Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
Transportation Law Review Fx: Facts: Ernesto Cendaña, a junk dealer, was engaged in
Based on the lectures of:
Atty. Melissa Romana Suarez
 APPLICABLE LAW
Art. 1766. In all matters not regulated by this Code, the
rights and obligations of common carriers shall be governed
by the Code of Commerce and by special laws.
The primary law in transportation law is the civil code,
particularly the provisions on common carriers. The
suppletory laws are the Code of Commerce, and special
laws like the COGSA (Carriage of Goods by Sea Act),
Salvage Law, Warsaw Convention, Tariff and Customs
Code.
What is transportation?
It is a movement of things or persons from one place to
another; a carrying across.
What does transportation include?
1. Waiting time - just because a person is in the airport
waiting for the flight to board, does not mean that
transportation has not started.
2. Loading and unloading with respect to transportation of
goods
3. Stopping in transit - when one takes a long flight, transit
stops are also included even if passenger is required to
disembark and take all his belongings with him.
4. All other accessorial services in connection with the
loaded movement -- so it could be anything, like when
you are in HK, you are allowed to check-in the City, the
movement of your luggage from the city check in to the
airport is already included in the term transportation.
 DEFINITION OF COMMON CARRIER (CC)
Art. 1732. Common carriers are persons, corporations, firms
or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public.
Elements:
1. must be a person, association, corporation, or firms
2. Engaged in a business
3. Transports persons or goods or both by land, water or air
4. Offers service to the public
5. Accepts compensation for services
If one element is missing, then it is not a common carrier.
National Steel vs. CA 283 SCRA 45 (True test of Common
carrier)
The carriage of goods and passengers provided it has
space for all who opt to avail themselves of its transportation
for a fee.
This means that if you are a carrier, you cannot discriminate.
You have to provide space for everyone who wants to avail
of the services of transporting persons or things.
Q: To be a common carrier, must one be engaged in the
transport of goods/passengers primarily?
A: No. Still considered common carrier ---
1.) De Guzman vs. CA - even if the carriage of goods or
pax is only an ancillary or sideline, that person can
still be considered a cc. Even if the transportation is
merely occasional, sporadic or not on a regular
basis. Even though the transporation is offered only
to a narrow segment of the general population. And
lastly, even if he has not secured a certificate of
public convenience.
1
buying up used bottles and scrap metal in Pangasinan.
Upon gathering sufficient quantities of such scrap material,
Cendaña would bring such material to Manila for resale. He
utilized 2 six-wheeler trucks which he owned for hauling the
material to Manila. On the return trip to Pangasinan,
Cendaña would load his vehicles with cargo which various
merchants wanted delivered to differing establishments in
Pangasinan. For that service, Cendaña charged
freight rates which were commonly lower than regular
commercial rates. Sometime in November 1970, Pedro de
Guzman, a merchant and authorized dealer of General Milk
Company (Philippines), Inc. in Urdaneta, Pangasinan,
contracted with Cendaña for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in
Makati, Rizal, to de Guzman’s establishment in Urdaneta on
or before 4 December 1970. Accordingly, on 1 December
1970, Cendaña loaded in Makati the merchandise on to his
trucks: 150 cartons were loaded on a truck driven by
Cendaña himself; while 600 cartons were placed on board
the other truck which was driven by Manuel Estrada,
Cendaña ’s driver and employee. Only 150 boxes of Liberty
filled milk were delivered to de Guzman. The other 600
boxes never reached de Guzman, since the truck which
carried these boxes was hijacked somewhere along the
MacArthur Highway in Paniqui, Tarlac, by armed men who
took with them the truck, its driver, his helper and the cargo.
Held: Article 1732 of the Civil Code makes no distinction
between one whose principal business activity is the
carrying of persons or goods or both, and one who does
such carrying only as an ancillary activity (in local idiom, as
“a sideline”). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the “general
public,” i.e., the general community or population, and one
who offers services or solicits business only from a narrow
segment of the general population. Article 1733 deliberately
refrained from making such distinctions.
Cendaña is properly characterized as a common carrier
even though he merely “back-hauled” goods for other
merchants from Manila to Pangasinan, although such
backhauling was done on a periodic or occasional rather
than regular or scheduled manner, and even though
Cendaña’s principal occupation was not the carriage of
goods for others. There is no dispute that Cendaña charged
his customers a fee for hauling their goods; that fee
frequently fell below commercial freight rates is not relevant.
A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the moment
a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate
of public convenience or other franchise.
2. FPIC vs. CA - still a common carrier even if the mode
of transportation is not a motor vehicle (in this case,
pipeline) for as long as all the requisites/elements of
a cc are present. Here, it is not the pipeline that
moves, it is the oil.
3. Asia Lighterage vs. CA (2003) -- even if it has no fixed
and publicly known route, maintains no terminals
and issues no tickets
4. Calvo vc. UCPB - even if it is not in the business of
public transportation; here, Calvo was a customs
broker.
5. Schmitz vs. TVI - even if the mode of transport is not
owned by him
6. Bascos vs. CA - even if the contract is not a contract
of carriage. Here, what was entered into was a contract
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
of lease of the truck. The goods were lost and the
defense was that what was entered into was a lease
contract. According to the SC, the name of the contract
does not matter, for as long as the requisites are
present, then that person is considered a common
carrier.
 WHO ARE NOT CONSIDERED COMMON
CARRIER?
FGU vs. Sarmiento (2002) - Truck owned by Sarmiento
carrying refrigerators belonging to shipper, Concepcion
Industries. Here, SC said that Sarmiento was not a common
carrier because it was the exclusive hauler of Concepcion
Industries.
GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its
services to no other individual or entity, cannot be
considered a common carrier. Common carriers are
persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or
both, by land, water, or air, for hire or compensation,
offering their services to the public,[8] whether to the public
in general or to a limited clientele in particular, but never on
an exclusive basis. The true test of a common carrier is the
carriage of passengers or goods, providing space for those
who opt to avail themselves of its transportation service for
a fee.Given accepted standards, GPS scarcely falls within
the term “common carrier.” BUT GPS is still liable based on
the contract. However, there is no presumption of
negligence in case of loss.
2. Crisostomo vs. CA (2003) Is a travel agency a common
carrier?
Held: No. Petitioner contends that respondent did not
observe the standard of care required of a common carrier
when it informed her wrongly of the flight schedule. She
could not be deemed more negligent than respondent since
the latter is required by law to exercise extraordinary
diligence in the fulfillment of its obligation. If she were
negligent at all, the same is merely contributory and not the
proximate cause of the damage she suffered. Her loss
could only be attributed to respondent as it was the direct
consequence of its employee’s gross negligence.
Petitioner’s contention has no merit.
By definition, a contract of carriage or transportation is one
whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one
place to another for a fixed price. Such person or
association of persons are regarded as carriers and are
classified as private or special carriers and common or
public carriers. A common carrier is defined under Article
1732 of the Civil Code as persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water or
air, for compensation, offering their services to the public.
It is obvious from the above definition that respondent is not
an entity engaged in the business of transporting either
passengers or goods and is therefore, neither a private nor
a common carrier. Respondent did not undertake to
transport petitioner from one place to another since its
covenant with its customers is simply to make travel
arrangements in their behalf. Respondent’s services as a
travel agency include procuring tickets and facilitating travel
permits or visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through
the efforts of respondent company, this does not mean that
the latter ipso facto is a common carrier. At most,
respondent acted merely as an agent of the airline, with
whom petitioner ultimately contracted for her carriage to
Europe. Respondent’s obligation to petitioner in this regard
was simply to see to it that petitioner was properly booked
with the airline for the appointed date and time. Her
transport to the place of destination, meanwhile, pertained
directly to the airline.
2
The object of petitioner’s contractual relation with
respondent is the latter’s service of arranging and facilitating
petitioner’s booking, ticketing and accommodation in the
package tour. In contrast, the object of a contract of carriage
is the transportation of passengers or goods. It is in this
sense that the contract between the parties in this case was
an ordinary one for services and not one of carriage.
Petitioner’s submission is premised on a wrong assumption.
 DILIGENCE REQUIRED:
Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods
is further expressed in Articles 1734, 1735, and 1745, Nos.
5, 6, and 7, while the extraordinary diligence for the safety of
the passengers is further set forth in Articles 1755 and 1756.
Notes:
1. What is Extra Ordinary Diligence (XOD)? That extreme
measure of care and caution which persons of which
unusual prudence and circumspection use for securing
and preserving their own properties or rights. (National
Trucking and Forwarding Corp. vs. Lorenzo Shipping
(2005))
Facts: DOH and CARE signed an agreement where CARE
would acquire from the US donations to be transported to
the Philippines. To deliver the goods within the Phil, DOH
entered into a contract with NTFC. NTFC shipped the goods
through Lorenzo Shipping. The consignee was A, NTFC’s
branch manager. LS delivered the goods but when it
requested A to return the bills of ladings, A merely returned
certified true copies thereof. Every after delivery, A and his
subordinates signed a delivery receipt. Despite delivery
however, it was alleged that the goods were never received.
LS invoked that it exercised XOD, and thus was not liable
for the loss.
Held: Is LS presumed to be at fault for the loss of the
goods?
No - Article 173 of the Civil Code demands that a common
carrier observe extraordinary diligence over the goods
transported by it. Extraordinary diligence is that extreme
measure of care and caution which persons of unusual
prudence and circumspection use for securing and
preserving their own property or rights. This exacting
standard imposed on common carriers in a contract of
carriage of goods is intended to tilt the scales in favor of the
shipper who is at the mercy of the common carrier once the
goods have been lodged for shipment. Hence, in case of
loss of goods in transit, the common carrier is presumed
under the law to have been at fault or negligent. However,
the presumption of fault or negligence, may be overturned
by competent evidence showing that the common carrier
has observed extraordinary diligence over the goods.
In the instant case, we agree with the court a quo that the
respondent adequately proved that it exercised
extraordinary diligence. Although the original bills of lading
remained with petitioner, respondent’s agents demanded
from Abdurahman the certified true copies of the bills of
lading. They also asked the latter and in his absence, his
designated subordinates, to sign the cargo delivery receipts.
This practice, which respondent’s agents testified to be their
standard operating procedure, finds support in Article 353 of
the Code of Commerce. Conformably with the aforecited
provision, the surrender of the original bill of lading is not a
condition precedent for a common carrier to be discharged
of its contractual obligation. If surrender of the original bill
of lading is not possible, acknowledgment of the delivery by
signing the delivery receipt suffices.
2. In PAL vs. CA 106 S 391 - SC said that the duty of to
exercise the duty of utmost diligence on the part of the
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009 3

CC is for the safety of passengers, as well as members LTFRB- common carrier

of the crew. Civil Aeronautics Board - public airplanes
ATO- private planes (according to Lyndon)
If you are part of the crew, and you are injured, you can sue MARINA - common carriers for sea
the the CC and the CC cannot invoke that it is not required
to exercise XOD. So there is no discrimination between 2. Note: The cancellation of certificate of public convenience
crew and passengers. cannot be done without hearing; although these bodies
have the power to initiate hearing motu propio. Take note
The duty to exercise the utmost diligence on the part of of the ground for cancellation as provided under Art.
common carriers is for the safety of passengers as well as 1765.
for the members of the crew or the complement operating
the carrier, the airplane in the present case. And this must 3. Pantranco vs. Public Service Commission 70 P 221 -
be so for any omission, lapse or neglect thereof will A certificate of public convenience constitutes neither a
certainly result to the damage, prejudice, nay injuries and franchise nor a contract. It confers no property rights and
even death to all aboard the plane, passengers and crew is a mere license or privilege and therefore can be
members alike. subject to regulation founded on the police power of the
State.
3. Benedicto vs. IAC - The prevailing doctrine on common
carriers makes the registered owner liable for 4. Medina vs. Cresencia- The sale of CPC without
consequences flowing from the operations of the carrier, approval of the governing bodies is not binding against
even though the specific vehicle involved may already the public. So there has to be approval first. It is binding
have been transferred to another person. This doctrine between the parties only. In contemplation of the law, the
rests upon the principle that in dealing with vehicles grantee of record continues to be responsible under the
registered under the Public Service Law, the public has CPC in relation to the governing body or the public.
the right to assume that the registered owner is the
actual or lawful owner thereof It would be very difficult 5. PAL vs. CAB 270 S 538 - PAL alleged that CAB abused
and often impossible as a practical matter, for members its discretion when it granted to Grand Air a Temporary
of the general public to enforce the rights of action that Operating Permit. Accdg. to PAL, Grand Air has not been
they may have for injuries inflicted by the vehicles being granted a legislative franchise to operate.
negligently operated if they should be required to prove
who the actual owner is. The registered owner is not The issue in this petition is whether or not Congress, in
allowed to deny liability by proving the identity of the enacting Republic Act 776, has delegated the authority to
alleged transferee. Thus, contrary to petitioner's claim, authorize the operation of domestic air transport services to
private respondent is not required to go beyond the the respondent Board, such that Congressional mandate for
vehicle's certificate of registration to ascertain the owner the approval of such authority is no longer necessary.
of the carrier.
Civil Aeronautics Board has the authority to issue a
4. BA Finance vs. CA - the registered owner, the Certificate of Public Convenience and Necessity, or
defendant-appellant herein, is primarily responsible for Temporary Operating Permit to a domestic air transport
the damage caused to the vehicle of the plaintiff- operator, who, though not possessing a legislative
appellee, but he (defendant-appellant) has a right to be franchise, meets all the other requirements prescribed by
indemnified by the real or actual owner of the amount the law. Such requirements were enumerated in Section 21
that he may be required to pay as damage for the injury of R.A. 776.
caused to the plaintiff-appellant. (File a 3rd party
complaint) There is nothing in the law nor in the Constitution, which
indicates that a legislative franchise is an indispensable
Reason: Were a registered owner allowed to evade requirement for an entity to operate as a domestic air
responsibility by proving who the supposed transferee or transport operator. Although Section 11 of Article XII
owner is, it would be easy for him, by collusion with others recognizes Congress' control over any franchise, certificate
or otherwise, to escape said responsibility and transfer the or authority to operate a public utility, it does not mean
same to an indefinite person, or to one who possesses no Congress has exclusive authority to issue the same.
property with which to respond financially for the damage or Franchises issued by Congress are not required before
injury done. A victim of recklessness on the public highways each and every public utility may operate. In many
is usually without means to discover or Identify the person instances, Congress has seen it fit to delegate this function
actually causing the injury or damage. He has no means to government agencies, specialized particularly in their
other then by a recourse to the registration in the Motor respective areas of public service.
Vehicles Office to determine who is the owner. The
protection that the law aims to extend to him would become A reading of Section 10 of the same reveals the clear intent
illusory were the registered owner given the opportunity to of Congress to delegate the authority to regulate the
escape liability by disproving his ownership. If the policy of issuance of a license to operate domestic air transport
the law is to be enforced and carried out, the registered services
owner should not be allowed to prove the contrary to the
prejudice of the person injured, that is, to prove that a third  Distinctions between CC and Private Carrier
person or another has become the owner, so that he may
thereby be relieved of the responsibility to the injured 1. Definition Cf: Art. 1766 Involves a single
person. undertaking
2. As to whom Bound to carry all May choose person
 STATE REGULATION OF COMMON CARRIER it may pax who choose with whom it may
contract to employ it contract
Art. 1765. The Public Service Commission may, on its own 3. Degree of Observe XOD GFOF
motion or on petition of any interested party, after due diligence
hearing, cancel the certificate of public convenience granted required
to any common carrier that repeatedly fails to comply with 4. As to Negligence is Person who alleges
his or its duty to observe extraordinary diligence as presumptio presumed if pax negligence must
prescribed in this Section. n of or goods do not prove the same
negligence reach final
Notes: destination
1. So the public service commission has been replaced by 5. As to how
the following bodies: to escape
liability
LTO - private vehicles 6. As to state A CC performs Does not perform
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
regulation public service public service; also
and is subject to subject to State
State regulation regulation but not
too strict.
 CC OF GOODS (CCOG)
Art. 1753. The law of the country to which the goods are to
be transported shall govern the liability of the common
carrier for their loss, destruction or deterioration.
NOTES:
1. If foreign voyage or flight from foreign country inbound to
Phil - governed by Phil laws. If outbound, carrier lands in
US and there is complaint, can pax sue CCOG here?
Yes, apply conflicts of laws. (Saudia Airlines case)
 TEST TO DETERMINE IF ONE IS CCOG
a. He must be engaged in the business of carrying goods
for others as a public employment, and must hold himself
out as ready to engage in the transportation of goods for
person generally as a business and not as a casual
occupation;
b. He must undertake to carry goods of the kind to which
his business is confined;
c. He must undertake to carry by the method by which his
business is conducted and over his established roads;
and
d. The transportation must be for hire. (FPIC VS. CA)
Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods X X X
Such extraordinary diligence in the vigilance over the goods
is further expressed in Articles 1734, 1735, and 1745, Nos.
5, 6, and 7, while the extraordinary diligence for the safety of
the passengers is further set forth in Articles 1755 and 1756.
Notes:
What is XOD in the vigilance of goods?
Extraordinary diligence requires rendering service with the
greatest skill and foresight to avoid damage and destruction
to the goods entrusted for carriage and delivery. (Leamer
vs. Malayan, 2005)
Art. 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same
is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international
or civil;
Notes:
1. Gen Rule is the first sentence; the exceptions are the 5
cases enumerated.
2. Does it mean that if goods are lost, damaged or
destroyed, is the CCOG automatically responsible?
NO. There is no automatic liability or responsibility for
loss/deterioration/damage of goods. What arises is
AUTOMATIC PRESUMPTION of negligence.
3. How to rebut presumption/escape liability?
The CCOG must prove that it exercised XOD. (Note: Do not
say "by exercising XOD" because that is different from
proving CCOG exercised XOD.)
Art. 1735. In all cases other than those mentioned in Nos. 1,
2, 3, 4, and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to
4
have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as required
in Article 1733.
4. If any of the 5 instances arises, the presumption of
negligence WILL NOT ARISE. The effect is that there is
no automatic presumption of negligence. What is the
effect? The effect is that the CCOG no longer needs to
prove that it exercised XOD.
5. Q: Is the CCOG automatically exempt from liability in
cases of the 5 instances mentioned in Art. 1734?
A: NO. The CCOG must still have to prove that it complied
with the requirements of Art. 1739, 1740, 1741, 1742.
6. YNCHAUSTI VS. DEXTER - What does the
shipper/consignee have to show in order to have a
prima facie case against the carrier?
1. Actual receipt of goods by the carrier;
2. Failure to deliver the goods in the same conditions as it
was received.
If these two are shown, the burden of proof is shifted and it
is incumbent upon the carrier, in order to exonerate itself, to
both allege and prove that the injury was due to some
circumstances.
The mere proof of delivery of goods in good order to a
carrier, and of their arrival at the place of destination in bad
order, makes out a prima facie case against the carrier, so
that if no explanation is given as to how the injury occurred,
the carrier must be held responsible. It is incumbent upon
the carrier to prove that the loss was due to accident or
some other circumstance inconsistent with its liability.
7. What does it mean if the shipment is 'containarized'?
(Bankers and Manufacturers vs. CA)
It must be underscored that the shipment involved in the A
t
case at bar was "containerized". The goods under this e
arrangement are stuffed, packed, and loaded by the shipper n
e
at a place of his choice, usually his own warehouse, in the o
absence of the carrier. The container is sealed by the
shipper and thereafter picked up by the carrier. d
Consequently, the recital of the bill of lading for goods thus e
transported ordinarily would declare "Said to Contain",
"Shipper's Load and Count", "Full Container Load", and the D
a
amount or quantity of goods in the container in a particular v
package is only prima facie evidence of the amount or a
o
quantity which may be overthrown by parol evidence.
C
A shipment under this arrangement is not inspected or o
l
inventoried by the carrier whose duty is only to transport
l
and deliver the containers in the same condition as when e
g
the carrier received and accepted the containers for e
transport.
o
What is the requirement to hold the CCOG liable if f
goods are damaged under this arrangement?
In order to hold the carrier liable for whatever loss, damage
or deterioration that happened on the goods inside the
container, it has to be opened in front of the carrier and
inspected. If the consignee receives the container, does not
check it, brings it to ihs warehouse and complains days
later, then that is no longer allowed. The inspection should
be done in front of the carrier.
If the inspection is done upon arrival, there is a presumption
that the goods were received in good order. The carrier then
will have to prove that the goods were received otherwise.
8. What is an arrastre operator?
Is an arrastre operator legally liable for the loss of a
shipment in its custody? If so, what is the extent of its
liability? (Summa Insurance vs. CA)
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
H: In the performance of its obligations, an arrastre operator
should observe the same degree of diligence as that
required of a common carrier and a warehouseman as
enunciated under Article 1733 of the Civil Code and Section
3(8) of the Warehouse Receipts Law, respectively. Being
the custodian of the goods discharged from a vessel, an
arrastre operator's duty is to take good care of the goods
and to turn them over to the party entitled to their
possession.
 Flood, storm, earthquake, lightning, or other
natural disaster or calamity -- in relation to 1739
and 1740:
Art. 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss. However,
the common carrier must exercise due diligence to prevent
or minimize loss before, during and after the occurrence of
flood, storm or other natural disaster in order that the
common carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods. The same duty is
incumbent upon the common carrier in case of an act of the
public enemy referred to in Article 1734, No. 2.
Art. 1740. If the common carrier negligently incurs in delay
in transporting the goods, a natural disaster shall not free
such carrier from responsibility.
Notes:
1. CCOG need not prove it exercised XOD; however,
CCOG must prove that: (Philamgen vs. MCG Marine)
a. the natural calamity or disaster must have been the
proximate and only cause of the loss; and
b. the CCOG exercised due diligence to prevent or minimize
the loss and
c. CCOG did not incur delay in transporting the goods.
2. Is fire a natural calamity? (This was not clearly
answered by Atty. Suarez; In response to the suggested
answer that fire is considered natural calamity if caused
by lightning, the answer given by Ma'am S was: When
you say natural, it has to be natural. Obviously if it was
caused by something that has some kind of human
intervention, it cannot fall under natural disaster.)
EASTERN SHIPPING VS. IAC
As a general rule, fire is not a natural disaster.
Petitioner Carrier claims that the loss of the vessel by fire
exempts it from liability under the phrase "natural disaster or
calamity. " However, we are of the opinion that fire may not
be considered a natural disaster or calamity. This must be
so as it arises almost invariably from some act of man or by
human means. It does not fall within the category of an act
of God unless caused by lightning or by other natural
disaster or calamity. It may even be caused by the actual
fault or privity of the carrier.
Of course the exception is unless it was naturally caused,
such as lightning, or if there was an earthquake and
suddenly the cement rubbed against each other.
This was reiterated in Cokaliong vs. UCPB (2003)
Having originated from an unchecked crack in the fuel oil
service tank, the fire could not have been caused by force
majeure. Broadly speaking, force majeure generally applies
to a natural accident, such as that caused by a lightning, an
earthquake, a tempest or a public enemy. Hence, fire is not
considered a natural disaster or calamity.
3. What about heavy rains, are they considered natural
disasters? NO. Vessels are built to withstand heavy rains
and seas.
5
Eastern Shipping vs. CA: The heavy seas and rains
referred to in the master's report were not caso fortuito, but
normal occurrences that an ocean-going vessel, particularly
in the month of September which, in our area, is a month of
rains and heavy seas would encounter as a matter of
routine. They are not unforeseen nor unforeseeable. These
are conditions that ocean-going vessels would encounter
and provide for, in the ordinary course of a voyage.
4. DSR Senator vs. Phoenix (2003) - same ruling as
Eastern Shipping that fire is not a natural calamity.
5. Illustration of Art. 1740: Philamgen vs. CA 222 SCRA
414 - Here, the goods arrived in port but because of the
heavy rains, they were not discharged and so the goods
were destroyed. The issue is did the CCOG negligently
incur in delay?
No, the cause of the delay was not the fault of the carrier.
The delay was caused by the decision of the board
(construction of catwalks, etc), customs of the place and
heavy, intermittent rains.
Other cases:
7. Schmitz Transport vs. Transventure: the natural
calamity was not the only and proximate cause of the
loss.
 Act of the public enemy in war, whether
international or civil;
Requirements:
a. the natural act of public enemy must have been the
proximate and only cause of the loss; and
b. the CCOG exercised due diligence to prevent or minimize
the loss
 Act of omission of the shipper or owner of the
goods in relation to:
Art. 1741. If the shipper or owner merely contributed to the
loss, destruction or deterioration of the goods, the proximate
cause thereof being the negligence of the common carrier,
the latter shall be liable in damages, which however, shall
be equitably reduced.
Notes:
1. In order to totally escape liability, the CCOG must prove
that the act/negligence of the shipper is the only and
proximate cause of the loss. Otherwise, Art. 1741 applies. If
the CCOG is not able to prove that the only and proximate
cause of the loss is the act of the shipper then, there will be
an equitable reduction of the liability.
2. COMPANIA MARITIMA VS. CA: Here, the shipper stated
the weight of the payloader was 2.5 tons when it was 7.5
tons in reality. CCOG used a lifting apparatus with a 5
ton capacity, so the payloader fell and was damaged.
H: We are not persuaded by the proferred explanation of
petitioner alleged to be the proximate cause of the fall of the
payloader while it was being unloaded at the Cagayan de
Oro City pier. Petitioner seems to have overlooked the
extraordinary diligence required of common carriers in the
vigilance over the goods transported by them by virtue of
the nature of their business, which is impressed with a
special public duty.
And circumstances clearly show that the fall of the
payloader could have been avoided by petitioner's crew.
Evidence on record sufficiently show that the crew of
petitioner had been negligent in the performance of its
obligation by reason of their having failed to take the
necessary precaution under the circumstances which usage
has established among careful persons, more particularly its
Chief Officer, Mr. Felix Pisang, who is tasked with the over-
all supervision of loading and unloading heavy cargoes and
upon whom rests the burden of deciding as to what
particular winch the unloading of the payloader should be
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
undertaken. While it was his duty to determine the weight
of heavy cargoes before accepting them. Mr. Felix Pisang
took the bill of lading on its face value and presumed the
same to be correct by merely "seeing" it.
In that sense, therefore, private respondent's act of
furnishing petitioner with an inaccurate weight of the
payloader upon being asked by petitioner's collector, cannot
be used by said petitioner as an excuse to avoid liability for
the damage caused, as the same could have been avoided
had petitioner utilized the "jumbo" lifting apparatus which
has a capacity of lifting 20 to 25 tons of heavy cargoes.
 Act of omission of the shipper or owner of the
goods;
 The character of the goods or defects in the
packing or in the containers;
ARTICLE 1742. Even if the loss, destruction, or
deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or
of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
Notes:
1. If there is a defect in the packaging or character of the
goods, for example in a case, grain was loaded and they
were already halfway to rotting, i.e. there were already
molds, then the requisite for CCOG to escape liability is
that it must prove that it exercised due diligence to
forsetall or lessen the loss. That is under Art. 1742.
2. But a perusal of the cases will show that the SC is saying
that CCOG should do something more than just Art.
1742:
a. Southern Lines vs. CA: Petitioner claims exemption
from liability by contending that the shortage in the
shipment of rice was due to such factors as the
shrinkage, leakage or spillage of the rice on account of
the bad condition of the sacks at the time it received the
same and the negligence of the agents of respondent
City of Iloilo in receiving the shipment.
Held: The contention is untenable, for, if the fact of improper
packing is known to the carrier or his servants, or apparent
upon ordinary observation, but it accepts the goods
notwithstanding such condition, it is not relieved of liability
for loss or injury resulting thereform.
Furthermore, according to the Court of Appeals, "appellant
(petitioner) itself frankly admitted that the strings that tied
the bags of rice were broken; some bags were with holes
and plenty of rice were spilled inside the hull of the boat,
and that the personnel of the boat collected no less than 26
sacks of rice which they had distributed among
themselves." This finding, which is binding upon this Court,
shows that the shortage resulted from the negligence of
petitioner.
Therefore, if goods are delivered to the CCOG and the
defect in the goods/packaging is apparent, then the CC may
accept the goods with reservation or exception. It must be
indicated in the bill of lading that the goods are already
defective, etc. And if the goods arrived in the same condition
as it was received, then that can be used as an exception. If
that happens, all the carrier has to prove is Art. 1742 -- due
diligence to forestall or lessen the loss.
Otherwise, the acceptance of CCOG without exception, the
CC cannot hide under this exception.
b. CALVO VS. UCPB: Calvo is a customs broker. The
vessel arrived in Manila. The cargo was loaded on the truck
of Calvo. Calvo as broker also volunteered to deliver the
goods to the warehouse of the shipper. When the goods
arrived, they were spoiled. Calvo denied liability for the
goods and alleged that the spoilage took place while the
goods were in the vessel or while with the arrastre operator.
6
According to the SC, when did the consignee discover the
spoilage of the goods? When they were in the possession of
Calvo.
For this provision to apply, the rule is that if the improper
packing or, in this case, the defect/s in the container, is/are
known to the carrier or his employees or apparent upon
ordinary observation, but he nevertheless accepts the same
without protest or exception notwithstanding such condition,
he is not relieved of liability for damage resulting therefrom.
In this case, petitioner accepted the cargo without
exception despite the apparent defects in some of the
container vans. Hence, for failure of petitioner to prove that
she exercised extraordinary diligence in the carriage of
goods in this case or that she is exempt from liability, the
presumption of negligence as provided under Art. 1735
holds.
c. Iron bulk Shipping vs. Remington
 Order or act of competent public authority.
ARTICLE 1743. If through the order of public authority the
goods are seized or destroyed, the common carrier is not
responsible, provided said public authority had power to
issue the order
Note:
1. First requisite: Person issuing order must have power to
issue such.
2. Second requisite: The order must be lawful or must have
been issued under legal process or authority
(Ganzon vs. CA - A,owner of the the CCOG was unloading
the iron. Mayor B demanded P5,000 and when A refused, B
shot A. After several days, the unloading resumed and
Acting Mayor C ordered X and the crew of the vessel to
dump the iron. The issue is, can the CCOG be held liable for
the loss of the cargo?
Held: YES. We cannot sustain the theory of caso fortuito. In
the courts below, the petitioner's defense was that the loss
of the scraps was due to an "order or act of competent
public authority," and this contention was correctly passed
upon by the Court of Appeals which ruled that:
... In the second place, before the appellee Ganzon could
be absolved from responsibility on the ground that he was
ordered by competent public authority to unload the scrap
iron, it must be shown that Acting Mayor Basilio Rub had
the power to issue the disputed order, or that it was lawful,
or that it was issued under legal process of authority. The
appellee failed to establish this. Indeed, no authority or
power of the acting mayor to issue such an order was given
in evidence.
The petitioner was not duty bound to obey the illegal order
to dump into the sea the scrap iron. Moreover, there is
absence of sufficient proof that the issuance of the same
order was attended with such force or intimidation as to
completely overpower the will of the petitioner's employees.
The mere difficulty in the fullfilment of the obligation is not
considered force majeure.
 DURATION OF LIABILITY (from what point to
what point is a carrier liable?)
ARTICLE 1736. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by
the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or
to the person who has a right to receive them, without
prejudice to the provisions of article 1738.
ARTICLE 1737. The common carrier's duty to observe
extraordinary diligence in the vigilance over the goods
remains in full force and effect even when they are
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temporarily unloaded or stored in transit, unless the shipper
or owner has made use of the right of stoppage in transitu.
ARTICLE 1738. The extraordinary liability of the common
carrier continues to be operative even during the time the
goods are stored in a warehouse of the carrier at the place
of destination, until the consignee has been advised of the
arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.
Notes:
From when: from the time the goods are unconditionally
placed in the possession of, and received by the carrier for
transportation.
Not actually place on the ship, it is enough even if custody is
transferred to the office/receiving office of the carrier.
It ends: When the goods are delivered, actually or
constructively, by the carrier to the consignee, or to the
person who has a right to receive them, without prejudice to
the provisions of article 1738.
1. Compania Maritima vs. Icna - Since the vessel of CM
was too large for the Sasa Warf, CM sent a lighter to pick
up the hemp. Before the hemp could be loaded to the
vessel, the lighter sank. CM alleged that it could not be
liable for the loss as the goods were not yet loaded on
the vessel. Besides, there was no bill of lading yet issued
to the shipper.
H: The claim that there can be no contract of affreightment
because the hemp was not actually loaded on the ship that
was to take it from Davao City to Manila is of no moment,
for the delivery of the hemp to the carrier’s lighter is in line
with the contract.
The authorities are to the effect that a bill of lading is not
indispensable for the creation of a contract of carriage. As
regards the form of the contract of carriage it can be said
that provided that there is a meeting of the minds and from
such meeting arise rights and obligations, there should be
no limitations as to form.’ The bill of lading is juridically a
documentary proof of the stipulations and conditions agreed
upon by both parties.
The liability of the carrier as common carrier begins with the
actual delivery of the goods for transportation, and not
merely with the formal execution of a receipt or bill of lading;
the issuance of a bill of lading is not necessary to complete
delivery and acceptance. Even where it is provided by
statute that liability commences with the issuance of the bill
of lading, actual delivery and acceptance are sufficient to
bind the carrier.
The test as to whether the relation of shipper and carrier
had been established is, had the control and possession of
the cotton been completely surrendered by the shipper to
the shipper? Whenever the control and possession of goods
passes to the carrier and nothing remains to be done by the
shipper, then it can be said with certainty that the relation of
shipper and carrier has been established.
2. In relation to Art. 1738, what if the goods are in the
customs warehouse and they get destroyed, deteriorated
or damaged because the processing of papers take too
long to process? Can the carrier be held liable?
LU DO & LU YM CORP VS. BINAMIRA -- NO.
H: It is true that, as a rule, a common carrier is responsible
for the loss, destruction or deterioration of the goods it
assumes to carry from one place to another unless the
same is due to any to any of the causes mentioned in Article
1734 on the new Civil Code, and that, if the goods are lost,
destroyed or deteriorated, for causes other that those
mentioned, the common carrier is presumed to have been
at fault or to have acted negligently, unless it proves that it
has observed extraordinary diligence in their care , and that
this extraordinary liability lasts from the time the goods are
7
placed in the possession of the carrier until they are
delivered to the consignee, or "to the person who has the
right to receive them" , but these provisions only apply when
the loss, destruction or deterioration takes place while the
goods are in the possession of the carrier, and not after it
has lost control of them.
The reason is obvious. While the goods are in its
possession, it is but fair that it exercise extraordinary
diligence in protecting them from damage, and if loss
occurs, the law presumes that it was due to its fault or
negligence. This is necessary to protect the interest the
interest of the owner who is at its mercy. The situation
changes after the goods are delivered to the consignee.
While we agree with the Court of Appeals that while delivery
of the cargo to the consignee, or to the person who has a
right to receive them", contemplated in Article 1736,
because in such case the goods are still in the hands of the
Government and the owner cannot exercise dominion over
them, we believe however that the parties may agree to limit
the liability of the carrier considering that the goods have
still to through the inspection of the customs authorities
before they are actually turned over to the consignee. This
is a situation where we may say that the carrier losses
control of the goods because of a custom regulation and it
is unfair that it be made responsible for what may happen
during the interregnum. And this is precisely what was done
by the parties herein.
So what can be done in cases such as this wherein we have
no exact provision under the law to govern the same? In
such case, the agreement of the parties prevail.
3. SERVANDO VS. PHIL STEAM NAVIGATION CO
Here, the goods were delivered in good order in the
warehouse of the customs authority. At about 2:00 in the
afternoon of the same day, said warehouse was razed by a
fire of unknown origin, destroying appellees' cargoes. Before
the fire, however, appellee Uy Bico was able to take delivery
of 907 cavans of rice. Is the carrier liable?
H: No. Article 1736 of the Civil Code imposes upon common
carriers the duty to observe extraordinary diligence from the
moment the goods are unconditionally placed in their
possession "until the same are delivered, actually or
constructively, by the carrier to the consignee or to the
person who has a right to receive them, without prejudice to
the provisions of Article 1738. "
The court a quo held that the delivery of the shipment in
question to the warehouse of the Bureau of Customs is not
the delivery contemplated by Article 1736; and since the
burning of the warehouse occurred before actual or
constructive delivery of the goods to the appellees, the loss
is chargeable against the appellant.
It should be pointed out, however, that in the bills of lading
issued for the cargoes in question, the parties agreed to
limit the responsibility of the carrier for the loss or damage
that may be caused to the shipment by inserting therein the
following stipulation:
Clause 14. Carrier shall not be responsible for loss or
damage to shipments billed 'owner's risk' unless such loss
or damage is due to negligence of carrier. Nor shall carrier
be responsible for loss or damage caused by force majeure,
dangers or accidents of the sea or other waters; war; public
enemies; . . . fire . ...
In the case at bar, the burning of the customs warehouse
was an extraordinary event which happened independently
of the will of the appellant. The latter could not have
foreseen the event.
So in this case, the burning of the customs warehouse was
considered as a fortuitous event in so far as the carrier is
concerned.
4. SAMAR MINING VS. NORDEUTCHER LLOYD
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
The bill of lading provided that it was effective only for the
transport of the goods for Germany to Manila. From Manila,
the goods were to be further transported to Davao. The
carrier had unloaded and delivered the good in the bonded
warehouse in Manila. They never reached Davao. Is
Nordeutcher Lloyd liable?
Held: No. When the carrier under the terms of the bill of
lading had delivered the goods at the port of destination, at
that point he merely becomes the agent of consignee and
ceases to be liable as carrier for loss or damages of the
goods transported. Thereafter, loss of goods in its hand for
causes beyond its control without negligence being proved,
cannot sustain a claim for damage against the carrier.
There is no doubt that Art. 1738 finds no applicability to the
instant case. The said article contemplates a situation
where the goods had already reached their place of
destination and are stored in the warehouse of the carrier.
The subject goods were still awaiting transshipment to their
port of destination, and were stored in the warehouse of a
third party when last seen and/or heard of. However, Article
1736 is applicable to the instant suit. Under said article, the
carrier may be relieved of the responsibility for loss or
damage to the goods upon actual or constructive delivery of
the same by the carrier to the consignee, or to the person
who has a right to receive them. In sales, actual delivery
has been defined as the ceding of corporeal possession by
the seller, and the actual apprehension of corporeal
possession by the buyer or by some person authorized by
him to receive the goods as his representative for the
purpose of custody or disposal. By the same token, there is
actual delivery in contracts for the transport of goods when
possession has been turned over to the consignee or to his
duly authorized agent and a reasonable time is given him to
remove the goods. The court a quo found that there was
actual delivery to the consignee through its duly authorized
agent, the carrier.
It becomes necessary at this point to dissect the complex
relationship that had developed between appellant and
appellee in the course of the transactions that gave birth to
the present suit. Two undertakings appeared embodied
and/or provided for in the Bill of Lading 19 in question. The
first is FOR THE TRANSPORT OF GOODS from Bremen,
Germany to Manila. The second, THE TRANSSHIPMENT
OF THE SAME GOODS from Manila to Davao, with
appellant acting as agent of the consignee. At the hiatus
between these two undertakings of appellant which is the
moment when the subject goods are discharged in Manila,
its personality changes from that of carrier to that of agent
of the consignee. Thus, the character of appellant's
possession also changes, from possession in its own name
as carrier, into possession in the name of consignee as the
latter's agent. Such being the case, there was, in effect,
actual delivery of the goods from appellant as carrier to the
same appellant as agent of the consignee. Upon such
delivery, the appellant, as erstwhile carrier, ceases to be
responsible for any loss or damage that may befall the
goods from that point onwards. This is the full import of
Article 1736, as applied to the case before Us.
But even as agent of the consignee, the appellant cannot be
made answerable for the value of the missing goods, It is
true that the transshipment of the goods, which was the
object of the agency, was not fully performed. However,
appellant had commenced said performance, the
completion of which was aborted by circumstances beyond
its control. An agent who carries out the orders and
instructions of the principal without being guilty of
negligence, deceit or fraud, cannot be held responsible for
the failure of the principal to accomplish the object of the
agency.
5. Macam vs. CA
Facts: Petitioner Macam exported watermelons and
mangoes to Hong Kong, Great Prospect Company is the
consignee. The bill of lading stated that one of the bill must
be presented by the Pakistan Bank as consignee and GPC
8
as the notify party. Upon arrival in Hong Kong, the shipment
was delivered by the carrier directly to GPC and not to
Pakistan Bank and without surrendering the bill of lading.
Was there a proper delivery?
Held: YES. Delivery to GPC is delivery to the consignee.
The extraordinary responsibility of common carriers last
until actual or constructive delivery of the cargo to the
consignee or his agent.
Pakistan was indicted as consignee and GPC was the notify
party. However, in the export invoice, GPC was clearly
named as buyer or importer. Petitioner referred to GPC as
such in his demand letter to respondent and his complaint
before the court. This premise brings into conclusion that
the deliveries of the cargo to GPC as buyer or importer is in
conformity with Art. 1736 of the Civil Code. Therefore, there
was a valid delivery.
So here, even if there was no delivery to the consignee but
there were instructions from the shipper then the goods are
deemed delivered and the CCOG can no longer be held
liable for the loss of the goods.
6. SCHMITZ TRANSPORT VS. TVI: The cargo was on
board MV Alexander that was parked outside the
breakwater. The goods were loaded on a barge that was
supposed to be pulled by the tugboat. According to Schmitz,
Black Sea, the owner of MV Alexander, should be liable
because the goods have not yet been delivered to the
consignee.
H: No, because Shcmitz is an agent of the consignee. And
Black Sea already delivered the goods once the same were
transferred from the vessel MV Alexander to the barge that
was supposed to bring the goods to the warehouse of Little
Giant, the consignee. Thus Black sea no longer had custody
over the goods. There was already actual delivery to the
person who had the right to receive them, Schmitz -- as an
agent of the consignee.
 VALIDITY OF STIPULATIONS
Can the CCOG and the shipper agree that the CCOG will
not be required to exercise XOD?
YES. As to the diligence required,
General rule: the CCOG and the shipper may enter into an
agreement/stipulation which lessens the diligence required,
but there are requisites:
ARTICLE 1744. A stipulation between the common carrier
and the shipper or owner limiting the liability of the former
for the loss, destruction, or deterioration of the goods to a
degree less than extraordinary diligence shall be valid,
provided it be:
(1) In writing,
(2) signed by the shipper or owner;
(3) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(4) Reasonable, just and not contrary to public policy.
Can the parties stipulate that there shall be no diligence to
be excercised by the CCOG?
NO. Under Art. 1745, these are void stipulations because
they are against public policy.
ARTICLE 1745. Any of the following or similar stipulations
shall be considered unreasonable, unjust and contrary to
public policy:
(1) That the goods are transported at the risk of
the owner or shipper;
(2) That the common carrier will not be liable for
any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any
diligence in the custody of the goods;
(4) That the common carrier shall exercise a
degree of diligence less than that of a good father of a
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
family, or of a man of ordinary prudence in the vigilance
over the movables transported;
(5) That the common carrier shall not be
responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act with
grave or irresistible threat, violence or force, is dispensed
with or diminished;
(7) That the common carrier is not responsible for
the loss, destruction, or deterioration of goods on
account of the defective condition of the car, vehicle,
ship, airplane or other equipment used in the contract of
carriage.
Notes:
1. De Guzman vs. CA: Cendana is not liable for the loss of
the goods because of the hijacking incident because it
fell under Art. 1745(6) . According to the court,
H: Applying the above-quoted Articles 1734 and 1735, we
note firstly that the specific cause alleged in the instant case
the hijacking of the carrier's truck does not fall within any of
the five (5) categories of exempting causes listed in Article
1734. It would follow, therefore, that the hijacking of the
carrier's vehicle must be dealt with under the provisions of
Article 1735, in other words, that the private respondent as
common carrier is presumed to have been at fault or to
have acted negligently. This presumption, however, may be
overthrown by proof of extraordinary diligence on the part of
private respondent.
Petitioner insists that private respondent had not observed
extraordinary diligence in the care of petitioner's goods.
Petitioner argues that in the circumstances of this case,
private respondent should have hired a security guard
presumably to ride with the truck carrying the 600 cartons of
Liberty filled milk. We do not believe, however, that in the
instant case, the standard of extraordinary diligence
required private respondent to retain a security guard to ride
with the truck and to engage brigands in a firelight at the
risk of his own life and the lives of the driver and his helper.
Under Article 1745 (6) above, a common carrier is held
responsible and will not be allowed to divest or to diminish
such responsibility even for acts of strangers like thieves or
robbers, except where such thieves or robbers in fact acted
"with grave or irresistible threat, violence or force." We
believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods
carried are reached where the goods are lost as a result of
a robbery which is attended by "grave or irresistible threat,
violence or force."
Three (3) of the five (5) hold-uppers were armed with
firearms. The robbers not only took away the truck and its
cargo but also kidnapped the driver and his helper,
detaining them for several days and later releasing them in
another province (in Zambales). In these circumstances, we
hold that the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier
and properly regarded as a fortuitous event. It is necessary
to recall that even common carriers are not made absolute
insurers against all risks of travel and of transport of goods,
and are not held liable for acts or events which cannot be
foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary
diligence.
ARTICLE 1746. An agreement limiting the common
carrier's liability may be annulled by the shipper or owner if
the common carrier refused to carry the goods unless the
former agreed to such stipulation.
ARTICLE 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the common
carrier's liability cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
9
ARTICLE 1748. An agreement limiting the common
carrier's liability for delay on account of strikes or riots is
valid.
 Stipulation lessening the amount of liability
Valid: Provided follow the requisites under 1749 and 1750
ARTICLE 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing in the
bill of lading, unless the shipper or owner declares a greater
value, is binding.
ARTICLE 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss, destruction,
or deterioration of the goods is valid, if it is reasonable and
just under the circumstances, and has been fairly and freely
agreed upon.
Normally, when are these stipulations present?
1. In contracts of carriage by sea -- in the bill of lading; (500
pesos per kilo)
2. In contracts of carriage by air -- in the ticket. (normally
$20 per kilo)
For the stipulation to be valid, it must not be just a
stipulation. It must contain a statement which says that if
the shipper agrees or has declared a higher valuation and
has paid for a higher price thereof, then the 500 peso
limitation is not applicable.
The 500-peso limitation is only applicable when the shipper
has not declared a higher value and paid a higher freight.
A stipulation which exempts the carrier from any or all
liability from loss or damage occasioned by its own
negligence is not valid.
A stipulation which provides for an unqualified limitations,
like 10 pesos per kilo (only) and thus limits liability to an
agreed valuation is not valid. (Meaning, wala yung
stipulation that if the shipper pays a higher freight, etc.)
(Heacock vs. Macondray) where the SC enumerated the
three kinds of stipulation:
1. No liability -- the carrier will not be liable at all for the
negligent acts of its crew and employees -- void
2. Limited Liability -- regardless of the value of the cargo,
the maximum liability of the carrier will by only to a
certain amount, i.e. 500 per kilo -- void.
3. Qualified liability- this is the only stipulation in a bill of
lading/ticket which can validly limit liability; here, the
carrier fixes a maximul liability in the event the shipper
doe snot delcare any value, or a value upto a certain
amount. Should shipper declare a higher value and
willing to pay higher freightage, the carrier shall
accordingly be liable for greater damage.
Other cases cited in ppt: Eastern vs. IAC (150 SCRA 463),
Sea-Land Services vs. IAC (153 SCRA), Cokaliong Shipping
vs. UCPB (2003)
Art. 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the common
carrier's liability cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
Even if there is any limitation limiting the liability of the
carrier, this cannot be availed of by the carrier if it without
just cause, delays the transportation of the goods, or etc.
What if there is a stipulation limiting the liability and the flight
is from Davao to Manila. But because there was a typhoon
in Manila, it was unable to land there so it landed in Cebu.
Can the carrier avail of the stipulation?
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
Yes, because there was a just cause for the change of flight.
1747 only applies if there is no reason.
Art. 1748. An agreement limiting the common carrier's
liability for delay on account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's liability is
limited to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater
value, is binding.
Art. 1750. A contract fixing the sum that may be recovered.
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been fairly and freely
agreed upon.
Art. 1751. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to which
the contract refers shall be taken into consideration on the
question of whether or not a stipulation limiting the common
carrier's liability is reasonable, just and in consonance with
public policy.
Art. 1752. Even when there is an agreement limiting the
liability of the common carrier in the vigilance over the
goods, the common carrier is disputably presumed to have
been negligent in case of their loss, destruction or
deterioration.
That presumption of negligence will still arise despite the
fact that there is an agreement. The carrier still has to prove
that it exercised EXOD to escape liability. If the carrier does
not want to prove it, it will just accept the liability, then the
carrier will be liable for the amount stipulated in the
agreement. Of course, unless any of the circumstances like
natural disaster, etc. are present.
 Baggage of passengers
With respect to baggage of passengers, we recognize
checked-in baggage and hand-carried baggages.
Passenger is responsible for his hand-carry baggages.
Art. 1754. The provisions of Articles 1733 to 1753 shall
apply to the passenger's baggage which is not in his
personal custody or in that of his employee. As to other
baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
applicable.
With respect to check in baggages, the applicable
provisions are the provisions we took up. However, if the
luggage is hand-carried, different provisions of the CC will
apply. (1998, 2000- 2003)
What is the summary for hand-carried items?
1. Art. 1998: The carrier shall be responsible for hand-
carried baggages as depositaries, provided that notice
was given to them, or to their employees, of the effects
brought by the passengers and that, on the part of the
latter, they take the precautions which said carriers or
their substitutes advised relative to the care and
vigilance of their effects.
2. Art. 2000. The responsibility referred to in the preceding
article shall include the loss of, or injury to the personal
property of the passenger caused by the servants or
employees of the carrier as well as strangers; but not
that which may proceed from any force majeure.
The fact that passengers are constrained to rely on the
vigilance of the carrier shall be considered in determining
the degree of care required of him.
3. Art. 2001. The act of a thief or robber, who has entered
the carrier is not deemed force majeure, unless it is done
with the use of arms or through an irresistible force. (n)
10
Art. 2002. The carrier is not liable for compensation if the
loss is due to the acts of the passenger, his family, servants
or visitors, or if the loss arises from the character of the
things brought. (n)
Art. 2003. The common carrier cannot free himself from
responsibility by posting notices to the effect that he is not
liable for the articles brought by the passengers.
 CARRIAGE OF PASSENGERS
Art. 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in Articles 1733 and
1755.
Automatic presumption of negligence, rebutted by proving
that carrier excercised extraordinary diligence for the safety
of passengers according to the circumstances of each case.
Under the provisions of carriage of goods, in carriage of
passengers, there are no exceptions as to the presumption
of negligence. They will be automatically presumed to be
negligent under 1756, there are no exceptions. So that is
the first distinction between COG and COP, but the
presumption can be rebutted.
Take note that proving extraordinary diligence is not the only
way of escaping liability. We all know that under the general
provisions of the Civil Code, a fortuitous event will always
exempt the obligor from liability, if the fortuitous event is the
cause of the death, injury of the passenger. Just memorize
the requisites of fortuitous events.
Issue: If A is a passenger of a taxi and taxi figured in an
accident. A sues the taxi for breach of contract of carriage,
does A have to prove that the taxi driver is at fault for A to
collect damages from the operator of the taxi?
Answer: In an action based on a contract of carriage, the
court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it
responsible to pay damages to the passenger. Because of
the automatic presumption of negligence, the burden of
proof is on the carrier. If the carrier rebuts the presumption,
then it is absolved. If it does not rebut that presumption,
there is no need for the passenger or his heirs to prove
negligence.
What kind of fortuitous event will exempt a carrier from
liability? Is a tire blow out a fortuitous event?
It depends. Remember that even the SC did not
categorically state that a tire blow out is not a fortuitous
event. You always have to look at the requisites.
In the cases (Yobido vs. CA, Necesito vs. Paras), they
were all cases of tire blow outs and the SC always found a
way to remove the tire blow out situtation from coverage of
fortuitous events.
In Necesito vs. Paras (1958), the SC said that "defective
parts of vehicles cannot be considered a fortuitous event
because the manufacturer of the defective parts is
considered in law the agent of the carrier, and the good
repute of the manufacturer will not relieve the carrier from
liability."
In Yobido, the court discovered that the driver was driving
too fast, so there was negligence and participation on the
part of the carrier in bringing the accident.
What about hi-jacking? Is it a fortuitous event?
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
As a general rule, hi-jacking of an airline cannot be a
fortuitous event because this is not unforseen, this is
expected. That is why security checks are conducted. But in
GACAL vs. PAL - this was considered a fortuitous event
because the inspection was done by the military, and not
PAL. This case is a special case.
But what if the hi-jack happened on a bus or a truck?
In De Guzman, the SC said that it was a fortuitous event.
Can you really expect that your bus will be hijacked while
you're traveling along the highway? No, otherwise nobody
will travel.
PILAPIL VS. CA: It was held that a CC is not liable for
failure to install window grills on its buses to protect its
passengers from injuries hurled at the bus by lawless
elements.
FORTUNE EXPRESS VS. CA: The SC said that FE was
liable because there was an early warning already. So the
element of unforseeability was missing.
 DURATION OF LIABILITY
No provision for CC of pax for the duration of liability; only
cases
1. Bataclan vs. Medina (overturned bus which leaked
gasoline and was set on fire when villagers who wanted
to help brought torches)
Held: CC is still liable even if the bus was no longer in
transit. In the present case and under the circumstances
obtaining in the same, we do not hesitate to hold that the
proximate cause of the death of Bataclan was the
overturning of the bus, this for the reason that when the
vehicle turned not only on its side but completely on its
back, the leaking of the gasoline from the tank was not
unnatural or unexpected; that the coming of the men with a
lighted torch was in response to the call for help, made not
only by the passengers, but most probably, by the driver
and the conductor themselves, and that because it was very
dark (about 2:30 in the morning), the rescuers had to carry
a light with them; and coming as they did from a rural area
where lanterns and flashlights were not available, they had
to use a torch, the most handy and available; and what was
more natural than that said rescuers should innocently
approach the overturned vehicle to extend the aid and effect
the rescue requested from them. In other words, the coming
of the men with the torch was to be expected and was a
natural sequence of the overturning of the bus, the trapping
of some of its passengers and the call for outside help.
What is more, the burning of the bus can also in part be
attributed to the negligence of the carrier, through its driver
and its conductor. According to the witnesses, the driver and
the conductor were on the road walking back and forth.
They, or at least, the driver should and must have known
that in the position in which the overturned bus was,
gasoline could and must have leaked from the gasoline tank
and soaked the area in and around the bus, this aside from
the fact that gasoline when spilled, specially over a large
area, can be smelt and detected even from a distance, and
yet neither the driver nor the conductor would appear to
have cautioned or taken steps to warn the rescuers not to
bring the lighted torch too near the bus. Said negligence on
the part of the agents of the carrier come under the codal
provisions above- reproduced, particularly, Articles 1733,
1759 and 1763.
2. La Mallorca vs. CA (the child of a Pax was run over by
the bus when she followed her father who was getting
their baggages. The bus was already moving steadily
after it had dropped off the Pax even though the
baggages were still on board the truck.)
Held: here can be no controversy that as far as the father is
concerned, when he returned to the bus for his bayong
which was not unloaded, the relation of passenger and
carrier between him and the petitioner remained subsisting.
For, the relation of carrier and passenger does not
necessarily cease where the latter, after alighting from the
11
car, aids the carrier's servant or employee in removing his
baggage from the car. The issue to be determined here is
whether as to the child, who was already led by the father to
a place about 5 meters away from the bus, the liability of the
carrier for her safety under the contract of carriage also
persisted.
It has been recognized as a rule that the (contractual)
relation of carrier and passenger does not cease at the
moment the passenger alights from the carrier's vehicle at a
place selected by the carrier at the point of destination, but
continues until the passenger has had a reasonable time or
a reasonable opportunity to leave the carrier's premises.
And, what is a reasonable time or a reasonable delay within
this rule is to be determined from all the circumstances. So
no specific time or specific distance.
3. PAL vs. Zapatos: Even if the pax are in transit, this will
not terminate the contractual relations.
Held: Undisputably, PAL's diversion of its flight due to
inclement weather was a fortuitous event. Nonetheless,
such occurrence did not terminate PAL's contract with its
passengers. Being in the business of air carriage and the
sole one to operate in the country, PAL is deemed equipped
to deal with situations as in the case at bar. What we said in
one case once again must be stressed, i.e., the relation of
carrier and passenger continues until the latter has been
landed at the port of destination and has left the carrier's
premises. Hence, PAL necessarily would still have to
exercise extraordinary diligence in safeguarding the
comfort, convenience and safety of its stranded passengers
until they have reached their final destination.
 DOCTRINE OF LAST CLEAR CHANCE:
This doctrine calls for application in suits between owners of
two colliding vehicles. It does not apply where a pax
demands responsibility from a carrier to enforce its
contractual obligations.
The principle of last clear chance is inapplicable in the
instant case, as it only applies in a suit between the owners
and drivers of two colliding vehicles. It does not arise where
a passenger demands responsibility from the carrier to
enforce its contractual obligations, for it would be
inequitable to exempt the negligent driver and its owner on
the ground that the other driver was likewise guilty of
negligence. The common law notion of last clear chance
permitted courts to grant recovery to a plaintiff who has also
been negligent provided that the defendant had the last
clear chance to avoid the casualty and failed to do so.
Accordingly, it is difficult to see what role, if any, the
common law of last clear chance doctrine has to play in a
jurisdiction where the common law concept of contributory
negligence as an absolute bar to recovery by the plaintiff,
has itself been rejected, as it has been in Article 2179 of the
Civil Code. (Tiu vs. Arriesgado)
 VALIDITY OF STIPULATIONS
Two kinds:
1. As to the diligence required
2. As to the amount of liability
AS TO THE DILIGENCE REQUIRED
Art. 1757. The responsibility of a common carrier for the
safety of passengers as required in Articles 1733 and 1755
cannot be dispensed with or lessened by stipulation, by the
posting of notices, by statements on tickets, or otherwise.
Remember:
Diligence required: XOD
What kind of XOD: Utmost diligence of a very cautious
person
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
(1) CC of Goods are allowed to lessened the
degree of diligence, but NOT do away with the same
completely.
(2) CC of Pax CANNOT dispense with nor lessen
the degree of diligence.
AS TO AMOUNT OF LIABILITY
Art. 1758. When a passenger is carried gratuitously, a
stipulation limiting the common carrier's liability for
negligence is valid, but not for wilful acts or gross
negligence.
The reduction of fare does not justify any limitation of the
common carrier's liability.
General Rule: Cannot be limited
But under 1758, there are circumstances where this liability
is limited:
1. Pax carried gratuitously
2. Existence of stipulation limiting liability
3. Accident/Breach not caused by willful acts or gross
negligence.
Remember: Minimum amount that heirs of pax can collect
from CC is P 50,000 because this is indemnity for death. CC
is automatically liable for this minimum amount; if it wants to
lessen this amount, CC must follow Art. 1758.
 LIABILITY FOR ACTS OF EES
Art. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or wilful acts
of the former's employees, although such employees may
have acted beyond the scope of their authority or in violation
of the orders of the common carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employees.
Notes:
1. There is no express provision in CC of Goods exactly like
Art. 1759. BUT, the absence of express stipulation does
not mean that CC of Goods not liable for acts of ees.
Under Art. 1775, par. 5, the CC cannot stipulate that it
shall not be responsible for the acts of its ees. So this
means that CC of goods still liable;
2. If driver is drunk and figures in an accident, CC cannot
say that it is not liable because driver violated company
rules of no drinking while driving.
3. Defense of Diligence of Good father of family is available
if the cause of action is culpa acquiliana (Art. 2176, 2180
of NCC), But if the cause of action is for breach of
contract of carriage, this defense of GFOF cannot be
invoked.
 CONTRIBUTORY NEGLIGENCE
Art. 1761. The passenger must observe the diligence of a
good father of a family to avoid injury to himself.
Art. 1762. The contributory negligence of the passenger
does not bar recovery of damages for his death or injuries, if
the proximate cause thereof is the negligence of the
common carrier, but the amount of damages shall be
equitably reduced.
Notes:
1. Definition of Contributory Negligence: It is the principle
that negligence, no matter how slight, on the part of the
person injured which is one of the causes proximately
contributing to his negligence equitably reduces the
liability of the CC.
2. Estacion vs. Bernardo (2006): (Pax of Jeepney was
seated in extension seat initially but gave his seat up to
an old lady. A then hung/stood outside the jeepney.
When jeepney stopped at the curve, an isuzu truck with
12
a faulty break hit the jeepney causing injury to A's leg
which had to be amputated.)
Held: There was contributory negligence on the part of A,
and both truck and jeepney were found to be negligent.
Sharing of liability: 20-40-40. 20 to be borne by A.
Contributory negligence is conduct on the part of the
injured party, contributing as a legal cause to the harm he
has suffered, which falls below the standard to which he is
required to conform for his own protection.
When is one considered to have contributed to his injuries:
It has been held that “to hold a person as having contributed
to his injuries, it must be shown that he performed an act
that brought about his injuries in disregard of warning or
signs of an impending danger to health and body.
Respondent Noe’s act of hanging on the Fiera is definitely
dangerous to his life and limb.
3. CANGCO VS. MRR ( Jose Cangco, herein plaintiff, was
an employee of the defendant in this case, manila
Railroad Company. Upon the occasion in question,
plaintiff was returning home by rail from his daily labors.
As the train drew up to the station, plaintiff arose from his
seat. As the train slowed down, plaintiff stepped off, but
one or both of his feet came in contact with a sack of
watermelons. As a result, his feet slipped from under
him and he fell violently on the platform.)
Held: The act of the plaintiff in stepping off the train while it
as yet slowly moving was not characterized by imprudence
so as to hold him guilty of contributory negligence.
In arriving to such conclusion, the court used the best of
negligence enunciated in the case of Picart vs. Smith (37
PHIL 809) which was stated as follow: Was there anything
in the circumstances surrounding the plaintiff at the time he
alighted from the train which would have admitted a person
of average prudence that to get off the train under the
conditions then existing was dangerous? If so, the plaintiff
should have deserted from alighting; and his failure so to
desist was contributory negligence.
In the case at bar, the plaintiff was ignorant of the fact that
the obstruction which was caused by the sacks of melds
piled on the platform existed. Moreover, the place was dark
or dimly lighted. Thus, he was a failure on the part of the
defendant to afford to its passengers facilities for safe
egress from its trains.
It is not negligence per se for a traveler to alight from a
slowly moving train.
4. Del Prado vs. MRR
Held: Defendant should still be held liable for the damages
sustained by the plaintiff. The contributory negligence upon
the latter was not the proximate cause of the injury. The
proximate cause was the act of the motorman in putting off
on the power prematurely. A person moving boarding a
moving car must be taken to assure the risk of injury from
boarding the car, but he cannot fairly be held to assume the
risk that the motorman will increase his peril by accelerating
the speed of the car before he is planted on the platform.
The motorman’s negligence succeeded the negligence of
herein plaintiff. Under the doctrine of “last clear chance”,
the contributory negligence of the party injured will not
defeat the action if it be shown that the carrier might be the
exercise of reasonable care and prudence have avoided the
consequences of the negligence of the injured party.
5. Brinas vs. People (old woman and her granddaughter
bound for Losacan. Conductor announced their stop so the
lola stood up and carried her "apo" and went to exit. When
train door opened, before they could go down, the train
picked up speed and they both fell and died)
Held: It is a matter of common knowledge and experience
about common carriers like trains and buses that before
reaching a station or flagstop they slow down and the
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
conductor announces the name of the place. It is also a
matter of common experience that as the train or bus
slackens its speed, some passengers usually stand and
proceed to the nearest exit, ready to disembark as the train
or bus comes to a full stop. This is especially true of a train
because passengers feel that if the train resumes its run
before they are able to disembark, there is no way to stop it
as a bus may be stopped.
It was negligence on the conductor's part to announce the
next flag stop when said stop was still a full three minutes
ahead. As the respondent Court of Appeals correctly
observed, "the appellant's announcement was premature
and erroneous and was the proximate cause of the death of
the victims. Any negligence of the victims was at most
contributory and does not exculpate the accused from
criminal liability.
6. Dangwa vs. CA - (There was no contributory negligence
on the part of the victim in this case)
Held: The foregoing testimonies show that the place of the
accident and the place where one of the passengers
alighted were both between Bunkhouses 53 and 54, hence
the finding of the Court of Appeals that the bus was at full
stop when the victim boarded the same is correct. They
further confirm the conclusion that the victim fell from the
platform of the bus when it suddenly accelerated forward
and was run over by the rear right tires of the vehicle, as
shown by the physical evidence on where he was thereafter
found in relation to the bus when it stopped. Under such
circumstances, it cannot be said that the deceased was
guilty of negligence. LLphil
The contention of petitioners that the driver and the
conductor had no knowledge that the victim would ride on
the bus, since the latter had supposedly not manifested his
intention to board the same, does not merit consideration.
When the bus is not in motion there is no necessity for a
person who wants to ride the same to signal his intention to
board. A public utility bus, once it stops, is in effect making a
continuous offer to bus riders. Hence, it becomes the duty
of the driver and the conductor, every time the bus stops, to
do no act that would have the effect of increasing the peril
to a passenger while he was attempting to board the same.
The premature acceleration of the bus in this case was a
breach of such duty.
It is the duty of common carriers of passengers, including
common carriers by railroad train, streetcar, or motorbus, to
stop their conveyances a reasonable length of time in order
to afford passengers an opportunity to board and enter, and
they are liable for injuries suffered by boarding passengers
resulting from the sudden starting up or jerking of their
conveyances while they are doing so.
Further, even assuming that the bus was moving, the act of
the victim in boarding the same cannot be considered
negligent under the circumstances. As clearly explained in
the testimony of the aforestated witness for petitioners,
Virginia Abalos, the bus had "just started" and "was still in
slow motion" at the point where the victim had boarded and
was on its platform.
It is not negligence per se, or as a matter of law, for one to
attempt to board a train or streetcar which is moving slowly.
An ordinarily prudent person would have made the attempt
to board the moving conveyance under the same or similar
circumstances. The fact that passengers board and alight
from a slowly moving vehicle is a matter of common
experience and both the driver and conductor in this case
could not have been unaware of such an ordinary practice.
The victim herein, by stepping and standing on the platform
of the bus, is already considered a passenger and is entitled
to all the rights and protection pertaining to such a
contractual relation. Hence, it has been held that the duty
which the carrier of passengers owes to its patrons extends
to persons boarding the cars as well as to those alighting
therefrom.
7. Isaac vs. Al Ammen
13
Facts: Plaintiff boarded defendant’s bus as paying
passenger from Albay. The bus collided with a pick-up truck
which was coming from opposite direction trying to swerve
from a pile of gravel. As a result, his left arm was
completely severed. Plaintiff chose to hold defendant liable
on its contractual obligation. Plaintiff brought an action for
damages which the lower court dismissed holding the driver
of the pick-up car negligent and not that of the bus.
Issue: Whether or not the common carrier is liable.
Held: The bus was running at a moderate speed. The
driver of the bus upon the speeding pick-up truck swerved
the bus to the very extreme right of the road. Said driver
would not move the bus further without endangering the
safety of his passengers. Notwithstanding all these efforts,
the rear left side was hit. This finding of the lower court was
sustained. Also, of the carrier’s employee is confronted with
a sudden emergency, he is not held to the same degree of
care he would otherwise, he required in the absence of
such emergency.
By placing his left arm on the window, he is guilty of
contributory negligence cannot relieve the carrier but can
only reduce its liability, this is a circumference which further
mistakes against plaintiff’s position. It is a prevailing rule
that it is negligence per se for passengers on a railroad to
protrude any part of his body and that no recovery can be
had for an inquiry.”
 Responsibility for acts of strangers
Art. 1763. A common carrier is responsible for injuries
suffered by a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of
the diligence of a good father of a family could have
prevented or stopped the act or omission.
Notes:
1. This is one instance wherein the carrier need not prove
that it exercised XOD to escape liability. If the
injury/death of pax was caused by the act of a stranger
(somebody who is not an ee of the carrier) the carrier
need only prove that its ees exercised diligence of GFOF
to prevent or stop the act or omission.
Why? It is not the responsibility of the CC of Pax to ensure
that no injury from outside forces will be caused to the pax,
i.e. when a bomb is thrown from the roadside.
2. MRR vs. Ballesteros - Here, the driver of the bus
allowed a stranger to take the wheel of the bus. After
awhile, the driver struggled with him as the stranger did
not want to give the wheel back. The bus met an
accident. Can this provision be invoked?
What kind of diligence does the CC of Pax have to prove
here? XOD because by actually allowing a stranger to drive
the bus even if that person caused the accident, but still the
driver did not exercise the diligence of GFOF to prevent or
stop the act or omission. (yan talaga sa lecture)
3. Fortune Express vs. CA- Fortune express cannot invoke
this provision.
As already stated, despite the report of PC agent Generalao
that the Maranaos were planning to burn some of
petitioner’s buses and the assurance of petitioner’s
operations manager (Diosdado Bravo) that the necessary
precautions would be taken, nothing was really done by
petitioner to protect the safety of passengers.
Issue: Are there other causes for breach of contract of
carriage aside from Art. 1755 and 1756?
Answer: Yes.
1. If a passenger is bumped off his flight and he has a
confirmed booking, that is a breach because the carrier
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
in the ticket ensured that it will deliver the pax to its
destination on the time and date stipulated.
2. Air France vs. Carrascoso – Rebooked to a lower
class without pax consent. Pax seated in first class
from Mla to Bangkok. Upon arrival in Bangkok, he was
downgraded to economy to give way to a "white man".
There is a breach because his ticket says first class, and
by booking the pax to economy class without his
consent, what happens is that there is no more consent
in the contract.
3. Singson vs. Cathay Pacific - On 24 May 1988 CARLOS
SINGSON and his cousin Crescentino Tiongson bought
from Cathay Pacific Airways, Ltd. (CATHAY), at its Metro
Manila ticket outlet two (2) open-dated, identically
routed, round trip plane tickets for the purpose of
spending their vacation in the United States. Each ticket
consisted of six (6) flight coupons corresponding to this
itinerary: flight coupon no. 1 - Manila to Hongkong; flight
coupon no. 2 - Hongkong to San Francisco; flight coupon
no. 3 - San Francisco to Los Angeles; flight coupon no. 4
- Los Angeles back to San Francisco; flight coupon no. 5
- San Francisco to Hongkong; and, finally, flight coupon
no. 6 - Hongkong to Manila. The procedure was that at
the start of each leg of the trip a flight coupon
corresponding to the particular sector of the travel would
be removed from the ticket booklet so that at the end of
the trip no more coupon would be left in the ticket
booklet.
On 6 June 1988 CARLOS SINGSON and Crescentino
Tiongson left Manila on board CATHAY’s Flight No. 902.
They arrived safely in Los Angeles and after staying there
for about three (3) weeks they decided to return to the
Philippines. On 30 June 1988 they arranged for their return
flight at CATHAY’s Los Angeles Office and chose 1 July
1988, a Friday, for their departure. While Tiongson easily
got a booking for the flight, SINGSON was not as lucky. It
was discovered that his ticket booklet did not have flight
coupon no. 5 corresponding to the San Francisco-Hongkong
leg of the trip. Instead, what was in his ticket was flight
coupon no. 3 - San Francisco to Los Angeles - which was
supposed to have been used and removed from the ticket
booklet. It was not until 6 July 1988 that CATHAY was
finally able to arrange for his return flight to Manila.
H: CATHAY undoubtedly committed a breach of
contract when it refused to confirm petitioner's flight
reservation back to the Philippines on account of his
missing flight coupon. Its contention that there was no
contract of carriage that was breached because petitioner’s
ticket was open-dated is untenable. To begin with, the
round trip ticket issued by the carrier to the passenger was
in itself a complete written contract by and between the
carrier and the passenger. It had all the elements of a
complete written contract, to wit: (a) the consent of the
contracting parties manifested by the fact that the
passenger agreed to be transported by the carrier to and
from Los Angeles via San Francisco and Hongkong back to
the Philippines, and the carrier’s acceptance to bring him to
his destination and then back home; (b) cause or
consideration, which was the fare paid by the passenger as
stated in his ticket; and, (c) object, which was the
transportation of the passenger from the place of departure
to the place of destination and back, which are also stated
in his ticket.
Interestingly, it appears that CATHAY was responsible for
the loss of the ticket. One of two (2) things may be
surmised from the circumstances of this case: first, US Air
(CATHAY’s agent) had mistakenly detached the San
Francisco-Hongkong flight coupon thinking that it was the
San Francisco-Los Angeles portion; or, second, petitioner’s
booklet of tickets did not from issuance include a San
Francisco-Hongkong flight coupon. In either case, the loss
of the coupon was attributable to the negligence of
CATHAY’s agents and was the proximate cause of the non-
confirmation of petitioner's return flight on 1 July 1988.
14
With regard to the second issue, we are of the firm view that
the appellate court seriously erred in disallowing moral and
exemplary damages. Although the rule is that moral
damages predicated upon a breach of contract of carriage
may only be recoverable in instances where the mishap
results in the death of a passenger, or where the carrier is
guilty of fraud or bad faith, there are situations where the
negligence of the carrier is so gross and reckless as to
virtually amount to bad faith, in which case, the passenger
likewise becomes entitled to recover moral damages, such
as in the instant case.
4. PAL vs. CA (Sept. 22, 2008) - Here, two unaccompanied
minors were not able to board the plane because PAL
was not able to produce the indemnity bond executed by
the minors' parents since they were travelling
unaccompanied.
Here, there was definitely a breach of contract even if the
flight that the minors were supposed to take is in another
airline. It was because of PAL's negligence that they were
not able board the other airline.
H: When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a contract
of carriage arises. The passenger has every right to expect
that he be transported on that flight and on that date, and it
becomes the airline's obligation to carry him and his
luggage safely to the agreed destination without delay. If the
passenger is not so transported or if in the process of
transporting, he dies or is injured, the carrier may be held
liable for a breach of contract of carriage.
Private respondents and petitioner entered into a contract of
air carriage when the former purchased two plane tickets
from the latter. Under this contract, petitioner obliged itself
(1) to transport Deanna and Nikolai, as unaccompanied
minors, on 2 May 1980 from Manila to San Francisco
through one of its planes, Flight 106; and (2) upon the
arrival of Deanna and Nikolai in San Francisco Airport on 3
May 1980, to transport them on that same day from San
Francisco to Los Angeles via a connecting flight on United
Airways 996. As it was, petitioner failed to transport Deanna
and Nikolai from San Francisco to Los Angeles on the day
of their arrival at San Francisco. The staff of United Airways
996 refused to take aboard Deanna and Nikolai for their
connecting flight to Los Angeles because petitioner's
personnel in San Francisco could not produce the indemnity
bond accomplished and submitted by private respondents.It
was established in the instant case that since Deanna and
Nikolai would travel as unaccompanied minors, petitioner
required private respondents to accomplish, sign and
submit to it an indemnity bond. Private respondents
complied with this requirement. Petitioner gave a copy of
the indemnity bond to one of its personnel on Flight 106,
since it was required for the San Francisco-Los Angeles
connecting flight of Deanna and Nikolai. Petitioner's
personnel lost the indemnity bond during the stop-over of
Flight 106 in Honolulu, Hawaii. Thus, Deanna and Nikolai
were not allowed to take their connecting flight.
Evidently, petitioner was fully aware that Deanna and
Nikolai would travel as unaccompanied minors and,
therefore, should be specially taken care of considering
their tender age and delicate situation. Petitioner also knew
well that the indemnity bond was required for Deanna and
Nikolai to make a connecting flight from San Francisco to
Los Angeles, and that it was its duty to produce the
indemnity bond to the staff of United Airways 996 so that
Deanna and Nikolai could board the connecting flight. Yet,
despite knowledge of the foregoing, it did not exercise
utmost care in handling the indemnity bond resulting in its
loss in Honolulu, Hawaii. This was the proximate cause why
Deanna and Nikolai were not allowed to take the connecting
flight and were thus stranded overnight in San Francisco.
Further, petitioner discovered that the indemnity bond was
lost only when Flight 106 had already landed in San
Francisco Airport and when the staff of United Airways 996
demanded the indemnity bond. This only manifests that
petitioner did not check or verify if the indemnity bond was
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009 15

in its custody before leaving Honolulu, Hawaii for San arises. But, just like other privileges, such priority could be
Francisco. waived. The Vazquezes should have been consulted first
whether they wanted to avail themselves of the privilege or
The foregoing circumstances reflect petitioner's utter lack of would consent to a change of seat accommodation before
care for and inattention to the welfare of Deanna and Nikolai their seat assignments were given to other passengers.
as unaccompanied minor passengers. They also indicate Normally, one would appreciate and accept an upgrading,
petitioner's failure to exercise even slight care and diligence for it would mean a better accommodation. But, whatever
in handling the indemnity bond. Clearly, the negligence of their reason was and however odd it might be, the
petitioner was so gross and reckless that it amounted to bad Vazquezes had every right to decline the upgrade and insist
faith. on the Business Class accommodation they had booked for
and which was designated in their boarding passes. They
It is worth emphasizing that petitioner, as a common carrier, clearly waived their priority or preference when they asked
is bound by law to exercise extraordinary diligence and that other passengers be given the upgrade. It should not
utmost care in ensuring for the safety and welfare of its have been imposed on them over their vehement objection.
passengers with due regard for all the circumstances.[19] By insisting on the upgrade, Cathay breached its contract of
The negligent acts of petitioner signified more than carriage with the Vazquezes.
inadvertence or inattention and thus constituted a radical
departure from the extraordinary standard of care required So it is not only death or injury which causes breach of
of common carriers. contract of carriage of pax. Anything that is in violation of a
contract will constitute a breach.
Petitioner's claim that it cannot be entirely blamed for the
loss of the indemnity bond because it gave the indemnity  DISTINCTIONS BETWEEN CCOG AND CCOP
bond to the immigration office of Honolulu, Hawaii, as a Diligence extraordinary Utmost diligence
matter of procedure during the stop-over, and the said required diligence of very cautious
immigration office failed to return the indemnity bond to person.
petitioner's personnel before Flight 106 left Honolulu, When Loss, destruction death or injury
Hawaii, deserves scant consideration. It was petitioner's presumption of or deterioration and non-
obligation to ensure that it had the indemnity bond in its negligence and non-arrival of fulfillment of the
custody before leaving Honolulu, Hawaii for San Francisco. arises the goods at contract
Petitioner should have asked for the indemnity bond from destination and
the immigration office during the stop-over instead of partly negligent delay
blaming the said office later on for the loss of the indemnity When in the five (5) NONE, the
bond. Petitioner's insensitivity on this matter indicates that it presumption of instances presumption of
fell short of the extraordinary care that the law requires of negligence does mentioned; negligence will
common carriers. not arise natural calamity, ALWAYS arise in
automatically etc. case the carriage
As we have earlier found, petitioner breached its contract of of PAX
carriage with private respondents, and it acted recklessly W/N degree of For both, it cannot be dispensed.
and malevolently in transporting Deanna and Nikolai as diligence can be
unaccompanied minors and in handling their indemnity dispensed with
bond. We have also ascertained that private respondents W/N degree of yes, under the NO
are entitled to moral damages because they have diligence can be requisites
sufficiently established petitioner's gross negligence which lessened previously
amounted to bad faith. This being the case, the award of discussed
exemplary damages is warranted. W/N liability in yes, under Art. As a general rule,
case of breach 1748, 1749 and NO, unless
5. Cathay Pacific vs. Vasquez- Is an involuntary upgrading can be 1750; carried
of an airline passenger’s accommodation from one class lessened? gratuitously;
to a more superior class at no extra cost a breach of stipulation but
contract of carriage that would entitle the passenger to only for simple
an award of damages? negligence.

H: We resolve the first issue in the affirmative.  VIP: When we talk about transportation laws we
should not only focus on breach of contract of
A contract is a meeting of minds between two persons carriage. We should also include that there are
whereby one agrees to give something or render some other causes of action which may arise.
service to another for a consideration. There is no contract
unless the following requisites concur: (1) consent of the Example: A car owned by E and driven by F was speeding
contracting parties; (2) an object certain which is the subject along JP Laurel hit a Taxi driven by D which in turn hit C. B
of the contract; and (3) the cause of the obligation which is the passenger of the taxi was also injured. The taxi is owned
established.[4] Undoubtedly, a contract of carriage existed by A.
between Cathay and the Vazquezes. They voluntarily and
freely gave their consent to an agreement whose object was Question: How many causes of action are available to B and
the transportation of the Vazquezes from Manila to Hong to C? What are the defenses available to E, D and F?1
Kong and back to Manila, with seats in the Business Class
Section of the aircraft, and whose cause or consideration MARITIME COMMERCE
was the fare paid by the Vazquezes to Cathay.
Applicable laws: Code of Commerce;
The only problem is the legal effect of the upgrading of the COGSA; Salvage Law
seat accommodation of the Vazquezes. Did it constitute a
breach of contract?  Governing body: Marina (Maritime Industry
Authority)
Breach of contract is defined as the “failure without legal
reason to comply with the terms of a contract.” It is also  Functions of Marina: CF PD 474
defined as the “[f]ailure, without legal excuse, to perform
any promise which forms the whole or part of the contract.” 1. Issue certificate of public conveniece for the operation of
domestic and overseas water carriers;
The Vazquezes never denied that they were members of
Cathay’s Marco Polo Club. They knew that as members of
the Club, they had priority for upgrading of their seat
accommodation at no extra cost when an opportunity
1 I did not include the Q and A already. Please see your UP
Bar.
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
2. Register and issue certificate, licenses, or documents
necessary or incident thereto.
Q: What is the requirement for a carrier to operate domestic
sea voyages?
A: Certificate of Public Convenience (CPC)
 Kinds of VESSELS (under PD 474)
"Vessels" or "Watercraft" Any barge, lighter, bulk carrier,
passenger ship freighter, tanker, container ship, fishing
boats or other artificial contrivance utilizing any source of
motive power, designed, used or capable of being used as a
means of water transportation operating either as common
contract carrier, including fishing vessels covered under
Presidential Decree No. 43, except
(1) those owned and/or operated by the Armed
Forces of the Philippines and by foreign governments
for military purposes, and
(2) bancas, sailboats and other waterborne
contrivance of less than three gross tons capacity and
not motorized.
 HOW OWNERSHIP OF A VESSEL MAY
BE ACQUIRED
ARTICLE 573. Merchant vessels constitute property which
may be acquired and transferred by any of the means
recognized by law2.
The acquisition of a vessel must be included in a written
instrument, which shall not produce any effect with regard to
third persons if not recorded in the mercantile registry.
The ownership of a vessel shall also be acquired by the
possession thereof in good faith for three years, with a good
title duly recorded.
In the absence of any of these requisites, uninterrupted
possession for ten years shall be necessary in order to
acquire ownership.
A captain can not acquire by prescription the ship of which
he is in command.
Notes:
1. Q: Kind of property is a vessel?
A: Movable, but ownership must be evidenced by certificate
of ownership and transfers must be registered in the proper
registry to bind 3rd persons.
2. Requisites for Legal Acquisition of a Merchant
Vessel:
1. Must appear in a written instrument;
2. Recorded in the proper registry -- under
EO 125, transaction must be registered with the Marina
but now this is being conducted by the PPA.
3. Robiso vs. Rivera: It is undeniable that the defendant
Rivera acquired by purchase the pilot boat Valentina on a
date prior to that of the purchase and adjudication made at
public auction, by and on behalf of the plaintiff Rubiso; but it
is no less true that the sale of the vessel by Sy Qui to
Florentino E. Rivera, on January 4, 1915, was entered in
the customs registry only on March 17, 1915, while its sale
at public auction to Fausto Rubiso on the 23d of January of
the same year, 1915, was recorded in the office of the
Collector of Customs on the 27th of the same month, and in
the commercial registry on the 4th of March, following; that
2 In relation to Art. 712 of the Civil Code:
a. Donation;
b. law
c. Testate or intestate succession;
d. As a consequence of certain contracts
e. By tradition
f. By prescription (3 years if possession in good faith,
with just title duly recorded, otherwise, 10 years)
16
is, the sale on behalf of the defendant Rivera was prior to
that made at public auction to Rubiso, but the registration of
this latter sale was prior by many days to the sale made to
the defendant.
The requisite of registration in the registry, of the purchase
of a vessel, is necessary and indispensable in order that the
purchaser's rights may be maintained against a claim filed
by a third person.
In view of said legal provisions, it is undeniable that the
defendant Florentino E. Rivera's rights cannot prevail over
those acquired by Fausto Rubiso in the ownership of the
pilot boat Valentina, inasmuch as, though the latter's
acquisition of the vessel at public auction, on January 23,
1915, was subsequent to its purchase by the defendant
Rivera, nevertheless said sale at public auction was
antecedently recorded in the office of the Collector of
Customs, on January 27, and entered in the commercial
registry-an unnecessary proceeding--on March 4th; while
the private and voluntary purchase made by Rivera on a
prior date was not recorded in the office of the Collector of
Customs until many days afterwards, that is, not until March
17, 1915.
 Repair and Maintenance of Vessel during the
Voyage (Art. 583)
ARTICLE 583. If the ship being on a voyage the captain
should find it necessary to contract one or more of the
obligations mentioned in Nos. 8 and 9 of Article 580, he
shall apply to the judge or court if he is in Philippine territory,
and otherwise to the Filipino Consul should there be one,
and, in his absence to the judge or court or to the proper
local authority, presenting the certificate of the registry of the
vessel treated of in Article 612, and the instruments proving
the obligation contracted.
The judge or court, the consul or the local authority as the
case may be, in view of the result of the proceedings
instituted, shall make a temporary memorandum in the
certificate of their result, in order that it may be recorded in
the registry when the vessel returns to the port of her
registry, or so that it can be admitted as a legal and
preferred obligation in case of sale before the return, by
reason of the sale of the vessel by virtue of a declaration of
unseaworthiness.
The lack of this formality shall make the captain personally
liable to the creditors who may be prejudiced through his
fault.
Notes:
1. Article 580 Nos. 8 and 9 3 = contract obligations for the
repair and equipment of the vessel and obtain loans and
bottomry.
2. Why are these formalities required for the captain?
Because omission to follow these requirements will make
the captain personally liable. He cannot ask for a refund
from the carrier.
 Persons who take part in marine commerce
I. SHIP OWNER
3 Art. 580 (8) The part of the price which has not been
paid the last vendor, the credits pending for the payment
of material and work in the construction of the vessel,
when it has not navigated, and those arising from the
repair and equipment of the vessel and its provisioning
with victuals and fuel during its last voyage. x x x
(9) The amounts borrowed on bottomry bonds before the
departure of the vessel, proven by means of the contracts
executed according to law and recorded in the commercial
registry; the amounts borrowed during the voyage with the
authority mentioned in the foregoing subdivision, filling the
same requisites, and the insurance premium, proven by
the policy of the contract or certificate taken from the
books of the broker.
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
II. SHIP AGENT - By agent is understood the person
intrusted with the provisioning of a vessel, or who
represents her in the port in which she happens to be.
ARTICLE 586. The owner of a vessel and the agent shall be
civilly liable for the acts of the captain and for the obligations
contracted by the latter to repair, equip, and provision the
vessel, provided the creditor proves that the amount claimed
was invested therein.
Notes:
1. Macondray vs. Provident (2004) - Canpotex, shipper,
shipped and loaded on board the vessel M/V ‘Trade
Carrier’, 5000 metric tons of Standard Grade Muriate of
Potash in bulk for transportation to and delivery at the
port of Sangi, Toledo City, Cebu, in favor of ATLAS
FERTILIZER CORPORATION, Consignee. Upon arrival,
it was discovered that the shipment sustained losses.
MACONDRAY filed ANSWER, denying liability over the
losses, having NO absolute relation with defendant TRADE
AND TRANSPORT, the alleged operator of the vessel who
transported the subject shipment; that accordingly,
MACONDRAY is the local representative of the SHIPPER;
the charterer of M/V TRADE CARRIER and not party to this
case; that it has no control over the acts of the captain and
crew of the Carrier and cannot be held responsible for any
damage arising from the fault or negligence of said captain
and crew.
The CA affirmed the trial court’s finding that petitioner was
not the agent of Trade and Transport. The appellate court
ruled, however, that petitioner could still be held liable for
the shortages of the shipment, because the latter was the
ship agent of Canpotex Shipping Services Ltd. -- the shipper
and charterer of the vessel M/V Trade Carrier.
H: In the present case, we find no compelling reason to
overturn the Court of Appeals in its categorical finding that
petitioner was the ship agent. Such factual finding was not
in conflict with the trial court’s ruling, which had merely
stated that petitioner was not the agent of Trade and
Transport. Indeed, although it is not an agent of Trade and
Transport, petitioner can still be the ship agent of the vessel
M/V Trade Carrier.
Article 586 of the Code of Commerce states that a ship
agent is “the person entrusted with provisioning or
representing the vessel in the port in which it may be
found.”
Hence, whether acting as agent of the owner of the
vessel or as agent of the charterer, petitioner will be
considered as the ship agent and may be held liable as
such, as long as the latter is the one that provisions or
represents the vessel.
The trial court found that petitioner “was appointed as local
agent of the vessel, which duty includes arrangement for
the entrance and clearance of the vessel.” Further, the CA
found and the evidence shows that petitioner represented
the vessel. The latter prepared the Notice of Readiness,
the Statement of Facts, the Completion Notice, the Sailing
Notice and Custom’s Clearance. Petitioner’s employees
were present at Sangi, Toledo City, one day before the
arrival of the vessel, where they stayed until it departed.
They were also present during the actual discharging of the
cargo. Moreover, Mr. de la Cruz, the representative of
petitioner, also prepared for the needs of the vessel, like
money, provision, water and fuel.
These acts all point to the conclusion that it was the entity
that represented the vessel in the Port of Manila and was
the ship agent within the meaning and context of Article 586
of the Code of Commerce.
III. CAPTAIN- one who governs vessels and navigates
the high seas or of large dimension and importance.
vs. Master- commands small ships and engages
exclusively in coastwide trade.
17
But For purposes of maritime commerce, captain, master,
patron, they all mean the same.
 Qualifications of Captain
ARTICLE 609. Captains and masters of vessels must be
Filipino having legal capacity to bind themselves in
accordance with this Code, and must prove that they have
the skill, capacity, and qualifications required to command
and direct the vessel, as established by marine laws,
ordinances, or regulations, or by those of navigation, and
that they are not disqualified according to the same for the
discharge of the duties of that position.
If the owner of a vessel desires to be the captain thereof
and does not have the legal qualifications therefor, he
shall limit himself to the financial administration of the
vessel, and shall intrust her navigation to a person
possessing the qualifications required by said
ordinances and regulations.
Notes:
1. Coastwise Lighterage vs. CA - Here, the patron of the
lighter admitted that he was not licensed.
H: Clearly, petitioner Coastwise Lighterage's embarking on
a voyage with an unlicensed patron violates Art. 609. It
cannot safely claim to have exercised extraordinary
diligence, by placing a person whose navigational skills are
questionable, at the helm of the vessel which eventually met
the fateful accident. It may also logically, follow that a
person without license to navigate, lacks not just the skill to
do so, but also the utmost familiarity with the usual and safe
routes taken by seasoned and legally authorized ones. Had
the patron been licensed, he could be presumed to have
both the skill and the knowledge that would have prevented
the vessel's hitting the sunken derelict ship that lay on their
way to Pier 18.
As a common carrier, petitioner is liable for breach of the
contract of carriage, having failed to overcome the
presumption of negligence with the loss and destruction of
goods it transported, by proof of its exercise of extraordinary
diligence.
 General Functions of a Captain:
ARTICLE 610. The following powers are inherent in
the position of captain or master of a vessel:
1. To appoint or make contracts with the crew
in the absence of the agent and propose said crew,
should said agent be present; but the agent shall not
be permitted to employ any member against the
captain's express refusal.
2. To command the crew and direct the vessel
to the port of its destination, in accordance with the
instructions he may have received from the agent.
3. To impose, in accordance with the
agreements and the laws and regulations of the
merchants marine, on board the vessel, correctional
punishment upon those who do not comply with his
orders or who conduct themselves against
discipline, holding a preliminary investigation on the
crimes committed on board the vessel on the high
seas, which shall be turned over to the authorities,
who are to take cognizance thereof, at the first port
touched.
4. To make contracts for the charter of the
vessel in the absence of the agent or of her
consignee, acting in accordance with the
instructions received and protecting the interests of
the owner most carefully.
5. To adopt all the measures which may be
necessary to keep the vessel well supplied and
equipped, purchasing for the purpose all that may be
necessary, provided there is no time to request
instructions of the agent.
6. To make, in similar urgent cases and on a
voyage, the repairs to the hull and engines of the
vessel and to her rigging and equipment which are
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
absolutely necessary in order for her to be able to
continue and conclude her voyage; but if she should
arrive at a point where there is a consignee of the
vessel, he shall act in concurrence with the latter.
Notes:
1. Inter-orient Maritime vs. NLRC- Here, the captain
refused to leave the port, contrary to the ship agent's
instructions, until the supplies he requested necessary
for the welding-repair of the turbo-charger and the
economizer were delivered. Subsequently, the captain
was dismissed. Issue: Was the captain remiss of his
duties?
H: NO. The captain has the authority to decide. The captain
of a vessel is a confidential and managerial employee within
the meaning of the above doctrine. A master or captain, for
purposes of maritime commerce, is one who has command
of a vessel. A captain commonly performs three (3) distinct
roles: (1) he is a general agent of the shipowner; (2) he is
also commander and technical director of the vessel; and
(3) he is a representative of the country under whose flag
he navigates. Of these roles, by far the most important is
the role performed by the captain as commander of the
vessel; for such role (which, to our mind, is analogous to
that of "Chief Executive Officer" [CEO] of a present-day
corporate enterprise) has to do with the operation and
preservation of the vessel during its voyage and the
protection of the passengers (if any) and crew and cargo. In
his role as general agent of the shipowner, the captain has
authority to sign bills of lading, carry goods aboard and deal
with the freight earned, agree upon rates and decide
whether to take cargo. The ship captain, as agent of the
shipowner, has legal authority to enter into contracts with
respect to the vessel and the trading of the vessel, subject
to applicable limitations established by statute, contract or
instructions and regulations of the shipowner. 17 To the
captain is committed the governance, care and
management of the vessel. Clearly, the captain is vested
with both management and fiduciary functions.
More importantly, a ship's captain must be accorded a
reasonable measure of discretionary authority to decide
what the safety of the ship and of its crew and cargo
specifically requires on a stipulated ocean voyage. The
captain is held responsible, and properly so, for such safety.
He is right there on the vessel, in command of it and (it must
be presumed) knowledgeable as to the specific
requirements of seaworthiness and the particular risks and
perils of the voyage he is to embark upon. The applicable
principle is that the captain has control of all departments of
service in the vessel, and reasonable discretion as to its
navigation. It is the right and duty of the captain, in the
exercise of sound discretion and in good faith, to do all
things with respect to the vessel and its equipment and
conduct of the voyage which are reasonably necessary for
the protection and preservation of the interests under his
charge, whether those be of the shipowners, charterers,
cargo owners or of underwriters. It is a basic principle of
admiralty law that in navigating a merchantman, the master
must be left free to exercise his own best judgment. The
requirements of safe navigation compel us to reject any
suggestion that the judgment and discretion of the captain
of a vessel may be confined within a straitjacket, even in
this age of electronic communications.
2. Far Eastern Shipping vs. CA- There was a Russian
vessel that arrived in Manila, owned by Far Eastern
Shipping. It was assigned berth no. 4. There is such a
thing as compulsory pilotage -- there is a pilot assigned
to pilot the vessel outside the break water until it reaches
its birth. In this case, A was assigned to the vessel. The
captain of the vessel was beside A. Under the rules of
compulsory pilotage, once a pilot takes over the helm,
the captain will have to stand aside and surrender all his
authority to the pilot who is more familiar with the
docking maneuvers. Now, A hit the pier. PPA filed a
complaint against Far Eastern Shipping. Issue: Can the
captain of the vessel be considered negligent in this
case? Because the only way that Far Eastern shipping
18
can be held liable is for the courts to declare the captain
negligent.
HELD: YES.
A pilot, in maritime law, is a person duly qualified, and
licensed, to conduct a vessel into or out of ports, or in
certain waters. In a broad sense, the term "pilot" includes
both (1) those whose duty it is to guide vessels into or out of
ports, or in particular waters and (2) those entrusted with
the navigation of vessels on the high seas. However, the
term "pilot" is more generally understood as a person taken
on board at a particular place for the purpose of conducting
a ship through a river, road or channel, or from a port.
Under English and American authorities, generally
speaking, the pilot supersedes the master for the time being
in the command and navigation of the ship, and his orders
must be obeyed in all matters connected with her
navigation. He becomes the master pro hac vice and
should give all directions as to speed, course, stopping and
reversing, anchoring, towing and the like. And when a
licensed pilot is employed in a place where pilotage is
compulsory, it is his duty to insist on having effective control
of the vessel, or to decline to act as pilot. Under certain
systems of foreign law, the pilot does not take entire charge
of the vessel, but is deemed merely the adviser of the
master, who retains command and control of the navigation
even on localities where pilotage is compulsory.
While it is indubitable that in exercising his functions a pilot-
is in sole command of the ship[69] and supersedes the
master for the time being in the command and navigation of
a ship and that he becomes master pro hac vice of a vessel
piloted by him,[70] there is overwhelming authority to the
effect that the master does not surrender his vessel to the
pilot and the pilot is not the master. The master is still in
command of the vessel notwithstanding the presence of a
pilot. There are occasions when the master may and
should interfere and even displace the pilot, as when the
pilot is obviously incompetent or intoxicated and the
circumstances may require the master to displace a
compulsory pilot because of incompetency or physical
incapacity. If, however, the master does not observe that a
compulsory pilot is incompetent or physically incapacitated,
the master is justified in relying on the pilot, but not blindly.
The master is not wholly absolved from his duties while a
pilot is on board his vessel, and may advise with or offer
suggestions to him. He is still in command of the vessel,
except so far as her navigation is concerned, and must
cause the ordinary work of the vessel to be properly carried
on and the usual precaution taken. Thus, in particular, he is
bound to see that there is sufficient watch on deck, and that
the men are attentive to their duties, also that engines are
stopped, towlines cast off, and the anchors clear and ready
to go at the pilot's order.
A perusal of Capt. Kabankov's testimony makes it apparent
that he was remiss in the discharge of his duties as master
of the ship, leaving the entire docking procedure up to the
pilot, instead of maintaining watchful vigilance over this risky
maneuver.
In sum, where a compulsory pilot is in charge of a ship, the
master being required to permit him to navigate it, if the
master observes that the pilot is incompetent or physically
incapable, then it is the duty of the master to refuse to
permit the pilot to act. But if no such reasons are present,
then the master is justified in relying upon the pilot, but not
blindly. Under the circumstances of this case, if a situation
arose where the master, exercising that reasonable
vigilance which the master of a ship should exercise,
observed, or should have observed, that the pilot was so
navigating the vessel that she was going, or was likely to
go, into danger, and there was in the exercise of reasonable
care and vigilance an opportunity for the master to intervene
so as to save the ship from danger, the master should have
acted accordingly. The master of a vessel must exercise a
degree of vigilance commensurate with the circumstances.
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
In general, a pilot is personally liable for damages caused
by his own negligence or default to the owners of the
vessel, and to third parties for damages sustained in a
collision. Such negligence of the pilot in the performance of
duty constitutes a maritime tort. At common law, a
shipowner is not liable for injuries inflicted exclusively by the
negligence of a pilot accepted by a vessel compulsorily.The
exemption from liability for such negligence shall apply if the
pilot is actually in charge and solely in fault. Since, a pilot is
responsible only for his own personal negligence, he cannot
be held accountable for damages proximately caused by
the default of others, or, if there be anything which
concurred with the fault of the pilot in producing the
accident, the vessel master and owners are liable.
3. WILDVALLEY SHIPPING VS. CA -
Almost same facts, except in this case the vessel was
Filipino owned and it arrived in Velenzuela. There was a
compulsory pilotage. When the pilot boarded the vessel,
the captain left the bridge. When it entered the
Venezuelan channel, the vessel experienced some
vibration and the pilot assured the captain that the
vibrations were normal - the result of the shallowness of
the channel. But the vessel ran aground thereafter.
Held: The captain in this case was not negligent.
We find that the grounding of the vessel is attributable to the
pilot. When the vibrations were first felt the watch officer
asked him what was going on, and pilot Vasquez replied
that "(they) were in the middle of the channel and that the
vibration was as (sic) a result of the shallowness of the
channel.
The law does provide that the master can countermand or
overrule the order or command of the harbor pilot on board.
The master of the Philippine Roxas deemed it best not to
order him (the pilot) to stop the vessel. The master of the
Philippine Roxas deemed it best not to order him (the pilot)
to stop the vessel, mayhap, because the latter had assured
him that they were navigating normally before the grounding
of the vessel. Based on these declarations, it comes as no
surprise to us that the master chose not to regain control of
the ship. Admitting his limited knowledge of the Orinoco
River, Captain Colon relied on the knowledge and
experience of pilot Vasquez to guide the vessel safely.
So the SC gave conflicting decisions, but if you look at it, the
SC ruled in these ways only for one reason -- ruling in favor
of Filipinos. (Very good, Lyndon!:D)
 Books to be carried by the captain
ARTICLE 612. The following obligations are inherent in
the office of captain: x x x
3.To have three folioed and stamped books, placing at the
beginning of each one a note of the number of folios it
contains, signed by the maritime official, and in his absence
by the competent authority.
In the first book, which shall be called "log book," he shall
enter every day the condition of the atmosphere, the
prevailing winds, the course sailed, the rigging carried, the
horsepower of the engines, the distance covered, the
maneuvers executed, and other incidents of navigation. He
shall also enter the damage suffered by the vessel in her
hull, engines, rigging, and tackle, no matter what is its
cause, as well as the imperfections and averages of the
cargo, and the effects and consequence of the jettison,
should there be any; and in cases of grave resolutions
which require the advice or a meeting of the officers of the
vessel, or even of the passengers and crew, he shall record
the decision adopted. For the informations indicated he shall
make use of the binnacle book, and of the steam or engine
book kept by the engineer.
In the second book, called the "accounting book," he shall
enter all the amounts collected and paid for the account of
the vessel, entering specifically article by article, the sources
of the collection, and the amounts invested in provisions,
19
repairs, acquisition of rigging or goods, fuel, outfits, wages,
and all other expenses. He shall furthermore enter therein a
list of all the members of the crew, stating their domiciles,
their wages and salaries, and the amounts they may have
received on account, either directly or by delivery to their
families.
In the third book, called "freight book," he shall record the
entry and exit of all the goods, stating their marks and
packages, names of the shippers and of the consignees,
ports of loading and unloading, and the freight earned. In
the same book he shall record the names and places of
sailing of the passengers and the number of packages of
which their baggage consists, and the price of the passage.
Notes:
1. Of the three books, the log book is the most important;
2. Haverton Shipping vs. NLRC - What is the probative
value of the entries in the logbook? Can you use the log
book as evidence? YES. It is an official record of entries
made by a person in the performance of his duty
required by law and are prima facie evidence of the facts
entered therein.
But in:
3. Centennial vs. Dela Cruz: In Wallem Maritime Services,
Inc. v. National Labor Relations Commission, citing
Haverton Shipping Ltd. v. National Labor Relations
Commission, the Court ruled that a copy of an official
entry in the logbook is legally binding and serves as an
exception to the hearsay rule. In the said case, however,
there was no controversy as to the genuineness of the
said entry and the authenticity of the copy presented in
evidence.
In the instant case, respondent has consistently assailed
the genuineness of the purported entry and the authenticity
of such copy. He alleged that before his repatriation, there
was no entry in the ship's official logbook regarding any
incident that might have caused his relief; that Captain
Kowalewski's signature in such purported entry was forged.
In support of his allegations, respondent submitted three
official documents bearing the signature of Capt. Sczepan
Kowalewski which is different from the one appearing in
Annex E. Thus, it was incumbent upon petitioners to prove
the authenticity of Annex E, which they failed to do.
Likewise, the purported report of Capt. Kowalewski dated
September 1, 2000 and the statements of Safety Officer
Khaldun Nacem Faridi and Chief Officer Josip Milin also
cannot be given weight for lack of authentication.
Although technical rules of evidence do not strictly apply to
labor proceedings, however, in the instant case,
authentication of the above-mentioned documents is
necessary because their genuineness is being assailed,
and since petitioners offered no corroborating evidence.
These documents and their contents have to be duly
identified and authenticated lest an injustice would result
from a blind adoption of such contents. Thus, the
unauthenticated documents relied upon by petitioners are
mere self-serving statements of their own officers and were
correctly disregarded by the Court of Appeals.
 DURATION OF LIABILITY of Captain
Do not forget the duration of liability under the Civil Code,
Art. 1736.
With respect to the captain:
ARTICLE 619. The captain shall be liable for the cargo
from the time it is turned over to him at the dock, or
afloat alongside the ship, at the port of loading until he
delivers it on the shores or on the discharging wharf, of
the port of unloading unless the contrary has been
expressly agreed upon.
Notes:
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
1. If the goods are delivered to Aboitiz in the warehouse,
does the liability of Aboitiz start? Yes, because the goods
are transferred already to Aboitize. Does the liability of the
captain start? NO. Only once the goods are at the dock and
until the goods are delivered to the shore. So the captain
has a shorter period of responsibility as compared to the
carrier. Of course, unless is a stipulation to the contrary.
 MARITIME PROTEST
Definition: This has to be done by the captain if the
vessel/cargo is lost or injured. It is a written statement under
oath, made by the captain or master of the vessel after the
occurrence of an accident or disaster in which the vessel or
cargo is lost or injured with respect to circumstances
attending such ocurrence.
Purpose: It is usually intended to show that the loss or
damge resulted from a peril of the sea or some other cause
for shich neither the master or owner was responsible. It
concludes with the protestation against any liablity of the
owner for such loss or damage.
ARTICLE 624. A captain whose vessel has gone
through a hurricane or who believes that the cargo has
suffered damages or averages, shall make a protest
thereon before the competent authority at the first port
he touches within the twenty-four hours following his
arrival, and shall ratify it within the same period when
he arrives at the place of his destination, immediately
proceeding with the proof of the facts, it not being
permitted to open the hatches until this has been done.
The captain shall proceed in the same manner if, the
vessel having been wrecked, he is saved alone or with
part of his crew, in which case he shall appear before
the nearest authority, and make a sworn statement of
the facts.
The authority or the consul abroad shall verify the said
facts, receiving a sworn statement of the members of
the crew and passengers who may have been saved,
and taking the other steps which may assist in arriving
at the facts, drafting a certificate of the result of the
proceedings in the log book and in that of the sailing
mate, and shall deliver the original records of the
proceedings to the captain, stamped and folioed, with a
memorandum of the folios, which he must rubricate, for
their presentation to the judge or court of the port of
destination.
The statement of the captain shall be believed if it is in
accordance with those of the crew and passengers; if
they disagree, the latter shall be accepted, unless there
is proof to the contrary
Procedure:
1. Protest must be made with a competent authority
at first port he touches;
2. within 24 hours following his arrival
3. Captain must ratify it within 24 hours when he
arrives at the place of destination where he must
proceed immediately with the proof of the facts
4. He must not open the hatches until all of the above
are done.
IV. OFFICERS AND CREW OF THE VESSEL
SAILING MATE - He is the 2nd chief of the vessel; takes
place of the captain and assumes all his duties and powers
in case of absence, sickness or death.
ARTICLE 627. The sailing mate, as the second chief
of the vessel and unless the agent orders otherwise,
shall take the place of the captain in cases of absence,
sickness, or death, and shall then assume all his
powers, obligations, and responsibilities.
Notes:
1. Centennial vs. Dela Cruz, supra. (2008) - Petitioners
allege loss of trust and confidence due to incompetence
as the ground for respondent's dismissal. Loss of trust
20
and confidence is premised on the fact that the
employee holds a position whose functions may only be
performed by someone who has the confidence of
management. Such employee may be managerial or
rank-and-file, but the nature of his position determines
the requirements for a valid dismissal.
Article 627 of the Code of Commerce defines the Chief
Mate, also called Chief Officer or Sailing Mate, as "the
second chief of the vessel, and unless the agent orders
otherwise, shall take the place of the captain in cases of
absence, sickness, or death, and shall then assume all his
powers, duties, and responsibilities." A Chief Officer,
therefore, is second in command, next only to the captain of
the vessel.
Chief Mate is a managerial employee because the said
officer performed the functions of an executive officer next
in command to the captain; that in the performance of such
functions, he is vested with powers or prerogatives to lay
down and execute management policies.
The exercise of discretion and judgment in directing a ship's
course is as much managerial in nature as decisions arrived
at in the confines of the more conventional board room or
executive office. Important functions pertaining to the
navigation of the vessel like assessing risks and evaluating
the vessel's situation are managerial in nature. Thus,
respondent, as Chief Officer, is a managerial employee;
hence, petitioners need to show by substantial evidence the
basis for their claim that respondent has breached their trust
and confidence.
Petitioners' basis for dismissing respondent was the alleged
entry by Captain Kowalewski in the ship's logbook regarding
respondent's inexperience and inefficiency. A ship's
log/logbook is the official record of a ship's voyage which its
captain is obligated by law to keep wherein he records the
decisions he has adopted, a summary of the performance of
the vessel, and other daily events. A logbook is a
respectable record that can be relied upon when the entries
therein are presented in evidence. (Connect with page 16)
SECOND MATE (which is actually the 3rd mate since the
sailing mate is the 2nd mate)
In case of disability, disqualification of the captain and the
sailing mate, he takes over. Relevant provisions: Art 632-
633, Code of Commerce
CREW OR SAILORS - Under the Code of Commerce, they
are enlisted by the captain in such number he may deem
proper. But I think at present the captain has no business
with the crew as they are hired by the carrier. Relevant
provisions: Art. 634-637
 DISCHARGE:
Who can discharge? The shipowner or the captain can
discharge the crew (Art. 637)
What is the effect if the captain or the crew is
discharged during the voyage? Example, voyage from
Manila to San Francisco and en route to SF they are
discharged:
ARTICLE 604. If the captain or any other member of
the crew should be discharged during the voyage, they
shall receive their salary until the return to the place
where the contract was made, unless there are good
reasons for the discharge, all in accordance with
Articles 636 et seq. of this Code.
Gen Rule: They shall continue to receive their salaries until
their return to the port where the contract was made. They
have to be paid the full round trip.
Except: If there is a just cause or just motive.
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
Rule in case of discharge if the contract is for a definite
period or voyage:
ARTICLE 605. If the contracts of the captain and
members of the crew with the agent should be for a
definite period or voyage, they can not be discharged
until the fulfillment of their contracts, except for
reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the
vessel or to its cargo by malice or manifest or proven
negligence.
Notes:
1. Madrigal vs. Ogilvie - The services of Jesus G. Ogilvie,
Salvador Ortile, Antonio C. Militar and Miguel M. Fermin
were engaged by Manuel Mascuñana, master or captain
employed by the petitioner Madrigal Shipping Company,
Inc., to man and fetch the vessel "S.S. Bridge" from
Sasebu, Japan. Pursuant thereto the respondents were
flown to Sasebu, Japan, and they manned the vessel out
of the port of Sasebu. On 16 March 1948, when the
vessel reached Hongkong, the respondents were
dismissed and replaced by a crew of Chinese nationality.
The respondents were flown back to Manila and paid
their respective salaries up to the date of their dismissal.
(So they were only paid from Japan to Hongkong)
H:The services of the respondents were engaged by the
petitioner to man its vessel for a determinate time or
voyage, with an express stipulation that "this contract
expires on the arrival of this boat at the port of Manila." Not
having been discharged for any of the causes enumerated
in the Art. 605, the respondents are entitled to the amounts
they respectively seek to collect from the petitioner.
2. Wallem vs. Minister of Labor: Wallem hired X and Y as
seamen for 10 months. For instigating the International
Transport Federation (ITF) Chapter to demand higher
wages they were dismissed. Was the dismissal proper?
No, the seamen cannot be dismissed without legal cause
because the contract was for a definite period of 10 months.
What X and Y did was not a legal cause under Art. 605 but
an exercise of the rights of all workmen to seek better rights
and higher benefits x x x
Grounds if captain discharges crew:(of course, the
captain cannot discharge himself!)
ARTICLE 636. Should a fixed period for which a sailor
has signed not be stated, he can not be discharged until
the end of the return voyage to the port where he
enrolled.
ARTICLE 637. Neither can the captain discharge a
sailor during the time of his contract except for
sufficient cause, the following being considered as
such:
1. The perpetration of a crime which disturbs order on
the vessel.
2. Repeated offenses of insubordination, against
discipline, or against the fulfillment of the service.
3. Repeated incapacity or negligence in the fulfillment
of the service to be rendered.
4. Habitual drunkenness.
5. Any occurrence which incapacitates the sailor to
carry out the work under his charge, with the
exception of the provisions contained in Article 644.
6. Desertion.
ARTICLE 644. A sailor who falls sick shall not lose
his right to wages during the voyage, unless the
sickness is the result of his own fault. At any rate, the
costs of the attendance and cure shall be defrayed from
the common funds, in the form of a loan.
If the sickness should be caused by an injury received
in the service or defense of the vessel the sailor shall be
attended and cured from the common funds, there
being deducted before anything else from the proceeds
of the freight, the cost of the attendance and cure.
21
 WHAT IS A SUPERCARGO? A person
specially employed by the owner of a cargo to take charge
of and sell to the best advantage merchandise which has
been shipped, and to purchase returning cargoes and to
receive freight, as he may be authorized.
ARTICLE 649. Supercargoes shall discharge on board
the vessel the administrative duties which the agent or
shippers may have assigned them; they shall keep an
account and record of their transactions in a book
which shall have the same conditions and requisites as
required for the accounting book of the captain, and
shall respect the latter in his duties as chief of the
vessel.
The powers and liabilities of the captain shall cease,
when there is a supercargo, with regard to that part of
the administration legitimately conferred upon the latter,
but shall continue in force for all acts which are
inseparable from his authority and office.
ARTICLE 650. All the provisions contained in the
second section of Title III, Book II, with regard to
qualifications, manner of making contracts, and
liabilities of factors shall be applicable to supercargoes.
ARTICLE 651. Supercargoes can not, without special
authorization or agreement, make any transaction for
their own account during the voyage, with the exception
of the ventures which, in accordance with the custom of
the port of destination, they are permitted to do.
Neither shall they be permitted to invest in the return
trip more than the profits from the ventures, unless
there is a special authorization thereto from the
principals.
 ABANDONMENT/DOCTRINE OF LIMITED
LIABILITY IN MARINE TRANSPORTATION
As already discussed, the CCOG can limit its liability by
stipulation. (Art. 1749-1750) For CCOP, liability can only be
limited when Pax is carried for free and there is a stipulation.
Under Maritime Commerce, there is a way for a CC to limits
its liability even without a stipulation because it is the law
itself which proves for this liability.
Recall: ARTICLE 586 and 583 (SO/SA civilly liable for acts
of captain and obligations contracted)
ARTICLE 587. The agent shall also be civilly liable for the
indemnities in favor of third persons which arise from the
conduct of the captain in the care of the goods which the
vessel carried; but he may exempt himself therefrom by
abandoning the vessel with all her equipments and the
freight he may have earned during the voyage.
Other provisions providing for abandonment:
ARTICLE 590. The owners of a vessel shall be civilly liable
in the proportion of their contribution to the common fund,
for the results of the acts of the captain, referred to in Article
587. Each part owner may exempt himself from this liability
by the abandonment before a notary of the part of the
vessel belonging to him.
And in cases of collision if the same is caused by the
captain alone, under
Art. 837: The civil liability contracted by the shipowners in
the cases prescribed in this section, shall be understood as
limited to the value of the vessel with all her appurtenances
and all the freight earned during the voyage.
Notes:
1. What is abandonment? It is equivalent to an offer of the
value of the vessel, her equipment and freigth earne in
return for an exemption from liability.
So if the vessel sank and the sinking of the vessel was
caused entirely by the negligence of the captain, the SO or

SA can be held liable. But if SO or SA abandons the vessel,
then the liability will only be limited to the value of the
vessel, the freightage and the equipment.
2. The real and hypothecary nature of maritime law,
therefore, distinguishes it from Civil law and commercial
law because of this doctrine. A shipping transportation
contract is "real and hypothecary" in nature under Art.
587 which accord/issue a shipowner/agent the right of
abandonment and by necessary implication, his liability
is confined to that to which he is entitled as of right to
abandon, meaning the vessel and all her equipment and
the freight she may have earned during the voyage.
Read: Yangco vs. Laserna for history of right
abandonment.
3. Reasons why SO/SA are given the right to
abandonment (Heirs of Amparo vs. delos Santos)
a. To offset against the innumerable hazards and perils of
the sea;
b. To encourage ship building and marine commerce
4. Note that when abandonment is made in the instances
provided by law, it cannot be refused.
5. Can a charterer make an abandonment? NO, because
he cannot be considered in place of the owner or the
shipagent in matters regarding to the reponsibility
pertaining to ownership and possession of the vessel.
Even if the charter is a bareboat or demise charter.
 EXCEPTIONS TO RIGHT OF ABANDONMENT
(meaning even if the right to abandonment exists,
the SO/SA will still pay for more than the value of
the vessel)
1. When the vessel is properly insured - the insurance will
take care of the liability, the value of which may be more
than the value of the vessel, freight, etc.
2. When the liability for repairs of the vessel was incureed
before the loss of such vessel (favorite BQ)
3. When the liability is one which arises from the provisions
of the labor code.
 When abandonment CANNOT BE MADE
1. When the voyage is not maritime, but only in a river, bay,
or gulf
2. When the vessel is not acting as a common carrier but a
private carrier.
3. When the SO/SA is at fault, i.e. when there is lack of
proper equipment, lack of technical training of the crew,
unlicensed crew members, captain. So any kind of
negligence, no matter how minute will remove the right of
abandonment.
a. Heirs of Amparo delos Santos vs. CA: The vessel left
late because the carrier decided to load more
unmanifested passengers and cargo. Because the
vessel left late, it encountered a typhoon and the vessel
sank. According to the Board of Marine Inquiry (BMI) the
sinking was caused by the fault of the captain and its
officers in operating the vessel. The SO/SA claimed the
right to abandon, but the SC said that the doctrine of
limited liability cannot be invoked in this case because
there was fault or negligence on the part of the carrier
because it overloaded the vessel even if it was cleared
to leave. And everytime it is discovered that a vessel is
overloaded with cargo/pax, goodbye abandonment.
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. Such a
situation will be covered by the provisions of the New Civil
Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009 22
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). Further, they are bound to
carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the
circumstances (Article 1755, 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
of b. PHILAMGEN VS. CA- According to the SC, despite the
fact that the vessel was sea worthy, it was not cargo
worthy. The cases and cases of coca-cola bottles were
loaded on deck and the vessel was top heavy making it
easy to tilt in case of strong winds.
Q: What if the sinking of the vessel is caused by fortuitous
event, is the right of abandonment present?
A: No, the SO or SA will be exempt from liability.
Other important cases:
1. Aboitiz Shipping v. General Accident (1993)- The
sinking of this vessel caused a lot of cases to be filed
against aboitiz. In this case, the SC applied the findings
of the BMI where it was found that the sinking of the
vessel was caused by a fortuitous event. The SC even
exonerated the captain and crew so nothing could be
collected from Aboitiz
2. Monarch Insurance vs. CA (2000)- It was discovered
that Aboitiz was negligent. So the sinking of the ship was
not caused by fortuitous event and it was not also
caused by the captain of the ship. So therefore the right
of abandonment does not exist as there was fault or
negligence on the part of the CC.
BUT in this case, there was so many claimants, about 110
claimants, the claim amounting to about 43 Million and the
insurance proceeds were only 14 million. The SC said that
the claimants cannot get their 43 million claims. They have
to share pro-rata the proceeds of the insurance. There is no
preference of credit.
In the instant case, there is, therefore, a need to collate all
claims preparatory to their satisfaction from the insurance
proceeds on the vessel M/V P. Aboitiz and its pending
freightage at the time of its loss. No claimant can be given
precedence over the others by the simple expedience of
having completed its action earlier than the rest. Thus,
execution of judgment in earlier completed cases, even
these already final and executory must be stayed pending
completion of all cases occasioned by the subject sinking.
Then and only then can all such claims be simultaneously
settled, either completely or pro-rata should the insurance
proceeds and freightage be not enough to satisfy all claims.
3. Aboitiz Shipping vs. New India (2006) - The SC
changed its mind again.
Our ruling in Monarch may appear inconsistent with the
exception of the limited liability doctrine, as explicitly stated
in the earlier part of the Monarch decision. An exception to
the limited liability doctrine is when the damage is due to the
fault of the shipowner or to the concurrent negligence of the
shipowner and the captain. In which case, the shipowner
shall be liable to the full-extent of the damage. We thus find
it necessary to clarify now the applicability here of the
decision in Monarch. Where the shipowner fails to
overcome the presumption of negligence, the doctrine of
limited liability cannot be applied. Therefore, we agree with
the appellate court in sustaining the trial court's ruling that
petitioner is liable for the total value of the lost cargo.
4. Aboitiz Shipping vs. Equitable (2008) which affirmed
the New India ruling. Here, the SC traced the history
starting from GAFLAC to New India. So no pro-rata
sharing of the insurance proceeds.
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
The Court declared in the 1993 GAFLAC case that claims
against Aboitiz arising from the sinking of M/V P. Aboitiz
should be limited only to the extent of the value of the
vessel. Thus, the Court held that the execution of judgments
in cases already resolved with finality must be stayed
pending the resolution of all the other similar claims arising
from the sinking of M/V P. Aboitiz. Considering that the
claims against Aboitiz had reached more than 100, the
Court found it necessary to collate all these claims before
their payment from the insurance proceeds of the vessel
and its pending freightage. As a result, the Court exhorted
the trial courts before whom similar cases remained
pending to proceed with trial and adjudicate these claims so
that the pro-rated share of each claim could be determined
after all the cases shall have been decided.
In Monarch Insurance, the Court deemed it fit to settle once
and for all this factual issue by declaring that the sinking of
M/V P. Aboitiz was caused by the concurrence of the
unseaworthiness of the vessel and the negligence of both
Aboitiz and the vessel's crew and master and not because
of force majeure. Notwithstanding this finding, the Court did
not reverse but reiterated instead the pronouncement in
GAFLAC to the effect that the claimants be treated as
"creditors in an insolvent corporation whose assets are not
enough to satisfy the totality of claims against it."
However, on 02 May 2006, the Court rendered a decision in
Aboitiz Shipping Corporation v. New India Assurance
Company, Ltd. (New India), reiterating the well-settled
principle that the exception to the limited liability doctrine
applies when the damage is due to the fault of the
shipowner or to the concurrent negligence of the shipowner
and the captain. Where the shipowner fails to overcome the
presumption of negligence, the doctrine of limited liability
cannot be applied. In New India, the Court clarified that the
earlier pronouncement in Monarch Insurance was not an
abandonment of the doctrine of limited liability and that the
circumstances therein still made the doctrine applicable.
In New India, the Court declared that Aboitiz failed to
discharge its burden of showing that it exercised
extraordinary diligence in the transport of the goods it had
on board in order to invoke the limited liability doctrine.
Thus, the Court rejected Aboitiz's argument that the award
of damages to respondent therein should be limited to its
pro rata share in the insurance proceeds from the sinking of
M/V P. Aboitiz.
The instant petitions provide another occasion for the Court
to reiterate the well-settled doctrine of the real and
hypothecary nature of maritime law. As a general rule, a
ship owner's liability is merely co-extensive with his interest
in the vessel, except where actual fault is attributable to the
shipowner. Thus, as an exception to the limited liability
doctrine, a shipowner or ship agent may be held liable for
damages when the sinking of the vessel is attributable to
the actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel. The instant
petitions cannot be spared from the application of the
exception to the doctrine of limited liability in view of the
unanimous findings of the courts below that both Aboitiz and
the crew failed to ensure the seaworthiness of the M/V P.
Aboitiz.
 SPECIAL CONTRACTS IN MARITIME
COMMERCE: (Charter party, bill of lading, loans
on bottomry and respondentia)
1. CHARTER PARTY - a contract wherein the entire ship or
some principal part thereof is let by the owner to another
person for a specified time or use, in consideration of the
payment of a fee.
Two kinds of C/P: a. Contract of Affreightment - here the
owner retains control of the vessel, he provides the crew,
what is being leased is only the space of the vessel. A
contract of affreightment can be a time charter or a voyage
charter. b. Bareboat/Demise Charter wherein the owner of
the vessel gives up the control and full possession of the
23
vessel to the charterer who becomes the owner pro hac
vice.
If Voyage or time charter = common carrier retains its nature
as a common carrier; but if it is bareboat charter, the
common carrier becomes a private carrier for that particular
charter only.
Formal/Substantial requirements:
ARTICLE 652. A charter party must be drawn in duplicate
and signed by the contracting parties, and when either does
not know how or can not do so, by two witnesses at their
request.
The charter party shall include, besides the conditions
unrestrictedly stipulated, the following statements:
1. The kind, name, and tonnage of the vessel.
2. Her flag and port of registry.
3. The name, surname, and domicile of the captain.
4. The name, surname, and domicile of the agent, if the
latter should make the charter party.
5. The name, surname, and domicile of the charterer, and if
he states that he is acting by commission, that of the
person for whose account he makes the contract.
6. The port of loading and unloading.
7. The capacity, number of tons or weight, or measure which
they respectively bind themselves to load and transport,
or whether it is the total cargo.
8. The freightage to be paid, stating whether it is to be a
fixed amount for the voyage or so much per month,
or for the space to be occupied, or for the weight or
measure of the goods of which the cargo consists,
or in any other manner whatsoever agreed upon.
(PRIMAGE- a small allowance or compensation payable to
the master or owner of the vessel for the use of its cables to
load and unload the goods and to the mariners for lading
and unlading in port. So what you pay those who load;
DEMURRAGE - an amount stipulated in the charter party to
be paid by the charter/shipper to the ship owner for any
delay. )
9.The amount of primage to be paid to the captain.
10.The days agreed upon for loading and unloading.
(laydays- no. of days between unloading and departure)
11.The lay days and extra lay days to be allowed and the
rate of demurrage.
 WHO CAN RESCIND A CHARTER PARTY: Either
party
ARTICLE 688. A charter party may be annulled at the
request of the charterer:
1. If before loading the vessel he should abandon the
charter, paying half of the freightage agreed upon.
(abandonment of charter before loading; pay 1/2 of
the freight)
2. If the capacity of the vessel should not agree with
that stated in the certificate of the tonnage, or if
there is an error in the statement of the flag under
which she sails. (Charterer will be indemnified by the
owner)
3. If the vessel should not be placed at the disposal of the
charterer within the period and in the manner agreed
upon. (non placement at disposal of the charterer)
4. If, after the vessel has put to sea, she should return to
the port of departure, on account of risk of pirates,
enemies, or bad weather, and the freighters should
agree to unload her. (charterer must pay owner for the
voyage out, meaning one way)
In the second and third cases the person from whom
the vessel was chartered shall indemnify the charterer
for the losses he may suffer. In the fourth case the
person from whom the vessel was chartered shall have
a right to the freightage in full for the voyage out. If the
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
charter should have been made by the months, the
charterers shall pay the full freightage for one month, if
the voyage were to a port in the same waters, and two
months, if the voyage were to a port in different waters.
From one port to another of the Peninsula and adjacent
islands, the freightage for one month only shall be paid.
5. If a vessel should make a port during the voyage in
order to make urgent repairs and the freighters
should prefer to dispose of the merchandise.(pay for
voyage out)
When the delay does not exceed thirty days, the
freighters shall pay the full freight for the voyage out.
Should the delay exceed thirty days, they shall only pay
the freight in proportion to the distance covered by the
vessel.
ARTICLE 689. At the request of the person from
whom the vessel is chartered the charter party may be
rescinded:
1. If the charterer at the termination of the extra lay days
does not place the cargo alongside the vessel.
In such case the charterer must pay half the freight
stipulated besides the demurrage for the lay days and
extra lay days elapsed.
2. If the person from whom the vessel was chartered
should sell her before the charterer has begun to load
her and the purchaser should load her for his own
account. In such case the vendor shall indemnify the
charterer for the losses he may suffer.
If the new owner of the vessel should not load her for his
own account the charter party shall be respected (in such
case, the charter party is not rescinded) and the vendor
shall indemnify the purchaser if the former did not inform
him of the charter pending at the time of making the sale.
Otherwise, if he informed him, then no need to indemnify.
Charter Party Ordinary Lease
Contract
Period If for definite period, If the lease is for a
the charterer may definite period, the
rescind the charter lessee cannot terminate
party by paying half of the contract
the freightage
Effect New owner cannot be If the leased property is
of sale compelled to respect sold to one who knows
to 3rd the charter party. of the existence of the
person lease contract, the new
owner must respect the
lease
Santiago Lighterage vs. CA: Seaworthiness cannot be
agreed to between the parties (parang jurisdiction of the
court) because it is a fact which has to be proven.
Fx: In this case two charter parties were entered into. The
owner of the vessel was Santiago. He chartered the vessel
to B (bareboat charter). B chartered the vessel to C (voyage
charter). The vessel was supposed to carry an ore to South
Korea. On the way to pick up the ore from Manila to
Zambales, the vessel had to undergo repairs. In short it
never reached Korea.
The pertinent provisions of the contract between Santiago
and B reads: "3. Delivery – The VESSEL shall be
delivered and taken over by the CHARTERERS at the port
of the City of Manila, in such ready berth as the
CHARTERERS may direct.
The OWNER shall before and at the time of delivery
exercise due diligence to make the VESSEL seaworthy and
in every respect ready in hull, machinery and equipment for
service hereunder. The VESSEL shall be properly
documented at time of delivery.
The delivery to the CHARTERERS of the VESSEL and the
taking over of the VESSEL by the CHARTERERS shall
24
constitute a full performance by the OWNER of all the
OWNER’S obligations hereunder, and thereafter the
CHARTERERS shall not be entitled to make or assert any
claim against the OWNER on account of the
representations or warranties expressed or implied with
respect to the VESSEL but the OWNER shall be
responsible for repairs or renewals occasioned by latent
defects in the VESSEL, her machinery or appurtenances
existing at the time of delivery under this Agreement,
provided such defects have manifested before turn-over."
What is the liability of Santiago as the owner?
Held: The mere physical transfer of MV Christine Gay from
petitioner to Pelaez does not constitute full performance of
its obligation under their bareboat charter agreement.
Neither is it considered a delivery. Under the agreement,
physical transfer of a seaworthy vessel is necessary to
satisfy delivery. Seaworthiness is a relative term. The
degree of seaworthiness varies in relation to the
contemplated voyage.
To be seaworthy, a vessel “must have that degree of fitness
which an ordinary, careful and prudent owner would require
his vessel to have at the commencement of her voyage,
having regard to all the probable circumstances of it.” Thus
the degree of seaworthiness varies in relation to the
contemplated voyage. Crossing the Atlantic calls for
stronger equipment than sailing across the Visayan Sea. It
is essential to consider that once the necessary degree of
seaworthiness has been ascertained, this obligation is an
absolute one, i.e. the undertaking is that the vessel actually
is seaworthy. It is no excuse that the shipowner took every
possible precaution to make her so, if in fact he failed.
In examining what is meant by seaworthiness we must bear
in mind the dual nature of the carrier’s obligations under a
contract of affreightment. To satisfy these duties the vessel
must (a) be efficient as an instrument of transport and (b) as
a storehouse for her cargo. The latter part of the obligation
is sometimes referred to as cargoworthiness.
A ship is efficient as an instrument of transport if its hull,
tackle and machinery are in a state of good repair, if she is
sufficiently provided with fuel and ballast, and is manned by
an efficient crew.
And a vessel is cargoworthy if it is sufficiently strong and
equipped to carry the particular kind of cargo which she has
contracted to carry, and her cargo must be so loaded that it
is safe for her to proceed on her voyage. A mere right given
to the charterer to inspect the vessel before loading and to
satisfy himself that she was fit for the contracted cargo does
not free the shipowner from his obligation to provide a
cargoworthy ship.
 BILLS OF LADING (CF: ART. 356, 357, 709, 718)
An intstrument in writing signed by the carrier or his agent,
describing the freight so as to identify it, staing the name of
the consigor, the terms of the contract of carriage and
agreeing or directing that the freight be delivered to the
order or assigns of a specified person at a specified place.
Two fold nature: Serves as a receipt as well as evidence of
a contract. BUT it is not important for a contract of carriage
to exist between the shipper/pax and the common carrier. It
is merely an evidence.
 What is the effect of the issuance by a carrier of
an unsigned bill of lading when accepted by the
shipper or the consignee?
A: Keng Hua Paper Products Co, Inc. vs. CA: A "bill of
lading delivered and accepted constitutes the contract of
carriage even though not signed," because the
"(a)cceptance of a paper containing the terms of a proposed
contract generally constitutes an acceptance of the contract
and of all of its terms and conditions of which the acceptor
has actual or constructive notice." In a nutshell, the
acceptance of a bill of lading by the shipper and the
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
consignee, with full knowledge of its contents, gives rise to
the presumption that the same was a perfected and binding
contract.
 What must be done to the bill of lading upon
fulfillment of the contract?
ARTICLE 353. The legal basis of the contract between
the shipper and the carrier shall be the bills of lading, by the
contents of which all disputes which may arise with regard to
their execution and fulfillment shall be decided without
admission of other exceptions than forgery or material errors
in the drafting thereof.
After the contract has been complied with the bill of lading
issued by the carrier shall be returned to him, and by virtue
of the exchange of this certificate for the article transported,
the respective obligations and actions shall be considered
as canceled, unless in the same act the claims which the
contracting parties desired to reserve are reduced to writing,
exception being made of the provisions of Article 366.
If in case of loss or for any other reason whatsoever, the
consignee can not return upon receiving the merchandise
the bill of lading subscribed by the carrier, he shall give said
carrier a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill of lading.
AFter the contract has been complied with, the bill of lading
shall be returend to the carrier who may have issued it and it
(the surrender) is proof that the goods have been delivered.
And after the deliverey or return of the bill of lading, the
respective obligations and actions between the parties shall
be considered as cancelled.
In case the consignee cannot return upon receive the
merchandise the bill of lading, he must give the said
carrier a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill of lading.
(Art. 353)
What is the presumption if the carrier does not hold the
bill of lading after the fulfillment of the contract of
transportation?
The presumption is that the carrier did not deliver the goods.
Who may change the consignee?
ARTICLE 360. The shipper may, without changing the
place where the delivery is to be made, change the
consignment of the goods delivered to the carrier, and the
latter shall comply with his orders, provided that at the time
of making the change of the consignee the bill of lading
subscribed by the carrier be returned to him, if one were
issued, exchanging it for another containing the novation of
the contract.
The expenses arising from the change of consignment shall
be defrayed by the shipper.
 TRANSSHIPMENT - It is the act of taking cargo
from one ship and loading it into another.
Transshipment cannot be made if the shipper does not
consent because it is dangerous.. it will expose the
goods to breakage, etc. So the effect if there was
transshipment without consent is that there is a breach
in the contract of carriage. And the carrier is liable to the
shipper in case of loss, even for an otherwise
excepted cause.
 BRINGING AN ACTION/CLAIM AGAINST THE
CARRIER
Under Art. 366, this does not cover loss because it says
upon receipt of the goods or merchandise.
ARTICLE 366. Within the twenty-four hours following the
receipt of the merchandise a claim may be brought against
the carrier on account of damage or average found therein
25
on opening the packages, provided that the indications of
the damage or average giving rise to the claim can not be
ascertained from the exterior of said packages, in which
case said claim would only be admitted on the receipt of the
packages. (So if the damage is apparent, file a claim, which
may be verbal, immediately upon receipt)
After the periods mentioned have elapsed, or after the
transportation charges have been paid, no claim
whatsoever shall be admitted against the carrier with
regard to the condition in which the goods transported
were delivered.
When does the 24 hour period begin to run? When the
goods are actually received.
Case: New Zealand vs. Chua Joy - Held: In order that the
condition provided in Article 366 of the Code of Commerce
may be demanded there should be a consignment of goods,
through a common carrier, by a consignor in one place to a
consignee in another place. And said article provides that
the claim for damages must be made “within twenty-four
hours following the receipt of the merchandise” by the
consignee from the carrier. In other words, there must be
delivery of the merchandise by the carrier to the consignee
at the place of destination.
The cargo never reached Manila, its destination, nor was it
ever delivered to the consignee, the office of the shipper in
Manila, because the ship ran aground upon entering Laoang
bay, Samar on the same day of the shipment. Such being
the case, it follows that the cargo was never received by the
consignee.
 Did the Civil Code repeal the prescriptive
period to file a claim under the Code of
Commerce?
No, the limitations of actions mentioned in the Civil Code are
without prejudice to those specified in teh Code of
Commerce.
Period to file for recovery of undelivered/lost cargo in
the courts:(note that under the Code of commerce, it
does not cover loss/non delivery of cargo)
If there is a bill of lading, 10 years, otherwise, 6 years. If it
involves overseas trading, 1 year from date when it was
supposed to be received.
 LOANS ON BOTTOMRY AND RESPONDENTIA
ARTICLE 719. A loan on bottomry or respondentia shall
be considered that which the repayment of the sum loaned
and the premium stipulated, under any condition
whatsoever, depends on the safe arrival in port of the goods
on which it is made, or of their value in case of accident.
Notes:
1. If the collateral is the vessel = bottomry; if collateral
is goods = respondentia.
Ex. Loan for 5 Million, en route to San Francisco, the
vessel sinks. The loan is extinguished because the
collateral is lost.
2. Characteristics of a loan on Bottomry: It is a loan the
security of which is the vessel itself and conditioned on
the safe arrival at the port of destination. Also the vessel
must be exposed to maritime peril. (So it must be
destroyed during its voyage)
3. Who may contract such loan? On bottomry: The
owner of the vessel or the captain (see previous
discussion, Art. 580); on respondentia: owner of the
cargo.
Ordinary Loan Loan on
Bottomry/respondentia
May or may not have Must always have collateral
collateral
 Transcribed and Prepared by: Hanniyah Sevilla 4 Manresa 2008-20009
Collateral may be real Collateral must be a vessel or a
or personal property cargo subject to maritime risk
Absolutely repayable Payment depends on the safe
arrival by the collateral at the
port of the loan
Need not be in writing Must be in writing
To be binding on 3rd Must be registered in the
persons, need not be registry of vessels
registered
Loss of collateral, if Loss of collateral extinguishes
any does not the loan.
extinguish the loan
Effect of loss of collateral:
Gen Rule: Extinguishes the loan provided requirements of
Art. 731 are complied with.
ARTICLE 731. The actions which may be brought by the
lender shall be extinguished by the absolute loss of the
goods on which the loan was made, if said loss arose from
an accident of the sea at the time and during the voyage
designated in the contract, and should it be proven that the
cargo was on board;
EXCEPTIONS:
but this shall not take place if the loss were caused by the
inherent defect of the thing;
or through the fault or malice of the borrower,
or through barratry on the part of the captain, or
if it were caused by damages suffered by the vessel as a
consequence of being engaged in contraband, or
if it arose through loading the merchandise on a vessel
other than that designated in the contract, unless this
change should have been made by reason of force majeure.
The proof of the loss is incumbent upon the person who
received the loan, as well as the proof of the existence in
the vessel of the goods declared to the lender as the object
thereof.
 RISKS, DAMAGES AND ACCIDENTS OF
MARITIME COMMERCE
ARTICLE 806. For the purposes of this Code the
following shall be considered averages:
1. All extraordinary or accidental expenses which may be
incurred during the navigation for the preservation of the
vessel or cargo, or both.
2. All damages or deterioration the vessel may suffer from
the time she puts to sea from the port of departure until
she casts anchor in the port of destination, and those
suffered by the merchandise from the time it is loaded in
the port of shipment until it is unloaded in the port of
consignment.
What are NOT averages? Petty expenses under Art. 807
ARTICLE 807. The petty and ordinary expenses of
navigation, such as pilotage of coasts and ports, lighterage
and towage, anchorage dues, inspection, health,
quarantine, lazaretto, and other so-called port expenses,
costs of barges, and unloading, until the merchandise is
placed on the wharf, and any other expenses common to
navigation shall be considered ordinary expenses to be
defrayed by the shipowner, unless there is a special
agreement to the contrary.
ARTICLE 808. Averages shall be:
1.Simple or particular.
2.General or gross.
PARTICULAR AVERAGE: Simple or particular averages
shall be, as a general rule, all the expenses and damages
caused to the vessel or to her cargo which have not
redounded to the benefit and common profit of all the
persons interested in the vessel and her cargo x x x (Art.
809)
26
Who bears the loss in P/A? The owner of the goods which
gave rise to the expense or suffered the damage shall bear
the simple or particular average (Art. 810)
Examples of P/A:
1. The damages suffered by the cargo from the time of its
embarkation until it is unloaded, either on account of the
nature of the goods or by reason of an accident at sea or
force majeure, and the expenses incurred to avoid and
repair the same.
3. The damages suffered by the vessel in her hull, rigging,
arms, and equipment, for the same causes and reasons,
from the time she puts to sea from the port of departure
until she anchored in the port of destination.
4. The damages suffered by the merchandise loaded on
deck, except in coastwise navigation, if the marine
ordinances allow it.
5. The wages and victuals of the crew when the vessel
should be detained or embargoed by a legitimate order
or force majeure, if the charter should have been for a
fixed sum for the voyage.
6. The necessary expenses on arrival at a port, in order to
make repairs or secure provisions.
7. The lowest value of the goods sold by the captain in
arrivals under stress for the payment of provisions and in
order to save the crew, or to cover any other requirement
of the vessel against which the proper amount shall be
charged.
8. The victuals and wages of the crew during the time the
vessel is in quarantine.
9. The damage suffered by the vessel or cargo by reason
of an impact or collision with another, if it were accidental
and unavoidable. If the accident should occur through
the fault or negligence of the captain, the latter shall be
liable for all the damage caused.
10. Any damage suffered by the cargo through the faults,
negligence, or barratry of the captain or of the crew,
without prejudice to the right of the owner to recover the
corresponding indemnity from the captain, the vessel,
and the freight.
GENERAL AVERAGE: all the damages and expenses
which are deliberately caused in order to save the vessel,
her cargo, or both at the same time, from a real and known
risk (Art. 811)
Who bears the loss? ARTICLE 812. In order to satisfy the
amount of the gross or general averages, all the persons
having an interest in the vessel and cargo therein at the time
of the occurrence of the average shall contribute.
Example of General Ave:
1. The goods or cash invested in the redemption of the
vessel or cargo captured by enemies, privateers, or
pirates, and the provisions, wages, and expenses of the
vessel detained during the time the arrangement or
redemption is taking place.
2. The goods jettisoned to lighten the vessel, whether they
belong to the vessel, to the cargo, or to the crew, and the
damage suffered through said act by the goods kept.
11. The cables and masts which are cut or rendered
useless, the anchors and the chains which are
abandoned in order to save the cargo, the vessel, or
both.
12. The expenses of removing or transferring a portion of the
cargo in order to lighten the vessel and place her in
condition to enter a port or roadstead, and the damage
resulting therefrom to the goods removed or transferred.
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of its master, that the expenses incurred in putting it afloat

13. The damage suffered by the goods of the cargo through
the opening made in the vessel in order to drain her and
prevent her sinking.
14. The expenses caused through floating a vessel
intentionally stranded for the purpose of saving her.
did not constitute general average, and that the liquidation
of the average was not made in accordance with law. After
trial, the lower court found for Magsaysay and rendered
judgment against Agan for the amount of the claim, with
legal interests. From this judgment, Agan has appealed
directly to the Supreme Court.

15. The damage caused to the vessel which it is necessary
to break open, scuttle, or smash in order to save the
cargo.
16. The expenses of curing and maintaining the members of
the crew who may have been wounded or crippled in
defending or saving the vessel.
17. The wages of any member of the crew detained as
hostage by enemies, privateers, or pirates, and the
necessary expenses which he may incur in his
imprisonment, until he is returned to the vessel or to his
domicile, should he prefer it.
10.The wages and victuals of the crew of a vessel chartered
by the month during the time it should be embargoed or
detained by force majeure or by order of the
Government, or in order to repair the damage caused for
the common good.
11.The loss suffered in the value of the goods sold at
arrivals under stress in order to repair the vessel
because of gross average.
12.The expenses of the liquidation of the average.
The Supreme Court reversed the decision appealed from,
and dismissed Magsaysay’s complaint.
Held: Herein, while the expenses incurred in putting
Magsaysay’s vessel afloat may well come under number 2
of article 809 — which refers to expenses suffered by the
vessel “by reason of an accident of the sea or force
majeure” — and should therefore be classified as particular
average, the said expenses do not fit into any of the specific
cases of general average enumerated in article 811.
Number 6 of Article 811 does mention “expenses caused in
order to float a vessel,” but it specifically refers to “a vessel
intentionally stranded for the purpose of saving it” and
would have no application where, as in the present case,
the stranding was not intentional.
With respect to Requisites of General average:
1. With respect to the first requisite, the evidence does not
disclose that the expenses sought to be recovered from
defendant were incurred to save vessel and cargo from a
common danger. The vessel ran aground in fine weather
inside the port at the mouth of a river, a place described as
“very shallow”. It would thus appear that vessel and cargo
were at the time in no imminent danger or a danger which
might “rationally be sought to be certain and imminent.”

 REQUISITES FOR GENERAL AVERAGE:
1. There must be a COMMON DANGER, a danger in
which the ship, cargo and crew all participate;
2. For the common safety or for the purposes of
avoiding imminent peril, part of the cargo or vessel
on board is sacrificed deliberately (part of the crew,
pwede? hehe)
3. There must be attempt to avoid the imminent peril
must be successful in a sense that the vessel and
some of the cargo are saved;
2. As to the second requisite, the expenses in question were
not incurred for the common safety of vessel and cargo,
since they, or at least the cargo, were not in imminent peril.
The cargo could, without need of expensive salvage
operation, have been unloaded by the owners if they had
been required to do so.
3. With respect to the third requisite, the salvage operation
was a success; however, as the sacrifice was for the benefit
of the vessel — to enable it to proceed to destination — and
not for the purpose of saving the cargo, the cargo owners
are not in law bound to contribute to the expenses.

4. Damages or expenses were incurred after taking the

proper legal steps.

Cases:
1. Magsaysay vs. Agan

Facts: The S S “San Antonio”, a vessel owned and operated

by A. Magsaysay Inc., left Manila on 6 October 1949, bound
for Basco, Batanes, via Aparri, Cagayan, with general cargo
belonging to different shippers, among them Anastacio
Agan. The vessel reached Aparri on the 10th of that month,
and after a day’s stopover in that port, weighed anchor to
proceed to Basco. But while still in port, it ran aground at
the mouth of the Cagayan river, and, attempts to refloat it
under its own power having failed, Magsaysay had it
refloated by the Luzon Stevedoring Co. at an agreed
compensation. The stranding of Magsaysay’s vessel was
due to the sudden shifting of the sandbars at the mouth of
the river which the port pilot did not anticipate. Once afloat,
the vessel returned to Manila to refuel and then proceeded
to Basco, the port of destination. There the cargoes were
delivered to their respective owners or consignees, who,
with the exception of Agan, made a deposit or signed a
bond to answer for their contribution to the average.

On the theory that the expenses incurred in floating the

vessel constitute general average to which both ship and
cargo should contribute, Magsaysay brought the action in
the CFI of Manila to make Agan pay his contribution, which,
as determined by the average adjuster, amounts to
P841.40. Agan, in his answer, denies liability for this
amount, alleging, among other things, that the stranding of
the vessel was due to the fault, negligence and lack of skill