ACTIONS IN CASE OF BREACH OF CONTRACT OF CARRIAGE

Passengers and shippers who suffered damages because of the breach of

the contractual obligation of the carrier may sue the latter for damages.

Note: The source of obligation is culpa contractual. This source of obligation is

separate and distinct from quasi-delict under Art. 2176 of the CC.

DISTINCTION BETWEEN CULPA CONTRACTUAL AND CULPA AQUILIANA

ARTICLE 1764 OF THE NCC

Damages in cases comprised in this Section shall be awarded in accordance
with Title XVII of this Book, concerning Damages. Article 2206 shall also apply to
the death of a passenger caused by the breach of contract by a common carrier.
 Sources of obligation under which the carrier-employer and his driver-
employee are liable to passenger or pedestrian in cases of injury.
Concurrent cause of action
 The same act that breaches the contract may also be a tort.
 A negligent act that breaches the contract may give rise to a liability based
on contract as well as quasi-delict under Art 2176 of the CC.
 With respect to the employee of the carrier, civil liability may be based on
quasi-delict as well as on criminal liability under Art 100 of the RPC.
 The cause of action of a passenger or shipper against the common carrier
can be culpa contractual or culpa aquiliana while the basis of liability on the
part of the driver is either culpa delictual or culpa aquiliana.
 The direct and primary liability of drivers based on quasi-delict and delict
applies to the captain, officers and crew of the vessel or the captain and
other personnel of the air carrier in proper cases where they committed the
negligent act or omission.
 The ship-owner or the operator, as employer, may be held primarily liable
under 2180 of the NCC or subsidiarily liable under the RPC. These liabilities
are in the nature or vicarious liability because the negligence of the
employee is imputed to the employer-operator.
ILLUSTRATION
 Suppose a passenger of a public utility bus was injured due to the driver’s
recklessness, what case or cases can the passenger file against the
common carrier and the driver?
 What quantum of evidence is required?
 Suppose the common carrier was able to prove due diligence in the
selection and supervision of his driver, will the common carrier still be
liable?
 Suppose the driver was pronounced guilty of the crime of reckless
imprudence resulting in physical injuries, who will be liable to pay the civil
damages of the injured passenger?
 In this case of criminal negligence, where can the injured passenger
recover subsidiary liability against the common carrier as employer in case
the driver-employee is insolvent? In the present criminal suit or in another
civil suit?
 May the injured passenger file also a case of culpa aquiliana or quasi-delict
against the common carrier even if there is a pre-existing contractual
relationship between them?
In Air France v Carascoso, the injured passenger may opt also to file a
quasi-delict case if the act that breaks the contract resulted in tort.
However, in case of quasi-delict, the injured passenger has the burden of
proving negligence of the common carrier and his driver, and the defense of due
diligence of the common carrier in the selection and supervision of employer is a
complete defense of the common carrier as employer to avoid civil liability.
CONCURRENCE WITH THIRD PERSONS
 If the negligence of third persons concurs with the breach ( as in the case
where the passenger was injured because the carrier collided with another
vehicle), the liability of the third person who was driving another vehicle
and/or his employer may be based on quasi-delict. The driver alone may be
held criminally liable and civil liability may be imposed on him based on
delict. In the latter case, the employer is subsidiarily liable
 However, in case of injury to a passenger due to the negligence of the
driver of the vehicle on which he was riding and the driver of another
vehicle, the drivers and the owners of the two vehicles are jointly and
severally liable for damages.
 It does not make any difference that the liability of one springs from
contract while that of the other arises from quasi-delict.
 If the owner and the driver of the other vehicle are not impleaded, the
carrier may implead them by filing a third party complaint.
SOLIDARY LIABILITY
 In case the negligence of the carriers’ driver and a third person concurs, the
liability of the parties-carrier and his driver, third person- is joint and
several.
ALTERNATIVE CAUSES OF ACTION
 In Fabre vs CA, SC clarified that it was permissible for the plaintiff to allege
in the Complaint alternative causes of action and join as many parties as
may be liable on such causes of action so long as the plaintiff does not
recover twice of the same injury.
 Thus, the carrier may be sued on the alternative causes of action of breach
of contract and quasi-delict.
ALTERNATIVE COMPENSATION SCHEME
In order to provide the commuting public with an easier way of recovering
damages for the injuries sustained due to the operation of common carriers, special
laws provide for mandatory insurance coverage for passengers and cargos.
 In marine transportation, section 14 of the Domestic Shipping Development
Act of 2004 requires mandatory insurance coverage for passengers to meet
the financial responsibility of domestic ship operator for breach of contract
of carriage.
 Section 15 of Maritime Industry Authority shall have the power to require
ship operator to obtain such other compulsory Insurance coverage
necessary to adequately cover claims for damages.
 With respect to motor vehicles, a Compulsory Motor Vehicle Liability
Insurance is mandated under section 374 to 389 of the Insurance Code of
the Philippines.
NOTICE OF CLAIM AND PRSCRIPTIVE PERIOD
In an action for damages due to breach of contract, it is essential that the
claimant will establish the following requirement:
1. the existence of a perfected contract;
2. the breach thereof by the other contracting party; and
3. the damages which he/she sustained due to the breach.
 It is also essential that the mandatory formal requirements that are
imposed by law and the Statute of Limitations are complied with. Thus, the
 law requires a notice of claim, the same must be complied with and any
action that may be filed thereafter must be filed within the prescriptive
period provided by law.
PERIOD FOR FILING CLAIMS
Pursuant to Article 366, Code of Commerce, a claim, on account of damage
found upon opening the packages, must be made against the carrier:
 Within 24 hours, if the indications of the damage cannot be ascertained
from the exterior of the packages (i.e., latent damage); or
 At the time of receipt, if the indications damage can be so ascertained (i.e.,
patent damage).
No claim whatsoever shall be admitted against the carrier with regard to
the condition in which the goods transported were delivered:
 After the periods mentioned have elapsed; or
 After the transportation charges have been paid.
The periods mentioned commence upon delivery of cargo to the consignee
at the place of destination .
Thus, Article 366 is limited to cases of claims for damage to goods actually
turned over by the carrier and received by the consignee. It does not apply to
misdelivery of goods.
Failure to file a claim bars recovery [Aquino (2011)].
Ratio: The rule protects the carrier by affording it an opportunity to make
an investigation of a claim while the matter is still fresh and easily investigated so as
to safeguard itself from false and fraudulent claims [UCPB General Ins. Co., Inc. v.
Aboitiz Shipping (2009)].
 However, the periods prescribed may be subject to modification by
agreement of the parties. [PHILAMGEN v. Sweet Lines, Inc. (1992)].
PERIOD FOR FILING ACTIONS
OVERLAND TRANSPORTATION AND COASTWISE SHIPPING
The general rules under the Civil Code on extinctive prescription apply. Thus, action
for damages must be filed in court:
 Within 6 years, if a bill of lading was not issued [Article 1145, Civil Code].
 Within 10 years, if a bill of lading was issued [Article 1146, Civil Code].
INTERNATIONAL CARRIAGE OF GOODS BY SEA (from a foreign country to the Phil.)
Period to File Claim:
 If the damage is apparent, the claim should be filed immediately upon the
discharge of the goods.
 The claim must be made within 3 days from delivery if the damage is not
apparent.
Note: failure to file notice of claim within the given period will not bar recovery.
INTERNATIONAL CARRIAGE OF GOODS BY SEA (from a foreign country to the Phil.)
Suit must be brought within one year:
 After delivery of the goods ; or
 From the date when the goods should have been delivered.
Otherwise, the carrier and the ship shall be discharged from all liability in respect
of loss or damage.
The absence of notice shall not affect or prejudice the right of the shipper
to bring suit within one year after the delivery of the goods or the date when the
goods should have been delivered [Section 3(6), Carriage of Goods by Sea
Act)
The period for filing the claim is one year, in accordance with the Carriage
of Goods by Sea Act. The Carriage of Goods by Sea Act, as adopted and embodied in
Commonwealth Act No. 65, applies because it is a special law, and, as such, prevails
over the general provisions of the Civil Code on prescription of actions [Maritime
Agencies & Services, Inc. v. CA (1990)].
EXTENT OF LIABILITY FOR DAMAGES
 Article 2206, on liability, in case of death, for loss of earning capacity,
support, and moral damages for mental anguish, shall also apply to the
death of a passenger caused by the breach of contract by a common carrier
[Article 1764].
Thus, the damages recoverable are:
* Actual or compensatory damages; * Moral damages;
* Exemplary damages; * Attorney’s fees
* Nominal, temperate, and liquidated damages;
Actual or compensatory damages
Actual or compensatory damages refer to adequate compensation for such pecuniary
loss suffered as duly proved [Article 2199].
Actual damages are recoverable, including, in case of death, liability for:
 Loss of earning capacity; and
 Support for a period not exceeding five years [Article 2206].
( see Art 2205 and 2206)
Purpose: To repair the wrong that has been done, to compensate to the injury
inflicted and not to impose penalty
Restitutio in Integrum
The amount to be awarded to the plaintiff should be the sum of
money which will put the party who has been injured or who has suffered in the
same position as he would have been if he had not sustained the wrong for which he
is now getting his compensation or reparation.(Aquino, Torts and Damages, p 940)
General Rule:
 Actual damages must be proved with a reasonable degree of certainty.
 A court cannot rely on speculation, conjecture, or guesswork as to the fact
and amount of damages but must depend on competent proof that they
have suffered, and on evidence of the actual amount thereof(PNR vs Ethel
Brunty and Juan Manuel M. Garcia, G.R. No. 169891, Nov. 2, 2006)
Exceptions
1.When the liquidated damages have been agreed upon;
2. When the penalty clause is agreed upon in the contract between the parties;
3. Damages for death cause by a crime or delict which can be awarded forwith to
the heirs of the victim by proof alone of such death.
Damages in case of death
The amount of damages caused by a crime or quasi-delict shall be at
leastPhp3,000.00 even though there may have been mitigating circumstances(Civil
Code, Article 2206)
Note : please see People v Jugueta, G. R. No. 2202124, April 5, 2016)
In addition:
  Loss of earning capacity of the deceased which shall be paid to the heirs of
the deceased(Art 2205, par 1 CC)
Exception: if the deceased had no earning capacity at the time of his death
Formula: Net Earning Capacity = Life Expectancy x (Gross annual income -
Reasonable and necessary living expenses).
Note: When there is no showing that the living expenses constituted the smaller
percentage of the gross income, the Court fixes the living expenses at half of the
gross income.
2  monthly earnings
 x  80  age of death   x x12
Thus:  3  2
Variables considered
1. Life expectancy , computed as:
2 
 x  80  age of death  
3 
2. Net income earnings- the total of the earnings less expenses necessary for
the creation of such earnings and less living or other incidental
expenses(Aquino, torts and damages)
The Court considered as an important element in measuring the loss of
earning capacity, the net earnings of the deceased as well as the latter’s
potentiality to increase his future income (Villa Rey Transit v CA , G. R. No. L-
25499, Feb 18, 1970)
Illustration:
In People vs Galvez ( G.R. No. 136790, March 26, 2001), deceased died at
the age of twenty-one(21) and was working as a construction worker with a monthly
income of P3, 262.50
2/3x(80-21(age of victim at the time of death))=39.33
P3262.50 x12=P39,150.00( gross annual salary)
P39, 150.00x0.50 (allocation of living expenses)
P19, 575.00 ( net Income)
Loss of earning capacity= 39.33xP19,575.00
= P769,884.75
Under Article 2201, the liability for damages include:
 In case the common carrier acted in good faith:
 The natural and probable consequence of the breach of the obligation; and
 Those which the parties have foreseen or could have reasonably foreseen
at the time the obligation was constituted;
 In case of fraud, bad faith, malice or wanton attitude, all damages which
may be reasonably attributed to the non-performance of the obligation.
In the absence of a showing that common carrier’s attention was called to the
special circumstances requiring prompt delivery of a passenger’s luggage, the
common carrier cannot be held liable for the cancellation of passenger’s contracts
[for exhibition of films] as it could not have foreseen such an eventuality when it
accepted the luggage for transit [Pan-Am World Airways v. IAC (1988)].
MORAL DAMAGES
Moral damages, though incapable of pecuniary computation, if they are the
proximate result of the common carrier’s wrongful act or omission, may be recovered
[Article 2217].
In cases of breach of contract of carriage, moral damages may be recovered where:
 The common carrier acted fraudulently;
 The common carrier acted in bad faith [Article 2220];
 Death of a passenger resulted [Article 2206].
Bad faith contemplates a state of mind affirmatively operating with furtive
design or with some motive of self-interest or will or for ulterior purpose [Air France
v. Carrascoso (1966)].
When it comes to contracts of common carriage, inattention and lack of
care on the part of the carrier resulting in the failure of the passenger to be
accommodated in the class contracted for amounts to bad faith or fraud which
entitles the passenger to the award of moral damages in accordance with Article
2220 [Ortigas v. Lufthansa (1975)].
Willful and deliberate overbooking on the part of the airline carrier
constitutes bad faith. Under Section 3, Economic Regulations No. 7 of the Civil
Aeronautics Board, overbooking which does not exceed ten percent, is not
considered as deliberate and therefore does not amount to bad faith [United Airlines
v. CA (2001)].
Specific cases when moral damages is recoverable
Art 2219 of the NCC: Moral damages may be recovered in the following and
analogous cases:
1. A criminal offense resulting in physical injuries;
2. Quasi-delicts causing physical injuries;
3. Seduction, abduction, rape , or other lascivious acts;
4. Adultery or concubinage;
5. Illegal or arbitrary detention or arrest;
6. Illegal search;
7. Libel, slander, or any other form of defamation;
8. . Malicious prosecution;
9. Acts mentioned in Art 309;
10. Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and
35;
The parents of the female seduced, abducted, rape, or abused , referred to
in no 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants and brothers and sisters may bring
the action mentioned in no 9 of this article , in the order named.
Factors to Consider
1. The extent of humiliation may also determine the amount of moral
damages that can be awarded;
2. The extent of pain and suffering;
3. Official, political, social and financial standing of the offended party and the
business and financial position of the offender ; and
4. The age of the claimant
MORAL DAMAGES INCLUDE
1. Bismirched reputation 6. Moral shock
2. Wounded feelings 7. Fright
3. Physical suffering 8. Mental anguish
4. Serious anxiety 9. Social humiliation
5. Similar injury( CC, art 22170
The award of moral damages is designed to compensate the claimants for actual
injury and is not meant to enrich the complainant at the expense of the defendant.
The grant of moral damages is based on the ancient maxim, when there is a
wrong there is a remedy)
 Nature and Purpose
Moral damages are not punitive and not intended to enrich the complainant
in order to punish the defendant. They are for reparation of the spiritual status quo
ante; a means to assuage the moral suffering of the complainant brought about by
defendant’s culpable action( manila Electric Company v Ma. Victoria Jose, GR No.
152769, Feb 14, 2007)
EXEMPLARY DAMAGES
 In a contract of carriage, exemplary damages may be awarded if the
common carrier acted in wanton, fraudulent, reckless, oppressive, or malevolent
manner [Article 2232].
 Imposed by way of example or correction for the public good, in addition
tot eh moral, temperate, liquidated or compensatory damages.
 It is required by public policy to suppress wanton acts.
Requisites:
1. Imposed by way of example, in addition to compensatory damages, only
after the claimant’s right to it has been established;
2. Not recoverable as a matter of right, their determination depending upon
the amount of compensatory damages that may be awarded, and
3. The act must be accompanied by bad faith or done in wanton, fraudulent,
oppressive or malevolent manner.
NOMINAL, TEMPERATE, AND LIQUIDATED DAMAGES
 Nominal damages are adjudicated in order that a right of the plaintiff, which
has been violated by the defendant, may be vindicated or recognized, not
for the purpose of indemnifying the plaintiff for any loss suffered by him
[Article 2221]. It may be awarded in case of breach of contract of carriage
and in every case where any property right has been invaded [Article
2222].
 However, the grant of nominal damages is a bar to recovery of actual or
compensatory, moral, or temperate damages
 Temperate or moderate damages, which are more than nominal but less
than compensatory damages, may be recovered when some pecuniary loss
has been suffered but its amount cannot, from the nature of the case, be
proved with certainty [Article 2224].
 Temperate and actual damages are mutually exclusive in that both may not
be awarded at the same time.
 Liquidated damages are those damages agreed upon by the parties to a
contract, to be paid in case of breach thereof [Article 2226].
 Purpose: to prevent breach of obligations between contracting parties
ATTORNEY’S FEES
 Under Article 2208, as applicable to a contract of carriage, attorney’s fees
and expenses of litigation may be recovered in the following cases:
 When exemplary damages are awarded;
 When the common carrier’s act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
 Where the common carrier acted in gross and evident bad faith in refusing
to satisfy the plaintiff’s valid, just and demandable claim;
 In any other case where the court deems it just and equitable that
attorney’s fees and expenses of litigation should be recovered.
Q: How much is the jurisprudential indemnity of a common carrier in case of death
of a passenger?
A: In case of death of a passenger, the Common Carrier is liable to pay 50,000
pesos as indemnity for the life of a passenger. (Victory Liner v Gammad, G.R. No.
159636, November 25, 2004)
Q: How much is are the heirs of a deceased passenger entitled to recover by way of
moral damages?
A: The current jurisprudential award for the loss of life of a passenger is
100,0000 pesos by way of moral damages (Victory Liner v Gammad, Heirs of Ochoa
v VS.G & S Transport Corporation, )
Q: Should the diligence of the passenger be considered in determining liability in
case of injury?
A: Yes. The passenger must observe the diligence of a good father of a family or
ordinary diligence to avoid injury to himself (Art. 1761, NCC.). This means that if the
proximate cause of the passenger’s injury is his negligence, the common carrier is
not liable.
Q: What are the kinds of damages that may be recovered in case of death of a
passenger?
1. An indemnity for the death of the victim
2. An indemnity for loss of earning capacity of the deceased
3. Moral damages
4. Exemplary damages
5. Attorney's fees and expenses of litigation
6. Interest in proper cases. (Briñas v. People,G.R. No. L-
30309, Nov. 25, 1983)
7. Hospital and funeral expenses
Note: Carrier is not liable for exemplary damages where there is no proof that it
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.
MARITIME COMMERCE
 It is a system of laws which particularly relates to the affairs and business
of the sea, to ships, their crews and navigation, and to maritime
 conveyance
ACCIDENTS AND DAMAGES IN MARITIME COMMERCE
AVERAGES
The following shall be considered averages:
 All extraordinary or accidental expenses incurred during the navigation for
the preservation of the vessel or cargo, or both;
 All damages or deterioration the vessel may suffer from the time she puts
to sea from the port of departure until she casts anchor in the port of destination,
and those suffered by the merchandise from the time it is loaded in the port of
shipment until it is unloaded in the port of consignment [Article 806, Code of
Commerce].
There are two kinds of averages:
 Particular or simple average; and
 Gross or general average.
 Particular or simple averages shall include all damages and expenses
caused to the vessel or cargo that did not inure to the common benefit and profit of
all persons interested in the vessel and her cargo [Article 809, Code of Commerce].
 The owner of the goods which gave rise to the expense or suffered the
damage shall bear this average [Article 810, Code of Commerce].
Examples of simple averages: See Art 809 of the Code of Commerce
GENERAL AVERAGE
General or gross averages shall include all the damages and expenses which are
deliberately caused in order to save the vessel, her cargo, or both at the same time,
from a real and known risk [Article 811, Code of Commerce].
Requisites
(1) There must be a common danger. This means, that both the ship and the cargo,
after it has been loaded, are subject to the same danger, whether during the
voyage, or in the port of loading or unloading, that the danger arises from the
accidents of the sea, dispositions of the authority, or faults of men, provided that the
circumstances producing the peril should be ascertained and imminent or may
rationally be said to be certain and imminent. This last requirement excludes
measures undertaken against a distant peril;
(2) That for the common safety, part of the vessel or of 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
proper legal steps and authority [Magsaysay, Inc. v. Agan (1955)].
Note: the proper steps and authority for making the sacrifice are prescribed in Article
813 to 815 of the Code of Commerce.
 The gross or general average shall be borne by those who benefited from
the sacrifice. These include the ship owner and the owners of the cargoes
that were saved. Contribution may also be imposed on the insurers of the
vessel or cargoes that were saved, as well as lenders on bottomry or
respondentia.
Cases of general average
 The goods or cash invested in the redemption of the vessel or cargo
captured by enemies, privateers, or pirates, and the provisions, wages, and
expenses of the vessel detained during the time the arrangement or
redemption is taking place;
 The goods jettisoned to lighten the vessel, whether they belong to the
vessel, to the cargo, or to the crew, and the damage suffered through said
act by the goods kept;
 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;
 The expenses of removing or transferring a portion of the cargo in order to
lighten the vessel and place her in condition to enter a port or roadstead,
and the damage resulting therefrom to the goods removed or transferred;
 The damage suffered by the goods of the cargo through the opening made
in the vessel in order to drain her and prevent her sinking;
 The expenses caused through floating a vessel intentionally stranded for
the purpose of saving her;
 The damage caused to the vessel which it is necessary to break open,
scuttle, or smash in order to save the cargo;
 The expenses of curing and maintaining the members of the crew who may
have been wounded or crippled in defending or saving the vessel;
 The wages of any member of the crew detained as hostage by enemies,
privateers, or pirates, and the necessary expenses which he may incur in
his imprisonment, until he is returned to the vessel or to his domicile,
should he prefer it;
 The wages and victuals of the crew of a vessel chartered by the month
during the time it should be embargoed or detained by force majeure or by
order of the Government, or in order to repair the damage caused for the
common good;
 The loss suffered in the value of the goods sold at arrivals under stress in
order to repair the vessel because of gross average;
 The expenses of the liquidation of the average [Article 811, Code of
Commerce];
 If in lightening a vessel on account of a storm, in order to facilitate her
entry into a port or roadstead, part of her 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 has originated from a gross average [Article 817,
Code of Commerce];
 If, as a necessary measure to extinguish a fire in a 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.
Procedure for recovery
 Assembly and deliberation with the sailing mate and other officers;
 Resolution of the captain adopted;
 Hearing of the persons interested. In case an interested person should not
be heard, he shall not contribute to the gross average [Article 813, Code of
Commerce];
 Resolution to be entered in the log book, stating the motives and reasons
therefore as well as the votes and reason for disagreement [Article 814,
Code of Commerce];
 Minutes to be signed by all the persons present or in urgent cases, the
captain;
 Captain shall deliver one copy of the minutes to the maritime judicial
authority of the first port he may make within 24 hours [Article 814, Code
of Commerce];
 Captain shall ratify the minutes under oath [Article 814, Code of
Commerce].
LENDERS ON BOTTOMRY AND RESPONDENTIA
Art 732 of the Code of Commerce provides that lenders on bottomry and
respondentia shall suffer, I proportion to their respective interest, the general
average which may take place in the goods on which the loan is made.
Who is entitled to indemnity
The owners of the goods which were sacrificed is entitled to receive the general
average contribution. However, the following goods even if sacrificed are not
covered:
1. Goods carried on deck unless the rule, special law or customs of the place
allow the same;
2. Goods that are not recorded in the books or records of the vessel; and
3. Fuel for the vessel if there is more than sufficient fuel for the voyage.
EFFECT OF NEGLIGENCE
 Article 848 of the Code of Commerce provides that claims for averages
shall not be admitted if they do not exceed 5% of the interest which the
claimant may have in the vessel or in the cargo if it be gross average and
1% of the goods damaged if particular average, deducting in both cases the
expenses of appraisal, unless there is an agreement of the contrary.
 However, the common carriers cannot limit their liability for injury or loss of
goods when such injury or loss was caused by its own negligence.
 The law on average under the Code of Commerce cannot be applied in
determining liability where there is negligence, hence the issue , the issue
of negligence must first be addressed before the proper provision of the
Code of Commerce on the extent of liability may be applied.
YORK-ANTWERP RULES
 Although the Code of Commerce provisions are still in force, the parties
may, by stipulation in the charter party or any written agreement, agree
that the York-Antwerp Rules shall be applied.
 In addition, the York-Antwerp Rules may also be used to solve
controversies where no provision in the Code of Commerce is in point
because the said rules embody the custom of maritime states.
 ( See York-Antwerp Rules, 1974)
COLLISIONS
 Collision is an impact or sudden contact between two moving vessels
[Aquino (2011)].
 Allision is the striking of a moving vessel against one that is stationary.
 However, it is not necessary for one to be liable for his vessel to have hit
another. A ship owner or ship agent may be made liable even if his vessel
did not actually collide with another vessel . This situation is covered by
ARTICLE 831 OF THE Code of Commerce which makes the owner of a third
vessel liable if it forced a vessel to hit another.
ZONES OF COLLISION
In all collisions between vessels at sea, there exist three divisions or zones of time:
 The first division covers all the time up to the moment when the risk of
collision may be said to have begun;
Note: Within this zone no rule is applicable because none is necessary. Each
vessel is free to direct its course as it deems best without reference to the
movement of the other vessel
 The second division covers the time between the moment when the risk of
collision begins and the moment when it has become practically certain;
Note: The burden is on the vessel required to keep away and avoid the danger
 The third zone covers the time between the moment when the collision has
become a practical certainty and the moment of actual contact [A. Urrutia
& Co. v. Baco River Plantation Co. (1913)].
Note: The rule is that the vessel which has forced the privileged vessel into danger is
responsible even if the privileged vessel committed an error within that zone.
Thus, if it was during the time when the sail vessel was passing through the third
zone, that it changed its course to port in order to avoid, if possible, the collision, the
act may be said to have been done in extremis, and even if wrong, the sailing vessel
is not responsible for the result.
Also, in the case of Ottawa , the court said :
“Rules of navigation are obligatory from the time the necessity for
precaution begin, and continue to be applicable as the vessels advance, so long as
the means and opportunity to avoid the danger remain; but they do not apply to a
vessel required to keep her course after the approach is so near that the collision is
inevitable, and are equally inapplicable to vessels of every description while they are
yet so distant from each other that measures of precaution have not become
necessary.”
APPLICABLE LAW
 Liability in collision cases is negligence-based. The person who caused the
injury is both civilly and criminally liable [Aquino (2011)].
 Liability for negligence in the absence of contract is governed by article
2176 of the NCC- the provision on quasi-delict.
 However, the liabilities of shipowners and ship agents as well as the captain
or crew in collision cases is still governed by the provisions of the Code of
Commerce on Collision.
 Although collision may be said to involve maritime tort, the special rules
under the Code of Commerce will govern the rights and liabilities of the
persons or entities involved.
COLREGS
 The existing international agreement with respect to collision in high
seas( and waters connected to high seas navigable by seagoing vessels) is
the International Regulations for Preventing Collision at Sea(COLREGS)
which was formulated by the International Maritime Organization.
 Although the Philippines has not yet acceded to COLREGS, the rules that
are embodied therein are already being used by most of its trading
partners. Hence, the personnel of Philippine vessel are not only required to
know the provisions of COLREGS but are even compelled to follow them.

RULE 7 and 8 of COLREGS
Rule 7 Risk of collision
(a) Every vessel shall use all available means appropriate to the prevailing
circumstances and conditions to determine if risk of collision exists. If there
is any doubt such risk shall be deemed to exist.
(b) (b) Proper use shall be made of radar equipment if fitted and operational,
including long-range scanning to obtain early warning of risk of collision and
radar plotting or equivalent systematic observation of detected objects.
(c) (c) Assumptions shall not be made on the basis of scanty information,
especially scanty radar information.
 (d) (d) In determining if risk of collision exists the following considerations shall
be among those taken into account: (i) such risk shall be deemed to exist if
the compass bearing of an approaching vessel does not appreciably
change; (ii) such risk may sometimes exist even when an appreciable
bearing change is evident, particularly when approaching a very large
vessel or a tow or when approaching a vessel at close range.
Rule 8 Action to avoid collision
(a) Any action taken to avoid collision shall be taken in accordance with the
Rules of this Part and shall, if the circumstances of the case admit, be
positive, made in ample time and with due regard to the observance of
good seamanship.
(b) (b) Any alteration of course and/or speed to avoid collision shall, if the
circumstances of the case admit, be large enough to be readily apparent to
another vessel observing visually or by radar; a succession of small
alterations of course and/or speed should be avoided.
(c) (c) If there is sufficient sea-room, alteration of course alone may be the
most effective action to avoid a close-quarters situation provided that it is
made in good time, is substantial and does not result in another close-
quarters situation.
(d) (d) Action taken to avoid collision with another vessel shall be such as to
result in passing at a safe distance. The effectiveness of the action shall be
carefully checked until the other vessel is finally past and clear.
(e) (e) If necessary to avoid collision or allow more time to assess the situation,
a vessel shall slacken her speed or take all way off by stopping or reversing
her means of propulsion.
(i) A vessel which, by any of these Rules, is required not to impede the
passage or safe passage of another vessel shall, when required by the
circumstances of the case, take early action to allow sufficient sea-room for
the safe passage of the other vessel.
(ii) A vessel required not to impede the passage or safe passage of another
vessel is not relieved of this obligation if approaching the other vessel so as
to involve risk of collision and shall, when taking action, have full regard to
the action which may be required by the Rules of this Part.
(iii) A vessel the passage of which is not to be impeded remains fully
obliged to comply with the Rules of this Part when the two vessels are
approaching one another so as to involve risk of collision.
Note:
 In the determination of negligence, the same test of a reasonable man in
the position of an expert that applies in quasi-delict should also be applied
although with due consideration to the expertise of the persons involved
including the carrier itself.
 Thus, it is still required to determine if a reasonable man with the same
expertise would have done what the party in question did under the same
circumstances .
 It is still relevant to determine if the collision is sufficiently forseeable such
that a reasonable man with the same expertise could have avoided the
impact.
Contributory Negligence and Last Clear Chance Not Applicable
 In some respect, the rules that apply to quasi-delict cannot be applied in
collision cases because of Article 827 of the Code of Commerce.
 Thus , if both vessels were negligently operated, it does not matter if the
other has the last clear chance of avoiding the injury because under Article
827, each must suffer its own damage if both of them are negligent.
 Although the negligence on the part of the mate of the incoming vessel
preceded the negligence on the part of the mate of the outgoing vessel by
an appreciable interval of time, the first vessel cannot on that account be
absolved from responsibility.
SPECIFIC RULES under the COC
 When only one vessel is at fault, the owner of the vessel at fault shall
indemnify the losses and damages suffered, after an expert appraisal
[Article 826, Code of Commerce];
 When both vessels are at fault, each shall suffer its own damages, and both
shall be solidarily responsible for the losses and damages occasioned to
their cargoes [Article 826, Code of Commerce];
 In case of inscrutable fault, that is, if it cannot be decided which of the two
vessels was the cause of the collision, each shall bear his own damage and
both shall be jointly responsible for the losses and damages suffered by
their cargoes [Article 828, Code of Commerce];
 When it is due to a fortuitous event, each vessel and its cargo shall bear its
own damages [Article 830, Code of Commerce];
 When, by reason of fortuitous event, a vessel properly anchored and
moored collides with another, the injury occasioned shall be looked upon as
particular average to the vessel run into [Article 832, Code of Commerce];
 When a third vessel at fault, the owner of the third vessel shall indemnify
the losses and damages caused, the captain thereof being civilly liable to
said owner [Article 831, Code of Commerce].
COLLISION IN FOREIGN WATERS
Article 839. If the collision should take place between Philippine vessels in foreign
waters, or if having taken place in the open seas, and the vessels should make a
foreign port, the Consul of the Republic of the Philippines in said port shall hold a
summary investigation of the accident, forwarding the proceedings to the secretary
of the dept of foreign affairs for continuation and conclusion.
PROTEST
Article 835. The action for recovery of losses and damges arising from collisions
cannot be admitted if a protest or declaration is not presented within 24 hours
before the competent authority of the point where the collision took place, or that of
the first port of arrival of the vessel, if in the Phil territory, and to the consul of the
Rep of the Phil if it occurred in a foreign country.
Article 836. With respect to damages caused to persons or to cargo, the absence of
protest may not prejudice the persons interested who were not on board or where
not in a condition to make known their wishes.
ARRIVAL UNDER STRESS
 Arrival under stress is 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.
  It is lawful when the inability to continue voyage is due to lack of
provisions, well-founded fear of seizure, privateers, pirates, or accidents of
the sea disabling it to navigate [Article 819, Code of Commerce].
It is unlawful when:
 The lack of provisions should arise from the failure to take the necessary
provisions for the voyage, according to usage and custom, or if they should
have been rendered useless or lost through bad stowage or negligence in
their care;
 The risk of enemies, privateers, or pirates should not have been well known
or manifest, and based on positive and justifiable facts;
 The injury to the vessel should have been caused by reason of her not
being repaired, rigged, equipped, and arranged in a convenient manner for
the voyage, or by reason of some erroneous order of the captain; or
 Malice, negligence, want of foresight, or lack of skill on the part of the
captain is the reason for the act causing the damage [Article 820, Code of
Commerce].
SHIPWRECKS
 Shipwreck denotes loss or wreck of a vessel at sea as a consequence of
running against another vessel or thing at sea or on coast where the vessel is
rendered incapable of navigation.
 If the wreck was due to malice, negligence or lack of skill of the captain,
the owner of the vessel may demand indemnity from said captain. [Article 841, Code
of Commerce].
SALVAGE
 Salvage is defined as the service which one person renders 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 and secure.
RATIONALE
Salvage is founded on equity and is compensation for actual services rendered.
The compensation for voluntary salvage is dictated by public policy to encourage
the hardy and adventurous mariner to engage in a laborious and sometimes
dangerous enterprise
Kinds of salvage claim
 VOLUNTARY- wherein compensation is dependent upon success
 RENDERED UNDER A CONTRACT FOR A PER DIEM OR PER HORAM WAGE-
payable at all events
 UNDER A CONTRACT FOR A COMPENSATION- payable only in case of
success
Three elements are necessary to a valid salvage claim:
 A marine peril;
 Service voluntarily rendered when not required as an existing duty or from
a special contract;
 Success, in whole or in part, or that the service rendered contributed to
such success [Erlanger & Galinger v. Swedish East Asiatic Co. Ltd (1916)].
JETSAM AND FLOTSAM
Jetsam and Flotsam are unless abandoned, still property of their original owners.
 Jetsam are goods that were thrown off a ship which was in danger.
 Flotsam are goods that floated off the ship while the ship was in danger or
when it sank.
 Ligan are goods left at sea on the wreck or tied to a buoy so that they can
be recovered later.
CARRIAGE OF GOODS BY SEA ACT (COGSA)
APPLICATION
COGSA (Commonwealth Act No. 65) is a special law that governs all contracts of
carriage of goods by sea between or to and from the Philippine ports.
Its application is according to the following scheme:
 If the common carrier is coming to the Philippines:
First: Civil Code;
Second: COGSA (in foreign trade);
Third: Code of Commerce;
 If the private carrier is coming to the Philippines:
First: COGSA;
Second: Code of Commerce;
Third: Civil Code (excluding rules on common carriers);
 If the private or common carrier is from the Philippines to a foreign country,
the law of the foreign country applies [Article 1753] unless the parties
make COGSA applicable.
 Under Article 1766, in all matters not regulated by the Civil Code, the
rights and obligations of common carriers shall be governed by the Code of
Commerce and special laws. Thus, although a special law, COGSA only
applies when the Civil Code has no provision dealing with the matter.
DOCUMENTS OF TITLE REQUIRED
 The contracts of carriage of goods covered by COGSA are evidenced by Bill
of Lading.
 Section 1 of COGSA provides that the term contract of carriage applies to
contracts of carriage by sea covered by a bill of lading or any similar documents of
title, in so far as such document relates to the carriage of goods by sea, including
any bill of lading or any similar document as aforesaid issued under or pursuant to a
charter party from the moment at which such bill of lading or similar document of
title.
NOTICE OF LOSS OR DAMAGES
 Notice of claim and the general nature of the loss or damage must be given
in writing to the carrier or his agent at the port of discharge before or at the time of
the removal of the goods [Section 3(6), COGSA].
 If damage is not patent or cannot be ascertained from the package, the
shipper should file the claim with the carrier within three days from delivery.
 Under Section 3(6), COGSA, a failure to file a notice of claim within three
days will not bar recovery if it is nonetheless filed within one year. This one-year
prescriptive period also applies to the shipper, the consignee, the insurer of the
goods or any legal holder of the bill of lading. Inasmuch as the neither the Civil Code
nor the Code of Commerce states a specific prescriptive period on the matter, the
COGSA may be applied [Belgian Overseas Chartering and Shipping v. Philippine First
Ins. Co. (2002)].
PERIOD OF PRESCRIPTION
 The carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after delivery of the goods or
the date when the goods should have been delivered.
 The absence of a notice shall not affect or prejudice the right of the shipper
to bring suit within one year after the delivery of the goods or the date when the
goods should have been delivered [Section 3 (6)].
 COGSA, as a special law, prevails over the general provisions of the Civil
Code on prescription of actions [Maritime Agencies & Services, Inc. v. CA (1990)].
LIMITATION OF LIABILITY
 Under Section 4(5), COGSA, the limit is set at a maximum of $500 per
package or customary freight unit.
 This is deemed incorporated in the bill of lading even if not mentioned
therein [Eastern Shipping v. IAC (1987)].
 The declaration made by the shipper stating an amount bigger than $500
per package will make the carrier liable for such bigger amount, but only if the
amount so declared is the real value of goods [Aquino (2011)].
 The Civil Code does not limit the liability of the common carrier to a fixed
amount per package. In all matters not regulated by the Civil Code, the right and the
obligations of common carriers shall be governed by the Code of Commerce and
special laws.
 Thus, the COGSA, which is suppletory to the provisions of the Civil Code,
supplements the latter by establishing a statutory provision limiting the carrier’s
liability in the absence of a shipper’s declaration of a higher value in the bill of
lading. [Belgian Overseas v. Philippine First Ins. Co. (2002)].
The Warsaw Convention
APPLICABILITY
The Warsaw Convention applies to:
 All international carriage of persons, baggage, or cargo performed by
aircraft for reward;
 Gratuitous carriage by aircraft performed by an air transport undertaking
[Article 1(1), Warsaw Convention].
 International air carriage or international air transport means transportation
by air between points of contact of two high contracting parties, or those countries
that have acceded to the Warsaw Convention, wherein the place of departure and
the place of destination are situated:
 Within the territories of two high contracting parties, regardless of whether
or not there be a break in the transportation or a trans-shipment; or
 Within the territory of a single high contracting party, if there is an agreed
stopping place within a territory subject to the sovereignty, mandate or authority of
another power, even though the power is not a party to the Convention [Article 1(2),
Warsaw Convention].
 A carriage to be performed by several successive air carriers is deemed, for
the purposes of the Convention, to be one undivided carriage, if it has been
regarded by the parties as a single operation, whether it had been agreed upon
under the form of a single contract or of a series of contracts [Article 1(3), Warsaw
Convention].
The carrier is liable for damages for:
1. Death or injury of a passenger if the accident causing it took place:
 On board the aircraft;
2. In the course of the operations of embarking or disembarking; or
3. When there was delay [Article 17 and 19, Warsaw Convention];
4. Destruction, loss, or damage to any baggage or goods that are checked in, if
damage occurred:
 During the transportation by air; or
 When there was delay [Section 18 and 19, Warsaw Convention];
5. Delay in the transport by air of passengers, baggage or goods.
------The carriage by air contemplated comprises the period in which the baggage or
goods are in charge of the carrier, whether in an airport or on board an aircraft, or,
in the case of a landing outside an airport, in any place whatsoever [Article 18,
Warsaw Convention].
LIMITATION OF LIABILITY
With respect to the following limitations of liability, Article 23, Warsaw Convention
provides that any provision tending to relieve the carrier of liability or to fix a lower
limit than that which is laid down shall be null and void, but the nullity of any such
provision does not involve the nullity of the whole contract.
Also, under Article 25, Warsaw Convention:
 The carrier shall not be entitled to avail himself of the provisions which
exclude or limit his liability, if the damage is caused by his wilful misconduct or by
such default on his part as is considered to be equivalent to wilful misconduct;
 Similarly the carrier shall not be entitled to avail himself of the said
provisions, if the damage is caused as aforesaid by any agent of the carrier acting
within the scope of his employment.
 Under Article 29, Warsaw Convention, the right to damages under the WC
is extinguished after two years from the date of arrival at the destination or from the
date on which the aircraft ought to have arrived, or from the date on which the
carriage stopped. The method of calculating the period of limitation shall be
determined by the law of the court seized of the case .
LIABILITY TO PASSENGERS
 General rule: In the carriage of passengers, the liability of the carrier for
each passenger is limited to 250,000 francs passenger.
 Exception: By special contract, the carrier and the passenger may agree to
a higher limit [Article 22(1), Warsaw Convention].
LIABILITY FOR CHECKED BAGGAGE
General rule: In the carriage of baggage and goods, the liability of the carrier is
limited to 250 francs per kilogram.
Exception: The limit does not apply when the consignor has made, at the time when
the package was handed over to the carrier, a special declaration of the value at
delivery and has paid a supplementary sum if the case so requires. In that case the
carrier will be liable to pay a sum not exceeding the declared sum, unless he proves
that that sum is greater than the actual value to the consignor at delivery [Article
22(2), Warsaw Convention].
LIABILITY FOR HAND-CARRIED BAGGAGE
 As regards hand-carried baggage, the liability of the carrier is limited to
5,000 francs per passenger [Article 22(3), Warsaw Convention].
 ·The Guatemala Protocol of 1971 increased the limit for passengers to
$100,000 and to $1,000 for baggage. However, the Supreme Court noted in Santos
III v. Northwest Orient Airlines (1992), that the Guatemala Protocol is still ineffective
[Sundiang and Aquino (2013)].
 The Warsaw Convention should be deemed a limit of liability only in those
cases where the cause of death or injury to person, or destruction, loss or damage
to property or delay in its transport is not attributable to or attended by any willful
misconduct, bad faith, recklessness, or otherwise improper conduct on the part of
any official or employee for which the carrier is responsible; and there is otherwise
no special or extraordinary form of resulting injury [Alitalia Airways v. CA (1990)].

WILLFUL MISCONDUCT
 A common carrier may not avail of the limitation in the following cases:
 Willful misconduct;
 Default amounting to willful misconduct [Article 25, Warsaw Convention];
 Accepting passengers without ticket [Article 3(2), Warsaw Convention];
 Accepting goods without airway bill or baggage without baggage check.
 Receipt by the person entitled to the delivery of baggage or cargo without
complaint is prima facie evidence that the same have been delivered in good
condition and in accordance with the document of carriage [Article 26, Warsaw
Convention].