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(1) Hazardous and Dangerous Substances The value of the goods which the carrier must pay in case of loss or
- Carrier not properly equipped to transport dangerous chemicals or misplacement shall be that what is declared in the bill of lading.
explosives may validly refuse to accept the same for transport.
- Those which are not authorized by the Maritime Industry Authority Consignee must not defer the payment of the expenses and transportation
to carry such goods may also validly refuse the same for transport. charges of the goods otherwise carrier may demand the judicial sale of the
- There must be a Special Permit to Carry from the MARINA. (accept goods.
only if the said cargoes are covered by the necessary clearance from
appropriate government agencies)
(2) Unfit for Transport Case: Magellan Mfg. Marketing Corp. vs. CA
Effects of ‘delayed and unfinished voyage’ in inter-island vessels: (2) Carriage of Passengers
vessel cannot continue or complete her voyage for any cause –
carrier is under obligation to transport the passenger to his/her By trains – the extraordinary responsibility of common carrier commences the
destination at the expense of the carrier including free meals and moment the person who purchases the ticket (or a ‘token’ or ‘card’) from the
lodging before the passenger is transported to his/her destination; carrier presents himself at the proper place and in a proper manner to be
the passenger may opt to have his/her ticket refunded in full if the transported with a bona fide intent to ride the coach.
cause of the unfinished voyage is due to the negligence of the carrier
or to an amount that will suffice to defray transportation cost at the * Mere purchase of a ticket does not of itself create the relation of carrier and
shortest possible route if the cause of the unfinished voyage is passenger but it is an element in the inception of the relation.
fortuitous event.
vessel is delayed in arrival at the port of destination – free meals * A proper person who enters upon the carrier’s premises (station, ticketing
during mealtime office, or waiting room) with the intention of becoming a passenger will
delay in departure at the point of origin due to carrier’s negligence; ordinarily be viewed as assuming the status of a passenger.
fortuitous event - free meals during mealtime; carrier not obliged to
serve free meals * One who goes to the railroad station to inquire as to the possibility of securing
carrier is not obliged to inform passengers of sailing schedule of the passage on a freight train, which he knows, by the rules of the company, is not
vessel allowed to carry passengers, and to secure passage thereon if possible, is not
entitled to the rights of a passenger but is a mere trespasser.
C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE
- Goods should be delivered in the same condition that they were * One who rides upon any part of the vehicle or conveyance which is unsuitable
received and to transport the passengers without encountering any or dangerous, or which he knows is not intended for passengers, is not
harm or loss. presumed to be a passenger.
- Read page 79-80 for provisions
* One who secures free passage by fraud or stealth is precluded from recovery
ARTICLE 1755. A common carrier is bound to carry the passengers safely as far for injuries sustained through the negligence of the carrier, for he has not
as human care and foresight can provide, using the utmost diligence of very assumed the status of a passenger.
cautious persons, with a due regard for all the circumstances. (Civil Code)
- Presumption of Negligence
3. Hi-jacking cannot exculpate the carrier from liability if it is shown IMPROPER PACKING
that the employees of the carrier were not overwhelmed by the
hijackers and that there was no showing of irresistible force. Since, Character of the goods and defects in the packaging or in the containers are
there were 4 employers while there were only 2 hijackers and only defenses available to the common carrier. Similarly, the Carriage of Good by Sea
one of them was armed with bladed weapon. Act provides that carrier shall not liable for:
ON THE OTHER HAND, a hijacking by 3 armed men is an event which 1. Wastage in bulk or weight or any damages arising form the inherent
is considered to be beyond the control of the carrier. Thus, the defect, quality or vice of goods;
carrier may be adjudged from liability if it can be proven that the 2. Insufficiency of packing;
hijacking was unforeseeable. 3. Insufficiency or inadequacy of the marks, or
4. Latent defects no discoverable by due diligence.
Case: Philippine American General Insurance Co. vs. MCG
- Even in cases where a natural disaster is the proximate and only However, NCC likewise provides:
cause of the loss, a common carrier is still required to exercise due Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
diligence to prevent or minimize loss before, during and after the caused by the character of the goods, or the faulty nature of the packing or
occurrence of the natural disaster, for it to be exempt from liability the containers, the common carrier must exercise due diligence to forestall or
under the law for the loss of the goods lessen the loss.
Case: Pilapil vs. CA Thus, if the carrier accepted the goods knowing the fact of improper packing or
- Facts: a bystander alongside national highway hurled a stone at the even if the carrier does not know but the defect was nonetheless apparent
left side of the bus, hitting petition above his left eye which resulted upon ordinary observation, it is not relived from liability for loss or injury to
to partial loss of the left eye’s vision goods resulting therefrom.
- SC: A common carrier does not give its consent to become an insurer
of any and all risks to passengers and goods. It merely undertakes to Cases:
perform certain duties to the public as the law imposes, and holds 1. Problem: A carrier knowing that some of a cargo of sacks of rice had
itself liable for any breach thereof. big holes and others had openings just loosely tied with strings
- The law does not make the carrier an insurer of the absolute safety resulting to the spillage of rice during the trip. Thus, there was
of its passengers shortage in the delivery of the cargoes. When sued due to the
- Article 1763: A common carrier is responsible for injuries suffered by shortage, the carrier interposed a defense that it was not liable since
a passenger on account of the willful acts or negligence of other the shortage was due to the defective condition of the sacks. Decide.
passengers or of strangers, if the common carrier’s employees Answer: Carrier must still exercise extraordinary diligence if the fact
through the exercise of the diligence of a good father of a family of improper packing is known to the carrier or its servants, or
could have prevented or stopped the act or omission apparent upon ordinary observation. If the carrier accepted the
o Clearly, a tort committed by a stranger which causes cargo without protests or exception notwithstanding such condition,
injury to a passenger does not accord the latter a cause of he is not relived of liability for damage resulting therefrom. Apply
action against the carrier. The negligence for which a Article 1742.
common carrier is held responsible is the negligent
omission by the carrier’s employees to prevent the tort ORDER OF PUBLIC AUTHORITY
from being committed when the same could have been
foreseen and prevented by them Art. 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible, provided said
Case: Franklin Gacal vs. PAL public authority had power to issue order.
- It is therefore not enough that the event should not have been
foreseen or anticipated, as is commonly believed, but it must be one Cases:
impossible to foresee or to avoid. 1. Carrier was not excused from liability since the order of an acting
- The mere difficulty to foresee the happening is not the impossibility mayor was not considered as a valid order of a public authority. It is
to foresee the same required that public authority who issued the order must be duly
authorized to issue the order.
PUBLIC ENEMY 2. Carriage of Goods by Sea Act – provides that carrier shall not
responsible for loss or damage resulting from “arrest or restraint of
- Presupposes a state of war and refers to the government of a foreign princes, rulers, or people, or seizure under legal process” and from
nation at war with the country to which the carrier belongs, though not “quarantine restrictions”.
necessarily with that to which the owner of the gods owes allegiance.
Art. 1741. If the shipper or owner merely contributed to the loss, Case: Compania Maritima vs. CA and Vicente Concepcion
destruction or deterioration of the goods, the proximate cause thereof - While the act of private respondent in furnishing petitioner with an
being the negligence of the common carrier, the latter shall be liable in inaccurate with of the payloader cannot successfully be used as an
damages, which however, shall be equitably reduced. excuse by petitioner to avoid liability to the damage thus caused,
said act constitutes a CONTRIBUTORY CIRCUMSTANCE to the damage
caused on the payloader, which mitigates the liability for damages of
Art. 1761. The passenger must observe the diligence of a good father of a
petitioner in accordance with Article 1741.
family to avoid injury to himself.
Case: Philippine National Railways vs. CA
Art. 1762. The contributory negligence of the passenger does not bar recovery - While petitioner failed to exercise extraordinary diligence as required
of damages for his death or injuries, if the proximate cause thereof is the by law, it appears that the deceased was chargeable with
negligence of the common carrier, but the amount of damages shall be contributory negligence.
equitably reduced. - Since he opted to sit on the open platform between the coaches of
the train, he should have held tightly and tenaciously on the upright
a. Last Clear Chance metal bar found at the side of said platform to avoid falling off from
the speeding train
With respect to carriage of goods by sea, the tickets are purchased in advance. Case: Kapalaran Bus Lines vs. Coronado
Carriers are not supposed to allow passengers without tickets --- the carrier is - If common carriers carefully observed the statutory standard of
bound to observe a “No Ticket, No Boarding Policy”. The carrier shall collect/ extraordinary diligence in respect of their own passengers, they
inspect the passenger’s ticket within one hour from vessel’s departure as not to cannot help but simultaneously benefit pedestrians and the owners
disrupt resting or sleeping passengers. and passengers of other vehicles who are equally entitled to the safe
and convenient use of our roads and highways
If the vessel is not able to depart on time and the delay is unreasonable, the
passenger may opt to have his/ her ticket refunded without refund service fee. A reasonable man or a good father of a family in the position of the carrier must
Delayed voyage means “late departure of the vessel from its port of origin and/ exercise extraordinary diligence in the performance of his contractual
or late arrival of the vessel to its port of destination”. Unreasonable delay means obligation.
“the period of time that has lapsed without just cause and is solely attributable - Generally, what should be determines is whether or not a reasonable
to the carrier which has prejudiced the transportation of the passenger and/ or man, exercising extraordinary diligence, could have foreseen and
cargoes to their port of destination. prevented the damage or loss that occurred.
A passenger who failed to board the vessel can refund or revalidate the ticket III. EFFECT OF STIPULATION
subject to surcharges. Revalidation means “the accreditation of the ticket that is
not used and intended to be used for another voyage. A. GOODS
- The parties cannot stipulate that the carrier will NOT exercise ANY
(2) Carrier’s Lien diligence in the custody of goods
- The law allows a stipulation whereby the carrier will exercise a
If consignor or the consignee fails to pay the consideration for the degree of diligence which is less than extraordinary with respect to
transportation of goods, the carrier may exercise his lien in accordance with Art. goods.
375 of Code of Commerce:
Art. 1744. A stipulation between the common carrier and the shipper
ARTICLE 375. The goods transported shall be especially bound to answer for owner limiting the liability of the former for the loss, destruction, or
the cost of transportation and for the expenses and fees incurred for them deterioration of the goods to a degree less than extraordinary
during their conveyance and until the moment of their delivery. diligence shall be valid, provided it be:
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 1. In writing, signed by the shipper/owner;
corresponding to him as an ordinary creditor. 2. Supported by a valuable consideration other than the service
rendered by the common carrier (Note: Typically fare/freight); and
DEMURRAGE 3. Reasonable, just and contrary to public policy.
Demurrage is the compensation provided for the contract of affreightment for B. PASSENGERS
the detention of the vessel beyond the time agreed on for loading and - There can be no stipulation lessening the utmost diligence that is
unloading. It is the claim for damages for failure to accept delivery. In broad owed to passengers.
sense, very improper detention of a vessel may be considered a demurrage.
Technically, liability for demurrage exists only when expressly stipulated in the Art. 1757. The responsibility of a common carrier for the safety of
contract. passengers as required in Arts. 1733 and 1755 cannot be dispensed
with or lessened by stipulation, by the posting of notices, by
Using the term in broader sense, damages in the nature of demurrage are statements on tickets, or otherwise. (Note: Absolute; extraordinary at
recoverable for a breach of the implied obligation to load or unload the cargo all times.)
with reasonable dispatch, but only by the party to whom the duty is owed and
only against on who is a party to the shipping contract. Notice of arrival of Gratuitous passenger – A stipulation limiting the common carrier’s liability for
vessels or conveyances, or their placement for purposes of unloading is often a negligence is valid, but not for willful acts of gross negligence. The reduction of
condition precedent to the right to collect demurrage charges. fare does not justify any limitation.
The vessel must be adequately equipped and properly manned. E. DEVIATION AND TRANSSHIPMENT
Note: there is transshipment whether or not the same person, firm or entity Airworthiness – An aircraft, its engines propellers, and other components and
owns the vessels (what matters is the actual physical transfer of cargo from one accessories, are of proper design and construction, and are safe for air
vessel to another) navigation purposes, such design and construction being consistent with
accepted engineering practice and in accordance with aerodynamic laws and
V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND aircraft science.
1. Exempting the carrier from any and all liability for loss or damage Note that Art. 1749 of the NCC applies to inter-island trade.
occasioned by its own negligence - INVALID as it is contrary to public
policy. Meaning of Package
2. Parties may stipulate that the diligence to be exercised by the carrier - If the goods are shipped in cartons, each carton is considered a
for the carriage of goods be less than extraordinary diligence if it is: package even if they are stored in container vans
a. in writing and signed by both parties - When what ordinarily be considered packages are shipped in a
b. supported by a valuable consideration other than the container supplied by the carrier and the number of such units is
service rendered by the common carrier disclosed in the shipping documents, each of those units and not the
c. the stipulation is just, reasonable and not contrary to law. container constitutes the package.
3. Providing an unqualified limitation of such liability to an agreed
valuation - INVALID Prescriptive periods
4. Limiting the liability of the carrier to an agreed valuation unless the - Suit for loss or damage to the cargo should be brought within one
shipper declares a higher value and pays a higher rate of freight- year after:
VALID and ENFORCEABLE. a. delivery of the goods; or
b. the date when the goods should be delivered. (Sec. 3[6])
Note: the purpose of limiting stipulations in the bill of lading is to protect th
common carrier. Such stipulation obliges the shipper/consignee to notify the The one-year prescriptive period is suspended by:
common carrier of the amount that the latter may be liable for in case of loss of 1. express agreement of the parties (Universal Shipping Lines, Inc. v.
the goods IAC, 188 SCRA 170)
2. when an action is filed in court until it is dismissed. (Stevens & Co. v.
Remember: Nordeutscher Lloyd, 6 SCRA 180)
1. The parties cannot stipulate so as to totally exempt the carrier from
exercising any degree of diligence whatsoever Things to Remember:
2. The parties cannot stipulate that the common carrier shall exercise 1. Article 1757 provides that the responsibility of a common carrier to
diligence less than the diligence of a good father of a family exercise utmost diligence for the safety of PASSENGERS CANNOT be
dispensed with or lessened by stipulation or statement on tickets or
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS: otherwise
1. Inter-island - if goods arrived in damaged condition (Art. 366): 2. Article 1750 of the Civil Code provides that a contract fixing the sum
a. If damage is apparent, the shipper must file a claim immediately (it may be that may be recovered by the owner or shipper for the loss,
oral or written); destruction, or deterioration of the GOODS is VALID, if it is
b. If damage is not apparent, he should file a claim within 24 hours from REASONABLE and JUST under the circumstances, and has been
delivery. FAIRLY AND FREELY AGREED UPON
The filing of claim under either (1) or (2) is a condition precedent for recovery. 3. It is unfair to deny the shipper the right to declare the actual value of
If the claim is filed, but the carrier refuses to pay: enforce carrier’s liability in his cargos and to recover such true value in case of loss or damage
court by filing a case: Note: it has been suggested that the signature of the shipper in the
a. within 6 year, if no bill of lading has been issued; or bill of lading with regards to the limitation applies only to reduction
b. within 10 years, if a bill of lading has been issued. of diligence and not to the stipulated amount to be paid.
4. It is unjust and contrary to public policy if the common carrier’s
2. Overseas –where goods arrived in a damaged condition from a foreign port to liability for acts committed by thieves, or of robbers who do not act
a Philippine port of entry: (COGSA) with grave or irresistible threat, violence or force, is dispensed with
a. upon discharge of goods, if the damage is apparent, claim should be filled or diminished
immediately; 5. The common carrier may EXEMPT itself from liability if he can prove
b. if damage is not apparent, claim should be filled within 3 days from delivery. that:
a. He observed extraordinary diligence
Filing of claim is not a condition precedent, but an action must be filed against b. The proximate and only cause of the incident is a
the carrier within a period of 1 year from discharge; if there is no delivery, the fortuitous event or force majeure
one-year period starts to run from the day the vessel left port (in case of c. The proximate and only cause of the loss is the character
undelivered or lost cargo), or from delivery to the arrastre (in case of damaged of the goods or defects in the packing or in the containers
cargo). d. The proximate and only cause of the loss is the order or
Where there was delivery to the wrong person, the prescriptive period is 10 act of competent public authority
years because there is a violation of contract, and the carriage of goods by sea Note: to limit its liability or at least mitigate the same, the carrier can
act does not apply to misdelivery. (Ang v. American SS Agencies (19 SCRA 631) cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the DOCTIRNE
OF AVOIDABLE CONSEQUENCES
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
Case: Sea-Land Service Inc. vs. IAC
C. Effects of Negotiation Under Art. 366 of the Code of Commerce, an action for damages is
- has the effect of manual delivery so as to constitute the transferee the owner barred if the goods arrived in damaged condition and no claim is filed
of the goods by the shipper within the following period:
- results in the transfer of ownership because transfer of document likewise 1. Immediately if damage is apparent;
transfers control over the goods 2. within twenty four (24) hours from delivery if damage is not
- refer to Art. 1513 apparent.
Chapter 5 - The period does not begin to run until the consignee has received
Actions and Damages in Case of Breach possession of the merchandise that he may exercise over it the
ordinary control pertinent to ownership.
Cause of action of a passenger and shipper: - This provision applies even to transportation by sea within the Phils.
a) against common carrier – based on culpa contractual or culpa aquiliana or coastwise shipping.
b) on the part of the driver – based on either culpa delictual or culpa aquiliana - Does NOT apply to misdelivery of goods.
Note: The source of obligation based on culpa contractual is separate and Q: Why does it not apply to misdelivery of goods?
distinct from quasi-delict. A: In such cases (misdelivery), there can be no question of claim for damages
suffered by the goods while in transport, since the claim for damages arises
Article 1903 (last paragraph) – 2 things are apparent: exclusively out of the failure to make delivery.
1. That when an injury is caused by the negligence of a servant or
employee there instantly arises a presumption of law that there was Case: Monica Roldan vs. Lim Ponzo and Co.
negligence on the part of the master or the employer either in the - Article 366 of the Commercial Code is limited to cases of claims for
selection of the servant or employee, or in supervision over him after damage to goods actually turned over by the carrier and received by
the selection, or both. the consignee.
2. That presumption is juris tantum and not juris et de jure (of law and
of right), and consequently may be rebutted But the period prescribed in Art. 366 may be subject to modification by
agreement of the parties.
Note however: that Article 1903 of the Civil Code is not applicable to acts of The validity of a contractual limitation of time for filing the suit itself
negligence which constitute the breach of contract. It is applicable only to culpa against a carrier shorter than the statutory period thereof has generally
contractual. been upheld as such stipulation merely affects the shipper’s remedy
The fundamental distinction between obligation of extra-contractual and and does not affect the liability of the carrier.
those which arise from contract, rests upon the fact that in cases of non-
contractual obligation it is the wrongful or negligent act or omission itself b) Extinctive Prescription
which creates the vinculum juris, whereas in contractual relations the - six (6) years if there is no written contract (bill of lading)
vinculum (bond) exists independently of the breach of the voluntary duty - ten (10) years if there is written contract
assumed by the parties when entering into the contractual relation.
This rule likewise applies to carriage of passengers for domestic
CONCURRENT CAUSES OF ACTION transportation.
- There is one action but several causes of action
Filing of claim is not condition precedent. Thus, regardless of whether Article 2216 provides that no proof of pecuniary loss is necessary in order that
the notice of loss or damage has been given, the shipper can still bring moral, nominal, temperate, liquidated or exemplary damages may be
an action to recover said loss or damage within one year after the adjudicated. The assessment of such damages, except liquidated ones, is left to
delivery of the goods or the date when the goods should have been the discretion of the court, according to the circumstances of each case.
delivered However, proof of pecuniary loss is necessary if actual or compensatory
damages are being claimed.
a) Prescription
Action for damages must be filed within a period of one (1) year from a) Actual or Compensatory Damages
discharge of the goods. - only for the pecuniary loss suffered by him as he has duly proved
The period is not suspended by an extra-judicial demand. (Why? - not only the value of the loss suffered, but also that of the profits
Transportation of goods by sea should be decided in as short a time as which the obligee failed to obtain
possible)
o Case: Dole Philippines Inc. vs. Maritime Company of the - 2 Kinds:
Philippines - the prescriptive period is not tolled or 1. the loss of what a person already possesses (daňo emergente);
interrupted by a written extra-judicial demand. Article 2. the failure to receive as a benefit that would have pertained to him
1155 is NOT applicable. (lucro cesante).
The period does not apply to conversion or misdelivery. - It should be proven: cannot be decided based on the consideration
The one (1) year period refers to loss of goods and not to misdelivery. of the judge; not to be based on the perception, observation and
consideration of the judge
- Damages arising from delay or late delivery are not the damage or - With respect to restorative medical procedure: to be entitled to
loss contemplated under the COGSA. The goods are not actually lost actual damage, you need to have an EXPERT TESTIMONY. Without
or damaged. The applicable period is ten (10) years. such, you cannot recover.
- Case: Domingo Ang vs. American Steamship Agencies
What is to be resolved – in order to determine the Damages may be recovered: Art. 2205 (Civil Code)
applicability of the prescriptive period of one year – is 1) For loss or impairment of earning capacity in cases of temporary or
whether or not there was loss of the goods subject matter permanent personal injury;
of the complaint. 2) For injury to the plaintiff’s business standing or commercial credit.
Loss contemplates merely a situation where no delivery at
all was made by the shipper of the goods because the Damages cannot be presumed. The burden of proof rests on the plaintiff
same had perished, gone out of commerce, or who is claiming actual damages against the carrier.
disappeared in such a way that their existence is unknown
or they cannot be recovered. (Note: It is not loss due to In case of goods – the plaintiff is entitled to their value at the time of
misdelivery or delivery to the wrong person.) destruction. The award is the sum of money which plaintiff would have
to pay in the market for identical or essentially similar goods
This rule applies in collision cases. The one (1) year period starts not For personal injury and even death – the claimant is entitled to all
from the date of the collision but when the goods should have been medical expenses as well as other reasonable expenses that he incurred
delivered, had the cargoes been saved. to treat his or her relative’s injuries.
In case of death – the plaintiff is entitled to the amount that he spent
Case: Maritime Agencies and Services Inc. vs. CA during the wake and funeral of the deceased. But, expenses after the
- When there is two destination of delivery, the one year period burial are not compensable.
should commence when the last item was delivered to the Read Art. 2206 (Civil Code):
consignee. death caused by a crime or quasi-delict shall be at least
P3,000; [The amount of fixed damages is now P50,000.00]
Insurance the defendant shall be liable for the loss of the earning
The insurer who is exercising its right of subrogation is also bound by the capacity of the deceased;
one (1) year prescriptive period. If deceased is obliged to give support, recipient may
However, it does not apply to the claim against the insurer for the demand support from the person causing the death for a
insurance proceeds. The claim against the insurer is based on contract period not exceeding five years
that expires in ten (10) years. Spouse, legitimate and illegitimate descendant and
descendants may demand moral damages for mental
II. Recoverable Damages anguish by reason of the death of the deceased
Damages – is 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 1) Loss of earning capacity
violation of some rights.
Net Earning Capacity = Life Expectancy x [Gross Annual Income less Necessary
A. Extent of Recovery (Contractual Breach: Art. 220, NCC) Living Expenses]
Carrier in good faith – is liable only to pay for the damages that are
the natural and probable consequences of the breach of the Life expectancy – (2/3 x 80 – age at death)
obligation and which the parties have foreseen or could have Net earnings – based on the gross income of the victim minus the
reasonably foreseen at the time the obligation was constituted. necessary incidental living expenses which the victim would have
Carrier in bad faith or guilty of gross negligence – liable for all incurred if he were alive.
damages, whether the same can be foreseen or not. Those which may Amount of living expenses must be established. In the absence of proof,
be reasonably attributed to the non-performance of the obligation. it is fixed at fifty (50%) of the gross income.
A. CONCEPTS (Chapter 6) Art. 643: vessel and cargo lost by reason of capture or wreck: all rights shall be
extinguished, both as regards the crew to demand any wages whatsoever, and
Maritime Law – is the system of laws which particularly relates to the affairs as regards the ship agent to recover the advances made
and business of the sea, to ships, their crews and navigation and to marine If a portion of the vessel or of the cargo, or both, should be saved,
conveyance of persons and property the crew engaged on wages, including the captain, shall retain their rights on
the salvage, so far as they go, on the remainder of the vessel as well on the
Governing Laws: amount of the freightage of the cargo saved; but sailors who are engaged on
1. New Civil Code – primary law on maritime commerce shares shall not have any right whatsoever on the salvage of the hull, but only
2. Book III Code of Commerce – applied suppletorily the portion of the freightage saved. If they should have worded to recover the
3. Special Laws remainder of the shipwrecked vessel they shall be given from the amount of the
a. Salvage Law (Act No. 2616) salvage an award in proportion of the efforts made and to the risks encountered
b. Carriage of Goods by Sea Act (CA No. 65) in order to accomplish the salvage
c. Ship Mortgage Decree of 1978 (PD 1521)
Art. 587: ship agent may exempt himself of the civil liabilities for the
REAL AND HYPOTHECARY NATURE OF MARITIME LAW indemnities in favor of third persons by abandoning vessel with all equipments
and freight it earned during voyage
Case: Philippine Shipping Company, et al. vs. Francisco Garcia Vergara
That which distinguishes the maritime from the civil law and even Art. 590: co-owners civilly liable in proportion to their interest and may exempt
from the mercantile law in general is the real and hypothecary liability by abandonment of the part of the vessel belonging to him
nature of the former
Limited liability rule – means that the liability of a shipowner for damages in
Evidence of this “real “ nature of maritime law: case of loss is limited to the value of his vessel.
o The limitation of the liability of the agents to the actual No vessel, no liability.
value of the vessel and the freight money The civil liability for collision is merely co-existent with the interest in
o The right to retain the cargo and the embargo and the vessel; if there was total loss, liability is also extinguished.
detention of the vessel even cases where the ordinary
civil law would not allow more than a personal action GR: If the ship is totally lost, liability is extinguished. If the ship or part thereof
against the debtor or person liable still exists, he can escape liability by abandoning the vessel, its appurtenances
and its freight.
This repeals the civil law to such extent that, in certain cases where
the mortgaged property is lost no personal action lies against the Case: Monarch Insurance Co., Inc. vs. Court of Appeals
owner or agent of the vessel The total destruction of the vessel extinguishes maritime liens
because there are no longer any res to which it can attach. This
Two reasons why it is impossible to do away with these privileges: doctrine is based on the real and hypothecary nature of maritime
o The risk to which the thing is exposed law.
o The real nature of maritime law, exclusively real,
according to which the liability of the parties is limited to Note: Since the Civil Code contains no provision regulating liability of
a thing to which is at mercy of the waves shipowners or agents in the event of total loss or destruction of the vessel,
Article 587 of the Code of Commerce governs.
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
Corporation, Ltd. Article 837, 587 and 590 of Code of Commerce cover only:
1. Liability to third persons
The real and hypothecary nature of maritime law simply means 2. Acts of the captain
that the liability of the carrier in connection with losses related to 3. Collisions
maritime contracts is confined to the vessel, which is hypothecated
for such obligations or which stands as the guaranty for their EXCEPTIONS TO THE LIMITED LIABILITY RULE
settlement 1. Where the injury or death to a passenger is due either to the fault of
Purpose: It was designed to offset such adverse conditions and to the shipowner, or to the concurring negligence of the shipowner and
encourage people and entities to venture into maritime commerce the captain (NEGLIGENCE)
despite the risks and prohibitive cost of shipbuilding
Thus, the liability of the vessel owner and agent arising from the GR: Shipowner is liable for the negligence of the captain in collision
operation of such vessel were confined to the (1) vessel itself, (2) its cases
equipment, (3) freight, (4) and insurance if any, which limitation ---- liability is limited to value of the vessel
served to induce capitalists into effectively wagering their resources
against the consideration of the large profits attainable in trade Limited liability rule applies if the captain or the crew caused the
damage or injury as when unseaworthiness of the vessel was caused
Real – similar to transactions over real property where to effect against third by the negligence of the captain or crew during the voyage
persons, registration is necessary However, if the failure to maintain the seaworthiness of the vessel
can be ascribed to the shipowner alone or the shipowner
Hypothecary – the liability of the owner of the value of the vessel is limited to concurrently with the captain, then the limited liability principle
the vessel itself cannot be invoked --- LIABILITY FOR THE DAMAGES IS TO THE FULL
EXTENT (ex. Overloading, unseaworthiness even at the time of
STATUTORY PROVISIONS departure)
If the plaintiff was injured or heirs will file action from insurance company, and
Required under the following cases: since shipowner cannot avail of limited liability, this is not advisable to the
1. When the vessel makes an arrival under stress plaintiff because it has no privity of contract with the insurance company
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the captain Q: when does insurance argument come in?
believe that the cargo has suffered damages or averages A: only when the shipowner will bring the insurance company to the case filed
4. Maritime collisions by the plaintiff—by way of third party complaint. Once insurance company is
impleaded then this can be used: that the owner cannot avail of limited liability.
Q: when is it not required?
A: But no shipowner will ever implead the insurance. Because they will be the one
1. when it does not fall under the four cases mentioned above who will claim the insurance without telling the plaintiffs. In the case, there is no
2. when what is not involve is not a vessel proof that the vessel is insured. Even if we know outside court, it is insured
But question, if vessel if covered with insurance, does this mean that plaintiff Case: Poliand Industrial
can recover to the amount applied? No, they can only recover until the coverage - facts shows that the proceeds debted from hardwood was for the modification
of the insurance proceeds. of the vessel (extended for vessels benefit), for crews wage
Ships ought to be understood in the sense of vessel serving the purpose ACQUISITION
of maritime navigation or seagoing vessel, and not in the sense of vessel
devoted to the navigation of rivers Vessel may be acquired or transferred by any means recognized by laws.
Thus, vessel may be sold, donated and may even be acquired through
The third book of the code of commerce, dealing with maritime prescription.
commerce, was evidently intended to define laws relative to merchant Under the present laws, vessels that are under the jurisdiction of MARINA
vessels and maritime shipping; and as appears from said code, the vessel can be transferred only with notice to said administrative agency.
intended in that book are such run by masters having special training with
elaborate apparatus of crew and equipment indicated in the code. A. Prescription (Code of Commerce)
Only vessels engaged in what is ordinarily known as maritime commerce Article 573. Merchant vessels constitute property which may be acquired and
are within the provision of law conferring limited liability on the owner in transferred by any of the means recognized by law. The acquisition of a vessel
case of maritime disaster. must appear in a written instrument, which shall not produce any effect with
respect to third persons if not inscribed in the registry of vessels.
Other vessel of minor nature not engaged in maritime commerce, such as
river boats and those carrying passengers from ship to shore, must be The ownership of a vessel shall likewise be acquired by possession in good faith,
governed, as to their liability to passenger, by the provision of the civil continued for three years, with a just title duly recorded.
code or other appropriate special provisions of law.
In the absence of any of these requisites, continuous possession for ten years
Case: Augusto Lopez vs. Juan Duruelo, et. al shall be necessary in order to acquire ownership.
- The code of commerce are not applicable to small craft which are
only subject to administrative (customs) regulations in the matter of A captain may not acquire by prescription the vessel of which he is in command.
port service and in the fishing industry
- Only vessels engaged in what is ordinarily known as maritime ARTICLE 575. Co-owners of vessels shall have the right of repurchase and
commerce are within the provisions of law conferring limited liability redemption in sales made to strangers, but they may exercise the same only
on the owner in case of maritime disaster within the nine days following the inscription of the sale in the registry, and by
- It is therefore clear that a passenger on a boat like the Jison, in the depositing the price at the same time.
case before use, is not required to make protest as a condition
precedent to his right of action for the injury suffered by him in the B. Sale (Code of Commerce)
collision described in the complaint – article 835 of the Code of
Commerce does not apply Article 576. In the sale of a vessel it shall always be understood as included the
CONSTRUCTION, EQUIPMENT AND MANNING rigging, masts, stores and engine of a streamer appurtenant thereto, which at
the time belongs to the vendor.
The Construction, equipment and manning of vessel are subject to the rules
issued by the Maritime Industry Authority (MARINA) and consistent with Article
The arms, munitions of war, provisions and fuel shall not be considered as
574 of the Code of Commerce
included in the sale.
Article 574. Builders of vessels may employ the materials and follow, with
The vendor shall be under the obligation to deliver to the purchaser a certified
respect to their construction and rigging, the systems most suitable to their
copy of the record sheet of the vessel in the registry up to the date of the sale.
interests. Ship owners and seamen shall be subject to what the laws and
regulations of the public administration on navigation, customs, health, safety of
Article 577. If the alienation of the vessel should be made while it is on a
vessels, and other similar matters.
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
PERSONAL PROPERTY
persons who make up its complement for the same voyage shall be for his
account.
Vessels are considered personal property under the Civil Law. The Code of
If the sale is made after the vessel has arrived at the port of its destination, the
Commerce likewise expressly acknowledges the special nature of a vessel as
freightage shall pertain to the vendor, and the payment of the crew and other
personal property.
individuals who make up its complement shall be for his account, unless the
contrary is stipulated in either case.
Case: Philippine Refining Company vs. Jargue
- Vessels are personal property although occasionally referred to as a
Article 578. If the vessel being on a voyage or in a foreign port, its owner or
peculiar kind of personal property
owners should voluntarily alienate it, either to Filipinos or to foreigners
- They are subject to mortgage agreeably to the provisions of the
domiciled in the capital or in a port of another country, the bill of sale shall be
Chattel Mortgage Law
executed before the consul of the Republic of the Philippines at the port where
- The only difference between a chattel mortgage of a vessel and a
it terminates its voyage and said instrument shall produce no effect with respect
chattel mortgage of other personality is that it is not now necessary
to third persons if it is not inscribed in the registry of the consulate. The consul
for a chattel mortgage of a vessel to be noted in the registry of the
OTHER CODE OF COMMERCE PROVISIONS Based on the first aforementioned role, the captain is regarded as the GENERAL
The provisions of the Code of Commerce reproduced hereunder are AGENT of the shipowner and as such, he:
deemed modified not only by the Civil Code but also by special laws
a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the freight earned;
SAFETY REGULATIONS c. Agree upon rates and decide whether to take cargo;
On February 23, 2000, the Maritime Industry Authority directed all d. Has legal authority to enter into contracts with respect to the vessel and
domestic shipowners and operators under Memorandum Circular No. the trading of the vessel, subject to applicable limitations established by
154 to strictly comply with existing Safety-Related Policies, Guidelines, statute, contract or instructions and regulations of the shipowner.
Rules and Regulations All aforementioned functions verily commits to the captain the governance,
Rules include: (read book page 488-489) care, and management of the vessel. Clearly then, the captain is vested with
Monitoring of compliances shall be undertaken by the Authority and its both MANAGEMENT and FIDUCIARY functions.
Maritime Regional Offices, together with the needed coordination with
the Philippine Coast Guard POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND THE MASTER: (See
The MARINA shall have the power to inspect vessels and all equipment on board Arts. 610-612 of the Code of Commerce)
to ensure compliance with safety standards
DISCRETION OF CAPTAIN AND MASTER
C. PERSONS WHO TAKE PART IN MARITIME COMMERCE A ship’s captain must be accorded a REASONABLE MEASURE OF
DISCRETIONARY AUTHORITY to decide what the safety of the ship and of its
In sum, the following are persons who take part in Maritime Commerce: crew and cargo specifically requires on a stipulated ocean voyage.
SHIPOWNERS and SHIP AGENTS; Presumption: A captain is knowledgeable as to the specific requirements of
CAPTAINS and MASTERS OF VESSELS; seaworthiness and the particular risks and perils of the voyage he is to embark
upon.
OFFICERS and CREW OF VESSELS
b. Shipowner and Pilot CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and Marine
Engineer, Crew, and Captain (See pages 552-560 of the Aquino book).
GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused by
his own negligence or default to the OWNERS of the vessel, and to THIRD Parties --- those provided above… plus seamen, other members of the
PARTIES for damages sustained in a collision. Such negligence of the pilot complement including the stokers (incharge of boilers) and supercargo (agent of
in the performance of duty constitutes a MARITIME TORT. the shippers who has authority to sell goods while on voyage)
In cases of COLLISION: the COLLIDING VESSEL is prima facie responsible, 4 maritime contracts
hence, the burden of proof is upon the party claiming benefit of the 1. charter parties
exemption from liability. Thus, it must be shown affirmatively that the 2. Botomry
pilot was at fault, and that there was no fault on the part of the officers or 3. Repondentia
crew, which might have been conducive to the damage. The fact that the 4. Marine insurance (incorporated in the subject insurance)
law compelled the master to take the pilot does not exonerate the vessel
from liability. The injured party shall seek redress from the vessel. The ON PERSONS
owners of the vessel are responsible to the injured party for the acts of
the pilot, and they must be left to recover the amount as well as they can Shipowner
against him. - he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can invoke the LLR?
c. Pilot and his Association No jurisprudence. Personal opinion of sir: distinguish on the type of
charter party. If affreightment, shipowner retains possession,
The fact that the pilot is a member of an association does not make the command and navigation of the vessel. If bareboat it is vested upon
association jointly and severally liable. Article 2180 of the Civil Code does the charterer.
not apply because there is NO EMPLOYER-EMPLOYEE Relationship. - Jurisprudence: except for registration, the charterer is the temporary
owner of the vessel. With this, the charterer can invoke LLR (this part
Well-established is the rule that pilot associations are immune to vicarious no juris)
liability for the tort of their members. They are not the employer of their
members and exercise no control over them once they take the helm of Note: there is not distinction of liability of shipowner and ship agent. They are
the vessel. They are also not partnerships because the members do not civilly liable
function as agents for the association or for each other. Pilots’
associations are also not liable for negligently assuring the competence of There is a situation in maritime law that shipower and agent they are held liable
their members because as PROFESSIONAL ASSOCIATIONS, they made no for the act or omission of a third person which is the ship captain or master.
guarantee of the professional conduct of their members to the general
public. ACTS of CAPTAIN
Case: Yucon case and Sweetlines case
CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the Aquino - In Yucon, money was entrusted to the captain and the money was
book) lost. SC concluded that shipowner was liable for the lost because the
captain failed to put up measures while in custody of the money. It
OFFICERS AND CREW OF VESSELS may not technically to an act but may refer to admission but would
fall under the term acts
Coastwise Lighterage v. CA Deadfreight – where the charterer failed to occupy the leased portion of the
- WON private carrier would convert to a common carrier; contract of vessel, he may thereby be liable by the shipowner for the deadfreight that
affreightment occurred
- Ruling : reiterated Planters ruling ; but was not able to rebut
presumption of negligence ; did not exercise EO diligence ( hired STIPULATION IN CHARTER PARTIES
unlicensed patron)
GR: parties are free to stipulate subject to art 1744 t01754 0f NCC
Home Insurance v. American Steamship
- case mostly used by the common carrier as defense ; Home Art. 1744. A stipulation between the common carrier and the shipper or
Insurance is subrogee (paid SMC of loss cargo shipped thru owner limiting the liability of the former for the loss, destruction, or
American Steamship ; no reference as to what contract but there was deterioration of the goods to a degree less than extraordinary diligence shall
a mention that it was in affreightment be valid, provided it be:
- Ruling : Common Carrier undertaking to carry special cargo (1) In writing, signed by the shipper or owner;
(chartered to special person only ) become a private carrier and (2) Supported by a valuable consideration other than the service
stipulation exempting owner from liability for loss due to the rendered by the common carrier; and
negligence of its agents is valid; (3) Reasonable, just and not contrary to public policy.
Shipowner can appoint senior officers for the vessel even if bareboat contract. Art. 1745. Any of the following or similar stipulations shall be considered
But technically it is an affreightment. Most conflicts will occur if these various unreasonable, unjust and contrary to public policy:
principles will have to be mixed. (1) That the goods are transported at the risk of the owner or
shipper;
The whereabouts of the vessel is important to know the time for loading and (2) That the common carrier will not be liable for any loss,
unloading… destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the
Policy – marina custody of the goods;
Implementing or enforcement --- Coastguard (4) That the common carrier shall exercise a degree of diligence less
than that of a good father of a family, or of a man of ordinary
2 conditions implied in charter party prudence in the vigilance over the movables transported;
1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter party (5) That the common carrier shall not be responsible for the acts or
2. --- look at book (ala kaapas) omission of his or its employees;
(6) That the common carrier's liability for acts committed by
JURISDICTION OF ADMIRALTY CASES thieves, or of robbers who do not act with grave or irresistible
- depends on the jurisdictional amount threat, violence or force, is dispensed with or diminished;
- important element of the contract = the subject matter of the (7) That the common carrier is not responsible for the loss,
contract (nature and character) destruction, or deterioration of goods on account of the defective
condition of the car, vehicle, ship, airplane or other equipment
International Harvester v Aragon used in the contract of carriage.
-involves loss of cargo shipped from LA to Manila; cargo owner filed an action
against common carrier Art. 1746. An agreement limiting the common carrier's liability may be
-SC said liability of petitioner was predicated upon the contract of carriage ; annulled by the shipper or owner if the common carrier refused to carry the
admiralty would involve all maritime contract in whatever form and wherever goods unless the former agreed to such stipulation.
made
Macondry v Delgado Brothers Art. 1747. If the common carrier, without just cause, delays the transportation
- Delgado was an operator of a pier service ; WON operator exercised of the goods or changes the stipulated or usual route, the contract limiting the
its duty in loading and unloading of cargos ; no contract of carriage ; common carrier's liability cannot be availed of in case of the loss, destruction,
obligation was only to load the to the ship ; no application of or deterioration of the goods.
admiralty
Art. 1748. An agreement limiting the common carrier's liability for delay on
FRIEGHT OR FREIGHTAGE account of strikes or riots is valid.
- price of carriage
- shall accrue according to what is stipulated in the contract Art. 1749. A stipulation that the common carrier's liability is limited to the
- should there be no stipulation or if it is ambiguous , rules shall be value of the goods appearing in the bill of lading, unless the shipper or owner
a. freight shall begin to run from the day of loading on the vessel declares a greater value, is binding.
Art. 1753. The law of the country to which the goods are to be transported 1. Bottomry – by the ship owner or ship agent; outside of the residence of
shall govern the liability of the common carrier for their loss, destruction or the owners, the captain.
deterioration. 2. Respondentia – only the owner of the cargo
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the DISTINCTIONS:
passenger's baggage which is not in his personal custody or in that of his BOTTOMRY/ RESPONDENTIA ORDINARY LOAN
employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 1. Not subject to Usury Law 1. Subject to Usury Law
concerning the responsibility of hotel-keepers shall be applicable.
2. Liability of the borrower is 2. Not subject to any contingency
ART. 653. if the cargo should be received without the charter party having been contingent on the safe arrival of the
signed, the contract shall be understood as executed In accordance with what vessel or cargo at destination
appears in the bill of lading, the sole evidence of title with regard to the cargo 3. The last lender is a preferred 3. The first lender is a preferred
for determining the rights and obligations of the ship agent, captain and creditor creditor
charterer
4. Must have a collateral 4. May or may not have collateral
- If there is charter party or bill of lading (BOL) = no contract at all; but according
to Blanco, if there is delivery and receipt of cargo combined with the GF and 5. Collateral is the vessel or cargo 5. Maybe property, real or personal
mutual consent = contract present , better than BOL subject to maritime risk
6. Must be in writing 6. Need not be in writing but
E. LOANS ON BOTTOMRY AND RESPONDENTIA interest shall not be due unless
expressly stipulated in writing
LOAN ON BOTTOMRY – loan made by shipowner or ship agent guaranteed by 7. To be binding on third person must 7. Need not be registered
vessel itself and repayable upon arrival of vessel at destination; vessel/portion be recorded in the registry of vessels
of port of registry of the vessel
LOAN ON RESPONDENTIA – loan, taken on security of the cargo laden on a 8. Loss of collateral extinguishes the 8. Does not extinguished if there is
vessel, and repayable upon safe arrival of cargo at destination; cargo/goods same a loss of the collateral (if any)
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS: Consequences of loss of effects of the loans
1. Exposure of security to marine peril;
2. Obligation of the debtor conditioned only upon safe arrival of the security 1. Effects of loans be lost due to accident of the sea during the time, and on the
at the point of destination. occasion of the voyage which has been designated in the contract and proven
that the cargo was on board
Requisites of a Loan on Bottomry/Respondentia: - lender losses the right to institute the action which would pertain to him
1. Shipowner borrows money for use, equipment or repair of vessel
2. For a definite term and with extraordinary interest called premium Except: when the loss was
3. Secured by pledged of vessel or portion thereof in the case on loan on 1. caused by inherent defect of the thing
Bottomry; or pledge of goods in case of Respondentia 2. through fault or malice of the borrower
4. Loan repayment depends or conditioned on the safe arrival of goods for 3. through barratry on the part of the captain
respondentia and obligation to repay is extinguished if pledged goods 4. caused by damages suffered by the vessel as a consequence of
are lost (Respondentia) being engaged in a contraband
5. Obligation to repay is extinguished if vessel is lost due to specified 5. loaded the goods on a vessel different from that designated in the
marine perils in the course of voyage or within limited time (Bottomry) contract unless the change was caused by force majeure
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
May be executed by means of: 2. The lenders on bottomry or respondentia shall suffer in proportion to their
1. public instrument respective interest, the general average which may take place in the things upon
2. policy signed by the contracting parties and the broker taking part therein which the loans were made.
3. private instrument (Art. 720)
3. In case of shipwreck, the amount for payment of the loan shall be deduced to
GR: The captain cannot contract loans on respondentia secured by the cargo, the proceeds of the effects which have been saved but only after deducting the
and should he do so, the contract shall be void. Neither can he borrow money costs of the salvage.
or Bottomry for his own transactions.
4. If the loan should be on the vessel or any of her parts, the freight earned
EXCEPTIONS: during the voyage for which the loan was contracted shall also be liable for its
payment, as far as it may reach.
Maritime contracts include charter parties… and loans on bottomry and A. Particular or Simple Average
respondentia are considered maritime contracts
Q: why do we have to study this topic? Are these relevant? Damage or expenses caused to the vessel or cargo that did not inure to
A: they are hardly used at present. However, we have to study this just in case common benefit, and borne by respective owners. (809)
this will be asked in the bar. Especially in the unique terms used in this topic.. The owner of the goods which gave rise to the expense or suffered th e
damage shall bear this average. (Art. 810)
General provisions in contracts will govern res perit domino applies
if the vessel or goods are hypothecated by loan on bottomry and
Basic provision you should not forget: respondentia, the lender shall bear the loss in proportion to his interest
1. there should be a marine risk
2. the condition that the vessel or the goods has perished then the right of the Examples: see article 809 of the code of commerce
lender to collect everything as well as stipulated interest is extinguished
(not sure if there are other more.. basin ala ko kaapas) RULES ON AVERAGES:
1. Averages is defined as damage deliberately caused or an expense
BOTTOMRY deliberately incurred due to a marine peril and which has resulted in
- It may refer to the vessel saving both vessel and cargo or only the vessel or cargo.
- The bottom or the hull or the kill of the vessel can be pledged in this 2. Where both vessel and cargo are saved, it is general average; where only
case the vessel or only the cargo is saved, it is particular average.
- The whole vessel can be a subject of a security or collateral 3. The person whose property has been saved must contribute to reimburse
- PD. 1521: (is this different) --- loan is the principal, mortgage is the the damage caused or expense incurred if the situation constitutes general
accessory. average.
- The contract of bottomry is principal, the mortgage under pd 1521 is
merely a security B. Gross or General Average
- In pd 1521 under section 4 it is a requirement that the whole of the Damage or expenses deliberately caused in order to save the vessel, its cargo
vessel must be mortgaged (no jurisprudence on this matter whether or both from real and known risk. (Art. 811)
a part of the vessel can be mortgaged) All the persons having an interest in the vessel and the cargo therein at the
- In bottomry the whole or the part of the vessel can be the subject time of the occurrence of the average shall contribute to satisfy this average.
- IF the part of the vessel can be pledged, is it necessary that there (Art. 812)
should be goods? No. no need for goods.
REQUISITES:
RESPONDENTIA 1. common danger present
- The vessel should have goods. The goods must be laden in the vessel 2. arising from accidents of sea, disposition of authority
- Is it necessary that the boat is on voyage? The vessel must be in the 3. peril imminent and ascertained
actual course of voyage because this is the objective of the law. 4. part of vessel or cargo deliberately sacrificed
Because if the vessel is docked in the port the owner can simply 5. intended to save vessel or cargo
obtain loans. And besides there is no risk when the vessel is docked 6. proper legal steps and authority taken
(but no jurisprudence)
Common danger
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the bar) - means both the ship and the cargo, after has been loaded, are subject to the
--- 5 differences same danger, whether during the voyage, or in the port of loading or unloading,
1. with respect to form --- can you validly execute a bottomry or respondentia that the danger arises from the accidents of the sea, disposition of authority, or
verbally? You cannot. Bec under the code of commerce no judicial action can faults of men, provided that circumstances producing the peril should be
arise when the contract is not reduced in writing. But this is not the case in ascertained and imminent or may rationally be said to be certain and imminent
simple loan. But in simple loan you take note the statute of frauds… if not in
writing B and R, you can dismiss case due to failure to state cause of action. - When the measure of precaution adopted solely and exclusively for the
preservation of the vessel from the danger of seizure or capture and not for the
Q: why hardly used at present? common safety is not considered as common danger
A: because of sophistication. Captains can just call up any agent the shipowner
to deliver anything for the use of the vessel to deliver. … This contract was Deliberate Sacrifice
recognized in medieval times. - voluntary sacrifice of a part for the benefit of the whole in order to justify the
average contribution
F. AVERAGES AND COLLISIONS * voluntary jettison- the casting away of some portion of the associated
interests for the purpose of avoiding the common peril from the whole to a
ACCIDENTS IN MARITIME COMMERCE: particular portion of those interests
1. Averages
2. Arrival Under Stress - the goods on board refer to in jettison should be proven by means of bill of
3. Collision lading and with regards to those belonging to vessel by means of inventory
4. Shipwreck prepared before the departure
* Averages – an extra-ordinary or accidental expense incurred during the voyage 2 cases where there can also be general averages even if the sacrifice was not
in order to preserve the cargo, vessel or both; and all damages or deterioration made during the voyage:
Art. 816: in order that the goods jettisoned may be included in the gross b. lenders of bottomry and respondentia (Code of Commerce)
average and the owners entitled to indemnity – it is necessary that the cargo’s -obliged to pay in proportion to their respective interest, the general average
existence on board be proven by a bill of lading; and with regard to those which may take place in the goods which the loan is made
belonging to the vessel, by means of an inventory prepared before departure.
Who is entitled to indemnity?
Art. 817: if in lightening of a vessel on account of a storm to facilitate its entry to Owner of the goods which were sacrificed is entitled to receive the general
a port or roadstead, part of the cargo should be transferred to barges or lighters contribution
and be lost, the owner of the said part is entitled to indemnity as if the loss Except;
originated from a gross average, the amount being distributed between the 1. goods carried on desk unless the rule special law or
vessel and cargo from which it came. customs of the place allow the same
If on the contrary the merchandise transferred should be saved and the vessel 2. goods that are not recorded in the books or records of the
should be lost, no liability may be demanded of the salvage. vessel
3. fuel of the vessel if there is more than sufficient fuel for
Art. 818: if, as a necessary measure to extinguish a fire in a port, roadstead, the voyage
creek, or bay, it should be decided to sink any vessel, this loss shall be
considered gross average, to which the vessels saved should contribute. American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do not exceed 5% of the
Note: the loss or damage sustained by cutting away wreck or parts of the ship interest which the claimant may have in the vessels or cargo if it is general
which have been previously carried away or effectively lost by accident shall not average, and 1% of the goods damaged if particular average… deducting in both
be made good as general average cases the expenses of appraisal, unless there is an agreement to the contrary.
Sacrifice must be Successful It is clear that the damage of the cargo is particular average since the loss is less
- no general contribution can be demanded if the vessel and other cargo that than 1% to the value of the cargo and there appears to be no allegations as to
are sought to be saved were in fact not saved (art. 860) any agreement defendants and consignee of the goods to the contrary , by
express provision of law, plaintiff is barred from suing for recovery.
- owners of the goods saved shall not be liable for the indemnification of those
jettisoned, lost or damaged Law on averages does not apply if the CC is negligent.
- hence when the sacrifice was not successful in saving the ship, there will be no
general contribution YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR CONTRIBUTION ON
AVERAGES
Compliance with Legal Steps
Under the rule, deck cargo is permitted in coastwise shipping but prohibited
- Procedure for recovery: (Art. 813-814) in overseas shipping.
1. There must be a resolution of the captain, adopted after a deliberation 1. If deck cargo is located with the consent of the shipper on overseas
with the other officers of the vessel and after hearing all persons trade, it must always contribute to general average, but should the same
interested in the cargoes. If the latter disagree, the decision of the captain be jettisoned, it would not be entitled to reimbursement because there
should prevail but they shall register their objections. is violation of the Y-A Rules.
2. The resolution must be entered in the logbook, stating the reasons and 2. If deck cargo is loaded with the consent of the shipper on coastwise
motives for the dissent, and the irresistible and urgent causes if he acted shipping, it must always contribute to general average and if jettisoned
in his own accord. It must be signed, in the first case, by all persons would be entitled to reimbursement.
present in the hearing. In the second case, by the captain and all the
officers of the vessel. - may also be used to solve controversies where no provision of the
3. The minutes must also contain a detail of all the goods jettisoned and code of commerce is in point because the said rules embody the
those injuries caused to those on board. custom of maritime states
4. The captain shall deliver it to the maritime judicial authority of the first
port he may make, within 24 hours after his arrival, and to ratify it AVERAGES
immediately under oath. - the same concept that was existing in medieval times can be applied at present
- ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON: Relevance of averages (take note these ex. Connected to expenses under 806)
1. those which are on the deck, preferring the heaviest one with the least ← under 806 --- averages are:
utility and value; o Extraordinary expenses – ex. If machine does not work,
2. those which are below the upper deck, beginning with the one with you have to ask help of a tugboat… the expenses on the
greatest weight and smallest value. (Art. 815) use of tugboat is a question of averages. This is
extraordinary because it is not foreseen. --- assuming the
engine of the vessel was defective, can that be considered
Examples of General Average an average? YES. (question now if it is particular or
Read Art 811 of the Code of Commerce general)
o Damages or deterioration suffered – refer to the physical
By Whom Borne feature or attribute of the goods.
- shall be borne by those who benefited from the sacrifice; the shipowner and - these two are different
the owner of the cargoes that were saved
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES
Contribution may be imposed to;
a. insurers ( Insurance Code of the Philippines) Hernandez – averages are losses. If there is a loss incurred, the loss will be
shouldered on where it falls. (ex. If you have goods transported from origin to
If no special circumstance, it is a particular or simple average --- the owner of Error in Extremis - sudden movement made by a faultless vessel during the
the vessel will be the one who will shoulder the loss. The negligence of captain, 3rd zone of collision with another vessel which is at fault during the 2nd zone.
the owner of the vessel will shoulder. But if there is special circumstance, the Even if such sudden movement is wrong, no responsibility will fall on said
loss will be shouldered proportionately by those who benefited faultless vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632).
Standard oil case – the ship captain will not release goods to the shipper unless Rules on Collision of Vessels under Code of Commerce:
the shipper will contribute their share. The issue was the duty of the captain to 1. The collision may be due to the fault, negligence or lack of skill of the
liquidate – he did not file for the appropriate proceeding, you should result to captain, sailing mate, or any other member of the complement of the
legal liquidation. Captain here failed TO INITIATE proper proceeding thus vessel. The owner of the vessel at fault be liable for losses or damage. (Art.
shipowner is liable for actions of captain 826)
2. The collision may be due to the fault of both vessels. Each vessel shall
Q: is the duty of captain to initiate a condition precedent? suffer its own losses, but as regards the owner of cargoes both vessels
A: no. even if ship captain does not initiate, the shipowner can still file the shall be jointly and severally liable. (Art. 827)
appropriate proceeding in court. 3. If it cannot be determined which vessel is at fault. Each vessel shall also
suffer its own losses and both shall be solidarily liable for losses o damages
COMMON DANGER – both to vessel and cargo. If one invokes general average on the cargoes. (Art. 828)
then that person must prove what he allege. In standard oil since ship captain 4. The vessels may collide with each other through fortuitous event or force
invoked gen aver – they should be the one to prove. Failure to prove, they majeure. In this case each shall bear its own damage. (Art. 830)
cannot ask for contribution from owners of the goods. 5. Two vessels may collide with each other without their fault by reason of a
third vessel. The third vessel will be liable for losses and damages. (Art.
It is also possible that there are no goods involved. Only extraordinary expense 831)
Phil. Home assurance case --- discussed also in chapter 3 --- when it exploded, 6. A vessel which is properly anchored and moored may collide with those
vessel got burned, another vessel came to the rescue to extinguish the fire and nearby reasons of storm or other cause of force majeure. The vessel run
towed the vessel to the nearest destination. Goods were saved from the subject into shall suffer its own damage and expense. (Art. 832)
vessel. The shipowner asked for contribution to the owner of the goods which
were saved. SC said, shipowner did not comply legal steps 813-815 thus you Cases covered by collision and allision:
cannot allege general averages. 1. One vessel at fault – such vessel is liable for damage caused to innocent
vessel as well as damages suffered by the owners of cargo of both vessels.
If the averages are not general, it is particular. the shipowner will be solely 2. Both vessels at fault – each vessel must bear its own loss, but the shippers
liable… in the case of Magsaysay, there was no deliberate sacrifice. of both vessels may go against the ship owners who will be solidarily
liable.
SUCCESSFUL SAVING 3. Vessel at fault not known – same as rule as (2). (Doctrine of Inscrutable
- Both vessel and goods must be saved Fault)
- If vessel not saved, no general averages. Even if goods were saved 4. Third vessel at fault – same rule as (1).
- You have to start with resolution, placing of reso in the log book, 5. Fortuitous event – no liability. Each bears its own loss.
accounting of goods thrown away starting those on deck and to
follow from those not on deck (read 83-815) Prerequisite to recovery:
Protest should be made within 24 hours before the competent authority at
American Home insurance (take note this case--- bar) the point of collision or at the first port of arrival, if in the Philippines and to the
- Transportation of tv sets, the shipcapatain was uprised of the Philippine consul, if the collision took place abroad. (Art. 835)
typhoon. Still captain continued with the journey. Then na abot ang Injuries to persons and damage to cargo of owners not on board on collision
typhoon captain directed that the tv sets should be jettison. Saved time need not be protested. (Art. 836)
vessel. Reklamo owner. Is there general average? No. if the
shipowner is negligent, the law on general averages does not apply. DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE NOT
Note that examples of the two types of averages are not exclusive. There is a APPLICABLE.
word “especially” thus there may be other example that may fall under this two
type of averages. DOCTRINE OF “INSCRUTABLE FAULT”
In case of collision where it cannot be determined which between the two
YORK AND TURP RULES vessels was at fault, both vessels bear their respective damage, but both should
- THIS CAN be stipulated in a contract that this rule will apply in be solidarily liable for damage to the cargo of both vessels.
respect to averages
- In the absence of stipulation in the contract in applying this rule, NOTE: The Doctrine of Limited Liability applies in case of collisions, but it shall
such rule is inapplicable be limited only to the value of the vessel with all its appurtenances and
freightage earned during the voyage. When the latter is not sufficient to cover
Q: ordinary expenses are not averages bec. They are foreseeable, are there all the liabilities, the indemnity due by reason of the death or injury of persons
instance that they can be considered to be extraordinary ave shall have preference. (Arts. 837 and 838)
SEC. 13. IF A VESSEL OR ITS CARGO SHALL HAVE BEEN ASSISTED OR SAVED, Limiting provision
ENTIRELY OR PARTIALLY, BY ANOTHER VESSEL, THE REWARD FOR SALVAGE OR - COGSA contains a provision that allows the shipper to recover only US$500 per
FOR ASSISTANCE SHALL BE DIVIDED BETWEEN THE OWNER, THE CAPTAIN, AND package unless there is a special declaration unless there the real value of the
THE REMAINDER OF THE CREW OF THE LATTER VESSEL, SO AS TO GIVE THE goods is declared
OWNER A HALF, THE CAPTAIN A FOURTH, AND ALL THE REMAINDER OF THE - declaration made by the shipper stating an amount bigger than $500 per
CREW THE OTHER FOURTH OF THE REWARD, IN PROPORTION TO THEIR package will make the carrier liable for such bigger amount but only if the
RESPECTIVE SALARIES, IN THE ABSENCE OF AN AGREEMENT TO THE CONTRARY. amount so declared is the real value of the goods
THE EXPRESS OF SALVAGE, AS WELL AS THE REWARD FOR SALVAGE OR
ASSISTANCE, SHALL BE A CHARGE ON THE THINGS SALVAGED ON THEIR VALUE. Right to discharge dangerous cargo
- COGSA allows the carrier to discharge the good of the carrier discovers that
COGSA (CARRIAGE OF GOODS BY SEA ACT) the goods are dangerous, inflammable or are explosives
- Adopted by the Philippines on October 22, 1936 through
Commonwealth Act No. 65
- New Civil Code primary law on goods that are being transported
from a foreign port to the Philippines
- COGSA remains to be a suppletory law for such type of
transportation – international shipping
ART. 1753, NCC: 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.
Parties:
Carrier, and
Shipper
- They are given their respective rights and obligations under COGSA.