TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia
AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA
January 25, 2017, AMPARO
DAMAGES
What do we understand about (recoverable) damages?
It refers to the pecuniary compensation, recompense, or
satisfaction for an injury sustained, or as otherwise expressed, the
pecuniary consequences, which the law imposes for the breach of
some duty or violation of some rights.
What is the extent of recovery? Art. 2201
In contracts and quasi-contracts, the damages for which the obligor who
acted in
1) good faith is liable shall be those that are
a. the natural and probable consequences of the breach
of the obligation, and
b. which the parties have foreseen or could have
reasonably foreseen at the time the obligation was
constituted.
2) Bad faith: In case of fraud, bad faith, malice or wanton attitude,
the obligor shall be responsible
a. for all damages, which may be reasonably attributed
to the non- performance of the obligation.
KIND OF DAMAGES
Article 2197, Civil Code: Damages may be: MENTAL
Article 2216, Civil Code: No proof of pecuniary loss is necessary in order
that moral, nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated ones, is left
to the discretion of the court, according to the circumstances of each case.
1. Liquidated Damages
The court has no discretion on that. It depends on the agreement
of the parties in their contract. All you have to show is that there
is a contract that shows that the common carrier is liable for a
certain amount for each day of delay.
2. Moral, Nominal, Temperate, or Exemplary damages
You have to prove that you suffered such damages. You should
show proof that you should be entitled to that. The court, in
awarding such damages, should state in the decision, not only in
the dispositive portion, why the damages were awarded. There
must be factual or justifiable circumstance that is shown during
trial that shows that the plaintiff is entitled to the kind of damages
being claimed.
MORAL DAMAGES
GR: Carrier is not liable for moral damages in case of breach
of contract
EXN:
1. Mishap results in the death of the passenger (2206)
2. Where it is proved that the carrier was guilty of fraud or bad
faith , even if death does not result
3. Where the passenger suffered social humiliation, wounded
feelings, serious anxiety and mental anguish
4. Subsidiarily liable for moral damages in actions delicto
Moral Damages is not imposed upon the defendant to enrich the
injured party but to compensate for the damage he had done.
EXEMPLARY DAMAGES
GR: Carrier is not ordinarily liable in exemplary damages for
act of employee (2332)
EXN:
1. Where they themselves are at fault or negligent (2232) in a
wanton or malevolent manner
2. it authorized or subsequently ratified the wrongful act of the
employee
Cathay Pacific Airways vs. Vasquez 399 SCRA 207
NO MORAL DAMAGES
Moral damages predicated upon a breach of contract of carriage
may only be recoverable in instances where the carrier is guilty
of fraud or bad faith or where the mishap resulted in the death of
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a passenger.[13] Where in breaching the contract of carriage the
airline is not shown to have acted fraudulently or in bad faith,
liability for damages is limited to the natural and probable
consequences of the breach of the obligation which the parties
had foreseen or could have reasonably foreseen. In such a case
the liability does not include moral and exemplary damages.[14]
In this case, we have ruled that the breach of contract of carriage,
which consisted in the involuntary upgrading of the Vazquezes
seat accommodation, was not attended by fraud or bad faith. The
Court of Appeals award of moral damages has, therefore, no leg
to stand on.
NO EXEMPLARY DAMAGES
. It is a requisite in the grant of exemplary damages that the act
of the offender must be accompanied by bad faith or done in
wanton, fraudulent or malevolent manner.[15] Such requisite is
absent in this case. Moreover, to be entitled thereto the claimant
must first establish his right to moral, temperate, or
compensatory damages.[16] Since the Vazquezes are not entitled
to any of these damages, the award for exemplary damages has
no legal basis. And where the awards for moral and exemplary
damages are eliminated, so must the award for attorneys fees.
NOMINAL DAMAGES AWARDED. Article 2221. Nominal
damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him. Nonetheless, considering
that the breach was intended to give more benefit and advantage
to the Vazquezes by upgrading their Business Class
accommodation to First Class because of their valued status as
Marco Polo members, we reduce the award for nominal damages
to P5,000.
3. Actual Damages
Article 2199, Civil Code: Except as provided by law or by
stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Article 2200, Civil Code: Indemnification for damages shall
comprehend not only the value of the loss suffered, but also that
of the profits which the obligee failed to obtain. (1106)
Kinds of Compensatory Damages
1. Actual Damages or Dano Emergente
Damage to what a person already possesses at that time.
You possess something that was lost as a result of an
accident or breach.
Example: A person lost his arm because of an
accident. Medical expenses for that loss of arm
is actual damages.
2. Loss of Profits or Lucro Cesante
Article 2205, Civil Code. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of
temporary or permanent personal injury
(2) For injury to the plaintiff's business standing or
commercial credit.
Unrealized profits; profits that could have been
earned if the accident or breach did not happen
In the example above, the income that could
have been earned had he not lost his arm is the
loss of profits.
NOTES:
ACTUAL OR COMPENSATORY Damages cannot be presumed. You
have to submit proof. Example: In case of hospitalization: Hospital
bills, professional fee of the doctor, fees paid for the therapy,
prosthetics.
The claimant, the plaintiff who is claiming from the carrier has the
burden of proof.
Personal injury, even death, entitles the claimant to all medical
expenses as well as other reasonable expenses that he incurred to treat
 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia
AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA
his or his relatives injury: Medical expenses, plastic surgery, or any
procedure to restore the part of the body that was affected.
4.
Damages recoverable when death occurs due to delict. 1
Indemnity for the (DELIMA)
1. death of the victim (now 50k)
2. loss of earning capacity of the deceased
3. moral damages
4. exemplary damages
5. attorneys fees and expenses of litigation
6. interest in proper cases
Article 2206, Civil Code: The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand pesos, even though there
may have been mitigating circumstances. In addition:
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;
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;
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.
1. Fact of Death
Php 3,000 (remember that the Civil Code took effect on 1951).
Pestao v. Sps. Sumayang, G.R. No. 139875, 4 December 2000,
346 SCRA 870.
o The amount now is already Php 50,000.
o This is automatic, no need of proof.
2. Loss of Earning Capacity
Formula:
Net Earning Capacity= Life Expectancy x (Gross Annual Income
less Necessary Living Expenses)
5.
1. Life Expectancy = 2/3 x (80 Age at Death), based on
American Expectancy Table of Mortality
2. Net Earning = gross income (expenses necessary +
living and other incidental expenses)
o Jurisprudence consistently held that expenses are 50% of
the gross income in the absence of any proof of living
expenses.
FORTUNE EXPRESS, INC. vs. COURT OF APPEALS
(1999)
Life expectancy is equivalent to two thirds (2/3) multiplied by the
difference of eighty (80) and the age of the deceased. Since Atty.
Caorong was 37 years old at the time of his death, he had a life
expectancy of 28 2/3 more years. His projected gross annual
income, computed based on his monthly salary of P11, 385.00 as
a lawyer in the Department of Agrarian Reform at the time of his
death, was P148, 005.00, allowing for necessary living expenses
of fifty percent (50%) of his projected gross annual income, his
total earning capacity amounts to P2, 121,404.90. Hence, the
petitioner is liable to the private respondents in the said amount
as compensation for loss of earning capacity.
3. Moral and exemplary
CATHAY PACIFIC VS. VASQUEZ
a. Moral damages can only be granted if there is fraud or bad
faith unless there is death that occurred.
b. As for the exemplary damages, Cathay was not proven to
have acted in a reckless, wanton or malevolent manner. As
for the attorneys fees, it cannot be granted because there
was no award of moral or exemplary damages.
1
ELIMA may be recovered separately from and in addition to the fixed sum of
50k arising from the sole fact of death. For the fixed sum, there is no need to
interrogate the witness.
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Attys Fees and Expenses of Litigation
Article 2208, Civil Code: In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs, cannot be
recovered, except:
1) When exemplary damages are awarded;
2) When the defendant's act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
interest;
3) In criminal cases of malicious prosecution against the plaintiff;
4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's plainly valid, just and
demandable claim;
6) In actions for legal support;
7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
8) In actions for indemnity under workmen's compensation and
employer's liability laws;
9) In a separate civil action to recover civil liability arising from a
crime;
10) When at least double judicial costs are awarded;
In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
PAL vs. CA(2008)
Current jurisprudence instructs that in awarding attorneys fees,
the trial court must state the factual, legal, or equitable
justification for awarding the same, bearing in mind that the
award of attorneys fees is the exception, not the general rule, and
it is not sound public policy to place a penalty on the right to
litigate; nor should attorneys fees be awarded every time a party
wins a lawsuit. The matter of attorneys fees cannot be dealt with
only in the dispositive portion of the decision. The text of the
decision must state the reason behind the award of attorneys
fees. Otherwise, its award is totally unjustified.
Interest
Eastern Shipping lines vs. CA (1994)
With regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
a. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of money,
the interest due should be that
i. stipulated in writing.
ii. interest due shall itself earn legal interest from the time it is
judicially demanded.
iii. NO stipulation, the rate of interest shall be 12% per annum to
be computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169
23 of the Civil Code.
b. When an obligation, not constituting a loan or forbearance of
money, is breached,
i. an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per
annum.
ii. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty.
iii. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art.
1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of
the court is made (at which time the quantification of
damages may be deemed to have been reasonably
 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia
AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA
ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
c. When the judgment of the court awarding a sum of money
becomes final and executory,
i. the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum
from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of
credit.
NOTES:
Common carrier liable for nominal damages for failure of common
carrier to bring passenger to destination under Art. 2221. But mere
violation of a contract of carriage does not warrant recovery of moral
damages
Court has discretion to adopt measure of depreciation in determining
carriers liability for loss of goods.
In breach of carriers contract liability of carrier for negligence of
driver is solidary; exercise of due diligence in selecting driver is not a
defense.
Advantages of suing carrier for breach of contract; this action imposes
on the CC the presumption of liability upon mere proof of injury to
passenger; the latter is relieved from the duty to establish the CCs
fault.
An airline passenger cannot file an action for quasi-delict and then
change his theory to breach of contract.
Preponderance of evidence is sufficient to prove civil liability arising
from negligence
Action for damages against cc for breach of contract is independent of
the criminal action vs driver
De Chavez vs Batangas pg 122
Offended party has option to base his action on culpa criminal or culpa
aquiliana
Action to recover culpa aquiline is different from delict;
motion to dismiss civil action improper notwithstanding
acquittal of accused in the criminal case
New rule: 2176 civil action for damages must be reserved,
if they arise from the same act or omission of the accused
Civil action based on quasi-delict against employer not
suspended by criminal case
Death of the driver not hindrance to separate quasi-delict
civil action against employer
Liability for quasi delict includes damage to property
Civil action vs the cc based on RPC not barred by previous
action based on 2176 if not based on the same act or
omission
There is no error in awarding civil damages against the
driver in criminal case even when separate civil action was
filed vs employer
Proceeding of enforcement of subsidiary liability of
employer part of proceeding on execution of judgment.
Separate independent action unnecessary.
Effect of death of plaintiff assignor, an action for damages
against carrier.
Due process requirements for imposing subsidiary liability
of employee-carrier.
he is indeed the employer of the convict
he is engaged in some kind of industry
the crime was committed by the employee in the discharge
of his duties
execution vs the employee is unsatisfied
BILL OF LADING
ARTICLE 349. A contract of transportation by land or water ways of
any kind shall be considered commercial:
1. When it has for its object merchandise or any article of commerce.
2. When, whatever its object may be, the carrier is a merchant or is
habitually engaged in transportation for the public.
Art 349 merely states that while the Code of Commerce distinguishes
merchandise for commercial purpose or private purpose. However it is not
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any more prevailing. As long as it is received by the carrier, the Civil Code
provisions shall govern without need for distinction.
ARTICLE 350. The shipper as well as the carrier of merchandise or
goods may mutually demand that a bill of lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to
whose order the goods are to be sent or whether they are to be
delivered to the bearer of said bill.
4. The description of the goods, with a statement of their kind, of their
weight, and of the external marks or signs of the packages in which
they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be
made.
9. The indemnity to be paid by the carrier in case of delay, if there
should be any agreement on this matter.
ARTICLE 351. In transportation made by railroads or other
enterprises subject to regulation rate and time schedules, it shall be
sufficient for the bills of lading or the declaration of shipment furnished
by the shipper to refer, with respect to
the cost, time and special conditions of the carriage, to
the schedules and regulations the application of which he requests;
and
if the shipper does not determine the schedule,
the carrier must apply the rate of those which appear to be the
lowest, with the conditions inherent thereto,
always including a statement or reference to in the bill of lading
which he delivers to the shipper.
Art 350 provides those details that are to be provided in a bill of lading.
A Bill of Lading is a
1. written acknowledgment of the receipt of the goods
2. signed by the master of the vessel or any of its authorized
representatives or agents,
3. acknowledging the goods described in the bill of lading and the
obligation to deliver it at a described destination and upon arrival at the
specified destination, is to be delivered to the described person or order
as the case may be.
ARTICLE 352. The bills of lading, or tickets in cases of transportation
of passengers, may be diverse, some for persons and others for baggage;
but all of them shall bear
the name of the carrier,
the date of shipment,
the points of departure and arrival,
the cost, and, with respect to the baggage,
the number and weight of the packages, with such other
manifestations which may be considered necessary for their easy
identification.
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. In the absence of a bill of lading, disputes shall be
determined by the legal proofs which the parties may present in support
 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia
AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA
of their respective claims, according to the general provisions established
in this Code for commercial contracts.
BILL OF LADING
1. Contract to transport and deliver goods as stipulated
2. Legal evidence by the contents of which the disputes which may arise
regarding their execution and performance
EXN:
a. falsity and
b. material error in the drafting.
3. Document of title
4. Receipt of cargo
5. Symbol of the goods
o Return of Bill 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.
o Receipt if BOL is lost. 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.
o If none, LEGAL PROOFS. In the 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, according to the
general provisions established in this Code for commercial
contracts.
Classes of BOL
1. Negotiable: goods referred to therein will be delivered to the bearer,
or to the order of any person named in such document.
2. Non-negotiable: delivered to specified person; straight/flat BOL
3. Clean: does not indicate any defect in the goods
4. Foul: notation that goods are in bad condition
5. Spent: goods that have already been delivered by the carrier without a
surrender of assigned copy of the lading
6. Through: issued by a carrier 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 BOL is honored by the 2nd and other interested carriers who do
not issue their own BOL
7. On Board: goods have been received on board
8. Received for shipment: goods have been received for shipment
with/out specifying the vessel by which the goods are to be shipped
9. Custody: steamer which is to carry the goods has not yet reached the
port where the goods are held for shipment
10. Port : the steamer indicated in the BOL by which the goods are to be
shipped is already in the port where the goods are held for shipment
TELENGTAN BROTHERS (LA SUERTE CIGAR) VS CA
Whether or not La Suerte is liable for demurrage for delay in removing
its cargo from the containers - YES but only for the period July 3 - 13,
1979 with respect to ten containers and from July 10 - July 13, 1979, in
respect of two other containers
Held:
PAYMENT OF DEMURRAGE
La Suerte's contention is that the bill of lading does not provide for the
payment of container demurrage, as Clause 23 of the bill of lading only
says "demurrage," i.e., damages for the detention of vessels. Here there
is no detention of vessels. It invokes a case where SC defined "demurrage"
as follows:
DEMURRAGE, in its strict sense, is the compensation provided for in the
contract of affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading. Essentially, demurrage is the claim
for damages for failure to accept delivery Whatever may be the merit
of petitioner's contention, the fact is that clause 29(a) also of the bill of
lading, in relation to Rule 21 of the Far East Conference Tariff ,
specifically provides for the payment by the consignee of demurrage for
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the detention of containers and other equipment after the so-called "free
time.
A BILL OF LADING is both a receipt and a contract. As a contract, its
terms and conditions are conclusive on the parties, including the
consignee. The enforcement of the rules of the Far East Conference and
the Federal Maritime Commission is in accordance with R.A. 1407 which
declares that the Philippines, in common with other maritime nations,
recognizes the international character of shipping in foreign trade and
existing international practices in maritime transportation and that it is
part of the national policy to cooperate with other friendly nations in the
maintenance and improvement of such practices. Period of Demurrage
With respect to the period of La Suertes liability, La Suerte cannot be
held liable for demurrage starting June 27 on the 10 containers because
the delay in obtaining release of the goods was not due to its fault.
The evidence shows that the Bureau of Customs refused to give an entry
permit to petitioner because the manifest issued by K-Line stated only 10
containers whereas the bill of lading also issued by the K-Line showed
there were 12 containers. For this reason, petitioner's broker had to see
Smith, Bell & Co. on June 22, but the latter did not immediately do
something to correct the manifest. Smith, Bell & Co. was asked to
"amend" the manifest, but it refused to do so on the ground that this would
violate the law. It was only on June 29 that it thought of adding instead a
footnote, by which time the "free time" had already expired. Now June 29
was a Friday. Again it is probable the correct manifest was presented to
the Bureau of Customs only on Monday, July 2, and therefore it was only
on July 3 that it was approved
It was therefore only from July 3 that La Suerte could have claimed its
cargo and charged for any delay With respect to the other two containers,
demurrage was properly considered to have accrued on July 10 since the
"free time" expired on July 9. The period of delay, however, for all the 12
containers must be deemed to have stopped on July 13, because on this
date petitioner paid P47,680.00. If it was not able to get its cargo from
the container vans, it was because of the breakdown of the shifter or
cranes of the arrastre service operation. It would be unjust to charge
demurrage after July 13, since the delay in emptying the containers was
not due to the fault of La suerte In sum, we hold that petitioner can be
held liable for demurrage only for the period July 3-13, 1979 and that in
accordance with the stipulation in its bill of lading.
SALUDO JR VS CA
A bill of lading is a written acknowledgment of the receipt of the goods
and an agreement to transport and deliver them at a specified place to
a person named or on his order. According to foreign and local
jurisprudence, "the issuance of a bill of lading carries the presumption
that the goods were delivered to the carrier issuing the bill, for immediate
shipment, and it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the carrier. . . . In the absence
of convincing testimony establishing mistake, recitals in the bill of lading
showing that the carrier received the goods for shipment on a specified
date controls.
However, except as may be prohibited by law, there is nothing to prevent
an inverse order of events, that is, the execution of the bill of lading even
prior to actual possession and control by the carrier of the cargo to be
transported. There is no law which requires that the delivery of the goods
for carriage and the issuance of the covering bill of lading must coincide
in point of time or, for that matter, that the former should precede the
latter.
As between the shipper and the carrier, when no goods have been
delivered for shipment no recitals in the bill can estop the carrier from
showing the true facts . . . Between the consignor of goods and receiving
carrier, recitals in a bill of lading as to the goods shipped raise only a
rebuttable presumption that such goods were delivered for shipment. As
between the consignor and a receiving carrier, the fact must outweigh the
recital."
In the case at bar, it was on October 26, 1976 the cargo containing the
casketed remains of Crispina Saludo was booked for PAL leaving San
Francisco for Manila on October 27, 1976, PAL Airway Bill No. 079-
01180454 was issued, not as evidence of receipt of delivery of the cargo
on October 26, 1976, but merely as a confirmation of the booking thus
made for the San Francisco-Manila flight scheduled on October 27, 1976.
Actually, it was not until October 28, 1976 that PAL received physical
delivery of the body at San Francisco.
 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia
AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA
Explicit is the rule under Article 1736 of the Civil Code that the
extraordinary responsibility of the common carrier begins from the time
the goods are delivered to the carrier. This responsibility remains in full
force and effect even when they are temporarily unloaded or stored in
transit, unless the shipper or owner exercises the right of stoppagein
transitu, and terminates only after the lapse of a reasonable time for the
acceptance, of the goods by the consignee or such other person entitled
to receive them. And, there is delivery to the carrier when the goods are
ready for and have been placed in the exclusive possession, custody and
control of the carrier for the purpose of their immediate transportation
and the carrier has accepted them. Where such a delivery has thus been
accepted by the carrier, the liability of the common carrier commences so
instantly.
As already demonstrated, the facts in the case at bar belie the averment
that there was delivery of the cargo to the carrier on October 26, 1976.
Rather, as earlier explained, the body intended to be shipped as agreed
upon was really placed in the possession and control of PAL on October
28, 1976 and it was from that date that private respondents became
responsible for the agreed cargo under their undertakings in PAL Airway
Bill No. 079-01180454. Consequently, for the switching of caskets prior
thereto which was not caused by them, and subsequent events caused
thereby, private respondents cannot be held liable.
MAGELLAN VS CA
Plaintiff-appellant Magellan Manufacturers Marketing Corp. (MMMC)
entered into a contract with Choju Co. of Yokohama, Japan, on May 20,
1980, to export 136,000 anahaw fans for and in consideration of
$23,220.00. A letter of credit was issued to plaintiff MMMC by the buyer
as payment. James Cu, the president of MMMC then contracted F.E.
Zuellig, a shipping agent, through its solicitor, one Mr. King, to ship the
anahaw fans through the other appellee, Orient Overseas Container
Lines, Inc., (OOCL) specifying that he needed an on-board bill of lading
and that transhipment is not allowed under the letter of credit.
Appellant MMMC paid F.E. Zuellig the freight charges and secured a
copy of the bill of lading which was presented to Allied Bank on June 30,
1980. The bank then credited the amount of US$23,220.00 covered by the
letter of credit to appellant's account.
When appellant's president James Cu, went back to the bank later, he was
informed that the payment was refused by the buyer because there was no
on-board bill of lading, and there was a transhipment of goods. The
anahaw fans were shipped back to Manila by appellees, for which the
latter demanded from appellant payment of P246,043.43 as a result of the
refusal of the buyer to accept, and upon appellants request. Appellant
abandoned the whole cargo and asked appellees for damages.
The petitioner filed the complaint praying that private respondents be
ordered to pay whatever petitioner was not able to earn from Choju Co.,
Ltd. The lower court decided the case in favor of private respondents. It
dismissed the complaint on the ground that petitioner had given its
consent to the contents of the bill of lading where it is clearly indicated
that there will be transshipment. On appeal to the respondent court, the
finding of the lower (court) that petitioner agreed to a transhipment of
the goods was affirmed.
Issues:
1. Whether or not there was transshipment YES
2. Whether or not the bill of lading which reflected the transshipment
against the letter of credit is consented by MMMC YES
Ratio:
TRANSHIPMENT, in maritime law, is defined as "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." Clearly, either in its ordinary or its strictly legal
acceptation, there is transhipment whether or not the same person, firm
or entity owns the vessels. In other words, the fact of transhipment is not
dependent upon the ownership of the transporting ships or conveyances
or in the change of carriers, as the petitioner seems to suggest, but rather
on the fact of actual physical transfer of cargo from one vessel to another.
It appears on the face of the bill of lading the entry "Hong Kong" in the
blank space labeled "Transhipment," which can only mean that
transhipment actually took place. This fact is further bolstered by the
certification issued by private respondent F.E. Zuellig, Inc. dated July 19,
1980, although it carefully used the term "transfer" instead of
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transhipment. No amount of semantic juggling can mask the fact that
transhipment in truth occurred in this case.
2. It is a long standing jurisprudential rule that a bill of lading operates
both as a receipt and as a contract. It is a receipt for the goods shipped
and a contract to transport and deliver the same as therein stipulated.
As a contract, it
1. names the parties, which includes the consignee,
2. fixes the route, destination, and freight rates or charges, and
3. stipulates the rights and obligations assumed by the parties.
4. Being a contract, it is the law between the parties who are bound by
its terms and conditions provided that these are not contrary to law,
morals, good customs, public order and public policy.
5. A bill of lading usually becomes effective upon its delivery to and
acceptance by the shipper. 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.
The petitioner had full knowledge of, and actually consented to, the terms
and conditions of the bill of lading thereby making the same conclusive
as to it, and it cannot now be heard to deny having assented thereto.
Based from the records, James Cu himself, in his capacity as president of
MMMC, personally received and signed the bill of lading. There is no
better way to signify consent than by voluntary signing the document
which embodies the agreement.
An on board bill of lading is one in which it is stated that the goods have
been received on board the vessel which is to carry the goods, whereas a
received for shipment bill of lading is one in which it is stated that the
goods have been received for shipment with or without specifying the
vessel by which the goods are to be shipped. Received for shipment bills
of lading are issued whenever conditions are not normal and there is
insufficiency of shipping space.
An on board bill of lading is issued when the goods have been actually
placed aboard the ship with every reasonable expectation that the
shipment is as good as on its way. It is, therefore, understandable that a
party to a maritime contract would require an on board bill of lading
because of its apparent guaranty of certainty of shipping as well as the
seaworthiness of the vessel which is to carry the goods.
The certification of F.E. Zuellig, Inc. can qualify the bill of lading, as
originally issued, into an on board bill of lading as required by the terms
of the letter of credit issued in favor of petitioner. The certification was
issued only on July 19, 1980, way beyond the expiry date of June 30, 1980
specified in the letter of credit for the presentation of an on board bill of
lading. Thus, even assuming that by a liberal treatment of the certification
it could have the effect of converting the received for shipment bill of
lading into an on board of bill of lading, as petitioner would have us
believe, such an effect may be achieved only as of the date of its issuance,
that is, on July 19, 1980 and onwards.
The fact remains, though, that on the crucial date of June 30, 1980 no on
board bill of lading was presented by petitioner in compliance with the
terms of the letter of credit and this default consequently negates its
entitlement to the proceeds thereof. Said certification, if allowed to
operate retroactively, would render illusory the guaranty afforded by an
on board bill of lading, that is, reasonable certainty of shipping the
loaded cargo aboard the vessel specified, not to mention that it would
indubitably be stretching the concept of substantial compliance too far.
SAID TO CONTAIN bill of lading pertains to the containerized system. So
there are shippers who are really engaged in volume of business so they
cannot bring their goods to the carrier. What the carrier does is to bring the
container to the premises of the shipper. And it is the shipper without the
participation of the carrier who will load the goods inside the container vans.
It is the shipper who seals the van and delivers it to the carrier. So the carrier
now issues a bill of lading with a notation there stating said to contain
because the carrier only relies on what the shipper declares on the bill of
lading. So the matter of quantity, quality, etc is the sole responsibility of the
shipper.
In the case however of
Raymond Brokerage Inc vs Phil Home Assurance 202 S 564
The SC here made an exception to the ruling on the doctrine in United States
Lines. Even in a said to contain bill of lading, when it additionally stated
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in the bill of lading that it is a receipt for the number of packages shown
above, such in effect admits that the containerized shipment in the bill of
lading and the carrier is liable for the shortage of the cargo actually delivered.
SC said that the fact that the common carrier noted that it is a receipt, the
carrier is in effect stating that what the shipper has stated is true or correct
even if it is without the carriers participation. The carrier is thus estopped
from saying that he has no participation in the loading of cargoes.
If there is a Charter Party, the Bill of Lading serves only as a receipt of the
goods and it is the charter party will govern with respect to the terms and
conditions, obligations, stipulations of the parties. It will now serve as the
contract of the parties.
Art 707-718 of the Code of Commerce provides for other rules that will
apply to Bill of Lading in the absence of Civil Code provisions. Again as
stated in 1766 in all matters not regulated by the Civil Code, the Code of
Commerce shall prevail.
Also the COGSA in so far as receipt of goods under the charge of the carrier
can also serve as basis on what is in the bill of lading.
BILL OF LADING (BOL) can be a contract of adhesion, it can also be a
negotiable instrument, if as provided in the BOL, it is negotiable. It is a
contract of adhesion in the sense that if a party agrees, then it is bound therein.
There are few terms and conditions in the Code of Commerce that is wanting
in so far as BOL is concerned or the obligations or responsibilities of the
parties in a contract of carriage. Because, based on the CC 1523 delivery to
whom should be made; 1523 provides that ownership is transferred by
tradition or delivery, in a contract of sale: this is the general term.
Usual forms of consummating Contracts
1. C.I.F. cost, insurance and freight;
2. F.O.B. - freight on board;
3. F.A.S. - freight alongside ship; and
4. C. & F. - cost and freight.
Functions of the above shipment terms
1) to determine the point of which the risk of loss passes from sellers to
buyers. Because basic is the fact that delivery is made to a consignee to
whom he delivers. And there are certain instances where delivery to the
carrier is delivery to the buyer where the buyer thereafter assumes the
risk from the time that the goods/cargoes are received by the CC.
2) to determine what performance by the seller amounts to a tender which
precludes the buyer if he refuses to accept the delivery is breached
(?)
3) used for quoting the price
4) to determine the *** where taxes should be paid
1. FREIGHT ON BOARD; FOB
What is the significance? It refers to the risk which is passed to
the buyer AT THE FOB POINT.
Ex. FOB Davao, or FOB Manila- so thats it. Therefore, the FOB
point of destination means the seller shall assume the risk until
the goods have reached at the point of destination.
Ex. The goods are shipped from abroad, BOL provides FOB
DAVAO, the place of delivery is Davao, and the place of
destination is Davao-in which case the buyer assumes the risk
only upon arrival of the goods at the place of destination.
2. FREIGHT ALONGSIDE SHIP; FAS
A variant of FOB. Freight alongside the vessel- which means the
seller relinquishes the risk the moment the goods are delivered
alongside the vessel unless we have this onboard BOL. When
we say there is already an indication of on board in a BOL, the
cargoes are already onboard the vessel on which it carried the
cargoes. What is the difference between FAS and FOB?
Freight Alongside; FAS Freight on Board; FOB
seller is under no seller must see to it that the
obligation to see to the goods are loaded; the
loading of the cargoes and responsibility of the seller
all that is required from does not cease until the
the seller is to deliver the loading of the cargo on the
cargo to the wharf vessel is completed. When
the BOL indicates
onboard, it signifies that
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the cargoes are already
completely onboard
3. COST INSURANCE FREIGHT; CIF.
The price quoted by the seller includes the invoice price, plus the
insurance and the freight. The seller completes its performance by
procuring the necessary requirements:
BOL,
insurance policy,
sales invoice and the seller forwards it to the seller
(sic) for this purpose.
In the meantime, the insurance in the same situation is payable to
the buyer. Therefore, the buyer bears the risk while the goods are
intransit. Only the seller procures the insurance policy, but it is
charged to the buyer.
4. COST AND FREIGHT; C & F
If the buyer would want to get its own insurance, the term is C &
F.
OBLIGATIONS OF THE
CARRIER
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; and 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 if its objections, is made to appear in the bill of lading.
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.
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.
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.
A. Duty to accept the goods
Gen. Rule: A common carrier cannot ordinarily refuse to carry a particular
class of goods.
EXN: some sufficient reason the discrimination against the traffic in such
goods is reasonable and necessary. (Fisher vs. Yangco Steamship Co. 31 Phil
1).
Instances when the carrier may validly refuse to accept the goods include
the ff:
1) Goods sought to be transported are dangerous objects, or
substances including dynamite and other explosives
2) Goods are unfit for transportation
3) Acceptance would result in overloading
4) Contrabands or illegal goods
5) Goods are injurious to health
6) Goods will be exposed to untoward danger like flood, capture by
enemies and the like
7) Goods like livestock will be exposed to disease
8) Strike
9) Failure to tender goods on time. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. & Hernando, R.P.
2004 ed. p.68)
In case of carriage by railway, the carrier is exempted from liability if
carriage is insisted upon by the shipper, provided its objections are stated in
the bill of lading.
However, when a common carrier accepts cargo for shipment for valuable
consideration, it takes the risk of delivering it in good condition as when it
was loaded. (PAL vs. CA)
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B. Duty to deliver the goods them, and he may have them in the hands of the carrier, demanding of
Not only to transport the goods safely but to the person indicated in the the latter their value at the current price on that day. If among the
bill of lading. The goods should be delivered to the consignee or any other damaged goods there should be some pieces in good condition and
person to whom the bill of lading was validly transferred or negotiated. without any defect, the foregoing provision shall be applicable with
respect to those damaged and the consignee shall receive those which
Time of delivery are sound, this segregation to be made by distinct and separate pieces
Stipulation under BOL No stipulation and without dividing a single object, unless the consignee proves the
Period Within such time Within a reasonable time. impossibility of conveniently making use of them in this form. The
same rule shall be applied to merchandise in bales or packages,
Duty of Carrier is bound to fulfill the Carrier is bound to forward separating those parcels which appear sound.
Common contract and is liable for any them in the 1st shipment of
Carrier delay; no matter from what the same or similar goods 3) Delay through the fault of the carrier
cause it may have arisen. which he may make to the ARTICLE 371. In case of delay through the fault of the carrier,
point of delivery. (ART. referred to in the preceding articles, the consignee may leave the goods
358 Code of Commerce) transported in the hands of the former, advising him thereof in writing
Failure: Indemnity stipulated in the CC is liable for damages before their arrival at the point of destination.
BOL; caused by the delay (358) When this abandonment takes place, the carrier shall pay the full value
As stipulated, neither the of the goods as if they had been lost or mislaid.
shipper nor the consignee If the abandonment is not made, the indemnification for losses and
being entitled to anything damages by reason of the delay cannot exceed the current price which
else. 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
If no stipulation and the in all other cases in which this indemnity may be due.
delay exceeds the time fixed
in the BOL, CONVERSION ABANDONMENT
damages which the delay 358 371
may have caused. (370). there is no period agreed There is a period agreed
Special It must have appeared that he had notice at the time of upon and the obligation of upon, but there is a delay in
Damages delivery to him of the particular circumstances attending the CC under 358 is to the delivery without the
the shipment, and which probably would lead to such deliver them in the first fault of the CC
special loss if he defaulted. shipment of the same on
similar good which he may
make to the point where he
must deliver them
Effects of delay Consignee can demand the Shipper has to inform or
a. Merely suspends and generally does not terminate the contract of goods and in case of notify the CC of his
carriage refusal, may seek intention to exercise the
b. Carrier remains duty bound to exercise extraordinary diligence conversion of the goods right to abandon.
c. Natural disaster shall not free the carrier from responsibility (Art.1740) But the consignee cannot The basis for payment is at
d. If delay is without just cause, the contract limiting the common carriers refuse acceptance if the the point of destination
liability cannot be availed of in case of loss or deterioration of the goods 1) goods are safely kept
(Art.1747) and
Delay amounts to conversion when CC is in delay or not 2) tender was made
delivered within a reasonable time after it has reached its before the filing of the
destination/ refusal to deliver despite demand. suit
The consignee cannot refuse to receive the goods if Goods are already at the The goods are NOT yet at
1) Goods are safely kept point of destination and are the point of destination
2) Tender by the CC to deliver is made before the case is in the possession of the
filed carrier but the CC did not
deliver w/I reasonable time

ABANDONMENT
Giving up something- in vessels, the owner gives up his corresponding
interest in the vessel
In maritime law, there are 5 cases of abandonment
1) ARTICLE 363. Partial Non-Delivery
2) ARTICLE 365. Damaged goods are rendered useless for sale and
consumption
3) ARTICLE 371. Delay through the fault of the carrier
4) ARTICLE 587 In case of civil liability from indemnities to third
persons
5) ARTICLE 687 - In case of leakage of at least of the contents of a
cargo containing liquids
6) ARTICLE 370/374 if the goods are delayed due to the fault of the CC
and the consignee refused to receive the goods by filing notice before
the arrival of the goods
1) Partial non-delivery
ARTICLE 363. xxx If those not delivered form part of the goods
transported, the consignee may refuse to receive the latter, when he
proves that he cannot make use of them independently of the others.
2) Goods are rendered useless
ARTICLE 365. If, in consequence of the damage, the goods are
rendered useless for sale and consumption for the purposes for which
they are properly destined, the consignee shall not be bound to receive
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 371 speaks of a situation where there is a fixed date,
the shipper and CC agree that on such date the goods will arrive.
The liability of the CC
a) right of abandonment exercised:
- full value of the goods
b) right not exercised:
- current price of the goods on the day it was supposed
to be delivered.
If there is an agreed indemnity, the shipper cannot be
entitled to more than what was agreed upon. If 100
pesos, the shipper cannot receive more than 100.
However, if the CC refuses, that is the time the shipper
can ask for damages, in view of such refusal. Under
371, if the delay is through the fault of the CC, the
shipper can exercise its right of abandonment (full
value of the goods), otherwise, the liability merely of
the current price.
4) Ship agent to third persons

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ARTICLE 587. The ship agent shall also the civilly liable for the
indemnities in favor of third persons which arise from the conduct of
the captain in the care of the goods which the vessel carried, but he may
exempt himself therefrom by abandoning the vessel with all her
equipments and the freight he may have earned during the trip.
5) Leakage of Liquids
ARTICLE 687. With respect to charterers of charter parties in the lease
of the vessels. The charterers and shippers may abandon the
merchandeise damaged if the cargo should cnosist of liquids and they
have leak out, nothing remaining in the containers on account of
inherent defects or fortuitous event.
Sec. 138 of the Insurance Code (Constructive Loss)
- Vessels suffers damage of its nsured value
- The insured exercises right of abandonment by notifying the
insurer of abandonment
- Damaged vessels ownership is passed to the insurer and the
insurer must pay the insured as if it were an actual loss of
the vessel.
NOTICE OF DAMAGE
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.
In an action for damages due to breach of contract, what is required is on the
part of the claimant is to establish his claim for damages existence of the
contract and the breach causing damage/injury by the carrier.
Requisites for applicability:
1. Domestic/inter-island/coastwise transportation
2. Land/water/air transportation
3. Carriage of goods
4. Goods shipped are damaged
Rules:
a. Patent damage: shipper must file a claim against the carrier
immediately upon delivery (it may be oral or written)
b. Latent damage: shipper should file a claim against the carrier
within 24 hours from delivery.
c. If there is no claim w/I that period, then the claim vs the CC is
barred.
However in COGSA, there is a modification.
Rules:
a. Patent damage: shipper must file a claim against the carrier
immediately upon delivery (it may be oral or written)
b. Latent damage: shipper should file a claim against the carrier
within 3 days from delivery.
c. Claim is NOT mandatory . Failure to file a notice of claim
within 3 days does not discharge the carrier for the consignee still
has a period of 1 year within which to file a claim.
NOTE:
Claim vs CC under 366 is a condition precedent for the filing of an
action in court.
Not provided by Article 366. Thus, in such absence, Civil Code rules
on prescription apply.
If despite the notice of claim, the carrier refuses to pay, action must be
filed in court.
a. No bill of lading was issued: within 6 years
b. Bill of lading was issued: within 10 years.
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However, the parties may agree to extend the period of 24 hours, otherwise
the provision under 366 governs.
Q: Why do you think this condition is important? In whose favor is this?
A: It is for the benefit of the carrier because this enables it to determine who
is accountable for the damages or to enable the CC to be given the
opportunity to immediately investigate the situation and to determine upon
whom the damages or its cause should be charged against (stevedoring,
arrastre, employees, delivery) so those are the reasons.
Who read the case of FedEx?
FEDERAL EXPRESS VS. AMERICAN HOME437 SCRA 50
ISSUE: Is Federal Express liable for damage to or loss of the insured
goods? NO
In this jurisdiction, the filing of a claim with the carrier within the time
limitation constitutes a condition precedent to the accrual of a right of
action against a carrier for loss of or damage to the goods. The shipper
or consignee must allege and prove the fulfillment of the condition. If it
fails to do so, no right of action against the carrier can accrue in favor of
the former.
The fundamental reasons for such a stipulation are
(1) to inform the carrier that the cargo has been damaged, and that it
is being charged with liability therefor; and
(2) to give it an opportunity to examine the nature and extent of the
injury. This protects the carrier by affording it an opportunity to
make an investigation of a claim while the matter is fresh and easily
investigated so as to safeguard itself from false and fraudulent
claims.
When an airway bill -- or any contract of carriage for that matter -- has
a stipulation that requires a notice of claim for loss of or damage to goods
shipped and the stipulation is not complied with, its enforcement can be
prevented and the liability cannot be imposed on the carrier. To stress,
notice is a condition precedent, and the carrier is not liable if notice is
not given in accordance with the stipulation. Failure to comply with such
a stipulation bars recovery for the loss or damage suffered.
In the present case, there is neither an allegation nor a showing of
respondents compliance with this requirement within the prescribed
period. While respondents may have had a cause of action then, they
cannot now enforce it for their failure to comply with the aforesaid
condition precedent.
No one recited the case, Maam moved on to the next case.
It is explained in the case of UCPB Gen vs Aboitiz with regards to the notice
of claim to be strictly complied with.
In this case of UCPB, the shipment was received by the consignee on Aug.
1991, however, the claim was filed only on Oct. 1991, more than 2 mos. from
the date of the receipt of shipment. So the claim was filed beyond the 24hr
timeframe under 366. The prescription does not begin to run unless there is
delivery. This 366 does not apply to misdelivery. The important requirement
of 24 hrs shall commence at the time when ACTUAL delivery is made
The law clearly requires that the claim for damage or average must be made
within 24 hours from receipt of the merchandise if, as in this case, damage
cannot be ascertained merely from the outside packaging of the cargo
The requirement to give notice of loss or damage to the goods is not an empty
formalism. The fundamental reason or purpose of such a stipulation is not to
relieve the carrier from just liability, but reasonably to inform it that the
shipment has been damaged and that it is charged with liability therefor, and
to give it an opportunity to examine the nature and extent of the injury. This
protects the carrier by affording it an opportunity to make an investigation of
a claim while the matter is still fresh and easily investigated so as to safeguard
itself from false and fraudulent claims.
We have construed the 24-hour claim requirement as a condition precedent
to the accrual of a right of action against a carrier for loss of, or damage to,
the goods. The shipper or consignee must allege and prove the fulfillment of
the condition. Otherwise, no right of action against the carrier can accrue in
favor of the former
Philipppine Charter Insurance vs. 462 SCRA 77
ISSUE: WHETHER OR NOT THE NOTICE OF CLAIM WAS FILED
WITHIN THE REQUIRED PERIOD.
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RULING: Article 366 of the Code of Commerce has profound application
in the case at bar. This provision of law imparts:
Art. 366. Within twenty-four hours following the receipt of the merchandise
a claim may be made against the carrier on account of damage or average
found upon opening the packages, provided that the indications of the
damage or average giving rise to the claim cannot be ascertained from the
exterior of said packages, in which case said claim shall only be admitted at
the time of the receipt of the packages.
After the periods mentioned have elapsed, or after the transportation charges
have been paid, no claim whatsoever shall be admitted against the carrier
with regard to the condition in which the goods transported were delivered.
Petitioner contends that the notice of contamination was given by Alfredo
Chan, an employee of PGP, to Ms. Encarnacion Abastillas, Vice President
for Administration and Operations of the respondent, at the time of the
delivery of the cargo, and therefore, within the required period. 25 This was
done by telephone. The respondent, however, claims that the supposed notice
given by PGP over the telephone was denied by Ms. Abastillas. Between the
testimonies of Alfredo Chan and Encarnacion Abastillas, the latter's
testimony is purportedly more credible because it would be quite
unbelievable and contrary to business practice for Alfredo Chan to merely
make a verbal notice of claim that involves millions of pesos.
Having examined the entire records of the case, we cannot find a shred of
evidence that will precisely and ultimately point to the conclusion that the
notice of claim was timely relayed or filed.
The requirement that a notice of claim should be filed within the period stated
by Article 366 of the Code of Commerce is not an empty or worthless
proviso. In a case, we held:
The object sought to be attained by the requirement of the submission of
claims in pursuance of this article is to compel the consignee of goods
entrusted to a carrier to make prompt demand for settlement of alleged
damages suffered by the goods while in transport, so that the carrier will be
enabled to verify all such claims at the time of delivery or within twenty-four
hours thereafter, and if necessary fix responsibility and secure evidence as to
the nature and extent of the alleged damages to the goods while the matter is
still fresh in the minds of the parties.
The filing of a claim with the carrier within the time limitation therefore
actually constitutes a condition precedent to the accrual of a right of action
against a carrier for loss of, or damage to, the goods. The shipper or consignee
must allege and prove the fulfillment of the condition. If it fails to do so, no
right of action against the carrier can accrue in favor of the former. The
aforementioned requirement is a reasonable condition precedent; it does not
constitute a limitation of action.
The second paragraph of Article 366 of the Code of Commerce is also
edifying. It is not only when the period to make a claim has elapsed that no
claim whatsoever shall be admitted, as no claim may similarly be admitted
after the transportation charges have been paid.
In this case, there is no question that the transportation charges have been
paid, as admitted by the petitioner, and the corresponding official receipt duly
issued.
DOLE Phil. vs. Martime 148 SCRA 118
Facts: DOLE Philippines files claims for damages on May 4, 1972 for a
cargo discharged in Dadiangas unto the custody of the consignee on
December 18, 1971. On June 11, 1973, DOLE filed a complaint in CFI
Manila embodying 3 separate causes of action including the cause of action
in the case at bar. In 1974, the same court dismissed the the complaint since
2 of the causes of action were covered by a settlement and the remaining one
(the case at bar) without prejudice.
Maritime Company of the Philippines (Maritime) filed its answer pleading
that the affirmative defense of prescription under the provisions of the
Carriage of Goods by Sea Act (COGSA). The Trial Court dismissed the
complaint on Maritimes motion to dismiss based on the ground prescription.
Under Section 3, Paragraph 6 of the COGSA:
". . . the carrier and the ship shall be discharged from all liability in respect
of loss or damage unless suit is brought within one year after delivery of the
goods or the date when the goods should have been delivered; Provided,
That, if a notice of loss or damage, either apparent or conceded, 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.
DOLE contends that prescription under the COGSA is subject to the
provisions of Article 1155 of the Civil Code on tolling; and because its claim
for loss or damage made on May 4, 1972 amounted to a written extrajudicial
demand which would toll or interrupt prescription under Article 1155, it
operated to toll prescription also in actions under the COGSA. It also argued
that based on Article 1176 of the Civil Code which provides that the rights
and obligations of common carriers shall be governed by the Code of
Commerce and by special laws in all matters not regulated by the Civil Code.
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Issue: WON Article 1155 of the Civil Code providing that the prescription
of actions is interrupted by the making of an extrajudicial written demand by
the creditor is applicable to actions brought under the COGSA.
Held: NO.
SC have already decided that in a case governed by the COGSA, the general
provisions of the Code of Civil Procedure on prescription should not be made
to apply. (Chua Kuy vs. Everett Steamship Corp.). In such a case the general
provisions of the new Civil Code (Art. 1155) cannot be made to apply, as
such application would have the effect of extending the one-year period of
prescription fixed in the law. Matters affecting transportation of goods by sea
be decided in as short a time as possible; the application of the provisions of
Article 1155 of the new Civil Code would unnecessarily extend the period
and permit delays in the settlement of questions affecting transportation,
contrary to the clear intent and purpose of the law.
Moreover, even if the Court were to accept that a written extrajudicial
demand does toll prescription under the COGSA, it will still not be favorable
to DOLE. DOLE demanded damages with Maritime on May 4, 1972. The
effect of that demand would have been to renew the one year prescriptive
period from the date of its making Stated otherwise, under Dole's theory,
when its claim was received by Maritime, the one-year prescriptive period
was interrupted "tolled" would be the more precise term and began to
run anew from May 4, 1972, affording Dole another period of one (1 ) year
counted from that date within which to institute action for damages. Dole let
the new period lapse without filing action. It instituted the complaint only on
June 11, 1973, more than one month after that period has expired and its right
of action had prescribed.
Mayer Steel Pipeline vs. CA 274 SCRA 432
The action (between shipper and insurer) has NOT prescribed.
Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and
the ship shall be discharged from all liability for loss or damage to the goods
if no suit is filed within one year after delivery of the goods or the date when
they should have been delivered.
Under this provision, only the carrier's liability is extinguished if no suit is
brought within one year. But the liability of the insurer is not extinguished
because the insurer's liability is based not on the contract of carriage but on
the contract of insurance.
Thus, when South Sea and Charter issued the "all risks" policies to petitioner
Mayer, they bound themselves to indemnify the latter in case of loss or
damage to the goods insured. Such obligation prescribes in ten years, in
accordance with Article 1144 of the New Civil Code
A close reading of the law reveals that the Carriage of Goods by Sea Act
governs the relationship between the carrier on the one hand and the shipper,
the consignee and/or the insurer on the other hand. It defines the obligations
of the carrier under the contract of carriage. It does not, however, affect the
relationship between the shipper and the insurer. The latter case is governed
by the Insurance Code.
Weimann Brokerage Inc vs PhilHome Assurance (202 SCRA 564)
SCs exn to the ruling of the doctrine in the United States Line. It was held
that even in a said to contain BOL covering containers, when it is
additionally stated in the BOL by the carrier that it is a receipt for the
number of packages as shown above, so this is a receipt for what is
declared by the shipper, carrier is liable for the shortage of the cargoes
actually delivered.
Caltex Philippines vs Sulpicio Lines
Contract of affreightment does not convert a contract to private from
common carrier. The control and supervision of the vessel remains with the
common carrier. It is not the charterer (Caltex) who will be liable, but the
common carrier (Sulpicio).
Summer Mining vs Roy (132 SCRA 529)
Period to deliver the goods. Art. 370. If there is a period, the CC should
deliver it within the period stipulated but if there is no period, then Art. 358
will govern which means that the CC shall deliver or load the cargo in a
vessel similar with other cargoes.
Philippine Islands vs CA (24 Phil 15)
Requirement under 366 applies even to transportation by sea within the
Philippines or coastwise shipping.
SUMMARY OF RULES
ARTICLE 366 COGSA Sec.3 (6)
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Applicability
1. Domestic/inter- 1) International/ Art. 352 refers not only to cargoes but also applies to passengers
island/coastwise transportation 2) overseas/foreign The bills of lading, or tickets in cases of transportation of passengers,
2. Land, water, air transportation (from foreign country to may be diverse, some for persons and others for baggage; but all of
3. Carriage of goods Phils.) them shall bear the name of the carrier, the date of shipment, the points
Note: subject to the rule on of departure and arrival, the cost, and, with respect to the baggage, the
Paramount Clause number and weight of the packages, with such other manifestations
Water/maritime which may be considered necessary for their easy identification.
transportation
3) Carriage of goods Art. 353 and 354
BOL is the best evidence to prove that cargoes are onboard. The legal
evidence of the contract between the shipper and the carrier shall be the
Notice of damage
bills of lading, by the contents of which the disputes which may arise
1. Condition precedent 1. Not a condition precedent
regarding their execution and performance shall be decided, no
2. 24-hour period for claiming 2. 3-day period for claiming
exceptions being admissible other than those of falsity and material
latent damage latent damage
error in the drafting.
Prescriptive period After the contract has been complied with, the bill of lading which the
None provided; Civil Code One year from the date of delivery carrier has issued shall be returned to him, and by virtue of the exchange
applies. (delivered but damaged goods), or of this title with the thing transported, the respective obligations and
date when the vessel left port or actions shall be considered cancelled, unless in the same act the claim
from the date of delivery to the which the parties may wish to reserve be reduced to writing, with the
arrastre (non-delivery or loss). 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
Again, take note receipt producing the same effects as the return of the bill of lading.
In maritime law, there are 5 cases of abandonment
1) ARTICLE 365. Damaged goods are rendered useless for sale and
consumption2 Art. 355: must be read with 1736 of the CC which refers to the liability
2) ARTICLE 371. Delay through the fault of the carrier 3 for the care of the cargo, to exercise extraordinary diligence from the
3) ARTICLE 587 In case of civil liability from indemnities to third moment the cargo was unconditionally delivered to the carrier by the
persons 4 shipper.
4) ARTICLE 687 - In case of leakage of at least of the contents of a
cargo containing liquids Art. 356 and 357: authorize the carrier to examine the cargo should the
5) ARTICLE 370/374 if the goods are delayed due to the fault of the CC cargo be suspicious in nature. The right is important today especially
and the consignee refused to receive the goods by filing notice before with the danger of explosives, high jacking, drug smuggling, terrorism,
the arrival of the goods etc. this right is also provded under sections 2530 and 2531 of the
Traffic and Customs Code.

TO WHOM SHOULD THE GOODS BE DELIVERED?. Art. 358 and 395: must be read with 1747 of the Civil Code which refers
1) Consignee5 to the occurrence of fortuitous events which shall not extinguish the
2) Municipal Judge, if:6 liability of the carrier if there is undue delay in starting the trip. So if
a. Consignee in the BOL refuses to pay the the carrier deviated under its regular route unjustifiably or there was
transportation charges and expenses undue delay, he is not relieved of liability in the event of caso fortuito.
b. if he refuses to receive the goods, the municipal judge This is an exception to the general rule.

Art. 361 (repealed by 1745)

REVIEW OF PROVISIONS
Art. 351 refers to the schedule that CCs must keep.
In transportation made by railroads or other enterprises subject to
regulation rate and time schedules, it shall be sufficient for the bills of
lading or the declaration of shipment furnished by the shipper to refer,
with respect to the cost, time and special conditions of the carriage, to
the schedules and regulations the application of which he requests; and
if the shipper does not determine the schedule, the carrier must apply
the rate of those which appear to be the lowest, with the conditions
inherent thereto, always including a statement or reference to in the bill
of lading which he delivers to the shipper.
Art. 362 (repealed by 1752)
Art. 363: cargo must be delivered in condition it was received
Art. 364: Basis of Damages in Abandonment /Conversion. in case of
abandonment or conversion, damage is based on the market value of
the goods at the point of destination. If the effect of the damage referred
to in Article 361 is merely a diminution in the value of the goods, the
obligation of the carrier shall be reduced to the payment of the amount
which, in the judgment of experts, constitutes such difference in value.

2If, in consequence of the damage, the goods are rendered useless for sale 4The ship agent shall also be civilly liable for indemnities in favor of third
and consumption for the purposes for which they are properly destined, the persons which may arise from the conduct of the captain in the care of the
consignee shall not be bound to receive them, and he may have them in the goods which he loaded on the vessel, but he may exempt himself therefrom
hands of the carrier, demanding of the latter their value at the current price by abandoning the vessel with all her equipments and the freight it may
on that day. If among the damaged goods there should be some pieces in have earned during the voyage
good condition and without any defect, the foregoing provision shall be
applicable with respect to those damaged and the consignee shall receive 5ARTICLE 368. The carrier must deliver to the consignee, without any delay
those which are sound, this segregation to be made by distinct and separate
or obstruction, the goods which he may have received, by the mere fact of
pieces and without dividing a single object, unless the consignee proves the
being named in the bill of lading to receive them; and if he does not do so,
impossibility of conveniently making use of them in this form. The same rule
he shall be liable for the damages which may be caused thereby.
shall be applied to merchandise in bales or packages, separating those
parcels which appear sound.
6 ARTICLE 369. If the consignee cannot be found at the residence indicated
3
in the bill of lading, or if he refuses to pay the transportation charges and
If a period has been fixed for the delivery of the goods, it must be made
expenses, or if he refuses to receive the goods, the municipal judge, where
within such time and for failure to do so, the carrier shall pay the indemnity
there is none of the first instance, shall provide for their deposit at the
stipulated in the Bill of Lading, neither the shipper nor the consignee being
disposal of the shipper, this deposit producing all the effects of delivery
entitled to anything else.
without prejudice to third parties with a better right.
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Art. 366: Notice of Damage (see discussion)
Art. 368: Duty to deliver the goods. The carrier must deliver to the
consignee, without any delay or obstruction, the goods which he may
have received, by the mere fact of being named in the bill of lading to
receive them; and if he does not do so, he shall be liable for the damages
which may be caused thereby.
Art. 369: Consignment. If the consignee cannot be found at the
residence indicated in the bill of lading, or if he refuses to pay the
transportation charges and expenses, or if he refuses to receive the
goods, the municipal judge, where there is none of the first instance,
shall provide for their deposit at the disposal of the shipper, this deposit
producing all the effects of delivery without prejudice to third parties
with a better right.
Art. 370: Remedy, claim for damages vs common carrier. If a period
has been fixed for the delivery of the goods, it must be made within the
same, otherwise the carrier shall pay the indemnity agreed upon in the
bill of lading, neither the shipper nor the consignee being entitled to
anything else. 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.
Art. 371: Remedy, right of abandonment by the shipper. In cases of
delay on account of the fault of the carrier, referred to in the foregoing
articles, the consignee may leave the goods transported on the hands of
the carrier, informing him thereof in writing before the arrival of the
same at the point of destination. When this abandonment occurs, the
carrier shall satisfy the total value of the goods, as if they had been lost
or mislaid. Should the abandonment not occur the indemnity for loss
and damages on account of the delays cannot exceed the current price
of the goods transported on the day and at the place where the delivery
was to have been made. The same provision shall be observed in all
cases where this indemnity is due.
Art. 372 (repealed by 1749) validity of carrier to stipulate in the BOL
a reduction of his liability for damages
ARTICLE 373. RIGHTS AND LIABILITIES OF PARTIES IN
COMBINED SERVICES The carrier who makes the delivery of the
merchandise to the consignee by virtue of combined agreements or
services with other carriers shall
1) assume the obligations of those who preceded him in the
conveyance,
2) 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.
3) likewise acquire all the actions and rights of those who preceded
him in the conveyance.
The shipper and the consignee shall have an immediate right of action
against the
1) carrier who executed the transportation contract, or
2) other carriers who may have received the goods transported
without reservation. However, the reservation made by the latter
shall not relieve them from the responsibilities which they may
have incurred by their own acts.
Art. 374- 376: provisions which give the carrier several remedies for
the collection of freightage
1) Judicial Sale
ARTICLE 374. The consignees to whom the shipment was
made may not defer the payment of the expenses and
transportation charges of the goods they receive after the lapse of
twenty-four hours following their delivery; and in case of delay
in this payment, the carrier may demand the judicial sale of the
goods transported in an amount necessary to cover the cost of
transportation and the expenses incurred.
2) Retaining Lien
ARTICLE 375. The goods transported shall be especially bound
to answer for the cost of transportation and for the expenses and
fees incurred for them during their conveyance and until the
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moment of their delivery.This special right shall 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.
Preference of Credits. ARTICLE 376. The preference of the
carrier to the payment of what is owed him for the transportation
and expenses of the goods delivered to the consignee shall not be
cut off by the bankruptcy of the latter, provided it is claimed
within the eight days mentioned in the preceding article.
3) Carrier may deliver the cargo and may waive previous right,
but he has right of preference over the cargo for a period of 30
days. This has been amended by Article 2341 of the Civil Code.
(Earlier period was 8 days ,now 30 days na.)
4) Collection of sum of money
5) Consignation under 369
Art. 377:The carrier shall be liable for all the consequences which may
arise from his failure to comply with the formalities prescribed by the
laws and regulations of the public administration, during the whole
course of the trip and upon arrival at the point of destination, except
when his failure arises from having been led into error by falsehood on
the part of the shipper in the declaration of the merchandise. If the
carrier has acted by virtue of a formal order of the shipper or consignee
of the merchandise, both shall become responsible.
Art 378. Agents for transportation shall be obliged to keep a special
registry, with the formalities required by Article 36, in which all the
goods the transportation of which is undertaken shall be entered in
consecutive order of number and dates, with a statement of the
circumstances required in Article 350 and others following for the
respective bills of lading.
Art 379. The provisions contained 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. (Notes and
Cases on the Law on Transportation and Public Utilities, Aquino
& Hernando, citing Francisco, p.254)
Maritime laws apply only to maritime trade and sea voyages.
(Pandect of Commercial Law and Jurisprudence, Justice Jose
Vitug, 1997 ed.)
Arrastre service is not maritime in character. It refers to a contract
for the unloading of goods from a vessel. (ICTSI vs. Prudential
Guarantee, 320 SCRA 244)
VESSELS
Vessel engaged in maritime commerce, whether foreign or
otherwise.
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Art. 573 Merchant vessels constitute property which may be acquired and
transferred by any of the means recognized by law. The acquisition of a Objectives of the convention
vessel must appear in a written instrument, which shall not produce any It standardizes minimum requirement as to construction, equipment and
effect with respect to third persons if not inscribed in the registry of inspection in respect of engineering safety.
vessels.
the necessity for granting a maritime safety treaty was brought to the
The ownership of a vessel shall likewise be acquired by possession in intention of the international community after 1912 after titanic (bc
good faith, continued for three years, with just tile duly recorded. there were no life boats).
In the absence of any of these requisites, continuous possession for ten
years shall be necessary in order to acquire ownership.
Q: Who are the regulatory agencies in vessels?
A captain may not acquire by prescription the vessel of which he is in 1) MARINA (Maritime Industry Authority)- formulates policies rules
command. for the growth of shipping enterprises and concerned with the
purchase, lease and amangement of the operation of vessels. so if you
Art. 574 Builders of vessels may employ the materials and follow, with have a client who wants to buy a vessel, you go to MARINA for
respect to their construction and rigging, the systems of most suitable to registration to approve the deed of sale. but the sale of public auction
their interests. Ship owners and seamen shall be subject to what the laws to Rubizo was recorded.
and regulations of public administration on navigation, customs, health, 2) PRC- administers and supervises the examination of licensing of
safety of vessels, and other similar matters marine officers and crew
Constitutes property which may be acquired and transferred by
any of the means recognized by law. They shall continue to be VESSEL REGISTRATION
considered as personal property. (Arts. 573, 585) Under Section 806 of PD 34 (Tariff and Customs code amended by PD 761),
They are susceptible to maritime liens such as for the repair, the law requires that
equipping and provisioning of the vessel in the preparation of a
voyage, as well as mortgage liabilities, in satisfaction of which a 1) Certificate of Philippine Registry
vessel may be validly arrested and sold. (Ship Mortgage Decree a) domestic ownership
of 1978) b) more than 15 tons gross
c) Purpose: to encourage our trade navigation and ship-
building by granting exclusive privileges of trade to the flag
of Ph; to declare the nationality of the vessel

includes every sort of boat, or other artificial contrivance used or 2) Certificate of Ownership
capable of being used as a means of transportation on water. a) More than 5 tons gross
b) Purpose: to give the right to engage in coastwise trade and
- PD 474 provided for the re-organization of maritime functions in the entitles the vessel to the protection of the authorities
Philippines. It also created the Maritime Industry Authority and other
purposes. Section 3 Par 3 defines a vessel, for purposes of falling
within the jurisdiction of MARINA, as 3) Registration under PCG
any barge, lighter, carrier, passenger ship, freighter, tanker, a) 3 tons or more by Filipino citizens or corporations and
container ship, fishing boat or pother artificial contrivance, associations, at least the 60% of the capital of which is
utilizing any source of motive power, motor power, designed, owned by such citizen shall be registered at the Philippine
used or capable of being used as a means of transportation Coast Guard under PD 1064.
either as a common contract carrier, including vessels covered o The registration of vessels 3 tons or less is optional.
under PD 43.
4) Temporary Certificate of Registration
So of course these vessels in order to be considered for maritime purposes, it A foreign-owned vessel under charter or leased by a Filipino national
could either be operating as a common carrier, contract carrier (which also may be issued a temporary Certificate of Registration under the
includes fishing vessels (PD 43)), but there are exceptions that are not following conditions (as provided by law):
considered vessels for purposes of rules and regulations concerning common 1) The charter or lease must be with the approval of the MARINA
carriers: 2) The duration is not less than one year
1) Those owned or operated by the Armed Forces of the Philippines and 3) The vessel shall be used exclusively in coastwise trade unless
foreign governments for military purposes permitted by MARINA to be used for overseas trade.
2) Banka/sailboats or other water-borne contrivance of less than 3tons
gross capacity and not motorized. So, non-merchant vessels are not So you have to clarify. If it is coastwise (coastwise is within the territory of
subject to maritime law. the Philippines), but if the vessel is qualified to be used internationally, it has
to secure a permit from the MARINA, not only a permit but approval to
Q: Why is this definition of vessel important? operate in overseas trade.
We have to know what vessels are covered for the purpose of applying the
laws and regulations implemented by MARINA (Maritime Industry Certificate of registration is needed for the purposes of renting the vessel out
Authority). or for business. A certificate of ownership is if private ang vessel not for
vessels.
DOMESTIC SHIPPING DEVELOPMENT ACT OF 2004 (RA 9295)
"ships" and "vessels" may be used interchangeably. Also, it shall meet any Several points of authority for vessels:
kind, class or type of craft or artificial contrivance capable in floating in 1) Philippine Coast Guard- regulation, documentation and licensing of
water, and for what purpose? To be used as means of water transport in vessels
domestic trade for either carriage of passengers, cargo or both. 2) BMI (under the Coast Guard)- investigates consudct of crew
members and officers in terms of casualties, and recommends to the
Kinds of Vessels commndant for penalties in cases of violations
SOLAS (Safety of Life at Sea) provides:
1) Passenger ship- carries more than 12 passengers
2) Cargo ship- Vessels for registration:
3) Tanker- a cargo ship adapted for the carriage in bulk of liquid cargos - Every sort of boat, craft, or other artificial contrivance
of inflammable nature - used, or capable of being used,
4) Fishing vessel- used to catch living resources at sea - as a means of transportation on water
5) Nuclear ship- ship provided with a nuclear power plant
6) New ship- still under construction and unregistered after the date of Vessels as property:
the effectivity of SOLAS - Vessels are considered personal or movable property under Art. 585.
7) Existing ship- contrary to new ship; used and registered Under the Civil Code, they are also considered as personalty, often
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referred to as a particular kind of personal things.
- ships or vessels whether moved by steam or sail, pertain to an extent of
the nautre and condition of realty on account of their value and
importance in the commerce.
Acquisitions of vessels
Vessels may be acquired or transferred by means recognized by law.
1) Purchase And Sale
a) Voluntary (575-578)
b) Judicial (578-582)
o Must be in written instrument, and Registered
Under Article 573, vessels are personal/movable property,
or a chattel, so until the enactment of the Ship Mortgage
Decree of 1978, ships are covered by the provisions of
Chattel Mortgage Law. Since ships are valuable movable
property dealt within commerce, they may be dealt and
bought and sold or chartered or hired out for long periods.
These operations of vessels are generally through agents
which are called ship brokers.
In order to be binding to third parties,
The requisite of registration is not to validate the sale, but it
is indispensable in order that the purchaser's rights against
the third persons may be maintained. For example, placing
a near-defunct vessel in a public auction, the purchaser
whose certificate of sale must register will prevail over an
earlier purchase of a purchaser who did not register his
purchase (Rubizo)
But as between the parties, ownership is parties upon
execution of the Deed of Sale and delivery of the vessel.
Rubiso vs Rivera
So a purchaser of a vessel in a public auction of a vessel (so
there is a judicial foreclosure) whose certificate of sale was
registered in a registry shall prevail over an earlier purchase
of the vessel by another person who did not register his
purchase.
SC characterized maritime transactions as having a real
nature (similar to registration of real property) with respect
to effectivity agaisnt 3rd persons. In this case, defendant
acquired by purchase the pilot boat on date prior to the
purchase and adjudication by plaintiff Rubiso. but the sale
to Rubiso was recorded in the office of collector of customs
in january 7and the commercial registry in march 17. as
ruled, the requisite of registration is a necessary and
indispensable in order for the pruchasers right be
maintained against third persons (Art 573).
Froilan vs. Oriental Shipping (12 S 276), the SC ruled that:
In the absence of stipulation to the contrary, the ownership of
the thing sold passes to the vendee upon the actual or
constructive delivery thereof (Art. 1477, New Civil Code). It
is for this reason that Froilan was able to constitute a
mortgage on the vessel in favor of the Administration, to
secure payment of the unpaid balance of the purchase price.
This is true if the sale has been made on credit or pyament
and the price is not essential to the trasnfer of ownership, as
long as the property has been delivered.
2) Prescription
a) Good faith + just title + possession of 3 years
b) Bad faith + possession of 10 years
3) Construction
o Shipbuilding and repair is to be registered but not as to
public utility. To engaged in business, it must be issued a
COR and license from MIA
o Ship brokers are commonly used when vessels are to be
built, or when shipyards are to be contracted with. These
are being undertaken by ship brokers. They are
professional experts in shipping, specializing in particular
types of tonnage/damage (?) or particular transactions.
o Aliens may be licensed as ship brokers as ship brokerage
is different from operation of vessels.
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o The business of ship brokerage covers not only purchase
and sell of vessels but also the negotiation of freight,
passengers, and other business for the owners of vessels,
or for the shipper and consignors or consignees of freight
carried by vessels.
4) Capture
5) Donation
6) Succession
7) Other means such as barter
ARTICLE 575. Co-owners of vessels shall have the right of repurchase and
redemption in sales made to strangers, but they may exercise the same only
within the NINE DAYS following the inscription of the sale in the registry,
and by depositing the price at the same time.
Illustration: If A wants to sell his share to X, he must first offer the same to
his co-owners. This is the right of preemption. If A does not do so and sell to
X, B and C have the right to buy back such share from X. This is the right of
redemption which must be exercised within nine days following the
inscription of the sale in the registry, and by depositing the price at the same
time.
ARTICLE 576. In the sale of a vessel it shall always be understood as
included the
1) rigging, masts,
2) stores and engine of a streamer appurtenant thereto, which at the
time belongs to the vendor.
except
3) The arms,
4) munitions of war,
5) provisions and fuel
The vendor shall be under the obligation to deliver to the purchaser
a certified copy of the record sheet of the vessel in the registry up
to the date of the sale.
ARTICLE 577.If the alienation of the vessel should be made while it is on a
voyage, the freightage which it earns from the time it receives its last cargo
shall pertain entirely to the purchaser, and the payment of the crew and other
persons who make up its complement for the same voyage shall be for his
account. If the sale is made after the vessel has arrived at the port of its
destination, the freightage shall pertain to the vendor, and the payment of the
crew and other individuals who make up its complement shall before his
account, unless the contrary is stipulated in either case.
1) Freightage which it earns from receipt of last cargo
2) Payment of crew and other persons/complements
a. While on voyage, sold purchaser
b. After the vessel has arrived, sold seller
ARTICLE 578. If the vessel being on a voyage or in a foreign port, its owner
or owners should voluntarily alienate it, either to Filipinos or to foreigners
domiciled in the capital or in a port of another country, the bill of sale shall
be executed before the consul of the Republic of the Philippines at the port
where it terminates its voyage and said instrument shall produce no effect
with respect to third persons if it is not inscribed in the registry of the
consulate. The consul shall immediately forward a true copy of the
instrument of purchase and sale of the vessel to the registry of vessels of the
port where said vessel is inscribed and registered.
In every case the alienation of the vessel must be made to appear with a
statement of whether the vendor receives its price in whole or in part, or
whether he preserves in whole or in part any claim on said vessel. In case the
sale is made to a Filipino, this fact shall be stated in the certificate of
navigation.
FORMALITIES required for the voluntary sale of vessels abroad as
follows:
1) Execution of the bill of sale before the consul of the Philippines at the
port where it terminates its voyage;
2) Inscription in the registry of its consulate;
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AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA

3) Forwarding by the consul of a true copy of the instrument or purchase not delivered to the 6. Damages arising out of tort;
and sale to the registry of vessels of the port of registration; and consignee; and
4) Statement must be made to appear on said instrument of whether the 5. Costs of repair and 7. Preferred mortgage
vendor receives its price in whole or in part, or whether he preserves equipment of the vessel, and registered prior in time.
in whole or in part, any claim on said vessel. provisioning of food,
supplies and fuel during its
ARTICLE 579. After the damage to the vessel and the impossibility of her last voyage; and
being repaired, in order to continue the voyage had been shown, its sale at
6. Preferred mortgages
public auction shall be ordered.
registered prior in time.
FORMALITIES required to be observed for the sale of vessels when
Effect of sale: All pre-existing claims in the vessel are terminated. They
they are rendered useless for navigation as follows:
1) Application by the captain for examination to the judge or court of the will then be satisfied from the proceeds of the sale subject to the order
port of arrival if in the Philippines, or if in a foreign country, to the of preference.
consul of the Philippines, should there be one, or where there is none,
to the judge or court or to the local authority;
2) Notification of the consignee or the insurer should they reside at said International Conventions or Agreements
port or their representatives thereat; To Which The Philippines Is A Signatory
3) Proof of damage and impossibility of the repair of the vessel; and
4) Order for the sale of the vessel at public auction. 1. Carriage of Goods by Sea Act (COGSA) RA 521 Enacted by the
74th Act of US Congress to give effect to the Brussels Treaty
The rules to be followed in the sale of a vessel at public auction after the This Act embodies the commonly known as the Hague Laws.
damage to the vessel and the impossibility of her being repaired in order to 2. SOLAS International Convention for the Safety of Life at Sea -
continue its voyage have been shown are enumerated in Article 579. Done in London, June 17, 1960; Entered into PH: 1965.
1) The hull of the vessel, its rigging, engines, stores and other This convention standardizes the minimum requirements as to
articles shall be apprised, after making an inventory, said construction, equipment, inspection with respect to engineering
proceedings to be brought to the notice of the persons who may safety, masters, trails and radio methods. Take note that the xxx
wish to take part in the auction in drafting maritime safety treaty was brought to the attention to
2) The order or decree ordering the acution shall be posted the the international community in 1912 by the sinking of the
period fixed for the sale be not less than 20 days Titanic, which like most ships, did not carry enough number of
3) Announcements to be repeated every 10 days and publication be life boats
made to appear on the records 3. International Conventions of Load Lines in 1966 This pertains to
4) Auction shall be held on the day fixed and follow formalities of tankers or vessels carrying tankers.
judicial sales 4. International Regulations for Preventing Collisions at Sea
5. International Convention for the Prevention of Collision at Sea by
Oil Adopted in London in May 1954 and entered into Philippines on
1964
MARITIME AND 6.
7.
International Convention on Tonnage Measurement of Ships
Special Trade Passenger Ship Agreement Adopted in London in
PREFENCE OF CREDITS 8.
1971 and in the Philippines in 1974
Convention on the Prevention of Marine Collision by Dumping
It constitutes a present right of property in the ship, a jus in re, to be Wastes and Other Matters Open for Signature in London, Boston,
afterward enforced in admiralty by process in rem. (PNB vs. CA, 337 Mexico, Washington; entered into the Philippines in 1975
SCRA 381) 9. Agreement for the Facilitation of Search for Ships in Distress and
If the maritime lien arose prior to the recording of a preferred Rescue for Ships Accidents
mortgage, it shall have priority over the said mortgage lien. (PNB vs.
CA, 337 SCRA 381)

ORDER OF PREFERENCE IN CASE OF SALE OF VESSEL

R.A. 6106
Effectivity date
1969
Applicability
Overseas shipping only
Kind of sale
Judicial
Order of Preference
A preferred mortgage shall have
priority over all claims against the
vessel, except the following
preferences in the order stated:
1. Judicial costs of the
proceedings;
2. Taxes due the Philippine
Government;
3. Salaries and wages of the
Captain and Crew of the
vessel during its last voyage;
4. General average or salvage
including contract salvage,
bottomry loans, and
indemnity due shippers for
the value of goods
transported but which were
PARTICIPANTS IN
P.D. 1521
MARITIME COMMERCE
A. Shipowners and ship agents
1978
B. Captains and masters of the vessel
C. Officers and crew of the vessel
Both domestic and overseas D. Supercargoes
shipping E. Pilot
Judicial and extrajudicial A. SHIPOWNERS AND SHIP AGENTS
1) Shipowner (proprietario) Person who has possession, control
The preferred mortgage lien shall and management of the vessel and the consequent right to direct
have priority over all claims her navigation and receive freight earned and paid, while his
possession continues.
against the vessel, except the
following preferences in the order
2) Ship agent (naviero) Person entrusted with provisioning and
stated: representing the vessel in the port in which it may be found; also
1. Expenses and fees allowed includes the shipowner.Not a mere agent under civil law; he is
and costs taxed by the court solidarily liable with the ship owner.
and taxes due to the
Government;
2. Crews wages; Powers and functions:
3. General average; 1. Capacity to trade;
4. Salvage, including contract 2. Discharge duties of the captain, subject to Art.609;
salvage; 3. Contract in the name of the owners with respect to repairs,
5. Maritime liens arising prior details of equipment, armament, provisions of food and
in time to the recording of fuel, and freight of the vessel, and all that relate to the
the preferred mortgage; requirements of navigation;

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AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA

4. Order a new voyage, make a new charter or insure the 9. Hold in custody properties left by deceased passengers and
vessel after obtaining authorization from the shipowner or crew members;
if granted in certificate of appointment. 10. Comply with the requirements of customs, health, etc. at
the port of arrival;
Civil Liabilities of the Shipowner And Ship Agent 11. Observe rules to avoid collision;
1. All contracts of the captain, whether authorized or not, to repair, equip 12. Demand a pilot while entering or leaving a port. (Art. 612)
and provision the vessel; (Art. 586)
2. Loss and damage to the goods loaded on the vessel without prejudice A ships captain must be accorded a reasonable measure of discretionary
to their right to free themselves from liability by abandoning the vessel authority to decide what the safety of the ship and of its crew and cargo
to the creditors. (Art. 587) specifically requires on a stipulated ocean voyage (Inter-Orient Maritime
3. Damages to 3rd persons for tort or quasi-delict committed by the Enterprises Inc. vs. CA).
captain, except collision with another vessel (2201,CC)
4. Damages in case of collision due to the fault, negligence, or want of No liability for the following:
skill of the captain, sailing mate, or any other member of the 1. Damages caused to the vessel or to the cargo by force
complement majeure;
2. Obligations contracted for the repair, equipment, and
Duty of Ship Agent to Discharge the Captain and Members of the Crew provisioning of the vessel unless he has expressly bound
If the seamen contract is not for a definite period or voyage, he may himself personally or has signed a bill of exchange or
discharge them at his discretion. (Art. 603) promissory note in his name. (Art. 620)
If for a definite period, he may not discharge them until after the
fulfillment of their contracts, except on the following grounds: Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the
THIRD Captain towards Passengers and Cargoes
1) Insubordination in serious matters; 1. Damages to vessel and to cargo due to lack of skill and negligence;
2) Robbery; 2. Thefts and robberies of the crew;
3) Theft; 3. Losses and fines for violation of laws;
4) Habitual drunkenness; 4. Damages due to mutinies;
5) Damage caused to the vessel or to its cargo through malice or 5. Damages due to misuse of power;
manifest or proven negligence. (Art. 605) 6. For deviations;
7. For arrivals under stress;
B. CAPTAINS AND MASTERS 8. Damages due to non-observance of marine regulations. (Art. 618)
They are the chiefs or commanders of ships.
The terms have the same meaning, but are particularly used in C. OFFICERS AND CREW
accordance with the size of the vessel governed and the scope of 1. Sailing Mate/First Mate
transportation, i.e., large and overseas, and small and coastwise, 2. Second Mate
respectively. 3. Engineers
Nature of position (3-fold character): 4. Crew
1. General agent of the shipowner;
2. Technical director of the vessel; No liability under the following circumstances:
3. Representative of the government of the country under 1. If, before beginning voyage, captain attempts to change it, or a
whose flag he navigates. naval war with the power to which the vessel was destined
occurs;
Qualifications: 2. If a disease breaks out and be officially declared an epidemic in
1. Filipino citizen; the port of destination;
2. Legal capacity to contract; 3. If the vessel should change owner or captain. (Art. 647)
3. Must have passed the required physical and mental
examinations required for licensing him as such. (Art. 609) Sailing Mate/First Mate
Second chief of the vessel who takes the place of the captain in
Inherent powers: case of absence, sickness, or death and shall assume all of his
1. Appoint crew in the absence of ship agent; duties, powers and responsibilities. (Art. 627)
2. Command the crew and direct the vessel to its port of Duties:
destination; 1. Provide himself with maps and charts with astronomical
3. Impose correctional punishment on those who, while on tables necessary for the discharge of his duties;
board vessel, fail to comply with his orders or are wanting 2. Keep the Binnacle Book;
in discipline; 3. Change the course of the voyage on consultation with the
4. Make contracts for the charter of vessel in the absence of captain and the officers of the boat, following the decision
ship agent. of the captain in case of disagreement;
5. Supply, equip, and provision the vessel; and 4. Responsible for all the damages caused to the vessel and
6. Order repair of vessel to enable it to continue its voyage. the cargo by reason of his negligence. (Arts. 628 - 631)
(Art. 610)
Second Mate
Sources of funds to comply with the inherent powers of the Takes command of the vessel in case of the inability or
captain (in successive order): disqualification of the captain and the sailing mate, assuming in
1. From the consignee of the vessel; such case their powers and responsibilities.
2. From the consignee of the cargo; Third in command
3. By drawing on the ship agent; Duties:
4. By a loan on bottomry; 1. Preserve the hull and rigging of the vessel;
5. By sale of part of the cargo. (Art. 611) 2. Arrange well the cargo;
3. Discipline the crew;
Duties: 4. Assign work to crew members;
1. Bring on board the proper certificate and documents and a 5. Inventory the rigging and equipment of the vessel, if laid
copy of the Code of Commerce; up. (Art. 632)
2. Keep a Log Book, Accounting Book and Freight Book;
3. Examine the ship before the voyage; Engineers
4. Stay on board during the loading and unloading of the Officers of the vessel but have no authority except in matters
cargo; referring to the motor apparatus. When two or more are hired,
5. Be on deck while leaving or entering the port; one of them shall be the chief engineer.
6. Protest arrivals under stress and in case of shipwreck; Duties:
7. Follow instructions of and render an accounting to the ship 1. In charge of the motor apparatus, spare parts, and other
agent; instruments pertaining to the engines;
8. Leave the vessel last in case of wreck; 2. Keep the engines and boilers in good condition;
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AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA

3. Not to change or repair the engine without authority of the 2. Countermand or overrule by the master of the vessel in which case the
captain; registered owner of the vessel is liable. (Sec.11, Art.III PPA Admin Order
4. Inform the captain of any damage to the motor apparatus; 03-85)
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
CINDID
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.
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DOCTRINE OF LIMITED
LIABILITY
CHARACTERISTICS OF MARITIME TRANSACTION
1) Real - similar to transactions over real property with respect to
effectivity against third persons which is done through registration.
(Rubiso vs. Rivera, 37 Phil. 72). 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).
HYPOTHECARY RULE
- No vessel, no liability.
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: VEFI
1) the vessel itself;
2) equipment;
3) freightage; and
4) insurance proceeds
Cases where applicable:
1. Art. 587 civil liability for indemnities to third persons for the
negligent acts of the captain
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
5. Maritime Liens as there is no longer any res to which it can attach
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;
7. Ship chattel mortgaged
8. Not maritime (small bancas) or a private carrier
9. Expenses for equipping or repairing the conditions of the vessels
completed before its loss
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).
 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia
AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA
CASE:
Yangco vs Laserna
The ship agents liability is merely co-extensive with his interest in the vessel
such that a total loss thereof results in its extinction. The total destruction of
the vessel extinguishes a maritime lien, as there is no longer any res to which
it can attach.
Inter-orient Maritime Enterprises: Role of a captain. 3 distinct roles:
general, agent of the SO, commander and technical director of the vessel, rep
of the country he navigates. 595(2)
Under what circumstances can the crew be dismissed?
Before voyage:
Art. 603: Before the vessel sets out to sea, the ship agent may at his discretion
discharge the captain and members of the crew whose contracts are not for a
definite period or voyage, paying them the salaries earned according to their
contracts, and without any indemnity whatsoever, unless there is an express
and specific agreement in respect thereto.
What if the crew and captain are discharged during voyage?
- Continue to Receive salaries until they return to port where the
contract was made unless there should be just mtive for their
discharge in accordance with Art 636, but the provisions of Art
603 and 604 applies only if the captain is not a co-owner.
- If he is a co-owner he cannot be discharged under art 606, without
the ship agent returning to him the aountof his interest in the
vessel which in the absence of agreement shall be appraised by
experts appointed in the manner established under the Civil
Procedure.
- If the captain who is a co-owner should have obtained the
command of the vessel by vitrue of a special agreement contained
in the article of co-partnership, he cannot be deprived of his office
except for just cause- insubordination, and in serious matters-
robbery, theft, habitual drunkeness or damages caused to the
vessel or to her cargo by malice, manifest or proven negligence
under Art 607 in connection to Art 605.
Madrigal Shipping Company Inc v. Ogilve (1958)
May the dismissed crewmembers recover damages?
SHIPS AND SHIPPING; CAPTAINS CONTRACT OF SERVICES OF
SEAMEN FOR DEFINITE VOYAGE; LIABILITY OF OWNER OF
VESSEL. The captain employed by Madrigal Shipping Company Inc.
engaged the service of several seamen to man and fetch the vessel S.S. Bridge
owned by the corporation from Sasebu, Japan, to the port of Manila, the
engagement to last upon the arrival of the boat at the last mentioned port. In
pursuance thereof, the seamen were flown to Sasebu, Japan, and manned the
vessel out of the port of Sasebu. On 16 March 1948, upon arrival of the vessel
at Hongkong, the seamen were dismissed, replaced by a Chinese crew, were
flown back to Manila and paid their salaries up to the date of their discharge.
The seamen brought an action to collect their salaries and subsistence
allowance from 17 March 1948 to 30 September 1948 when the vessel
arrived in the port of Manila.
Held: that under Article 605 of the Code of Commerce, where the contract is
for a definite period of voyage, the seamen may not be discharged until after
the contract shall have been performed, except by reason of insubordination
in serious matters, robbery, theft, habitual drunkenness, or damage caused to
the vessel or its cargo through malice or manifest or proven negligence. The
discharge of the seamen not being any of the causes under the exception,
they are entitled to collect from the owner or agent of the vessel their
unpaid salaries for the whole period they were engaged to render the
service.
Arado vs CA & San Miguel
The fact show that on March 24, 1982, petitioner, through its crew master,
apply for a clearance with the Philippine Coast Guard for M/LV Maya to
leave the port of San Carlos. But due to the typhoon, it was denied clearance
by the San Carlos Coast Guard. A day after, M/L Maya was given clearance
because the weather was already fine. However, the vessel left for Mandaue
City. While it was navigating Cebu, the vessel drifted for 16 hours although
its engine was still running. In March 24 (4AM), the vessel sank. The crew
was rescued by a passing pumpboat. A marine protest was filed.
On the basis of such marine protest, the board of xxx conducted a hearing on
the sinking of M/L Maya. The Board's report containing its findings and
recommendation was then forwarded to the headquarters of the Philippine
~ 17 ~
Coast Guard for appropriate action. On the basis of such report, the
Commandant of the Philippine Coast Guard rendered a decision dated
December 21, 1984 in SBMI Adm. Case No. 88-82 exonerating the
owner/operator officers and crew of the ill-fated M/L Maya from any
administrative liability on account of said incident. petitioner claims that
the factual findings of the Special Board of Marine Inquiry exonerating the
owner/operator, crew officers of the ill-fated vessel M/L Maya from any
administrative liability is binding on the court.
Held:
Such exoneration was but with respect to the administrative liability of the
owner/operator, officers and crew of the ill-fated" vessel. It could not have
meant exoneration of appellee from liability as a common carrier for his
failure to observe extraordinary diligence in the vigilance over the goods it
was transporting and for the negligent acts or omissions of his employees.
Such is the function of the Court, not the Special Board of Marine Inquiry."
(From Dos Sanchez Roman 2014)
What is the difference here if they have been exonerated of
administrative liability? That is only in so far as the employer- employee
relationship. The finding here of the board is only in so far as whether or not
they were negligent or that they perform their functions being an employee
of that vessel. So in so far as the value of the cargo is concerned, that is
between the shipper and the carrier. If the officers were exonerated
administratively, they can still be liable to the carrier for whatever the carrier
has paid, this is separate and distinct from the liability of the CC to the
shipper under contract of carriage.
Amparo Delos Santos vs CA (BQ 2000)
This is a case where the vessel was made liable despite the loss of the vessel.
The petition has merit. At the outset, We note that there is no dispute as to
the finding of the captain's negligence in the mishap. The present controversy
centers on the questions of Maritima's negligence and of the application of
Article 587 of the Code of Commerce. The said article provides:
Art. 587. The ship agent shall also be civilly liable for indemnities
in favor of third persons which may arise from the conduct of the
captain in the care of the goods which he loaded on the vessel, but
he may exempt himself therefrom by abandoning the vessel with
all her equipment and the freight it may have earned during the
voyage.
Under this provision, a shipowner or agent has the right of abandonment; and
by necessary implication, his liability is confined to that which he is entitled
as of right to abandon-"the vessel with all her equipment and the freight it
may have earned during the voyage"
Contrary to the petitioners' supposition, the limited liability doctrine applies
not only to the goods but also in all cases like death or injury to passengers
wherein the shipowner or agent may properly be held liable for the negligent
or illicit acts of the captain (Yangco v. Laserna, Ibid). It must be stressed at
this point that Article 587 speaks only of situations where the fault or
negligence is committed solely by the captain. In cases where the shipowner
is likewise to be blamed, Article 587 does not apply (see Manila Steamship
Co., Inc. v. Abdulhanan, et al., 100 Phil. 32, 38). Such a situation will be
covered by the provisions of the New Civil Code on Common Carriers.
Owing to the nature of their business and for reasons of public policy,
common carriers are tasked to observe extraordinary diligence in the
vigilance over the goods and for the safety of its passengers (Article 1733,
New Civil Code). Whenever death or injury to a passenger occurs, common
carriers are presumed to have been at fault or to have acted negligently unless
they prove that they observed extraordinary diligence as prescribed by
Articles 1733 and 1755 (Article 1756, New Civil Code).
Vasquez vs CA (99 and 00 BQ)
Sinking of vessel due to typhoon was not considered as an exempting cause
as the captain was negligent in over loading the vessel and proceeding despite
notice of bad weather. However the SC ruled that since there was no
negligence on the part of the ship owner, the liability of ship owner and ship
agent can be extended only to the proceeds of the insurance.
 TRANSPORTATION LAW TSN
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AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA

EFFFECT OF REDEMPTION
DUES ASSESSED ON A Art 662. If the vessel or the goods are redeemed or salvages, the freightage
corresponding to the distance covered by the vessel transporting the cargo
VESSEL: shall be paid. Therefore if the agreed amount of freightage, is 1k and the
goods are seized by pirates when the vessel is already half-way the half of
1) Berthing fees levied in vessels coming or mooring at a wharf,
freightage does not need to be paid- 500.00.
river, channel, w/I any slit channel basin or canal under the
jurisdiction of any court in the PH; are like wharfage dues in that
If the cargoes were redeemed from the pirates, balance of the freightage must
they are imposed regardless of the ownership thereof. The only
be paid in proportion to the distance covered by the vessel.
difference is that while Berthing fees are assessed vs vessels,
Wharfage is vs the cargo
CARGOES REQUIRED TO TAKE FREIGHTAGE
2) Wharfage dues cargoes from foreign trade
Read:
3) Tonnage dues assessed to vessels from foreign port or vessels
Art. 659
leaving Philippine port
Art. 663
Art. 644
4) Harbor fees entrance into or departure from harbor or port of
entry

5) Primage bonus to be paid to the capt after successful voyage

SPECIAL CONTRACTS OF
6) Demurrage another name for penal clause to compensate the
owner of the vessel for its non-use; A term of transportation law MARITIME COMMERCE
which refers to the damages payable to a carrier as compensation 1. Charter party
for lost time. 2. Bill of lading
3. Contract of transportation of passengers
NFA v CA 311 sra 700 on sea voyages
What is demurrage? It is Sum fixed in a charter party 4. Loan on bottomry
as a renumeration to the ship owner for the detention 5. Loan on respondentia
of his vessel. Exists only when expressly stipulated in 6. Marine insurance
the contract. The charterer is liable for the payment of
demurrage when he exceeds the period of loading and CHARTER PARTY
unloading as agreed upon on the contract. A charter A contract by virtue of which the owner or agent binds himself to
party may either provide for fixed lay days or transport merchandise or persons for a fixed price.
customary quick dispatch ( as fast as the steamer can A contract by which an entire ship, or some principal part thereof
go) implies that loading and unloading should be is let/leased by the owner to another person for a specified time
within a reasonable period of time so due diligence or use. (Planters Products, Inc. vs. CA, 226 SCRA 476)
should be exercised according to the customs and Parties:
usages of a particular port, the circumstances 1. Ship owner or ship agent
obtaining are to be taken into account. 2. Charterer
Classes:
7) Lay days period of delay in port for loading and unloading. 1. Bareboat or demise The charterer provides crew, food and fuel.
Extra lay days- over staying lay days if it exceeds the The charterer is liable as if he were the owner, except when the
laydays agreed upon, in some contracts over staying is cause arises from the unworthiness of the vessel. The shipowner
allowed on occasion of weather, availability of man leases to the charterer the whole vessel, transferring to the latter
power, usually there is a period of lay days which may the entire command, possession and consequent control over the
be based on the customs of each port. vessels navigation, including the master and the crew, who
thereby become the charters servants. It transforms a common
8) Dead freight cargo not loaded; covers the amount paid by or carrier into a private carrier.
recoverable from a charterer of a ship for such part of the ship's The charterer becomes the owner of the vessel pro
capacity as the charterer has contracted for but fails to hac vice, just for that one particular purpose only.
occupy; also : the unoccupied space in such a ship; bulky Because the charterer is treated as owner pro hac vice,
nonperishable freight; CHARTERER is liable to pay; Under Art the charterer assumes the customary rights and
680 of Code of commerce, the charterer is liable for the dead liabilities of the shipowner to third persons and is held
freight. liable for the expense of the voyage and the wages of
the seamen.
9) Customary Quick dispatch implies that loading/unloading
should be w/I a reasonable period of time; 2. Contract of Affreightment A contract whereby the owner of the
vessel leases part or all of its space to haul goods for others.
CARGOES NOT REQUIRED TO PAY FREIGHT: The shipowner retains the possession, command
Under Art. 660 & Art 661 and navigation of the ship, the charterer merely having
1. Those jettisoned in order to preserve the vessel and the crew and use of the space in the vessel in return for his payment
passengers; if there is danger of sinking, the load is lightened by of the charter hired.
throwing the cargo;
a. Those that are thrown for the common safety, the freight Kinds:
that should have been paid is considered as general average a. Time charter vessel is chartered for a fixed
and therefore will be computed accordingly. The shipper period of time or duration of voyage.
whose cargoes have been saved as a result of the jettison of b. Voyage or trip charter the vessel is leased for
some cargoes, the owners of saved cargoes shall contribute one or series of voyages usually for purposes of
to the general fund pro rata to the value of his cargo and this transporting goods for charterer.
is considered as general average which shall be distributed
to those shippers whose cargoes were jettisoned. LEASE CHARTER PARTY
If for a definite period, Charterer may rescind
2. Those lost to ship wreck or stranding if the freight shall be paid in lessee cannot give up the charter party by paying half
advance, it shall be returned unless there was an agreement to the lease by paying a portion of of the freightage agreed
contrary. the amount agreed upon. upon.
3. Those seized by pirates and if the freightage shall have been paid in If the leased property is The new owner is not
advance it shall also be returned unless otherwise agreed upon. sold to one who knows of compelled to respect the
the existence of the lease, charter party so long as he
the new owner must respect can load the vessel with his
the lease. own cargo. (Art. 689)
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 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia

AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA

Civil law concept Commercial law concept Rights and Obligations of Parties

SHIPOWNER OR SHIP CHARTERER

AGENT
CHARTER PARTY BILL OF LADING 1. If the vessel is 1. To pay the agreed
An entire or complete More like a private receipt chartered wholly, not charter price;
contract. which the captain gives to to accept cargo from 2. To pay freightage on
accredit goods received others; unboarded cargo;
from persons 2. To observe 3. To pay losses to
Consensual contract Real contract represented capacity; others for loading
3. To unload cargo uncontracted cargo
BAREBOAT OR CONTRACT OF clandestinely placed and illicit cargo;
DEMISE CHARTER AFFREIGHTMENT 4. To substitute another 4. To wait if the vessel
(TIME OR VOYAGE vessel if load is less needs repair;
CHARTER) than 3/5 of capacity; 5. To pay expenses for
Charterer becomes liable to Owner remains liable as 5. To leave the port if deviation. (Arts. 679-
others caused by its carrier and must answer for the charterer does not 687)
negligence any breach of duty bring the cargo within
the lay days and extra
Charterer regarded as Charterer is not regarded as
lay days allowed;
owner pro hac vice for the owner.
6. To place in a vessel in
voyage
a condition to
Owner of vessel The vessel owner retains navigate;
relinquishes possession, possession, command and 7. to bring cargo to
command and navigation to navigation of the ship nearest neutral port in
charterer case of war or
blockade. (Arts. 669-
678)
Common carrier is Common carrier is not
converted to private carrier. converted to a private
carrier.
Rescission of a Charter Party
At charterers At shipowners Fortuitous
request request causes
(Art 688) (Art. 689) (Art. 690)
PERSONS WHO MAY MAKE A CHARTER
1. Owner or owners of the vessel, either in whole or in majority part, 1. By 1. If the extra lay 1. War or
who have legal control and possession of the vessel abandoning the days terminate interdiction of
2. Charterer may subcharter entire vessel to 3rd person only if not charter and without the commerce;
prohibited in original charter. (Art.679) paying half of cargo being 2. Blockade;
3. Ship agent if authorized by the owner/s or given such power in the freightage; placed alongside 3. Prohibition to
the certificate of appointment. (Art.598) 2. Error in the vessel; receive cargo;
4. Captain in the absence of the ship agent or consignee and only if tonnage or flag; 2. Sale by the 4. Embargo; and
he acts in accordance with the instructions of the agent or owner 3. Failure to owner of the 5. Inability of the
and protects the latters interests. (Art.609) place the vessel vessel before vessel to
at the charterers loading by the navigate.
REQUISITES OF A VALID CHARTER PARTY disposal; charterer;
1. Consent of the contracting parties 4. Return of the
2. Existing vessel which should be placed at the disposition of the vessel due to
shipper pirates, enemies
3. Freight or bad weather;
4. Compliance with Art. 652 of the Code of Commerce 5. Arrival at a
port for repairs.
Clauses Which May Be Included In a Charter Party
Terms:
1. Primage - bonus to be paid to the captain after the successful voyage.
Jason clause Clause paramount or 2. Demurrage the sum fixed in the charter party as a remuneration to the
paramount clause owner of the ship for the detention of his vessel beyond the number of
A stipulation in a A clause in a charter days allowed by the charter party for loading or unloading or for
charter party that in case party providing that the sailing.
of a maritime accident COGSA shall apply, 3. Deadfreight the amount paid by or recoverable from a charterer of a
for which the shipowner even though the ship for the portion of the ships capacity the latter contracted for but
is not responsible by transportation is failed to occupy.
law, contract or domestic, subject to the 4. Lay Days - days allowed to charter parties for loading and unloading
otherwise, the cargo extent that any term of the cargo.
shippers, consignees or the bill of lading is 5. Extra Lay Days days which follow after the lay days have elapsed.
owners shall contribute repugnant to the
with the shipowner in COGSA or applicable Usual forms of Consummating Contracts
general average. law, then to the extent 5. C.I.F. cost, insurance and freight;
(Pandect of thereof the provision of 6. F.O.B. - free on board;
Commercial Law and the bill of lading is void. 7. F.A.S. - free alongside ship; and
Jurisprudence, Justice (Pandect of 8. C. & F. - cost and freight.
Jose Vitug, 1997 ed.) Commercial Law and
Jurisprudence, Justice TranSshipment of Goods
Jose Vitug, 1997 ed.) 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.

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 TRANSPORTATION LAW TSN
Atty. Jocelyn Arro-Valencia

AdDULaw2017: AMPARO, BANUELOS , CAMPANER, CONFESOR, DEL ROSARIO, NITURA, TAN, VIOLA

It is not dependent on the ownership of the transporting ships or Note: Under existing laws, the parties to a loan, whether ordinary or
in the change of carriers, but rather on the fact of actual physical maritime, may agree on any rate of interest. (CB Circular 905)
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 MARINE INSURANCE LOAN ON
and infringement of right of shipper and subjects carrier to BOTTOMRY OR
liability if freight is lost event by cause otherwise excepted. RESPONDENTIA
(Magellan Manufacturing vs. CA, 201 SCRA 102) Indemnity is paid after the loss Indemnity is paid in
has occurred advance by way of a
Loan oN Bottomry AND RESPONDENTIA loan
A real, unilateral, aleatory contract, by virtue of which one person In case of loss of the vessel due In case of loss of the
lends to another a certain amount of money or goods on things to a risk insured against, the vessel due to a marine
exposed to maritime risks, which amount, with its earnings, is to obligation of the insurer peril, the obligation of
be returned if the things are safely transported, and which is lost becomes absolute the borrower to pay is
if the latter are lost. extinguished
Consensual contract Real contract

LOAN ON LOAN ON Hypothecary Nature of Bottomry/ Respondentia

BOTTOMRY RESPONDENTIA GENERAL RULE: The obligation of the borrower to pay the loan is
Definition extinguished if the goods given as security are absolutely lost by reason of
Loan made by shipowner Loan taken on security of an accident of the sea, during the voyage designated, and if it is proven that
or ship agent guaranteed the cargo laden on a the goods were on board.
by vessel itself and vessel, and repayable
repayable upon arrival of upon safe arrival of cargo EXCEPTIONS:
vessel at destination. at destination. (Art. 719) 1. Loss due to inherent defect;
(Art. 719) 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.
Who may contract
Shipowner or ship agent. Only the owner of the Concurrence of Marine Insurance and Loan on Bottomry/Respondentia
Outside of the residence cargo. 1. The insurable interest of the owner of a ship hypothecated by
of the owners - the bottomry is only the excess of the value over the amount secured
captain. by bottomry. (Sec. 101, Insurance Code)
Common elements: 2. The value of what may be saved in case of shipwreck shall be
1. Exposure of security to marine peril; divided between the lender and the insurer in proportion to the
2. Obligation of the debtor conditioned only upon interest of each one. (Art. 735)
safe arrival of the security at the point of
destination. Note: If a vessel is hypothecated by bottomry only the excess is insurable,
Forms: since a loan on bottomry partakes of the nature likewise of an insurance
1. Public instrument coverage to the extent of the loan accommodation. The same rule would
2. Policy signed by the contracting parties and the apply to the hypothecation of the cargo by respondentia. (Pandect of
broker taking part therein Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.)
3. Private instrument (Art. 720)
Contents:
EFFECT OF A CHARTER PARTY EXECUTED BY A CAPTAIN IN
1. Kind, name and registry of the vessel;
THE ABSENCE OF THE SHIP OWNER
2. Name, surname and domicile of the captain;
Art. 655
3. Names, surnames and domiciles of the borrower
and the lender;
WHO CAN ENTER INTO A CHARTER PARTY
4. Amount of the loan and the premium stipulated;
1. Owner or owners of the vessel, either in whole or majority part,
5. Time for repayment;
who have legal control and possession of the vessel
6. Goods pledged to secure repayment;
2. Broker, who shall intervene in the execution of the charter
7. Voyage during which the risk is run (Art.721)
between the principal and the charter himself
3. Charterer may subcharter entire vessel to 3rd persons only if not
prohibited in original charter
BOTTOMRY/ ORDINARY LOAN 4. Ship agent if authorized by the owner or given such power in the
RESPONDENTIA (MUTUUM) certificate of appointment
Not subject to Usury Law Subject to Usury Law 5. 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
Liability of the borrower Not subject to any and protects the latters interests.
is contingent on the safe contingency (absolute
arrival of the vessel or liability)
cargo at destination

The last lender is a The first lender is a

preferred creditor preferred creditor

WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED

AS SIMPLE LOAN
1. Lender loaned an amount larger than the value of the object due
to fraudulent means employed by the borrower. (ART.726)
2. Full amount of the loan is not used for the cargo or given on the
goods if all of them could not have been loaded, the balance will
be considered a simple loan. (ART.727)
3. If the effects on which the money is taken is not subjected to any
risk. (ART.729)

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