CODE OF COMMERCE OF THE PHILIPPINES

COMMERCIAL CONTRACTS FOR TRANSPORTATION

shall transport them, being exempt from all responsibility if its

objections, is made to appear in the bill of lading.

ARTICLE 349 Commercial contract of transportation by land or

water
Has articles of commerce
Engaged in public transpo

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, he shall proceed with his investigation in the
presence of witnesses, with the shipper or consignee in attendance.

ARTICLE 350 Bill of Lading

Receipt
Evidence of contract of carriage
Absence thereof does not negate CC but is best evidence of
existence of CC

If the shipper or consignee who has to be cited does not

attend, 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 proper.

ARTICLE 353 The legal evidence of the contract between the

shipper and the carrier shall be the bills of lading, by the contents
of which the disputes which may arise regarding their execution
and performance shall be decided, no exceptions being admissible
other than those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading
which the carrier has issued shall be returned to him, and by virtue
of the exchange of this title with the thing transported, the
respective obligations and actions shall be considered cancelled,
unless in the same act the claim which the parties may wish to
reserve be reduced to writing, with the exception of that provided
for in Article 366.
In case the consignee, upon receiving the goods, cannot
return the bill of lading subscribed by the carrier, because of its loss
or of any other cause, he must give the latter a receipt for the
goods delivered, this receipt producing the same effects as the
return of the bill of lading.
ARTICLE 354 absence of a bill of lading, disputes shall be
determined by the legal proofs which the parties may present in
support of their respective claims
ARTICLE 355 The responsibility of the carrier shall commence
from the moment he receives the merchandise, personally or
through a person charged for the purpose, at the place indicated
for receiving them.
ARTICLE 356 Carriers may refuse packages which appear unfit for
transportation but if the shipment is insisted upon, the company

If the declaration of the shipper should be true, the expense

occasioned by the examination and that of carefully repacking the
packages shall be for the account of the carrier and in a contrary
case for the account of the shipper.
ARTICLE 358 If there is no period fixed for the delivery of the
goods the carrier shall be bound to forward them in the first
shipment of the same or similar goods which he may make point
where he must deliver them; and should he not do so, the damages
caused by the delay should be for his account.
ARTICLE 359 If there is an agreement between the shipper and
the carrier as to the road over which the conveyance is to be made,
the carrier may not change the route, unless it be by reason of
force majeure; and should he do so without this cause, he shall be
liable for all the losses which the goods he transports may suffer
from any other cause, beside paying the sum which may have been
stipulated for such case.
When on account of said cause of force majeure, the carrier
had to take another route which produced an increase in
transportation charges; he shall be reimbursed for such increase
upon formal proof thereof.
ARTICLE 360 The shipper, without changing the place where the
delivery is to be made, may change the consignment of the goods
which he delivered to the carrier, provided that at the time of
ordering the change of consignee the bill of lading signed by the
carrier, if one has been issued, be returned to him, in exchange for
another wherein the novation of the contract appears.

The expenses with this change of consignment occasions

shall be for the account of the shipper.
ARTICLE 361
GR: merchandise shouldered by shipper

proof of accident is the burden of carrier

ARTICLE 362
Liable for Art. 361 if arose through negligence or failure to
take necessary precaution
ARTICLE 363
Outside of the cases mentioned in the second paragraph of
Article 361, carrier obliged to ship the goods in the same
condition in which they were received
ARTICLE 364
Diminution of value of goods, damages should also be
equitably reduced
ARTICLE 365
Rendered useless for sale and consumption, consignee not
bound to receive them and have them in the hands of the
carrier, demanding their value at the current price on that
day.
ARTICLE 366 Within the twenty-four hours following the receipt of
the merchandise, the claim against the carrier for damage or
average be found therein upon opening the packages, may be
made, provided that the indications of the damage or average
which gives rise to the claim cannot be ascertained from the
outside part of such packages, in which case the claim shall be
admitted only at the time of receipt.
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim shall be admitted
against the carrier with regard to the condition in which the goods
transported were delivered.
ARTICLE 367
Doubts or disputes with respect to conditions of goods, it
shall be examined by an expert
ARTICLE 368

Deliver without delay or obstruction otherwise carrier is

liable.
If receiver refuses to receive, receiver is liable

ARTICLE 369
Deposit to court equals delivery to party (consignment)
Liability discontinue to attach
ARTICLE 370
Period for delivery fixed, must be made on time, otherwise
carrier is liable for delay
Liquidated damages
Damages caused by delay
ARTICLE 371
Abandonment carrier pay full value as if they are already
lost
ARTICLE 372
Value of lost goods paid according to bill of lading
ARTICLE 373
Carrier who makes the delivery 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.
Acquire all the actions and rights of those who preceded him
in the conveyance.
The shipper and the consignee shall have an immediate
right of action against the carrier who executed the
transportation contract, or against the other carriers who
may have received the goods transported without
reservation.
The reservation made by the latter shall not relieve them
from the responsibilities which they may have incurred by
their own acts.
ARTICLE 374
In case of delay in this payment, carrier may demand the
judicial sale of the goods transported in an amount
necessary to cover the cost of transportation and the
expenses incurred.

ARTICLE 375
The goods transported shall be bound to answer for the
cost of transportation and for the expenses and fees
incurred for them during their conveyance and until the
moment of their delivery.
Prescribe eight days after the delivery has been made, and
once prescribed, the carrier shall have no other action than
that corresponding to him as an ordinary creditor.
ARTICLE 376
Preference of the carrier to the payment of what is owed
him shall not be cut off by the bankruptcy of the latter,
provided it is claimed within the eight days
ARTICLE 377
Carrier liable for all the consequences which may arise from
his failure to comply with the formalities prescribed by the
laws and
If the carrier has acted by virtue of a formal order of the
shipper or consignee of the merchandise, both shall become
responsible
ARTICLE 379
Provisions in Articles 349 and following shall be understood
as equally applicable to those who, although they do not
personally effect the transportation of the merchandise,
contract to do so through others, either as contractors for a
particular and definite operation, or as agents for
transportations and conveyances.
In either case they shall be subrogated in the place of the
carriers themselves, with respect to the obligations and
responsibility of the latter, as well as with regard to their
rights.
MARITIME COMMERCE
(Arts. 573-869)
IMPORTANT CONCEPTS:
1. Merchant vessel
2. Maritime lien and Preference of Credit
3. Doctrine of limited liability
4. Causes of revocation of voyage
5. Participants in maritime commerce
6. Charter party

7. Loans on bottomry and respondentia

8. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
It is the system of laws which particularly relates to the affairs
and business of the sea, to ships, their crews and navigation,
and to maritime conveyance of persons and property.
Maritime laws apply only to maritime trade and sea voyages.
Arrastre service is not maritime in character. It refers to a
contract for the unloading of goods from a vessel.
CHARACTERISTICS OF MARITIME TRANSACTION
1. Real - similar to transactions over real property with respect to
effectively against third persons which is done through
registration.
The evidence of real nature is shown by:
1) The limitation of the liability of the agents to the actual
value of the vessel and the freight money; and
2) The right to retain the cargo and embargo and detention of
the vessel (Luzon Stevedoring Corp v. CA, 156 SCRA 169);
2. Hypothecary - the liability of the owner of the value of the
vessel is limited to the vessel itself (Doctrine of Limited
Liability).

The real and hypothecary nature of maritime law simply

means that the liability of the carrier in connection with
losses related to maritime contracts is confined to the
vessel, which stands as the guaranty for their settlement.
(Aboitiz Shipping Corp. vs. General Accident Fire and Life
Assurance Corp. 217 SCRA 359).

MERCHANT VESSEL
Vessel engaged in maritime commerce, whether foreign or
otherwise.
Constitutes property which may be acquired and transferred
by any of the means recognized by law. They shall continue to
be considered as personal property. (Arts. 573, 585)
They are susceptible to maritime liens such as for the repair,
equipping and provisioning of the vessel in the preparation of
a voyage, as well as mortgage liabilities, in satisfaction of
which a vessel may be validly arrested and sold.
MARITIME LIEN
o It constitutes a present right of property in the ship, a jus in re,

o
o

to be afterward enforced in admiralty by process in rem. (PNB

vs. CA, 337 SCRA 381)
If the maritime lien arose prior to the recording of a preferred
mortgage, it shall have priority over the said mortgage lien.
(PNB vs. CA, 337 SCRA 381)
Effect of sale: All pre-existing claims in the vessel are
terminated. They will then be satisfied from the proceeds of
the sale subject to the order of preference.

DOCTRINE OF LIMITED LIABILITY

(HYPOTHECARY RULE)
Cases where applicable:
1. Art. 587 civil liability for indemnities to third persons
2. Art. 590 indemnities from negligent acts of the captain
(not the shipowner or ship agent)
3. Art. 837 collision
4. Art. 643 liability for wages of the captain and the crew and
for advances made by the ship agent if the vessel is lost by
shipwreck or capture
GENERAL RULE: The liability of shipowner and ship agent is limited
to the amount of interest in said vessel such that where vessel is
entirely lost, the obligation is extinguished. (Luzon Stevedoring v.
Escano, 156 SCRA 169)
The interest extends to:
1) the vessel itself;
2) equipments;
3) freightage; and
4) insurance proceeds. (Chua v. IAC, 166 SCRA 183)
EXCEPTIONS:
1. Claims under Workmens Compensation (Abueg vs. San Diego
77 Phil 730);
2. Injury or damage due to shipowner or to the concurring
negligence of the shipowner and the captain;
3. The vessel is insured (Vasquez vs. CA 138 SCRA 553).
4. Expenses for repair on vessel completed before loss;
5. In case there is no total loss and the vessel is not abandoned;
6. Collision between two negligent vessels;
Abandonment of the vessel is necessary to limit the liability of the
shipowner. The only instance were abandonment is dispensed with
is when the vessel is entirely lost (Luzon Stevedoring vs. CA 156
SCRA 169).

RIGHT OF SHIPOWNER OR SHIP AGENT TO ABANDON VESSEL

Instances:
1. In case of civil liability from indemnities to third persons (Art.
587);
2. In case of leakage of at least of the contents of a cargo
containing liquids (Art. 687); and
3. In case of constructive loss of the vessel (Sec. 138, Insurance
Code).
CAUSES OF REVOCATION OF VOYAGE
1. War or interdiction of commerce;
2. Blockade;
3. Prohibition to receive cargo at destination;
4. Embargo;
5. Inability of the vessel to navigate. (Art. 640)
Terms:
1. Interdiction of commerce A governmental prohibition of
commercial intercourse intended to bring about an entire
cessation for the time being of all trade whatever.
2. Blockade A sort of circumvallation of a place by which all
foreign connection and correspondence is, as far as human
power can effect it, to be cut off.
3. Embargo A proclamation or order of a state, usually issued in
time of war or threatened hostilities, prohibiting the departure
of ships or goods from some or all the ports of such state until
further order.
PARTICIPANTS IN MARITIME COMMERCE
A. Shipowners and ship agents
B. Captains and masters of the vessel
C. Officers and crew of the vessel
D. Supercargoes
E. Pilot
A. SHIPOWNERS AND SHIP AGENTS
Shipowner (proprietario)
Person who has possession, control and management of the
vessel and the consequent right to direct her navigation and
receive freight earned and paid, while his possession continues.
Ship agent (naviero)
Person entrusted with provisioning and representing the vessel in
the port in which it may be found; also includes the shipowner.
Not a mere agent under civil law; he is solidarily liable with the

ship owner.
Powers and functions:
1. Capacity to trade;
2. Discharge duties of the captain, subject to Art.609;
3. Contract in the name of the owners with respect to repairs,
details of equipment, armament, provisions of food and fuel,
and freight of the vessel, and all that relate to the requirements
of navigation;
4. Order a new voyage, make a new charter or insure the vessel
after obtaining authorization from the shipowner or if granted in
certificate of appointment.
Civil Liabilities of the Shipowner And Ship Agent
1. All contracts of the captain, whether authorized or not, to
repair, equip and provision the vessel; (Art. 586)
2. Loss and damage to the goods loaded on the vessel without
prejudice to their right to free themselves from liability by
abandoning the vessel to the creditors. (Art. 587)
Duty of Ship Agent to Discharge the Captain and Members
of the Crew
If the seamen contract is not for a definite period or voyage, he
may discharge them at his discretion. (Art. 603)
If for a definite period, he may not discharge them until after the
fulfillment of their contracts, except on the following grounds:
a. Insubordination in serious matters;
b. Robbery;
c. Theft;
d. Habitual drunkenness;
e. Damage caused to the vessel or to its cargo through malice
or manifest or proven negligence. (Art. 605)
B. CAPTAINS AND MASTERS
They are the chiefs or commanders of ships.
The terms have the same meaning, but are particularly used in
accordance with the size of the vessel governed and the scope of
transportation, i.e., large and overseas, and small and coastwise,
respectively.
Nature of position (3-fold character):
1. General agent of the shipowner;
2. Technical director of the vessel;
3. Representative of the government of the country under
whose flag he navigates.
Qualifications:

1. Filipino citizen;
2. Legal capacity to contract;
3. Must have passed the required physical and mental
examinations required for licensing him as such. (Art. 609)
Inherent powers:
1. Appoint crew in the absence of ship agent;
2. Command the crew and direct the vessel to its port of
destination;
3. Impose correctional punishment on those who, while on
board vessel, fail to comply with his orders or are wanting in
discipline;
4. Make contracts for the charter of vessel in the absence of
ship agent.
5. Supply, equip, and provision the vessel; and
6. Order repair of vessel to enable it to continue its voyage.
(Art. 610)
Sources of funds to comply with the inherent powers of the
captain (in successive order):
1. From the consignee of the vessel;
2. From the consignee of the cargo;
3. By drawing on the ship agent;
4. By a loan on bottomry;
5. By sale of part of the cargo. (Art. 611)
Duties:
1. Bring on board the proper certificate and documents and a
copy of the Code of Commerce;
2. Keep a Log Book, Accounting Book and Freight Book;
3. Examine the ship before the voyage;
4. Stay on board during the loading and unloading of the
cargo;
5. Be on deck while leaving or entering the port;
6. Protest arrivals under stress and in case of shipwreck;
7. Follow instructions of and render an accounting to the ship
agent;
8. Leave the vessel last in case of wreck;
9. Hold in custody properties left by deceased passengers and
crew members;
10. Comply with the requirements of customs, health, etc. at the
port of arrival;
11. Observe rules to avoid collision;
12. Demand a pilot while entering or leaving a port. (Art. 612)
A ships captain must be accorded a reasonable measure of
discretionary authority to decide what the safety of the ship and of

its crew and cargo specifically requires on a stipulated ocean

voyage (Inter-Orient Maritime Enterprises Inc. vs. CA).
No liability for the following:
1. Damages caused to the vessel or to the cargo by force
majeure;
2. Obligations contracted for the repair, equipment, and
provisioning of the vessel unless he has expressly bound
himself personally or has signed a bill of exchange or
promissory note in his name. (Art. 620)
Solidary Liabilities of the Ship Agent/Shipowner for Acts
Done by the Captain towards Passengers and Cargoes
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. (Art.
618)
C. OFFICERS AND CREW
1. Sailing Mate/First Mate
2. Second Mate
3. Engineers
4. Crew
No liability under the following circumstances:
1. If, before beginning voyage, captain attempts to change it, or a
naval war with the power to which the vessel was destined
occurs;
2. If a disease breaks out and be officially declared an epidemic in
the port of destination;
3. If the vessel should change owner or captain. (Art. 647)
Sailing Mate/First Mate
Second chief of the vessel who takes the place of the captain in
case of absence, sickness, or death and shall assume all of his
duties, powers and responsibilities. (Art. 627)
Duties:
1. Provide himself with maps and charts with astronomical
tables necessary for the discharge of his duties;
2. Keep the Binnacle Book;

3. Change the course of the voyage on consultation with the

captain and the officers of the boat, following the decision of
the captain in case of disagreement;
4. Responsible for all the damages caused to the vessel and
the cargo by reason of his negligence. (Arts. 628 - 631)
Second Mate
Takes 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 responsibilities.
Third in command
Duties:
1. Preserve the hull and rigging of the vessel;
2. Arrange well the cargo;
3. Discipline the crew;
4. Assign work to crew members;
5. Inventory the rigging and equipment of the vessel, if laid up.
(Art. 632)
Engineers
Officers of the vessel but have no authority except in matters
referring to the motor apparatus. When two or more are hired, one
of them shall be the chief engineer.
Duties:
1. In charge of the motor apparatus, spare parts, and other
instruments pertaining to the engines;
2. Keep the engines and boilers in good condition;
3. Not to change or repair the engine without authority of the
captain;
4. Inform the captain of any damage to the motor apparatus;
5. Keep an Engine Book;
6. Supervise all personnel maintaining the engine. (Art. 632)
Crew
The aggregate of seamen who man a ship, or the ships company.
Hired by the ship agent, where he is present and in his absence,
the captain hires them, preferring Filipinos, and in their absence, he
may take in foreigners, but not exceeding 1/5 of the crew. (Art.
634)
Classes of Seamans Contracts
1. By the voyage;
2. By the month; and
3. By share of profits or freightage.

Just Causes for the Discharge of Seaman While Contract

Subsists
1. Perpetration of a crime;
2. Repeated insubordination, want of discipline;
3. Repeated incapacity and negligence;
4. Habitual drunkenness;
5. Physical incapacity;
6. Desertion. (Art. 637)
Rules in case of Death of a Seaman
The seamans heirs are entitled to payment as follows:
1. If death is natural:
a. compensation up to time of death if engaged on wage
b. if by voyage - half of amount if death occurs on voyage out;
and full, if on voyage in
c. if by shares - none, if before departure; full, if after
departure
2. if death is due to defense of vessel - full payment;
3. if captured in defense of vessel - full payment;
4. if captured due to carelessness - wages up to the date of the
capture. (Art. 645)
Complement of the Vessel
All persons on board, from the captain to the cabin boy, necessary
for the management, maneuvers, and service, thus including the
crew, the sailing mates, engineers, stokers and other employees on
board not having specific designations.
Does not include the passengers or the persons whom the vessel
is transporting.
D. SUPERCARGOES
Persons who discharges administrative duties assigned to him by
ship agent or shippers, keeping an account and record of
transaction as required in the accounting book of the captain. (Art.
649)
E. PILOT
A person duly qualified, and licensed, to conduct a vessel into or
out of ports, or in certain waters.
The term generally connotes a person taken on board at a
particular place for the purpose of conducting a ship through a
river, road or channel, or from a port.
Master pro hac vice for the time being in the command and
navigation of the ship.

While in exercising his functions a pilot is in sole command of the

ship and supersedes the master for the time being in the command
and navigation of the ship, the master does not surrender his
vessel to the pilot and the pilot is not the master. There are
occasions when the master may and should interfere and even
displace the pilot, as when the pilot is obviously incompetent or
intoxicated (Far Eastern Shipping Company vs. CA).
Compulsory Pilotage States possessing harbors have enacted
laws or promulgated rules requiring vessels approaching their ports
to take on board pilots licensed under the local laws. (Notes and
Cases on the Law on Transportation and Public Utilities, Aquino, T.
& Hernando, R.P. 2004 ed. p. 518)
Liablity of Pilot
GENERAL RULE: On compulsory pilotage grounds, the Harbor Pilot
is responsible for damage to a vessel or to life or property due to
his negligence.
EXCEPT:
1. Accident caused by force majeure or natural calamity provided
the pilot exercised prudence and extra diligence to prevent or
minimize damages.
2. Countermand or overrule by the master of the vessel in which
case the registered owner of the vessel is liable. (Sec.11, Art.III PPA
Admin Order 03-85)
SPECIAL CONTRACTS OF MARITIME COMMERCE
1. Charter party
2. Bill of lading
3. Contract of transportation of passengers on sea voyages
4. Loan on bottomry
5. Loan on respondentia
6. Marine insurance
CHARTER PARTY
A contract by virtue of which the owner or agent binds himself to
transport merchandise or persons for a fixed price.
A contract by which an entire ship, or some principal part thereof
is let/leased by the owner to another person for a specified time or
use. (Planters Products, Inc. vs. CA, 226 SCRA 476)
Parties:
1. Ship owner or ship agent
2. Charterer
Classes:
1. Bareboat or demise The charterer provides crew, food and fuel.
The charterer is liable as if he were the owner, except when the

cause arises from the unworthiness of the vessel. The shipowner

leases to the charterer the whole vessel, transferring to the latter
the entire command, possession and consequent control over the
vessels navigation, including the master and the crew, who
thereby become the charters servants. It transforms a common
carrier into a private carrier.
The charterer becomes the owner of the vessel pro hac vice,
just for that one particular purpose only. Because the charterer
is treated as owner pro hac vice, the charterer assumes the
customary rights and liabilities of the shipowner to third persons
and is held liable for the expense of the voyage and the wages
of the seamen.
2. Contract of Affreightment A contract whereby the owner of the
vessel leases part or all of its space to haul goods for others.
The shipowner retains the possession, command and
navigation of the ship, the charterer merely having use of the
space in the vessel in return for his payment of the charter
hired.
Kinds:
a. Time charter vessel is chartered for a fixed period of time
or duration of voyage.
b. Voyage or trip charter the vessel is leased for one or series
of voyages usually for purposes of transporting goods for
charterer.
LEASE
If for a definite period, lessee
cannot give up the lease by
paying a portion of the amount
agreed upon.

CHARTER PARTY
Charterer may rescind charter
party by paying half of the
freightage agreed upon.

If the leased property is sold to

one who knows of the existence
of the lease, the new owner
must respect the lease.

The new owner is not compelled

to respect the charter party so
long as he can load the vessel
with his own cargo. (Art. 689)

Civil law concept

Commercial law concept

CHARTER PARTY
An entire or complete contract.

BILL OF LADING
More like a private receipt which the
captain gives to accredit goods
received from persons
Real contract

Consensual contract

BAREBOAT OR DEMISE
CHARTER
Charterer becomes liable to
others caused by its negligence
Charterer regarded as owner pro
hac vice for the voyage
Owner of vessel relinquishes
possession,
command
and
navigation to charterer

CONTRACT OF AFFREIGHTMENT
(TIME OR VOYAGE CHARTER)
Owner remains liable as carrier and
must answer for any breach of duty
Charterer is not regarded as owner.

Common carrier is converted to

private carrier.

Common carrier is not converted to a

private carrier.

The vessel owner retains possession,

command and navigation of the ship

PERSONS WHO MAY MAKE A CHARTER

1. Owner or owners of the vessel, either in whole or in majority
part, who have legal control and possession of the vessel
2. Charterer may subcharter entire vessel to 3rd person only if
not prohibited in original charter. (Art.679)
3. Ship agent if authorized by the owner/s or given such power
in the certificate of appointment. (Art.598)
4. Captain in the absence of the ship agent or consignee and
only if he acts in accordance with the instructions of the
agent or owner and protects the latters interests. (Art.609)
REQUISITES OF A VALID CHARTER PARTY
1. Consent of the contracting parties
2. Existing vessel which should be placed at the disposition of
the shipper
3. Freight
4. Compliance with Art. 652 of the Code of Commerce
Terms:
1. Primage - bonus to be paid to the captain after the successful
voyage.
2. Demurrage the sum fixed in the charter party as a
remuneration to the owner of the ship for the detention of his
vessel beyond the number of days allowed by the charter party
for loading or unloading or for sailing.
3. Deadfreight the amount paid by or recoverable from a
charterer of a ship for the portion of the ships capacity the
latter contracted for but failed to occupy.
4. Lay Days - days allowed to charter parties for loading and
unloading the cargo.

5. Extra Lay Days days which follow after the lay days have
elapsed.
USUAL FORMS OF CONSUMMATING CONTRACTS
1. C.I.F. cost, insurance and freight;
2. F.O.B. - free on board;
3. F.A.S. - free alongside ship; and
4. C. & F. - cost and freight.
TRANSSHIPMENT OF GOODS
The act of taking cargo out of one ship and loading it in another,
or 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, or the transfer for further
transportation from one ship or conveyance to another.
It is not dependent on the ownership of the transporting ships or
in the change of carriers, but rather on the fact of actual physical
transfer of cargo from one vessel to another.
If done without legal excuse, however competent and safe the
vessel into which the transfer is made, is a violation of contract and
infringement of right of shipper and subjects carrier to liability if
freight is lost event by cause otherwise excepted. (Magellan
Manufacturing vs. CA, 201 SCRA 102)
LOAN ON BOTTOMRY AND RESPONDENTIA
A real, unilateral, aleatory contract, by virtue of 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 lost if the
latter are lost.
LOAN ON
BOTTOMRY

LOAN ON RESPONDENTIA

Shipowner or ship agent.

Outside of the residence of the
owners - the captain.
1.
2.

1.
2.
3.

1.
2.
3.
4.
5.
6.
7.

Only the owner of the cargo.

Common elements:
Exposure of security to marine peril;
Obligation of the debtor conditioned only upon safe arrival of the
security at the point of destination.
Forms:
Public instrument
Policy signed by the contracting parties and the broker taking part
therein
Private instrument (Art. 720)
Contents:
Kind, name and registry of the vessel;
Name, surname and domicile of the captain;
Names, surnames and domiciles of the borrower and the lender;
Amount of the loan and the premium stipulated;
Time for repayment;
Goods pledged to secure repayment;
Voyage during which the risk is run (Art.721)

BOTTOMRY/ RESPONDENTIA

ORDINARY LOAN (MUTUUM)

Not subject to Usury Law

Subject to Usury Law

Liability of the borrower is

contingent on the safe arrival of
the vessel or cargo at destination

Not subject to any contingency

(absolute liability)

The last lender is a preferred

creditor

The first lender is a preferred

creditor

WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED

AS SIMPLE LOAN
Definition
1. Lender loaned an amount larger than the value of the object
Loan made by shipowner or Loan taken on security of the cargo
due to fraudulent means employed by the borrower.
ship agent guaranteed by laden on a vessel, and repayable
(ART.726)
vessel itself and repayable upon safe arrival of cargo at
2.
Full amount of the loan is not used for the cargo or given on
upon arrival of vessel at destination. (Art. 719)
the goods if all of them could not have been loaded, the
destination. (Art. 719)
balance will be considered a simple loan. (ART.727)
3.
If the effects on which the money is taken is not subjected
Who may contract
to any risk. (ART.729)

Note: Under existing laws, the parties to a loan, whether ordinary

or maritime, may agree on any rate of interest. (CB Circular 905)
MARINE INSURANCE

LOAN ON BOTTOMRY OR
RESPONDENTIA

Indemnity is paid after the loss has

occurred

Indemnity
is
paid
in
advance by way of a loan

In case of loss of the vessel due to a

risk insured against, the obligation of
the insurer becomes absolute

In case of loss of the vessel

due to a marine peril, the
obligation of the borrower
to pay is extinguished

Consensual contract

Real contract

Hypothecary Nature of Bottomry/ Respondentia

GENERAL RULE: The obligation of the borrower to pay the loan is
extinguished if the goods given as security are absolutely lost by
reason of an accident of the sea, during the voyage designated,
and if it is proven that the goods were on board.
EXCEPTIONS:
1. Loss due to inherent defect;
2. Loss due to the barratry on the part of the captain;
3. Loss due to the fault or malice of the borrower;
4. The vessel was engaged in contraband; and
5. The cargo loaded on the vessel be different in from that agreed
upon.
Concurrence of Marine Insurance and Loan on
Bottomry/Respondentia
1. The insurable interest of the owner of a ship hypothecated
by bottomry is only the excess of the value over the amount
secured by bottomry. (Sec. 101, Insurance Code)
2. The value of what may be saved in case of shipwreck shall
be divided between the lender and the insurer in proportion
to the interest of each one. (Art. 735)
Note: If a vessel is hypothecated by bottomry only the excess is
insurable, since a loan on bottomry partakes of the nature likewise

of an insurance coverage to the extent of the loan accommodation.

The same rule would apply to the hypothecation of the cargo by
respondentia. (Pandect of Commercial Law and Jurisprudence,
Justice Jose Vitug, 1997 ed.)
ACCIDENTS IN MARITIME COMMERCE
1. Averages
2. Arrival Under Stress
3. Collision
4. Shipwreck
AVERAGE
An extraordinary or accidental expense incurred during the
voyage in order to preserve the cargo, vessel or both, and all
damages or deterioration suffered by the vessel from departure to
the port of destination, and to the cargo from the port of loading to
the port of consignment. (Art. 806)
The person whose property has been saved must contribute to
reimburse the damage caused or expense incurred if the situation
constitutes general average.
Classes:
1. Particular or Simple Average
2. Gross or General Average
Where both vessel and cargo are saved, it is general average;
where only the vessel or only the cargo is saved, it is particular
average.
Expenses incurred to refloat a vessel, which accidentally ran
aground, in order to continue its voyage, do not constitute general
average. Not only is there absence of a marine peril, common
safety factor, and deliberateness. It is the safety of the property,
and not the voyage, which constitutes the true foundation of
general average. (A. Magsaysay, Inc. vs. Agan, G.R.No. L-6393, Jan.
31, 1955)
PARTICULAR OR SIMPLE
GROSS OR GENERAL
Definition
Damages or expenses caused Damages
or
expenses
to the vessel or cargo that did deliberately caused in order
not inure to the common to save the vessel, its cargo
benefit,
and
borne
by or both from real and known
respective owners. (Art. 809)
risk. (Art. 811)
Requisites
1. common danger;
2. deliberate sacrifice;

3. success;
4. proper formalities and
legal steps.
Liability
The owner of the goods which All the persons having an
gave rise to the expense or interest in the vessel and the
suffered the damage shall bear cargo therein at the time of
this average. (Art. 810)
the
occurrence
of
the
average shall contribute to
satisfy this average. (Art.
812)
The insurers (Art.859) and
lenders on bottomry and
respondentia shall likewise
contribute. (Art.732).
Number of interests involved
Only one interest involved
Several interests involved
Share in the damage or expense
100% share
In proportion to the value of
the owners property saved
Right to recover
No reimbursement
There may be reimbursement
Kinds (not exclusive)
Art. 809
Art. 811
Procedure for recovery
1. Assembly and deliberation
2. Resolution of the captain
3. Entry of the resolution in
the logbook
4. Detailed minutes
5. Delivery of the minutes to
the
maritime
judicial
authority of the first port,
within 24 hours from arrival,
6. Ratification
by
captain
under oath. (Arts. 813-814)

GOODS NOT COVERED BY GENERAL AVERAGE EVEN IF

SACRIFICED
1. Goods carried on deck. (ART.855)
2. Goods not recorded in the books or records of the vessel.
(ART.855 (2))

3. Fuel for the vessel if there is more than sufficient fuel for the
voyage. (Rule IX, York-Antwerp Rule)
Jettison
Act of throwing cargo overboard in order to lighten the vessel.
Order of goods to be cast overboard:
1. Those which are on the deck, preferring the heaviest one
with the least utility and value;
2. Those which are below the upper deck, beginning with the
one with greatest weight and smallest value. (Art. 815)
Jettisoned goods are not res nullius nor deemed abandoned
within the meaning of civil law so as to be the object of occupation
by salvage. (Pandect of Commercial Law and Jurisprudence, Justice
Jose Vitug, 1997 ed.)
In order that the jettisoned goods may be included in the gross
or general average, the existence of the cargo on board should be
proven by means of the bill of lading. (Art. 816)
York-Antwerp (Y-A) Rules on Determining Liability for
Averages With Regard To Deck Cargo
1. Deck cargo is allowed only in domestic/coastwise/inter-island
shipping, and is prohibited in international/overseas/foreign
shipping.
2. If deck cargo is loaded with the consent of the shipper on
overseas trade, it must always contribute to general average, but
should the same be jettisoned, it would not be entitled to
reimbursement because there is violation of the Y-A Rules.
3. If deck cargo is loaded with the consent of the shipper on
coastwise shipping, it must always contribute to general average
and if jettisoned would be entitled to reimbursement.
Reason: In domestic shipping, voyages are usually short and the
seas are generally not rough. In overseas shipping, the vessel is
exposed for many days to perils of the sea.
DOMESTIC
Deck cargo is allowed

INTERNATIONAL
Deck cargo is not allowed

With shippers consent

General average
Particular average
Without shippers consent
Captain is liable
Captain is liable
ARRIVAL UNDER STRESS (ARRIBADA)
The arrival of a vessel at the nearest and most convenient port

instead of the port of destination, if during the voyage the vessel

cannot continue the trip to the port of destination.
When lawful

When unlawful

The
inability
to
continue voyage is
due to lack of
provisions,
wellfounded fear of
seizure, privateers,
pirates,
or
accidents of the
sea disabling it to
navigate. (Art. 819)

1. Lack
of
provisions due to
negligence to carry
according to usage
and customs;
2. Risk of enemy
not well known or
manifest
3. Defect of vessel
due
to
improper
repair; and
4. Malice,
negligence, lack of
foresight or skill of
captain. (Art. 820)

Who
expenses:

bears

The shipowner or
ship agent is liable
in case of unlawful
arrival under stress.
But they shall not
be liable for the
damages
caused
by reason of a
lawful arrival. (Art.
821)

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

after the cause of the arrival under stress has ceased failing in such
duty renders him liable. However, in case the cause has been risk
of enemies, there must first be an assembly before departure. (Art.
825)
Steps:
1. Captain should determine during the voyage if there is well
founded fear of seizure, privateers and other valid grounds;
2. Captain shall assemble the officers and summon the
persons interested in the cargo who may attend the meeting
but without a right to vote;
3. The officers shall determine and agree if there is wellfounded reason after examining the circumstances. The
captain shall have the deciding vote;
4. The agreement shall be drafted and the proper minutes shall
be signed and entered in the log book;
5. Objections and protests shall likewise be entered in the
minutes.
COLLISION
Impact of two vessels both of which are moving.

Allision
Impact between a moving vessel and a stationary one.
Nautical Rules to Determine Negligence
1. When two 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 two 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 which has left earlier.
5. There is a presumption against the vessel which sets sail in the
night.
6. There is a presumption 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. There is a presumption against an improperly moored vessel.
8. There is a presumption against a vessel which has no buoys to
indicate the location of its anchors to prevent damage to
vessels which may approach it.
9. Vessels must have proper look-outs or persons trained as
such and who have no other duty aside therefrom. (Smith Bell v.
CA)
Nautical Rules as to Sailing Vessel and Steamship
1. Where a steamship and a sailing vessel are approaching each
other from opposite directions, or on intersecting lines, the
steamship from the moment the sailing vessel is seen, shall
watch with the highest diligence her course and movements so
as to be able to adopt such timely means of precaution as will
necessarily prevent the two boats from coming in contact.
2. The sailing vessel is required to keep her course unless the
circumstances require otherwise.

Zones of Time in the Collision of Vessels

1. First zone all time up to the moment when risk of collision
begins. No rule is as yet applicable for none is necessary.
2. Second zone time between moment when risk of collision

begins and moment it becomes a practical certainty. It is in this

period where conduct of the vessels is primordial. It is in this
zone that vessels must strictly observe nautical rules, unless a
departure therefrom becomes necessary to avoid imminent
danger.
3. Third zone time when collision is certain and time of impact.
An error in this zone would no longer be legally consequential.
Error in Extremis - sudden movement made by a
faultless vessel during the third zone of collision with
another vessel which is at fault during the 2nd zone.
Even if such sudden movement is wrong, no
responsibility will fall on said faultless vessel. (Urrutia
and Co. v. Baco River Plantation Co., 26 PHIL 632)
Cases Covered By Collision and Allision
1. One vessel at fault
Vessel at fault is liable for damage caused to innocent
vessel as well as damages suffered by the owners of
cargo of both vessels. (Art. 826)
2. Both vessels at fault
Each vessel must bear its own loss, but the shippers of
both vessels may go against the shipowners who will be
solidarily liable. (Art. 827)
3. Vessel at fault not known
Each vessel must bear its own loss, but the shippers of
both vessels may go against the shipowners who will be
solidarily liable. (Art. 828)
Doctrine of Inscrutable Fault In case of collision where
it cannot be determined which between the two vessels
was at fault, both vessels bear their respective damage,
but both should be solidarily liable for damage to the
cargo of both vessels.
4. Third vessel at fault
The third vessel will be liable for losses and damages.
(Art. 831)
5. Fortuitous event/force majeure
No liability. Each bears its own loss. (Art. 830)

The doctrine of res ipsa loquitur applies in case a moving vessel

strikes a stationary object, such as a bridge post, dock, or
navigational aid. (Far Eastern Shipping v. CA, Luzon Stevedoring vs.
CA)
Even if the cause of action against the common carrier is based

on quasi-delict, the defense of due diligence in the selection and

supervision of employees is unavailing in case of a maritime tort
resulting in collision. It is not a civil tort governed by the Civil Code
but a maritime one governed by Arts. 826-839 of the Code of
Commerce. (Manila Steamship vs. Insa Abdulhaman)
Doctrine of Last Clear Chance and Rule on Contributory
Negligence cannot be applied in collision cases because of Art.827
of the Code of Commerce. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004
ed.)
MARITIME PROTEST
Condition precedent or prerequisite to recovery of damages
arising from collisions and other maritime accidents.
It is a written statement made under oath by the captain of a
vessel after the occurrence of an accident or disaster in which the
vessel or cargo is lost or damaged, with respect to the
circumstances attending such occurrence, for the purpose of
recovering losses and damages.
Excuses for not filing protest: 1) where the interested person is
not on board the vessel; and 2) on collision time, need not be
protested. (Art. 836)
Cases applicable:
1. Collision (Art. 835);
2. Arrival under stress (Art. 612(8));
3. Shipwrecks (Arts. 612(15), 843);
4. Where the vessel has gone through a hurricane or when the
captain believes that the cargo has suffered damages or
averages (Art. 624).
Who makes: Captain
When made: within 24 hours from the time the collision took
place.
Before whom made: competent authority at the point of collision
or at the first port of arrival, if in the Philippines and to the
Philippine consul, if the collision took place abroad. (Art. 835)
SHIPWRECK
It is the loss of the vessel at sea as a consequence of its
grounding, or running against an object in sea or on the coast. It
occurs when the vessel sustains injuries due to a marine peril
rendering her incapable of navigation.
If the wreck was due to malice, negligence or lack of skill of the
captain, the owner of the vessel may demand indemnity from said
captain. (Art. 841)

 The rules on collision or allision, as may be pertinent, can equally

apply to shipwrecks.
SPECIAL CONCEPTS
ARRASTRE SERVICE
A contract for the unloading of goods from a vessel.
Applicability: Overseas trade only. (Commercial Law Review, C.
Villanueva, 2004 ed.)
Significance: When a person brings in cargo from abroad, he
cannot unload and deliver the cargo by himself. The unloading
must be done by the arrastre operator, which will then deliver the
cargo to the importer. (Commercial Law Review, C. Villanueva,
2004 ed.)
Nature of business: It is a public utility, discharging functions
which are heavily invested with public interest.
Liability:
1. Similar to a warehouseman (Lua Kian v. Manila Railroad)
2. Similar to a common carrier (Northern Motors v. Prince Line)
3. Solidary liability with the common carrier
Note: In order that the arrastre operator may be held liable, the
consignee must prove that the damage was due to the negligence
and while the goods are in the custody of the arrastre operator.
(Hartford Fire Insurance v. E. Razon, Inc.)
STEVEDORING SERVICE
The carriage of goods from the warehouse or pier to the holds of
the vessel. (Chief of Staff vs. CIR)
As understood in the port business, the term consists of the
handling of cargo from the hold of the ship to the dock, in case of
pier-side unloading; or to a barge, in case of unloading at sea.
(Anglo-Fil Trading Corp. vs. Lazaro)
The loading on the ship of outgoing cargo is also part of
stevedoring work. (Ibid.)
CONTAINERIZATION/ SAID-TO-CONTAIN/ SHIPPERS LOAD
AND COUNT SYSTEM
System whereby the shipper loads his cargoes in a specially
designed container, seals the container and delivers it to the carrier
for transportation. The carrier does not participate in the counting
of the merchandise for loading into the container, the actual
loading, and the sealing of the container. (US Lines v. Comm. Of
Customs, ICTSI v. Prudential Guarantee)
The matter of quantity, description and conditions of the cargo
inside the container is the sole responsibility of the shipper, unless
there is stipulation to the contrary. (US Lines vs. Comm. Of

Customs, Reyma Brokerage v. Phil. Home Assurance)

Note: In order to attribute to the carrier any damage to the
shipment that may be found, inspection of the goods should be
done at pier-side. (Bankers vs. CA)
III. CARRIAGE OF GOODS BY SEA ACT/COGSA (C.A. No. 65)
APPLICABILITY
The transportation must be:
1. Water/maritime transportation;
2. for the carriage of goods; and
3. overseas/international/foreign (from foreign port to
Philippine port).
It can be applied in domestic sea transportation if agreed upon
by the parties. (Clause paramount or paramount clause)
IMPORTANT FEATURES:
1. Amount of carriers liability
2. Notice of damage
3. Prescriptive period
AMOUNT OF CARRIERS LIABILITY
Under the Sec. 4(5), the liability limit is set at $500 per package
or customary freight unit unless the nature and value of such goods
is declared by the shipper. This is deemed incorporated in the bill
of lading even if not mentioned in it. (Eastern Shipping vs. IAC, 150
SCRA 463)
Note that Art. 1749, NCC applies to domestic/interisland/coastwise trade.
NOTICE OF DAMAGE (SEC. 3(6))
Rules:
a. Patent damage: shipper should file a claim with the carrier
immediately upon delivery
b. Latent damage: shipper should file a claim with the carrier
within three days from delivery.
Note: The filing of a notice of claim is not a condition precedent.
PRESCRIPTIVE PERIOD
Action for loss or damage to the cargo should be brought within
one year after:
a. Delivery of the goods (delivered but damaged goods); or
b. The date when the goods should have been delivered (non-

delivery). (Sec. 3[6])

Loss or Damage as applied to the COGSA contemplates a
situation where no delivery at all was made by the shipper of the
goods because the same had perished, gone out of commerce, or
disappeared in such a way that their existence is unknown or they
cannot be recovered. Thus, it is inapplicable in case of misdelivery
or conversion. (Ang vs. American Steamship Agencies Inc.) and
damage arising from delay or late delivery (Mitsui O.S.K. Lines Ltd.
vs. CA). In such instance the, Civil Code rules on prescription shall
apply.
The one-year prescriptive period is suspended by:
1. The express agreement of the parties (Universal Shipping
Lines, Inc. vs. IAC, 188 SCRA 170)
2. The filing of an action in court until it is dismissed. (Stevens
& Co. vs. Nordeutscher Lloyd, 6 SCRA 180)
The one-year period shall run from delivery of the last package
and is not suspended by extrajudicial demand. (Dole Phils.,Inc. vs.
Maritime Co.,148 SCRA 118)
The one-year period shall run from delivery to the arrastre
operator and not to the consignee. (Union Carbide Phils, Inc. vs.
Manila Railroad Co.,SCRA 359)
The insurer exercising its right of subrogation is bound by the
one-year prescriptive period. However, it does not apply to the
claim against the insurer for the insurance proceeds.
(Fil.
Merchants Ins. Co. vs. Alejandro; Mayer Steel Pipe Corp. vs. CA)
IV. WARSAW CONVENTION OF 1929 (WC)
PURPOSE: To protect the emerging air transportation industry and
to secure the uniformity of recovery by the passengers.
APPLICABILITY
The transportation must be:
1. International transportation;
2. Air transportation; and
3. Carriage of passengers, baggage or goods.
The WC shall also apply to fortuitous transportation by aircraft
performed by an air transportation enterprise.
International transportation - any transportation in which the
place of departure and the place of destination are situated either:

1. Within the territories of two High Contracting Parties

regardless of whether or not there be a break in the
transportation or transshipment, or
2. Within the territory of a single High Contracting Party, if there
is an agreed stopping place within a territory subject to the
sovereignty, mandate or authority of another power, even
though that power is not a party to the Convention. (round
trip, Am. Jur.)
Transportation to be performed by several successive air carriers
shall be deemed to be one undivided transportation, if it has been
regarded by the parties as a single operation, whether it has been
agreed upon under the form of a single contract or of a series of
contracts, and it shall not lose its international character merely
because one contract or a series of contracts is to be performed
entirely within a territory subject to the sovereignty, suzerainty,
mandate, or authority of the same High Contracting Party. (Art. 1
Sec.3)
WHEN INAPPLICABLE
1. When public policy is contradicted;
2. If the requirements under the Convention are not complied
with.
IMPORTANT CONCEPTS:
1. Transportation documents
a. Passenger ticket
b. Baggage check
c. Air way bill
2. Liability of the carrier for damages
a. Death or injury to passengers
b. Loss or damage to baggage or goods
c. Delay
3. Successive carrier agreement
4. Jurisdiction
5. Combined transportation agreement
PASSENGER
TICKET
Passenger

BAGGAGE
CHECK
Checked-in
baggage

AIR WAYBILL
Goods to be
shipped

LIABILITY OF CARRIER FOR DAMAGES

1. Death or injury of a passenger if the accident causing it took
place on board the aircraft or in the course of its operations of
embarking or disembarking; (Art. 17)

2. Destruction, loss or damage to any baggage or goods, if it took

place during the transportation by air; (Art. 18) and
Transportation by air The period during which the baggage or
goods are in the charge of the carrier, whether in an airport or on
board an aircraft, or, in case of a landing outside an airport, in any
place whatsoever.
It includes any transportation by land or water outside an
airport if such takes place in the performance of a contract for
transportation by air, for the purpose of loading, delivery, or
transshipment.
3. Delay in the transportation of passengers, baggage or goods.
(Art. 19)

Thus, the WC does not operate as an exclusive enumeration of

the instances of an absolute limit of the extent of liability. It does
not preclude the application of the Civil Code and other pertinent
local laws. It does not regulate or exclude liability for other
breaches of contract by the carrier, or misconduct of its employees,
or for some particular or exceptional type of damage. (Alitalia vs.
CA)

Note: The Hague Protocol amended the WC by removing the

provision that if the airline took all necessary steps to avoid the
damage, it could exculpate itself completely (Art. 20(1)). (Alitalia
vs. IAC, 192 SCRA 9)

In KLM Royal v. Tuller, the WC has invariably been held

inapplicable, or as not restrictive of the carriers liability, where
there was satisfactory evidence of malice or bad faith attributable
to its officers and employees. (Alitalia vs. IAC)

LIMIT OF LIABILITY (Art. 22, as amended by Guatemala

Protocol, 1971; Alitalia vs. IAC)
1. Passengers
GENERAL RULE: $100,000 per passenger
EXCEPTION: Agreement to a higher limit

ACTION FOR DAMAGES

1. Notice of claim
A written complaint must me made within:
a. 3 days from receipt of baggage
b. 7 days from receipt of goods
c. In case of delay, 14 days from receipt of baggage/goods
The complaint is a condition precedent. Without the complaint,
the action is barred except in case of fraud on the part of the
carrier. (Art. 26)

2. Checked-in baggage
GENERAL RULE: $20 per kilogram
EXCEPTION: In case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value.
3. Hand-carried baggage
$1000/passenger
4. Goods to be shipped
GENERAL RULE: $20 per kilogram
EXCEPTION: In case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value.
An agreement relieving the carrier from liability or fixing a lower
limit is null and void. (Art. 23)
Carrier is not entitled to the foregoing limit if the damage is
caused by willful misconduct or default on its part. (Art. 25)

In PanAm v. IAC, the WC was applied as regards the limitation on

the carriers liability, there being a simple loss of baggage without
any improper conduct on the part of the officials or employees of
the airline or other special injury sustained by the passenger.

2. Prescriptive period
Action must be filed within 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29)
In United Airlines vs. Uy the two-year prescriptive period was not
applied where the airline employed delaying tactics.
RULE IN CASE OF VARIOUS SUCCESSIVE CARRIERS
1. Carriage of passengers
GENERAL RULE: Action is filed only against the carrier in which
the accident or delay occurred.
EXCEPTION: Agreement or contract whereby the first carrier
assumed liability for the whole journey.
2. Carriage of baggage or goods

a. Passenger or consignor can file an action against the first

carrier and the carrier in which the damage occurred
b. Passenger or consignee can file an action against the last
carrier and the carrier in which the damage occurred.
These carriers are jointly and severally liable. (Art. 30)
A contract of international carriage by air, although performed by
different carriers under a series of airline tickets constitutes a single
operation. Members of the International Air Transportation
Association (IATA) are under a general pool partnership agreement
wherein they act as agent of each other in the issuance of tickets to
contracted passengers to boost ticket sales worldwide and at the
same time provide passengers easy access to airlines which are
otherwise inaccessible in some parts of the world. (American
Airlines vs. CA)
Under a general pool partnership agreement, the ticket-issuing
airline is the principal in a contract of carriage while the endorseeairline is the agent. The obligation of the former remained and did
not cease even when the breach occurred not on its own flight but
on that of another airline which had undertaken to carry the
passengers to one of their destinations. (China Airlines vs. Chiok)
JURISDICTION
At the option of the plaintiff, the action for damages may be filed
in the:
a. Court of domicile of the carrier;
b. Court of its principal place of business;
c. Court where it has a place of business through which the
contract has been made; or
d. Court of the place of destination. (Art. 28(1))
NOTE: It is the passengers ultimate destination not an agreed
stopping place that determines the country where suit is to be
filed.
The forum of action provided in Art. 28(1) is a matter of
jurisdiction rather than of venue. (Santos III vs. Northwest; 2A
C.J.S.)