TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
DAMAGES
It refers to the pecuniary compensation, recompense, or satisfaction
for an injury sustained, or as otherwise expressed, the pecuniary
consequences, which the law imposes for the breach of some duty or
violation of some rights.
What is the extent of recovery? Art. 2201
In contracts and quasi-contracts, the damages for which the obligor
who acted in
1) good faith is liable shall be those that are
a. the natural and probable consequences of the breach
of the obligation, and
b. which the parties have foreseen or could have
reasonably foreseen at the time the obligation was
constituted.
2) Bad faith: In case of fraud, bad faith, malice or wanton attitude,
the obligor shall be responsible
a. for all damages, which may be reasonably attributed
to the non- performance of the obligation.
Article 2197, Civil Code: Damages may be: MENTAL
Article 2216, Civil Code: No proof of pecuniary loss is necessary in order
that moral, nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated ones, is left
to the discretion of the court, according to the circumstances of each case.
a. MORAL DAMAGES
GR: Carrier is not liable for moral damages in case of
breach of contract
EXN:
1. Mishap results in the death of the passenger (2206)
2. Where it is proved that the carrier was guilty of fraud or
bad faith , even if death does not result
3. Where the passenger suffered social humiliation, wounded
feelings, serious anxiety and mental anguish
4. Subsidiarily liable for moral damages in actions delicto
Moral Damages is not imposed upon the defendant to enrich the
injured party but to compensate for the damage he had done.
Cathay Pacific Airways vs. Vasquez 399 SCRA 207
NO MORAL DAMAGES
Moral damages predicated upon a breach of
contract of carriage may only be recoverable in
instances where the carrier is guilty of fraud or bad
faith or where the mishap resulted in the death of
a passenger.[13] Where in breaching the contract
of carriage the airline is not shown to have acted
fraudulently or in bad faith, liability for damages is
limited to the natural and probable consequences
of the breach of the obligation which the parties
had foreseen or could have reasonably foreseen
b. EXEMPLARY DAMAGES
Art. 2229. Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated, or compensatory damages.
GR: Carrier is not ordinarily liable in exemplary damages for act
of employee (2332)
EXN:
1. Where they themselves are at fault or negligent (2232) in a
WAFROM wanton, fraudulent, reckless, oppressive or
malevolent manner
2. it authorized or subsequently ratified the wrongful act of
the employee
NO EXEMPLARY DAMAGES
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. It is a requisite in the grant of exemplary damages that the act
of the offender must be accompanied by bad faith or done in
wanton, fraudulent or malevolent manner. Moreover, to be
entitled thereto the claimant must first establish his right to
moral, temperate, or compensatory damages. Where the awards
moral and exemplary damages are eliminated, so must the
award for attorneys fees.
c. NOMINAL DAMAGES
Article 2221. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
d. TEMPERATE DAMAGES
Article 2224. Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered when
the court finds that some pecuniary loss has been suffered but its
amount can not, from the nature of the case, be provided with
certainty
e. ACTUAL DAMAGES
Article 2199, Civil Code: Except as provided by law or by stipulation,
one is entitled to an adequate compensation only for such pecuniary
loss suffered by him as he has duly proved. Such compensation is
referred to as actual or compensatory damages.
Article 2200, Civil Code: Indemnification for damages shall
comprehend not only the value of the loss suffered, but also that of the
profits which the obligee failed to obtain. (1106)
Kinds of Compensatory Damages
1. Actual Damages or Dano Emergente
Damage to what a person already possesses at that time.
You possess something that was lost as a result of an
accident or breach.
2. Loss of Profits or Lucro Cesante
Article 2205, Civil Code. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases
of temporary or permanent personal injury
(2) For injury to the plaintiff's business standing or
commercial credit.
f. LIQUIDATED DAMAGES
Art. 2226. Liquidated damages are those agreed upon by the parties to
a contract, to be paid in case of breach thereof.
Damages recoverable when death occurs due to delict. 1
Indemnity for the (DELIMA)
1. death of the victim (now 50k)
2. loss of earning capacity of the deceased
3. moral damages
4. exemplary damages
5. attorneys fees and expenses of litigation
6. interest in proper cases
Article 2206, Civil Code: The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand pesos, even though
there may have been mitigating circumstances. In addition:
1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical disability
1 ELIMA may be recovered separately from and in addition to the fixed sum of
50k arising from the sole fact of death. For the fixed sum, there is no need to
interrogate the witness.
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
not caused by the defendant, had no earning capacity at the time of his
death;
2) If the deceased was obliged to give support according to the
provisions of Article 291, the recipient who is not an heir called to the
decedent's inheritance by the law of testate or intestate succession,
may demand support from the person causing the death, for a period
not exceeding five years, the exact duration to be fixed by the court;
3) The spouse, legitimate and illegitimate descendants and ascendants of
the deceased may demand moral damages for mental anguish by
reason of the death of the deceased.
1. Fact of Death
Php 3,000 (remember that the Civil Code took effect on 1951).
Pestao v. Sps. Sumayang, G.R. No. 139875, 4 December
2000, 346 SCRA 870.
o The amount now is already Php 50,000.
o This is automatic, no need of proof.
2. Loss of Earning Capacity
Damages arising from death, factors to be considered:
a) Number of years on the basis of which damages shall be
computed
Life Expectancy = 2/3 x (80 Age at Death), based
on American Expectancy Table of Mortality
b) Rate at which the losses sustained should be fixed.
NET EARNING = total of the earnings less the expenses
necessary in the creation of such earnings or income and less
living and other incidental expenses
Net Earning Capacity= LE2 x NI3 (gross-necessary)
FORTUNE EXPRESS, INC. vs. COURT OF APPEALS
(1999)
Life expectancy is equivalent to two thirds (2/3) multiplied by
the difference of eighty (80) and the age of the deceased. Since
Atty. Caorong was 37 years old at the time of his death, he had a
life expectancy of 28 2/3 more years. His projected gross annual
income, computed based on his monthly salary of P11, 385.00 as
a lawyer in the Department of Agrarian Reform at the time of
his death, was P148, 005.00, allowing for necessary living
expenses of fifty percent (50%) of his projected gross annual
income, his total earning capacity amounts to P2, 121,404.90.
Hence, the petitioner is liable to the private respondents in the
said amount as compensation for loss of earning capacity.
3. Moral and exemplary
CATHAY PACIFIC VS. VASQUEZ
a. Moral damages can only be granted if there is fraud or
bad faith unless there is death that occurred.
b. As for the exemplary damages, Cathay was not proven to
have acted in a reckless, wanton or malevolent manner.
As for the attorneys fees, it cannot be granted because
there was no award of moral or exemplary damages.
4. Attys Fees and Expenses of Litigation
Article 2208, Civil Code: In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial costs, cannot be
recovered, except:
1) When exemplary damages are awarded;
2) When the defendant's act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
interest;
3) In criminal cases of malicious prosecution against the plaintiff;
4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
2 life expectancy;
3 Net income
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5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's plainly valid, just and
demandable claim;
6) In actions for legal support;
7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
8) In actions for indemnity under workmen's compensation and
employer's liability laws;
9) In a separate civil action to recover civil liability arising from a
crime;
10) When at least double judicial costs are awarded;
In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
PAL vs. CA(2008)
Current jurisprudence instructs that in awarding attorneys fees, the
trial court must state the factual, legal, or equitable justification for
awarding the same, bearing in mind that the award of attorneys fees
is the exception, not the general rule. The text of the decision must
state the reason behind the award of attorneys fees. Otherwise, its
award is totally unjustified.
5. Interest
Eastern Shipping lines vs. CA (1994)
With regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
a. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that
i. stipulated in writing.
ii. interest due shall itself earn legal interest from the time it is
judicially demanded.
iii. NO stipulation, the rate of interest shall be 12% per annum
to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of
Article 1169 23 of the Civil Code.
b. When an obligation, not constituting a loan or forbearance
of money, is breached,
i. an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per
annum.
ii. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty.
iii. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art.
1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment
of the court is made (at which time the quantification of
damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally
adjudged.
c. When the judgment of the court awarding a sum of money
becomes final and executory,
i. the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum
from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance
of credit.
BILL OF LADING
ARTICLE 349. A contract of transportation by land or water ways of
any kind shall be considered commercial:
1. When it has for its object merchandise or any article of commerce.
2. When, whatever its object may be, the carrier is a merchant or is
habitually engaged in transportation for the public.
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
ARTICLE 350. The shipper as well as the carrier of merchandise or
goods may mutually demand that a bill of lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to
whose order the goods are to be sent or whether they are to be
delivered to the bearer of said bill.
4. The description of the goods, with a statement of their kind, of
their weight, and of the external marks or signs of the packages in
which they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be
made.
9. The indemnity to be paid by the carrier in case of delay, if there
should be any agreement on this matter.
ARTICLE 351. In transportation made by railroads or other
enterprises subject to regulation rate and time schedules, it shall be
sufficient for the bills of lading or the declaration of shipment furnished by
the shipper to refer, with respect to
the cost, time and special conditions of the carriage, to
the schedules and regulations the application of which he requests;
and
if the shipper does not determine the schedule,
the carrier must apply the rate of those which appear to be the lowest,
with the conditions inherent thereto,
always including a statement or reference to in the bill of lading
which he delivers to the shipper.
ARTICLE 352. The bills of lading, or tickets in cases of
transportation of passengers, may be diverse, some for persons and
others for baggage; but all of them shall bear
the name of the carrier,
the date of shipment,
the points of departure and arrival,
the cost, and, with respect to the baggage,
the number and weight of the packages, with such other
manifestations which may be considered necessary for their easy
identification.
ARTICLE 353. The legal evidence of the contract between the
shipper and the carrier shall be the bills of lading, by the contents of
which the disputes which may arise regarding their execution and
performance shall be decided, no exceptions being admissible other than
those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading which the
carrier has issued shall be returned to him, and by virtue of the exchange
of this title with the thing transported, the respective obligations and
actions shall be considered cancelled, unless in the same act the claim
which the parties may wish to reserve be reduced to writing, with the
exception of that provided for in ARTICLE 366. In case the consignee,
upon receiving the goods, cannot return the bill of lading subscribed by
the carrier, because of its loss or of any other cause, he must give the
latter a receipt for the goods delivered, this receipt producing the same
effects as the return of the bill of lading.
ARTICLE 354. In the absence of a bill of lading, disputes shall be
determined by the legal proofs which the parties may present in support of
their respective claims, according to the general provisions established in
this Code for commercial contracts.
A Bill of Lading is a written acknowledgment of the receipt of the goods
and the agreement to transport them to a specific place and to a named
person or to his order.
A. Receipt recites the date and place of the shipment, describes
the goods as to quantity, weight, dimension, identification marks
and condition, quality, and value.
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B. Contract names the contracting parties, fixes the route,
destination, and freight rate or charges, and stipulates the rights
and obligations of the parties.
C. Legal evidence of the contract the contents of which shall decide
all disputes that may arise with regard to the execution and
fulfillment EXN: falsity and material error in the drafting
D. Document of Title
Classes of BOL
1. Negotiable: goods referred to therein will be delivered to the bearer,
or to the order of any person named in such document.
2. Non-negotiable: delivered to specified person; straight/flat BOL
3. Clean: does not indicate any defect in the goods
4. Foul: notation that goods are in bad condition
5. Spent: goods that have already been delivered by the carrier without
a surrender of assigned copy of the lading
6. Through: issued by a carrier who is obliged to use the facilities of
other carriers as well as his own facilities for the purpose of
transporting the goods from the city of the seller to the city of the
buyer, which BOL is honored by the 2nd and other interested carriers
who do not issue their own BOL
7. On Board: goods have been received on board
8. Received for shipment: goods have been received for shipment
with/out specifying the vessel by which the goods are to be shipped
9. Custody: steamer which is to carry the goods has not yet reached the
port where the goods are held for shipment
10. Port : the steamer indicated in the BOL by which the goods are to be
shipped is already in the port where the goods are held for shipment
TELENGTAN BROTHERS (LA SUERTE CIGAR) VS CA
Whether or not La Suerte is liable for demurrage for delay in removing
its cargo from the containers - YES but only for the period July 3 - 13,
1979 with respect to ten containers and from July 10 - July 13, 1979, in
respect of two other containers
Held:
PAYMENT OF DEMURRAGE
La Suerte's contention is that the bill of lading does not provide for the
payment of container demurrage, as Clause 23 of the bill of lading only
says "demurrage," i.e., damages for the detention of vessels. Here there
is no detention of vessels. It invokes a case where SC defined
"demurrage" as follows:
DEMURRAGE, in its strict sense, is the compensation provided for in the
contract of affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading. Essentially, demurrage is the
claim for damages for failure to accept delivery Whatever may be the
merit of petitioner's contention, the fact is that clause 29(a) also of the
bill of lading, in relation to Rule 21 of the Far East Conference Tariff ,
specifically provides for the payment by the consignee of demurrage for
the detention of containers and other equipment after the so-called "free
time.
A BILL OF LADING is both a receipt and a contract. As a contract, its
terms and conditions are conclusive on the parties, including the
consignee. The enforcement of the rules of the Far East Conference and
the Federal Maritime Commission is in accordance with R.A. 1407
which declares that the Philippines, in common with other maritime
nations, recognizes the international character of shipping in foreign
trade and existing international practices in maritime transportation
and that it is part of the national policy to cooperate with other friendly
nations in the maintenance and improvement of such practices. Period
of Demurrage With respect to the period of La Suertes liability, La
Suerte cannot be held liable for demurrage starting June 27 on the 10
containers because the delay in obtaining release of the goods was not
due to its fault.
The evidence shows that the Bureau of Customs refused to give an entry
permit to petitioner because the manifest issued by K-Line stated only
10 containers whereas the bill of lading also issued by the K-Line
showed there were 12 containers. For this reason, petitioner's broker
had to see Smith, Bell & Co. on June 22, but the latter did not
immediately do something to correct the manifest. Smith, Bell & Co.
was asked to "amend" the manifest, but it refused to do so on the ground
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
that this would violate the law. It was only on June 29 that it thought of
adding instead a footnote, by which time the "free time" had already
expired. Now June 29 was a Friday. Again it is probable the correct
manifest was presented to the Bureau of Customs only on Monday, July
2, and therefore it was only on July 3 that it was approved
It was therefore only from July 3 that La Suerte could have claimed its
cargo and charged for any delay With respect to the other two
containers, demurrage was properly considered to have accrued on July
10 since the "free time" expired on July 9. The period of delay, however,
for all the 12 containers must be deemed to have stopped on July 13,
because on this date petitioner paid P47,680.00. If it was not able to get
its cargo from the container vans, it was because of the breakdown of
the shifter or cranes of the arrastre service operation. It would be unjust
to charge demurrage after July 13, since the delay in emptying the
containers was not due to the fault of La suerte In sum, we hold that
petitioner can be held liable for demurrage only for the period July 3-
13, 1979 and that in accordance with the stipulation in its bill of lading.
SALUDO JR VS CA
A bill of lading is a written acknowledgment of the receipt of the goods
and an agreement to transport and deliver them at a specified place to
a person named or on his order.
GR: "the issuance of a bill of lading carries the presumption that the
goods were delivered to the carrier issuing the bill, for immediate
shipment, and it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the carrier. . . . In the
absence of convincing testimony establishing mistake, recitals in the bill
of lading showing that the carrier received the goods for shipment on a
specified date controls.
EXN: However, except as may be prohibited by law, there is nothing to
prevent an inverse order of events, that is, the execution of the bill of
lading even prior to actual possession and control by the carrier of the
cargo to be transported. There is no law which requires that the delivery
of the goods for carriage and the issuance of the covering bill of lading
must coincide in point of time or, for that matter, that the former should
precede the latter.
As between the shipper and the carrier, when no goods have been
delivered for shipment no recitals in the bill can estop the carrier from
showing the true facts . . . Between the consignor of goods and receiving
carrier, recitals in a bill of lading as to the goods shipped raise only a
rebuttable presumption that such goods were delivered for shipment. As
between the consignor and a receiving carrier, the fact must outweigh
the recital."
As already demonstrated, the facts in the case at bar belie the averment
that there was delivery of the cargo to the carrier on October 26, 1976.
Rather, as earlier explained, the body intended to be shipped as agreed
upon was really placed in the possession and control of PAL on October
28, 1976 and it was from that date that private respondents became
responsible for the agreed cargo under their undertakings in PAL
Airway Bill No. 079-01180454. Consequently, for the switching of
caskets prior thereto which was not caused by them, and subsequent
events caused thereby, private respondents cannot be held liable.
MAGELLAN VS CA
Plaintiff-appellant Magellan Manufacturers Marketing Corp. (MMMC)
Issues:
1. Whether or not there was transshipment YES
2. Whether or not the bill of lading which reflected the transshipment
against the letter of credit is consented by MMMC YES
Ratio:
TRANSSHIPMENT, in maritime law, is defined as "the act of taking
cargo out of one ship and loading it in another," or "the transfer of
goods from the vessel stipulated in the contract of affreightment to
another vessel before the place of destination named in the contract has
been reached," or "the transfer for further transportation from one ship
or conveyance to another." Clearly, either in its ordinary or its strictly
legal acceptation, there is transhipment whether or not the same
person, firm or entity owns the vessels. In other words, the fact of
transhipment is not dependent upon the ownership of the transporting
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ships or conveyances or in the change of carriers, as the petitioner
seems to suggest, but rather on the fact of actual physical transfer of
cargo from one vessel to another.
It appears on the face of the bill of lading the entry "Hong Kong" in the
blank space labeled "Transhipment," which can only mean that
transhipment actually took place. This fact is further bolstered by the
certification issued by private respondent F.E. Zuellig, Inc. dated July
19, 1980, although it carefully used the term "transfer" instead of
transhipment. No amount of semantic juggling can mask the fact that
transhipment in truth occurred in this case.
2. It is a long standing jurisprudential rule that a bill of lading operates
both as a receipt and as a contract. It is a receipt for the goods shipped
and a contract to transport and deliver the same as therein stipulated.
The petitioner had full knowledge of, and actually consented to, the
terms and conditions of the bill of lading thereby making the same
conclusive as to it, and it cannot now be heard to deny having assented
thereto. Based from the records, James Cu himself, in his capacity as
president of MMMC, personally received and signed the bill of lading.
There is no better way to signify consent than by voluntary signing the
document which embodies the agreement.
An on board bill of lading is issued when the goods have been actually
placed aboard the ship with every reasonable expectation that the
shipment is as good as on its way. It is, therefore, understandable that a
party to a maritime contract would require an on board bill of lading
because of its apparent guaranty of certainty of shipping as well as the
seaworthiness of the vessel which is to carry the goods.
Maersk Lines vs CA
GR: . It is presumed that the stipulations of the bill were, in the absence of
fraud, concealment or improper conduct, known to the shipper, and he is
generally bound by his acceptance whether he reads the bill or not.
EXN, CAB: However, the aforequoted ruling applies only if such contracts
will not create an absurd situation as in the case at bar. The questioned
provision in the subject bill of lading has the effect of practically leaving
the date of arrival of the subject shipment on the sole determination and
will of the carrier.
MOF Co. vs. Shinyang 600 SCRA 521
a consignee, although not a signatory to the contract of
carriage between the shipper and the carrier, becomes a
party to the contract by reason of either
a) the relationship of agency between the consignee
and the shipper/ consignor;
b) the unequivocal acceptance of the bill of lading
delivered to the consignee, with full knowledge of
its contents or
c) availment of the stipulation pour autrui,
Philippine Charter Insurance Corp vs. Unknown
owner
463 SCRA 202
The statement in the Bill of Lading, that the shipment was in
apparent good condition, is sufficient to sustain a finding of
absence of defects in the merchandise. Case law has it that
such statement will create a prima facie presumption only
as to the external condition and not to that not open to
inspection.
Belgian Overseas 383 SCRA 23
A bill of lading serves two functions. (contract and receipt)
First, a notation in the Bill of Lading which indicated the
amount of the Letter of Credit obtained by the shipper for
the importation of steel sheets did not effect a declaration
of the value of the goods as required by the bill. That
notation was made only for the convenience of the shipper
and the bank processing the Letter of Credit.
Second, in Keng Hua Paper Products v. Court of Appeals, it
was held that a bill of lading was separate from the Other
Letter of Credit arrangements. It was ruled thus: "The
contract of carriage, as stipulated in the bill of lading in the
present case, must be treated independently of the contract
of issuance of a letter of credit between the amount of
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
goods described in the commercial invoice in the contract of
sale and the amount allowed in the letter of credit will not
affect the validity and enforceability of the contract of
carriage as embodied in the bill of lading. As the bank
cannot be expected to look beyond the documents
presented to it by the seller pursuant to the letter of credit,
neither can the carrier be expected to go beyond the
representations of the shipper in the bill of lading and to
verify their accuracy vis--vis the commercial invoice and
the letter of credit. Thus, the discrepancy between the
amount of goods indicated in the invoice and the amount in
the bill of lading cannot negate petitioner's obligation to
private respondent arising from the contract of
transportation."
Weimann Brokerage Inc vs PhilHome Assurance (202
SCRA 564)
SAID TO CONTAIN bill of lading pertains to the containerized system.
shippers who are really engaged in volume of business no
longer bring their good the carrier.
Instead, the carrier brings the container to the premises of the
shipper and the latter without the participation of the carrier will
load the goods inside the container vans. It is the shipper who
seals the van and delivers it to the carrier.
carrier now issues a bill of lading with a notation there stating
said to contain because the carrier only relies on what the
shipper declares on the bill of lading. So the matter of quantity,
quality, etc is the sole responsibility of the shipper.
BUT
Raymond Brokerage Inc vs Phil Home Assurance 202 S 564
the fact that the common carrier noted that it is a receipt, the
carrier is in effect stating that what the shipper has stated is true
or correct even if it is without the carriers participation. The
carrier is thus estopped from saying that he has no participation
in the loading of cargoes.
If there is a Charter Party, the Bill of Lading serves only as a receipt of
the goods and it is the charter party will govern with respect to the terms
and conditions, obligations, stipulations of the parties. It will now serve as
the contract of the parties.
Art 707-718 of the Code of Commerce provides for other rules that will
apply to Bill of Lading in the absence of Civil Code provisions. Again as
stated in 1766 in all matters not regulated by the Civil Code, the Code of
Commerce shall prevail.
Also the COGSA in so far as receipt of goods under the charge of the
carrier can also serve as basis on what is in the bill of lading.
Usual forms of consummating Contracts
1. C.I.F. cost, insurance and freight;
2. F.O.B. - freight on board;
3. F.A.S. - freight alongside ship; and
4. C. & F. - cost and freight.
1. FREIGHT ON BOARD; FOB
What is the significance? It refers to the risk which is passed to the
buyer AT THE FOB POINT.
Ex. FOB Davao, or FOB Manila- so thats it. Therefore, the FOB
point of destination means the seller shall assume the risk until the
goods have reached at the point of destination.
2. FREIGHT ALONGSIDE SHIP; FAS
A variant of FOB. Freight alongside the vessel- which means the
seller relinquishes the risk the moment the goods are delivered
alongside the vessel unless we have this onboard BOL. When we
say there is already an indication of on board in a BOL, the cargoes
are already onboard the vessel on which it carried the cargoes. What is
the difference between FAS and FOB?
Freight Alongside; FAS Freight on Board; FOB
seller is under no seller must see to it that
obligation to see to the the goods are loaded; the
loading of the cargoes responsibility of the seller
and all that is required does not cease until the
from the seller is to loading of the cargo on the
deliver the cargo to the vessel is completed. When
wharf the BOL indicates
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onboard, it signifies that
the cargoes are already
completely onboard
3. COST INSURANCE FREIGHT; CIF.
The price quoted by the seller includes the invoice price, plus the
insurance and the freight. The seller completes its performance by
procuring the necessary requirements:
BOL,
insurance policy,
sales invoice and the seller forwards it to the seller (sic) for
this purpose.
In the meantime, the insurance in the same situation is payable to the
buyer. Therefore, the buyer bears the risk while the goods are
intransit. Only the seller procures the insurance policy, but it is
charged to the buyer.
4. COST AND FREIGHT; C & F
If the buyer would want to get its own insurance, the term is C & F.
OBLIGATIONS OF THE
CARRIER
ARTICLE 355. The responsibility of the carrier shall commence from the
moment he receives the merchandise, personally or through a person
charged for the purpose, at the place indicated for receiving them.
ARTICLE 356. Carriers may refuse packages which appear unfit for
transportation; and if the carriage is to be made by railway, and the
shipment is insisted upon, the company shall transport them, being exempt
from all responsibility if its objections, is made to appear in the bill of
lading.
ARTICLE 357. If by reason of well-founded suspicion of falsity in the
declaration as to the contents of a package the carrier should decide to
examine it, he shall proceed with his investigation in the presence of
witnesses, with the shipper or consignee in attendance.
If the shipper or consignee who has to be cited does not attend, the
examination shall be made before a notary, who shall prepare a
memorandum of the result of the investigation, for such purposes as may be
proper.
If the declaration of the shipper should be true, the expense occasioned by
the examination and that of carefully repacking the packages shall be for
the account of the carrier and in a contrary case for the account of the
shipper.
A. Duty to accept the goods
Gen. Rule: A common carrier cannot ordinarily refuse to carry a particular
class of goods.
EXN: some sufficient reason the discrimination against the traffic in such
goods is reasonable and necessary. (Fisher vs. Yangco Steamship Co. 31
Phil Instances when the carrier may validly refuse to accept the goods
include the ff: DUOCHE DSD
1) Goods sought to be transported are dangerous objects, or
substances including dynamite and other explosives
2) Goods are unfit for transportation
3) Acceptance would result in overloading
4) Contrabands or illegal goods
5) Goods are injurious to health
6) Goods will be exposed to untoward danger like flood, capture by
enemies and the like
7) Goods like livestock will be exposed to disease
8) Strike
9) Failure to tender goods on time. (Notes and Cases on the Law
on Transportation and Public Utilities, Aquino, T. & Hernando,
R.P. 2004 ed. p.68)
In case of carriage by railway, the carrier is exempted from liability if
carriage is insisted upon by the shipper, provided its objections are stated in
the bill of lading.
However, when a common carrier accepts cargo for shipment for
valuable consideration, it takes the risk of delivering it in good condition as
when it was loaded. (PAL vs. CA)
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

B. Duty to deliver the goods ARTICLE 365. If, in consequence of the damage, the goods are
Not only to transport the goods safely but to the person indicated rendered useless for sale and consumption for the purposes for which
in the bill of lading. The goods should be delivered to the they are properly destined, the consignee shall not be bound to receive
consignee or any other person to whom the bill of lading was them, and he may have them in the hands of the carrier, demanding of
validly transferred or negotiated. the latter their value at the current price on that day. If among the
damaged goods there should be some pieces in good condition and
Time of delivery without any defect, the foregoing provision shall be applicable with
Stipulation under BOL No stipulation respect to those damaged and the consignee shall receive those which
Period Within such time Within a reasonable time. are sound, this segregation to be made by distinct and separate pieces
and without dividing a single object, unless the consignee proves the
Duty of Carrier is bound to fulfill the Carrier is bound to forward impossibility of conveniently making use of them in this form. The
Common contract and is liable for any them in the 1st shipment of same rule shall be applied to merchandise in bales or packages,
separating those parcels which appear sound.
Carrier delay; no matter from what the same or similar goods
cause it may have arisen. which he may make to the
3) Delay through the fault of the carrier
point of delivery. (ART. ARTICLE 371. In case of delay through the fault of the carrier,
358 Code of Commerce) referred to in the preceding articles, the consignee may leave the
Failure: Indemnity stipulated in the CC is liable for damages goods transported in the hands of the former,
BOL; caused by the delay (358) a. advising him thereof in writing
As stipulated, neither the b. before their arrival at the point of destination.
shipper nor the consignee c. When this abandonment takes place, the carrier shall pay
being entitled to anything the
else. i. full value of the goods as if they had been
lost or mislaid.
If no stipulation and the d. If the abandonment is not made, the indemnification for
delay exceeds the time fixed losses and damages by reason of the delay
in the BOL, i. cannot exceed the current price which the
damages which the delay goods transported would have had on the
may have caused. (370). day and at the place in which they should
have been delivered; this same rule is to be
Special It must have appeared that he had notice at the time of
observed in all other cases in which this
Damages delivery to him of the particular circumstances attending the
indemnity may be due.
shipment, and which probably would lead to such special
loss if he defaulted. CONVERSION ABANDONMENT
358 371
there is no period agreed There is a period agreed
upon and the obligation of upon, but there is a delay
Effects of delay
a. Merely suspends and generally does not terminate the contract of the CC under 358 is to in the delivery without the
carriage deliver them in the first fault of the CC
b. Carrier remains duty bound to exercise extraordinary diligence shipment of the same on
c. Natural disaster shall not free the carrier from responsibility similar good which he may
(Art.1740) make to the point where he
d. If delay is without just cause, the contract limiting the common must deliver them
carriers liability cannot be availed of in case of loss or deterioration Consignee can demand the Shipper has to inform or
of the goods (Art.1747) goods and in case of notify the CC of his
Delay amounts to conversion when CC is in delay or not refusal, may seek intention to exercise the
delivered within a reasonable time after it has reached its conversion of the goods right to abandon.
destination/ refusal to deliver despite demand. But the consignee cannot The basis for payment is at
refuse acceptance if the the point of destination
The consignee cannot refuse to receive the goods if 1) goods are safely kept
1) Goods are safely kept and
2) Tender by the CC to deliver is made before the case is 2) tender was made
filed before the filing of
the suit
Goods are already at the The goods are NOT yet at

ABANDONMENT
Giving up something- in vessels, the owner gives up his corresponding
point of destination and are
in the possession of the
the point of destination

carrier but the CC did not

interest in the vessel deliver w/I reasonable time

In maritime law, there are 5 cases of abandonment

1) ARTICLE 363. Partial Non-Delivery
2) ARTICLE 365. Damaged goods are rendered useless for sale and
consumption
3) ARTICLE 371. Delay through the fault of the carrier if the goods
are delayed due to the fault of the CC and the consignee refused to
receive the goods by filing notice before the arrival of the goods
4) ARTICLE 587 In case of civil liability from indemnities to third
persons
5) ARTICLE 687 - In case of leakage of at least of the contents of a
cargo containing liquids
1) Partial non-delivery
ARTICLE 363. xxx If those not delivered form part of the goods
transported, the consignee may refuse to receive the latter, when he
proves that he cannot make use of them independently of the others.
2) Goods are rendered useless
ARTICLE 358. If there is no period fixed for the delivery of
the goods the carrier shall be bound to forward them in the first
shipment of the same or similar goods which he may make point
where he must deliver them; and should he not do so, the
damages caused by the delay should be for his account.
4) Ship agent to third persons
ARTICLE 587. The ship agent shall also the civilly liable for the
indemnities in favor of third persons which arise from the conduct of
the captain in the care of the goods which the vessel carried, but he
may exempt himself therefrom by abandoning
a) the vessel with all her equipments and
b) the freight he may have earned during the trip.
5) Leakage of Liquids
ARTICLE 687. With respect to charterers of charter parties in the
lease of the vessels. The charterers and shippers may abandon the

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 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
merchandise damaged if the cargo should consist of liquids and they
have leak out, nothing remaining in the containers on account of
inherent defects or fortuitous event.
Sec. 138 of the Insurance Code (Constructive Loss)
- Vessels suffers damage of its insured value
- The insured exercises right of abandonment by notifying
the insurer of abandonment
- Damaged vessels ownership is passed to the insurer and
the insurer must pay the insured as if it were an actual loss
of the vessel.
NOTICE OF DAMAGE
ARTICLE 366. Within the twenty-four hours following the receipt of
the merchandise, the claim against the carrier for damage or average be
found therein upon opening the packages, may be made, provided that the
indications of the damage or average which gives rise to the claim cannot
be ascertained from the outside part of such packages, in which case the
claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges
have been paid, no claim shall be admitted against the carrier with regard to
the condition in which the goods transported were delivered.
Requisites for applicability:
1. Domestic/inter-island/coastwise transportation
2. Land/water/air transportation
3. Carriage of goods
4. Goods shipped are damaged
Rules:
a. Patent damage: shipper must file a claim against the carrier
immediately upon delivery (it may be oral or written)
b. Latent damage: shipper should file a claim against the carrier
within 24 hours from delivery.
c. If there is no claim w/I that period, then the claim vs the CC is
barred.
However in COGSA, there is a modification.
Rules:
a. Patent damage: shipper must file a claim against the carrier
immediately upon delivery (it may be oral or written)
b. Latent damage: shipper should file a claim against the carrier
within 3 days from delivery.
c. Claim is NOT mandatory . Failure to file a notice of claim
within 3 days does not discharge the carrier for the consignee
still has a period of 1 year within which to file a claim.
NOTE:
If despite the notice of claim, the carrier refuses to pay, action must be
filed in court.
a. No bill of lading was issued: within 6 years
b. Bill of lading was issued: within 10 years.
FEDERAL EXPRESS VS. AMERICAN HOME437 SCRA 50
ISSUE: Is Federal Express liable for damage to or loss of the insured
goods? NO. In this jurisdiction, the filing of a claim with the carrier
within the time limitation constitutes a condition precedent to the
accrual of a right of action against a carrier for loss of or damage to the
goods. The shipper or consignee must allege and prove the fulfillment of
the condition. If it fails to do so, no right of action against the carrier can
accrue in favor of the former.
The fundamental reasons for such a stipulation are
(1) to inform the carrier that the cargo has been damaged, and that it is
being charged with liability therefor; and
(2) to give it an opportunity to examine the nature and extent of the
injury.
This protects the carrier by affording it an opportunity
to make an investigation of a claim while the matter is
fresh and easily investigated so as to safeguard itself
from false and fraudulent claims.
UCPB vs. Aboitiz GR 168433 feb 10, 2009
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The requirement to give notice of loss or damage to the goods is not an
empty formalism. The fundamental reason or purpose of such a stipulation
is not to relieve the carrier from just liability, but reasonably to inform it
that the shipment has been damaged and that it is charged with liability
therefor, and to give it an opportunity to examine the nature and extent of
the injury. This protects the carrier by affording it an opportunity to make
an investigation of a claim while the matter is still fresh and easily
investigated so as to safeguard itself from false and fraudulent claims.
We have construed the 24-hour claim requirement as a condition precedent
to the accrual of a right of action against a carrier for loss of, or damage to,
the goods. The shipper or consignee must allege and prove the fulfillment
of the condition. Otherwise, no right of action against the carrier can accrue
in favor of the former
Philipppine Charter Insurance vs. 462 SCRA 77
The second paragraph of Article 366 of the Code of Commerce is also
edifying. It is not only when the period to make a claim has elapsed that no
claim whatsoever shall be admitted, as no claim may similarly be admitted
after the transportation charges have been paid. In this case, there is no
question that the transportation charges have been paid, as admitted by the
petitioner, and the corresponding official receipt duly issued.
DOLE Phil. vs. Martime 148 SCRA 118
Issue: WON Article 1155 of the Civil Code providing that the prescription
of actions is interrupted by the making of an extrajudicial written demand
by the creditor is applicable to actions brought under the COGSA.
Held: NO.
SC have already decided that in a case governed by the COGSA, the
general provisions of the Code of Civil Procedure on prescription should
not be made to apply. (Chua Kuy vs. Everett Steamship Corp.). In such a
case the general provisions of the new Civil Code (Art. 1155) cannot be
made to apply, as such application would have the effect of extending the
one-year period of prescription fixed in the law. Matters affecting
transportation of goods by sea be decided in as short a time as possible; the
application of the provisions of Article 1155 of the new Civil Code would
unnecessarily extend the period and permit delays in the settlement of
questions affecting transportation, contrary to the clear intent and purpose
of the law.
Mayer Steel Pipeline vs. CA 274 SCRA 432
Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and
the ship shall be discharged from all liability for loss or damage to the
goods if no suit is filed within one year after delivery of the goods or the
date when they should have been delivered.
Under this provision, only the carrier's liability is extinguished if no suit is
brought within one year. But the liability of the insurer is not
extinguished because the insurer's liability is based not on the contract
of carriage but on the contract of insurance. Thus, when South Sea and
Charter issued the "all risks" policies to petitioner Mayer, they bound
themselves to indemnify the latter in case of loss or damage to the goods
insured. Such obligation prescribes in ten years, in accordance with
Article 1144 of the New Civil Code
A close reading of the law reveals that the Carriage of Goods by Sea Act
governs the relationship between the carrier on the one hand and the
shipper, the consignee and/or the insurer on the other hand. It defines the
obligations of the carrier under the contract of carriage. It does not,
however, affect the relationship between the shipper and the insurer. The
latter case is governed by the Insurance Code.
SUMMARY OF RULES
ARTICLE 366 COGSA Sec.3 (6)
Applicability
Domestic/inter-island/coastwise 1) International/
transportation 2) overseas/foreign
Land, water, air transportation (from foreign country to
Carriage of goods Phils.)
Note: subject to the rule on
Paramount Clause
Water/maritime
transportation
3) Carriage of goods
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
Notice of damage
Condition precedent Not a condition precedent
24-hour period for claiming 3-day period for claiming latent
latent damage damage
Prescriptive period
None provided; Civil Code One year from the date of delivery
applies. (delivered but damaged goods), or
date when the vessel left port or
from the date of delivery to the
arrastre (non-delivery or loss).
REVIEW OFPROVISIONS
Art. 351 refers to the schedule that CCs must keep.
In transportation made by railroads or other enterprises subject to
regulation rate and time schedules, it shall be sufficient for the bills of
lading or the declaration of shipment furnished by the shipper to refer,
with respect to the cost, time and special conditions of the carriage, to
the schedules and regulations the application of which he requests;
and if the shipper does not determine the schedule, the carrier must
apply the rate of those which appear to be the lowest, with the
conditions inherent thereto, always including a statement or reference
to in the bill of lading which he delivers to the shipper.
Art. 352 refers not only to cargoes but also applies to passengers
The bills of lading, or tickets in cases of transportation of passengers,
may be diverse, some for persons and others for baggage; but all of
them shall bear the name of the carrier, the date of shipment, the
points of departure and arrival, the cost, and, with respect to the
baggage, the number and weight of the packages, with such other
manifestations which may be considered necessary for their easy
identification.
Art. 353 and 354
BOL is the best evidence to prove that cargoes are onboard. The legal
evidence of the contract between the shipper and the carrier shall be
the bills of lading, by the contents of which the disputes which may
arise regarding their execution and performance shall be decided, no
exceptions being admissible other than those of falsity and material
error in the drafting.
After the contract has been complied with, the bill of lading which the
carrier has issued shall be returned to him, and by virtue of the
exchange of this title with the thing transported, the respective
obligations and actions shall be considered cancelled, unless in the
same act the claim which the parties may wish to reserve be reduced
to writing, with the exception of that provided for in Article 366.
In case the consignee, upon receiving the goods, cannot return the bill
of lading subscribed by the carrier, because of its loss or of any other
cause, he must give the latter a receipt for the goods delivered, this
receipt producing the same effects as the return of the bill of lading.
Art. 355: must be read with 1736 of the CC which refers to the
liability for the care of the cargo, to exercise extraordinary diligence
from the moment the cargo was unconditionally delivered to the
carrier by the shipper.
Art. 356 and 357: authorize the carrier to examine the cargo should
the cargo be suspicious in nature. The right is important today
especially with the danger of explosives, high jacking, drug
smuggling, terrorism, etc. this right is also provded under sections
2530 and 2531 of the Traffic and Customs Code.
Art. 358 and 395: must be read with 1747 of the Civil Code which
refers to the occurrence of fortuitous events which shall not extinguish
the liability of the carrier if there is undue delay in starting the trip. So
if the carrier deviated under its regular route unjustifiably or there was
undue delay, he is not relieved of liability in the event of caso fortuito.
This is an exception to the general rule.
Art. 361 (repealed by 1745)
Art. 362 (repealed by 1752)
Art. 363: cargo must be delivered in condition it was received
Art. 364: Basis of Damages in Abandonment /Conversion. in case
of abandonment or conversion, damage is based on the market value
~8~
of the goods at the point of destination. If the effect of the damage
referred to in Article 361 is merely a diminution in the value of the
goods, the obligation of the carrier shall be reduced to the payment of
the amount which, in the judgment of experts, constitutes such
difference in value.
Art. 366: Notice of Damage (see discussion)
Art. 368: Duty to deliver the goods. The carrier must deliver to the
consignee, without any delay or obstruction, the goods which he may
have received, by the mere fact of being named in the bill of lading to
receive them; and if he does not do so, he shall be liable for the
damages which may be caused thereby.
Art. 369: Consignment. If the consignee cannot be found at the
residence indicated in the bill of lading, or if he refuses to pay the
transportation charges and expenses, or if he refuses to receive the
goods, the municipal judge, where there is none of the first instance,
shall provide for their deposit at the disposal of the shipper, this
deposit producing all the effects of delivery without prejudice to third
parties with a better right.
Art. 370: Remedy, claim for damages vs common carrier. If a
period has been fixed for the delivery of the goods, it must be made
within the same, otherwise the carrier shall pay the indemnity agreed
upon in the bill of lading, neither the shipper nor the consignee being
entitled to anything else. Should no indemnity have been agreed upon
and the delay exceeds the time fixed in the bill of lading, the carrier
shall be liable for the damages which may have been caused by the
delay.
Art. 371: Remedy, right of abandonment by the shipper. In cases of
delay on account of the fault of the carrier, referred to in the foregoing
articles, the consignee may leave the goods transported on the hands
of the carrier, informing him thereof in writing before the arrival of
the same at the point of destination. When this abandonment occurs,
the carrier shall satisfy the total value of the goods, as if they had been
lost or mislaid. Should the abandonment not occur the indemnity for
loss and damages on account of the delays cannot exceed the current
price of the goods transported on the day and at the place where the
delivery was to have been made. The same provision shall be
observed in all cases where this indemnity is due.
Art. 372 (repealed by 1749) validity of carrier to stipulate in the BOL
a reduction of his liability for damages
ARTICLE 373. RIGHTS AND LIABILITIES OF PARTIES IN
COMBINED SERVICES The carrier who makes the delivery of the
merchandise to the consignee by virtue of combined agreements or
services with other carriers shall
1) assume the obligations of those who preceded him in the
conveyance,
2) reserving his right to proceed against the latter if he was not the
party directly responsible for the fault which gave rise to the
claim of the shipper or consignee.
3) likewise acquire all the actions and rights of those who preceded
him in the conveyance.
The shipper and the consignee shall have an immediate right of
action against the
1) carrier who executed the transportation contract, or
2) other carriers who may have received the goods transported
without reservation. However, the reservation made by the latter
shall not relieve them from the responsibilities which they may
have incurred by their own acts.
Art. 374- 376: provisions which give the carrier several remedies for
the collection of freightage
1) Judicial Sale
ARTICLE 374. The consignees to whom the shipment was
made may not defer the payment of the expenses and
transportation charges of the goods they receive after the lapse
of twenty-four hours following their delivery; and in case of
delay in this payment, the carrier may demand the judicial sale
of the goods transported in an amount necessary to cover the
cost of transportation and the expenses incurred.
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
2) Retaining Lien
ARTICLE 375. The goods transported shall be especially
bound to answer for the cost of transportation and for the
expenses and fees incurred for them during their conveyance
and until the moment of their delivery.This special right shall
prescribe eight days after the delivery has been made, and once
prescribed, the carrier shall have no other action than that
corresponding to him as an ordinary creditor.
3) Preference of Credits. ARTICLE 376. The preference of the
carrier to the payment of what is owed him for the transportation
and expenses of the goods delivered to the consignee shall not
be cut off by the bankruptcy of the latter, provided it is claimed
within the eight days mentioned in the preceding article.
4) Carrier may deliver the cargo and may waive previous right,
but he has right of preference over the cargo for a period of 30
days. This has been amended by Article 2341 of the Civil Code.
(Earlier period was 8 days ,now 30 days na.)
5) Collection of sum of money
6) Consignation under 369
ARTICLE 369. If the consignee cannot be found at the
residence indicated in the bill of lading, or if he refuses to pay
the transportation charges and expenses, or if he refuses to
receive the goods, the municipal judge, where there is none of
the first instance, shall provide for their deposit at the disposal
of the shipper, this deposit producing all the effects of delivery
without prejudice to third parties with a better right.
Art. 377:The carrier shall be liable for all the consequences which
may arise from his failure to comply with the formalities prescribed
by the laws and regulations of the public administration, during the
whole course of the trip and upon arrival at the point of destination,
except when his failure arises from having been led into error by
falsehood on the part of the shipper in the declaration of the
merchandise. If the carrier has acted by virtue of a formal order of the
shipper or consignee of the merchandise, both shall become
responsible.
Art 378. Agents for transportation shall be obliged to keep a special
registry, with the formalities required by Article 36, in which all the
goods the transportation of which is undertaken shall be entered in
consecutive order of number and dates, with a statement of the
circumstances required in Article 350 and others following for the
respective bills of lading.
Art 379. The provisions contained in Articles 349 and following
shall be understood as equally applicable to those who, although they
do not personally effect the transportation of the merchandise,
contract to do so through others, either as contractors for a particular
and definite operation, or as agents for transportations and
conveyances.
In either case they shall be subrogated in the place of the carriers
themselves, with respect to the obligations and responsibility of the
latter, as well as with regard to their rights.
MARITIME COMMERCE
(Arts. 573-869)
IMPORTANT CONCEPTS:
1. Merchant vessel
2. Maritime lien and Preference of Credit
3. Doctrine of limited liability
4. Causes of revocation of voyage
5. Participants in maritime commerce
6. Charter party
7. Loans on bottomry and respondentia
8. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
It is the system of laws which particularly relates to the affairs
and business of the sea, to ships, their crews and navigation, and
to maritime conveyance of persons and property. (Notes and
Cases on the Law on Transportation and Public Utilities,
Aquino & Hernando, citing Francisco, p.254)
~9~
Maritime laws apply only to maritime trade and sea voyages.
(Pandect of Commercial Law and Jurisprudence, Justice Jose
Vitug, 1997 ed.)
Arrastre service is not maritime in character. It refers to a
contract for the unloading of goods from a vessel. (ICTSI vs.
Prudential Guarantee, 320 SCRA 244)
Objectives of the convention
International convention is an agreement between states that the
parties to it, to observe and enforce a common set of principles on a
particular subject or issue. As an agreement, it is the law among the
contracting parties. As such, it forms part of the municipal laws of the
states of the contracting parties.
International Conventions or Agreements
To Which The Philippines Is ASignatory
1. Carriage of Goods by Sea Act (COGSA) RA 521 Enacted by the
74th Act of US Congress to give effect to the Brussels Treaty
This Act embodies the commonly known as the Hague Laws.
2. SOLAS International Convention for the Safety of Life at Sea -
Done in London, June 17, 1960; Entered into PH: 1965.
This convention standardizes the minimum requirements as to
construction, equipment, inspection with respect to engineering
safety, masters, trails and radio methods. Take note that in
drafting maritime safety treaty was brought to the attention to
the international community in 1912 by the sinking of the
Titanic, which like most ships, did not carry enough number of
life boats
3. International Conventions of Load Lines in 1966 This pertains
to tankers or vessels carrying tankers.
4. International Regulations for Preventing Collisions at Sea
5. International Convention for the Prevention of Collision at Sea
by Oil Adopted in London in May 1954 and entered into
Philippines on 1964
6. International Convention on Tonnage Measurement of Ships
7. Special Trade Passenger Ship Agreement Adopted in London in
1971 and in the Philippines in 1974
8. Convention on the Prevention of Marine Collision by Dumping
Wastes and Other Matters Open for Signature in London,
Boston, Mexico, Washington; entered into the Philippines in 1975
9. Agreement for the Facilitation of Search for Ships in Distress and
Rescue for Ships Accidents
Regulatory Agencies
1) MARINA (Maritime Industry Authority)- formulates policies and
rules for the growth of shipping enterprises and concerned with the
purchase, lease and management of the operation of vessels.
if you have a client who wants to buy a vessel, you go to
MARINA for registration to approve the deed of sale.
2) PRC- administers and supervises the examination of licensing of
marine officers and crew
3) Philippine Coast Guard- regulation, documentation and licensing
of vessels
4) BMI (under the Coast Guard)- investigates conduct of crew
members and officers in terms of casualties, and recommends to the
commandant for penalties in cases of violations
VESSELS
includes every sort of boat, or other artificial contrivance used or
capable of being used as a means of transportation on water.
Vessel engaged in maritime commerce, whether foreign or otherwise.
Constitutes property which may be acquired and transferred by any
of the means recognized by law. They shall continue to be considered
as personal property. (Arts. 573, 585)
They are susceptible to maritime liens such as for the repair,
equipping and provisioning of the vessel in the preparation of a
voyage, as well as mortgage liabilities, in satisfaction of which a
vessel may be validly arrested and sold. (Ship Mortgage Decree of
1978)
DOMESTIC SHIPPING DEVELOPMENTACT OF2004 (RA 9295)
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
"ships" and "vessels" may be used interchangeably. Also, it shall meet any
kind, class or type of craft or artificial contrivance capable in floating in
water, and for what purpose? To be used as means of water transport in
domestic trade for either carriage of passengers, cargo or both.
Kinds of Vessels
SOLAS (Safety of Life at Sea) provides:
1) Passenger ship- carries more than 12 passengers
2) Cargo ship-
3) Tanker- a cargo ship adapted for the carriage in bulk of liquid
cargos of inflammable nature
4) Fishing vessel- used to catch living resources at sea
5) Nuclear ship- ship provided with a nuclear power plant
6) New ship- still under construction and unregistered after the date of
the effectivity of SOLAS
7) Existing ship- contrary to new ship; used and registered
VESSELREGISTRATION
Under Section 806 of PD 34 (Tariff and Customs code amended by PD
761), the law requires
1) Certificate of Philippine Registry
a) domestic ownership
b) more than 15 tons gross
c) Purpose: to encourage our trade navigation and ship-
building by granting exclusive privileges of trade to the
flag of Ph; to declare the nationality of the vessel
2) Certificate of Ownership
a) More than 5 tons gross
b) Purpose: to give the right to engage in coastwise trade and
entitles the vessel to the protection of the authorities
3) Registration under PCG
a) 3 tons or more by Filipino citizens or corporations and
associations, at least the 60% of the capital of which is
owned by such citizen shall be registered at the Philippine
Coast Guard under PD 1064.
o The registration of vessels 3 tons or less is optional.
4) Temporary Certificate of Registration
A foreign-owned vessel under charter or leased by a Filipino national
may be issued a temporary Certificate of Registration under the
following conditions (as provided by law):
1) The charter or lease must be with the approval of the MARINA
2) The duration is not less than one year
3) The vessel shall be used exclusively in coastwise trade unless
permitted by MARINA to be used for overseas trade.
Vessels:
- Every sort of boat, craft, or other artificial contrivance
- used, or capable of being used,
- as a means of transportation on water
- PD 474 provided for the re-organization of maritime functions in the
Philippines. It also created the Maritime Industry Authority and other
purposes. Section 3 Par 3 defines a vessel, for purposes of falling
within the jurisdiction of MARINA, as
any barge, lighter, carrier, passenger ship, freighter,
tanker, container ship, fishing boat or pother artificial
contrivance, utilizing any source of motive power,
motor power, designed, used or capable of being used
as a means of transportation either as a common
contract carrier, including vessels covered under PD
43.
Except:
1) Those owned or operated by the Armed Forces of
the Philippines and foreign governments for military
purposes
2) Banka/sailboats or other water-borne contrivance of
less than 3tons gross capacity and not motorized.
So, non-merchant vessels are not subject to
maritime law.
Vessels as property:
- Vessels are considered personal or movable property under Art. 585.
Under the Civil Code, they are also considered as personalty, often
referred to as a particular kind of personal things.
- ships or vessels whether moved by steam or sail, pertain to an extent
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of the nature and condition of realty on account of their value and
importance in the commerce.
Acquisitions of vessels
Vessels may be acquired or transferred by means recognized by law.
Purchase and sale, prescription, construction, capture, donation, succession,
and other means.
1) Purchase And Sale
a) Voluntary (575-578)
b) Judicial (578-582)
o Must be in written instrument, and Registered
Under Article 573, vessels are personal/movable property,
or a chattel, so until the enactment of the Ship Mortgage
Decree of 1978, ships are covered by the provisions of
Chattel Mortgage Law. Since ships are valuable movable
property dealt within commerce, they may be dealt and
bought and sold or chartered or hired out for long periods.
These operations of vessels are generally through agents
which are called ship brokers.
In order to be binding to third parties,
The requisite of registration is not to validate the sale, but
it is indispensable in order that the purchaser's rights
against the third persons may be maintained. For example,
placing a near-defunct vessel in a public auction, the
purchaser whose certificate of sale must register will
prevail over an earlier purchase of a purchaser who did not
register his purchase (Rubizo)
But as between the parties, ownership is parties upon
execution of the Deed of Sale and delivery of the vessel.
Rubiso vs Rivera
So a purchaser of a vessel in a public auction of a vessel
(so there is a judicial foreclosure) whose certificate of sale
was registered in a registry shall prevail over an earlier
purchase of the vessel by another person who did not
register his purchase.
SC characterized maritime transactions as having a real
nature (similar to registration of real property) with respect
to effectivity agaisnt 3rd persons. In this case, defendant
acquired by purchase the pilot boat on date prior to the
purchase and adjudication by plaintiff Rubiso. but the sale
to Rubiso was recorded in the office of collector of
customs in january 7and the commercial registry in march
17. as ruled, the requisite of registration is a necessary and
indispensable in order for the pruchasers right be
maintained against third persons (Art 573).
Froilan vs. Oriental Shipping (12 S 276), the SC ruled
that: In the absence of stipulation to the contrary, the
ownership of the thing sold passes to the vendee upon the
actual or constructive delivery thereof (Art. 1477, New
Civil Code). It is for this reason that Froilan was able to
constitute a mortgage on the vessel in favor of the
Administration, to secure payment of the unpaid balance of
the purchase price. This is true if the sale has been made on
credit or pyament and the price is not essential to the
trasnfer of ownership, as long as the property has been
delivered.
2) Prescription
a) Good faith + just title + possession of 3 years
b) Bad faith + possession in the concept of an owner of 10 years
3) Construction
o Shipbuilding and repair is to be registered but not as to
public utility. To engaged in business, it must be issued a
COR and license from MIA
o Ship brokers are commonly used when vessels are to be
built, or when shipyards are to be contracted with. These
are being undertaken by ship brokers. They are
professional experts in shipping, specializing in particular
types of tonnage/damage (?) or particular transactions.
o Aliens may be licensed as ship brokers as ship brokerage
is different from operation of vessels.
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

o The business of ship brokerage covers not only purchase 1) Application by the captain for examination to the judge or court of
and sell of vessels but also the negotiation of freight, the port of arrival if in the Philippines, or if in a foreign country, to
passengers, and other business for the owners of vessels, the consul of the Philippines, should there be one, or where there is
or for the shipper and consignors or consignees of freight none, to the judge or court or to the local authority;
carried by vessels. 2) Notification of the consignee or the insurer should they reside at said
port or their representatives thereat;
4) Capture 3) Proof of damage and impossibility of the repair of the vessel; and
5) Donation 4) Order for the sale of the vessel at public auction.
6) Succession
7) Other means such as barter RULES
APAA
RULES ON PURCHASE AND SALE 1) The hull of the vessel, its rigging, engines, stores and other articles
shall be apprised, after making an inventory, said proceedings to be
ARTICLE 575. Co-owners of vessels shall have the right of repurchase and
brought to the notice of the persons who may wish to take part in the
redemption in sales made to strangers, but they may exercise the same only
auction
within the NINE DAYS following the inscription of the sale in the registry,
2) The order or decree ordering the auction shall be posted the period
and by depositing the price at the same time.
fixed for the sale be not less than 20 days
3) Announcements to be repeated every 10 days and publication be made
Inclusions: to appear on the records
rigging, masts, stores and engine of a streamer 4) Auction shall be held on the day fixed and follow formalities of
appurtenant thereto, which at the time belongs to the judicial sales
vendor.
EFFECTS OF REGISTRATION
Exclusions
JUDICIAL SALE VOLUNTARY SALE
The arms, munitions of war, provisions and fuel
Extinguish all liability of the If on voyage
vessel Preferred and hypothecary nature
The vendor shall be under the obligation to deliver to the purchaser a
certified copy of the record sheet of the vessel in the registry up to of the credit subsists vs the vessel
the date of the sale. until after its return to the port of
registry and 3 mos after the
inscription or after return
ARTICLE 577.If the alienation of the vessel should be made while it is on a If insufficient, all not paid will be
voyage, the freightage which it earns from the time it receives its last cargo considered as simple loan
shall pertain entirely to the purchaser, and the payment of the crew and If insufficient, and the creditors
other persons who make up its complement for the same voyage shall be for belong in one number or grade,
his account. If the sale is made after the vessel has arrived at the port of its residue is divided pro rata
destination, the freightage shall pertain to the vendor, and the payment of
the crew and other individuals who make up its complement shall before
his account, unless the contrary is stipulated in either case.

1) Freightage which it earns from receipt of last cargo

2) Payment of crew and other persons/complements
a. While on voyage, sold purchaser MARITIME AND
b. After the vessel has arrived, sold seller

PREFENCE OF CREDITS
It constitutes a present right of property in the ship, a jus in re, to be
ARTICLE 578. If the vessel being on a voyage or in a foreign port, its
owner or owners should voluntarily alienate it, either to Filipinos or to afterward enforced in admiralty by process in rem. (PNB vs. CA,
foreigners domiciled in the capital or in a port of another country, the bill of 337 SCRA 381)
sale shall be executed before the consul of the Republic of the Philippines If the maritime lien arose prior to the recording of a preferred
at the port where it terminates its voyage and said instrument shall produce mortgage, it shall have priority over the said mortgage lien. (PNB vs.
no effect with respect to third persons if it is not inscribed in the registry of CA, 337 SCRA 381)
the consulate. The consul shall immediately forward a true copy of the
instrument of purchase and sale of the vessel to the registry of vessels of the ORDER OF PREFERENCE IN CASE OF SALE OF VESSEL
port where said vessel is inscribed and registered.
R.A. 6106 P.D. 1521
In every case the alienation of the vessel must be made to appear with a Effectivity date
statement of whether the vendor receives its price in whole or in part, or 1969 1978
whether he preserves in whole or in part any claim on said vessel. In case Applicability
the sale is made to a Filipino, this fact shall be stated in the certificate of Overseas shipping only Both domestic and overseas
navigation. shipping
Kind of sale
Judicial Judicial and extrajudicial
FORMALITIES required for the voluntary sale of vessels abroad as Order of Preference
follows: EIFS A preferred mortgage shall have The preferred mortgage lien shall
1) Execution of the bill of sale before the consul of the Philippines at priority over all claims against the have priority over all claims
the port where it terminates its voyage; vessel, except the following against the vessel, except the
2) Inscription in the registry of its consulate;
preferences in the order stated: following preferences in the order
3) Forwarding by the consul of a true copy of the instrument or
1. Judicial costs of the stated:
purchase and sale to the registry of vessels of the port of registration;
and proceedings; TWAS TML
4) Statement must be made to appear on said instrument of whether the 2. Taxes due the Philippine 1. Expenses and fees allowed
vendor receives its price in whole or in part, or whether he preserves Government; and costs taxed by the court
in whole or in part, any claim on said vessel. 3. Salaries and wages of the and taxes due to the
Captain and Crew of the Government;
ARTICLE 579. After the damage to the vessel and the impossibility of her vessel during its last voyage; 2. Crews wages;
being repaired, in order to continue the voyage had been shown, its sale at 4. General average or salvage 3. General average;
public auction shall be ordered. including contract salvage, 4. Salvage, including contract
bottomry loans, and salvage;
FORMALITIES: indemnity due shippers for 5. Maritime liens arising prior
ANPO the value of goods in time to the recording of
transported but which were the preferred mortgage;
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 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

not delivered to the 6. Damages arising out of tort; b) Unless THIRD

consignee; and 1) Insubordination in serious matters;
5. Costs of repair and 7. Preferred mortgage 2) Robbery;
equipment of the vessel, and registered prior in time. 3) Theft;
provisioning of food, 4) Habitual drunkenness;
supplies and fuel during its 5) Damage caused to the vessel or to its cargo through
last voyage; and malice or manifest or proven negligence. (Art. 605)
6. Preferred mortgages
C. CO-OWNER CAPTAIN
registered prior in time.
a) Return the amount of his interest
b) In the absence of agreement, appraised by experts
Effect of sale: All pre-existing claims in the vessel are terminated. They c) If by special agreement, there must be just cause: THIRD
will then be satisfied from the proceeds of the sale subject to the order
of preference.
Madrigal Shipping Company Inc v. Ogilve (1958)
May the dismissed crewmembers recover damages?
captain employed by Madrigal Shipping Company Inc. engaged the service

PARTICIPANTS IN of several seamen to man and fetch the vessel S.S. Bridge owned by the
corporation from Sasebu, Japan, to the port of Manila, the engagement to
last upon the arrival of the boat at the last mentioned port. In pursuance
MARITIME COMMERCE thereof, the seamen were flown to Sasebu, Japan, and manned the vessel
out of the port of Sasebu. On 16 March 1948, upon arrival of the vessel at
A. Shipowners and ship agents
B. Captains and masters of the vessel Hongkong, the seamen were dismissed, replaced by a Chinese crew, were
C. Officers and crew of the vessel flown back to Manila and paid their salaries up to the date of their
D. Supercargoes discharge. The seamen brought an action to collect their salaries and
E. Pilot subsistence allowance from 17 March 1948 to 30 September 1948 when the
vessel arrived in the port of Manila.
A. SHIPOWNERS AND SHIP AGENTS
1) Shipowner (proprietario) Person who has possession, control Held: that under Article 605 of the Code of Commerce, where the contract
and management of the vessel and the consequent right to direct is for a definite period of voyage, the seamen may not be discharged until
her navigation and receive freight earned and paid, while his after the contract shall have been performed, except by reason of
possession continues. insubordination in serious matters, robbery, theft, habitual drunkenness, or
damage caused to the vessel or its cargo through malice or manifest or
2) Ship agent (naviero) Person entrusted with provisioning and proven negligence. The discharge of the seamen not being any of the
representing the vessel in the port in which it may be found; causes under the exception, they are entitled to collect from the owner
also includes the shipowner.Not a mere agent under civil law; or agent of the vessel their unpaid salaries for the whole period they
he is solidarily liable with the ship owner. were engaged to render the service.

D. CAPTAINS AND MASTERS

Powers and functions: They are the chiefs or commanders of ships.
1. Capacity to trade; The terms have the same meaning, but are particularly used in
2. Discharge duties of the captain, subject to Art.609; accordance with the size of the vessel governed and the scope
3. Contract in the name of the owners with respect to repairs, of transportation, i.e., large and overseas, and small and
details of equipment, armament, provisions of food and coastwise, respectively.
fuel, and freight of the vessel, and all that relate to the
requirements of navigation; Nature of position (3-fold character):
4. Order a new voyage, make a new charter or insure the ADR
vessel after obtaining authorization from the shipowner or 1. General agent of the shipowner;
if granted in certificate of appointment. 2. Technical director of the vessel;
3. Representative of the government of the country under
Civil Liabilities of the Shipowner And Ship Agent whose flag he navigates.
ALDD
1. All contracts of the captain, whether authorized or not, to repair, Qualifications:
equip and provision the vessel; (Art. 586) 1. Filipino citizen;
2. Loss and damage to the goods loaded on the vessel without prejudice 2. Legal capacity to contract;
to their right to free themselves from liability by abandoning the 3. Must have passed the required physical and mental
vessel to the creditors. (Art. 587) examinations required for licensing him as such. (Art.
3. Damages to 3rd persons for tort or quasi-delict committed by the 609)
captain, except collision with another vessel (2201,CC)
4. Damages in case of collision due to the fault, negligence, or want of Inherent powers:
skill of the captain, sailing mate, or any other member of the 1. Appoint crew in the absence of ship agent;
complement 2. Command the crew and direct the vessel to its port of
destination;
Duty of Ship Agent to Discharge the Captain and Members of the 3. Impose correctional punishment on those who, while on
Crew board vessel, fail to comply with his orders or are wanting
in discipline;
A. BEFORE THE VESSEL SETS OUT TO THE SEA 4. Make contracts for the charter of vessel in the absence of
INDEFINITE PERIOD ship agent.
a) Discretion to discharge the captain and crewmembers 5. Supply, equip, and provision the vessel; and
b) Paying them salaries earned according to their contracts 6. Order repair of vessel to enable it to continue its voyage.
c) without any indemnity unless there is an express (Art. 610)
agreement thereto
Sources of funds to comply with the inherent powers of the
DEFINITE PERIOD captain (in successive order):
a) Not discharged until after the fulfillment of their contract 1. From the consignee of the vessel;
b) Unless THIRD 2. From the consignee of the cargo;
3. By drawing on the ship agent;
B. DURING THE VOYAGE 4. By a loan on bottomry;
DEFINITE PERIOD 5. By sale of part of the cargo. (Art. 611)
a) Salary until their return to the port where the contract was
made Duties:
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 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

1. Bring on board the proper certificate and documents and a 5. Inventory the rigging and equipment of the vessel, if laid
copy of the Code of Commerce; up. (Art. 632)
2. Keep a Log Book, Accounting Book and Freight Book;
3. Examine the ship before the voyage; Engineers
4. Stay on board during the loading and unloading of the Officers of the vessel but have no authority except in matters
cargo; referring to the motor apparatus. When two or more are hired,
5. Be on deck while leaving or entering the port; one of them shall be the chief engineer.
6. Protest arrivals under stress and in case of shipwreck; Duties:
7. Follow instructions of and render an accounting to the 1. In charge of the motor apparatus, spare parts, and other
ship agent; instruments pertaining to the engines;
8. Leave the vessel last in case of wreck; 2. Keep the engines and boilers in good condition;
9. Hold in custody properties left by deceased passengers 3. Not to change or repair the engine without authority of the
and crew members; captain;
10. Comply with the requirements of customs, health, etc. at 4. Inform the captain of any damage to the motor apparatus;
the port of arrival; 5. Keep an Engine Book;
11. Observe rules to avoid collision; 6. Supervise all personnel maintaining the engine. (Art. 632)
12. Demand a pilot while entering or leaving a port. (Art.
612) Crew
The aggregate of seamen who man a ship, or the ships
A ships captain must be accorded a reasonable measure of company.
discretionary authority to decide what the safety of the ship and of its crew Hired by the ship agent, where he is present and in his absence,
and cargo specifically requires on a stipulated ocean voyage (Inter-Orient the captain hires them, preferring Filipinos, and in their
Maritime Enterprises Inc. vs. CA). absence, he may take in foreigners, but not exceeding 1/5 of the
crew. (Art. 634)
No liability for the following:
1. Damages caused to the vessel or to the cargo by force Classes of Seamans Contracts
majeure; 1. By the voyage;
2. Obligations contracted for the repair, equipment, and 2. By the month; and
provisioning of the vessel unless he has expressly bound 3. By share of profits or freightage.
himself personally or has signed a bill of exchange or
promissory note in his name. (Art. 620) Just Causes for the Discharge of Seaman While Contract Subsists
CINDID
Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the 1. Perpetration of a crime;
Captain towards Passengers and Cargoes 2. Repeated insubordination, want of discipline;
1. Damages to vessel and to cargo due to lack of skill and negligence; 3. Repeated incapacity and negligence;
2. Thefts and robberies of the crew; 4. Habitual drunkenness;
3. Losses and fines for violation of laws; 5. Physical incapacity;
4. Damages due to mutinies; 6. Desertion. (Art. 637)
5. Damages due to misuse of power;
6. For deviations; Rules in case of Death of a Seaman
7. For arrivals under stress; The seamans heirs are entitled to payment as follows:
8. Damages due to non-observance of marine regulations. (Art. 618) 1. If death is natural:
a. compensation up to time of death if engaged on wage
E. OFFICERS AND CREW b. if by voyage - half of amount if death occurs on voyage out;
1. Sailing Mate/First Mate and full, if on voyage in
2. Second Mate c. if by shares - none, if before departure; full, if after departure
3. Engineers 2. if death is due to defense of vessel - full payment;
4. Crew 3. if captured in defense of vessel - full payment;
4. if captured due to carelessness - wages up to the date of the capture.
No liability under the following circumstances: (Art. 645)
1. If, before beginning voyage, captain attempts to change it, or a
naval war with the power to which the vessel was destined Complement of the Vessel
occurs; All persons on board, from the captain to the cabin boy, necessary
2. If a disease breaks out and be officially declared an epidemic in for the management, maneuvers, and service, thus including the
the port of destination; crew, the sailing mates, engineers, stokers and other employees on
3. If the vessel should change owner or captain. (Art. 647) board not having specific designations.
Does not include the passengers or the persons whom the vessel is
Sailing Mate/First Mate transporting.
Second chief of the vessel who takes the place of the captain in
case of absence, sickness, or death and shall assume all of his F. SUPERCARGOES
duties, powers and responsibilities. (Art. 627) Persons who discharges administrative duties assigned to him
Duties: by ship agent or shippers, keeping an account and record of
1. Provide himself with maps and charts with astronomical transaction as required in the accounting book of the captain.
tables necessary for the discharge of his duties; (Art. 649)
2. Keep the Binnacle Book;
3. Change the course of the voyage on consultation with the E. PILOT
captain and the officers of the boat, following the decision A person duly qualified, and licensed, to conduct a vessel into or out
of the captain in case of disagreement; of ports, or in certain waters.
4. Responsible for all the damages caused to the vessel and The term generally connotes a person taken on board at a particular
the cargo by reason of his negligence. (Arts. 628 - 631)
place for the purpose of conducting a ship through a river, road or
channel, or from a port.
Second Mate
Master pro hac vice for the time being in the command and
Takes command of the vessel in case of the inability or
navigation of the ship.
disqualification of the captain and the sailing mate, assuming in
While in exercising his functions a pilot is in sole command of the
such case their powers and responsibilities.
Third in command ship and supersedes the master for the time being in the command
and navigation of the ship, the master does not surrender his vessel
Duties:
to the pilot and the pilot is not the master. There are occasions when
1. Preserve the hull and rigging of the vessel; the master may and should interfere and even displace the pilot, as
2. Arrange well the cargo; when the pilot is obviously incompetent or intoxicated (Far Eastern
3. Discipline the crew; Shipping Company vs. CA).
4. Assign work to crew members;
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 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE
Compulsory Pilotage States possessing harbors have enacted laws
or promulgated rules requiring vessels approaching their ports to
take on board pilots licensed under the local laws. (Notes and Cases
on the Law on Transportation and Public Utilities, Aquino, T. &
Hernando, R.P. 2004 ed. p. 518)
Liablity of Pilot
GENERAL RULE: On compulsory pilotage grounds, the Harbor Pilot is
responsible for damage to a vessel or to life or property due to his
negligence.
EXCEPT:
1. Accident caused by force majeure or natural calamity provided
the pilot exercised prudence and extra diligence to prevent or
minimize damages.
2. Countermand or overrule by the master of the vessel in which
case the registered owner of the vessel is liable. (Sec.11, Art.III
PPA Admin Order 03-85)
DOCTRINE OF LIMITED
LIABILITY
CHARACTERISTICS OF MARITIME TRANSACTION
1) Real - similar to transactions over real property with respect to
effectivity against third persons which is done through registration.
(Rubiso vs. Rivera, 37 Phil. 72). The evidence of real nature is
shown by: 1) the limitation of the liability of the agents to the actual
value of the vessel and the freight money; and 2) the right to retain
the cargo and embargo and detention of the vessel (Luzon
Stevedoring Corp v. CA, 156 SCRA 169);
2) Hypothecary - the liability of the owner of the value of the vessel is
limited to the vessel itself (Doctrine of Limited Liability).
The real and hypothecary nature of maritime law simply
means that the liability of the carrier in connection with
losses related to maritime contracts is confined to the
vessel, which stands as the guaranty for their settlement.
(Aboitiz Shipping Corp. vs. General Accident Fire and
Life Assurance Corp. 217 SCRA 359).
HYPOTHECARY RULE
- No vessel, no liability.
GENERAL RULE: The liability of shipowner and ship agent is limited
to the amount of interest in said vessel such that where vessel is entirely
lost, the obligation is extinguished. (Luzon Stevedoring v. Escano, 156
SCRA 169) The interest extends to: VEFI
1) the vessel itself;
2) equipment;
3) freightage; and
4) insurance proceeds
Cases where applicable:
1. Art. 587 civil liability for indemnities to third persons for the
negligent acts of the captain
2. Art. 590 indemnities from negligent acts of the captain (not the
shipowner or ship agent)
3. Art. 837 collision
4. Art. 643 liability for wages of the captain and the crew and for
advances made by the ship agent if the vessel is lost by shipwreck or
capture
5. Maritime Liens as there is no longer any res to which it can attach
EXCEPTIONS:
1. Claims under Workmens Compensation (Abueg vs. San Diego 77
Phil 730);
2. Injury or damage due to shipowner or to the concurring negligence of
the shipowner and the captain;
3. The vessel is insured (Vasquez vs. CA 138 SCRA 553).
4. Expenses for repair on vessel completed before loss;
5. In case there is no total loss and the vessel is not abandoned;
6. Collision between two negligent vessels;
7. Ship chattel mortgaged
8. Not maritime (small bancas) or a private carrier
9. Expenses for equipping or repairing the conditions of the vessels
completed before its loss
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Abandonment of the vessel is necessary to limit the liability of the
shipowner. The only instance were abandonment is dispensed with is
when the vessel is entirely lost (Luzon Stevedoring vs. CA 156 SCRA
169).
CASE:
Yangco vs Laserna
The ship agents liability is merely co-extensive with his interest in the
vessel such that a total loss thereof results in its extinction. The total
destruction of the vessel extinguishes a maritime lien, as there is no longer
any res to which it can attach.
Arado vs CA & San Miguel
Board Marine Inquiry exonerated the carrier with respect to the
administrative liability of its owner/operator, officers and crew of the ill-
fated" vessel. It could not have meant exoneration of appellee from liability
as a common carrier for his failure to observe extraordinary diligence in the
vigilance over the goods it was transporting and for the negligent acts or
omissions of his employees. Such is the function of the Court, not the
Special Board of Marine Inquiry."
What is the difference here if they have been exonerated of
administrative liability? That is only in so far as the employer- employee
relationship. The finding here of the board is only in so far as whether or
not they were negligent or that they perform their functions being an
employee of that vessel. So in so far as the value of the cargo is
concerned, that is between the shipper and the carrier. If the officers
were exonerated administratively, they can still be liable to the carrier for
whatever the carrier has paid, this is separate and distinct from the liability
of the CC to the shipper under contract of carriage.
Amparo Delos Santos vs CA (BQ 2000)
This is a case where the vessel was made liable despite the loss of the
vessel.
The petition has merit. At the outset, We note that there is no dispute as to
the finding of the captain's negligence in the mishap. The present
controversy centers on the questions of Maritima's negligence and of the
application of Article 587 of the Code of Commerce. The said article
provides:
Art. 587. The ship agent shall also be civilly liable for
indemnities in favor of third persons which may arise from the
conduct of the captain in the care of the goods which he loaded
on the vessel, but he may exempt himself therefrom by
abandoning the vessel with all her equipment and the freight it
may have earned during the voyage.
Under this provision, a shipowner or agent has the right of abandonment;
and by necessary implication, his liability is confined to that which he is
entitled as of right to abandon-"the vessel with all her equipment and the
freight it may have earned during the voyage"
Contrary to the petitioners' supposition, the limited liability doctrine applies
not only to the goods but also in all cases like death or injury to passengers
wherein the shipowner or agent may properly be held liable for the
negligent or illicit acts of the captain (Yangco v. Laserna, Ibid). It must be
stressed at this point that Article 587 speaks only of situations where the
fault or negligence is committed solely by the captain. In cases where the
shipowner is likewise to be blamed, Article 587 does not apply (see Manila
Steamship Co., Inc. v. Abdulhanan, et al., 100 Phil. 32, 38). Such a situation
will be covered by the provisions of the New Civil Code on Common
Carriers. Owing to the nature of their business and for reasons of public
policy, common carriers are tasked to observe extraordinary diligence in the
vigilance over the goods and for the safety of its passengers (Article 1733,
New Civil Code). Whenever death or injury to a passenger occurs, common
carriers are presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence as prescribed
by Articles 1733 and 1755 (Article 1756, New Civil Code).
Vasquez vs CA (99 and 00 BQ)
Sinking of vessel due to typhoon was not considered as an exempting cause
as the captain was negligent in over loading the vessel and proceeding
despite notice of bad weather. However the SC ruled that since there was no
negligence on the part of the ship owner, the liability of ship owner and ship
agent can be extended only to the proceeds of the insurance.
 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

SPECIAL CONTRACTS OF sold to one who knows of

the existence of the lease,
compelled to respect the
charter party so long as he
the new owner must can load the vessel with
MARITIME COMMERCE respect the lease.
Civil law concept
his own cargo. (Art. 689)
Commercial law concept
1. Charter party
2. Bill of lading
3. Contract of transportation of passengers
on sea voyages
4. Loan on bottomry CHARTER PARTY BILL OF LADING
5. Loan on respondentia An entire or complete More like a private receipt
6. Marine insurance contract. which the captain gives to
accredit goods received
CHARTER PARTY from persons
A contract by virtue of which the owner or agent binds himself Consensual contract Real contract
to transport merchandise or persons for a fixed price.
A contract by which an entire ship, or some principal part
thereof is let/leased by the owner to another person for a PERSONS WHO MAY MAKE A CHARTER
specified time or use. (Planters Products, Inc. vs. CA, 226 1. Owner or owners of the vessel, either in whole or in majority part,
SCRA 476) who have legal control and possession of the vessel
Parties: 2. Charterer may subcharter entire vessel to 3 rd person only if not
1. Ship owner or ship agent prohibited in original charter. (Art.679)
2. Charterer 3. Ship agent if authorized by the owner/s or given such power in the
Classes: certificate of appointment. (Art.598)
1. Bareboat or demise The charterer provides crew, food and 4. Captain in the absence of the ship agent or consignee and only if he
fuel. The charterer is liable as if he were the owner, except when acts in accordance with the instructions of the agent or owner and
the cause arises from the unseaworthiness of the vessel. The protects the latters interests. (Art.609)
shipowner leases to the charterer the whole vessel, transferring 5. Broker who shall intervene in the execution of the charter between
to the latter the entire command, possession and consequent the principal and the charter himself.
control over the vessels navigation, including the master and the
crew, who thereby become the charters servants. It transforms a REQUISITES OF A VALID CHARTER PARTY
common carrier into a private carrier. CEF 652
The charterer becomes the owner of the vessel pro 1. Consent of the contracting parties (shipowner and charterer)
hac vice, just for that one particular purpose only. 2. Existing vessel which should be placed at the disposition of the
Because the charterer is treated as owner pro hac shipper
vice, the charterer assumes the customary rights and 3. Freight
liabilities of the shipowner to third persons and is 4. Compliance with Art. 652 of the Code of Commerce
held liable for the expense of the voyage and the a. Writing
wages of the seamen. b. Drawn in duplicate
c. Signed by the parties
2. Contract of Affreightment A contract whereby the owner of d. Contains stipulations enumerated under 652
the vessel leases part or all of its space to haul goods for others.
The shipowner retains the possession, command and FREIGHT CHARGES
navigation of the ship, the charterer merely having The freight may be fixed depending on the agreement of the parties. if the
use of the space in the vessel in return for his contract is ambiguous, the ff shall be observed:
payment of the charter hired. a) By months or by days: freightage shall begin to run from the day the
loading of the vessel is begun
Kinds: b) Fixed period: from that very day
a. Time charter vessel is chartered for a fixed c) Weight: by gross weight including containers
period of time or duration of voyage.
b. Voyage or trip charter the vessel is leased
for one or series of voyages usually for
purposes of transporting goods for charterer. CARGOES NOT REQUIRED TO PAY FREIGHT:
Under Art. 660 & Art 661
BAREBOAT OR CONTRACT OF JeLoSe
DEMISE CHARTER AFFREIGHTMENT 1. Those jettisoned in order to preserve the vessel and the crew and
(TIME OR VOYAGE passengers; if there is danger of sinking, the load is lightened by
CHARTER) throwing the cargo;
Charterer becomes liable Owner remains liable as a. Those that are thrown for the common safety, the freight
to others caused by its carrier and must answer that should have been paid is considered as general
negligence for any breach of duty average and therefore will be computed accordingly. The
Charterer regarded as Charterer is not regarded shipper whose cargoes have been saved as a result of the
owner pro hac vice for the as owner. jettison of some cargoes, the owners of saved cargoes shall
voyage contribute to the general fund pro rata to the value of his
Owner of vessel The vessel owner retains cargo and this is considered as general average which shall
relinquishes possession, possession, command and be distributed to those shippers whose cargoes were
command and navigation of the ship jettisoned.
navigation to charterer
2. Those lost to ship wreck or stranding if the freight shall be paid in
CC Converted to private Still Common carrier advance, it shall be returned unless there was an agreement to the
carrier. contrary.
3. Those seized by pirates and if the freightage shall have been paid in
advance it shall also be returned unless otherwise agreed upon.

LEASE CHARTER PARTY EFFECT OF REDEMPTION

If for a definite period,
lessee cannot give up the
lease by paying a portion
of the amount agreed
upon.
If the leased property is
Charterer may rescind Art 662. If the vessel or the goods should be redeemed or the effects of the
charter party by paying shipwreck be salvaged, the freightage corresponding to the distance covered
half of the freightage by the vessel transporting the cargo shall be paid.; and should the vessel,
agreed upon. after being repaired transport merchandise to the port of destination, the full
freightage shall be paid, without prejudice to what may be due by reason of
The new owner is not the average.

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 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

1) By abandoning 1) If the extra lay 1) War or

If the cargoes were redeemed from the pirates, balance of the freightage the charter and days terminate interdiction of
must be paid in proportion to the distance covered by the vessel. paying half of without the commerce;
the freightage; cargo being 2) Blockade;
CARGOES REQUIRED TO TAKE FREIGHTAGE 2) Error in placed 3) Prohibition to
SID tonnage or flag; alongside the receive cargo;
1) Art. 659 Goods sold by the captain to pay for the necessary 3) Failure to place vessel; 4) Embargo; and
repairs to the hull, machinery or equipment, or for unavoidable and the vessel at the 2) Sale by the 5) Inability of the
urgent needs. The freightage shall be paid in proportion to the charterers owner of the vessel to
distance covered until the vessel is lost. disposal; vessel before navigate.
4) Return of the loading by the
2) Art. 663 goods which suffer deteriorations or diminutions on vessel due to charterer;
account of pirates, enemies
a. Inherent defects of bad quality of the packing or bad weather;
b. Fortuitous event 5) Arrival at a port
for repairs.
3) Art. 644 Goods that increase in size or weight by natural cause.
Such goods shall pay the proper freightage fixed in the contract for
the same.

Clauses Which May Be Included In a Charter Party

DUES ASSESSED ON A
Jason Clause
A stipulation in a charter
Paramount Clause
A clause in a charter party
VESSEL:
party that in case of a providing that the COGSA 1) Berthing fees levied in vessels coming or mooring at a wharf, river,
maritime accident for which shall apply, even though the channel, w/I any slit channel basin or canal under the jurisdiction of
the shipowner is not transportation is domestic, any court in the PH; are like wharfage dues in that they are imposed
responsible by law, contract subject to the extent that any regardless of the ownership thereof. The only difference is that while
or otherwise, the cargo term of the bill of lading is Berthing fees are assessed vs vessels, Wharfage is vs the cargo
shippers, consignees or repugnant to the COGSA or 2) Wharfage dues cargoes from foreign trade
owners shall contribute with applicable law, then to the 3) Tonnage dues assessed to vessels from foreign port or vessels
the shipowner in general extent thereof the provision leaving Philippine port
average. of the bill of lading is void. 4 4) Harbor fees entrance into or departure from harbor or port of entr
5) Primage bonus to be paid to the capt after successful voyage
6) Demurrage another name for penal clause to compensate the owner
of the vessel for its non-use; A term of transportation law which refers
Rights and Obligations of Parties to the damages payable to a carrier as compensation for lost time.

SHIPOWNER OR SHIP CHARTERER NFA v CA 311 sra 700

AGENT What is demurrage? It is Sum fixed in a charter party as
1. If the vessel is chartered 1. To pay the agreed a renumeration to the ship owner for the detention of his
wholly, not to accept charter price; vessel.
cargo from others; 2. To pay freightage on Exists only when
2. To observe represented unboarded cargo; a) expressly stipulated in the contract.
capacity; 3. To pay losses to others b) When charterer exceeds the period of loading and
3. To unload cargo for loading uncontracted unloading as agreed upon on the contract.
clandestinely placed cargo and illicit cargo; c) A charter party may either provide for fixed lay days
4. To substitute another 4. To wait if the vessel or customary quick dispatch ( as fast as the steamer
vessel if load is less than needs repair; can go) implies that loading and unloading should be
3/5 of capacity; 5. To pay expenses for within a reasonable period of time so due diligence
5. To leave the port if the deviation. (Arts. 679- should be exercised according to the customs and
charterer does not bring 687) usages of a particular port, the circumstances
the cargo within the lay obtaining are to be taken into account.
days and extra lay days
allowed;
6. To place in a vessel in a 7) Lay days days allowed to charter parties for loading and unloading
condition to navigate; the cargo.
7. to bring cargo to nearest 8) Extra lay days- over staying lay days if it exceeds the laydays agreed
neutral port in case of upon, in some contracts over staying is allowed on occasion of
war or blockade. (Arts. weather, availability of man power, usually there is a period of lay
669-678) days which may be based on the customs of each port.

9) Dead freight cargo not loaded; covers the amount paid by or

Rescission of a Charter Party recoverable from a charterer of a ship for such part of the ship's
At charterers At shipowners Fortuitous causes capacity as the charterer has contracted for but fails to occupy; also :
request request (Art. 690) the unoccupied space in such a ship; bulky nonperishable freight;
(Art 688) (Art. 689) CHARTERER is liable to pay; Under Art 680

10) Customary Quick dispatch implies that loading/unloading should

be w/I a reasonable period of time;

LOAN ON BOTTOMRY AND RESPONDENTIA

A real, unilateral, aleatory contract, by virtue of which one person
lends to another a certain amount of money or goods on things
exposed to maritime risks, which amount, with its earnings, is to be
returned if the things are safely transported, and which is lost if the
latter are lost.

4 (Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.) LOAN ON LOAN ON
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 TRANSPORTATION LAW MIDTERM REVIEWER
Atty. Jocelyn Arro-Valencia
CONFESOR KRISTINE

BOTTOMRY RESPONDENTIA
Definition MARINE INSURANCE LOAN ON
Loan made by shipowner Loan taken on security of BOTTOMRY OR
or ship agent guaranteed the cargo laden on a RESPONDENTIA
by vessel itself and vessel, and repayable Indemnity is paid after the Indemnity is paid in
repayable upon arrival of upon safe arrival of cargo loss has occurred advance by way of a
vessel at destination. at destination. (Art. 719) loan
(Art. 719) In case of loss of the vessel In case of loss of the
Who may contract due to a risk insured against, vessel due to a
Shipowner or ship agent. Only the owner of the the obligation of the insurer marine peril, the
Outside of the residence cargo. becomes absolute obligation of the
of the owners - the borrower to pay is
captain. extinguished
Consensual contract Real contract
Common elements:
1. Exposure of security to marine peril;
Hypothecary Nature of Bottomry/ Respondentia
2. Obligation of the debtor conditioned only upon
GENERAL RULE: The obligation of the borrower to pay the loan is
safe arrival of the security at the point of
extinguished if the goods given as security are absolutely lost by reason of
destination.
an accident of the sea, during the voyage designated, and if it is proven that
Forms:
the goods were on board.
1. Public instrument
2. Policy signed by the contracting parties and the
EXCEPTIONS:
broker taking part therein
1. Loss due to inherent defect;
3. Private instrument (Art. 720)
2. Loss due to the barratry on the part of the captain;
Contents:
3. Loss due to the fault or malice of the borrower;
1. Kind, name and registry of the vessel;
4. The vessel was engaged in contraband; and
2. Name, surname and domicile of the captain;
5. The cargo loaded on the vessel be different in from that agreed upon.
3. Names, surnames and domiciles of the borrower
and the lender;
Concurrence of Marine Insurance and Loan on
4. Amount of the loan and the premium stipulated;
Bottomry/Respondentia
5. Time for repayment;
1. The insurable interest of the owner of a ship hypothecated by
6. Goods pledged to secure repayment;
bottomry is only the excess of the value over the amount secured
7. Voyage during which the risk is run (Art.721)
by bottomry. (Sec. 101, Insurance Code)
2. The value of what may be saved in case of shipwreck shall be
divided between the lender and the insurer in proportion to the
BOTTOMRY/ ORDINARY LOAN interest of each one. (Art. 735)
RESPONDENTIA (MUTUUM)
Not subject to Usury Law Subject to Usury Law Note: If a vessel is hypothecated by bottomry only the excess is insurable,
since a loan on bottomry partakes of the nature likewise of an insurance
Liability of the borrower Not subject to any coverage to the extent of the loan accommodation. The same rule would
is contingent on the safe contingency (absolute apply to the hypothecation of the cargo by respondentia. (Pandect of
arrival of the vessel or liability) Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.)
cargo at destination

EFFECT OF A CHARTER PARTY EXECUTED BY A CAPTAIN IN

The last lender is a The first lender is a
preferred creditor preferred creditor
WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED
AS SIMPLE LOAN
1. Lender loaned an amount larger than the value of the object due
to fraudulent means employed by the borrower. (ART.726)
2. Full amount of the loan is not used for the cargo or given on the
goods if all of them could not have been loaded, the balance will
be considered a simple loan. (ART.727)
3. If the effects on which the money is taken is not subjected to any
risk. (ART.729)
Note: Under existing laws, the parties to a loan, whether ordinary or
maritime, may agree on any rate of interest. (CB Circular 905)
THE ABSENCE OF THE SHIP OWNER
Art. 655
WHO CAN ENTER INTO A CHARTER PARTY
1. Owner or owners of the vessel, either in whole or majority part,
who have legal control and possession of the vessel
2. Broker, who shall intervene in the execution of the charter
between the principal and the charter himself
3. Charterer may subcharter entire vessel to 3rd persons only if not
prohibited in original charter
4. Ship agent if authorized by the owner or given such power in the
certificate of appointment
5. Captain in the absence of the ship agent or consignee and only if
he acts in accordance with the instructions of the agent or owner
and protects the latters interests.

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