TRANSPO.NOTES
COMMON CARRIER
12
Rules in Granting the CPC
2
12
Unlawful arrangements
Vigilance of Goods
2
Safety of Passengers
13
WARSAW CONVENTION
5
14
Duty of the CC:
History
5
In Case of Death or Injury
14
Not Covered by Warsaw Convention
5
Is the responsibility of the CC subject to stipulation?
16
Nature of Air Carrier
6
Effect of Allowing Passenger to Ride Gratuitously
of Discount or Reduced Fare
16
Liability of Air Carrier
& Effect
16
Defenses of Air Carrier
6
Responsibility of CC for injury/death caused by the acts of their employees
17
Monetary Cap [Art. 22, WC]
7
• When does the relationship of a CC and a passenger terminate?
17
CODE OF COMMERCE
8
Duty of the Passenger
8
Contributory Negligence of the Passenger
17
8
Acts of Co-passengers or Strangers
A. Overland Transportation
18
Maritime Commerce
9
DAMAGES
23
A.
Shipowner and Ship Agent
9
Public Service Act
B.
26
Captains and Masters of Vessels
10
28
C. Officers and Crew of the Vessel
History
31
Special Contracts of Maritime Commerce
10
Offices/Agencies/Businesses Connected with Public Interest/for the Operation of Public Utility (out
of the Philippine Public Commission)
33
A. Charter Parties
10
Purpose of Public Service Act
33
D. Loan on Bottomry
11
Reason for Creating the PSC
37
E. Loan on Respondentia
11
Public Utility & Public Service
11
CPC & CPCN
12
Requisites for the Issuance of Public Convenience
37
Risks, Damages and Accidents of Maritime Commerce
38
COGSA
43
1 of 43
TRANSPO.NOTES
✓ Establish that common carrier committed willful negligence before the act of
God.
✓ Shipper did not contribute to the loss, destruction, deterioration
o No intervention by the shipper
COMMON CARRIER
Vigilance of Goods
Is fire a fortuitous event?
- No. Arises by act of man
Reason for exercising extra – ordinary diligence
➢ The business of common carriers is impressed with public duty and invested public
interest.
➢ The public must of necessity rely on the care, competence, and skill of common carriers
in the vigilance of goods and transport of passengers
➢ The development of transportation technology today is emerging, complicated,
hazardous.
Lightning which caused fire, fortuitous event?
- Yes, because lightning is the proximate cause.
Mechanical defects?
- Not fortuitous
Acts of Public enemy
2. Public enemy
Presumption of negligence (art 1735)
▪ That carrier is always at fault and that he acted negligently
▪ How to rebut: that common carrier observed extra-ordinary diligence
Is a pirate considered a public enemy?
- Yes. Because they are enemies of all mankind.
• Ordinarily, shipper has burden to prove that the goods were lost, deteriorated, or destroyed
during the course of the transport. If shipper proved the same, the presumption of negligence
comes in automatically. The burden is now shifted to the common carrier that he observed
extraordinarily diligence.
Terrorists?
- Yes. Pwedeng civil pwedeng international
• Requisites..
A. Act of public enemy is the proximate cause
B. Common carrier exercised extraordinary diligence to minimize loss before during
after acts of public enemy
Coastwise Corp vs CA, GR No. 114167 12 July 1995
➢ Mere proof of delivery of goods in good order to a carrier and the subsequent arrival
of the same in bad order to the consignee makes a prima facie case against the carrier.
• In the transportation of goods, a common carrier has the duty to properly handle, keep, and
exercise due care for the goods. Ascertain nature of goods placed for shipment, common
carrier may ask for value of goods.
3. Acts / omissions of shipper
May a common carrier be exempted by reason of the contributory negligence of the
shipper?
- No. If merely contributory….Art 1741- There shall be equitable reduction of
liability
• The appearance of the goods when received by the common carrier shall be the same when
delivered to the consignee.
• If the fact of improper packing is known to the carrier, he can refuse to accept the same.
Otherwise, he will not be relieved from liability for loss or injury during the transportation.
• Because of the presumption, there is no need for the express finding of negligence.
(Regional Container Lines of Singapore and Edsa Shipping Agency vs the Netherlands insurance
co. Gr no168151 4 sept 2009)
Ways for common carrier to be exempted from liability (art 1734)
1. Elements of force majeure or fortuitous event (art 1174)
•
•
•
•
4. Character of goods
• To exempt common carrier, damage was due to inherent nature of the goods
Art 1742
Saludo vs Ca gr no 95536
- The carrier is entitled to fair representation of the nature and value of the goods.
Common carrier should no longer go beyond such representation. With the concomitant
right to rely thereon and he need not ask further as to the correctness of the
representation.
No person shall be made responsible for events which cannot be foreseen.
Loss, destruction, deterioration- independent of human will.
In order to be exempt from liability due to fortuitous events- requisites (art1739)
Proximate Cause- it is the cause of the loss, destruction, deterioration independent of
other causes.
• Effect of delay in transporting goods if the loss is due to a natural disaster but
common carrier is negligent- not exempted (Art 1740)
2 of 43
When does the duty to conduct inspection arise?
✓ Only when there is reason to doubt the veracity of the representation.
✓ There must be a proof to cause apprehension
5. Order of competent public authority (art 1743)
- Destruction or seizure of goods—may be prohibited goods, dangerous to life/
property, infected with disease.public authority may recall such goods so common
carrier will no longer transfer the goods.
TRANSPO.NOTES
• Public authority must have the right to issue order.
• Over and above contractual stipulations, police power shall prevail.
*If there is temporary unloading, the carrier is still liable until delivered to the consignee
unless the shipper exercises his right of stoppage in transit
is Hijacking/ acts of thieves, robbers a valid cause to exonerate a common carrier from
liability
- No…. Art 1735…. Presumption of negligence.. Exercised extraordinary diligence to be
exempted.
Contract: liability of the common carrier shall be diminished by reason of the acts of
Thieves, robbers…. (Art 1745 par 6) liability cannot be allowed to be diminished…except
when act of robbers / thieves --- grave, there is irresistible threat, violence, force…
• Art 1734--- closed list… Exclusive,..
• If there are other causes --- art 1735. Prove extraordinary diligence.
When does the carrier’s responsibility begin?
Carriage of Goods
Article 1736- 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
*The carrier must receive the goods
• Test to determine if there is delivery
• Whenever the control and possession of the goods passes to the carrier and nothing
remains to be done by the shipper
*if the shipper does not still pay, the responsibility does not yet attach
When does the responsibility terminate?
• When the goods are delivered to the consignee and or the person who has a right to
receive them
How delivery is made?
• Either actually or constructively by the carrier to the consignee
How is constructive delivery made?
- When notice is given to the consignee that the package or goods has already arrived
at the destination
- Once there is notice, the shipper can get possession of the goods.
* if the stoppage in transit occurs, the extraordinary diligence that must be exercised ceases;
but, the carrier has the responsibility to take care of the goods with the diligence of a good
father of the family; the carrier becomes a depository
* if the goods are in the warehouse, the carrier must still exercise extraordinary diligence
*Art. 1738- The extraordinary liability of the common carrier continues to be
operative even during the time the goods are stored in a warehouse of the carrier at
the place of destination, until the consignee has been advised of the arrival of the
goods and has had reasonable opportunity thereafter to remove them or otherwise
dispose of them.
When does responsibility terminate if the goods are in the warehouse?
- When there is constructive delivery and that the consignee must be given the
reasonable opportunity to remove the goods or dispose them.
• if the goods are stored in the warehouse of the BoC,
- Common carrier will not be held liable since there is already notice of arrival. Some of
the goods are also removed by the consignee
- the carrier has no more control if the goods are held by the BoC. This may amount to an
act of public authority or by law
- if there was no notice, the common carrier will be liable but limited only.
- if the goods has already arrived but not placed in a warehouse, the carrier need not to
exercise extraordinary diligence. The shipper has no more cause of active since there is
notice and the shipper has been given reasonable opportunity. But, the CC has the cause
of action from the shipper in the form of demurrage• Demurrage
- a charge which is permitted and recognized not only because it may afford compensation
to the carrier for an additional service nut because of the usefulness and importance of
its main object which to obtain prompt release of the goods and thus prevent interference
from the general traffic of the carrier
• Effect of constructive delivery
- The carrier is released from the responsibility of exercising extraordinary diligence in the
possession of the cargo
What if there is misdelivery?
- The responsibility of the carrier continues or still attachesArt. 1736- “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”
- If the consignee is the one who went to the place where the package was
misdelivered, the responsibility still attaches, thus, the carrier is always liable.
Cause of action: breach of contract, damages
Prescription:
• based on contract: 10 years
• Based on quasi- delict: 4 years
- If there is loss of cargo: 1 year from the time of the cause of action happened
3 of 43
Time for the delivery of the goods
- If there is contract, reasonable time
- If there is the contract, the time stipulated in the contract
Why reasonable time only?
- because a carrier is not an insurer against delay in the transport
Stipulation as regards the limitation of the liability of the CC
Art. 1744- A stipulation between the common carrier and the shipper or owner limiting
the liability of the former for the loss, destruction, or deterioration of the goods to a
degree less than extraordinary diligence shall be valid, provided it be:
(1) 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.
• all the requisites must be present especially if you are a common carrier
• Valuable consideration: other than the services of the CC
TRANSPO.NOTES
Bill of Lading:
- Three stipulations which will limit the liability of the CC:
1. Exempting the carrier from any and all liability for loss or damage occasioned by its
own negligence
2. An unqualified limitation of such liability to an agreed valuation
3. Limiting the liability of the carrier to an agreed valuation unless the shipper declares a
higher value
• 1 and 2 are void while the 3rd stipulation is valid
Is art 1744 applicable to private carriers?
- Yes except the 3rd requisite.
What are the other stipulations limiting the liability of CC: Art. 1748- 1750
•
Art. 1748. An agreement limiting the common carrier's liability for delay on
account of strikes or riots is valid.
Strikes or riots, whether legal or illegal is immaterial. CC can no longer proceed. The
happening is out of its control
•
•
Art. 1749. A stipulation that the common carrier's liability is limited to
the value of the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if
it is reasonable and just under the circumstances, and has been fairly and
freely agreed upon.
Conditions that must be present in order that the provisions of Art. 1749- 1750 will be
available:
1. That the contract is reasonable and just under the circumstances;
2. It has been freely agreed upon by the parties
What is the effect on the stipulation if consent is obtained because of refusal to carry
goods?
- The contract is voidable. Art. 1746. An agreement limiting the common carrier's liability
may be annulled by the shipper or owner if the common carrier refused to carry the
goods unless the former agreed to such stipulation.
- The reason behind it is that there might be force or undue influence exerted against
the shipper.
What is the effect of the limited liability by a common carrier by reason of delay in
transportation or change in the route?
- In this case, Art. 1747 is applicable. Art. 1747. If the common carrier, without just
cause, delays the transportation of the goods or changes the stipulated or usual route,
the contract limiting the common carrier's liability cannot be availed of in case of the
loss, destruction, or deterioration of the goods.
What is the effect of lack of completion to a CC?
- Art. 1751. The fact that the common carrier has no competitor along the
line or route, or a part thereof, to which the contract refers shall be
taken into 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.
It depends upon the circumstances present. Even if there is lack of competition along
the line or route to which the contract refers, it shall be taken only in consideration
on the question whether or not a stipulation limiting the liability is reasonable, just
and in consonance with public policy.
4 of 43
When there is a stipulation as to the limitation of liability, what is the presumption?
- The presumption is that the CC is negligent. Art. 1752. Even when there is an
agreement limiting the liability of the common carrier in the vigilance over the goods,
the common carrier is disputably presumed to have been negligent in case of their loss,
destruction or deterioration.
Is the presumption rebuttable?
- Yes, by presenting evidence that the CC exercised extraordinary diligence.
How to construe stipulations limiting the CC’s liability which is couched in general terms?
- An exemption in general words not expressly relating to negligence even though the
words are wide enough to include loss by negligence or default of the carrier’s servant
must be construes as limiting the liability of the CC as an assurer. But it does not
relieve him from the duty of exercising reasonable skill and care (extraordinary
diligence).
What are the void stipulations?
- Art. 1745. Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
Except: fortuitous events, any exempting events
(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 acts of the employees are attributable to the shipper since the employees are the
extension of the shipper.
Even stipulations limiting the liability of the owner as a result of acts of thieves and
robbers who did not apply grave abuse, coercion, etc, are void
What law should be followed if the goods are bound internationally?
- Art. 1753. The law of the country to which the goods are to be transported
shall govern the liability of the common carrier for their loss, destruction or
deterioration.
- The Civil code will be the primary law, suppletorily will be the Code of Commerce and
other special laws.
Does the law of destination also applies even if the goods were never transported?
- No, the goods were not successfully transported to the other country.
However, if during transit, there was loss, destruction, and deterioration, will the Law of
destination apply?
TRANSPO.NOTES
- Yes. Even if the goods are in the high seas and that they did not yet reach the
Is the CC liable for undeclared goods? Yes, if accepted by the CC. Thus extraordinary
diligence is still required.
- Failure to deliver the package will make the CC liable
destination, still the Law of destination still applies in cases where there is loss,
destruction, or deterioration.
- However, if the seller exercises his right of stoppage in transit, the law of the seller
will apply because the goods will go back to the seller
Baggage of passengers
• Classes of Baggage
1. Baggage in custody of the passenger or their employees
Arts. 1998, 2002 to 2003 will apply or the law on necessary deposits.
In this instance, the duty of the CC is to observe ordinary diligence since he is merely
a depositary.
- Art. 1998. 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 hotelkeepers or their substitutes advised relative to the care and vigilance of
their effects.
When the CC does becomes liable for the loss, destruction or deterioration of the baggage
which is in the custody of the passenger?
Safety of Passengers
Duty of the CC:
Article 1755. A common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all the circumstances.
• utmost diligence of very cautious persons = higher than EOD of a good father of a family
• When should this obligation of the CC exist?
- it should exist not only during the course of the trip but for as long as the passengers
are within its premises and where they ought to be in pursuance to the contract of
carriage
- Art. 2000. 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.
Art. 2001. 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.
Exception:
Art. 2002. 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.
Is there a possibility that there will be a stipulation limiting the liability of the CC in this
instance?
- NO
- Art. 2003. 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.
2. Baggage not in the custody of the passenger
- Arts. 1733 to 1753 will apply since it is considered that the baggage is in custody
of the CC. Thus, extraordinary diligence must still be observed. The presumption of
negligence will apply if there is loss, destruction or deterioration.
- Extraordinary diligence is needed because it is as if the passenger is sending goods.
The moment the goods of the passenger are unconditionally placed in the
possession of the CC for conveyance, the law immediately imposes upon the CC
extraordinary responsibility for the loss thereof until there is delivery.
Is the CC liable if the passenger did not pay baggage fee?
- Yes, even if the passenger did not pay baggage fee. That is still considered as deposit.
Example/Illustration:
* a person who alighted a bus and got his baggage, but still within the premises
- the obligation still exist
* a person carrying his bag, after alighting, went to the waiting area of chance passenger and
about to go out of the premises, however, something happened which cause death or injury
upon him inside the premises of the CC
- opinion of judge C — CC has NO obligation
- Reason: although “within the premises”, there are circumtances where the passenger has
severed already the contract of carriage; the only thing the person is doing is going out
of the premises
- Thus, it will still depend upon the circumstances
In Case of Death or Injury
Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755.
• CC presumed to be negligent in case of death or injury of passengers
- the plaintiff-passenger has the burden of proof to establish such presumption of
negligence
- kind of evidence needed: simple proof of injury will suffice
- the plaintiff need only simple proof of injury and then he is relieved from
establishing fault or negligence
- Reason: because of the presumption that if he incurs injury or dies by reason of
the fault or negligence of CC, the CC is at fault (that is always the presumption)
- Thus in case the passenger was injured or died, the only things he need to prove are:
1. a contract of carriage which he entered into with the common carrier; and
5 of 43
TRANSPO.NOTES
2. that the CC failed to perform its duty to carry him safely to his destination as far
as human care can foresee
- Once this things are proved, the burden now shift to the CC to prove that he should
be exonerated because he exercise EOD
• To overcome the presumption, CC must prove:
1. that it observed EOD;
2. that the injury was due to unforeseen event or fortuitous event
Reason why only this two circumstances must go together before the CC can be
exonerated from his liability
- one must remember that the duty of the CC is to exercise utmost diligence
- therefore, it is presumed that once a CC will go travel:
1. its vessel/vehicle is in good condition
2. its operator or driver is fit to manipulate or to handle said vehicle
- thus, if a CC who was able to see an incident before occuring, was able to avoid it
and did avoid it, it can be said that it is exercising utmost diligence
- But for an unforeseen event, CC will not be able to foresee such, therefore, no
matter how much care or diligence it exercises, the incident will inevitably occur.
• In case of injury or death of the passenger in the course of transportation, the only question
that has to be asked is not to determine whether the parties seeking the damages has
adduced sufficient evidence to show the negligence or fault of the CC because of the
presumption (which is automatic) but whether the CC has presented the required quantum of
proof to overcome the presumption that it has been at fault or that it acted negligently in
the performance of its duty.
• Does the rule on Last Clear Chance apply to CC? — No
Last Clear Chance — def.
- it does not apply to CC because it applies to colliding vehicles
- the claim of a passenger involved in the accident where two vehicles collide is based on
the contract of carriage
- Thus, if a CC was exonerated from the accident using this defense, the passanger can still
run after the CC based on the contract of carriage
Is the responsibility of the CC subject to stipulation?
• NO! Responsibility of the CC subject to stipulation!
Article 1757. The responsibility of a common carrier for the safety
of passengers as required in articles 1733 and 1755 cannot be
dispensed with or lessened by
1) stipulation
2) by the posting of notices,
3) by statements on tickets,
4) or otherwise.
- Article 1744 does not apply to safety of passengers, it only applies to carriage of goods
Article 1744. A stipulation between the common carrier and the shipper
or owner limiting the liability of the former for the loss,
destruction, or deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than
rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
the
service
- Reasons:
1. value of life is very precious
2. the nature of the business of common carrier
3. a CC with respect to transport of passenger is imbued of public interest
- thus, even if the passenger has signed a contract of adhesion (written in the ticket) as
asked by the CC, such stipulation is considered void and will not bind him
• CC & passengers cannot enter into an agreement absolutely exempting from liability for
passenger’s death or injury or entering into agreement lessening the EOD required by law
• What is the contract between the CC and the passenger?
- the ticket represents the contract
- not only implied, it is a contract by itself because it has all of the elements — consent,
object, cause/consideration
• Consent:
- on the part of the CC, is when it accepts the passenger to the vehicle/vessel
- on the part of the passenger, when he enters the common carrier
• Object
- transportation of the passenger from place of departure to the place of destination
• Cause/consideration
- the payment or fare
Effect of Allowing Passenger to Ride Gratuitously
& Effect of Discount or Reduced Fare
Article 1758. When a passenger is carried gratuitously, a stipulation
limiting the common carrier's liability for negligence is valid, but not
for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common
carrier's liability.
Allowing passenger to ride gratuitously
CC still has the obligation or liability to
observe diligence
BUT it can be subject of stipulation
Discounted or reduced fare
CC has still the obligation or liability to
observe diligence
AND not subject to stipulation
• Who are those allowed to ride gratuitously?
- those who are sitting on the lap of another
Example/Illustration:
• A mother and her child rode a bus. The mother paid her fare and the CC allowed the child to
ride gratuitiously. Finding that the bus had few passengers, the mother let her child sit on a
vacant seat beside her. The bus met an accident and the child was injured. Can the CC
contended that it was not liable since the child rode the bus gratuitously?
- NO. because they did enter into stipulation.
6 of 43
TRANSPO.NOTES
- unitlateral change in the costs of the ticket
- rude attitude of employee
• A father asked the CC to allow his child to sit beside him since there were few passengers.
The CC allowed but asked the father to sign a agreement limiting the its liability. In case
injury or death befall upon the child, can the CC claim that it has no liability?
- yes, because there is a stipulation
RULING:
- Passengers have the right to be treated by a carrier’s employees with kindness, respect, courtesy and due
• Accommodation or Invited Guest
- “ung mga umaangkas”
- Rule: the obligation of the carrier with respect to accommodation or invited guest or
passenger is that the CC will only exercise reasonable care or the diligence of the a good
father of a family
• Reason of the difference of the liability between gratuitous passenger and that of an
accommodation or invited guest
- that is because the an invited guest or accommodation passenger ASKED for the privilege
to be there; that person insited to ride on the vehilce;
- on the other hand the passenger who was allowed to ride gratuitious passenger, while yes
he did not pay, had the intention still to enter into a contract of carriage with he common
carrier
LARA v. VALENCIANA [GR No. L-9907, 30 June 1958]
RULING:
It therefore appears that the deceased, as well his companions who rode in the pick-up of defendant, were
merely accommodation passengers who paid nothing for the service and so they can be considered as invited
guests within the meaning of the law. As accommodation passengers or invited guests, defendant as owner
and driver of the pick-up owes to them merely the duty to exercise reasonable care so that they may be
transported safely to their destination. Thus, "The rule is established by the weight of authority that the
consideration. T
- hey are entitled to be protected against personal misconduct, injurious language, indignities and abuses
from such employees. So it is that any discourteous conduct on the part of these employees toward a
passenger gives the latter an action for damages against the carrier.
- Any discourteous conduct on the part of the employee toward the passenger gives the latter an action for
damages against the carrier
• Basis of the ruling:
Article 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or wilful acts of the
former's employees, although such employees may have acted beyond
the scope of their authority or in violation of the orders of the
common carriers.
This liability of the common carriers does not cease upon proof
that they exercised all the diligence of a good father of a family
in the selection and supervision of their employees.
• If the CC proved that it exercised diligence of a good father of a family in selecting and
supervising their employees, can this be a defense?
- NO
owner or operator of an automobile owes the duty to an invited guest to exercise reasonable care in its
MARANAN v. PEREZ [GR No. L-22272, 26 July 1967]
operation, and not unreasonably to expose him to danger and injury by increasing the hazard of travel. This
FACTS:
rule, as frequently stated by the courts, is that an owner of an automobile owes a guest the duty to exercise
Maranan was passenger of taxi owned by Perez when he was stabbed and killed by the driver, Simeon
ordinary or reasonable care to avoid injuring him. Since one riding in an automobile is no less a guest
Valenzuela (who was held guilty). Then Maranan’s mother filed an action for damages against Perez
because he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as in
Perez countered that it is a fortuitous event.
the case of one expressly invited to ride" (5 Am. Jur., 626-627). Defendant, therefore, is only required to
RULING:
- Common carriers are liable for intentional assaults committed by its employees on passengers
- special undertaking of carrier requires that it furnish its passengers that full measure of protection afforded
observe ordinary care, and is not in duty bound to exercise extraordinary diligence as required of a common
carrier by our law (Articles 1755 and 1756, new Civil Code).
by the exercise of high degree of care prescrived by law
- as b/w the carrier and the passenger the former must bear the risk of wrongful acts of former’s employee
Responsibility of CC for injury/death caused by the acts of
their employees
against passengers since the carrier, not the passengers, has the power to remove them
- breach of contract of carriage, hence, carrier is liable
- driver’s liability covered by judgment of criminal case
NORTHWEST AIRLINES v. CATAPANG [GR No. 174364, 30 July 2009]
FACTS:
Catapang had a business trip to Paris. Then he visited his siblings to US, hence, has to rebook his flight to
US after going to Paris ($50.00 payment). Upon arrival in N.Y. he was treated in a rude manner by the
employee of the petitioner “that his ticket is not rebookable, hence, must pay US $644 because it is
restricted type.
• the liability of CC for the acts of its employees cannot be subject to stipulation
Article 1760. 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.
He filed in RTC for damages:
Reason:
7 of 43
TRANSPO.NOTES
- the employees or servants are clothe with a delegated authority;
- they are charged with the duty by the CC to execute its undertaking to carry the
FACTS
- Viana boarded M/V vessel going to Manila. Upon reaching Manila, passengers disembarked a gang-plank
passenger safely
provided connecting the side of the vessel to the pier.
- they are agents of the CC
- the crane owned by 3rd party defendant was place alongside the vessel and after 1 hr, it started its
REAL V. BELO [GR No. 146224, 26 January 2007]
operation by unloading cargoes
- while the crane was being operated, Viana who already disembarked went back to the vessel as he
FACTS:
- Real owns Wasabe Fastfood while Belo also owns BS Master Fastfood Stall
- fire in Wasabe that include all nearby stalls so belo demanded compensation from petitioner, which Real
remembered that some of his cargoes are in the vessel; then the crane hit him, causing his death
RULING
declined
- Carrier-passenger relationship continues until the passenger has been landed at the port of destination and
as well as selection and supervision of employees and that petitioner’s negligence was the proximate cause
- all persons who remain on the premises a reasonable time after leaving the conveyance are deemed
- Belo filed for damages alleging that Real filed to exercise due diligence to up keep his cooking equipments
has left the vessel-owner’s premises
of fire
passengers
- Real denied alleging fortuitious event
RULING:
- Whenever an employee's negligence causes damage or injury to another, there instantly arises a
presumption juris tantum that the employer failed to exercise diligence of a good father of a family in the
selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. To avoid liability for a quasidelict committed by his employee, an employer must overcome the presumption by presenting convincing
proof that he exercised the care and diligence of a good father of a family in the selection and supervision
of his employee.
- elements of fortuitous events; there must be an entire exclusion of human agency from the cause of injury
or loss
Duty of the Passenger
Article 1761. The passenger must observe the diligence of a good father
of a family to avoid injury to himself.
- very applicable to accommodation passengers or invited guests
- while the law imposes a heavy responsibility upon the CC, the law is not one-sided as it does
not also protect the negligence of the passenger tot he extent of doing harm or damage upon
the public utility
- the conductor much less the driver cannot at all time attend to careless passenger
- evidence is established that the fire originated from LPG and her employees failed to prevent fire from
LARA v. VALENCIANA [GR No. L-9907, 30 June 1958]
spreading. Such circumstances do not support Real’s theory.
- because of the disputable presumption, the CC can rebut that it exercise due diligence of a good father of a
family in selecting its employees.
• When does the relationship of a CC and a passenger
terminate?
• law is silent
- however, it has been recognized as a rule that the relation of the CC and the passenger
does not cease at the moment the passenger alight from the carrier’s vehicle at the place
directed by the carrier at the place of destination but continues until the passenger had
reasonable time or reasonable opportunity to leave the premises.
• Reasonable time
- depends upon the circumstances
- therefore, the duration of the liability of the CC in transporting passengers depends upon
the circumstances
ABOITIZ SHIPPING CORPORATION V. CA [GR No. 84458, 6 November 1989]
Example/Illustration
• a passenger in a bus extended rest his arm on the window of the bus as such it extended
outside. The bus met an accident and the passenger’s arm was injured.
- the passenger was held to be responsible for his own injury because he was negligent; he
did not see to it that he took care of himself so such that he will not be injures
- the CC was not made liable
Contributory Negligence of the Passenger
Article 1762. The contributory negligence of the passenger does not bar
recovery of damages for his death or injuries, if the proximate cause
thereof is the negligence of the common carrier, but the amount of
damages shall be equitably reduced.
- if there is contributory negligence on the part of the passenger, the
CC will still be liable but the liability will be equitably reduced
- if however the death or injury was really the fault of the passenger
then the CC will not be made liable
• How to determine the extent of the contributory negligence on the part of the passenger?
CANGCO V. MANILA RAILROAD CO. [GR No. 12191, 14 October 1918]
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TRANSPO.NOTES
RULING:
DAMAGES
In determining the question of contributory negligence in performing such act — that is to say, whether the
passenger acted prudently or recklessly — the age, sex, and physical condition of the passenger are
circumstances necessarily affecting the safety of the passenger, and should be considered. Women, it has
been observed, as a general rule are less capable than men of alighting with safety under such conditions, as
the nature of their wearing apparel obstructs the free movement of the limbs.
Article 1764. Damages in cases comprised in this Section shall be awarded
in accordance with Title XVIII 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.
• in the event there is loss, destruction, deterioration of goods or injury or death of passenger,
what are the sources of obligation to which a common carrier may be held liable:
1. Culpa contractual
2. Culpa acquiliana
3. Culpa criminal
• Doctrine of Comparative Negligence
RAKES V. THE ATLANTIC GULF, AND PACIFIC COMPANY [71 Phil 359, 23 January 1907]
RULING:
The doctrine of comparative negligence:
- if the accident was caused by plaintiff’s own negligence no liability is imposed upon defendant.
however, if the accident was caused by the defendant’s negligence and plaintiff’s negligence merely
• Damages that the court may grant to a PASSENGER who was injured or has died
- the law applicable is Article 2206
Article 2206. The amount of damages for death caused by a crime or quasidelict shall be at least three thousand pesos, even though there may have
been mitigating circumstances. In addition:
contributed to his injury, the damages should be apportioned
- it is therefore important to ascertain that defendant was in fact guilty of negligence
- it actually refers to 1762
(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such
indemnity shall in every case be assessed and awarded by the court, unless
the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;
Acts of Co-passengers or Strangers
(2) If the deceased was obliged to give support according to the provisions
of article 291, the recipient who is not an heir called to the decedent's
inheritance by the law of testate or intestate succession, may demand support
from the person causing the death, for a period not exceeding five years, the
exact duration to be fixed by the court;
Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other passengers
or of strangers, if the common carrier's employees through the exercise
of the diligence of a good father of a family could have prevented or
stopped the act or omission.
- covers only injuries
- does not cover death
• in case of death, the CC will not be held liable
Example/Illustration
• a security guard, employed by an agency being contracted by the CC, is considered as
employees. He is not yet on duty, thus considered as stranger, but he was waiting for his duty.
A passenger entered who turned out to be a person who the security guard has a grudge on.
The security guard shot the passenger.
- the CC is not liable because at the time the security guard was there he had not
obligation yet to take care of the passengers.
- however, looking at the situation, the security guard was not on duty, so he is a stranger
(3) The spouse, legitimate and illegitimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the death
of the deceased.
• Damages for death
1. Indemnity for death - P50,000
2. Loss of Earning Capacity
Net Earning Capacity = Life expectancy x [Gross Annual Income – Living Expenses]
Life Expectancy = 2/3 (80-age at death)
3. Moral damages
- applies only if there is death
- does not apply for injury only, except if the CC acted in bad faith or through fraud
4. Exemplary Damages
5. Atty’s Fees, expenses of litigation
- filing fee, TSN
- cost of suit
6. Interest
7. Actual Damages
- only be granted if with proof
• Damages for GOODS
- law applicable is Article 2176 on damages
Article 2197. Damages may be:
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
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TRANSPO.NOTES
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Public Service Act
Example/Illustration
• A pregnant woman ride the vehicle of the CC. The CC met an accident and by reason of the
accident, the fetus was aborted. Can there be recovery of damages on account of the death
of the fetus?
a. if the parents file a claim damages against the CC for and in behalf of the fetus, it will
not be granted
- because based on Article 40 of the Civil Code, a dead fetus has not obtained
juridical personality
b. if the parents themselves, they can claim for moral damages
- because as far as they are concerned the abortion of the fetus caused them
mental anxiety….
- Because the parents can not expect either help, support or services from an unborn
child, they would normally be limited to moral damages for the illegal arrest of the
normal development of the spes hominis that was the foetus, i.e., on account of
distress and anguish attendant to its loss, and the disappointment of their parental
expectations as well as to exemplary damages, if the circumstances should warrant
them (Geluz v. CA)
• Quantum of Evidence to prove civil liability arising from neglicgence:
- mere preponderance of evidence
- unlike in criminal cases, proof beyond reasonable doubt
Example/Illustration:
• A passenger met an accident and then filed a case against the driver. He did not institute a
separate civil action but when the accused was convicted it so happen that he was merely a
co-driver, he cannot pay for the civil liability. How do you run for the civil liability?
- File a motion for the subsidiary liability of the CC
• What evidence must be established in order to claim subsidiary liability from the CC? —
REQUISITES:
1) the existence of an employer-employee relationship;
- however, if a driver is only being called now and then, he cannot be considered an
employee
2) that the employer is engaged in some kind of industry;
3) that the employee is a employee committed the offense in the discharge of his duties;
and
4) that the execution agains the employee is unsatisfied (he is insolvent or has not
properties to meet the civil liability)
History
1972
Sep 24:
PD No. 1 was issued by Marcos which made a major revamp on the executive
department.
PD No. 1, Art. 3. Part X: it abolished the Public Service Commission and it was
replaced by 3 specialized regulatory boards:
1. board of transportation
2. board of communitcation
3. board of power and water works
1985
Mar 20
Before Cory took over.
The Board of Transportation was abolished and the Bureau of Land Transportation
was created.
The powers and functions of the Bureau of Transporation as well as the Bureau of
Land Transportation were later on merged into the Land Transportation Commission
1987
Cory was the president.
The Land Transportation Commission was abolished by EO No. 125 dated January 30,
1987 and EO No. 125-A dated April 13, 1987 which reorganized the Department of
Transportation and Communication (DOTC)
1987
June 19
LTFRB was created under EO 202 which is now the existing franchansing
regulatory body for over land transportation.
Offices/Agencies/Businesses Connected with Public Interest/
for the Operation of Public Utility (out of the Philippine
Public Commission)
A. Department of Transportation and Communication (DOTC)
• Offices (existing)
1. Land Transportation Franchising and Regulatory Board (LTFRB)
2. Land Transportation Office (LTO)
3. Philippine Coast Guard (PCG)
• Attached Offices
1. Office for Transportation Security (OTS)
2. Civil Aviation Authority of the Philippines (CAAP)
3. Civil Aeronautics Board (CAB)
4. International Airports:
a. Manila International Airport Authority (MIAA)
b. Clark International Airport Corporation (CIAC)
c. Mactan-Cebu International Airport Authority (MCIAA)
5. Philippine Aerospace Development Corporation (PADC)
6. Toll Regulatory Board (TRB)
7. Light Rail Transit Authority (LRTA)
10 of 43
TRANSPO.NOTES
8.
9.
10.
11.
12.
- therefore, the state has the right to regulate the public utility which is based on the
North Luzon Railways Corporation (NLRC)
Philippine Ports Authority (PPA)
Marine Industry Authority (MARINA)
Cebu Ports Authority
Philippine Merchant Marine Academy (PMMA)
police police power of the state
B. National Telecommunication Commission (NTC)
C. National Water Resources Board (NWRB)
D. Energy Regulatory Board (ERB)
Purpose of Public Service Act
- the ordinary purpose is to subject public services to state control and regulation
- the primary purposes:
1. to secure adequate sustained service for the public at the least possible cost and protect
the public against unreasonable charges and poor inefficient service
- because of the regulatory power of the different agencies, the private co. who are now
granted franchise to operate a public utility or are given Certificate of Public Convenience
are going to be regulated so that the service they are going to offer must undergo or
must follow strict regulation
- otherwise, if they do not follow, then the Certification of Public Convenience (CPC) or
franchise will be easily or could be cancelled
2. to protect and conserve investments which have already been made for public service and
prevent ruinous competition
- ruinous competition because, since it is regulated, it is not outrightly given
- once an operator is given franchise or CPC, they have to maintain their business such that
they can meet the needs of the public
- thus, if they can meet the needs of the public, there is no need to add additional
franchises or CPC that will operate similarly to that which have already been granted.
- this second purpose is actually for purposes of those who are already granted franchises
or CPC
• Limitation on the power to regulate?
- the limitation however of the power to regulate must not have the effect of:
1. depriving the owner of his property without due process of law,
2. confiscating or appropriating private property without just compensation or
3. limiting or prescribing irrevocable rights or privileges lawfully acquired under a
charter or a franchise
- the government has the right to regulate, but if there are already rights
vested on the owner of that franchise, the government cannot limit those
vested rights
- public utility also is considered a property.
- the right to regulate by the government does not extend beyond
1. the right to regulate rate and charges
- the public utility granted the franchise or CPC may set its rates and charges
2. the right to prevent discrimination upon the part of the public utility against those
who employe it
- it depends on the situation
- if it thinks that it will cause damage to the CC or to their passengers or to the
goods, then it has the right to discriminate
3. the right to make order governing the conduct of the public utility to the end
that its efficiency may be build up and maintained and the public and its
employees afforded desirable safeguards and conveniences
- the public utility has the discretion on how to operate
- keeping in mind the rules that have to be applied especially if it is a CC
Public Utility & Public Service
Reason for Creating the PSC
Public Utility
-business or service is a business or service engaged in regularly supplying the public with some
commodity or service of public consequence such as electricity, gas, water, transportation,
telephone or telegraph service.
- it implies a public use or service
- because public utilities are privately-owned-and-operated business but they cater to the
CA No. 146 or Public Service Act states that “Public Service” and “Public Utility” disappeared
general public; therefore, they are affected with public concern and interest
Case
- once private property is affected by public interest, it cease to be juris privati
- therefore, once it ceases to be juris privati, it grants to the public an interest to use the
business itself and therefore must submit to the public for the common good to the
extent of the interest he has created
• How to withdraw?
- this grant to the public to use his business is easily be withdrawn by him by discontinuing
the operation
- but as long as he maintains this use, he maintains the business, and allows the public to
use his business, he must submit himself to control
• Basis of the power to regulate?
Public Service [CA No. 146 as amended by RA 2677]
- 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 whether 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 railways, marine repair shop, [warehouse] 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 parties engaged in agriculture, not itself or
11 of 43
TRANSPO.NOTES
- therefore, it is a property right, the owner of such CPC has a right to file an action against
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.
this other grantee/holder of CPC
- so, while it does not confer property rights, it is considered a property right because rights
were already vested and there is a right to protect those right which have been granted
- likewise, it is considered as property because they have considerable material value and
Public Service v. Public Utility
- public service encompasses everything concerning water, light, electricity, transportation, even
ice plants
- public utility is the business itself
- thus, the difference is if in public service there is no need for a franchise, but if it is a public
utility it requires franchise aside from CPNC
- all public utility are public service but not vice versa
- thus, if one is engaged in the transportation of passengers or goods or is a cooperative
engaged in a distribution of electricity, then it is a public public service at the same time a
public utility
- not all public service are considered as public utility because there are some who is not
engaged in business
CPC & CPCN
Certificate of Public Convenience (CPC)
- an authorization granted by the LTFRB for the operation of land transportation services for
public use as required by law. [Kilusang Mayo Uno Labor Center, GR No. 115381, 23 December
1994]
- there is no need for franchise
valuable assets, thus, may be subject of attachment or seizure by legal process and may be
acquired by purchase
Requisites for the Issuance of Public Convenience
1. citizenship
- must be a Filipino, whether natural or juridical
- if natural, must be Filipino citizen
- if juridical, 60% of the share must belong to Filipino citizens
2. prove financially capable of undertaking the proposed service
- Reason: because this is a guarantee at all times that the applicant will be in position to
cope with the obligations and responsibilities of the service, maintenance of the complete
number of units
- that is why corporation are the ones usually given CPC
3. prove that the operation and authorization will promote the public interest in a proper and
suitable manner
Rules in Granting the CPC
Certificate of Public Convenience and Necessity (CPCN)
- is issued upon approval of any franchise or privilege granted by any political subdivision of
the Philippines when in the judgment of the Commission (PSC) such franchise or privilege will
properly conserve the public interest
- there is a need for a grant of franchise
1. Prior Operator Rule
- states that before allowing new operator to operate in the territory of another operator
or the first licensee who was already granted a CPC, the first licensee or prior operator
must be given the opportunity to hold out and continue service in order to meet public
needs
Case: Philippines airlines
- the difference between CPC and CPCN is done away with
- the words “convenience” and “necessity” merely modified the character of the
certificate
- these are words that have to go together
- Public convenience and necessity exist when the proposed facility will meet a
reasonable want of the public and supply a need which the existing facility does not
adequately afford
- therefore, a CPC and a CPCN are similar; the purpose is similar which is to grant
authority to a business to operate through that public certificate of convenience
because of the need to meet the needs of the public
example/illustration
- the Genesis was still granted franchise, although the Victory Liner has many units,
because based from the circumstances (demand of the public especially during peak
season), the available units of Victory are still inadequate
- prior operator rule applies
- Victory was given the opportunity to hold out and continue its service in order to
meet public needs
- attached to the prior operator rule, first operator rule is actually a condition to the first
franchisee
- in order to be granted or to see to it that there will be no additional franchisees granted
or CPC granted for the same line or area that they are operating, the prior operator must
establish, operate and provide adequate, efficient satisfactory service for the benefit and
convenience of the public by enhancing and expanding his equipment and services before a
new operator may be allowed to serve the territory
- the PRIOR OPERATOR RULE is one where in order to help the prior operator, he is given
the opportunity to continue the service in order to meet the public needs
- the purpose for giving the prior operator rule is to prevent ruinous and wasteful
competition
- if the operator is able to meet the needs of the riding public, there is no need to
grant additional franchise or CPC, it will be a wasteful competition
Nature of the CPC
- a CPC is not a franchise or a contract
- it confers no property rights
- it is a mere license or a privilege
- however, a CPC represents property rights to the extent that if the rights which any public
utility exercising pursuant to lawful orders has been invaded such that there is another
franchise granted or another CPC that was granted for a line or area covered by the an
existing franchise and it impedes on the rule on protection on investment
12 of 43
TRANSPO.NOTES
- but in order to maintain this prior operator rule such that no other franchisees
or applicants will be granted CPCs, they should have to comply with the first
operator rule, such that, this prior operator must enhance and expand his
equipment or service; if he was able to enhance and expand his equipment or
service, then the board who will issue the CPC and franchise will not see the
need to grant another franchise
• Registered Owner Rule
- the registered owner of the a CPC is liable to the public for the damages suffered by
passengers or third persons caused by the operation of said vehicle even though the
same had been transferred to another person
- Reason: is to avoid the failure to run after the responsible persons by the passengers
who were injured or suffered or died by reason of the accident
- However, the registered owner the right to run after the transferee; he is not totally
devoid of any action
- EXC: if however, the vehicle is stolen or used without authority and it met an accident,
the registered owner is not liable against the injured party [Duavit v. CA, GR No.
82318, 18 May 1989]
Exceptions:
1. there is great demand for public utility
2. it would better serve the public interest
3. the operator is of not of good standing
- even if it has prior operator rule
4. failure to increase the service
5. CPC is a maiden franchise (new franchise)
- for example, Trancoville public utility will still be granted franchise even if it passes the
same route as that of Aurora Hill public utility; prior operator rule will not apply
6. it is reasonable or not harmful or obnoxious to public service or it will lead to monopoly
7. corporate existence of prior operator has expired
- the corporation died
8. it will encourage free competition
- prevent monopoly
9. the line passes a subdivisions whose owners granted permit to another
- because it is a private property
• May a holder of a CPC transfer such?
- Yes
- provided with approval of the LTFRB
- what is prohibited is transferring it for a fee without the authority and approval of
the LTFRB
- but when one was granted by the LTFRB to transfer the franchise or CPC, should there
be an accident, he will not anymore be liable; the one liable is the transferee
- approval and authorization is given only after:
a. a notice to the public and hearing and
b. the one who asked for the transfer must prove that there is just and reasonable
ground for the transfer and it is not detrimental to public interest
2. Protection of Investment Rule
- states that as long as the operator under a prior license complies with the terms and
condition of his license and the reasonable rules and regulations for its operations and
meets the reasonable needs of the public, it is the duty of the Commission (the agencies)
to protect rather than destroy the investment of the holder of the CPC by granting the
second license to another for the same thing over the same route of travel
- this is one of the main purposes of the Agencies
- not an absolute rule!
- if one does not follow the rules and regulations that were implemented by the Agencies,
its franchise can be withdrawn from him
- thus, one can forego this rule
2. Boundary System
- an arrangement in which the drivers of jeepneys and buses, for the use thereof, within a
specified number of hours, with the gasoline burned for their account, give to the owneroperator a fixed amount of the daily earnings derived from their operation, their day’s
earnings being the excess over the amount paid for the gasoline and use of the vehicles.
[National Labor Union v. Dinglasan, 98 Phil 649, 3 March 1956]
Life of CPC: definite period of time
- the agencies, who will grant the CPC to a corporation or one who will engage in a public
utility, can specify the number of years
VILLAMARIA, JR. V. CA (GR No. 165881, 19 April, 2006)
- The boundary system is a scheme by an owner/operator engaged in transporting passengers as a
common carrier to primarily govern the compensation of the driver, that is, the latter’s daily earnings
are remitted to the owner/operator less the excess of the boundary which represents the driver’s
compensation.
- the jeepney owner/operator-driver relationship under the boundary system is that of employeremployee because the owner/operator exercises control and supervision over the driver.
Maximum years: 50 years
- for taxis and ice and refrigeration plants — 15 yrs
Unlawful arrangements
1. Kabit System
- where a person who is granted a CPC allows another person who owns motor vehicles to
operate such franchise for a fee
- thought not criminally penalized, it is considered contrary to public policy, therefore, it is
a void arrangement
- thus, if the vehicle is under a kabit system and it met an accident where the passenger
was injured or died, the passenger can run after the registered owner
13 of 43
TRANSPO.NOTES
WARSAW CONVENTION
History
Why was there a need to adopt a private air law — international carriage by air? When is its starting point?
During World War I, planes were very important but these were used for dropping bombs.
After the WWI, they found importance for the airplanes because they can use it to transport mail,
passengers as well as freight.
The Government of France, in 1923, first thought of the need to adopt a certain law —
international law that will be binding upon all countries. Realizing that they are going to be involving
other countries, they must have a unification of all these laws on a wide international level so that
there will be prevention of any conflicts of laws and conflict of jurisdiction.
From October 27 to November 6, 1925, the first international conference on air law was
held in Paris. Here, because this is a French country, they created a committee (which i cannot
pronounce) “Comité International Technique d'Experts Juridiques Aériens” (CITEJA). This committee is
composed of legal experts who will study and make a draft convention that will be presented before a
joining of all of these countries. That was the first convention.
A. WARSAW CONVENTION OF 1929
There was a second convention held on October 4-12, 1929. This is the second international
conference on private air law. This was held in Royal Castle, in Warsaw, Polland. It was here that the
first convention was signed on October 12, 1929. That is why it was referred to as the Warsaw
Convention of 1929. This was the very first convention and has evolved into the most important
instrument with respect to private international law. This is now the basis for most of the conventions
that were subsequently signed.
Important Features of Warsaw
Applicability
The applicability of the Warsaw Convention regulates the liability in the event of accident
for:
1. international carriage of persons, luggage or goods performed by aircraft for reward
2. it applies equally to gratuitous carriage by aircraft performed by an air transport
undertaking [Art. 1]
Monetary Cap
Another important milestone is that it provides for a monetary cap limiting the carrier’s
liability in relation to both passengers, their luggage and cargo.
Presumption of Fault
Similarly to our Civil Law, the Warsaw Convention also creates a presumption of fault on the
part of the carrier. The claimant does not need to adduce evidence to proved that the carrier
was at fault. Therefore, the burden is for the carrier to prove that he was not at fault by
availing of certain defenses; but under the Warsaw Convention, they are limited defenses only.
Exclusive and Mandatory Provisions
The provisions of the Warsaw Convention is exclusive and mandatory.
• Exclusive
- meaning, in circumstances where the Warsaw Convention will apply, the claimant can only
rely on the Warsaw Convention — the liabilities that are provided on the WARSAW
Convention
- on the part of the carrier, they cannot seek to be excluded or to limit their liability
provided under the Warsaw convention
What is the monetary cap?
Monetary Cap
• Passengers — 125,000 gold Francs (equivalent to $5,000 in 1929)
• Registered luggage — 250 gold Francs/kg (equivalent to $10 in 1929)
• Hand-carry/unregistered luggage — 5,000 gold Francs/passenger (equivalent $200 in 1929)
B. HAGUE PROTOCOL OF 1955
There were calls to amend the Warsaw Convention. The next convention is the Hague
Protocol 1955. After extensive study by International Civil Aviation Organization (ICAO), they had to
come up with another convention which was held on September 6-28, 1955 at the Hague (that is why
it was called Hague Protocol). With respect to Hague Protocol, the amendment was merely to double
the 125,000 francs liability to 250,000. With respect to cargo or baggage, however, the liability
remained the same. The Hague Protocol expressly provided that if a state becomes a contracting state
to the Hague Protocol but is not a contracting state to the Warsaw Convention, it shall have the effect
of ADHERENCE. Therefore, those states who are not signatories to Warsaw Convention but they are
signatories of Hague Protocol, considering that Hague is an amendment to the Warsaw Convention,
they adhered already to the Warsaw Convention. The Hague Protocol entered into force on August 1,
1963.
C. GUADALAJARA CONVENTION OF 1961
In 1961, there was the Guadalajara Convention of 1961. There are instances where the carrier cannot
or is not able to continue with the performance of delivering package and it will transfer or will
substitute his performance to another air carrier. The first carrier to whom one has contracted with is
the performing carrier. The one with whom the performing carrier transfers/substitutes the
performance is called the actual carrier. For example, you’re going to send a package from States to
Philippines. Unfortunately, your carrier cannot enter the Philippines or is not authorized to do business
in the Philippines. Therefore, it will find another carrier which will carry your package to the
Philippines. Unfortunately, once they do that, the actual carrier does not have any contract of carriage
with the consignor. This arrangement between the performing carrier and actual carrier is called
CODESHARE AGREEMENT. The problem is: when your parcel becomes lost or damaged during the
transportation by this actual carrier, since there is not contract of carriage between the consignor
and the actual carrier, you cannot run after the carrier. Therefore, comes in the Guadalajara
Convention of 1961 wherein it provides that in order to extend the contracting carrier's right and the
liabilities under the Warsaw Convention to a non-contracting actual carrier, there was this
Guadalajara Convention which came to effect. Therefore, if there is an actual Codeshare Agreement
between the contracting carrier and actual carrier, their obligations and responsibilities were
extended to the actual carrier which is a non-contracting carrier with the consignor.
w/o just cause
with just cause
1. NO fixed period
a. BEFORE voyage
b. AFTER voyage
2.
WITH fixed period
D. MONTREAL AGREEMENT OF 1966
14 of 43
entitled to salaries earned
entitled to their salary
until their return to the
port where the contract
was made
entitled to salaries
earned as of the time of
their discharge
cannot be discharge until
after the fulfillment of
their contract
can be discarged when
1. in subo r din at io n in
serious matters
2. robbery
3. theft
4. habitual drunkenness
5. damage cause d to
the vessel or to its
cargo by malice or
manifest or proven
negligence
TRANSPO.NOTES
In the 1960’s, the Americans were saying that the monetary cap as provided by the Warsaw
Convention is very low. By October 18, 1965, they are already saying that they are going to withdraw
as a contracting state to the Warsaw Convention. By May 15, 1966, their withdrawal of their
membership to the Warsaw Convention became effective. At that time when the Americans were
powerful, they said that if the US is not going to be a member of the Warsaw Convention, this was
noticed as a serious crisis of the unification of private air law. They have to find now a blanket
solution -- they had to make the Montreal Agreement of 1966. This is not a convention but merely an
agreement between the UN and carriers where the point of origin and point of destination and a
stopping place will in the US. Therein contains the basis under the Passenger Bill of Rights. In the
event of bodily injury or death where the point of origin, destination or the stopping place is in the
USA, $75,000 with legal cost if the claim was filed in a state where all award consists of all cost
including legal fees; but $58,000 if without legal cost if you going to file your claim in a state where
there is a separate reward for legal cost. As soon as the Montreal Agreement 1966 was concluded,
they withdrew their membership from the Warsaw Convention.
GUATAMALA PROTOCOL OF 1971
In 1971, there was Guatemala Protocol of 1971. This is not really important because this is
where they tried to increase further the monetary cap but this never took effect.
• Guadalajara of 1961
• Montreal Convention of 1999 was ratified in August 10, 2015 (a signatory but not yet in effect
because no yet presentation to the ICAO)
What happens if one contracting state files an action against a non-contracting state of the same convention?
- the convention cannot be enforced against the other
- the applicable law is either:
a. the domestic/national law or
b. the terms of the contract
What happens if they are signatories to one and the same and one is a signatory to some different from that which the
other is a signatory?
- Principle of Determination of the Lowest Common Denominator
- the latest convention to which they are both a party is the one to be applied
1.
E. MONTREAL ADDITIONAL PROTOCOLS (MAP) OF 1975)
Since there was still a problem with respect to cargo, they had to make further
amendments or protocols which is the Montreal Additional Protocols (MAP) in 1975. Another reason is
that there were developments in the International Monetary Fund (IMF) demonitizing gold Francs. This
protocols used the monetary unit SDR (Special Drawing Rate1) which is a currency value determined by
summing the values in dollars; the values being the different exchange rates of very stable currencies
“basket of currencies” or “major currencies”,eg.: US dollar, Euro, Japanese yen, Pounds sterling. As of
the present, the 1US$ = 0.709657 SDR.
- determined in the airway bill
WARSAW SYSTEM CONVENTION
All of these agreements are referred to the Warsaw System Convention.
MONTREAL CONVENTION OF 1999
The last convention and the most recent is the Montreal Convention of 1999. Here, they
wanted to make a single convention where everything (monetary cap, codeshare agreement, SDR)
should be placed therein. So the tried to unify the fragmented liability regime in the Warsaw System
Convention. The Montreal Convention of 1999 reflects the changes of Warsaw-Hague Convention of
1955, the Montreal Additional Protocols, and the Codeshare agreement embodied under the
Guadalajara Convention. The changes with respect to the monetary cap under the Montreal Convention
of 1999 is that for damages in excess of 100,000 SDR arising from death or injury of passengers, the
monetary cap limiting the carrier’s liability is removed. The carrier may be partly or fully exonerated if
it proves that it was not negligent or that there was contributory negligence on the part of the
passenger. With respect to injury or death of passengers, there is strict liability for proven damages
as up to 100,000 SDR. The liability for loss, delay to the package is limited now to 1,000 SDR per
passenger and an action for damages with respect to injury or death of passenger may also be
brought before the court of contracting states in which at the time of accident, the passenger has his
principal and permanent residence, unlike in the Warsaw Convention.
To which convention is the Philippines a signatory?
• Warsaw Convention of 1929
- concurred by the Senate through Resolution no. 19 on May 16, 1950
- The Philippine Instrument of Accession was signed by Pres. Elpidio Quirino on October 13,
1950 and was deposited to the Polish Government on November 9, 1950.
- This became applicable to the Philippines on February 9, 1951
- On September 23, 1955, Pres. Ramon Magsaysay issued a Proclamation No. 201 declaring
the Philippine’s formal adherence to the Warsaw Convention.
• Hague Protocol of 1955
1
Steps when a different states are contracting states of different conventions:
Determine if the contract of carriage falls under the international carriage first:
• International carriage [Art.1, WC]
a. any carriage in which, according to the contract made by the parties, the place of departure
and the place of destination are situated within the territories of two High Contracting
Parties, whether or not there be a break in the carriage or a transhipment; or
b. any carriage in which, according to the contract made by the parties, the place of departure
and the place of destination are situated within the territory of a single High Contracting
Party, whether or not there be a break in the carriage or a transhipment,, if there is an
agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or
authority of another Power, even though that Power is not a party to this Convention.
2. Determine the applicable convention
a. b/w a contracting state & non-contracting state
- domestic law or terms of the contract
b. b/w states who are signatories of different conventions but both signatories to some same
convention
- latest common convention
c. b/w states who are signatories to more than one same conventions
- the latest convention
Illustration:
• Manila to Davao
- no convention applicable because it is a domestic flight not covered by international law
• Manila to Davao via Vietnam (contracting state of Warsaw)
- Warsaw convention is applicable
• Geneva, Switzerland to Thailand; Switzerland is a contracting state to the Montreal Convention;
Thailand is not a contracting state to the Warsaw System Conventions and Montreal Convention 1999
- what will apply is the national law or the terms of the contract of carriage
• Kilimanjaro, United Republic of Tanzania to Jakarta, Indonesia; United Republic of Tanzania is a
contracting state of Montreal Convention of 1999; Jakarta is not a contracting state of Montreal
Convention of 1999; both are contracting states to the Warsaw convention
- the one applicable is the Warsaw convention
• Mexico to Sydney, Australia; Mexico is a contracting state to the Montreal Convention of 1999,
Australia is not but is a contracting state to the Warsaw, Hague, Guadalajara, and Montreal; Mexico
is a contracting state of Warsaw, Hague, and Guadalajara.
- apply only Warsaw, Hague, and Guadalajara.
• Beijing, China to Albania; China is a contracting party to the Warsaw, Hague but Albania is not. Both
are contracting state of Montreal Convention of 1999
Special Drawing Right (SDR) sabi sa net
15 of 43
TRANSPO.NOTES
- applicable law is the Montreal Convention of 1999
Lhuillier vs. British Airways Gr No. 171092, March 15, 2010
- the courts have to apply the principles of international law and are bound by treaty stipulations
-
entered into by the Philippines which form part of the law of the land, one of which is the
Warsaw Convention.
Being a signatory therefore, the Philippines adheres to its stipulations and is bound by the
provisions including the place where the actions involving damages is to be instituted.
the court therefore cannot deviate from the indicated limitations
adherence is in consonance with the comity of nations and deviation from it can only be effected
through proper denounciation
2. damage sustained in the event of the destruction or loss of, or of damage to, any registered
luggage or any goods,
- if the occurrence which caused the damage so sustained took place during the carriage
by air [Art. 18 (1), WC]
• Transportation/Carriage by air [Art. 18 (2), WC]
- comprises the period during which the luggage or goods are in charge of the carrier,
whether:
a. in an aerodrome (airport) or on board an aircraft, or,
b. in the case of a landing outside an aerodrome, in any place whatsoever.
• GR: period of the carriage by air does NOT extend to any carriage by land, by sea or by river
performed outside an aerodrome
EXC: if such a carriage takes place in the performance of a contract for carriage by air, for
the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to
the contrary, to have been the result of an event which took place during the carriage by air.
- the claimant need not prove that the carrier was at fault. Once there is loss or damage
to the goods, whether or not it was the carrier’s fault, claim for damages can be filed.
- no need to prove where did the damage occurred as long as it the goods were received
in such condition
Not Covered by Warsaw Convention
1. Carriage of mail and postal packages [Art.2 (2)]
2. Carriage by air performed by way of experimental trial by air navigation undertakings with the
view to the establishment of a regular line of air navigation [Art. 34]
3. Carriage performed in extraordinary circumstances outside the normal scope of an air carrier's
business. [Art. 34]
- e.g., carriage of cargo to territories affected by hostilities
4. Reservation with respect to carriage for a state’s military authorities on aircrafts registered in
that state, the capacity of which is reserved by or on behalf of such authority
- e.g., where the state charters aircraft to transport military goods to a warzone in another
state; if they make a reservation, it means that Warsaw Convention can be applied with respect
to carriage for the state’s military authority
5. When the contracting state also makes a reservation so that the relevant international air
convention will not apply in relation to carriage performed directly by the state
- e.g., if a state holds shares in an air carriage company, the air carrier is not entitled to avoid
the application of the international air convention by invoking the state reservation
- to come within state reservation exception, the carriage has be performed directly by the state
for the state and not as part of the commercial operations
3. damage occasioned by delay in the carriage by air of passengers, luggage or goods. [Art. 19, WC]
Venue and Jurisdiction of Claims [Art. 28, WC]
- in the territory of one of the High Contracting Parties
- at the option of the plaintiff, (4 options), either:
1. before the Court having jurisdiction where the carrier:
a. is ordinarily resident, or
b. has his principal place of business, or
c. has an establishment by which the contract has been made
2. before the Court having jurisdiction at the place of destination.
Lhuillier vs. British Airways Gr No. 171092, March 15, 2010
- the Philippine Courts are divested of jurisdiction where Philippines is not the place of domicile of
the defendant (British Airways) nor is the principal place of business (Europe). Neither was the
plaintiff’s ticket issued in this country or the destination Manila but Rome, Italy.
Nature of Air Carrier
Air Carrier
- a person who undertakes, whether directly or indirectly, or by lease or any other arrangements
to engage in air transportation or air commerce. [RA 776, the created the CAB (Civil Aeronautics
Board)]
• Domestic transportation
- transportation within the Philippines
• Foreign Air Transportation
- between the Philippine and any place outside it
For the Prescriptive Period to Start [Art. 26(2)]
- a written notice must be filed within the following period:
• damage to baggage — within 3 days from receipt
• damage to goods — within 7 days from receipt
• in case of delay — within 21 (new, before 14) days from date on which the luggage or goods
have been placed at his disposal.
Nature of Airlines Contract of Carriage
- contract to transport passengers and to deliver cargo or merchandise to their destination
Liability of Air Carrier
1.
Prescription of Actions to be Filed [Art. 29, WC]
- w/in 2 years from:
• the date of arrival at the destination, or
• the date on which the aircraft ought to have arrived, or
• the date on which the carriage stopped.
damage sustained in the event of the death or wounding of a passenger or any other bodily
injury suffered by a passenger,
- if the accident which caused the damage so sustained took place on board the aircraft or in
the course of any of the operations of embarking or disembarking [Art. 17, WC]
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Condition for Filing a Case
- complaint in writing to the carrier
Phil. Airlines, Inc. v. CA, 254 SCRA 48
- the respondent filed an action for damages against the petitioner PAL for the breakage
of the glass of a microwave oven, which he had shipped through PAL. The defense of the
PAL is while the action was filed w/in 7 months from arrival, she failed to make a
complaint in writing which is provided under the airway bill
TRANSPO.NOTES
- SC: although she did not comply with the complaint in writing, when she submitted a
- determine if the carrier or his agent acted within the scope of their employment and
formal complaint to the petitioner, the PAL transferred from one employee to another
the complaint until it was delayed, thus, she was not able to make the complaint. She was
deemed to have substantially complied with the requirements of a complaint in writing. It
was the carrier’s fault.
are guilty of relevant misconduct of the law of the court before which the case is
brought
- under Hague Protocol, it refers to act or omission done with intent to cause damage
or recklessly and with knowledge that damage would probably result
1. accepting a passenger without a ticket [Art. 3 (2)]
2. accepting a luggage without a luggage ticket [Art. 4(4)]
3. accepting goods without airway bill [Art. 9]
Will carriers be liable for actions by their servants, employees or agents?
- Yes. Generally, carriers are accountable
United Airlines v. Uy, GR NO. 127768, November 19, 1999
- the respondent filed a case. There are two cause of action: first, the humiliating
treatment he received from the petitioner’s employees at San Francisco Airport which
caused him extreme embarrassment and social humiliation; second, the slashing of his
baggage and the loss of his personal effects amounting to $5,310.
- SC: the action for damages arising from theft or damage of the property is covered by
the Warsaw Convention; however, the action for damage arising from the misconduct of
the airline employees and the violation of respondent’s rights as a passenger is not
covered by the Warsaw Convention. Nevertheless, the Civil Code will apply, such that, the
prescription for the first cause of action is 4 years [Art. 1146] and the prescription for
the slashing of baggage has lapsed.
Monetary Unit
- French franc consisting of 65 ½ milligrams gold of millesimal fineness 900. These sums may
be converted into any national currency in round figures. [Art. 22 (4)]
- the applicable rate is during 1929 thus
• 125,000 Francs = $5,000
• 250 francs = $10
• 5,000 francs = $200
CODE OF COMMERCE
The primary law governing common carrier in transportation is the Civil Code, suppletory is the Code of Commerce.
There are provisions in the Code of Commerce with respect to overland transportation. This is still in effect because initially
the laws in transportation are covered by the Code of Commerce. Upon effectivity of the Civil Code, it overturned the Code of
Defenses of Air Carrier
1.
Defense of Contributory Negligence [Art. 21, WC]
- may wholly or partially relieved the liability if he proves that the negligence on the part of the
claimant caused or contributed to the loss or damage or delay in question
Commerce. Thus, the primary law is the Civil Code. But this did not repeal the provisions under the Code of Commerce. Any
provisions not present in the Civil Code, the Code of Commerce is then applicable.
Coverage of Code of Commerce
Overland Transportation
Maritime Admiralty
Commercial Contracts
2. Defense on Necessary Measures [Art. 20(1), WC]
- he proves:
a. that he and his agents have taken all necessary measures to avoid the damage or
b. that it was impossible for him or them to take such measures.
3. Defense of Negligent Pilotage
- he proves:
a. that the damage was occasioned by negligent pilotage or negligence in the handling of the
aircraft or in navigation and
b. that, in all other respects, he and his agents have taken all necessary measures to avoid the
damage.
Monetary Cap [Art. 22, WC]
• Passenger — 125,000 Francs
- doubled by the Hague Protocol to 250,000 francs
• Registered Luggage — 250 francs per kg
• Unregistered Luggage — 5,000 francs per passenger
Transportation of persons or news fall under the Commercial Contracts?
- no, generally, it only involves transportation of merchandise (strictly speaking) and
persons and news are not considered merchandise
- the transportation of persons or news is considered to be commercial contract, if:
1. the carrier must be a merchant and
2. he is habitually engaged in transportation for the public.
- however, the Civil Code removed the distinction between tranportation of goods,
person and news.
Air transportation
not covered because at the Code of Commerce was enunciated the idea of transportation
by air was not considered as commercial, in fact, in States, it is not commercial, it is still
common carrier.
so, you never refer to the Code of Commerce for air transportation ALTHOUGH it can be
applied because, now, with the provisions of Civil Code, air transportation is now covered
under commercial
How do you apply the law? or Which law do you apply? Do you always apply the Civil Code or are there instances
May the carrier be removed from the this limitation on monetary cap, such that higher amount can be claimed?
when the Code of Commerce will be initially applied before the Civil Code?
- Yes,
Instances when the carrier cannot avail the monetary cap:
1. when the carrier committed wilful misconduct or recklessness [Art. 25, WC]
• Wilful Misconduct
- no definition under the Warsaw Convention
- entail that the act of the carrier will require a degree of intention or subjective
recklessness
17 of 43
TRANSPO.NOTES
the contract for carriage, and agreeing or directing that the freight to be delivered to
the order or assigns of a specified person at a specified place.
Summary of Application of Laws
Subject Matter
If it involve commercial contract involving
common carriers:
Primary Law: Civil Code
Suppletory: Code of Commerce
Private carriers involved in commercial contract:
Primary Law: Code of Commerce
Suppletory: Civil Code, excluding the
provisions on common carriers
Carriage of goods as an accessory to another
industry
Civil Code
- because it is not a commercial contract
since it is an accessory only
- it is not really their main business
- thus, if there is injury or damage, Civil
Code will apply
- example transportation services from the airport to the hotel
provided by the hotel
Air Transportation
Other Names
- it is sometimes called:
a. Shipping Receipt
b. Forwarder’s Receipt
c. Receipt for Transportation
Applicable Law
Function/Nature
1. it is also a symbol of the goods covered by it
- because it recites the date and place of shipment, describes the goods as to quantity,
weight, dimensions, identification marks and condition, quality, and value. [Ace
Navigation]
2. bill of lading is also a receipt of goods
- proof that the goods are delivered
3. each bill is a contract in itself and the parties are bound by its terms
- because (1) there are parties to the contract, (2) there is obligation stipulated, (3)
there is consent of the parties
- it names the contracting parties, which include the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations
assumed by the parties. [Ace Navigation]
Civil Code;and
Warsaw Convention
Unsworth Transport Int’l (Phils), Inc. v. CA GR 166250, 26 July 2010
- a bill of lading is a contract in itself between the parties where they are
bound by the terms thereof or where they undertake specific responsibilities
and assume stipulated obligations. It is a document of title.
A. Overland Transportation
Scope:
transportation on land
transportation on small bodies of water
• examples: rivers, provided it is not very large
4. it is also a legal evidence of a contract between the shipper and the carrier
- such that in the event that there will be dispute that will arise with regard to the
execution and fulfillment of that bill of contract, the only evidence, therefore, that
you need to show is the bill of lading [Article 353]
What is the nature of overland transportation? When do you consider it commercial?
Article 349. A contract of transportation by land or waterways of any
kind shall be considered commerical:
1. when it involves merchandise or any object of commerce
2. when, no matter what its object may be, the carrier is a merchant
or is customarily (habitually) engaged in transportation for the
public
What is your proof that you have entered into a contract of transportation when you will transport goods or you yourself
will be transported?
• with respect to goods, baggage, or merchandise — BILL OF LADING
• with respect to persons — TICKET
What is important to be contained under that BILL OF LADING or TICKET
What is a bill of lading?
BILL OF LADING
Defintion:
- written acknowledgment of the receipt of goods and an agreement to transport and to
deliver them at a specified place to a person named or on his order.
Ace Navigation Co, Inc. v. FGU Insurance Corp., GR No. 171591, 25 June 2012
- A bill of lading is defined as "an instrument in writing, signed by a carrier or his agent,
describing the freight so as to identify it, stating the name of the consignor, the terms of
18 of 43
Is the bill of lading always needed in proving the contract of transportation?
- under Article 350, the shipper and the carrier may mutually agree that a bill of
lading be issued, however, it is NOT obligatory
- there can be a bill of lading or none
- the fact that a bill of lading is not issued does not preclude the existence of a
contract of transportation
How, therefore, are disputes going to be decided if there is no bill of lading? What is now the evidence?
- under Article 354, the respective claims shall be decided by legal proofs:
Article 354. In the absence of a bill of lading, dispute the
respective claim shall be decided by legal proofs which the
parties may present in support of their respective claims,
according to the general provisions in this Code for commercial
contracts.
- there is still need to present proof — other proofs, legal proofs
Saludo v. CA, GR No. 95536, 23 March 1992
- acceptance of a bill of lading without dissent raises a presumption that all
terms therein were brought to the knowledge of the shipper and agreed to by
him,
- in the absence of fraud or mistake on the part of the carrier, the shipper is
estopped from thereafter denying that he assented to such terms
TRANSPO.NOTES
- In order that any presumption of assent to a stipulation in a bill of lading
limiting the liability of a carrier may arise, it must appear that the clause
containing this exemption from liability plainly formed a part of the contract
contained in the bill of lading.
Kinds of Bill of Lading
1. negotiable B/L - where it is stated that the goods will be delivered to the bearer, or to
the order of any person named in such document
2. non-negotiable B/L - where the goods are to be delivered to a specified person
- it also known as a STRENGTH or FLAT B/L
3. clean B/L - does not indicate any defect in the goods
4. foul B/L - indicates that the goods covered by it are in bad condition
5. spent B/L - covers goods that have already been delivered by the CC without a surrender
of a signed copy of the B/L; the subsequent delivery of the spent B/L cannot give to the
buyer of it any actual control of the goods, or anything which can fairly be called delivery
- the goods were already delivered but there was no surrender of the signed copy of lading
- when goods are delivered, the consignee has the duty to surrender the bill of lading
- when the bill of lading was surrendered, all the obligations and rights as a carrier or shipper will be cancelled
6. through B/L - issued by the CC who is obliged to use the facilities of other carriers as
well as his own facilities for the purpose of transporting the goods from the city of the
seller to the city of the buyer, which B/L is honored by the subsequent interested carriers
who do not issue their own ladings
- entails 2 or more carriers
- because the subsequent carriers do not issue anymore a bill of lading but the obligations carry over to the
other carriers under the contract of transportation
7. on board B/L - states that the goods have been received on board the vessels which is to
carry the goods
- under the COGSA, this is called also a SHIPPED BILL OF LADING wherein once goods are loaded a bill of
lading is then issued
- generally, the issuance of the bill of lading will come first but in ON BOARD B/L, what comes first is the
boarding of goods on the vessel then the bill of lading will be later on be issued
8. received for shipment B/L - states that the goods have been received for shipment with or
w/o specifying the vessel by which the goods are to be shipped; issued when conditions are
not normal and there is an insufficiency of shipping space
9. custody B/L - issued by the CC to whom the goods have been delivered for shipment but
the steamer indicated in the B/L which is to carry the goods has not yet reached the port
where the goods are held for shipment
10.port B/L - issued by the CC to whom the goods have been delivered and the steamer
indicated in the B/L by which the goods are to be shipped is already in the port where the
goods are held for shipment
If a B/L contains an undertaking that the carrier will deliver goods to the bearer, to a specified person but it is
stated there “non-negotiable”, is it considered non-negotiable bill of lading?
- NO. It is still considered a negotiable B/L [Article 1510, NCC]
Who may negotiate, therefore, a negotiable B/L?
NCC Article 1512. A negotiable document of title may be negotiated:
(1)By the owner thereof; or
(2)By any person to whom the possession or custody of the document
has been entrusted by the owner, if, by the terms of the
document the bailee (carrier) issuing the document undertakes
to deliver the goods to the order of the person to whom the
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possession or custody of the document has been entrusted, or if
at the time of such entrusting the document is in such form
that it may be negotiated by delivery.
How is a negotiable B/L be negotiated?
NCC Article 1508. A negotiable document of title may be negotiated
by delivery:
(1)Where by the terms of the document the carrier issuing the same
undertakes to deliver the goods to the bearer; or
(2)Where by the terms of the document the carrier issuing the same
undertakes to deliver the goods to the order of a specified
person, and such person or a subsequent indorsee of the
document has indorsed it in blank or to the bearer.
(3)Where by the terms of a negotiable B/L the goods are
deliverable to bearer or where a negotiable B/L has been
indorsed in blank or to bearer, any holder may indorse the same
to himself or to any specified person, and in such case the
document shall thereafter be negotiated only by the indorsement
of such indorsee.
How is a negotiable B/L be indorsed?
NCC Article 1509. A negotiable B/L may be negotiated by the
indorsement of the person to whose order the goods are by the terms
of the document deliverable. Such indorsement may be in blank, to
bearer or to a specified person.
What must be contained in a bill of lading?
Contents of a Bill of Lading
Art. 350. The shipper as well as the carrier of merchandise and goods
may mutually demand of each other the issuance of a bill of lading in
which there shall be stated:
1. The name, surname, and domicile of the shipper.
2. The name, surname, and domicile of the carrier.
3. The name, surname, and domicile of the person to whom or to
whose order the goods are addressed, or whether they are to be
delivered to the bearer of the said bill.
4. A description of the goods, stating their generic character, their
weight, and the external marks or signs of the packages containing the
same.
5. The cost of the transportation.
6. The date of which the shipment is made.
7. The place of the delivery to the carrier.
8. The place and time at which the delivery is to be made to
the consignee.
9. The damages to be paid by the carrier in case of delay, if
any agreement is made on this point.
Is it imperative that all of these be included in a bill of lading?
TRANSPO.NOTES
- NO. It is not important that all of these be included because as long as it contains an
-
acknowledgement by the carrier of the receipt of these goods for transportation and the
shipper or the consignee will receive such document, it is in legal effect a bill of lading
while yes these 9 items generally be included, it is not important that all of it must be
included, as long as the carrier indicates that this is the shipper, this is the goods to be
shipped and this the character of this goods, and it will be delivered at this time, at this
place, to this person, then in effect it will be considered a bill of lading
Bills of Lading are CONTRACT OF ADHESION. Why?
- under the law on contracts, contracts of adhesionare generally made voidable.
- A bill of lading can be considered as not totally prohibited because otherwise, at anytime,
the shipper may just back out from the contract of transportation
there is an agreement — the agreed route
there is NO agreement — the carrier may select the route as long as it is
a. the shortest
b. least expensive
c. practically passable
When can the carrier change the route?
- he will be obliged to change the route because of ONLY under FORCE MAJEURE
- if the did go and change the route because of force majeure and there is an
increase of expenses, it will be reimbursed after presentment of formal proof that
indeed there were additional expenses
if there is no justifiable reason to change the route, but the carrier change the route and then there will be
Saludo v. CA, GR No. 95536, 23 March 1992
- If the shipper follows, adheres or gives his consent to the bill of lading, therefore,
despite being a contract of adhesion, it will be still be binding between the parties
Magellan Mftg. Mktg, Corp, v. CA, 201 SCRA 102
- quoted the case of Lime v. CA, GR No. 94761, 17 May 1993;
It is presumed that the stipulations of the bill were, in the absence of fraud,
concealment or improper conduct, known to the shipper, and he is generally
bound by his acceptance whether he reads the bill or not.
Who are the parties to a bill of lading?
Parties to a Bill of Lading
1. shipper
2. carrier
3. consignee
- but generally, only the shipper and carrier
later on damage that will be incurred, what now will be paid by the common carrier?
- damage/loss of the goods + agreed indemnity stipulated in the B/L
- if in the bill of lading there was an agreement that in case of change of route
for no reason, such an amount will be paid by the carrier, then, on top of the
damage suffered by the goods, the agreed indemnity must be paid by the carrier
3. CARE OF THE GOODS
Article 361. The merchandise shall be transported at the risk and
venture of the shipper, if the contrary was not expressly stipulated.
Therefore, all damages and impairment suffered by the goods
during the transportation, by reason of accident, force majeure, or by
virtue of the nature or defect of the articles, shall be for the
account and risk of the shipper.
The proof of these accidents is incumbent on the carrier.
there is NO agreement — at the risk of the shipper
What are the responsibilities and obligation of a carrier under a bill of lading?
Obligations of the Carrier
When does the responsibility of the carrier commence?
1. WHEN IT COMMENCES
- when delivery is made to the carrier, that is, the goods are left to the custody of the
carrier and nothing else is left to be done by the shipper and the carrier has the control
and possesion over the goods:
Article 355. The liability of the carrier shall begin from the moment
he receives the merchandise, in person or through a person entrusted
therewith in the place indicated for their reception.
What about the route? Can the carrier determine its own route to take the transportation of goods?
2. ROUTE
Art. 359. If there should be an agreement between the shipper and the
carrier with regard to the road over which the transportation is to be
made, the carrier may not change the route, unless obliged to do so by
force majeure; and should he do so without such cause, he shall be
liable for any damage which may be suffered by the goods transported
for any other cause whatsoever, besides paying the amount which may
have been stipulated for such a case.
When on account of said force majeure the carrier is obliged
to take another route, causing an increase in the transportation
charges, he shall be reimbursed for said increase after formal proof
thereof.
20 of 43
when does the common carrier liable?
Art. 362. The carrier, however, shall be liable for the losses and
damages arising from the causes mentioned in the foregoing article
if it is proved that they occurred on account of his negligence or
because he did not take the precautions usually adopted by careful
persons, unless the shipper committed fraud in the bill of lading,
making him believe that the goods were of a class or quality
different from what they really were.
If, notwithstanding the precaution referred to in this
article, the goods transported run the risk of being lost on
account of the nature or by reason of an unavoidable accident,
there being no time for the owners to dispose of the same, the
carrier shall proceed to their sale, placing them for this purpose
at the disposal of the judicial authority or of the officials
determined by special provisions.
carrier is liable when:
1. he was negligent
2. he did not take the precuations usually adopted by careful persons
EXCeption:
the shipper committed fraud in the bill of lading, making him believe that the
goods were of a class or quality different from what they really were.
TRANSPO.NOTES
NCC, Article 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless
the same is due to any of the ff. 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 or 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.
Remedy of the CC
- to sell the goods by placing them for the purpose at the disposal of the
judicial authority of the officials determined by special provisions
- provided, the owners had no time to dispose of the same
When can the carrier refuse to accept?
Rule on Acceptance of the transportation of goods
GR: A carrier cannot refuse
EXCEPTIONS:
1. Article 356:Carriers may refuse packages which appear unfit for
transportation x x x
Is this rule absolute?
- it depends. If the mode of transportation is other than railway, it is
absolute. If railway, NO.
Article 356 x x x if the carriage is to be made by
railway, and the shipment is insisted upon, the
company shall transport them, being exempt from all
responsibility of its objections, is made to appear
in the bill of lading.
2. Article 357. If by reason of well-founded suspicion of falsity
in the declaration as to the contents of a package the carrier
should decide to examine it, x x x
How does he examine it?
Article 357. x x x he shall proceed with his investigation
in the presence of witnesses, with the shipper or
consignee in attendance.
What if the shipper does not attend?
- Art. 357. x x x the examination shall be made before a
notary, who shall prepare a memorandum of the result of
the investigation, for such purposes as may be.
- the notary public will issue a report stating the findings as to the
examination
If the declaration is CORRECT
- Art. 357. x x x the expense occasioned by
examination and that of carefully repacking
packages shall be for the account of the carrier
If the declaration is INCORRECT
the
the
21 of 43
- Art. 357. x x x expenses x x x for the account of the
shipper.
4. DELIVERY
How should goods be delivered?
a. Condition of Goods
Art. 363. With the exception of the cases prescribed in the second
paragraph of Article 361, the carrier shall be obliged to deliver
the goods transported in the same condition in which, according to
the bill of lading, they were at the time of their receipt,
without any damage or impairment, x x x
What is the liability when the goods were delivered in a different condition as when it was given to the
carrier?
Art. 363. x x xand should he not do so, he shall be obliged to pay
the value of the goods not delivered at the point where they
should have been and at the time the delivery should have taken
place. If part of the goods transported should be delivered the
consignee may refuse to receive them, when he proves that he
cannot make use thereof without the others.
When should delivery be made?
- within the period fixed in the bill of lading
b. When delivery be made
there is a period fixed
Article 370. If a period has been fixed for the delivery of
the goods, it must be made within the same, x x x
If not delivered within the period fixed, what is the liability of the carrier?
Articel 370. x x x otherwise the carrier shall pay the
indemnity agreed upon in the bill of lading, neither the
shipper nor consignee being entitled to anything else. x x
x
Should there be no agreement as to the indemnity?
Articel 370. x x x Should no indemnity have been agreed
upon and the delay exceeds the time fixed in the bill of
lading, the carrier shall be liable for the damages which
may have been caused by the delay.
there is no fixed period
Art. 358. Should no period within which goods are to be
delivered be previously fixed, the carrier shall be under the
obligation to forward them in the first shipment of the same
or similar merchandise which he may make to the point of
delivery; x x x
What is the liability of the carrier if there is delay?
Art. 358. x x x and should he not do so, the
occasioned by the delay shall be suffered by him.
damages
TRANSPO.NOTES
What is the valuation? How do you determine the amount/cost of the delay?
- if there is no period fixed and there would be delay, the damages would be
computed on this wise, the difference between the market value of the goods
at the time it should have been delivered and the price at the time that they
were delivered to which may be added reasonable expenses caused by delay.
- Cost = Market value @ time it should have been delivered - Price @ the time
they are delivered + reasonable expenses caused by delay
What are the rights of the consignee?
1. The consignee may refuse to receive the goods delivered, if he can prove that he cannot
make use of them independently of those not delivered:
Art. 363 x x x If part of the goods transported should be
delivered the consignee may refuse to receive them, when he
proves that he cannot make use thereof without the others.
2. If the goods delivered were rendered useless for sale or consumption:
Art. 365. If, on account of the damage, the goods are rendered
useless for sale or consumption for the use for which they are
properly destined the consignee shall not be bound to receive
them, and may leave them in the hands of the carrier,
demanding payment of their value at the current market price
that day. x x x
3. If the goods delivered are damaged to such an extent that their value is diminished the
carrier must pay the difference in value as judged by experts:
Art. 364. If the effect of the damage referred to in Article
361 should be only a reduction in the value of the goods, the
obligation of the carrier shall be reduced to the payment of
the amount of said reduction in value, after appraisal by
experts.
Who are these experts? — appraisers
Right of Abandonment
- With respect to the first two, the consignee may exercise the right of abandonment
- if there is an abandonment, the shipper/consignee will be entitled to the full value of the
goods.
If there is damage to the goods, when should claim be made?
1. if it is very apparent that there is damage to the goods, then, as soon as the damage is
seen or discovered
- the consignee must immediately state his the objection or claim from the carrier
2. but if the damage was only discovered upon opening of the goods
- from receipt of the goods, the consignee has 24 hours to raise his objection or
claim
3. if the consignee forgo or did not immediately raised his objection or claim upon looking
at the exterior or upon opening, he failed to raise his objections within 24 hours
- the consignee can no longer run after carrier
- no claim shall be admitted against the carrier
claim is a condition precedent to the filing an action in court
What is the period for filing a claim?
Period for Filing a Claim
• under Code of Commerce — 1 year
- a shorter period may be stipulated in the bill of lading
- Reason: the common carrier cannot just accept the claim, it needs to investigate. The
chance to discover or investigate the reason for the loss must be immediately be
22 of 43
investigated. They might be instances that the chance will not longer be available if
for longer period of time
• under
- if
- if
- if
Civil Code,
contract — 10 years
quasi-delict - 4 years
oral — 4 years
To whom shall delivery be made?
- to the consignee, without any delay or obstruction [Art. 368]
- the carrier must exert efforts to look for the consignee
What does it mean when the bill of lading is issued “to the order of the shipper”?
- means that the carrier has the duty NOT to deliver the merchandise EXCEPT upon
presentation of Bill of Lading duly endorsed by the shipper.
- If there is delivery w/o asking for the presentation of the Bill of Lading endorsed by the
shipper, there will be a MISDELIVERY; the carrier will be liable for the damage
What should the carrier do, when despite his efforts, he cannot find the consignee?
- there will be a judicial deposit such that:
Art. 369. x x x the municipal judge, where there is none of the
first instance, shall provide (an order) for their deposit at
the disposal of the shipper, x x x
- the effect of which is:
Art. 369. x x x this deposit producing all the effects of
delivery without prejudice to third parties with a better
right.
- the causes when a carrier can make a judicial deposit are:
Art. 369. If
(a)the consignee cannot be found at the residence indicated in
the bill of lading
(b)he refuses to pay the transportation charges and expenses
(c)he refuses to receive the goods x x x
2 or more carriers
When can there be two or more carriers?
- when there is an agreement or there are combined services with other carriers
• Effects:
1. they assume the rights and obligations of the preceding carriers
2. may reserve his right against the carrier at fault:
Art. 373. 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. x x x
• Rights of shipper
Art. 373. x x x The shipper or consignee shall have an immediate
right of action against the carrier who executed the transportation
contract or against the other carriers who may have receive the
goods transported without reservation.
Damage
- The shipper has the right to receive the amount of damage
TRANSPO.NOTES
How do you fix the amount of damages?
• Amount of damage
- determined by what is delcared in the bill of lading, the shipper cannot present proof:
Art. 372. The value of the goods which the carrier must pay in cases
if loss or misplacement shall be determined in accordance with that
declared in the bill of lading, the shipper not being allowed to
present proof that among the goods declared therein there were
articles of greater value or money.
- parties may also agree that the amount be determined by appraisal of experts
• Shipper’s lien
- security for the payment of the value of the goods which the carrier must pay in cases of
loss or misplacement
Art. 372. Horses, vehicles, vessels, equipment and all other
principal and accessory means of transportation shall be bound in
favor of the shipper, x x x.
Rights of Consignee in case of delay
1. Right to abandon
Art. 371. In case of delay through the fault of the carrier,
referred to in the preceding articles, the consignee may leave the
goods transported in the hands of the former, x x x
• How made?
Art. 371. x x x [by] advising him thereof in writing before their
arrival at the point of destination. x x x
• Liability of Carrier
Art. 371. x x x When this abandonment takes place, the carrier shall
pay full value of the goods as if they had been lost or misplaced x
x x
2. Right to the amount of delay, if no abandonment made
• Amount:
Art. 371. x x x If the abandonment is not made, the indemnification
for losses and damages by reason of the delay cannot exceed the
current price which the goods transported would have had on the day
and at the place in which they should have been delivered; this same
rule is to be observed in all other cases in which this indemnity
may be due.
Maritime Commerce
VESSELS, scope
• Under the Civil Code
- if you are a vessel engage in a business of carrying and transportation of passengers or goods
for compensation offering your services to the public, then you are considered as a common
carrier
- anything that pertains to transportation of vessels plying the sea or bodies of water
• Under the Code of Commerce
- vessels are those which are licensed to engage in maritime commerce or commerce by sea
whether in foreign or coastwise trade
- vessels refers solely to merchant ships
23 of 43
Under the Code of Commerce, what are vessels?
Vessels
- in its broadest sense extends to anything floating in and on the water build in a form of
vessel and use for navigation, regardless of form, right or power
- refers solely to merchant ships
• Excluded:
military ships or warships
yacht
pleasure ships
health service and harbor police vessels
fishing vessels
towboats and other craft destined to other uses such as coast and geodetic survey, scientific
research and exploration,
crafts engaged in the loading and discharge of vessels
transhipments from one vessel to another
tug boats
those crafts which in harbors, along shore, bays, inlet, coves and anchorages are engaged in
transporting passengers and baggage
Lopez v. Duruelo, 52 Phil 229
- FACTS: a person want to board a ship but the ship was far away from the port. He
boarded a boat, the purposes of which is to transport goods and passengers to the ship.
Unfortunately, the boat was so near the propeller which hit the boat. The boat sunk and
the passengers were injured.
- RULING: Vessels of a minor nature not engaged in maritime commerce (like river boats)
and those carrying passengers from ship to shore are governed as to their liability to
passengers by the Civil Code
- Thus, the boat was not considered a vessel such as to fall under the Code of Commerce.
Thus, run after the carrier under the Civil Code
Nature of a Vessel
Art. 585. For all purposes of law not modified or restricted by the
provisions of the Code, vessels shall continue to be considered
personal property.
- considered as personal or movable property
- whether the vessel is moved by steam, by sail, or by engine, they partake of certain extent
of the nature and conditions of a real property
- to certain extent, it is considered a real property because of the value and importance in the
world of commerce
- being a property it may be a subject of acquisition
Modes of Acquisition
Art. 573. Merchant vessels constitute property which may be acquired and
transferred by any of the means recognized by law. x x x
1. purchase and sale — most common mode
2. prescription
3. construction
4. capture
5. donation
6. succession
7. other means, such as barter
Requisites for Acquisition
TRANSPO.NOTES
A vessel may have more than 1 owner. If one of the owners is going to sell the vessel and the other co-owners are not
Art. 537. x x x The acquisition of a vessel must be included in a written
instrument, which shall not produce any effect with regard to third
persons if not recorded in the registry of vessels.
willing to sell, can the latter object?
- yes, the co-owners who are not willing to sell are not obligated to sell
If one of the owner decides to sell his share on the vessel and his co-owners would not want the purchaser to be his co-
1. In a written instrument
2. Registration to the Philippine Coast Guard (PCG)
- shall be effected:
a. at its home port or
b. when the home port does not have Coast Guard, at the nearest Coast Guard
district or station
- Purpose: to bind third persons
owner, can he object to sale?
- yes, the co-owner who is not willing to sell can now exercise his right of preemption
Art. 575. Part owners of the vessels shall enjoy the right of preemption
and redemption in sales made to strangers; but they can only exercise it
within the nine days following the registration of the sale in the
registry and by delivering the price at once.
Why in the PCG?
- because under PD 1064, the Tariff and Customs Code, the PCG is vested with the
exclusive authority over the registration and documentation of Philippine vessels as
well as the insurance of the certificates, licenses, and other documents necessary or
incident to such registration.
• Right of Preemption
- the co-owner before the sale can buy the share of his co-owner who is going to sell the
vessel
- against the co-owner who plans to sell
• Right of Redemption
- the co-owner will buy the share from the purchaser
- against the third person purchaser
• Period to exercise the right:
- w/in 9 days from inscription in the registry
• Duty of the co-owner who exercise his right
- to deposit the price
Before the PCG, where registered?
- to be registered to the Maritime Industry Authority
• Vessels Required to be Registered
all vessels used in Philippine waters, not being a transients of foreign registry
thus, vessels registered in foreign registry sailing on Philippine waters are nor
required to be registered;
but if the owner is here in the Philippines and deploys the Philippine waters,
it needs to be registered in the Philippines
vessels of 3 tons gross or less shall NOT be registered, unless the owner shall so
desire [Marina Rules and Regulations]
vessels of more than 3 tons gross, there is a need for registration
What is deemed included in the sale?
Art. 576. The rigging, tackle, stores, and engine of a vessel, if it is
a steamer, shall always be understood as included in the sale thereof
if, at the time of sale, they are owned by the vendor. x x x
What cannot be included in the sale?
Art. 576. x x x The arms, munitions of war, provisions, and fuel shall
not be considered as included in the sale. x x x
• Certificates of Philippine Register with PCG [Tariff and Customs Trade]
upon registration of a vessel of domestic ownership and of more than 15 tons, a
certificate of Philippine registry shall be issued
vessels of domestic ownership and of 15 tons or less, the taking of the
certificate of Philippine registry shall be optional with the owner
There are also instances where a vessel can be sold even when it is on its voyage. Who shall be entitled to freightage and
obliged to pay the crew and other persons
- Purpose of certificate of Philippine Registry of vessels:
Rules
to declare the nationality of a vessel engaged in trade with foreign nations to
enable her to assert that nationality wherever found
2. it confers upon the vessel the right to engage, consistently with law, in the
Philippines coastwise trade and entitles it to the protection of the authorities
and the flag of the Philippines in all ports and on the high seas, and at the
same time secures to it the same privileges and subjects it to the same
disabilities as, under the laws of the Philippines, pertain to foreign built
vessels transferred abroad to citizens of the Philippines
Sold During Voyage
Sold After the Arrival of the
Vessel at the port of her
Destination
Art. 575. If the sale of the
vessel should take place while
she is on a voyage, all the
freightage she earns from the
time she received her last cargo
shall belong to the buyer, and
the latter shall pay the crew
and other person who go to make
up her complement for the said
voyage.x x x
Art. 575. x x x If the sale
should take place after the
arrival of the vessel at the
port of her destination, the
freightage shall belong to the
seller and the latter shall pay
the crew and other person who go
to
make
up
her
complement,
unless there is an agreement to
the contrary in either case
1.
provision
• Certificate of Ownership
upon registration of a vessel of more than 5 tons gross, a certificate of ownership
shall be issued
vessel of 5 tons gross or less, a certificate of ownership shall be optional
Kinds of Sale of Vessels
- can either be:
1. voluntary sale
2. judicial sale
Voluntary Sale
who is entitled
to the
freightage
who shall pay
the crew
24 of 43
purchaser
seller
TRANSPO.NOTES
To whom can a Philippine registered vessel be sold?
Art. 578. If, the vessel while on a voyage or in a foreign port, her
owner or owners should voluntarily sell her either to Filipinos or to
foreigners domiciled in the capital or in a port of another country, x x
x
1. Filipinos citizens
2. American Citizens
Art. 579. After the damage of the vessel and the impossibility of being
repaired, in order to continue the voyage, having been proven, her sale
at public auction shall be ordered. x x x
1.
May a Philippine registered vessel be registered in a foreign registry?
- yes, provided there is approval of the President
2.
3.
What are now the formalities if sale is made outside of the country?
Formalities of Sale
Art. 578. x x x the bill of sale shall be executed before the consul of
the Philippines of the port where she terminates her voyage; and said
instrument shall have no effect with regard to third persons if it is not
registered in the registry of the consulate. The consul shall immediately
forward a true copy of the bill of purchase of the vessel to the registry
of vessels of the port where said vessel is entered and registered.
In every case the sale of the vessel must be made to appear with a
statement whether the seller receives the full price or part thereof, or
whether he retains any interest in said vessel in full or in part. In
case the sale is made to a Filipino, this fact shall be stated in the
certificate of navigation. x x x
1.
Execution — bill of sale shall be executed before the consul
where she terminates her voyage.
2. Inscription — the consul shall record in the registry the bill of
3. Forwarding — the consul shall forward a true copy of the
registration, the PCG
4. There must be statement
a. whether the seller receives the price
b. whether he reserves in whole or in part any claim on the
of the Philippines of the port
sale
bill of purchase to the port
vessel
Should there be NO inscription in the consulate registry, is that fatal to the sale?
- the sale is valid, but it will not produce an effect to third persons
What does it mean when the vessel is rendered useless?
Vessel Rendered Useless
- beyond repair
- it may be sold
Formalities of Selling a Useless Vessel
Art. 578. If the vessel while on a voyage, should become useless for
navigation, the captain shall report the matter to the judge or court of
competent jurisdiction of the port of arrival, should she be in the
Philippines; and should she be in foreign port, to the Filipino consul
should there be one; or to the judge, or court, or local authority in the
absence of the former; and the consul, or judge, or court, or, in their
absence, the local authority, 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 to take part in
the proceedings for the account of whom it may concern.
25 of 43
4.
5.
6.
Reporting — The captain shall report the matter to:
a. if vessel in the Phil — RTC at the port of arrival
b. if vessel in foreign port:
(1) to the consul
(2) if no consul — judge or court
(3) if no judge or court — local authority
Examination — apply for vessel to be examined to determine if it is indeed useless
Consignee or insurer must be cited in order to take part in the proceedings
- if consignee or insurer is in another place, call the representatives
Proof of damage and impossibility of repair must be proven
Order of sale and publication
Public Auction [Art. 579]
When can there be judicial sale?
Judicial Sale
- needed because there are creditors that are present. Since these creditors are not paid, they
-
are going to file a case for the vessel to be sued so that the proceeds of that sale will be
distributed to these creditors.
Order of preference
Art. 580. In all judicial sales of vessels for the payment of creditors,
the following shall be preferred in the order named;
1. The credits in favor of the public treasury proven by means of an
official certificate of the competent authority.
2. The judicial costs of the proceedings, according to an appraisement
approved by the judge or court
3. The pilotage charge, tonnage dues, and the other sea or port
charges, proven by means of proper certificates of the officers
intrusted with the collection thereof.
4. The salaries of the depositaries and keepers of the vessel and any
other expenses for its preservation from the time of arrival at the
port until the sale, which appear to have been paid or be due by
virtue of an account verified and approved by the judge or court
5. The rent of the warehouse where the rigging and stores of the
vessel have been taken care of, according to contract.
6. The salaries due the captain and crew during its last voyage, which
shall be verified by means of the liquidation to be made in view of
the lists and of the books of account of the vessel, approved by
the chief of the Bureau of Merchant Marine, where there is one, and
is in his absence by the consul or judge or court
7. The reimbursement for the goods of the freight which the captain
may have sold in order to repair the vessel, provided that the sale
has been ordered through a judicial proceedings held with the
formalities required in such cases, and recorded in the certificate
of registry of the vessel.
8. The part of the price which has not been pad to the said vendor,
the unpaid credits for materials and labor in the construction of
the vessel, when it has not navigated, and those arising from the
repair. In order that the credits provided for in this subdivision
may enjoy this preference, they must appear by contracts recorded
in the registry of vessels, or if they were contracted for the
TRANSPO.NOTES
- the any vessel, whether foreign or domestic as long as found in the Philippines, may be
vessel while on a voyage and said vessel has not returned to the
port where it is registered, they must be made with the
authorization required for such cases and annotated in the
certification of registration of the vessel.
9. The amount borrowed on bottomry on the hull, keel, tackle, and
stores of the vessel before its departure, proven by means of the
contract executed according to law and recorded in the registry of
vessels; those borrowed during the voyage with the authorization
mentioned in the preceding subdivision, satisfying the same
requisites; and the insurance premium, proven by the insurance
policy or a certificate taken from the books of the broker.
10.The indemnity due the shipper for the value of the goods shipped
which were not delivered to the consignees or for averages suffered
for which the vessel is liable, provided that either appear in a
judicial or arbitration decision.
attached and judicially sold [Art. 584]
How do you acquire prescription over a vessel
Prescription
Art. 573. x x x The ownership of a vessel shall also be acquired by
possession thereof in good faith for three years, with a good title duly
recorded
In the absence of any of these requisites, continuous possession for
10 years shall be necessary in order to acquire ownership.
A captain cannot acquire by prescription of the ship of which he is in
command.
• Possession in good faith — 3 years (under CC, 4 yrs)
• Possession in bad faith — 10 years (under CC 8 yrs)
• Prescription will never lie on the part of the Captain
- because the nature of the possession of the captain is such that he is only an agent of the
owner; he is also a depositary of the vessel and a depositary can never acquire the thing
deposited by prescription
If the judge declares to the creditors that they are entitled to the proceeds of the sale, what is created?
- what is created is a LIEN on the vessel
Hypothecary Right
• as to the owner
- limited liability of the shipowner or ship agent such that the liability is limited to the value of
the vessel
Construction
Art. 574. The builders of
to the construction and
interest. Ship owners and
the laws and regulations
customs, health, safety of
Creditors have hypothecary right over the vessel. What do you mean by that?
• on the part of the creditors
- constitutes as a guarantee for the satisfaction of their claims insofar as may be covered by the
proceeds of the sale whether the sale may be voluntary or judicial in the order
vessels may employ materials and, with regard
rigging the systems most suitable to their
seamen shall be subject to the provisions of
of the public administration on navigation,
vessels, and other similar matters.
Who are the people who take part in Marine Commerce?
Legal Liens
- liens on the part of the creditor
- whoever buys a vessel or loans money with vessel as security on a chattel mortgage, makes the
Persons who take part in Marine Commerce
A. Shipowners and Ship agents
B. Captains and Masters of the Vessel
C. Officers and Crew of the Vessel
1. Sailing Mate or First Mate
2. Second Mate
3. Engineers
4. Crew
D. Supercargoes
E. Pilot
vessel subject to such lien
- the purpose of the lien is that it gives the lienor (the creditor) a right to arrest the vessel for
the payment for his claim;
- the arrest is with a proprietary interest and it is a kind of limited ownership only because the
ownership is only to the extent of his claim against the vessel
What is the effect of sale on prior liens?
- (if the chattel mortgage is foreclose,) it will not affect the prior lein
McMicking v. El Banco Espanol-Filipino, 13 Phil 429
- Sanchez and Cue Suan are owners of steamship, known as Hock-Tay. They mortgage it to Banco
-
Espanol Filipino. They used that vessel as security for the loan. The loan was duly registered and
later on, they were not able to pay. So, the El Banco Espanol-Filipino filed an action to foreclose
the mortgage over the vessel. On the day of the auction, Ayala claimed that the sheriff gave
him an amount of about P4,000+ from the proceeds of the sale for payment of the salaries of
the crew and supplies
SC: the wages due and the expenses incurred constitute a lien under the law and take
preference over the lien by giving the ship as security for money borrowed.
- So, the sale of the ship under the mortgage in no way divested the lien which the law
created in favor of Ayala. Thus, it will still be satisfied.
- But the remedy of the Ayala is not against the money which was received under the sale
but against the ship by foreclosing the lien on the same.
A.
What is the procedure in enforcing a lien?
Procedure in Enforcing a Lien
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Shipowner and Ship Agent
Ship agent
Art. 586. By ship agent is understood the person intrusted with
provisioning of a vessel, or who represents her in the port in which
may be found.
Art. 595. x x x The ship agent shall represent the ownership of
vessel, and may in his own name and in such capacity take judicial
extrajudicial steps in matters relating to commerce.
the
she
the
and
Maritime Corporation of the Philippines v. CA 171 SCRA 61
- one appointed to manage and operate the vessels of the ship owner and are bound to
render reports on the operations of the vessel; they are authorized to appoint subagents; remaining responsible to a shipowner is the ship agent
TRANSPO.NOTES
4. the law makes the owner responsible for the acts of the captain without
distinguishing whether the captain was appointed by him or another
What are the liability of the Shipowner and Ship agent?
Nature of liability of shipowner and ship agent
- solidarily liable, meaning claim may be demanded from anyone of them
Liabilities:
1. Art. 586. The shipowner and the ship agent shall be civilly liable for
the acts of the captain x x x
NO Vessel NO Liability
- expresses the limited liability rule
- liability is merely co-extensive with the interest of the shipowner and the ship agent in the
vessel such that if there is total loss, this will extinguish the maritime liens or any obligation
because there is no longer any res to which the lien will attach
2. Art. 586. x x x and for the obligations contracted by the latter to
repair, equip and provision the vessel, provided that the amount
claimed was invested therein.
- even if the captain incurred liabilities or entered into contracts for as long as it was for
the benefit of the vessel, the shipowner or ship agent will be liable
Abandonment (with respect to maritime commerce)
- relinquishment by the shipowner or captain of the vessel, with all her equipment and the
freight it may have earned during the voyage in favor of the creditors
• Effect:
- amounts to an offer of the value of the vessel, of her equipment, and freight money earned;
results in the cessation of the responsibility of the owner/agent
- the cargoes and the vessel are transferred to the creditors; the creditors have the right as
they will (for example sell) with the cargo and vessel in satisfaction of their claim
-
3. Art. 587. The ship agent shall also be civilly liable for the
indemnities in favor of third persons which arise from the conduct of
the captain in the vigilance over the goods which the vessel carried
(as well as safety of passengers); but he may exempt himself therefrom
by abandoning the vessel with all her equipment and the freight he may
have earned during the voyage.
4. for the damages to third person for tort or quasi-delit committed by
the captain, except collision with another vessel [Art. 1780, NCC]
5. Art. 826. If a vessel should collide with another, through the fault,
negligence, or lack of skill of the captain, sailing mate, or any other
member of the complement, the owner of the vessel at fault shall
indemnify the losses and damages suffered, after an expert appraisal.
Can the creditor refuse to accept the subjects of abandonment?
- No. If right of abandonment is exercised, the creditors have no choice but to accept the
vessel or the equipment
What are the exceptions to limited liability or when it is not applicable ?
1.
2.
• Ship agent shall be liable to the shippers and owners of the cargo transported by it, for losses
and damages occasioned to such cargo without prejudice to his rights against the owner of the
ship, to the extent of the value of the vessel, its equipment and the freight
3.
If for example damages were incurred, is it necessary to proceed to the ship agent first before proceeding to the ship
5.
4.
owner?
- no, generally, the injured party may immediately look for reimbursement to the owner of the
ship
- it is universally recognized that the ship master or captain is primarily the representative of the
owner
- reason is to place the primarily liability upon the person who has actual control over the
contract of the voyage and has most capital embark at the venture
EXCEPTIONS to Limited Liability
by reason of fault or negligence on the part of the shipowner
- they cannot raise the defense of limited liability
- therefore, there is loss of cargo or vessel, they cannot set up “by reason of the default or
negligence of the ship owner or the captain because acts of the captain will make the shipowner
liable
with respect to employer-employee relationship
- limited liability cannot be set up because this is a separate claim from the workmen’s
compensation
with respect to repairs contracted before the loss
- because this for purposes of the vessel
when the vessel is insured
- because the insurance will pay off for the credits
when the injury or death to a passenger is due to the fault of the shipowner or concurring
negligence of the shipowner or the captian
Husbanding Agent
- general agent of the owner in relation to the ship with powers among others to engage the
vessel for general freight and usual conditions and settle for freight and adjust averages for
the same
- shipowner usually ask for investors since ships are expensive; that is why you go directly to the
What is the extent of the authority of a ship agent?
A shipowner will lease a vessel to a third person. It is that person (lessee) now who will appoint the captain. Who will be
Powers of the ship agent
1. Art. 595. x x x 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.
ship owner because he is now capable of looking for other sources or asking for other sources
of those who can pay for the indemnity
liable for the acts of the captain?
- there are 2 opinions:
a. the lessee is liable
b. the shipowner or captain is liable — majority opinion
- reasons:
1. it is the owner who still has control over the person
2. it is the owner who is registered under the certificate of registration
3. it is would be easy for the ship owner to circumvent the law if he will not be
liable
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2. order a new voyage, make contracts for a new charter, insure the vessel
Art. 598. The agent cannot order a new voyage, nor make contracts
for a new charter, nor insure the vessel, without the authority of
her owner or by virtue of a resolution of the majority of the coowners, unless these powers were granted him in the certificate of
his appointment.
TRANSPO.NOTES
- if there is no general or no specific power, pwede xa actually kasi nga agent xa… (hnd ko
gets)
3. render an account to the shipowner
Art. 599. The managing agent of an association, shall give his coowners 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.
4. Art. 602. The agent shall indemnify the captain for all the expenses he
may have made from his own funds or from those of other persons, for
the benefit of the vessel.
- it entails the captain using funds of his own but for purposes of repairs for the vessel,
by provisions of the vessel, therefore, anything that is in connection or for the benefit of
the vessel including the crew; the ship agent has to refund kung ano ung mga ginastos
ng ship captain
5. to discharge or remove from employment the captain or the members of the crew
Art. 603.Before a vessel goes out to sea the agent may at his
discretion, discharge the captain and members of the crew whose
contract did not state a definite period nor a definite voyage,
paying them the salaries earned according to their contracts, and
without any indemnity whatsoever, unless there is an expressed and
specific agreement in respect thereto.
Art. 604. If the captain or any other member of the crew should be
discharged during the voyage, they shall receive their salary until
their return to the place where the contract was made, unless there
are good reasons for the discharge, all in accordance with Art. 636
et seq. of this Code.
Art. 605. If the contracts of the captain and members of the crew
with the agent should be for a definite period or voyage, they
cannot be discharged until the fulfillment of their contracts,
except for reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the vessel or to
its cargo by malice or manifest or proven negligence
• Conditions or Rules on Discharge of Captain and Crew
B.
Captains and Masters of Vessels
- the name “captain” or “master of abvessel” is given according to the kind of vessel, therefore,
captain and master of a vessel are different
- for purposes of code of commerce, they are considered as one and similar
- there is a marked difference between a captain and master of a vessel:
• Captain
- one who governs vessels that navigate the high seas or ships of large dimensions and
importance, although they may be engaged in coastwise trade
• Master of a Vessel
- one who commands smaller ships engaged exclusively in coastwise trade
3. represents the government of the country under whose flag he navigates
Which acts of the captain will make the both the shipowner and ship agent liable and which will make him personally
liable?
Captain’s acts which will make the shipowner and ship agent liable:
- same with “liability of shipowner and ship agent”
1. Art. 586. 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 that
the amount claimed was invested therein.
2. Art. 587. The ship agent shall also be civilly liable for the
indemnities in favor of third persons which arise from the conduct
of the captain in the vigilance over the goods which the vessel
carried (as well as safety of passengers) x x x
3. for the damages to third person for tort or quasi-delit committed
by the captain, except collision with another vessel [Art. 1780,
NCC]
4. Art. 826. If a vessel should collide with another, through the
fault, negligence, or lack of skill of the captain, sailing mate,
or any other member of the complement, the owner of the vessel at
fault shall indemnify the losses and damages suffered, after an
expert appraisal.
Captain’s acts which will make him personally liable:
1. making any separate transactions for his own account and losses where incurred
thereby
Art. 613. A captain who navigates for freight in common or on
shares may not make any separate transaction for his own
account, and should he do so the profits shall belong to the
other persons interested, and the losses shall be borne by him
alone.
Does this include transactions/contracts for merchandise separate from the cargo supposed to be
brought to the port of destination — different cargoes?
- NO. It does not include:
a. transactions which has nothing to do with the voyage.
b. transactions for different merchandise or freight completely distinct
from that for the port of destination
2. failing to perform an undertaking to make a voyage except if caused by force majeure;
he is also subject to criminal penalities
Art. 614. A captain who, having made an agreement to make a
voyage, fails to performs his undertaking, without prevented by
fortuitous accident or force majeure, shall indemnify for all
the losses which me may cause without prejudice to the criminal
penalties which may be proper.
Can a captain always refuse to fulfill his obligations given the right to deny or not to fulfill his
obligations?
- Yes. He can refuse. He has the choice but he will be liable under 614.
Can a captain be force to fulfill his obligations through an action for specific performance?
- No. The shipowner cannot force him though specific performance but the
captain will be liable under 614.
Nature/Role of the Captain’s Position
1. general agent of the shipowner
2. technical director of the vessel
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TRANSPO.NOTES
3. substituting himself by another person w/o consent of ship agent
Art. 615. Without the consent of the ship agent, the captain
may not have himself substituted by another person; and should
he do so, besides being liable for all the acts of the
substitute and bound to pay the indemnities mentioned in the
foregoing article, the substitute as well as the captain may be
discharged by the ship agent.
What is the reason why he needs to ask for permission before he can substitute himself?
- the duties of a captain is essentially personnal due to the confidence given to
him arising from the fact that he possess the required technical ability and
that he is the man worthy of trust by the shipowner
4. Art. 616. If the provisions and fuel of the vessel should be
consumed before arriving at the port of destination, the captain
shall order, with the consent of the officers of the same, the
arrival at the nearest port to get a supply of either; but if there
are persons on board who have provisions of their own, he may force
them to deliver said provision for the common consumption of all
those who may be on board, paying the price thereof at the same
time, or at the latest, at the first port reached.
5. contracting loans on respondentia over the cargo and loans on bottomry on the vessel
• EXCEPTION: when he owns a portion of the vessel and there has been no loan
entered into over the whole vessel
Art. 617. The captain may not contract loans on respondentia
secured by the cargo, and should he do so the contract shall be
void.
Neither may he borrow money on bottomry for his own
transactions, except on the portion of the vessel he owns,
provided no money has been previously borrowed on the whole
vessel, and provided there does not exist any other kind of
lien or obligation chargeable against the vessel. When he is
permitted to do so, he must necessarily state what interest he
has in the vessel.
In case of violation of this article the principal, interest,
and costs shall be charged to the private account of the
captain, and the ship agent may furthermore discharge him.
Instances where the Captain is civilly liable to the ship agent not third person; and
the ship agent liable to third person
Art. 618. The captain shall be civilly liable to the ship agent
and the latter to the third persons who may have made contracts
with the former
1. For all the damages suffered by the vessel and its cargo by
reason of want of skill or negligence on his part. If a
misdemeanor or crime has been committed he shall be liable in
accordance with the Penal Code.
2. For all the thefts and robberies committed by the crew,
reserving his right of action against the guilty parties.
3. For the losses, fines, and confiscations imposed on account of
violation of the laws and regulations of customs, police,
health, and navigation.
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4. For the losses and damages caused by mutinies on board the
vessel, or by reason of faults committed by the crew in the
service and defense of the same, if he does not prove that he
made full use of his authority to prevent or avoid them.
5. For those arising by reason of a misuse of powers and
nonfulfillment of the duties which pertain to him in accordance
with Articles 610 and 612.
6. For those arising by reason of his going out of his course or
taking a course which, in the opinion of the officers of the
vessel, at a meeting attended by the shippers or supercargoes
who may be on board, he should not have taken without
sufficient cause. No exception whatsoever shall exempt him from
his obligation.
7. For those arising by reason of his voluntarily entering a port
other than his destination, with the exception of the cases or
without the formalities referred to in Article 612.
8. For those arising by reason of the nonobservance of the
provisions contained in the regulations for lights and
maneuvers for the purpose of preventing collisions.
• Summary
1. Damages to vessel and to cargo due to lack of skill and negligence;
2. Thefts and robberies of the crew;
3. Losses and fines for violation of laws;
4. Damages due to mutinies;
5. Damages due to misuse of power;
6. For deviations;
7. For arrivals under stress;
8. Damages due to non-observance of marine regulations.
• Reason for imposition of liability on owner for damages suffered by third persons occasioned by
the acts of the captain:
- To place the primary liability upon the person who has actual control over the conduct
of the voyage and who has the most capital embarked in the venture, namely, the
owner of the ship, leaving him to obtain recourse, from other individuals who have been
drawn into the venture as shippers
- The shippers and passengers in making contracts with the captain do so through the
confidence they have in the shipowner who appointed him — they presume that the
owner made a most careful investigation before appointing him
- a third person will rely mainly on the representation being made by the ship agent saying
that the captain is capable therefore he can enter contract with whom. They rely or can
say that the owner made careful investigation as to the background and capability of the
captain.
Liability of captain extends to acts of person in the complement
- the responsibility of the captain extends to every fraudulent or negligent act of any person in
the complement, in the execution of his employment
For example, they docked on a port and the crew unboarded. Because they were drunk, they entered into a brawl
with people. Will the captain be liable for the acts of the crew who entered into a brawl?
- NO. he will only be liable for those in execution of his employment. Thus, if he has
unboarded the ship, he is no longer in the exercise of employment.
- if the incident happen inside the ship, still, the captain will not be liable
- he will only be liable for acts of his crew which is in the execution of his employment
When does the liability of the captain start and when does it terminate?
TRANSPO.NOTES
Liability of Captain; when
Art. 619. The captain shall be liable for the cargo from the time it is
delivered to him at the dock or afloat alongside the ship at the port of
loading, until he delivers it on the shore or on the discharging wharf at
the port of unloading, unless the contrary has been expressly stipulated.
What is the evidence in order to claim liability?
- usually, the bill of lading; but it is not enough that you show that the goods were lost in
transit. You must show that the lost or impairment occurred while the goods were in
possession of the carrier [Saludo v. CA]
- In the case of SALUDO, it involves an air carrier with respect to the transport of cadaver of
the cadaver of Saludo. Somewhere along the way, the cadaver was misplaced. The body was
supposed to be loaded from Chicago to San Francisco and then San Francisco to Manila, then
Manila to Cebu. Supposed to be Saludo will accompany the body. When he arrived in San
Francisco, he confirmed whether the body has also arrived. Apparently, the body was sent to
Mexico. Unfortunately, the SC stated that the carrier was not liable because while the
shipper was in possession of the bill of lading, it is not enough to prove that the loss occured
while in the possession of the carrier.
- the provision on wind turbulence or mechanical defect is part of the bill of lading thus, it is
not for everybody. It was stated in the bill of lading that in case of wind turbulence, the
carrier may change its root. Thus, in the exam, wind turbulence is not a fortuitous event
1. to make the nearest neutral port
2. inform the ship agent or shippers
3. await:
a. an occasion to sail under convoy or
b. until the danger is over or
c. to receive final orders from ship agent or shippers.
What if there was no available convoy or the danger is continuous or the ship agent did not contact you yet on what
should you do?
- “pray” -Orallo; “magiging liable ka pa din hindi ka isesave ni Lord!” - J. Cualing
- If transshipment is not available, you just WAIT until the danger cease or there is
further orders
What if the goods are perishable?
- the captain may sell or make such other advantageous disposition of the property of
the absent shipper as circumstances will permit
- the captain must:
(1) first see to it if he can transship
(2) But if it is not possible to transship such that no carrier would ship or the
condition of the cargo cannot be transshiped or there is a belief that if it will be
transship, probably there will be greater damages, the captain is allowed to SELL
the goods
When will a captain be not liable for the vessel or the cargo?
Captain not Liable
1. only for force majeure; no fortuitous event
Art. 620. The captain shall not be liable for the damages caused to
the vessel or to the cargo by force majeure; but he shall always be
so for those arising from his own fault, no agreement to the
contrary being valid. x x x
• Condition to claim exception by reason of force majeure:
a) that the vessel was SEAWORTHY
• Seaworthy:
- means that:
a. the vessel is adequately equip for the voyage
b. vessel is manned with competent and sufficient officers and crew
b) he is not negligent unless he can prove that he exercise extraordinary diligence
Within what time frame should the ship captain decide on these things?
- he was decide upon entering the port of refuge within a reasonable time depending
on the nature of the cargo or goods shipped
What if while sailing from Manila to China, China declared a war against the Philippines? What is now the duty of the
captain?
Duty of Captain in case of declaration of war
- The captain will now be justified to “biglang-liko” to turn around and not to continue to the
port of destination because there is a possibility that China will fire at you.
- the captain is justified to flee such enemy port and go to a nearest neutral port
• Condition:
- as long as there is an absence of any assurance that he will be allowed to sail the port of
destination with a safe conduct or “laissez-passer”
What is the effect if he fled or did proceed to the port of destination and while sailing to the nearest neutral port, the
ship sank and therefore there was loss? Will the ship captain and owner be liable?
- NO. For reason of deviation occasioned by the outbreak of war, the ship captain and the
shipowner will be relieved from liability.
2. for repairs, equipment, and provisioning of the vessel
• EXCEPTIONS:
a. he has expressly bound himself personally
b. signed a bill of exchange or promissory note
Is this an absolute rule such that anytime that there is deviation because of that outbreak of war, they will be
Art. 620. x x x Neither shall he be personally liable for the
obligations he may have contracted for the repair, equipment, and
provisioning of the vessel, which shall devolve upon the ship agent,
unless the former has expressly bound himself personally or has
signed a bill of exchange or promissory note in his name.
What is the duty of the captain in case privateers (pirates) or enemy appear?
Duty of Captain in case privateers/pirates or enemy appear
Art. 622. If when on a voyage the captain should receive news of the
appearance of privateers or men of war against his flag, he shall be
obliged to make the nearest neutral port, inform his agents or shippers,
and await an occasion to sail under convoy or until the danger is over or
to receive final orders from the ship agent or shippers.
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relieved from liability?
- NO. If however, full freightage has been received at the commencement of the voyage,
the shipowner and the ship captain will not be relieved from obligation.
How will he fulfill his obligation to unload the cargo to the port of destination?
- since full freightage was paid at the start of the voyage, he has to fulfill his obligation
by going to the neutral port and look for another carrier which can enter the port of
destination to transship the cargoes to the port of destination
What if the vessel went through a hurricane?
Duty of Captain in case of hurricane
Art. 624. A captain whose vessel has gone through a hurricane or who
believes that the cargo has suffered damages or averages, shall make a
protest thereon before the competent authority at the first port he
touches within the twenty-four hours following his arrival, and shall
TRANSPO.NOTES
ratify it within the same period when he arrives at the place of his
destination, immediately proceeding with the proof of the facts, it
not being permitted to open the hatches until after this has been
done. x x x
• Procedure
1. upon entering the nearest port, the captain must make protest before a competent authority
(eg: coast guard) within 24 hours
- since there is no certainty whether the vessel is still seaworthy because of the ravages
of the storm or probably water entered has entered the cargo-hold damaging the cargo
2. when he arrives at his destination, the captain shall ratify the protest within the 24 hours
3. he must proof the facts — that indeed they met a hurricane at the area where they passed
• In cases of differences in opinions and decisions by the captain and the sailing mate, it is
always the captain who will prevail.
What happens if the captain insisted, what will he do?
- in case of conflict, the sailing mate will, in presence of other officers, raise his protest,
after which the protest will be recorded in the logbook where he will sign together
with an officer.
- But he still has to follow the captain
6. Second Mate
Art. 633. The second mate shall take command of the vessel in case of the
inability or disqualification of the captain and the sailing mate,
assuming in such case their powers and responsibility.
7. Engineers
• Failure to comply with the procedure
- he cannot open the hatch to see if there was indeed damage to the cargo
Duty of the Captain in case of Shipwreck
Art. 624. x x x The captain shall proceed in the same manner if, the
vessel having been wrecked, he is saved alone or with part of his crew, in
which case he shall appear before the nearest authority, and make a sworn
statement of the facts.
The authority or the consul abroad shall verify the said facts,
receiving sworn statements of the members of the crew and passengers who
may have been saved, and taking such other steps as may help in arriving
at the facts, he shall make a statement of the result of the proceedings
in the log book and in that of the sailing mate, and shall deliver the
original records of the proceedings to the captain, stamped and folioed,
with a memorandum of the folios, which he must rubricate, for their
presentation to the judge or court of the port of destination.
The statement of the captain shall be believed if it is in accordance
with those of the crew and passengers; if they disagreed, the latter shall
be accepted, unless there is proof to the contrary.
• Procedure
1. captain must appear before the nearest authority and make a sworn statement of facts in the
same manner required in case of hurricane
2. authority or consul shall verify the facts
3. authority or consul shall make a statement of the result of the proceedings in his and the
sailing mate’s log book
4. authority or consul shall deliver the original records of the proceedings to the captain
- stamped and folioed with a memorandum of the folios which he must rubricate
• Rubricate — to make a short commentary or explanation covering a broad subject;
summarize
Are engineers always considered officers of the vessel?
- Yes, only with respect to the engines/motor apparatus
- whatever happens with the fight between the captain and the sailing mate, he has no
authority to intervene
8. Supercargo
- An agent of the owner of the goods shipped as cargo on a vessel, who has charge of the
cargo on board, sells the same to the best advantage in the foreign markets, buys cargo to
be brought back on the return voyage of the ship, and comes home with it
- this provision on supercargoes has been superseded by the provisions on Agency as provided
in the Civil Code
9. Crew or Complement of the Vessel
• Complement
- those people who are needed to manage, maneuver and service the vessel
- consists of the captain to the cabin crew
• Crew
- aggregate of seamen who man a ship or vessel
- they include the master and the officer
- it may also mean the ship’s company, exclusive of the master or exclusive of the all the
officers (hindi ko to gets kasi sbi nya nung una including tapos biglang exclusive)
May the captain discharge the crew or the seamen?
- it depends. because a seaman in order to enter into his duties, he must enter into a contract.
Captain’s Right to Discharge Crew of a Vessel
w/o just cause
1. NO fixed period
Art. 636. If there is no
fixed period for which a
seaman has been contracted he
may not be discharged until
the end of the return voyage
to the port where he enlisted
may be discharged
• effect on salary
If discharge, whether or not the
voyage has commenced, the seamen
is entitled to his wages until the
return voyage
the seamen will only be entitled to
the wages earned as of the time
of his discharge
2. WITH fixed period
entitled to the wages as if he has
rendered services for the period
fixed; received the salary as a
whole
entitled to the wages for the
period he has rendered service
C. Officers and Crew of the Vessel
1. Sailing Mate or First Mate
- second-in-command who will take the place of the captain only in cases of absence, sickness,
or death of the captain
Art. 627. The sailing mate, as the second chief of the vessel,
and unless the agent orders otherwise, shall take the place of
the captain in cases of absence, sickness, or death, and shall
then assume all his powers, duties, and responsibilities.
with just cause
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TRANSPO.NOTES
Revocation
Art. 638. If, after the crew has been engaged, the voyage is revoked by
the will of the ship agent or of the charterers, before or after the
vessel has put to sea, or if the vessel is for the same reason given a
different destination from that fixed in the agreement with the crew, the
latter shall be indemnified on account of the rescission of the contract,
according to the following cases:
1. If the revocation of the voyage should be decided before departure of
the vessel from the port, each sailor engaged shall be given one
month's salary, besides what may be due him, in accordance with his
contract, for the services rendered to the vessel up to the date of the
revocation.
2. If the agreement should have been for a fixed amount for the whole
voyage, what may be due for said month and days shall be determined in
proportion to the approximate duration of the voyage, in the judgment
of the experts, in the manner established by the law of civil
procedure; and if the proposed voyage should be of such short duration
that it is calculated at approximately one month, the indemnity shall
be fixed at fifteen days, discounting in all cases the sums advanced.
3. If the revocation should take place after the vessel has put to sea,
the sailors engaged for a fixed amount for the voyage shall receive the
entire salary which may have been offered them if the voyage had
terminated; and those engaged by the month shall receive the amount
corresponding to the time they might have been on board and to the time
they may require to arrive at the port of destination, the captain
being obliged, furthermore, to pay said sailors in both cases the
passage to the said port or to the port of sailing of the vessel, as
may be convenient for them.
4. If the ship agent or the charterers of the vessel should give it a
destination different from that fixed in the agreement, and the members
of the crew should not agree thereto, they shall be given by way of
indemnity half the amount fixed in the first case, in addition to what
may be due them for the part of the monthly wages corresponding to the
days which may have elapsed from the date of their agreements.
If they accept the change, and the voyage, on account of
greater distance or of other reasons, should give rise to an increase
of wages, the latter shall be adjusted privately, or through friendly
adjusters in case of disagreement. Even if the voyage should be
shortened to a nearer point, this shall not give rise to a reduction
in the wages agreed upon.
Should the revocation or change of the voyage originate from
the shippers or charterers, the ship agent shall have a right to
demand of them the indemnity which may be justly due.
A. will of owner w/o
just cause
contract w/ fixed monthly
compensation
contract w/ fixed amount for the
whole voyage
1. Before voyage
wages earned + indemnity of 1
month salary
wages earned + 1 months salary
computed in proportion to the
approximate number of days the
voyage should have lasted
2. At sea/ during
voyage
amount earned had the vessel
pro ce e d e d to t h e p o r t o f
destination + passage to said port
or the port of sailing
entire salary of voyage + passage
to the port of destination or port
of sailing
if the crew will agree with the
change
if the crew does not agree with
the change
B. change of
destination w/ just
cause
Rules on Revocation
• Instances when Revocation will happen
1. where voyage has been revoked by will of the ship agent or the charterers, without cause
2. where the destination is changed by will of the ship agent or the charterers, with just cause
• Effects
32 of 43
wages shall be reduced, if the
voyage is shortened; or increase if
the voyage has been lengthen
wages earned + half month salary
Revocation with Just Cause
Art. 639. Should the revocation of the voyage arise from a just cause
independent of the will of the ship agent and the charterers, and the
vessel should not have left the port, the members of the crew shall no
other right than to collect the wages earned up to the day the revocation
was made.
Art. 640. The following shall be just causes for the revocation of the
voyage:
1. A declaration of war or interdiction of commerce with the power to
whose territory the vessel was bound.
2. The blockade of the port of its destination or the breaking out of an
epidemic after the agreement.
3. The prohibition to receive in said port the goods which make up the
cargo of the vessel.
4. The detention or embargo of the same by order of the government, or for
any other reason independent of the will of the agent.
5. The inability of the vessel to navigate.
Art. 641. If, after a voyage has been begun, and any of the first three
causes mentioned in the foregoing article should occur, the sailors shall
be paid at the port which the captain may deem advisable to make for the
benefit of the vessel and cargo, according to the time they may have
served thereon; but if the vessel is to continue its voyage, the captain
and the crew may mutually demand the enforcement of the contract.
In case of the occurrence of the fourth cause, the crew shall continue to
be paid half wages, if the agreement is by month; but if the detention
should exceed three months, the contract shall be rescinded and the crew
shall be paid what they should have earned according to the contact, as if
the voyage had been made. And if the agreement.
should be for a fixed sum for the voyage, the contract must be complied
with in the terms agreed upon.
TRANSPO.NOTES
- contract by which an entire ship or some principal part thereof is leased by one party to
In the fifth case, the crew shall have no other right than to collect the
wages earned; but if the disability of the vessel should have been caused
by the negligence or lack of skill of the captain, engineer, or sailing
mate, they shall indemnify the crew for the damages suffered, always
without prejudice to the criminal liability which may be proper.
• Just causes:
1. declaration of war or interdiction of commerce with the power to whose territory the vessel was
bound
• interdiction of commerce
- also refer to as interdiction of commercial intercourse
- means governmental prohibition of commercial intercourse intended to bring about entire
cessation for the time being of all trade whatsoever
another person for a specified time or use
- it is a contract of affreightment by which an owner of a ship or other vessel lets the whole or
part of her to a merchant or other person for the conveyance of goods on a particular voyage
in consideration of freight
1.
2. blockade of the port of its destination or the breaking of an epidemic after the agreement
• blockade
- a sort of circumvallation (to surround with other defensive barrier) of a place by which
connection or correspondence is as far as human power can effect it to be cut off
- actual investment by a port or place by hostile forces fully competent under ordinary
circumstances to to cut of all communications thereto so arranged or disposed as to be able
to apply its force to every point of every practicable access or approach to the port or place
so invested
3. prohibition to receive in said port the goods whcih make the cargo of the vessel
4. detention or embargo of the same by order of the government or for any other reason
independent of the will of agent
• embargo
- when there is proclamation by a state usually issued in times of war or threatened hostilities
prohibiting the departure of ships or goods from some or all of the ports of such state until
further ordered
Planters Products Inc. v. CA, Gr NO. 101503 September 15, 1993
- In both cases, the charter-party provides for the hire of vessel only, either for a
determinate period of time or for a single or consecutive voyage, the shipowner to supply
the ship's stores, pay for the wages of the master and the crew, and defray the
expenses for the maintenance of the ship.
5. inability of the vessel to navigate
Special Contracts of Maritime Commerce
When do you say that a contract is maritime in nature?
- depends not on the place where the contract is made and is to be executed making the locality
-
2. Bareboat or Demise Charter
- is when the whole vessel is leased to the charterer with the transfer to him of its entire
command and possession and consequent control over his navigation.
the test but on the subject matter of the contract making the true criterion maritime service
or maritime transaction
as long as the subject matter of the contract pertains to maritime commerce then it will be a
contract which is maritime in nature
Puromines, Inc. vs. CA, GR No. 91228, March 22, 1993
- Under the demise or bareboat charter of the vessel, the charterer will generally be
considered as owner for the voyage or service stipulated. The charterer mans the vessel
with his own people and becomes, in effect, the owner pro hac vice, subject to liability to
others for damages caused by negligence.
- To create a demise the owner of a vessel must completely and exclusively relinquish
possession, anything short of such a complete transfer is a contract of affreightment
(time or voyage charter party) or not a charter party at all.
- Responsibility to third persons for goods shipped on board a vessel follows the vessel's
possession and employment
What are the special contracts of maritime commerce?
A. Charter Parties
B. Bills of Lading (B/L issued over Overland Transportation will also apply)
C. Contracts of Transportation of Passengers on Sea Voyages (only minor differences; rely mainly
on the Civil Code provisions on common carriers)
D. Loans on Bottomry
E. Loans on Respondentia
F. Marine Insurance (topic under Insurance)
A. Charter Parties
Charter party, defined
Types
Contract of Affreightment
- involves only the use of the shipping space on the vessel by the owner in part or as a whole
- rent of either a space, a space on the vessel, or a portion of the vessel where the charter will
load the goods to be transported
- contract for special services to be rendered by the owner of the vessel and under such contract
the general owner retains the possession, command navigation of the ship and the charter/
freighter merely having the use of the space in the vessel in return for his payment of the
charter
- rent of space only; possession and the right to control the vessel is still manned by the owner
Coastwise Case
- by the contract of affreightment, a common carrier is not converted into a private carrier
but remain a common carrier and still liable as such. Therefore, in case of damage to the
vessel, damage to the goods, the one who you will run after will be the ship owner or
ship agent not the charterer because the captain and crew are under the employ of the
shipowner and he remain as the common carrier
• Kinds of Contracts of Affreightment
a. Time Charter
- is when the vessel is leased to the charterer for a fixed period of time
b. Voyage Charter
- is when a vessel is leased for a single voyage or contract for voyage of goods from one
or more ports of loading to one or more ports of unloading
May a charterer abandon a vessel?
- No. A charterer cannot abandon a vessel because only a shipowner or a ship agent may make
an abandonment. Who is a charterer to abandon a vessel which he does not own (hiniram
lang nya yan)
Art. 653. If the freight should be received without the charter party having
been signed, the contract shall be understood as executed in accordance with
what appears in the bill of lading, which shall be the only instrument with
33 of 43
TRANSPO.NOTES
regard to the freight to determine the rights and obligations of the ship
agent, of the captain, and of the charterer.
- should the shipowner & charterer enter into a charter party, they must executed an instrument
What if cargo is received w/o a charter party, what will now be considered as the contract of the parties?
- it will be the bill of lading
Suppose neither the charter party or a bill of lading was issued, would there be now considered a contract entered into
between a shipowner or charterer?
- taking into account the fact that delivery of the cargo does not constitute the making of a
contract rather the partial performance thereof, the mere fact of delivery and receipt of such
cargo, the good faith and mutual consent with which they have been made should be a better
substitute of the charter party than it is for the bill of lading
Charter party v. Bill of Lading
Charter Party
1
2
an entire or complete contract
it is shown that a consensual contract is
entered into which can be dissolved by
means of indemnity for losses and damage
Bill of Lading
more likely a private receipt which a
captain gives to a credit that such and
such goods belong to such and such person
shows the existence of a real contract for
the reason that its effect exist sonly after
t h e d e li v e r y o f t h e g o o d s b e i n g
transported is made
Formalities of Charter Party
Art. 652. 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 include, besides the condition stipulated, the
following circumstances:
1. The kind, name, and tonnage of the vessel.
2. Her flag and port or registry.
3. The name, surname, and domicile of the captain.
4. The name, surname, and domicile of the agent, if the latter should make
the charter party.
5. The name, surname, and domicile of the charterer, and if he states that
he is acting by commission, that of the person for whose account he
makes the contract.
6. The port of loading and unloading.
7. The capacity, number of tons or weight, or measure which they
respectively bind themselves to load and transport, or whether it is
the total cargo.
8. The freightage to be paid, stating whether it is to be a fixed amount
for the voyage or so much per month, or for the space to be occupied,
or for the weight or measure of the goods of which the cargo consists,
or in any other manner whatsoever agreed upon.
9. The amount of primage to be paid the captain.
10.The days agreed upon for loading and unloading.
11.The lay days and extra lay days to be allowed and the rate of
demurrage.
1.
must be in writing
34 of 43
2. must be drawn in duplicate
3. must be signed by the parties
4. must contain the conditions stipulated
There are stipulations that must be agreed upon by the parties:
• Primage
- it is an amount stipulated in the charter party to be paid by the charterer or shipper as
compensation to the captain or master for his particular care on the goods
- formerly, it was a small allowance or compensation payable to the master and marines of the
vessel;
a. to the master, primage is paid for the use of his cables and ropes to discharge the
goods of merchants
b. for the marines of the ship, primage is paid for the loading and unloading in any port or
haven
- at present, it is no longer a gratuity to the master unless especially stipulated
- the primage belongs to the owners of freighters and is nothing but an increase of the
freight rate as of now
- the charters will give additional payment “primage” to the owners or freighters and it is
considered an increase of the freight rate
• Demurrage
- compensation provided for in the contract of affreightment for the detention of the vessel
beyond the time agreed on for loading and unloading
- this is claim for damages for failure to accept delivery
- it is a sum which is fixed by the contract of carriage or which is allowed as remuneration to
the owner of the shipped for the detention of his vessel beyond the number of days allowed
by the charter party for loading and unloading or sale
- it is only an extended freight or reward to the vessel in compensation of the earnings she is
improperly caused to lose
• in order for it to be collected, there must be condition precedent:
- there must be notice of arrival of the vessel or conveyances or for their placement
for purposes of unloading
• Laytime
layday — are the days allowed for the charter parties for the loading and unloading of
cargo
extra-laydays — are days which follow
lay time — if it is expressed in running days, these are the days when the ship would be
run continuously and holidays are not expected; a qualification of whether permitting
excepts only those days where bad weather reasonably prevents the work contemplated
”Layday: Customary Quick Despatch” (CDQD)
- it should be stated that the loading and unloading of the cargo should be made
within a reasonable period of time. Due diligence should be exercised according to the
customs and usages of the port or ports of call
NFA v. CA, GR No. 96453, August 4, 1999
- What is a reasonable time depends on the existing as opposed to normal
circumstances, at the port of loading and the custom of the port.
WWDSHINC — Weather Working Days, Sundays and Holidays Included
- the running of the laytime may be subject to WWDHINC and would cease to run in the
event that unfavorable weather interfered with the unloading of cargo
Is a charterer given the right to fix the date of departure? Can he decide when should the vessel depart?
TRANSPO.NOTES
- NO. When a charter party is only partial (affreightment), the charterer, as a rule, does not
shippers, to whom he shall communicate the facts on the first
opportunity, the freight being adjusted in such cases by the distance
covered by the vessel, with no right to any indemnification whatsoever.
acquire the right to fix the date when the vessel should depart unless such right is
expressly granted in the contract
What is the period of loading and unloading cargo?
- the period of loading and unloading may or may not be stipulated in the charter party
if stipulated — the fixed period shall govern
if no stipulation — usages of the port where these acts will be performed shall be
observed
if the usages of that port were not followed — captain shall be entitled to demand
demurrage for the delay for the loading and unloading
Art. 656. If in the charter party the time in which the loading and
unloading are to take place is not stated, the usages of the port
where these acts take place shall be observed. After the stipulated or
customary period has passed, and should there not be in the freight
contract an express provision fixing the indemnification for the
delay, the captain shall be entitled to demand demurrage for the lay
days and extra lay days which may have elapsed in loading and
unloading.
• Freight In and Out including Stevedoring and Trading (FOIST)
- means that the handling and loading of cargoes are the responsibilities of the charterer
May a captain execute a charter party?
- Yes, Article 655 authorized the capatain to execute a charter party in the absence of a ship
agent
- but if he violates the order and instructions of the ship agent, the consequences will be that:
a. the ship agent will be bound to said charter party and
b. the ship agent shall have the right of action against the captain for damages
Art. 655. 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 agent or shipowner; but the latter shall have a right of action
against the captain to recover damages.
• What must be done?
1.
the captain should charter another vessel at his own expense should his vessel be
rendered unseaworthy during the voyage
2.
the captain must be given time to charter the vessel
3.
the new charter party must be approved by judicial authority
4.
if the captain fails to do so due to indolence or malice, the shippers may themselves
charter another vessel
thus, the captain may perform transshipment
• Transshipment
- the act of taking cargo out of one ship and loading it in another
- the transfer of goods from the vessel stipulated in the contract of affreightment to another
vessel before the place of destination named in the contract has been reached
- the transfer for further transportation from one ship or conveyance to another
• Effect of failure to tranship by the captain
- where the master relinquishes the attempt to either carry on the goods on its own ship or to
send them to their destination in another ship, either by wholly abandons any claim for freight
in respect to them
- he can no longer claim for freight
- EXC: unless it has been made payable in advance or irrespective of delivery
- Where freight is payable only on delivery, no part is earned until it is delivered
• Freightage
- compensation for the transportation of the cargo/goods
• Rules on freightage
GR: charter party may or may not specify the date when the freightage shall begin to be
earned
a. If the charter party fixes the date — the freightage shall accrue from that date
b. If the charter party does not contain an indication as to when freightage shall accrue —
observed Art. 658.
When the vessel, during voyage, rendered unseaworthy
Art. 657. If during the voyage the vessel should be rendered unseaworthy
the captain shall be obliged to charter at his expense another one in
good condition, to carry the cargo to its destination, for which purpose
he shall be obliged to look for a vessel not only at the port of arrival
but also in the neighboring ports within a distance of 150 kilometers.
If the captain, through indolence or malice, should not furnish a
vessel to take the cargo to its destination, the shippers, after
requesting the captain to charter a vessel within an unextendible period,
may charter one and apply to the judicial authority for the summary
approval of the charter party which they may have made.
The same authority shall judicially compel the captain to carry out
for his account and under his responsibility the charter made by the
shippers.
If the captain, notwithstanding his diligence, should not find a
vessel to charter, he shall deposit the cargo at the disposal of the
35 of 43
Art. 658. The freightage shall accrue according to the conditions
stipulated in the contract and should they not be expressed, or should
they be ambiguous, the following rules shall be observed:
1. If the vessel has been chartered by months or days
- the freightage shall begin to run from the day the loading of the
vessel is begun
2. In charters made for a fixed period
- the freightage shall begin to run from that very day
3. If the freightage is charged according to weight
- the payment shall be made according to gross weight, including the
containers, such as barrels or any other objects in which the
cargo is contained
When should goods required to pay freightage?
Instances where the goods are required to pay freightage:
1. Art. 659. The merchandise is sold by the captain to pay for
necessary repairs to the hull, machinery or equipment, or
unavoidable and urgent needs, shall pay freightage.
2. Art. 663. Merchandise which suffer deterioration and diminutions
account of inherent defects or bad quality and condition of
the
for
on
the
TRANSPO.NOTES
3. Art. 674 - to refuse and unload at the expense of the owner excess cargo that cannot be
properly stowed
4. Art. 674 - to unload merchandise clandestinely placed on board, or to transport them if he
can do so, demanding the highest freightage
5. Art. 675- to find freight to take place of freight not received, if the vessel has been
chartered to receive cargo in another port, after he receives no cargo from the consignee
and after he receives no answer from the charterer
6. Art. 675 - to receive freight in full, discounting that which may have been earned on the
merchandise carried as substitute
7. Art. 677 - to have the charter party subsist notwithstanding the declaration of war or a
blockade during the voyage, and to receive in such cases, the freightage in full where the
shipper orders that the cargo should be discharged at the port of arrival
packing, or because of fortuitous event, shall pay freightage in full
and stipulated in the charter party
3. Art. 664. The natural increase in weight or size of the merchandise
loaded on the vessel shall accrue to the benefit of the owner, and
shall pay the proper freightage fixed in the contract for the same
Instances where the shipper is excused from paying freightage
1. Art. 660. Merchandise jettisoned for the common safety shall not pay
freightage; but the amount of the latter shall be considered as general
average computing the same in proportion to the distance covered when
they were jettisoned.
2. Art. 661. Neither merchandise lost by reason of shipwreck or stranding
nor those seized by the pirates or enemies, shall pay freightage. If
freightage should have been paid in advance, it shall be returned,
unless there is an agreement to the contrary
Obligations of the charterer
1. Art. 680 - to pay the freight in full even if the charterer does not complete the full cargo
he bound himself to ship
2. Art. 681- to answer with the value of his shipment and other property for the losses
suffered by the shipowner, captain or other shippers arising from confiscation, embargo,
detention, or other causes, where the charterer loads goods different from those stated at
the time of the execution of the charter party
3. Art. 682 - to be jointly liable with the captain for losses which may be caused to the other
shippers where the charterer ships goods for illicit commerce with the knowledge of the
shipowner or captain
4. Art. 682 - in case of making a port to repair the hull, machinery or equipment of the vessel,
to wait until the vessel is repaired or to pay for the expenses of unloading should the
charterer choose to unload
5. Art. 684 - where the charterer unloads goods before arriving at port of destination without
any force majeure occurring, to pay (1) expenses of arrival, (2) full freight and (3) for the
damages and losses caused to other shippers, if any
6. Art. 685 - where the charterer unloads before the beginning of the voyage, (1) to pay 1/2 of
the freight, (2) to pay for the expenses of stowing and restowing the cargo, (3) to pay any
other damage which he may have caused other shippers
7. Art. 686 - to pay for freight, other expenses and the primage after the vessel has been
unloaded and the cargo placed at the disposal of the consignee
8. Art. 687 - not to abandon merchandise damaged on account of inherent defect or fortuitous
event, for the payment of the freight and other expenses
IF vessel or goods are redeemed/salvaged — freightage must be paid:
Art. 662. If the vessel or the merchandise should be redeemed, or
the
effects
of
the
shipwreck
be
salvaged,
the
freightage
corresponding to the distance covered by the vessel transporting the
cargo shall be paid; x x x
IF vessel salvaged and used again — full freightage
Art. 662. and should the vessel, after being repaired, transport
said merchandise to the port of destination, the full freightage
shall be paid, without prejudice to what may be due by reason of the
average.
Obligations of the Shipowner
1. Art. 669 - to observe in the charter parties, the capacity of the vessel, and to indemnify
the shippers whose contracts are not fulfilled for the losses they may have suffered by the
failure of the shipowner to observe the capacity of the vessel
2. Art. 670 - to undertake a voyage at the time agreed upon or within 15 days from loading if
no time is stipulated, even if the shipowner should not find cargo sufficient to make up at
least 3/5 of the amount which the vessel may hold, where he fails to exercise his right to
change vessel
3. Art. 670 - where the shipowner should not find cargo sufficient to make up at least 3/5 of
the amount which the vessel may hold, to accept other cargo procured by the owner of the
freight already loaded under the same price and conditions
4. Art. 671- not to change the vessel after 3/5 of the vessel has been loaded, without the
consent of the charterers or shippers
5. Art. 672 - if the vessel has been chartered in whole, not to accept cargo from any other
person without the consent of the charterer
6. Art. 673 - to answer for losses arising from delay in putting to sea
7. Art. 676 - to have the vessel in a condition to navigate at the time of receiving the cargo
8. Art. 677 - in case of declaration of war or blockade during the voyage, where the captain
has not received any instructions from the charterer, for the captain to proceed to the
nearest safe and neutral port, requesting and awaiting orders from the shippers
Rights of a Shipowner
1. Art. 670 - where the cargo is not sufficient to make up at least 3/5 of the amount which
the vessel may hold, he may substitute another vessel inspected and declared suitable for the
voyage --> expenses of transfer and increase in price of the charter shall be paid by him
2. Art. 674 - to collect the freight in accordance with the price stipulated for cargo in excess
of that agreed upon is such excess can be properly stowed
Rescission
A. at the instance of the charterer
Art. 688. A charter party may be annulled at the request of the charterer:
1. If before loading the vessel he should abandon the charter, paying half
the freightage agreed upon.
2. If the capacity of the vessel should not agree with that stated in the
certificate of tonnage, or if there be an error in the statement of the
flag under which she sails.
3. If the vessel should not be placed at the disposal of the charterer
within the period and in the manner agreed upon.
4. If, after the vessel has put to sea, she should return to the port of
departure, on account of risk from pirates, enemies, or bad weather,
and the shippers should agree to unload her.
In the second and third cases the person from whom the vessel
was chartered shall indemnify the charterer for the losses he may
suffer.
36 of 43
TRANSPO.NOTES
In the fourth case the person from whom the vessel was
chartered shall have a right to the freightage in full for the voyage
out.
If the charter should have been made by the month, the
charterers shall pay the full freightage for one month, if the voyage
is for a port in the same waters; and two months, if for a port in
different waters.
(From one port to another of the Peninsula (Philippines) and
adjacent islands, the freightage for one month only shall be paid.)
5. If a vessel should make a port during the voyage in order to make
urgent repairs and the charterers should prefer to dispose of the
merchandise.
When the delay does not exceed thirty days, the shippers shall
pay the full freightage for the voyage out.
Should the delay exceed thirty days, they shall pay the
freight in proportion to the distance covered by the vessel.
B. at the instance of the shipowner
Art. 689. At the request of the person from whom the vessel is chartered
the charter party may be rescinded:
1. If the charterer at the termination of the extra lay days does not
place the cargo alongside the vessel.
In such case the charterer must pay half of the freightage
stipulated besides the demurrage due for the lay days and extra lay
days.
2. If the person from whom the vessel was chartered should sell it before
the charterer has begun to load it and the purchaser should load it for
his own account.
In such case the vendor shall indemnify the charterer for the
losses he may suffer.
If the new owner of the vessel should not load it for his own
account the charter party shall be respected, and the vendor shall
indemnify the purchaser if the former did not inform him of the
charter pending at the time of making the sale.
D. Loan on Bottomry
• Definition
- a contract by which a shipowner pledges the whole ship, as security for a loan to finance a
voyage
- basically, it is putting the ship up for collateral
- the lender will lose the money if the ship is lost during the voyage
- A contract in the nature of a mortgage, by which the owner of the ship borrows money for the
use, equipment and repair of the vessel and for a definite term, and pledges the ship (or the
keel or bottom of the ship) as a security for its repayment, with maritime or extraordinary
interest on account of the maritime risks to be borne by the lender, it being stipulated that if
the ship be lost in the course of the specific voyage or during the limited time, by any of the
perils enumerated in the contract, the lender shall also lose his money.
E. Loan on Respondentia
• Definition
- One made on the goods laden on board the ship, and which are to be sold or exchanged in the
course of the voyage, the borrower's personal responsibility being deemed the principal security
for the performance of the contract, which is therefore called respondentia. The lender must be
paid his principal and interest, thought the ship perishes, provided that the goods are saved.
C. by reason of causes independent of the will of the parties
• BEFORE voyage
Art. 690. The charter party shall be rescinded and all action arising
therefrom shall be extinguished if, before the vessel puts to sea from the
port of departure, any of the following cases should occur:
1. A declaration of war or interdiction of commerce with the power to
whose ports the vessel was to make its voyage.
2. A condition of blockage of the port of destination of said vessel, or
the breaking out of an epidemic after the contract was executed.
3. The prohibition to receive at the said port the merchandise
constituting the cargo of the vessel.
4. An indefinite detention, by reason of an embargo of the vessel by order
of the government, or for any other reason independent of the will of
the ship agent.
5. The inability of the vessel to navigate, without fault of the captain
or ship agent.
The unloading shall be made for the account of the charterer.
37 of 43
Nature of the Loan on Bottomry and Loan on Respondentia
- real, unilateral, aleatory contract by virtue which one person lends to another a certain
amount of money or goods on things exposed to maritime risks, which amount with its
earnings is to be returned if the things are safely transported, and which is loss if the
latter are lost
1. delivery of the amount loaned is necessary for the perfection of the contract
2. although there are reciprocal benefits, the contract produces obligations only for one party,
the borrower who must return the amount borrowed plus premium
3. lender really runs known risks
How Loans Executed:
Art. 720. 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.
- x x x In order that the policy of the contracts executed in
accordance with No.2 may have binding force, they must conform to
the registry of the broker who took part therein. x x x
3. By means of a private instrument. x x x
- x x x With respect to those executed in accordance with No. 3 the
acknowledgment of the signature shall be required. x x x
• in all three cases,
1. they must be in writing
x x x Contracts which are not reduced in writing shall not give
rise to judicial action. x x x
2. they must be registered
x x x it shall be entered in the certificate of the registry of the
vessel and shall be recorded in the registry of vessels x x x
• Effect of registration:
TRANSPO.NOTES
a. the loan shall have, with regard to other credits, the preference which, according to its
nature, it should have (Art. 580 - 8th in the order of preference)
b. shall be effective with regard to third persons from the date of
their execution, if they should be recorded in the registry of
vessels of the port of registry of the vessel before the lapse of
eight days following its arrival.
If said eight days should elapse without the record having been
made in the registry of vessels, the contracts made during the
voyage of a vessel shall produce no effect with regard to third
persons, except from the day and date of their inscription.
May a captain obtain a loan on bottomry or respondentia?
- GR: the captain has no authority to obtain a loan on bottomry or respondentia at the point of
the residence of the ship owner
- EXC:
a.
b.
if it is with the express authorization of the shipowner
outside of the residence of the owners, provided he follows the procedure as laid down in
Articles 583 and 611:
(1) application by the captain to:
(a) the judge or court if he is in the Philippines;
(b) the consul of the Philippines if he is in a foreign country; in the absence of the
consul, to the judge or court or proper local authority of that foregin country
(2) presentation by the captain of the certificate of registration sheet and the instruments
proving the obligations contracted
(3) making by the judge or authority of a temporary memorandum of their result of the
proceedings in the certificate;
- if no temporary memorandum, the captain will be personally liable
A. Averages
- consists of expenses or damages or deterioration to a vessel
Art. 806. For the purposes of this Code the following shall be
considered averages:
1. All extraordinary or accidental expenses which may be incurred
during the voyage for the preservation of the vessel or cargo, or
both.
2. All damages or deterioration which the vessel may suffer from the
time it puts to sea at the port of departure until it casts anchor at
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.
• to constitute an average as an EXPENSE:
1. they must be extraordinary or accidental
2. they were incurred during the voyage
3. they were incurred in order to preserve the vessel, cargo or both
Effect of Loss of goods on the Loan
- the obligation of the borrower is extinguished, if:
1.
the goods given as security are absolutely lost by reason of an accident of the sea
during the voyage designated and
2. it is proven that the goods were on board
• Instances where the loss does NOT extinguish the loan: [Art. 730]
1. when the loss is caused by the inherent defect of the thing
2. where the loss is caused by the fault or malice of the borrower
3. where the loss is caused by the barratry on the part of the captain
Barratry — unlawful breach of duty on the part of the ship’s master or crew resulting
to injury to the ship’s owner
4. where loss is caused by damage to the vessel as a consequence of its engaging in
contraband
5. where loss arose from having loaded the merchandise on a vessel different from that
designated in the contract (transshipment), except if change is due to force majeure
Risks, Damages and Accidents of Maritime Commerce
A. Averages
1. General
2. Particular
B. Arrival Under Stress
C. Collisions
D. Shipwrecks
38 of 43
• to constitute an average as DAMAGE or DETERIORATION
1. they must have been suffered at the time the vessel puts to sea at the port of departure
until it casts anchor at the port of destination; or
2. they have been suffered by the merchandise from the time they are loaded in the port of
shipment until they are unloaded in the port of consignment
• NOT considered as average are:
- petty or ordinary expenses which are incident of navigation because they will be defrayed
by the shipowner
Art. 807. The petty and ordinary expenses incident to navigation, such
as those of pilotage of coasts and ports, lighterage and towage,
anchorage, inspection, health, quarantine lazaretto, and other socalled port expenses, costs of barges, and unloading, until the
merchandise is placed on the wharf, and other usual expenses of
navigation shall be considered ordinary expenses to be defrayed by the
shipowner, unless there is an express agreement to the contrary.
• When the law on averages NOT applicable
- when there is negligence on the part of the captain during the collision of the vessel which
is the caused of the collision and the cargoes were not jettisoned to save some of the
cargos in the vessel
• Kinds of Averages:
Art. 808. Averages shall be:
1. Simple or particular.
Art. 809. As a general rule, simple or particular averages 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, especially the following:
1. The losses suffered by the cargo from the time of its embarkation
until it is unloaded, either on account of the inherent defect of
the goods or by reason of a marine accident 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 equipments, for the same causes and reasons,
from the time it puts to sea from the port of departure until it
anchors in the port of destination.
TRANSPO.NOTES
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 a 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 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 to save the crew, 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 damage caused.
9. Any loss suffered by the cargo through the faults, negligence, or
barratry of the captain or of the crew, without prejudice to the
right of the owner to recover the corresponding indemnity from the
captain, the vessel, and the freight.
Example: Bananas worth P100,000 were transported through ship. During the voyage,
bananas worth P20,000 were overripe. The P20,000 are considered particular averages
Effect:
Art. 810. The owner of the goods which gave rise to the expense or
suffered the damage shall bear the simple or particular averages.
2. General or gross.
Art. 811. As a general rule, general or gross averages shall include
all the damages and expenses which are deliberately caused in order to
save the vessel, its cargo, or both at the same time, from a real and
known risk, and particularly the following:
1. The goods or cash invested in the redemption of the vessel or of
the cargo captured by enemies, privateers, or pirates, and the
provisions, wages, and expenses of the vessel detained during the
time the settlement or redemption is being made.
2. The goods jettisoned to lighten the vessel, whether they belong to
the cargo, to the vessel, or to the crew, and the damage suffered
through said act by the goods which are kept on board.
3. The cables and masts which are cut or rendered useless, the anchors
and the chains which are abandoned, in order to save the cargo, the
vessel, or both.
4. The expenses of removing or transferring a portion of the cargo in
order to lighten the vessel and place it in condition to enter a
port or roadstead, and the damage resulting therefrom to the goods
removed or transferred.
5. The damage suffered by the goods of the cargo by the opening made
in the vessel in order to drain it and prevent its sinking.
6. The expenses caused in order to float a vessel intentionally
stranded for the purpose of saving it.
7. The damage caused to the vessel which had to be opened, scuttled or
broken in order to save the cargo.
39 of 43
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. The depreciation resulting in
the value of the goods sold at arrivals under stress in order to
repair the vessel by reason of gross average.
11.The expenses of the liquidation of the average.
Requisites: [Magsaysay Inc. vs Agan 96 Phil. 504]
1. there must be a common danger --> the ship and cargo are subject to the same danger
and that the danger arises from accidents of the sea, dispositions of the authorities or
faults of men, provided that the circumstances producing the peril should be
ascertained and imminent
2. for the common safety, part of the vessel or the cargo or both is sacrificed deliberately
(eg. jettisoning)
3. from the expenses or damages caused follows the successful saving of the vessel and
cargo
4. the expenses or damages should have been incurred or inflicted after taking legal steps
and authority
Effects:
Art. 812. In order to satisfy the amount of the gross or general
averages, all the persons having an interest in the vessel and cargo
therein at the time of the occurrence of the average shall contribute.
(in proportion to their interest)
Formalities [Arts. 813-814]
1. there must be an assembly of the sailing mate and other officers with the captain
including those with interests in the cargo
2. there must be a resolution of the captain
3. the resolution shall be entered in the log book, with the reasons and motives and the
votes for and against the resolution
4. the minutes shall be signed by the parties
5. within 24 hours upon arrival at the first port the captain makes, he shall deliver one
copy of these minutes to the maritime judicial authority thereat
Rules on Jettison
Art. 815. The captain shall direct the jettison, and shall order the goods
cast overboard in the following order:
1. Those which are on deck, beginning with those which embarrass (cause
imbalance) the maneuver or damage the vessel, preferring, if possible,
the heaviest ones with the least utility and value.
2. Those which are below the upper deck, always beginning with those of
the greatest weight and smallest value, to the amount and number
absolutely indispensable.
Art. 816. 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 in so far as the cargo is concerned that their existence on
TRANSPO.NOTES
1. the entire cargo or party thereof should appear to be damaged or there should
be imminent danger of its being damage
2. there must be an authorization of the sale by the competent court or consul
3. the formalities under Art. 624 (when the vessel has gone through a hurricane)
must be followed
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 612.
B. Arrival Under Stress
- arrival of a vessel at the most convenient port if during the voyage…
Art. 819. If during the voyage the captain should believe that the vessel
cannot continue the trip to the port of destination on account of:
(1)the lack of provisions,
(2)well-founded fear of seizure, privateers, or pirates, or
(3)by reason of any accident of the sea disabling it to navigate, x x
Effect:
Art. 821. 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.
1.
C. Collisions
- the crashing together of two vessels which are moving
• Allision
- striking of a moving vessel against one that is stationary and perhaps, other species of
encounters between vessels or a vessel and other floating though non-navigable
objects (eg. structures on water are subject of allision not collision)
*the Civil Code, however, does not provide for any provisions on collision; that is why, go
directly to the provisions of the Code of Commerce
Rules on Collision
1. if 1 vessel is at fault, the owner thereof shall be liable for the damages
Art. 826. If a vessel should collide with another, through the fault,
negligence, or lack of skill of the captain, sailing mate, or any other member
of the complement, the owner of the vessel at fault shall indemnify the losses
and damages suffered, after an expert appraisal.
if the arrival is legitimate
- expenses shall be borne by the shipowner or agent
2. if the arrival is not legitimate
- the ship agent and the captain shall be jointly liable for the damages which may be
caused the shippers
• when is an arrival under stress considered NOT LEGAL
1. if lack of provisions should arise from failure to take the necessary provisions for
the voyage according to usage or 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 or justifiable facts
3. if the defects of the vessel should have been caused 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
4. whenever malice, negligence, want of foresight or lack of skill on the part of the
captain exist in the act causing damage
2. if 2 vessels are involved:
a. if both vessels are blamed for the collision, each one shall suffer its own damage and be
solidarily liable for the losses suffered by their cargo
IF there is an Arrival Under Stress, the captain is given the authority to unload the goods,
provided the following conditions are met:
1. the unloading must be necessary to make repairs or there must be danger that the
cargo may suffer damage
2. the captain must be authorized by either a competent court or the Phil. consul,
depending on the port of arrival
• IF the cargo is unloaded:
Art. 823. The custody and preservation of the cargo which has been
unloaded shall be entrusted to the captain, who shall be responsible
for the same, except in cases of force majeure.
Art. 827. 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.
b. if it is not determinable which between the vessel is at fault, also apply the rule in (a) —
each one shall suffer its own damage and be solidarily liable for the losses suffered by their
cargo
Art. 828. The provisions of the preceding article are applicable to the
case in which it cannot be determined which of the two vessels has
caused the collision.
*this is also referred to as the DOCTRINE OF INSCRUTABLE FAULT
In these cases, owner will reserve the right to run after (civilly/criminally) after the person
who caused the damage. (right of recourse)
Art. 829. 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.
International Rules of the Road
Rule 18. (a) provides: where 2 power driven vessels are meeting head-on or nearly head-on, so
as to involve risk of collision, each shall alter their course to starboard (to the right) so that
each may pass to the port side of each other
(There is this episode of Mr. Bean na he boarded a vessel/ship, sinusundan nya ung sun actually)
• IF there is loss or destruction of the goods, the captain will be liable
• EXCEPT caused by force majeure
- in a vessel the direction is not right left right left; it is starboard or port
• starboard — means go to the RIGHT
• port — means go to the LEFT
May a captain sell his cargo which is subject of the vessel which arrived under stress?
- Yes, but under the following conditions:
NOT applicable
40 of 43
TRANSPO.NOTES
- this rule does NOT apply to vessels which, if they keep their respective courses, will pass
• In case a vessel properly anchored and moored collied with others by reason of force
majeure — damages = particular average
each other
APPLICABLE
- this apply to cases
1. by which, by day, each vessel sees the mast of the other in align or nearly in align with
the other
2. By night, if each vessel is in such a position to see both the sidelight of the other [Smith
Bell and Co., Inc. vs. CA, GR NO. L-56294, May 20, 1991]
Art. 832. If, by reasons 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.
Nautical Rules to Determine Negligence:
- rules which were established by usage over time to determine whether there was fortuitous
event or negligence
Mecenas v. CA, GR No. 88052, December 14, 1989]
- FACTS: there is a collision between Don Carlos and Tai Maru
- SC: there were certain factors that where present showing the negligence of the
second mate which made Don Carlos liable. These factors of negligence are:
(1) Don Carlos failed to comply with Rule 18 of the International Rules of Rome;
instead of going to starboard it went port, thus, the collision.Moreover, it did
not give a signal indicating that it was going to port, glaring two horn ___
(2) Don Carlos failed to have on board that night a proper lookout
1. When 2 vessels are about to enter a port, the farther one must allow the nearer to
enter first; if they collide, the fault is presumed to be imputable to the one who
arrived later, unless it can be proved that there was no fault on its part.
2. When 2 vessels meet, the smaller should give the right of way to the larger one.
3. A vessel leaving port should leave the way clear for another which may be entering
the same port.
4. The vessel which leaves later is presumed to have collided against one who has left
earlier.
5. There is also a presumption against the vessel which sets sail at night.
6. The presumption also works against the vessel with spread sails which collides with
another which is at anchor, and cannot move, even when the crew of the latter has
received word to lift anchor, when there was not sufficient time to do so or there was
fear of a greater damage or other legitimate reason.
7. The vessel which is not properly moored or does not observe the proper distances, has
the presumption against itself.
8. The vessel which is moored at a place not used for the purpose, or which is improperly
moored or does not have sufficient cables, or which has been left without watch, has
also against itself the presumption.
9. The same rule applies to those vessels which do not have buoys to indicate the location
of its anchors to prevent damage to these vessels which may approach it.
(ano ung cause ni… sinking of Titanic according to the movie? — dba hindi nag-lumilingon
ung lookout. At the last minute, sabi nya “iceberg ahead!” kaya lang nanjan na pala. So, it
was too late for the titanic to turn, natamaan nya ngayon ung iceberg, ang laki nung gash
sa side. So that was the story of Titanic, hindi naten alam kung anong ngyari sa totoo
cause we were not there? anyway…)
What is a proper lookout?
- a proper lookout is one who has been trained as such and who is
given no other duty save to act as a lookout and who is stationed
where he can see and hear best and maintain good communication
with the other officers in charge of the vessel.
(3) it was the second mate who was navigating the ship and there was no
showing that the captain was incapacitated
G. Urrutia & Co. & Baco River Plantation Corp, Gr No L-77675, March 25, 1930
- there are 3 divisions or time zones in the course of a collision:
- this introduce the DOCTRINE OF TERROR IN EXTREMES (changing course at the 3rd
zone)
1. First zone
- covers all the time up to the moment when the risk of collision may be
said to have begun
- but, in this first zone, no rule is applicable. Each vessel is free to direct its
course as it deems best with reference to the movements of the other
vessel.
2. Second zone
- covers the time between the moment when the risk of collision begins and
the moment when it has become a practical necessity.
3. Third zone
- the time between the moment when collision has become a practical
certainty and the moment of actual contact
4. When there is a 3rd vessel at fault:
- in this case, it was during the third zone when the vessel was passing through that it
3.
changed its course to port (left) in order to avoid collision. This act may be said to
have been been done in extremis.
the ___ vessel is not responsible for the loss
it is in the second zone where the vessels must exercise the provisions on the
International Rule of Rome
In case of for fortuitous event or force majeure:
Art. 830. If a vessel should collide with another through fortuitous event
or force majeure, each vessel and its cargo shall bear its own damages.
41 of 43
Art. 831. 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.
Loss by Reason of Collision
Art. 833. A vessel which, upon being run into, sinks immediately, as well as
that which, having been obliged to make a port to repair the damages caused by
the collision, is lost during the voyage or is obliged to be stranded in order
to be saved, shall be presumed as lost by reason of collision.
Action for Recovery of Losses Damages
- can only be admitted if protest has been made w/in 24 hours before a competent
authority of the point where the collision took place
- a condition precedent before any action for the recovery of damages arising from
collisions may be admitted --> presentation of a protest
Art. 835. The action for the recovery of losses and damages arising from
collisions cannot be admitted if a protest or declaration is not presented
within twenty-four 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 Philippine territory and to the consul of the Philippines, if
it occurred in a foreign country.
• Protest
- reporting of what happened
TRANSPO.NOTES
• Instances where protest is required:
1. under 612, when the vessel makes an arrival under stress
2. under 612, 624 and 843, where the vessel is shipwrecked
3. under 624, where the vessel has gone through a hurricane or when the captain
believes that the cargo has suffered damages or averages
4. under 835, in case of maritime collisions
• Excuses of the failure of protest w/in 24 hours
Art. 836. With respect to damages caused to persons or to the cargo, the
absence of a protest may not prejudice the persons interested who were not
on board or were not in a condition to make known their wishes.
Limited Liability Rule
Art. 837. The civil liability incurred by the shipowners in the cases
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.
- the liability of the shipowner is limited to the value of or interest over the vessel such that
Art. 841. If the wreck or standing should be caused by the malice,e
negligence, or lack of skill of the captain, or because the vessel put to sea
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.
Salvage Law (Act No. 2616)
• Salvage
- “hindi to ung pagpatay ng tao. Iba un!” - J. Cualing
- compensation allowed to persons by whose voluntary assistance has sink at sea or her
cargo or boat have been saved, in whole or in part, from a pending sea peril or such
property recovered from actual peril or loss as in case of shipwreck or derelict or
recapture
- also known as a service by which one person renders to the owner of a ship or goods by
his own labor reserving the goods or ship of owner or those entrusted with the care of
them either abandoned in stress at sea or unable to protect the same
if the vessel is lost, their liability is likewise lost
Luzon Stevedoring Corp. vs. CA, GR NO. L-38897, December 3, 1987
- abandonment of the vessel is necessary in order to limit the liability of the ship owner or
the agent to the value of the vessel
- the only instance that where there can be no abandonment or abandonment is dispensed
with is when the vessel is entirely lost
Why is there a need of a declaration of abandonment?
- because if there is abandonment, you are giving up the whole vessel in favor of
the creditors and these creditors are now the one who will be liable to
foreclose the liens they have over the vessel
Collision on Foreign Waters
Art. 839. If the collision should take place
(1)between Philippine vessels in foreign waters, or
(2)if having taken place in the open seas, and the vessels should make a
foreign port,
the Filipino consul in said port shall
(1)hold a summary investigation of the accident,
(2)forwarding the proceedings to the Secretary of the Department of Foreign
Affairs for continuation and conclusion.
D. Shipwreck
- ship which has received injuries rendering him incapable of navigations
- Loss of a vessel at sea, either by being swallowed up by the waves, by running against
another vessel or thing at sea, or on coast --> renders the ship incapable of navigation
Person Liable
a. Caused by Force Majeure — damages shall be suffered by the shipowner
Art. 840. The losses and deteriorations suffered 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.
b. Caused by the Malice, Lack of Negligence or Skill of the Captain or Vessel put to sea was
insufficiently repaired or equipped — Captain liable
thus under the salvage law, those who assist in saving a vessel or cargo in case of
shipwreck shall be entitled to a reward or salvage
• Derelict
- a ship or cargo which is abandoned and left at sea by those in charged of it without any
hope of recovery or any intention to return to it
the one who will rescue this derelict has also rights — right of possession which he
can maintain against the true owner
- finder has a right of possession; but does NOT acquire ownership over the derelict
because the owner does not intentionally renounce his right of possession over that
vessel such that at anytime, owner has the right to recover his vessel
- this means that the owner temporarily abandons his right of possession which is
transferred to the finder who becomes:
1. bound to preserve the property with good faith and
2. brings it to a place of safety for the owner’s use;
in return therefore, he acquires a right to be paid for his service a reasonable
and proper compensation out of the property itself
- the finder may not released immediately the vessel until he is paid properly for
the safekeeping of the vessel
Erlanger Gallinger v. Swedish, 34 Phil 178; Barrios v. Go Thong & Company, GR No.
L-17192, March 30, 1983
- these are the ELEMENTS necessary to a SALVAGE CLAIM:
1. it must be a marine peril
- the damage must be by reason of a marine peril
2. the service voluntarily rendered when not required as an existing duty or
from a special contract
3. success in whole or in part or that the service rendered contributed to such
success
Salvage v. Towage
• Towage — the crew does not have any interest or rights with the renumeration because
pursuant to the contract
- what is paid is the fee for towing the vessel to a port
• Salvage — the crew of a vessel and the other participants of the services may be given
compensation
- the persons paid are those who help (not only the captain but also the crew) in
salvaging the vessel
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TRANSPO.NOTES
- it must be filed within 1 year after delivery of the goods or the day when the goods
should have been delivered [Section 3 (6)]
COGSA
- if the action is not filed within 1 year, the carrier will be discharged from liability
Carriage of Goods by Sea Act (COGSA)
Is notice of damage or loss of goods required such that by filing such notice, the 1 year period will start running?
Why is there a need for this COGSA?
Eastern Shipping Lines v. IAC, GR NO. 69044, May 29, 1987
- the law of the country to which the goods are to be transported governs the
liability of the common carrier in cases of loss, destruction, or deterioration
- this provision can also be found under Article 1766 (Law of the Destination)
- if however, there are matters in that contract which is not formulated by the Civil
Code, the Code of Commerce and Special Laws shall be applies suppletory
- COGSA is a special law which provides particularly for goods that are transported
from a foreign country which will come inside the Philippines; thus it is suppletory
to the provisions of Civil Code
Belgian Overseas Chartering and Shipping N.V. v. Jardine Davies Tranport Services, Inc.,
GR No. 143133, June 5, 2002
- 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. The provisions on limited liability are as much a part of the bill of
lading as though physically in it and as though placed there by agreement of the
parties.
- what will prevail as to the determination of the liability of the carrier will be the
nature and the value of the goods as declared and reflected in the bill of lading
Under Section 4 (5) of the COGSA provides:
- the maximum limit of the damages is only $500 per package:
Neither the carrier nor the ship shall in any event be or become
liable for any loss or damage to or in connection with the transportation
of goods in an amount exceeding $500 per package of lawful money of the
United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the
nature and value of such goods have been declared by the shipper before
shipment and inserted in the bill of lading. This declaration, if
embodied in the bill of lading, shall be prima facie evidence, but shall
not be conclusive on the carrier.
- but according to the SC, it is absurd to say that $500 is the maximum because what
will prevail as the basis of the liability of a carrier will be the value declared in the
bill of lading. So that if the valued declared in the bill of lading is greater and there is
a loss, destruction and deterioration of goods coming to the Philippines, the $500/
packages will not be followed but that stated in the bill of lading.
- however under Section 4(5) of COGSA, the parites may also agree that the amount of
liability may be less than $500/package
By agreement between the carrier, master or agent of the carrier,
and the shipper another maximum amount than that mentioned in this
paragraph may be fixed: Provided, that such maximum shall not be less
than the figure above named. In no event shall the carrier be liable for
more than the amount of damage actually sustained.
Period of Prescription
Lonestar Shipping Corp., Inc., v. CA, 373 Phil 976 (1999); Wallem Phil. Shipping, Inc. v. S.R.
Farms, GR No. 161849, July 9, 2010; Asean Terminals, Inc. vs. Philam Insurance, Inc., GR No.
1811163, July 24, 2013
- Notice is not required because Section 3 of the COGSA:
if a notice of loss or damage, either apparent or concealed, is not given
as provided for in this section, that fact shall not affect or prejudice
the right of the shipper to bring suit within one year after the delivery
of the goods or the date when the goods should have been delivered.
- but notice may be filed w/in 3 days of the delivery or receipt from the carrier
When is the period of 1 year not applicable ?
- in cases of misdelivery or conversions
the COGSA however did not define what a “LOSS” means
- thus, refer to the Civil Code:
Loss or damage to cargo is understood to mean that the thing is loss:
1. when it perishes
2. goes out of commerce
3. disappears in such a ways that its existence is unknown; or
4. cannot be recovered therefore no delivery that could be made
- thus, if no delivery could be made, that is the time that there is loss or damage
IF there is delivery but was delivered to another person who should not have received such
cargo, then there is a MISDELIVERY
- thus, the 1 year prescription in COGSA will not apply
- the person who was supposed to received the cargo must file under the provisions of
the Civil Code which provides the following prescriptive period:
• breach of written contract — 10 years [Art. 1144]
• oral contract - 6 years [Art. 1145]
• based on quasi-delict — 4 years [Art. 1146]
- demands under these cases will not toll the running of the period, thus, upon
misdelivery, the prescription period will start running
To whom is prescription applicable?
- shipper or consignee against the carrier
Philippines Insurance Corp., Inc. vs. Alejandro, GR No. L-54140, October 14, 1986
- citing Chua Kuy v. Everett Steamship Corporation (93 Phil 207, 213-214) and The Yek
Tong Fire and Marine Insurance Co., Ltd., v. American President Lines, Inc., 103 Phil.
1125-1126:
insurers must also file w/in the 1 year prescriptive period against the carrier
Mayer Steel Pipe Corp. v. Hongkong Government Supplies Department, GR No. 124050,
June 19, 1997
however, the claim of the shipper/consignee against the insurer is not covered by
the 1 year prescriptive period of COGSA; the Marine Insurance shall apply (10yrs)
thus, 1 yr prescriptive period applies only to person running after the carrier
May the COGSA be applied in Domestic Trade?
- Yes, only when the parties agreed that the provisions of the COGSA will apply to their
contract
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—————-———-“so that’s it for transportation law”———————