
14
 crews and navigation, and to maritime conveyance of
persons and property.
*Apply only to maritime trade and sea voyages.
B. Limited Liability Rule
1. Concept
The exclusively real and hypothecary nature of
maritime law operates to limit the liability of the
shipowner to the value of the vessel, earned
freightage and proceeds of the insurance, if any. NO
VESSEL NO LIABILITY expresses in a nutshell the
limited liability rule. The total destruction of the
vessel extinguishes maritime lien as there is no longer
any res to which it can attach.
Q: Is this rule applies in the handling of the
passengers?
A: YES
Q: Whose liability is this?
A: Shipowner or Agents.
Article 586 2nd paragraph states that: By ship agent
is understood the person entrusted with provisioning
or representing the vessel in the port in which it may
be found.
*Ship agent is the only person that can be sued
directly.
Reason: Article 618 of the Code of Commerce
provides so.
Article 618 1st paragraph states that: The ship
captain shall be civilly liable to the ship agent, and the
latter to the third persons who may have made
contracts with the former; x x x.
Q: What kind?
A: Maritime in nature; marine transactions connected
with maritime law; maritime trade and commerce
Purpose: To encourage shipbuilding and maritime
transactions
Article 587 of the Code of Commerce provides that:
The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise
from the conduct of the captain in the care of the
goods which he loaded on the vessel; but he may
exempt himself therefrom by abandoning the vessel
with all her equipments and the freight it may have
earned during the voyage.
Article 590 of the Code of Commerce provides that:
The co-owners of a vessel shall be civilly liable in the
proportion of their interests in the common fund, for
the results of the acts of the captain, referred to in
Article 587. Each co-owner may exempt himself from
this liability by the abandonment, before a notary, of
the part of the vessel belonging to him.
Article 837 of the Code of Commerce provides that:
The civil liability incurred by the shipowners in the
case prescribed in this section, shall be understood as
limited to the value of the vessel with all its
appurtenances and freightage earned during the
voyage.
When applicable:
The Code of Commerce sanctions the application of
the doctrine in the following cases: 1. Civil liability for
indemnities in favor of third persons which arise from
the conduct of the captain in the case of the goods
which the vessel carried; 2. Civil liability arising from
collisions; 3. Unpaid wages of the captain and the
crew if the vessel and its cargo are totally lost by
reason of capture of shipwreck.
2. Exceptions to the rule
Exceptions:
1. When the injury to or death of a passenger is
due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and
the captain;
2. When the vessel is insured to the extent of the
insurance proceeds; and
*Freightage collectible
Q: How come insurance is an exception?
A: Because there is no loss. The loss was
compensated by the insurance company
3. In Workmens Compensation claims
Q: Why is an exception?
A: Because not maritime in nature
*In Yangco v Laserna case, the SC held that it
covers anything that is connected with maritime
transactions
3. Abandonment
Q: If theres partial loss can the shipowner/agent be
exempted from liability?
A: YES. If there is abandonment.
Q: If there is total loss, is it necessary to abandon?
A: NO. There is nothing to abandon.
Case: Luzon Stevedoring
Article 587 of the Code of Commerce states that:
The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise
from the conduct of the captain in the care of the
goods which he loaded on the vessel; but he may
exempt himself therefrom by abandoning the vessel
with all her equipments and the freight it may have
earned during the voyage.
Q: How claims are satisfied under the Limited Liability
Rule?
A: All claims should be collated before they can be
satisfied from what remains of the insurance
proceeds and freightage at the time of the loss. No
claimant should be given preference over the others
by the simple expedience of having filed or
completed its action earlier than the rest. Thus, the
execution of judgment in earlier completed cases,
15
 even those already final and executory, must be
stayed pending completion of all cases occasioned by
the subject sinking. Then and only then can all such
claims be simultaneously settled, either completely or
pro-rata should the insurance proceeds and
freightage be not enough to satisfy the claim.
Case: Aboitiz Shipping Co. v General Accident Fire
and Life Insurance Corporation
C. Vessels
- Those engaged in navigation, whether coastwise
or on the high seas, including floating docks,
pontoons, dredges, scows and any other floating
apparatus destined for the services of the
industry or maritime commerce. Excluded are
local and foreign military vessels, bancas and
other watercrafts of less than 3 tons gross
capacity and small watercrafts engaged in river
and bay traffic.
1. Acquisition
a. By prescription
Article 573 of the Code of Commerce states
that: Merchant vessels constitute property
which may be acquired and transferred by any of
the means recognized by law. The acquisition of
a vessel must appear in a written instrument,
which shall not produce any effect with respect
to third persons if not inscribed in the registry of
vessels. The ownership of a vessel shall likewise
be acquired by possession in good faith,
continued for three years, with a just title duly
recorded. In the absence of any of these
requisites, continuous possession for ten years
shall be necessary in order to acquire ownership.
A captain may not acquire by prescription the
vessel of which he is in command.
Requisites:
1. Acquisition must appear in a written
instrument
2. Such shall not produce any effect to third
persons if not inscribed in the registry of
vessels
3. Shall be acquired by possession in good
faith, continued for 3 years
4. With a just title duly recorded
5. In the absence of any of there, continuous
possession for 10 years shall be necessary
to acquire ownership
Q: Can the ship captain acquire vessel by
prescription?
A: NO. The character of possession he has is not
those for acquisitive possession. The requisite
for acquisitive possession is that possession as
an owner.
Article 575 of the Code of Commerce states
that: Co-owners of vessels shall have the right
of repurchase and redemption in sales made to
strangers, but they may exercise the same only
within the 9 days following the inscription of the
sale in the registry, and by depositing the price
at the same time.
b. By sale
Article 576 of the Code of Commerce states
that: In the sale of a vessel it shall always be
understood as included the rigging, masts, stores
and engine of a steamer appurtenant thereto,
which at the time belongs to the vendor. The
arms, munitions of war, provisions and fuel shall
not be considered as included in the sale. The
vendor shall be under the obligation to deliver to
the purchaser a certified copy of the record
sheet of the vessel in the registry up to the date
of sale.
Article 577 of the Code of Commerce states
that: If the alienation of the vessel should be
made while it is on voyage, the freightage which
it earns from the time it receives its last cargo
shall pertain entirely to the purchaser, and the
payment of the crew and other persons who
make up its complement for the same voyage
shall be for his account. If the sale is made after
the vessel has arrived at the port of its
destination, the freightage shall pertain to the
vendor, and the payment of the crew and other
individuals who make up its complement shall be
for his account, unless the contrary is stipulated
in either case.
*If made while it is on voyage, the freightage
which it earns from the time it receives its last
cargo shall pertain entirely to the purchaser, and
the payment of the crew and other persons who
make up its complement shall be for his account.
*If made after vessel arrived at port of its
destination, freightage shall pertain to the
vendor, and the payment of the crew and other
individuals who make up its complement shall be
for his account, unless the contrary is stipulated
in either case.
Article 578 of the Code of Commerce states
that: If the vessel being on a voyage or in a
foreign port, its owner or owners should
voluntarily alienate it, either to Filipinos or to
foreigners domiciled in the capital or in a port of
another country, the bill of sale shall be
executed before the consul of the Republic of
the Philippines at the port where it terminates
its voyage and said instrument shall produce no
effect with respect to third persons if it is not
16
 inscribed in the registry of the consulate. The
consul shall immediately forward a true copy of
the instrument of purchase and sale of the
vessel to the registry of vessels of the port where
said vessel is inscribed and registered. In every
case the alienation of the vessel must be made
to appear with a statement of whether the
vendor receives its price in whole or in part, or
whether he preserves in whole or in part any
claim on said vessel. In case the sale is made to a
Filipino, this fact shall be stated in the certificate
of navigation. When a vessel, being in a voyage,
shall be rendered useless for navigation, the
captain shall apply to the competent judge or
court of the port of arrival, should it be in the
Philippines; and should it be in a foreign country,
to the consul of the Republic of the Philippines,
should there be one, or, where there is none, to
the judge or court or to the local authority; and
the consul, or the judge or court, shall order an
examination of the vessel to be made. If the
consignee or the insurer should reside at said
port, or should have representatives there, they
must be cited in order that they may take part in
the proceedings on behalf of whoever may be
concerned.
c. Registration
Section 810 of the Tariff and Customs Code
provides that: The Bureau of Customs is vested
with exclusive authority over the registration
and documentation of Philippine vessels. By it
shall be kept and preserved the records of
registration and of transfers and encumbrances
of vessels; and by it shall be issued all
certificates, licenses or other documents
incident to registration and documentation, or
otherwise requisite for Philippine vessels.
*Through the MARINA
d. Ships manifest
Sec. 906 of the Tariff and Customs Code
provides that: Manifests shall be required for
cargo and passengers transported from one
place or port in the Philippines to another only
when one or both of such places is a port of
entry.
*Declaration of the entire cargo. The object is to
furnish customs officers with a list to check
against, to inform the revenue officers what
goods are brought into a port of the country on a
vessel. Hence, the requirement that a vessel
must carry a manifest is not complied with even
if a bill of lading can be presented.
*A bill of lading is just a declaration of a specific
cargo rather than the entire cargo. It is issued as
a matter of convenience by virtue of a contract.
D. Persons who take part in Maritime Commerce
1. Shipowners and shipagents
Article 586 of the Code of Commerce provides that:
The shipowner and the ship agent shall be civilly
liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip,
and provision the vessel, provided the creditor proves
that the amount claimed was invested for the benefit
of the same. By ship agent is understood the person
entrusted with provisioning or representing the
vessel in the port in which it may be found.
Article 587 of the Code of Commerce provides that:
The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise
from the conduct of the captain in the care of the
goods which he loaded on the vessel; but he may
exempt himself thereform by abandoning the vessel
with all her equipments and the freight it may have
earned during the voyage.
Article 588 of the Code of Commerce provides that:
Neither the shipowner nor the ship agent shall be
liable for the obligations contracted by the captain, if
the latter exceeds the powers and privileges
pertaining to him by reason of his position or
conferred upon him by the former. Nevertheless, if
the amounts claimed were invested for the benefit of
the vessel, the responsibility therefor shall devolve
upon its owner or agent.
a. Rules in case of part-owners
Article 589 of the Code of Commerce provides
that: If two or more persons should be part
owners of a merchant vessel, a partnership shall
be presumes as estrablished by the co-owners.
This partnership shall be governed by the
resolution of the majority of the members. If the
part-owners should not be more than two, the
disagreement of views, if any, shall be decided
by the vote of the member having the largest
interest. If the interests are equal, it should be
decided by lot. The person having the smallest
share in the ownership shall have one vote; and
proportionately the other part owners as many
votes as they have parts equal to the smallest
one. A vessel may not be detained, attached or
levied upon in execution in its entirety, for the
private debts of a part owner, but the
proceedings shall be limited to the interest
which the debtor may have in the vessel,
without interfering with the navigation.
17
 Article 590 of the Code of Commerce provides
that: The co-owners of a vessel shall be civilly
liable in the proportion of their interests in the
common fund, for the results of the acts of the
captain, referred to in Article 587.
Article 591 of the Code of Commerce provides
that: All the part owners shall be liable, in
proportion to their respective ownership, for the
expenses for repairing the vessel, and for other
expenses which are incurred by virtue of a
resolution of the majority. They shall likewise be
liable in the same proportion for the expenses
for the maintenance, equipment, and
provisioning of the vessel, necessary for
navigation.
Article 592 of the Code of Commerce provides
that: The resolution of the majority with regard
to the repair, equipment, and provisioning of the
vessel in the port of departure shall bind the
minority, unless the minority members renounce
their interests, which must be acquired by the
other co-owners, after a judicial appraisement of
the value of the portion or portions assigned.
The resolutions of the majority relating to the
dissolution of the partnership and sale of the
vessel shall also be binding on the minority. The
sale of the vessel must be made at public
auction, subject to the provisions of the law of
civil procedure, unless the co-owners
unanimously agree otherwise, saving always the
right of repurchase and redemption provided for
in Article 575.
Article 593 of the Code of Commerce provides
that: The owners of a vessel shall have
preference in her charter over other persons,
under the same conditions and price. If two or
more of them should claim this right, the one
having the greater interest shall be preferred;
and should they have equal interests, the matter
shall be decided by lot.
Article 594 of the Code of Commerce states
that: The co-owners shall elect the manager
who is to represent them in the capacity of ship
agent. The appointment of director or ship agent
shall be revocable at the will of the members.
b. Rules in case of shipagents
Article 595 of the Code of Commerce states
that: The ship agent, whether he is at the same
time the owner of the vessel, or a manager for
an owner or for an association of co-owners,
must have the capacity to trade and must be
recorded in the merchants registry of the
province. The ship agent shall represent the
ownership of the vessel, and may, in his own
name and in such capacity, take judicial and
extrajudicial steps in matters relating to
commerce.
Article 596 of the Code of Commerce provides
that: The ship agent may discharge the duties of
captain of the vessel, subject in every case to the
provision of Article 609. If two or more co-
owners apply for the position of captain, the
disagreement shall be decided by a vote of the
members; and if the vote should result in a tie, it
shall be decided in favor of the co-owner having
the larger interest in the vessel. If the interests
of the applicants should be equal, and there
should be a tie, the matter shall be decided by
lot.
Article 597 of the Code of Commerce states
that: The ship agent shall designate and come
to terms with the captain, and shall contract in
the name of the owners, who shall be bound in
all that refer to repairs, details equipment,
armament, provisions of food and fuel, and
freight of the vessel, and, in general, in all that
relate to the requirements of navigation.
Article 598 of the Code of Commerce states
that: The ship agent may not order a new
voyage, or make contracts for a new charter, or
insure the vessel, without the authorization of its
owner or resolution of the majority of the co-
owners, unless these powers were granted him
in the certificate of his appointment. If he
insures the vessel without authorization
therefore, he is subsidiarily liable for the
solvency of the insurer.
Article 599 of the Code of Commerce states
that: The ship agent managing for an
association shall render to his associates an
account of the results of each voyage of the
vessel, without prejudice to always having the
books and correspondence relating to the vessel
and to its voyages at their disposal.
Article 600 of the Code of Commerce states
that: After the account of the managing agent
has been approved by a relative majority, the co-
owners shall pay the expenses in proportion to
their interest, without prejudice to the civil or
criminal actions which the minority may deem fit
to institute afterwards. In order to enforce the
payment, the managing agent shall be entitled
to an executor action (accion ejecutiva), which
shall be instituted by virtue of a resolution of the
majority, and without further proceedings than
the acknowledgment of the signatures of the
persons who voted for the resolution.
18
 Article 601 of the Code of Commerce states
that: Should there be any profits, the co-owners
may demand of the managing agent the amount
corresponding to their interests by means of an
executor action (accion ejecutiva), without any
other requisite than the acknowledgment of the
signatures on the instrument approving the
account.
Article 602 of the Code of Commerce states
that: The ship agent shall indemnify the captain
for all the expenses he may have incurred with
funds of his own or of others, for the benefit of
the vessel.
*The ship agent is entrusted with the
provisioning and representing the vessel in the
port in which it may be found. His liability to
passengers and cargo owners for loss or injury is
the same as the shipowner.
*He is solidarily liable with the owner for such
loss or damage subject to his right to claim
reimbursement from the shipowner.
*Only agent that can be sued directly.
2. Captains and masters of vessels
a. Qualifications
Article 609 of the Code of Commerce states
that: Captains, masters or patrons of vessels
must be Filipinos, have legal capacity to contract
in accordance with this code, and prove the skill,
capacity, and qualifications necessary to
command and direct the vessel, as established
by marine or navigation laws, ordinances, or
regulations, and must not be disqualified
according to the same for the discharge of the
duties of the position. If the owner of a vessel
desired to be the captain thereof, without having
the legal qualifications therefor, he shall limit
himself to the financial administration of the
vessel, and shall intrust the navigation to a
person possessing the qualifications required by
said ordinances and regulations.
b. Powers and functions
Article 610 of the Code of Commerce states
that: The following powers shall be inherent in
the position of captain, master or patron of a
vessel: 1. To appoint or make contracts with the
crew in the absence of the ship agent, and to
propose said crew, should said agent be present;
but the ship agent may not employ any member
against the captains express refusal; 2. To
command the crew and direct the vessel to the
port of its destination, in accordance with the
instructions he may have received from the ship
agent; 3. To impose, in accordance with the
contracts and with the laws and regulations of
the merchant marine, and when on board the
vessel, correctional punishment upon those who
fail to comply with his orders or are wanting in
discipline, holding a preliminary hearing on the
crimes committed on board the vessel on the
seas, which crimes shall be turned over to the
authorities having jurisdiction over the same at
the first port touched; 4. To make contracts for
the charter of the vessel in the absence of the
ship agent or of its consignee, acting in
accordance with the instructions received and
protecting the interests of the owner with
utmost care; 5. To adopt all proper measures to
keep the vessel well supplied and equipped,
purchasing all that may be necessary for the
purpose, provided there is no time to request
instruction from the ship agent; and 6. To order,
in similar urgent cases while on a voyage, the
repairs on the hull and engines of the vessel and
in its rigging and equipment, which are
absolutely necessary to enable it to continue and
finish its voyage; but if he should arrive at a
point where there is a consignee of the vessel,
he shall act in concurrence with the latter.
Article 611 of the Code of Commerce states
that: In order to comply with the obligations
mentioned in the preceding article, the captain,
when he has no funds and does not expect to
receive any from the ship agent, shall obtain the
same in the successive order stated below: 1. By
requesting said funds from the consignee of the
vessel or correspondents of the ship agent; 2. By
applying to the consignees of the cargo or to
those interested therein; 3. By drawing on the
ship agent; 4. By borrowing the amount required
by means of a loan on bottomry; and 5. By
selling a sufficient amount of the cargo to cover
the sum absolutely indispensable for the repair
of the vessel and to enable it to continue its
voyage. In these two last cases he must apply to
the judicial authority of the port, if in the
Philippines, and to the consul of the Republic of
the Philippines if in a foreign country, and where
there is none, to the local authority, proceeding
in accordance with the provisions of Article 583,
and with the provisions of the law of civil
procedure.
Article 612 of the Code of Commerce states
that: The following obligations shall be inherent
in the office of the captain:
1. To have on board before starting on a voyage
a detailed inventory of the hull, engines, rigging,
spare-masts, tackle, and other equipment of the
vessel; the royal or the navigation certificate; the
19
roll of the persons who make up the crew of the
vessel, and the contracts entered into with
them; the lists of passengers; the bill of health;
the certificate of the registry proving the
ownership of the vessel and all the obligations
which encumber the same up to that date; the
charter parties or authenticated copies thereof;
the invoices or manifests of the cargo, and the
memorandum of the visit or inspection by
experts, should it have been made at the port of
departure;
2. To have a copy of this code on board; 3. To
have thee folioed and stamped books, placing at
the beginning of each one a memorandum of the
number of folios it contains, signed by the
maritime authority, and in his absence by the
competent authority. In the first book, which
shall be called log book, he shall enter day by
day the condition of the atmosphere, the
prevailing winds, the courses taken, the rigging
carried, the power of the engines used in
navigation, the distances covered, the
maneuvers executed, and other incidents of
navigation; he shall also enter the damage
suffered by the vessel in her hull, engines,
rigging, and tackle, no matter what its cause may
be, as well as the impairment and damage
suffered by cargo, and the effect and importance
of the jettison, should there be any; and in cases
of serious decisions which require the advice or
a meeting of the officers of the vessel, or even of
the crew and passengers, he shall record the
decisions adopted. For the information indicated
he shall make use of the binnacle book and of
the steam of engine book kept by the engineer.
In the second book called the accounting book,
he shall record all the amounts collected and
paid for the account of the vessel, entering
specifically the article by article, the source of
the collection and the amounts spent for
provisions, repairs, acquisitions of equipment or
goods, fuel, food, outfits, wages, and other
expenses of whatever nature they may be. He
shall furthermore enter therein a list of all the
members of the crew, stating their domiciles,
their wages and salaries, and the amounts they
may have received on account, directly or by
delivery to their families. In the third book,
called freight book, he shall record the loading
and discharge of all the gods, stating their marks
and packages, names of the shippers and of the
consignees, ports of loading and unloading, and
the freightage they give. In this same book he
shall record the names and places of sailing of
the passengers, the number of packages in their
baggage, and the price of passage;
4. Before receiving cargo, to make with the
officers of the crew and two experts, if required
by the shippers and passengers, an examination
of the vessel, in order to ascertain whether it is
water-tight, with the rigging and engines in good
condition, and with the equipment required for
good navigation, preserving under his
responsibility a certificate of the memorandum
of his inspection, signed by all those who may
have taken part therein. The experts shall be
appointed, one by the captain of the vessel and
another by those who request its examination,
and in case of disagreement a third shall be
appointed by the marine authority of the port or
by the authority exercising his functions;
5. To remain constantly on board the vessel with
the crew while the cargo is being taken on board
and to carefully watch the stowage thereof; not
to consent to the loading of any merchandise or
matter of a dangerous character, such as
inflammable or explosive substances, without
the precautions which are recommended for
their packing, handling and isolation; not to
permit the carriage on deck of any cargo which
by reason of its arrangement, volume, or weight
makes the work of the sailors difficult, and which
might endanger the safety of the vessel; and if,
on account of the nature of the merchandise,
the special character of the shipment, and
principally the favorable season in which it is
undertaken, merchandise may be carried on
deck, he must hear the opinion of the officers of
the vessel and have the consent of the shippers
and of the ship agent;
6. To demand a pilot at the expense of the vessel
whenever required by the navigation, and
principally when he has to enter a port, canal, or
river, or has to take a roadstead or anchoring
place with which neither he nor the officers and
crew are acquainted;
7. To be on deck on reaching land and to take
command on entering and leaving ports, canals,
roadsteads, and rivers, unless there is a pilot on
board discharging his duties. He shall not spend
the night away from the vessel except for serious
causes or by reason of official business;
8. To present himself, when making a port in
distress, to the maritime authority if in the
Philippines and to the consul of the Republic of
the Philippines if in a foreign country, before 24
hours have elapsed, and to make a statement of
the name registry, and port of departure of the
20
vessel, of its cargo, and the cause of arrival
which declaration shall be visaed by the
authority or the consul, if after examining the
same it is found to be acceptable, giving the
captain the proper certificate proving his arrival
in distress and the reasons therefor. In the
absence of the maritime authority or of the
consul, the declaration must be made before the
local authority;
9. To take the necessary steps before the
competent authority in order to record in the
certificate of the vessel in the registry of vessels
the obligations which he may contract in
accordance with Article 583;
10. To place under good care and custody all the
papers and belongings of any members of the
crew who might die on the vessel, drawing up a
detailed inventory, in the presence of
passengers, or, in their absence, of members of
the crew as witnesses;
11. To conduct himself according to the rules
and precepts contained in the instructions of the
ship agent, being liable for all that which he may
do in violation thereof;
12. To inform the ship agent from the port at
which the vessel arrives, of the reason of his
arrival, taking advantage of the semaphore,
telegraph, mail, etc., as the case may be; to
notify him of the cargo he may have received,
stating the names and domiciles of the shippers,
freightage earned, and amounts borrowed on
bottomry loan; to advise him of his departure,
and of any operation and date which may be of
interest to him;
13. To observe the rules with respect to
situation, lights and maneuvers in order to avoid
collisions;
14. To remain on board, in case the vessel is in
danger, until all hope to save it is lost, and
before abandoning it, to hear the officers of the
crew, abiding by the decision of the majority;
and if the boats are to be taken to, he shall take
with him, before anything else, the books and
papers, and then the articles of most value,
being obliged to prove, in case of the loss of the
books and papers, that he did all he could to
save them;
15. In case of wreck, to make the proper protest
in due form at the first port of arrival, before the
competent authority or the Philippine consul,
within 24 hours, specifying therein all the
incidents of the wreck, in accordance with
subdivision 8 of this article;
16. To comply with the obligations imposed by
the laws and regulations on navigation, customs,
health, and others.
c. Discretion powers
*A ships captain must be accorded a reasonable
measure of discretionary authority to decide
what the safety of the ship and of its crew and
cargo specifically requires on a stipulated ocean
voyage.
Case:Inter-Orient Maritime Enterprises Inc. v CA
3. Pilot
a. Concept
Pilot is a person duly qualified and licensed to
conduct a vessel into or out of ports or in certain
waters.
*Generally connotes a person taken on board at
a particular place for the purpose of conducting
a ship through a river, road or channel or from a
port.
*If he is in command, he becomes the Master
pro hac vice.
*While exercising his functions a pilot is in sole
command of the ship and supersedes the master
for the time being in the command and
navigation of the ship; the master does not
surrender his vessel to the pilot and the pilot is
not the master. There are occasions when the
master may and should interfere and even
displace the pilot, as when the pilot is obviously
incompetent or intoxicated.
Case: Far Eastern Shipping v CA
b. Relationship to master and shipowner
4. Officers and crew of the vessel
i. Sailing mate/First mate
ii. Second mate
iii. Engineers marine engineers
iv. Crew cabin boy; paramedics; watchkeeper;
radio officers
5. Supercargoes person who discharges administrative
duties assigned to him by ship agent or shippers,
keeping an account and record of transaction as
required in the accounting book of the captain.
E. Charter parties
1. Concept
Article 655 of the Code of Commerce states that:
Charter parties executed by the captain in the
absence of the ship agent shall be valid and effective,
even though in executing them he should have acted
in violation of the orders and instructions of the ship
agent or shipowner; but the latter shall have a right of
action against the captain for indemnification of
damages.
21
 Charter party is a lease contract by which with the
entire ship or some principal part thereof is let by the
owner to another person for a specified period of
time or use.
2. Kinds; bareboat and contract of affreightment
Kinds:
1. Bareboat or demise means the whole vessel is
lend to the charterer which transfers to him its
entire command and possession and consequent
control over its navigation, including the master
and crew who are his servants. The charterer is
treated as owner pro hac vice of the vessel. In
such case, a common carrier becomes a private
carrier.
*Charterer means the vessel assumes all
responsibilities of navigation and provides his
own people.
*Shipowner is not liable to third person; it is the
charterer who is liable to them.
General Rule: The charterer is liable to the third
person.
Exception: Shipowner may still be held liable if
the injury was caused by unseaworthiness or
negligence of the shipowner beyond before the
demise or bareboat took over.
2. Contract of affreightment involves that use of
shipping space leased by the owner in part or as
a whole, to carry goods for others.
*The shipowner retains the possession,
command and navigation of the ship, the
charterer merely having use of the space in the
vessel in return for his payment of the charter
hired.
*The shipowner is liable to third person.
3. Persons qualified to make charter
Q: Can the captain enter into a charter contract?
A: YES provided that he is authorized.
Q: Can the charterer enter into a sub-charter
contract?
A: YES provided it is not prohibited. This is just like
the rule in lease.
4. Requisites of a valid charter
Article 652 of the Code of Commerce states that: A
charter party must be drawn in duplicate and signed
by the contracting parties, and when either does not
know how or is not able to do so, by two witnesses at
his request. The charter party shall contain, besides
the conditions freely stipulated, the following
circumstances: 1. The kind, name, and tonnage of the
vessel; 2. Its flag and port of registry; 3. The name,
F.
surname, and domicile of the captain; 4. The name,
surname, and domicile of the ship agent, if the latter
should make the charter party; 5. The name,
surname, and domicile of the charterer; and if he
states that he is acting by commission, that of the
person for whose account he makes the contract; 6.
The port of loading and unloading; 7. The capacity,
number of tons or the weight or measurement which
they respectively bind themselves to load and to
transport, or whether the charter party is total; 8. The
freightage to be paid, stating whether it is to be a
fixed amount for the voyage or so much per month,
or for the space to be occupied, or for the weight or
measure of the goods of which the cargo consists, or
in any other manner whatsoever agreed upon; 9. The
amount of primage to be paid to the captain; 10. The
days agreed upon for loading and unloading; 11. The
lay days and extra lay days to be allowed and the
demurrage to be paid for each of them.
Requisites:
1. Consent of the contracting parties
2. Existing vessel which should be placed at the
disposition of the shipper
3. Freight
4. Compliance with Article 652 of the Code of
Commerce
5. Concept of and liability for demurrage
Demurrage is the sum due, by express contract, for
the detention of the vessel, in loading and unloading,
beyond the time allowed in the contract of
affreightment, and to any other improper detention
or delay beyond the time set for loading.
6. Rights and obligations of charter parties
Shipowner or Ship agent Charterer
If the vessel is chartered To pay the agreed
wholly, not to accept charter price
cargo from others
To observe represented To pay freightage on
capacity unboarded cargo
To unload cargo To pay losses to others
clandestinely placed for loading uncontracted
cargo or illicit cargo
To substitute another To wait if the vessel
vessel if load is less than needs repair
3/5 of capacity
To leave the port if the To pay expenses for
charterer does not bring deviation
the cargo within the lay
days and extra lay days
allowed
To place in a vessel in a
condition to navigate; to
bring cargo to nearest
neutral port in case of
war or blockade
Loans on Bottomry and Respondentia
1. Definition
Article 719 of the Code of Commerce states that: A
loan in which under any condition whatever, the
repayment of the sum loaned and of the premium
22
 stipulated depends upon the safe arrival in port of the
goods on which it is made, or of the price they may
receive in case of accident, shall be considered a loan
on bottomry or respondentia.
Bottomry is a loan secured by the shipowner or ship
agent guaranteed by the vessel itself and payable
only upon arrival of vessel at destination.
*Captain may enter into bottomry loan provided
there is justification, example of which is, for
immediate repairs.
Respondentia is a loan secured by the owner of the
cargo payable upon safe arrival of cargo at
destination.
Barratry is an act of the captain or crew for
fraudulent purposes.
2. Distinguished from ordinary loan
Ordinary Loan Bottomry/Respondentia
With or without Always with collateral
collateral
Any property may be Property is limited to
used as collateral vessel/cargo
Absolutely payable Conditionally payable
Obligation to pay still Loan is extinguished in the
exists in the event the event that the vessel/cargo
collateral was lost was lost
First lender is the first Last lender is the first
priority priority
Need not be in Need to be in writing to be
writing to be enforceable
enforceable
3. Parties to the loan
Parties:
1. Ship owner or ship agent
2. Owner of the cargo
3. Lender
4. Formalities needed
Article 720 of the Code of Commerce states that:
Loans on bottomry or respondentia may be
executed:
1. By means of a public instrument;
2. By means of a policy signed by the contracting
parties and the broker taking part therein;
3. By means of a private instrument.
Under whichever of these forms the contract is
executed, it shall be entered in the certificate of the
registry of the vessel and shall be recorded in the
registry of vessels, without which requisites the
credits of this kind shall not have, with regard to
other credits, the preference which, according to
their nature, they should have, although the
obligation shall be valid between the contracting
parties.
Formal Requirements: a. By means of public
instrument; b. Policy signed by the contracting parties
and the broker taking part therein; and c. by means of
private instrument.
Reason: Must be in writing to be enforceable.
5. Effect of loss of on loan
Article 731 of the Code of Commerce states that:
The actions pertaining to the lender shall be
extinguished by the absolute loss of the goods on
which the loan was made, if it arose from an accident
of the sea at the time and during the voyage
designated in the contract, and it is proven that the
cargo was on board; but this shall not take place if the
loss was caused by the inherent defect of the thing,
or through the fault or malice, of the borrower, or
barratry on the part of the captain, or if it was caused
by damages suffered by the vessel as a consequence
of being engaged in contraband, or if it arose from
having loaded the merchandise on a vessel different
from that designated in the contract, unless this
change should have been made by reason of force
majeure. Proof of the loss as well as of the existence
of the vessel of the goods declared to the lender as
the object of the loan is incumbent upon him who
received the loan.
General Rule: If the property that was collateral was
loss, the loan is extinguished.
Exceptions: 1. Perished due to inherent defects; 2.
Brought about by malicious conduct of the
shipowner; 3. Barratry of the captain; 4. Engaged in
unlawful transaction; and 5. The cargo loaded on the
vessel be different in from that agreed upon.
*Commonality of all the exceptions is that the
borrower is at fault.
6. Cases where loan is regarded as simple loan
a. The loan must be made in connection with the
maritime transaction otherwise the loan
becomes a simple loan.
b. If the loan is bigger than the value of the
collateral, the loan becomes a simple loan.
c. If the property is not exposed to maritime peril.
Reason: To prevent abuse by the borrower of the
benefits of this loan.
Article 726 of the Code of Commerce states that: If
the lender should prove that he loaned as amount
larger than the value of the object liable for the
bottomry loan, on account of fraudulent measures
employed by the borrower, the loan shall be valid
only for the amount at which said object is appraised
by experts. The surplus principal shall be returned
with legal interests for the entire time required for
repayment.
Article 727 of the Code of Commerce states that: If
the full amount of the loan contracted in order to
load the vessel should not be used for the cargo, the
balance shall be returned before clearing. The same
23
 procedure shall be observed with regard to the goods
taken as loan, if they were not loaded.
Article 728 of the Code of Commerce states that:
The loan which the captain takes at the point of
residence of the owners of the vessel shall only affect
that part thereof which belongs to the captain, if the
other owners or their agents should not have given
their express authorization therefor or should not
have taken part in the transaction. If one or more of
the owners should be requested to furnish the
amount necessary to repair or provision the vessel,
and they should not do so within 24 hours, the
interest which the parties in default may have in the
vessel shall be liable for the loan in the proper
proportion. Outside of the residence of the owners
the captain may contract loans in accordance with
the provisions of Articles 583 and 611.
Article 729 of the Code of Commerce provides that:
Should the goods on which money is taken not be
subjected to risk, the contract shall be considered a
simple loan, with the obligation on the part of the
borrower to return the principal and interest at the
legal rate, if that agreed upon should not be lower.
G. Averages
1. Concept
Article 806 of the Code of Commerce provides that:
For the purposes of this code the following shall be
considered averages: 1. All extraordinary or
accidental expenses which may be incurred during
the voyage in order to preserve the vessel, the cargo,
or both; 2. Any damages or deteriorations which the
vessel may suffer from the time it puts to sea from
the port of departure until it casts anchor in the port
of destination, and those suffered by the
merchandise from the time they are loaded in the
port of shipment until they are unloaded in the port
of their consignment.
2. Classes of average and the persons liable
a. Simple average
Article 809 of the Code of Commerce provides
that: As a general rule, simple or particular
averages shall include all the expenses and
damages caused to the vessel or to her cargo
which have not inured to the common benefit
and profit of all the persons interested in the
vessel and her cargo, and especially the
following:
1. The losses suffered by the cargo from the
time of its embarkation until it is unloaded,
either on account of inherent defect of the
goods or by reason of an accident of the sea
or force majeure, and the expenses
incurred to avoid and repair the same;
2. The losses and expenses suffered by the
vessel in its hull, rigging, arms, and
equipment, for the same causes and
reasons, from the time it puts to sea from
the port of departure until it anchors and
lands in the port of destination;
3. The losses suffered by the merchandise
loaded on deck, except in coastwise
navigation, if the marine ordinances allow
it;
4. The wages and victuals of the crew when
the vessel is detained or embargoed by
legitimate order or force majeure, if the
charter has been contracted for a fixed sum
for the voyage;
5. The necessary expenses on arrival at a port,
in order to make repairs or secure
provisions;
6. The lowest value of the goods sold by the
captain in arrivals under stress for the
payment of provisions and in order to save
the crew, or to meet any other need of the
vessel, against which the proper amount
shall be charged;
7. The victuals and wages of the crew while
the vessel is in quarantine;
8. The loss inflicted upon the vessel or cargo
by reason of an impact or collision with
another, if it is accidental and unavoidable.
If the accident should occur through the
fault or negligence of the captain, the latter
shall be liable for all the losses caused;
9. Any loss suffered by the cargo through the
fault, negligence, or barratry of the captain
or of the crew, without prejudice to the
right of the owner to recover the
corresponding indemnity from the captain,
the vessel, and the freightage.
General Rule: No reimbursement
Principle: Loss will lie where it falls
Reason: There was no common benefit
Exception: if there is insurance
Exception to the Exception: Stipulated in the
insurance policy stating no liability on the part of
the insurer regarding particular average.
Article 810 of the Code of Commerce provides
that: The owner of the goods which gave rise to
the expense or suffered the damage shall bear
the simple or particular averages.
Q: Who is liable?
A: Owner of the goods
b. General average
Article 811 of the Code of Commerce provides
that: As a general rule, general or gross
24
averages shall include all the damages and
expenses which are deliberately caused in order
to save the vessel, its cargo, or both at the same
time, from a real and known risk, and
particularly the following:
1. The goods or cash invested in the
redemption of the vessel or of the cargo
captured by enemies, privateers, or pirates,
and the provisions, wages, and expenses of
the vessel detained during the time the
settlement or redemption is being made;
2. The goods jettisoned to lighten the vessel,
whether they belong to the cargo, to the
vessel, or to the crew, and the damage
suffered through said act by the goods
which are kept on board;
3. The cables and masts which are cut or
rendered useless, the anchors and the
chains which are abandoned, in order to
save the cargo, the vessel, or both;
4. The expenses of removing or transferring a
portion of the cargo in order to lighten the
vessel and place it in condition to enter a
port or roadstead, and the damage
resulting therefrom to the goods removed
or transferred;
5. The damage suffered by the goods of the
cargo by the opening made in the vessel in
order to drain it and prevent its sinking;
6. The expenses caused in order to float a
vessel intentionally stranded for the
purpose of saving it;
7. The damage caused to the vessel which had
to be opened, scuttled or broken in order to
save the cargo;
8. The expenses for the treatment and
subsistence of the members of the crew
who may have been wounded or crippled in
defending or saving the vessel;
9. The wages of any member of the crew held
as hostage by enemies, privateers, or
pirates, and the necessary expenses which
he may incur in his imprisonment, until he is
returned to the vessel or to his domicile,
should he prefer it;
10. The wages and victuals of the crew of a
vessel chartered by the month, during the
time that it is embargoed or detained by
force majeure or by order of the
government, or in order to repair the
damage caused for the common benefit;
11. The depreciation resulting in the value of
the goods sold at arrival under stress in
order to repair the vessel by reason of gross
average;
12. The expenses of the liquidation of the
average.
Article 812 of the Code of Commerce provides
that: In order to satisfy the amount of the gross
or general averages, all the persons having an
interest in the vessel and cargo therein at the
time of the occurrence of the average shall
contribute.
Article 813 of the Code of Commerce provides
that: In order to incur the expenses and cause
the damages corresponding to gross average,
there must be a resolution of the captain,
adopted after deliberation with the sailing mate
and other officers of the vessel, and after
hearing the persons interested in the cargo who
may be present. If the latter shall object, and the
captain and officers or a majority of them, or the
captain, if opposed to the majority, should
consider certain measures necessary, they may
be executed under his responsibility, without
prejudice to the right of the shippers to proceed
against the captain before the competent judge
or court, if they can prove that he acted with
malice, lack of skill, or negligence. If the persons
interested in the cargo, being on board the
vessel, have not been heard, they shall not
contribute to the gross average, their share
being chargeable against the captain, unless the
urgency of the case should be such that the time
necessary for previous deliberations was
wanting.
Article 816 of the Code of Commerce states
that: In order that the goods jettisoned may be
included in the gross average and the owners
thereof be entitled to indemnity, it shall be
necessary insofar as the cargo is concerned that
their existence on board be proven by means of
the bill of lading; and with regard to those
belonging to the vessel, by means of the
inventory prepared before the departure in
accordance with the first paragraph of Article
812.
Article 817 of the Code of Commerce states
that: if in lightning a vessel on account of a
storm, in order to facilitate its entry into a port
or roadstead, part of the cargo should be
transferred to lighters or barges and be lost, the
owner of said part shall be entitled to indemnity,
as if the loss had originated from a gross
average, the amount thereof being distributed
between the vessel and cargo from which it
came. If, on the contrary, the merchandise
25
transferred should be saved and the vessel
should be lost, no liability may be demanded of
the salvage.
Article 818 of the Code of Commerce states
that: If, as a necessary measure to extinguish a
fire in port, roadstead, creek, or bay, it should be
decided to sink any vessel, this loss shall be
considered gross average, to which the vessels
saved shall contribute.
Article 732 of the Code of Commerce provides
that: Lenders on bottomry or respondentia shall
suffer, in proportion to their respective interest,
the general average which may take place in the
goods on which the loan is made. In particular
averages, in the absence of an express
agreement between the contracting parties, the
lender on bottomry or respondentia shall also
contribute in proportion to his respective
interest, should it not belong to the kind of risks
excepted in the foregoing article.
Article 859 of the Code of Commerce provides
that: The insurers of the vessel of the
freightage, and of the cargo shall be obliged to
pay for the indemnification of the gross average,
insofar as is required of each one of these
objects respectively.
Article 860 of the Code of Commerce provides
that: If, notwithstanding the jettison of
merchandise, breakage of masts, ropes, and
equipment, the vessel should be lost running the
same risk, no contribution whatsoever by reason
of gross average shall be proper. The owners of
the goods saved shall not be liable for the
indemnification of those jettisoned, lost, or
damaged.
Article 861 of the Code of Commerce provides
that: If, after the vessel has been saved from
the risk which gave rise to the jettison, it should
be lost through another accident taking place
during the voyage, the goods saved and existing
from the first risk shall continue liable to
contribution by reason of the gross average
according to their value in the condition in which
they may be found, deducting the expenses
incurred in saving them.
Remedy: Reimbursement
General Rule: The sacrifice made must be in the
course of the voyage.
Exceptions: General average exists even if there
is no voyage yet: 1. Article 817 of the Code of
Commerce which covers fire in the port; and 2.
Article 818 of the Code of Commerce which
covers transfer of cargo to another vessel for the
necessity to enter another port.
Requisites:
1. Exposure to common danger to ship and
the cargo after it has been loaded whether
during voyage or port of loading and
unloading;
2. That for the common safety part of the
vessel or the cargo or both is sacrificed
deliberately;
3. That from the expenses or damages caused
follows the successful saving of the vessel
and cargo;
4. That the expenses or damages should have
been incurred or inflicted after taking legal
steps and authority
Formalities:
1. There must be a resolution of the captain,
adopted after a deliberation with the other
officers of the vessel and after hearing all
persons interested in the cargoes. If the
latter disagree, the decision of the captain
should prevail but they shall register their
objections.
2. The resolution must be entered in the
logbook, stating the reasons and motives
for the dissent, and the irresistible and
urgent causes if he acted in his own accord.
It must be signed, in the first case, by all
persons present in the hearing. In the
second case, by the captain and all the
officers of the vessel. The minutes must
also contain a detail of all the goods
jettisoned and those injuries caused to
those on board.
H. Collisions
1. Definition
Collision is an impact of two vessels both of which are
moving.
Allision is an impact between a moving vessel and a
stationary one.
Possible damage:
a. Damage to vessel
b. Loss/damage to cargo
c. Injury or death of passenger
Example:
Q: A and B collided, A was found to be negligent, who
bears the consequential damages?
A: A shall be liable for the consequential damages for
she is at fault.
Q: What if A and B were found to be negligent, who
bears the consequential damages?
A: With regard to the vessel, each vessel shall be
liable for their own losses. With regard to the cargoes
and passengers, they are solidarily liable.
26
2. Zones in collision (Doctrine of error in extremis)
*Knowing these zones are important for liability
purposes.
1. First zone all time up to the moment when risk
of collision begins
2. Second zone time between moment when risk
of collision begins and moment it becomes a
practical certainty.
*It is in this period where conduct of the vessels
is primordial. It is in this zone that vessels must
strictly observe nautical rules unless a departure
therefrom becomes necessary to avoid imminent
danger.
3. Third zone time when collision is certain and
time of impact.
*An error in this zone would no longer be legally
consequential.
Doctrine of Error in Extremis is a sudden movement
made by a faultless vessel during the third zone of
collision with another vessel which is at fault during
the second zone. Even if such sudden movement is
wrong, no responsibility will fall on said faultless
vessel.
Doctrine of Last Clear Chance provides that a
negligent defendant is held liable to a negligent
plaintiff or even to a plaintiff who has been grossly
negligent where he should have been aware of it in
the reasonable exercise of due care, had in fact an
opportunity later than that of the plaintiff to avoid an
accident.
*In this doctrine, both parties are at fault but only
one party is liable. Only the party who has the last
clear opportunity to avoid the impact is held liable.
*This doctrine is inapplicable in the following
instances:
1. If the suit is between a parties of contract of
carriage; and
2. In case of collision of vessels
3. Rule on liability
Article 826 of the Code of Commerce provides that:
If a vessel should collide with another, through the
fault, negligence, or lack of skill of the captain, sailing
mate, or any other member of the complement, the
owner of the vessel at fault shall indemnify the losses
and damages suffered, after an expert appraisal.
Article 827 of the Code of Commerce provides that:
If the collision is imputable to both vessels, each one
shall suffer its own damages, and both shall be
solidarily responsible for the losses and damages
occasioned to their cargoes.
*This is known as the Doctrine of Inscrutable Fault.
Doctrine of Inscrutable Fault provides that in case of
collision where it cannot be determined which
between the two vessels was at fault, both vessels
bear their respective damage, but both should be
solidarily liable for damage to the cargo of both
vessels.
Article 828 of the Code of Commerce states that:
The provisions of the preceding article are applicable
to the use in which it cannot be determined which of
the two vessels has caused the collision.
Article 829 of the Code of Commerce states that: In
the cases above mentioned the civil action of the
owner against the person causing the injury as well as
the criminal liabilities, which may be proper, are
reserved.
Article 830 of the Code of Commerce states that: If
a vessel should collide with another, through
fortuitous event or force majeure, each vessel and its
cargo shall bear its own damages.
Requisites:
1. The natural disaster must have been the
proximate and only cause of the loss;
2. The common carrier must have exercised due
diligence to prevent or minimize loss before,
during and after the occurrence of the natural
disaster;
3. The common carrier must not have been guilty
of delay; and
4. The captain must have made a protest before
the competent authority at the first port he
touched within the 24 hours following his arrival,
and should have ratified it within the same
period when he arrived at the port of
destination, proceeding immediately with the
proof of the facts, without opening the hatches
until after this has been done.
Article 831 of the Code of Commerce provides that:
If a vessel should be forced by a third vessel to
collide with another, the owner of the third vessel
shall indemnify the losses and damages caused, the
captain thereof being civilly liable to said owner.
*This is known as the Doctrine of Proximate Cause
Article 832 of the Code of Commerce states that: If
by reason of a storm or other cause of force majeure,
a vessel which is properly anchored and moored
should collide with those nearby, causing them
damages, the injury occasioned shall be considered as
particular average of the vessel run into.
4. Limited liability rule
*There must be no fault on the part of the shipowner.
*The fault falls only with his crew.
Article 837 of the Code of Commerce states that:
The civil liability incurred by the shipowners in the
case prescribed in this section, shall be understood as
limited to the value of the vessel with all its
appurtenances and freightage.
27
I. Arrival under stress
1. Concept
The arrival of a vessel at the nearest and most
convenient port instead of the port of destination, if
during the voyage the vessel cannot continue the trip
to the port of destination.
Article 819 of the Code of Commerce provides that:
If during the voyage the captain should believe that
the vessel can not continue the trip to the port of
destination on account of the lack provisions, well
founded fear of seizure, privateers, or pirates, or by
reason of any accident of the sea disabling it to
navigate, he shall assemble the officers and shall
summon the persons interested in the cargo who may
be present, and who may attend the meeting without
the right to vote; and if, after examining the
circumstances of the case, the reason should be
considered well-founded, the arrival at the nearest
and most convenient port shall be agreed upon,
drafting and entering the proper minutes, which shall
be signed by all, in the log book. The captain shall
have the deciding vote, and the persons interested in
the cargo, may make the objections and protests they
may deem proper, which shall be entered in the
minutes in order that they may make use thereof in
the manner they may consider advisable.
2. When improper
Article 820 of the Code of Commerce provides that:
An arrival shall not be considered lawful in the
following cases:
1. If the lack of provisions should arise from the
failure to take the necessary provisions for the
voyage according to usage and customs, or if
they should have been rendered useless or lost
through bad stowage or negligence in their care;
2. If the risk of enemies, privateers, or pirates
should not have been well known, manifest, and
based on positive and provable facts;
3. If the defect of the vessel should have arisen
from the fact that it was not repaired, rigged,
equipped, and prepared in a manner suitable for
the voyage, or from some erroneous order of the
captain;
4. When malice, negligence, want of foresight, or
lack of skill on the part of the captain exists in
the act causing the damage.
3. Expenses
Article 821 of the Code of Commerce provides that:
The expenses of an arrival under stress shall always
be for the account of the shipowner or agent, but
they shall not be liable for the damages which may be
caused the shippers by reason of the arrival, provided
the latter is legitimate. Otherwise, the ship agent and
the captain shall be jointly liable.
Article 822 of the Code of Commerce provides that:
If in order to make repairs to the vessel or because
there is danger that the cargo may suffer, it should be
necessary to unload, the captain must request the
authorization from the competent judge or court for
the removal, and carry it out with the knowledge of
the person interested in the cargo, or his
representative, should there be any. In a foreign port,
it shall be the duty of the Philippine Consul, where
there is one, to give the authorization. In the first
case, the expenses shall be for the account of the ship
agent or owner, and in the second, they shall be
chargeable against the owners of the merchandise for
whose benefit the act was performed. If the
unloading should take place for both reasons, the
expenses shall be divided proportionately between
the value of the vessel and that of the cargo.
4. Custody of Cargo
Article 823 of the Code of Commerce provides that:
The custody and preservation of the cargo which has
been unloaded shall be intrusted to the captain, who
shall be responsible for the same, except in cases of
force majeure.
Article 824 of the Code of Commerce states that: If
the entire cargo or part thereof should appear to be
damaged, or there should be imminent danger of its
being damaged, the captain may request of the
competent judge or court, or of the consul in a proper
case, the sale of all or of part of the former, and the
person taking cognizance of the matter shall
authorize it, after an examination and declaration of
experts, advertisements, and other formalities
required by the case, and an entry in the book, in
accordance with the provisions of Article 624. The
captain shall, in proper case, justify the legality of his
conduct, under the penalty of answering to the
shipper for the price the merchandise would have
brought if they had arrived in good condition at the
port of destination.
5. Captains liability
Article 825 of the Code of Commerce states that:
The captain shall be responsible for the damages
caused by his delay, if after the cause of the arrival
under stress has ceased, he should not continue the
voyage. If the cause of arrival should have been the
fear of enemies, privateers, or pirates, a deliberation
and resolution in a meeting of the officers of the
vessel and persons interested in the cargo who may
be present, in accordance with the provisions
contained in Article 819, shall precede the
departure.
6. Rules in case of shipwreck
Shipwreck denotes all types of loss/ wreck of a vessel
at sea either by being swallowed up by the waves, by
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running against another vessel or thing at sea or on
coast where the vessel is rendered incapable of
navigation.
Article 840 of the Code of Commerce provides that:
The losses and deteriorations by a vessel and her
cargo by reason of shipwreck or stranding shall be
individually for the account of the owners, the part
which may be saved belonging to them in the same
proportion.
Article 841 of the Code of Commerce states that: If
the wreck or stranding should be caused by the
malice, negligence, or lack of skill of the captain, or
because the vessel put to sea was insufficiently
repaired and equipped, the ship agent or the shippers
may demand indemnity of the captain for the
damages caused to the vessel or to the cargo by the
accident, in accordance with the provisions contained
in Articles 610, 612, 614, and 621.
Article 842 of the Code of Commerce states that:
The goods saved from the wreck shall be specially
bound for the payment of the expenses of the
respective salvage, and the amount thereof must be
paid by the owners of the former before they are
delivered to them, and with preference over any
other obligation if the merchandise should be sold.
Article 843 of the Code of Commerce states that: If
several vessels sail under convoy, and any of them
should be wrecked, the cargo saved shall be
distributed among the rest in proportion to the
amount which each one is able to take. If any captain
should refuse, without sufficient cause, to receive
what may correspond to him, the captain of the
wrecked vessel shall enter a protest against him,
before two sea officials, of the losses and damages
resulting therefrom, ratifying the protest within 24
hours after arrival at the first port, and including it in
the proceedings he must institute in accordance with
the provisions contained in Article 612. If it is not
possible to transfer to the other vessels the entire
cargo of the vessel wrecked, the goods of the highest
value and smallest volume shall be saved first, the
designation thereof to be made by the captain with
the concurrence of the officers of his vessel.
Article 844 of the Code of Commerce provides that:
A captain who may have taken on board the goods
saved from the wreck shall continue his course to the
port of destination, and on arrival shall deposit the
same, with judicial intervention, at the disposal of
their legitimate owners. In case he changes his
course, if he can unload them at the port of which
they were consigned, the captain may make said port
if the shippers or supercargoes present and the
officers and passengers of the vessel consent thereto;
but he may not do so, even with said consent, in time
of war or when the port is difficult and dangerous to
make. The owners of the cargo shall defray all the
expenses of this arrival as well as the payment of the
freightage which, after taking into consideration the
circumstances of the case, may be fixed by
agreement or by a judicial decision.
Article 845 of the Code of Commerce provides that:
If on the vessel there should be no person interested
in the cargo who can pay the expenses and freightage
corresponding to the salvage, the competent judge or
court may order the sale of the part necessary to
cover the same. This shall also be done when its
preservation is dangerous, or when in a period of one
year it should not have been possible to ascertain
who are its legitimate owners. In both cases the
proceedings shall be with the publicity and formalities
prescribed in Article 579, and the net proceeds of the
sale shall be safely deposited, in the discretion of the
judge or court, so that they may be delivered to the
legitimate owner thereof.
*It is the loss of the vessel at sea as a consequence of
its grounding, or running against an object in sea or
on the coast. It occurs when the vessel sustains
injuries due to a marine peril rendering her incapable
of navigation.
*The rules on collision or allusion, as may be
pertinent, can equally apply to shipwrecks.
J. Salvage
1. Definition
Salvage - Compensation allowed to persons by whose
voluntary assistance a ship at sea or her cargo or both
have been saved in whole or in part from an
impending or actual peril, shipwrecks, derelicts or
recapture
- Services one person render to the owner of a ship or
goods, by his own labor, preserving the goods or the
ship which the owner or those entrusted with the
care of them have either abandoned in distress at
sea, or are unable to protect or secure.
2. Rights and obligations of salvors and owners
(Salvage Law)
Salvors Owners
Entitled to compensation He does not renounce his
for services rendered right to the derelict
Acquires a lien upon the Has a right to the
property salvaged until delivery of the vessel or
he is compensated things saved after the
salvage is accomplished,
provided he pays or gives
a bond
To all intents and Should make a claim
purposes, he is a joint within 3 months after the
owner and if the publication of a salvage
property is lost he must report, otherwise the
bear his share thing saved shall be sold
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 Acquires the right of Entitled to the salvage
possession of derelict for reward for the use of his
purposes of a salvage vessel in rendering
claim salvage services
Entitled to half of the
deposit of the derelict
sold, if after the lapse of
3 years no claim was
made
WARSAW CONVENTION:
Warsaw Convention is an agreement among sovereign countries
concerning the regulation in a uniform manner of the conditions of
international transportation by air in respect of the documents used
for such transportation and of the liability of the carrier.
- Signed on October 12, 1929 in Warsaw, Poland.
Purpose: To protect the emerging air transportation industry and to
secure the uniformity of recovery by the passengers.
Applicability: The transportation must be:
1. International transportation
2. Air transportation
3. Carriage of passengers, baggage or goods
*The Warsaw Convention shall also apply to fortuitous events
affecting transportation by aircraft performed by an air
transportation enterprise.
*The Convention is likewise applicable to air transportation by legal
entities constituted under public law of the High Contracting Parties.
*The Convention does not apply to transportation performed under
the terms of any international postal convention.
International Transportation is any transportation in which the
place of departure and the place of destination are situated either:
1. Within the territories of two High Contracting Parties
regardless of whether or not there be a break in the
transportation or transhipment; or
Controlling: Two territories must be High Contracting
Parties
*Also called as one way ticket
2. Within the territory of a single High Contracting Parties, if
there is an agreed stopping place within a territory subject
to the sovereignty, mandate or authority of another
power, even though that power is not a party to the
Convention.
Controlling: There must be a stopping place in another
territory.
*Also called as round trip ticket.
High Contracting Party is one of the original parties to the
convention.
When inapplicable:
1. When public policy is contradicted;
2. If the requirement under the Convention are not complied
with
Transportation Documents:
a. Passenger passenger ticket
b. Checked-in baggage baggage check
c. Goods to be shipped airway bill
Liability of carrier for damages:
1. Death or injury of a passenger if the accident causing it
took place on board the aircraft or in the course of its
operations of embarking or disembarking;
2. Destruction, loss or damage to any baggage or goods, if it
took place during the transportation by air; and
3. Delay in the transportation of passengers, baggage or
goods.
Limit of Liability:
1. Passenger:
In case of death or injury, general rule: 100,000 STR per
passenger
*1.51 US Dollar
Exception: Agreement to a higher limit
In case of delay, 4150 STR per passenger
2. Checked in baggage:
General Rule: 20 STR per kilogram
Exception: In case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value.
3. Hand carried baggage: 1000 STR per passenger
4. Goods to be shipped:
General Rule: 17 STR per kilogram
Exception: In case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value.
Action for damages:
1. Notice of claim
*A written complaint must be made within: 3 days
from receipt of baggage; 7 days from receipt of
goods; in case of delay, 14 days from receipt of
baggage/goods.
*The complaint is a condition precedent. Without the
complaint, the action is barred except in case of fraud
on the part of the carrier.
2. Prescriptive period
*Action must be filed within 2 years from:
a. The date of arrival at the destination
*An intermediate place where carriage may
be broken is not a place of destination.
b. The date of expected arrival
c. The date on which the transportation
stopped
Venue:
At the option of the plaintiff, the action for damages may be filed in
the:
1. Court of domicile of the carrier;
2. Court of its principal place of business;
3. Court where it has a place of business through which the
contract has been made; or
4. Court of the place of destination.
*In Santos III v Northwest Airline, the SC held that the forum of
action is a matter of jurisdiction rather than of venue.
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