TRANSPORTATION LAW
1732)
 Contract of Transportation – when a person obligates himself to transport persons
or property from one place to another for a consideration. It may involve carriage of
passenger or of goods.
o Parties
a. Carriage of passengers
1. Common carrier
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public.
2. passenger – one who travels in a public conveyance by virtue of
contract, express or implied, with the carrier subject to payment of fare
or an equivalent thereof
 a passenger is still considered as “passenger” even if he is
being carried gratuitously or under a reduced fare
 2 types of contracts of carriage of passengers
a. contract to carry – agreement to carry the passenger at
some future date – perfected by mere consent
b. contract of carriage or of common carriage itself –
considered a real contract for not until the facilities of the
carrier are actually used can the carrier be said to have
already assumed the obligation of the carrier
b. Carriage of goods
1. Shipper – person who delivers the goods to the carrier for
transportation. The person who pays the consideration or on whose
behalf payment is made
2. carrier
3. Consignee – the person to whom the goods are to be delivered. He
may be the shipper himself
 although not a signatory to the contract, becomes a party to
the contract by reason of either
a. the relationship of agency between the consignee and
the shipper/consignor
b. the unequivocal acceptance of the bill of lading
delivered to the consignee, with full knowledge of its
contents
c. availment of the stipulation of pour autrui
 there may be a consensual contract to carry goods
whereby the carrier agrees to accept and transport goods
at some future date
However, by the act of delivery of the goods, that is “when
the goods are unconditionally placed in the possession and
control of the carrier, and upon their receipt by the carrier
for transportation, the contract of carriage is perfected”
 the liability of the carrier as common carrier begins with the
actual delivery of the goods for transportation, and not
merely with the formal execution of a receipt or bill of lading
 Common carrier (Art.
 true test is not the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but whether the
undertaking is a part of the activity engaged in by the carrier that he has held out
to the general public as his business or occupation.
 the fact that the petitioner has a limited clientele does not exclude it from the
definition of a common carrier
 it does not provide that the transportation of the passengers or goods should be
by motor vehicle
 NOT COMMON CARRIER BY LAW. Under Sec. 7 of R.A. No. 10668, foreign
vessels engaging in carriage conducted in accordance with said law shall not be
considered common carriers under the New Civil Code; they are also not offering
a public service and thus shall fall outside the coverage of R.A. No. 9295 or the
“Domestic Shipping Development Act of 2004”
 Charter party a contract by which an entire ship, or some principal part thereof,
is let by the owner to another person for a specified time or use;
o may transform a common carrier into a private carrier. However, I must be a
bareboat or demise charter where the charterer mans the vessel with his
own people and becomes, in effect, the owner for the voyage or service
stipulated. The common carrier is not transformed into a private carrier if the
charter party is a contract of affreightment like a voyage charter or a time
charter
o Common carriers are bound to observe extraordinary
o in case of loss, destruction or deterioration of the goods, common carriers
are presumed to have been at fault or to have acted negligently, and the
burden of proving otherwise rests on them
 Nature of business – public utilities
 Private carrier
 the distinction lies in the character of the business, such that if the undertaking is
a single transaction, not a part of a general business or occupation, although
involving the carriage of the goods for a fee, the person or corporation offering
such is a private carrier
 a stipulation with private carrier that would disclaim responsibility for simple
negligence of its agents is a valid stipulation
Page | 1
 GOVERNING LAWS
 Art. 1766. In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of
Commerce and by special laws.
o Primary: Civil Code
o Supplementary: Code of Commerce & Special law (ex. COGSA) – treaties
are applicable since they are part of the law of the land
 SUMMARY OF RULES
1. Coastwise domestic shipment – parties cannot stipulate
Primary: Civil Code
Supplementary: Code of Commerce
2. Carriage from Philippines Ports to Foreign Ports
Primary: law of foreign country to which the goods are to be transported
Art. 1753. The law of the country to which the goods are to be
transported shall govern the liability of the common carrier for their
loss, destruction or deterioration.
3. Carriage from Foreign port to Philippines ports
Primary: Civil Code
Supplementary: Code of Commerce, Carriage of Goods by Sea Act and
Special laws
4. Overland Transportation
Primary: Civil Code
Supplementary: Code of Commerce & Special laws
5. Air Transportation
a. domestic flight
Primary: Civil Code
Supplementary: Code of Commerce & Special laws
b. international flight
Primary: provisions of the warsaw of convention

 In case of breach of contract, where do you file?

1. Place of principal domicile of the carrier
2. Place of principal business place of carrier
3. Place where you purchased ticket
4. Place of destination
X residence of plaintiff

 Registration of motor vehicles is now governed by R.A. 4136 “The Land

Transportation and Traffic Code”
 Registered owner rule – the person who is the registered owner of a vehicle is liable
for any damage caused by the negligent operation of the vehicle although the same
was already sold or conveyed to another person at the time of the accident
 Kabit system – is an arrangement whereby a person who has been granted a
certificate of public convenience allows other persons who own motor vehicles to
operate them under his license, sometimes for a fee or percentage of the earnings
 Pari delicto rule – persons who are parties to the “kabit” system cannot invoke the
same as against each other either to enforce their illegal agreement or to invoke the
same to escape liability
 Boundary system – in land transportation where the boundary system may be
implemented by the common carrier, the carrier cannot escape liability by claiming
that the driver is a lessee

Page | 2
 OBLIGATIONS OF THE COMMON CARRIER
 Most basic obligation is to transport the goods or passenger safety to the agreed
destination
 Duties of the common carrier include:
1. to accept passenger and goods without discrimination
o one of the conditions for public convenience
o Valid ground for non acceptance
1. when the goods sought to be transported are dangerous objects,
or substances including dynamites and other explosives
 toxic and hazardous materials need clearance from the
Environmental Management Bureau
2. The goods are unfit for transportation
 Art. 1742 Even if the loss, destruction, or deterioration of the
goods should be caused by the character of the goods, or
the faulty nature of the packing or of the containers, the
common carrier must exercise due diligence to forestall or
lessen the loss.
3. Acceptance would result in overloading
4. The goods are considered 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 diseases
8. Strike
9. Failure to tender goods on time
2. to seasonably deliver the goods or bring the passenger to the destination
o Reasonable time
factors: distance and nature of cargo
o Consequences of delay
 If the delay is legally inexcusable, the ff. consequences
results:
1. the carrier is still liable even if natural disaster caused the
damage
2. the stipulation limiting the liability of the carrier is inoperative
3. the carrier is liable for the damages caused by the delay
4. consignee may exercise his right to abandon under Art. 371
of the Code of Commerce
 Art. 1740. If the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free such
carrier from responsibility.
 Art. 1747. If the common carrier, without just cause, delays
the transportation of the goods or changes the stipulated or
usual route, the contract limiting the common carrier's
liability cannot be availed of in case of the loss, destruction,
or deterioration of the goods.
3. to deliver the goods or bring the passenger to the proper place or
destination
4. to deliver the goods to the proper person
5. to exercise extraordinary diligence in the performance of its duties
o Art. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is
further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and
7, while the extraordinary diligence for the safety of the
passengers is further set forth in Articles 1755 and 1756.
o Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4,
and 5 of the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault
or to have acted negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733.
o Art. 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
o Art. 1736. The extraordinary responsibility of the common carrier lasts
from the time the goods are unconditionally placed in the possession
of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or
to the person who has a right to receive them, without prejudice to the
provisions of Article 1738.
o Art. 1737. The common carrier's duty to observe extraordinary
diligence over the goods remains in full force and effect even when
they are temporarily unloaded or stored in transit, unless the shipper or
owner has made use of the right of stoppage in transitu.
o Art. 1738. The extraordinary liability of the common carrier continues to
be operative even during the time the goods are stored in a warehouse
of the carrier at the place of destination, until the consignee has been
advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.
o Art. 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.
o Art. 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or wilful acts of the former's
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
o Art. 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other
passengers or of strangers, if the common carrier's employees through
the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
o Duty to exercise extraordinary diligence owed to the passengers
extends to third persons
Page | 3
EXTRAORDINARY DILIGENCE
 Parties may voluntarily modify the duty of the carrier by expressly provision of
their contract
1. Goods – cannot stipulate that the carrier will not exercise any diligence in
the custody of goods
o Art. 1744. A stipulation between the common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service
rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
2. Passengers – cannot lessen the duty of utmost diligence
o Art. 1757. The responsibility of a common carrier for the safety of
passengers as required in Articles 1733 and 1755 cannot be
dispensed with or lessened by stipulation, by the posting of notices, by
statements on tickets, or otherwise.
3. Gratuitous Passenger – cannot lessen the duty of utmost diligence
o Art. 1758. When a passenger is carried gratuitously, a stipulation
limiting the common carrier's liability for negligence is valid, but not for
wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common
carrier's liability.
 Common carrier can observe a lesser diligence than extraordinary diligence in
carriage of goods
1. through stipulation (Art. 1744)
2. stoppage in transit
3. during calamity – provided extraordinary diligence is exercised before and after
calamity (Art. 1739)
4. defective packaging (Art. 1742)
 the law requires extraordinary diligence to be exercised in transporting the
cargo
 Common Carrier shall ALWAYS exercise Extra ordinary diligence
o exception: in case of gratuitous passenger, as stipulated
EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
DUTIES:
a. To make the ship seaworthy
o Seaworthiness – strength, durability, engineering skill made a part of a ship’s
construction and continued maintenance, together with a competent and
sufficient crew, which would withstand the vicissitudes and dangers of the
elements which might reasonably be expected or encountered during her voyage
without loss or damage to her particular cargo
o For a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew.
o seaworthiness of the vessel is impliedly warranted under the Insurance Code
o where the vessel is found unseaworthy, the ship owner is also presumed to be
negligent – burden of proving the ship is seaworthy is on the carrier
o duty to make the ship seaworthy can be delegated, however the ship owner must
exercise close supervision over its men
o seaworthiness includes:
1. Fit – engineering is well done, has good materials, vessel can meet the
normal hazards of the sea
2. Cargo worthy –vessel must be sufficiently strong and equipped to carry the
particular kind of cargo that she has contracted to carry and her cargo must
be so loaded that it is safe for her to proceed on her voyage
3. Proper manning – vessel is manned with a sufficient number of competent
officers and crew
4. Adequate equipment – ex. life vest, exit doors, lifeboats etc
b. to take passengers or cargoes that are within the carrying capacity of the vessel (not
overload)
c. to take proper route
o Transshipment – the act of taking cargo out of one ship and loading it in another
 the fact of transshipment is not dependent upon the ownership of the
transporting ships but rather on the fact of actual physical transfer of cargo
from one vessel to another
 well-known commercial usage that transshipment of freight without legal
excuse, however competent and safe the vessel into which the transfer is
made, is a violation of the contract and an infringement of the right of the
shipper, and subject the carrier to liability if the freight is lost even by a
cause otherwise excepted
d. to inspect
o has the right to inquire the goods’ value
o carrier has no obligation to inquire into the correctness or sufficiency of such
information
Page | 4
EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
DUTIES:
a. to make the vehicle Roadworthy
o duty bound to purchase and use vehicle parts that are not defective
b. to comply with the basic traffic rules
c. Diligence in the selection and supervision
o In quasi delict cases under Art. 2176 in relation to Art. 2180, the employer can
invoke the defense of due diligence in the selection and supervision of the
employee in order to escape liability.
Such defense is not available if the case against the carrier is based on contract
– culpa contractual
o Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers.
This liability of common carriers does not cease upon proof that they exercised
all the diligence of a good father of a family in the selection and supervision of
their employees
d. to inspect
o depends on the circumstances –No unbending duty (Art. 1733) to inspect each
and every package or baggage that is being brought inside the bus or jeepney
o a carrier is ordinarily not liable for injuries to passengers from fires or explosions
caused by articles brought by the other passengers, in the absence of any
evidence that the carrier, through its employees, was aware of the nature of the
article or had any reason to anticipate danger therefrom
EXTRAORDINARY DILIGENCE IN CARRIAGE BY TRAIN
DUTIES:
a. to hire competent engineers and employees
b. to keep the platform safe
c. to maintain the vehicle (train) or the means of transportation (tracks) in good and safe
working condition
 Due care must be exercised when train passengers are embarking or disembarking
 it is not the duty of the engineer to stop the train every time that he sees a person on
or near the tracks
 Railroad crossing
o to ensure the safety of others through placing safety devices and signs to prevent
vehicles or pedestrians from crossing
o running the train at an excessive speed can be proof of negligence
o GR: the rights and obligations between the public and railroad company at a
public crossing are mutual and reciprocal
 the negligence of driver of a car that collided with a train as well as the negligence of
the engineer of the train cannot be imputed to the passengers of each vehicle.
Imputed liability is present only if the driver is the employee of the passenger
o passenger of the car can still recover from the railroad company despite the
negligence of the driver of the car, whose liability is solidary as joint-tortfeasor
PASSENGER’S BAGGAGES
 Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's
baggage which is not in his personal custody or in that of his employee. As to other
baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility of
hotel-keepers shall be applicable
 Baggage – whatever articles a passenger usually takes with him for his own personal
use, comfort, and convenience according to the habits or wants of the particular class
to which he belongs either with reference to his immediate necessities or to the
ultimate purpose of his journey
 Check-in baggage – baggage that are checked-in or delivered to the carrier
o rules that are applicable to goods that are being shipped are applicable
 Hand carried luggage
o rules: (governed by rules on necessary deposit)
 Art. 1998. The deposit of effects made by the travelers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be
responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that,
on the part of the latter, they take the precautions which said hotel-keepers
or their substitutes advised relative to the care and vigilance of their effects.
(1783)
 Art. 2000. The responsibility referred to in the two preceding articles shall
include the loss of, or injury to the personal property of the guests caused
by the servants or employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force majeure. The fact
that travelers are constrained to rely on the vigilance of the keeper of the
hotels or inns shall be considered in determining the degree of care required
of him. (1784a)
 Art. 2001. The act of a thief or robber, who has entered the hotel is not
deemed force majeure, unless it is done with the use of arms or through an
irresistible force. (n)
 Art. 2002. The hotel-keeper is not liable for compensation if the loss is due
to the acts of the guest, his family, servants or visitors, or if the loss arises
from the character of the things brought into the hotel. (n)
 Art. 2003. The hotel-keeper cannot free himself from responsibility by
posting notices to the effect that he is not liable for the articles brought by
the guest. Any stipulation between the hotel-keeper and the guest whereby
the responsibility of the former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void. (n)
o Duty of passenger:
 to give notice to the common carrier or the carrier’s employees, of the
effects brought by the passenger
 to take the precautions which the common carrier or their substitutes
advised relative to the care and vigilance of their effects
Page | 5
PASSENGER OBLIGATIONS OF THE PASSENGER AND SHIPPER

a. Air  Duty to exercise due diligence

o brought ticket and went to airport – no breach of contract o to pay the consideration in the form of freight or fare
o If CHECK-In and went to departure area – there is breach of contract o to exercise due diligence in avoiding damage or injury
b. Sea  Duty to disclose information relating to the cargo
o went to pre departure area o carrier has no obligation to inquire into the correctness or sufficiency of such
c. Train information
o ticket and entered the place o shipper may be held liable for any damage that may have been caused solely by
d. Land the dangerous nature o the cargoes or the defect in the packaging of the cargoes
o open the door = invitation to ride  Freight
o regulation of rates of public utilities is founded upon the police power of the State
Last stop – if asked to get off but didn’t get off = no longer a passenger therefore not liable and prescribing rules for the control and regulation of public utilities are a valid
exercise thereof
o Who will pay:
 shipper may pay the necessary freight before or at the time he delivers the
goods to the carrier for shipment.; or
 parties may stipulate that the consignee will pay the freight at the point of
destination
 consignee who is supposed to pay must do so within 24 hours from the
time of delivery (Art. 374 of the Code of Commerce)
 if the consignor failed to pay the carrier may exercise his lien (Art. 375)
 Timely loading and unloading
o shipper must make sure that the goods are delivered to the carrier on the date,
time, and place agreed upon
o consignee must likewise timely obtain delivery from the carrier
 Demurrage – the compensation provided for in the contract of affreightment for the
detention of the vessel beyond the time agreed on for loading and unloading (claim for
damages for failure to accept delivery)
o parties may stipulate the period (lay days) within which to load and unload
cargoes
 Permits
o passenger or shipper may also be required to secure the necessary permits for
the transportation of certain goods
 Shipper’s load and count
o Shipper’s Load and Count arrangement – the contents are not required to be
checked and inventoried by the carrier, for it may be stipulated in the Bill of
Lading that the shipper has the sole responsibility for the quantity, description,
and condition of the cargoes shipped in container vans
 Duties of passenger
a. must pay the proper fare for the transportation
b. must present himself in the proper place
c. must present himself at the proper time
d. with respect to his or her luggage, he is obligated not to bring such luggage that
is in excess of the weight and size prescribed by regulations or contract
e. must secure the appropriate travel documents

Page | 6
DEFENSES OF THE COMMON CARRIER
 DEFENSES IN THE CARRIAGE OF GOODS
o Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following
causes only:
1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
2) Act of the public enemy in war, whether international or civil
3) Act or omission of the shipper or owner of the goods
4) The character of the goods or defects in the packing or in the
containers;
5) Order or act of competent public authority
o Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
caused by the character of the goods, or the faulty nature of the packing or of the
containers, the common carrier must exercise due diligence to forestall or lessen
the loss
o Art. 1743. If through the order of public authority the goods are seized or
destroyed, the common carrier is not responsible, provided said public authority
had power to issue the order.
o No other defenses may be raised by the common carrier in the carriage of goods
 Fortuitous event
o requisites
1. the event must be independent of the human will or at least of the obligor’s
will
2. the event could not be foreseen, or if it could be foreseen, must have been
impossible to avoid
3. event must be of such character as to render it impossible for the obligor to
comply with his obligation in a normal manner
4. the obligor must be free from any participation in, or the aggravation of the
injury to the oblige
o fortuitous event may be produced by nature and by acts of man (invasion,
attacks of bandits, robbery)
o Art. 1739. In order that the common carrier may be exempted from responsibility,
the natural disaster must have been the proximate and only cause of the loss.
However, the common carrier must exercise due diligence to prevent or minimize
loss before, during and after the occurrence of flood, storm or other natural
disaster in order that the common carrier may be exempted from liability for the
loss, destruction, or deterioration of the goods. The same duty is incumbent upon
the common carrier in case of an act of the public enemy referred to in Article
1734, No. 2
o invalid defenses
1. Fire
2. Hijacking
3. Mechanical defects
 passenger cannot sue the manufacturer because of the absence of
privity
 tire blow outs not considered as fortuitous event
4. explosion
5. worms and rats
6. water damage
7. barratry
 Public enemy
o state against the country is at war is the country of the carrier. It does not refer to
the country of the owner or shipper of the goods
o war may be either international or civil
o acts of pirates on high seas are included
 Nature of goods and improper packing
o Carriage of Goods by Sea Act provides that the carrier shall not be liable for:
1. wastage in bulk or weight or any other loss or damage arising from inherent
defect, quality or vice of goods
2. insufficiency of packing
3. insufficiency or inadequacy of the marks
4. latent defects not discoverable by due diligence
 Order of public authority
o defense is not available if:
1. the public authority has no authority to issue the subject order
2. if the public authority exceeded his authority
 DEFENSES IN THE CARRIAGE OF PASSENGERS
o exercise of extraordinary or utmost diligence
o the defense of utmost diligence is not available in breach of contract but available
in quasi delict cases
o carrier is liable for the acts of its employees
o Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
o passenger has no duty to inquire
o Art. 1763. A common carrier is responsible for injuries suffered by a passenger
on account of the wilful acts or negligence of other passengers or of strangers, if
the common carrier's employees through the exercise of the diligence of a good
father of a family could have prevented or stopped the act or omission.
 DOCTRINE OF CONTRUBUTORY NEGLIGENCE
o Art. 1741. If the shipper or owner merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in damages, which however, shall
be equitably reduced
o Art. 1761. The passenger must observe the diligence of a good father of a family
to avoid injury to himself
o Art. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the
negligence of the common carrier, but the amount of damages shall equitably
reduced.
o The carrier may be able to prove that the only cause of the loss of the goods is
any of the following acts of the shipper:
1. failure of the shipper to disclose the nature of the goods
2. improper marking or direction as to destination
3. improper loading when he assumes such responsibility
 DOCTRINE OF AVOIDABLE CONSEQUENCES
o passenger is also required to lessen the damage or injury
 DOCTRINE OF LAST CLEAR CHANCE
o when both parties involved in the accident were both negligent, the negligence of
the party will not be considered the proximate cause if the other party has the last
clear chance of avoiding the injury
Page | 7
MARITIME LAW – system of laws which particularly relates to the affairs and business of governed by the provisions of Labor Code. It is not the employer
the sea, to ships, their crews and navigation, and to marine conveyance of persons and who will held liable but the ECC
property o total destruction of the vessel does not affect the liability of the owner
for repairs of the vessel completed before its loss
a. Special laws 2. the right to retain the cargo and the embargo and detention of the vessel
i. Book III of the Code of Commerce (Maritime Commerce) even in cases where the ordinary civil law would not allow more than a
ii. Salvage Law (Act No. 2616) personal action against the debtor or person liable
iii. Carriage of Goods by Sea Act (Commonwealth Act No. 65) o if the agent can exempt himself from liability by abandoning the vessel and
iv. Ship Mortgage Decree of 1978 (P.D. 1521) freight money, thus avoiding himself from liability, it is also just the maritime
v. other special laws creditor may attach the vessel to secure his claim without waiting for a settlement
b. Civil Code of his rights by a final judgment, even to the prejudice of a third person
c. Treaties and Conventions
i. United Nations Convention on the Law of the Sea (UNCLOS) PROTEST – the written statement by the master of a vessel or any authorized officer,
ii. SOLAS 1974 attested by proper officer or a notary, to the effect that damages has been suffered by the
iii. Tonnage Convention 1969 ship
d. PH has not yet acceded to certain treaties but the provisions thereof are being
followed  Protest is required under the Code of Commerce in the following cases:
i. COLREGS 1972 1. when the vessel makes an arrival under stress
2. where the vessel is shipwrecked
REAL AND HYPOTHECARY NATURE – the liability of the carrier in connection with 3. where the vessel has gone through a hurricane or the captain believes that the
losses related to maritime contracts is confined to the vessel cargo has suffered damages or averages
4. Maritime collisions
1. the limitation of the liability of the agents to the actual value of the vessel
and the freight money
 No vessel, no liability
o total destruction of the vessel extinguishes maritime liens because
there is no longer any res to which it can attach
o liability of the owner of the vessel shall not exceed the amount or value
of the interest of such owner in such vessel, and her freight then
pending
 Coverage
1. liability to third persons
2. acts of the captain
3. collisions
 If the vessel is co owned
o Art. 590. The co-owners of the vessel shall be civilly liable in the
proportion of their contribution to the common fund for the results of
the acts if the captain referred to in Article 587.
Each co-owner may exempt himself from his liability by the
abandonment, before a notary, of that part of the vessel belonging to
him
 It is the shipowner who is entitled to the benefit of limited liability
 Exceptions to limited liability
1. where the injury or death to a passenger is due either to the fault of the
shipowner or to the concurring negligence of the ship owner and the
captain – obligated to make sure the vessel is sea worthy
 the carrier or shipowner has the burden of showing that is
exercised extraordinary diligence in the transport of the goods it
had on board in order to invoke the limited liability doctrine
2. where the vessel is insured
 limited liability rule applies to the paying insurer when it exercises
its right of subrogation against the shipowner
3. in workmen’s compensation claims
 liability is still enforceable against the employer
 the present workmen’s compensation regime is now administered
by the ECC (Employees Compensation Commission) and is
Page | 8
CHARTER PARTIES – a contract whereby an entire ship, or some principal part of the said
ship, is let by the owner thereof to a merchant or other person for a specified time or us for
the conveyance of goods, in consideration of the payment of freight
 taken from carta partita – divided document – ancient practice of writing out the terms
and conditions of the contract in duplicate on one piece of parchment and then
dividing it down the middle this providing each party with a copy
 often referred to as a form of mercantile lease
 Parties
1. Charterer
2. Charter party
3. Shipowner
 Different kinds of Charter Parties
1. Bareboat or Demise Charter
o shipowner leases to the charterer the whole vessel, transferring to the latter
the entire command, possession and consequent control over the vessel’s
navigation, including the master and the crew, who thereby become the
charterer’s servants
o charterer is treated as owner pro hac vice of the vessel – liable for the
expenses of the voyage including wages of the seamen
2. Contract of Affreightment
o charterer hires the vessel only, either for a determinate period of time or for
a single or consecutive voyage, with the shipowner providing for the
provisions of the ship, the wages of the master and crew, and the expenses
for the maintenance of the vessel
o further subdivided
a. Time Charter
 the vessel is leased to the charterer for a fixed period of time
b. Voyage Charter
 vessel is leased for a single or consecutive voyage
 Who may make charter
1. owner of the vessel
2. part owners
3. broker – may intervene in the execution of the charter between the principals
4. charterer – may subcharter the entire vessel to a third person but only in he
event there is no prohibition in the original charter
5. ship agent – In the Code of Commerce, they are not allowed to make contracts
for a new charter unless he is properly or duly authorized by the owner, or by
virtue of an authority given a resolution of the majority of the co-owners
6. Captain or master – one of the inherent powers is to enter into valid and binding
charter parties, but only in the event of absence of the ship agent or consignee,
and only if the captain or master acts in accordance with the instructions of the
agent or owner and protects the latter’s interest
o validity of the charter is not affected by the violation of the orders or
instruction of the agent or owner by the Captain or master – agent or owner
have a right of action to recover damages
 Requisites of a valid charter party
1. Consent of the contracting parties
2. An existing vessel which should be placed at the disposition of the shipper
3. Freight
4. Compliance with the formal requirements prescribed under Art. 652 of the Code
of Commerce which include the requirement that the charter party must be
a. in writing
b. drawn in duplicate and
c. signed by the parties
 Formal requisites under Art. 652
o A charter party must be drawn in duplicate and signed by the contracting parties,
and when either does not know or is not able to do so, by two witnesses at his
request.
The charter party shall contain, besides the conditions freely stipulated, the
following circumstances:
1. The kind, name, tonnage of the vessel
2. Her flag and port of registry
3. The name, surname, and domicile of the captain
4. The name, surname, and domicile of the ship agent, if the latter should
make the charter party
5. The name, surname, and domicile of the character, and if he states that he
is acting by commission, that of the person for whose account he makes the
contract
6. The port of loading and unloading
7. The capacity, number of toms or weight, or measurement which they
respectively bind themselves to load and transport, or whether the charter
party is total
8. The freight to be paid, stating whether it is to be a fixed amount for the
voyage or so must per month, or for the space to be occupied, or for the
weight or measurement of the goods making up the cargo, or in any other
manner whatsoever agreed upon
9. The amount of primage (payment for the use of the equipment belonging to
the captain) to be paid the captain
10. The days agreed upon for loading and unloading
11. The lay days and extra lay days to be allowed and the demurrage for each
of them to be paid
 In case of discrepancy between the copy of the broker and the parties, that of the
broker’s would prevail
FREIGHT
 freight shall accrue according to the conditions stipulated in the contract
o If there are no stipulation or there is but the same is ambiguous, then the rules
shall be:
1. the freight shall begin to run from the day of loading on the vessel
2. in charters with a fixed period, the freight shall begin upon the very day
3. if the freight is charged according to weight, the payment thereof shall be
made according to the gross weight, including the weight of the containers
 The following are not obligated to pay freightage under the Code of Commerce:
1. Jettisoned goods that are considered general average loss
2. merchandise that are lost because of shipwreck or stranding
3. goods that are lost due to seizure by pirates or enemies
o If the freight should have been paid in advance, then the same should be
returned unless there is an agreement to the contrary
 failure of the captain or master to carry the goods on his ship or to send them to the
point of destination in another vessel resulted in the abandonment upon any claim for
freight thereon, except where it has been made payable in advance
 Payment of freightatge is not excused if merchandise suffer deterioration or
diminutions on account of inherent defects or bad quality and condition of the packing,
or because of fortuitous event (Art. 659)
 Natural increase in weight or size of the merchandise loaded on the vessel shall
accrue to the benefit of the owner, and shall pay the proper freightage fixed in the
contract for the same (Art. 664)
Page | 9
PORT OF UNLOADING
 parties may provide that the charterer is given the option of discharge at one or more
ports within a geographic range
o when an option is given to the charterer, the shipowner may protect himself by
including a “safe-ports clause” in the Charter Party whereby he reserves the
right to decline to risk his vessel in an unsafe port
DEMURRAGE
 If the vessel is detained beyond the number of days agreed upon in the charter
contract for the loading and unloading of cargo, or for eventual sail, the charterer shall
answer for the demurrage incurred thereby, the sum of which is usually fixed by the
parties in the charter party
 If in the charter party the time in which the loading and unloading are to take place is
not stated, the usages of the port where these acts take place shall be observed. After
the stipulated or the customary period has passed, and there is no express proviso in
the charter party fixing the indemnity for the delay, the captain shall be entitled to
demand demurrage for the lay days and extra lay days which may have elapsed in
loading and unloading (must be done within a reasonable time or with reasonable
diligence)
 The period so stipulated is known as the “lay days”
o The stipulated lay days do not begin to run against the consignee until the vessel
has arrived at berth or other usual and customary place for loading or unloading,
and is in actual readiness to discharge its cargo in accordance with its legal
obligation, UNLESS otherwise stipulated
 When the charterer failed to occupy the leased portion of the vessel, he may be made
liable by the shipowner for the “deadfreight” that occured
RIGHTS AND OBLIGATION OF THE CHARTER PARTIES
 Shipowner or Captain
1. to receive cargo which had been contracted to be transported
2. to observe the capacity of the vessel or that which is indicated expressly in the
registry, a margin greater than 2% between that represented and her actual
capacity which is not allowable
3. shall indemnify the shipper , whose cargo is refused on account of the receipt by
the shipowner of a greater amount of cargo belonging to other persons.
If there is only 1 shipper and there was apparent fraud or error in the vessel’s
capacity, the charterer may opt to have the freight reduced or to rescind the
charter with a right to be indemnified
4. If there should be several charter parties, and due to lack of space, not all could
be accommodated although not one would want to rescind the charter,
preference shall be given to the person who is first in loading his cargo, and
the others shall have preference in the order of the dates of their charter
In the absence of priority, the charterers may choose to load in proportion to the
amounts of weight or space that they may have contracted, with a right to
indemnified for the loss
5. shipowner, under certain conditions, may effect a substitution in respect of the
vessel which had been initially chartered with that of another, so long as the
substitute vessel had been duly inspected and is seaworthy
6. After 3/5 of the vessel is loaded, the shipowner may not substitute the chartered
vessel with another one unless he procures the consent of the charterers or
shippers. Otherwise, he runs the risk of answering for all damages suffered
during the voyage by those who did not give their consent
7. may not, if the vessel is chartered in whole, accept cargo from any other person
unless the consent of the charterer is obtained. Otherwise, the captain may be
compelled to unload the said cargo and pay to the charterer any damage that he
may suffer
8. may be generally held liable for damages incurred by the charterer due to the
voluntary delay of the captain in putting to sea, provided he was requested, by
way of a notarial or judicial notice, to put to sea at the proper time
 Charterer
1. shall not subcharter the vessel to a third person if not authorized by the
shipowner.
2. shall not load goods different from that contracted upon, without the knowledge
of the shipowner or captain
3. shall be jointly liable with the shipowner for all damages caused to the other
shippers
4. may not, for the payment of freight and other expenses incurred, abandon the
goods damaged due to inherent defects or by reason of fortuitous event
 abandonment may be proper however if the cargo, if consisting of liquid,
may have leaked out and none remains except ¼ of their contents
 Liability of charterer to shipowner in case of bareboat charter
1. may be held liable under Arts. 1665 and 1667 of the New Civil Code because the
charterer or lessee under the bareboat charter is contract-bound to return the
thing leased and it was liable for the deterioration or loss of the same
Sub-charterer is bound to preserve the vessel (Art. 1651)
2. may be held liable under Art. 1189
Page | 10
REPLACEMENT OF VESSEL
 Shipowner may replace the chartered vessel:
1. If, after receiving a part of the freight, should not find sufficient to make up at
least 3/5 of the amount which the vessel may hold, at the price he may have
fixed, he may substitute for the transportation another vessel inspected and
declared suitable for the same voyage
2. Substitution with the consent of the charters or shippers

EFFECT OF BILL OF LADING

 As between the parties, the bill of lading is a proof of receipt of the goods but the
terms and conditions of the contract are in the charter party
 bill of lading does not operate as a new contract as between shipowner and the
charterer– does constitute a contract between the vessel and the consignee, and
neither he nor his endoresee is bound by the terms of the charter party of which he
has no notice or knowledge
 if the bill of lading is a negotiable document of title, it is binding in favor of a
subsequent holder for value
 if the cargo should be received without the charter party having been signed, the
contract shall be understood as executed in accordance with what appears in the bill
of lading, the sole evidence of title with regard to the cargo for determining the rights
and obligations of the ship agent, of the captain, and of the charterer
 in a bareboat charter, the charterer himself controls the master, and the bills of lading
are issued just as they would be if the ship were under the hand of her general owner;
the personal liability, however, is that of the demise charterer

FREIGHT
 goods loaded shall be liable in the first place for the freight and expenses thereof
during 30 days, to be counted from the date of their delivery or deposit
 cargo shall be liable for the payment of
1. freightage
2. expenses and duties arising therefrom, which must be reimbursed by the
shippers
3. for the part of the general average which may correspond to it
 Captain should not delay unloading on account of suspicion that the shipper’s
obligation may not be complied with
 the judge may order the deposit of the merchandise until he has been paid in full,
when there is a reason for distrust and the two cases mentioned in Art. 668
1. if the consignee refuses to receive the goods
2. the consignee cannot be found

Page | 11
LOANS ON BOTTOMRY AND RESPONDENTIA  Forms of the loans
o must be executed in accordance with the form and manner prescribed in Art. 720
 Bottomry – a contract whereby the owner of a ship borrows for the use, equipment or of the Code of Commerce
repair of the vessel, for a definite term, and pledges the ship as security, with the 1. by means of a public instrument
stipulation that if the ship is lost during the voyage or during the limited time on 2. by means of a policy signed by the contracting parties and the broker taking
account of the perils enumerated, the lender shall lose his money part therein
o Distinguished from simple loan 3. by means of a private instrument
Bottomry or respondentia Simple loan
Rate of Not subject to the Usury Law Must not exceed the ceiling CONSEQUENCES OF LOSS OF EFFECTS OF THE LOANS
interest on account of the fixed by the Usury Law  lender loses the right to institute action
extraordinary risks involved o lost due to an accident of the sea
Risk There must necessarily be a There need not be such risk  lender retains the right of action
marine risk the existence of involved o lost caused by inherent defect of the thing, or
which must be duly o through the fault or malice of the borrower,
established o through barratry on the part of the captain,
Form Must be executed in Formal requisites regarding o or if it was caused by damages suffered by the vessel as a consequence of being
accordance with form and contracts in general would engaged in a contraband
manner required in the Code apply o if it arose from having loaded the goods on a vessel different from that
of Commerce designated in the contract
Registration Must be recorded in the No such registration is  lenders on bottomry or respondentia shall suffer in proportion to their respective
registry of vessels in order to required interest
bind third persons  If what transpire is a shipwreck, the amount for the payment of the loan shall be
Preference Preference is extended to the The first lender, as a general reduced to the proceeds of the effects which have been saved but only after deducting
last lender if there be several rule, enjoys preference over the costs of the salvage
lenders subsequent ones If the loan should be on the vessel or any of her parts, the freight earned during the
voyage for which the loan was contracted shall also be liable for its payment, as far as
o loan on bottomry or respondentia may be regarded as a simple loan only it may reach
 if the lender should prove that he loaned an amount which is larger than the  If the same vessel or cargo should be the object of a loan on bottomry or respondentia
value of the object liable for the bottomry loan due to fraudulent means and marine insurance, the value of what may be saved in case of shipwreck shall be
employed by the borrower, the loan shall be valid only for the amount at divided between the lender and the insurer, in proportion to the legitimate interest of
which the object is appraised by experts, and the surplus principal shall be each one taking into consideration, for this purpose only, the principal with respect to
repaid as if it were a simple loan, with legal interest thereon the loan, and without prejudice to the right of preference of other creditors in
 if the full amount of the loan which is contracted in order to load the vessel accordance with art. 580
is not used for the cargo, or given on the goods if all of then could not have
been loaded, the balance will be considered as a simple loan which should PREFERENCE
be returned prior to the commencement of the voyage  Art. 730. Loans made during the voyage shall have preference over those made
 if the effects in which the money is taken not be subjected to any risk, the before the clearing of the vessel, and they shall be graduated in the inverse order of
contract will be regarded as a simle loan their dates
 Authority to constitute loan on bottomry The loans for the last voyage shall have preference over prior ones
o Shipowner may secure a loan on bottomry upon his ship, although in the case Should several loans have been made at the same port of arrival under stress and for
where he is only a part owner, any bottomry that he may contract shall be limited the same purpose, all of them shall be paid pro rata
only to the extent of his interest in the vessel
o ship captain, who is a part owner, may also obtain a loan on bottomry only to the
extent of his interest
 there are instances when the captain, although he has no interest in the
ship, may still enter into a loan on bottomry as when, on account of extreme
necessity
 Authority to constitute loan on respondentia
o cargo owner shall have the right to enter into a loan on respondentia involving his
cargo
o The captain, being a mere agent of the shipowner and not of the cargo owner,
may not contract a loan on respondentia – if he does, such loan would be void
and the principal, interest and costs of the contract shall be chargeable to his
private account – he may also be discharged by the shipowner

Page | 12