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TRANSPORTATION AND MARITIME LAW done for general business purposes, any common

carrier, railroad, street railway, traction railway, sub-


Based on the outline of Prof. Rodrigo Quimbo way motor vehicle, either for freight or passenger, or
both with or without fixed route and whatever may be
_______________ its classification, freight or carrier service or any class,
express service, steamboat, or steamship line,
pontines, ferries, and water craft, engaged in the
transportation of passengers and freight or both,
I. General Considerations shipyard, marine repairshop, [warehouse], wharf or
dock, ice plant, ice refrigeration plant, canal, irrigation
A. Public Utilities system, gas, electric light, heat and power, water
supply and power, petroleum, sewerage system, wire
1. Article XII, 1987 Constitution or wireless communications system, wire or wireless
broadcasting stations and other similar public
services..." [Sec. 13(b)] (Albano vs Reyes)
Art. XII, Section 11. No franchise,
certificate or any other form of authorization for
the operation of a public utility shall be granted Albano vs Reyes 175 SCRA 264
except to citizens of the Philippines or to
corporations or associations organized under F: On 20 April 1987, the Phil. Ports Authority
the laws of the Philippines at least 60% of (PPA) adopted a resolution directing mgmt. to prepare
whose capital is owned by such citizens, nor the Invitation to Bid and all relevant bidding
shall such franchise, certificate or authorization documents necessary for the public bidding of the
be exclusive in character or for a longer period development, mgmt., and operation of the Manila Intl.
than fifty years. Neither shall any franchise or Container Terminal (MICT) and authorized the Board
right be granted except under the condition that Chairman Secretary Reyes to oversee and implement
it shall be subject to amendment, alteration or the project.
repeal by the Congress when the common good
so requires. The State shall encourage equity Secretary Reyes created a 7-man MICT Bidding
participation in public utilities by the general Committee to evaluate all bids and recommend to the
public. The participation of foreign investors in Board the best bid. The PPA published the Invitation to
the governing body of any public utility Bid with the reservation that it had the right to reject
enterprise shall be limited to their any bid and to accept such bid it may deem
proportionate share in its capital, and all the advantageous to the govt.
executive and managing officers of such Seven companies submitted bids. The
corporation or association must be citizens of Committee recommended that the contract be
the Philippines. awarded to Intl. Container Terminal Services (ICTSI) on
the ground that it offered the best technical and
Section 17. In times of national financial proposal. Secretary Reyes awarded the
emergency, when the public interest so contract to ICTSI. Before the contract could be signed,
requires, the State may, during the emergency two cases were filed questioning the legality or
and under reasonable terms prescribed by it, regularity of the bidding. The first was a special action
temporarily take over or direct the operation of for prohibition with prelim injunction filed by Alo, a
any privately owned public utility or business concerned taxpayer. The second was a civil case for
affected with public interest. prohibition with prayer for TRO filed by Sharp Co.
which actively participated in the bidding.
Section 18. The State may, in the The President approved the proposed MICT
interest of national welfare or defense, contract. The PPA and ICTFSI perfected the contract.
establish and operate vital industries and, upon Rodolfo Albano, a member of the House of
payment of just compensation, transfer to Representatives filed the present case assailing the
public ownership utilities and other private award of the contract on the ground that since the
enterprises to be operated by the Government. MICT is a public utility, it needs a legislative franchise
before it can legally operate as a public utility.
Section 19. The State shall regulate or
prohibit monopolies when the public interest so Issue : WON a legislative franchise is necessary.
requires. No combinations in restraint of trade
or unfair competition shall be allowed. Held : NO. Petition dismissed.
A franchise specially granted by Congress is
not necessary for the operation of the MICT by a
(a) What is a public utility? private entity. A contract entered into by the PPA and
such entity is substantial compliance with the law. 1.
A public utility is a business or service Executive Order No. 30 authorized the PPA to take
engaged in regularly supplying the public with some over, manage and operate the MICT in accordance
commodity or service of public consequence such as with PD 857 (Revised Charter of the PPA). PD 857
electricity, gas, water, transportation, telephone or expressly empowers the PPA to provide services within
telegraph service. Apart from statutes which define Port Districts "whether on its own, by contract or
the public utilities that are within the purview of such otherwise." Therefore, under EO 30 and PD 857, the
statutes, it would be difficult to construct a definition PPA may contract with ICTSI for the mgmt., operation
of a public utility which would fit every conceivable and devt. of the MICT.
case. As its name indicates, however, the term public 2. Even if the MICT be considered a public utility or a
utility implies a public use and service to the public. public service on the theory that it is a wharf or a dock
(Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes) as contemplated by the Public Service Act, its
operation would not necessarily call for a legislative
(b) What is a public service? franchise. Legislative franchises are not required
before each and every public utility may operate. The
The Public Service Act (CA No. 146 as law has granted certain administrative agencies the
amended) provides that the term public service power to grant licenses for or to authorize the
"includes every person that now or hereafter may own, operation of certain public utilities.
operate, manage, or control in the Philippines, for hire That the Consti provides that the issuance of a
or compensation, with general or limited clientele, franchise for the operation of a public utility shall be
whether permanent, occasional or accidental, and subject to amendment, alteration or repeal by
TRANSPORTATION AND MARITIME LAW

Congress does not necessarily imply that only shall not be considered as operating a public
Congress has the power to grant such authorization. service for the purposes of this Act.
There are several laws granting specified agencies in
the Executive Dept. the power to issue such
authorization for certain classes of public utilities. [ 1. B. Transportation
LTFRB wrt Certificates of Public Convenience
authorizing the operation of public land transportation 1. Definition - A contract of
services provided by motorized vehicles; 2. ERB wrt transportation is one whereby a certain person or
operation of electric power utilities and services association of persons obligate themselves to
except electric coops] transport persons, things, news from one place to
Reading EO 30 and PD 857 together, the PPA another for a fixed price. It is the removal of goods or
has been empowered to undertake by itself or to persons from one place to another.
authorize the operation and mgmt. of the MICT by
another by contract. The latter power having been 2. Public Nature
delegated to the PPA, a legislative franchise is no
longer necessary. In this case, the PPA's contracting (a) Public Service Act
with ICTSI is wholly within its jurisdiction and powers.
3. The award of the contract to ICTSI is all the Section 13 (a) The Commission (PSC)
authorization that is necessary. The award made by shall have jurisdiction, supervision, and control
the PPA and the President enjoys the presumption of over all public services and their franchises,
validity and regularity of official action. There is no eqpt., and other properties, and in the exercise
evidence to the contrary. of its authority, it shall have the necessary
4. Albano has standing to assail the contract. While powers and the aid of the public force:
the expenditure of public funds may not be involved Provided, That public services owned or
under the contract, public interest is definitely operated by govt. entities or GOOCs shall be
involved considering the important role of the MICP in regulated by the Commission in the same way
the economic devt. of the country and the magnitude as privately owned public services, but
of the amount involved. He has sufficient standing certificates of public convenience or certificates
since a public right (disclosure provision) is sought to of public convenience and necessity shall not
be enforced. be required of such entities or corporations: And
5. There in no conflict among the 3 branches of govt. provided, further, That it shall have no authority
The Executive Dept. has not contravened an act of to require steamboats, motorships and
Congress. There is no usurpation of powers of another steamship lines, whether privately owned or
branch. owned or operated by any govt. controlled
6. The determination of the winning bid should be left corporation or instrumentality to obtain
to the sound judgment of the PPA. It is in the best certificates of public convenience or to
position to evaluate the bids. It has the technical prescribe their definite routes or lines of
expertise which neither the Court nor Congress has. service.
No abuse of discretion has been shown.
(b) The term public service includes
every person that now or hereafter may
2. CA 146, as amended, Sec 13 (b) operate, manage, or control in the Philippines,
for hire or compensation, with general or limited
The term public service includes every clientele, whether permanent, occasional or
person that now or hereafter may operate, accidental, and done for general business
manage, or control in the Philippines, for hire or purposes, any common carrier, railroad, street
compensation, with general or limited clientele, railway, traction railway, sub-way motor vehicle,
whether permanent, occasional or accidental, either for freight or passenger, or both with or
and done for general business purposes, any without fixed route and whatever may be its
common carrier, railroad, street railway, traction classification, freight or carrier service or any
railway, sub-way motor vehicle, either for class, express service, steamboat, or steamship
freight or passenger, or both with or without line, pontines, ferries, and water craft, engaged
fixed route and whatever may be its in the transportation of passengers and freight
classification, freight or carrier service or any or both, shipyard, marine repairshop,
class, express service, steamboat, or steamship warehouse, wharf or dock, ice plant, ice
line, pontines, ferries, and water craft, engaged refrigeration plant, canal, irrigation system,
in the transportation of passengers and freight gas, electric light, heat and power, water supply
or both, shipyard, marine repairshop, and power, petroleum, sewerage system, wire or
[warehouse], wharf or dock, ice plant, ice wireless communications system, wire or
refrigeration plant, canal, irrigation system, wireless broadcasting stations and other similar
gas, electric light, heat and power, water supply public services: Provided, however, that a
and power, petroleum, sewerage system, wire or person engaged in agriculture, not otherwise a
wireless communications system, wire or public service, who owns a motor vehicle and
wireless broadcasting stations and other similar uses it personally and/or enters into a special
public services: Provided, however, that a contract whereby said motor vehicle is offered
person engaged in agriculture, not otherwise a for hire or compensation to a third party or third
public service, who owns a motor vehicle and parties engaged in agriculture, not itself or
uses it personally and/or enters into a special themselves a public service, for operation by
contract whereby said motor vehicle is offered the latter for a limited time and for a specific
for hire or compensation to a third party or third purpose directly connected with the cultivation
parties engaged in agriculture, not itself or of his or their farm, the transportation,
themselves a public service, for operation by processing, and marketing of agricultural
the latter for a limited time and for a specific products of such third party or third parties
purpose directly connected with the cultivation shall not be considered as operating a public
of his or their farm, the transportation, service for the purposes of this Act.
processing, and marketing of agricultural
products of such third party or third parties (c) The word "person" includes every
individual, co- partnership, joint stock co. or
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TRANSPORTATION AND MARITIME LAW

corporation, whether domestic or foreign, their Philippines; Provided, that 60% of the stock or
lessees, trustees, or receivers, as well as any paid-up capital ... must belong entirely to
municipality, province, city, GOOC, or agency of citizens of the Philippines or of the US;
the govt. of the Philippines, and whatever other Provided, further, that no such certificate shall
person or entities that may own or possess or be issued for a period of more than 50 years.
operate public services.
(b) To approve, subject to constitutional
Section 14. The ff. are exempted from limitations any franchise, privilege granted
the provisions of the preceding section : under the provisions of Act No. 667, as amended
(a) Warehouses; by Act. No. 1022, by any political subdivision of
(b) Vehicles drawn by animals and the Philippines when, in the judgment of the
bancas moved by oar or sail, and tugboats and Commission, such franchise or privilege will
lighters; properly conserve the public interests xxx
(c) Airships within the Philippines except
as regards the fixing of their maximum rates on (c) To fix and determine individual or
freight and passengers; joint rates, tolls, charges, classifications, or
(d) Radio companies except with respect schedules thereof, as well as commutation,
to the fixing of rates; mileage, kilometrage, and other special rates
(e) Public services owned or operated by which shall be imposed, observed and followed
any instrumentality of the Natl. Govt. or by any thereafter by any public service ; Provided,
GOOC, except with respect to the fixing of rates. further that in case the public service
equipment of an operator is used principally or
Section 15. With the exception of those secondarily for the promotion of a private
enumerated in the preceding section, no public business, the net profits of said business shall
service shall operate in the Philippines without be considered in relation with the public service
possessing a valid and subsisting certificate of such operator for the purpose of fixing the
from the PSC known as the certificate of public rates.
convenience, or certificate of public
convenience and necessity as the case may be, (d) To fix just and reasonable standards,
to the effect that the operation of said service classifications, regulations, practices,
and the authorization to do business will measurements, or service to be furnished,
promote the public interests in a proper and imposed, observed, and followed thereafter by
suitable manner. any public service.
The Commission may prescribe as a
condition for the issuance of the certificate (e) To ascertain and fix adequate and
provided in the preceding paragraph that the serviceable standards for the measurement of
service can be acquired by the Republic of the quantity, quality, pressure, initial voltage, or
Philippines or any instrumentality thereof upon other condition pertaining to the supply of the
payment of the cost price of its useful eqpt., product or service rendered by any public
less reasonable depn.; and likewise, that the service, and to prescribe reasonable regulations
certificate shall be valid only for a definite for the examination and test of such product or
period of time; and that the violation of any of service and for the measurement thereof.
these conditions shall produce the immediate
cancellation of the certificate without the (f) To establish reasonable rules,
necessity of any express action on the part of regulations, instructions, specifications, and
the Commission. standards, to secure the accuracy of all meters
In estimating the depn., the effect of the and appliances for measurements.
use of the eqpt., its actual condition, the age of
the model, or other circumstances affecting its (g) To compel any public service to
value in the market shall be taken into furnish safe, adequate, and proper service as
consideration. regards the manner of furnishing the same as
The foregoing is likewise applicable to well as the maintenance of the necessary
any extension or amendment of certificates material and eqpt.
actually in force and to those which may
hereafter be issued, to permit to modify (h) To require any public service to
itineraries and time schedules of public establish, construct, maintain and operate any
services, and to authorizations to renew and reasonable extension of its existing facilities,
increase eqpt. and properties. where, in the judgment of said commission,
such extension is reasonable and practicable,
Section 16. Proceedings of the and will furnish sufficient business to justify the
Commission, upon notice and hearing. The construction and maintenance of the same, and
Commission shall have power, upon proper when the financial condition of the said public
notice and hearing in accordance with the rules service reasonably warrants the original
and provisions of this Act, subject to the expenditure required in making and operating
limitations and exceptions mentioned and such extension.
saving provisions to the contrary.
(i) To direct any railroad, street, railway
(a) To issue certificates ... authorizing the or traction co. to establish and maintain at any
operation of public services within the junction or point of connection or intersection
Philippines, whenever the Commission finds with any other line of said road or track, or with
that the operation of the public service any other line of any other railroad, street,
proposed and the authorization to do business railway or traction co., such just and reasonable
will promote the public interest in a proper and connection as shall be necessary to promote the
suitable manner. Provided, that certificates will convenience of shippers of property, or of
be granted only to citizens of the Philippines or passengers, and in like manner to direct any
of the US or to corps., co-partnerships, railroad, street railway or traction co. engaged
associations or joint stock companies in carrying merchandise, to construct, maintain
constituted and organized under the laws of the and operate, upon reasonable terms, a switch
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TRANSPORTATION AND MARITIME LAW

connection with any private sidetrack which Provided, that said fees shall be smaller than
may be constructed by any shipper to connect those charged for auto- buses, trucks, and
with the railroad, street railway or traction motor trucks of types not made regulation
company line where, in the judgment of the under this subsection.
commission, such connection is reasonable and
practicable, and can be put in with safety, and Section 17. Proceedings of commission
will furnish sufficient business to justify the without previous hearing:
construction and maintenance of the same. (a) To investigate, upon its own initiative,
or upon complaint in writing, any matter
(j) To authorize, in its discretion, any concerning any public service as regards
railroad, street railway of traction company to matters under its jurisdiction; to require any
lay its tracks across tracks of any other railroad, public service to furnish safe, adequate and
street railway or traction company, or across proper service as the public interest may
any public highway. require and warrant; to enforce compliance with
(k) To direct any railroad or street any standard xxx and to prohibit or prevent any
railway co. to install such safety devices or to public service from operating without first
adopt such other reasonable measures as may securing a certificate of public convenience or
in the judgment of the commission be necessary public necessity and convenience xxx and
for the protection of the public at passing grade require existing public services to pay the fees
crossings of (1) public highways and railroads, provided for in this act for the issuance of the
(2) public highways and street railways, or (3) proper certificate xxx under the penalty, in the
railroads and street railways. discretion of the commission, of the revocation
and cancellation of any acquired right.
(l) To fix and determine the proper and
adequate rates of depn. of the property of any (b) To require payment of actual
public service which will be observed in proper expenses incurred in any investigation if a
and adequate depn. account to be carried for violation shall be found; to assess costs not to
the protection of stockholders, or bondholders exceed 25% with reference to such investigation
or creditors, in accordance with such rules,
regulations, and forms of account as the (c) To appraise and value the property of
commission may prescribe. Said rates shall be any public service; in relation thereto, to have
sufficient to provide the amounts required over access to and use any books, documents or
and above the expenses of maintenance to keep records in the possession of any govt. dept.,
such property in a state of efficiency bureau, office, or political subdivision
corresponding to the progress of the industry.
Each public service shall conform its (d) To provide, on motion by or at the
depreciation accounts to the rates so request of any consumer, for the examination
determined and fixed, and shall set aside the and test of any appliance used for the
money so provided for out of its earnings and measuring of any product or service of a public
carry the same in a depreciation fund. The service, to enter any premises where said
income from such investments of money in such appliances may be, and other premises of the
fund shall likewise be carried in such fund. This public service, for the purpose of setting up and
fund shall not be expended otherwise than for using on said premises any apparatus necessary
depreciation, improvements, extensions, new therefor, and to fix fees to be paid by the
constructions or additions to the property of consumer who may apply for such examination,
such public service. and in case of defect, to refund the fees paid

(m) To amend, modify or revoke at any (e) To permit any street railway or
time any certificate under the provisions of this traction company to change its existing gauge
act, whenever the facts and circumstances on to standard steam railroad gauge
the strength of which said certificate was issued
have been misrepresented or materially (f) To grant any public service special
changed. permits to make extra or special trips within the
territory covered by its certificate and to make
(n) To suspend or revoke any certificate special excursions outside if the public interest
issued under the provisions of this act whenever or special circumstances so require; Provided
the holder thereof has violated or willfully and where the public service cannot render such
consumatedly refused to comply with any order, extra service on its own line or in its own
rule or regulation of the commission or any territory, a special permit for such extra service
provisions of this act: Provided, that the may be granted to any other public service
commission for good cause, may prior to the
hearing suspend for a period not exceeding 30 (g) To require any public service to keep
days any certificate or the exercise of any right its books, records, and accounts; to adopt a
or authority issued or granted under this act by uniform system of accounting as approved by
order of the commission, whenever such step the auditor general
shall in the judgment of the commission be
necessary to avoid serious and irreparable (h) To require any public service to
damage or inconvenience to the public or to furnish annual reports of finances and
private interests. operations, covering the 12 month period
ending December 31
(o) To fix, determine, and regulate, as the
convenience of the state may require, a special (i) To require every public service to file
type for auto buses, trucks and motor trucks, to with the commission a written, verified
be hereafter constructed, purchased, and statement made by the owner, president or
operated by operators after the approval of this secretary setting forth the officers, authority,
act; to fix and determine a special registration power and duties of every officer, as to disclose
fee for auto-buses, trucks and motor trucks so the source and origin of each administrative act
constructed, purchased, and operated: or rule
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TRANSPORTATION AND MARITIME LAW

(j) To require any public service to commission in accordance with section 16 of


comply with the laws of the Philippines and with this act.
any local resolution or ordinance or its charter
Section 20. Acts requiring the approval
(k) To investigate accidents directly or of the Commission - Subject to established
indirectly arising from or connected with the limitations and exceptions and saving
maintenance or operation of the public service provisions to the contrary, it shall be unlawful
for any public service or for the owner, lessee or
(l) To require every public service to file a operator thereof, without the approval and
complete schedule of every classification, authorization of the Commission previously had
individual or joint rate, toll, fare or charge, and -
in case of public carriers, a complete statement
of itineraries or routes (a) To adopt, establish, fix, impose,
maintain, collect or carry into effect any
o Section 18 - It shall be unlawful for any individual or joint rates, commutation, mileage
individual, co- partnership, association, or other special rate, toll, fare, charge,
corporation or joint-stock company, their classification or itinerary. The Commission shall
lessees, trustees or receivers xxx to engage in approve only those that are just and reasonable
any public service business without having first and not nay that are unjustly discriminatory or
secured from the commission a certificate, unduly preferential, only upon reasonable
except grantees of legislative franchises notice to the public services and other parties
expressly exempting such grantee from the concerned, giving them a reasonable
reqts of securing a certificate from the opportunity to be heard and the burden of the
commission, as well as those expressly proof to show that the proposed rates or
exempted from the jurisdiction of the regulations are just an reasonable shall be upon
commission the public service proposing the same.

Section 19. Unlawful acts - It shall be (b) To establish, construct, maintain or


unlawful for any public service : operate new units or extend existing facilities or
make any other addition to or general extension
(a) To provide or maintain any service of the service.
that is unsafe, improper or inadequate ,or
withhold or refuse any service which can (e) Hereafter to issue any stock or stock
reasonably be demanded and furnished, as certificates representing an increase of capital;
found and determined by the commission in a or issue any share of stock without par value; or
final order which shall be conclusive and shall issue any bonds or other evidence of
take effect in accordance with this act, upon indebtedness payable in more than one year
appeal or otherwise. from the issuance thereof, provided that it shall
be the duty of the Commission, after hearing, to
(b) To make or give, directly or indirectly, approve any such issue maturing in more than
by itself or through its agents, attorneys or one year from the date thereof, when satisfied
brokers, or any of them, discounts or rebates on that the same is to be made in accordance with
authorized rates, or grant credit for the law, and the purpose of such issue be approved
payment of freight charges, or any undue or by the Commission.
unreasonable preference or advantage to any
person or corporation or to any locality or to any (g) To sell, alienate, mortgage, encumber
particular person or corporation or locality or or lease its property, franchises, certificates,
any particular description of traffic or service, privileges or rights or any part thereof; or
or subject any particular person or corporation merge or consolidate its property, franchises,
or locality or any particular description of traffic privileges or rights, or any part thereof, with
to any prejudice or disadvantage in any respect those of any public service. The approval herein
whatsoever; to adopt, maintain, or enforce any required shall be given, after notice to the
regulation, practice or measurement which shall public and after hearing, if it be shown that
be found or determined by the commission to be there are just and reasonable grounds for
unjust, unreasonable, unduly preferential, or making the mortgage or encumbrance, for
unjustly discriminatory, in a final order which liabilities of more than one year maturity, or the
shall be conclusive and shall take effect in sale, alienation, lease , merger or consolidation
accordance with the provisions of this act, upon to be approved, and that the same are not
appeal or otherwise. detrimental to the public interest, and in case of
a sale, the date on which the same is to be
(c) To refuse or neglect, when requested consummated shall be fixed in the order of
by the director of posts or his authorized approval: Provided, however, that nothing
representative to carry public mail on the herein contained shall be construed to prevent
regular trips of any public land transportation the transaction from being negotiated or
service maintained or operated by any such completed before its approval or to prevent the
public service, upon such terms and conditions sale, alienation, or lease by any public service
and for a consideration in such amount as may of any of its property in the ordinary course of
be agreed upon between the Director of Posts its business.
and the public service carrier or fixed by the
commission in the absence of an agreement (h) To sell or register in its books the
between the Director of Posts and the carrier. transfer or sale of shares of its capital stock, if
In case the Director of Posts and the public the result of that sale in itself or in connection
service carrier are unable to agree on the with another previous sale, shall be to vest in
amount of the compensation to be paid for the the transferee more than 40% of the subscribed
carriage of the mail, the Director of Posts shall capital of said public service. Any transfer
forthwith request the commission to fix a just made in violation of this provision shall be void
and reasonable compensation for such carriage and of no effect and shall not be registered in
and the same shall be promptly fixed by the the books of the public service corporation.
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TRANSPORTATION AND MARITIME LAW

Nothing herein contained shall be construed to - prior operator is given opportunity to improve service
prevent the holding of shares lawfully acquired. - prior operator given opportunity to extend lines
- basis of rule : to prevent ruinous and wasteful
(i) To sell, alienate or in any manner competition in order that the interests of the public
transfer shares of its capital stock to any alien would be conserved and preserved; so long as the
if the result of that sale, alienation, or transfer operator complied with the terms and conditions of the
in itself or in connection with another previous license and the reasonable demands of the public, it is
sale shall be the reduction to less than 60% of the duty of the PSC to protect rather than to destroy
the capital stock belonging to Philippine its investment
citizens. Such sale, alienation or transfer shall
be void and of no effect and shall be sufficient Raymundo vs Luneta Motor 58 Phil 889
cause for ordering the cancellation of the
certificate. F: Nicanor de Guzman signing as Guzco Transit
purchased trucks from Luneta Motor and executed PNs
guaranteed by a chattel mortgage on several trucks.
(b) The Certificate of Public Failing to pay the PNs, a suit for collection was filed. A
Convenience (CPC), the Certificate of writ of attachment was issued and garnishment was
Public Convenience and Necessity served on the PSC attaching the right, title, and
(CPCN), and the Prior Operator Rule participation of Guzco Transit in the CPC covering the
bus transportation lines between Manila and Rizal. The
Difference between CPC and CPCN : A CPCN is issued CFI ordered the selling of these certificates in a public
by the PSC to a public service to which any political bidding in which Luneta Motor was the highest bidder.
subdivision has granted a franchise under Act 667 Nine days after the certificates were attached,
after the PSC has approved the same under Section these were sold to Raymundo (including certificate No.
16(b). A CPC is any authorization to operate a public 25951 which was not included in the sale to Luneta
service issued by the PSC. A CPC is an authorization Motor Co.). The approval of the sale was sought from
issued by the Commission for the operation of public the PSC. The PSC approved the sale in the public
services for which no franchise, either municipal or bidding and disapproved the sale to Raymundo except
legislative, is required by law (e.g. auto-trucks and with respect to Certificate No. 25951 which Raymundo
motor vehicles). A CPCN is an authorization issued by could apply for its approval.
the PSC for the operation of public services for which a
franchise is required by law (e.g. electric, telephone Issue : Which of the two sales should prevail? public
services). auction by virtue of an attachment vs voluntary sale
Held : Sale to Luneta Motor Co. in a public auction
Nature of certificate : It constitutes neither a franchise The Public Service Law authorizes certificates
nor a contract, confers no property rights and is a of public convenience to be secured by public service
mere license or privilege, and such privilege is operators from the PSC. A CPC grants a right in the
forfeited when the grantee fails to comply with his nature of a limited franchise. The Code of Civil
commitments behind which lies the paramount Procedure does not exclude franchises or certificates
interest of the public, for public necessity cannot be from the word "property." The test by which to
made to wait, nor sacrificed for private convenience. determine WON a property can be attached and sold
However, certificates represent property rights upon execution is whether the judgment debtor has
to the extent that if the rights which any public utility such a beneficial interest therein that he can sell or
is exercising pursuant to lawful orders of the PSC has otherwise dispose of it for value. The Public Service
been invaded by another public utility, in appropriate Law permits the PSC to approve the sale, alienation,
cases actions may be maintained by the complainant mortgaging, encumbering or leasing of property,
public utility. Owners of public utilities have the right franchises, privileges, or rights or any part thereof. If
to maintain appropriate actions against other public the holder of a certificate can voluntary sell it, there is
utilities not authorized to operate in competition with no reason why the same cannot be sold involuntarily
the complainant. pursuant to court process.
Certificates are considered as property as used CPCs have considerable material value. They
in Civil Procedure as they have material value and are are valuable assets. They are subject to being sold for
material assets. They are subject to attachment and consideration as much as any other property. They are
seizure by legal process, and may be acquired by even more valuable than ordinary properties, taking
purchase. into consideration that they are not granted to every
one who applies for them but only to those who
Determination of WON an issuance of a certificate is undertake to furnish satisfactory and convenient
for public convenience - (1) financial responsibility of service to the public. Though intangible, they are of
the applicant, (2) reliability of the applicant, (3) value and are considered properties which can be
priority of filing the application for a certificate, and seized through legal process.
(4) priority of operation

Prior operator rule - to carry out the purpose and Batangas Transportation Co. vs Orlanes 52 Phil 455
intent for which the PSC was created the law
contemplates that the first licensee will be protected F: Orlanes sought to have a CPC to operate a line
in his investment and will not be subjected to a of auto trucks with fixed times of departure between
ruinous competition. It is not therefore the policy of Taal and Bantilan, with the right to receive passengers
the law for the PSC to issue a CPC to a second and freight from intermediate points. The evidence is
operator to cover the same field and in competition conclusive that at the time of his application, Orlanes
with a first operator who is rendering sufficient, was an irregular operator between Bantilan and Taal,
adequate and satisfactory service, and who in all and that BTC was a regular operator between
things and respects is complying with the rules and Batangas and Rosario. Orlanes sought to have his
regulations of the PSC. Accordingly, a CPC or CPCN irregular operation changed into a regular operation,
ought not to be granted where there is no complaint and to set aside and nullify the prohibition against him
as to existing rates and the co. in the field is rendering in his CPC that he shall not have or receive any
adequate services. passengers or freight at any of the points served by
- regular operators are preferred over irregular the BTC which holds a prior license from the PSC. His
operators petition is based on the fact that to comply with the
PAGE 6
TRANSPORTATION AND MARITIME LAW

growing demands of the public, the BTC applied for a Carmelo and Oriol then applied to the PSC for
permit to increase the no. of trip hours at and between a CPC to operate a taxicab service within Manila.
the same places and for an order that all irregular Monserrat opposed. The PSC denied the application.
operators be prohibited from operating unless they
should observe an interval of 2 hours before or one Held : There is no valid, legal reason why Monserrat
hour after the regular hours of the BTC. The PSC should have the exclusive right of operating a taxicab
granted the petition of Orlanes. service. In the granting and refusal of a CPC, the
question is what is for the best interest of the public.
Issue : WON a CPC should be issued to a second Tested by that rule, it is hard to conceive how it would
operator in a field where, and in competition with, a be for the best interests of the public to have one
first operator who is already operating a sufficient, taxicab service only, and how the public would be
adequate and satisfactory service. injured by the granting of the certificate in question,
for it must be conceded that two companies in the
Held : NO. Decision of PSC is revoked. field would stimulate the business, and the public
An autobus line is a public utility, and as such, would much sooner and much easier become
is a common carrier and an impt. factor in the educated in the use of taxi.
business affairs of the community. Monserrat does not have a vested right in the
The PSC has the power to specify and define business of any person that might want the use of a
the terms and conditions upon which any public utility taxi, for the simple reason that the use of any taxi is
shall operate and to make reasonable rules and the sole discretion of the customer. This is unlike the
regulations for its operation, and to fix the BTC case which dealt with an autobus service with
compensation that it shall receive for its service to the fixed schedules and routes.
public, and for good cause may suspend or even
revoke a license granted. San Pablo vs Pantranco South Express, Inc. 153 SCRA
It is not the policy of the law for the PSC to 199
issue a CPC to a second operator to cover the same
field and in competition with a first operator who is F: Pantranco operates passenger buses from
rendering sufficient, adequate and satisfactory service, Metro Manila to Bicol and Eastern Samar. It wrote to
and who in all things and respects is complying with the Maritime Industry Authority (MARINA) requesting
the rules and regulations of the PSC. authority to lease/purchase MV Black Double to be
The power of the PSC to issue a CPC is founded used in operating a ferryboat service from Matnog,
on the condition precedent that after a full hearing and Sorsogon and Allen, Samar that will provide service to
investigation, it shall find as a fact that the proposed co. buses and freight trucks that have to cross the
operation is for the convenience of the public. Bernardo Strait. MARINA denied the petition on the
So long as the first operator keeps and ground that the Matnog- Allen run is adequately
performs his terms and conditions of its license and serviced by the Cardinal Shipping Corp. and Epitacio
complies with the reasonable demands of the public, it San Pablo and that market conditions cannot support
has more or less of a vested and preferential right the entry of additional tonnage.
over another who seeks to acquire a later license to Pantranco acquired the vessel. It then applied
operate over the same route. to BOT claiming that it can operate a ferry service in
To carry out the purpose and intent for which connection with its franchise for bus operation in the
the PSC was created, the law contemplates that the highway from Pasay City to Tacloban City for the
first license will be protected in his investment and will purpose of continuing the highway, which is
not be subjected to ruinous competition. interrupted by a small body of water, and that the
The primary purpose of the PSC is to secure proposed ferry operation is merely a necessary and
adequate, sustained service for the public at the least incidental service to its main service and obligation of
possible cost and to protect and conserve investments transferring passengers from Pasay City to Tacloban
which have already been made for that purpose. A City. Accdg. to it, there is no need to obtain a separate
CPCN for the operation of an auto truck line in CPC to operate a ferry service to cater exclusively to
occupied territory should not be granted where there its passenger buses and ferry trucks. Pantranco began
is no complaint as to existing rates and the co. in the operating its ferry service. The BOT held that the
field is rendering adequate service. It is the duty of ferryboat service is part of Pantranco's CPC and
the PSC to protect rather than to destroy the amended Pantranco's CPC to provide so. The two
investment of a public utility. other ferry boat services filed motions for
The policy of regulation upon which the reconsideration.
present public utility commission plan is based and
which tends to do away with competition among public Issue : WON the sea can be considered as a
utilities as they are natural monopolies, is at once the continuation of the highway. WON a land transpo co.
reason that the regulation of an existing system of can be authorized to operate a ferry service or
transportation, which is properly serving a given field, coastwise or interisland shipping service along its
or may be required to do so, is to be preferred to authorized route as an incident to its franchise without
competition among several independent systems. the need of filing a separate application for the same.
While requiring a proper service from a single system Held : The water transport service between Matnog
for a territory in consideration for protecting it as a and Allen is not a ferryboat service but a coastwise or
monopoly for all the service required and in conserving interisland shipping service. Before private
its resources, no economic waste results and service respondent may be issued a franchise or CPC for the
may be furnished at a minimum cost. operation of the said service as a common carrier, it
must comply with the usual reqts. of filing an
application, payment of the fees, publication, adducing
Carmelo vs Monserrat 55 Phil 644 evidence at a hearing and affording the oppositors the
opportunity to be heard.
F: Monserrat twice applied to Congress for an Considering the environmental circumstances
exclusive franchise to operate a taxicab service in of the case, the conveyance of passengers from
Manila. The Governor General twice vetoed the bill. Matnog to Allen is not a ferryboat service but a
Monserrat then applied to the PSC for a CPC. It was coastwise or interisland shipping service. Under no
granted. circumstances can the sea between Matnog and Allen
be considered a continuation of the highway. While a
ferryboat service has been considered as a
PAGE 7
TRANSPORTATION AND MARITIME LAW

continuation of the highway when crossing rivers or EO 125, Sec. 4. Mandate. The DOTC shall
even lakes, which are small body of waters separating be the primary policy, planning, programming,
the land, however, when as in this case the two coordinating, implementing, regulating, and
terminals are separated by an open sea, it cannot be administrative entity of the Executive Branch of
considered a continuation of the highway. Pantranco the govt. in the promotion, devt. and regulation
must secure a separate CPC for the operation of an of dependable and coordinated networks of
interisland or coastwise shipping service. Its CPC transportation and communication systems, as
cannot be merely amended to include this water well as in the fast, safe, efficient, and reliable
service under the guise that it is a mere private ferry postal, transportation and communication
service. services.
Pantranco does not deny that it charges its To accomplish such mandate, the Dept.
passengers separately from the charges for the bus shall have the ff. objectives:
trips and issues separate tickets whenever they board (a) promote the devt. of dependable and
the MV Black Double. It cannot pretend that it issued coordinated networks of transportation and
tickets as a private carrier and not as a common communication systems;
carrier. It in fact accepts walk in passengers during (b) guide govt. and private investments
the trips. It cannot claim that it is both a private in the devt. of the country's inter-modal
carrier and a common carrier at the same time. transportation and communication system in a
most practical, expeditious, and orderly fashion
In the case of Javellana vs PSC, the Court for maximum safety, service and cost
differentiated between ferry service and interisland or effectiveness;
coastwide service. Ferry means service either by (c) impose appropriate measures so that
barges or rafts, even by motor or steam vessels, technical, economic and other conditions for the
between the banks of a river or stream to continue the continuing economic viability of the
highway which is interrupted by a body of water, or in transportation and communication entities are
some cases, to connect two points on opposite shores not jeopardized and do not encourage
of an arm of the sea such as a bay or lake which does inefficiency and distortion of traffic patronage;
not involve too great a distance or too long a time to (d) develop an integrated plan for a
navigate. But where the line or service involves nationwide transmission system in accordance
crossing a body of water which is wide and dangerous with national and intl. telecommunications
with big waves, then such line or service belongs service reqts. including, among others, radio
properly to interisland or coastwide trade. and television broadcast relaying leased
3. Private nature: rights and channel services and data transmission;
obligations of parties inter se arising from (e) guide govt. and private investments
transactions relating to transportation in the establishment, operation and
maintenance of an intl. switching system for
(a) absent a transportation incoming and outgoing telecommunication
contract services;
(f) encourage the devt. of a domestic
(b) arising from a telecommunications industry in coordination
transportation contract with the concerned entities particularly, the
manufacture of communications/electronics
equipment and components to complement and
(i) contract of support, as much as possible, the expansion,
transportation, defined - one development, operation and maintenance of the
whereby a certain person or nationwide telecommunication network;
association of persons obligate (g) Provide for a safe, reliable and
themselves to transport efficient postal system for the country.
persons, things or news from
one place to another for a fixed
price EO 125-A, Sec. 5. To accomplish its
mandate, the Dept. shall have the ff. powers
(ii) contract of and functions:
transportation, elements (a) formulate and recommend national
policies and guidelines for the preparation and
Parties to the contract : implementation of integrated and
comprehensive transportation and
1. shipper - one who gives rise to the contract communications systems at the national,
of transportation by agreeing to deliver the things or regional and local levels; (b) establish and
news to be transported, or to present his own person administer comprehensive and integrated
or those of other or others in the case of programs for transportation and
transportation of passengers communications, xxx call on any agency, corp.,
2. carrier or conductor - one who binds himself or organization xxx to participate and assist in
to transport persons, things, or news as the case may the preparation and implementation of such
be or one employed in or engaged in the business of program;
carrying goods for others for hire (c) assess, review and provide direction
to xxx research and devt. programs of the govt
Persons or corporations who undertake to xxx;
transport or convey goods, property, or persons from (d) administer and enforce all laws xxx in
one place to another, gratuitously or for hire, and are the field of transportation and communication;
classified as private or special carriers and common or (e) coordinate with the DPWH in the
public carriers design, location, devt, rehabilitation,
improvement, etc. of all infrastructure projects
C. Regulation of the Transportation Industry and facilities of the Dept. xxx
(f) establish, operate and maintain a
* The Department of Transportation nationwide postal system xxx;
and Communications

PAGE 8
TRANSPORTATION AND MARITIME LAW

(g) issue certificates of public


convenience for the operation of public land and RA 776, as amended
rail transportation utilities and services;
(h) accredit foreign aircraft and Section 5. The Civil Aeronautics Board
manufactures xxx; shall be composed of the Secretary of
(i) establish and prescribe rules and Commerce and Industry (now DOTC) as
regulations for identification of routes, zones Chairman, the CAB Administrator, the
and/or areas of operation of particular operator Commanding Officer of the Phil. Air Force, and 2
of public land services; others to be appointed by the President xxx
(j) establish and prescribe rules xxx for
the establishment, operation and maintenance Section 10 (A) Except as otherwise
of such telecommunication facilities in areas not provided herein, the Board shall have the power
adequately served by the private sector xxx; to regulate the economic aspect of air
(k) establish and prescribe rules xxx transportation, and shall have the general
operation and maintenance of a nationwide supervision and regulation of, and jurisdiction
postal system xxx; and control over, air carriers, as well as their
(l) establish and prescribe rules xxx property, property rights, equipment, facilities,
issuance of CPCs for public land transportation and franchise, in so far as may be necessary for
utilities, such as motor vehicles, trimobiles, and the purpose of carrying out the provisions of
railways; this Act.
(m) establish and prescribe rules xxx
inspection and registration of air and land Section 10 (C) Powers and Duties of the
transportation facilities, such as motor vehicles, CAB
trimobiles, and aircrafts; 1. issue, deny, amend, revise, alter,
(n) establish and prescribe rules xxx modify, cancel, suspend, or revoke xxx any
issuance of licenses xxx; temporary operating permit or CPCN xxx
(o) establish and prescribe rules xxx 2. fix and determine reasonable
enforcement of laws governing transportation individual, joint or special rates, charges, or
xxx; fares which an air carrier may demand, collect
(p) determine, fix and/or prescribe or receive for any service in connection with air
charges and/or rates pertinent to the operation commerce xxx
of public air and land transportation utility 3. authorize charters whether domestic
facilities and services xxx; or intl. and special air services or flights xxx;
(q) establish and prescribe rules xxx 4. approve or disapprove increase of
accreditation of driving schools; capital, sale of equipment of an air carrier
(r) administer and operate the Civil engaged in air commerce, consolidation,
Aviation Training Center xxx; merger, purchase, lease, operating contract, or
(s) perform such other powers and acquisition and control between domestic air
functions as it may be prescribed by law, or as carriers xxx
may be necessary, incidental, or proper to its 5. inquire into the mgmt. of the business
mandate, or as may be assigned from time to of any air carrier xxx;
time by the President. 6. require annual, monthly, periodical
and special reports from any carrier xxx;
(a) Air 7. prescribe the forms of any and all
accounts, records, and memoranda of the
(i) Air Transportation movement of traffic, as well as of the receipt
Office and expenditures of money and the length of
time such accounts, records, and memoranda
EO 125, as amended by EO 125-A shall be preserved xxx;
Sec. 10. Assistant Secretaries and 8. require each officer and director of
Service Chiefs. any air carrier to transmit a report describing
xxx the shares of stock or other interest held by
h) Office of the Assistant such air carrier with any person engaged in any
Secretary for Air Transportation phase of aeronautics, and the holding of the
stock in, and control of, other persons engaged
in any phase of aeronautics.
Sec. 11. xxx The present Airport Offices
of the Bureau of Air Transportation are hereby Section 11. A CPCN is a permit issued by
abolished and their functions are transferred to the Board authorizing a person to engage in air
the Dept. Airport Offices. xxx commerce and/or air transportation, foreign
and/or domestic.
Any permit may be altered, amended,
Sec. 13. xxx modified, suspended, canceled and revoked by
d) The Civil Aeronautics Board is hereby the Board xxx whenever the Board finds such
transferred from the Dept. of Tourism to the action to be in the public interest.
Dept. as an attached agency xxx. The Secretary There shall be attached to the exercise of
of Transportation and Communications or his the privileges xxx such reasonable terms,
designated representative shall be the conditions, or limitations as, in the judgment of
Chairman of the Board xxx the Board, the public interest may require.
xxx

Sec. 25, RA 776. The Civil Aeronautics Section 12. Except as otherwise provided
Administration shall be under the administrative in the Constitution and existing treaty or
supervision and control of the Dept. of treaties, a permit authorizing a person to
Commerce and Industry (now the DOTC) xxx engage in domestic air commerce and/or air
transportation shall be issued only to citizens of
(ii) Civil Aeronautics the Philippines.
Board
PAGE 9
TRANSPORTATION AND MARITIME LAW

f. issue subpoena and subpoena duces


(b) Land tecum and to summon witnesses to appear in
any proceedings of the Board, to administer
(i) Land Transportation oaths and affirmations;
Office g. conduct investigations and hearings of
EO 125-A complaints for violation of the public service
laws on land transportation and of the Board's
Section 9. Assistant Secretaries and rules and regulations xxx;
Service Chiefs h. to review motu proprio the decisions,
xxx actions of the Regional Franchising and
e) Office of the Assistant Secretary for Regulatory Office herein created;
Land Transportation i. promulgate rules and regulations
governing proceedings before the Board and the
Section 11. xxx The present Regional Regional Franchising and Regulatory Office xxx;
Offices of the Land Transportation Commission j. fix, impose, and collect, and
are hereby abolished and their functions are periodically review and adjust reasonable fees
transferred to the respective Department and other related charges for services
Regional offices for Land Transportation. xxx rendered;
k. formulate, promulgate, administer,
Section 13 (a) The Land Transportation implement and enforce rules and regulations on
Commission is hereby abolished and its staff land transportation public utilities, standards of
functions are transferred to the service offices measurements and/or design, and rules and
of the Dept. Proper and line functions are regulations requiring operators of any public
transferred to the Dept. Regional Offices for land transportation service to equip, install and
Land Transportation as provided in Section 11 provide in their utilities and in their stations
herein. xxx The quasi-judicial powers and such devices, eqpt. facilities and operating
functions of the Commission are transferred to procedures and techniques as may promote
the Dept. The corresponding position structure safety, protection, comfort and convenience to
and staffing pattern shall be approved and persons and property in their charges as well as
prescribed by the Secretary xxx. the safety of persons and property within their
areas of operations;
Administrative Code of 1987, Title XV l. coordinate and cooperate with other
govt. agencies and entities xxx;
Sec. 9. The Department shall have the m. perform such other functions and
following line offices : duties as may be provided by law, or as may be
(1) The Office of the Assistant Secretary necessary, or proper or incidental to the
for Land Transportation. purposes and objectives of this Executive Order.
xxx
Sec.6. The Board xxx shall sit and render
its decision en banc; xxx concurrence and
(ii) Land Transportation signature of at least 2 members xxx
Franchising and Regulatory Board The decision shall be appealable to the
Secretary within 30 days from receipt of the
EO 202 decision; Provided, that the Secretary may motu
proprio review any decision or action of the
Sec.1. There is hereby created in the Board before the same becomes final.
DOTC, the Land Transportation Franchising and
Regulatory Board. Sec.7. There shall be a Regional
Franchising and Regulatory Office in each of the
Sec.2. The Board shall be composed of a administrative regions of the country which
Chairman and 2 members with the same rank, shall be headed by a Board Regional Manager
salary and privileges of an Assistant Secretary, having the rank, salary and privileges of a Dept.
xxx Assistant Regional Director. The Regional
Franchising and Regulatory Offices shall hear
Sec.4. The Secretary of Transportation and decide uncontested applications/petitions
and Communications, through his duly for routes, within their respective
designated Undersecretary, shall exercise administrative regions: Provided, that
administrative supervision and control over the applications/petitions for routes extending their
LTFRB. respective territorial jurisdictions shall be heard
and decided by the Board.
Sec.5. Powers and functions:
a. prescribe and regulate routes of
service, xxx zones or areas of operation of Administrative Code, Title XV
public land transportation services provided by
motorized vehicles xxx; Sec. 15. The quasi-judicial powers and
b. issue, amend, revise, suspend or functions with respect to land transportation
cancel CPCs or permits authorizing the shall be exercised through the Land
operation of public land transportation services Transportation and Regulatory Board.
provided by motorized vehicles xxx;
c. determine, prescribe, approve and Sec. 16. The Board shall be composed of
periodically review and adjust reasonable fares, a Chairman and 2 members with the rank, salary
rates and other related charges, relative to the and privileges of an Assistant Secretary, all of
operation of public land transportation services whom shall be appointed by the President upon
provided by motorized vehicles; the recommendation of the Secretary of
d. issue preliminary or permanent Transportation and Communications xxx
injunction xxx;
e. punish for contempt of the Board, both Sec. 17. The Board shall have an
direct and indirect xxx; Executive Director who shall also be appointed
PAGE 10
TRANSPORTATION AND MARITIME LAW

by the President xxx. He shall have the rank, The Maritime Industry Authority is
salary and privileges of a Dept. Service Chief. hereby retained and shall have the ff. functions:
He shall assist the Board in the performance of a. develop and formulate plans, policies,
its powers and functions. projects xxx geared toward the promotion and
The Board shall be supported by the devt. of the maritime industry, the growth and
Technical Evaluation Division, Legal Division, effective regulation of shipping enterprises, and
Management Information Division, for the national security objectives of the
Administrative Division and Finance Division. country;
b. establish, prescribe and regulate
Sec. 18. The Secretary of Transportation routes, zones and/or areas of operation of
and Communications shall exercise particular operators of public water services;
administrative supervision and control over the c. issue CPCs for the operation of
Board. domestic and overseas water carriers;
d. register vessels as well as issue
certificates, licenses or document necessary or
Sec. 19. Powers and functions of the incident thereto;
Board: e. undertake the safety regulatory
1. prescribe and regulate routes xxx; functions pertaining to vessel construction and
2. issue, amend, revise, suspend, or operation including the determination or
cancel CPCs or permits, xxx; manning levels and issuance of certificates of
3. determine, prescribe, approve and competency to seamen;
periodically review and adjust reasonable fares f. enforce laws, prescribe and enforce
xxx; rules and regulations, including penalties for
4. issue injunctions xxx; violations thereof, governing water
5. punish for contempt of the Board xxx; transportation and the Phil. merchant marine
6. issue subpoena and subpoena duces xxx;
tecum and to summon witnesses xxx; g. undertake the issuance of licenses to
7. conduct investigations and hearings of qualified seamen and harbor, bay and river
complaints for violation of the public service pilots;
laws on land transportation xxx; h. determine, fix, prescribe charges/rates
8. review motu proprio the decisions, pertinent to the operation of public water
actions of the Regional Franchising and transport utilities xxx;
Regulatory Offices xxx; i. accredit marine surveyors and
9. promulgate rules and regulations maritime enterprises engaged in shipbuilding,
governing proceedings before the Board and the ship repair xxx;
Regional Franchising and Regulatory Office xxx; j. issue and register the continuous
10. fix, impose and collect, and discharge book of Filipino seamen;
periodically review and adjust reasonable fees, k. establish and prescribe rules and
and other related charges for services regulations, standards and procedures for the
rendered; efficient and effective discharge of the above
11. formulate, promulgate, administer, functions;
implement and enforce rules and regulations on l. perform such other functions as may
land transportation xxx; now or hereafter be provided by law.
12. coordinate and cooperate with other
govt. agencies and entities concerned with any II. Common Carriers
aspect involving public land transportation
services xxx; A. In General
13. perform such other functions and
duties as may be provided by law, or as may be 1. Definitions; essential elements
necessary, or proper or incidental to the
purposes and objectives of the Dept.
Art. 1732. Common carriers are persons,
Sec. 20. The Board shall xxx sit and corporations, firms or associations engaged in
decide en banc; concurrence and signature of at the business of carrying or transporting
least 2 members; decision shall be appealable passengers or goods or both, by land, water or
to the Secretary within 30 days from receipt of air, for compensation, offering their services to
the decision; the Secretary may motu proprio the public.
review any decision or action of the Board
before it becomes final.
Aguedo F. Agbayani, COMMERCIAL LAWS OF THE
Sec. 21. Regional Franchising and PHILIPPINES, vol. 4, 1989 ed. (hereinafter 4 Agbayani)
Regulatory Offices - hear and decide
uncontested applications/ petitions for routes
xxx; Transportation defined.-- a contract of
transportation is one whereby a certain person or
Sec. 22. decisions of the Regional association of persons obligate themselves to
Franchising and Regulatory Offices shall be transport persons, things, or news from one place to
appealable to the Board within 30 days from another for a fixed price
receipt of the decision.
Classification :
1. As to object: (1) things; (2) persons; (3) news
(c) Water
2. As to place of travel: (1) land; (2) water; (3) air
(i) Maritime Industry
Authority
Parties to contract of transportation:
EO 125, Sec. 14 as amended by EO 125-A, Sec. 3

PAGE 11
TRANSPORTATION AND MARITIME LAW

(1) shipper or consignor.-- person to be


transported; one who gives rise to the contract of and is therefore not subject
transportation by agreeing to deliver the things or
news to be transported, or to present his own person to regulation as a common carrier
or those of other or others in the case of
transportation of passengers
(2) carrier or conductor.-- one who binds Test for a common carrier:
himself to transport persons, things, or news as the
case may be; one employed in or engaged in the (1) He must be engaged in the business of
business of carrying goods for other for hire carrying goods for others as a public employment, and
(3) consignee.-- the party to whom the carrier must hold himself out as ready to engage in the
is to deliver the things being transported; one to transportation of goods for persons generally as a
whom the carrier may lawfully make delivery in business, and not a casual occupation.
accordance with its contract of carriage (but the (2) He must undertake to carry goods of the
shipper and the consignee may be one person) kind to which his business is confined.
(3) He must undertake to carry by the methods
Freight defined.-- The terms has been defined as: by which his business is conducted, and over his
(1) the price or compensation paid for the established roads.
transportation of goods by a carrier, at sea, from port (4) The transportation must be for hire.
to port. But the term is also used to denote (2) the The true test is whether the given undertaking
hire paid for the carriage of goods on land from place is a part of the business engaged in by the carrier
to place, or on inland streams or lakes. The name is which he has held out to the general public as his
also applied to (3) the goods or merchandise occupation rather than the quantity or extent of the
transported at sea, on land, or inland streams or lakes. business actually transacted, or the no. and character
Thus the term is used in 2 senses: to designate the of the conveyances used in the employment (the test
price for the carriage, also called freightage, or to is therefore the character of the business actually
designate the goods carried. carried on by the carrier.)

Contracts through transportation agents.-- A Case : an airplane owner is a common carrier where
contract of transportation is not changed, altered or he undertakes for hire to carry all persons who apply
affected by the mere fact that the obligor avails of for passage indiscriminately as long as there is room
other parties to effect the transportation agreed upon, and no legal excuse for refusing; airlines engaged in
as in the case of transportation agents. the passenger service on regular schedules on definite
routes, who solicit patronage of the traveling public,
Carriers defined.-- Persons or corporations who advertise schedules for routes, times of leaving and
undertake to transport or convey goods, property or rates of fare, and make the usual stipulation as to
persons, from one place to another, gratuitously or for baggage are common carriers
hire, and are classified as private or special carriers,
and common or public carriers
Characteristics of common carriers:
Private carriers defined.-- Those who transport or
undertake to transport in a particular instance for hire (1) The common carrier undertakes to carry for
or reward all people indifferently; he holds himself out as ready
to engage in the transportation of goods for hire as a
Common carriers vs Private carriers: public employment and not as a casual occupation,
and he undertakes to carry for all persons indifferently,
(1) the common carrier holds within the limits of his capacity and the sphere of the
(1) the private carrier agrees business required of him, so that he is bound to serve
himself out in common, that is, all who apply and is liable for refusal, without sufficient
in some special case with some reason, to do so
to all persons who choose to em- (2) The common carrier cannot lawfully decline
private individual to carry to accept a particular class of goods for carriage to the
ploy him, as ready to carry for prejudice of the traffic in those goods
for hire Exception : for some sufficient reason, where
hire; no one can be a common the discrimination in such goods is reasonable and
carrier unless he has held himself necessary (substantial grounds)
out to the public as a carrier in (3) No monopoly is favored - the Commission
such a manner as to render him has the power to say what is a reasonable
liable to an action if he should compensation to the utility and to make reasonable
refuse to carry for anyone who rules and regulations for the convenience of the
wished to employ him traveling public and to enforce them
(4) Public convenience - for the best interests
(2) a common carrier is bound to of the public
(2) a private carrier is not
carry all who offer such goods as Meaning of Public use.-- It is not confined to
bound to carry for any reason, privileged individuals, but is open to the indefinite
it is accustomed to carry and public; there must be a right which the law compels
unless it enter into a special the owner to give to the general public. Public use is
tender reasonable compensation not synonymous with public interest. The true criterion
agreement to do so is whether the public may enjoy it by right or only by
for carrying them permission

(3) a common carrier is a public service The law prohibits unreasonable discrimination
(3) a private carrier does not by common carriers.-- The law requires common
and is therefore subject to regulation carriers to carry for all persons, either passengers or
hold itself out as engaged in property, for exactly the same charge for a like or
contemporaneous service in the transportation of like
the business for the public, kind of traffic under substantially similar
PAGE 12
TRANSPORTATION AND MARITIME LAW

circumstances or conditions. The law prohibits owner to give to the general public. It is not enough
common carriers (CC) from subjecting any person, etc. that the general prosperity of the public is promoted.
or locality, or any kind of traffic, to any undue or Public use is not synonymous with public interest. The
unreasonable prejudice or discrimination whatsoever. true criterion by which to judge the character of the
Exception: When the actual cost of handling use is whether the public may enjoy it by right or only
and transporting is different, then different rates may by permission.
be charged

Cases : (1) merchandise of like quantity may not be Home Insurance Co. vs American Steamship Agencies,
considered alike - the quantity, kind and quality may 23 SCRA 24
be exactly the same, and yet not be alike, so far as the
cost of transportation is concerned F: A Peruvian firm shipped fishmeal through the
(2) shipments may be alike although SS Crowborough consigned to the SMB and insured by
composed of different classes of merchandise - the Home Insurance Co. The cargo arrived with
difference in the charge for handling and transporting shortages. SMB demanded and Home Insurance Co.
may only be made when the difference is based upon paid P14,000 in settlement of SMB's claim. Home
actual cost Insurance filed for recovery from Luzon Stevedoring
and American Steamship Agencies. Luzon Stevedoring
claimed that it merely delivered what it received from
Determination of justifiable refusal: the carrier in the same condition it received it.
American Steamship contended that it was not liable
This involves a consideration of the following-- because of a stipulation in the charter party that the
charterer and not the shipowner was to be liable for
(1) suitability of the vessels of the company for any loss or damage to the cargo. The CFI absolved
the transportation of such products; Luzon Stevedoring but ordered American Steamship to
(2) reasonable possibility of danger or disaster, reimburse the P14,000 to Home Insurance, declaring
resulting from their transportation in the form and that Art. 587 of the Code of Commerce makes the ship
under the conditions in which they are offered for agent civilly liable for damages in favor of third
carriage; persons due to the conduct of carrier's captain and
(3) the general nature of the business done by that the stipulation in the charter party exempting
the carrier; owner from liability is against public policy under Art.
(4) all the attendant circumstances which 1744 of NCC.
might affect the question of the reasonable necessity
for the refusal by the carrier to undertake the Issue : Is the stipulation valid? YES.
transportation of this class of merchandise
Held : The provisions of our Civil Code on common
Case: The mere fact that the carriage of dynamites carriers were taken from Anglo-American law. Under
may lead to destructive explosions is not sufficient to American jurisprudence, a common carrier
justify refusal if it can be proven that in the condition undertaking to carry a special cargo or chartered to a
in which it is offered for carriage there is no real special person only, becomes a private carrier. As a
danger to the carrier nor reasonable ground to fear private carrier, a stipulation exempting the owner
that the vessel and those on board will be exposed to from liability for the negligence of its agents is not
unnecessary or unreasonable risks against public policy and is deemed valid.
The Civil Code provisions on common carriers
should not be applied where the carrier is not acting
US vs Tan Piaco, 40 Phil 853 as such but as a private carrier. The stipulation in the
charter party absolving the owner from liability for loss
F: Tan Piaco rented two automobile trucks and due to the negligence of the agent would be void only
was using them upon the highways of Leyte for the if the strict public policy governing CC is applied. Such
purpose of carrying some passengers and freight. He policy has no force where the public at large is not
carried passengers and freight under a special involved, as in the case of a ship totally chartered (as
contract in each case and had not held himself out to in this case) for the use of a single party. Based on the
carry all passengers and freight for all persons who stipulation, recovery cannot be had, for loss or
might offer passengers and freight. He was convicted damage to the cargo against shipowners, unless the
for violation of the Public Utility Law for operating a same is due to personal acts or negligence of said
public utility without permission from the Public Utility owner or its managers, as distinguished from agents
Commission. or employees. No personal act or negligence has been
proved.
Issue: WON defendant operated a public utility. NO. In a charter of the entire vessel, the bill of
lading issued by the master to the charterer, as
Held: There is no public use. The trucks were used shipper, is in fact and legal contemplation merely a
under special agreements to carry particular persons receipt and a document of title and not a contract, for
and property. the contract is the charter party.
Under the Public Service Law, two things are
necessary : (1) the individual, co-partnership, etc. De Guzman vs CA, 168 SCRA 612
must be a public utility; and (2) the business in which
such individual, co-partnership, etc. is engaged must F: Cendana was a junk dealer and was engaged
be for public use. "Public use" means the same as in buying used bottles and scrap materials in
"use by the public." The essential feature of public use Pangasinan and brought these to Manila for resale. He
is that it is not confined to privileged individuals, but used two 6-wheeler trucks. On the return trip to
is open to the indefinite public. In determining whether Pangasinan, he would load his vehicles with cargo
a use is public, we must look not only to the character which various merchants wanted delivered to
of the business to be done, but also to the proposed Pangasinan. For that service, he charged freight lower
mode of doing it. If the use is merely optional with the than regular rates. General Milk Co. contracted with
owners, or the public benefit is merely incidental, it is him for the hauling of 750 cartons of mild. On the way
not a public use, authorizing the exercise of the to Pangasinan, one of the trucks was hijacked by
jurisdiction of the public utility commission. There armed men who took with them the truck and its cargo
must be, in general, a right which the law compels the and kidnapped the driver and his helper. Only 150
PAGE 13
TRANSPORTATION AND MARITIME LAW

cartons of milk were delivered. The Milk Co. sued to hired a marine and cargo surveyor to determine if
claim the value of the lost merchandise based on an there was any shortage. A shortage and
alleged contract of carriage. Cendana denied that he contamination of the fertilizer was discovered. PPI
was a common carrier and contended that he could sent a claim letter to SSA, the resident agent of KKKK
not be liable for the loss since it was due to force for the amount of the loss. An action for damages was
majeure. The TC ruled that he was a common carrier. filed. SSA contended that the provisions on CC do not
The CA reversed. apply to them because they have become private
carriers by reason of the charter-party. The TC awarded
Issue : WON Cendana is a common carrier. YES. damages. The CA reversed.

Held : Cendana is properly characterized as a common Issue : Does a charter party between a shipowner and
carrier even though he merely backhauled goods for a charterer transform a CC into a private one as to
other merchants, and even if it was done on a periodic negate the civil law presumption of negligence in case
basis rather than on a regular basis, and even if his of loss or damage to its cargo? NO.
principal occupation was not the carriage of goods.
Art. 1732 makes no distinction between one Held : A charter-party is a contract by which an entire
whose principal business activity is the carrying of ship, or some principal part thereof, is let by the owner
persons or goods or both, and one who does such to another person for a specified time or use. There
carrying only as an ancillary activity. It also avoids are 2 kinds: (1) contract of affreightment which
making a distinction between a person or enterprise involves the use of shipping space or vessels leased by
offering transportation services on a regular or the owner in part or as a whole, to carry goods for
scheduled basis and one offering service on an others; and (2) charter by demise or bareboat charter
occasional, episodic or unscheduled basis. Neither where the whole vessel is let to the charterer with a
does it make a distinction between a carrier offering transfer to him of its entire command and possession
its services to the general public and one who offers and consequent control over its navigation, including
services or solicits business only from a narrow the master and the crew, who are his servants.
segment of the population. It is not disputed that the carrier operates as a
The fact that Cendana does not hold a CPC is CC in the ordinary course of business. When PPI
no excuse to exempt him from incurring liabilities as a chartered the vessel, the ship captain, its officers and
CC. Otherwise, it would be to reward persons who fail crew were under the employ of the shipowner and
to comply with applicable statutory reqts. and would therefore continued to be under its direct supervision
be offensive to public policy. The liability arises the and control. Thus it continued to be a public carrier.
moment a person or firm acts as a common carrier, It is therefore imperative that a public carrier
without regard to whether or not such carrier has also shall remain as such, notwithstanding the charter of
complied with the requirements of the applicable the whole or portion of a vessel, provided the charter
regulatory statute and implementing regulations. is limited to the ship only, as in the case of a time-
charter or a voyage-charter. It is only when the
Issue : WON Cendana may be held liable for the loss of charter includes both the vessel and the crew, as in a
the milk. NO. bareboat or demise that a CC becomes private, insofar
as such particular voyage is concerned.
Held: Common carriers by the very nature of their
business and for reasons of public policy are held to a Issue : WON the carrier is liable for damages. NO.
very high degree of care and diligence (extra-ordinary
diligence) in the carriage of goods as well as Held : The presumption of negligence on the part of
passengers. Article 1734 establishes the general rule respondent carrier has been overcome by the showing
that CC are responsible for the loss, destruction, or of extraordinary zeal and assiduity exercised by the
deterioration of the goods which they carry unless the carrier in the care of the cargo. On the other hand, no
same is due to the causes enumerated therein. Such proof was adduced by the petitioner showing that the
enumeration is a closed list. Causes falling outside carrier was remiss in the exercise of due diligence in
the list, even if they are force majeure, fall within the order to minimize the loss or damage to the goods it
scope of Art. 1735 which provides that CC are carried.
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence required under Art. 1733. Coastwise Lighterage Corp. vs. CA, GR No. 114167,
However, Art. 1745 provides that a CC cannot July 12, 1995
be allowed to divest or diminish his responsibility even
for acts of strangers like thieves or robbers, except F: Pag-asa Sales, Inc. entered into a contract to
where such thieves or robbers acted with grave or transport molasses from Negros to Mla. w/ Coastwise,
irresistible threat, violence or force. The limits of using the latter's dumb barges. The barges were
extraordinary diligence are reached where there is towed in tandem by the tugboat MT Marcia, w/c is
grave or irresistible threat, violence or force. In this likewise owned by Coastwise.
case, the loss was quite beyond the control of the CC. Upon reaching Mla. Bay, while approaching
Even CC are not made absolute insurers against all Pier 18, one of the barges, "Coastwise 9," struck an
risks of travel and of transport of goods, and are not unknown sunken object. The forward buoyancy
liable for acts or events which cannot be foreseen or compartment was damaged, and water gushed in
are inevitable, provided that they shall have complied through a hole 2 inches wide and 22 inches long. As a
with the rigorous standard of extraordinary diligence. consequence, the molasses at the cargo tanks were
contaminated and rendered unfit for the use it was
intended. This prompted the consignee, Pag-asa to
Planters Products vs CA, G.R. 101503 (Sept. 15, 1993) reject the shipment of molasses as a total loss.
Thereafter, Pag-asa filed a formal claim w/ the insurer
F: Planters purchased urea fertilizer from of its cargo, herein pvt. resp., Phil. Gen. Insurance Co.
Mitsubishi, New York. The fertilizer was shipped on MV (Philgen) and against the carrier, herein petitioner
Sun Plum, which is owned by KKKK, from Alaska to San Coastwise. Coastwise denied the claim and it was
Fernando, La Union. A time charter party was entered Philgen w/c paid the consignee the amount of
into between Mitsubishi as shipper/charterer and KKKK P700,000 representing the value of the damaged cargo
as shipowner. Upon arrival in the port, PPI unloaded of molasses.
the cargo. It took PPI 11 days to unload the cargo. PPI
PAGE 14
TRANSPORTATION AND MARITIME LAW

In turn, Phil-gen filed an action agsint or its duty to observe extraordinary diligence as
Coastwise bef. RTC-Mla. seeking to recover the prescribed in this Section.
P700,000 it paid to Pag-asa. RTC ruled in favor of
Philgen. CA affirmed the RTC decision. Hence, this 4 Agbayani:
petition.
Common carriers are subject to legislative
RULINGS: (1) Bareboat charter and contract of regulation.-- The business of a common carrier holds
affreightment, difference; Coastwise, by the contract such a peculiar relation to the public interest that
of affreightment, was not converted into a private there is superinduced upon it the right of public
carrier, but remained a common carrier.-- Under the regulation. The business of a common carrier is
demise or bareboat charter of the vessel, the charterer affected with public interest. When, therefore, one
will generally be regarded as the owner of the voyage devotes his property to a use in which the public has
or service stipulated. The charterer mans the vessel an interest, he, in effect, grants to the public an
w/ his own people and becomes the owner pro hac interest in that use, and must submit to be controlled
vice, subject to liability to others for damages caused by the public for the common good, to the extent of
by negligence. To create a demise, the owner of a the interest he had thus created.
vessel must completely and exclusively relinquish
possession, command and navigation thereof to the Limitation on power to regulate.-- Such
charterer; anything short of such a complete transfer regulations must not have the effect of depriving an
is a contract of affreightment (time or voyage charter owner of his property without due process of law, nor
party) or not a charter party at all. of confiscating, or appropriating private property
A contract of affreightment is one in w/c the without just compensation, nor of limiting or
owner of the vessel leases part or all of its space to prescribing irrevocably vested rights or privileges
haul goods for others. It is a contract for special lawfully acquired under a charter or franchise [just
service to be rendered by the owner of the vessel and compensation, due process of law]
under such contract the general owner retains the
possession, command and navigation of the ships, the When judiciary may interfere with legislative
charterer or freighter merely having use of the space regulation of common carriers.-- The judiciary
in the vessel in return for his payment of the charter ought not to interfere with legislative regulations
hire. xxx unless they are so plainly and palpably unreasonable
xxx as to make their enforcement equivalent to the taking
Although a charter party may transform a of property for public use without such compensation
common carrier into a private one, the same, however, as under all circumstances is just both to the owner
is not true in a contract of affreightment on account of and to the public.
the aforementioned distinctions bet. the two.
Petitioner admits that the contract it entered
into w/ the consignee was one of afreightment. We Pantranco vs PSC, 70 Phil 221
agree. Pag-asa only leased 3 of petitioner's vessels, in
order to carry cargo from one point to another, but the F: Pantranco has been engaged for the past 20
possession, command and navigation of the vessels years in the business of transporting passengers by
remained w/ petitioner. means of motor vehicles in accordance with the CPCN
issued to it. It filed with the PSC an application for
(2) Petitioner is liable for breach of contract of authorization to operate 10 addtl. new trucks. The
carriage, having failed to overcome the presumption application was granted with two conditions : (1) that
of negligence w/ the loss and destruction of goods it the CPCN would be valid for only 25 years and (2) that
transported, by proof of its exercise of extraordinary the service can be acquired by the govt. upon
diligence.-- Mere proof of delivery of goods to a carrier payment of cost price of its useful eqpt. less
and the subsequent arrival of the same goods at the reasonable depreciation. Pantranco challenged the
place of destination in bad order makes for a prima constitutionality of Art. 15, CA 146 as an undue
facie case against the carrier. Jesus Constantino, the delegation of legislative powers.
patron of the vessel "Coastwise 9" admitted that he
was not licensed. This violates the rule in the Code of Issue : WON the PSC may prescribe the 2 conditions as
Commerce (Art. 609) w/c requires that patrons must a prerequisite to the issuance of the CPCN.
"have the legal capacity to contract in accordance w/
this code, and prove the skill, capacity and Held : Yes. CA 146 provides a sufficient standard,
qualifications necessary to command and direct the which is public interest, by which the PSC is guided in
vessel xxx and must be qualified xxx for the discharge imposing such conditions.
of the duties of the position. xxx" Coastwise cannot The business of a common carrier holds such a
safely claim to have extraordinary diligence, by peculiar relation to the public interest that there is
placing a person whose navigational skills are superinduced upon it the right of public regulation.
questionable, at the helm of the vessel w/c eventually When private property is affected with a public
met the fateful accident. xxx Had the patron been interest, it ceases to be juris privati only. When,
licensed, he could be presumed to have both the skill therefore, one devotes his property to a use in which
and the knowledge that would have prevented the the public has an interest, he, in effect, grants to the
vessel's hitting the sunken derelict ship that lay on public an interest in that use, and must submit to be
their way to Pier 8. RAM. controlled by the public for the common good, to the
extent of the interest he had thus created. He may
withdraw his grant by discontinuing the use, but so
2. Nature of business; power of State long as he maintains the use, he must submit to
to regulate control. Indeed this right is so far beyond question that
it is settled that the power of the state to exercise
Art. 1765. The [Public Service legislative control over public utilities may be
Commission] Board of Transportation may, on its exercised through the board of commissioners. This
own motion or on petition of any interested right of the state to regulate public utilities is founded
party, after due hearing, cancel the certificate upon the police power, and statutes for the control and
of public convenience granted to any common regulation of utilities are a legitimate exercise thereof,
carrier that repeatedly fails to comply with his for the protection of the public as well as the utilities
themselves. Such statutes are not unconstitutional,
PAGE 15
TRANSPORTATION AND MARITIME LAW

either as impairing the obligation of contracts, taking loss, destruction, or deterioration


property without due process, or denying the equal of goods on account of the
protection of the laws, especially inasmuch as the defective condition of the car,
question WON private property shall be devoted to a vehicle, ship, airplane or other
public use and the consequent burdens assumed is equipment used in the contract of
ordinarily for the owner to decide; and if he voluntarily carriage.
places his property in public service he cannot
complain that it becomes subject to the regulatory Art. 1755. A common
powers of the state. This is more so in the light of carrier is bound to carry the
authorities which hold that a CPC constitutes neither a passengers safely as far as human
franchise nor a contract, confers no property rights care and foresight can provide,
and is a mere license or privilege. using the utmost diligence of very
cautious persons, with a due
3. Nature and Basis of Liability regard for all circumstances.

Art. 1733. Common carriers, from the Art. 1756. In case of death
nature of their business and for reasons of of or injuries to passengers,
public policy, are bound to observe common carriers are presumed to
extraordinary diligence in the vigilance over the have been at fault or to have
goods and for the safety of the passengers acted negligently, unless they
transported by them, according to the prove that they observed
circumstances of each case. extraordinary diligence as
Such extraordinary diligence in the prescribed in articles 1733 and
vigilance over the goods is further expressed in 1755.
Articles 1734, 1735, and 1745, Nos. 5,6, and 7,
while the extraordinary diligence for the safety 4 Agbayani:
of the passengers is further set forth in Articles
1755 and 1756. Extraordinary diligence required of common
carriers.-- The law requires CC to exercise extra-
Art. 1734. Common carriers ordinary diligence which means that they must render
are responsible for the loss, service with the greatest skill and utmost foresight.
destruction, or deterioration of The extra-ordinary diligence required of carriers in the
the goods, unless the same is due handling of the goods of the shippers and consignees
to any of the following causes last from the time the cargoes are loaded in the
only: vessels until they are discharged and delivered to the
(1) Flood, storm, consignees.
earthquake, lightning, or other
natural disaster or calamity; Reasons for requiring extra-ordinary diligence.--
(2) Act of the public enemy The nature of the business of common carriers and the
in war, whether international or exigencies of public policy demand that they observe
civil; extra-ordinary diligence; the business of CC is
(3) Act or omission of the impressed with a special public duty and therefore
shipper or owner of the goods; subject to control and regulation by the state. The
(4) The character of the public must of necessity rely on the care and skill of
goods or defects in the packaging CC in the vigilance over the goods and safety of the
or in the containers; passengers
(5) Order or act of
competent public authority. Rigorous law on common carriers not applicable
to special employment as carrier.-- The laws
Art. 1735. In all cases other applicable to CC are rigorous and should not be
than those mentioned in Nos. 1, 2, extended to a person who has neither expressly
3, 4 and 5 of the preceding article, assumed that character, nor by his conduct and from
if the goods are lost, destroyed or the nature of his business justified the belief on the
deteriorated, common carriers are part of the public that he intended to assume it.
presumed to have been at fault or
to have acted negligently, unless Registered owner primarily and solidarily liable
they prove that they observed with driver, under the "kabit system."--
extraordinary diligence as Registered owner is primarily and solidarily liable for
required in Art. 1733. the damage caused by the vehicle registered in his
name, even if the said vehicle had already been sold,
Art. 1745. Any of the ff. or leased or transferred to another person who was, at
similar stipulations shall be the time of the accident, actually operating the
considered unreasonable, unjust vehicle. The operator of record continues to be the
and contrary to public policy: operator of the vehicle in contemplation of law, as
xxx regards the public and third persons, and as such is
(5) That the common responsible for the consequences incident to its
carrier shall not be responsible for operation; such owner/operator of record is held in
the acts or omissions of his or its contemplation of law as the employer of the driver.
employees;
(6) That the common Kabit system.-- One whereby a person who has
carrier's liability for acts been granted a certificate of public convenience allows
committed by thieves, or of other persons who own vehicles to operate them
robbers who do not act with grave under such license, for a fee or percentage of the
or irresistible threat, violence or earnings. This is contrary to public policy, and
force, is dispensed with or therefore, void and inexistent; "this is a pernicious
diminished; system that cannot be too severely condemned; it
(7) That the common constitutes an imposition upon the good faith of the
carrier is not responsible for the govt."
PAGE 16
TRANSPORTATION AND MARITIME LAW

Vicenta Medina, one of its passengers. In a criminal


Reason for holding registered owner liable.-- The case of homicide through reckless imprudence,
law does not relieve the registered owner directly of Avorque pleaded guilty. The right to file a separate
the responsibility that the law fixes and places upon action for damages was reserved. Cresencia was still
him as an incident or consequence of registration -- the registered operator of the jeepney in the records of
where a registered owner allowed to evade the Motor Vehicles Office and the PSC, while Rosario
responsibility by proving who the supposed transferee Avorque was the owner at the time of the accident.
or owner is, it would be easy for him by collusion with
others or otherwise, to escape said responsibility and Issue: WON Cresencia is liable for breach of the
transfer the same to an indefinite person or to one contract of carriage. YES.
who possesses no property with which to respond
financially for the damage or injury done; in case of an Ratio: The law requires the approval of the PSC, in
accident, the registered owner should not be allowed order that a franchise, or any privilege pertaining
to disprove his ownership to the prejudice of the thereto, may be sold or leased without infringing the
person injured or to be relieved from responsibility certificate issued to the grantee; and that if property
covered by the franchise is transferred or leased
without this requisite approval, the transfer is not
Cangco vs MRR, 38 Phil 768 binding against the public or the PSC; and in
contemplation of law, the grantee of record continues
F: Jose Cangco, an employee of MRR, was riding to be responsible under the franchise in relation to the
on its train. As it drew up to the station, the plaintiff PSC and to the public. Since a franchise is personal in
made his exit. As he alighted, his foot stepped on a nature, any transfer or lease thereof should be notified
sack of watermelons causing him to slip and his right to the PSC so that the latter may take proper
arm was crushed. This happened between 7 and 8 safeguards to protect the interest of the public.
p.m. and as the railroad station was lighted dimly by a Plaintiff's action is based on the breach of the
single light, objects on the platform were difficult to carrier's contractual obligation to carry his passengers
see. safely to their destination (culpa contractual). The
liability of the carrier is direct and immediate.
Issue : WON MRR is liable to pay damages for the acts
of its EEs. Isaac vs A.L. Ammen Trans. Co., 101 Phil 1046

Held : YES. F: Plaintiff boarded defendant's bus as a paying


It cannot be doubted that the EEs of the passenger from Albay. The bus collided with a pick-up
railroad co. were guilty of negligence in piling sacks on truck which was coming from the opposite direction
the platform; their presence constituted an effective trying to swerve from a pile of gravel. As a result, his
legal cause of the injuries sustained by Cangco. left arm was completely severed. Plaintiff chose to
It is impt. to note that the foundation of the hold defendant liable on its contractual obligation.
legal liability of the defendant is the contract of Plaintiff brought this action for damages which the
carriage, and that the obligation to respond for the lower court dismissed holding the driver of the pick-up
damage which plaintiff has suffered arises, if at all, negligent and not that of the bus.
from the breach of that contract by reason of the
failure of defendant to exercise due care in its Issue : WON defendant observed extra-ordinary
performance. Its liability is direct and immediate diligence or the utmost diligence of a very cautious
(culpa contractual), differing essentially, from that person in avoiding the collision. YES.
presumptive responsibility for the negligence of its
servants, which can be rebutted by proof of the Held : The facts of the case show that the bus and the
exercise of due care in the selection and supervision of pick-up were approaching each other head-on. The
EEs (culpa aquiliana). bus swerved to the right and went over a pile of stones
The liability of masters and employers for the and gravel. Despite the efforts of the bus driver, the
negligent acts or omissions of their servants or agents, pick up car still hit the rear left side of the bus. The
when such act or omissions cause damage which sense of caution one should observe cannot always be
amount to the breach of a contract, is not based upon expected from one who is placed suddenly in a
a mere presumption of the master's negligence in their predicament where he is not given enough time to
selection or control, and proof of exercise of the take the proper course of action under ordinary
utmost diligence and care in this regard does not circumstances. Furthermore, plaintiff is guilty of
relieve the master of his liability for the breach of his contributory negligence since he placed his left elbow
contract. When the facts averred show a contractual outside the window.
undertaking by defendant for the benefit of plaintiff,
and it is alleged that plaintiff has failed or refused to Ratio: A CC is bound to carry the passengers safely as
perform the contract, it is not necessary for plaintiff to far as human care and foresight can provide, using the
specify in his pleadings whether the breach of the utmost diligence of very cautious persons, with due
contract is due to wilful fault or to negligence on the regard for all circumstances. This extra-ordinary
part of the defendant, or of his servants or agents. diligence required of common carriers is calculated to
Proof of the contract and of its nonperformance is protect the passengers from the tragic mishaps that
sufficient prima facie to warrant recovery. frequently occur in connection with rapid modern
The contract of defendant to transport plaintiff transportation. This high standard of care is
carried with it, by implication, the duty to carry him in imperatively demanded by the preciousness of human
safety and to provide safe means of entering and life and by the consideration that every person must in
leaving its trains. That duty, being contractual, was every way be safeguarded against all injury.
direct and immediate, and its nonperformance could Principles as to liability of CC:
not be excused by proof that the fault was morally (1) the liability of a carrier is contractual and
imputable to defendant's servants. arises upon breach of its obligation; there is breach if
it fails to exert extra-ordinary diligence accdg. to all
the circumstances of each case
Medina vs Cresencia, 99 Phil 506 (2) a carrier is obliged to carry its passenger
with the utmost diligence of a very cautious person,
F: A passenger jeepney driven by Brigido Avorque having due regard for all the circumstances
smashed into a Meralco post resulting in the death of
PAGE 17
TRANSPORTATION AND MARITIME LAW

(3) a carrier is presumed to have been at fault Ratio: The principle of last clear chance would call for
or to have acted negligently in case of death of, or application in a suit between the owners and drivers of
injury to, passengers, it being it duty to prove that it two colliding vehicles. It does not arise where a
exercised extra-ordinary diligence passenger demands responsibility from the carrier to
(4) the carrier is not an insurer against all risks enforce its contractual obligations. For it would be
of travel. inequitable to exempt the negligent driver of the
jeepney and its owners on the ground that the other
driver was likewise guilty of negligence.
Fores vs Miranda, 105 Phil 266 On the presumption that the drivers who bump
the rear of another vehicle are guilty and the cause of
F: Respondent, a professor of Fine Arts, was a the accident, unless contradicted by other evidence,
passenger of a jeep registered in the name of Fores the SC held that the jeep made a sudden U-turn which
but actually operated by Carmen Sackerman. While was so abrupt that the other driver de los Reyes did
the jeep was descending at Sta. Mesa bridge at not anticipate the sudden U-turn.
excessive speed, the driver lost control of it causing it The proximate cause of the accident was the
to swerve and hit the bridge wall resulting to injuries negligence of Manalo and the spouses Mangune. In
to its passengers including respondent who suffered a culpa contractual, the carrier is presumed to have
fracture of the upper right humerus. In an action for been at fault or to have acted negligently, and this
damages, the CFI awarded actual damages. The CA disputable presumption may only be overcome by
reduced the actual damages and added moral evidence that he had observed extra-ordinary
damages and attorney's fees. diligence or that the death or injury of the passenger
was due to a fortuitous event.
Issue : WON the approval of the PSC is necessary for The driver cannot be held jointly liable with the
the sale of a public service vehicle even without owners of the jeep in case of breach of the contract of
conveying therewith the authority to operate the carriage. The contract of carriage is between the
same. YES. carrier and the passenger, and in the event of
contractual liability, the carrier is exclusively
Held : A transfer made without the requisite approval responsible therefore to the passenger, even if such
of the PSC is not effective and binding in so far as the breach be due to the negligence of the driver. To make
responsibility of the grantee under the franchise in the driver jointly liable would make the carrier's
relation to the public is concerned. The law was liability personal instead of merely vicarious and
designed primarily for the protection of the public consequently, the victim is entitled to recover only the
interest. share which corresponds to the driver.

Issue : WON moral damages may be awarded.


4. Classes of common carriers
Held : In case of breach of contract (including one of
transportation), proof of bad faith or fraud, i.e., wanton Art. 1732. Common carriers are persons,
or deliberately injurious conduct, is essential to justify corporations, firms or associations engaged in
an award of moral damages. The exception to this is the business of carrying or transporting
when a mishap results in the death of a passenger, in passengers or goods or both, by land, water, or
which a CC is liable to pay moral damages for the air, for compensation, offering their services to
mental anguish by reason of the death of the the public.
passenger. So where the injured passenger does not
die, moral damages are not recoverable unless it is Art. 1733. Common carriers, from the
proved that the carrier was guilty of malice or bad nature of their business and for reasons of
faith. public policy, are bound to observe
Under the law, the presumption is that extraordinary diligence in the vigilance over the
common carriers acted negligently but not maliciously. goods and for the safety of the passengers
The distinction between fraud, bad faith or malice in transported by them, according to the
the sense of deliberate or wanton wrong doing and circumstances of each case.
negligence (as mere carelessness) is too fundamental Such extraordinary diligence in the
in our law to be ignored. A carrier's bad faith is not to vigilance over the goods is further expressed in
be lightly inferred from a mere finding that the Articles 1734, 1735, and 1745, Nos. 5,6, and 7,
contract was breached through negligence of the while the extraordinary diligence for the safety
carrier's employees. of the passengers is further set forth in Articles
1755 and 1756.

Phil. Rabbit Bus Lines vs IAC, 189 SCRA 159 Art. 1755. A common carrier is bound to
carry the passengers safely as far as human
F: Several passengers boarded the jeepney care and foresight can provide, using the
owned by spouses Mangune and driven by Manalo at utmost diligence of very cautious persons, with
Dau, Pampanga bound for Carmen, Rosales, a due regard for all circumstances.
Pangasinan. Their contract with Manalo was P24 for
the trip. Upon reaching Tarlac, the right wheel of the
jeepney was detached, so it was running in an 5. Laws applicable
unbalanced position. Manalo stepped on the brake,
making a sudden U-turn and encroaching on the right Art. 1766. In all matters not regulated by
of way of the other vehicles. The Phil. Rabbit bus this Code, the rights and obligations of common
bumped from behind the jeepney. As a result of the carriers shall be governed by the Code of
collision, 3 persons died while the others sustained Commerce and by special laws.
injuries. Cases were filed against the spouses
Mangune, Manalo, Phil. Rabbit and De los Reyes 4 Agbayani:
(driver).
New Civil Code primarily governs common
Issue: Who should be held liable? the Mangunes and carriers.-- The Provisions of the Civil Code [1732-
Filriters Guaranty Assurance Corp. (Insurance co.) 1766] primarily govern common carriers and the
provisions of the Code of Commerce [Overland
PAGE 18
TRANSPORTATION AND MARITIME LAW

Transportation and Maritime Commerce] and special of the goods unless the same is due to any of the ff.
laws [Carriage of Goods by Sea Act; Salvage Act] have causes only (Art. 1734, NCC):
only subsidiary application to common carriers. "(1) Flood, storm, earthquake, lightning or
other natural disaster or calamity; xxx"

Art. 1753, NCC. The law of the country to The Carrier claims that the loss of the vessel
which the goods are to be transported shall by fire exempts it from liability under the phrase
govern the liability of the common carrier for "natural disaster or calamity." However, we are of the
their loss, destruction or deterioration. opinion that fire may not be considered a natural
disaster or calamity. This must be so as it arises
The provisions of the NCC primarily govern almost invariably from some act of man or by human
contracts of carriage of goods from foreign ports to means. It does not fall within the category of an act of
Philippine ports God unless caused by lightning or by other natural
disaster or calamity. It may even be caused by the
actual fault or privity of the carrier.
As the peril of fire is not comprehended within
the exceptions in Article 1734, then Article 1735
provides that in all cases other than those mentioned
Eastern Shipping Lines vs IAC 150 SCRA 463 in Art. 1734, the CC shall be presumed to have been at
fault or to have acted negligently, unless it proves that
F: These two cases, both for the recovery of value it has observed the extra-ordinary diligence required
of cargo insurance, arose from the same incident, the by law.
sinking of the M/S ASIATICA when it caught fire, In this case, the respective Insurers, as
resulting in the total loss of ship and cargo. subrogees of the cargo shippers, have proven that the
In the first case, the M/S ASIATICA, a vessel transported goods have been lost. Petitioner carrier
operated by petitioner Eastern Shipping Lines, loaded has also proven that the loss was caused by fire. The
at Kobe, Japan for transportation to Manila 5,000 burden then is upon Petitioner carrier to prove that it
pieces of colorized lance pipes in 28 packages valued has exercised the extra-ordinary diligence required by
at P256,039 consigned to Phil. Blooming Mills and 7 law.
cases of spare parts valued at P92,361.75 consigned Having failed to discharge the burden of
to Central Textile Mills. Both sets of goods were proving that it had exercised the extra-ordinary
insured against marine risk for their stated value with diligence required by law, Petitioner Carrier can not
respondent Devt. Insurance and Surety Corporation. escape liability for the loss of the cargo.
In the second case, the same vessel took on And even if fire were to be considered a
board 128 cartons of garment fabrics and accessories, natural disaster within the meaning of Art. 1734, it is
in 2 containers, consigned to Mariveles Apparel required under Art. 1739 of the same Code that the
Corporation, and 2 cases of surveying instruments natural disaster must have been the proximate and
consigned to Aman Enterprises and General only cause of the loss, and that the carrier has
Merchandise. The 128 cartons were insured by exercised due diligence to prevent or minimize the
respondent Nisshin Fire and Marine Insurance Co. and loss before, during or after the occurrence of the
Dowa Fire & Marine Insurance Co. disaster. This petitioner carrier has also failed to
En route for Manila, the ship caught fire and establish satisfactorily.
sank. The insurers paid the corresponding marine Nor may Petitioner Carrier seek refuge from
insurance values and were subrogated to the rights of liability under the COGSA. It is provided therein that:
the latter as the insured. They filed suits against the
petitioner Carrier and won (affirmed by the CA). "Sec.4 (2). Neither the carrier nor the ship
Petitioner carrier denies liability on the ff. grounds: shall be responsible for loss or damage arising or
(a) that the loss was due to an extraordinary resulting from: (b) Fire, unless caused by the actual
fortuitous even which is an exempting circumstance fault or privity of the carrier."
under Sec. 4(2)(b) of the Carriage of Goods by Sea Act
(COGSA); In this case, both the TC and the CA, in effect,
(b) that when fire is established, the burden of found, as a fact, that there was "actual fault" of the
proving negligence is shifted to the cargo shipper. carrier shown by lack of diligence in that when the
smoke was noticed, the fire was already big; that the
Issues: (1)Which law should govern : the Civil Code or fire must have started 24 hrs before the same was
the Carriage of Goods by Sea Act. noticed; and that after the cargoes were stored in the
(2)Who has the burden of proof to show hatches, no regular inspection was made as to their
negligence of the carrier. condition during the voyage.
The foregoing suffices to show that the
Ratio : (1) The law of the country to which the goods circumstances under which the fire originated and
are to be transported governs the liability of the spread are such as to show that Petitioner carrier or its
common carrier in case of their loss, destruction or servants were negligent in connection therewith.
deterioration. As the cargoes in question were Consequently, the complete defense afforded by the
transported from Japan to the Philippines, the liability COGSA when the loss results from fire is unavailing to
of Petitioner Carrier is governed primarily by the Civil petitioner carrier.
Code. However, in all matters not regulated by said
Code, the rights and obligations of common carriers
shall be governed by the Code of Commerce and B. Common Carriers
special laws. Thus, the COGSA, a special law, is
suppletory to the provisions of the Civil Code. 1. Liability and presumption of
negligence
(2) Under the Civil Code, common carriers,
from the nature of their business and for reasons of Art. 1733. Common carriers, from the
public policy, are bound to observe extra-ordinary nature of their business and for reasons of
diligence in the vigilance over goods, accdg. to all the public policy, are bound to observe
circumstances of each case. Common carriers are extraordinary diligence in the vigilance over the
responsible for the loss, destruction, or deterioration goods and for the safety of the passengers

PAGE 19
TRANSPORTATION AND MARITIME LAW

transported by them, according to the belongings. A CC can terminate an EE whose


circumstances of each case. continued service is inimical to its interests and the
Such extraordinary diligence in the safety of the passengers.
vigilance over the goods is further expressed in
Articles 1734, 1735, and 1745, Nos. 5,6, and 7, Carrier has duty to keep and care for goods
while the extraordinary diligence for the safety carried.-- It is the duty of the CC to properly and
of the passengers is further set forth in Articles carefully handle, carry, keep and care for the goods
1755 and 1756. carried and to exercise due care to ascertain and
consider the nature of the goods offered for shipment
(read discussion under [3] Nature and basis of and to use such methods for their care during the
liability) voyage as their nature requires. The carrier is liable
for injury to, or loss of, cargo resulting from the failure
Art. 1734. Common carriers are to properly care for and handle the cargo en route; and
responsible for the loss, destruction, or it is required to provide adequate ventilation for the
deterioration of the goods, unless the same is safe carriage of the cargo, and provide reasonable and
due to any of the following causes only: ordinary inspection and care in and about the
(1) Flood, storm, earthquake, lightning, transportation of cargo. A vessel should not accept
or other natural disaster or calamity; cargo unless it can be given the type of storage that
(2) Act of the public enemy in war, its character requires, for placing of conditions in a bill
whether international or civil; of lading does not relieve the vessels of obligation to
(3) Act or omission of the shipper or take appropriate care of the cargo.
owner of the goods;
(4) The character of the goods or defects Duty of carrier to deliver cargo in good
in the packaging or in the containers; condition as when loaded.-- There is no absolute
(5) Order or act of competent public obligation for a CC to accept cargo. It should not be
authority. accepted unless it can be given the type of storage
that its character requires. Where a vessel accepts a
Art. 1735. In all cases other than those cargo for shipment for valuable consideration, it takes
mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding the risk of delivering it in good condition as when it
article, if the goods are lost, destroyed or deteriorated, was loaded. And if the fact of improper packing is
common carriers are presumed to have been at fault known to the carrier or his servants, or apparent upon
or to have acted negligently, unless they prove that ordinary observation, but it accepts the goods
they observed extraordinary diligence as required in notwithstanding such condition, it is not relieved of
Art. 1733. liability for loss or injury resulting therefrom.
In the exercise of extra-ordinary diligence
4 Agbayani: required by law, the CC must give due regard to all
circumstances and take all steps necessary to insure
Responsibility of common carriers.-- In the safety of the passengers and the goods given the
general, CC are responsible for the loss, destruction, circumstances.
or deterioration of the goods carried by them. This
responsibility arises from contract, as the relation Presumption of negligence.-- Under Art. 1735, if
between a carrier and its patrons is of a contractual the goods are proved to have been lost, destroyed or
nature. A failure on the carrier to use extra-ordinary deteriorated, CC are presumed to have been at fault or
care in carrying goods or passengers safely is a breach to have acted negligently, unless they prove that they
of contract and constitutes culpa contractual not culpa have observed the extra-o diligence required by law.
aquiliana. While the liability of a carrier as an insurer The plaintiff needs only to prove that the
is not recognized in this jurisdiction, a carrier is liable goods he transported have been lost, destroyed or
for damages suffered by goods carried if such deteriorated
damages arise from its negligence. The carrier is also CC must then prove that he has exercised
liable even in those cases where the cause of the loss extra-ordinary diligence required by law or that the
or damage is unknown. loss, etc. was due to accident or some other
circumstances inconsistent with its liability
Due extraordinary diligence required, carriers Mere proof of delivery of goods in order to a
given wide discretion in selection and carrier, and of their arrival at the place of destination
supervision of persons to handle goods.-- The in bad order makes out a prima facie case against the
law requires CC to exercise extra-o diligence which CC
means that they must render service with the greatest
skill and utmost foresight. The extra-o diligence Defenses available to CC:
required of CC in the handling of the goods of the
shipper and the consignees lasts from the time the 1. Art. 1734
cargoes are loaded in the vessels until they are 2. Art. 1735 (exercise of extra-ordinary
discharged and delivered to the consignees. To diligence required by law)
comply with this obligation, CC should be afforded the 3. Natural disaster: The CC is exempt from
right of having a wide discretion in the selection and liability if he proves that the loss or destruction of the
supervision of persons who will handle the goods. merchandise was due to accident and force majeure
and not to fraud, fault or negligence on the part of the
Air carrier can terminate services of pilot for EEs and owners of the CC.
serious misconduct and drunkenness, because CC cannot interpose the defense that it
of its duty of extraordinary dilignece.-- The CC exercised due diligence in the selection and
can terminate the services of its drivers, pilots and EEs supervision of EEs. The liability of the CC arises from
for serious misconduct and drunkenness because of its breach of the contract of carriage and not from culpa
duty of extra-ordinary diligence. Whenever a aquiliana. It is however the duty of CC to teach their
passenger dies or is injured the presumption is that drivers not to overload vehicles, not to exceed safe
the CC is at fault notwithstanding the fact that it has and legal speed limits, and other safety precautions.
exercised due diligence of a good father of a family in
the selection and supervision of its EEs. Thus, extra- Carrier not insurer.-- CC are not required to exercise
ordinary measures and diligence should be exercised all the care, skill and diligence of which the human
by it for the safety of its passengers and their mind can conceive nor such as will free the
PAGE 20
TRANSPORTATION AND MARITIME LAW

transportation of passengers from all possible perils. loss of the other. Mirasol filed claims, but Dollar
A CC is not an insurer of the safety of the passengers refused to pay alleging that the damage was caused
and is not absolutely and at all events to carry them by sea water and that Mirasol entered into a contract
safely and without injury. providing that Dollar will not be held liable for loss or
damage of merchandise resulting from "acts of God" or
Ynchausti Steamship Co. vs Dexter 41 Phil 289 "perils of the sea," and that in no case shall it be held
liable beyond $250 for any article not enclosed in a
F: The Govt. of the Philippines, acting through the package unless a higher value is stated therein and ad
Insular Purchasing Agent, employed the services of valorem freight paid or assessed thereon. The LC ruled
petitioner, Ynchausti Steamship Co., a common carrier in favor of Mirasol for payment of P 2,080.
for the transportation, on board the steamship Venus,
from the port of Manila to the port of Appari, Cagayan, Issue : WON Dollar may be held liable. YES.
of consignments of merchandise, consisting of 30
cases of Wine Rose mineral oil of two 5-gallon cans to Ratio: There was no claim or pretense that Mirasol
the case. On another occasion, the Govt. also sent 96 signed the bill of lading or that he knew of its
cases of Cock brand mineral oil, ten gallons to the contents. In that situation, he was not legally bound by
case. The goods were delivered by the shipper to the the clause limiting Dollar's liability. Where it appears
carrier which accordingly received them, and to that a bill of lading was issued to a shipper containing
evidence the contract of transportation, the parties a clause limiting the carrier's liability, printed in fine
duly executed and delivered what is popularly called letters on the back of the bill of lading, which the
Govt. bill of lading, whereby it was stipulated that the shipper did not sign and of which he was not advised,
carrier, Ynchausti, received the above-mentioned the shipper is not bound by the clause limiting liability
supplies in apparent good condition, obliging itself to and the stipulation is void or against public policy.
carry said supplies to the place agreed upon. Shippers who are forced to ship goods in an
Both shipments arrived with one case missing ocean liner have legal rights. When the goods are
per shipment. Ynchausti denied negligence. However, delivered on board the ship in good order and
upon investigation, the Insular Auditor decided that condition and the carrier delivers them to the shipper
the leakages were due to Ynchausti's negligence. The in bad order and condition, in an action for damages,
Insular Auditor deducted the amount of the lost goods the burden of proof shifted and it devolves upon the
from the entire amount payable to Ynchausti. carrier to both allege and prove that the goods were
Petitioner refused to accept the warrant. Hence, this damaged by reason of some act which legally exempts
action was filed. it from liability.
Having received the boxes in good condition,
Issue : Is Ynchausti liable for the loss? YES. its legal duty was to deliver them in the same
condition as received. Dollar, having admitted that
Ratio : Sec. 646 of the Administrative Code provided the goods were damaged while in transit and in its
that when Govt. property is transmitted from one possession, the burden of proof then shifted and it
source to another by carrier, it shall be upon proper devolved upon him to allege and prove that the
bill of lading or receipt, from such carrier; and it shall damage was caused by reason of some fact which
be the duty of the consignee or his representative to exempted it from liability. As to when and how the
make all notation of any evidence of loss, shortage, or goods were damaged in transit is a matter peculiarly
damage, on the bill of lading or receipt before within the knowledge of the carrier and its employees.
accomplishing it. It is admitted by petitioner that the To require Mirasol to prove such, would force him to
consignee, at the time the goods were delivered, rely upon the EEs of Dollar's ship, which in legal effect
noted the losses in the respective bill of ladings. Such would be to say that he could not recover damages at
notation made in obedience to the code, is competent all.
evidence to show that the shortage did exist. Since Dollar was not even able to prove that
Inasmuch as the fact of loss was proven, it results in the goods were wet with sea water due to a fortuitous
the presumption that the petitioner was to blame for event, it must be presumed that the carrier was liable.
the loss; and it was incumbent upon the petitioner to
rebut that presumption by proving that the loss was
not due to any fault or negligence of the petitioner. 2. Exemption from liability
The mere proof of delivery of goods in good
order to a carrier, and of their arrival at the place of Proof of the delivery of the goods in good order
destination in bad order, makes out a prima facie case to a carrier, and of their arrival at the place of
against the carrier, so that if no explanation is given destination short or in bad order, makes a prima facie
as to how the injury occurred, the carrier must be held case; it is incumbent on the carrier, in order to
responsible. It is incumbent upon the carrier to prove exonerate itself, to prove that the loss or injury was
that the loss was due to accident or some other due to some circumstances inconsistent with its
circumstance inconsistent with its liability. Indeed, if liability
the Govt. had instituted an action in court against
petitioner to recover the value of the oil lost, it would, (a) Natural disaster
based on the facts, be entitled to judgment. In the
absence of proof showing that the carrier was not at Art. 1734. Common carriers are
fault for the loss, the Insular Auditor was entitled to responsible for the loss, destruction, or
withhold the amount admittedly due to the petitioner deterioration of the goods, unless the same is
for the freight charges, a sum sufficient to cover the due to any of the ff. causes only:
value of the oil lost in transit. (1) Flood, storm, earthquake, lightning,
or other natural disaster or calamity;
xxx
Mirasol vs Dollar 53 Phil 124
Art. 1739. In order that the common carrier
F: Mirasol was the owner of two cases of may be exempted from responsibility, the natural
Encyclopedia Brittanica shipped in good order and disaster must have been the proximate and only cause
condition on board Dollar's steamship, President of the loss. However, the common carrier must
Garfield, to be transported from New York to Manila. exercise due diligence to prevent or minimize loss
The books arrived in bad order and damaged before, during and after the occurrence of flood, storm,
condition, resulting in total loss of one case and partial or other natural disaster in order that the common
PAGE 21
TRANSPORTATION AND MARITIME LAW

carrier may be exempted from liability for the loss, Tan Chiong San vs Ynchausti & Co., 22 Phil 152
destruction, or deterioration of the goods. The same
duty is incumbent upon the common carrier in case of F: Ynchausti and Co. received from Ong Bien Sip
an act of the public enemy referred to in Art. 1734 (2). in Manila 205 bundles of goods to be conveyed by YC's
steamer to Gubat in Sorsogon, and there to be
Art. 1740. If the CC negligently incurs in transhipped to another vessel belonging to YC and
delay in transporting the goods, a natural transported to Catarman, in Samar. As the lorcha
disaster shall not free such carrier from Pilar, which was to transport the goods to Catarman
responsibility. was not yet in Gubat when the cargo arrived, the cargo
was stored in YC's warehouse.
Art. 361. Merchandise shall be Several days later, the lorcha arrived and the
transported at the risk and venture of the goods were loaded. However, as the lorcha was being
shipper, if the contrary has not been expressly towed, a storm arose, drove the lorcha to the shore
stipulated. and wrecked it, scattering the goods on the beach.
As a consequence, all the losses and YC's laborers proceeded to gather up the goods. As it
deteriorations which the goods may suffer was impossible to preserve the goods, they were sold
during the transportation by reason of at a public auction. Plaintiff filed an action for
fortuitous event, force majeure, or the inherent damages for P 20,000. LC decided that plaintiff was
nature and defect of the goods, shall be for the entitled only to P 14,642.63.
account and risk of the shipper.
Proof of these accidents is incumbent Issues: (1) WON the carrier is relieved from liability
upon the carrier. (Code of Commerce.) due to force majeure. YES.
(2) WON the carrier is liable for the loss of the
cargo and for failure to deliver the same at the place
of destination. NO.
4 Agbayani: Ratio: (1) It is a proven fact that the loss or damage to
the goods shipped on the said lorcha was due to the
Effect of New Civil Code.-- Transportation of the force majeure which caused the wreck of the said
merchandise "at the risk and venture of the shipper" craft. Accdg. to Art. 361 of the Code of Commerce,
means that the shipper will suffer losses and merchandise shall be transported at the risk and
deterioration arising from fortuitous event, force venture of the shipper, unless the contrary be
majeure, or inherent nature and defects of the goods. expressly stipulated. No such stipulation appears of
It does not mean that the carrier is free from liability record, therefore, all damages and impairment
for losses and deterioration arising from his negligence suffered by the goods in transportation, by reason of
or fault, w/c is presumed. Thus construed, par. 1 of accident, force majeure, or by virtue of the nature or
Art. 361 is not inconsistent with Art. 1735 of the NCC. defect of the articles, are for the account and risk of
the shipper. The carrier is exempt from liability if he is
Requisites for defense of natural disaster: able to prove, as he did prove, that the loss or
destruction of the merchandise was due to accident
1. Art. 1739 -- natural disaster must have been and force majeure and not to fraud, fault or negligence
the proximate and only cause of the loss on the part of the captain or owner of the ship -- that
2. The CC must exercise due diligence to the loss was a result of the stranding of Pilar because
prevent or minimize the loss before, during and after of the hurricane that overtook it.
the occurrence of flood, storm, or other natural
disaster. If the CC does not exercise due diligence in (2) The record bears no proof that said loss
minimizing the loss, he may yet be held liable caused by the destruction of Pilar occurred through the
notwithstanding the fact that the loss, destruction or carelessness or negligence of the defendant, its
deterioration of the goods arose out of natural agents or patron of the lorcha. The defendant as well
disaster. as its agents and patron had a natural interest in
3. Art. 1740 -- the CC must not be in delay. If preserving the craft -- an interest equal to that of the
the CC incurs in delay, a natural disaster shall not free plaintiff. The record discloses that Pilar was manned
it from responsibility. Under Art. 1165 par. 3, if the by an experienced patron and a sufficient number of
obligor incurs delay, he shall be responsible for any crewmen plus the fact that it was fully equipped. The
fortuitous event until he has effected delivery. crewmen took all the precautions that any diligent
man should have taken whose duty it was to save the
However, if between the delay or refusal of the boat and its cargo, and by the instinct of self-
CC to transport the goods and the loss of the goods preservation of their lives. Considering, therefore, the
due to an act of God there intervened the shipper's conduct of the men of the defendant Pilar and of its
negligence, thus causing a break in the chain of agents during the disaster, the defendant has not
causation between the act of God which caused their incurred any liability whatsoever for the loss of the
loss and the CC's fault, the act of God is the proximate goods, inasmuch as such loss was the result of a
cause of the loss and the carrier's delay or refusal to fortuitous event or force majeure, and there was no
transport the goods, is merely the remote cause. In negligence or lack of care or diligence on the part of
such cases, the shipper is not even entitled to set up the defendant or its agents.
the claim of contributory negligence. It is then Loss of a ship and of its cargo, in a wreck due
necessary that it be established that the CC was guilty to accident or force majeure must, as a general rule,
of a willful or negligent act and that between this fall upon their respective owners, except in cases
willful or negligent act and the act of God, no where the wrecking or stranding of the vessel occurred
negligence on the part of the shipper intervened. through malice, carelessness or lack of skill on the
part of the captain or because the vessel put to sea is
Accident due to defects of carrier not caso insufficiently repaired and prepared. (Art. 841, Code of
fortuito.-- Accidents caused either by defects in the Commerce)
carrier or through the negligence of the carrier is not
caso fortuito. The passenger or shipper has every
right to presume that the carrier is perfectly in good Martini Ltd. vs Macondray & Co., 39 Phil 934
condition and could transport him safely and securely
to his destination F: Martini shipped on board the Easter, owned by
the Australian Steamship Co. represented in the
PAGE 22
TRANSPORTATION AND MARITIME LAW

Philippines by Macondray, 219 cases of chemicals for might have been avoided by the exercise of
Kobe, Japan. Upon arrival in Kobe, it was discovered reasonable skill and attention on their part. However,
that the shipment was damaged by rain and sea water. in this case, where the shipper consented to the
Martini claims that it was the ship's duty to stow the conditions of carriage, the burden of proof is shifted to
cargo in the hold and not to place it on the deck the shipper.
exposed to the elements. Macondray denied any As there is no allegation or proof of negligence
responsibility on the ground that the contract of on the part of the carrier in protecting the cargo from
affreightment clearly states that the cargo was to be rain or sea water and as the complaint clearly
carried on deck at shipper's risk as evidenced by the indicates that the damage was due to it being kept on
words "on deck at shipper's risk" stamped on the bill of deck, and such manner of carriage having been
lading. consented to by the plaintiff, the defendant is
Ordinarily, when a shipper wishes to avail of absolved. It is not permissible for the court, in the
space on board a ship, he first obtains a shipping order absence of any allegation or proof of negligence, to
from the ship owner. This shipping order is authority attribute negligence to the ship's employees in the
for the ship's officers to accept the shipper's cargo. matter of protecting the goods from rains and storms.
When signed by the ship's mate, this would constitute
the mate's receipt showing that the cargo has been Eastern Shipping Lines vs IAC, 150 SCRA 463
taken aboard. The shipper would then present this
receipt to the agent of the ship's company who would Issue: Should petitioner be exempted from liability
then issue the bill of lading. However, in this case, under Art. 1734 on the ground that the loss of the
the shipper obtained the bill of lading without first vessel by fire comes under the phrase "natural
presenting the mate's receipt (so as to expedite the disaster or calamity?" NO.
negotiation of the bill with the banks). By doing so, the
shipper entered into a written guaranty, binding Ratio: Fire may not be considered a natural disaster or
himself to abide by the terms of the mate's receipt calamity. This must be so as it arises almost
which in this case obtained a stipulation that the cargo invariably from some act of man or by human means.
shall be shipped on or under the deck at the option of It does not fall within the category of an act of God
the ship and at shipper's risk. unless caused by lightning or by another natural
In this case, plaintiff protested the disaster or calamity. It may even be caused by the
arrangement but when the defendant informed them actual fault or privity of the carrier. Art. 1680 which
that the cargo could be discharged if they were considers fire as an extra-ordinary fortuitous event
dissatisfied, plaintiff did not order its discharge. The does not apply since it refers only to leases of rural
CFI ruled for Martini. lands where a reduction of rent is allowed when more
than 1/2 of the fruits have been lost due to such event.
Issues: (1) WON plaintiff consented to having the As the peril of fire is not comprehended under
cargo carried on deck. YES. Art. 1734, Art. 1735 applies and the CC shall be
(2) WON defendant was negligent and thus presumed to have been at fault or to have acted
liable for the damage to the cargo. NO. negligently, unless it proves extra-ordinary diligence.
The burden is on the CC.
Ratio: While Martini would have greatly preferred for The LC and the CA found that there was lack of
the cargo to be carried under the hatches, they diligence on the part of CC amounting to actual fault.
nevertheless consented for it to go on deck. Codina, Even if the fire were to be considered a natural
an EE of Martini, if attentive to the interests of his disaster under Art. 1734, it is required under Art. 1739
company, must have known from the tenor of the that the disaster must have been the proximate and
guaranty which he signed that defendant had reserved only cause of the loss, and that the CC exercised due
the right to carry the cargo on deck. The bill of lading diligence to prevent or minimize the loss before,
plainly showed that the cargo would be so carried. during or after the occurrence of the disaster. Nor may
The plaintiff was duly notified as to the manner by petitioner seek refuge under COGSA since fire is only
which was the cargo was to be shipped. They only an exempting circumstance if not caused by actual
protested after the bill had been negotiated at the fault or privity of the carrier.
bank and even when there was time to stop the
shipment, they failed to give the necessary Issue: On the $500 Per Package Limitation
instructions thereby manifesting acquiescence.
In every contract of affreightment, losses by Ratio: Petitioner carrier avers that its liability should
dangers of the seas are excepted from the risk which not exceed $500 per package as provided in Section
the carrier takes upon himself whether the exception 4(5) of the COGSA, which reads:
is expressed in contract or not. The exception is made
by law and falls within the general principle that no "(5) Neither the carrier nor the ship shall in
one is responsible for fortuitous events. But then this any event be or become liable for any loss or damage
general law is subject to the exception that when the to or in connection with the transportation of goods in
inevitable accident is preceded by fault of the carrier, an amount exceeding $500 per package xxx or in case
without which it would not have happened, then he of goods not shipped in packages, per customary
becomes responsible for it. freight unit, or the equivalent of that sum in other
The carrier is responsible for safe and proper currency, unless the nature and value of such goods
storage of the cargo, and there is no doubt that by the have been declared by the shipper before shipment
general maritime law he is bound to secure the cargo and inserted in the bill of lading."
safely under deck. If he carries the goods on deck
without the consent of the shipper and the goods are Article 1749, NCC also allows the limitations of
damaged or lost in consequence of being exposed, the liability in that it provides that "a stipulation that the
carrier cannot protect himself by showing that they CC's liability is limited to the value of the goods
were damaged or lost by the dangers of the sea. appearing in the bill of lading, unless the shipper or
When the shipper consents to his goods being carried owner declares a greater value, is binding."
on deck, he takes the risk upon himself. It is to be noted that the Civil Code does not of
If goods shipped are found to have been itself limit the liability of the CC to a fixed amount per
damaged, the burden of proof is on the carrier to show package, although the Code expressly permits a
that the damage was due to fortuitous events. But, stipulation limiting such liability. Thus, the COGSA,
even if the damage is caused by one of the excepted which is suppletory to the Civil Code, steps in and
causes, the carrier is still responsible if the injury supplements the Code by establishing a statutory
PAGE 23
TRANSPORTATION AND MARITIME LAW

provision limiting the carrier's liability in the absence thereof being the negligence of the common
of a declaration of a higher value of the goods by the carrier, the latter shall be liable in damages,
shipper in the bill of lading. The provisions of the which, however, shall be equitably reduced.
COGSA on limited liability are as much a part of a bill
of lading as though physically in it and as much a part
thereof as though placed therein by agreement of the Act or omission of the shipper.-- The act or
parties. omission of the shipper must be the proximate cause
In these cases, there is no stipulation in the of the loss, destruction or deterioration of the goods.
respective bills of lading limiting the carrier's liability If the shipper merely contributed to the loss,etc. and
for the loss or destruction of the goods. Nor is there a the proximate cause is still the negligence of the CC,
declaration of a higher value of the goods. Hence, the CC shall still be liable for damages although the
petitioner carrier's liability should not exceed $500 per damages shall be equitably reduced.
package, or its peso equivalent, at the time of the
payment of the value of the goods lost, but in no case
"more than the amount of damage actually sustained." (d) Character of goods, etc.
The liability was computed as: 128 cartons
(shipping unit) x $500 = $64,000. The cartons and not Art. 1734. Common carriers are
the containers should be considered as the shipping responsible for the loss, destruction, or
unit. deterioration of the goods, unless the same is
due to any of the following causes only:
(4) The character of the goods or defects
Dissenting : Yap, J. in the packaging or in the containers;
There is no evidence that the containers were
carrier- supplied. The shipper must have saved on Art. 1742. Even if the loss, destruction,
freight charges by using containers for shipment. The or deterioration of the goods should be caused
containers should be considered as the shipping unit. 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
(b) Act of public enemy forestall or lessen the loss.

Art. 1734. Common carriers are Art. 366. Within the twenty four hours
responsible for the loss, destruction, or following the receipt of the merchandise, a
deterioration of the goods, unless the same is claim may be brought against the carrier on
due to any of the following causes only: account of damage or average found therein on
xxx opening the packages, provided that the signs
(2) Act of the public enemy in war, of the damage or average giving rise to the
whether international or civil; claim may not be known from the exterior part
of the packages, and in case that they may be
Art. 1739. In order that the common so ascertained, said claim shall only be
carrier may be exempted from responsibility, admitted at the time of the receipt of the
the natural disaster must have been the packages.
proximate and only cause of the loss. However, After the periods mentioned have
the common carrier must exercise due diligence elapsed, or after the transportation charges
to prevent or minimize loss before, during and have been paid, no claim whatsoever shall be
after the occurrence of flood, storm, or other admitted against the carrier with regard to the
natural disaster in order that the common condition in which the goods transported were
carrier may be exempted from liability for the delivered. (Code of Commerce.)
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 Claims for damages must be made at the time
referred to in Art. 1734 (2). the goods are delivered unless the indications of the
damage cannot be ascertained from the exterior of the
4 Agbayani: package, in which case such written claims must be
made w/in 24 hours from delivery
Acts of public enemy.-- This defense is not
absolute. Under 1739, in order for the CC to be Rule: As long as the damage to the goods
exempted from liability, (1) the act of the public was due purely to the inherent nature or defect of the
enemy must have been the proximate and only cause; goods or of the containers thereof, the CC cannot be
and (2) the CC must have exercised due diligence to held responsible. However, under 1742, the CC must
prevent or minimize the loss before, during and after exercise due diligence to forestall or lessen the loss for
the act of the public enemy causing the loss, it to completely escape liability.
destruction or deterioration of the goods.

Govt. vs Ynchausti, 40 Phil 219


(c) Act or omission of the
shipper F: Plaintiff shipped a cargo of roofing tiles from
Manila to Iloilo on a vessel owned by Ynchausti.
Art. 1734. Common carriers are Defendant stamped on the bill of lading the condition
responsible for the loss, destruction, or that the goods have been accepted for transportation
deterioration of the goods, unless the same is subject to the conditions prescribed by the Insular
due to any of the following causes only: Collector of Customs. The tiles were delivered by
xxx defendant to the consignee of the plaintiff at Iloilo.
(3) Act or omission of the shipper or Upon delivery, it was found that some of the tiles had
owner of the goods; been damaged. The LC absolved the defendant from
any liability since the defendant was able to prove that
Art. 1741. If the shipper or owner merely the tiles were leaded, stored and discharged by hand
contributed to the loss, destruction or labor and not by any mechanical device. Defendant
deterioration of the goods, the proximate cause proved, without dispute from the plaintiff, that there
PAGE 24
TRANSPORTATION AND MARITIME LAW

was no negligence on its part, the tiles being


discharged by handlabor and not by mechanical
device. (e) Order of competent
authority
Issue : WON the terms and conditions of the bill of
lading were binding upon the plaintiff. YES. Art. 1734. Common carriers are
responsible for the loss, destruction, or
Ratio: The defendant placed said stamp upon the bill deterioration of the goods, unless the same is
of lading before the plaintiff shipped the tiles, and that due to any of the following causes only:
having shipped the tiles under said bill, with the terms xxx
and conditions of carriage stamped thereon, the govt. (5) Order or act of competent public
must be deemed to have assented to said terms and authority.
conditions. The binding effect of the conditions
stamped on the bill of lading did not proceed from the Art. 1743. If through order of public
Collector of Customs, but from the actual contract authority the goods are seized or destroyed, the
which the parties made. Each bill of lading is a common carrier is not responsible, provided
contract and the parties thereto are bound by its said public authority had power to issue the
terms. order.
The defendant, to free itself from liability, was
only obliged to prove that the damages suffered by the
tile were by virtue of the nature or defect of the 4 Agbayani:
articles. The plaintiff, to hold the defendant liable, was
obliged to prove that the damage to the tiles, by virtue Order or act of competent authority.-- Under
of their nature, occurred on account of the defendant's 1743, the CC is not responsible for the loss, etc. of the
negligence or because the latter did not take goods if the public authority had power to issue the
precaution usually adopted by careful persons. order. Where the officer acts without legal process,
The defendant proved,and the plaintiff did not the CC will be held liable.
attempt to dispute that the tiles were of a brittle and
fragile nature and that they were delivered to the
defendant without any packing or protective covering. Ganzon vs CA, 161 SCRA 646
The plaintiff, not having proved negligence on the part
of the defendant, is not entitled to recover damages. F: Gelacio Tumambing contracted the services of
Ganzon to haul 305 tons of scrap iron from Mariveles,
Bataan to the port of Manila on board the lighter LCT
Southern Lines vs CA, 4 SCRA 256 Batman. When half of the scrap iron was already
loaded, the mayor of Mariveles arrived and demanded
F: The city of Iloilo requisitioned for rice from P 5,000 from Tumambing. An argument resulted in the
NARIC in Manila. NARIC shipped from Manila to Iloilo shooting of Tumambing. The loading of the scrap iron
1726 sacks of rice on board the SS Gen. Wright was resumed but the acting mayor arrived and
belonging to Southern Lines. After the city paid for the ordered Captain Niza to dump the scrap iron. The
rice, it was noted that 41 sacks were missing. The city acting mayor took the rest to the compound of
filed a complaint against NARIC and Southern Lines to NASSCO and took custody of the scrap iron.
recover the amount. The LC absolved NARIC but Tumambing filed an action for damages against
ordered Southern Lines to pay. The CA affirmed. Ganzon based on culpa contractual. The TC and CA
held Ganzon liable.
Issue: WON petitioner is liable for the loss or
shortage. YES. Held: Ganzon contended that the scrap iron had not
been unconditionally placed under his custody and
Ratio: Under Art. 361 of the Code of Commerce, the control to make him liable. However, he admitted that
carrier, in order to free itself from liability, was only he received the scraps of iron which Tumambing
obliged to prove that the damage suffered by the delivered to him. By the said act of delivery, the
goods were by virtue of defects of the articles. Under scraps were unconditionally placed in the possession
Art. 362, the plaintiff in order to hold the carrier liable, and control of the common carrier and upon their
was obliged to prove that the damage to the goods by receipt by the carrier for transportation, the contract
virtue of their nature, occurred on account of the of carriage was deemed perfected. The carrier's
carrier's negligence or because the carrier did not take extraordinary responsibility for the loss, destruction, or
the precaution adopted by careful persons. deterioration of the goods commenced.
Petitioner claims exemption based on the fact Pursuant to Art. 1736, such extra-ordinary
that the sacks were in bad condition and that rice was responsibility would cease only upon the delivery,
improperly packed causing a lot of spillage of the rice actual or constructive, by the carrier to the consignee
while it was being loaded. or to the person who has the right to receive them.
Southern Lines' contention is untenable, for if The fact that part of the shipment had not been loaded
the fact of improper packing is known to the carrier or on board the lighter did not impair the said contract of
its servants or apparent upon ordinary observation, transportation as the goods remained in the custody
but it accepts the goods notwithstanding such and control of the carrier, albeit still unloaded.
condition, it is not relieved of liability for loss or injury Ganzon failed to show that the loss was due to
resulting therefrom. Furthermore, the petitioner itself any causes under Art. 1734. We cannot sustain the
frankly admitted that the strings tying the bags of rice theory of caso fortuito. The carrier raised the defense
were broken, that some bags were with holes and that the loss was due to an order or act of competent
plenty of rice were spilled inside the hull of the vessel, public authority. The carrier, however, failed to show
and that the boat personnel collected 26 sacks of rice, that the acting mayor had the power to issue the
which they distributed among themselves. This shows disputed order or that it was lawful or issued under
that the shortage resulted from the negligence of the legal process of authority. The order was part of the
petitioner. pressure by the mayor to shakedown Tumambing for P
This is an action for refund of the amount paid 5,000. The order did not constitute valid authority for
in excess of delivery and is not for damages. Ganzon to carry out.
Therefore, the 24 hour rule under Art. 366 does not In any case, the intervention of the municipal
apply. officials was not of a character that would render
PAGE 25
TRANSPORTATION AND MARITIME LAW

impossible the fulfillment by the carrier of its carrier, due in turn to the failure of the former, upon
obligation. The petitioner was not duty bound to obey receipt of notice of the arrival of the goods at the place
the illegal order to dump into the sea the scrap iron. of destination, to unload forthwith and take away the
There is absence of sufficient proof that the issuance cargo from the vehicles. This is a charge for
of the order was attended with such force or demurrage (addtl. service provided by CC)
intimidation as to completely overpower the will of the
carrier's EEs. Effect of storing in transit.-- Under 1737, the
temporary unloading or storage of the goods during
Melencio-Herrera, Dissenting: Through the order or the time that they are being transported does not
act of competent public authority, the performance of interrupt the extra-ordinary responsibility of the CC
the contract was rendered impossible. The captain has Exception: Where the shipper or owner
no control over the situation just as Tumambing had no exercises its right of stoppage in transitu (the act by
control over the situation. which the unpaid vendor of goods stops their progress
and resumes possession of them, while they are in the
3. Duration of Extraordinary course of transit from him to the purchaser, and not
Responsibility yet actually delivered to the latter. This is exercised
when the buyer is or becomes insolvent.)
Art. 1736. The extraordinary
responsibility of the common carrier lasts from Responsibility of carrier when right exercised.--
the time the goods are unconditionally placed in The extra-ordinary responsibility of the CC ceases
the possession of, and received by the carrier when the goods being transported are temporarily
for transportation until the same are delivered, unloaded or stored in transit be reason of the exercise
actually or constructively, by the carrier to the of the right of stoppage in transitu by the unpaid
consignee, or to the person who has a right to seller. The CC holds the goods in the capacity of an
receive them, without prejudice to the ordinary bailee or warehouseman upon the theory that
provisions of Art. 1738. the exercise of the right of stoppage in transitu
terminates the contract of carriage (ordinary diligence
Art. 1737. The common carrier's duty to is required)
observe extra-ordinary diligence in the vigilance
over the goods remains in full force and effect Effect of storage in warehouse of carrier.--
even when they are temporarily unloaded or Under 1738, the extra-ordinary responsibility of the CC
stored in transit, unless the shipper or owner does not cease notwithstanding the fact that the
has made use of the right of stoppage in goods being transported are stored in the warehouse
transitu. of the CC at the place of destination. Extra-ordinary
responsibility ceases only after the consignee has
Art. 1738. The extra-ordinary liability of been advised of the arrival of the goods and has had
the common carrier continues to be operative reasonable opportunity to remove them or otherwise
even during the time the goods are stored in a dispose of them.
warehouse of the carrier at the place of Liability as a warehouseman (ordinary
destination until the consignee has been diligence) arises only when the consignee has been
advised of the arrival of the goods and has advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove reasonable opportunity to remove them or otherwise
them or otherwise dispose of them. dispose of them

4 Agbayani:
Cia Maritima vs Insurance Co. of North America, 12
When carrier's responsibility begins.-- Under Art. SCRA 213
1738, the extra-o responsibility of the CC begins from
the time the goods are delivered to the carrier. The F: Macleod and Co. contracted the services of Cia
delivery to the CC must place the goods to be Maritima for the shipment of bales of hemp from
transported unconditionally in the possession of the Davao to Manila. The bales were loaded into CC's
CC and the CC must receive them. Otherwise, the lighters. One of the lighters sunk. The insurance co.
extra-ordinary responsibility of the CC will not paid Macleod and filed to collect from CC. CC denied
commence. liability on the grounds that the hemp was loaded on a
barge owned by the CC free of charge, that there was
When carrier's responsibility terminates.-- no bill of lading issued thereby resulting to the
Under 1738, the extra-ordinary responsibility of the CC nonexistence of a contract of carriage, that the sinking
is terminated at the time the goods are delivered to was due to a fortuitous event, and that the insurance
the consignee or the person who has a right to receive co. has no personality to sue.
them (actual or constructive delivery).
Constructive delivery: Notice by the CC that Held: There was a complete contract of carriage the
the cargo had already arrived, placing them at the consummation of which has already begun when the
disposal of the shipper or consignee releases CC from shipper delivered the cargo to the carrier and the
extra-ordinary responsibility. From such moment the latter took possession of the same by placing it on a
consignee or shipper should exercise over the cargo lighter manned by its EEs, under which Macleod
the ordinary control pertinent to ownership (should became entitled to the privilege secured to him by law
unload cargo from the CC) for its safe transportation and delivery, and the carrier
to the full payment of its freight upon completion of
Shipper bound to observe all diligence in the voyage. The barges or lighters were merely
obtaining delivery of goods.-- The shipper is employed as the first step of the voyage, which is part
bound to observe all diligence in obtaining delivery of of the contract.
the goods. Once the goods are delivered, the extra- The receipt of the goods by the carrier has
ordinary responsibility of the CC ceases. been said to lie at the foundation of the contract to
carry and deliver, and if no goods are received there
Liability of shipper for delay in obtaining can be no such contract. The liability and
delivery of goods, demurrage.-- The shipper is responsibility of the carrier under a contract for the
liable for lost earnings occasioned by the unnecessary carriage of goods commence on their actual delivery
delay in the use of the vehicles belonging to the to, or receipt by the carrier or an authorized agent, of
PAGE 26
TRANSPORTATION AND MARITIME LAW

the goods. The test as to whether the relation of


shipper and carrier had been established is: Had the
control and possession of the goods been completely 4. Agreement Limiting Liability
surrendered by the shipper to the CC. Whenever the
control and possession of goods passes to the carrier (a) As to diligence required
and nothing remains to be done by the shipper, then it
can be said with certainty that the relation of shipper Art. 1744. A stipulation between the
and carrier has been established. common carrier and the shipper or owner
The bill of lading is not indispensable to a limiting the liability of the former for the loss or
contract of carriage. It is merely documentary proof of destruction, or deterioration of the goods to a
the agreement of the parties. degree less than extra-ordinary diligence shall
There was no force majeure. The reason for be valid, provided it be:
the damage or the loss was lack of adequate (1) In writing, signed by the shipper or
protections and measures taken by the carrier to owner;
prevent the loss. (2) Supported by a valuable
consideration other than the service rendered
Lu Do vs Binamira, 101 Phil 120 by the CC; and
(3) Reasonable, just and not contrary to
F: Delta Co. of NY shipped six cases of films and public policy.
photographic supplies consigned to Binamira. The
shipped arrived in Cebu and discharged her cargo, Art. 1745. Any of the following or similar
placing it in the possession and custody of the arrastre stipulations shall be considered unreasonable,
operator appointed by the Bureau of Customs. The unjust and contrary to public policy:
cargo was checked both by the stevedoring co. as well (1) That the goods are transported at the
as by the arrastre operator and was found in good risk of the owner or shipper;
order. In the contract of carriage, however, it was (2) That the common carrier will not be
stipulated that the carrier is no longer liable for the liable for any loss, destruction or deterioration
cargo upon its delivery to the hands of the custom of the goods;
authorities. The cargo was delivered to Binamira and (3) That the common carrier need not
some goods were missing. observe any diligence in the custody of the
goods;
Held: The general rule is that CC's responsibility to (4) That the common carrier shall
observe extra-ordinary diligence lasts from the time exercise a degree of diligence less than that of
the goods are placed in the possession of the carrier a good father of a family, or of a man of
until they are delivered to the consignee. BUT this ordinary prudence in the vigilance over the
rule applies only when the loss, destruction and movable transported;
deterioration of the goods takes place while the goods (5) That the common carrier shall not be
are in the possession of the carrier and not after it has responsible for the acts or omissions of his or
lost control of them. While the goods are in its its employees;
possession, it is but fair that it exercise extra-ordinary (6) That the common carrier's liability for
diligence in protecting them from damage and if loss acts committed by thieves, or of robbers who do
occurs, the law presumes that it was due to its fault or not act with grave or irresistible threat, violence
negligence. or force, is dispensed with or diminished;
While delivery to the customs authorities is not (7) That the common carrier is not
delivery to the consignee, the parties may however, responsible for the loss, destruction, or
agree to limit the liability of the carrier considering deterioration of goods on account of the
that the goods have still to go through the inspection defective condition of the car, vehicle, ship,
of the customs authorities before they are actually airplane or other equipment used in the
turned over to the consignee. This stipulation is not contract of carriage.
contrary to morals or public policy. This is a situation
where the CC loses control of the goods because of Art. 1751. The fact that the common
custom regulations and it is unfair that it be made carrier has no competitor along the line or
responsible for any loss or damage during such route, or a part thereof, to which the contract
interregnum. refers shall be taken into consideration of the
question of whether or not a stipulation limiting
the common carrier's liability is reasonable, just
APL vs Klepper, 110 Phil 243 and in accordance with public policy.

F: Klepper shipped one lift van containing


personal and household effects from Yokohama to (b) As to amount liability
Manila. While the lift van was being unloaded by
crane, it fell on the pier damaging its contents. The TC Art. 1749. A stipulation that the common
found for Klepper. carrier's liability is limited to the value of the
goods appearing in the bill of lading, unless the
Held: APL does not question the finding that the shipper or owner declares a greater value, is
damage was due its negligence but contends that its binding.
liability cannot exceed $500 based on the bill of lading
and Sec 4(5) of the COGSA. Regardless of its Art. 1750. A contract fixing the sum that
negligence, the carrier's liability would attach because may be recovered by the owner or shipper for
being a CC, its responsibility is extra-ordinary and the loss, destruction, or deterioration of the
lasts from the time the goods are placed in its goods is valid, if it is reasonable and just under
possession until they are delivered, actually or the circumstances, and has been fairly and
constructively, to the consignee or to the person who freely agreed upon.
has a right to receive them.
The carrier should only pay $ 500; the shipper
who accepted the bill of lading is bound by its terms. Ysmael vs Barreto, 51 Phil 90
COGSA is merely suppletory to the provisions of the
NCC which govern the contract.
PAGE 27
TRANSPORTATION AND MARITIME LAW

F: Plaintiff sought to recover from defendant the freight is valid and enforceable. If a CC gives to a
alleged value of 4 cases of merchandise which it shipper the choice of 2 rates, the lower of them
delivered to a vessel of defendant at the port of Manila conditioned upon his agreeing to a stipulated valuation
to be shipped to Surigao, but which were never of his property in case of loss, even by the carrier's
delivered to consignee. Defendant relied on clause 7 negligence, if the shipper makes the choice
of the bill of lading where it provided that actions not understandingly and freely, and names his valuation,
brought within 60 days from the time the cause of he cannot thereafter recover more than the value
action accrued shall be barred, and on clause 12 which which he thus places upon his property.
provided that the defendant is not liable for any
package in excess of P 300 unless the value and
contents of such package are correctly stated in the
bill of lading at the time of the shipment. Plaintiffs
complaint was filed a little less than 6 months after Shewaram vs PAL, 17 SCRA 606
the shipment was made.
F: Plaintiff bought a plane ticket from Zamboanga
Held: The evidence shows that 164 cases were to Manila. When he arrived in Manila, his suitcase was
shipped valued at P 2,500 a case. The limit of tampered with and his camera and radio were lost.
defendant's liability for each case for loss or damage PAL contended that plaintiff was bound by the
from any cause or for any reason, would put it in the conditions printed at the back of his ticket which
power of the defendant to take the whole cargo of 164 provided that the liability of PAL for any loss is limited
cases at a value of P 300/case, or less than 1/8 of its to the value of the thing unless the passenger declares
actual value. If that rule should be sustained, no silk in advance a higher valuation and pays an additional
would ever be shipped. Such limitation of value is charge, and that the value is conclusively deemed not
unconscionable and void as against public policy. to exceed P 100/ticket.
The validity of stipulations limiting the carrier's
liability is to be determined by their reasonableness Held : Two requisites must be fulfilled in order that the
and their conformity to the sound public policy. It liability of PAL be limited according to the stipulations
cannot lawfully stipulate for exemption from liability behind the ticket stub : (1) the contract is just and
unless such exemption is just and reasonable and reasonable under the circumstances; and (2) it has
unless the contract is freely and fairly made. No been fairly and freely agreed upon. (Art. 1750)
contractual limitation is reasonable which is The fact that the conditions are printed at the
subversive of public policy. A CC cannot limit its back of the ticket stub in letters so small that they are
liability for injury or loss where such is caused by its hard to read would not warrant the presumption that
own negligence, unskillfulness or carelessness of its plaintiff was aware of those conditions such that he
EEs. The rule rests on public policy. The shipper and had "fairly and freely agreed" to those conditions. PAL
CC are not on equal terms; the shipper is entirely at has admitted that passengers do not sign the ticket.
the mercy of the CC unless protected by the law. Such Also the carrier cannot limit his liability for injury or
contracts are wanting in the element of voluntary loss of goods shipped when such injury or loss was
assent. caused by its own negligence. (Arts. 1734, 1735)
The action was brought within reasonable time
considering the distance between Surigao and Manila
and the fact that plaintiff had to make a full Ong Yiu vs CA, 91 SCRA 223
investigation to determine liability. Stipulations
limiting the time for bringing suit must be reasonable, F: Atty. Ong Yiu was a passenger on a PAL Cebu-
otherwise they can be declared void. Butuan flight to attend court hearings in Butuan. His
suitcase was accidentally sent to Manila. PAL-Manila
sent the suitcase to Butuan but the lock had been
Heacock vs Macondray, 42 Phil 205 opened and a folder containing court documents was
missing. Plaintiff refused to accept the luggage. PAL-
F: Plaintiff shipped Edmonton clocks from NY to Cebu delivered the luggage to Ong Yiu with the
Manila on board defendant's vessel. It was agreed in promise to investigate the matter. Plaintiff sued and
the bill of lading that the value of the goods receipted was awarded moral and exemplary damages. CA
do not exceed $500 per freight on or in proportion for reversed holding that PAL was guilty of simple
any part of a ton, unless the value be expressly stated negligence and denied moral and exemplary damages
in the bill and freight paid. It was also agreed that in but ordered PAL to pay P100, the baggage liability
the event of claims for shortage or damage the carrier assumed by it under the condition of carriage printed
shall not be liable for more than the net invoice price on the back of the ticket.
plus freight and insurance less charges, and any loss
or damage for which the carrier may be liable shall be Held: PAL incurred delay in the delivery of petitioner's
adjusted pro rata on said basis. The clocks were not luggage. However, there was no bad faith. The liability
delivered despite demands. Plaintiff claimed P420 as of PAL was limited to the stipulations printed on the
the MV of the clocks, while defendant claimed P76.36 back of the ticket.
as the proportionate freight ton value. While the passenger had not signed the plane
ticket, he is nevertheless bound by the provision
Held: Three kinds of stipulations have often been thereof; such provisions have been held to be part of
made in a bill of lading. First, one exempting the the contract of carriage and valid and binding upon
carrier from any and all liability for loss or damage the passenger regardless of the latter's lack of
occasioned by its own negligence. Second, one knowledge or assent to the regulation. It is what is
providing for an unqualified limitation of such liability known as a contract of adhesion wherein one party
to an agree valuation. Third, one limiting the liability imposes a ready made form of contract on the other; it
of the carrier to an agreed valuation unless the is not entirely prohibited. The one who adheres to the
shipper declares a higher value and pays a higher rate contract is in reality free to reject it entirely; if he
of freight. The first and second stipulations are invalid adheres, he gives his consent. A contract limiting
as contrary to public policy. The third is valid and liability upon an agree valuation does not offend
enforceable. against the policy of the law forbidding one from
A stipulation in the bill of lading limiting the contracting against his own negligence.
liability of the CC to a specified amount unless the Considering that petitioner had failed to
shipper declares a higher value and pays a higher declare a higher value for his baggage, he cannot be
PAGE 28
TRANSPORTATION AND MARITIME LAW

permitted a recovery in excess of P 100.00. Besides, Pan Am contended that the claim was subject
passengers are advised not to place valuable items to the Notice of Baggage Liability Limitations attached
inside their baggage. Also, there is nothing in the to the ticket. Such notice was also conspicuously
evidence to show the actual value of the goods posted in its offices. It alleged that its liability is
allegedly lost by petitioner. limited to $160 because Rapadas did not declare a
higher value and did not pay the corresponding
additional charges.
PAN AM vs IAC, 164 SCRA 268 The lower court ruled in favor of Rapadas. It
however did not find Pan Am guilty of discriminatory
F: This is a petition filed by Pan Am to limit its acts or bad faith. CA affirmed the decision.
liability for lost baggage containing promotional and
advertising materials for films to be exhibited in Guam Issue: WON a passenger is bound by the terms of a
and the US, clutch bags, barong tagalogs and personal passenger ticket declaring that the limitations of
belongings of Rene Pangan to the amount specified in liability set forth in the Warsaw Convention as
the airline ticket absent a declaration of a higher amended by the Hague Protocol shall apply in case of
valuation and payment of additional charges. loss, damage or destruction to a registered luggage of
Pan Am contends that its liability for lost a passenger. YES. Pan Am was ordered to pay $400
baggage is limited to $600 ($20 x 30 kilos) as the and P 10,000 as attorney's fees and costs of suit.
latter did not declare a higher value for his baggage.
Such stipulation is printed at the back of the ticket. Held: There is no dispute that there was a notice
appearing on page 2 of the ticket stating that the
Held : Pan Am cited Ong Yiu vs CA. Such case is Warsaw Convention governs in case of death or injury
squarely applicable in this case. The ruling in to a passenger or of loss, damage or destruction to a
Shewaram vs PAL is inapplicable since it was premised passenger's luggage. Such notice should be sufficient
on the fact that the conditions printed at the back of notice showing the applicability of the Warsaw
the ticket were so small and hard to read. limitations. The passenger, upon contracting with the
Liability is limited to $600 as stipulated at the airline and receiving the plane ticket, was expected to
back of the ticket. be vigilant insofar as his luggage is concerned. If the
The SC reversed the CA ruling awarding passenger fails to adduce evidence to overcome the
respondent damages for lost profits. The rule laid stipulations, he cannot avoid the application of the
down in Mendoza vs PAL provides that before damages liability limitations.
can be awarded for loss of profits on account of delay The Warsaw Convention, as amended,
or failure of delivery, it must have appeared that CC specifically provides that it is applicable to
had notice at the time of delivery to him of the international carriage which it defines as "any carriage
particular circumstances attending the shipment, and in which, according to the agreement between the
which probably would lead to such special loss if he parties, the place of departure and the place of
defaulted. In the absence of a showing that Pan Am's destination xxx are situated either within the
attention was called to the special circumstances territories of two High Contracting Parties or within the
requiring prompt delivery of the luggage, it cannot be territory of a single High Contracting Party if there is
held liable for the cancellation of respondent's an agreed stopping place within the territory of
contracts as it could not have foreseen such an another State xxx." Nowhere in the Warsaw
eventuality when it accepted the luggage for transit. Convention is such detailed notice of baggage liability
limitations required. It is however a common, safe and
practical custom for air carriers to indicate beforehand
Pan Am vs Rapadas, 209 SCRA 67 the precise sums equivalent to those fixed by Art.
22(2) of the Convention.
F: Jose Rapadas was en route from Guam to The facts show that Rapadas actually refused
Manila. While standing in line to board the flight, he to register his attache case. In attempting to avoid
was ordered by Pan Am's handcarry control agent to registering the luggage, he manifested a disregard of
check in his Samsonite attache case. He protested on airline rules on allowable handcarried baggages.
the ground that other passengers were permitted to Prudence dictates that cash and jewelry should be
handcarry bulkier baggages. He tried to check-in removed from checked-in luggage and placed in one's
without having to register his attache case. He was pockets or handcarried. The alleged lack of enough
however forced to register his baggage. He gave his time for him to make a declaration of a higher value
attache case to his brother who checked it in for him and to pay the corresponding supplementary charges
without declaring its contents or the value of its cannot justify his failure to comply with the
contents. Upon arriving in Manila, he was given all his requirement that will exclude the application of limited
checked-in baggages except the attache case. Since liability. Had he readily complied with airline
he felt ill, he sent his son to request for the search of regulations from the start, this situation would not
the missing luggage. He sent letters of demand to Pan have arisen.
Am. While contracts of adhesion are not entirely
Pan Am offered to settle the claim for $160, prohibited, neither is blind reliance on them
representing the CC's alleged limit of liability for loss encouraged. In the face of facts showing they should
or damage to a passenger's personal property. be ignored because of their basically one- sided
Rapadas filed this action for damages. He alleged that nature, the Court does not hesitate to rule out blind
Pan Am discriminated or singled him out in ordering adherence to their terms. The SC is not saying that
that his luggage be checked in; that Pan Am neglected passengers are always bound to the stipulated
its duty in the handling and safekeeping of his attache amounts printed on a ticket, found in a contract of
case from the point of embarkation in Guam to his adhesion, or printed elsewhere but referred to in
destination in Manila; that the value of the lost attache handouts or forms. The Court simply recognizes that
case and its contents is $42,403.90. According to him, the reasons behind stipulations on liability limitations
the loss resulted in his failure to pay certain arise from the difficulty, if not impossibility, of
obligations, failure to remit money sent through him to establishing with a clear preponderance of evidence
relatives, inability to enjoy the fruits of his retirement the contents of a lost suitcase. Unless the contents
and vacation pay and inability to return to Tonga are declared, it will always be the word of a passenger
Construction Co. to comply with then existing against that of the airline. If the loss of life or property
contracts. During the trial, he showed proof of the is caused by the gross negligence or arbitrary acts of
contents of his attache case. the airline or the contents of the lost luggage are
PAGE 29
TRANSPORTATION AND MARITIME LAW

proved by satisfactory evidence other than the self- The parties may stipulate that the diligence to
serving declarations of one party, the Court will not be exercised by the CC be less than extra-ordinary
hesitate to disregard the fine print in a contract of diligence, provided that the requirements under Article
adhesion. Otherwise, the Court is constrained to rule 1744 are complied with. However, the parties cannot
that we have to enforce the contract as it is the only reduce the diligence to less than that of a good father
reasonable basis to arrive at a just award. of a family. Art. 1745 provides for 7 stipulations which
shall be considered unreasonable, unjust and contrary
to public policy.
(c) Factors affecting agreement
Construction of stipulations limiting common
Art. 1746. An agreement limiting the carrier's liability.-- An exemption in general words
common carrier's liability may be annulled by not expressly relating to negligence, even though the
the shipper or owner if the CC refused to carry words are wide enough to include loss by negligence
the goods unless the former agree to such or default of CC's servants, must be construed as
stipulation. limiting the liability of the CC as assurer, and not as
relieving him from the duty of exercising reasonable
Art. 1747. If the common carrier, without skill and care
just cause, delays the transportation of the Effect of lack of competitor to common carrier.--
goods or changes the stipulated or usual route, Under 1751, the lack of competition of the CC shall be
the contract limiting the common carrier's considered in determining WON a stipulation limiting
liability cannot be availed of in case of the loss, CC's liability is reasonable, just and in consonance
destruction, or deterioration of the goods. with public policy.

Art. 1748. An agreement limiting the Examples of valid stipulations:


common carrier's liability for delay on account 1. 1748 - an agreement limiting the CC's
of strikes or riots is valid. liability for delay on account of strikes or riots
2. 1749, Heacock vs Macondray - a stipulation
Art. 1751. The fact that the common that the CC's liability is limited to the value of the
carrier has no competitor along the line or route goods appearing in bill of lading unless the shipper or
or a part thereof, to which the contract refers owner declares a greater value
shall be taken into consideration on the 3. 1750 - a contract fixing the sum that may be
question of whether or not a stipulation limiting recovered by the owner or shipper for the loss,
the common carrier's liability is reasonable, destruction or deterioration of the goods, if it is
just, and in consonance with public policy. reasonable and just under the circumstances, and has
been fairly and freely agreed upon
Art. 1752. Even when there is an
agreement limiting the liability of the common Under 1746, an agreement limiting the CC's liability
carrier in the vigilance over the goods, the may be annulled by the shipper or owner if the CC
common carrier is disputably presumed to have refused to carry the goods unless the former agreed to
been negligent in case of their loss, destruction such stipulation. The effect of the shipper's consent
or deterioration. obtained by means of refusal on the part of the carrier
to carry the goods is to make the agreement limiting
the CC's liability voidable at the instance of the
4 Agbayani: shipper

Kinds of stipulation limiting liability.-- The Principles : [St. Paul Insurance vs Macondray, 70 SCRA
following stipulations are often made in a bill of lading 122]
bill of lading: 1. A stipulation in the bill of lading limiting the
1. stipulation exempting the CC from any and CC's liability to the value of the goods appearing in the
all liability for loss or damage occasioned by its own bill, unless the shipper or owner declares a greater
negligence - VOID value, is valid and binding.
2. stipulation providing for an unqualified 2. The insurer who pays the insured on his
limitation of such liability to an agreed stipulation - claim for damage is merely subrogated to the rights of
VOID the insured; therefore, said insurer cannot collect from
3. stipulation limiting the liability of the CC to the CC more than what the insured can collect from
an agreed valuation unless the shipper declares a the CC.
higher value and pays a higher rate of freight -- VALID 3. The obligation to pay the damage begins
and ENFORCEABLE from the date it fails to deliver the shipment in good
condition to the consignee (on the basis of the rate of
When stipulation limiting liability valid.-- Under exchange on that date).
1744, the shipper or owner and the CC may stipulate
to limit the liability of the CC for the loss, destruction Effect of delay in transportation, etc.-- Under
or deterioration of goods to a degree less than extra- 1747, the CC cannot avail of the contract limiting his
ordinary diligence : liability in these cases : (1) where the CC delays the
1. the stipulation must be in writing and transportation of the goods; (2) where the CC changes
signed by both parties; the stipulated or usual route [in both cases, the delay
2. the stipulation must be supported by or change of route must be without just cause]
valuable consideration other than the service rendered
by the CC; Presumption as to negligence in case of limited
3. the stipulation must be reasonable, just and liability.-- Under 1752, the presumption continues
not contrary to public policy. This applies only when even when there is an agreement limiting the liability
the CC is acting as such but not when it acts as a of the CC in the vigilance of the goods. This
private carrier [in Home Insurance vs American presumption is disputable or rebuttable by evidence
Steamship Co., the SC held that the Civil Code that the CC exercised extra-ordinary diligence.
provisions on CC should not be applied where the CC
is not acting as such but as a private carrier; such
policy has no force where the public at large is not 5. Applicable Law in foreign trade
involved]
PAGE 30
TRANSPORTATION AND MARITIME LAW

Art. 1753. The law of the country to regarded as necessary deposits. The CC shall be
which the goods are to be transported shall responsible for such baggage as depositaries, provided
govern the liability of the common carrier for that (1) notice was given to them or to their EEs, of the
their loss, destruction or deterioration. baggage brought by their passengers, and that (2) the
passengers take the precautions which said CCs
4 Agbayani: advised relative to the care and vigilance of their
baggage.
The Civil Code governs the liability of the CC in
case of loss, damage or deterioration. Under 1766, in Responsibility for acts of EEs, thieves.--
all matters not regulated by the Civil Code, the rights Under 2000, a CC is responsible as a depositary for the
and obligations of CC shall be governed by the Code of loss of or injury to the baggage in the personal
Commerce and by special laws which are suppletory to custody of passengers, caused by the CC's servants or
the provisions of the Civil Code. EEs but not those caused by force majeure.
Under 2001, the act of a thief or robber, who
has entered the CC's vehicle is not deemed force
6. Rules on Passenger Baggage majeure, unless it is done with the use of arms or
through irresistible force.
Art. 1754. The provisions of Arts.1733 to Under 2002, the CC is not liable if the loss of
1753 shall apply to the passenger's baggage the baggage in the personal custody of the passenger
which is not in his personal custody or in that of is due to the acts of the passengers, his family,
his employees. As to other baggage, the rules servants or visitors, OR if the loss arises from the
in Articles 1998 and 2000 to 2003 concerning character of the baggage.
the responsibility of hotel keepers shall be
applicable. Stipulations limiting liability.-- Under
2003, a CC cannot free himself from responsibility by
Art. 1998. The deposit of effects made posting notices to the effect that he is not liable for
by travelers in hotels and inns shall also be the baggage brought by the passengers. Any
regarded as necessary. The keepers of hotels stipulation diminishing the responsibility required
and inns shall be responsible for them as under 1998 to 2001 shall be void.
depositaries, provided that notice was given to
them, or to their employees, of the effects Liability for baggage not in custody of
brought by the guests and that, on the part of passenger.-- This refers to baggage delivered to the
the latter, they take the precautions which said custody of the CC and received by him, to be carried
hotel-keepers or their substitutes advised in the same manner as other goods being transported
relative to the care and vigilance of their by him. As the CC has custody of such baggage and
effects. are carried like any other goods, the provisions on
carriage of goods shall apply (extra-ordinary diligence
Art. 2000. The responsibility referred to in the vigilance over the goods).
in the preceding article shall include the loss of, The moment the effects of a passenger are
or injury to the personal property of the guests unconditionally placed in the possession of and
caused by the servants or employees of the received by a carrier for conveyance, the law
keepers of hotels or inns as well as by immediately imposes on the CC extra-ordinary
strangers; but not that which may proceed from responsibility for the loss thereof which lasts until the
any force majeure. The fact that travelers are actual or constructive delivery of the effects to the
constrained to rely on the vigilance of the passenger as the person who has the right to receive
keeper of the hotel or inn shall be considered in them (presumption of negligence exists but may be
determining the degree of care required of him. rebutted by proof of exercise of extraordinary diligence
or causes under 1734).
Art. 2001. The act of a thief or robber, A CC is liable for the loss of baggage although
who has entered the hotel is not deemed force not declared and the charges not paid, if it accepted
majeure, unless it is done with the use of arms them for transportation
or through irresistible force.

Art. 2002. The hotelkeeper is not liable C. Common Carrier of Passengers


for compensation if the loss is due to the acts of
the guest, his family, servants or visitors, or if 1. Nature and extent of responsibility
the loss arises from the character of the things
brought into the hotel. Art. 1733. Common carriers, from the
nature of their business and for reasons of
Art. 2003. The hotelkeeper cannot free public policy, are bound to observe
himself from responsibility by posting notices to extraordinary diligence in the vigilance over the
the effect that he is not liable for the articles goods and for the safety of the passengers
brought by the guest. Any stipulation between transported by them, according to the
the hotelkeeper and the guest where the circumstances of each case.
responsibility of the former as set forth in Arts. Such extraordinary diligence in the
1998 to 2001 is suppressed or diminished shall vigilance over the goods is further expressed in
be void. Articles 1734, 1735, and 1745, Nos. 5, 6, and 7,
while the extraordinary diligence for the safety
Classes of baggage of passengers.-- The law of the passengers is further set forth in Articles
makes a distinction between (1) baggage in the 1755 and 1756.
custody of the passengers or their EEs; and (2)
baggage not in such custody but in that of the CC. Art. 1755. A common carrier is bound to
carry the passengers safely as far as human
Liability for baggage in custody of passenger.-- care and foresight can provide, using the
Art. 1754 refers to Arts. 1998, 2000- 2003 concerning utmost diligence of very cautious persons, with
the responsibility of hotel keepers. Under 1998, the a due regard for all circumstances.
baggage of passengers in their personal custody or in
that of their EEs while being transported shall be
PAGE 31
TRANSPORTATION AND MARITIME LAW

Held : In aviation, inevitable accident is defined as one


4 Agbayani: that is not occasioned in any degree remotely or
directly by want of such skill or care as the law holds
Common carriers must exercise extraordinary for what man is bound to exercise. Airplane
diligence in carrying passengers.-- Art. 1755 companies are not required to exercise all the care.
shows clearly the high degree of care and extra-o Passengers necessarily should take upon the usual and
diligence required of a CC with respect to its ordinary perils to airplane travel. A carrier is not an
passengers. insurer against all risks.
A carrier is not liable for defects of ignition
Carrier's duty of extraordinary diligence cables used on his plane, nor of the installation
extends also to crew members.-- The duty to thereof, which cables were purchased from a
exercise the utmost diligence on the part of CCs is for competent and reputable manufacturer in the absence
the safety of passengers as well as for the members of of a showing that it knew those defects or that such
the crew or the complement operating the carrier. kind of ignition cable is not ordinarily used on the
This must be so for any omission, lapse or neglect airplane operated by it.
thereof will certainly result to the damage, prejudice, The doctrine of res ipsa loquitor cannot be
injuries or even death to all aboard the plane. applied when there is no proof that according to the
general experience of mankind, the accident was such
Cangco vs MRR, 38 Phil 768 that it does not usually occur in the ordinary course of
events without the negligence on the part of those in
Facts: supra. EE riding on train who stepped on control.
watermelons.
Isaac vs A.L. Ammen Trans. Co., 101 Phil 1046
Held: The conduct of plaintiff in undertaking to alight
while the train was yet slightly underway was not F: supra. Passenger aboard a bus who placed his
characterized by imprudence and that he was not left arm on the window lost his arm when the bus
guilty of contributory negligence. collided with a pick up.
It is not negligence per se for a traveler to alight from
a slowly moving train. Held : If the carrier's EE is confronted with a sudden
MRR failed to exercise due care in not emergency, he is not held to the same degree of care
providing for safe exit of its passengers. It also failed he would otherwise be required in the absence of such
to provide adequate lighting for its station. emergency.
It is impt. to note that the foundation of the By placing his left arm on the window, the
legal liability of the defendant is the contract of passenger is guilty of contributory negligence, and
carriage, and that the obligation to respond for the although contributory negligence cannot relieve the
damage which plaintiff has suffered arises, if at all, carrier but can only reduce his liability (Art. 1762), this
from the breach of that contract by reason of the is a circumstance which militates against plaintiff's
failure of defendant to exercise due care in its position. It is negligence per se for passengers to
performance. Its liability is direct and immediate protrude any part of his body and that no recovery can
(culpa contractual), differing essentially, from that be had for an injury.
presumptive responsibility for the negligence of its
servants, which can be rebutted by proof of the Ratio: A CC is bound to carry the passengers safely as
exercise of due care in the selection and supervision of far as human care and foresight can provide, using the
EEs (culpa aquiliana). utmost diligence of very cautious persons, with due
The liability of masters and employers for the regard for all circumstances. This extraordinary
negligent acts or omissions of their servants or agents, diligence required of common carriers is calculated to
when such act or omissions cause damage which protect the passengers from the tragic mishaps that
amount to the breach of a contract, is not based upon frequently occur in connection with rapid modern
a mere presumption of the master's negligence in their transportation. This high standard of care is
selection or control, and proof of exercise of the imperatively demanded by the preciousness of human
utmost diligence and care in this regard does not life and by the consideration that every person must in
relieve the master of his liability for the breach of his every way be safeguarded against all injury.
contract. When the facts averred show a contractual Principles as to liability of CC:
undertaking by defendant for the benefit of plaintiff, (1) The liability of a carrier is contractual and
and it is alleged that plaintiff has failed or refused to arises upon breach of its obligation; there is breach if
perform the contract, it is not necessary for plaintiff to it fails to exert extraordinary diligence accdg. to all the
specify in his pleadings whether the breach of the circumstances of each case
contract is due to willful fault or to negligence on the (2) A carrier is obliged to carry its passenger
part of the defendant, or of his servants or agents. with the utmost diligence of a very cautious person,
Proof of the contract and of its nonperformance is having due regard for all the circumstances
sufficient prima facie to warrant recovery. (3) A carrier is presumed to have been at fault
The contract of defendant to transport plaintiff or to have acted negligently in case of death of, or
carried with it, by implication, the duty to carry him in injury to, passengers, it being its duty to prove that it
safety and to provide safe means of entering and exercised extraordinary diligence
leaving its trains. That duty, being contractual, was (4) The carrier is not an insurer against all
direct and immediate, and its nonperformance could risks of travel
not be excused by proof that the fault was morally
imputable to defendant's servants. Landingin vs Pantranco, 33 SCRA 284

Strong vs Iloilo-Negros Air Express, 40 OG 269 F: Plaintiffs are parents of 2 girls who were
passengers on a Pantranco bus on an excursion trip
F: Plaintiff was a passenger aboard defendant's from Dagupan to Baguio. The bus was open on one
plane en route from Iloilo to Manila. The plane's side. The TC found that the crossjoint of the bus broke
motors went dead and, notwithstanding the efforts of and the bus started to roll back. Some passengers
its pilot, it plunged into the sea and sank. The jumped out. The bus driver maneuvered the bus safely
passengers and the pilot were rescued. to the mountainside. Two of the girls who jumped
were seriously injured and died.

PAGE 32
TRANSPORTATION AND MARITIME LAW

Held : In Lasam vs Smith, the court held that accidents


caused by defects in the automobile are not caso
fortuito. The rationale is that the passenger has 2. Duration of responsibility
neither the choice nor control over the carrier in the
selection and use of the equipment and appliances in 4 Agbayani:
use by the carrier.
When the passenger dies or is injured, the When relationship of carrier and passenger
presumption is that the CC is at fault or acted terminates.-- The relation of CC and passenger does
negligently. This is only rebutted by proof on the not cease at the moment that the passenger alights
carrier's part that it observed extraordinary diligence from the CC's vehicle at a place selected by the CC at
required in Art. 1733 and the utmost diligence of very the point of destination, but continues until the
cautious persons required in Art. 1755. passenger had reasonable time or a reasonable
It does not appear that the carrier gave due opportunity to leave the CC's premises. What is a
regard for all the circumstances with cross joints' reasonable time or a reasonable delay within this rule
inspection the day previous to the accident. The bus is to be determined from all the circumstances
was heavily laden, and it would be traversing
mountainous, circuitous and ascending road. Thus the
entire bus would naturally be taxed more heavily than La Mallorca vs CA, 17 SCRA 739
it would be under the ordinary circumstances. The
mere fact that the bus was inspected only recently and F: Husband and wife together with minor children
found to be in order would not exempt carrier from boarded a La Mallorca bus. They alighted from the
liability unless it is shown that the particular bus. The father returned to the bus to get their
circumstances under which the bus would travel were baggage. He was followed by his daughter. While the
also considered. father was still on the running board awaiting for the
conductor to give his baggage, the bus stated to run
so that the father had to jump. His daughter was run
Landicho vs BTC, 52 OG 764 over and was killed. The bus co. contended that when
she was killed, she was no longer a passenger and the
F: Landicho boarded a BTC bus. Before he did so, contract of carriage had terminated.
the conductor helped him in placing his two baskets of
chicken inside the running board. After a distance, he Held: Whether or not the relation between carrier and
claimed that he noticed one cage falling and he called passenger does not cease at the moment the
the conductor's attention who did not respond. He passenger alights from the carrier's premises is to be
tried to fix it himself resulting in his fall in which he determined from the circumstances.
suffered injuries. In this case, there was no utmost diligence.
The driver stopped the bus but did not turn off the
Held : The facts show that the cage was not about to engine. He started to run the bus even before the
fall. Plaintiff was probably dizzy or sleepy that he fell conductor gave him the signal. The presence of
from the truck. passengers near the bus was not unreasonable and
It is true that defendant being a CC is bound to the duration of the responsibility still exists.
transport its passengers from the point of origin to the
place of destination, but the duty does not encompass
all the risks attendant to a passenger in transit, for Bataclan vs Medina, 102 Phil 181
then the co. would be a good source of stipend for a
family who would like to end it all by simply boarding, F: The bus of Medina Trans left Cavite for Pasay
paying the fare and intentionally falling off. It is with 18 passengers. Around dawn, the front tires burst
enough for the CC's EEs to see to it that the passenger and the vehicles began to zigzag until it fell into a
places himself safely inside the vehicle, that it is canal and turned turtle. Some passengers were able
operated carefully and that its mechanism is perfectly to get out while four were trapped including Bataclan.
alright to prevent mishaps. It would be unreasonable Later, 10 men came to help, one of them carrying a
to exact upon operators to determine beforehand lighted torch, fueled by petroleum. A fire started,
whether a passenger is likely to fall dizzy or sleepy on burning the bus and the 4 passengers. Gas had leaked
the way, for that is the lookout of the passenger when the bus overturned.
himself. A passenger must see to it that he seats
himself in a safe portion of the vehicle. Held: The proximate cause of the death was the
overturning of the vehicle which was followed by the
negligence of the driver and the conductor who were
Necesito vs Paras, 105 Phil 75 on the road walking back and forth. They should have
known that with the position of the bus, leakage was
F: A mother and son boarded a passenger possible aside from the fact that gas when spilled can
autotruck of the Phil. Rabbit Bus Lines. While entering be smelled from a distance. The failure of the driver
a wooden bridge, its front wheels swerved to the right, and conductor to have cautioned or taken steps to
the driver lost control and the truck fell into a creek. warn rescuers not to bring a lighted torch too near the
The mother drowned; the son was injured. bus constitutes negligence on the part of the agents of
Held : While the carrier is not an insurer of the safety the carrier.
of the passengers, it should nevertheless be held
answerable for the flaws of its equipment if such flaws
were discoverable. The liability of the CC rests upon Aboitiz vs CA 179 SCRA 95
negligence or his failure to exercise the utmost degree
of diligence that the law requires. The rationale of F: A farmer boarded a boat owned by Aboitiz at
CC's liability for manufacturing defects is the fact that Mindoro bound for Manila. When the vessel arrived,
the passenger has neither choice nor control over the Pioneer Stevedoring took over control of the cargoes
carrier in the selection and use of the eqpt. and loaded at the vessel and placed its crane alongside the
appliances in use by the carrier. Having no privity vessel. One hour after he disembarked, he went back
whatever with the manufacturer or vendor of the to get his cargo but the crane hit him and he died.
defective eqpt, the passenger has no remedy against
him. In this case, the defect could have been detected Held: Aboitiz is still liable for his death under the
with the exercise of utmost diligence by the CC. contract of carriage. The relation of carrier and
PAGE 33
TRANSPORTATION AND MARITIME LAW

passenger continues until the passenger has been The contract of air carriage is a peculiar one.
landed at the port of destination and has left the Being imbued with public interest, the law requires
vessel owner's dock. Once created the relationship common carriers to carry the passengers safely as far
will not ordinarily terminate until the passenger has as human care and foresight can provide, using the
safely alighted from the carrier's conveyance or had utmost diligence of very cautious persons, with due
reasonable opportunity to leave the carrier's premises. regard for all the circumstances. In Air France vs
All persons who remain on the premises a reasonable Carrascoso, the SC held that the contract to transport
time after leaving the conveyance are to be deemed passengers is quite different from any contractual
passengers and what is reasonable time is to be relation in that it invites people to avail of the comforts
determined from all circumstances and includes a and advantages it offers. The diversion of the flight
reasonable time to see after his baggage and prepare was due to a fortuitous event. However, such did not
for his departure. The CC-passenger relationship is terminate PAL's contract with its passengers. Being in
not terminated merely by the fact that the person the business of air carriage, PAL is deemed equipped
transported has been carried to his destination if the to deal with situations like the case at bar. The
person remains in the premises to claim his baggage. relation of carrier and passenger continues until the
The test is the existence of a reasonable cause latter has been landed at the port of destination and
as will justify the presence of the passenger near the has left the CC's premises. Hence, PAL necessarily
vessel. would still have to exercise extraordinary diligence in
A CC is bound to carry its passengers as far as safeguarding the comfort, convenience and safety of
human care and foresight can provide, using the the stranded passengers until they have reached their
utmost diligence of a very cautious person with due final destination. PAL was therefore remiss in its duty
regard for all circumstances. of extending utmost care to Zapatos while being
stranded in Cotabato City.
The CA held : "While the failure of Zapatos to
PAL vs CA, G.R. 82619, Sept. 1993 reach his destination xxx in accordance with the
contract of carriage was due to the closure of the
F: Pedro Zapatos was among 21 passengers on a airport on account of rain and inclement weather xxx it
PAL flight from Cebu to Ozamis. The flight was Cebu- becomes the duty of PAL to provide all means of
Ozamis-Cotabato. Fifteen minutes before landing in comfort and convenience to its passengers when they
Ozamis, the pilot received a message that the airport would have to be left in a strange place in case of such
was closed due to heavy rains and inclement weather by-passing. If the cause of non-fulfillment of the
and that he should proceed to Cotabato City. In contract is due to a fortuitous event, it has to be the
Cotabato, PAL informed the passengers of their options sole and only cause. Since part of the failure to
and that due to limited number of seats in the other comply with the obligation to deliver its passengers
flights, the basis for priority would be the check-in safely to their destination lay in PAL's failure to provide
sequence at Cebu. Zapatos chose to return to Cebu comfort and convenience to its stranded passengers
but was not accommodated because he checked in as using extraordinary diligence, the cause of non-
passenger no. 9. However, his personal belongings fulfillment is not solely and exclusively due to
including a camera from Japan were still on board the fortuitous event, but due to something that PAL could
flight to Manila. He tried to stop the departure but his have prevented, PAL becomes liable to the passenger."
plea fell on deaf ears. He was given a free ticket to However the SC found that although PAL was remiss in
Iligan City which he received under protest. He was its duty of extending utmost care to Zapatos while
left at the airport. PAL neither provided him with being stranded in Cotabato City, there was no
transportation from the airport to the city proper nor sufficient basis to conclude that PAL failed to inform
food and accommodation for his stay in Cotabato City. him about his other options.
The next day, he purchased a ticket to Iligan City. He
informed PAL that he would not use the free ticket
because he was filing a case against PAL. His personal 3. Presumption of negligence
belongings were never recovered.
PAL denied that it unjustifiably refused to Art. 1756. In case of death of or injuries
accommodate Zapatos. It alleged that there was to passengers, common carriers are presumed
simply no more seat for him on Flight 560 to Manila; to have been at fault or to have acted
and that there was force majeure which was a valid negligently, unless they prove that they
justification for the pilot to bypass Ozamis City and observed extraordinary diligence as prescribed
proceed directly to Cotabato City. PAL contended that in articles 1733 and 1755.
it did not unjustifiably deny his demand for priority
over confirmed passengers which they could not 4 Agbayani:
satisfy in view of the limited seats. PAL also asserted
that it should not be charged with the task of looking Presumption of negligence.-- CCs are presumed to
after the passengers' comfort and convenience have been at fault or to have acted negligently in case
because the diversion of the flight was due to a of death or injuries to passengers. This disputable
fortuitous event, and that if made liable, an added presumption may only be overcome by superior
burden is given to PAL which is over and beyond its evidence that he had observed extraordinary diligence
duties under the contract of carriage. It argued that prescribed in 1733, 1755, 1756
granting there was negligence, PAL cannot be liable in Where death or injury results to the passenger
damages in the absence of fraud or bad faith. because of the negligence of the CC's Es, the CC is
The RTC held in favor of plaintiff. The CA liable, notwithstanding the fact that he had exercised
affirmed. all the diligence of a good father of a family, in the
selection and supervision of his EEs
Held: The passenger's complaint touched on PAL's xxx
indifference and inattention to his predicament and Consequently, in an action for damages, the
not on PAL's refusal to comply with his demand for issue is not WON the party seeking damages has
priority over the other passengers. He claimed that he adduced sufficient evidence to show the negligence of
was exposed to the peril of Muslim rebels and that he the CC but WON the carrier has presented the required
suffered mental anguish, mental torture, social quantum of proof to overcome the presumption that it
humiliation, besmirched reputation and wounded has been at fault or that it acted negligently in the
feeling. He referred to PAL's apathy. performance of its duty.

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TRANSPORTATION AND MARITIME LAW

In the exercise of extraordinary diligence, the in Tabon-Tabon, Butuan, the bus picked up a
CC must give due regard for all circumstances in passenger. A passenger suddenly stabbed a PC soldier
connection with the transport of passengers which caused commotion and panic among the
passengers. Two passengers jumped out (finding of
How presumption of negligence overcome.-- To the TC which was reversed by the CA) of the bus and
overcome such presumption, it must be shown that were found dead as a result of head injuries. The
the CC had observed the required extraordinary passenger- assailant ran away from the bus but was
diligence or that the accident was caused by fortuituos killed by the police. The parents of the dead
event. In order to constitute caso fortuito that would passengers filed a complaint for a sum of money
exempt a person from responsibility, it is necessary against the CC, the owner and the driver.
that : The CC denied liability and alleged that the
1. The event must be independent of human driver was able to transport his passengers safely to
will; their respective places of destination except for the
2. The occurrence must render it impossible two passengers who jumped off the bus without the
for the obligor to fulfill his obligation in a normal knowledge and consent, much less, the fault of the
manner; driver; that the CC exercised due diligence in the
3. The obligor must be free of a concurrent or choice of its EEs to avoid as much as possible
contributory fault or negligence. [Estrada vs accidents; that the incident was not a traffic or
Consolacion, 71 SCRA 523] vehicular accident but was an incident very much
beyond the control of the CC; that the CC was not a
Carrier not precluded from proving negligence party to the incident as it was an act of a third party
of other carrier involved in collision.-- While the who is not in any way connected with the CC and of
plaintiff-passenger does not need to prove the which they have no control and supervision. The CC
negligence of the CC, he may not preclude the CC argued that the incident's proximate cause was the act
from proving the legal defense of negligence of the of the passenger who ran amuck and which triggered
other vehicle involved in the collision (the CC may file off the commotion and panic.
a third-party complaint against the other vehicle for The TC dismissed the complaint. The CA
reimbursement) reversed and ordered the CC, the owner and driver
solidarily liable to the heirs of the deceased.
"Last clear chance" rule not applicable to
contracts of carriage.-- The principle of last clear Held : The CC is liable for the death of the passengers.
chance applies only in a suit between the owners and Bachelor Express as a CC is bound to carry its
drivers of two colliding vehicles; it does not apply passengers safely as far as human care and foresight
where a passenger demands responsibility from the can provide using the utmost diligence of very
CC to enforce its contractual obligation; it would be cautious person, with due regard for all the
iniquitous to exempt the driver and his ER on the circumstances. In this case where passengers suffered
ground that the other driver was also negligent injuries which caused their death, under 1756, the CC
is presumed to have acted negligently unless it can
Court need not make express finding of carrier's prove that it had observed extraordinary diligence. The
fault or negligence.-- The court need not make an CC raised the defense of caso fortuito. Art. 1174
express finding of fault or negligence on the part of the provides that no person shall be responsible for those
CC in order to hold it responsible to pay the damages events which could not be foreseen or which though
sought by the passenger. By the contract of carriage, foreseen were inevitable. In Lasam vs Smith, the SC
the CC assumes the express obligation to observe held that a caso fortuito must have the following
extraordinary diligence in transporting the passenger elements: (1) The cause of the unforeseen and
This is an exception to general rule that negligence unexpected occurrence must be independent of the
must be proved. human will; (2) It must be impossible to foresee the
event; (3) The occurrence must be so as to render it
Carriers not ordinarily liable for injuries to impossible for the debtor to fulfill his obligation in a
passengers due to fires or explosions caused by normal manner; and (4) The obligor must be free
articles brought into conveyance by other from any participation in the aggravation of the injury
passengers.-- CC is not ordinarily liable for injuries resulting to the creditor. The running amuck of the
to passengers due to fires or explosions caused by passenger was the proximate cause of the incident
articles brought into conveyance by other passengers. and is within the context of force majeure.
Fairness demands that in measuring the CC's duty However, in order that a CC may be absolved
towards its passengers, allowance should be given to from liability in case of force majeure, it is not enough
the reliance that should be reposed on the sense of that the accident was caused by force majeure. The
responsibility of all the passengers in regard to their CC must still prove that it was not negligent in causing
common safety (that the passenger will not take with the injuries resulting from such accident. It must prove
him anything dangerous to his co-passengers.) For that there was no negligence or lack of care and
the carrier to be liable, he must be aware, through his diligence on the part of the CC.
EEs of the nature of the article or must have had some The TC and the CA had conflicting findings of
reason to anticipate danger therefrom (circumstances fact. The SC upheld the findings of the CA-- the driver
must show that there are causes for apprehension that did not immediately stop the bus at the height of the
the passenger's baggage is dangerous and that the CC commotion; the bus was speeding from a full stop; the
fails to act in the fact of such evidence) [Nocum vs victims fell from the bus door when it was opened or
Laguna Bus Co., 1969] gave way while the bus was still running; the
conductor panicked and blew his whistle after people
had already fallen off the bus; the bus was not
4. Force Majeure properly equipped with doors in accordance with law.
It is therefore clear that the petitioners have failed to
Bachelor Express vs CA 188 SCRA 217 overcome the presumption of fault and negligence
found in the law governing CCs.
F: Bus No. 800 owned by Bachelor Express and The CC's argument that it is not an insurer of
driven by Cresencio Rivera was the situs of a its passengers deserves no merit in view of the failure
stampede which resulted in the death of passengers of the CC to prove that the deaths of the 2 passengers
Beter and Rautrat. The bus came from Davao City on were exclusively due to force majeure and not to the
its way to Cagayan de Oro passing Butuan City. While failure of the CC to observe extra-ordinary diligence in
PAGE 35
TRANSPORTATION AND MARITIME LAW

transporting safely the passengers to their consideration, not contrary to law will still be void
destinations as warranted by law. where the passenger is not carried gratuitously.

Liability of owner of CC to accommodation


5. Limitation of liability; validity of passengers or invited guests.-- [Lara vs Valencia,
stipulations 1958] an owner of an automobile owes a guest the
duty to exercise ordinary or reasonable care to avoid
Art. 1757. The responsibility of the injuring him; since one riding in an automobile is no
common carrier for the safety of passengers as less a guest because he asked for the privilege of
required in Arts. 1733 and 1755 cannot be doing so, the same obligation of care is imposed upon
dispensed with or lessened by stipulation, by the driver and owner as in the case of one expressly
the posting of notices, by statements on tickets, invited to ride
or otherwise.

Art. 1758. When a passenger is carried 6. Responsibility for acts of EEs


gratuitously, a stipulation limiting the common
carrier's liability for negligence is valid, but not Art. 1759. Common carriers are liable for
for willful acts or gross negligence. the death of or injuries to passengers through
The reduction of fare does not justify any the negligence or willful acts of the former's
limitation of the common carrier's liability. employees, although such employees may have
acted beyond the scope of their authority or in
Ticket given to a passenger is a written violation of the orders of the common carrier.
contract.-- Ticket given to passenger is a written The liability of the common carrier does
contract with the ff. elements: (1) the consent of the not cease upon proof that they exercised all the
contracting parties manifested by the fact that the diligence of a good father of a family in the
passenger boards the ship and the shipper consents or selection and supervision of their employees.
accepts him in the ship for transportation; (2) cause or
consideration which is the fare paid by the passenger Art. 1760. The common carrier's
as stated in the ticket; (3) object, which is the responsibility prescribed in the preceding
transportation of the passenger from the place of article cannot be eliminated or limited by
departure to the place of destination which are stated stipulation, by the posting of notices, by
in the ticket. statements on the tickets, or otherwise.

Passenger bound notwithstanding his failure to 4 Agbayani:


sign ticket containing stipulation limiting
liability.-- Even if the passenger failed to sign the Liability for negligence or willful acts of
ticket, he is nevertheless bound by the provisions employees.-- Under 1759, CC are held liable for the
thereof. Such provisions are part of the contract of death or injuries to passengers caused by the
carriage, regardless of the passenger's lack of negligence or the willful acts of their EEs, although
knowledge or assent to the regulation. It is what is such EEs may have acted beyond the scope of their
known as a contract of adhesion which is not entirely authority or in violation of the orders of the CC. The
prohibited by law. The one who adheres to the CC cannot escape liability by interposing the defense
contract is in reality free to reject it entirely; if he that its EEs have acted without any authority or
adheres, he gives his consent. Accordingly, where the against the orders of the CC
CC incurred delay, it is liable only for the amount The passenger is entitled to protection from
printed in the ticket the passenger not having declared personal violence by the CC or its agents or EEs since
a higher value for his luggage nor paid addtl. charges. the contract of transportation obligates the CC to
transport a passenger safely to his destination and a
Dispensing with or limiting liability.-- General CC is responsible for the misconduct of its EEs
rule: Under 1757, the extraordinary diligence required
under 1733 and 1755 for the carriage of passengers Cardenas vs Fernando, 54 OG no. 4, p. 1043 (1957):
cannot be dispensed with or lessened (1) by (1) extraordinary diligence required of CC: calculated
stipulation, (2) by the posting of notices, (3) by to protect the passengers as demanded by the
statements on tickets, or (4) otherwise preciousness of human life and by the consideration
What cannot be stipulated in a carriage of that every person must in every way be safeguarded
passengers : against all injury; (2) liability for injury of passenger is
(1) absolutely exempting the CC from liability based on a breach of contract of carriage for failure to
from the passenger's death or injuries; bring the passenger safely to his destination
(2) lessening the extraordinary diligence
required by law to the diligence of a good father of a Reason for making the CC liable for the
family misconduct of its EEs in their own interest.--
The servant is clothed with delegated authority and
Exception: Effect of gratuitous carriage.-- charged with the duty by the CC, to execute his
Under 1758, the CC and the passenger may validly undertaking to carry the passenger safely; when the
stipulate limiting the CC's liability for negligence EE mistreats the passenger, he violates the
where the passenger is carried gratuitously (but the contractual obligation of the CC for which he
parties cannot stipulate to entirely eliminate liability of represents the CC
CC)
Liability of CC for defects of its equipment.-- A
Effect of reduction of fares.-- Under 1758 (2), passenger is entitled to recover damages from a CC
the reduction of fare does not justify any limitation of for an injury resulting from a defect in an appliance
the CC's liability -- the law requires gratuitous purchased from a manufacturer, whenever it appears
passage. that the defect would have been discovered by the CC
if it had exercised the degree of care which under the
The law is much stricter with respect to circumstances was incumbent upon it, with regard to
carriage of passengers as compared with carriage of inspection and application of the necessary tests; for
goods: a stipulation limiting the CC's liability in the purposes of this doctrine, the manufacturer is
writing, signed by the parties, supported by sufficient considered as being in law the agent or servant of the
PAGE 36
TRANSPORTATION AND MARITIME LAW

CC, as far as regards the work of constructing the a caso fortuito, both being unforeseeable and
appliance inevitable under the circumstances.
When the crime took place, the guard had no
Common carrier is exempt from acts of EE not duties to discharge. His position would be that of a
done in line of duty.-- The CC is exempt from passenger also waiting transportation and not of an EE
liability where the EE was never in a position in which assigned to discharge duties.
it became his duty to his ER to represent him in
discharging any duty of the CC towards the passenger;
the EE is deemed as a stranger or co-passenger since Maranan vs Perez, 20 SCRA 412
his act was not done in the line of duty
F: A passenger in a taxicab was stabbed and
Defense of diligence in selection, etc., of killed by the driver. The driver claimed self defense
employees.-- CC cannot escape liability by since accdg to him, he was stabbed first by the
interposing defense that he exercised due diligence in passenger. The taxicab operator claimed caso fortuito.
the selection and supervision of his EEs; his liability is
based on culpa contractual Held: The NCC unlike the OCC makes the CC
absolutely liable for intentional assaults committed by
When relationship of carrier and passenger its EEs upon its passengers (Art. 1754). The CC's
terminates.-- The relation of CC and passenger does liability is based on either (1) respondeat superior or
not cease at the moment that the passenger alights (2) the CC's implied duty to transport the passenger
from the CC's vehicle at a place selected by the CC at safely. Under respondeat superior (w/c is the minority
the point of destination, but continues until the view), the CC is liable only when the act of the EE is
passenger had reasonable time or a reasonable within the scope of his authority and duty. Under the
opportunity to leave the CC's premises. What is a second view, the CC is liable as long as the assault
reasonable time or a reasonable delay within this rule occurs within the course of the performance of the
is to be determined from all the circumstances EE's duty. It is no defense that the act was done in
excess of authority or in disobedience of the CC's
Elimination or limitation of carrier's liability.-- orders. The CC's liability is absolute in the sense that
Under 1760, the CC's liability for the negligence or it practically secures the passengers from assaults
willful acts of his EEs which cause death of or injury to committed by its own EEs. Three cogent reasons
passengers cannot be eliminated or limited by (1) underlie this rule : (1) the special undertaking of the
stipulation, (2) by the posting of notice, (3) by CC requires that it furnish the passengers the full
statements on the tickets, or (4) otherwise measure of protection afforded by the exercise of the
high degree of care prescribed in the law, from
Bataclan vs Medina, 104 Phil 181 violence and insults in the hands of strangers, other
passengers, and from its own servants charged with
F: supra. Bus turned turtle with gas leaking out. the passenger's safety; (2) liability is based on the
Rescuers brought torches which resulted in fire. CC's confiding in the servant's hands the performance
of his contract to safely transport the passenger,
Held : There was a breach of the contract of carriage delegating therewith the duty of protecting the
and negligence on the part of the agent of the CC, the passenger with utmost care prescribed by law; (3) as
driver. At the time of the blowout of the tires, the bus between the CC and the passenger, the CC must bear
was speeding. The proximate cause of the death was the risk of wrongful acts or negligence of the CC's EEs
the overturning of the vehicle which was followed by against passengers since it has the power to select
the negligence of the driver and the conductor who and remove them.
were on the road walking back and forth. They should It is the CC's obligation to select its drivers
have known that with the position of the bus, leakage with due regard not only to their technical competence
was possible aside from the fact that gas when spilled and physical ability but also to their total personality,
can be smelled from a distance. The failure of the including patterns of behavior, moral fiber, and social
driver and conductor to have cautioned or taken steps attitude.
to warn rescuers not to bring a lighted torch too near
the bus constitutes negligence on the part of the 7. Responsibility for acts of strangers
agents of the carrier. and co-passengers

Art. 1763. A common carrier is


De Gillaco vs MRR, 97 Phil 884 responsible for injuries suffered by a passenger
on account of the willful acts or negligence of
F: Plaintiff's husband was a passenger in the train other passengers or of strangers, if the common
from Calamba to Manila. When the train reached the carrier's employees through the exercise of the
Paco Railroad, a train guard of MRR was in the station diligence of a good father of a family could have
waiting for the same train to take him to Tutuban to prevented or stopped the act or omission.
report for duty. He had a long standing grudge against
Gillaco and he shot and killed him upon seeing him 4 Agbayani:
inside the train coach.
The CC is responsible for such willful acts or
Held : While a passenger is entitled to protection from negligence of other passengers or of strangers,
personal violence by the CC or its agents or EEs, the provided that the CC's EEs could have prevented or
responsibility of the CC extends only to those acts that stopped the act or omission through the exercise of
the CC could foresee or avoid through the exercise of ordinary diligence. If the injury could not have been
the degree of care and diligence required of it. The avoided by the exercise of ordinary diligence on the
OCC did not impose upon CC the absolute liability for part of the EEs of the CC, the CC is not liable
assaults of their EEs upon the passengers. Notice that the law speaks of injuries suffered
The act of the guard was entirely by the passenger but not his death. However, there
unforeseeable by MRR which had no means to appears to be no reason why the common carrier
ascertain or anticipate that the two would meet nor should not be held liable under such circumstances.
could it foresee every personal rancor that might exist The word "injuries" should be interpreted to include
between its EEs and its passengers. The shooting was "death." (Aguedo F. Agbayani, COMMERCIAL LAW
REVIEWER, 1988 ed.)
PAGE 37
TRANSPORTATION AND MARITIME LAW

Art. 1761. The passenger must observe


the diligence of a good father of a family to
Pilapil vs CA 180 SCRA 546 avoid injury to himself.

F: While on a bus, an unidentified bystander Art. 1762. The contributory negligence of


hurled a stone at the bus and hit Pilapil above his left the passenger does not bar recovery of
eye. He sustained some injuries to his eye. damages for his death or injuries, if the
proximate cause thereof is the negligence of the
Held: The law does not make the CC an insurer of the common carrier, but the amount of damages
absolute safety of its passengers. Art. 1755 qualifies shall be equitably reduced.
the duty of the CC in exercising vigilance to only such
as human care and foresight can provide. The Law does not protect negligence of passenger.--
presumption created by law against the CC is Law does not protect negligence of passenger to the
rebuttable by proof that the CC had exercised extent of doing harm or damage upon a public utility
extraordinary diligence in the performance of its
obligations and that the injuries suffered were caused Diligence required of passenger.-- Diligence of a
by fortuitous events. The liability of the CC good father of a family to avoid injury to himself.
necessarily rests upon its negligence, or its failure to
exercise the degree of diligence required by law. Effect of negligence of passenger.-- Where the
Under Art. 1763, the diligence required, with regards proximate cause of the death of or injury to the
to its liability in cases when intervening acts of passenger is his own negligence, and not that of the
strangers directly caused the injury, is the diligence CC, the CC is exempted from liability
only of a good father of a family and not the
extraordinary diligence generally required. The rule is Effect of passenger's contributory negligence.--
not so exacting as to require one charged with its Contributory negligence on the part of the passenger
exercise to take doubtful or unreasonable precautions does not justify the CC's exemption from liability.
to guard against unlawful acts of strangers. The CC Where it is not the proximate cause of the death or
would only be negligent if the tort caused by a third injury, he or his heirs are not barred from recovery of
person could have been foreseen and prevented by damages, provided of course that the CC is the
them. proximate cause of his death or injury
The injury was in no way connected to the
performance of the obligation of the bus company. It
was caused by a stranger, over which the carrier had Cangco vs MRR 38 Phil 768
no control or even knowledge of, and which could not
have been prevented. F: supra. EE riding on train who stepped on
watermelons.

Bachelor Express vs CA, 180 SCRA 217 Held: The conduct of plaintiff in undertaking to alight
while the train was yet slightly underway was not
F: supra. A passenger stabbed a PC officer which characterized by imprudence and that he was not
caused a commotion which resulted in the death of 2 guilty of contributory negligence.
passengers. The circumstances show that it was no means so risky
for him to get off while the train was yet moving. It is
Held: The CC raised the defense of caso fortuito. The not negligence per se for a traveler to alight from a
running amuck of the passenger was the proximate slowly moving train.
cause of the incident and is within the context of force
majeure. However, in order that a CC may be absolved
from liability in case of force majeure, it is not enough Isaac vs A. L. Ammen
that the accident was caused by force majeure. The
CC must still prove that it was not negligent in causing F: supra. Passenger aboard a bus who placed his
the injuries resulting from such accident. It must prove left arm on the window lost his arm when the bus
that there was no negligence or lack of care and collided with a pick up.
diligence on the part of the CC.
The TC and the CA had conflicting findings of Held: By placing his left arm on the window, the
fact. The SC upheld the findings of the CA-- the driver passenger is guilty of contributory negligence, and
did not immediately stop the bus at the height of the although contributory negligence cannot relieve the
commotion; the bus was speeding from a full stop; the carrier but can only reduce his liability (Art. 1762), this
victims fell from the bus door when it was opened or is a circumstance which militates against plaintiff's
gave way while the bus was still running; the position. It is negligence per se for passengers to
conductor panicked and blew his whistle after people protrude any part of his body and that no recovery can
had already fallen off the bus; the bus was not be had for an injury.
properly equipped with doors in accordance with law. In this case, the bus driver had done what a
It is therefore clear that the petitioners have failed to prudent man could have done to avoid the collision.
overcome the presumption of fault and negligence The injury was due to passenger's fault.
found in the law governing CCs.
The CC's argument that it is not an insurer of Liability of air carrier under the Warsaw
its passengers deserves no merit in view of the failure Convention (Oct. 12, 1929)
of the CC to prove that the deaths of the 2 passengers
were exclusively due to force majeure and not to the Art. 17. The carrier shall be liable for
failure of the CC to observe extraordinary diligence in damages sustained in the event of death or
transporting safely the passengers to their wounding of a passenger or any other bodily
destinations as warranted by law. injury suffered by a passenger, if the accident
which caused the damage so sustained took
place on board the aircraft or in the course of
8. Duty of passenger; effect of any of the operations of embarking or
contributory negligence disembarking.

PAGE 38
TRANSPORTATION AND MARITIME LAW

Art. 18. (1) The carrier shall be liable for In case of fraud, bad faith, malice or
damage sustained in the event of the wanton attitude, the obligor shall be
destruction or loss of, or of damage to, any responsible for all damages which may be
checked baggage or any goods, if the reasonably attributed to the non-performance
occurrence which caused the damage so of the obligation.
sustained took place during the transportation
by air. Art. 2203. The party suffering loss or
(2) The transportation by air within the injury must exercise diligence of a good father
meaning of the preceding paragraph shall of a family to minimize the damages resulting
comprise the period during which the baggage from the act or omission in question.
or goods are in the charge of the carrier,
whether in an airport or on board an aircraft, or, Art. 1764. Damages in cases comprised
in case of a landing outside an airport, in any in this Section shall be awarded with the title
place whatsoever. XVIII of this book concerning damages. Article
(3) The period of the transportation by 2206 shall also apply to the death of a
air shall not extend to any transportation by passenger caused by the breach of contract by
land, by sea, or by river performed outside an a common carrier.
airport. If however, such transportation takes
place in the performance of a contract for Art. 2206. The amount of damages for
transportation by air, for the purpose of loading, death caused by a crime or quasi-delict shall be
delivery, or transshipment, any damage is at least P 3,000 (now P50,000), even though
presumed, subject to proof to the contrary, to there may have been mitigating circumstances.
have been the result of an event which took In addition:
place during the transportation by air. (1) The defendant shall be liable for the
loss of the earning capacity of the deceased,
Art. 19. The carrier shall be liable for and the indemnity shall be paid to the heirs of
damages occasioned by delay in the the latter; such indemnity shall in every case be
transportation by air of passengers, baggage or assessed and awarded by the court, unless the
goods deceased on account of permanent physical
disability not caused by the defendant, had no
earning capacity at the time of his death;
SC has held that these provisions merely (2) If the deceased was obliged to give
declare the carrier liable for damages in the support according to the provisions of article
enumerated cases, if the conditions therein specified 291, the recipient who is not an heir called to
are present. Neither said provisions nor others in the the decedent's inheritance by the law of testate
Convention regulate or exclude liability for other or intestate succession, may demand support
breaches of contract by the carrier. from the person causing the death, for a period
not exceeding five years, the exact duration to
be fixed by the court;
D. Damages Recoverable from Common (3) The spouses, legitimate and
Carriers illegitimate descendants and ascendants of the
deceased may demand moral damages for
1. In general mental anguish by reason of the death of the
deceased.
Art. 1764. Damages in cases comprised
in this Section shall be awarded with the title
XVIII of this book concerning damages. Article Cariaga vs LTBCo., 110 Phil 346
2206 shall also apply to the death of a
passenger caused by the breach of contract by F: Edgardo Cariaga, a fourth year medical
a common carrier. student of UST, was a passenger of an LTBC bus which
bumped against a train of MRR on the national
Art. 2197. Damages may be: highway crossing a railroad tract at Laguna de Bay.
(1) Actual or compensatory; Cariaga suffered severe injuries on the head making
(2) Moral; him unconscious during the first 35 days after the
(3) Nominal; accident, reducing his intelligence by 50% and
(4) Temperate or moderate; rendering him in a helpless condition, virtually invalid,
(5) Liquidated; both physically and mentally. LTBC paid all medical
(6) Exemplary or corrective. expenses plus allowance during convalescence. Later,
Cariaga's parents brought an action to recover
damages from LTBC and MRR in the amount of P
2. Actual or compensatory 312,000 as actual, compensatory, moral and
exemplary damages. LTBC disclaimed liability and
Art. 2199. Except as provided by law or filed a cross-complaint against MRR for recovery of
by stipulation, one is entitled to an adequate expenses paid by it to the plaintiff placing MRR
compensation only for such pecuniary loss negligent for not providing a crossing bar at the
suffered by him as he has duly proved. Such national highway railroad track. Laguna CFI dismissed
compensation referred to as actual or the cross-complaint against MRR and held LTBC liable
compensatory damages. for P 10,000 as compensatory damages with interest.
Plaintiff and LTBC appealed.
Art. 2201. In contracts and quasi-
contracts, the damages for which the obligor Held: The train driver was not negligent. He sounded
who acted in good faith is liable shall be those the train's whistle four times before the intersection,
that are natural and probable consequences of which were heard even by the bus passengers. The
the breach of the obligation, and which the bus did not slow down but instead the bus driver tried
parties have foreseen or could have reasonably to pass the intersection before the train. In addition,
foreseen at the time the obligation was another LTBC bus which arrived ahead of the bus in
constituted. this case, at the crossing heeded the train whistle by
stopping and allowing the train to pass. Clearly, the
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TRANSPORTATION AND MARITIME LAW

bus driver was negligent in totally disregarding the probably would lead to such special loss if he
warning. On the other hand, MRR cannot be held to be defaulted. In order to impose on the defaulting party
contributorily negligent because LTBC was not able to further liability than for damages naturally and
discharge its burden of proof when it alleged that MRR directly, i.e. in the ordinary course of things, arising
violated its charter by failing to ring the locomotive from a breach of contract, such unusual or
bell. extraordinary damages must have been brought
The evidence shows that Ed C. had been within the contemplation of the parties as the
rendered physically and mentally invalid by the probable result of the breach at the time of or prior to
accident. He suffered head injuries specifically a contracting. In the absence of proof that Pan Am's
fractured right forehead necessitating the removal of attention was called to the special circumstances
all the right frontal lobe of his brain, which reduced his requiring prompt delivery of Pangan's luggages,
intelligence by 50% so that he can no longer finish his petitioner cannot be held liable for the cancellation of
medical course. In addition, he has to lead a quiet and Pangan's contracts as it could not have reasonably
retired life because if the tantalum plate which foreseen such eventuality when it accepted the
replaced a portion of his skull is pressed in or dented, luggage for transit. Pan Am was not privy to the
it would cause his death. contracts of Pangan nor was its attention called to the
LTBC admitted that under Art. 2201, it is liable condition therein requiring delivery of the promotional
for damages that are the natural and probable and advertising materials on or before a certain date.
consequences of the breach and which the parties had No attorney's fees could be awarded since
foreseen or could have reasonably foreseen at the there was no unjustified refusal by Pan Am to satisfy
time the obligation was constituted. It however claims the passenger's just and valid claim.
that the said provision contemplates only the medical,
hospital, and other expenses in the total sum of P
17,719.75. The SC ruled that the income which Ed Villa Rey Transit vs CA, 31 SCRA 511
could earn if he should finish the medical course, and
pass the corresponding board exams must be deemed F: Policronio Quintos boarded a Villa Rey Transit
included because they could have reasonably been bus at Lingayen, Pangasinan for Manila and was
foreseen by the parties at the time he boarded the seated on the first seat right side. When they reached
bus. the national highway in Pampanga, the bus frontally
While his scholastic record may not be first hit the rear side of a bull cart filled with hay. The end
rate, it is sufficient to justify the assumption that he of the bamboo pole tied to the cart hit the windshield
could have finished his course and would have passed and landed on the face of Quintos who was seated in
the board exams in due time. As regards the income front. He died of cerebral injuries. His sisters and
that he could possibly earn as a doctor, P 300 (accdg. surviving heirs brought an action against the bus co.
to LTBC witness, Dr. Doria) could easily be expected as The TC and CA held Villa Rey liable for P 63,750.00.
minimum monthly income of Ed C. had he finished his
studies. Compensatory damages should be increased Held: The determination of damages due is dependent
to P 25,000. on 2 factors : (1) on the no. of years on the basis of
The claim for moral damages could not be which damages shall be computed (life expectancy);
granted because Art. 2219 enumerates the instances and (2) rate at which the losses sustained should be
when moral damages may be recovered and the fixed.
present case does not fall under any of them, even CA determined life expectancy accdg. to the
par. (2) thereof because this case is not one of quasi- American Expectancy Table of Mortality; and since
delict and could not be considered as such because of Quintos was around 30 years old at the time of his
a pre-existing contractual relation between Ed C. and death : 2/3 x [80 - 30] = 33 1/3 years. The bus co.
LTBC. Neither could LTBC be liable under Art. 2220 wanted to use the 4 year basis adopted in Alcantara vs
because it did not act fraudulently or in bad faith. Surro but the court held that the case is not controlling
Attorney's fees could also not be granted because this as it did not lay down any rule on the length of time to
case does not fall under Art. 2208. be used in the computation of damages. In fact, it
The claim by the parents for actual and declared that there is no fixed basis for determination
compensatory damages is also without merit because of indemnity and much is left to the discretion of the
the present action is based upon a breach of contract court considering the material damages involved and
of carriage and the parents were not a party thereto, that there can be no exact or uniform rule for
and were not themselves injured as a result of the measuring the value of human life and the measure of
collision. damages cannot be arrived at by precise
mathematical calculations.
Villa Rey impugns the decision on the ground
Pan Am vs IAC, 164 SCRA 268 that damages will have to be paid NOW where most of
those sought to be indemnified will be suffered years
F: supra. Baggage containing promotional and later. This argument if offset by the fact that payment
advertising materials for films to be exhibited in the of the award will take place upon the finality of the
US, clutch bags, barong tagalogs and personal decision, fixed at the rate of P 2,184 per year and did
belongings was lost. PAN AM sought to limit its not anymore compute the potentiality and capacity of
liability to the amount specified in the ticket absent a Quintos to increase his future income, upon conclusion
declaration of higher valuation and the payment of of his training, when he would be promoted and
addtl. charges. receive a higher salary.
In determining the losses sustained by the
Held: On the basis of stipulations printed at the back dependents and heirs of Quintos. they consist NOT of
of the ticket, Pan Am contends that its liability for the the full amount of his earnings but of the support they
lost baggage of Pangan is limited to $ 600.00 ($20 x would have received from him had he not died. In
30 kilos) as the latter did not declare a higher value for fixing said amount, the necessary living expenses
his baggage and pay the corresponding charges. should therefore be deducted from his earnings. The
The SC applied the ruling in Mendoza vs PAL: amount recoverable would therefore be the NET
Before defendant could be held to special damages, earnings, which is the portion which the beneficiaries
such as alleged loss of profits on account of delay or would have received. To this sum must be added
failure of delivery, it must have appeared that he had P12,000 pursuant to Art. 104 and 107 of the RPC, in
notice at the time of delivery to him of the particular relation to Art. 2206, NCC and P 1,727.95 for the
circumstances attending the shipment, and which
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TRANSPORTATION AND MARITIME LAW

amount actually spent by the sisters for his medical discretion of the court, according to the
and burial expenses and circumstances of each case.
P 2, 500 attorney's fees.

Art. 2219. Moral damages may be


PAL vs CA, 185 SCRA 110 recovered in the following analogous cases :
(1) A criminal offense resulting in
F: In 1960, Nicanor Padilla boarded the PAL flight physical injuries;
from Iloilo to Manila. The plane crashed on Mt. Baco, (2) Quasi-delicts causing physical
Mindoro. The plane, a PI-C133, was manufactured in injuries;
1942 and was acquired by PAL in 1948. It had been xxx
certified airworthy by the Civil Aeronautics (10) Acts and actions referred to in
Administration. As a result of her son's death, Mrs. Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
Padilla demanded P 600,000 as actual and xxx
compensatory damages plus exemplary damages and
P 60,000 attorney's fees.
Prior to his death, Nicanor Padilla was 29 years Art. 2220. Willful injury to property may
old, President and General Manager of Padilla Shipping be a legal ground for awarding moral damages
Co. at Iloilo City, and a legal assistant of the Padilla if the court should find that, under the
Law Office. Upon learning of the death of her son, she circumstances, such damages are justly due.
suffered shock and mental anguish, because her son The same rule applies to breaches of contract
who was still single was living with her. Nicanor had where the defendant acted fraudulently or in
life insurance of P 20,000, the proceeds of which were bad faith.
paid to his sister. Eduardo Mate of the Allied Overseas
Trading Co. testified that the deceased was one of the Art. 2206. xxx
incorporators of the co. and also its VP with a monthly (3) The spouses, legitimate and
salary of P 455. Isaac Reyes, auditor of Padilla illegitimate descendants and ascendants of the
Shipping Co., declared that the deceased was deceased may demand moral damages for
President and General Manager and received a salary mental anguish by reason of the death of the
of P 1,500 per month. deceased.
The RTC and the CA awarded damages of P
477,000 as award for the expected income of the Fores vs Miranda 105 Phil 266
deceased, P 10,000 as moral damages; P 10,000 as
attorney's fees and to pay the costs. PAL appealed the F: supra. While the jeepney was descending the
decision since accdg. to it, the court erred in Sta. Mesa bridge at an excessive rate of speed, the
computing the awarded indemnity based on the life driver lost control, causing it to swerve and hit the
expectancy of the deceased rather than on the life bridge wall. Five of the passengers were injured,
expectancy of the mother. Accdg. to it, the life including the respondent. The CA awarded moral
expectancy of the deceased or of the beneficiary, damages.
whichever is shorter, is used in computing for amount
of damages. Held: Art. 1764 makes it all the more evident that
where the injured passenger does not die, moral
Held: Under Arts. 1764 and Article 2206 (1), the damages are not recoverable unless it is proved that
award of damages for death is computed on the basis the CC was guilty of malice or bad faith. In the case at
of the life expectancy of the deceased and not of the bar, there is no other evidence of such malice to
beneficiary. In this case, the lower courts determined support an award of moral damages. To award moral
the deceased gross annual income to be P 23,100 less damages for breach of contract, without proof of bad
P 9,200 as living expenses, resulting in a net faith or malice on the part of the CC, as required by
income of P 13,900. The lower court allowed the Art. 2220, would be to violate the clear provisions of
deceased a life expectancy of 30 years. Multiplying the law, and constitute unwarranted legislation. A
his annual net income by his life expectancy of 30 CC's bad faith is not to be lightly inferred from a mere
years, the product is P 417,000, which is the death finding that the contract was breached through
indemnity due to his mother and only forced heir. negligence of the CC's EEs. The exception is a mishap
Because of the long delay in this case, the resulting to the death of a passenger in which case
mother already died without being able to receive the Art. 1764 makes the CC subject to Art. 2206 (award of
indemnity she deserved. PAL is ordered to pay her moral damages).
heirs the death indemnity with legal rate of interest of
6% per annum.
Air France vs Carrascoso, 18 SCRA 155

3. Moral F: Plaintiff, a civil engineer, was a member of a


group of 48 Filipinos that left Manila for Lourdes on
Art. 2217. Moral damages include March 30, 1958. Air France, through its authorized
physical suffering, mental anguish, fright, agent, PAL, issued to plaintiff a first class round trip
serious anxiety, besmirched reputation, ticket from Manila to Rome. From Manila to Bangkok,
wounded feelings, moral shock, social he traveled first class, but at Bangkok, Air France
humiliation, and similar injury. Though forced him to vacate the first class seat that he was
incapable of pecuniary computation, moral occupying because there was a white man who had a
damages may be recovered if they are the better right to the seat. There was a commotion when
proximate result of the defendant's wrongful plaintiff first refused to give up his seat, but he was
act or omission. pacified by his fellow Filipino passengers to give up his
seat and transfer to another class.
Art. 2216. No proof of pecuniary loss is The lower court sentenced Air France to pay P
necessary in order that moral, nominal, 25,000 as moral damages, P 10,000 as exemplary
temperate, liquidated or exemplary damages damages, the difference in fare between first class and
may be adjudicated. The assessment of such tourist class plus P 3,000 for attorney's fees and costs
damages, except liquidated ones, is left to the of suit. The CA reduced the refund from P 393.20 to P
383.20.
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TRANSPORTATION AND MARITIME LAW

interest of ill will. It may not be humiliating to travel


Held: Air France contended that the issuance of the as tourist passengers, but it is humiliating to be
first class ticket was no guarantee that he would have compelled to travel as such, contrary to what is
a first class ride, but such would depend upon the rightfully to be expected from the contractual
availability of first class seats. The SC ruled that it undertaking.
could not understand how a reputable firm like Air Plaintiffs are entitled to moral damages.
France could have the indiscretion to give out tickets it Considering their official, political, social and financial
never meant to honor at all. It received the standing, they are awarded P 200,000 as moral
corresponding amount in payment of first-class tickets damages, P 75,000 as exemplary damages all with
and yet it allowed the passenger to be at the mercy of interest, and P 50,000 as attorney's fees considering
its EEs. Plaintiff was indeed confirmed for first class all the standing of plaintiff's counsel.
the way to Rome.
There was contract to furnish plaintiff a first
class passage. Said contract was breached when the Ortigas vs Lufthansa, 64 SCRA 610
CC failed to furnish the first class transportation at
Bangkok. Third, there was bad faith when petitioner's F: Plaintiff took a first class accommodation on
EE compelled Carrascoso to leave his first class Lufthansa Airlines in Rome for his trip to Manila, with
accommodation after he was already seated and to confirmation of the airlines office, but its EE on seeing
take a seat in the tourist class by reason of which he plaintiff's Filipino nationality in his passport, disallowed
suffered inconvenience, embarrassments and him to board the place and his seat was given to a
humiliation, thereby causing him mental anguish, Belgian. Plaintiff having a heart ailment was advised
serious anxiety, wounded feelings, and social by his physician to take only a first class seat, but he
humiliation, resulting in moral damages. It is true that was compelled to take an economy seat with a
the complaint did not use the term Bad Faith. But the promise of the Lufthansa EE that plaintiff will be
interference of BF is there. The manager not only transferred to first class in Cairo and onward to
prevented Carrascoso from enjoying his right to a first Hongkong. Upon arrival in Cairo, the promise was not
class seat; worse, he imposed his arbitrary will; he complied with. Similar false representations were
forcibly ejected him from his seat, made him suffer the made to him at Dharnan and Calcutta. Plaintiff sued
humiliation of having to go to the tourist class the airlines for damages. TC awarded plaintiff moral
compartment -- just to give way to another passenger and exemplary damages.
whose right thereto has not been established. This is
certainly BF. For the willful malevolent act of CC's Held: It is the opinion of the SC that moral damages
manager, the CC-ER must answer. Moral damages should be raised from P 100,000 to P 150,000 and
are recoverable. exemplary damages be increased from P 30,000 to P
CC's contract with Carrascoso is attended with 100,000. It is our considered view that when it comes
public duty. The expulsion of Carrascoso is a violation to contracts of common carriage, inattention and lack
of a public duty by the CC -- a case of quasi-delict. of care on the part of the CC resulting in the failure of
Damages are proper. The manner of ejectment of the passenger to be accommodated in the class
Carrascoso fits into the legal precept for awarding contracted for amounts to bad faith or fraud which
exemplary damages in addition to moral damages. entitles the passenger to an award of moral damages
in accordance with Art. 2220. In this case, the breach
appears to be of graver nature, since the preference
Lopez vs Pan Am, 16 SCRA 431 given to the Belgian passenger over plaintiff was done
willfully and in wanton disregard of plaintiff's rights
F: Plaintiffs made first class reservations with and his dignity as a human being and as a Filipino,
defendant air carrier, in its Tokyo-SF flight, which who may not be discriminated against with impunity.
reservation was confirmed and first class tickets Since both Alitalia and Lufthansa are members of IATA
issued; but defendant's agent by mistake canceled and are agents of each other, they are bound by the
plaintiff's reservations and thereafter deliberately mistakes committed by a member such as the mistake
withheld from plaintiffs the information, letting them of the Alitalia EE to inform Ortigas that he could travel
go on believing that their first class reservations stood first class instead of only being waitlisted. The award
valid and confirmed, expecting some cancellations of of higher damages is justified by the aggravation of
bookings would be made before the flight time, which the situation when the Lufthansa EE at Rome falsely
failed to occur. Upon arrival in Tokyo, only then were noted on Ortigas' ticket that he was traveling economy
the plaintiffs informed that there were no from Rome to HK and which was repeated four times.
accommodations for them in the first class, and they Also taken into consideration was the heart condition
were constrained, due to pressing engagements in the of Ortigas which gave him added apprehension about
US, to take the flight as tourist passengers, which they traveling economy against the advice of the doctor.
did under protest. Plaintiffs sued the defendant for
moral and exemplary damages. The Rizal CFI awarded 4. Exemplary
the plaintiffs moral and exemplary damages and
attorney's fees. Upon plaintiff's MFR, said damages Art. 2229. Exemplary or corrective
were increased in amount. damages are imposed, by way of example or
correction for the public good, in addition to the
Held: In so misleading the plaintiffs into purchasing moral, temperate, liquidated or compensatory
first class tickets in conviction that they had confirmed damages.
reservations when in fact they had none, defendant
willfully and knowingly placed itself into position of Art. 2232. In contracts and quasi
having breached its contract with plaintiffs. contracts, the court may award exemplary
Such actions of the defendant may indeed damages if the defendant acted in a wanton,
have been prompted by nothing more than the fraudulent, reckless, oppressive, or malevolent
promotion of its self-interest in holding on to plaintiffs manner.
as passengers and foreclosing on their chances to
seek the service of other airlines that may have been Art. 2233. Exemplary damages cannot be
able to afford to them first class accommodations. All recovered as a matter of right; the court will
the same, in legal contemplation, such conduct decide whether or not they should be
already amounts to action in BF. For bad faith means adjudicated.
a breach of a known duty through some motive of
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TRANSPORTATION AND MARITIME LAW

deleterious behaviors, specifically, in the case, to


Mecenas vs CA, 180 SCRA 83 compel CC to control their EEs, to tame their reckless
instincts, and to force them to take adequate care of
F: M/V Tacloban City (TC) left Amlan, Negros human beings and their property.
Oriental bound for Manila. M/V Don Juan (DJ) left
Manila bound for Bacolod. TC had visual contact of DJ
when they were about 5 miles apart and as a 5. Nominal, Temperate and Liquidated
precaution, it was steered to its left. DJ had radar
contact of TC when they were four miles apart and Art. 2221. Nominal damages are
following R18 of the International Rules of the Road adjudicated in order that a right of the plaintiff,
when a collision is possible, it was steered to its right. which has been violated or invaded by the
At 10:30 PM, both collided as a result of which DJ sank defendant, may be vindicated or recognized,
15 minutes later and hundreds of its passengers and not for the purpose of indemnifying the
perished. plaintiff for any loss suffered by him.
Petitioners, children of the victims, filed a case
against Negros Navigation, owner of DJ, based on Art. 2224. Temperate or moderate
quasi-delict. The RTC awarded damages of P 400,000 damages, which are more than nominal but less
for the death of plaintiffs' parents and P 15,000 for than compensatory damages, may be recovered
attorney's fees. The CA modified the award to P when the court finds that some pecuniary loss
100,000 as actual and compensatory damages. has been suffered but its amount cannot, from
the nature of the case, be proved with certainty.
Held: Before going into the issue, the SC ruled that
the action which was based on quasi-delict should be Art. 2226. Liquidated damages are those
appropriately regarded as grounded on contract, and agreed upon by the parties to a contract, to be
indulged in the presumption of negligence on the part paid in case of breach thereof.
of the CC although its EEs may have acted beyond the
scope of their authority or even in violation of its Art. 1757. The responsibility of a
instructions. Its liability would include moral damages common carrier for the safety of passengers as
(Art. 1764) and exemplary damages if the defendants required in Arts. 1733 and 1755 cannot be
acted recklessly or with gross negligence (Art. 2332). dispensed with or lessened by stipulation, by
There is no question that the defendants are the posting of notices, by statements on tickets,
negligent. As found by the CFI, DJ steered to the right or otherwise.
while TC continued its course to the left. There can be
no excuse for them not to realize that with such
maneuvers, they will collide. They executed Alitalia vs IAC, 192 SCRA 10
maneuvers inadequately and too late, to avoid
collision. The question is WON the defendants were F: Dr. Felipa Pablo, an associate professor of UP
recklessly or grossly negligent. The SC ruled in the and a research grantee of the Phil. Atomic Energy
affirmative. Association was invited to take part at a meeting
As for the captain, he was playing mahjong sponsored by the United Nations in Ispra, Italy. She
before and up to the time of the collision. WON he accepted the invitation and was then scheduled by the
was then off-duty is immaterial; there is, both organizers to read her paper. She was to be the 2nd
realistically speaking and in contemplation of law, no speaker on the first day of the meeting. She then
such thing as off-duty hours for the master of a vessel booked passage with Alitalia. She arrived in Milan on
at sea that is a CC upon whom the law imposes the the day before the meeting in accordance with the
duty of extraordinary diligence. When the collision itinerary set for her by Alitalia but her luggage was
occurred, the captain failed to supervise his crew in delayed as it was in one of the succeeding flights from
the process of abandoning the ship and he failed to Rome to Milan. However, the other flights from Rome
avail of measures to prevent the too rapid sinking of did not have her baggage on board. Her luggage
his vessel, thus aggravating the casualties. consisted of 2 suitcases-- one for her clothing and
As for Negros Aviation, in permitting, or in personal items and the other for her scientific papers,
failing to discover and correct the regularity of the slides and other research material.
captain's mahjong sessions while DJ was at sea, it Feeling desperate, she went to Rome to try to
must be deemed grossly negligent. It also sailed with locate her bags. She inquired about her suitcases in
an overload (1,004 passengers and crewmembers). the international and domestic airports and filled out
As for the failure of TC to follow R18 by turning the forms required by Alitalia for people in her
right instead of left, the SC ruled that it is not predicament. However, her baggage could not be
applicable and will not relieve DJ from responsibility if found. Discouraged, she returned to Manila without
the collision could have been avoided by proper care attending the meeting in Ispra, Italy.
and skill on her part or even by a departure from the In Manila, she demanded that Alitalia make
rules. DJ is still at fault when, upon seeing TC turn to reparation for damages suffered by her. Alitalia
its left, it still turned to its right resulting in the offered her free airline tickets which she rejected while
collision. instituting this action. Her bags were located and
The SC awarded moral damages of P 307,000 forwarded to Ispra but only on the day after her
and exemplary damages of P 307,000 and attorney's scheduled appearance. As she was no longer there to
fees of P 15,000 together with actual and accept delivery, her bags were not actually returned to
compensatory damages for wrongful death of P her until after 11 months. The CFI awarded nominal
126,000 and P 60,000 for a total of P 815,000. damages of P 20,000 and attorney's fees of P 5,000
Although the petitioners only asked for P 400,000 plus costs of the suit. The IAC increased the award of
award of damages granted by the CFI, the SC nominal damages to P 40,000. The increase was
increased it to P 800,000 following the doctrine that justified as follows-- considering the negligence
the SC must consider and resolve all issues which committed by defendant, the amount of P20,000 under
must be decided in order to render substantial justice present inflationary conditions as awarded to plaintiff
to the parties, including issues not explicitly raised by as nominal damages is too little to make up for the
the parties affected. plaintiff's frustration and disappointment in not being
In discussing the rule of exemplary damages in able to appear at said conference, and for the
law, the SC looks to it as an instrument to serve the embarrassment and humiliation she suffered from the
ends of law and public policy by reshaping socially academic community for failure to carry out an official
PAGE 43
TRANSPORTATION AND MARITIME LAW

mission for which she was singled out by the faculty to and further just and equitable relief in the premises."
represent her institution and the country. Also absent any claim for actual or compensatory
Alitalia appealed on the following grounds: (1) damages (she asked for moral and exemplary
That the Warsaw Convention should have been applied damages and attorney's fees), and with proof of Dr.
to limit Alitalia's liability; and (2) That there is no Pablo's right being violated, the issue of nominal
warrant in fact or in law for the award of nominal damages is raised.
damages and attorney's fees. The award of P 5,000 for attorney's fees is
reasonable. The law authorizes recovery of attorney's
Held: Under the Warsaw Convention, an air carrier is fees where the defendant's act or omission has
made liable for damages for: (1) The death, wounding compelled the plaintiff to litigate with third person or
or other bodily injury of a passenger if the accident to incur expenses to protect his interest, or where the
causing it took place on board the aircraft or in the court deems it just and equitable.
course of its operations of embarking or disembarking;
(2) Saludo vs CA 207 SCRA 498
The destruction, or loss of damage to, any registered
luggage or goods, if the occurrence causing it took F: After the death of plaintiff's mother Crispina
place during the carriage by air; and (3) Delay in the Galdo, Saludo in Chicago, Pomierski and Son Funeral
transportation by air of passengers, luggage or goods. Home, made the necessary preparations and
The Convention also limits the liability of the carriers arrangements for the shipment of the body from
for each passenger to 250,000 francs and for Chicago to the Philippines. They had the body
registered baggage and cargo to 250 francs per kg embalmed and secured a permit from the Philippine
unless the passenger has declared a higher rate and Vice Consul in Chicago. The Phil. Vice Consul sealed
has paid additional charges. The Warsaw Convention, the shipping case on Oct. 26,1976. On the same date,
however, denies to the carrier availment of the Pomierski brought the remains to the Continental
provisions which exclude or limit his liability, if the Mortuary Air Service (CMAS) which made the
damage is caused by his wilful misconduct or by such necessary arrangements such as flights, transfers,etc.
default on his part as is considered to be equivalent to CMAS is a national service used by undertakers which
wilful misconduct or if the damage is similarly caused furnishes the air pouch in which the casket is enclosed
by any agent of the carrier acting within the scope of in and they see to it that the remains are taken to the
his employment. The Convention does not thus proper air freigh terminal. CMAS booked the shipment
operate as an exclusive enumeration of the instances with PAL, through its agent Air Care International, with
of an airline's liability, or as an absolute limit of the Pomierski as shipper and Maria Saludo as consignee.
extent of that liability. Such proposition is not borne PAL Airway Bill was issued for the route from Chicago
out by the language of the Convention. The to SF on board TWA Flight 131 of Oct. 27, 1976, and
Convention should be deemed a liability only in those from SF to Manila, on board PAL Flight 107 of Oct. 27,
cases where the cause of the death or injury to person, 1976, and from Manila to Cebu on board PAL Flight 149
or destruction, loss or damage to property or delay in of Oct. 29, 1976.
its transport is not attributable to or attended by any Maria Saludo and Saturnino Saludo, children of
wilful misconduct, bad faith, recklessness, or the deceased were booked with United Airlines from
otherwise improper conduct. The Convention does not Chicago to California and with PAL from California to
regulate or exclude liability for other breaches of Manila. When she learned of her mother's
contract by the carrier. Otherwise, an air carrier would arrangements, she changed reservations from UA to
be exempt from any liability for damages in the event TWA. She watched from the look-out area but she saw
of its absolute refusal, in bad faith, to comply with a no body being brought on the flight. She reluctantly
contract of carriage. The Warsaw Convention has took the TWA flight with her cousin's assurance to look
invariably been held inapplicable, or as not restrictive into the matter. Upon arrival in SF, she went to the
of the carrier's liability, where there was satisfactory TWA counter to inquire about her mother's remains
evidence of malice or bad faith attributable to its but she was told that they did not know anything
officers and employees. about it. She then called Pomierski who then called
In the case at bar, no bad faith or otherwise CMAS which in a matter of 10 minutes told him that
improper conduct may be ascribed to the EEs of the remains had been switched with another body and
Alitalia. Dr. Pablo's luggage was eventually returned had been sent to Mexico. Based on the facts, there was
belatedly, but without appreciable damage. The fact a mix-up in Chicago Airport between the two bodies.
is, nevertheless, that some special species of injury Arrangements were made to send the body to
was caused to her because Alitalia misplaced her California through Texas. On October 28, 1976, the
baggage and failed to deliver it to her at the time remains arrived in SF and was received by PAL at 7:45
appointed -- a breach of its contract of carriage -- with p.m. The shipment was immediately loaded on PAL
the result that she was unable to read her paper that flight for Manila that same evening and arrived in
she had painstakingly labored over. The opportunity Manila on October 30, 1976, a day after its expected
to claim honor or distinction for herself, for UP and for arrival on October 29, 1976.
the country, was irretrievably lost to her. She also Plaintiffs then filed a case against PAL and
underwent profound distress and anxiety, which TWA before the CFI of Leyte, praying for the award of
gradually turned into panic and despair, when she actual damages of P 50,000, moral damages of P
learned that her suitcases were missing. 1,000,000, exemplary damages and attorney's fees
The compensation for the injury suffered by Dr. and costs of suit. The CFI and CA absolved the two
Pablo cannot under the circumstances be restricted to airline companies. Plaintiffs then appealed the
that prescribed by the Warsaw Convention for delay in decision on the ff. grounds: (1) That the delay in the
the transport of baggage. She is not entitled to be delivery of the remains was due to the fault of the
compensated for loss or damage to her luggage since airlines, (2) The one day delay in the delivery
they were ultimately delivered to her. She is however constitutes breach of contract as would entitle them to
entitled to nominal damages, which is adjudicated in damages, (3) That damages are recoverable by
order that a right of the plaintiff, which has been petitioners for the humiliating, arrogant, and
violated or invaded by the defendant, may be indifferent acts of the EEs of TWA and PAL. The airlines
vindicated and recognized, and not for the purpose of objected on the ground that this petition only raises
indemnifying the plaintiff for any loss suffered. factual questions. Since it is precisely the soundness
As to the argument that she failed to include a of the inferences or conclusions that may be drawn
specific claim for nominal damages in her complaint, from the factual issues which are here being assailed,
it suffices that her general prayer includes "such other
PAGE 44
TRANSPORTATION AND MARITIME LAW

the issues raised in the petition indeed warrant a of the package offered for transportation and is not
second look. bound to inquire particularly about them. It can safely
be said that a CC is entitled to fair representation of
Held: (1) Petitioners allege that private respondents the nature and value of the goods to be carried, with
received the casketed remains of petitioner's mother the concomitant right to rely thereon, and that a
on Oct. 26, 1976 as evidenced by the issuance of the carrier has no obligation to inquire into the correctness
PAL Airway Bill. From said date, private respondents or sufficiency of such information. The consequent
were charged with the responsibility to exercise duty to conduct an inspection arises in the event that
extraordinary diligence so much so that for the alleged there should be reason to doubt the veracity of such
switching of the caskets on Oct. 27, 1976, or one day representations.
after private respondents received the cargo, the latter In this case, private respondents had no
must necessarily be liable. Petitioners relied on the reason to doubt the truth of the shipper's
doctrine that the issuance of the bill of lading carries representations. The airway bill was issued on the
the presumption that the goods were delivered to the basis of such representations.
carrier issuing the bill, for immediate shipment, and it Neither can they be held accountable on the
is nowhere questioned that a bill of lading is prima basis of petitioner's theory that whoever brought the
facie evidence of the receipt of the goods by the cargo to the airport or loaded it on the plane did so as
carrier. A bill of lading is a written acknowledgment of an agent of private respondents, so that even if CMAS
the receipt of the goods and an agreement to was indeed at fault, the liability would be attributed to
transport and deliver them at a specified place to a the airlines. CMAS was not an agent of private
person named or on his order. A bill of lading is a respondents. It was hired to handle all the necessary
receipt as to the quantity and description of the goods shipping arrangements for the transportation of the
shipped and a contract to transport the goods to the remains. CMAS may be classified as a forwarder,
consignee or other person therein designated, on the which is regarded as the agent of the shipper
terms specified in such instrument. (Pomierski) and not of the crrier. It merely contracts
SC: An airway bill estops the carrier from for the transportation of goods by carriers and has no
denying receipt of goods. However, as between the interest in the freight but receives compensation from
shipper and the carrier, when no goods have been the shipper as his agent.
delivered for shipment no recitals in the bill can estop The facts of the case would point to CMAS as
the carrier from showing the true facts. We must the culprit. In fact, even the petitioners wrote CMAS
therefore allow the airline companies to explain, why, entertaining serious doubts as to whether they were
despite the issuance of the airway bill and the date responsible for the mix-up. But the court cannot rule
thereof, they deny having received the remains of on the possible liability of CMAS as such is not at issue
Saludo on Oct. 26, 1976. in this case and there has not been convincing
As found by the CA, the airway bill was issued, evidence on the matter.
not as evidence of receipt of delivery but merely as
confirmation for the booking made for the SF-Manila (3) Petitioners contended that TWA by agreeing to
flight scheduled on October 27, 1976. It was not until transport the remains, it made itself a party to the
Oct. 28 that PAL received physical delivery of the body contract of carriage nad was therefore bound by the
at SF. The extraordinary responsibility of CC begins airway bill. When TWA shipped the remains ten hours
from the time the goods are delivered to the carrier. earlier than scheduled, it allegedly violated the terms
This responsibility remains in force even when they are of the airway bill which compounded, if not directly
temporarily unloaded or stored in transit, unless the caused, the switching of the caskets. The EEs of TWA
shipper exercises the right of stoppage in transitu, and presumably caused the mix-up by loading the wrong
terminates ony after the lapse of a reasonable time for casket on the plane. TWA must be presumed
the acceptance of the goods by the consignee or other negligent unless such is rebutted. TWA contends that
person entitled to receive them. For such duty to it faithfully complied with the obligations under the
commence, there must in fact have been delivery of airway bill. Said faithful compliance was not affected
the cargo subject of the contract of carriage. Only by the fact that the remains were shipped on an earlier
when such fact of delivery has been unequivocally flight as there was no fixed time for completion of
esablished can the reqt. of extraordinary responsibility carriage stipulated on. TWA did not undertake to carry
arise. the cargo aboard any specified aircraft, in view of the
As found by the CA, the body was really condition on the back of the airway bill, which provides
received by PAL on Oct. 28, 1976 and it was from such that " xxx no time is fixed for the completion of the
date that it became responsible for the agreed cargo carriage, xxx and that Carrier may without notice
under the airway bill. Consequently, for the switching substitute alternate carriers or aircrafts xxx."
of caskets prior thereto which was not caused by them
and subsequent events caused thereby, PAL cannot be SC : TWA's contention is tenable. TWA can use
held liable. substitute aircraft, even without notice and without the
assumption of any obligation whatsoever to carry the
(2) Petitioners allege that even assuming CMAS was at goods on any specified aircraft. This is clearly
fault, PAL would still be liable because whoever sanctioned by the contract of carriage. When a CC
brought the cargo to the airport or loaded it on the undertakes to convey goods, the law implies a
plane did so as agent of PAL. contract that they shall be delivered at destination
within a reasonable time, in the absence of any
SC: This contention is without merit. When agreement as to the time of delivery. In case at bar, no
the cargo was received from CMAS, Air Care Intl, PAL's special contract for prompt delivery was entered into
agent and TWA had no way of determining its actual by the parties.
contents, since the casket was hermetically sealed by Condition No. 5 is binding on the plaintiff even
the Philippine Vice-Consul. They had to rely on the if it is printed at the back of the airway bill. This is in
information given by CMAS. No amount of inspection the nature of a contract of adhesion. However, such
by the airlines could have guarded against the condition only serves to insulate the carrier from
switching that had taken place. They had no authority liability in those instances when the changes in routes,
to unseal and open the casket. It is the right of the flights and schedules are clearly justified by the
carrier to require good faith on the part of those peculiar circumstances of a particular cae, or by
persons who deliver goods to be carried by it. In the general transportation practices, customs and usages,
absence of more definite information, the carrier has or by contingencies, emergencies in aviation, such as
the right to accept shipper's marks as to the contents weather turbulence, mechanical failure, reqts. of
PAGE 45
TRANSPORTATION AND MARITIME LAW

national security and the like. In this case, the delay (4) In case of a clearly unfounded civil
in the delivery of the remains cannot be attributed to action or proceeding against the plaintiff;
the fault, negligence or malice of private respondents. (5) Where the defendant acted in gross
When TWA shipped the remains on an earlier flight, it and evident BF in refusing to satisfy the
did so in the exercise of sound discretion and with plaintiff's plainly valid, just and demandable
reasonable prudence -- they wanted to assure that the claim;
shipment would be received in SF in sufficient time for (6) In actions for legal support;
transfer to PAL. TWA knew of the urgency of the (7) In actions for the recovery of wages
shipment due to the notation on the airway bill : "xxx or household helpers, laboreres and skilled
Please return bag first available flight to SFO." workers;
(8) In actions for indemnity under
(4) Petitioners alleged that private respondents are workmen's compensation and employer's
liable for tort on account of humiliating, arrogant and liability laws;
indifferent acts of their officers and personnel. They (9) In a separate civil action to recover
contended that there was no reason for the personnel civil liability arising from a crime;
to disclaim knowledge of the arrival or whereabouts of (10) When at least double judicial costs
the body other than their sheer arrogance, indifference are awarded;
and extreme insensitivity to their feelings. (11) In any other cases where the court
deems it just and equitable that attorney's fees
SC: It affirmed the CA's findings that TWA EEs and expenses of litigation should be recovered.
did not deal with petitioners in a grossly humiliating, In all cases, the attorney's fees and
arrogant or indifferent manner as to amount to BF or expenses of litigation must be reasonable.
malice. It must be pointed out that the lamentable
actuations of TWA's EEs leave much to be desired, Art. 2210. Interest may, in the discretion
particularly so given the grief of petitioners, their of the court, be allowed upon damages awarded
tension and anxiety wrought by the confusion and the for breach of contract.
fear about where their mother's remains were. Airline
companies are sternly admonished to strictly require
their personnel to be more accommodating to 4 Agbayani:
passengers and the general public.
Petitioners agonized for 5 hours unattended to Damages arising from death; factors to be
and without any assurance from the EEs of TWA. considered
Common sense should have dictated that they exert a 1. number of years on the basis of which the
little extra effort in making more extensive inquiry, by damages shall be computed
themselves or through their superiors, rather than just 2. the rate at which the losses sustained
shrug off the promblem with a callous and uncaring should be fixed. In the determination of the losses or
remark that they had no knowledge about it. damages sustained by dependents and heirs of the
The foregoing observations do not appear to deceased, said damages consist not of the full amount
be applicable to PAl and its EEs. of his earnings, but of the support they received or
would have received from him had he not died in
(5) In the absence of strong and positive evidence of consequence of the negligence of defendant.
fraud, malice or bad faith, moral damages cannot be In fixing the amount of support, only net
awarded. Neither can exemplary damages nor earnings are to be considered-- total earnings less
attorney's fees, in the absence of proof that expenses necessary in the creation of such earnings
defendants acted with malice, fraud or BF. The less living and incidental expenses
censurable conduct of TWA's EEs cannot be said to
have approximated the dimensions of fraud, malice or Damages recoverable when death occurs due to
BF. Nonetheless, the facts show that petitioners' right commission of crime.-- (1) indemnity for the death
to be treated with due courtesy in accordance with the of victim (P 50T); (2) indemnity for loss of earning
degree of diligence required by law to be exercised by capacity of the deceased; (3) moral damages; (4)
every common carrier was violated by TWA and this exemplary damages; (5) attorney's fees and expenses
entitles them, at least, to nominal damages from TWA of litigation; and (6) interest. Indemnity arising from
alone. Arts. 2221 and 2222 of the Civil Code makes it the fact of death is fixed whereas the others are still
clear that nominal damages are not intended for subject to the determination of the court based on
indemnification of loss suffered but for the vindication evidence presented; indemnity for death is distinct
or recognition of a right violated or invaded. They are and separate from the other forms of indemnity
recoverable where some injury has been done but the
amount of which the evidence fails to show, the
assessment of damages being left to the discretion of Common carrier not liable for moral damages to
the court accdg. to the circumstances of the case. passenger injured due to negligence of driver.--
Nominal damages of P 40,000 to be paid by TWA was A CC's bad faith is not to be lightly inferred from a
awarded in favor of petitioners as a reasonable mere finding that the contract was breached through
amount in the circumstances. negligence of the CC's employees (Fores vs Miranda)

Extent of liability of air carrier for death of


6. Attorney's Fees and Interest passenger:
(1) where there was no satisfactory explanation on
Art. 2208. In the absence of stipulation, the part of PAL as to how and why the accident
attorney's fees and expenses of litigation, other occurred, the presumption is that it was at fault, under
than judicial costs, cannot be recovered, except: Art. 1756
(1) When exemplary damages are (2) liability for lost earnings are the deceased
awarded; passenger's net earnings during his expected length of
(2) When the defendant's act or omission life based on accepted mortality tables (compensatory
has compelled the plaintiff to litigate with third damages)
persons or to incur expenses to protect his (3) PAL is not liable for exemplary damages
interest; where it was not proven that it acted in a wanton,
(3) In criminal cases of malicious fraudulent, reckless, oppressive or malevolent manner
prosecution against the plaintiff; [Davila vs PAL]
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TRANSPORTATION AND MARITIME LAW

where because of the BF of the CC, the passenger


Nature of liability of air carrier to its suffered social humiliation, wounded feelings, serious
passengers: anxiety and mental anguish
Under 2206, the heirs of the deceased
[Zulueta vs Pan Am] passenger may demand moral damages in an amount
commensurate with the mental anguish suffered by
F: Filipino passenger who went to relieve himself them
was berated by the captain for coming back late to the xxx
plane and was called a monkey. In a case where the passenger suffers physical
injuries because of the CC's injuries, he cannot recover
Held: A passenger is entitled to courteous treatment moral damages for such breach of contract since it
from the carrier and its EEs and failure of the CC to does not fall under any of the cases where moral
comply with this obligation will entitle the passenger damages are recoverable under Art. 2219
to damages. xxx
The relation between CC and passenger In determining the amount of moral damages,
involves special and peculiar obligations and duties, the TC may consider the nature and extent of the
differing in kind and degree, from those of almost injuries and the suffering occasioned by them and the
every legal or contractual relation. On account of the duration thereof. The appellate court should not
peculiar situation of the parties, the law implies a interfere unless such is palpably and scandalously
promise and imposes upon the CC the corresponding excessive so as to indicate that it was the result of
duty of protection and courteous treatment. passion, prejudice or corruption on the part of the TC
Therefore, the CC is under the absolute duty of
protecting his passengers from assault or insult by BF justifying moral damages must be in the
himself or his servants. securing, execution and enforcement of contract of
A contract to transport passengers is quite carriage. BF cannot be imputed but must be alleged
different in kind and degree from any other contractual and proved; mere carelessness of the CC's driver does
relation. And this, because of the relation which an air not per se constitute or justify an inference of malice
carrier sustains with the public. Its business is mainly or BF on the part of the CC
with the traveling public. It invites people to avail of xxx
the comforts and advantages it offers. The contract of CC is subsidiarily liable for moral damages in
air carriage, therefore, generates a relation attended actions ex delicto or where the action is based upon its
with a public duty. Neglect or malfeasance of the CC's liability arising from a crime
employees naturally could give ground for an action xxx
for damages. CC is not ordinarily liable for exemplary or
Passengers do not contract merely for corrective damages based upon the wrongful act of its
transportation. They have a right to be treated by the EE or driver where it did not have anything to do with
CC's EEs with kindness, respect, courtesy and due the wrongful act or had not previously authorized or
consideration. They are entitled to be protected subsequently ratified such act (Art. 2332) This cannot
against personal misconduct, injurious language, be presumed but must be proven by evidence;
indignities and abuses from such employees. So it is, exemplary damages cannot be recovered as a matter
that any rude or discourteous conduct on the part of of right
EEs towards a passenger gives the latter an action for
damages against the CC. Nominal and exemplary damages awarded for
willful breach of contract committed through agent or
Damages caused by CC on third persons.-- EE
Negligence refers to the failure to observe for the xxx
protection of the interests of another person that Where the CC has incurred in delay in the
degree of care, precaution, and vigilance which the delivery of the luggage of the offended party, but it
circumstances justify demand, whereby such other had not acted in BF nor been guilty of gross
person suffers injury negligence, the offended party is not entitled to moral
nor exemplary damages but only to the limited
Common carrier is liable only for damages that amount printed in the plane ticket where the offended
are natural and probable consequence of breach party had not declared a higher value nor paid addtl.
of contract.-- Where the CC is guilty of a breach of transpo charges
contract, but acted in GF, it is liable only for the
natural and probable consequences of the breach and
which the parties had foreseen or could have Liability of air carriers for moral and exemplary
reasonably foreseen at the time the obligation was damages.-- [Ortigas vs Lufthansa] (1) Under the pool
constituted (includes medical, hospital expenses) arrangement among different airlines of the IATA
agreement of which Alitalia and Lufthansa are
Actual damages.-- (1) lost income.-- includes signatories, both airlines are constituted as agents of
income to be earned by the injured passenger or each other in the issuing of tickets and other matters
deceased passenger had he finished his course (could pertaining to their relations with those who would
have been foreseen) need their services.
(2) sum being carried by the deceased (2) When it comes to contracts of common
passenger which was lost carriage, inattention and lack of care on the part of the
(3) funeral expenses CC resulting in the failure of the passenger to be
(4) attorney's fees accommodated in the class contracted for amounts to
(5) loss of merchandise carried by the BF or fraud which entitles the passenger to the award
deceased of moral damages. Where the passenger's seat was
(6) loss of baggage and personal belongings given to a white passenger, there is willful breach
giving rise to an action for moral damages.
Exception to rule that CC is not liable for moral (3) Exemplary damages were awarded.
damages in breach of contract: Defendant as an airline should be made to pay an
(1) where the mishap results in death of the amount that can really serve as a deterrent against a
passenger seeming pattern of indifference and unconcern, and
(2) where it is proved that the CC was guilty of discrimination for racial reasons, discernible in the
fraud or BF, even if death does not result Ex. treatment of air passengers.
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TRANSPORTATION AND MARITIME LAW

Art. 349. A contract of transportation by


[PAL vs CA, 106 SCRA 391] The duty to exercise the land or waterways of any kind shall be
utmost diligence on the part of the CC is for the safety considered commercial:
of passengers as well as for the members of the crew
or the complement operating the carrier. Any 1. When it involves merchandise or any
omission, lapse or neglect thereof will certainly result object of commerce.
to the damage, prejudice, injuries and even death to 2. When, no matter what its object may
all aboard the plane, passengers, and crew members be, the carrier is a merchant or is customarily
alike. [habitually] engaged in transportation for the
xxx public.
[KLM vs CA] A provision in passage ticket that
carriage by successive air carriers is to be regarded as Requisites for a contract of transportation by
a single operation makes the ticket-issuing carrier land or water to be commercial :
liable for tortious conduct of other carriers (1) transportation of merchandise is always
xxx commercial
Exemplary damages may be awarded where (2) transportation of person or news is
the vehicle involved in the accident operated under commercial only when the CC is a merchant or is
the kabit system, which is a pernicious system in habitually engaged in transportation for the public
violation of law and which is in fraud of the traveling * principal requirement : the CC is a merchant
public which has a right to expect that the holder of or is habitually engaged in transportation for the
the certificate of convenience be the one to actually public; the object carried is of little importance
operate his transport line.
xxx A contract of air transportation may be
CC is liable for nominal damages for its failure regarded as commercial since it is analogous to land
to bring passengers to their destination which is in and water transportation. The reason for its non-
violatin of their right as passengers. inclusion in the Code of Commerce was that at the
xxx time of its promulgation, air transportation on a
The CC is liable for the negligence of his driver commercial basis was not yet known.
in case of breach of contract and cannot avail of the
defense that he exercised due diligence in the
employment of his driver. The action for breach of C. Effect of Civil Code
contract imposes on the CC a presumption of liability
upon mere proof of injury to the passenger. Art. 1766. In all matters not regulated by
xxx this Code, the rights and obligations of common
An action for damages against CC for breach of carriers shall be governed by the Code of
contract is primary and independent and does not Commerce and by special laws. (New Civil
depend upon the previous conviction of the driver or Code.)
EE. Indemnification in a criminal prosecution is
distinct from that awarded as damages in a civil Art. 2270. The following laws and
action. regulations are hereby repealed:
(2) The provisions of the Code of
Commerce governing sales, partnership,
Other Principles : agency, loan, deposit and guaranty;
(4) All laws, Acts, parts of Acts, rules of
The offended party has the option between an court, executive orders, and administrative
action for enforcement of civil liability based on culpa regulations which are inconsistent with this
criminal and an action for recovery of damages based Code. (Ibid.)
on culpa aquiliana. Responsibility for negligence
under the Civil Code is entirely separate from
negligence under the Penal Code. There is now no distinction between a
transportation contract of a CC under the Civil Code
An independent civil action based on quasi- and a transportation contract under the Code of
delict against the ER-operator of a negligent driver Commerce
cannot be suspended by the filing of a criminal action The New Civil Code does not expressly repeal
against the driver. the provisions of the Code of Commerce on overland
transportation; it makes such provisions suppletory to
Death of driver is not a hindrance to a the provisions of the Civil Code on CCs.
separate quasi-delict action against the CC-employer

There is no error in awarding civil damages D. Contract of Carriage


against a driver in a criminal case even when a
separate civil action was filed against the ER. Culpa 1. Bill of Lading
contractual and an act or omission punishable by law
are two distinct sources of obligation. (a) Definition, Subject Matter

III. CODE OF COMMERCE PROVISIONS ON Art. 352. The bills of lading or tickets in
OVERLAND TRANSPORTATION cases of transportation of passengers may be
COMMERCIAL CONTRACTS FOR diverse, one for persons and another for
TRANSPORTATION OVERLAND baggage; but all of them shall bear the name of
the carrier, the date of shipment, the point of
departure and arrival, the cost, and with regard
A. Scope of Overland Transportation to the baggage, the number and weight of the
packages, with such other statements which
may be necessary for their easy identification.
B. Nature of Contract
A bill of lading may defined as a written
acknowledgment of the receipt of goods and an
agreement to transport and to deliver them at a
PAGE 48
TRANSPORTATION AND MARITIME LAW

specified place to a person named or on his order. It receipt of goods for transportation, it is in legal effect,
comprehends all methods of transportation. a bill of lading
A ticket issued by a carrier to a passenger is
Nature : (1) each bill is a contract in itself and the not only a receipt for the fare paid but is the contract
parties are bound by its terms between the passenger and the carrier, of the
(2) a bill of lading is also a receipt passenger's right to ride in the CC's vehicle
(3) it is also a symbol of the goods covered by
it Classes of bills of lading :
1. negotiable B/L - where it is stated that the
A bill of lading is also a document of title. A goods will be delivered to the bearer, or to the order of
document of title is any document used in the ordinary any person named in such document
course of business in the sale or transfer of goods, as 2. non-negotiable B/L - where the goods are to
proof of the possession or control of goods, or be delivered to a specified person
authorizing or purporting to authorize the possessor of 3. clean B/L - does not indicate any defect in
the document to transfer or receive, either by the goods
indorsement or by delivery, goods represented by such 4. foul B/L - indicates that the goods covered
document. by it are in bad condition
5. spent B/L - covers goods that have already
(b) Form, Contents been delivered by the CC without a surrender of a
signed copy of the B/L; the subsequent delivery of the
Art. 350. The shipper as well as the spent B/L cannot give to the buyer of it any actual
carrier of merchandise and goods may mutually control of the goods, or anything which can fairly be
demand of each other the issuance of a bill of called delivery
lading in which there shall be stated: 6. through B/L - issued by the CC who is
1. The name, surname, and domicile of obliged to use the facilities of other carriers as well as
the shipper. his own facilities for the purpose of transporting the
2. The name, surname, and domicile of goods from the city of the seller to the city of the
the carrier. buyer, which B/L is honored by the subsequent
3. The name, surname, and domicile of interested carriers who do not issue their own ladings
the person to whom or to whose order the goods 7. on board B/L - states that the goods have
are addressed, or whether they are to be been received on board the vessels which is to carry
delivered to the bearer of the said bill. the goods
4. A description of the goods, stating 8. received for shipment B/L - states that the
their generic character, their weight, and the goods have been received for shipment with or w/o
external marks or signs of the packages specifying the vessel by which the goods are to be
containing the same. shipped; issued when conditions are not normal and
5. The cost of the transportation. there is an insufficiency of shipping space
6. The date of which the shipment is 9. custody B/L - issued by the CC to whom the
made. goods have been delivered for shipment but the
7. The place of the delivery to the steamer indicated in the B/L which is to carry the
carrier. goods has not yet reached the port where the goods
8. The place and time at which the are held for shipment
delivery is to be made to the consignee. 10. port B/L - issued by the CC to whom the
9. The damages to be paid by the goods have been delivered and the steamer indicated
carrier in case of delay, if any agreement is in the B/L by which the goods are to be shipped is
made on this point. already in the port where the goods are held for
shipment

Art. 351. In transportation made by railroads or Negotiation of Bills by delivery/ by indorsement


other enterprises which are subject to
schedules or the time fixed by regulations, it Effect of fraud, accident on validity of
shall be sufficient that the bills of lading or the negotiation : not impaired where the person to whom
declarations of shipment furnished by the the bill was negotiated paid value thereof in GF
shipper refer, with respect to the rate, terms, without notice of the breach of duty or loss, theft,
and special conditions of the transportation, to fraud, accident, mistake, duress or conversion
the schedules and regulations, the application
of which he requests; and should no schedule be Who may negotiate? owner; any person to
determined, the carrier must apply the rate of whom possession or custody of the bill has been
the merchandise paying the lowest, with the entrusted by the owner
conditions inherent therein, always including
such statement or reference to them in the bill Rights acquired:
of lading which he delivers to the shipper. 1. such title to the goods as the person
negotiating the bill had or had ability to convey to a
buyer in good faith for value
Many of the items required in a bill of lading may be 2. direct obligation of the CC issuing the bill to
omitted with much advantage to commerce, which hold possession of the goods for him according to the
aims to have the greatest number of transactions in terms of the B/L as fully as if such CC contracted
the last possible time especially in cases where there directly with him
are tariffs or regulations issued by the carrier
company. In this case, the circumstances relative to Transfer of non-negotiable B/L
price, term and conditions of carriage may be omitted
and simple reference be made to the tariff and Rights acquired:
regulations under which the transportation is to be 1. as against the transferor, title to the goods
made. (Art. 351) subject to the terms of any agreement with the
transferor
The form of the bill of lading is not material : if 2. right to notify the CC who issued the bill and
it contains an acknowledgment by the carrier of the thereby acquire the direct obligations of such CC to
hold possession of the goods for him accdg to the
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TRANSPORTATION AND MARITIME LAW

terms of the document; prior to notification of the CC, Art. 357. If by reason of well-founded
the title of the transferee may be defeated by levy suspicions of falsity in the declaration of the
upon the goods or a subsequent purchaser from the contents of a package, the carrier should decide
transferor of a subsequent sale of the goods by a to examine it, he shall do so before witnesses,
transferor in the presence of the shipper or of the
consignee.
Should the shipper or consignee cited not
(c) Function appear, the examinations shall be made before
a notary, who shall draft a certificate of the
Art. 353. The legal basis of the contract result of the examination, for such purposes as
between the shipper and the carrier shall be the may be proper.
bills of lading, by the contents of which all If the declaration of the shipper should
disputes which may arise with regard to their be correct, the expenses caused by the
execution and fulfillment shall be decided, no examination and those of carefully repacking
exceptions being admissible other than forgery the packages shall be defrayed by the carrier,
or material errors in the drafting thereof. and in a contrary case by the shipper.

After the contract has been complied If the CC has a well-founded suspicion of falsity in the
with, the bill of lading shall be returned to the declaration as to the contents of a package, he may
carrier who may have issued it, and by virtue of examine it --> he must follow the procedure under 357
the exchange of this title for the article
transported, the respective obligations and 4. No bill of lading
actions shall be considered canceled, unless the
same act the claims which the contracting Art. 354. In the absence of a bill of
parties desire to reserve are reduced to writing, lading the respective claims of the parties shall
exception being made of the provisions of be decided by the legal proofs that each one
Article 366. may submit in support of his claims, in
accordance with the general provisions
In case the consignee, upon receiving the established in this Code for commercial
goods, cannot return the bill of lading contracts.
subscribed by the carrier, due to its loss or for
any other cause, he shall give said carrier a Art. 351. In transportation made by
receipt for the goods delivered, this receipt railroads or other enterprises which are subject
producing the same effect as the return of the to schedules or the time fixed by regulations, it
bill of lading. shall be sufficient that the bills of lading or the
declarations of shipment furnished by the
shipper refer, with respect to the rate, terms,
B/L constitutes the legal evidence of the contract of and special conditions of the transportation, to
transportation --> all disputes between the parties the schedules and regulations, the application
regarding the execution and performance of the of which he requests; and should no schedule be
contract shall be decided by the contents of the B/L determined, the carrier must apply the rate of
issued by the CC --> the law admits no exceptions the merchandise paying the lowest, with the
other than falsity and material error in the drafting of conditions inherent therein, always including
the B/L such statement or reference to them in the bill
of lading which he delivers to the shipper.
As a contract expressing the terms and
conditions upon which the property is to be
transported, it is to be regarded as merging all prior Bill not essential to contract : While under 350, the
and contemporaneous agreements of the parties, and shipper and the CC may mutually demand that a B/L is
in the absence of fraud, concealment or mistake, its made, it is not obligatory. The fact that a B/L is not
terms or legal import, when free from ambiguity issued does not preclude the existence of a contract of
cannot be explained nor added to by parol (Parol transpo. Provided there is a meeting of the minds and
Evidence Rule) from such meeting arise rights and obligations, there
should be no limitations as to form.
2. Refusal to Transport The B/L is not essential to the contract,
although it may become obligatory by reason of the
Art. 356. Carriers may refuse to accept regulations of companies or as a condition imposed in
packages which appear unfit for transportation; the contract by agreement of the parties themselves
and if said transportation is to be made by Where no B/L is issued, the disputes between
railway, and the shipment is insisted on, the the parties shall be decided accdg. to the rules laid
company shall carry them, being exempt from down in Art. 354
all liability if its objections are so stated in the
bill of lading.
E. Responsibility of the Carrier

CC cannot ordinarily refuse to carry a particular class 1. When it commences


of goods to the prejudice of the traffic in those goods
exception : when the goods or packages are unfit for Art. 355. The liability of the carrier shall
transportation begin from the moment he receives the
--> if transpo is insisted upon, railroads cannot refuse merchandise, in person or through a person
to carry them, but they shall be exempt from all entrusted therewith in the place indicated for
responsibility if their objections are made to appear in their reception.
the B/L
The responsibility of the CC commences from the
moment he receives the merchandise --> the delivery
3. Doubtful declaration of contents must be made to him personally or through his duly
authorized agent, and at the place indicated for
receiving the merchandise
PAGE 50
TRANSPORTATION AND MARITIME LAW

nature or by reason of an unavoidable accident,


2. Route there being no time for the owners to dispose of
the same, the carrier shall proceed to their sale,
Art. 359. If there should be an placing them for this purpose at the disposal of
agreement between the shipper and the carrier the judicial authority or of the officials
with regard to the road over which the determined by special provisions.
transportation is to be made, the carrier may
not change the route, unless obliged to do so by Burden of proof : the CC has the burden of proving that
force majeure; and should he do so without such the injury was occasioned by one of the excepted
cause, he shall be liable for any damage which causes
may be suffered by the goods transported for The shipper then has the burden to prove that
any other cause whatsoever, besides paying the although the injury may have been occasioned by one
amount which may have been stipulated for of the excepted causes, yet still the CC is responsible if
such a case. the injury might have been avoided by the exercise of
When on account of said force majeure reasonable skill and attention on his part
the carrier is obliged to take another route,
causing an increase in the transportation Art. 362 is in consonance with Art. 1735, NCC
charges, he shall be reimbursed for said --> except that under 1732, proof of extra-o diligence
increase after formal proof thereof. is required and not just ordinary diligence as implied
under 362

Where there is an agreed route, the CC shall be liable Where goods run risk of loss due to their
for losses due not only to the change of route but also nature, Art. 362 provides for the remedy of sale by the
to other causes, together with the indemnity agreed CC of the goods, placing them for the purpose at the
upon --> the CC may not avail of the contract limiting disposal of the judicial authority or of the officials
his liability in case of unjustified change of route designated by special provisions

Where there is no agreed route, the carrier


must select one which may be the shortest, least
expensive and practically passable Art. 1734. Common carriers are
responsible for the loss, destruction, or
deterioration of the goods, unless the same is
3. Care of Goods due to any of the ff. causes only:
(1) Flood, storm, earthquake, lightning,
Article 361. The merchandise shall be or other natural disaster or calamity;
transported at the risk and venture of the (2) Act of the public enemy in war,
shipper, if the contrary was not expressly whether international or civil;
stipulated. (3) Act or omission of the shipper or
Therefore, all damages and impairment owner of the goods;
suffered by the goods during the transportation, (4) The character of the goods or defects
by reason of accident, force majeure, or by in the packing or in the containers;
virtue of the nature or defect of the articles, (5) Order or act of competent public
shall be for the account and risk of the shipper. authority. (New Civil Code.)
The proof of these accidents is
incumbent on the carrier.
Art. 1735. In all cases other than those
mentioned in Nos. 1,2,3,4, and 5 of the
When goods are delivered on board a ship in good preceding article, if the goods are lost,
order and condition, and the shipper-owner delivers destroyed or deteriorated, CCs are presumed to
them to the shipper in bad order and condition, it then have been at fault or to have acted negligently,
devolves upon the shipowner to both allege and prove unless they prove that they observed
that the goods were damaged by reason of some fact extraordinary diligence as required in Art. 1733.
which legally exempts him from liability (Ibid.)
The shipper will suffer losses and
deteriorations arising from fortuitous event, force
majeure, or inherent nature and defects of the goods 4. Delivery
(at the risk and venture of the shipper)
It does not mean that the CC is free from (a) Condition of Goods
liability for losses and deterioration arising from his
negligence or fault, which is presumed Art. 363. With the exception of the cases
Relate this with Art. 1734 and 1735 of the Civil prescribed in the second paragraph of Article
Code 361, the carrier shall be obliged to deliver the
goods transported in the same condition in
which, according to the bill of lading, they were
Art. 362. The carrier, however, shall be at the time of their receipt, without any damage
liable for the losses and damages arising from or impairment, and should he not do so, he shall
the causes mentioned in the foregoing article if be obliged to pay the value of the goods not
it is proved that they occurred on account of his delivered at the point where they should have
negligence or because he did not take the been and at the time the delivery should have
precautions usually adopted by careful persons, taken place.
unless the shipper committed fraud in the bill of If part of the goods transported should
lading, making him believe that the goods were be delivered the consignee may refuse to
of a class or quality different from what they receive them, when he proves that he cannot
really were. make use thereof without the others.

If, notwithstanding the precaution


referred to in this article, the goods transported Duty to deliver goods : duty to deliver the goods in
run the risk of being lost on account of the the same condition in which accdg. to the B/L they
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TRANSPORTATION AND MARITIME LAW

were found at the time they were received, without packages, in which case said claim shall only be
damage or impairment --> otherwise, the CC is liable admitted at the time of the receipt of the
for damages packages.

Partial delivery: The consignee may refuse to After the periods mentioned have
receive the goods delivered, if he can prove that he elapsed, or after the transportation charges
cannot make use of them independently of those not have been paid, no claim whatsoever shall be
delivered --> true solution depends upon the economic admitted against the carrier with regard to the
use which the goods transported have (consignee condition in which the goods transported were
cannot be arbitrary and must justify his determination) delivered.
Estoppel of shipper by laches : neglect or
delay of shipper to demand immediately, or within a
reasonable time, the return of the merchandise In case of damaged goods, the damage may either be
shipped or its value in case of non-delivery (1) ascertainable only by opening of the packages, or
constitutes estoppel by laches (2) ascertainable from the outside part of the package
Places the CC at a disadvantageous position to In Case 1, the claim against the CC for
show that it had fulfilled what it had undertaken; damages must be made within 24 hours following the
makes it difficult for the CC to prove delivery receipt of the merchandise
In Case 2, the claim must be made at the time
of receipt
Art. 364. If the effect of the damage The claim must be made before the payment
referred to in Article 361 should be only a of transportation charges
reduction in the value of the goods, the ** otherwise, no action for damages may be
obligation of the carrier shall be reduced to the maintained against the CC
payment of the amount of said reduction in
value, after appraisal by experts. When period begins to run : period begins to
run when the consignee received possession of the
Where all the goods are delivered but damage goods such that he may exercise over it the ordinary
is to such an extent that their value is diminished, the control pertinent to ownership
obligation of the CC shall be reduced to the payment There must be delivery of the merchandise by
of the amount which, in the judgment of experts, the CC to the consignee at the place of destination -->
constitute such difference in value --> subject of Art. 366 applies only to cases of claims for damage to
course to other damages under the NCC goods actually turned over by the CC and received by
the consignee

Art. 365. If, on account of the damage, The conditions under Art. 366 are not
the goods are rendered useless for sale or limitation of action but are conditions precedent to a
consumption for the use for which they are cause of action --> if the shipper or consignee fails to
properly destined the consignee shall not be allege and prove the conditions under 366, he shall
bound to receive them, and may leave them in have no right of action against the CC
the hands of the carrier, demanding payment of
their value at the current market price that day. The CC may require in the B/L that the goods
If among the goods damages there be examined at the time of delivery thereof --> the CC
should be some in good condition and without may likewise waive such right
any defect whatsoever, the foregoing provision
shall be applicable with regard to the damaged Art. 366 is modified by a B/L prescribing a
ones, and the consignee shall receive those longer period for filing of written claim with the CC or
which are sound, this separation being made by its agent
distinct and separate articles, no object being The unilateral action of a CC in stamping a
divided for the purpose, unless the consignee condition in the notice of arrival, requiring examination
proves the impossibility of conveniently making of bad order cargo by the ship's agent before removal
use thereof in this form. from port authorities as condition precedent to an
The same provision shall be applied to action for recovery cannot modify or add conditions to
merchandise in bales or packages, with the B/L --> unreasonable and unfair in that it allows
distinction of the packages which appear sound. CC to avoid responsibility for the loss of or damage to
their cargo when in packages or covered

Where damage renders the goods useless for sale and The purpose of short period for claiming
consumption for the purposes for which they are damages : to afford the CC a reasonable opportunity
properly destined: and facilities to check the validity of the claims while
1. if the damage affects all goods, the the acts are still fresh in the minds of the person who
consignee may abandon all the goods to the CC who took part in the transaction and the documents are
shall pay the corresponding damages still available.
2. if the damage affects only some of the
goods, the consignee may abandon only the damaged The consignee may file a provisional claim : it
goods --> but if the consignee can prove that it is is not necessary that such claim should state a
impossible to conveniently use the undamaged goods detailed list of the loss or damage; they only have to
in that form, without the damaged goods, the law contain descriptions of the shipments in question
authorizes the consignee to abandon all the goods sufficient to have allowed the CC to make reasonable
verifications of such claim --> the determination of the
specific amount of damages claimed should be done
Art. 366. Within the twenty-four hours carefully and without haste and these can be done
following the receipt of the merchandise a claim only in a formal claim which will be filed after the
may be made against the carrier on account of provisional claim
damage or average found upon opening the
packages, provided that the indications of the This stipulation is in the nature of a limitation
damage or average giving rise to the claim upon the owner's right to recovery --> the burden of
cannot be ascertained from the exterior of said proof is on the CC to show that the limitation was
PAGE 52
TRANSPORTATION AND MARITIME LAW

reasonable and in proper form or within the time shall be ordered by the municipal judge, where
stated (see Southern Lines vs CA) there is no judge of first instance, to be placed
at the disposal of the shipper or sender, without
A a stipulation in the B/L providing for a prejudice to a person having a better right, this
shorter period than the statutory period within which deposit having all the effects of a delivery.
to bring action for breach is valid --> does not in
any way defeat the right to recover but merely
requires that said right be asserted by action at an Judicial deposit as a remedy:
earlier period (filing of claims is different from filing of 1. where the consignee cannot be found at the
suits) residence indicated
2. where the consignee refused to pay the
transportation charges
Art. 367. If there should occur doubts 3. where the consignee refuses to receive the
and disputes between the consignee and the goods
carrier with regard to the condition of goods Judicial deposit shall produce all the effects of
transported at the time of their delivery to the delivery subject to third persons with better rights
former, the said goods shall be examined by Duty to look for consignee : if consignee is not
experts appointed by the parties, and in case of present, he is entitled to reasonable notice from the
disagreement, a third one appointed by the CC of their arrival and a fair opportunity to take care of
judicial authority, the result of the examination and remove them
being reduced to writing; and if the persons : if the consignee is unknown to the CC, the
interested should not agree to the report of the latter must use proper and reasonable diligence to find
experts and could not settle their disputes, said him, and if the consignee still cannot be found, the
judicial authority shall order the deposit of the goods may be stored in a proper place and the CC will
merchandise in a safe warehouse, and the have performed his whole duty and shall be
parties interested shall make use of their rights discharged from liability as a CC
in the proper manner. Failure to look for consignee and to give him
reasonable notice shall make the CC liable for
If doubts and disputes should arise between the damages resulting from the delay in the receipt of the
consignee and the CC with respect to the condition of goods by the consignee --> apply 1738 on the liability
the goods transported at the time of the delivery, Art. of the CC even when the goods are deposited in its
367 shall govern --> expert opinion on the matter is warehouse until after the consignee has been given
not conclusive on the parties reasonable notice and opportunity to remove the
goods

(b) To Whom Delivery Made


Art. 1752. Even when there is an
Art. 368. The carrier must deliver to the agreement limiting the liability of the CC in the
consignee without any delay or obstruction the vigilance over the goods, the CC is disputably
merchandise received by him, by the mere fact presumed to have been negligent in case of
of being designated in the bill of lading to their loss, destruction or deterioration. (New
receive it; and should he not do so he shall be Civil Code.)
liable for the damages which may arise
therefrom.
(d) When to be made

The delivery must be made to the consignee Article 370. If a period has been fixed for
the delivery of the goods, it must be made
Where the B/L is issued to the order of the shipper, the within the same, otherwise the carrier shall pay
CC is under a duty not to deliver the merchandise the indemnity agreed upon in the bill of lading,
except upon presentation of the B/L duly indorsed by neither the shipper nor consignee being entitled
the shipper, and where the CC delivered the goods to to anything else.
another person who did not present the B/L, such CC is Should no indemnity have been agreed
liable for misdelivery --> duty to transport the goods upon and the delay exceeds the time fixed in
safely and to deliver them to the person indicated in the bill of lading, the carrier shall be liable for
the B/L the damages which may have been caused by
the
Misdelivery: Delivery to a person different from that delay.
indicated in the B/L --> different from non-delivery
In case of conflicting orders of the shipper and Art. 358. Should no period within which
the consignee (where one orders the return and the goods are to be delivered be previously fixed,
other orders the delivery of the goods), there is no the carrier shall be under the obligation to
other recourse than to determine at what moment the forward them in the first shipment of the same
right of the shipper to countermand the shipment or similar merchandise which he may make to
terminates --> this moment can be no other than the the point of delivery; and should he not do so,
time when the consignee or legitimate holder of the the damages occasioned by the delay shall be
B/L appears with such B/L before the CC and makes suffered by him.
himself a party to the contract (prior to that time, he is
a stranger to the contract)
Where period fixed for delivery : the CC must deliver
the goods within the time fixed --> for failure to do so,
(c) Judicial Deposit the CC shall pay indemnity stipulated in the B/L,
neither the shipper nor the consignee being entitled to
Art. 369. Should the consignee be not anything else --> however, under the CC, damages
found at the domicile indicated in the bill of shall be paid if the carrier refuses to pay the stipulated
lading, or should refuse to pay the indemnity or is guilty of fraud in the fulfillment of his
transportation charges and expenses, or to obligation (Art. 1126,NCC)
receive the goods, the deposit of said goods
PAGE 53
TRANSPORTATION AND MARITIME LAW

If no indemnity has been stipulated and the


delay exceeds the time fixed in the B/L, the CC shall be
liable for the damages that the delay may have Successive carriers shall assume the obligations of
caused, e.g. the difference between the MV of the previous carriers but have a right of action against
goods at the time when they should have been previous carriers is the latter are directly responsible
delivered, and the price at the time when they were for the fault giving rise to the claim of the shipper
delivered to which may be added reasonable expenses
caused by delay (f) Obligation to keep registry

A CC in GF may be held liable only for Art. 378. Transportation agents shall be
damages that were foreseen or might have been obliged to keep a special registry, with the
foreseen at the time the contract of transpo was formalities required by Article 36, in which there
entered into --> before a CC could be held liable for shall be entered, in progressive order of number
special damages, such as loss of profits on account of and dates, all the goods the transportation of
the delay or failure of deliver, he must have notice at which is undertaken, stating the circumstances
the time of the delivery of the particular circumstances required by Articles 350 et seq. for the
attending the shipment and which would probably lead respective bills of lading.
to such special loss if he defaulted (Mendoza vs PAL)
If the CC incurs in delay in transporting the
goods, a natural disaster shall not free such carrier (g) Compliance with
from responsibility; where the CC without cause delays administrative regulations
the transportation of the goods, the contract limiting
the CC's liability cannot be availed of in case of the Art. 377. The carrier shall be liable for all
loss, destruction or deterioration of the goods the consequences arising from noncompliance
Where property in the hands of a CC is not on his part with the formalities prescribed by
delivered within a reasonable time after it has reached the laws and regulations of the public
its destination, the CC in the absence of any legal administration during the entire course of the
exemption and after demand has been made and trip and upon arrival at the point of destination,
delivery refused, is liable for a conversion of the except when his omission arises from his having
property --> the consignee may waive title to the been induced into error by false statements of
property and sue for conversion and is entitled to the the shipper in the declaration of the
value of the goods at the time they should have been merchandise.
delivered to him --> subsequent tender of the goods If the carrier has acted in accordance
by the CC is not available as a defense with a formal order received from the shipper or
If there has been demand and the CC tenders consignee of the merchandise both shall incur
the goods, the consignee cannot refuse to receive the liability.
goods and sue for conversion; his sole remedy is an
action for damages on account of the delay --> there
can only be conversion if there has been demand and The CC is exempted from responsibility where his
the CC refuses delivery failure to comply arises from having been led into error
The time for delivery when no period fixed : by the falsehood on the part of the shipper in the
the CC shall be bound to forward them in the first declaration of the merchandise
shipment of the same or similar goods which he makes The shipper or consignee may become liable
to the point where he must deliver them --> should he for noncompliance with govt. rules and regulations,
not do so, the damages caused by the delay shall be when the CC has acted by virtue of a formal order of
for his account the shipper or consignee --> but the CC continues to
Art. 358 is not violated when though the be liable
goods were not shipped on the train agreed upon, they
were shipped on another train which arrived earlier F. Rights and Obligations of Shipper and/or
than the one agreed upon Consignee

1. Right to Damages
(e) Two or more carriers
(a) Condition imposed on right
Art. 373. A carrier who delivers
merchandise to a consignee by virtue of
agreements or combined services with other Art. 366. Within the twenty-four hours
carriers shall assume the obligations of the following the receipt of the merchandise a claim
carriers who preceded him, reserving his right may be made against the carrier on account of
to proceed against the latter if he should not be damage or average found upon opening the
directly responsible for the fault which gives packages, provided that the indications of the
rise to the claim of the shipper or of the damage or average giving rise to the claim
consignee. cannot be ascertained from the exterior of said
packages, in which case said claim shall only be
The carrier making the delivery shall also admitted at the time of the receipt of the
assume all the actions and rights of those who packages.
may have preceded him in the transportation. After the periods mentioned have
elapsed, or after the transportation charges
The shipper and the consignee shall have have been paid, no claim whatsoever shall be
an immediate right of action against the carrier admitted against the carrier with regard to the
who executed the transportation contract, or condition in which the goods transported were
against the other carriers who received the delivered.
goods transported without reservation.

The reservations made by the latter shall Art. 357. If by reason of well-founded
not however exempt them from the liabilities suspicions of falsity in the declaration of the
they may have incurred by reason of their own contents of a package, the carrier should decide
act. to examine it, he shall do so before witnesses,
PAGE 54
TRANSPORTATION AND MARITIME LAW

in the presence of the shipper or of the Par. 2 especially binds the horses, vehicles, vessels
consignee. and eqpt. and all other principal and accessory means
Should the shipper or consignee cited not of the CC in favor of the shipper --> this lien is a
appear, the examinations shall be made before security for the payment of the value of the goods
a notary, who shall draft a certificate of the which the CC must pay in case of loss or
result of the examination, for such purposes as misplacement
may be proper. Art. 1744, NCC. A stipulation between
If the declaration of the shipper should the CC and the shipper or owner limiting the
be correct, the expenses caused by the liability of the former for the loss, destruction or
examination and those of carefully repacking deterioration of the goods to a degree less than
the packages shall be defrayed by the carrier, extra-o diligence shall be valid, provided it be:
and in a contrary case by the shipper. (1) in writing, signed by the shipper or
owner;
(2) supported by a valuable consideration
Art. 353. The legal basis of the contract other than the service rendered by the CC; and
between the shipper and the carrier shall be the (3) reasonable, just, and not contrary to
bills of lading, by the contents of which all public policy. (New Civil Code.)
disputes which may arise with regard to their
execution and fulfillment shall be decided, no (c) Amount of damages for
exceptions being admissible other than forgery delay
or material errors in the drafting thereof.
After the contract has been complied Art. 371. In cases of delay on account of
with, the bill of lading shall be returned to the the fault of the carrier, referred to in the
carrier who may have issued it, and by virtue of foregoing articles, the consignee may leave the
the exchange of this title for the article goods transported in the hands of the carrier,
transported, the respective obligations and informing him thereof in writing before the
actions shall be considered canceled, unless the arrival of the same at the point of destination.
same act the claims which the contracting When this abandonment occurs, the
parties desire to reserve are reduced to writing, carrier shall satisfy the total value of the goods,
exception being made of the provisions of as if they had been lost or mislaid.
Article 366. Should the abandonment not occur the
In case the consignee, upon receiving the indemnity for loss and damages on account of
goods, cannot return the bill of lading the delays cannot exceed the current price of
subscribed by the carrier, due to its loss or for the goods transported on the day and at the
any other cause, he shall give said carrier a place where the delivery was to have been
receipt for the goods delivered, this receipt made. The same provision shall be observed in
producing the same effect as the return of the all cases where this indemnity is due.
bill of lading.

Damages for delay (par. 3) : Provided there is no


Effect of return of the B/L or giving of the express agreement as to indemnity in the B/L and
receipt: The respective obligations and actions of the there is no fraud on the part of the CC, and the goods
parties against each other shall be considered have a known current price at the place and on the
canceled, except where in the same act of return or day they should have been delivered, the damages
giving of a receipt the claims of the parties be reduced shall not exceed such value --> subject to Civil Code
to writing subject to the provisions of Art. 366 provisions on damages in case of delay

(b) Amount of damages for loss 2. Right to abandon

Art. 372. The value of the goods which Art. 371. In cases of delay on account of
the carrier must pay in case of their being lost the fault of the carrier, referred to in the
or mislaid shall be fixed in accordance with foregoing articles, the consignee may leave the
what is stated in the bill of lading, no proofs goods transported in the hands of the carrier,
being allowed on the part of the shipper that informing him thereof in writing before the
there were among the goods declared therein arrival of the same at the point of destination.
articles of greater value, and money. When this abandonment occurs, the
carrier shall satisfy the total value of the goods,
Horses, vehicles, vessels, equipments, as if they had been lost or mislaid.
and all the other principal and accessory means Should the abandonment not occur the
of transportation, shall be especially obligated indemnity for loss and damages on account of
in favor of the shipper, although with respect to the delays cannot exceed the current price of
railroads said obligation shall be subordinated the goods transported on the day and at the
to the provisions of the laws of concession with place where the delivery was to have been
regard to property and to those of this Code made. The same provision shall be observed in
with regard to the manner and form of making all cases where this indemnity is due.
attachments and seizures against the said
companies.
Right of abandonment: Exceptional but limited
right
The value of the goods stated in the B/L is conclusive The right must be exercised during the
between the parties and the shipper is not allowed to intervening period between the moment when the
prove a higher value fault of the CC produces a delay, which is the
It is only when the CC's fault is so gross as to generative cause of the action, until the moment just
amount to actual fraud, that the actual amount of the before the arrival of the goods at the place of delivery,
losses and damages suffered may be proved by the by communicating such abandonment to the CC in
shipper against the carrier writing

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TRANSPORTATION AND MARITIME LAW

Where these conditions do not concur, the bill of lading subscribed by the carrier, if one
refusal to accept cannot be effective were issued, be returned to him, exchanging it
for another containing the novation of the
Damages for abandonment : Art. 371 (2) --> subject to contract.
Civil Code The expenses arising from the change of
consignment shall be defrayed by the shipper.
Art. 360. The shipper may, without
changing the place where the delivery is to be 3. Obligation to pay transportation
made, change the consignment of the goods charges
delivered to the carrier, and the latter shall
comply with his orders, provided that at the Art. 374. The consignees to whom the
time of making the change of the consignee the remittance may have been made may not defer
bill of lading subscribed by the carrier, if one the payment of the expenses and transportation
were issued, be returned to him, exchanging it charges on the goods that they received after
for another containing the novation of the twenty-four hours have elapsed from the time
contract. of the delivery; and in case of delay in making
The expenses arising from the change of this payment, the carrier may demand the
consignment shall be defrayed by the shipper. judicial sale of the goods he transported to a
sufficient amount to cover the transportation
charges and the expenses incurred.
Art. 365. If, on account of the damage,
the goods are rendered useless for sale or Railroad corporations have the power to detain
consumption for the use for which they are freight, goods or luggage, to answer for the freight,
properly destined the consignee shall not be storage and other transportation charges
bound to receive them, and may leave them in In case of failure of the shipper, owner or
the hands of the carrier, demanding payment of consignee to pay for such charges, the CC has the
their value at the current market price that day. power to sell such freight, goods, or luggage at public
If among the goods damages there auction following the procedure under the law
should be some in good condition and without
any defect whatsoever, the foregoing provision
shall be applicable with regard to the damaged Art. 375. The goods transported shall be
ones, and the consignee shall receive those specifically bound to answer for the
which are sound, this separation being made by transportation charges and for the expenses
distinct and separate articles, no object being and fees caused by the same during their
divided for the purpose, unless the consignee transportation, and until the time of their
proves the impossibility of conveniently making delivery.
use thereof in this form.
The same provision shall be applied to This special right shall be limited to eight
merchandise in bales or packages, with days after the delivery has been made, and
distinction of the packages which appear sound. after said prescription the carrier shall have no
further right of action than that corresponding
to an ordinary creditor.
Art. 363. With the exception of the cases
prescribed in the second paragraph of Article
361, the carrier shall be obliged to deliver the Art. 376. The preference of the carrier to
goods transported in the same condition in the payment of what is due him for the
which, according to the bill of lading, they were transportation and expenses of the goods
at the time of their receipt, without any damage delivered to the consignee shall not be affected
or impairment, and should he not do so, he shall by the bankruptcy of the latter, provided the
be obliged to pay the value of the goods not action is brought within the eight days
delivered at the point where they should have mentioned in the foregoing article.
been and at the time the delivery should have
taken place.
If part of the goods transported should Art. 2241. With reference to specific
be delivered the consignee may refuse to movable property of the debtor, the ff. claims or
receive them, when he proves that he cannot liens shall be preferred :
make use thereof without the others. xxx
(9) Credits for transportation, upon the
Cases where consignee may abandon goods : goods carried, for the price of the contract and
1. Art. 363, in case of partial non-delivery incidental expenses, until their delivery and for
where the consignee proves that he cannot make use thirty days thereafter. (New Civil Code.)
of the goods capable of delivery independently of
those not delivered
2. Art. 365, where the goods are rendered Two sanctions for the enforcement by the CC of the
useless for sale and consumption for the purposes for payment of expenses and transpo charges :
which they are properly destined 1. Art. 374 - judicial sale of the goods
3. Art. 371, where there is delay through the transported
fault of the carrier 2. Art. 375 - creating a lien in favor of the CC
on the goods transported --> 8 day period has been
increased to 30 days by the NCC
2. Right to change consignment The purpose of the lien and time limit:
Reciprocal to that established in favor of the shipper
Art. 360. The shipper may, without under
changing the place where the delivery is to be
made, change the consignment of the goods Art. 372(par. 2); time limit rests on the necessity which
delivered to the carrier, and the latter shall the consignee must have for alienation of the goods,
comply with his orders, provided that at the by which the CC is given a period relatively urgent
time of making the change of the consignee the pertaining to the said goods transported --> after the
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TRANSPORTATION AND MARITIME LAW

time has prescribed, his preference prescribes and his


only remedy is by ordinary action IV. ADMIRALTY AND MARITIME COMMERCE

The mere fact that the goods remain in the A. Concept of Admiralty; Jurisdiction over
possession of the CC because they have not been Admiralty Cases
removed by the consignee, and the right of the CC to
demand the sale of the goods to satisfy the cost of BP 129, Sec. 19. Regional Trial Courts
transportation and other expenses, do not deprive the shall exercise exclusive original jurisdiction:
CC of its right to demand in a proper action the xxx
amounts owing to it by reason of the contract of (3) In all actions in admiralty and
transpo maritime jurisdiction where the demand or
claim exceeds one hundred thousand pesos
The bankruptcy of the consignee shall not cut (P100,000) xxx.
off the preference of the CC, provided that the claim is
made w/in 30 days from date of delivery (NCC)
BP 129, Sec. 33. Metropolitan Trial
Courts, Municipal Trial Courts and Municipal
5. Obligation to return bill of lading Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over
Art. 353. The legal basis of the contract civil actions and probate proceedings, testate
between the shipper and the carrier shall be the and intestate, including the grant of provisional
bills of lading, by the contents of which all remedies in proper cases, where the value of
disputes which may arise with regard to their the personal property, estate or amount of the
execution and fulfillment shall be decided, no demand does not exceed one hundred thousand
exceptions being admissible other than forgery pesos (P100,000), or in Metro Manila where such
or material errors in the drafting thereof. personal property, estate, or amount of the
After the contract has been complied demand does not exceed Two hundred thousand
with, the bill of lading shall be returned to the pesos (P200,000), exclusive of interest,
carrier who may have issued it, and by virtue of damages of whatever kind, attorney's fees,
the exchange of this title for the article litigation expenses, and costs, the amount of
transported, the respective obligations and which must be specifically alleged: Provided,
actions shall be considered canceled, unless the That interest, damages of whatever kind,
same act the claims which the contracting attorney's fees, litigation expenses, and costs
parties desire to reserve are reduced to writing, shall be included in the determination of the
exception being made of the provisions of filing fees: Provided, further, That where there
Article 366. are several claims or causes of action between
In case the consignee, upon receiving the the same or different parties, embodied in the
goods, cannot return the bill of lading same complaint, the amount of the demand
subscribed by the carrier, due to its loss or for shall be the totality of the claims in all the
any other cause, he shall give said carrier a causes of action, irrespective of whether the
receipt for the goods delivered, this receipt causes of action arose out of the same or
producing the same effect as the return of the different actions.
bill of lading.

International Harvester vs Aragon 84 Phil 363


Under par. 2, Art. 353, after the contract of transpo
has been complied with, the B/L shall be returned to F: The S/S Belle of the Sea took on board in LA,
the issuing CC in exchange for the goods transported goods for shipment to Manila and covered by B/L No.
which are delivered to the shipper or consignee 105. The S/S Belle of the Sea arrived in Manila and
Where the consignee upon receiving the goods discharged her cargo at the govt. piers under the
cannot return the B/L to the CC by reason of its loss or supervision and custody of the defendant Manila
any other cause, par. 3, Art. 353 provides that he must Terminal Inc. Of the entire shipment, one carton of
give the CC a receipt of the goods delivered assorted samples with a stipulated value of P200 was
not delivered to plaintiff Yaras and Co. The latter filed
Effect of return of the B/L or giving of the a complaint with the Municipal Court of Manila against
receipt: The respective obligations and actions of the International Harvester, as agent of the S/S Belle of
parties against each other shall be considered the Sea and Manila Terminal Inc. The complaint
canceled, except where in the same act of return or charged that the merchandise was lost through the
giving of a receipt the claims of the parties be reduced negligence of either of the defendants. Before trial
to writing subject to the provisions of Art. 366 could proceed, the International Harvester Inc. (IH)
filed a motion to dismiss on the ground that the court
had no jurisdiction. The motion was denied.
Prohibition proceedings were instituted before the CFI
G. Applicability of Provisions of Manila to stop the judge from proceeding with the
action. The petition was granted and the respondents
Art. 379. The provisions contained in now appeal.
Article 349 et seq. shall also be understood as Held : It is clear from the complaint that IH is being
relating to persons who, although they do not held liable only on the assumption that the goods had
personally effect the transportation of been lost in transit or before being discharged at the
commercial goods, contract to do so through pier. The liability of IH is predicated on the contract of
others, either as contracts for a special and carriage by sea between IH and Yaras & Co. as
fixed transaction or as freight and evidenced by the B/L, independently of the liability of
transportation agents. the Manila Terminal Co. as operator of an arrastre
In either case they shall be subrogated to service.
the place of the carriers with regard to the Admiralty has jurisdiction over all maritime
obligations and liability of the latter, as well as contracts, in whatever form, wherever they were
with regard to their right. executed or are to be performed, but not over non-
maritime contracts. Whether or not a contract is
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TRANSPORTATION AND MARITIME LAW

maritime depends not on the place where the contract Book of the Code of Commerce which deals with
is made and is to be executed, making the locality the maritime commerce and in which Art. 865 is found
test, but on the subject matter of the contract, making was evidently intended to define the law relative to
the true criterion a maritime service or a maritime merchant vessels and marine shipping, and the
transaction. Specifically, admiralty has jurisdiction of vessels intended in that Book are such as are run by
a proceeding in rem or in personam for the breach of a masters having special training with the elaborate
contract of affreightment, whether evidenced by a B/L apparatus of crew and equipment indicated in the
or a charter party. And typical of a controversy over Code. The word "vessel" used in the section was not
contracts of affreightment is a suit of one party intended to include all ships, craft, or floating
against the other for loss or damage to the cargo. This structures of every kind without limitation, and the
is the very case before us, because the respondent provision of that section should not be held to include
Yaras & Co. seeks to recover from the petitioner IH the minor craft engaged only in river or bay traffic. Vessels
value of certain lost cargo. of minor nature, such as river boats and those carrying
The contention of Yaras that the admiralty passengers from ship to shore are governed as to their
jurisdiction is not involved because the contract in liability in passengers, by the Civil Code.
question was made upon land and to be terminated The word ship and vessel, in their grammatical
upon land, merely reflects the English rule which had sense are applied to designate every kind of craft,
long been rejected in the US. It is now well-settled in large or small, merchant or war, a signification which
the latter country that the jurisdiction of admiralty in does not differ essentially from its juridical meaning
matters of contract depends upon the subject matter, according to which vessels for the purpose of the Code
i.e., the nature and character of the contract and that of Commerce, are considered not only those engaged
the English rule which conceded jurisdiction only to in navigation whether coastwise or high seas, but also
contracts made upon and to be performed upon floating docks, pontoons,dredges, scows, and other
navigable waters, is inadmissible, the true criterion floating apparatus for the service of the industry or
being that the contract has reference to maritime maritime commerce.
service or maritime transaction. Under the law, the Yet notwithstanding these principles from
CFI has jurisdiction over admiralty cases. which it would seem that any floating apparatus which
serves directly for the transportation of things or
persons or which indirectly is related to this industry,
B. Vessels ought to be subjected to the principles of the Code
with reference to ownership, transfer, rights,
1. Meaning registrations, etc. they are not applicable to small craft
which are only subject to administrative regulations in
the matter of port service and in the fishing industry.
Lopez vs Duruelo 52 Phil 229 But even if The Code Of Commerce was
applicable, a protest still need not be made since
F: Augusto Lopez, of Silay, Occidental Negros, under Art. 836, want of protest cannot prejudice a
wanted to embark on the interisland steamer San person not in a condition to make known his wishes. A
Jacinto bound for Iloilo. The steamer was anchored person who has suffered injuries like that of the
some half a mile from the shore or port of Silay. In plaintiff cannot be supposed to be in a condition to
order to board the steamer, Lopes boarded the motor make a protest.
boat Jison at the landing which was then engaged in
conveying passengers and luggage to and from the
steamer. Whether due to negligence or incompetence 2. Nature and acquisition of vessels
of Duruelo, the engineer of Jison aged 16, as alleged,
the boat approached too near to the stern of the Art. 573. Merchant vessels constitute
steamer wherein it was struck by the still turning property which may be acquired and transferred
propeller of the steamer. The boat sunk and Lopez by any of the means recognized by law. The
was thrown into the water against the propeller acquisition of a vessel must be included in a
wherein he suffered a bruise in the breast, two serious written instrument, which shall not produce any
fractures of the bones of the left leg and a compound effect with regard to third persons if not
fracture of the left femur. As a result, Lopez was recorded in the registry of vessels. The
hospitalized from February 28 to October 19, 1927 or ownership of a vessel shall also be acquired by
eight months. Lopez filed a complaint and sought the possession thereof in good faith for three
damages amounting to P120,000 alleging that he years, with a good title duly recorded.
suffered injuries due to the negligence and In the absence of any of these requisites,
inexperience having only been in its third day of uninterrupted possession for ten years shall be
apprenticeship on the day of the accident. It was also necessary in order to acquire ownership.
alleged that Jison was overloaded when it carried 14 A captain cannot acquire by prescription
passengers instead of its capacity for eight or nine. the ship of which he is in command.
The defendants assigned in it demurrer that the
plaintiff did not show a right of action since the
complaint did not allege that a protest had been Vessels: Those engaged in navigation , whether
presented by the plaintiff within 24 hours after the coastwise or on the high seas, including floating
occurrence, to the competent authority of the port docks, pontoons, dredges, scows and any other
where the accident occurred as provided under the floating apparatus destined for the services of the
Code of Commerce. CFI dismissed the complaint, industry or maritime commerce
hence the appeal.
Vessels engaged in the business of carrying or
Held : Assuming that article 835 of the Code of transporting passengers or goods for compensation,
Commerce states a condition precedent to the offering their services to the public are common
maintenance of an action in a case requiring protest, carriers --> governed primarily by the Civil Code
such as protest is nevertheless not necessary in the provisions on common carriers and subsidiarily by the
case at bar. The article is found in the section dealing Code of Commerce and special laws
with collisions and the context shows the collisions The Code of Commerce regulates merchant
intended are collisions of sea-going vessels. Said ships or those engaged in the transportation of
article cannot be applied to small boats engaged in passengers and freight from one port to another or
river and bay traffic. The vessels intended in the Third from place to another
PAGE 58
TRANSPORTATION AND MARITIME LAW

The Code of Commerce does not refer to agencies, as Bureau of Commerce, SEC, NACIDA,
pleasure ships, yachts, pontoons, health service and BOI, Export Incentives Board or Oil Commission,
harbor police vessels, floating storehouses, warships as now or may hereafter be required by law.
or patrol vessels, coast guard vessels, fishing vessels,
towboats and other craft destined to other uses, such
as coast and geodetic survey, scientific research and PD 761 as amended by PD 1064, 1521
exploration, crafts engaged in the loading and the
discharge of vessels, or transhipments from one vessel Sec. 806. Upon registration of a vessel of
to another domestic ownership, and of more than 15 tons
Vessels of a minor nature not engaged in gross, a certificate of Philippine registry shall
maritime commerce, such as, river boats and those be issued for it. If the vessel is of domestic
carrying passengers from ship to shore, must be ownership and of 15 tons gross or less, the
governed as to their liability to passengers, by the taking of the certificate of Philippine registry
provisions of the Civil Code shall be optional with the owner.
Domestic ownership means ownership
Modes of acquisition: (1) purchase and sale, vested in the citizens of the Philippines or
(2) prescription, (3) construction, (4) capture, (5) corporations or association organized under the
donation, (6) succession, and (7) other means, such as laws of the Philippines at least 60% of the C/S or
barter capital of which is wholly owned by citizens of
Possession in GF will ripen into ownership in 3 the Philippines, and in the case of corporations
years; if the possession is otherwise, it will ripen into or associations which will engage in coastwise
ownership in 10 years trade the president and managing directors
There can be no prescription in favor of the thereof shall be such citizens xxx
captain because the nature of the possession of the xxx an enterprise duly registered with
captain is such that he is only an agent of the owner, a the Board of Investments WON entirely owned
depositary of the vessel by foreign nationals, may register its own
vessels xxx if such vessels are to be used
The acquisition of a vessel must appear in a exclusively to transport its own raw materials
written instrument and such instrument must be and finished products in Philippine waters as an
registered in order that the transfer may affect third incident to its manufacturing, processing or
persons business activity registered with the BOI and
certified to by said Board as an essential
Art. 574. Builders of vessels may employ element in the operation of the registered
the material and follow with regard to their project.
construction and rigging the systems most
suitable to their interest. Ship owners and
seamen shall be subject to the provisions of the Rule III, Marina Rules and Regulations:
laws and regulations of the public
administration on navigation, customs, health, Subjects of Registration:
safety of vessels, and other similar matters. 1) All vessels used in Phil. waters, not
being transients of foreign registry, shall be
registered with the MARINA. To this end, it shall
The business of constructing and repairing vessels or be the duty of the master, owner and agent of
parts thereof shall not be considered a public utility every such vessel to make application to the
and no CPC shall be required thereof proper MARINA district office for registration
thereof within 15 days after the vessel becomes
subject to such registration.
Art. 585. For all purposes of law not 2) A vessel of 3 tons gross or less shall
modified or restricted by the provisions of this not be registered unless the owner shall so
Code, vessels shall continue to be considered as desire, nor shall documents licenses of any kind
personal property. be required for such vessel, but the proper fee
shall be charged for measurement when
Vessels are considered personal or movable property; measurement is necessary, except when the
but they partake to a certain extent, of the nature and same is engaged in towing or carrying of
conditions of real property, on account of their value articles and passengers for hire.
and importance in the world of commerce 3) All undocumented vessels shall be
numbered in such form as may be prescribed by
the Administrator.
Art. 712. Ownership is acquired by
occupation and by intellectual creation.
Ownership and other real rights over
property are acquired and transmitted by law,
by donation, by testate and intestate
succession, and in consequence of certain Vessels exempt from Registration :
contracts, by tradition. AFP vessels, vessels owned and/or
They may also be acquired by means of operated by the AFP or by foreign govt. for
prescription. (New Civil Code.) military purposes, and bancas, sail boats and
3. Registration; certificates issued; other water craft which are not motorized of
distinctions less than 3 gross tons shall not be subject to the
requirements of these rules and regulations
Tariff and Customs Code, Sec. 802 relative to registration and navigation, except in
so far as may be prescribed by regulations of
(1) vessels - every sort of boat, craft or MARINA.
other artificial contrivance used, or capable of
being used, as a means of transportation on The Phil. Coast Guard is vested with exclusive
water authority over the registration and documentation of
(2) duly registered - person, natural or Phil. vessels, as well as the issuance of all certificates,
juridical, registered with the proper govt.
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TRANSPORTATION AND MARITIME LAW

licenses, or other documents necessary or incident to bank's defective title. That the collector did not
such registration perform his duty was no fault of PNB.
The registration shall be effected at its home Judgment affirmed in part in the sense that as
port or at the nearest Coast Guard district or station between Yu and PNB, the latter has a superior right to
when the home port does not have such its claim for P20,000, and set aside in part in the sense
that the record is remanded for further proceedings.
Certificates of Philippine register: upon
registration of a vessel of domestic ownership and of
more than 15 tons gross, a certificate of Phil. register Rubiso vs Rivera 37 Phil 72
shall be issued for it
The purpose of certificates of register of F: Defendant Rivera acquired by purchase the
vessels : to declare the nationality of a vessel engaged pilot boat Valentina on a date prior to that of the
in trade with foreign nations and to enable her to purchase and adjudication at public auction by plaintiff
assert that nationality wherever found Rubiso. But the sale at public auction to Rubiso was
recorded in the office of the collector of customs on
Privileges of certificate: It confers upon the Jan. 27, 1915 and in the commercial registry on March
vessel the right to engage, consistently with law, in 4, 1915, while the sale to Rivera was entered in the
the Philippines coastwise trade and entitles it to the customs registry only on March 17, 1915. Lower court
protection of the authorities and the flag of the decided for plaintiff. Defendant appealed.
Philippines in all ports and on the high seas, and at the
same time secures to it the same privileges and HELD : The requisite of registration in the registry of
subjects it to the same disabilities as, under the laws the purchase of a vessel is necessary and
of the Philippines, pertain to foreign built vessels indispensable in order that the purchaser's rights may
transferred abroad to citizens of the Philippines be maintained against a claim filed by a third person.
Certificates of ownership : upon registration of a Such registration is required both Art. 573 of the Code
vessel of more than 5 tons gross, a certificate of of Commerce in connection with Sec 2 of Act No. 1900
ownership shall be issued for it which Act amended said article. The amendments
solely consisted in charging the Insular Collector of
Customs, as at present, with the fulfillment of the
4. Significance of registration of duties of the commercial register concerning the
transactions affecting vessels registering of vessels, so that the registration of a bill
of sale of a vessel shall be made in the Insular
Presumption of ownership from registration : the Collector of Customs, who, since May 18, 1909, has
presumption is that the person in whose name a been performing the duties of the commercial registry
vessel is registered has legal title thereto --> but such in place of this latter official. In view of said legal
is not conclusive proof against the real owners provisions, it is undeniable that defendant's rights
It is essential that a record of documents cannot prevail over those acquired by plaintiff in the
affecting the title of a vessel be entered in the ownership of said boat, in as much as defendant's
Philippine Coast Guard registration came after plaintiff's registration.

Arroyo vs Yu 54 Phil 511 C. Persons Participating in Maritime Commerce

F: The appeal of Yu relates to the preferences to 1. Shipowners and shipagents


the ten lorchas as between herself and the PNB.
Among the facts found by the trial judge is that they Art. 586. The owner of a vessel and ship
were owned by Lim Ponzo Navigation Co. They were agent shall be civilly liable for the acts of the
mortgaged to Po Pauco to guarantee a loan of captain and for the obligations contracted by
P20,000. This was duly registered with the register of the latter to repair, equip, and provision the
deeds. Po Pauco later mortgaged them in favor of PNB vessel, provided the creditors proves that the
and registered with the register of deeds but was amount claimed was invested therein.
recorded in the Office of Collector of Customs much By agent is understood the person
later. Meanwhile, Yu secured a judgment against Lim entrusted with the provisioning of a vessel, or
Ponzo Navigation Co. The notice of seizure was who represents her in the port in which she
recorded by the collector of customs of Iloilo on which happens to be.
date the records of the office disclosed the vessels as
free from encumbrances. Art. 587. The ship agent shall also be
civilly liable for the indemnities in favor of third
HELD : Sec. 1171 of AC has modified the provisions of persons which arise from the conduct of the
the Chattel Mortgage Law, particularly Sec. 4 thereof. captain in the care of the goods which the
It is now not necessary for a chattel mortgage of a vessel carried; but he may exempt himself
vessel to be noted in the register of deeds. But it is therefrom by abandoning the vessel with all her
essential that a record of documents affecting the title equipments and the freightage he may have
of a vessel be entered in the office of the collector of earned during the voyage.
customs at a port of entry. This is designed to protect
persons who deal with a vessel on the strength of the
record title. Mortgages on vessels., although not Art. 588. Neither the owner of the vessel
recorded, are good as between the parties. But as nor the agent shall be liable for the obligations
against creditors of the mortgagor, an unrecorded contracted by the captain if the latter exceeds
mortgage is valid. his powers and privileges inherent in his
position or those which may have been
However, we find an explanation of the delay conferred upon him by the former.
of registration with the collector of customs-because of However, if the amounts claimed were
doubts entertained by the latter relative to the made use of for the benefit of the vessel, the
applicability of Act No. 3324 to a mortgage executed in owner or agent shall be liable.
1918 in favor of a Chinese subject. This
uncontradicted fact must be taken as curing the
Liability of shipowner and shipagent :
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TRANSPORTATION AND MARITIME LAW

(1) under Art. 857, for the acts of the captain They shall likewise be liable in the same
(2) for contracts entered into by the captain to proportion for the expenses of maintenance,
repair, equip and provision the vessel, provided that equipment, and provisioning of the vessel,
the amount claimed was invested for the benefit of the necessary for navigation.
vessel
(3) for the indemnities in favor of third persons
which may arise from the conduct of the captain in the Art. 592. The resolutions of the majority
care of the goods transported, as well as for the safety with regard to the repair, equipment, and
of passengers transported provisioning of the vessel in the port of
(4) for damages to third persons for tort or departure shall bind the minority, unless they
quasi-delict committed by the captain, except collision renounce their participation therein, which must
with another vessel be acquired by the other part owners after a
(5) under Art. 826, for damages in case of judicial appraisement of the value of the portion
collision due to the fault, negligence, or want of skill of or portions assigned.
the captain, sailing mate, or any other member of the The resolutions of the majority relating
complement to the dissolution of the association and sale of
The agent is liable to the shippers and owners the vessel shall also be binding on the minority.
of the cargo transported by it, for losses and damages The sale of the vessel shall be made at a
occasioned to such cargo without prejudice to his public auction, subject to the provisions of the
rights against the owner of the ship, to the extent of law of civil procedure unless the part owners
the value of the vessel, its equipment and the freight unanimously agree otherwise, subject always to
the right of pre-emption and redemption
mentioned in Article 575.
Under 588, the shipowner and the shipagent are not
liable for the obligations contracted by the captain if
he exceeds his authority, unless the amounts claimed Art. 593. The owners of a vessel shall
were invested for the benefit of the vessel --> however have preference in her charter over other
under Art. 1759, NCC, the ship owner is liable for the persons, offering equal conditions and price. If
death of or injuries to the passengers which are two or more of the former should claim said
caused by the negligence or wilful acts of his EEs right the one having greater interest shall be
although such EEs may have acted beyond the scope preferred, and should they have an equal
of their authority or in violation of the orders of the interest it shall be decided by lot.
shipowner

Art. 594. The part owners shall elect the


Art. 589. If two or more persons should manager who is to represent them in the
be part owners of a merchant vessel, an capacity of agent.
association shall be presumed as established by The appointment of director or agent
the part owners. shall be revocable at the will of the partners.
This association shall be governed by the
resolutions of a majority of the members.
A majority shall be the relative majority Art. 595. The agent, be he at the same
of the voting members. time an owner of a vessel or a manager for an
If there should be only two part owners, owner or for an association of co- owners, must
in case of disagreement the vote of the member be qualified to trade and must be recorded in
having the largest interest shall be decisive. If the merchant's registry of the province.
the interests are equal, it shall be decided by The agent shall represent the ownership
lot. of the vessel, and may in his own name and in
The representation of the smallest part such capacity take judicial and extrajudicial
in the ownership shall have one vote; and steps in all that relates to commerce.
proportionately the other part owners as many
votes as they have parts equal to the smallest
one. Art. 596. The agent may discharge the
duties of captain of the vessel, subject, in every
A vessel cannot be detained, attached or case, to the provisions contained in Article 609.
levied upon execution in her entirety for the If two or more co-owners request the
private debts of a part owner, but the position of captain, the disagreement shall be
proceedings shall be limited to the interest the decided by a vote of the members; and if the
debtor may have in the vessel, without vote should result in a tie, the position shall be
interfering with her navigation. given to the part owner having the larger
interest in the vessel.
If the interest of the petitioners should
Art. 590. The co-owners of a vessel shall be the same, and there should be a tie, the
be civilly liable, in the proportion of their matter shall be decided by lot.
contribution to the common fund, for the results
of the acts of the captain, referred to in Article
587. Art. 597. The agent shall select and
Each part owner may exempt himself enter into an agreement with the captain, and
from this liability by the abandonment before a shall contract in the name of the owners, who
notary of the part of the vessel belonging to shall be bound in all that refers to repairs,
him. details of equipment, armament, provisions,
fuel, and freight of the vessel, and, in general,
in all that relates to the requirements of
Art. 591. All the part owners shall be navigation.
liable, in proportion to their respective
ownership, for the expenses which are incurred
by virtue of a resolution of the majority. Art. 598. The agent cannot order a new
voyage, nor make contracts for a new charter,
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nor insure the vessel, without the authority of


her owner or by virtue of a resolution of the Art. 606. If the captain should be a part
majority of the co-owners, unless these powers owner in the vessel, he may not be discharged
were granted him in the certificate of his unless the agent returns to him the amount of
appointment. his interest therein, which, in the absence of an
If he should insure the vessel without agreement between the parties, shall be
authority therefor he shall be subsidiarily liable appraised by experts appointed in the manner
for the solvency of the underwriter. established in the law of civil procedure.

Art. 599. The managing agent of an Art. 607. If the captain who is a part
association, shall give his co-owners an account owners should have obtained the command of
of the results of each voyage of the vessel, the vessel by virtue of a special agreement
without prejudice to always having the books contained in the articles of copartnership, he
and correspondence relating to the vessel and cannot be deprived thereof except for the
to its voyages at their disposal. reasons mentioned in Article 605.

Art. 600. After the account of the Art. 608. In case of the voluntary sale of
managing agent has been approved by a the vessel, all contracts between the agent and
relative majority, the co-owners shall satisfy the captain shall terminate, reserving to the latter
expenses in proportion to their interest, without his right to the indemnity which may be proper,
prejudice to the civil or criminal actions which according to the agreements made with the
the minority may deem fit to institute agent.
afterwards. The vessel sold shall remain subject to
In order to enforce the payment, the the security of the payment of said indemnity if,
managing agents shall be entitled to an after the action against the vendor has been
executory action, which shall be instituted by instituted, the latter should be insolvent.
virtue of a resolution of the majority, and
without further proceedings than the
acknowledgment of the signatures of the Art. 618. The captain shall be civilly
persons who voted for the resolution. liable to the ship agent and the latter to the
third persons who may have made contracts
* Note : an executory action is no longer recognized in with the former -
this jurisdiction 1. For all the damages suffered by the
vessel and its cargo by reason of want of skill or
Art. 601. Should there be any profits, the negligence on his part. If a misdemeanor or
co-owners may demand of the managing agent crime has been committed he shall be liable in
the amount due them, by means of an executory accordance with the Penal Code.
action without further requisite than the 2. For all the thefts and robberies
acknowledgment of the signatures in the committed by the crew, reserving his right of
instrument approving the account. action against the guilty parties.
3. For the losses, fines, and
confiscations imposed on account of violation of
Art. 602. The agent shall indemnify the the laws and regulations of customs, police,
captain for all the expenses he may have made health, and navigation.
from his own funds or from those of other 4. For the losses and damages caused by
persons, for the benefit of the vessel. mutinies on board the vessel, or by reason of
faults committed by the crew in the service and
defense of the same, if he does not prove that
Art. 603. Before a vessel goes out to sea he made full use of his authority to prevent or
the agent may at his discretion, discharge the avoid them.
captain and members of the crew whose 5. For those arising by reason of a
contract did not state a definite period nor a misuse of powers and nonfulfillment of the
definite voyage, paying them the salaries duties which pertain to him in accordance with
earned according to their contracts, and without Articles 610 and 612.
any indemnity whatsoever, unless there is an 6. For those arising by reason of his
expressed and specific agreement in respect going out of his course or taking a course which,
thereto. in the opinion of the officers of the vessel, at a
meeting attended by the shippers or
supercargoes who may be on board, he should
Art. 604. If the captain or any other member not have taken without sufficient cause.
of the crew should be discharged during the voyage, No exception whatsoever shall exempt
they shall receive their salary until their return to the him from his obligation.
place where the contract was made, unless there are 7. For those arising by reason of his
good reasons for the discharge, all in accordance with voluntarily entering a port other than his
Art. 636 et seq. of this Code. destination, with the exception of the cases or
without the formalities referred to in Article
Art. 605. If the contracts of the captain 612. 8. For those arising by reason of the
and members of the crew with the agent should nonobservance of the provisions contained in
be for a definite period or voyage, they cannot the regulations for lights and maneuvers for the
be discharged until the fulfillment of their purpose of preventing collisions.
contracts, except for reasons of insubordination
in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel Art. 618 provides for the direct responsibility of the
or to its cargo by malice or manifest or proven shipowner and shipagent to third persons; the captain
negligence. shall be civilly liable to the ship agent and the latter is
the one liable to third persons This article applies to
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breaches of contract and tortious negligence of the to its total loss as the value of both ship and cargo
captain bears to the value of ship and entire cargo before
But where the vessel is totally chartered for jettison was effected.
use of a single party, the shipowner and that party It is universally recognized that the captain is
may validly stipulate that the latter shall be exempt the representative of the owner and both under Art.
from liability for the negligence of the captain and 586 of the Code of Commerce, are civilly liable for the
crew acts of the master. When jettison of cargo occurs, it is
the duty of the captain to effect the adjustment,
Reason for imposition of liability on owner for liquidating and distribution of the general average; his
damages suffered by third persons occasioned failure gave rise to liability for which the owner of the
by the acts of the captain: To place the primary ship must answer.
liability upon the person who has actual control over The owner of the ship ordinarily has vastly
the conduct of the voyage and who has the most more capital embarked upon a voyage than has any
capital embarked in the venture, namely, the owner of shipper of cargo. Moreover, the shipowner, in
the ship, leaving him to obtain recourse, from other captain's person, has complete and exclusive control
individuals who have been drawn into the venture as of the crew and ship navigation. It is therefore proper
shippers that any person whose property may have been cast
The shippers and passengers in making should have a right of action directly against the
contracts with the captain do so through the shipowner for breach of duty which the law imposed
confidence they have in the shipowner who appointed on the captain with respect to such cargo. The evident
him --> they presume that the owner made a most intention of the Com. Code is to place primary liability
careful investigation before appointing him upon the person who has actual control over the
conduct of the voyage and who has most capital in the
Distinction between liability for lawful and venture, namely, the shipowner, leaving him to obtain
unlawful acts : recourse, as it is very easy to do, from other
The lawful acts and obligations of the captain individuals who have been drawn into the venture as
beneficial to the vessel may be enforced as against the shippers. Defendant is therefore liable.
agent/owner for the reason that such obligations arise
from the contract of agency ( provided that the captain Araullo, and Avancena, dissenting :
does not exceed his authority) Action for recovery, if any, should be brought
As to any liability incurred by the captain not against the defendant owner but against the
through his unlawful acts, the ship agent is simply captain thereof.
subsidiarily liable

Liabilities of captain: the responsibility of the (a) Responsibilities and


captain extends to every fraudulent or negligent act of liabilities
any person in the complement, in the execution of his
employment --> he does not respond for personal
injuries of the crew arising from personal quarrels but Yu Con vs Ipil 41 Phil 770
he is liable for damages to persons or property
occasioned by a maneuvering of the vessel, for failure F: Yu delivered to Ipil and Solamo P 450 for
to follow international rules and regulations, for failure delivery from Catmon to Cebu aboard a banca named
to take the precautions to prevent every damage Maria of which Lauron was the owner and Ipil and
possible to the vessel which has suffered an average Solamo, the master and supercargo, respectively. The
money together with various merchandise belonging
to plaintiff was to be carried from the port of Cebu to
Standard Oil vs Castelo 42 Phil 256 Catmon in Cebu. The money was placed by Yu in his
trunk and was transferred to that of Ipil. That night,
F: Castelo, owner of the interisland steamer the window of the stateroom in which the trunk
Batangueno, contracted with Chumbuque stipulating containing the money was kept was broken through by
that for a term of one year, the latter shall use it in persons not identified and through which the said
conveying cargo; that the crew should be supplied by trunk was stolen. It was found at the trial that Ipil and
the owner; and that the charterer should have no Solamo were negligent in guarding the money because
control over the captain and crew than to specify the they were sound asleep at the time of the theft and
voyages. Plaintiff delivered petroleum which was they assigned no one to stand guard during the night.
placed on deck. While the steamer was on her way, a Their defense was that Yu chartered and had control
typhoon came, compelling the captain to jettison the and responsibility of the banca and that the theft was
petroleum. When the storm abated, the ship made due to Yu's negligence. The CFI held Ipil and Solamo
port and 13 cases of petroleum were recovered, but negligent and held Lauron liable as ER and shipowner
the remainder was wholly lost. Plaintiff brought action under Articles 586, 587 and 618 of the Code of
to recover the petroleum value against the shipowner. Commerce.
CFI rendered judgment for plaintiff.
Held : Ipil and Solamo, as carriers and depositories of
Held : Ordinarily, the loss of cargo carried on deck the money were liable under the Civil Code, the theft
shall not be considered as general average loss, as not being a fortuitous event or of force majeure and
expressed in the York- Antwerp Rules. This rule, first they being manifestly negligent and at fault.
made during the days of sailing vessels has changed As to the liability of Lauron, the SC proceeded
and it is now generally held that jettisoned goods by first defining the banca "Maria" as within the
carried on deck, according to the customs of trade, by meaning of the term "vessel." Thus, according to the
steam vessels navigating coastwise and inland waters, foregoing definitions (by the Mercantile Code, by Reus
are entitled to contribution as general average loss. in Commentaries on the Code of Commerce, and by
The reason for this, in coastwise trade, is that boats Blanco) we hold that the banca "Maria" chartered by
are small and voyages are short, with the result that Yu Con from Lauron, was a "vessel" under Mercantile
the coasting vessel can use more circumspection Law and the Code of Commerce. Ipil, the master of
about the condition of the weather at departure time. the banca, was also held to be the captain (masters
It is evident therefore, that the loss of the petroleum is are to small vessels as captains are to big ones).
a general average with the result that plaintiff is Under Arts. 587 and 618, the shipowner shall be civilly
entitled to recover an amount bearing such proportion liable to third persons when the captain of the vessel
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TRANSPORTATION AND MARITIME LAW

causes the damage or loss to goods entrusted to him and vigilance of the officers and crew as exempting
by said third persons under a contract to carry said the shipowner from any liability for their faults, would
goods. Thus, it is well and god that the shipowner be render nugatory the solidary liability in Art. 827 for the
not held criminally liable for such crimes or quasi greater protection of injured parties.
crimes but he cannot be excused from liability for the (2) It is to be noted that Macrohon was not
damage and harm which in consequence of those acts duly licensed as a shipmaster and Lim knew of this
may be suffered by the third parties who contracted fact when it hired the former, thus deliberately
with the captain in his double capacity of agent and increasing the risk to which the unknowing passengers
subordinate of the shipowner himself. In maritime would be subjected. The liability of Lim, cannot,
commerce, the shippers and passengers in making therefore be identical to that of a shipowner who bears
contracts with the captain do so through the in mind the safety of the passengers by employing
confidence they have in the shipowner who appointed duly licensed officers. To hold, as the CA had done,
him. that Lim may limit his liability to the value of his
The owner of a minor craft who has equipped vessels, is to erase all differences between compliance
and victualed it for the purpose of using it in the with law and the deliberate disregard thereof.
transportation of merchandise from one port to The international rule is to the effect that the
another is under the law a shipowner and the master right of abandonment of vessels, as a legal limitation
of the craft is to be considered as its captain in the of a shipowner's liability, does not apply to cases
legal acceptation of this word, and the former must be where the injury of the average is due to shipowner's
held civilly liable for indemnities in favor of third own fault.
parties to which the conduct of the master/captain
may give rise in the custody of the effects laden on the
craft, and for all losses which, through his fault or (b) The doctrine of limited
negligence, may occur to the merchandise or effects liability
delivered to him for their transportation as well as for
the damages suffered by those who contracted with * Doctrine of limited liability is provided for in Arts.
him, in consequence of misdemeanors and crimes 587, 590 and 837
committed by him or by the members of the crew of
the craft. Art. 587. The ship agent shall also be
civilly liable for the indemnities in favor of third
persons which arise from the conduct of the
Manila Steamship vs Abdulhaman 100 Phil 32 captain in the care of the goods which the
vessel carried; but he may exempt himself
F: At around 7 p.m., M/L Consuelo V, owned by therefrom by abandoning the vessel with all her
Lim Hong To, laden with cargoes and passengers left equipments and the freightage he may have
Zamboanga City bound for Siokon under the command earned during the voyage.
of Faustino Macrohon. Among her passengers were
plaintiff Insa Abdulhaman, his wife, and their 5 kids.
On the same night, the M/S Bowline Knot owned by the A shipagent is liable notwithstanding the insolvency of
Manila Steamship Co. were navigating from Maribojoc the principal/owner
towards Zamboanga City. The weather then was
considered fair. BUT the ship agent may exempt himself from liability
At around 10 PM, without any warning to the by abandoning the vessel with all her equipment and
resting passengers, both vessels collided. M/L the freight it may have earned during the voyage -->
Consuelo V capsized, resulting in the death of the effect of abandonment is to extinguish the liability
Abdulhaman's five children. The above facts found by of the shipagent
the Board of Marine Inquiry, was used by the CFI to The ship agent's liability is confined to that
hold the owners of both vessels solidarily liable to which he is entitled as a matter of right to abandon :
Abdulhaman for P 20,784 as damages. The CA, the vessel with all her eqpt. and the freight it may
however, exempted Lim from liability by reason of the have earned during the voyage and to the insurance
sinking and total loss of his vessel. Hence, this thereof
petition by the Manila Steamship Co. questioning the Limited liability is not applicable when no
exemption of Lim while also alleging its exemption abandonment of vessel is made
having had exercised due diligence in the selection of
its EEs. Effect of abandonment: An abandonment amounts
to an offer of the value of the vessel, of her equipment,
Held : (1) While it is true that plaintiff's action against and freight money earned --> results in the cessation
petitioner is based on a tort or quasi-delict, the tort in of the responsibility of the owner/agent
question is not a civil tort under the Civil Code but is a Abandonment cannot be refused by creditors
maritime tort resulting in a collision at sea, governed This applies to all cases where the
by Arts. 826-939 of the Code of Commerce, while the owner/agent may be held liable for the negligent or
owners of both colliding vessels are solidarily liable for illicit acts of the captain
damages caused. This direct responsibility is
recognized in Art. 618 of the Code of Commerce, Effect of loss or destruction of vessel: The
under which the captain shall be civilly liable to the shipagent's liability is merely co-extensive with his
ship agent, and the latter is the one liable to third interest in the vessel such that the total loss thereof
persons. results in its extinction --> the total destruction of the
In fact it is a general principle well established vessel extinguishes a maritime lien as there is no
in the maritime law and custom, that shipowners and longer any res to which it can attach.
shipagents are civilly liable for the acts of the captain
(Art. 586) and for the indemnities due to the third Thre (3) cases where the loss of the
persons (Art. 587). This direct liability moderated and vessel extinguishes the liability of the
limited by the owner's right of abandonment of the shipowner:
vessel and earned freight (Art. 587) has been declared (1) under 587, liability arising from the
to exist not only in the case of breached contracts but conduct of the captain in the vigilance of the goods
also in cases of tortious negligence. and for the safety of the passengers and for any
It is easy to see that to admit the defense of liability arising from the negligent or illicit acts of the
the diligence of a bonus pater familias in the selection
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TRANSPORTATION AND MARITIME LAW

captain for which the shipowner or ship agent may be to sail after some loading. The boat was overloaded
held liable with cargo and passengers (180 instead of only 123).
(2) under 643, liability for the wages of the After two weeks of sailing, the sea became too
captain and the crew and for advances made by the dangerous. The captain ordered that they return to
shipagent if the vessel is lost by shipwreck or capture Romblon and while turning, a big wave caught them
(3) under 837, liability for collision on the side causing it to capsize. Among the
passengers who perished were the relatives of
Exceptions: respondents Laserna.
(1) Doctrine does not apply where shipowner is at fault In the separate civil action for damages for the
: the doctrine is premised on the condition that the death of the passengers, the CFI held Yangco liable for
death or injury to the passenger occurred by reason of a total of P3,180. After the rendition of the judgment,
the fault or negligence of the captain only Yangco sought to abandon the vessel to
(2) Doctrine does not apply in cases of Workmen's plaintiffs/respondents with all its equipments.
Compensation --> such compensation has nothing to Abandonment was denied. The CA affirmed the
do with maritime commerce; it is an item in the cost of judgment.
production which must be included in the budget of
any well-managed industry Held : Art. 587 accords a shipowner or agent the right
(3) Total destruction of the vessel does not affect the of abandonment; and by necessary implication, his
liability of the owner for repairs on the vessel liability is confined to that which he is entitled as of
completed before its loss --> owners of a vessel are right to abandon -- the vessel with all her equipments
liable for necessary repairs; its liability for repairs and the freight it may have earned during the voyage.
remains unaffected by the loss of the thing In other words, such liability is limited to the value of
the vessel and other things appertaining thereto such
Reason for limited liability: This doctrine had its that a total loss thereof results in its extinction.
origin when maritime trade and sea voyage was Although the article appears to deal only with the
attended by innumerable hazards and perils --> to limited liability of shipowners or agents for damages
offset against these adverse conditions and to arising from the misconduct of the captain in the care
encourage shipbuilding and maritime commerce, it of the goods which the vessel carries, this is a mere
was deemed necessary to confine the liability of the deficiency of language and in no way indicates the
owner or agent arising from the operation of a ship to true extent of such liability, to wit, the benefit of
the vessel, eqpt. and freight or insurance, if any limited liability applies in all cases (as regards both
goods and passengers of the vessel) wherein the
Limited liability is evidence of the real and shipowner or agent may properly be held for the
hypothecary nature of maritime law: negligent or illicit acts of the captain.
(1) limitation of liability to the actual value of the The reason for the limited liability is the real
vessel and freight; (2) right to retain the cargo and the and hypothecary nature of maritime law as
embargo and detention of the vessel in cases where distinguished from civil law and mercantile law in
the ordinary civil law would not allow more than a general. As evidence of this real nature, we have (1)
personal action against the debtor or personal liable -- the limitation of the liability of the agents to the actual
> the maritime creditor may attach the vessel itself to value of the vessel and the freight money and (2) the
secure his claim without waiting for a settlement of his right of the maritime creditor to retain the cargo, and
rights by a final judgment, even to the prejudice of a the embargo and detention of the vessel in cases
third person where the ordinary civil law would not allow more than
a personal action against the debtor or person liable.
Thus, even assuming that Yangco is liable for breach of
Manila Steamship vs Abdulhaman 100 Phil 32 contract because his relationship to the passengers
rests on a contract of carriage, the exclusively real and
Issue : How is the doctrine of limited liability applied in hypothecary nature of maritime law still operates to
this case with M/V Consuelo? limit his liability to the value of the vessel or to the
insurance thereon, if any. In this case, the vessel was
Held : The direct liability may be moderated or limited not insured. Whether the abandonment of the vessel
by the shipowner's right to abandon the vessel and sought by the petitioner in instant case was in
earned freight. However, this right of abandonment of accordance with law or not, is immaterial. The vessel
vessels, as a legal limitation of a shipowner's liability having totally perished, any act of abandonment would
does not apply to cases where the injury or the be an idle ceremony. Petitioner is absolved from all
average is due to shipowner's fault. Thus, the owner of complaints.
Consuelo is solidarily liable with Manila Steamship, the
former having caused the vessel to sail without Abueg vs San Diego 77 Phil 730
licensed officers, for injuries caused by the collision
over and beyond the value of the said vessel. F: Bartolome San Diego was the owner of 2
In the application for permission to operate, motorships, San Diego II and Bartolome S. Dionisia
despite lack of trained crew, Lim Hong To even Abueg is the widow of Amado Nunez, who was a
declared expressly, "that in case of any accident, machinist on board the M/S San Diego II. Marciana de
damage, or loss, I shall assume full risks and Salvacion is the widow of Victoriano Salvacion, who
responsibility for all consequences, thereof." Hence, was a machinist on board the M/S Bartolome S.
Lim cannot escape liability because of the sinking of Rosario Oching is the widow of Francisco Oching, who
the vessel. Operating with an unlicensed shipmaster was the captain of the M/S Bartolome S. The 2 ships,
constitutes such negligence as would prevent the while engaged in fishing operations around Mindoro
shipowner from claiming the benefit of limited liability Island on October 1941, were caught by a typhoon as
under Art. 587. a consequence of which they were sunk and totally
lost. Nunez, Salvacion and Oching while acting in their
capacities perished in the shipwreck. The vessels
Yangco vs Laserna 73 Phil 330 were not covered by any insurance. The widows were
awarded compensation under the Workmen's
F: Petitioner Yangco's vessel SS Negros left Compensation Act by the CFI.
Romblon for Manila. The captain was duly advised and
his attention was called by the passengers that Held : The real and hypothecary nature of the liability
typhoon Signal No. 2 was up. But the boat proceeded of the shipowner or agent embodied in the provisions
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TRANSPORTATION AND MARITIME LAW

of the Maritime Law, had its origin in the prevailing limited liability doctrine applies not only to the goods
conditions of the maritime trade and sea voyages but also in all cases like death or injury to passengers
during the medieval ages, attended by innumerable wherein the shipowner of agent may properly be held
hazards and perils. To offset against these adverse liable for the negligent or illicit acts of the captain.
conditions and to encourage shipbuilding and Art. 587 speaks only of situations where the fault or
maritime commerce, it was deemed necessary to negligence is committed solely by the captain. In
confine the liability of the owner or agent arising from cases where the shipowner is likewise to be blamed,
the operation of a ship to the vessel, equipment, and Art. 587 does not apply. Such a situation will be
freight, or insurance, if any, so that if the shipowner or covered by the Civil Code provisions on CCs. Owing to
agent abandoned the ship, equipment, and freight, his the nature of their business and for reasons of public
liability was extinguished. policy, they are required to observe EO diligence.
The provisions of the Code of Commerce Maritima's claim that it had no information of
regarding maritime commerce have no room in the typhoon Welming until after the boat was at sea is
application of the Workmen's Compensation Act which untenable in light of modern technology which enables
seeks to improve, and aims at the amelioration of, the it to detect any incoming atmospheric disturbances.
condition of laborers and EEs. Said Act creates a In fact, the Weather Bureau issued a total of 17
liability to compensate EEs and laborers in cases of warnings or advisories of typhoon Welming. In
injury received by or inflicted upon them, while allowing the ship to depart late from Manila despite
engaged in the performance of their work or the typhoon advisories, Maritima displayed lack of
employment, or the heirs and dependents of such foresight and minimum concern for the safety of its
laborers and EEs in the event of death caused by their passengers taking into account the surrounding
employment. circumstances of the case.
The officers of motor ships engaged in fishing
are industrial EEs and are entitled to the benefits of While the captain was negligent for
the Workmen's Compensation Act. If an accident is overloading the ship, Maritima shares equally in his
compensable under the WCA, it must be compensated negligence. M/V Mindoro was cleared for departure at
even when the workman's right is not recognized by or 2 PM by the Bureau of Customs and the Coast Guard
is in conflict with other provisions of the Civil Code or but its departure was delayed for 4 hours. Maritima
Code of Commerce. The reason is that the WCA was could not account for the delay because it neither
enacted in abrogation of existing laws. checked from the captain the reasons behind the
delay. It was due to this interim that there is great
probability that unmanifested cargo and passengers
Heirs of Amparo de los Santos vs CA 186 SCRA 649 were loaded.
Maritima presented evidence of the seaworthy
F: M/V Mindoro owned by Compania Maritima condition of the ship prior to its departure, including
sailed from Manila bound for New Washington, Aklan. the installation of life saving equipment and other
Said vessel met typhoon Welming on the Sibuyan Sea, navigational instruments. But it could not present
causing the death of many of its passengers, although evidence that it specifically installed a radar which
about 136 survived. Mauricio de los Santos declared could have allowed the vessel to navigate safely for
that he, his wife and 4 children were aboard the boat shelter during the storm. An important device such as
together with their household utensils valued at P the radar could have enabled the ship to pass through
1,000, with the intention of living in Aklan the river and to safety.
permanently. His wife and his children were among Maritima's lack of EO diligence coupled with
the casualties. The Board of Marine Inquiry found that the negligence of the captain were the proximate
the captain and some officers of the crew were causes of the sinking of M/V Mindoro. Maritima is liable
negligent in operating the vessel and imposed upon for the deaths and injury of the victims. It was ordered
them a suspension and/or revocation of their license to pay death indemnities to the heirs of the victims,
certificates. This decision could not be executed moral damages, actual damages and attorney's fees.
against the captain who perished with the vessel. The
shipowner alleged that no negligence was ever
established and in fact they took all the necessary
precautions in operating the vessel. Furthermore, the (c) Specific rights and prerogatives
loss of lives as a result of the drowning of some
passengers, including the relatives of the plaintiffs,
was due to force majeure because of the strong Art. 575. Part owners of vessels shall
typhoon Welming. It also presented the findings of the enjoy the right of pre-emption and redemption
Board of Marine Inquiry recommending that the in the sales made to strangers; but they can
captain be exonerated and that the ship was in only exercise it within the nine days following
seaworthy condition. The CFI dismissed the complaint the record of the sale in the registry and by
in view of lack of sufficient evidence. The CA ruled that delivering the price at once.
while concurring negligence on the part of the captain
is imputable to Maritima, Maritima could not be held
liable in damages based on the principle of limited Art. 593. The owners of a vessel shall
liability of the shipowner or shipagent under Art. 587 have preference in her charter over other
of the Code of Commerce. persons, offering equal conditions and price. If
two or more of the former should claim said right
Held : There is no dispute as to the finding of the the one having greater interest shall be preferred, and
captain's negligence. The present controversy centers should they have an equal interest it shall be decided
on the questions of Maritima's negligence and of the by lot.
application of Art. 587 of the Code of Commerce.
Under this provision, a shipowner or agent has the
right of abandonment; and by necessary implication, Art. 594. The part owners shall elect the
his liability is confined to that which he is entitled as of manager who is to represent them in the
right to abandon -- the vessel with all her equipments capacity of agent.
and the freight it may have earned during the voyage.
This rule is found necessary to offset against the The appointment of director or agent
innumerable hazards and perils of a sea voyage and to shall be revocable at the will of the partners.
encourage shipbuilding and marine commerce. The
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TRANSPORTATION AND MARITIME LAW

possessing the qualifications required by said


Art. 596. The agent may discharge the ordinances and regulations.
duties of captain of the vessel, subject, in every
case, to the provisions contained in Article 609. notes:
- Captain - one who governs vessels that navigate the
If two or more co-owners request the high seas or ships of large dimensions and importance,
position of captain, the disagreement shall be although they may be engaged in coastwise trade
decided by a vote of the members; and if the - Master - one who commands smaller ships engaged
vote should result in a tie, the position shall be exclusively in coastwise trade
given to the part owner having the larger - captain and master have the same meaning for
interest in the vessel. maritime commerce
- patron - bancas
If the interest of the petitioners should
be the same, and there should be a tie, the - Roles of the captain :
matter shall be decided by lot. (1) general agent of the shipowner
(2) technical director of the vessels
Art. 609. Captains, masters (3) represents the government of the country under
or patrons of vessels must be whose flag he navigates
Filipinos, have legal capacity to
contract in accordance with this (b) Inherent Powers
Code, and prove the skill,
capacity, and qualifications
necessary to command and direct Art. 610. The following powers are
the vessel, as established by inherent in the position of captain or master of a
marine or navigation laws, vessel:
ordinances, or regulations, and 1. To appoint or make contracts with the
must not be disqualfied according crew in the absence of the ship agent and
to the same for the discharge of propose said crew, should said agent be present;
the duties of the position. but the agent may not employ any member
If the owner of a vessel against the captain's express refusal.
desires to be the captain thereof, 2. To command the crew and direct the
without having the legal vessel to the port to its destination, in
qualifications therefor, he shall accordance with the instructions he may have
limit himself to the financial received from the ship agent.
administration of the vessel, and 3. To impose, in accordance with the
shall intrust the navigation to a contracts and the laws and regulations of the
person possessing the merchants marine, on board the vessel,
qualifications required by said correctional punishment upon those who do not
ordinances nd regulations. comply with his orders or who conduct
themselves against discipline, holding a
preliminary investigation on the crimes
Art. 601. Should there be any profits, the committed on board the vessel on the high seas,
co- owners may demand of the managing agent which he shall turn over to the authorities, who
the amount due them, by means of an executory are to take cognizance thereof, at the first port
action without further requisite than the touched.
acknowledgment of the signatures in the 4. To make contracts for the charter of the
instrument approving the account. vessel in the absence of the ship agent or of the
consignee, acting in accordance with the
instructions received and protecting the interests
2. Captains and Masters of the owner with utmost care.
5. To adopt all the measures which may be
(a) Qualifications and licensing necessary to keep the vessel well supplied and
equipped, purchasing all that may be necessary
RA 5173 for the purpose, provided there is no time to
request instructions of the agent.
Sec. 3. The Philippine Coast Guard shall 6. To provide in similar urgent cases and
perform the following functions : (e) to issue on a voyage, for the repairs to the hull and
licenses and certificates to officers, pilots, major engines of the vessel and to her rigging and
and minor patrons and seamen, as well as equipment which are absolutely necessary in
suspend and revoke such licenses and order for her to be able to continue and conclude
certificates. her voyage; but if she should arrive at a point
where there is a consignee of the vessel, he shall
act in concurrence with the latter.
Art. 609. Captains and masters of vessels
must be Filipinos having legal capacity to bind notes: The first three powers cannot be renounced as
themselves in accordance with this Code, and they relate to public order and are vested in the captain
must prove that they have the skill, capacity, and as a delegation of public authority
qualifications required to command and direct
the vessel, as established by marine laws, Art. 611. In order to comply with the
ordinances, or regulations, or by those of obligations mentioned in the foregoing article,
navigation, and that they are not disqualified and when he has no funds and does not expect to
according to the same for the discharge of the receive any from the agent, the captain shall
duties of that position. procure the same in the successive order stated
If the owner of a vessel desires to be the below:
captain thereof and does not have the legal 1. By requesting said funds of the
qualifications therefore, he shall limit himself to consignees of the vessel or the correspondents of
the financial administration of the vessel, and the ship agent.
shall entrust her navigation to the person
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TRANSPORTATION AND MARITIME LAW

2. By applying to the consignees of the In the first book, which shall be called "log
cargo or to the persons interested therein. book," he shall enter every day the condition of
3. By drawing on the ship agent. the atmosphere, the prevailing winds, the course
4. By borrowing the amount required by sailed, the rigging carried, the horsepower of the
means of a bottomry loan. engines, the distance covered, the maneuvers
5. By selling a sufficient amount of the executed, and other incidents of navigation. He
cargo to cover the amount absolutely necessary shall also enter the damage suffered by the
to repair the vessel and to equip her to pursue vessel in her hull engines, rigging, and tackle, no
the voyage. matter what is its cause, as well as the
In the two last cases he must apply to the imperfections and averages of the cargo, and the
judicial authority of the port, if in the Philippines effects and consequence of the jettison, should
and to the Filipino consul, if in a foreign country; there be any; and in cases of grave resolutions
and where there should be none, to the local which require the advice or a meeting of the
authority, proceeding in accordance with the officers of the vessel, or even of the passengers
prescriptions of Article 583, and with the and crew, he shall record the decision adopted.
provisions of the law of civil procedure. For the informations indicated he shall make use
of the binnacle book, and of the steam or engine
Art. 583. If while on a book kept by the engineer.
voyage the captain should find it In the second book, called the "accounting
necessary to contract one or more book", he shall enter all the amounts collected
of the obligations mentioned in and paid for the account of the vessel, entering
subdivisions 8 and 9 of articl 580, specifically article by article, the sources of the
he shall apply to the judge or collection, and the amounts invested in
court if he is in the Philippine provisions, repairs, acquisition of rigging or
territory, and otherwise to the goods, fuel, outfits, wages, and all other
consul of the Republic of the expenses. He shall furthermore enter therein a
Philippines, should there be one, list of all the members of the crew, stating their
and in his absence, to the judge or domiciles, their wages and salaries, and the
court or proper local authority, amounts they may have received on accounts,
presenting the certificate of the either directly or by delivery to their families.
registration sheet treated of in In the third book, called "freight book," he
Article 612 and the instruments shall record the entry and exit of all the goods,
proving the obligation contracted. stating their marks and packages, names of the
The judge or court, the shippers and of the consignees, ports of loading
consul, or the local authority, as and unloading, and the freight earned. In the
the case may be, in view of the same book he shall record the names and places
result of the proceedings of sailing of the passengers and the number of
institutied, shall make a packages of which their baggage consists, and
temporary memorandum of their the price of the passage.
result in the certificate, in order 4. To make, before receiving the freight,
that it may be recorded in the with the officers of the crew, and the two
registry when the vessel returns experts, if required by the shippers and
to the port of its registry, or so passengers, an examination of the vessel, in
that it can be admitted as a legal order to ascertain whether she is watertight, and
and preferred obligation in case of whether the rigging and engines are in good
sale before its return, by reason condition; and if she has the equipment required
of the sale of the vessel on for good navigation, preserving a certificate of
account of a declaration of the memorandum of this inspection, signed by all
unseaworthiness. the persons who may have taken part therein,
The omission of this under their liability.
formality shall make the captain The experts shall be appointed one by the
personally liable for the credits captain of the vessel and the other one by the
prejudiced on his account. persons who request the examination, and in
case of disagreement a third shall be appointed
(the ff. is not required by the outline) by the marine authority of the port.
Art. 612. The following duties are inherent 5. To remain constantly on board the
in the office of captain: vessel with the crew during the time the freight
1. To have on board before starting on a is taken on board and carefully watch the
voyage a detailed inventory of the hull, engines, stowage thereof; not to consent to any
rigging, tackle, stores, and other equipments of merchandise or goods of a dangerous character
the vessel; the navigation certificate; the roll of to be taken on, such as inflammable or explosive
the persons who make up the crew of the vessel, substances, without the precautions which are
and the contracts entered into with the crew; the recommended for their packing, management
list of passengers; the health certificate; the and isolation; not to permit that any freight be
certificate of the registry proving the ownership carried on deck which by reason of its dispo-
of the vessel; and all the obligations which sition, volume, or weight makes the work of the
encumber the same up to that date; the charters sailors difficult, and which might endanger the
or authenticated copies thereof; the invoices or safety of the vessel; and if, on account of the
manifest of the cargo, and the instrument of the nature of the merchandise, the special character
expert visit or inspection, should it have been of the shipment, and principally the favorable
made at the port of departure. season it takes place, he allows merchandise to
2. To have a copy of this Code on board. be carried on deck, he must hear the opinion of
3. To have three folioed and stamped the officers of the vessel, and have the consent
books, placing at the beginning of each one a of the shippers and of the agent.
note of the number of folios it contains, signed by 6. To demand a pilot at the expense of the
the marine official, and in his absence by the vessel whenever required by navigation, and
competent authority. principally when a port, canal, or river, or a
roadstead or anchoring place is to be entered
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TRANSPORTATION AND MARITIME LAW

with which neither he, the officers nor the crew


are acquainted. (not included in the outline)
7. To be on deck at the time of sighting Art. 622. If when on a voyage the captain
land and to take command on entering and should receive news of the appearance of
leaving ports, canals, roadsteads, and rivers, privateers or men of war against his flag, he shall
unless there is a pilot on board discharging his be obliged to make the nearest neutral port,
duties. He shall not spend the night away from inform his agents or shippers, and await an
the vessel except for serious causes or by reason occasion to sail under convoy or until the danger
of official business. is over or to receive final orders from the ship
agent or shippers.
8. To present himself, when making a port
in distress, to the maritime authority if in the
Philippines and to the Filipino consul if in a
foreign country, before twenty-four hours have (not included in the outline)
elapsed, and make a statement of the name, Art. 624. A captain whose vessel has gone
registry, and port of departure of the vessel, of through a hurricane or who believes that the
its cargo, and reason of arrival, which declaration cargo has suffered damages or averages, shall
shall be vised by the authority of by the consul if make a protest thereon before the competent
after examining the same it is found to be authority at the first port he touches within the
acceptable, giving the captain the proper twenty-four hours following his arrival, and shall
certificate in order to show his arrival under ratify it within the same period when he arrives
stress and the reasons therefore. In the absence at the place of his destination, immediately
of marine officials or of the consul, the proceeding with the proof of the facts, it not
declaration must be made before the local being permitted to open the hatches until after
authority. this has been done.
9. To take the steps necessary before the
competent authority in order to enter in the The captain shall proceed in the same
certificate of the vessel in the registry of the manner if, the vessel having been wrecked, he is
vessels, the obligations which he may contract in saved alone or with part of his crew, in which
accordance with Article 583. case he shall appear before the nearest
10. To put in a safe place and keep all the authority, and make a sworn statement of the
papers and belongings of any members of the facts.
crew who might die on the vessel, drawing up a
detailed inventory, in the presence of passengers The authority or the consul abroad shall
as witnesses, and, in their absence, of members verify the said facts, receiving sworn statements
of the crew. of the members of the crew and passengers who
11. To conduct himself according to the may have been saved, and taking such other
rules and precepts contained in the instructions steps as may help in arriving at the facts, he shall
of the agent, being liable for all that he may do in make a statement of the result of the
violation thereof. proceedings in the log book and in that of the
12. To give an account to the agent from sailing mate, and shall deliver the original
the port where the vessel arrives, of the reason records of the proceedings to the captain,
therefore, taking advantage of the semaphore, stamped and folioed, with a memorandum of the
telegraph, mail, etc., according to the cases; folios, which he must rubricate, for their
notify him the freight he may have received, presentation to the judge or court of the port of
stating the name and domicile of the shippers, destination.
freight earned, and amounts borrowed on
bottomry bond, advise him of his departure, and The statement of the captain shall be
give him any information and date which may be believed if it is in accordance with those of the
of interest. crew and passengers; if they disagreed, the latter
13. To observe the rules on the situation shall be accepted, unless there is proof to the
of lights and evolutions to prevent collisions. contrary.
14. To remain on board in case of danger
to the vessel, until all hope to save her is lost,
and before abandoning her to hear the officers of (not included in the outline)
the crew, abiding by the decision of the majority; Art. 625. Upon arrival at the port of
and if he should have to take a boat he shall take destination, the captain shall, under his personal
with him, before anything else, the books and liability, turn over the cargo, without any
papers, and then the articles of most value, being defalcation, to the consignees, and, in a proper
obliged to prove in case of the loss of the books case, the vessel, rigging, and freights to the
and papers that he did all he could to save them. agent, after having obtained the necessary
15. In case of wreck he shall make the permission from the health and customs officers
proper protest in due form at the first port and fulfilled the other formalities required by the
reached, before the competent authority or regulations of the administration.
Filipino consul, within twenty-four hours, stating [If, by reason of the absence of the
therein all the incidents of the wreck, in consignee or on account of the nonappearance of
accordance with case 8 of this article. a legal holder of the invoices, the captain does
16. To comply with the obligations not know to whom he is to make the legal
imposed by the laws and rules of navigation, delivery of the cargo, he shall place it at the
customs, health, and others. disposal of the proper judge or court or authority,
in order that he may decide with regard to its
deposit, preservation, and custody.]
Notes: Although the duties in Art. 612 are inherent in
the captain, the civil liability arising from the non-
fulfillment thereof is not limited to the captain, since Notes: Under 619, the delivery of the cargo at the port
while the captain is liable to the shipagent, the of discharge terminates the captain's responsibility as to
shipagent is liable to third persons (Art. 618). the cargo

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TRANSPORTATION AND MARITIME LAW

INTER-ORIENT MARINE ENTERPRISES V. NLRC [235 4. Compagnie de Commerce v. Hamburg is instructive in


S 634 (1994)] this connection. In that case, the captain of a German
vessel at the port of Saigon decided to head for the port
F: 1. Captain Rizalino Tayong was employed by of Manila instead of the ports of Dunkirk and Hamburg
petitioner shipwoners as master of a vessel for one year. because of WWI has been declared and in his judgment,
His instructions were to replenish bunker and diesel fuel the vessel could not reach its destination. The charterer
and to sail to South Africa , and there to load 120,000 sued for damages arising from the breach of the charter
metric tons of coal. party, and unauthorized sale of the Cargo. The SC held
that the master of the vessel had reasonable grounds to
2. While in HK, a storm hit, and precautionary measures apprehend that the vessel was in danger of seizure of
were taken since the vessel was 14 years old and the captur by the French authorities in Saigon and was
turbo-charger was leaking. The Captain requisitioned for justified by necessity to elect the court which he took -
supplies of oxygen and acetylene necessary for the to flee Saigon for the port of Manila - with the result that
repairs. The vessel sailed from HK to Singapore. the shipowner was relieved from liability for the
deviation from the stipulated route and from liability for
3. While in Singapore, the supplies were not available, the damage to the cargo.
hence after consultation with the Chied Engineer, the
Captain decided to delay departure and wait for the
supplies. (c) Prohibited acts and transactions

4. After the supplies were delivered, the vessel sailed for Art. 613. A captain who navigates for
South Africa, where upon arrival, the Captain was freight in common or on shares may not make
instructed to turn over his post to a new captain. He was any separate transaction for his own account,
then repatriated to the Philippines. and should he do so the profits shall belong to
the other persons interested, and the losses shall
5. Captain Tayong filed with the POEA a complaint for be borne by him alone.
illegal dismissal, which was dismissed.

6. On appeal, the NLRC reversed and ordered the Art. 615. Without the consent of the ship
shipowner to pay his salary for the unexpired contract agent, the captain may not have himself
plus one month leave benefit, and attorney's fees. substituted by another person; and should he do
Hence, this appeal. so, besides being liable for all the acts of the
substitute and bound to pay the indemnities
ISSUE: W/N CAPTAIN TAYONG WAS ILLEGALLY mentioned in the foregoing article, the substitute
DISMISSED? as well as the captain may be discharged by the
ship agent.
HELD: Yes.
Notes: The duties of a captain are essentially personal
1. It is well settled that confidential and managerial due to the confidence given to him arising from the fact
employees cannot be arbitrarily dismissed at any time, that he possesses the required technical ability and that
and without case as reasonably established in an he is a man worthy of trust of the shipowner
appropriate investigation.

2. The captain of a vessel is a confidential and Art. 617. The captain may not contract
managerial employee within the meaning of the above loans on respondentia secured by the cargo, and
doctrine. A master or captain, for purposes of maritime should he do so the contract shall be void.
commerce, is one who has command of a vessel. A Neither may he borrow money on bottomry
captain commonly performs three (3) distinct roles: (1) for his own transactions, except on the portion of
he is a general agent of the shipowner; (2) he is also the vessel he owns, provided no money has been
commander and technical director of the vessel; and (3) previously borrowed on the whole vessel, and
he is a representative of the country under whose flag provided there does not exist any other kind of
he navigates. Of these roles, by far the most important lien or obligation chargeable against the vessel.
is the role performed by the captain as commander of When he is permitted to do so, he must
the vessel, for such role (which to our mind, is necessarily state what interest he has in the
analogous to that of "Chief Executive Officer" [CEO] of a vessel.
present-day corporate enterprise) has to do with the In case of violation of this article the
operation and protection of the vessel during its voyag principal, interest, and costs shall be charged to
and the protection of the passengers (if any) and crew the private account of the captain, and the ship
and cargo. In his role as general agent of the shipowner, agent may furthermore discharge him.
the captain has authority to sign bills of lading, carry
goods aboard and and deal with the freight earned,
agree upon rates and decide whether to take cargo. The Art. 621. A captain who borrows money on
ship captain, as agent of the shipowner, has legal the hull, engine, rigging, or tackle of the vessel,
authority to enter into contracts with respect to the or who pledges or sells merchandise or provisions
vessel and the trading of the vessel, subkect to outside of the cases and without the formalities
applicable limitations established by statute, contract or prescribed in this Code, shall be liable for the
instructions and regulations of the shipowner. To the principal, interest, and costs, and shall indemnify
captain is committed the governance, care and for the damages he may cause.
management of the vessel. Clearly, the captain is veste He who commits fraud in his accounts
with both management and fiduciary functions. shall reimburse the amount defrauded, and shall
be subject to the provisions of the Penal Code.
3. More importantly, a ship's captain must be accorded
a reasonable measure of discretionary authority to
decide what the safety of the ship and its crew and Art. 583. If the ship being on a voyage the
cargo specifically requires on a stipulated ocean voyage. captain should find it necessary to contract one
The captain is held responsible, and properly so, for or more of the obligations mentioned in Nos. 8
such safety. and 9 of Article 580, he shall apply to the judge or
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TRANSPORTATION AND MARITIME LAW

court if he is in Philippine territory, and otherwise may arise between the captain and the crew with
to the Filipino consul, should there be one, and in regard to the agreements contained therein and
his absence to the judge or court or to the proper the amounts paid on account of the same.
local authority, presenting the certificate of the Every member of the crew may demand of
registry of the vessel treated of in Article 612, the captain a copy, signed by the latter, of the
and the instruments proving the obligation agreement and of the liquidation of his wages, as
contracted. they appear in the book.
The judge or court, the consul or the local
authority as the case may be in view of the result Notes: The contract with a seaman has the nature of a
of the proceedings instituted, shall make a lease of service, in virtue of which one person binds
temporary memorandum in the certificate of their himself to perform or to do the services or works for
result, in order that it may be recorded in the which he has signed himself in the vessel in
registry when the vessel returns to the port of consideration of the compensation stipulated
her registry, or so that it can be admitted as a
legal and preferred obligation in case of sale
before the return, by reason of the sale of the (b) Duties and liabilities
vessel by virtue of a declaration of
unseaworthiness.
The lack of this formality shall make the Art. 635. A sailor who has been contracted
captain personally liable to the creditors who may to serve on a vessel cannot rescind his contract
be prejudiced through his fault. nor fail to comply therewith except by reason of a
legitimate impediment which may have occurred.
Neither can he pass from the service of
Notes: Obligations covered by this article : (1) price one vessel to another without obtaining the
which has not been paid to the last vendor; (2) for written consent of the vessel on which he may be.
materials and labor in the construction of the vessel; (3) If, without obtaining said permission, the
for the repair, equipment and provisioning with the sailor who has signed for one vessel should sign
victuals and fuel; (4) loan on bottomry before departure for another one, the second contract shall be
of the vessel; (5) insurance premiums under Art. 580 void, and the captain may choose between forc-
pars. 8 and 9. ing him to fulfill the service to which he first
bound himself or look for a person to substitute
him at his expense.
3. Other Officers and Crew Said sailor shall furthermore lose the
wages earned on his first contract to the benefit
notes: of the vessel for which he may have signed.
Art. 626 - 631 : sailing mate or second in command A captain who, knowing that a sailor is in
Art. 632 - 633 : second mate or third in command the service of another vessel, should have made
Complement of a vessel or crew - all the persons on a new agreement with him, without having
board, from the captain to the cabin boy, necessary for requested the permission referred to in the
the management, maneuvers, and service; includes the foregoing paragraphs, shall be personally liable
sailing mates, engineers, stokers, and other employees. to the captain of the vessel to which the sailor
first belonged for that part of the indemnity,
referred to in the third paragraph of this article,
(a) Contracts and formalities which the sailor may not be able to pay.

Art. 634. The captain may make up his


crew with the number he may consider advisable, (c) Rights
and in the absence of Filipino sailors he may ship
foreigners residing in the country, the number Art. 636. Should there be no fixed period
thereof not to exceed one-fifth of the total crew. for which a sailor has been contracted, he cannot
If in foreign ports the captain should not find a be discharged until the end of the return voyage
sufficient number of Filipino sailors, he may make to the port where he enlisted.
up the crew with foreigners, with the consent of
the consul or marine authorities.
The agreements which the captain may Art. 637. Neither may the captain
make with the members of the crew and others discharge a sailor during the time of his contract
who go to make up the complement of the except for just cause, the following being
vessels, to which reference is made in Article 612 considered as such:
(obligations inherent in the office of captain) 1. The perpetration of a crime which
must be reduced to writing in the account book disturbs order on the vessel.
without the intervention of a notary public or 2. Repeated insubordination, want of
clerk of court, signed by the parties thereto, and discipline, or non- fulfillment of the service.
vised by the marine authority if they are 3. Incapacity and repeated negligence in
executed in Filipino territory, or by the consuls or the fulfillment of the service which he should
consular agents of the Philippines if executed render.
abroad, stating therein all the obligations which 4. Habitual drunkenness.
each one contracts and all the rights they 5. Any occurrence which incapacitates the
acquire, said authorities taking care that these sailor to perform the work entrusted to him, with
obligations and rights are recorded in a concise the exception of that provided in Article 644.
and clear manner, which will not give rise to
doubts or claims. Art. 644. A seaman who
The captain shall take care to read to them falls sick shall not lose his right to
the articles of this Code which concern them, wages during the voyage, unless
stating in the said document that they were read. the sickness is the result of his
If the book includes the requisites own fault. At any rate, the costs of
prescribed in Article 612, and there should not the attendance and cure shall be
appear any signs of alterations in its entries, it defrayed from the common funds,
shall be admitted as evidence in questions which in the form of a loan.
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TRANSPORTATION AND MARITIME LAW

4. If the ship agent or the charterers of


If the sickness should the vessel should give it a destination different
comee from an injury received in from that fixed in the agreement, and the
the service or defense of the members of the crew should not agree thereto,
vessel, the seaman shall be they shall be given by way of indemnity half the
attended and cured at the amount fixed in the first case, in addition to what
expense of the common funds de- may be due them for the part of the monthly
ducting, before anything else, wages corresponding to the days which may have
from the proceeds of the elapsed from the date of their agreements.
freightage the cost of the If they accept the change, and the voyage,
attendance and cure. on account of greater distance or of other
reasons, should give rise to an increase of wages,
the latter shall be adjusted privately, or through
6. Desertion. friendly adjusters in case of disagreement. Even
if the voyage should be shortened to a nearer
The captain may, however, before setting out on point, this shall not give rise to a reduction in the
a voyage and without giving any reason whatsoever, wages agreed upon.
refuse to permit a sailor whom he may have engaged to Should the revocation or change of the
go on board, and may leave him on land, in which case voyage originate from the shippers or charterers,
his wages have to be paid as if he had rendered the ship agent shall have a right to demand of
services. them the indemnity which may be justly due.

The indemnity shall be paid from the funds of


the vessel if the captain should have acted for reasons Art. 639. Should the revocation of the
of prudence and in the interest of the safety and good voyage arise from a just cause independent of
service of the vessel. Should this not be the case, it the will of the ship agent and the charterers, and
shall be paid by the captain personally. the vessel should not have left the port, the
members of the crew shall no other right than to
After the voyage has begun, and during the collect the wages earned up to the day the
same and until the conclusion thereof, the captain may revocation was made.
not abandon any member of his crew on land or on the
sea, unless, as the accused of a crime, his imprisonment Art. 640. The following shall be just
and delivery to the competent authority in the first port causes for the revocation of the voyage:
touched should be proper, which shall be obligatory to 1. A declaration of war or interdiction of
the captain. commerce with the power to whose territory the
vessel was bound.
2. The blockade of the port of its
Art. 638. If, after the crew has been destination or the breaking out of an epidemic
engaged, the voyage is revoked by the will of the after the agreement.
ship agent or of the charterers, before or after 3. The prohibition to receive in said port
the vessel has put to sea, or if the vessel is for the goods which make up the cargo of the vessel.
the same reason given a different destination 4. The detention or embargo of the same
from that fixed in the agreement with the crew, by order of the government, or for any other
the latter shall be indemnified on account of the reason independent of the will of the agent.
rescission of the contract, according to the 5. The inability of the vessel to navigate.
following cases:
1. If the revocation of the voyage should
be decided before departure of the vessel from Art. 641. If, after a voyage has been
the port, each sailor engaged shall be given one begun, and any of the first three causes
month's salary, besides what may be due him, in mentioned in the foregoing article should occur,
accordance with his contract, for the services the sailors shall be paid at the port which the
rendered to the vessel up to the date of the captain may deem advisable to make for the
revocation. benefit of the vessel and cargo, according to the
2. If the agreement should have been for time they may have served thereon; but if the
a fixed amount for the whole voyage, what may vessel is to continue its voyage, the captain and
be due for said month and days shall be the crew may mutually demand the enforcement
determined in proportion to the approximate of the contract.
duration of the voyage, in the judgment of the In case of the occurrence of the fourth
experts, in the manner established by the law of cause, the crew shall continue to be paid half
civil procedure; and if the proposed voyage wages, if the agreement is by month; but if the
should be of such short duration that it is detention should exceed three months, the
calculated at approximately one month, the contract shall be rescinded and the crew shall be
indemnity shall be fixed at fifteen days, dis- paid what they should have earned according to
counting in all cases the sums advanced. the contact, as if the voyage had been made.
3. If the revocation should take place And if the agreement should be for a fixed sum
after the vessel has put to sea, the sailors for the voyage, the contract must be complied
engaged for a fixed amount for the voyage shall with in the terms agreed upon.
receive the entire salary which may have been In the fifth case, the crew shall have no
offered them if the voyage had terminated; and other right than to collect the wages earned; but
those engaged by the month shall receive the if the disability of the vessel should have been
amount corresponding to the time they might caused by the negligence or lack of skill of the
have been on board and to the time they may captain, engineer, or sailing mate, they shall
require to arrive at the port of destination, the indemnify the crew for the damages suffered,
captain being obliged, furthermore, to pay said always without prejudice to the criminal liability
sailors in both cases the passage to the said port which may be proper.
or to the port of sailing of the vessel, as may be
convenient for them. Art. 642. If the crew has been engaged on
shares it shall not be entitled, by reason of the
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TRANSPORTATION AND MARITIME LAW

revocation, delay, or greater extension of the credits of such kind pertaining to the preceding
voyage, to anything but the proportionate part of voyage shall lose the preference.
the indemnity which may be paid to the common
funds by the persons responsible for said Art. 647. The officers and the crew of the
occurrences. vessel shall be exempted from all obligations
contracted, if they deem if proper, in the
Art. 643. If the vessel and her cargo following cases;
should be totally lost by reason of capture or 1. If, before the beginning of the voyage,
shipwreck, all rights shall be extinguished, both the captain attempts to change it, or there occurs
as regards the right of the crew to demand any a naval war with the power to which the vessel
wages and as regards the right of the ship agent was destined.
to recover the advances made. 2. If a disease should break out and be
If a portion of the vessel or of the cargo, officially declared epidemic in the port of
or of both, should be saved, the crew engaged on destination.
wages, including the captain, shall retain their 3. If the vessel should change owner or
rights on the salvage, as far as possible, on the captain.
remainder of the vessel as well as on the value of
the freightage or the cargo saved; but sailors 4. Supercargoes
who are engaged on shares shall have no right on
the salvage of the hull, but only on the portion of Art. 649. Supercargoes shall discharge on
the freightage saved. (If they should have board the vessel the administrative duties which
worked to recover the remainder of the the agent or shippers may have assigned them;
shipwrecked vessel, they shall be given from the they shall keep an account and record of their
amount of the salvage an award in proportion to transactions in a book which shall have the same
the efforts made and to the risks encountered in conditions and requisites as required for the
order to accomplish the salvage.) accounting book of the captain, and shall respect
the latter in his duties as chief of the vessel.
Art. 644. A sailor who falls sick shall not The powers and liabilities of the captain
lose his right to wages during the voyage, unless shall cease, when there is a supercargo, with
his sickness is the result of his own fault. At any regard to that part of the administration
rate, the costs of medical attendance and legitimately conferred upon the latter, but shall
treatment shall be defrayed from the common continue in force for all acts which are
funds, in the form of a loan. inseparable from his authority and office.
If the sickness should be caused by an
injury received in the service or defense of the Supercargo: An agent of the owner of the goods
vessel, the sailor shall be attended and treated at shipped as cargo on a vessel, who has charge of the
the expense of the common funds, deducting, cargo on board, sells the same to the best advantage in
before anything else, from the proceeds of the the foreign markets, buys cargo to be brought back on
freightage, the cost of the attendance and the return voyage of the ship, and comes home with it
treatment.
Art. 650. All the provisions contained in
Art. 645. If a sailor should die during the the second section of Title III, Book II, with regard
voyage, his heirs shall be given the wages earned to qualifications, manner of making contracts,
and not received, according to his contract and and liabilities of factors shall be applicable to
the cause of his death, namely --- supercargoes.
If he died a natural death and was
engaged on wages, that which may have been Now governed by the provisions on agency
earned up to the date of his death shall be paid.
If the contract was for a fixed sum for the Art. 651. Supercargoes cannot, without
whole voyage, half the amount earned shall be special authorization or agreement, make any
paid if the sailor died on the voyage out, and the transaction for their own account during the
whole amount if he died on the return voyage. voyage, with the exception of the ventures which,
And if the contract was on shares and the in accordance with the custom of the port of
death occurred after the voyage was begun, the destination, they are permitted to do.
heirs shall be paid the entire portion due the Neither shall they be permitted to invest
sailor; but if the latter died before the departure in the return trip more than the profits from the
of the vessel from the port, the heirs shall not be ventures, unless there is a special authorization
entitled to claim anything. therefor from the principals.
If death occurred in the defense of the
vessel, the sailor shall be considered as living, D. Accidents and Damages in Maritime
and his heirs shall be paid, at the end of the Commerce
voyage, the full amount of wages or the entire
part of the profits which may be due him as RISKS, DAMAGES, AND ACCIDENTS OF MARITIME
others of his class. COMMERCE
The sailor shall likewise be considered as
present if he was captured while defending the 1. Averages
vessel, in order to enjoy the benefits as the rest;
but should he have been captured on account of (a) Nature and Kinds
carelessness or other accident not related to the
service, he shall only receive the wages due up
to the day of his capture. Art. 806. For the purposes of this Code
the following shall be considered averages:
Art. 646. The vessel with her engines, 1. All extraordinary or accidental
rigging, equipment, and freightage shall be liable expenses which may be incurred during the
for the wages earned by the crew engaged per voyage for the preservation of the vessel or
month or for the trip, the liquidation and payment cargo, or both.
to take place between one voyage and the other. 2. All damages or deterioration which
// After a new voyage has been undertaken, the vessel may suffer from the time it puts to
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TRANSPORTATION AND MARITIME LAW

sea at the port of departure until it casts anchor 5. The necessary expenses on arrival at
at the port of destination, and those suffered by port, in order to make repairs or secure
the merchandise from the time they are loaded provisions.
in the port of shipment until they are unloaded 6. The lowest value of the goods sold by
in the port of their consignment. the captain in arrivals under stress for the
payment of provisions and to save the crew, to
meet any other need of the vessel against which
Art. 807. The petty and ordinary the proper amount shall be charged.
expenses incident to navigation, such as those 7. The victuals and wages of the crew
of pilotage of coasts and ports, lighterage and while the vessel is in quarantine.
towage, anchorage, inspection, health, 8. The loss inflicted upon the vessel or
quarantine lazaretto, and other so-called port cargo by reason of an impact or collision with
expenses, costs of barges, and unloading, until another, if it is accidental and unavoidable. If
the merchandise is placed on the wharf, and the accident should occur through the fault or
other usual expenses of navigation shall be negligence of the captain, the latter shall be
considered ordinary expenses to be defrayed by liable for all the damage caused.
the shipowner, unless there is an express 9. Any loss suffered by the cargo
agreement to the contrary. through the faults, negligence, or barratry of
the captain or of the crew, without prejudice to
the right of the owner to recover the
Art. 808. Averages shall be: corresponding indemnity from the captain, the
1. Simple or particular. vessel, and the freight.
2. General or gross.

Distinguishing feature : an expense incurred or


Averages consist of 2 items : damage suffered which has not inured to the common
1. Expenses : to constitute an average, an benefit and profit of all persons interested in the
expense must be: vessel and its cargo
a. extraordinary or accidental
b. incurred during the voyage (b) Effects
c. incurred in order to preserve the
vessel, cargo or both Art. 810. The owner of the goods which
2. Damages or deterioration : to constitute an gave rise to the expense or suffered the
average, it must be: damage shall bear the simple or particular
a. have been suffered from the time averages.
the vessel puts to sea from
the port of departure until it casts (2) Gross or General
anchor in the port of
destination (a) Defined
b. have been suffered by the
merchandise from the time they are Art. 811. As a general rule, general or
loaded in the port of shipment until gross averages shall include all the damages
they are unloaded in the port and expenses which are deliberately caused in
of consignment order to save the vessel, its cargo, or both at
the same time, from a real and known risk, and
(1) Simple or Particular particularly the following:
1. The goods or cash invested in the
(a) Defined redemption of the vessel or of the cargo
captured by enemies, privateers, or pirates, and
Art. 809. As a general rule, simple or the provisions, wages, and expenses of the
particular averages include all the expenses and vessel detained during the time the settlement
damages caused to the vessel or to her cargo or redemption is being made.
which have not inured to the common benefit 2. The goods jettisoned to lighten the
and profit of all the persons interested in the vessel, whether they belong to the cargo, to the
vessel and her cargo, especially the following: vessel, or to the crew, and the damage suffered
1. The losses suffered by the cargo from through said act by the goods which are kept on
the time of its embarkation until it is unloaded, board.
either on account of the inherent defect of the 3. The cables and masts which are cut
goods or by reason of a marine accident or force or rendered useless, the anchors and the chains
majeure, and the expenses incurred to avoid which are abandoned, in order to save the
and repair the same. cargo, the vessel, or both.
2. The losses and expenses suffered by 4. The expenses of removing or
the vessel in its hull, rigging, arms, and transferring a portion of the cargo in order to
equipments, for the same causes and reasons, lighten the vessel and place it in condition to
from the time it puts to sea from the port of enter a port or roadstead, and the damage
departure until it anchors in the port of resulting therefrom to the goods removed or
destination. transferred.
3. The losses suffered by the 5. The damage suffered by the goods of
merchandise loaded on deck, except in the cargo by the opening made in the vessel in
coastwise navigation, if the marine ordinances order to drain it and prevent its sinking.
allow it. 6. The expenses caused in order to float
4. The wages and victuals of the crew a vessel intentionally stranded for the purpose
when the vessel is detained or embargoed by a of saving it.
legitimate order or force majeure, if the charter 7. The damage caused to the vessel
has been contracted for a fixed sum for the which had to be opened, scuttled or broken in
voyage. order to save the cargo.
8. The expenses for the treatment and
subsistence of the members of the crew who
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TRANSPORTATION AND MARITIME LAW

may have been wounded or crippled in If the latter should object, and the
defending or saving the vessel. captain and officers or a majority of them, or
9. The wages of any member of the crew the captain, if opposed to the majority, should
held as hostage by enemies, privateers, or consider certain measures necessary, they may
pirates, and the necessary expenses which he be executed under his responsibility, without
may incur in his imprisonment, until he is prejudice to the right of the shippers to proceed
returned to the vessel or to his domicile, should against the captain before the competent judge
he prefer it. or court, if they can prove that he acted with
10. The wages and victuals of the crew malice, lack of skill, or negligence.
of a vessel chartered by the month, during the If the persons interested in the cargo,
time that it is embargoed or detained by force being on board the vessel, have not been heard,
majeure or by order of the Government, or in they shall not contribute to the gross average,
order to repair the damage caused for the their share being chargeable against the
common benefit. captain, unless the urgency of the case should
11. The depreciation resulting in the be such that the time necessary for previous
value of the goods sold at arrivals under stress deliberation was wanting.
in order to repair the vessel by reason of gross
average.
12. The expenses of the liquidation of Art. 814. The resolution adopted to
the average. cause the damages which constitute general
average must necessarily be entered in the log
book, stating the motives and reasons on which
Art. 817. If in the lightening a vessel on it is based, the votes against it and the reason
account of a storm, in order to facilitate its for the dissent, should there be any, and the
entry into a port or roadstead, part of her cargo irresistible and urgent causes which impelled
should be transferred to lighters or barges and the captain if he acted of his own accord.
be lost, the owner of said part shall be entitled In the first case the minutes shall be
to indemnity, as if the loss had originated from signed by all the persons present who could do
a gross average, the amount thereof being so before taking action, if possible; and if not,
distributed between the vessel and cargo from at the first opportunity. In the second case, it
which it came. shall be signed by the captain and by the
If, on the contrary, the merchandise officers of the vessel.
transferred should be saved and the vessel In the minutes, and after the resolution,
should be lost, no liability may be demanded of shall be stated in detail all the goods jettisoned,
the salvage. and mention shall be made of the injuries
caused to those kept on board. The captain
shall be obliged to deliver one copy of these
Art. 818. If, as a necessary measure to minutes to the maritime judicial authority of the
extinguish a fire in port, roadstead, creek, or first port he may make, within twenty- four
bay, it should be decided to sink any vessel, this hours after his arrival, and to ratify it
loss shall be considered gross average, to which immediately under oath.
the vessels saved shall contribute.

Formalities for incurring gross average :


Distinguishing feature: Expense or damage suffered 1. there must be an assembly of the sailing mate and
deliberately in order to save the vessel, its cargo or other officers with the captain including those with
both from a real and known risk --> it is the interests in the cargo
deliverance from an immediate peril, by a common 2. there must be a resolution of the captain
sacrifice, that constitutes the essence of general 3. the resolution shall be entered in the log book,
average with the reasons and motives and the votes for and
against the resolution
Requisites for general average: 4. the minutes shall be signed by the parties
5. within 24 hours upon arrival at the first port the
1. there must be a common danger --> the captain makes, he shall deliver one copy of these
ship and cargo are subject to the same danger and minutes to the maritime judicial authority thereat
that the danger arises from accidents of the sea,
dispositions of the authorities or faults of men,
provided that the circumstances producing the peril Art. 860. If, notwithstanding the jettison
should be ascertained and imminent of the merchandise, breakage of masts, ropes,
2. for the common safety, part of the vessel or and equipment, the vessel should be lost
the cargo or both is sacrificed deliberately running same risk, no contribution whatsoever
3. from the expenses or damages caused by reason of gross average shall be proper.
follows the successful saving of the vessel and cargo The owners of the goods saved shall not
4. the expenses or damages should have been be liable for the indemnification of those
incurred or inflicted after taking legal steps and jettisoned, lost or damaged.
authority
The goods that were not sacrificed shall not be liable
(b) Essential for the indemnification of those sacrificed - One of
Requisites the requisites of general average is lacking, that is,
success in saving the vessel and remaining cargo
Art. 813. In order to incur the expenses
and cause the damages corresponding to gross
average, there must be a resolution of the Magsaysay Inc. vs Agan 96 Phil. 504
captain, adopted after deliberation with the
sailing mate and other officers of the vessel, F: Plaintiff's vessel SS Antonio left for Manila for
and after hearing the persons interested in the Basco, Batanes with general cargo owned by the
cargo who may be present. different shippers including that of the defendant.
Upon reaching Aparri, it accidentally ran aground.
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TRANSPORTATION AND MARITIME LAW

Plaintiff had it refloated by Luzteveco for surrender the machineries to the owner's agent unless
compensation. After refueling, the vessel proceeded the latter would agree to subject said cargo to liability
to Basco where the cargoes were delivered. On the upon general average to satisfy the cost and expenses
theory that the expenses incurred in floating the of the vessel incident to its stay in Manila. Plaintiff did
vessel constituted a general average to which both the not assent and brought an action for recovery of the
ship and cargo should contribute, plaintiff asked from machineries plus damages. The plaintiff later
the shippers a deposit or bond to answer for obtained said cargo by a writ of replevin and
contribution to the average. All shippers acceded forwarded it to Vladivostok by another streamer.
except the defendant. In action to recover said Defendant denied liability asserting its lien on the
contribution, the Manila CFI decided for the plaintiff. cargo for general average. Trial court awarded the
Defendant appealed contending that the floating of a plaintiff damages. Defendant appealed.
vessel, unintentionally stranded inside a port and at
the mouth of a river during a fine weather, does not Held: It is clear that the cargo in question is not liable
constitute general average expenses. to a general average. It is not claimed that said cargo
was contraband of war and being neutral goods, they
Held: In classifying averages into simple or particular were not liable to forfeiture in the event of capture by
and general or gross and defining each class, the Code the enemies of the ship's flag. It follows that when the
of Commerce at the same time enumerate certain master of the vessel decided to take refuge in Manila,
specific cases as coming specially under one or the he acted exclusively with a view to the vessel's
other class. While the expenses incurred in putting protection. There was no common danger to the ship
the vessel afloat may well come under No. 2 of Art. and cargo; and, therefore, it was not a case for a
809 - referring to expenses suffered by the vessel due general average.
to an accident of the sea or force majeure- said The outbreak of the war between Germany and
expenses do not fit into any of the specific cases of Russia absolved the defendant from conveying the
general average enumerated in ART. 811. No. 6 of Art. cargo to Russia, and no damage could be recovered by
811 mentions expenses caused to afloat a vessel, but the plaintiff from the defendant for the latter's failure
it specifically refers to a vessel intentionally stranded to convey the cargo to the port of destination on that
for the purpose of saving it, and would have no ship. But by the terms of the contract of
application where the stranding was unintentional. affreightment, the defendant was bound to forward the
The following are the requisites for a general cargo to Vladivostok at its expense, not necessarily by
average: 1) there must be common danger, 2) for the a streamer of defendant. It does not by any means
common safety part of the vessel or cargo or both is follow that it is not liable for the expenses incurred by
sacrificed deliberately, 3) from the expenses or the plaintiff in completing the unfinished portion of the
damages caused follows the successful saving of the voyage in another ship. Defendant is, therefore, liable
vessel and cargo, and 4) the expenses or damages for the cost of forwarding the cargo by another line,
should have been incurred or inflicted after taking the the full freight having been received by the ship at the
proper legal steps and authority. commencement of the voyage.
It is the deliverance from an immediate peril, Judgment affirmed.
by reason of a common sacrifice, that constitutes the
essence of a general average. Where there is no proof
that the stranded vessel had to be put afloat to save it Compagnie de Commerce vs Hamburg 36 Phil 590
from imminent danger, and what does appear is that
the vessel had to be salvaged in order to enable it to F: In July 1914, defendant's vessel undertook to
proceed to its port of destination, the expenses carry a cargo of rice meal in the French port of Saigon
incurred in floating the vessel do not constitute for delivery to Dunkirk under a contract of
general average. It is the safety of the property, and affreightment with a French shipper. While the loading
not of the voyage which constitutes the true of the cargo was made, rumors of the outbreak of war
foundation of general average. between French and Germany spread. The master of
The expenses incurred for the common safety the German vessel, after completion of the loading of
of the vessel and cargo in this case did not arise from the cargo and after being refused by the French
the imminent peril of both. The cargo could have been Governor at Saigon for a pass of safe-conduct, fled
unloaded by the owners had they been required to do with his vessel and her cargo and took refuge in
so. The refloating was a success, but as the sacrifice Manila. Considering the nature of the cargo and its
was for the vessel's benefit -- to enable it to proceed to impossibility of being delivered to its destination
its destination -- and not for the purpose of saving the within reasonable time, the master of the vessel
cargo, the cargo owners are not in law bound to consulted the shipper's instruction as to the
contribute to expenses. The final requisite has not disposition of the cargo, but the shipper's agent
been proved for it does not appear that the expenses refused to assume responsibility. Defendant's agent in
in question were incurred after following the procedure Manila, upon the court's authority secured by the
laid down in Art. 913. master of the vessel, sold said rice meal and deposited
Decision reversed. the proceeds thereof with the court minus the
expenses incident to the sale. Plaintiff filed an action
for recovery of the proceeds of the sale and the
resulting damages. Defendant also claimed, in a
International Harvester vs Hamburg American Line 42 cross-complaint, contribution from plaintiff for general
Phil 845 average for the expenses incurred by the vessel's stay
in Manila. Trial court decided for the plaintiff including
F: In the spring of 1917, defendant undertook to damages for the defendant's breach of the charter
carry agricultural machineries, belonging to the party. Both parties appealed.
plaintiff, from Hamburg to Vladivostok, Russia. Freight
charges were prepaid to ultimate destination and Held: The danger from which the master of the vessel
defendant reserved the right to forward the fled was a real and not merely an imaginary one.
machineries at its own expense by some other means Seizure at the hands of the enemy, though not
in case of its inability to effect discharge at the port of inevitable, was a possible outcome of a failure to leave
destination. When the voyage was almost completed the port of Saigon; and it cannot be said that under
at the China Sea, war broke out between Germany and the conditions existing at the time when the master
Russia, and the ship put in to the port of Manila, where elected to flee from that port, there were no grounds
it was interned. Captain of the vessel refused to for a reasonable apprehension of danger from seizure
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TRANSPORTATION AND MARITIME LAW

by French authorities, and therefore no necessity for the sacrifice or expenditure may have been due to the
flight. The deviation of the vessel therefore, from the fault of one of the parties to the adventure; but this
route prescribed in her charter party, and the shall not prejudice any remedies which may be open
subsequent abandonment by the master of the voyage against that party for such fault.
contemplated in the contract of affreightment, must
be held to have been justified by the necessity under
which the master was placed to elect that course (b) Proof and Liquidation of
which would remove and preserve the vessel from Averages
danger of seizure by the public enemy of the flag
which the vessel sailed; and that neither the vessel (1) Modes
nor her owners are liable for the resultant damages
suffered by the owner of the cargo. Art. 846. Those interested in the proof
The claim for general average by the and liquidation of averages may mutually agree
shipowner, however, cannot be sustained under the and bind themselves at any time with regard to
provisions of the York-Antwerp Rules. An examination the liability, liquidation and payment thereof.
of the entire body of these rules discloses that general In the absence of agreements, the
average is never allowed thereunder unless the loss or following rules shall be observed:
damage sought to be made good as general average 1. The proof of the average shall take
has been incurred for the `common safety'. It is very place in the port where the repairs are made,
clear that in fleeing from the port of Saigon and taking should any be necessary, or in the port of
refuge in Manila, the master of the vessel was not unloading.
acting for the common safety of the vessel and her 2. The liquidation shall be made in the
cargo. The French cargo was absolutely secure from port of unloading, if it is a Philippine port.
danger of seizure or confiscation so long as it 3. If the average occurred outside of the
remained in the port of Saigon, and there can be no jurisdictional waters of the Philippines, or the
question that the flight of the vessel was a measure of cargo has been sold in a foreign port by reason
precaution adopted solely and exclusively for the of an arrival under stress, the liquidation shall
preservation of the vessel from danger of seizure or be made in the port of arrival.
capture. Delivery of the net proceeds of the sale to 4. If the average has occurred near the
plaintiff should be affirmed, but recovery of damages port of destination, so that said port can be
by plaintiff should be reversed. Defendant cannot made, the proceedings mentioned in rules 1 and
claim for general average. 2 shall be held there.
Judgment modified.

Art. 847. In the case where the


(c) Effects liquidation of the averages is made privately by
virtue of agreement, as well as when a judicial
Art. 812. In order to satisfy the amount authority intervenes at the request of any of the
of the gross or general averages, all the persons parties interested who do not agree thereto, all
having an interest in the vessel and cargo of them shall be cited and heard, should they
therein at the time of the occurrence of the not have renounced this right.
average shall contribute. Should they not be present or should
they have no legal representative, the
(d) Jettison liquidation shall be made by the consul in a
foreign port, and where there is none, by the
Art. 815. The captain shall direct the competent judge or court, according to the laws
jettison, and shall order the goods cast of the country and for the account of the proper
overboard in the following order: party.
1. Those which are on deck, beginning When the representative is a person well
with those which embarrass the maneuver or known in the place where the liquidation is
damage the vessel, preferring, if possible, the made, his intervention shall be admitted and
heaviest ones with the least utility and value. shall produce legal effects, even though he be
2. Those which are below the upper authorized only by a letter of the ship agent, the
deck, always beginning with those of the shipper, or the insurer.
greatest weight and smallest value, to the
amount and number absolutely indispensable.
Art. 848. Claims for averages shall not
be admitted if they do not exceed 5 per cent of
Art. 816. In order that the goods the interest which the claimant may have in the
jettisoned may be included in the gross average vessel or in the cargo if it be gross average, and
and the owners thereof be entitled to indemnity, 1 per cent of the goods damaged if particular
it shall be necessary in so far as the cargo is average, deducting in both cases the expenses
concerned that their existence on board be of appraisal, unless there is an agreement to
proven by means of the bill of lading; and with the contrary.
regard to those belonging to the vessel, by
means of the inventory prepared before the
departure, in accordance with the first
paragraph of Article 612. (2) Appraisal of general
average

Art. 850. If by reason of one or more


(e) Jason accidents of the sea, particular and gross
Clause averages of the vessel, of the cargo, or of both,
should take place on the same voyage, the
Jason Clause, Rule D, York-Antwerp Rules expenses and damages corresponding to each
average shall be determined separately in the
Rights to contribution in general average shall port where the repairs are made, or where the
not be affected, though the event which gave rise to merchandise is discharged, sold, or utilized.
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TRANSPORTATION AND MARITIME LAW

For this purpose the captains shall be are delivered. Should it not be visible at the
obliged to demand of the expert appraisers and time of unloading, said examination may be
of the contractors making the repairs, as well as made after the delivery, provided that it is done
of those appraising and taking part in the within forty-eight hours from the unloading, and
unloading, repair, sale, or utilization of the without prejudice to the other proofs which the
merchandise, that in their appraisements or experts may deem proper.
estimates and accounts they set down
separately and accurately the expenses and
damages pertaining to each average, and in Art. 854. The valuation of the objects
those of each average those corresponding to which are to contribute to the gross average,
the vessel and to the cargo, also stating and that of those which constitute the average,
separately whether or not there are damages shall be subject to the following rules:
proceeding from inherent defect of the thing 1. The merchandise saved which is to
and not from accident of the sea; and in case contribute to the payment of the gross average
there should be expenses common to the shall be valued at the current price at the port
different averages and to the vessel and its of unloading, deducting the freightage, customs
cargo, the amount corresponding to each must duties, and expenses of unloading, as may
be estimated and stated distinctly. appear from a material inspection of the same,
without taking the bills of lading into
consideration, unless there is an agreement to
Art. 851. At the instance of the captain, the contrary.
the adjustment, liquidation, and distribution of 2. If the liquidation is to be made in the
gross averages shall be held privately, with the port of departure, the value of the merchandise
consent of all the parties in interest. loaded shall be determined by the purchase
For this purpose, within forty-eight price, including the expenses until they are
hours, following the arrival of the vessel at the placed on board, the insurance premium
port, the captain shall convene all the persons excluded.
interested in order that they may decide as to 3. If the merchandise should be
whether the adjustment or liquidation of the damaged, it shall be appraised at its true value.
gross average is to be made by experts and 4. If the voyage having been interrupted,
liquidators appointed by themselves, in which the merchandise should have been sold in a
case did shall be so done if the interested foreign port, and the average cannot be
parties agree. estimated, the value of the merchandise in the
If an agreement is not possible, the port of arrival, or the net proceeds obtained at
captain shall apply to the competent judge or the sale thereof, shall be taken as the
court, who shall be the one in the port where contributing capital.
these proceedings are to be held in accordance 5. Merchandise lost, which constitutes
with the provisions of this Code, or to the consul the gross average, shall be appraised at the
of the Philippines should there be one, and value which merchandise of its kind may have in
should there be none, to the local authority the port of unloading, provided that its kind and
when they are to be held in a foreign port. quality appear in the bill of lading; and should
they not appear, the value shall be that stated
in the invoices of the purchase issued in the
Art. 852. If the captain does not comply port of shipment, adding thereto the expenses
with the provisions of the preceding article, the and freightage subsequently arising.
ship agent or the shippers shall demand the 6. The masts cut down, the sails, cables,
liquidation, without prejudice to the action they and other equipment of the vessel rendered
may bring to demand indemnity from him. useless for the purpose of saving it, shall be
appraised at the current value, deducting one-
third by reason of the difference between new
Under Art. 851, the captain is required to initiate the and old.
proceedings for the adjustment, liquidation and This deduction shall not be made with
distribution of any gross average; it is his duty to take respect to anchors and chains.
the proper steps to protect any shipper whose goods 7. The vessel shall be appraised at its
may have been jettisoned for the general safety ==> true value in the condition in which it is found.
if the captain does not comply with his duty under 8. The freightage shall represent 50 per
851, the shipowner or shipper has the right to cent by way of contributing capital.
maintain an action against the captain for
indemnification for the loss --> this does not involve
the suppression of the right of action of the shipper Art. 855. The merchandise loaded on the
against the shipowner upper deck of the vessel shall contribute to the
gross average should it be saved; but there
shall be no right to indemnify if it should be lost
Art. 853. After the experts have been by reason of having been jettisoned for common
appointed by the persons interested, or by the safety, except when the marine ordinances
court, and after the acceptance, they shall allow its shipment in this manner in coastwise
proceed to the examination of the vessel and of navigation.
the repairs required and to the appraisal of The same shall take place with that
their cost, separating these losses and damages which is on board and is not included in the bills
from those arising from the inherent defect of of lading or inventories, according to the cases.
the things. In any case the shipowner and the
The experts shall also declare whether captain shall be liable to the shippers for the
the repairs may be made immediately, or damages from the jettison, if the storage on the
whether it is necessary to unload the vessel in upper deck was made without the consent of
order to examine and repair it. the latter.
With regard to the merchandise, if the The goods may be stowed on deck (1) with the
average should be visible at a mere glance, the consent of the shipper or (2) without his consent --> if
examination thereof must be made before they stowed on deck with his consent, he takes the risk
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TRANSPORTATION AND MARITIME LAW

upon himself of the perils arising from the dangers of


the sea and any damage will be borne by the owner
[particular average] Art. 867. If the persons contributing
--> if stowed on deck without his consent, the should not pay the amount of the contribution
captain does so at his own risk; the captain cannot at the end of the third day after having been
protect himself by showing that they are damaged or required to do so, the goods saved shall be
lost by dangers of the sea proceeded against, at the request of the
captain, until payment has been made from
The carriage of gasoline on deck by coastwise their proceeds.
or interisland vessels is allowed by marine regulations
--> the loss of petroleum for common safety and
benefit will constitute a general average. Art. 868. If the person interested in
receiving the goods saved should not give
security sufficient to answer for the amount
Art. 857. After the appraisement of the corresponding to the gross average, the
goods saved and of those lost which constitute captain may defer the delivery thereof until
the gross average, has been concluded by the payment has been made.
experts, the repairs, if any, made on the vessel,
and, in this case, the accounts of the same
approved by the persons interested or by the Art. 869. The experts whom the court or
judge or court, the entire record shall be turned the persons interested may appoint, as the case
over to the liquidator appointed, in order that may be, shall proceed with the examination and
he may proceed with the distribution of the appraisement of the averages in the manner
average. prescribed in Articles 853 and 854, Rules 2 to 7,
in so far as they are applicable.

(3) Liquidation of
general average (4) Liquidation of
particular average
Art. 858. In order to effect the
liquidation, the liquidator shall examine the Art. 869. The experts whom the court or
protest of the captain, comparing it, if the persons interested may appoint, as the case
necessary, with the log book, and all the may be, shall proceed with the examination and
contracts which may have been made among appraisement of the averages in the manner
the persons interested in the average, the prescribed in Articles 853 and 854, Rules 2 to 7,
appraisements, expert examinations, and in so far as they are applicable.
accounts of repairs made. If, as a result of this
examination, he should find any defect in the
procedure which might injure the rights of the 2. Arrivals Under Stress
persons interested or affect the liability of the
captain, he shall call attention thereto in order (a) Causes
that it may be corrected, if possible, and
otherwise he shall include it in the exordial of Art. 819. If during the voyage the
the liquidation. captain should believe that the vessel cannot
Immediately thereafter he shall proceed continue the trip to the port of destination on
with the distribution of the amount of the account of the lack of provisions, well-founded
average, for which purpose he shall fix: fear of seizure, privateers, or pirates, or by
1. The contributing capital, which he reason of any accident of the sea disabling it to
shall determine by the value of the cargo, in navigate, he shall assemble the officers and
accordance with the rules established in Article shall summon the persons interested in the
854. cargo who may be present, and who may attend
2. That of the vessel in its actual the meeting without the right to vote; and if,
condition, according to a statement of experts. after examining the circumstances of the case,
3. The 50 per cent of the amount of the the reason should be considered well-founded,
freightage, deducting the remaining 50 per cent the arrival at the nearest and most convenient
for wages and maintenance of the crew. port shall be agreed upon, drafting and entering
After the amount of the gross average the proper minutes, which shall be signed by all,
has been determined in accordance with the in the log book.
provisions of this Code, it shall be distributed The captain shall have the deciding vote,
pro rata among the goods which are to cover and the persons interested in the cargo may
the same. make the objections and protests they may
deem proper, which shall be entered in the
minutes in order that they may make use
Art. 865. The distribution of the gross thereof in the manner they may consider
average shall not be final until it has been advisable.
agreed to, or in the absence thereof, until it has
been approved by the judge or court, after an
examination of the liquidation and a hearing of
the persons interested who may be present or Art. 820. An arrival shall not be
of their representatives. considered lawful in the following cases:
1. If the lack of provisions should arise
from the failure to take the necessary
Art. 866. After the liquidation has been provisions for the voyage according to usage
approved, it shall be the duty of the captain to and custom, or if they should have been
collect the amount of the contribution, and he rendered useless or lost through bad stowage or
shall be liable to the owners of the goods negligence in their care.
averaged for the damages they may suffer 2. If the risk of enemies, privateers, or
through his delay or negligence. pirates should not have been well known,
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TRANSPORTATION AND MARITIME LAW

manifest, and based on positive and provable


facts. (c) Expenses
3. If the defector the vessel should have
arisen from the fact that it was not repaired, Art. 821. The expenses of an arrival
rigged, equipped, and prepared in a manner under stress shall always be for the account of
suitable for the voyage, or from some erroneous the shipowner or agent, but they shall not be
order of the captain. liable for the damages which may be caused the
4. Whenever malice, negligence, want of shippers by reason of the arrival, provided the
foresight, or lack of skill on the part of the latter is legitimate.
captain exists in the act causing the damage. Otherwise, the ship agent and the
captain shall be jointly liable.

Arrival under stress: Arrival of a vessel at the


nearest and most convenient port, if during the voyage Art. 822. If in order to make repairs to
the vessel cannot continue the trip to the port of the vessel or because there is danger that the
destination due to : (1) lack of provisions, (2) well- cargo may suffer damage, it should be
founded fear of seizure, privateers, or pirates, (3) by necessary to unload, the captain must request
reason of any accident of the sea disabling it to authorization from the competent judge or court
navigate for the removal, and carry it out with the
knowledge of the person interested in the
cargo, or his representative, should there be
(b) Formalities any.
In a foreign port, it shall be the duty of
Art. 819. If during the voyage the the Filipino consul, where there is one, to give
captain should believe that the vessel cannot the authorization.
continue the trip to the port of destination on In the first case, the expenses shall be
account of the lack of provisions, well-founded for the account of the ship agent or owner, and
fear of seizure, privateers, or pirates, or by in the second, they shall be chargeable against
reason of any accident of the sea disabling it to the owners of the merchandise for whose
navigate, he shall assemble the officers and benefit the act was performed.
shall summon the persons interested in the If the unloading should take place for
cargo who may be present, and who may attend both reasons, the expenses shall be divided
the meeting without the right to vote; and if, proportionately between the value of the vessel
after examining the circumstances of the case, and that of the cargo.
the reason should be considered well-founded,
the arrival at the nearest and most convenient
port shall be agreed upon, drafting and entering Requisites for the captain to unload the cargo
the proper minutes, which shall be signed by all, arriving under stress:
in the log book. 1. the unloading must be necessary to make repairs or
The captain shall have the deciding vote, there must be danger that the cargo may suffer
and the persons interested in the cargo may damage
make the objections and protests they may 2. the captain must be authorized by either a
deem proper, which shall be entered in the competent court or the Phil. consul, depending on the
minutes in order that they may make use port of arrival
thereof in the manner they may consider
advisable. (d) Responsibility of Captain

Art. 823. The custody and preservation


Formalities : 1. assembly of the officers including all of the cargo which has been unloaded shall be
interested parties entrusted to the captain, who shall be
2. drafting and entering in the log book the proper responsible for the same, except in cases of
minutes, which shall be signed by all force majeure.
3. entry in the log book of the objections and
protests of the persons interested in the cargo
Art. 824. If the entire cargo or part
thereof should appear to be damaged, or there
Art. 822. If in order to make repairs to should be imminent danger of its being
the vessel or because there is danger that the damaged, the captain may request of the
cargo may suffer damage, it should be competent judge or court, or of the consul in a
necessary to unload, the captain must request proper case, the sale of all or of part of the
authorization from the competent judge or court former, and the person taking cognizance of the
for the removal, and carry it out with the matter shall authorize it, after an examination
knowledge of the person interested in the and declaration of experts, advertisements, and
cargo, or his representative, should there be other formalities required by the case, and an
any. entry in the book, in accordance with the
In a foreign port, it shall be the duty of provisions of Article 624.
the Filipino consul, where there is one, to give The captain shall, in a proper case,
the authorization. justify the legality of his conduct, under the
In the first case, the expenses shall be penalty of answering to the shipper for the price
for the account of the ship agent or owner, and the merchandise would have brought if it had
in the second, they shall be chargeable against arrived in good condition at the port of
the owners of the merchandise for whose destination.
benefit the act was performed.
If the unloading should take place for
both reasons, the expenses shall be divided Art. 825. The captain shall be
proportionately between the value of the vessel responsible for the damages caused by his
and that of the cargo. delay, if after the cause of the arrival under

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TRANSPORTATION AND MARITIME LAW

stress has ceased, he should not continue the 7. The vessel which is not properly moored or
voyage. does not observe the proper distances, has the
If the cause of the arrival should have presumption against itself.
been the fear of enemies, privateers, or pirates,
a deliberation and resolution in a meeting of the 8. The vessel which is moored at a place not
officers of the vessel and persons interested in used for the purpose, or which is improperly moored or
the cargo who may be present, in accordance does not have sufficient cables, or which has been left
with the provisions contained in Article 819, without watch, has also against itself the presumption.
shall precede the departure.
9. The same rule applies to those vessels
which do not have buoys to indicate the location of its
The captain has the duty to continue the voyage anchors to prevent damage to these vessels which
without delay after the cause of the arrival under may approach it.
stress has ceased--> otherwise, he shall be liable for
damages caused by the delay
Zones in time of collisions (3 time zones):
3. Collisions
1. all the time up to the moment when the risk
Collision: impact of two vessels both of which are of collision may have said to have begun
moving --> within this zone, no rule is applicable
Allision: striking of a moving vessel against one that because none is necessary. Each vessel is free to
is stationary direct its course as it deems best with reference to the
movements of the other vessel.
Cases of collision :
1. due to the fault, negligence or lack of skill of the 2. the time between the moment when the risk
captain, sailing mate or the complement of the vessel of collission begins and the moment when it has
--> under 826, the shipowner shall be liable for the become a practical necessity.
losses and damages
2. due to the fault of both vessels --> under 827, each 3. the time between the moment when
vessel shall suffer its own losses, but as regards the collission has become a practical certainty and the
owners of the cargoes, both vessels shall be jointly moment of actual contact
and severally liable
3. where it cannot be determined which of the 2
vessels is at fault --> under 828, each vessel shall Effect of fault of privileged vessel during third
suffer its own losses, and both shall also be solidarily zone :
responsible for the losses and damages caused to
their cargoes If a vessel having a right of way suddenly
4. collision due to fortuitous event or force majeure --> changes its course during the third zone, in an effort to
under 830, each vessel shall bear its own damages avoid an imminent collision due to the fault of another
5. where two vessels collide with each other without vessel, such act may be said to be done in extremis,
their fault but by reason of the fault of a third vessel -- and even if wrong, cannot create responsibility on the
> under 831, the owner of the third vessel causing the part of said vessel with the right of way. Thus, it has
collision shall be liable for the losses and damages 6. a been held that fault on the part of the sailing vessel at
vessel which is properly anchored and moored may the moment preceding a collission, that is, during the
collide with those nearby by reason of a storm or other third division of time, does not absolve the steamship
cause of force majeure --> under 832, the vessel run which has suffered herself and a sailing vessel to get
into shall suffer its own damages and expenses into such dangerous proximity as to cause inevitable
harm and confusion, and a collision results as a
Nautical Rules to determine negligence : consequence. The steamer having a far greater fault in
allowing such proximity to be brought about is charge-
1. When 2 vessels are about to enter a port, able with all the damages resulting from the collission;
the farther one must allow the nearer to enter first; if and the act of the sailing vessel having been done in
they collide, the fault is presumed to be imputable to extremis and even wrong, is not responsible for the
the one who arrived later, unless it can be proved that result.
there was no fault on its part.
(a) Classes and Effects
2. When 2 vessels meet, the smaller should
give the right of way to the larger one. (1) Fortuitous

3. A vessel leaving port should leave the way Art. 830. If a vessel should collide with
clear for another which may be entering the same another through fortuitous event or force
port. majeure, each vessel and its cargo shall bear its
own damages.
4. The vessel which leaves later is presumed to
have collided against one who has left earlier.
Art. 832. If, by reasons of a storm or
5. There is also a presumption against the other cause of force majeure, a vessel which is
vessel which sets sail at night. properly anchored and moored should collide
with those nearby, causing them damages, the
6. The presumption also works against the injury occasioned shall be considered as
vessel with spread sails which collides with another particular average of the vessel run into.
which is at anchor, and cannot move, even when the
crew of the latter has received word to lift anchor, Each to his own damage --> particular damage
when there was not sufficient time to do so or there
was fear of a greater damage or other legitimate
reason. (2) Culpable

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TRANSPORTATION AND MARITIME LAW

Art. 826. If a vessel should collide with having been obliged to make a port to repair the
another, through the fault, negligence, or lack of damages caused by the collision, is lost during
skill of the captain, sailing mate, or any other the voyage or is obliged to be stranded in order
member of the complement, the owner of the to be saved, shall be presumed as lost by
vessel at fault shall indemnify the losses and reason of collision.
damages suffered, after an expert appraisal.

(c) Liabilities
Where the obligation arises from tortious act and not
from contract, both the owner and the shipagent (1) Shipowner or agent
should be declared liable
Art. 837. The civil liability incurred by
the shipowners in the cases prescribed in this
Art. 827. If the collision is imputable to section, shall be understood as limited to the
both vessels, each one shall suffer its own value of the vessel with all its appurtenances
damages, and both shall be solidarily and freightage earned during the voyage.
responsible for the losses and damages
occasioned to their cargoes. Art. 838. When the value of the vessel
and her appurtenances should not be sufficient
to cover all the liabilities, the indemnity due by
Defense of due diligence of a good father of a family in reason of the death or injury of persons shall
the selection and vigilance of the officers and crew have preference.
cannot be used to render nugatory the solidary liability
under 827
Limited liability : limited to the value of the vessel and
Under the express provisions of 827, the shipowners the freight earned during the voyage [provided for in
cannot successfully maintain an action against the Arts. 587, 590 and 837]
other for the loss or injury to his vessel Damages may be recovered to the extent of
what may be salvaged or of the freightage received or
of the value of the insurance recoverable
Art.831. If a vessel should be forced by a
third vessel to collide with another, the owner of
the third vessel shall indemnify the losses and
damages caused, the captain thereof being (2) Captain, pilot,
civilly liable to said owner. others

Art. 829. In the cases above mentioned


(3) Inscrutable Fault the civil action of the owner against the person
causing the injury as well as the criminal
Art. 828. The provisions of the preceding liabilities, which may be proper, are reserved.
article are applicable to the case in which it
cannot be determined which of the two vessels
has caused the collision. Art. 834. If the vessels colliding with
each other should have pilots on board
Relation of Art. 827 to Art. 828 discharging their duties at the time of the
Art. 828 must be considered an extension of collision, their presence shall not exempt the
Art. 827 captains from the liabilities they incur, but the
The rule of liability under Art. 827 is applicable latter shall have the right to be indemnified by
not only to the case where both vessels may be shown the pilots, without prejudice to the criminal
to be actually blameworthy but also to the case where liability which the latter may incur.
it is obvious that only one was at fault but the proof
does not show which
(3) conditions; protests
Under Arts. 827 and 828, in case of collision
between two vessels at sea, both are solidarily liable Art. 835. The action for the recovery of
for the loss of cargo carried by either to the full extent losses and damages arising from collisions
of the value thereof, not only in the cse where both cannot be admitted if a protest or declaration is
vessels may be shown to be actually blameworthy but not presented within twenty-four hours before
also in the case where it is shown that only one ws at the competent authority of the point where the
fault but the proof does not show it --> it makes no collision took place, or that of the first port of
difference that the negligence imputable to the two arrival of the vessel, if in Philippine territory
vessels may have differed somewhat in character and and to the consul of the Philippines, if it
degree and that the negligence of the sunken ship was occurred in a foreign country.
somewhat more marked than that of the ther

The doctrine of last clear chance cannot be Art. 836. With respect to damages
raised --> under the express provisions of Art. 827, caused to persons or to the cargo, the absence
under which the evidence disclosing that both vessels of a protest may not prejudice the persons
are blameworthy, the owners of neither can interested who were not on board or were not in
successfully maintain an action against the other for a condition to make known their wishes.
the loss or injury to his vessel
Art. 835 establishes a condition precedent before any
action for the recovery of damages arising from
(b) Presumption of loss by collisions may be admitted --> presentation of a
collision protest or declaration within 24 hours before the
proper authorities [competent authority at the point
Art.833. A vessel which, upon being run where the collision took place or of the first port of
into, sinks immediately, as well as that which,
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TRANSPORTATION AND MARITIME LAW

arrival of the vessel or to the consul of the Philippines same as in general averages and neither is liable for
if it occurred in a foreign country] the salvage due from the other
Where a personal action is brought by the
The requirement of protest is not necessary with salvor against the owner of the ship, the liability of the
respect to small boats engaged in river and bay traffic latter is limited to such part of the salvage
and boats manned by a group of fishermen compensation due for the entire service as is
proportionate to the value of the ship
Reason for requiring protest: Neccesity of
preventing fictitious collisions and improper
indemnities Art. 843. If several vessels sail under
convoy, and any of them should be wrecked, the
cargos saved shall be distributed among the
Summary of cases where protest is required: rest in proportion to the amount which each one
1. under 612, when the vessel makes an arrival under is able to take.
stress If any captain should refuse, without
2. under 612, 624 and 843, where the vessel is sufficient cause, to receive what may
shipwrecked correspond to him, the captain of the wrecked
3. under 624, where the vessel has gone through a vessels shall enter a protest against him, before
hurricane or when the captain believes that the cargo two sea officials, of the losses and damages
has suffered damages or averages resulting therefrom, ratifying the protest within
4. under 835, in case of maritime collisions twenty-four hours after arrival at the first port,
and including it in the proceedings he must
institute in accordance with the provisions
Art. 839. If the collision should take contained in Article 612.
place between Philippine vessels in foreign If it is not possible to transfer to the
waters, of if having taken place in the open other vessels the entire cargo of the vessel
seas, and the vessels should make a foreign wrecked, the goods of the highest value and
port, the Filipino consul in said port shall hold a smallest volume shall be saved first, the
summary investigation of the accident, designation thereof to be made by the captain
forwarding the proceedings to the Secretary of with the concurrence of the officers of his
the Department of Foreign Affairs for vessel.
continuation and conclusion.
Salvage Law (Act No. 2616)
4. Shipwrecks
Section 1. When in case of shipwreck, the
Art. 840. The losses and deteriorations vessel or its cargo shall be beyond the control
suffered by a vessel and her cargo by reason of of the crew, or shall have been abandoned by
shipwreck or stranding shall be individually for them, and picked up and conveyed to a safe
the account of the owners, the part which may place by other persons, the latter shall be
be saved belonging to them in the same entitled to a reward for the salvage.
proportion. Those who, not being included in the
above paragraph, assist in saving a vessel or its
cargo from shipwreck, shall be entitled to a like
Art. 841. If the wreck or standing should reward.
be caused by the malice,e negligence, or lack of
skill of the captain, or because the vessel put to Salvage.-- The compensation allowed to persons by
sea insufficiently repaired and equipped, the whose voluntary assistance a ship at sea or her cargo
ship agent or the shippers may demand or both have been saved in whole or in part from
indemnity of the captain for the damages impending sea peril, or such property recovered from
caused to the vessel or to the cargo by the actual peril or loss, as in cases of shipwrecks, derelict
accident, in accordance with the provisions or recapture -- a service which one person, renders
contained in Articles 610, 612, 614, and 621. to the owner of a ship or goods by his own labor,
preserving the goods or ship which the owner or those
entrusted with the care of them either abandoned in
Shipwreck: Loss of a vessel at sea, either by being distress at sea or are unable to protect and secure --->
swallowed up by the waves, by running against a permit is required to engage in salvage business
another vessel or thing at sea, or on coast --> renders
the ship incapable of navigation Shipwreck-- means a ship which has received
Under 841, in case the wreck or stranding is injuries rendering her incapable by navigation; loss of
due to the (1) malice, negligence, or lack of skill of the a vessel at sea, either by being swallowed up by the
captain, or (2) because the vessel put to sea was waves, running against a thing at sea, or on the coast
insufficiently repaired and equipped, the captain shall
be liable Derelict.-- A ship or her cargo which is abandoned
and deserted at sea by those who are in charge of it,
without any hope of recovering it, or without any
Art. 842. The goods saved from the intention of returning it --> if those in charge of the
wreck shall be specially bound for the payment property left it with the intention of finally leaving it, it
of the expenses of the respective salvage, and is a derelict and the change of their intention and an
the amount thereof must be paid by the owners attempt to return to it will not change its nature
of the former before they are delivered to them, ex. a schooner which has capsized in the high
and with preference over any other obligation if seas, deserted by her captain with no intention to
the merchandise should be sold. return, is a derelict
a vessel, though not abandoned, may be the
subject of salvage, if at the time the services were
Where a ship and its cargo are saved together, the rendered, there was a probable, threatening danger to
salvage allowance should be charged against the ship the vessel or its cargo --> if the vessel towed is aided
and cargo in proportion of their respective values, the in escaping present or prospective danger, the service
is one of salvage an the towage is merely incidental
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TRANSPORTATION AND MARITIME LAW

together, the salvage allowance should be charged


Rights of finder of derelict: The finder who against the ship and cargo in the proportion of their
takes possession with the intention of saving her, respective values, as in the case of general average
gains a right of possession which he can maintain
against the true owners. The owner does not renounce Section 5. The Collector of Customs,
his right of property. This is not presumed to be provincial treasurer, or municipal mayor, to
intentional, nor does the finder acquire any such right. whom a salvage is reported, shall order:
But the owner thus abandons temporarily, his right of a. That the things saved be safeguarded
possession, which is transferred to the finder who and inventoried.
becomes bound to preserve the property with GF and b. The sale at public auction of the things
bring it to a place of safety for the owner's use; in saved which may be in danger of immediate loss
return, he acquires a right to be paid for his service a or those whose conservation is evidently
reasonable and proper compensation out of the prejudicial to the interests of the owner, when
property itself. He is not bound to part with the no objection is made to such sale.
possession until he is paid or the property is taken into c. The advertisement within the 30 days
the possession of the law preparatory to the amount of subsequent to the salvage, in one of the local
salvage being legally asserted newspapers or in the nearest newspaper
published, of all the details of the disaster, with
Elements of a valid salvage: a statement of the mark and number of the
effects requesting all interested persons to
1. a marine peril make their claims.
2. service voluntarily rendered when not
required as an existing duty or from special contract Section 6. If, while the vessel or thing
3. success, in whole or in part, or that the saved are at the disposition of the authorities,
services rendered contributed to such success the owner or his representative shall claim
them, such authorities shall order their delivery
Distinction between salvage and towage is of to such owner or his representative, provided
importance to the crew of the salvaging ship : if the that there is no controversy over their value,
contract for towage is in fact towage, then the crew and a bond is given by the owner or his
does not have any interest or rights with the representative to secure the payment of the
renumeration pursuant to the contract; BUT if the expenses and the proper reward. Otherwise,
owners of the respective vessels are of a salvage the delivery shall not be made until the matter
nature, the crew of the salvaging ship is entitled to is decided by the CFI (RTC) of the province.
salvage, and can look to the salvaged vessel for its
share Section 7. No claim being presented in
Captain towing vessel cannot invoke equity in the three months subsequent to the publication
quasi-contract of towage --> there is an express of the advertisements prescribed in subsection
provision of law (Art. 2142, NCC) applicable to the (c) of Section 5, the things saved shall be sold at
relationship of quasi-contract of towage, where the public auction, and their proceeds, after
crew is not entitled to compensation separate from deducting the expenses and the proper reward
that of the vessel shall be deposited in the insular treasury. If
three years shall pass without anyone claiming
Section 2. If the captain of the vessel, or it, one-half of the deposit shall be adjudged to
the person acting in his stead, is present, no him who saved the things, and the other half to
one shall take from the sea, or from the shores, the insular government.
or coast merchandise or effects proceeding
from a shipwreck or proceed to the salvage of Section 8. The following shall have no
the vessel, without the consent of such captain right to a reward for salvage or assistance:
or person acting in his stead. a. The crew of the vessel shipwrecked or
which was in danger of shipwreck;
Section 3. He who shall save or pick up a b. He who shall have commenced the
vessel or merchandise at sea, in the absence of salvage in spite of opposition of the captain or
the captain of the vessel, owner or a his representative; and
representative of either of them, they being c. He who shall have failed to comply
unknown, shall convey and deliver such vessel with the provisions of Section 3.
or merchandise, as soon as possible, to the
Collector of Customs, if the port has a collector, Section 9. If, during the danger, an
and otherwise to the provincial treasurer or agreement is entered into concerning the
municipal mayor. amount of the reward for salvage or assistance,
its validity may be impugned because it is
Section 4. After the salvage is excessive, and it may be required to be reduced
accomplished, the owner or his representative to an amount proportionate to the
shall have the right to the delivery of the vessel circumstances.
or the things saved, provided that he pays or
gives a bond to secure the expenses and the
proper reward. Kinds of salvage service:
(1) voluntary - wherein the compensation is
dependent upon success
Salvor has an interest in the property; this is called a (2) rendered under a contract for a pier diem
lien, but it is not a debt due by the owner to the salvor or per horam wage, payable at all events
for services rendered but upon the principle that the Where the compensation is dependent upon success,
service creates a property in the thing saved --> he is, it may be very much larger than mere quantum meruit
to all intents and purposes, a joint owner and if, the --> as a reward for perilous services
property is lost he must bear his share like other joint Such contracts for salvage will not be set aside
owners. unless corruptly entered into, or made under
fraudulent representations, a clear mistake or
Payment of compensation where vessel and cargo suppression of important facts, under compulsion or
salvage : where a ship and its cargo are saved contrary to equity and good conscience
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property were simultaneously imperiled and both are


Section 10. In a case coming under the rescued at the same time
last preceding section, as well as in the
absence of an agreement, the reward for
salvage or assistance shall be fixed by the RTC Section 13. If a vessel or its cargo shall
of the province where the things salvaged are have been assisted or saved, entirely or partially,
found, taking into account principally the by another vessel, the reward for salvage or for
expenditures made to recover, or save the assistance shall be divided between the owner,
vessel or the cargo or both, the zeal the captain, and the remainder of the crew of the
demonstrated, the time employed, the services latter vessel, so as to give the owner a half, the
rendered, the excessive expenses occasioned, captain a fourth, and all the remainder of the
the number of persons who aided, the danger to crew the other fourth of the reward, in proportion
which they and their vessels were exposed as to their respective salaries, in the absence of an
well as that which menaced the things agreement to the contrary. The expenses of
recovered or salvaged, and the value of such salvage, as well as the reward for salvage or
things after deducting the expenses. assistance, shall be a charge on the thing
salvaged or their value.
Reasons for allowing salvage compensation to The owner of the salving vessel has always been
salving vessel: considered as entitled to salvage reward for the use of
(1) to reward promptness, energy, efficiency, and his vessel in rendering salvage services, though he was
heroic endeavor in saving life and property in peril; not present when the salvage service was rendered -->
(2) to compensate the use and service of the vessel as remuneration is awarded on account of the danger to
an indispensable instrument for the salvage; which the service exposes their property and the risk
(3) recognizes the danger and risk to which the crew which they run of loss in suffering their vessels engaged
and the vessel were exposed to in saving the ship and in such perilous undertaking.
property and life.
Section 14. This Act shall take effect on
The amount should be liberal enough to cover the its passage. Enacted 2/4/16.
expenses and to give an extra sum as a reward for the
services rendered; should be liberal enough to offer an
inducement to others to render like services in similar MRR vs Macondray 37 Phil 850
emergencies in the future; BUT should not be so high
as to cause vessels in need of assistance to hesitate F: On April 6, 1915 the steamer Seward owned by
because of ruinous cost Macondray & Co. left Saigon for the Philippine Islands,
encountering a moderately high sea. Laden with a cargo
"Public policy encourages the hardy of rice, the weight of which, taken with the condition of
and adventurous mariner to engage in the sea, caused the vessel to spring a leak, and her
these laborious and sometimes master felt compelled to return to Saigon. At this
dangerous enterprises, and with a view juncture, the steamship Hondagua owned by plaintiff,
to withdraw from him every temptation was sighted, whereupon the Seward flew the
to embezzlement and dishonesty, the international distress signal asking for assistance. The
law allows him, in case he is Hondagua changed her course and approached the
successful, a liberal compensation." Seward. Seward had indicated that it had sprung a leak
and wished to be taken in tow. In response to signals
Section 11. From the proceeds of the sale from the Hondagua, the Seward sent her boat to the
of the things saved shall be deducted, first, the Hondagua for a heaving line, by means of which a
expenses of their custody, conversation, hawser was passed from the Hondagua to the Seward
advertisement, and auction, as well as whatever and the former, with the latter in tow, then proceeded at
taxes or duties they should pay for their half speed towards Saigon. Shortly afterwards, the
entrance; then there shall be deducted the Seward signaled that the leak was gaining rapidly. The
expenses of salvage; and from the net amount Hondagua went full speed ahead, until their arrival at
remaining shall be taken the reward for the Cape St. James, at the mouth of the Saigon River. The
salvage or assistance which shall not exceed 50% towing occupied some 4 or 5 hours and covered a
of such amount remaining. distance of 20 to 30 miles.
The court found that the value of the Seward
Section 12. If in the salvage or in the upon her arrival at Cape St. James did not exceed P
rendering of assistance different persons shall 20,000 and that the value of the cargo was
have intervened the reward shall be divided approximately P 54,000. The defendant company had no
between them in proportion to the services which interest in the cargo, other than that of the carrier, and
each one may have rendered, and in case of the cargo was owned by shippers whose names do not
doubt, in equal parts. appear of record.
Those who, in order to save persons, shall Plaintiff filed an action in the CFI of Manila,
have been exposed to the same dangers shall seeking to recover from defendant P 75,000, the alleged
also have a right to participation in the reward. value of the salvage service. The CFI ordered the
defendant to pay P 4,000 to the plaintiff. Both appealed.

No other person has the right to interfere with the Issues : Is the plaintiff entitled to recover renumeration
salvage of a vessel or cargo if the salvor is able to effect for saving the cargo as well as for saving the ship? What
the salvage with fidelity and vigor --> if their means are is the reasonable compensation which should be
inadequate, they are bound to accept additional allowed?
assistance if offered Held : There is no question as to the liability of
defendant for the service rendered by plaintiff. Nor is
Taking passengers from a sinking ship, without there any dispute over the fact that the service
rendering any service in rescuing the vessel, is not a rendered was a salvage service and renumerable as
salvage service, being a duty of humanity and not for such. Where a ship and its cargo are saved together, as
reward --> the Salvage Act, giving salvors of human life a result of services carried on with a view to saving
a fair share or remuneration offered to salvors of the both, the salvage allowance should be apportioned
vessel, refers to a situation where both lives and between the ship and cargo in the proportion of their
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respective values, the same as in a case of general In this case, the sum of P 1,000 is adequate for
average; and neither is liable for the salvage due from the service rendered.
the other. If one who have salved both ship and cargo
brings before the court in his salvage action only the
ship, or only the cargo, he will get judgment only for Barrios vs Go Thong 7 SCRA 535
such amount of reward as the court finds to be due in
respect of the value of that property which is before the F: Plaintiff Barrios was the captain of MV Henry I, a
court. Not only is the salvage charge a separate and vessel of William Lines, Inc. At about 8:00 p.m. of May
divisible burden as between ship and cargo, but also as 1, 1958, plaintiff as captain received an SOS or distress
between portions of the cargo belonging to different signal by blinkers from the MV Alfredo, owned by the
owners. There is no common liability for the amounts defendant Carlos Go Thong & Co. Answering the SOS
due from the ship or other portions of the cargo when call, the plaintiff as captain of MV Henry, which was then
the ship and cargo, or either, are brought into the sailing from Dumaguete City, altered the course of said
custody of the court as a result of a proceeding in rem. vessel, and headed towards the MV Don Alfredo, which
The rule of liability must be the same where a personal plaintiff found to be in trouble, due to engine failure and
action is instituted against the owners of the one or the the loss of her propeller, for which reason, it was drifting
other. The personal liability of each must be limited to slowly southward from Negros Island towards Borneo in
the portion of the salvage charge which should be borne the open China Sea, at the mercy of a moderate easterly
by his own property. wind. At about 8:25 p.m. on the same day, May 1, 1958,
If it had been alleged and proved that the ship the MV Henry, under the command of the plaintiff,
was unseaworthy when she put to sea or that the succeeded in getting near the MV Don Alfredo -- in fact
necessity for the salvage service was due to the as near as about 7 meters from the latter ship -- and
negligence of the master, or of the ship's owner, the with the consent and knowledge of the captain and/or
latter might have been liable, at least between himself master of the MV Don Alfredo, the plaintiff caused the
and the shipper, for the entire cost of the service. But latter vessel to be tied to, or well-secured and
when the claim is put upon the basis of salvage, the connected with two lines from the MV Henry; and the
fixing of the compensation goes beyond the limits of a latter had the MV Don Alfredo in tow and proceeded
quantum meruit for the work and labor done and towards the direction of Dumaguete City, as evidenced
involves the assessment of a bounty. The amount to be by a written certificate to this effect executed by the
allowed is in part determined upon considerations of Master, the Chief Engineer, the Chief Officers, and the
equity and public policy; and it is not proper to make the Second Engineer of the MV Don Alfredo, who were then
ship or the ship's owner liable for the whole amount. But on board the latter ship at the time of the occurrence.
where the owner of the cargo has not been made a When both vessels were approaching the vicinity of
party to the action, no recovery can be had in this action Negros Oriental, the MV Lux, a sister ship of MV Don
in regard to the service rendered to the cargo. Alfredo, was sighted heading towards the two vessels.
In fixing the compensation, the ff. circumstances At the request and instance of the captain of MV Don
are taken into consideration: (1) the labor expended by Alfredo, the plaintiff caused the tow lines to be released,
the salvors in rendering the salvage service; (2) the thereby also releasing the MV Don Alfredo.
promptitude, skill and energy displayed in rendering the
service and saving the property; (3) the value of the Issue: WON the service rendered by plaintiff constituted
property employed by the salvors, and the danger to salvage or towage, and if so, WON plaintiff may recover
which such property was exposed; (4) the risk incurred from defendant compensation for such service.
by the salvors in rescuing the property from the Held :(1) According to Sec. 1 of the Salvage Law, those
impending peril; (5) the value of the property salved; who assist in saving a vessel or its cargo from
and (6) the degree of danger from which the property shipwreck, shall be entitled to a reward (salvage).
was rescued. "Salvage" has been defined as the compensation
In applying these criteria to this case, the ff. allowed to persons by whose assistance a ship or her
circumstances are pertinent : the Hondagua was cargo has been saved, in whole or in part, form
delayed in her voyage about nine hours. This delay impending peril on the sea, or in recovering such
caused her to enter Iloilo, the port of destination, in the property from actual loss, as in case of shipwreck,
early hours of the morning instead of the late afternoon derelict or recapture. There was no marine peril in this
of the previous day; but the unloading of her cargo was case. Although defendant's vessel was in a helpless
not thereby retarded. Under the charter party contract condition due to engine failure, it did not drift too far
under which she was operating, the Hondagua was from the place where it was. As found by the LC, the
earning about P 300/day, which was considered weather was fair, clear and good. The waves were small
reasonable compensation for her use, including the and too slight, so much so, that there were only ripples
services of officers and crew. The service rendered did on the sea, which was quite smooth. During the towing
not involve any further expenditure of labor on the part of the vessel on the same night, there was moonlight.
of the salvors, no unusual display of skill and energy and Although said vessel was drifting towards the open sea,
the condition of the sea was not such as to involve any there was no danger of its foundering or being stranded,
special risk either to Hondagua or her crew. Finally, the as it was far from any island or rocks. In case of danger
danger from which the Seward was rescued was real of stranding, its anchor could be released, to prevent
since the ship was confronted by a serious peril. such occurrence. There was no danger that defendant's
In determining the amount of the award, the aim vessel would sink, in view of the smoothness of the sea
should be to hold out to seafaring men a fair and the fairness of the weather. That there was absence
inducement to the performance of salvage service of danger is shown by the fact that said vessel or its
without fixing a scale of compensation so high as to crew did not even find it necessary to lower its launch
cause vessels in need of such services to hesitate and and two motor boats, in order to evacuate its
decline to receive them because of the ruinous cost. passengers no were the cargo in danger of perishing.
That the salvor is entitled, as of bounty, to something All that the vessel's crew members could no do was to
more than mere renumeration for his own work and the move the vessel on its own power. That did not make
risk incurred by him is conceded; but the interests of the vessel a quasi-derelict, considering that even before
commerce should also be considered. Towage is not the plaintiff-appellant extended the help to the
considered a salvage service of high order of merit and distressed ship, a sister vessel was known to be on its
where the risk is inconsiderable and other conditions way to succor it.
favorable, the compensation to be allowed should be (2) But plaintiff's service can be considered as a
modest in its amount. quasi- contract of towage. In consenting to plaintiff's
offer to tow the vessel, the defendant through its
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TRANSPORTATION AND MARITIME LAW

captain, thereby impliedly entered into a juridical chartered the vessel, the ship captain, its officers and
relation of towage with the owner of the MV Henry. If crew were under the employ of the shipowner and
the contract thus created is one for towage, then only therefore continued to be under its direct supervision
the owner of the towing vessel , to the exclusion of the and control. Thus it continued to be a public carrier.
crew of the said vessel, may be entitled to It is therefore imperative that a public carrier shall
renumeration. And as the vessel-owner, William Lines, remain as such, notwithstanding the charter of the
had expressly waived its claim for compensation for the whole or portion of a vessel, provided the charter is
towage service rendered to defendant, it is clear that limited to the ship only, as in the case of a time-
plaintiff, whose right if at all depends upon and not charter or a voyage-charter. It is only when the
separate from the interest, is not entitled to payment for charter includes both the vessel and the crew, as in a
such towage services. Neither may the plaintiff captain bareboat or demise that a CC becomes private, insofar
invoke equity in support of his claim for compensation as such particular voyage is concerned.
against defendant. There being an express provision of
law (Art. 2142, NCC) applicable to the relationship Issue : WON the carrier is liable for damages. NO.
created in this case, that is, that of a quasi-contract of
towage where the crew is not entitled to compensation Held : The presumption of negligence on the part of
separate from that of the vessel, there is no occasion to respondent carrier has been overcome by the showing
resort to equitable considerations. of extraordinary zeal and assiduity exercised by the
carrier in the care of the cargo. On the other hand, no
proof was adduced by the petitioner showing that the
carrier was remiss in the exercise of due diligence in
E. SPECIAL CONTRACTS OF MARITIME COMMERCE order to minimize the loss or damage to the goods it
carried.
1. Charter Parties
b. Kinds
a. Definition; as common
carrier Classes of charter party:

A charter party is a contract by virtue of which (1) as to extent of vessel hired


the owner or agent of a vessel binds himself to (a) total
transport merchandise or persons for a fixed price. It is (b) partial - the charterer does not as a
a contract by which the owner or agent of the vessel rule acquire the right to fix the date when the vessel
leases for a certain price the whole or a portion of the should depart, unless such right is expressly granted
vessel for the transportation of goods or persons from in the contract
one port to another. (2) as to time
Towage is not a charter party; instead it is a (a) until a fixed day or for a determined
contract for the hire of services by virtue of which a number of days or month
vessel is engaged to tow another vessel from one port (b) for a voyage
to another for a consideration
(3) as to freightage
(a) for a fixed amount for the whole
Planters Products vs CA G.R. 101503 (Sept. 15, 1993) cargo
(b) for a fixed rate per ton
F: Planters purchased urea fertilizer from (c) for so much per month
Mitsubishi,New York. The fertilizer was shipped on MV
Sun Plum, which is owned by KKKK, from Alaska to San Maritime Agencies vs CA 187 SCRA 346
Fernando, La Union. A time charter party was entered
into between Mitsubishi as shipper/charterer and KKKK F: Transcontinental Fertilizer Co. of London
as shipowner. Upon arrival in the port, PPI unloaded chartered from Hongkong Island Shipping Co. the
the cargo. It took PPI 11 days to unload the cargo. PPI motor vessel Hongkong Island for the shipment of
hired a marine and cargo surveyor to determine if bagged urea from Odessa, USSR to the Philippines.
there was any shortage. A shortage and The parties signed a Uniform General Charter dated
contamination of the fertilizer was discovered. PPI August 1979. The consignee was Atlas Fertilizer Co.
sent a claim letter to SSA, the resident agent of KKKK while the insurer was the Union Insurance Society of
for the amount of the loss. An action for damages was Canton. Maritime Agencies was appointed as the
filed. SSA contended that the provisions on CC do not charterer's agent and Macondray as the owner's
apply to them because they have become private agent. The vessel arrived in Manila to unload part of its
carriers by reason of the charter-party. The TC awarded cargo and then proceeded to Cebu to discharge the
damages. The CA reversed. rest of the cargo. The consignee filed a formal claim
for shortlanded bags. The consignee also filed a claim
Issue : Does a charter party between a shipowner and against Viva Customs Brokerage for the unrecovered
a charterer transform a CC into a private one as to spillage. These claims having been rejected, the
negate the civil law presumption of negligence in case consignee went to Union, which paid the total
of loss or damage to its cargo? NO. indemnity of P 113,123.86 pursuant to the insurance
contract. As subrogee of the consignee, Union filed a
Held : A charter-party is a contract by which an entire claim for reimbursement against Hongkong Island Co.,
ship, or some principal part thereof, is let by the owner Maritime Agencies and/or Viva Customs Brokerage.
to another person for a specified time or use. There Viva was dropped from the complaint while Macondray
are 2 kinds : (1) contract of affreightment which Co. was impleaded.
involves the use of shipping space or vessels leased by The RTC found Hongkong Island liable for the
the owner in part or as a whole, to carry goods for shortlanded bags while Maritime Agencies was held
others; and (2) charter by demise or bareboat charter liable for the spillage during discharge. The RTC
where the whole vessel is let to the charterer with a ordered Hongkong Island and its local agent
transfer to him of its entire command and possession Macondray to pay P 87,000+ and Maritime Agencies to
and consequent control over its navigation, including pay P 36,000+ to Union Insurance. CA exempted
the master and the crew, who are his servants. Hongkong Island and Macondray exempt from liability.
It is not disputed that the carrier operates as a Thus this petition. Maritime pleads non-liability on the
CC in the ordinary course of business. When PPI ground that it was only the charterer's agent and
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TRANSPORTATION AND MARITIME LAW

should not answer for whatever responsibility might the vessel. Transcontinental was disclosed as the
have attached to the principal. Union asked that charterer's principal and Maritime only acted within
Maritime should be made solidarily liable since its the scope of its authority.
principal had not been impleaded. The TC's findings were upheld except for some
modifications. The liability of Macondray can no longer
Held : There are 3 general categories of charters: be enforced because of prescription. Maritima cannot
1. Demise or bareboat charter - involves the be held liable for the principal's acts.
transfer of full possession and control of the vessel for
the period covered by the contract, the charterer c. Forms and Effects
obtaining the right to use the vessel and carry
whatever cargo it chooses, while manning and Art. 652. A charter party must be drawn
supplying the ship as well in duplicate and signed by the contracting
2. Time Charter - contract to use a vessel for a parties, and when either does not know how or
particular period of time, the charterer obtaining the is not able to do so, by two witnesses at his
right to direct the movements of the vessel during the request.
chartering period, although the owner retains The charter party shall include, besides
possession and control the condition stipulated, the following
3. Voyage Charter - contract for the hire of a circumstances:
vessel for one or a series of voyages usually for the 1. The kind, name, and tonnage of the
purpose of transporting goods for the charterer; the vessel.
voyage charter is a contract of affreightment and is 2. Her flag and port or registry.
considered a private carriage 3. The name, surname, and domicile of
- being a private carriage, the parties may the captain.
freely contract respecting liability for damages to the 4. The name, surname, and domicile of
goods and other matters; responsibility for the cargo the agent, if the latter should make the charter
loss falls on the one who agreed to perform the duty party.
involved in accordance with the terms of the voyage 5. The name, surname, and domicile of
charter the charterer, and if he states that he is acting
by commission, that of the person for whose
This case involves a voyage charter.In the account he makes the contract.
present case, the charterer was responsible for 6. The port of loading and unloading.
loading, stowage and discharging at the ports visited, 7. The capacity, number of tons or
while the owner was responsible for the care of the weight, or measure which they respectively
cargo. Par. 2 of the Uniform General Charter provided bind themselves to load and transport, or
that the owner shall be responsible for loss or damage whether it is the total cargo.
or delay in the delivery of goods caused by improper 8. The freightage to be paid, stating
or negligent stowage of the goods or by personal want whether it is to be a fixed amount for the
of due diligence in making the vessel seaworthy and voyage or so much per month, or for the space
properly manned. However, the owner shall not be to be occupied, or for the weight or measure of
liable for any other cause, even from the neglect of the the goods of which the cargo consists, or in any
captain or the crew or any other person employed by other manner whatsoever agreed upon.
the owner on board, or for any unseaworthiness of the 9. The amount of primage to be paid the
vessel on loading or commencement of the voyage. captain.
In cases at bar, the TC found that there were 10. The days agreed upon for loading and
shortlanded bags, which could only mean that they unloading.
were damaged or lost on board the vessel before 11. The lay days and extra lay days to
unloading of the shipment. The entire cargo was be allowed and the rate of demurrage.
covered by a clean B/L. As the bags were in good order
when received by the vessel, the presumption is that
they were damaged or lost during the voyage as a Art. 653. If the freight should be
result of their negligent improper storage. The received without the charter party having been
shipowner should be held liable. signed, the contract shall be understood as
The filing of the claim must be within one year, executed in accordance with what appears in
in accordance with the COGSA. Otherwise, the carrier the bill of lading, which shall be the only
and the ship shall be discharged from liability. The one instrument with regard to the freight to
year period should commence from Oct. 20, 1979, the determine the rights and obligations of the ship
date when the last item was delivered to the agent, of the captain, and of the charterer.
consignee. Union filed the complaint against
Hongkong within the one year period but tardily
against Macondray. The action has prescribed with If the cargo is received without a charter party, the B/L
respect Macondray but not against the principal, shall be considered the contract of the parties
Hongkong Island.
As regards the goods damaged or lost during Q: If there is no charter party and B/L, would there be
unloading, the charterer is liable thereof, having a valid contract?
assumed this activity under the charter party free of A: Taking Art. 653 literally, the answer is no.
expense to the vessel. The difficulty is that However, if we take into account the fact that delivery
Transcontinental has not been impleaded and so is of the cargo does not constitute the making of a
beyond the court's jurisdiction. The liability imposed contract but rather the partial performance thereof,
on it cannot be borne by Maritime which is a mere the mere fact of delivery and receipt of such cargo, the
agent and is not answerable for the injury caused by GF and mutual consent with which they have been
its principal (unless the principal is undisclosed). made, should be a better substitute for the charter
In this case, the charterer did not represent party than is the B/L which is nothing more than the
itself as a carrier and indeed assumed responsibility proof of such delivery.
only for the unloading of the cargo. Maritime acted in
representation of the charterer and not of the vessel. Primage.-- Formerly, a small allowance or
As a mere charterer's agent, it cannot be held compensation payable to the master and marines of a
solidarily liable with Transcontinental for the ship; to the former for the use of his cables and ropes
losses/damages to the cargo outside the custody of
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TRANSPORTATION AND MARITIME LAW

to discharge the goods of the merchant; to the latter The same authority shall judicially
for lading and unlading in any port of haven compel the captain to carry out for his account
Primage, at present, it is no longer a gratuity and under his responsibility the charter made
to the master, unless especially stipulated; but it by the shippers.
belongs to owners or freighters and is nothing but an If the captain, notwithstanding his
increase of the freight rate. diligence, should not find a vessel to charter, he
shall deposit the cargo at the disposal of the
Demurrage.-- Sum which is fixed by the contract of shippers, to whom he shall communicate the
carriage, or which is allowed, as remuneration to the facts on the first opportunity, the freight being
owner of a ship for the detention of his vessel beyond adjusted in such cases by the distance covered
the number of days allowed by the charter party for by the vessel, with no right to any
loading and unloading or for sailing; it is an extended indemnification whatsoever.
freight or reward to the vessel in compensation for the
earnings she is improperly caused to lose
Articles 659 to 664 : Some of the goods being
Lay days.-- Days allowed to charter parties for transported may : (1) be sold by the captain to pay for
loading and unloading the cargo necessary repairs; (2) be jettisoned for the common
safety; (3) be lost by reason of shipwreck or stranding;
(4) be seized by pirates or enemies; (5) suffer
Art. 654. The charter parties executed deteriorations or dimunitions; or (6) increase by
with the intervention of a broker, who certifies natural cause in weight or size
to the authenticity of the signatures of the
contracting parties made in his presence, shall ** Goods that shall not pay freightage:
be full evidence in court; and, if they should be (1) Art. 660 - goods jettisoned for the common safety
conflicting, that which agrees with the one but the amount of freightage that should have been
which the broker must keep in his registry, if paid shall be considered as a general average and
kept in accordance with law, shall govern. shall be computed in proportion to the distance
The contracts shall also be admitted as covered when they were jettisoned
evidence, even though a broker has not taken (2) Art. 661 - merchandise lost by reason of shipwreck
part therein, if the contracting parties or stranding; if freight had been paid in advance, it
acknowledge the signatures of the same as shall be returned
their own. (3) Art. 661 - goods seized by pirates or enemies;
Should no broker have taken part in the freight paid in advance shall be returned
charter party and the signatures be not ** Goods required to pay freightage:
acknowledged, doubts shall be decided by what (1) Art. 659 - goods sold by the captain to pay for the
is provided for in the bill of lading, and, in the necessary repairs to the hull, machinery or equipment
absence thereof, by the proofs submitted by the or for unavoidable and urgent needs --> but the freight
parties. may not be required to be paid in full
(2) Art. 663 - goods which suffer deterioration or
dimunition on account of (a) inherent defects or bad
Art. 655. Charter parties executed by the quality of packing, or of (b) fortuitous event
captain in the absence of the ship agent shall be (3) Art. 644 - goods that increase in size or weight by
valid and effective, even though in executing natural cause
them he should have acted in violation of the
orders and instructions of the agent or
shipowner; but the latter shall have a right of d. Rights and Obligations of
action against the captain to recover damages. Shipowners

Art. 669. The shipowner of the captain


Art. 656. If in the charter party the time shall observe in charter parties the capacity of
in which the loading and unloading are to take the vessel or that expressly designated in its
place is not stated, the usages of the port where registry, a difference greater than 2 per cent
these acts take place shall be observed. After between that registered and her true capacity
the stipulated or customary period has passed, not being permissible.
and should there not be in the freight contract If the shipowner or the captain should
an express provision fixing the indemnification contract to carry a greater amount of cargo
for the delay, the captain shall be entitled to than the vessel can carry, in view of her
demand demurrage for the lay days and extra tonnage, they shall indemnify the shippers
lay days which may have elapsed in loading and whose contracts they do not fulfill for the losses
unloading. they may have caused them by reason of their
default, according to the cases, viz:
If the vessel has been chartered by one
Art. 657. If during the voyage the vessel shipper only, and there should appear to be an
should be rendered unseaworthy the captain error or fraud in her capacity, and the charterer
shall be obliged to charter at his expense should not wish to rescind the contract, when he
another one in good condition, to carry the has a right to do so, the freightage shall be
cargo to its destination, for which purpose he reduced in proportion to the cargo the vessel
shall be obliged to look for a vessel not only at cannot receive, the person from whom the
the port of arrival but also in the neighboring vessel is chartered being furthermore obliged to
ports within a distance of 150 kilometers. indemnify the charterer for the losses he may
If the captain, through indolence or have caused him.
malice, should not furnish a vessel to take the If, on the contrary, there should be
cargo to its destination, the shippers, after several charter parties, and by reason of the
requesting the captain to charter a vessel want of space all the cargo contracted for
within an unextendible period, may charter one cannot be received, and none of the charterers
and apply to the judicial authority for the desires to rescind the contract, preference shall
summary approval of the charter party which be given to the person who has already loaded
they may have made. and arranged the cargo in the vessel, and the
PAGE 89
TRANSPORTATION AND MARITIME LAW

rest shall take the place corresponding to them and keep the vessel in trim, demanding by way
in the order of the dates of their contracts. of freightage the highest price which may have
Should there be no priority, the been stipulated for said voyage.
charterers may load, if they wish, in proportion
to the weight or space they may have engaged,
and the person from whom the vessel was Art. 675. If the vessel has been
chartered shall be obliged to indemnify them for chartered to receive the cargo in another port,
losses and damages. the captain shall appear before the consignee
designated in the charter party, and should the
latter not deliver the cargo to him, he shall
Art. 670. If the person from whom the inform the charterer and await his instructions,
vessel is chartered, after receiving a part of the the lay days agreed upon, or those allowed by
cargo, should not find sufficient to make up at custom in the port, beginning to run in the
least three fifths of the amount the vessel can meantime, unless there is an express
hold, at the price he may have fixed, he may agreement to the contrary.
substitute for that transportation another Should the captain not receive an answer
vessel inspected and declared suitable for the within the time necessary therefore, he shall
same voyage, the expenses of transfer, and the make efforts to find cargo; and should he not
increase in the price of the charter, should there find any after the lay days and extra lay days
be any, being for his account. Should he not be have elapsed, he shall make a protest and
able to make this change, the voyage shall be return to the port where the charter was made.
undertaken at the time agreed upon; and should The charterer shall pay the freightage in
no time have been fixed, within fifteen days full, discounting that which may have been
from the time the loading began, should nothing earned on the merchandise which may have
to the contrary have been stipulated. been carried on the voyage out or on the return
If the owner of the part of the cargo trip, if carried for the account of third persons.
already loaded should procure some more at the The same shall be done if a vessel,
same price and under similar or proportionate having been chartered for the round trip, should
conditions to those accepted for the freight not be given any cargo for her return.
received, the person from whom the vessel is
chartered or the captain may not refuse to
accept the rest of the cargo; and should he do Art. 676. The captain shall lose the
so, the charterer shall have a right to demand freightage and shall indemnify the charterers if
that the vessel put to sea with the cargo she the latter should prove, even against the
may have on board. certificate of inspection, if one has been made
at the port of departure, that the vessel was not
Art. 671. After three-fifths of the vessel in a condition to navigate at the time of
is loaded, the person from whom she is receiving the cargo.
chartered may not, without the consent of the
charterers or shippers, substitute the vessel
designated in the charter party with another Art. 677. The charter party shall subsist
one, under the penalty of making himself if the captain should not have any instructions
thereby liable for all the losses and damages from the charterer, and a declaration of war or a
occurring during the voyage to the cargo of blockade should take place during the voyage.
those who did not consent to the change. In such case the captain must proceed to
the nearest safe and neutral port, requesting
and awaiting orders from the shipper; and the
Art. 672. If the vessel has been expenses and salaries accruing during the
chartered in whole, the captain may not, detention shall be paid as general average.
without the consent of the person chartering If, by orders of the shipper, the cargo
her, accept cargo from any other person; and should be discharged at the port of arrival, the
should he do so, said charterer may oblige him freightage for the voyage out shall be paid in
to unload it and to indemnify him for the losses full.
suffered thereby.

Art. 678. If the time necessary, in the


Art. 673. The person from whom the opinion of the judge or court, to receive orders
vessel is chartered shall be liable for all the from the shippers should have elapsed without
losses caused the charterer by reason of the the captain having received any instructions,
voluntary delay of the captain in putting to sea, the cargo shall be deposited, and it shall be
according to the rules prescribed, provided he liable for the payment of the freightage and
has been requested to put to sea at the proper expenses incurred by reason of the delay, which
time through a notary or judicially. shall be paid from the proceeds of the part first
sold.

Art. 674. If the charterer should carry to


the vessel more cargo than that contracted for, Obligations of shipowner:
the excess may be admitted in accordance with 1. Art. 669 - to observe in the charter parties, the
the price stipulated in the contract if it can be capacity of the vessel, and to indemnify the shippers
well stowed without incurring the other whose contracts are not fulfilled for the losses they
shippers, but if in order to stow said cargo it may have suffered by the failure of the shipowner to
should be necessary to stow it in such manner observe the capacity of the vessel
as to throw the vessel out of trim the captain 2. Art. 670 - to undertake a voyage at the time agreed
must refuse it or unload it at the expense of its upon or within 15 days from loading if no time is
owner. stipulated, even if the shipowner should not find cargo
The captain may likewise, before leaving sufficient to make up at least 3/5 of the amount which
the port, unload the merchandise clandestinely the vessel may hold, where he fails to exercise his
placed on board, or transport it, it he can do so right to change vessel
PAGE 90
TRANSPORTATION AND MARITIME LAW

3. Art. 670 - where the shipowner should not find cargo was chartered or of the captain, and should
sufficient to make up at least 3/5 of the amount which thereby give rise to losses, by reason of
the vessel may hold, to accept other cargo procured confiscation, embargo, detention, or other
by the owner of the freight already loaded under the causes, to the person from whom the vessel was
same price and conditions chartered or to the shippers, the person giving
4. Art. 671- not to change the vessel after 3/5 of the rise thereto shall be liable with the value of his
vessel has been loaded, without the consent of the shipment and furthermore with his property, for
charterers or shippers the full indemnity to all those injured through
5. Art. 672 - if the vessel has been chartered in whole, his fault.
not to accept cargo from any other person without the
consent of the charterer
6. Art. 673 - to answer for losses arising from delay in Art. 682. If the merchandise should have
putting to sea been shipped for the purpose of illicit
7. Art. 676 - to have the vessel in a condition to commerce, and was taken on board with the
navigate at the time of receiving the cargo knowledge of the person from whom the vessel
8. Art. 677 - in case of declaration of war or blockade was chartered or of the captain, the latter,
during the voyage, where the captain has not received jointly with the owner of the merchandise, shall
any instructions from the charterer, for the captain to be liable for all the losses which may be caused
proceed to the nearest safe and neutral port, to other shippers, and even though it may have
requesting and awaiting orders from the shippers been agreed, they cannot demand any
indemnity whatsoever from the charterer for
Rights of Shipowner: the damage caused the vessel.
1. Art. 670 - where the cargo is not sufficient to make
up at least 3/5 of the amount which the vessel may
hold, he may substitute anohter vessel inspected and Art. 683. In case of making a port to
declared suitable for the voyage --> expenses of repair the hull, machinery, or equipment of the
transfer and increase in price of the charter shall be vessel, the shippers must wait until the vessel is
paid by him repaired, being permitted to unload her at their
2. Art. 674 - to collect the freight in accordance with own expense should they deem it advisable.
the price stipulated for cargo in excess of that agreed If, for the benefit of cargo which runs the
upon is such excess can be properly stowed 3. Art. 674 risk of deterioration, the shippers or the court,
- to refuse and unload at the expense of the owner or the consul, or the competent authority in a
excess cargo that cannot be properly stowed foreign land should order the merchandise to be
4. Art. 674 - to unload merchandise clandestinely unloaded, the expenses of unloading and
placed on board, or to transport them if he can do so, reloading shall be for the account of the former.
demanding the highest freightage
5. Art. 675- to find freight to take place of freight not
received, if the vessel has been chartered to receive Art. 684. If the charterer, without the
cargo in another port, after he receives no cargo from occurrence of any
the consignee and after he receives no answer from of the cases of force majeure mentioned in the
the charterer foregoing article, should wish to unload his
6. Art. 675 - to receive freight in full, discounting that merchandise before arriving at the port of
which may have been earned on the merchandise destination, he shall pay the full freightage, the
carried as substitute expenses of the arrival made at his request, and
7. Art. 677 - to have the charter party subsist the losses and damages caused the other
notwithstanding the declaration of war or a blockade shippers, should there be any.
during the voyage, and to receive in such cases, the
freightage in full where the shipper orders that the
cargo should be discharged at the port of arrival Art. 685. In charters for transportation
of general freight any of the shippers may
unload the merchandise before the beginning of
e. Obligations of charterers the voyage, paying one half the freightage, the
expense of stowing and restoring the cargo, and
Art. 679. The charterer of an entire any other damage which may be caused the
vessel may subcharter the whole or part thereof other shippers.
for the amounts he may consider most
convenient, the captain not being allowed to
refuse to receive on board the cargo delivered Art. 686. After the vessel has been
by the second charterers, provided the unloaded and the cargo placed at the disposal
conditions of the first charter are not changed, of the consignee, the latter must immediately
and that the price agreed upon is paid in full, pay the captain the freightage due and the
even though the full cargo is not loaded, with other expenses for which the cargo may be
the limitation established in the next article. liable.
The primage must be paid in the same
proportion and at the same time as the
Art. 680. A charterer who does not freightage, all the changes and modifications to
complete the full cargo he bound himself to ship which the latter should be subject also
shall pay the freightage of the amount he fails governing the former.
to load, if the captain does not take other
freight to complete the load of the vessel, in
which case he shall pay the first charterer the Art. 687. The charterers and shippers
difference should there be any. may not abandon merchandise damaged on
account of its own inherent defect or of
fortuitous event for the payment of the
Art. 681. If the charterer should ship freightage and other expenses.
goods different from those indicated at the time The abandonment shall be proper,
of executing the charter party, without the however, if the cargo should consist of liquids
knowledge of the person from whom the vessel which may have leaked out, there remaining in
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TRANSPORTATION AND MARITIME LAW

the containers not more than one-fourth of their When the delay does not exceed thirty
contents. days, the shippers shall pay the full freightage
for the voyage out.
Should the delay exceed thirty days, they
Obligations of the charterer: shall pay the freight in proportion to the
1. Art. 680 - to pay the freight in full even if the distance covered by the vessel.
charterer does not complete the full cargo he bound
himself to ship
2. Art. 681- to answer with the value of his shipment Art. 689. At the request of the person
and other property for the losses suffered by the from whom the vessel is chartered the charter
shipowner, captain or other shippers arising from party may be rescinded:
confiscation, embargo, detention, or other causes, 1. If the charterer at the termination of
where the charterer loads goods different from those the extra lay days does not place the cargo
stated at the time of the execution of the charter party alongside the vessel.
3. Art. 682 - to be jointly liable with the captain for In such case the charterer must pay half
losses which may be caused to the other shippers of the freightage stipulated besides the
where the charterer ships goods for illicit commerce demurrage due for the lay days and extra lay
with the knowledge of the shipowner or captain days.
4. Art. 682 - in case of making a port to repair the hull, 2. If the person from whom the vessel
machinery or equipment of the vessel, to wait until the was chartered should sell it before the charterer
vessel is repaired or to pay for the expenses of has begun to load it and the purchaser should
unloading should the charterer choose to unload load it for his own account.
5. Art. 684 - where the charterer unloads goods before In such case the vendor shall indemnify
arriving at port of destination without any force the charterer for the losses he may suffer.
majeure occurring, to pay (1) expenses of arrival, (2) If the new owner of the vessel should not
full freight and (3) for the damages and losses caused load it for his own account the charter party
to other shippers, if any shall be respected, and the vendor shall
6. Art. 685 - where the charterer unloads before the indemnify the purchaser if the former did not
beginning of the voyage, (1) to pay 1/2 of the freight, inform him of the charter pending at the time of
(2) to pay for the expenses of stowing and restowing making the sale.
the cargo, (3) to pay any other damage which he may
have caused other shippers
7. Art. 686 - to pay for freight, other expenses and the Art. 690. The charter party shall be
primage after the vessel has been unloaded and the rescinded and all action arising therefrom shall
cargo placed at the disposal of the consignee be extinguished if, before the vessel puts to sea
8. Art. 687 - not to abandon merchandise damaged from the port of departure, any of the following
on account of inherent defect or fortuitous event, for cases should occur:
the payment of the freight and other expenses 1. A declaration of war or interdiction of
commerce with the power to whose ports the
vessel was to make its voyage.
f. Rescission 2. A condition of blockage of the port of
destination of said vessel, or the breaking out of
Art. 688. A charter party may be an epidemic after the contract was executed.
annulled at the request of the charterer: 3. The prohibition to receive at the said
1. If before loading the vessel he should port the merchandise constituting the cargo of
abandon the charter, paying half the freightage the vessel.
agreed upon. 4. An indefinite detention, by reason of
2. If the capacity of the vessel should an embargo of the vessel by order of the
not agree with that stated in the certificate of government, or for any other reason inde-
tonnage, or if there be an error in the statement pendent of the will of the ship agent.
of the flag under which she sails. 5. The inability of the vessel to navigate,
3. If the vessel should not be placed at without fault of the captain or ship agent.
the disposal of the charterer within the period The unloading shall be made for the
and in the manner agreed upon. account of the charterer.
4. If, after the vessel has put to sea, she
should return to the port of departure, on
account of risk from pirates, enemies, or bad Art. 691. If the vessel cannot put to sea
weather, and the shippers should agree to on account of the closing of the port of
unload her. departure, or any other temporary cause, the
In the second and third cases the person charter shall remain in force without right of
from whom the vessel was chartered shall either of the contracting parties to claim
indemnify the charterer for the losses he may damages.
suffer. The subsistence and wages of the crew
In the fourth case the person from whom shall be considered as general average.
the vessel was chartered shall have a right to During the interruption the charterer
the freightage in full for the voyage out. may, at the proper timer and for his own
If the charter should have been made by account, unload and load the merchandise,
the month, the charterers shall pay the full paying demurrage if the reloading should
freightage for one month, if the voyage is for a continue after the cause for the detention has
port in the same waters; and two months, if for ceased.
a port in different waters.
(From one port to another of the
Peninsula (Philippines) and adjacent islands, the Art. 692. A charter party shall be
freightage for one month only shall be paid.) partially rescinded, unless there is an
5. If a vessel should make a port during agreement to the contrary, and the captain shall
the voyage in order to make urgent repairs and only be entitled to the freightage for the voyage
the charterers should prefer to dispose of the out, if, by reason of a declaration of war, closing
merchandise. of ports, or interdiction of commercial relations
PAGE 92
TRANSPORTATION AND MARITIME LAW

during the voyage, the vessel should make the


port designated for such a case in the Marine insurance vs Bottomry and Respondentia
instructions of the charterer. Loans:

The borrower is in effect indemnified for his loss, at


2. Loans on Bottomry and least, to the extent of the loan --> in case of loss of the
Respondentia thing given as security, the borrower is under no
obligation to pay the loan
a. Loan on Bottomry, defined
Marine insurance
A contract in the nature of a mortgage, by bottomry/respondentia loans
which the owner of the ship borrows money for the 1. indemnity is paid after the
use, equipment and repair of the vessel and for a indemnity is paid in advance by way of loan
definite term, and pledges the ship (or the keel or loss has occurred
bottom of the ship) as a security for its repayment,
with maritime or extraordinary interest on account of 2. when marine peril occurs,
the maritime risks to be borne by the lender, it being when marine peril causes the loss of the
stipulated that if the ship be lost in the course of the the obligation of the insurer vessel
specific voyage or during the limited time, by any of or cargo, the obligation of the
the perils enumerated in the contract, the lender shall becomes absolute
also lose his money. borrower to pay is extinguished

3. consensual contract real


b. Loan on Respondentia, contract --perfected from the
defined * governed by Insurance Act
moment of delivery of the thing loaned
One made on the goods laden on board the
ship, and which are to be sold or exchanged in the
course of the voyage, the borrower's personal When loss does not extinguish loan: (Art. 731)
responsibility being deemed the principal security for 1. where the loss is caused by inherent defect of the
the performance of the contract, which is therefore thing
called respondentia. The lender must be paid his 2. where the loss is caused by fault or malice of
principal and interest, thought the ship perishes, borrower
provided that the goods are saved. 3. where loss is caused by barratry on the part of the
captain
c. Character of Loan 4. where loss is caused by damage to the vessel
as a consequence of its
Art. 719. A loan in which, under any engaging in contraband
condition whatever, the repayment of the sum 5. where loss arose from having loaded the
loaned and of the premium stipulated depends merchandise on a vessel different from that
upon the safe arrival in port of the goods on designated in the contract, except if change is due to
which it is made, or of the price they may force majeure
receive in case of accident, shall be considered
a loan on bottomry or respondentia.
d. Forms and Requisites
Real, unilateral, aleatory contract:
1. delivery of the amount loaned is necessary Art. 720. Loans on bottomry or
for the perfection of the contract respondentia may be executed:
2. although there are reciprocal benefits, the 1. By means of a public instrument.
contract produces obligations only for one party, the 2. By means of a policy signed by the
borrower who must return the amount borrowed plus contracting parties and the broker taking part
premium therein.
3. lender really runs known risks 3. By means of a private instrument.
Under whichever of these forms the
contract is executed, it shall be entered in the
Distinguished from ordinary loans: certificate of the registry of the vessel and shall
be recorded in the registry of vessels, without
Ordinary loan loan which requisites the credits of this kind shall
on bottomry and respondentia not have, with regard to other credits, the
1. first lender has preference preference which, according to their nature,
last lender has preference over they should have, although the obligation shall
over subsequent lenders be valid between the contracting parties.
previous ones The contracts made during a voyage
shall be governed by the provisions of Articles
2. must be paid absolutely 583 and 611, and shall be effective with regard
loan is required to be paid only upon to third persons from the date of their
at all events, WON thing safe execution, if they should be recorded in the
arrival of the thing given as registry of vessels of the port of registry of the
given as security is lost or vessel before the lapse of eight days following
security at port of destination its arrival. If said eight days should elapse
destroyed without the record having been made in the
registry of vessels, the contracts made during
3. subject to Usury Law no limit the voyage of a vessel shall produce no effect
as to rate of interest in with regard to third persons, except from the
view of day and date of their inscription.
diff. classes and various In order that the policy of the contracts
risks in executed in accordance with No.2 may have
a maritime voyage binding force, they must conform to the registry
PAGE 93
TRANSPORTATION AND MARITIME LAW

of the broker who took part therein. With the object liable for the bottomry loan, on
respect to those executed in accordance with account of fraudulent measures employed by
No. 3 the acknowledgment of the signature shall the borrower, the loan shall be valid only for the
be required. amount at which said object is appraised by
Contracts which are not reduced in experts.
writing shall not give rise to judicial action. The surplus principal shall be returned
with legal interest for the entire time required
for repayment.

Effect of registration:
Art. 727. If the full amount of the loan
1. the loan shall have, with regard to other credits, the contracted in order to load the vessel should not
preference which, according to its nature, it should be used for the cargo, the balance shall be
have (Art. 580 - 8th in the order of preference) returned before clearing.
2. effective against third persons from the time of The same procedure shall be observed
execution/registration with regard to the goods taken as loan, if they
were not loaded.
Art. 721. In a contract on bottomry or
respondentia the following must be stated:
1. The kind, name, and registry of the The excess shall be valid only as an ordinary loan
vessel.
2. The name, surname, and domicile of
the captain. g. By whom
3. The names, surnames, and domiciles
of the person giving and the person receiving Art. 728. The loan which the captain
the loan. takes at the point of residence of the owners of
4. The amount of the loan and the the vessel shall only affect that part thereof
premium stipulated. which belongs to the captain, if the other
5. The time for repayment. owners or their agents should not have given
6. The goods pledged to secure their express authorization therefor or should
repayment. not have taken part in the transaction.
7. The voyage during which the risk is If one or more of the owners should be
run. requested to furnish the amount necessary to
repair or provision the vessel, and they should
not do so within twenty-four hours, the interest
Art. 722. The contracts may be made to which the parties in default may have in the
order, in which case they shall be transferable vessel shall be liable for the loan in the proper
by indorsement, and the indorsee shall acquire proportion.
all the rights and shall incur all the risks Outside of the residence of the owners,
corresponding to the indorser. the captain may contract loans in accordance
with the provisions of Articles 583 and 611.
e. On What Constituted

Art. 724. The loans may be constituted Art. 617. The captain may not contract
jointly or separately: loans on respondentia secured by the cargo,
1. On the hull of the vessel. and should he do so the contract shall be void.
2. On the rigging. Neither may he borrow money on
3. On the equipment, provisions, and bottomry for his own transactions, except on
fuel. the portion of the vessel he owns, provided no
4. On the engine, if the vessel is a money has been previously borrowed on the
steamer. whole vessel, and provided there does not exist
5. On the merchandise loaded. any other kind of lien or obligation chargeable
If the loan is constituted on the hull of against the vessel. When he is permitted to do
the vessel, the rigging, equipment and other so, he must necessarily state what interest he
goods, provisions, fuel, steam engines, and the has in the vessel.
freightage earned during the voyage on which In case of violation of this article the
the loan is made, shall also be considered as principal, interest, and costs shall be charged to
included in the liability for the loan. the private account of the captain, and the ship
If the loan is made on the cargo, all that agent may furthermore discharge him.
which constitutes the same shall be subject to
the repayment; and if on a particular object of
the vessel or of the cargo, only the object con- Art. 611. In order to comply with the
cretely and specifically mentioned shall be obligations mentioned in the foregoing article,
liable. and when he has no funds and does not expect
to receive any from the agent, the captain shall
procure the same in the successive order stated
Art. 725. No loans on bottomry may be below:
made on the salaries of the crew or on the 1. By requesting said funds of the
profits expected. consignees of the vessel or the correspondents
of the ship agent.
f. Amount 2. By applying to the consignees of the
cargo or to the persons interested therein.
Art. 723. Loans may be made in goods 3. By drawing on the ship agent.
and in merchandise, fixing their value in order 4. By borrowing the amount required by
to determine the principal of the loan. means of a bottomry loan.
5. By selling a sufficient amount of the
Art. 726. If the lender should prove that cargo to cover the amount absolutely necessary
he loaned an amount larger than the value of
PAGE 94
TRANSPORTATION AND MARITIME LAW

to repair the vessel and to equip her to pursue Art. 730. Loans made during the voyage
the voyage. shall have preference over those made before
In the two last cases he must apply to the clearing of the vessel, and they shall be
the judicial authority of the port, if in the graduated in the inverse order of their dates.
Philippines and to the Filipino consul, if in a The loans for the last voyage shall have
foreign country; and where there should be preference over prior ones.
none, to the local authority, proceeding in Should several loans have been made at
accordance with the prescriptions of Article 583, the same port of arrival under stress and for the
and with the provisions of the law of civil same purpose, all of them shall be paid pro rata.
procedure.

Art. 583. If the ship being on a voyage F. BILL OF LADING


the captain should find it necessary to contract
one or more of the obligations mentioned in B/L operates both as a receipt and as a contract; it is a
Nos. 8 and 9 of Article 580, he shall apply to the receipt for the goods shipped and a contract to
judge or court if he is in Philippine territory, and transport and deliver the same as stipulated
otherwise to the Filipino consul, should there be
one, and in his absence to the judge or court or A stipulation that a CC's liability is limited to
to the proper local authority, presenting the the value of the goods appearing in the B/L, unless the
certificate of the registry of the vessel treated owner declares a greater value, is valid and binding
of in Article 612, and the instruments proving
the obligation contracted. Bill of Lading vs Charter party
The judge or court, the consul or the 1. Charter party - entire or complete contract
local authority as the case may be in view of the B/L - private receipt which the captain gives to
result of the proceedings instituted, shall make accredit that such goods belong to such persons
a temporary memorandum in the certificate of 2. Charter party - consensual party, which can be
their result, in order that it may be recorded in dissolved by means of indemnity for losses and
the registry when the vessel returns to the port damages
of her registry, or so that it can be admitted as B/L - real contract; exists only after delivery of the
a legal and preferred obligation in case of sale goods to be transported is made
before the return, by reason of the sale of the
vessel by virtue of a declaration of 1. Contents
unseaworthiness.
The lack of this formality shall make the Art. 706. The captain and the shipper
captain personally liable to the creditors who shall have the obligation of drawing up the bill
may be prejudiced through his fault. of lading, in which shall be stated:
1. The name, registry, and tonnage of
h. Effects of Contract the vessel.
2. The name of the captain and his
Art. 719. A loan in which, under any domicile.
condition whatever, the repayment of the sum 3. The port of loading and that of
loaned and of the premium stipulated depends unloading.
upon the safe arrival in port of the goods on 4. The name of the shipper.
which it is made, or of the price they may 5. The name of the consignee, if the bill
receive in case of accident, shall be considered of lading is issued in the name of a specified
a loan on bottomry or respondentia. person.
6. The quantity, quality, number of
packages, and marks of the merchandise.
Art. 729. Should the goods on which 7. The freightage and the primage
money is taken not be subjected to risk, the stipulated.
contract shall be considered a simple loan, with The bill of lading may be issued to
the obligation on the part of the borrower to bearer, to order, or in the name of a specified
return the principal and interest at the legal person, and must be signed within twenty- four
rate, if that agreed upon should not be lower. hours after the cargo has been received on
board, the shipper being entitled to demand the
unloading at the expense of the captain should
Art. 726. If the lender should prove that the latter not sign it, and, in any case, the
he loaned an amount larger than the value of losses and damages suffered thereby.
the object liable for the bottomry loan, on
account of fraudulent measures employed by
the borrower, the loan shall be valid only for the Art.707. Four true copies of the original
amount at which said object is appraised by bill of lading shall be made, and all of them shall
experts. be signed by the captain and by the shipper. Of
The surplus principal shall be returned these copies the shipper shall keep one and
with legal interest for the entire time required send another to the consignee; the captain shall
for repayment. take two, one for himself and the other for the
ship agent.
There may also be drawn as many copies
Art. 727. If the full amount of the loan of the bill of lading as may be considered
contracted in order to load the vessel should not necessary by the parties; but, when they are
be used for the cargo, the balance shall be issued to order or to bearer, there shall be
returned before clearing. stated in all the copies, be they the first four or
The same procedure shall be observed the subsequent ones, the destination of each
with regard to the goods taken as loan, if they one, stating whether it is for the ship agent, for
were not loaded. the captain, for the shipper, or for the
consignee. If the copy sent to the latter should
have a duplicate, this circumstance and the fact
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TRANSPORTATION AND MARITIME LAW

that it is not valid except in default of the first Art. 693. If the passage price has not
one must be stated therein. been agreed upon, the judge or court shall
summarily fix it, after a statement of experts.

Art. 713. If before the delivery of the


cargo a new bill of lading should be demanded Art. 699. If the contract is rescinded,
of the captain, on the allegation that the failure before or after the commencement of the
to present the previous ones is on account of voyage, the captain shall have a right to claim
their loss or for any other just cause, he shall be payment for what he may have furnished the
obliged to issue it, provided that security for the passengers.
value of the cargo is given to his satisfaction;
but without changing the consignment and stat-
ing therein the circumstances prescribed in the Art. 704. In order to collect the fare and
last paragraph of Article 707, when dealing with expenses of sustenance, the captain may retain
the bills of lading referred to therein, under the goods belonging to the passenger, and in
penalty, should he not do so, of being liable for case of their sale, he shall be given preference
said cargo if improperly delivered through his over other creditors, acting in the same way as
fault. in the collection of freightage.

Art. 714. If before the vessel puts to sea Art. 694. Should the passenger not
the captain should die or should cease to hold arrive on board at the time fixed, or should he
his position through any cause, the shipper shall leave the vessel without permission from the
have the right to demand of the new captain the captain, when the latter is ready to leave the
ratification of the first bills of lading, and the port, the captain may continue the voyage and
latter must do so, provided that all the copies demand the full passage price.
previously issued be presented or returned to
him, and it should appear from an examination
of the cargo that they are correct. Art. 700. In all that pertains to the
The expenses arising from the preservation of order and discipline on board
examination of the cargo shall be for the the vessel, the passengers shall be subject to
account of the ship agent, without prejudice to the orders of the captain, without any
his right of action against the first captain, if he distinction whatsoever.
ceased to be such through his own fault. Should
said examination not be made, it shall be
understood that the new captain accepts the 3. Rights of Passengers
cargo as it appears from the bills of lading.

Art. 697. If before beginning the voyage


2. Probative Value it should be suspended through the sole fault of
the captain or ship agent, the passengers shall
Art. 709. A bill of lading drawn up in be entitled to have their passage refunded and
accordance with the provisions of this title shall to recover for losses and damages; but if the
be proof as between those interested in the suspension was due to an accidental cause, or
cargo and between the latter and the insurers, to force majeure, or to any other cause beyond
evidence to the contrary being reserved by the the control of the captain or ship agent, the pas-
latter. sengers shall only be entitled to the return of
the passage money.

Art. 710. If the bills of lading do not


agree, and no change or erasure appears in any Art. 698. In case a voyage already begun
of them, those in the possession of the shipper should be interrupted, the passengers shall be
or consignee signed by the captain shall be obliged to pay only the fare in proportion to the
proof against the latter or ship agent in favor of distance covered, and without right to recover
the consignee or the shipper; and those for losses and damages if the interruption is
possessed by the captain or ship agent signed due to a fortuitous event or to force majeure,
by the shipper shall be proof against the but with a right to indemnify if the interruption
shipper or consignee in favor of the captain or should have been caused by the captain
ship agent. exclusively. If the interruption should be by
reason of the disability of the vessel, and the
passenger should agree to await the repairs, he
B/L - proof of the agreement between the parties may not be required to pay any increased price
Issuance of B/L is merely prima facie evidence of passage, but his living expenses during the
of the receipt of the merchandise by the carrier or his delay shall be for his own account.
agent; not conclusive evidence In case of delay in the departure of the
Defective and irregular B/L may be cured by vessel, the passengers have a right to remain
other complementary documents on board and to be furnished food for the
G. PASSENGERS ON SEA VOYAGE account of the vessel, unless the delay is due to
an accidental cause or to force majeure. If the
1. Nature of Contract delay should exceed 99ten days, the passengers
requesting the same shall be entitled to the
Art. 695. The right to passage, if issued return of the fare; and if it is due exclusively to
to a specified person, may not be transferred the captain or ship agent they may furthermore
without the consent of the captain or of the demand indemnity for losses and damages.
consignee. A vessel exclusively destined to the
transportation of passengers must take them
2. Obligations of Passengers directly to the port or ports of destination, no

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TRANSPORTATION AND MARITIME LAW

matter what the number of passengers may be, notified them previously and offered to bring them to
making all the stops indicated in its itinerary. their destination at its expense or refunded the value
of the tickets purchased, perhaps this controversy
would not have arisen.
In the Philippines, there is no law which requires Furthermore, the conditions relied upon by
shipowners to publish a schedule of the arrivals and petitioner cannot prevail over Arts. 614 and 698 of the
departures of their vessels in the different ports of call, Code of Commerce.
and which holds them liable in damages to passengers The voyage to Catbalogan was interrupted by
for any deviation from said schedule the captain upon instruction of management. The
interruption was not due to fortuitous event or force
majeure nor to disability of the vessel. Having been
Sweet Lines vs CA 121 SCRA 769 caused by the captain upon instructions of
management, the passengers' right to indemnity is
F: Private respondents purchased first-class evident. The owner of a vessel and the ship agent
tickets from petitioner in Cebu City. They were to shall be civilly liable for the acts of the captain under
board petitioner's vessel M/V Sweet Grace, bound for Art. 586 of the Code of Commerce.
Catbalogan, Western Samar. Instead of departing at
the scheduled hour of about midnight, the vessel The passengers are also entitled to moral
sailed at around 3 A.M. only to be towed back to Cebu damages on account of the BF on the part of the
due to engine trouble, arriving back at Cebu at about 4 carrier. They did not give notice of the change of
PM. After repairs, the vessel was only able to leave schedule. Knowing fully well that it would take 15
around 8 A.M. of the next day. hours to repair the vessel, they informed the
Instead of docking at Catbalogan, which was passengers that it would take only a few hours. They
the first port of call, the vessel proceeded directly to did not offer to refund the tickets of the passengers
Tacloban. Private respondents had no recourse but to nor provide them transportation from Bacolod City to
disembark and board a ferryboat to Catbalogan. Hence Catbalogan.
this suit for damages for breach of contract of
carriage. The TC and CA decided in favor of plaintiffs.
4. Responsibilities of Captain
Issue: WON defendant is liable.
Held: The governing provisions are found in the Code Art. 701. The convenience or the interest
of Commerce. Art. 614 provides that a captain who of the passengers shall not obligate nor
agreed to make a voyage and who fails to fulfill his empower the captain to stand in-shore or enter
undertaking, without being prevented by fortuitous places which may take the vessel out of her
event or force majeure, shall indemnify all the losses course, nor to remain in the ports he must or is
which his failure may cause, without prejudice to under the necessity of touching for a period
criminal penalties which may prosper. Art. 698 also longer than that required by the needs of
provides for the captain's liability. navigation.
The crucial factor then is the existence of a
fortuitous event or force majeure. Without it, the right
to damages and indemnity exists against a captain Art. 702. In the absence of an agreement
who fails to fulfill his undertaking or where the to the contrary, the subsistence of the
interruption has been caused by the captain passengers during the voyage shall be deemed
exclusively. included in the price of the passage; but should
As found by both courts below, there was no it be for their account, the captain shall be
fortuitous event or force majeure which prevented the under the obligation, in case of necessity, to
vessel from fulfilling its undertaking of taking private supply the food necessary for their sustenance
respondents to Catbalogan. Mechanical defects in the at a reasonable price.
CC are not considered caso fortuito that exempts the
CC from responsibility. Even granting that the engine
failure was a fortuitous event, it accounted only for the Art. 705. In case of the death of a
delay in the departure. When the vessel left Cebu, passenger during the voyage the captain shall
there was no longer any force majeure that justified be authorized, with respect to the body, to take
the by-passing a port of call. The vessel was the steps required by the circumstances, and
completely repaired when it left Cebu for Samar and shall carefully take care of the papers and
Leyte. In fact, after docking at Tacloban City, the goods of said passenger which may be on board,
vessel left for Manila to complete its voyage. complying with the provisions of case No. 10 of
Petitioner cannot rely on the conditions in Article 612 with regard to members of the crew.
small bold print at the back of the ticket reading: "The
passenger's acceptance of this ticket shall be
considered as an acceptance of the ff. conditions: Art. 612. The following duties are
3. In case the vessel cannot continue or inherent in the office of captain:
complete the trip for any cause whatsoever, the 1. To have on board before starting on a
carrier reserves the right to bring the passenger to voyage a detailed inventory of the hull, engines,
his/her destination at the expense of the carrier or to rigging, tackle, stores, and other equipments of
cancel the tickets and refund the passenger the value the vessel; the navigation certificate; the roll of
of his/her ticket. the persons who make up the crew of the
11. The sailing schedule of the vessel xxx is vessel, and the contracts entered into with the
subject to change without previous notice." crew; the list of passengers; the health
certificate; the certificate of the registry
Even assuming that those conditions are proving the ownership of the vessel; and all the
applicable to case at bar, petitioner did not comply obligations which encumber the same up to that
with the same. It did not cancel the ticket nor did it date; the charters or authenticated copies
refund the value of the tickets to private respondents. thereof; the invoices or manifest of the cargo,
Besides, it was not the vessels' sailing schedule that and the instrument of the expert visit or
was involved. The complaint is directed not at the inspection, should it have been made at the port
delayed departure the next day but at the by-passing of departure.
of Catbalogan, their destination. Had petitioner 2. To have a copy of this Code on board.
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TRANSPORTATION AND MARITIME LAW

3. To have three folioed and stamped he allows merchandise to be carried on deck, he


books, placing at the beginning of each one a must hear the opinion of the officers of the
note of the number of folios it contains, signed vessel, and have the consent of the shippers
by the marine official, and in his absence by the and of the agent.
competent authority. 6. To demand a pilot at the expense of
In the first book, which shall be called the vessel whenever required by navigation,
"log book," he shall enter every day the and principally when a port, canal, or river, or a
condition of the atmosphere, the prevailing roadstead or anchoring place is to be entered
winds, the course sailed, the rigging carried, the with which neither he, the officers nor the crew
horsepower of the engines, the distance are acquainted.
covered, the maneuvers executed, and other 7. To be on deck at the time of sighting
incidents of navigation. He shall also enter the land and to take command on entering and
damage suffered by the vessel in her hull leaving ports, canals, roadsteads, and rivers,
engines, rigging, and tackle, no matter what is unless there is a pilot on board discharging his
its cause, as well as the imperfections and duties. He shall not spend the night away from
averages of the cargo, and the effects and the vessel except for serious causes or by
consequence of the jettison, should there be reason of official business. 8. To present
any; and in cases of grave resolutions which himself, when making a port in distress, to the
require the advice or a meeting of the officers maritime authority if in the Philippines and to
of the vessel, or even of the passengers and the Filipino consul if in a foreign country, before
crew, he shall record the decision adopted. For twenty-four hours have elapsed, and make a
the informations indicated he shall make use of statement of the name, registry, and port of
the binnacle book, and of the steam or engine departure of the vessel, of its cargo, and reason
book kept by the engineer. of arrival, which declaration shall be vised by
In the second book, called the the authority of by the consul if after examining
"accounting book", he shall enter all the the same it is found to be acceptable, giving the
amounts collected and paid for the account of captain the proper certificate in order to show
the vessel, entering specifically article by his arrival under stress and the reasons
article, the sources of the collection, and the therefor. In the absence of marine officials or of
amounts invested in provisions, repairs, the consul, the declaration must be made before
acquisition of rigging or goods, fuel, outfits, the local authority.
wages, and all other expenses. He shall 9. To take the steps necessary before
furthermore enter therein a list of all the the competent authority in order to enter in the
members of the crew, stating their domiciles, certificate of the vessel in the registry of the
their wages and salaries, and the amounts they vessels, the obligations which he may contract
may have received on accounts, either directly in accordance with Article 583.
or by delivery to their families. 10. To put in a safe place and keep all
In the third book, called "freight book," the papers and belongings of any members of
he shall record the entry and exit of all the the crew who might die on the vessel, drawing
goods, stating their marks and packages, names up a detailed inventory, in the presence of
of the shippers and of the consignees, ports of passengers as witnesses, and, in their absence,
loading and unloading, and the freight earned. of members of the crew.
In the same book he shall record the names and 11. To conduct himself according to the
places of sailing of the passengers and the rules and precepts contained in the instructions
number of packages of which their baggage of the agent, being liable for all that he may do
consists, and the price of the passage. in violation thereof.
4. To make, before receiving the freight, 12. To give an account to the agent from
with the officers of the crew, and the two the port where the vessel arrives, of the reason
experts, if required by the shippers and therefor, taking advantage of the semaphore,
passengers, an examination of the vessel, in telegraph, mail, etc., according to the cases;
order to ascertain whether she is watertight, notify him the freight he may have received,
and whether the rigging and engines are in stating the name and domicile of the shippers,
good condition; and if she has the equipment freight earned, and amounts borrowed on
required for good navigation, preserving a bottomry bond, advise him of his departure, and
certificate of the memorandum of this give him any information and date which may be
inspection, signed by all the persons who may of interest.
have taken part therein, under their liability. 13. To observe the rules on the situation
The experts shall be appointed one by of lights and evolutions to prevent collisions.
the captain of the vessel and the other one by 14. To remain on board in case of danger
the persons who request the examination, and to the vessel, until all hope to save her is lost,
in case of disagreement a third shall be and before abandoning her to hear the officers
appointed by the marine authority of the port. of the crew, abiding by the decision of the
5. To remain constantly on board the majority; and if he should have to take a boat he
vessel with the crew during the time the freight shall take with him, before anything else, the
is taken on board and carefully watch the books and papers, and then the articles of most
stowage thereof; not to consent to any value, being obliged to prove in case of the loss
merchandise or goods of a dangerous character of the books and papers that he did all he could
to be taken on, such as inflammable or to save them.
explosive substances, without the precautions 15. In case of wreck he shall make the
which are recommended for their packing, proper protest in due form at the first port
management and isolation; not to permit that reached, before the competent authority or
any freight be carried on deck which by reason Filipino consul, within twenty-four hours, stating
of its disposition, volume, or weight makes the therein all the incidents of the wreck, in
work of the sailors difficult, and which might accordance with case 8 of this article.
endanger the safety of the vessel; and if, on 16. To comply with the obligations
account of the nature of the merchandise, the imposed by the laws and rules of navigation,
special character of the shipment, and customs, health, and others.
principally the favorable season it takes place,
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TRANSPORTATION AND MARITIME LAW

Art. 703. A passenger shall be


considered a shipper of the goods he carries on Q: What application does COGSA have in carriage of
board, and the captain shall not be responsible passengers?
for what the former may keep under his A: None. Applies only to carriage of goods.
immediate and special custody, unless the
damage arises from an act of the captain or of Sec. 2. This Act shall take effect upon its
the crew. approval. (Approved October 22, 1936).

Art. 1754. The provisions of Arts. 1733 to TITLE I


1753 shall apply to the passenger's baggage
which is not in his personal custody or in that of Sec. 1. When used in this Act-
his employee. As to the other baggage, the (a) The term "carrier" includes the owner
rules in Articles 1998 and 2000 to 2003 or the charterer
concerning the responsibility of hotel-keepers who enters into a contract of carriage with a
shall be applicable. (New Civil Code.) shipper.
(b) The term "contract of carriage"
applies only to contracts of carriage covered
J. Carriage of Goods by Sea Act (Commonwealth Act. by a bill of lading or any similar document of
No. 65, Public Act No. 521, 74the US Congress) title, insofar as such document relates to the
carriage of goods by sea, including any bill of
Sec. 1. That the provisions of Public Act No. 521 lading or any similar document as aforesaid
of the 74th Congress of the United States, issued under or pursuant to a charter party
approved on April 16, 1936, be accepted, as it is from the moment at which such bill of lading or
hereby accepted to be made applicable to all similar document of title regulates the relations
contracts for the carriage of goods by sea to between a carrier and a holder of the same.
and from Philippine ports in foreign trade: (c) The term "goods" includes goods,
Provided, that nothing in this Act shall be wares, merchandise, and articles of ever kind
construed as repealing any existing provision of whatsoever, except live animals and cargo
the Code of Commerce which is not in force, or which by the contract of carriage is stated as
as limiting its application. being carried on deck and is so carried.
(d) The term "ship" means any vessel
Notes: In relation to Civil Code : used for the carriage
Art. 1753 - governed by law of place of destination, if of goods by sea.
shipped to a foreign country, governed by law of (e) The term "carriage of goods" covers
foreign country the period from the time when the goods are
Art. 1766 - goods from foreign country shipped to the loaded to the time when they are discharged
Philippines, governed by the Civil Code from the ship

COGSA - applicable to all transportation of goods by


sea in foreign trade to and from Philippine ports
- does not apply to purely domestic transport RISKS

- Laws applicable to a contract for the carriage of Sec. 2. Subject to the provisions of
goods by sea: Section 6, under every contract of carriage of
goods by sea, the carrier in relation to the
1. Distinguish - common carrier (Civil Code) loading, handling, stowage, carriage, custody,
- private carrier care, and discharge of such goods shall be
2. Where is the vessel going? subject to the responsibilities and liabilities and
a. Common carrier coming to the Phils. = what law entitled to the rights and immunities
applies? hereinafter set forth.
1st: Civil Code
2nd: COGSA (it's more specific than Code of
Commerce)
- in foreign trade RESPONSIBILITIES AND LIABILITIES
3rd: Code of Commerce
Sec. 3. (1) The carrier shall be bound
b. Private carrier coming to the Phils. in foreign trade before and at the beginning of the voyage to
1st: COGSA (because it's more specific) exercise due diligence to-
2nd: Code of Commerce
3rd: Civil Code (provisions not on common carriers (a) Make the ship
e.g. torts, contracts) seaworthy;
(b) Properly man, equip,
c. From the Phils. to a foreign country: apply laws of and supply the ship;
such foreign country (Art. 1753) (c) Make the holds,
refrigerating and cooling
- with respect to vessels destined for foreign ports, the chambers, and all other parts of
COGSA doesn't apply unless parties make it the ship in which goods are
applicable. carried, fit and safe for their
reception, carriage, and
Q: In what situations does COGSA primarily apply? preservation
A: Where the parties expressly stipulate that COGSA
shall govern their respective rights and obligations. (2) The carrier shall properly and
carefully load, handle, stow, carry, keep, care
Q: Can the COGSA apply in domestic shipping? for, and discharge the goods carried.
A: Generally, NO.
(3) After receiving the goods into his
EXCEPTION: when parties agree to make it apply. charge the carrier, or the master or agent of the
PAGE 99
TRANSPORTATION AND MARITIME LAW

carrier, shall, on demand of the shipper, issue to within one year after the deliver of the goods or
the shipper a bill of lading showing among other the date when the goods should have been
things- delivered.

(a) The loading marks necessary In the case of any actual or apprehended
for identification of the goods as loss or damage, the carrier and the receiver shall
the same are furnished in writing give all reasonable facilities to each other for
by the shipper before the loading inspecting and tallying the goods
of such goods starts, provided
such marks are stamped or (7) After the goods are loaded the bill of
otherwise shown clearly upon the lading to be issued by the carrier, master, or
goods if uncovered, in such a agent of the carrier to the shipper shall if the
manner as should ordinarily shipper so demands, be a "shipped" bill of lading:
remain legible until the end of the Provided, that if the shipper shall have previously
voyage. taken up any document of title to such goods, he
(b) Either the number of packages shall surrender the same as against the issue of
or pieces, or the quantity or the "shipped" bill of lading, but at the option of
weight, as the case may be, as the carrier such document of title may be noted
furnished in writing by the at the port of shipment by the carrier, master, or
shipper. agent with the name or names of the ship or
(c) The apparent order and conditions of ships upon which the goods have been shipped
the goods: Provided, that no carrier, and the date or dates of shipment, and when so
master, or agent of the carrier, shall be noted the same shall for the purpose of this
bound to state or show in the bill of lading section be deemed to constitute a "shipped" bill
any marks, number, quantity, or weight of lading.
which he has reasonable ground for
suspecting not accurately to represent the (8) Any clause, covenant, or agreement in
goods actually received or which he has a contract of carriage relieving the carrier of the
had no reasonable means of checking. ship from liability for loss or damage to or in
connection with the goods, arising from
(4) Such a bill of lading shall be prima neg