Transportation Laws (Maritime Commerce)

TRANSPORTATION LAWS
MARITIME COMMERCE
Maritime
Pertaining to navigable waters, i.e. to the sea, ocean, great
lakes, navigable rivers, or the navigation or commerce
thereof (Blacks Law Dictionary)
Governing Laws on Maritime Commerce

1. Code of Commerce
2. COGSA [Carriage of Goods by Sea Act]
Other Applicable Laws

1. PD 474 (Reorganization of Maritime Functions of MARINA)
2. RA 1937 (Tariff and Customs Code)
3. Act 2616 (Salvage Law)
4. PD 1521 (Ship Mortgage Decree of 1978)
Governing Body in Maritime Transportation

MARINA (Maritime Industry Authority)
General Functions of MARINA

1. Issue Certificates of Public Convenience for the operation
of domestic and overseas water carriers
based on the lectures of ATTY. RIZADA
Code of Commerce on Vessels (Art. 573-585)]

Art. 573. Merchant vessels constitute property which may be
acquired and transferred by any of the means recognized
by law. The acquisition of a vessel must appear in a written
instrument, which shall not produce any effect with respect
to third persons if not inscribed in the registry of vessels.
The ownership of a vessel shall likewise be acquired by
possession in good faith, continued for three years, with a
just title duly recorded. In the absence of any of these
requisites, continuous possession for ten years shall be
necessary in order to acquire ownership.
A captain may not acquire by prescription the vessel of
which he is in command.
How ownership of a vessel may be acquired

1. By any means recognized by law (Art. 712 Civil Code):
a. By law (sale or dacion en pago)
b. By donation
c. By testate or intestate succession
d. In consequence of certain contracts
e. By tradition
2. Register and issue certificates, licenses, or documents

necessary or incident thereto
2. By prescription
a. 3 years if possession thereof was in good faith
with just title duly recorded, or
b. 10 years in the absence of above requisites
What is the requirement for a carrier to operate

domestic sea voyages?
Requisites for Legal Acquisition of a Merchant Vessel

under[Art. 573
Certificate of Public Convenience (CPC)
1. The mode of transfer must appear in a written instrument
Vessel
2. It must be recorded in the registry or vessels to bind 3rd

persons:
a. Under EO 125 transaction must be registered
with MARINA,
b. But, this is also being conducted by the PPA
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. (Section 3(b), Presidential Decree 474)
What kind of property is a vessel?

It is a personal or movable property but
a. ownership thereof must be evidenced by a certificate of
ownership, and
b. transfer thereof must be registered in the proper registry
[to bind 3rd persons] (Art. 585)
2SR 2015: BASIR. BIRUAR. BUNIEL. DEIPARINE. GADIA. GUMBOC. IBAY. SUAN. TITO.
TRANSPORTATION LAWS
RUBISO vs RIVERA (1920)
Obligations of the Captain if Repair and

Maintenance of Vessel is Required During the Voyage
(Art. 583)]
The counsel of plaintiff (Rubiso) brought a suit alleging that

his clients were the owners of the pilot boat named
Valentine, which has been in bad condition and on the date
of the complaint, was stranded in the place called Tingly, of
the municipality of Battings. The defendant Rivera took
charge or took possession of the said boat without the
knowledge or consent of the plaintiff and refused to deliver it
to them, under the claim that he was the owner thereof. The
refusal on the part of the defendant has caused the plaintiff
damages because they were unable to derive profit from the
voyages for which the said pilot boat was customarily used.
Art. 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.
FACTS
The defendant, on the other hand, alleged that they

purchased the subject pilot boat. The plaintiff alleged that the
sale on behalf of the defendant Rivera was prior to that made
at public auction to Rubio, but the registration of this latter
sale was prior to the sale made to the defendant.
ISSUE
Whether or not, the plaintiff still has the better right over the
subject vessel?
RULING
Yes. Under the Code of Commerce, Art 573 provides:
Merchant vessels constitute property that may be acquired
and transferred by any of the means recognized by law. 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 commercial registry.
The requisite of registration in the registry of the purchase of
a vessel is necessary and indispensable in order that the
purchasers rights may be maintained against a claim filed by
third person. It is undeniable that Riveras right cannot prevail
over those acquired by Rubiso in the ownership of the pilot
boat, though the latters acquisition of the vessel at public
auction was subsequent to its purchase by the defendant,
Rivera.
Policy: What is controlling is not the date of sale but the date
of registration. A registered owner, even if he belatedly
purchased the vessel, has a better right than the one who
earlier bought the same vessel but failed to register it.
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.
1. The captain shall apply to:
a. If in Philippine territory the judge or the courts, or
b. If outside the Philippine territory:
i. the Filipino consul (if there is one), or
ii. the judge or court of the local authority, if
no consul is available
2. He must present:
a. the certificate or registry of the vessel, and
b. the instruments proving the obligation contracted
Note: Why are these formalities required for the captain when
he contracts obligations for the repair and equipment of the
vessel (Article 580[8]) or when he obtains loans on bottomry
(Article 580[9])? This is because omission to follow these
requirements will make the captain personally liable for the
credits which may be prejudiced through his fault. He cannot
ask for a refund from the carrier.
TRANSPORTATION LAWS
Persons Who Take Part in Marine Commerce (Art.
586-651)
1. Ship Owner the owner of the vessel
2. Ship Agent the person:
a. entrusted with provisioning of the vessel, or
b. who represents the vessel in the port where she
(vessel) happens to be
3. Captain or Master the one who governs the vessel
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; that upon arrival at the port, M/V Trade
Carrier discharged the full amount of shipment as shown by
the draft survey.
ISSUE
Whether or not MACONDRAY & CO. INC., as an agent, is
responsible for any loss sustained by any party from the
vessel owned by Trade & Transport.
4. Sailing Mate the second chief of the vessel

RULING
5. Second Mate the one who takes command of the vessel
in case of disability or disqualification of captain or sailing
mate
6. Crew or Sailors the persons who man the vessel and
those who perform other duties
Ship Owner and Ship Agent

Art. 586. The ship owner and the ship 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 for the benefit of the same.
By ship agent is understood the person entrusted with
provisioning or representing the vessel in the port in which
it may be found.
MACONDRAY vs PROVIDENT INSURANCE (2004)

FACTS
CANPOTEX SHIPPING SERVICES LIMITED INC., shipped on
board the vessel M/V Trade Carrier certain goods in favor of
ATLAS FERTILIZER CORPORATION. Subject shipments were
insured with Provident Insurance Corp. against all risks.
When the shipment arrived, consignee discovered that the
shipment sustained losses. Provident paid for said losses.
Formal claims were then filed with Trade & Transport but
MACONDRAY refused and failed to settle the same.
MACONDRAY denies liability over the losses, it, having no
absolute relation with Trade & Transport, the alleged
operator of the vessel who transported the shipment; that
accordingly, MACONDRAY is the local representative of the
shipper; the charterer of M/V Trade Carrier and not party to
Yes. Although petitioner is not an agent of Trade & Transport,

it can still be the ship agent of the vessel M/V Trade Carrier. 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
that 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 Customs Clearance. Petitioners employees were present
at the port of destination 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. These acts all point to the
conclusion that it was the entity that represented the vessel
at the port of destination and was the ship agent within the
meaning and context of Article 586 of the Code of Commerce.
Powers and Duties of a Ship Agent

1. Art. 595 (2) - Represent the ownership of the vessel and
may, in his own name and in such capacity, take judicial and
extra-judicial steps in matters relating to commerce
2. Art. 596 (1) Occupy the duties of the captain, if he has the
qualifications of a captain
3. Art. 597 Select and come into an agreement with the
captain and contract in the name of the owners, who shall be
bound in all that refers to repairs, details of equipment,
TRANSPORTATION LAWS
armament, provisions, fuel, freight, and in general that

pertains to the requirement of navigation.
a. marine laws, ordinances or regulations

b. those of navigation
4. Art. 602 Indemnify the captain for all expenses he may

have incurred from his own funds or from those of other
persons for the benefit of the vessel
4. Not disqualified according to the same for the discharge of

the duties of that position
Note: The owner, ship agent and captain can be one and the
same person. This in relation to Art. 595, 596, and 606.
COASTWISE LIGHTERAGE vs CA (1995)
Captain and Master of the Vessel

Captain - one who governs vessels:
a. that navigate the high seas, or
b. of large dimensions and importance (although
engaged in coastwise trade)
Master - one who commands smaller ships engaged
exclusively in the coastwise trade.
Note: For purposes of Maritime Commerce, the terms
captain and master (which are sometimes referred to as
patron) have the same meaning, both being the chiefs and
commanders of vessels.
Art. 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.
FACTS
Pag-asa Sales Inc. entered into a contract to transport
molasses from the province of Negros to Manila with
Coastwise Lighterage Corp., using the latters dumb barges.
The barges were towed in tandem by the tugboat MT Marica,
which is likewise owned by Coastwise. Upon reaching Manila
Bay, while approaching Pier 18, one of the barges, Coastwise
9, struck an unknown sunken object. The forward buoyancy
compartment was damaged, and water gushed in through a
hole 2 inches wide and 22 inches long. As a consequence,
the molasses at the cargo tanks were contaminated and
rendered unfit for the use it was intended. This prompted the
consignee, Pag-asa Sales, Inc. to reject the shipment of
molasses as a total loss.
Thereafter, Pag-asa Sales, Inc. filed a formal claim with the
insurer of its lost cargo, Philippine General Insurance
Company (PhilGen) and against the carrier, Coastwise
Lighterage. Coastwise Lighterage denied the claim and it was
PhilGen which paid the consignee, Pag-asa Sales, the amount
of P700,000.00 representing the value of the damaged cargo
of molasses.
In turn, PhilGen then filed an action against Coastwise
Lighterage before the RTC of Manila, seeking to recover the
amount of P700,000.00 which it paid to Pag-asa Sales for the
latters lost cargo PhilGen now claims to be subrogated to all
the contractual rights and claims which the consignee may
have against the carrier, which is presumed to have violated
the contract of carriage.
ISSUE
Whether or not there is a violation of Art 609.
Qualifications of a Captain under Art 609 of the Code

of Commerce
1.
Filipino
2. Legal capacity to bind himself

3. Proof that they have skill, capacity, and qualification
required to command and direct a vessel as established by:
RULING
Yes. Article 609 of the Code of Commerce, which subsidiarily
governs common carriers (which are primarily governed by
the provisions of the Civil Code) provides that captains,
masters, or patrons of vessels must be Filipinos, have legal
capacity to contract in accordance with this code, and prove
the skill capacity and qualifications necessary to command
and direct the vessel, as established by marine and navigation
TRANSPORTATION LAWS
laws, ordinances or regulations, and must not be disqualified
according to the same for the discharge of the duties of the
position.
Far from having rendered service with the greatest skill and
outmost foresight, and being free from fault, the carrier was
culpably remiss in the observance of its duties. For one, Jesus
R. Constantino, the patron of the vessel Coastwise 9
admitted that he was not licensed.
Clearly, Coastwise Lighterages embarking on a voyage with
an unlicensed patron violates Article 609 of the Code of
Commerce. 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 vessels 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.
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 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.
INTER-ORIENT MARITIME vs NLRC (1994)

FACTS
General Functions of a Captain
1. General agent of the shipowner

2. Technical director of the vessel
3. Representative of the government of the country under

whose flag he navigates (3-fold character)
Art. 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
Captain Tayong was hired by Trenda World Shipping and

Sea Horse Ship Management through Inter-Orient
Maritime Enterprises for a period of 1 year.
He took command of Inter-Orients vessel in Hong Kong.
o He was instructed to replenish bunker and
diesel fuel, to sail forthwith to Richard Bay,
South Africa, and there to load 120, 000 metric
tons of coal.
Since a storm would hit Hong Kong, precautionary
measures were taken to secure the vessels safety
considering that the turbo-charger was leaking and the
vessel was 14 years old.
Captain Tayong followed-up the requisition by the
former Captain for supplies of oxygen and acetylene,
necessary for the welding-repair of the turbo-charger
and economizer.
The vessel sailed to Singapore.
o On the way to Singapore, the vessel stopped in
the middle of the ocean for 6 hours and 45
minutes due to a leaking economizer.
o He was instructed to shut down the economizer
and use the auxiliary boiler instead.
When the vessel arrived in Singapore, the Chief Engineer
reminded Captain Tayong that the oxygen and acetylene
TRANSPORTATION LAWS
supplies had not been delivered.

o Upon inquiry, the Captain was informed that the
supplies could only be delivered on Aug. 1 as the
stores had closed.
Captain Tayong called the shipowner, Seahorse Ship
Management and informed them that the departure of
the vessel for South Africa may be affected because of the
delay in the delivery of the supplies.
o He was advised to contact Mr. Clark, the Technical
Director.
o According to Mr. Clark, after being informed that
the ship cannot travel without the supplies,
Captain Tayong agreed with him when he said by
shutting off the water to the turbo chargers and
using the auxiliary boilers, there should be no
further problem.
o According to Captain Tayong, he was informed by
Sea Horse to wait for the supplies.
Captain Tayong immediately sailed for South Africa upon
the delivery of the supplies.
Upon reaching South Africa, Captain Tayong was
instructed to turn-over his post to the new captain. He
was thereafter repatriated to the Philippines.
o He was not informed of the charges against him.
He then instated a complaint for illegal dismissal.
ISSUE
Whether or not Captain Tayong was remiss of his duties that
would justify his dismissal.
RULING
No. It is well settled in this jurisdiction that confidential and
managerial employees cannot be arbitrarily dismissed at any
time, and without cause as reasonably established in an
appropriate investigation. Such employees, too, are entitled
to security of tenure, fair standards of employment and the
protection of labor laws.
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. 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.
FAR EASTERN SHIPPING vs CA (1998)

FACTS
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
M/V PAVLODAR, a Russian vessel owned and operated by Far

Eastern Shipping Company (FESC), arrived at the Port of
Manila and was assigned Berth 4 of the Manila International
Port, as its berthing space. Captain Roberto Abellana was
tasked by the Philippine Port Authority to supervise the
berthing of the vessel. Appellant Senen Gavino, on the other
hand, was assigned by the Appellant Manila Pilots'
Association (MPA) to conduct docking maneuvers for the safe
berthing of the vessel to Berth No. 4.
Captain Gavino (pilot of the vessel) boarded the vessel at the
quarantine anchorage and stationed himself in the bridge,
with the master of the vessel, Victor Kavankov, beside him.
After a briefing of Gavino by Kavankov of the particulars of
TRANSPORTATION LAWS
the vessel and its cargo, the vessel lifted anchor from the
quarantine anchorage and proceeded to the Manila
International Port. The sea was calm and the wind was ideal
for docking maneuvers. When the vessel reached the
landmark, one-half mile from the pier, Gavino ordered the
engine stopped. When the vessel was already about 2,000
feet from the pier, Gavino ordered the anchor dropped.
Kavankov relayed the orders to the crew of the vessel on the
bow. The left anchor, with two (2) shackles, were dropped.
However, the anchor did not take hold as expected. The
speed of the vessel did not slacken. A commotion ensued
between the crew members.
After Gavino noticed that the anchor did not take hold, he
ordered the engines half-astern. Abellana, who was then on
the pier apron, noticed that the vessel was approaching the
pier fast. Kavankov likewise noticed that the anchor did not
take hold. Gavino thereafter gave the "full-astern" code.
Before the right anchor and additional shackles could be
dropped, the bow of the vessel rammed into the apron of the
pier causing considerable damage to the pier as well as the
vessel.
Upon assuming such office as compulsory pilot, Capt. Gavino

is held to the universally accepted high standards of care and
diligence required of a pilot, whereby he assumes to have
skill and knowledge in respect to navigation in the particular
waters over which his license extends superior to and more
to be trusted than that of the master. He is not held to the
highest possible degree of skill and care, but must have and
exercise the ordinary skill and care demanded by the
circumstances, and usually shown by an expert in his
profession. Under extraordinary circumstances, a pilot must
exercise extraordinary care. In this case, Capt. Gavino failed
to measure up to such strict standard of care and diligence
required of pilots in the performance of their duties. As pilot,
he should have made sure that his directions were promptly
and strictly followed.
ISSUE (2)
Would the owner of the vessel (Far Eastern) be liable likewise
if the damage is caused by the concurrent negligence of the
master of the vessel (Capt. Kavankov) and the pilot (Capt.
Gavino) under a compulsory pilotage?
ISSUE (1)
RULING (2)
Is the pilot of a commercial vessel (Capt. Gavino), under

compulsory pilotage, liable for the damage caused by the
vessel to the pier, at the port of destination, for his
negligence?
Yes. The negligence on the part of Capt. Gavino is evident;

but Capt. Kavankov is no less responsible for the allision. His
unconcerned lethargy as master of the ship in the face of
troublous exigence constitutes negligence.
RULING (1)
While it is indubitable that in exercising his functions a pilot-is

in sole command of the ship 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, 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.
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.
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 in localities
where pilotage is compulsory.
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,
TRANSPORTATION LAWS
towlines cast off, and the anchors clear and ready to go at the
pilot's order.
A perusal of Capt. Kavankov'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.
thoroughly acquainted with the harbor, to pilot vessels

seeking to enter or depart, and thus protect life and property
from the dangers of navigation.
Compare the Far Eastern case to the WildValley case.
WILDVALLEY SHIPPING vs CA (2000)

FACTS
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.
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 of the shipowner 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. In other words, Even
though the pilot is compulsory, if his negligence was not the
sole cause of the injury, but the negligence of the master or
crew contributed thereto, the owners are also liable.
Note: There is such a thing as compulsory pilotage in
maritime commerce. If there is a vessel owned by a foreign
company, the master of this vessel is not familiar with the set
up here in the Philippines. So in order to facilitate its docking,
a pilot is assigned to that vessel for its berthing or parking.
It is quite common for states and localities to provide for
compulsory pilotage, and safety laws have been enacted
requiring vessels approaching their ports, with certain
exceptions, to take on board pilots duly licensed under local
law. The purpose of these laws is to create a body of seamen
In the Orinoco River in Venezuela, it is a rule that ships

passing through it must be piloted by pilots familiar to the
river. Hence, in 1988 Captain Nicandro Colon, master of
Philippine Roxas, a ship owned by Philippine President Lines,
Inc. (PPL), obtained the services of Ezzar Vasquez, a duly
accredited pilot in Venezuela to pilot the ship in the Orinoco
River.
The vessel experienced some vibrations but the pilot assured
that they were just a result of the shallowness of the channel.
Unfortunately, Philippine Roxas ran aground in the Orinoco
River while being piloted by Vasquez. As a result, the
stranded ship blocked other vessels. One such vessel was
owned Wildvalley Shipping Co., Ltd. (WSC). The blockade
caused $400k worth of losses to WSC as its ship was not able
to make its delivery.
Subsequently, WSC sued PPL in the RTC of Manila. It averred
that PPL is liable for the losses it incurred under the laws of
Venezuela, which provide that the master and owner of the
ship are liable for the negligence of the pilot of the ship.
Vasquez was proven to be negligent when he failed to check
on certain vibrations that the ship was experiencing while
traversing the river.
ISSUE
Whether or not the master of the vessel (Capt. Colon) is liable
for the negligence of the pilot (Capt. Vasquez).
RULING
No. The master remains the overall commander of the vessel
even when there is a pilot on board. He remains in control of
the ship as he can still perform the duties conferred upon him
by law despite the presence of a pilot who is temporarily in
charge of the vessel.
The Orinoco River being a compulsory pilotage channel
necessitated the engaging of a pilot who was presumed to be
knowledgeable of every shoal, bank, deep and shallow ends
of the river. In his deposition, pilot Ezzar Solarzano Vasquez
testified that he is an official pilot in the Harbour at Port
Ordaz, Venezuela, and that he had been a pilot for twelve
(12) years. He also had experience in navigating the waters of
TRANSPORTATION LAWS
the Orinoco River.
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, mayhap, because the
latter had assured him that they were navigating normally
before the grounding of the vessel. Moreover, the pilot had
admitted that on account of his experience he was very
familiar with the configuration of the river as well as the
course headings, and that he does not even refer to river
charts when navigating the Orinoco River.
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.
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 a result of the shallowness of the channel.
Pilot Ezzar Solarzano Vasquez was assigned to pilot the vessel
Philippine Roxas as well as other vessels on the Orinoco River
due to his knowledge of the same. In his experience as a pilot,
he should have been aware of the portions which are shallow
and which are not. His failure to determine the depth of the
said river and his decision to plod on his set course, in all
probability, caused damage to the vessel. Thus, we hold him
as negligent and liable for its grounding.
Commentary: There are conflicting decisions in the Far
Eastern case and the WildValley case. In the former, the
master of the vessel, who was a Russian, was held liable
together with the Filipino pilot. In the latter, the Filipino
master of the vessel was absolved and the Venezuelan pilot
was held solely liable. The common denominator? The
Supreme Court ruled in favor of Filipinos.
Books to be Carried by the Captain on Board the

Vessel under Art. 612[(3)]
Art. 612. The following obligations are inherent in the

office of captain:
xxx
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,
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.
1. Logbook - where he shall enter everyday everything

significant about the voyage
2. Accounting Book - where he shall enter all the amounts
collected and paid for the account of the vessel
In the case of Haverton, what is the probative value of the

entries in the logbook?
3. Freight Book where he shall record the entry and exit of

goods
TRANSPORTATION LAWS
HAVERTON SHIPPING vs NLRC (1985)
FACTS
The records show that on March 12, 1982, Alfredo BENITEZ
was hired by OFSI Services, the local manning agent of
Haverton Shipping, as a boatswain on the M.V. Gold Alisa,
owned and operated by the latter, for a period of one year
with a monthly salary of US $485.00. On May 24, 1982, while
the vessel was berthed at the port of Durban, South Africa, a
fight occurred between BENITEZ and his shipmates, Arnel
Candelaria and Maximo Espiritu, as a result of which the
latter suffered injury on the fingers of his left hand.
An investigation of the incident was conducted by the Master
who made a written report of his findings and decision in the
ship's "log book". BENITEZ was found to have breached the
disciplinary code of merchant service on several counts
among which was "assault with a knife on a member of the
ship's crews," which behavior "seriously detract(ed) from the
safe and efficient working of the ship." He was then
repatriated to the Philippines after serving only two and a
half months of his contract.
ISSUE
Whether or not the facts in the logbook shall be considered.
RULING
Yes. In declaring that copy of the Official Entry in the Ship's
Log Book was not legally binding for being hearsay, public
respondents overlooked the fact that under our laws the
ship's captain is obligated to keep a "log book" where, among
others, he records the decisions he has adopted. Even
according to the law of the vessel's registry, that book is also
"required by law" as disclosed by the entry itself. There is no
controversy as to the genuineness of the said entry.
The vessel's log book is an official record and entries made by
a person in the performance of a duty required by law are
prima facie evidence of the facts stated therein.
In the light of all the foregoing, the inevitable conclusion is
that public respondents had misappreciated the significance
of the entry in the vessel's official log book regarding the
incident. The probative value of the facts stated therein has
not been overcome by BENITEZ's submittals.
Commentary: So the logbook was used as evidence. So may 2
crew members na nag-away. Then this occurrence was noted
by the ship captain in the logbook and it was offered in
evidence. So what is the probative value of the logbook? The
Supreme Court said it is an official record of entries made by
a person in the performance of his duties as required by law
and are prima facie evidence of the facts entered therein. So

whatever cause provided therein in the logbook, its provided
as evidence, and you want to rebut that, you have to present
proof to the contrary.
But in the case of Centennial vs. Dela Cruz, what happened to
the logbook?
CENTENNIAL VS. DELA CRUZ (2008)

FACTS
On May 9, 2000, petitioner Centennial Transmarine, Inc., for
and in behalf of its foreign principal, petitioner Centennial
Maritime Services, Corp., hired respondent Dela Cruz as Chief
Officer of the oil tanker vessel "MT Aquidneck," owned by
petitioner B+H Equimar, Singapore, Pte. Ltd., for a period of
nine months.
On May 15, 2000, respondent boarded "MT Aquidneck" and
performed his functions as Chief Officer. However, on
September 14, 2000, respondent was relieved of his duties
and repatriated to the Philippines. Failing to get a satisfactory
explanation from petitioners for his relief, respondent filed a
complaint for illegal dismissal with prayer for payment of his
salaries for the unexpired portion of contract, moral and
exemplary damages and attorneys fees.
Respondent alleged that while the vessel was docked in Lake
Charles in the United States, another Chief Officer boarded
the vessel. He inquired from the master of the vessel, Captain
Kowalewski, why he had a reliever, however the latter
disclaimed any knowledge. At the same time, he showed
respondent an electronic mail (e-mail) from petitioner B+H
Equimar Singapore, Pte. Ltd. stating that there was an
incoming Chief Officer who was to take over the operations
upon boarding.
On September 19, 2000, Captain Kowalewski gave
respondent his flight schedule. He was subsequently
repatriated on September 22, 2000. Upon arrival in Manila,
respondent inquired from Mr. Eduardo Jabla, President of
petitioner Centennial Transmarine, Inc., why he was relieved.
However, Jabla could only surmise that his relief was possibly
due to the arguments he had with Capt. P. Bajaj, a company
superintendent who came on board in August 2000 while the
vessel was berthed in Los Angeles, regarding deck operations
and deck work, and documentation and safety procedures in
the cargo control room.
On the other hand, petitioner alleged that respondent was
relieved of his functions as Chief Officer due to his
inefficiency and lack of job knowledge. Capt. Kowalewski
allegedly informed them of respondents lack of experience in
tanker operations which exposed the vessel and its crew to
TRANSPORTATION LAWS
danger and caused additional expenses. Petitioners allegedly
advised respondent to take a refresher course in order to
facilitate his deployment to another vessel. However, instead
of taking a refresher course, respondent filed a case for illegal
dismissal.
ISSUE
Whether or not entries in the official logbook of a vessel
should not be given weight for being self-serving.
RULING
Petitioners basis for dismissing respondent was the alleged
entry by Captain Kowalewski in the ships logbook regarding
respondents inexperience and inefficiency. A ships
log/logbook is the official record of a ships 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.
In the instant case, however, respondent correctly pointed
out that the issue is not whether an official logbook entry is
acceptable in evidence, but whether a document purporting
to be a copy of a logbook entry has been duly established to
be authentic and not spurious.
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 ships official logbook regarding any incident
that might have caused his relief; that Captain Kowalewskis
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 (Annex D), and the statements of Safety Officer
Khaldun Nacem Faridi and Chief Officer Josip Milin also
cannot be given weight for lack of authentication.
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.
Commentary: So in the earlier case, there was no question in
the genuineness of the entries in the logbook. So it is binding
and thats an exception to the hearsay rule according to the
rules in evidence. The authenticity and genuineness of the
entries are not in question. But in this case, the entries in
question were allegedly entered only after the fact. So sabi
nila, the entries that were stated there by the Chief Engineer
were just written down by somebody else.
Its not a
question about the admissibility of the logbook. The question
here is the authenticity of the statements made therein. So if
theres a question as to that and it is proven na the entries
were just drawn by a person not during that particular
incident, the entries will not bind the Court and cannot be
used as evidence.
Captains Duration of Responsibility for the Cargo

Article 619 talks about the duration of the responsibility of
the captain where cargo is on board his vessel.
Art. 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 shore or on the discharging wharf, of the port of
unloading unless the contrary has been expressly agreed
upon.
So the captain technically has a shorter responsibility than
that of a common carrier.
Maritime Protest
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 occurrence.
A maritime protest will have to be signed or done by the
captain if the vessel is lost or impaired.
Now what is the purpose for one to file a maritime protest?
Although technical rules of evidence do not strictly apply to

labor proceedings, however, in the instant case,
authentication of the above-mentioned documents is
TRANSPORTATION LAWS
Purpose of a Maritime Protest
It is usually intended to show
1) That the loss or damage resulted from:
a)
a peril of the sea, or
b)
some other cause for which neither the
master or owner was responsible;
2) It concludes with the protestation against any liability of
the owner for such loss or damage.
Now take a look at Article 624. It provides for the procedure
or duties when the captain whose vessel has gone through a
hurricane or whose cargo suffered damages or averages.
Procedure (Duties of the Captain whose Vessel or

Cargo has Suffered Damages or Averages):
1) He shall make a PROTEST thereon before a competent
authority at the first port he touches within 24 hours
following his arrival.
2) He 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.
3) He must not open the hatches until all of the above is
done. (Art. 624, Com. Code)
So if you want to invoke your doctrine of limited liability, the
owner of the vessel may escape liability for loss of the goods
when it is due to perils of the sea. We will learn that later on.
Under Article 623, what if the captain does not manage to

outrun the corsair or the man of war of the enemy country
and what if the goods were forcibly taken by the corsair?
Art. 623. If he should be attacked by a privateer and after
having tried to avoid the encounter and having resisted the
delivery of the equipment of the vessel or of its cargo, they
should be forcibly taken away from him, or he should be
obliged to deliver them, he shall make an entry in his
freight book and shall prove the fact before the competent
authority at the first port he touches.
After the force majeure has been proven, he shall be
exempted from liability.
This is very common in Africa because there are a lot of
pirates there. So take note of your duty if in the future you
will be a captain.
Lets proceed to another captain in maritime commerce, the

officers and crew of the vessel. We have the sailing mate.
Sailing Mate
Who is a sailing mate?
Art. 627. The sailing mate, as the second chief of the vessel
and unless the ship agent does not order otherwise, shall
take the place of the captain in case of absence, sickness or
death, and shall then assume all his powers, obligations,
and liabilities.
This obligation of the sailing mate was discussed in
Centennial.
Are you familiar with corsair or men of war?
CENTENNIAL vs. DELA CRUZ (2008)
Corsair and Men of War

A corsair is a pirate ship. A man of war is a battle ship of the
navy used by the government. Why did I discuss about men
of war or corsair? It is in 622. What is the duty of the captain
in seas of corsair? What is his action against this man of war?
Read 622. The captain must proceed to the nearest neutral
port. Just read the procedure under 622 when you see a
corsair or man of war.
Art. 622. If when on a voyage, the captain should receive
news of the appearance of privateers or men of war against
his flag, he shall be obliged to make the nearest neutral
port, inform his ship agent or shippers, and await an
occasion to sail under convoy or until the danger is over or
to receive final orders from the ship agent or shippers.
FACTS
On May 9, 2000, petitioner Centennial Transmarine, Inc., for
and in behalf of its foreign principal, petitioner Centennial
Maritime Services, Corp., hired respondent Dela Cruz as Chief
Officer of the oil tanker vessel "MT Aquidneck," owned by
petitioner B+H Equimar, Singapore, Pte. Ltd., for a period of
nine months.
On May 15, 2000, respondent boarded "MT Aquidneck" and
performed his functions as Chief Officer. However, on
September 14, 2000, respondent was relieved of his duties
and repatriated to the Philippines. Failing to get a satisfactory
explanation from petitioners for his relief, respondent filed a
complaint for illegal dismissal with prayer for payment of his
salaries for the unexpired portion of contract, moral and
exemplary damages and attorneys fees.
TRANSPORTATION LAWS
Respondent alleged that while the vessel was docked in Lake
Charles in the United States, another Chief Officer boarded
the vessel. He inquired from the master of the vessel, Captain
Kowalewski, why he had a reliever, however the latter
disclaimed any knowledge. At the same time, he showed
respondent an electronic mail (e-mail) from petitioner B+H
Equimar Singapore, Pte. Ltd. stating that there was an
incoming Chief Officer who was to take over the operations
upon boarding.
On September 19, 2000, Captain Kowalewski gave
respondent his flight schedule. He was subsequently
repatriated on September 22, 2000.
Upon arrival in Manila, respondent inquired from Mr.
Eduardo Jabla, President of petitioner Centennial
Transmarine, Inc., why he was relieved. However, Jabla could
only surmise that his relief was possibly due to the arguments
he had with Capt. P. Bajaj, a company superintendent who
came on board in August 2000 while the vessel was berthed
in Los Angeles, regarding deck operations and deck work, and
documentation and safety procedures in the cargo control
room.
On the other hand, petitioner alleged that respondent was
relieved of his functions as Chief Officer due to his
inefficiency and lack of job knowledge. Capt. Kowalewski
allegedly informed them of respondents lack of experience in
tanker operations which exposed the vessel and its crew to
danger and caused additional expenses. Petitioners allegedly
advised respondent to take a refresher course in order to
facilitate his deployment to another vessel. However, instead
of taking a refresher course, respondent filed a case for illegal
dismissal.
ISSUE
Whether or not the position of chief officer of an ocean going
vessel is a managerial position or one of trust and confidence.
evidence which must establish clearly and convincingly the

facts on which the loss of confidence rests.
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.
Moreover, the Standards of Training, Certification and
Watchkeeping for Seafarers 1978 (STCW 78), to which the
Philippines is a signatory, defines a Chief Mate as "the deck
officer next in rank to the master and upon whom the
command of the ship will fall in the event of incapacity of the
master."
In Association of Marine Officers and Seamen of Reyes and
Lim Co. v. Laguesma, the Court held that the 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 ships
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
vessels 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.
Ok, thank you. So thats a sailing mate. What about a second
mate?
RULING
Second Mate
The petition lacks merit. Petitioners allege loss of trust and
confidence due to incompetence as the ground for
respondents dismissal. Loss of trust 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.
A second mate takes the command of the vessel in case of

the inability or disqualification of the captain and sailing
mate, assuming therefore their powers and responsibilities.
Crew Sailors
The crew sailors are the other persons who man the vessel.
With respect to a managerial employee, the mere existence

of a basis for believing that such employee has breached the
trust of his employer would suffice for his dismissal. Proof
beyond reasonable doubt is not required, only substantial
TRANSPORTATION LAWS
Discharge of Captain and Crew
RULING
Who will discharge or terminate the services of the person

despite of the vessel?
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." Article 605 of the
Code of Commerce gives the causes for dismissal.
1) The ship agent or shipowner may discharge the captain or

the crew
2) The captain may discharge lower level sailors or crew
Effects if the captain and crew are discharged during

the voyage
Not having been discharged for any of the causes

enumerated in the foregoing article, the respondents are
entitled to the amounts they respectively seek to collect from
the petitioner.
Art. 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.
Commentary: So this was for a definite voyage galing Manila

to Japan to Hong Kong then back to Manila. They were
dismissed sa Hong Kong. So ang bayad sa kanila is from
Manila up to Hong Kong. So theyre asking now for damages
and salary up to their return to Manila. The Supreme Court
said they are entitled to their salary up to their return to
Manila. So definite voyage, up to the fulfillment of the
contract.
Exception (definite period or voyage)
Lets go to Wallem.
General Rule (during the voyage)
Art. 605. If the contract of the captain and members of the

crew with the ship agent should be for a definite period or
voyage, they cannot be discharged until the fulfillment of
their contracts, EXCEPT for reasons of insubordination in
serious matters, robbery, theft, habitual drunkenness, an
damage caused to the vessel or to its cargo by malice, or
manifest or proven negligence.
MADRIGAL SHIPPING vs OGILVIE (1958)

FACTS
The captain, employed by Madrigal Shipping, engaged the
services of several seamen to fetch and man the vessel SS
Bridge owned by the latter from Sasebu, Japan to the port of
Manila. The seamen were flown to Sasebu and they manned
the vessel. Upon arrival of the vessel in Hongkong, the
seamen were dismissed, replaced by a Chinese crew and
were flown back to Manila and paid their salaries up to the
date of their discharge.
The seamen brought this action to collect their salaries and
subsistence allowance from day of dismissal to the date when
the vessel arrived in manila. CFI dismissed complaint on the
ground that the respondents failed to prove that the
petitioner is a corporation organized under Philippine laws
and therefore it has no jurisdiction over the subject matter of
the action.
WALLEM vs MINISTER OF LABOR (1981)

FACTS
Private respondents were hired by petitioner sometime in
May 1975 to work as seamen for a period of ten months on
board the M/V Woermann Sanaga, a Dutch vessel owned and
operated by petitioner's European principals. While their
employment contracts were still in force, private respondents
were dismissed by their employer, petitioner herein, and
were discharged from the ship on charges that they
instigated the International Transport Federation (ITF) to
demand the application of worldwide ITF seamen's rates to
their crew.
Private respondents were repatriated to the Philippines on
October 27, 1975 and upon their arrival in Manila, they
instituted a complaint against petitioner for illegal dismissal
and recovery of wages and other benefits corresponding to
the five months' unexpired period of their shipboard
employment contract.
ISSUE
The whole controversy is centered around the liability of
petitioner when it ordered the dismissal of herein private
respondents before the expiration of their respective
employment contracts.
CA reversed CFI decision and ordered petitioner to pay

respondents. Petitioner for certiorari.
TRANSPORTATION LAWS
RULING
Discharge by the Captain of the Sailor
In its Order of December 19, 1977 5 the Board, thru its

Chairman, Minister Blas F. Ople, held that there is no showing
that the seamen conspired with the ITF in coercing the ship
authorities to grant salary increases, and the Special
Agreement was signed only by petitioner and the ITF without
any participation from the respondents who, accordingly,
may not be charged as they were, by the Secretariat, with
violation of their employment contract. The Board likewise
stressed that the crew members may not be discharged until
after the expiration of the contract which is for a definite
period, and where the crew members are discharged without
just cause before the contract shall have been performed,
they shall be entitled to collect from the owner or agent of
the vessel their unpaid salaries for the period they were
engaged to render the services, applying the case of Madrigal
Shipping Co., Inc. vs. Jesus Ogilivie et al.
Art. 637. Neither can the captain discharge a sailor during

the time of his contract except for sufficient cause, the
following being considered as such:
The findings and conclusion of the Board should be sustained.

As already intimated above, there is no logic in the statement
made by the Secretariat's Hearing Officer that the private
respondents are liable for breach of their employment
contracts for accepting salaries higher than their contracted
rates. Said respondents are not signatories to the Special
Agreement, nor was there any showing that they instigated
the execution thereof. Respondents should not be blamed for
accepting higher salaries since it is but human for them to
grab every opportunity which would improve their working
conditions and earning capacity.
It is a basic right of all workingmen to seek greater benefits
not only for themselves but for their families as well, and this
can be achieved through collective bargaining or with the
assistance of trade unions. The Constitution itself guarantees
the promotion of social welfare and protection to labor. It is
therefore the Hearing Officer that gravely erred in disallowing
the payment of the unexpired portion of the seamen's
respective contracts of employment.
It is petitioner who is guilty of breach of contract when they
dismissed the respondents without just cause and prior to the
expiration of the employment contracts. As the records
clearly show, petitioner voluntarily entered into the Special
Agreement with ITF and by virtue thereof the crew men were
actually given their salary differentials in view of the new
rates. It cannot be said that it was because of respondents'
fault that petitioner made a sudden turn-about and refused
to honor the special agreement.
So it was for a definite period of 10 months. Theres this case
because they wanted to demand higher wages. Is that a just
cause for termination? No.
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.
Incapacity and repeated negligence in

fulfillment of the service he should render.
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.
the
The captain may, however, before setting out on a voyage

and without giving any reason whatsoever, refuse to permit
a sailor whom he may have engaged to go on board, and
may leave him on land, in which case he will be obliged to
pay him his wages as if he had rendered services.
This indemnity shall be paid from the funds of the vessel if
the captain should have acted for reasons of prudence and
in the interest of the safety and good services of the
former. Should this not be the case, it shall be paid by the
captain personally.
After the vessel has sailed, and during the voyage and until
the conclusion thereof, the captain may not abandon any
member of his crew and land or on the sea, unless by reason
of being guilty of some crime, his imprisonment and
delivery to the competent authority should be proper in the
first port touched, which shall be obligatory to the captain.
Supercargo
A person especially employed by the owner of a cargo to take
charge of and sell the best advantage merchandise which has
been shipped, and to purchase returning cargoes and to
receive freight, as he may be authorized.
Duties of a Supercargo
The supercargoes shall discharge on board the vessel the
administrative duties which the ship agent or shippers may
have assigned to them; they shall keep an account and record
of their transactions in a book which shall have the same
conditions and requisites as those required for the accounting
TRANSPORTATION LAWS
book of the captain, and shall respect the latter in his duties
as chief of the vessel. (Art. 649, par 1, Com. Code)
vessel carried; but he may exempt himself therefrom by

abandoning the vessel with all her equipment and the
freightage it may have earned during the voyage.
Effect When There is a Supercargo

So when is the ship owner and ship agent civilly liable?
The power and responsibilities of the captain shall cease,
when there is a supercargo, with regard to that part of the
administration legitimately conferred upon the latter, but
they shall continue in force for all acts which are inseparable
from his authority and office. (Art. 649, par 2, Com. Code)
Prohibited Acts of Supercargoes

1.
2.
Supercargoes, cannot, without authorization or

express 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. (Art. 651, par. 1, Com. Code)
Neither can they invest in the return voyage more
than the profit from the ventures, unless there is an
express authorization from the principals. (Art. 651,
par. 2, Com. Code)
Note: 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. (Art. 650, Com. Code)
Doctrine Of Limited Liability

Under Maritime Commerce, vessels also may be able to limit
their liability even without a stipulation because it is the law
that provides for that.
Articles 586 and 587 talk about the liability of the ship owner
and ship agent.
Liability of Ship Owner and Ship Agent
Art. 586. The owner of a vessel and the ship 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 for the benefit of the same.
By ship agent is understood the person entrusted with
provisioning of a vessel, or who represents her in the port in
which she happens to be.
1.
For the acts of the captain
2.
For the obligations contracted by the captain to

repair, equip, and provision the vessel
3.
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 when can a ship agent be exempt from liability?

By abandoning the vessel with all her equipment and the
freightage it may have earned during the voyage.
The doctrine of limited liability is invoked by the common
carrier in case of loss or damage to the goods due to perils of
the sea because of the real and hypothecary nature of
maritime commerce.
YANGCO vs LASERNA (1941)

FACTS
Petitioner Yangcos vessel SS Negros left Romblon. The
captain was duly advised and his attention was called by the
passengers that typhoon signal No. 2 was up. But the boat
proceeded to sail after some loading. As the sea became very
violent, the captain ordered that the ship return to the port
but was caught by waves causing it to capsize and sink. Many
passengers died.
Respondent heirs of deceased filed
separate civil actions against the petitioner to recover
damages which the lower court awarded. Petitioner,
however, in a pleading sought to abandon the vessel to
plaintiff/respondents with all its equipment. Abandonment
was denied. CA affirmed the judgment. Hence, this petition
for review on certiorari.
ISSUE
May the shipowner or agent, notwithstanding the total loss
of the vessel as a result of the negligence of its captain, be
properly held liable in damages for the consequent death of
its passengers?
RULING
Art. 587. The ship agents shall 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
If the shipowner or agent may in any way be held civilly liable

at all for injury to or death of passengers arising from the
negligence of the captain in cases of collisions or shipwrecks,
TRANSPORTATION LAWS
his liability is merely co-extensive with his interest in the
vessel such that a total loss thereof results in its extinction.
The steamship Negros, as a vessel engaged in interisland
trade, is a common carrier and that the relationship between
the petitioner and the passengers who died in the mishap
rests on a contract of carriage. But assuming that petitioner is
liable for a breach of contract of carriage, the exclusively real
and hypothecary nature of maritime law operates to limit
such liability to the value of the vessel, or to the insurance
thereon, if any.
In the instant case it does not appear that the vessel was
insured. Whether the abandonment of the vessel sought by
the petitioner in the instant case was in accordance with law
of not, is immaterial. The vessel having totally perished, any
act of abandonment would be an idle ceremony.
Commentary: Okay. So there are several cases discussing
about the hypothecary nature of maritime contract. In
accordance with Article 587 of the Code of Commerce, the
law allows a ship owner or a ship agent the right of
abandonment. So what are those that can be abandoned?
The vessel with all her equipment and the freightage it may
have earned during the voyage.
So the reasons why the ship owner and ship agent are given
the right to abandon, lets hear the case of Heirs of dela
Santos.
HEIRS OF DELOS SANTOS vs CA (1990)

FACTS
The petition for certiorari seeks to set aside the CA decision in
affirming the CFI decision which dismissed the petitioners
claim for damages against Compania Maritima for the injury
and death of the victims as a result of the sinking of M/V
Mindoro on November 4, 1967.
ISSUE
Whether or not the CA erred in not concentrating to the
provision of law in the New Civil Code as expressed in Art.
1766 which provides that, 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.
RULING
The petition has merit. At the outset, We note that there is
no dispute as to the finding of the captains negligence in the
mishap. The present controversy centers on the questions of
Maritimas negligence and of the application of Article 587 of
the Code of Commerce.
Under this provision, a shipowner or agent has the right of

abandonment; and by necessary implication, his liability is
confined to that which he is entitled as of right to abandonthe vessel with all her equipments and the freight it may
have earned during the voyage (Yangco v. Laserna, et al., 73
Phil. 330, 332). Notwithstanding the passage of the New Civil
Code, Article 587 of the Code of Commerce is still good law.
The reason lies in the peculiar nature of maritime law which
is exclusively real and hypothecary that operates to limit such
liability to the value of the vessel, or to the insurance
thereon, if any (Yangco v. Laserna, Ibid). As correctly stated
by the appellate court, (t)his rule is found necessary to offset
against the innumerable hazards and perils of a sea voyage
and to encourage shipbuilding and marine commerce.
Contrary to the petitioners supposition, the limited liability
doctrine applies not only to the goods but also in all cases like
death or injury to passengers wherein the shipowner or agent
may properly be held liable for the negligent or illicit acts of
the captain (Yangco v. Laserna, Ibid).
It must be stressed at this point that Article 587 speaks only
of situations where the fault or negligence is committed
solely by the captain. In cases where the shipowner is
likewise to be blamed, Article 587 does not apply (see Manila
Steamship Co., Inc. v. Abdulhanan, et al., 100 Phil. 32, 38).
Such a situation will be covered by the provisions of the New
Civil Code on Common Carriers. Owing to the nature of their
business and for reasons of public policy, common carriers
are tasked to observe extraordinary diligence in the vigilance
over the goods and for the safety of its passengers (Article
1733, New Civil Code).
Guided by the above legal provisions, We painstakingly
reviewed the records of the case and found imprints of
Maritimas negligence which compel Us to reverse the
conclusion of the appellate court.
Maritima claims that it did not have any information about
typhoon Welming until after the boat was already at sea.
Modem technology belie such contention. The Weather
Bureau is now equipped with modern apparatus which
enables it to detect any incoming atmospheric disturbances.
In his summary report on tropical cyclone Welming which
occurred within the Philippine Area of Responsibility, Dr.
Roman L. Kintanar, Weather Bureau Director, stated that
during the periods of November 15, 1967, the Bureau issued
a total of seventeen (17) warnings or advisories of typhoon
Welming to shipping companies.
If the captain knew of the typhoon beforehand, it is
inconceivable for Maritima to be totally in the dark of
Welming. In allowing the ship to depart late from Manila
despite the typhoon advisories, Maritima displayed lack of
foresight and minimum concern for the safety of its
TRANSPORTATION LAWS
passengers taking into
circumstances of the case.
account
the
surrounding
While We agree with the appellate court that the captain was
negligent for overloading the ship, We, however, rule that
Maritima shares equally in his negligence. We find that while
M/V Mindoro was already cleared by the Bureau of Customs
and the Coast Guard for departure at 2:00 p.m. the ships
departure was, however, delayed for four hours.
As the appellate court stated, (v) erily, if it were not for have
reached (its) destination and this delay, the vessel could
thereby have avoided the effects of the storm. This
conclusion was buttressed by evidence that another ship,
M/V Mangaren, an interisland vessel, sailed for New
Washington, Aklan on November 2, 1967, ahead of M/V
Mindoro and took the same route as the latter but it arrived
safely.
Puerto Galera, Oriental Mindoro, while private respondents

are the owners of the vessels, M/V Luzviminda I, a common
carrier engaged in the coastwise trade from the different
ports of Oriental Mindoro to the Port of Manila.
In October 1977, petitioner loaded 1,000 sacks of copra,
valued at P101,227.40 on board the vessel M?V Luzviminda I
for shipment from Puerto Galera, Oriental Mindoro to
Manila. Said cargo, however, did not reach Manila because
somewhere between Cape Santiago and Calatagan, Batangas,
the vessel capsized and sank with all its cargo.
ISSUE
Whether the doctrine of limited liability under Article 587 of
the Code of Commerce as expounded in Yangco vs. Laserna
was correctly applied by the Appellate Court.
RULING
Maritima presents evidence of the seaworthy condition of

the ship prior to its departure to prove that it exercised
extraordinary diligence in this case. M/V Mindoro was
drydocked for about a month. Necessary repairs were made
on the ship. Lifesaving equipment and navigational
instruments were installed.
While indeed it is true that all these things were done on the
vessel, Maritima, however, could not present evidence that it
specifically installed a radar which could have allowed the
vessel to navigate safely for shelter during a storm.
With the impending threat of Welming, an important device
such as the radar could have enabled the ship to pass through
the river and to safety.
The foregoing clearly demonstrates that Maritimas lack of
extraordinary diligence coupled with the negligence of the
captain as found by the appellate court were the proximate
causes of the sinking of M/V Mindoro. Hence, Maritima is
liable for the deaths and injury of the victims.
Commentary: So if youre asking about what is
abandonment, abandonment parang you are invoking
exception to liability. So instead of paying, you can just
abandon the value of the vessel with all her equipment and
the freightage. In most instances, when an abandonment is
made, the purpose is to offset against the numerable hazards
against perils of the sea.
CHUA YEK HONG vs IAC (1988)

FACTS
Petitioner Chua is a duly licensed copra dealer based at
The term shipagent as used in Article 587 of the Code of

Commerce is broad enough to include the shipowner
(Standard Oil Co. vs. Lopez Castelo, 42 Phil. 256). Pursuant to
said provision, therefore, both the shipowner and shipagent
are civilly and directly liable for the indemnities in favor of
thid persons, which may arise from the conduct of the
captain in the care of goods transported, as well as for the
safety to passengers transported (Yangco vs. Laserna; Manila
Steamship vs. Abdulhaman).
However, under the same Articles, this direct liability is
moderated and limited by the shipagents or shipowners
right of abandonment of the vessel and earned freight. This
expresses the universal principle of limited liability under
maritime law. The most fundamental effect of abandonment
is the cessation of the responsibility of the shipagent/owner
(Switzerland General vs. Ramirez).
The ship owner's or agent's liability is merely co-extensive
with his interest in the vessel such that a total loss thereof
results in its extinction. "No vessel, no liability" expresses in a
nutshell the limited liability rule. The total destruction of the
vessel extinguishes maritime liens as there is no longer any
res to which it can attach (Govt. Insular Maritime Co. vs. The
Insular Maritime, 45 Phil. 805, 807 [1924]).
The limited liability rule, however, is not without exceptions,
namely: (1) where the injury or death to a passenger is due
either to the fault of the ship owner, or to the concurring
negligence of the ship owner and the captain (Manila
Steamship Co., Inc. vs. Abdulhaman supra); (2) where the
vessel is insured; and (3) in workmen's compensation claims
Abueg vs. San Diego, supra). In this case, there is nothing in
the records to show that the loss of the cargo was due to the
fault of the private respondent as shipowners, or to their
TRANSPORTATION LAWS
concurrent negligence with the captain of the vessel.

What about the provisions of the Civil Code on common
carriers? Considering the "real and hypothecary nature" of
liability under maritime law, these provisions would not have
any effect on the principle of limited liability for ship owners
or ship agents. As was expounded by this Court:
In arriving at this conclusion, the fact is not ignored that the
illfated, S.S. Negros, as a vessel engaged in interisland trade,
is a common carrier, and that the relationship between the
petitioner and the passengers who died in the mishap rests on
a contract of carriage. But assuming that petitioner is liable
for a breach of contract of carriage, the exclusively 'real and
hypothecary nature of maritime law operates to limit such
liability to the value of the vessel, or to the insurance thereon,
if any. In the instant case it does not appear that the vessel
was insured. (Yangco vs. Laserila, et al., supra).
Moreover, Article 1766 of the Civil Code provides:
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.
In other words, the primary law is the Civil Code (Arts.
17321766) and in default thereof, the Code of Commerce and
other special laws are applied. Since the Civil Code contains
no provisions regulating liability of ship owners or agents in
the event of total loss or destruction of the vessel, it is the
provisions of the Code of Commerce, more particularly Article
587, that govern in this case.
In sum, it will have to be held that since the ship agent's or
ship owner's liability is merely co-extensive with his interest
in the vessel such that a total loss thereof results in its
extinction (Yangco vs. Laserna, supra), and none of the
exceptions to the rule on limited liability being present, the
liability of private respondents for the loss of the cargo of
copra must be deemed to have been extinguished. There is
no showing that the vessel was insured in this case.
-END OF FEBRUARY 3 DISCUSSION-
TRANSPORTATION LAWS
REVIEW
What is the governing body? MARINA or Maritime Industry
Authority.
What are the general functions of MARINA?
1.
2.
Issue certificate of public convenience for the

operation of domestic and overseas water carriers;
and
Register and issue certificate, licenses, or documents
necessary or incident thereto.
RA 1937, Sec. 911. Vessels Eligible for Bay and River License.
To be eligible for the bay and river license, a vessel must
be built in the Philippines, and the ownership of such vessel
must be vested in:
We discussed Article 573 on how to acquire ownership of a

vessel. It can be acquired by prescription and by any other
means prescribed by law.
What type of property is a vessel? It is a personal or movable
property but there are requisites to be complied with. The
ownership thereof must be evidenced by a certificate of
ownership, and the transfer must be registered in the proper
rd
registry to bind 3 persons.
Take note of the case of Rubiso vs. Rivera.
Art. 575 .Co-owners of vessels shall have the right of
repurchase and redemption in sales made to strangers, but
they may exercise the same only within the nine days
following the inscription of the sale in the registry, and by
depositing the price at the same time.
a) citizens of the Philippines;

b) domestic corporations or companies seventy-five
per centum of whose corporate capital belongs to citizens of
the Philippines: Provided, That the present owners of vessels
with bay and river license under existing law who do not
possess any of the requirements herein prescribed may
nevertheless continue operating such vessels as eligible for
said bay and river license.
RA 1937, Sec. 912. Exemption of Certain Craft from
Requirement of Bay and River License. No bay and river
license shall be required of any of the following classes of
vessels:
a) Vessels of three tons net or less.
b) Yachts, launches and other craft used exclusively for
pleasure and recreation.
Right of preemption and right of redemption? Lets say for

example, a vessel is co-owned by 3 persons A, B, and C. And
A wants to sell his share of the vessel. So even before the
share of A is sold to a stranger or 3rd person, the other coowners can exercise the right of preemption. Meaning, you
preempt the sale of the share of the co-owner to a 3rd person.
Thats the right of preemption.
What if the sale has already been consummated? It was
already sold to a 3rd person. What would be the remedy of
the co-owners? Exercise the right of redemption. So in right
rd
of redemption, you pay to the 3 person the amount that the
3rd person paid to the co-owner-seller.
But when it comes to vessels, you take note of Art. 575. That
right can only be exercised with 9 days following the
inscription of the sale in the registry and by depositing the
price at the same time.
c) Ships boats and launches bearing the name and

home port of the vessel plainly marked thereon.
d) Vessels
Philippines.
owned by
the Government
of
the
The exemption of any vessel shall at once cease if it engages

in the business of transporting cargo or passengers, for hire.
So if you have to use a yacht for business to transport, you
have to apply for a bay or river license.
Art. 577. If the alienation of the vessel should be made

while it is on a voyage, the freightage which it earns from
the time it receives its last cargo shall pertain entirely to the
purchaser, and the payment of the crew and other persons
who make up its complement for the same voyage shall be
for his account.If the sale is made after the vessel has
arrived at the port of its destination, the freightage shall
pertain to the vendor, and the payment of the crew and
other individuals who make up its complement shall be for
his account, unless the contrary is stipulated in either case.
TRANSPORTATION LAWS
Article 577 also discusses the rights and obligations.
1.
2.
If alienation is made while the vessel is on a voyage,

the freightage which it earns from the time it
receives its last cargo shall belong entirely to the
purchaser. The payment of the crew and other
persons shall also be for his account.
If the sale is made after the vessel arrived at its
destination, the freightage shall belong to the
vendor and the payment of the crew shall be for his
own account.
Art. 583. If while on a voyage the captain should find it

necessary to contract one or more of the obligations
mentioned in subdivisions 8 and 9 of Article 580, he shall
apply to the judge or court if he is in Philippine territory,
and otherwise to the consul of the Republic of the
Philippines, should there be one, and, in his absence, to the
judge or court or proper local authority, presenting the
certificate of the registration sheet 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 of their
result in the certificate, in order that it may be recorded in
the registry when the vessel returns to the port of its
registry, or so that it can be admitted as a legal and
preferred obligation in case of sale before its return, by
reason of the sale of the vessel on account of a declaration
of unseaworthiness.The omission of this formality shall
make the captain personally liable for the credits prejudiced
on his account.
Article 583 is a situation that is contemplated by the captain
when he has to borrow money to have the vessel fixed. Is the
captain obligated to use his own money to have the vessel
repaired?
If while on voyage and within the Philippines, the

captain shall apply to the judge or court.
If not in the Philippines, apply to the consul of the

Republic of the Philippines. In the absence of a
consul, to the judge or court or proper local
authority.
What if he spent the borrowed money? He will be the one to

pay for the same.
These formalities are also required when the captain acquires
a loan on bottomry. A loan on bottomry is a loan that the
collateral is the vessel. But loan on respondentia, the
collateral is the cargo.
Now, the different persons who take part in maritime
commerce.
1.
2.
3.
4.
5.
6.
Ship owner is the owner of the vessel.

Ship agent is the person entrusted with the
provisioning of the vessel, or who represents the
vessel in the port where she happens to be.
Captain or master is the one who governs the vessel.
Sailing mate is the second chief of the vessel.
Second mate is the one who takes command of the
vessel in case of disability or disqualification of
captain or sailing mate.
Crew or sailors are the persons who man the vessel
and those who perform other duties. They are
enlisted by the captain.
How is ship agent chosen? The co-owner shall elect him.

Art. 594. The co-owners shall elect the manager who is to
represent them in the capacity of ship agent. The
appointment of director or ship agent shall be revocable at
the will of the members.
Art. 595. The ship agent, whether he is at the same time the
owner of the vessel, or a manager for an owner or for an
association of co-owners, must have the capacity to trade
and must be recorded in the merchant's registry of the
province.The ship agent shall represent the ownership of
the vessel, and may, in his own name and in such capacity,
take judicial and extrajudicial steps in matters relating to
commerce.
What are the powers and duties of the ship agent?
What is the effect if the captain would not comply with the
requirements? He will be personally liable. He will not be
reimbursed.
1.
2.
He represents the ownership of the

He may take judicial and extrajudicial steps in
matters relating to commerce, in his own name and
in such capacity.
So technically, the ship agent is as powerful as the ship

owner. But its different because the ship owner collects
freight. It will always be in favor of the ship owner. Ship agent
TRANSPORTATION LAWS
can be sued for breach of contract of carriage. Even if your
contract is with the ship owner.
Take note of the case of Macondray vs. Provident. Even if
youre not related at all to the carrier or the shipper, if you
act as agent of the vessel, you can be sued for breach of
contract of carriage.
Now, the captain. He is the one who governs the vessels that
navigate the high seas or of large dimensions and
importance. For purposes of maritime commerce, the captain
is the same as the master.
What are the qualifications of a captain?
1.
2.
3.
4.
Must be a citizen of the Philippines

Legal capacity to bind himself
Proof that they have skill, capacity, and qualification
required to command and direct a vessel as
established by marine laws, ordinances or
regulations and those of navigation
Not disqualified according to the same for the
discharge of the duties of that position
Art. 609. Captains, masters or patrons of vessels must be

Filipinos, have legal capacity to contract in accordance with
this code, and prove the skill, capacity, and qualifications
necessary to command and direct the vessel, as established
by marine or navigation laws, ordinances, or regulations,
and must not be disqualified according to the same for the
discharge of the duties of the position.If the owner of a
vessel desires to be the captain thereof, without having the
legal qualifications therefor, he shall limit himself to the
financial administration of the vessel, and shall intrust the
navigation to a person possessing the qualifications
required by said ordinances and regulations.
Art. 610. The following powers shall be inherent in the

position of captain, master or patron of a vessel:
1. To appoint or make contracts with the crew in the
absence of the ship agent, and to propose said crew, should
said agent be present; but the ship agent may not 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 ship agent.
3. To impose, in accordance with the contracts and
with the laws and regulations of the merchant marine, and
when on board the vessel, correctional punishment upon

those who fail to comply with his orders or are wanting in
discipline, holding a preliminary hearing on the crimes
committed on board the vessel on the seas, which crimes
shall be turned over to the authorities having jurisdiction
over the same at the first port touched.
4. To make contracts for the charter of the vessel in
the absence of the ship agent or of its consignee, acting in
accordance with the instructions received and protecting
the interests of the owner with utmost care.
5. To adopt all proper measures to keep the vessel well
supplied and equipped, purchasing all that may be
necessary for the purpose, provided there is no time to
request instruction from the ship agent.
6. To order, in similar urgent cases while on a voyage,
the repairs on the hull and engines of the vessel and in its
rigging and equipment, which are absolutely necessary to
enable it to continue and finish its voyage; but if he should
arrive at a point where there is a consignee of the vessel, he
shall act in concurrence with the latter.
General functions of the captain?

1.
2.
3.
General agent of the ship owner this is the most

important!
Technical director of the vessel
Representative of the government in the country
under whose flag he navigates
Art. 611. In order to comply with the obligations mentioned

in the preceding article, the captain, when he has no funds
and does not expect to receive any from the ship agent,
shall obtain the same in the successive order stated below:
1. By requesting said funds from the consignee of the
vessel or correspondents of the ship agent.
2. By applying to the consignees of the cargo or to
those interested therein.
3. By drawing on the ship agent.
4. By borrowing the amount required by means of a
loan on bottomry.
5. By selling a sufficient amount of the cargo to cover
the sum absolutely indispensable for the repair of the vessel
and to enable it to continue its voyage.
In these two last cases he must apply to the judicial
authority of the port, if in the Philippines, and to the consul
of the Republic of the Philippines if in a foreign country,
and where there is none, to the local authority, proceeding
TRANSPORTATION LAWS
in accordance with the provisions of Article 583, and with
the provisions of the law of civil procedure.
Also take note of Article 612. Remember the cases of Far
Eastern and Wildvalley on compulsory pilotage.
contracted for the repair, equipment, and provisioning of

the vessel, which shall devolve upon the ship agent, unless
the former has expressly bound himself personally or has
signed a bill of exchange or promissory note in his name.
Again, what is corsair? Corsair is a pirate ship or privateer.
Books that have to be carried by the captain on board:

1.
2.
3.
Logbook most important!

Accounting book
Freight book
What is the duration of the responsibility?

Art. 619. The captain shall be liable for the cargo from the
time it is delivered to him at the dock or afloat alongside
the at the port of loading, until he delivers it on the shore
or on the discharging wharf at the port of unloading, unless
the contrary has been expressly agreed upon.
Remember in CCOG, when will carrier be liable? If the cargo
has been unconditionally placed in his possession.
Prohibited acts
1.
2.
3.
4.
5.
6.
7.
Cannot make separate transactions for his own

account (Art. 613)
Fails to make the agreed voyage (Art. 614)
Substitute himself by other persons (Art. 615) but
the sailing mate may take over the duties of the
captain, especially when the captain is taking a
break; consequence if he allows an unqualified
person, the captain will be liable for the acts of such
substitute and may be ground for his discharge
Contract loans on respondentia, where the collateral
is the cargo (Art. 617)
Borrow money on bottomry for his own transaction
(Art. 617)
Borrow or sell outside of the cases and without the
formalities prescribed by law (Art. 621)
Commit fraud in his accounts (Art. 621)
Art. 622. If while on a voyage the captain should learn of

the appearance of privateers or men of war against his flag,
he shall be obliged to make the nearest neutral port, inform
his agent or shippers, and await an occasion to sail under
convoy, or until the danger is over or he has received
express orders from the ship agent or the shippers.
What is a man of war? A battleship or war ship used by the
government or navy.
What is the duty of the captain if he would see a corsair or

man of war? He should make it to the nearest neutral port,
inform and await an occasion to sail under convoy or until
danger is over or he has received express orders from the
ship agent. In other words, he should flee from the pirates.
What if the captain acted slowly? He did not overrun the

corsair and they are now to board the vessel?
Art. 623.If he should be attacked by a privateer, and, after
having tried to avoid the encounter and having resisted the
delivery of the effects of the vessel or its cargo, they should
be forcibly taken away from him, or he should be obliged to
deliver them, he shall make an entry thereof in his freight
book and shall prove the fact before the competent
authority at the first port he touches.
After the force majeure has been proved, he shall be
exempted from liability.
Now, maritime protest.
But if the captain is part owner of the vessel, can he sell or

mortgage his exclusive share? Yes. As long as the vessel is not
already mortgaged and there exists no current lien
chargeable to the vessel.
When is captain not liable?
Art. 620. The captain shall not be liable for the damages
caused to the vessel or to the cargo by force majeure; but
he shall always be so for those arising through his own
fault, no agreement to the contrary being valid.Neither
shall he be personally liable for the obligations he may have
Art. 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
twenty-four hours following his arrival and shall ratify it
within the same period when he arrives at his destination,
immediately proceeding with the proof of the facts, and he
may not open the hatches until after 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
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nearest authority, and make a sworn statement of
facts.The authority or the consul shall verify the said facts
receiving sworn statements of the members of the crew and
passengers who may have been saved; and taking such
other steps as may assist in arriving at the facts he shall
make a statement of the result of the proceedings in the
log book and in that of the sailing mate, and shall deliver
to the captain the original record of the proceedings,
stamped and folioed, with a memorandum of the folios,
which he must rubricate, in order that it may be presented
to the judge or court of the port of destination.The
statement of the captain shall be accepted if it is in
accordance with those of the crew and passengers; if they
disagree, the latter shall be accepted, always saying proof
to the contrary.
A maritime protest 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
with respect to circumstances attending to such occurrence.
But there must be no participation on the part of the crew. It
must be purely accidental.
What is the purpose of maritime protest? It is intended to
show that the loss or damage resulted from a peril of the sea,
or from some other cause for which neither master nor
owner was responsible, and concludes with the protestation
against any liability of the owner for such loss or
damage.
What is the procedure? It is under Article 624.
If you have entries in the logbook of maritime protest, those
are just prime facie evidence. For example, the entries of the
captain are not in agreement with the contentions of the
crew or sailors. The evidence in the logbook of a maritime
protest, that is merely prima facie. Disputable. So if the crew
or sailors or other persons who take part in the vessel allege
on the contrary the contention of the captain, then the
entries in his logbook can be rebutted by the crews and
sailors.
What are the instance when you have to file a maritime
protest?
1.
2.
3.
When the vessel has gone through a hurricane

If the cargo has suffered damages or averages
Vessel is wrecked
Now, the officers or crew. Sailing mate is the second chief of

the vessel. He shall also take the place of the captain in cases
of absence, sickness, or death.
Art. 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, duties, and
responsibilities.
Then we have the crew and sailors. The qualifications of the
crew are under Art. 634.
Art. 634. The captain may make up the crew of his vessel
with such number of men as he may consider proper, and in
the absence of Filipino sailors, he may take on foreigners
residing in the country, the number thereof not to exceed
one-fifth of the crew. If in foreign ports the captain should
not find a sufficient number of Filipino sailors, he may
complete the crew with foreigners, with the consent of the
consul or marine authorities.
The agreement which the captain may make with the
members of the crew and others who go to make up the
complement of the vessel, to which reference is made in
Article 612, must be reduced to writing in the account
book, without the intervention of a notary public or clerk
of court ("escribano"), signed by the parties thereto and
visaed by the marine authority if they be executed in
Philippine territory or by the consuls or consular agents of
the Republic of the Philippines if executed abroad, stating
therein all the obligations which each one contracts and all
the rights he acquires said authorities taking care that these
obligations and rights are recorded in a clear and definite
manner which give no room for doubts or claims.
The captain shall take care to read to them the articles of
this Code which concern them, stating in said document
that they were read.If the book contains the requisites
prescribed in Article 612, and there should not appear any
signs of alterations in its entries, it shall be admitted as
evidence in questions which may arise between the captain
and the crew with respect to the agreements contained
therein and the amounts paid on account of the same.
Every member of the crew may demand of the captain a
copy, signed by the latter, of the agreement and of the
liquidation of his wages, as they appear in the book.
TRANSPORTATION LAWS
What is the rule?
1.
2.
What are the rules on discharge of captain or crew if

contract is for a definite voyage?
The captain shall enlist Filipino crew.

In the absence of Filipinos, resident aliens.
But if they are in a foreign port and there are no Filipino

sailors or not enough Filipino sailors, he may complete the
crew with foreigners but with the consent of the consul or
marine authorities.
What are the prohibited acts of crew members?
Art. 635. A seaman who has been contracted to serve on a
vessel may not rescind his contract or fail to comply
therewith except by reason of a legitimate impediment
which may have happened to him.
Neither may he transfer from the service of one vessel to
another without obtaining the written permission of the
captain of the vessel on which he may be.
If, without obtaining said permission, the seaman who has
signed for one vessel should sign for another one, the
second contract shall be void, and the captain may choose
between forcing him to fulfill the service to which he first
bound himself, or at his expense to look for a person to
substitute him.Furthermore, he shall lose the wages earned
on his first contract, to the benefit of the vessel for which
he had signed.A captain who, knowing that a seaman is in
the service of another vessel, should have made a new
agreement with him without having required of him the
permission referred to in the preceding paragraphs, shall be
subsidiarily responsible to the captain of the vessel to which
the seaman first belonged, for that part of the indemnity,
referred to in the third paragraph of this article, which the
seaman may not be able to pay.
And now, discharge. So, who can discharge? It is the ship
owner and ship agent, or the captain. Ship owner and ship
agent can discharge the captain or master. Captain can
discharge all other lower levels, the crew.
Art. 604. If the captain or any other member of the crew
should be discharged during the voyage, they shall receive
their salary until they return to the port where the contract
was made, unless there should be just cause for the
discharge, all in accordance with Article 636 and following
of this Code.
Article 604 is the general rule.
Art. 605. If the contracts of the captain and members of

the crew with the ship agent should be for a definite period
or voyage, they may not be discharged until after the
fulfillment of their contracts, except by reason of
insubordination in serious matters, robbery, theft, habitual
drunkenness, or damage caused to the vessel or to its cargo
through malice or manifest or proven negligence.
As to discharge of a sailor or crew member by captain?

Art. 637. Neither may the captain discharge a seaman
during the time of his contract except for just cause, the
following being considered as such:
1. The perpetration of a crime which disturbs order
on the vessel.
2. Repeated insubordination, want of discipline, or
non-fulfillment of the service.
3. Repeated incapacity and negligence in the
fulfillment of the service he should render.
4. Habitual drunkenness.
5. Any occurrence which incapacitates the seaman to
perform the work entrusted to him, with theexception of
that provided in Article 644.
6. Desertion.
The captain may, however, before getting out on a voyage
and without giving any reason, refuse to permit a seaman
whom he may have engaged to go on board, and leave him
on land, in which case he will be obliged to pay him his
wages as if he had rendered services.This indemnity shall
be paid from the funds of the vessel if the captain should
have acted for reasons of prudence and in the interest of
the safety and good services of the farmer. Should this not
be the case, it shall be paid by the captain personally.
aisadcAfter the voyage has begun, during the same, and
until the conclusion thereof, the captain may not abandon
any member of his crew on land or on sea, unless, by reason
of some crime, his imprisonment and delivery to the
competent authority in the first port touched should be
proper, a matter obligatory for the captain.
Art. 644. A seaman 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
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cure shall be defrayed from the common funds, in the form
of a loan.If the sickness should come from an injury
received in the service or defense of the vessel, the seaman
shall be attended and cured at the expense of the common
funds deducting, before anything else, from the proceeds
of the freightage the cost of the attendance and cure.
Who is a supercargo? A representative of the ships owner on

board a merchant ship, responsible for overseeing the cargo
and its sale.
Art. 649. Supercargoes shall discharge on board the vessel
the administrative duties which the ship agent or the
shippers may have assigned to 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 they shall respect
the latter in his capacity as chief of the vessel.The powers
and responsibilities 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.
or representing the vessel in the port in which it may be

found.
Art. 587. The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise from
the conduct of the captain in the care of the goods which
he loaded on the vessel; but he may exempt himself
therefrom by abandoning the vessel with all her equipments
and the freight it may have earned during the voyage.
So how to exempt himself from liability? Through exercising

the right of abandonment. Abandon the vessel and other
equipments and the freightage it may have earned during the
voyage.
Take note of the real and hypothecathery nature of maritime
law discussed in Yangco vs. Laserna. It can only be applied
when the vessel sinks because you cannot abandon if the
vessel is still there.
Reasons why it is impossible to do away with the privilege
of giving vessel owner the right to abandon
1.
Art. 650. All the provisions contained in the second section

of Title III, Book II, with regard to capacity, manner of
making contracts, and liabilities of factors, shall be
applicable to supercargoes.
Art. 651. Supercargoes may 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 an
express authorization from the principals.
Now, DOCTRINE OF LIMITED LIABILITY.

Art. 586. The shipowner and the ship 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 for the benefit of the same.By ship
agent is understood the person entrusted with provisioning
2.
The risk to which the thing is exposed. It is not cheap

for a shipowner to operate a vessel. And one must
spend so much if he wants to own a vessel. And if a
vessel is lost, your entire fortune will likewise be
lost.
The real nature of maritime law exclusively
according to which the liability of the parties is
limited to a thing which is at the mercy of the
If the agent is only liable if the vessel and freight money and
boat may be lost, it is only just that the maritime creditor
Reasons why ship owner is given the right of abandonment

1.
2.
To offset against enumerable hazards

To encourage shipbuilding and marine commerce
If you exercise the right to abandon, you still have to prove

the exercise of extraordinary diligence.
Can a charterer make an abandonment? No. It cannot be

regarded as being in the place of the owner or agent in
matters relating to the responsibility pertaining to ownership
and possession of the vessel.
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Instances when abandonment can be made/Provisions
which speak of the doctrine of limited liability
1.
For civil liability to third persons arising from the

conduct of the captain in the vigilance over the
goods which the vessel carried
For the proportionate contribution of co-owners or
the vessel to a common fund for the results of the
acts of the captain
For civil liability incurred by the ship owner in case of
collision
2.
3.
When can the ship agent be held liable for more than value
of the vessel?
1.
2.
When the vessel is properly insured

When the liability for repairs of the vessel was
incurred before the loss of such vessel
When the liability is one that arises from the
provisions of the labor code
3.
When abandonment cannot be made?

1.
2.
3.
When the ship owner or ship agent is at fault

When the voyage is not maritime
When the vessel is not acting as a common carrier
but a private carrier
Now, these are 4 cases which arose from the same incident:
ABOITIZ vs GENERAL ACCIDENT (1993)

FACTS
Malayan Insurance Company, Inc. filed five separate actions
against several defendants for the collection of the amounts
of the cargoes allegedly paid by Malayan under various
marine cargo policies issued to the insurance claimants. In
the five consolidated cases, Malayan sought the recovery of
amounts totaling P639,862.02.
Aboitiz raised the defenses that M/V P. Aboitiz was
seaworthy, that it exercised extraordinary diligence and that
the loss was caused by a fortuitous event.
ISSUE
WON the real and hypothecary doctrine may be invoked by
the ship owner to limit its liability
Yes. Aboitiz was not negligent. The only time the Limited
Liability Rule does not apply is when there is an actual finding
of negligence on the part of the vessel owner or agent. A
careful reading of the decision rendered by the trial court as
well as the entirety of the records in the instant case will
show that there has been no actual finding of negligence on
the part of petitioner.
The real and hypothecary doctrine in maritime law is that the
shipowner or agent's liability is merely co-extensive with his
interest in the vessel such that a total loss thereof results in
its extinction. "No vessel, no liability" expresses in a nutshell
the limited liability rule. In this jurisdiction, the limited
liability rule is embodied in Articles 587, 590 and 837. These
articles precisely intend to limit the liability of the shipowner
or agent to the value of the vessel, its appurtenances and
freightage earned in the voyage, provided that the owner or
agent abandons the vessel. When the vessel is totally lost in
which case there is no vessel to abandon, abandonment is
not required. Because of such total loss the liability of the
shipowner or agent for damages is extinguished. However,
despite the total loss of the vessel, its insurance answers for
the damages for which a shipowner or agent may be held
liable.
Nonetheless, there are exceptional circumstances wherein
the ship agent could still be held answerable despite the
abandonment of the vessel, as where the loss or injury was
due to the fault of the shipowner and the captain. The
international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner's
liability, does not apply to cases where the injury or average
was occasioned by the shipowner's own fault.
In the instant case, there is, however, 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 filed or completed its action earlier than the rest.
Thus, execution of judgment in earlier completed cases, even
those 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.
RULING
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Discussion: In this case, it was allowed to abandon despite
the fact that it was not a fortuitous event that caused the
sinking of the vessel. But there were more than a hundred
claims. The court found it necessary to collate all the things
first before payment of the insurance proceeds.
an insolvent corporation whose assets are not enough to

satisfy the totality of the claims. Why? Because the claim
amounted to 43 million but the insurance proceed were only
14 million. You cannot get the entire 43 million, you have to
share pro-rata the proceeds of the insurance and there is no
preference of credit.
MONARCH INSURANCE vs CA (2000)

ABOITIZ vs NEW INDIA (2006)
ISSUE
WON the doctrine of limited liability applies
ISSUE
RULING
WON the limited liability doctrine applies in this case
Yes. The failure of Aboitiz to present sufficient evidence to

exculpate itself from fault and/or negligence in the sinking of
its vessel in the face of the foregoing expert testimony
constrains us to hold that Aboitiz was concurrently at fault
and/or negligent with the ship captain and crew of the M/V P.
Aboitiz. This is in accordance with the rule that in cases
involving the limited liability of shipowners, the initial burden
of proof of negligence or unseaworthiness rests on the
claimants. However, once the vessel owner or any party
asserts the right to limit its liability, the burden of proof as to
lack of privity or knowledge on its part with respect to the
matter of negligence or unseaworthiness is shifted to it.
RULING
This burden, Aboitiz had unfortunately failed to discharge.

That Aboitiz failed to discharge the burden of proving that the
unseaworthiness of its vessel was not due to its fault and/or
negligence should not however mean that the limited liability
rule will not be applied to the present cases. The peculiar
circumstances here demand that there should be no strict
adherence to procedural rules on evidence lest the just claims
of shippers/insurers be frustrated. The rule on limited liability
should be applied in accordance with the latest ruling in
Aboitiz Shipping Corporation vs. General Accident that
claimants be treated as "creditors in an insolvent corporation
whose assets are not enough to satisfy the totality of claims
against it."
Discussion: Aboitiz was held liable. It was found out that the
sinking of the vessel was because the vessel was
unseaworthy, the negligence of both Aboitiz and the crew
and master, and that the sinking was not due to a fortuitous
event but nothwithstanding the ruling, it did not reverse its
ruling in the 1993 case. Instead, it reiterated its
pronouncement to the effect that is treated as creditor in
No. Where the shipowner fails to overcome the presumption

of negligence, the doctrine of limited liability cannot be
applied.
From the nature of their business and for reasons of public
policy, common carriers are bound to observe extraordinary
diligence over the goods they transport according to all the
circumstances of each case. In the event of loss, destruction
or deterioration of the insured goods, common carriers are
responsible, unless they can prove that the loss, destruction
or deterioration was brought about by the causes specified in
Article 1734 of the Civil Code. In all other cases, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence. Moreover, where the vessel is found
unseaworthy, the shipowner is also presumed to be negligent
since it is tasked with the maintenance of its vessel. Though
this duty can be delegated, still, the shipowner must exercise
close supervision over its men.
In the present case, petitioner has the 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. Differently put, to limit its liability to the amount of
the insurance proceeds, petitioner has the burden of proving
that the unseaworthiness of its vessel was not due to its fault
or negligence.
Considering the evidence presented and the circumstances
obtaining in this case, we find that petitioner failed to
discharge this burden. Both the trial and the appellate courts,
in this case, found that the sinking was not due to the
typhoon but to its unseaworthiness. Evidence on record
showed that the weather was moderate when the vessel
TRANSPORTATION LAWS
sank. These factual findings of the Court of Appeals,
affirming those of the trial court are not to be disturbed on
appeal, but must be accorded great weight. These findings
are conclusive not only on the parties but on this Court as
well.
Discussion: In this case, the SC changed its mind again. It

considered the exception to the doctrine of limited liability. If
that is the case, then the ship owner is liable to the full extent
of the damage.
If you fail to overcome the presumption of negligence, the
doctrine of limited liablty canont apply. Hence, Aboitiz is
liable for the total value of the last cargo. Thus it rejected the
argument that the damages should be limited to the pro-rata
share in the insurance proceeds.
So first, limited to the amount of the vessel only. Second, prorata share in the insurance. Third, total value of the lost
cargo.
fault on the part of Aboitiz, is not supported by the record.

Thus, Aboitiz is not entitled to the limited liability rule and is,
therefore, liable for the value of the lost cargoes as so duly
alleged and proven during trial.
Discussion: The ruling in 2008 affirmed the 2006 ruling in

New India. So as a general rule, a ship owners liability is
really just coextensive with its interest in the vessel. Except if
there was actual fault attributable to the ship owner. Thus an
exception to the limited liability rule is when a ship owner or
agent is liable for damages and the sinking of the vessel is
attributable to its negligence or its failure to ensure the
seaworthiness of the vessel.And in this case, as it was found
by the courts below, that both Aboitiz and its crew failed to
insure the seaworthiness of M/V Aboitiz. It failed to prove
that it exercised extra diligence. So it is liable.
Lets go to charter parties.

These are special contracts of maritime commerce, what are
the special contracts of maritime commerce?
ABOITIZ vs EQUITABLE (2008)

ISSUE
1) Charter party
2) Bill of lading
3) Loan on bottomry or respondentia
WON the limited liability doctrine applies

How is charter party defined?
RULING
No. A perusal of the decisions of the courts below in all three
petitions reveals that there is a categorical finding of
negligence on the part of Aboitiz. For instance, in G.R. No.
121833, the RTC therein expressly stated that the captain of
M/V P. Aboitiz was negligent in failing to take a course of
action that would prevent the vessel from sailing into the
typhoon. In G.R. No. 130752, the RTC concluded that Aboitiz
failed to show that it had exercised the required
extraordinary diligence in steering the vessel before, during
and after the storm. In G.R. No. 137801, the RTC categorically
stated that the sinking of M/V P. Aboitiz was attributable to
the negligence or fault of Aboitiz. In all instances, the Court of
Appeals affirmed the factual findings of the trial courts.
The finding of actual fault on the part of Aboitiz is central to
the issue of its liability to the respondents. Aboitizs
contention, that with the sinking of M/V P. Aboitiz, its liability
to the cargo shippers and shippers should be limited only to
the insurance proceeds of the vessel absent any finding of
Contracts in which an entire ship or some principal parts

thereof is left by the owner to another person or a specified
time or used in consideration or for payment of a fee.
What are the two kinds of charter party?
1) contract of affreightment control is retained by the
owner. What is leased is the use of ship or a part
thereof
Two kinds of contract of affreightment
a) time charter - for a particular time only
b) voyage charter the vessel is leased for
one or series of voyage
2) bareboat or demise full possession and control of
the vessel is given to the charterer. The entire
command, possession and control of navigation,
including the master, and crew are turned over to
the charterer.
TRANSPORTATION LAWS
You know already that if its a contract of affreightment, is it a
common carrier or a private carrier? COMMON CARRIER.
Lay days refer to the number of days between the loading

and departure. Take note of this.
If it is a bareboat or demise, it is a private carrier.

What is meant by owner pro hac vice? Is it a bareboat or
contract of affreightment? BAREBOAT
But there are some formal requirements so as to constitute a
charter party under Article 652 of the Code of Commerce.
The following are the formal requirements:
1) it must be drawn in duplicates
2) must be signed by contracting parties or by two
witnesses at the request of party who does not
know or is not able to sign
What are the substantial requirements of a charter party
under Article 652? There are formal requirements and we
also have substantial requirements. The following are the
substantial requisites:
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
Conditions freely stipulated

Indicate the kind, name and tonnage of vessel
Flag and port of registry
Name, surname and domicile of captain ship,
agent and charterer
Port of loading and unloading
Capacity, weight or measure the parties
respectively bind themselves to load and
transport, or whether it is a total cargo
Freightage to be paid
Primage to be paid by the captain
Days agreed for loading and unloading
Lay days and extra lay days to be allowed and
the date of demurrage
There are terms in maritime commerce. First what is a

primage?
A primage is a small allowance or compensation payable :
1.
2.
to the master or owner of the vessel

for the use of his cables and ropes to
discharge the goods, and
to the mariners for lading and
unlading in any port
Demurrage is the amount stipulated in the charter party to

be paid by the charterer or shipper to the shipowner for any
DELAY in the sailing of his ship (it must state when it shall
leave)
What is the probative value of charter party? Thats Article

654. If it is executed with intervention of a broker who
certifies to the authenticity of the signatures of the
contracting parties, because they were signed in his presence
shall be FULL EVIDENCE in COURT, so kelangan na may
broker. What if there is a discrepancy? Then we refer to the
copy of the broker which the broker filed or kept in the
registry. Just take note of Article 654.
Rescission. Who can rescind a charter party? Either party can

rescing. Pwd si charterer or pwd rin si shipowner. But there
are differences lang and different consequences. Take note
lng of Article 688 if the rescission is made by charterer and
Article 699 if made by the shipowner.
If the rescission is made by the charterer, the following are

the grounds and consequences:
1. Ground: Abandonment of charter before
Consequence: The charterer must pay of freight
agreed upon
2. Ground: Capacity of vessel not found to be in conformity
with that stated in certificate of tonnage
Consequence: He will be indemnified by owner for
damages suffered
3. Ground: Error in the statement of the flag under which
vessel navigates
damages suffered
4. Ground: Non-placement of vessel at disposal of charterer
within period and manner agreed upon
damages suffered
5. Ground: Vessel returns to port of departure on account of
risk from pirates, enemies or inclement weather
Consequence: if he unloads the vessel, owner shall
have the right to freight in full for voyage out
TRANSPORTATION LAWS
6. Ground: Vessel makes port in order to make repairs
Consequence: He must dispose of the goods
If the rescission is made by the shipowner, the following are

the grounds and consequences:
1. Ground: Failure of charterer to place cargo alongside
vessel at the termination of extra lay days
Consequence: Charter is rescinded but he must pay
the charterer of the freight stipulated and demurrage for
the lay days and extra lay days
2. Ground: Sale of vessel before the charterer has begun to
load the vessel
Consequences: 1) Charter is rescinded if the buyer of
the vessel has loaded the vessel for his own account BUT
seller/owner must indemnify charterer for damages suffered
2) Charter is NOT rescinded if buyer has

NOT loaded the vessel for his own account BUT the seller
shall indemnify the buyer if he did not inform the buyer of
the charter at the time of making the sale (if new owner has
no intention of using the vessel but only bought it as
investment, then the charterer can still use it. But if the
owner has a plan and he will use the vessel on the same dates
of the charter contract, then the previous ship owner shall
be liable to the charterer.
Charter party is also different from a contract of lease.

Contract of lease, if the lease is for a definite period, you
cannot terminate the lease by just paying a portion of the
amount agreed upon. But if its a charter party, even if it is for
a definite period, the charterer may rescind the charter party
but you have to pay half of the freightage. What is the second
difference? If a leased property, you sell to other person, and
that third person knows of the existence of lease, he must
respect the lease. In case of charter party, if the vessel is sold
to another person, the new owner cannot be compelled to
respect the charter party, for as long the new owner can
already move his vessel or can already load on his vessel.
In the case of Santiago Lighterage vs CA, Sister ____

executed a contract with Pelaez, and then Sister filed a
complaint for damages against Pelaez because of his
misrepresentation that the vessel was seaworthy. Pelaez filed

a third-party complaint against Santiago Lighterage under the
agreement because it was Santiago who made the
misrepresentation that the vessel was seaworthy at the time
it was delivered to Pelaez. Santiago argued that when the
vessel was turned over to Pelaez, the latter already took an
inspection of the vessel.
ISSUE: WON the delivery of the vessel to the charterer Pelaez
constitutes full performance of its obligation.
RULING: The SC held in the negative. The mere physical
transfer of the vessel from petitioner to Pelaez does not
constitute full performance of its obligation under their
bareboat charter agreement and neither can it be considered
a delivery. Specifically, the SC interpreted paragraph 3 of
their charter agreement, which states that Santiago
Lighterage can make the vessel seaworthy at the time of
delivery. And here, petitioner failed to perform his obligation.
There was also contention by Santiago that vessel made
further voyages within the philppines, the SC held that the
subsequent voyage within the Philippines does not guaranty
that it is seaworthy to withstand a ___ voyage to south korea.
The SC said that to be seaworthy, a vessel must have fitness
which an ordinary person and a prudent owner would require
his vessel to have a ____ having regard to probable
circumstances of it. It must be efficient under the instrument
of transport and ________. (READ THE CASE, inaudible)
So take note of Santiago Lighterage vs CA.
Is subchartering allowed? Pwede sya if it is bareboat. You can

further charter it to another person, either time or voyage or
charter. Santiago rules on whether seaworthiness can be
agreed upon by the parties, the SC ruled that they cannot
agree as to its seaworthiness. So take note of the liability of
Santiago as shipowner and the definition of seaworthiness
and take note also of dual nature of the carriers obligation
under a contract of affreightment.
Two important things, when is a ship seaworthy? And when is

a ships cargo worthy?
Bill of Lading according to Blacks law dictionary, it is an

instrument in writing signed by a carrier or his agent.
Describing the freight so as to identify it stating the name of
TRANSPORTATION LAWS
the consignor (shipper), 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.
port where the goods are held for shipment. Of course the
shipper wants to know if the vessel arrived especially for
perishable goods
What are the 3-fold character of a Bill of Lading? This has

been asked by the BAR many times already.
7.
On board, issued when the goods have been
actually placed abroad the ship w/ very reasonable
expectation that the shipment is as good as on its way.
1.
A RECEIPT which:
8.
a. specifies the quantity, condition and
character of the goods received, and
Received, one in which it is stated that the

goods have been received for shipment w/ or
w/o specifying the vessel by which the goods
are to be shipped.
b. recites the date and place of shipment and

the fees paid by the shipper
2.
3.
It is evidence of a CONTRACT by which the 3

parties [shipper, carrier, consignee] undertake
specific responsibilities and assume stipulated
obligations; also fixes the route, destination,
freight charges, and stipulates the rights and
obligations assumed by the parties [Art. 353]
Document of
instruments law
title,
under
Negotiable
What are the different kinds of bill of lading?

1. A clean bill of lading, says that the goods were
received in good order/does not say anything on the
condition of the goods. Meaning no defect.
2.
Foul, there are notations, goods are rusty,
packaging has holes.
3.
Spent, the goods are already delivered but the
bill of lading was not returned by consignee to the carrier.
4.
Through, one issued by the carrier who is
obliged to use the facilities of other carriers. So we have here
Carrier A, B, C, D from davao to manial to hongkong so no
need for each carrier to issue a Bill of lading pwede na si A
lang and in w/c bill of lading is honoured by the second and
other interested carriers who do not issue their own bills.
5. Custody, one wherein the goods are already
received by the carrier but the vessel indicated therein has
not yet arrived in the port.
6.
Port, issued by the carrier to whom the goods
have been delivered, and the vessel indicated in the bill of
lading by which the goods are to be shipped is already in the
What if the carrier issued an UNSIGNED bill of lading? What is

the effect? In the case of Keng Hua vs CA
The Supreme Court held that acceptance with full knowledge
of its contents gives rise to the presumption that the same
was a perfected and binding contract. (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 consignee, with full knowledge
of its contents, gives rise to the presumption that the same
was a perfected and binding contract. Keng Hua Paper
Products Co, Inc. vs. CA)
A Bill of Lading is not indispensable to a contract of carriage
for as long as there is a meeting of the minds of the parties, a
contract of carriage exists. But under Art. 350, the shipper or
carrier may mutually demand that a bill of lading be made.
What must be done to the Bill of Lading upon fulfillment of

the contract of transportation?
After the contract has been complied with, the bill of lading
shall be returned to the carrier who may have issued it and it
(the surrender) is proof that the goods have been delivered.
And after the delivery or return of the bill of lading, the
respective obligations and actions between the parties shall
be considered as cancelled.
What if the consignee/shipper cannot return the bill of
lading?
In case the consignee cannot return upon receive the
merchandise the bill of lading, he must give the said carrier a
TRANSPORTATION LAWS
receipt for the goods delivered, this receipt producing the
same effects as the return of the bill of lading. (Art. 353)
Why is there presumption that the carrier did not deliver the
goods of the consignee if the carrier does not hold the bill of
lading after the fulfillment of the contract of transportation?
Therefore, the burden of proof is on the carrier to establish
that there was delivery of the goods to the consignee.
You review the case of Mapa vs CA.
Who may change the consignee? Answer is Article 360 of the

Code of Commerce.
Art 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.
Transshipment? Are you familiar with transshipment?

Transshipment is the act of taking cargo from one ship and
loading it on another. It is immaterial whether the same
person or entity owns the other vessel. This must be stated in
the Bill of Lading and the shipper must be informed.
There is transshipment without legal cause if there is
transshipping of the cargoes of the shipper without his
consent. It is important to know or inform the shipper if there
is transshipment because it can be, at the time of
transshipment, damage to the cargo can be had. Because it is
very dangerous in transferring you cargo from one vessel to
another. So if you didnt inform your shipper, that is
transshipment without legal cause.
What are the effects of transshipment without legal cause?

1. It is a violation of the contract of carriage since it
will tell you the terms of contract like it says shipped
not transshipped.
2. Carrier shall be liable to the shipper if cargo is lost
even by a cause otherwise excepted.
So even if the cause of the loss of the cargoes is force

majeure, you are still liable because you did not inform the
shipper.
Can a carrier refuse to accept goods? In general, NO because

a common carrier is required to offer his services to the
general public. However, it can refuse if the goods are unfit
for transportation. There are also instances when a carrier
must examine the goods for transportation. If there is a
reason of well-founded belief or suspicion of falsity, it can
refuse, but the carrier must take steps before it can refuse to
transport. The following are the steps to be taken by the
carrier:
1.
It must made in the presence of witnesses
2.
The Shipper/consignee must be in attendance/

before a notary public
3.
It must open the goods in front of the shipper
4.
If after examination, the declaration is found to
be true, like totoo pala na old clothes even though it is very
heavy, the expenses for examination and repackage shall be
borne by the carrier, otherwise, it shall be paid by the shipper
Another very important topic and has been asked in the bar is
how can you bring an action or claim against the carrier?
There is a difference between bringing a claim against the
carrier and bringing a claim against a carrier in court. Before
you go to court, you have to bring your claim first against the
carrier, and the procedure that you have to follow is covered
in Article 366 of the Code of Commerce.
Art 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 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.
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.
TRANSPORTATION LAWS
When you a bring claim to the carrier it only happens if there

is damage and deterioration of the goods, but is not available
if it is loss of goods. Take note of that. Article 366 applies only
when there is damage or deterioration, but not to loss. Why?
Because immediately after receipt of the package, the
damage is already apparent, for such purpose, you have to
make a verbal claim. But what if the damage to the cargo is
not apparent, within 24 hours, following receipt of the
damaged goods, if the damage cannot be known to the
exterior of the package. You can file a claim within 24 hours.
But what if you fail to file a claim against the carrier beyond
the 24 hour period, you cannot anymore claim it. Bringing
this claim within 24 hours is a condition precedent before you
can file a claim in court.
What are the periods in bringing your claim? Again, it must be

immediately if the damage is apparent, if not apparent,
within 24 hours.
What is the purpose of the above rules?

In the case of Roldan vs Lim Ponzo, the SC ruled that the
purpose of the abovementioned rules is to compel the
consignee of goods entrusted to a carrier to make prompt
demand for settlement of alleged damages suffered by the
goods while in transport, so that the carrier will be enabled to
verify all claims, fix responsibility and secure evidence as to
the goods while the matter is still fresh in the minds of the
parties. So if the damage is apparent, file a claim, which may
be verbal, immediately upon receipt.
It is also important to know when will you bring your action.
Also, such rules will never apply if the goods are not delivered
at all. It only applies if the goods are damaged or
deteriorated. If the goods are not delivered at all, the period
within which to bring your claim does not commence to run.
Because if the consignee receives the goods, that is the
moment when the period of bringing action will start to run.
-END OF FEBRUARY 17 DISCUSSION-
TRANSPORTATION LAWS
REVIEW
Art 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.
Can the consignee be changed by the shipper? Yes.
Conditions
1.
Carrier has to be informed.
2.
The carrier must comply with the change of the

consignee if the place of delivery shall not be
altered.
Atty Resci: Kunyari nandoon na ang goods, the
consignee is in Tokyo and refuses to pay tapos
naka kita yung shipper ng consignee sa San
Francisco, then di pwede, he can look for another
consignee but dapat sa Tokyo pa rin.
3.
The original bill of lading must be returned to the

carrier who will issue another one containing the
novation of contract and expenses in the change of
consignee shall be paid by the shipper, so just read
Art. 363-365.
Art 363. Outside of the cases mentioned in the second

paragraph of Article 361, the carrier shall be obliged to
deliver the goods shipped in the same condition in which,
according to the bill of lading, they were found at the time
they were received, without any damage or impairment,
and failing to do so, to pay the value which those not
delivered may have at the point and at the time at which
their delivery should have been made.
If those not delivered form part of the goods transported,
the consignee may refuse to receive the latter, when he
proves that he cannot make use of them independently of
the others.
Art 364. If the effect of the damage referred to in Article

361 is merely a diminution in the value of the goods, the
obligation of the carrier shall be reduced to the payment of
the amount which, in the judgment of experts, constitutes

such difference in value.
Art 365. If, in consequence of the damage, the goods are

rendered useless for sale and consumption for the purposes
for which they are properly destined, the consignee shall
not be bound to receive them, and he may have them in the
hands of the carrier, demanding of the latter their value at
the current price on that day.
If among the damaged goods there should be some pieces
in good condition and without any defect, the foregoing
provision shall be applicable with respect to those damaged
and the consignee shall receive those which are sound, this
segregation to be made by distinct and separate pieces and
without dividing a single object, unless the consignee
proves the impossibility of conveniently making use of them
in this form.
The same rule shall be applied to merchandise in bales or
packages, separating those parcels which appear sound.
Bringing an Action/Claim against the Carrier

Art 366. Within the twenty-four hours following the receipt
of the merchandise, the claim against the carrier for
damage or average be found therein upon opening the
packages, may be made, provided that the indications of
the damage or average which gives rise to the claim cannot
be ascertained from the outside part of such packages, in
which case the claim shall be admitted only at the time of
receipt.
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim shall be
admitted against the carrier with regard to the condition in
which the goods transported were delivered.
Rule
Immediately upon receipt of the package if damage

is apparent from exterior of package for such purpose,
a verbal claim made immediately is sufficient
compliance with the law
Within 24 hours following receipt of package if the
damage cannot be known from exterior of package
Note: All claims are extinguished if the consignee receives the

merchandise, and pays the freight charges without protest.
TRANSPORTATION LAWS
CLASS PROPER
NEW ZEALAND vs CHOA JOY (1955)
There must be delivery of the goods to the consignee at the
place of destination for Article 366 to apply.
FACTS
Shipper - Lee Teh & Co., Inc, Samar
Consignee - Lee Teh & Co., Inc, Manila
Goods - 107 bundles of first class loose weight hemp
Route - Carangian, Samar to Manila
Carrier - South Sea Shipping Line
Ship owner - Adriano Choa Joy
Insurance co - New Zealand Insurance Co., Ltd.
The cargo failed to arrive in Manila because the vessel ran
aground while entering the Laoang Bay, Samar, on May 20,
1950, due to the negligence of its captain.
CFI of Manila Dismissed the case. The liability of the carrier
did not attach because of the failure of the shipper or of the
consignee to file its claim for damages within 24 hours from
receipt of the cargo as required by law.
ISSUE
Whether 24-hour period provided Article 366 of the Code of
Commerce is applicable.
RULING
No. There must be delivery of the merchandise by the carrier
to the consignee at the place of destination. In the instant
case, the consignor is the branch office of Lee Teh & Co., Inc.,
at Catarman, Samar, which placed the cargo on board the
ship Jupiter, and the consignee, its main office at Manila. The
lower court found that 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 aforesaid Article 366
does not have application because the cargo was never
received by the consignee. Moreover, under the bill of lading

issued by the carrier, it was the letter's undertaking to bring
the cargo to its destinationManila, and deliver it to
consignee, which undertaking was never complied with. The
carrier, therefore, breached its contract, and, as such, it
forfeited its right to invoke in its favor the conditions required
by Article 366.
Article 366 of the Commercial Code is limited to cases of
claims for damages to goods actually turned over by the
carrier and received by the consignee, whether those
damages be apparent from an examination of the packages in
which the goods are delivered, or of such character that the
nature and extend of the damage is not apparent until the
packages are opened and the contents examined. Clearly it
has no application in cases wherein the goods entrusted to
the carrier are not delivered by the carrier to the consignee.
In such cases there can be no question of a claim for damages
suffered by the goods while in transport, since the claim for
damages arises exclusively out of the failure to make delivery.
The 24-hour period never started to run.
IRON BULK SHIPPING vs REMINGTON (2003)

FACTS
Remington Industrial Sales Corporation (Remington) ordered
from defendant Wangs Company, Inc. (Wangs) 194 packages
of hot rolled steel sheets. The 194 packages were loaded on
board the vessel MV Indian Reliance at the Port of Gdynia,
Poland, for transportation to the Philippines, under a Bill of
Lading. The vessels owner/charterer is represented in the
Philippines by Iron Bulk Shipping Phils., Inc. (Iron Bulk). Upon
the arrival in Manila, the cargoes were discharged from the
vessel. The cargo was inspected twice and found to be wet
and rusty. A case was filed against Iron Bulk for damages.
Note that a clean bill of lading was issued, i.e., it does not
indicate any defect in the goods covered by it, as shown by
the notation, CLEAN ON BOARD and Shipped at the Port of
Loading in apparent good condition on board the vessel for
carriage to Port of Discharge.
ISSUE
WON a clean bill of lading can be relied upon to establish the
condition of the cargo upon landing.
TRANSPORTATION LAWS
Hence, the following are the prescriptive periods to file a case

in court :
RULING
Yes. It is settled that a bill of lading has a two-fold character.
[A] bill of lading operates both as a receipt and as a contract.
It is a receipt for the goods shipped and a contract to
transport and deliver the same as therein stipulated. As a
receipt, it recites the date and place of shipment, describes
the goods as to quantity, weight, dimensions, identification
marks and condition, quality and value. As a contract, it
names the contracting parties, which include the consignee,
fixes the route, destination, and freight rate or charges, and
stipulates the rights and obligations assumed by the parties.
Evidence shows that the cargo covered by the subject bill of
lading, although it was partially wet and covered with rust
was, nevertheless, found to be in a fair, usually accepted
condition when it was accepted for shipment.
The fact that the issued bill of lading is pro forma is of no
moment. If the bill of lading is not truly reflective of the true
condition of the cargo at the time of loading to the effect that
the said cargo was indeed in a damaged state, the carrier
could have refused to accept it, or at the least, made a
marginal note in the bill of lading indicating the true
condition of the merchandise. But it did not. On the contrary,
it accepted the subject cargo and even agreed to the issuance
of a clean bill of lading without taking any exceptions with
respect to the recitals contained therein. Since the carrier
failed to annotate in the bill of lading the alleged damaged
condition of the cargo when it was loaded, said carrier and
the petitioner, as its representative, are bound by the
description appearing therein and they are now estopped
from denying the contents of the said bill.
Did the prescriptive period in the Civil Code repeal Article 366
of the Code of Commerce?
No. The Code Commerce provides that failure to file a claim
within 24 hours from receipt extinguishes the right of the
aggrieved party against the carrier. It is a condition
precedent. Hence, you can no longer file a case in court.
Will the 24 hour period affect the prescriptive period
provided by the Civil Code?
No. The provision of Article 366 only refers to those notice of
claim against the carrier. It does not affect the right to file a
case in court. Since the Code of Commerce does not provide
for a period for filing a case in court, the Civil Code applies.
1.
If there is a bill of lading 10 years (Art. 1144

based on a written contract)
2.
If there is NO bill of lading 6 years (Art. 1145

based on an oral or quasi-contract)
3.
If it involves overseas trading 1 year (COGSA,

Article 3.6)
LORENZO SHIPPING vs CHUBB and SONS (2004)

FACTS
On November 21, 1987, steel pipes were loaded for shipment
from Manila to Davao. A clean bill of lading was issued for the
account of the consignee, a corporation in San Francisco. So
the voyage is Manila-Davao-San Francisco, USA. The vessel
arrived in Sasa wharf in Dec. 2, 1987. When the shipment
reached in Davao, it was discovered that sea water was in the
vessel and the steel pipes were submerged in water. It was
found out that the cargo was no longer suitable and was
flooded with sea water. The rusty condition of the cargo was
noted on the mate's receipts and the checker of M/V A signed
his conforme thereon. The shipment was later loaded on
board another vessel, for carriage to the United States. It
issued Bills of Lading covering 364 bundles of steel pipes to
be discharged at Oakland, U.S.A. All bills of lading were
marked "ALL UNITS HEAVILY RUSTED."
While the cargo was in transit from Davao City to the U.S.A.,
consignee sent a letter of intent dated December 7, 1987, to
the carrier filing a claim based on the damaged cargo.
On January 17, 1988, the vessel arrived at Oakland, California,
U.S.A. Due to its heavily rusted condition, the consignee
rejected the damaged steel pipes and declared them unfit for
the purpose they were intended.
On December 2, 1988, a complaint was filed for collection of
a sum of money, against the carrier. The carrier contends that
a notice of claim should have been filed when the goods
arrived in Davao on December 2, 1987. Thus, the right to file
a claim already prescribed.
ISSUE
Whether or not the notice of claim was timely filed by the
consignee.
TRANSPORTATION LAWS
RULING
ISSUE
Yes. The twenty-four-hour period prescribed by Art. 366 of

the Code of Commerce within which claims must be
presented does not begin to run until the consignee has
received the merchandise. In other words, there must be
delivery of the cargo by the carrier to the consignee at the
place of destination.
WON there was a sufficient notice of claim against the carrier
In the case at bar, consignee has not received possession of

the cargo, and has not physically inspected the same at the
time the shipment was discharged in Davao City. The carrier
failed to establish that an authorized agent of the consignee
Sumitomo received the cargo at Sasa Wharf in Davao City.
Respondent Transmarine Carriers as agent of respondent
Gearbulk, Ltd., which carried the goods from Davao City to
the United States, and the principal, respondent Gearbulk,
Ltd. itself, are not the authorized agents as contemplated by
law. What is clear from the evidence is that the consignee
received and took possession of the entire shipment only
when the latter reached the United States' shore. Only then
was delivery made and completed. And only then did the 24hour prescriptive period start to run.
PCIC vs CHEMOIL (2005)

This involves storage tanks. The Supreme Court held that
there was no proper notice of claim since it was only a
telephone call and there was no date indicated.
FACTS
Insurance Company
Corporation
Philippine
Charter
Insurance
Carrier - Chemoil Lighterage Corporation

Shipper - Samkyung Chemical Company, Ltd., based in Ulsan,
South Korea
Goods - liquid chemical
Consignee - Plastic Group Phils., Inc. (PGP) in Manila.
Upon inspection by PGP, the samples taken from the
shipment showed discoloration from yellowish to amber,
demonstrating that it was damaged. On 15 July 1991, an
action for damages was instituted by the petitioner-insurer
against respondent-carrier before the RTC.
RULING
No. The notice was allegedly made by the consignee through
telephone. The claim for damages was denied. This Court
ruled that such a notice did not comply with the notice
requirement under the law. There was no evidence presented
that the notice was timely given. Neither was there evidence
presented that the notice was relayed to the responsible
authority of the carrier.
The object sought to be attained by the requirement of the
submission of claims in pursuance of this article is to compel
the consignee of goods entrusted to a carrier to make prompt
demand for settlement of alleged damages suffered by the
goods while in transport, so that the carrier will be enabled to
verify all such claims at the time of delivery or within twentyfour hours thereafter, and if necessary fix responsibility and
secure evidence as to the nature and extent of the alleged
damages to the goods while the matter is still fresh in the
minds of the parties.
The filing of a claim with the carrier within the time limitation
therefore actually constitutes a condition precedent to the
accrual of a right of action against a carrier for loss of, or
damage to, the goods. The shipper or consignee must allege
and prove the fulfillment of the condition. If it fails to do so,
no right of action against the carrier can accrue in favor of the
former. The aforementioned requirement is a reasonable
condition precedent; it does not constitute a limitation of
action.
Another exception on filing the claim: The second paragraph
of Article 366 of the Code of Commerce is also edifying. It is
not only when the period to make a claim has elapsed that no
claim whatsoever shall be admitted, as no claim may similarly
be admitted after the transportation charges have been paid.
In this case, there is no question that the transportation
charges have been paid, as admitted by the petitioner, and
the corresponding official receipt.
Note: An oral claim may be made however in the case at bar,
the timeliness of the claim was not established.
TRANSPORTATION LAWS
ABOITIZ vs ICNA (2008)
RULING
Under the Code of Commerce, the notice of claim must be
made within twenty four (24) hours from receipt of the cargo
if the damage is not apparent from the outside of the
package. For damages that are visible from the outside of the
package, the claim must be made immediately.
The periods, as well as the manner of giving notice may be
modified in the terms of the bill of lading, which is the
contract between the parties. Notably, neither of the parties
in this case presented the terms for giving notices of claim
under the bill of lading issued by petitioner for the goods.
The shipment was delivered on August 11, 1993. Although
the letter informing the carrier of the damage was dated
August 15,1993, that letter, together with the notice of claim,
was received by petitioner only on September 21, 1993. But
petitioner admits that even before it received the written
notice of claim, Mr. Mayo B. Perez, Claims Head of the
company, was informed by telephone sometime in August 13,
1993. Mr. Perez then immediately went to the warehouse
and to the delivery site to inspect the goods in behalf of
petitioner.
The call to petitioner was made two days from delivery, a
reasonable period considering that the goods could not have
corroded instantly overnight such that it could only have
sustained the damage during transit. Moreover, petitioner
was able to immediately inspect the damage while the matter
was still fresh. In so doing, the main objective of the
prescribed time period was fulfilled. Thus, there was
substantial compliance with the notice requirement in this
case.
Note: Pro hac vice cannot be used as a precedent to other
cases; the general rule still governs
MALAYAN INSURANCE vs JARDINE DAVIES (2009)

FACTS
Petrosul shipped on board the vessel from Vancouver,
Canada yellow crude sulphur said to weigh 6,599.23 metric
tons as per draft survey for transportation to Manila,
consigned to LMG Chemicals Corporation (LMG). Upon arrival
in Manila, the stevedores of respondent Asian Terminals, Inc.
(ATI) undertook discharging operations of the shipment or

cargo from the vessel directly onto the steel barges of Creed
Customs Brokerage, Inc. (CCBI), which barges were later
towed upriver and arrived at the consignee LMGs storage
area in Pasig, Manila. The consignees hired workers
thereupon received and unloaded the cargo.
During the discharge of the cargo ex vessel onto CCBIs barges,
the surveyors, reported the cargo at 6,247.199 Metric Tons
(MT). Hence, a shortage of 352.031 MT. Once on board the
barges, the weight of the cargo was again taken and recorded
at 6,122.023 MT, thus reflecting a shortage of 477.207 MT.
The weight of the cargo, taken a third time upon discharge at
LMGs storage area, was recorded at 6,206.748 MT[4] to thus
reflect a shortage of 392.482 MT.
Petitioner as subrogee filed on September 5, 1995 a
Complaint against herein respondents ATI and Jardine Davies
in RTC of Manila, for recovery of the amount it paid to LMG.
ISSUE
WON the Bill of Lading is a sufficient basis for the claims
against Jardine Davies.
RULING
No. Petitioner argues, in the main, that the appellate court
erred in failing to consider the bill of lading as a binding
contract between the carrier and shipper or consignee insofar
as the accuracy of the weight of the cargo is concerned.
The presumption that the bill of lading, which petitioner
relies upon to support its claim for restitution, constitutes
prima facie evidence of the goods therein described have
been rebutted in light of abundant evidence casting doubts
on its veracity. To wit:
1. Under such clause, the shipper is solely responsible for the
loading of the cargo while the carrier is oblivious of the
contents of the shipment. Nobody really knows the actual
weight of the cargo inasmuch as what is written on the bill of
lading, as well as on the manifest, is based solely on the
shippers declaration.
2. The bill of lading carried an added clause the shipments
weight, measure, quantity, quality, condition, contents and
value unknown. Evidently, the weight of the cargo could not
be gauged from the bill of lading.
TRANSPORTATION LAWS
In the absence of clear, convincing and competent evidence
to prove that the cargo indeed weighed, albeit the Bill of
Lading qualified it by the phrase said to weigh, 6,599.23 MT
at the port of origin when it was loaded onto the MV Hoegh,
the fact of loss or shortage in the cargo upon its arrival in
Manila cannot be definitively established. The legal basis for
attributing liability to either of the respondents is thus sorely
wanting. The Bill of Lading cannot be used as a basis. Hence,
there is no evidence that any shortage occurred.
When does a consignee be bound by the stipulation in the bill

of lading?
MOF COMPANY vs SHIN TANG (2009)

FACTS
shipper/ consignor; b) the unequivocal acceptance of the bill

of lading delivered to the consignee, with full knowledge of
its contents or c) availment of the stipulation pour autrui, i.e.,
when the consignee, a third person, demands before the
carrier the fulfillment of the stipulation made by the
consignor/shipper in the consignees favor, specifically the
delivery of the goods/cargoes shipped.
In the instant case, Shin Yang consistently denied that it
authorized Halla Trading, Co. to ship the goods on its behalf;
or that it got hold of the bill of lading covering the shipment
or that it demanded the release of the cargo. Basic is the rule
in evidence that the burden of proof lies upon him who
asserts it. Thus, MOF has the burden to controvert all these
denials, it being insistent that Shin Yang asserted itself as the
consignee and the one that caused the shipment of the goods
to the Philippines.
Halla Trading Co., a company based in Korea, shipped to

Manila secondhand cars and other articles on board the
vessel Hanjin. The bill of lading covering the shipment which
was prepared by the carrier Hanjin Shipping Co., Ltd. (Hanjin),
named respondent Shin Yang Brokerage Corp. (Shin Yang) as
the consignee and indicated that payment was on a Freight
Collect basis, i.e., that the consignee/receiver of the goods
would be the one to pay for the freight and other charges in
the total amount of P57,646.00.
Here, MOF failed to meet the required quantum of proof.

MOF has not adduced any other credible evidence to
strengthen its cause of action. There is also nothing in the
records which would indicate that Shin Yang was an agent of
Halla Trading Co. or that it exercised any act that would bind
it as a named consignee. Thus, the CA correctly dismissed the
suit for failure of petitioner to establish its cause against
respondent.
The shipment arrived in Manila. Thereafter, MOF Company,

Inc. (carrier), Hanjins exclusive general agent in the
Philippines, repeatedly demanded the payment and other
handling charges from the consignee. The consignee,
however, failed and refused to pay contending that it did not
cause the importation of the goods, that it is only the
Consolidator of the said shipment, that the ultimate
consignee did not endorse in its favor the original bill of
lading and that the bill of lading was prepared without its
consent. Thus, the carrier filed a case for sum of money
before the MeTC Pasay.
Rule in cases of doubts and disputes between consignee and

carrier
ISSUE
Art. 367. If doubts and disputes should arise between the

consignee and the carrier with respect to the condition of
the goods transported at the time their delivery to the
former is made, the goods shall be examined by experts
appointed by the parties, and, in case of disagreement, by a
third one appointed by the judicial authority, the results to
be reduced to writing; and if the interested parties should
not agree with the expert opinion and they do not settle
their differences, the merchandise shall be deposited in a
safe warehouse by order of the judicial authority, and they
shall exercise their rights in the manner that may be proper.
WON the consignee, not a signatory thereof, be bound by the

terms in the Bill of Lading.
When shall the goods be delivered?
RULING
No. In sum, a consignee, although not a signatory to the
contract of carriage between the shipper and the carrier,
becomes a party to the contract by reason of either a) the
relationship of agency between the consignee and the
Art. 370. If a period has been fixed for the delivery of the
goods, it must be made within such time, and, for failure to
do so, the carrier shall pay the indemnity stipulated in the
bill of lading, neither the shipper nor the consignee being
entitled to anything else.
TRANSPORTATION LAWS
If no indemnity has been stipulated and the delay exceeds
the time fixed in the bill of lading, the carrier shall be liable
for the damages which the delay may have caused.
If the carrier has the right to abandon, can the consignee also
abandon the goods that were delivered to him in case there is
delay?
Yes, if the delay was through the fault of the carrier.
Art 371. In case of delay through the fault of the carrier,
referred to in the preceding articles, the consignee may
leave the goods transported in the hands of the former,
advising him thereof in writing before their arrival at the
point of destination.
When this abandonment takes place, the carrier shall pay
the full value of the goods as if they had been lost or
mislaid. If the abandonment is not made, the
indemnification for losses and damages by reason of the
delay cannot exceed the current price which the goods
transported would have had on the day and at the place in
which they should have been delivered; this same rule is to
be observed in all other cases in which this indemnity may
be due.
What is the effect to the carrier then?

The carrier shall pay the full value of the goods as if they had
been lost or mislaid.
However, if the consignee does not opt to abandonIf the
abandonment is not made, the indemnification for losses and
damages by reason of the delay cannot exceed the current
price which the goods transported would have had on the
day and at the place in which they should have been
delivered; this same rule is to be observed in all other cases in
which this indemnity may be due. (Article 371)
The carrier who makes the delivery shall likewise acquire all
the actions and rights of those who preceded him in the
conveyance.
The shipper and the consignee shall have an immediate
right of action against the carrier who executed the
transportation contract, or against the other carriers who
may have received the goods transported without
reservation.
However, the reservation made by the latter shall not
relieve them from the responsibilities which they may have
incurred by their own acts.
Who shall the consignee sue among the initial carrier,

forwarding carrier, delivering carrier? For convenience
purposes, sue against the last carrier (delivering carrier) for
breach of contract.
If the last carrier is not at fault, his remedy is to file a third
party complaint against the carrier at fault.
Who shall the shipper sue among the three? Sue the initial
carrier.
Loan on Bottomry and Respondentia

What is a loan on bottomry?
1.
-
A loan:
Under which any condition whatsoever,
The repayment of the sum loaned and of the
premium stipulated depends upon the safe arrival of
the effects,
In the port on which it is made
Note: Under a loan on bottomry, if the vessel used as

collateral is faced with marine peril, there shall be no
repayment of the sum loaned. This is its difference from an
ordinary loan.
Liability of Carriers in Combined Services

Art. 373. The carrier who makes the delivery of the
merchandise to the consignee by virtue of combined
agreements or services with other carriers shall assume the
obligations of those who preceded him in the conveyance,
reserving his right to proceed against the latter if he was
not the party directly responsible for the fault which gave
rise to the claim of the shipper or consignee.
2.
A loan with things exposed to maritime risks as

collateral, to be paid if the collateral are safely
transported, and the lender shall lose his money if
the collateral is lost.
If the security is a vessel, it is a loan on bottomry. If the

security is cargo, it is respondentia.
TRANSPORTATION LAWS
Art. 719. A loan in which under any condition whatever, the
repayment of the sum loaned and of the premium
stipulated depends upon the safe arrival in port of the
goods on which it is made, or of the price they may receive
in case of accident, shall be considered a loan on bottomry
or respondentia.
The characteristics of these two loans are:
1.
2.
3.
It is a loan or a security which is the vessel itself or

again the cargo on the vessel. It is the cargo loaded
on the vessel. Must be loaded;
It is conditioned on the safe arrival at the port where
the loan was made and; very important
The vessel must be exposed to maritime peril. So it
must have left the port.
For example, di nakaalis si vessel then nag typhoon and then

nasira and it was a loan on bottomry, are you still liable to
pay for the amount of the loan? Nandyan lang sa port di naka
alis.
Yes, its not a loan on bottomry anymore, its an ordinary
loan. The element that was missing there was the vessel must
be exposed to maritime risk.
Now the question is who may contract the loan?
If it is a loan on bottomry, it should be the owner of the
vessel or the captain. Remember, if the captain will have to
make repairs for the vessel and then he has no money, the
captain can obtain a loan on bottomry but he has to comply
with the provisions of Article 580 on the petitions that must
be complied with by the captain in case he incurs a loan to
repair the vessel.
If it is a loan on respondentia who may contract the loan?
It must be the owner of the cargo or the shipper.
Ordinary loan vs Loan on Bottomry/Respondentia

Ordinary Loan
Loan on Bottomry/
Respondentia
May or may not have

collateral
Must always have collateral
Collateral may be real or

personal property
Collateral must be a vessel or a

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
rd
To be binding on 3
persons, need not be
registered
Must be registered in the registry of

vessels
Loss of collateral, if any

does not extinguish the
loan
Loss of collateral extinguishes the

loan.
Ordinary loan pwede meron or walang collateral

whereas, a loan on respondentia or bottomry must
always have a collateral.
In an ordinary loan, the collateral can be a real or
personal property whereas, in bottomry or
respondentia the collateral must a vessel or a cargo
subject to maritime risk.
An ordinary loan is in all instances absolutely
repayable whereas, in loan of bottomry or
respondentia there is a condition that payment
depends upon the safe arrival of the collateral at the
port of the loan. So it must arrive safely at the port.
In ordinary loan it need not be in writing. In
bottomry and respondentia it must be in writing.
In an ordinary loan in order to bind third persons it
may not be registered but in loan on bottomry or
respondentia it must be registered in the registry of
vessels.
Finally, in an ordinary loan if the collateral is lost it
does not extinguish the loan. But in bottomry or
respondentia the loss of the collateral extinguishes
the loan.
Article 726 provides for the rule on the amount of the loan
that can be honored. For example you obtain a loan, an
ordinary loan, if you make a loan and ang collateral is a parcel
of land, the land will have to be appraised by the appraisers.
The amount of the loan whenever it exceeds the maximum
amount/value of the land, for example the value of the land is
10M, you cannot really loan an amount of 10M because your
collateral is 10M. The amount will be lower. Usually you only
take 70%. So if the value of the land is 10M you can only loan
70% of that. So how much? You calculate! That is also the
same principle in maritime loans. If the vessel is only worth
10M the amount that you can loan will only be up to 70% of
the value of the vessel. That is the only maximum amount
that you can loan.
TRANSPORTATION LAWS
But say for example, if the appraisers are in cahoots with the
owner of the vessel. So sabihin natin na ang value ng aking
vessel is 10M actually pero pag appraise mo taas taasan mo
naman para mataas ang loan ko, say 50M. 50M ang niloan sa
bank. Dapat ang loan lang na allowable is how much? It will
only be based on the 10M, 70% of the 10M. What happens to
the excess? The amount of credit na pwede ma loan is 7M
but ang na loan mo sa bank is 50M. What happens to the
excess? The excess will be considered as ordinary loan in
which they will be repayable. In case there is a loss of the
vessel because it was exposed to maritime risk, the loan will
only be extinguished up to the amount of 7M and the
difference will be payable by the owner of the vessel. Did you
get me? You have no choice.
Basta the excess if there is conspiracy between the appraiser
and the owner of the vessel to bloat the value of the vessel
compared to what really is true, yung excess na yun will be
considered as ordinary loan, not a maritime loan. Remember
the differences between a maritime loan and ordinary loan,
okay? Ang maritime loan will be extinguished if the collateral
is lost an ordinary loan not extinguished if the collateral is
lost.
You read also Article 727, and 731.
Article 731 is important also.
What are the effects of the total loss of collateral on the loan
on bottomry or respondentia? The loan will be extinguished
provided the two requisites are present:
1.
2.
The loss arose from an accident of the sea at the

time and during the voyage indicated in the
contract;
It is proven in case it is a loan on respondentia that
the cargo was on board.
The loan will not be extinguished (ibig sabihin they still have
to pay for the full amount) when the loss was caused by the
following:
1.
2.
3.
4.
5.
Inherent defect of the thing;

Malice of the borrower;
Barratry of the captain;
Damages suffered by the vessel as a consequence of
being engaged in contraband; and
When the cargo on the vessel is different from that
agreed upon unless the change should have been
made by reason of force majeure. For example if it
was a loan on respondentia, the cargo you said was a

box of banana but it was found that the one that
was loaded is actually a box of marijuana. So, the
loan will not be extinguished if there is a different
cargo that was loaded from that agreed upon.
Barratry
Barratry of the captain is any willful misconduct on the part of
the master or crew in pursuance of some lawful or fraudulent
purpose without the consent of the owners and to the
prejudice of the owners interest.
Lets go to risks, damages, and accidents of maritime
commerce.
Averages
Averages are the all extraordinary or accidental expenses
which may be incurred during the voyage for the preservation
of the vessel, cargo, or both.
(We are already going to Article 806) Averages also mean all
damages or deterioration which the vessel may suffer from
the time she puts to sea at the port of departure until she
casts anchor at the port of destination. Or all the damages
that were suffered by the goods from the time they are
loaded in the port of shipment until they are unloaded in the
port of their consignment.
Averages can be two different things. It can be:
1.
2.
Extraordinary;
Ordinary or petty expenses;
What are the petty expenses?

Petty expenses are provided under Article 807.
Petty and ordinary expenses incident to navigation such as
those of:
1.
2.
3.
4.
5.
6.
7.
8.
Pilotage of coast and ports;

Lighterage;
Towage;
Anchorage;
Inspection;
Health;
Quarantine;
Lazaretto; and
TRANSPORTATION LAWS
9.
Other so called port expenses, costs of barges, and

unloading, until the goods are placed on the wharf;
and
10. Other usual expenses of navigation.
3.
The damages suffered by the merchandise loaded on

deck, except in coastwise navigation, if the marine
ordinances allow it.
4.
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.
5.
The necessary expenses on arrival at a port, in order

to make repairs or secure provisions.
6.
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.
7.
The victuals and wages of the crew during the time

the vessel is in quarantine.
8.
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 damages
caused.
9.
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.
Lazaretto is a quarantine station for maritime travellers.

Other ordinary expenses are under petty expenses or
averages under Article 807.
Who would pay for ordinary expenses?
Under Article 807, as a general rule, petty expenses are paid
for by the ship owner unless there is an express agreement to
the contrary.
Article 808 on the other hand also differentiates two more
kinds of averages:
1.
2.
Simple or Particular Average; and

General Average.
As defined under Article 809, particular averages are all

expenses and damage caused to the vessel or to the cargo
which have not inured to the common benefit and profit of
all the persons interested in the vessel or the cargo. It must
be an expense that does not inure to the common benefit
and profit of all.
Who will bear the loss?
It will be the owner of the things which gave rise to the
expenses or suffered the damaged as provided under Article
810. The examples of particular averages are the following,
marami 1-9. This is Article 809. Article 809, just read them
and love them.
Examples of Particular Average under Article 809:
1.
2.
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.
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.
General average is provided under Article 811. These are

damages and expenses which are deliberately caused in order
to save the vessel, its cargo, or both at the same time, from a
real or known risk.
Who will bear the loss?
All the persons having an interest in the vessel and cargo
therein at the time of the occurrence of the average shall
contribute.
Requisites of a general average (for an expense to constitute
as a general average):
1.
There must be a common danger, a danger in which

ship, cargo and crew all participate;
TRANSPORTATION LAWS
2.
3.
4.
It must be for the common safety or for the purpose

of avoiding an imminent peril, part of the vessel or
cargo or both is sacrificed deliberately;
This attempt of avoiding the peril must be successful
in a sense that the vessel and some of the cargo are
saved; and
The expenses were incurred or damages were
inflicted after taking proper legal steps and
authority.
For example, pirates are already running after a vessel and

then hinay kaau ang vessel and diba usually in maritime
commerce for the vessel to gain more speed you have to
unlighten. What will be your remedy? You have to jettison
cargo, ipanlabay nimo. Say for example if the cargo of ABCDE,
the cargo of A and B were jettisoned, syempre the vessel
gained speed and was able to avoid the pirates. Whose cargo
was saved? The cargoes of C D E. What is the remedy of A and
B? They may be reimbursed through payment of general
average. General average is like there is fund or there is
money. Who will pay for the general average in order to
compensate A and B for the loss of their cargo? All those who
have been benefited. Those whose cargo was saved, C D and
E. Who else? The carrier because the ship was saved. So C D E
and the carrier.
What will be the remedy of all those who contributed?

It is not without prejudice to their right to go against me or
to the person who misstated the weight of his cargo for
proper actions.
You will still be indemnified but it is without prejudice of the
suit that may be filed against him. You take note also Article
665.
Take note also of the differences between general and
particular average.
a.
b.
c.
General average deliberately caused in order to save

the vessel or cargo or both. Particular average may
be due to causes other than a deliberate act.
A general average inures to the benefit of those
interested in the vessel or a cargo. PA it does not
inure to the common benefit of all persons
interested in the vessel or cargo.
In GA it will be shared and contributed by all persons
benefited but in PA borne only by the owner of the
things that were damaged.
MAGSAYSAY VS. AGAN (1955)

FACTS
Jason Clause (Bar Q)

Jason Clause was provided under Rule D, York Antwerp Rules.
The clause says rights to contribution in general average shall
not be affected though the event which gave rise to the
sacrifice or expenditure may have been due to the fault of
one of the parties to the adventure, but this shall not
prejudice any remedies which may be open against that party
for such clause.
Magsaysay is the owner of SA San Antonio which was bound

from Manila to Batanes via Apari. When it stopped at the port
in Apari it run about (?) to Cagayan River. In order to afloat
the vessel the shipper engaged the services of Rural Services
Corporation (?). The issues in this case really started when
one of the owners of cargo, Agan, refused to contribute
regarding the shortage. Hence here, the shipper filed a case
for it to be liable for P841.
ISSUE
Example, I have a cargo and I misstated the weight of my

cargo, meaning gamay akong gibutang na weight sa cargo but
in fact bug-at kayo siya and it was placed on the deck so the
vessel was not heavy. And pirates were there chuchuchu.
What was jettisoned cargo was my cargo. Sinong may
kasalanan na naging top heavy ang vessel? Diba ako?! Tapos
akong cargo ang nalabay. Syempre kung ikaw ang may cargo
na na save, you will say na I will not contribute to the general
average kasi si Resci ang may kasalanan. But under the Jason
Clause, even if that person who was the reason for that
sacrifice, he can still be compensated through the general
average.
WON Agan is liable

RULING
Here, the court differentiated between general average and
specific average, and their requisites.
a.
There must be a common danger which means that
both the ship and the cargo has been subject to the same
danger whether during the voyage or in the port of loading or
unloading that will make the presence or accidents of the sea
TRANSPORTATION LAWS
dispositions of the authority provided that the circumstances
producing the peril should be ascertained;
b.
The common safety of the vessel or the cargo both
be sacrificed deliberately;
c.
That from the expenses or damages caused follows
the successful saving of the vessel and the cargo;
d.
The expenses or damages should have been incurred
after taking proper or legal steps and authority.
Here, in the first requisite the SC said there was no payment
made as provided in the testimonies. The testimony stated
that it is in order for the vessel to continue the voyage. In the
second cargo, although the sacrifice was made it was not for
the benefit of both the vessel and the cargo owners but only
for the vessel. Lastly, in the 4th requisite the expenses the
court said, it should have followed Art 813 in order to be
liable.
Art 813 provides in order to incur the expenses and cause the
damages corresponding the gross average, there must a
resolution of the captain adopted after deliberation with the
sailing mate and other officers of the vessel and after hearing
the persons interested in the cargo who may be present. If
the latter should object, the captain and officers or majority
or the captain if opposed, the majority should consider
certain measures necessary being may be executed under his
liability without prejudice to the right of the shipper to
proceed against the captain before a judge or court of
competent jurisdiction. They can prove that the captain acted
with malice, lack of skill, or negligence. If the person
interested in the cargo being on board the vessel will not be
heard, they shall not contribute with the gross average, their
share being chargeable against the captain, unless the
urgency of the case should be such that the time necessary
for the previous deliberation was not made. Here, all
requisites were not followed. Hence, Agan was not liable.
Atty. Resci: It was considered as?
Student: It was considered as simple, Maam. It should be
borne by the shipper.
Atty. Resci: It should be considered as a particular average.
Remember this is a case of payment for expenses caused in
order to float a vessel. The stranding of the vessel was due to
the sudden shifting of the sandbars at the mouth of the river
which the port pilot did not anticipate. So, in the expenses of
making the vessel afloat, who should contribute? Did the

benefit inure to the vessel and the cargo? Or was it pertaining
to the vessel alone? So it was checked with respect to the
requisites of the general average. As stated by your classmate
it did not meet the requisites of GA. So it was considered as a
particular average.
STANDARD OIL vs CASTELO (1921)

FACTS
A time charter voyage agreement was made by Castelo and
Shibuki. In this case, Standard Oil delivered several gallons of
petroleum in the ship that was chartered by Shibuki. The ship
here was from Manila going to Sorsogon. However, before
the ship reached the port of Sorsogon they encountered a
typhoon. The captain of the ship was forced to jettison all the
goods, not all the petroleum but a huge amount of
petroleum. When the ship docked at a port of Sorsogon,
Standard Oil filed a claim against Castelo to recover the
jettison goods that was made by the captain.
ISSUE
WON the loss of this petroleum was a GA loss or a PA to be
borne solely by the owner of the cargo.
RULING
Ordinarily, no jettison of deck cargo shall be made as general
average. This is based on the York Antwerp rule. However,
with the advent of steamship as the principal conveyer of
cargo by sea it has been felt that the reason for the rule has
become less weighty.
According to the SC, the reason why deck cargo can be
jettison first rather than the cargo that was placed on-deck is
because it is extra hazardous and also when you talk about
small ship, it can render the vessel top heavy. But with regard
to that, with the advent of the steam ship, the SC said that
jettison goods carried on-deck according to the custom of
trade by steam vessels navigating coastwise and inland
waters are entitled to contribution as a general average loss.
The loss of this petroleum is a general and not a special
average, with the result that the plaintiff is entitled to recover
in some way and from somebody an amount bearing such
proportion to its total loss as the value of both the ship and
the saved cargo bears to the value of the ship and entire
cargo before the jettison was effected.
TRANSPORTATION LAWS
Atty. Resci: When you jettison goods there is an order that

must be followed. You check Article 815. Those which are on
deck beginning those which unbalance the handling of the
vessel or damage preferring, if possible, the heaviest ones,
and those of least utility. Next, those which are below the
upper deck, always beginning with those of the greatest
weight and smallest value, to the amount and number
absolutely indispensable.
upon in the Bill of Lading in case of war). HAL declined. IHCR

sued HAL in Manila. RTC Manila issued a writ of replevin
hence IHCR recovered its cargoes, it then contracted a
separate ship to continue the transport. HAL claimed that
IHCR is liable for general averages for the expenses of the
Suevia while at the port of Manila. IHCR claimed that HAL is
liable for the expenses incurred by ICHR in contracting a
different shipping line.
Article 677 on Effects of a Declaration of War or Blockade

when there is a charter party.
ISSUE
If there is a war and there is a blockade the law says:
RULING
a.
The charter party shall remain force if the captain

should not have any instruction from the charterer.
b.
The captain must proceed to the nearest safe and

neutral port.
c.
At said port, the captain must request and await

orders from the shippers.
d.
Expenses and salaries accruing during detention in

said port shall be paid as general average.
e.
If, by order of the shipper, the cargo should be

discharged at the port of arrival, the freight for the
voyage out shall be paid in full.
INTERNATIONAL vs HAMBURG (1918)

FACTS
The International Harvester Company in Russia (IHCR), an
American Company, contracted the Hamburg-American Line
(HAL) to transport 852 crates of agricultural machinery from
Baltimore, Maryland (USA) to Hamburg, Germany and that
after it reached Hamburg, the crates were to be delivered, at
the order of the consignor, to Vladivostock, Russia. The crates
were delivered via the vessel Bulgaria to Hamburg, at the
expense of HAL. It was transferred to the German ship Suevia
to resume journey from Hamburg to Russia.
During Suevias journey, war broke out between Russia and
Germany. Suevias captain ordered the ship to be placed on
neutral ground, which happened to be the nearest port of
Manila. IHCR demanded HAL to continue the journey by
transferring the cargoes to a non-German ship (as agreed
Whether or not IHCR is liable for general averages
No. It is clear that the cargo in question is not liable to a

general average. It is not claimed that this agricultural
machinery was contraband of war; and being neutral goods,
it was not liable to forfeiture in the event of capture by the
enemies of the ships flag. It follows that when the master of
the Suevia decided to take refuge in the port of Manila, he
acted exclusively with a view to the protection of his vessel.
There was no common danger to the ship and cargo; and
therefore it was not a case for a general average.
The cargoes were not contraband and are not in danger at
war. Suevias captain merely thought about the safety of the
ship, not of the cargos hence there is no common benefit
here between the ship and the cargo; therefore, general
averages does not exist.
HAL is liable for the expenses incurred by IHCR in contracting
a different shipper. By the terms of the contract of
affreightment HAL was bound to forward the cargo to
Vladivostock at the steamers expense, not necessarily by a
steamer belonging to HAL; and it does not by any means
follow that it is not liable for the expense incurred by IHCR in
completing the unfinished portion of the voyage in another
ship.
Atty. Resci: In International Harvester vs. Hamburg the vessel
was German the goods or cargo were American. The
destination was in Russia. On the way to Russia, there was a
war that broke out between Germany and Russia and then
for reasons I dont know why they reached Manila, nasaag
silag Manila. In Manila, they incur expenses. The IH does not
have to contribute to the GA because the expenses that were
incurred in Manila, you check it with the requisites of General
Average. The element missing there was (1) no common
danger shared or participated in by the cargo and the crew
TRANSPORTATION LAWS
because there was no danger attributed to the American
cargo. The war was only between Germany and Russia.
America was never involved there. The danger was only with
respect to the German vessel because it was the one in war
with Russians. The first requisite was not present.
occasioned by the deviation and by taking refuge in Manila

Bay during the European war were not for the benefit of the
cargo, but for the sole benefit of the ship and its crew; and
therefore the cargo should not in any event be called upon
for contribution under general average.
Liability of Lenders for Average
In Compagnie vs. Hamburg, this is the same German vessel,

at that time it was from the port of Saigon, Vietnam to the
port of Hamburg. The Vietnam was occupied at that time by
the French. The cargo from Saigon was supposed to be
delivered to ___. Vessel was German, and shipper was
French. While loading the cargo in the Port of Saigon there
were rumours that there is going to be a war between France
and Germany. So the master of the German vessel upon
completion of the loading immediately left Saigon and then
fled to the nearest port, Manila. So they parked in Manila
that time they waited for instructions, likewise they spent
several expenses while they stayed there. So the German
vessel now was claiming GA for contribution to the GA from
the French shipper of the Cargo.
Is the French shipper obliged to pay the General Average? SC
said, NO.
COMPAGNIE vs HAMBURG (1917)

ISSUE
Is the French shipper obliged to pay the General Average?
RULING
No, because only the German vessel, at that time, was at risk.
And if the French cargo just stayed at Saigon, it would still be
safe.
That inasmuch as the French cargo was absolutely safe in the
French port of Saigon, and the deviation of the steamship
Sambia from her intended voyage to Dunkirk and Hamburg
and her entry into Manila Bay were induced by fear of the
capture of the vessel by one of the belligerents at war with
Germany, the alleged peril which induced the master of said
vessel to enter Manila Bay was not common to both ship and
cargo as required by the York-Antwerp Rules as a condition
precedent to the levying of a general average; that this cargo
under the law of nations was not subject to confiscation by
any enemy of Germany, and the cargo not having been
imperilled, the expense and loss to the ship and its owners
Art. 723. Loans may be made in goods and in merchandise,

fixing their value in order to determine the principal of the
loan.
Arrival under Stress
Art. 819. If during the voyage the captain should believe
that the vessel cannot continue the trip to the port of
destination on account of the lack of provisions, wellfounded fear of seizure, privateers, or pirates, or by reason
of any accident of the sea disabling it to navigate, he shall
assemble the officers and shall summon the persons
interested in the cargo who may be present, and who may
attend the meeting without the right to vote; and if, after
examining the circumstances of the case, the reason should
be considered well-founded, the arrival at the nearest and
most convenient port shall be agreed upon, drafting and
entering the proper minutes, which shall be signed by all, in
the log book. The captain shall have the deciding vote, and
the persons interested in the cargo, may make the
objections and protests they may deem proper, which shall
be entered in the minutes in order that they may make use
thereof in the manner they may consider advisable.
Art. 820. An arrival shall not be considered lawful in the

following cases:
1. If the lack of provisions should arise from the
failure to take the necessary provisions for the voyage
according to usage and customs, or if they should have
been rendered useless or lost through bad stowage or
negligence in their care.
2. If the risk of enemies, privateers, or pirates
should not have been well known, manifest, and based on
positive and provable facts.
3. If the defect of the vessel should have arisen
from the fact that it was not repaired, rigged, equipped,
and prepared in a manner suitable for the voyage, or from
some erroneous order of the captain.
TRANSPORTATION LAWS
4. When malice, negligence, want of foresight, or

lack of skill on the part of the captain exists in the act
causing the damage.
na kayo. For failure to foresee the needs of the

vessel for the 2 weeks voyage, it is not in
accordance to usage and customs. So there was
failure to comply with the necessary provisions
accdg to usage and customs, and you arrived at a
different port, the same is not lawful.
Art. 821. The expenses of an arrival under stress shall

always be for the account of the shipowner or agent, but
they shall not be liable for the damages which may be
caused the shippers by reason of the arrival provided the
latter is legitimate. Otherwise, the ship agent and the
captain shall be jointly liable.
B. Or, if they should have been rendered useless or lost

through bad stowage or negligence in their care.
For example naa lagi mo food for 2 weeks, but
inyo gi store sa bodega wala sa freezer. There
was negligence on your part. So the food can no
longer be utilized. Even if you invoke na wala
kayo food, but it was proven that the lack of
provision was due to bad stowage or negligence,
so the arrival under stress will be considered
unlawful and you are made to pay damages.
Arrival under stress means the arrival of the vessel at the

nearest and most convenient port, because the vessel
CANNOT continue the trip to the port of destination, on
account of:
1. Lack of provisions,
2. Well founded fear of seizure, privateers or pirates, or
2.
3. By reason of any accident of the sea disabling the

vessel to navigate.
So say, for example, from MNL to San Francisco, then for lack
of provision, wala kayo food. You have to stop by Germany.
So what are the effects?
Well, arrival under stress can be lawful or unlawful. If it is a
lawful arrival under stress, it is considered only as a
particular average and damages need not be paid to the
shipper. If it is lawful, syempre may damages man, you are
liable for a particular average but you are not liable to pay for
damages. But if it is an unlawful arrival under stress (there
are requirements that must have to be complied with for it to
be considered as lawful), then damages must be paid. So the
issue in lawful and unlawful arrival under stress will be the
issue on the payment of damages.
Lets go to the first ground.
1. A. If your reason is because of lack of provisions. It will
be considered unlawful if the lack of provisions should
arise from the failure to take the necessary provisions
for the voyage according to usage and customs.
For example, your trip is from MNL to San
Francisco and your trip will have to take a period
of 2 weeks so syempre you have to store food
enough for 2 weeks, but on the 3rd day naubusan
If your reason is a well-founded fear of seizure,

privateers or pirates. It is unlawful if the risk should
not have been well known, manifest, and based on
positive and provable facts.
So if the captain diverted or arrived at the nearest
convenient port because he only dreamt that pirates
were going to board the ship, and he believed in his
dream. Gi daman si Captain. So the risk here is not
manifest, so the arrival under stress is unlawful.
3.
If it is by reason of any accident of the sea disabling

the vessel to navigate. It is considered unlawful if the
defect arises from the fact that it was not repaired,
rigged, equipped and prepared in a manner suitable
for voyage, or for some erroneous order of the
captain. AND, when there is malice, negligence, want
of foresight, or lack of skill on the part of the captain
exists in the act causing the damage.
Collisions
Art.826. If a vessel should collide with another, through or
the fault, negligence, or lack of skill of the captain, sailing
mate, or any other member of the complement, the owner
of the vessel at fault shall indemnify the losses and
damages suffered, after an expert appraisal.
Art. 827. If the collision is imputable to both vessels, each

one shall suffer its own damages, and both shall be
TRANSPORTATION LAWS
solidarily responsible for the losses and damages occasioned
to their cargoes.
Art. 828. The provisions of the preceding article are

applicable to the use in which it cannot be determined
which of the two vessels has caused the collision.
Art. 829. In the cases above mentioned the civil action of

the owner against the person causing the injury as well as
the criminal liabilities, which may be proper, are reserved.
Art. 830. If a vessel should collide with another, through

fortuitous event or force majeure, each vessel and its cargo
shall bear its own damages.
Art. 831. If a vessel should be forced by a third vessel to

collide with another, the owner of the third vessel shall
indemnify the losses and damages caused, the captain
thereof being civilly liable to said owner.
Art. 832. If by reason of a storm or other cause of force

majeure, a vessel which is properly anchored and moored
should collide with those nearby, causing them damages,
the injury occasioned shall be considered as particular
average of the vessel run into.
Art. 833. A vessel which, upon being run into, sinks

immediately, as well as that which, having been obliged to
make a port to repair the damages caused by the collision,
is lost during the voyage or is obliged to be stranded in
order to be saved, shall be presumed as lost by reason of
collision.
Art. 834. If the vessels colliding with each other should

have pilots on board discharging their duties at the time of
the collision, their presence shall not exempt the captains
from the liabilities they incur, but the latter shall have the
right to be indemnified by the pilots, without prejudice to
the criminal liability which the latter may incur.
Art. 835. The action for the recovery of losses and damages
arising from collisions cannot be admitted if a protest or
declaration is not presented within twenty-four hours
before the competent authority of the point where the
collision took place, or that of the first port of arrival of the
vessel, if in Philippine territory, and to the consul of the
Republic of the Philippines if it occurred in a foreign
country.
Art. 836. With respect to damages caused to persons or to

the cargo, the absence of protest may not prejudice the
persons interested who were not on board or were not in a
condition to make known their wishes.
Art. 837. The civil liability incurred by the shipowners in the

case prescribed in this section, shall be understood as
limited to the value of the vessel with all its appurtenances
and freightage earned during the voyage.
Art. 838. When the value of the vessel and her

appurtenances should not be sufficient to cover all the
liabilities, the indemnity due by reason of the death or
injury of persons shall have preference.
In a strict sense:
a. Collision the impact of 2 vessels, both or which are
moving
b. Allision - the striking of a moving vessel against one that is
stationary
In a broad sense collision includes allision, and perhaps
another species of encounters between vessels, or a vessel
and other floating, though non-navigable object (so even a
vessel hitting an iceberg can be considered collision).
What we need to remember is what will be the liability of the
vessels in case of collisions. Well, you have to determine who
is at fault.
If two vessels are to be blamed to the collision:
Art. 827. If the collision is imputable to both vessels, each
one shall suffer its own damages, and both shall be
solidarily responsible for the losses and damages occasioned
to their cargoes.
TRANSPORTATION LAWS
Art. 828. The provisions of the preceding article are
applicable to the use in which it cannot be determined
which of the two vessels has caused the collision.
If no vessel was at fault [ e.g. Fortuitous event] [Art. 830],

Liability will be none each one must bear his own loss.
Error in Extremis
Art 829. In the cases above mentioned the civil action of
the owner against the person causing the injury as well as
the criminal liabilities, which may be proper, are reserved.
Where a navigator, suddenly realizing that a collision

is imminent by no fault of his own, in confusion and
excitement of the moment, does something which
contributes to the collision, or omits to do
something by which the collision may be avoided.
Art. 830. If a vessel should collide with another, through

fortuitous event or force majeure, each vessel and its cargo
shall bear its own damages.
Such act or omission is ordinarily considered to be in

extremis, and the ordinary rules of strict
accountability do NOT apply.
Art. 831. If a vessel should be forced by a third vessel to

collide with another, the owner of the third vessel shall
indemnify the losses and damages caused, the captain
thereof being civilly liable to said owner.
So if one vessel is at fault, said vessel shall be liable for:
For example (in ordinary sense, instead of vessels kuntahay

cars), a collision between Car A and Car B, and you see the
two of you are about to collide. Instead of stepping on the
break, you stepped on the gas. You collided. So na shock ka,
in confusion and excitement of the moment, your error is
considered an error in extrimis. What will apply there
depends on the facts, but not the rules of collision.
1. damage caused to the innocent vessel, and

2. damages suffered by the owners of the cargo of:
a. the innocent vessel, and
b. its own vessel
If both vessels are at fault, or it cannot be determined which

vessel is at fault:
1. Each vessel must bear its own loss, and
2. Both shipowners shall be solidarily liable to the
shippers for damages suffered
If a third vessel is at fault, said vessel shall be liable for: [Art.

831]
1. damage caused to 2 the innocent vessels, and
2. damages suffered by the owners of the cargo of:
a. the 2 innocent vessels, and
b. its own vessel
When does the rule of error in extremis apply?

A: It must appear that there was an imminent danger and
it is the actual risk of danger and not apprehension
merely that determines the question whether the error is
one in extremis. It must appear that there was an
imminent danger since the error of judgment is
excusable only if it was committed during such peril. It is
the actual risk of danger and not apprehension merely
that determines the question whether the error is one
extremis.
Doctrine of Inscrutable Fault

Means that the court can see that a fault has been
committed, but is unable, from the conflict of
testimony or otherwise to locate it. Hence, when it is
impossible to determine to what direct and specific
acts the collision is attributable, it is a case of
damage arising for a cause that is inscrutable.
So, when it is impossible to determine to what direct and
specific acts the collision is attributable, it is a case of damage
arising from a cause that is inscrutable. ~ so what rule will
apply? Art. 831, the rule when both vessels are at fault but
you cannot determine who really was at fault.
TRANSPORTATION LAWS
What kind of AVERAGE is damage caused by a collision due to
a storm or force majeure?
A: The injury shall be considered as a particular
average of the vessel run into [Art. 832] and each
will bear its own loss.
Can a shipowner raise the defense of good father of a family?
Manila Steamship vs Abdulhaman (1956)

FACTS
May 4, 1948 - M/L Consuelo V (owned by Lim Hong To) and
M/S Bowline Knot (owned by Manila Steamship Co.)
collided, which resulted to the death of 9 passengers
including the 5 children of Insa Abdulhaman, and the lost of
the cargoes including those of Abdulhaman. Now,
Abdulhaman filed an action for damages for the death of his
five children and loss of personal properties on board the M/L
Consuelo V as a result of a maritime collision.
The Court held the owners of both vessels solidarily liable to
plaintiff for damages caused to the latter under Article 827 of
the Code of Commerce but exempted defendant Lim Hong To
from liability due to the sinking and total loss of his vessel.
While Manila steamship, owner of the Bowline Knot was
ordered to pay all of plaintiffs damages.
Petitioner Manila Steamship Co. pleads that it is exempt from
any liability under Article 1903 of the Civil Code because it
had exercised the diligence of a good father of a family in the
selection of its employees, particularly the officer in
command of the M/S Bowline Knot.
ISSUE
Whether or not petitioner Manila Steamship Co. is exempt
from any liability.
RULING
No. Petitioner is not exempted from liabilities. While it is true
that plaintiffs action against petitioner is based on a tort or
quasi delict, the tort in question is not a civil tort under the
Civil Code but a maritime tort resulting in a collision at sea,
governed by Articles 826-939 of the Code of Commerce.
for the damages occasioned to their cargoes. The shipowner

is directly and primarily responsible in tort resulting in a
collision at sea, and it may not escape liability on the ground
that exercised due diligence in the selection and supervision
of the vessels officers and crew.
Further, if the SC will adopt the contention of Manila
steamship, Shipowners would be able to escape liability in
practically every case, considering that the qualifications and
licensing of ship masters and officers are determined by the
State, and that vigilance is practically impossible to exercise
over officers and crew of vessels at sea. To compel the parties
prejudiced to look to the crew for indemnity and redress
would be an illusory remedy for almost always its members
are, from captains down, mere wage earners.
Re: Doctrine of Limited Liability not applied to this case
because both vessels were found to be at fault.
Remember: The rule on Civil Tort will not apply to Maritime
Tort.
Shipwreck
It is a demolition or shattering of a vessel, caused by her
driving ashore or on rocks and shoals in the mid-seas, or by
the violence of the winds and waves in tempests.
General Rule: If there is a shipwreck, as a general rule,
damage is borne individually by the respective owners.
Exception: You may demand from the captain:
If the wreck or stranding should be caused by the
malice, negligence, or lack of skill of the captain, or
because the vessel put to sea was insufficiently
repaired and equipped, the ship agent or the
shippers may demand indemnity of the captain for
the damages caused to the vessel or to the cargo by
the accident, in accordance with the provisions
contained in Articles 610, 612, 614, and 621. (Art.
841)
Obsolete provisions in the Code of Commerce

Articles 608, 613, 635, 642, 645, 649, 650, 651
Under Art. 827 of the Code of Commerce, in case of collision

between two vessels imputable to both of them, each vessel
shall suffer her own damage and both shall be solidarily liable
TRANSPORTATION LAWS
Salvage
Difference between Salvage vs. Towage
The service which one person renders to the owner of a ship

or goods, by his own labor, preserving the goods or the ship
which the owner or those entrusted with the care of them
have either abandoned in distress at sea, or are unable to
protect and secure.
Salvage Law (Act No. 2616)

Act 2616, Section 1. When in case of shipwreck, the vessel or
its cargo shall be beyond the control of the crew, or shall
have been abandoned by them, and picked up and conveyed
to a safe place by other persons, the latter shall be entitled to
a reward for the salvage.
Those who, not being included in the above paragraph, assist
in saving a vessel or its cargo from shipwreck, shall be entitled
to a like reward.
Salvage is when a vessel by towing is dedicated(?) to

escape present or prospective danger, while towage
is made to take the vessel from one place to
another.
Salvage, the captain and crew are entitled to share
in the reward, while in towage, the captain and crew
are not entitled to share in the towage service
payment.
-END OF MARCH 2 DISCUSSION-
Provides for a compulsory reward for those who

brave the perils of the sea to save the vessel.
How much are you entitled to?
The owner of the vessel has to give 50% of
the value of the property that was saved.
50% is the maximum. But there are
requisites.
Requisites:
1. There must be a valid object to salvage, not
a person.
2. The subject to be salvage must have been
exposed to a grave peril.
3. The salvage service must have been
rendered voluntarily, and must not arise
from a pre-existing contract or from special
contract. So, it must be from a third party.
4. The efforts must be successful.
TRANSPORTATION LAWS
Last meeting, we started already with COGSA. Carriage of

Goods by Sea Act is more interesting. Contracts covered are
transport of goods by sea to and from the Philippine ports in
foreign trade. You have to remember that this only applies to
foreign trade and not domestic trade. Foreign trade can be to
the Philippines from another country or from the Philippines
to another country.
Code you either have 6 or 10 years. So what would govern?

COGSA or Civil Code?
The very first question that you should ask whether COGSA
applies or Civil Code applies is to take note whether what
type of carriage is involved: if foreign trade COGSA shall
apply, if domestic Civil Code shall apply.
The SC said, the transshipment was made via an inter-island

vessel did not operate to remove the transaction from the
operation of the Carriage of Goods by Sea Act. The
transshipment of the cargo from Manila to Cebu was not a
separate transaction from that originally entered into by
Macondray, as general agent for the M/S TOREADOR.
AMERICAN INSURANCE VS COMPANIA

MARITIMA (1967)
FACTS
Macondray moved to dismiss the amended complaint on the
ground that plaintiffs action had already prescribed under
the Carriage of Goods by Sea Act which provides in Sec. 3(6):
In any event, the carrier and the ship shall be discharged
from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the
date when the goods shall have been delivered; x xx.
Plaintiff avers that the one year prescriptive period provided
for in the Carriage of Goods by Sea Act does not apply in this
case, which should be governed by the statute of limitations
in the Civil Code.
RULING
The action is based on the contract of carriage up to the final
port of destination, which was Cebu City, for which the
corresponding freight had been prepaid. The transshipment
of the cargo from Manila to Cebu was not a separate
transaction from that originally entered into by Macondray,
as general agent for the M/S TOREADOR. It was part of
Macondrays obligation under the contract of carriage and
the fact that the transshipment was made via an inter-island
vessel did not operate to remove the transaction from the
operation of the Carriage of Goods by Sea Act.
Maam: This case speaks of the applicability of COGSA in case
of transshipment. The journey sa goods kay from Ney York to
Manila then Cebu. Transhipment is the transfer of good from
one ship to another. Naay is aka vessel from Manila to Cebu
something happened to the vessel. What law will govern
regarding the filing of claim against the carrier?
Under COGSA, when you file a claim against Common Carrier
you only have a prescriptive period of 1 year. Under, Civil
So you take a look at the type of contract involved. Does it

involve a foreign trade? The contention was no because the
damage happened between the travel from Manila to Cebu.
So you take a look at the argument of the transshipment.
So the contract of carriage here was from NY-Cebu and was

an undivided contract which the corresponding freight has
already been paid. This is one type of Bill of Lading(BOL)
issued as through BOL. What do you mean by this? Only one
carrier issues a BOL which is recognized by the succeeding
carrier. Hence, it was not removed from the operation of
COGSA.
Now, what is the effect of the COGSA on our Maritime Laws

on our Code of Commerce?
A: It shall not:
1.
repeal any existing provision of the Code of

Commerce which is now in force, or
2.
limit its application
So in other words, we apply the Code of Commerce and the

COGSA, that is why in some of the cases we discussed that
the Code of Commerce applies despite the fact that the
COGSA could be applied, so obviously the COGSA is lower
than the code of commerce.
We learned last week that in case of damage of goods, you
have to file a notice of claim against the carrier when?
When the damage is apparent immediately, if not apparent
within 24 hours and the filing of claim under Code of
Commerce is immediately or 24 hours.
If COGSA this is under 3.6. What is the procedure
undertaken by shipper or consignee in case of Loss or
Damage of the cargo? You have to file a notice of loss or
damage. The general nature of such loss or damage must be
in writing.
What about Code of Commerce? Pwede ba oral? Yes. Does it
have to be in writing? Hindi. But in COGSA it is explicit that
the notice of Loss or Damage must be in writing and this must
TRANSPORTATION LAWS
be given to the carrier or representative at the port of

discharge or at the time of the removal of the goods into the
custody of the person entitled to delivery thereof under the
contract of carriage, such removal shall be prima facie
evidence of the delivery by the carrier of the goods as
described in the bill of lading.
Unlike Code of Commerce, if wala ka naka-file sa notice of

loss within the prescribed period, you can still file a case
against the carrier ok lang basta it is within the 1 year
period. Compared to the Code of Commerce, kung wala jud
ka naka-file ug notice within 24 hours, you cannot file a case
anymore in the court.
If the loss or damage is not apparent, the notice must be

given within three days of the delivery.
Now what if the notice was filed and no claim in court was
filed within 1 year? What is the effect?
Said notice of loss or damage may be endorsed upon the

receipt for the goods given by the person taking delivery
thereof.
Action already prescribed. The SC says that this shall not

affect/prejudice the right of the shipper to bring the suit
within the period. The most important things to remember
about is that you have to file a claim within 1 year period. If
wala ka naghimo ug claim within 1 year, the effect will be the
carrier and ship agent will be dischargerd from the liability
from such loss/damage.
So, its still the same, if loss is apparent, you report it

immediately otherwise 3 days with notice of loss.
Now what is the prescriptive period?
Under the Code, it depends on whether there is a written
contract 6 or 10 years.
Under COGSA - In any event the carrier and the ship shall be
discharged from all liability in respect of loss or damage
unless suit is brought within one year after delivery of the
goods or the date when the goods should have been
delivered: Provided, that, if a notice of loss or damage, either
apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of the
shipper to bring suit within one year after the delivery of the
goods or the date when the goods should have been
delivered.
Take note about the distinction between provisions of Code

and COGSA. (i.e. period to file, effect of failure to file,
prescription blah2x) One is a condition precedent, the other
is not. It is very important.
CHUA KUY vs EVERRETT STEAMSHIP (1953)

FACTS
In COGSA what is important here is the filing of claim and

when did it commenced -3.6 and 3.6.4.
The S/S H.H. Raymond arrived at the port of Manila on

February 21,1947, discharged the cargo covered by the above
bill of lading and delivered it to the custody of the Manila
Terminal Company. On February 26, 1947, the Manila
Terminal Company delivered the cargo to Mun Sheng
Trading, through the Serrano Transportation, a local broker,
under a receipt of the following tenor:
What is the effect of failure of giving notice within the period

prescribed?
Received from the Serrano Transportation the following

merchandise in good order and condition.
Remember, under the Code of Commerce, if you failed to file

a notice of claim within 24 hours, can you still file a case in
the court? Remember that under the code of commerce the
filing of the notice of claim is a condition precedent. If you did
not file a notice within 24 hours/immediately you are
barred from filing a case in court against the common carrier.
When the contends of the cases were unpacked, the plaintiff

discovered that the cargo delivered to him consisted of 500
cases of 48 babies of evaporated milk, and not 96 babies as
ordered by him. The plaintiff immediately gave notice to the
defendant of the shortage in the cargo delivered, and later on
filed with the latter a formal claim for said loss which
amounted to P3,911.06. Certain negotiations for the amicable
settlement of the matter having failed, this action was
instituted on May 7, 1948.
So we are talking about 2 different things : (1) you file first

your claim against the carrier and then you go to court. (2) In
COGSA there is also such thing as filing of notice of loss with
the carrier and the filing of case in the court against the
carrier. The filing of notice again under COGSA is either
immediately or within 3 days from delivery. The filing of the
case again is within 1 year from the date of deliver or date
when the goods should have been delivered.
ISSUES
(1) Whether the Carriage of Goods by Sea Act is applicable to
this particular case, as claimed by respondent, or the same
should be governed by the Code of Commerce or other laws,
as claimed by petitioner;
TRANSPORTATION LAWS
(2) Whether the action of petitioner has already prescribed;
RULING
1.
What Law Governs Shipments from United States to

Philippines . Contracts for the carriage of goods by
sea, after July 4, 1946, from the United States to
Philippine ports is governed, not by the Code of
Commerce, but by the Carriage of Goods by Sea Act
enacted by the United States Congress on April 16, 1936
(Commonwealth Act No. 65, section 1).
2.
Prescriptive Period is One Year from Delivery of the

Cargo. Where action is brought for recovery of alleged
shortage of cargo from the United States to the City of
Manila, andthe suit was filed more than one year from
receipt of the cargo and from the discovery of the
shortage, the action has pre-scribed. Under section 3,
subsection 6, of the Carriage of Goods by Sea Act, suit
can only be brought against the carrier within one year
after delivery of the cargo.
The prescriptive period embodied in the Code of Civil

Procedure (Act No. 190) is not applicable for the simple
reason that this is a general law which only applies to cases
not covered by any special act. The transaction under
consideration is covered by the Carriage of Goods by Sea Act
and since this is a special act, its pro-visions must of necessity
limit or restrict a law of general application.
3.
When Prescriptive Period is not Interrupted by

Arbitration. A mere proposal for arbitration or the fact
that negotiations have been made for the adjustment of
the contraversy between the local importer and the
carrier does not suspend the running of the period of
prescription, unless there is an express agreement to the
contrary.
In this case the cargo was received Feb.26, 1947. The case
against the carrier was filed May 7, 1948 so it was already
beyond the prescriptive period. Case has already prescribed.
What will prevail with respect to prescriptive period will it
be prescriptive period under Civil Code or COGSA?
MARITIME AGENCIES & SERVICES, INC. vs CA

(1990)
FACTS
Maritime Agencies & Services, Inc. was appointed as the
charterer's agent and Macondray Company, Inc. as the
owner's agent.
The vessel arrived in Manila on October 3, 1979, and

unloaded part of the consignee's goods, then proceeded to
Cebu on October 19, 1979, to discharge the rest of the cargo.
On October 31, 1979, the consignee filed a formal claim
against Maritime, copy furnished Macondray, for the amount
of P87,163.54, representing C & F value of the 1,383
shortlanded bags. 5 On January 12, 1980, the consignee filed
another formal claim, this time against Viva Customs
Brokerage, for the amount of P36,030.23, representing the
value of 574 bags of net unrecovered spillage.
These claims having been rejected, the consignee then went
to Union, which on demand paid the total indemnity of
P113,123.86 pursuant to the insurance contract. As subrogee
of the consignee, Union then filed on September 19, 1980, a
complaint for reimbursement of this amount, with legal
interest and attorney's fees, against Hongkong Island
Company, Ltd., Maritime Agencies & Services, Inc. and/or
Viva Customs Brokerage. On April 20, 1981, the complaint
was amended to drop Viva and implead Macondray
Company, Inc. as a new defendant.
ISSUE
WON the action has prescribed
RULING
The one-year period in the cases at bar should commence on
October 20, 1979 when the last item was delivered to the
consignee.
Unions complaint was filed against Hongkong on September
19, 1980, but tardily against Macondray on April 20, 1981.
The consequence is that the action is considered prescribed
as far as Macondray is concerned but not against its principal,
which is what matters anyway.
Commentary : So in maritime agencies, the new civil code did
not intend to repeal the period of prescription under COGSA.
You have learned hat between a general and special law,
what will govern? Special law. COGSA is a special law which
applies to foreign trade. When it comes to prescriptive
period, the special law COGSA will prevail over provisions of
Civil Code.
We are settled that COGSA shall apply 1 year prescriptive
period. You have to take note when was the delivery of the of
the goods or if the goods were not delivered, then when was
it supposed to be delivered? The last item was delivered Oct.
20, 1979. 1st case was filed on September 19, 1980. May
dinagdag siyang defendant. Diba when you file an
amendment on pleading, you implead additional defendant.
Jurisdiction will only be acquired upon the filing of the
TRANSPORTATION LAWS
amended complaint. So if you file the original on Sept 1980,
nagamendka the following year it will not retroact.
The filing in April 1981 will not retroact to the earlier Sept
pleading. When the first case was filed for example
shipowner as defendant so shipowner and ship agent
different but both can be sued in different action.
Say for example you filed against the shipowner on Sept 1980
so pasok sa 1 year. Pero yung ship agent inimplead mo on
April 1981 na and the last item delivered was Oct 1980 pa
so lampas nasa 1 year period.
SC said with respect to the Shipowner action did not
prescribe but with respect to the shipagent, it is already
beyond the prescriptive period, hence action has already
been barred or prescribed.
So take note of the distinctions and when do you reckon the
prescriptive period.
scheduling the preliminary hearing on April 27, 1977. The

record before the Court does not show whether or not that
hearing was held, but under date of May 6, 1977, Maritime
filed a formal motion to dismiss invoking once more the
ground of prescription.
The Trial Court, after due consideration, resolved the matter
in favor of Maritime and dismissed the complaint.
ISSUE
Whether or not Article 1155 of the Civil Code applies in lieu of
the COGSA.
RULING
No. Article 1155 of the Civil Code provides that the
prescription of actions is interrupted by the making of an
extrajudicial written demand by the creditor
Section 3, paragraph 6 of the COGSA provides that:
What is now the effect of extrajudicial demand made to the

carrier?
Diba we learned in our Civ Pro kung ano ang effect ng Extra
Judicial Demand. Will it stop the running of the prescriptive
period? Have you studied that?
DOLE PHILIPPINES, INC vs MARITIME COMPANY

OF THE PHILIPPINES (1987)
FACTS
The cargo subject of the instant case was discharged in
Dadiangas unto the custody of the consignee, Dole
Philippines. The corresponding claim for the damages
sustained by the cargo was filed by the plaintiff with the
defendant, Maritime Company on May 4, 1972.
On June 11, 1973 the plaintiff filed a complaint in the CFI
Manila embodying 3 causes of action involving 3 separate and
different shipments. The third cause of action therein
involved the cargo now subject of this present litigation.
On December 11, 1974, Judge Serafin Cuevas issued an Order
dismissing the first two causes of action. The third cause of
action which covered the cargo subject of this case now was
likewise dismissed but without prejudice as it was not
covered by the settlement. Because of the dismissal of the
complaint with respect to the third cause of action, DOLE
instituted this present complaint on January 6, 1975.
Maritime filed an answer pleading inter alia the affirmative
defense of prescription under the provisions of the Carriage
of Goods by Sea Act. The Trial Court granted the motion,
The carrier and the ship shall be discharged from all liability
in respect of loss or damage unless suit is brought within one
year after delivery of the goods or the date when the goods
should have been delivered; Provided, That, if a notice of loss
or damage, either apparent or conceded, is not given as
provided for in this section, that fact shall not affect or
prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods
should have been delivered.
1. Dole argues that since the provisions of the Civil Code are,
by express mandate of said Code, suppletory of deficiencies
in the Code of Commerce and special laws in matters
governed by the latter and there being a patent deficiency
with respect to the tolling of the prescriptive period provided
for in the Carriage of Goods by Sea Act, prescription under
said Act is subject to the provisions of Article 1155 of the Civil
Code on tolling. Since Dole's claim for loss or damage was
filed on May 4, 1972 amounted to a written extrajudicial
demand which would toll or interrupt prescription under
Article 1155, it operated to toll prescription also in actions
under the Carriage of Goods by Sea Act.
These arguments might merit weightier consideration were it
not for the fact that the question has already received a
definitive answer, adverse to the position taken by Dole, in
The Yek Tong Lin Fire & Marine Insurance Co., Ltd. vs.
American President Lines, Inc.
2. Dole argues that it was error for the court not to have
considered the action of plaintiff-appellant suspended by the
extrajudicial demand which took place, according to
defendant's own motion to dismiss on August 22, 1952.
TRANSPORTATION LAWS
Court noticed that while plaintiff avoids stating any date
when the goods arrived in Manila, it relies upon the
allegation made in the motion to dismiss that a protest was
filed on August 22, 1952 which goes to show that plaintiffappellant's counsel has not been laying the facts squarely
before the court for the consideration of the merits of the
case.
We have already decided that in a case governed by the
Carriage of Goods by Sea Act, the general provisions of the
Code of Civil Procedure on prescription should not be made
to apply. (Chua Kuy vs. Everett Steamship Corp., G.R. No. L5554, May 27, 1953.) We hold that in such a case the general
provisions of the new Civil Code (Art. 1155) cannot be made
to apply, as such application would have the effect of
extending the one-year period of prescription fixed in the
law. It is desirable that matters affecting transportation of
goods by sea be decided in as short a time as possible; the
application of the provisions of Article 1155 of the new Civil
Code would unnecessarily extend the period and permit
delays in the settlement of questions affecting
transportation, contrary to the clear intent and purpose of
the law.
Under Dole's theory, when its claim was received by
Maritime, the one-year prescriptive period was interrupted
and began to run anew from May 4, 1972, affording Dole
another period of one year counted from that date within
which to institute action on its claim for damage.
Unfortunately, Dole let the new period lapse without filing
action. It instituted Civil Case No. 91043 only on June 11,
1973, more than one month after that period has expired and
its right of action had prescribed.
So as explained, an extra judicial demand shall not toll the
running of the prescriptive period. ONLY the filing of the case
in court will interrupt the running of the prescriptive period.
So what are the instances where one year prescriptive period
in COGSA shall not be interrupted? We said Extra Judicial
demand will not toll the period. So what will interrupt?
STEVENS vs NORDDEUSCHER (1962)

FACTS
On July 8, 1960, defendant moved to dismiss the complaint
upon the ground that plaintiff's causes of action had
prescribed, it having been filed on June 24, 1960, or more
than a year from May 21, 1959, when plaintiff was notified of
the delivery of the case containing the thermometers in
question. This motion having been granted and the complaint
dismissed, plaintiff interposed this appeal, maintaining that
the period of one (1) year prescribed in Commonwealth Act
No. 65, in relation to Carriage of Goods by Sea Act within

which the liability of carriers, based upon a contract of
carriage goods by sea, may be enforced by suit was
suspended by the commencement of the first action in the
municipal court, on April 27, 1960; that the running of said
period was resumed or continued on June 13, 1960, when
said action was dismissed; and that, excluding said period
from April 27, 1960 to June 13, 1960, or forty-seven (47) days,
less than one (1) year has elapsed from May 21, 1959 to June
24, 1960, when this case was filed in the court of first
instance. In support of this pretense, plaintiff invokes Article
1155 of the Civil Code of the Philipines, reading:
The prescription of actions is interrupted when they filed
before the court, when there is a written extrajudicial
command by the creditors, and when there is any written
acknowledged judgment of the debt by the debtor.
ISSUE
WON the action has prescribed
RULING
No. Upon mature deliberation, we are of the opinion, and so
hold, that the order appealed from should be reversed, not
only because of the operation of said Article 1155 of our Civil
Code, but, also, in view of the provisions section 49 of Act No.
190, pursuant to which:
If, in an action commenced, in due time, a judgment for the
plaintiff be reversed, or if the plaintiff fail otherwise than
upon the merits, and the time limited for the commencement
of such action has, at the date of such reversal or failure,
expired, the plaintiff, or, if he die and the cause of action
survive, his representatives may commence a new action
within one year after such date, and this provision shall apply
to any claim asserted in any pleading by a defendant.
The action commenced by the plaintiff in the Municipal Court
of Manila, on April 27, 1960, was dismissed June 13, 1960, or
over twenty (20) days after the expiration of the period of
one (1) year, beginning from May 21, 1959, within which
plaintiff's action could be brought pursuant to
Commonwealth Act No. 65, in relation to the Carriage of
Goods by Sea Act. Under said section of Act No. 190, the
period within which plaintiff could initiate the present case
was renewed, therefore, for another year, beginning from
June 14, 1960 (TolentinoVitug, 39 Phil., 126; Smith vs.
McNeal, 100 U.S. 426, 27 L. ed. 986). The case at bar was
commenced on June 24, 1960, or within the period last
mentioned.
TRANSPORTATION LAWS
Commentaries:
RULING
Maam: Why did it dismiss the case?

Student: Lack of jurisdiction maam.
Maam: hindi ba because the party is not the real party in
interest?
(Blank stares and air, sorry, no commentaries on the case)
Yes. The trial court correctly held that the one-year statutory
and contractual prescriptive period had already expired .The
one year period commenced on February 25, 1964 when the
damaged cargo was delivered to the consignee. Aetna
invokes: the rule that where the original complaint states a
cause of action but does it imperfectly, and afterwards an
amended complaint is filed, correcting the defect, the plea of
prescription will relate to the time of the filing of the original
complaint.- Untenable.
Okay, one instance in which the 1 year prescriptive period

under COGSA will be interrupted is in case the action has
been filed in the court. BUT, if you were able to file a case in
court, there is a qualification there. The filing of the case
must be against the real party in interest. If you file it against
the wrong party-defendant, it will not toll the running of the
prescriptive period.
AETNA INSURANCE vs BARBER STEAMSHIP

(1975)
FACTS
Aetna Insurance Company, as insurer, filed a complaint
against Barber Steamship Lines, Inc., Luzon Stevedoring
Corporation and Luzon Brokerage Corporation. It sought to
recover the sum of P12,100.06 as the amount of the damages
which were caused to a cargo of truck parts shipped on the SS
Turandot . The insurer paid the damages to Manila Trading &
Supply Company, the consignee.
Barber Steamship Lines, Inc. alleged that it was a foreign
corporation not licensed to do business in the Philippines,
that it was not engaged in business here, that it had no
Philippine agent and that it did notown nor operate the SS
Turandot. Aetna filed a manifestation stating that the name
of defendant Barber Steamship Lines, Inc. wasincorrect and
that the correct name was Barber Line Far East Service.
The filing of the original complaint interrupted the

prescriptive period as to Barber Steamship Lines, Inc. but not
as to Barber Line Far East Service, an entity supposedly
distinct from the former. That ruling would apply to
defendants Luzon Stevedoring Corporation and Luzon
Brokerage Corporation. But it would not apply to Barber Line
Far East Service which was impleaded for the first time in
theamended complaint.
Feb. 25, 1964 delivery of cargo. 1st complaint was made
within 1 year period but it was against an entity not who is
not a real party in interest. Now will the filing against the
wrong defendant toll the running of the period because the
amended complaint was already beyond the prescriptive
period?
When it filed the case against the wrong defendant the 1 year
period continued to run. So when it caused the amendment
of the complaint beyond the 1 year period so it totally, just
categorically barred the action of the carrier for having the
amendment beyond the 1 year period. So the case must be
against the real party in interest. If you file a case against a
wrong defendant, it will not interrupt the running of the
period.
From what part should the 1 year period be counted?
Barber Line Far East Service moved for the dismissal of the
amended complaint on the grounds
1. that it is not a juridical person and, hence, it could not be
sued;
2. that the court had no jurisdiction over its person;
3. that it was not the real party in interest and
4. that the action had prescribed according to the bill of
lading and the Carriage of Goods by Sea Act. "
Under COGSA it depends, if the delivery was made, from

date of delivery. And this delivery includes the kind of
delivery that was paid to an arrastre operator. What if no
delivery? Then from the date when it should have been
delivered.
The case was dismissed as to Barber Line Far East Service

based on the prescription period.
ISSUE
Whether the action of Aetna Insurance Company against
Barber Line Far East Service, as ventilated in its amended
complaint, which was filed on April 7, 1965, had prescribed.
TRANSPORTATION LAWS
INSURANCE vs PHILIPPINE PORTS (1965)
damage does NOT apply. The applicable rule on prescription

is found in the Civil Code.
FACTS
Consignee sued arrastre operator for failure to deliver goods
from abroad which the latter received from the carrier for
delivery to the consignee. The action was brought within 4
years but after the lapse of 1 year. The case was dismissed
on the ground of prescription.
The COGSA will not apply in case of misdelivery. Then what

will apply is the prescriptive period under the civil code.
What do you mean by loss?
MITSUI vs CA (1998)
ISSUE
FACTS
Has the action prescribed?
The carrier undertook to deliver goods loaded by the shipper

to France. The goods were bathing suits, etc. The
commitment of the carrier was to deliver the goods within 28
days from loading. However, the latter failed to ship the
goods within the stipulated date.
RULING
No. The one year period will only apply to foreign trade of
foreign trade of goods by sea. The arrastre operator is no
longer within the purview of a foreign transport of goods by
sea. The prescriptive period in this case is 4 years because
there is no written contract.
ANG vs AMERICAN STEAMSHIP (1967)

FACTS
The shipper agreed to sell to consignee steel sheets.
Consignee was supposed to pay to the shipper a bank draft
upon arrival of the goods at the port. If the shipper received
the bank draft, then the bill of lading would be delivered to
the carrier, and the latter has to issue a permit to deliver to
be presented to the customs warehouse.
So the consignee in France paid half of the value of the goods

on the ground that they arrived off season. The remaining
half of the value of the goods were charged by the shipper to
the carrier.
The carrier denied liability which prompted the shipper to file
a case against the former. The carrier filed a motion to
dismiss alleging that the claim against it has prescribed under
the COGSA.
ISSUE
RULING
But the consignee did not issue the bank draft. So the
shipper decided to change the consignee to Ang. But the
consignee obtained a bank guarantee in favor of the carrier.
The latter in turn issued a permit to deliver to the consignee
and therefore the consignee was able to retrieve the goods.
So when Ang got there, the goods were no longer there.
No, even if the case was filed more than one year after
delivery. The loss was not a physical loss, but loss of income.
Loss of income is not the loss contemplated under COGSA.
The goods here were not deteriorated or damaged, either.
Ang filed a complaint against the carrier for wrongful

delivery. The carrier filed a motion to dismiss on the ground
of prescription because more than 1 year has lapsed since the
goods were delivered to the consignee
As defined in the Civil Code and as applied to Section 3(6),

paragraph 4 of the Carriage of Goods by Sea Act, loss
contemplates merely a situation where no delivery at all was
made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a
way that their existence is unknown or they cannot be
recovered.
ISSUE
Loss refers to the deterioration or disappearance of goods.

RULING
NO, delivery should be made to the correct consignee.
Where the imported goods are delivered to a wrong person,
the 1 year limitation under COGSA which refers to loss or
Conformably with this concept of what constitutes loss or

damage, this Court held in another case that the
deterioration of goods due to delay in their transportation
constitutes loss or damage within the meaning of 3(6),
so that as suit was not brought within one year the action
TRANSPORTATION LAWS
was barred. Said one-year period of limitation is designed to
meet the exigencies of maritime hazards.
In a case where the goods shipped were neither lost nor
damaged in transit but were, on the contrary, delivered in
port to someone who claimed to be entitled thereto, the
situation is different, and the special need for the short
period of limitation in cases of loss or damage caused by
maritime perils does not obtain.
In the case at bar, there is neither deterioration nor
disappearance nor destruction of goods caused by the
carriers breach of contract. Whatever reduction there may
have been in the value of the goods is not due to their
deterioration or disappearance because they had been
damaged in transit. So apply Civil Code provision on
prescription which is 10 years.
Sea Surety and Insurance Co., Inc. and Charter Insurance

Corp., with Industrial Inspection Inc. appointed as third-party
inspector.
After examining the pipes and fittings, Industrial Inspection
certified that they are in good order condition. However,
when the goods reached Hong Kong, it was discovered that a
substantial
portion
thereof
was
damaged.
The trial court found in favor of the insured. However, when
the case was elevated to the CA, it set aside the decision of
the trial court and dismissed the complaint on the ground of
prescription. It held that the action was barred under Sec.
3(6) of the Carriage of Goods by Sea Act (COGSA) since it was
filed only on April 17, 1986, more than two years from the
time the goods were unloaded from the vessel.
ISSUE
For COGSA to apply, LOSS means practically the meaning of

the word loss physical loss when the same had gone
perished, gone out of commerce or disappeared in such a
way that there existence is unkown or that they cannot be
recovered.
Is the loss of income the loss contemplated under COGSA?
NO, because here, the goods were not deteriorated or
damaged. Loss must refer to deterioration or disappearance
of goods. In the case at bar, naa xay loss of income because
apparently nadelay ang products so dili na xa on season. Then
nagfile ng case then the contention of the carrier was that it
was filed out of time, beyond 1 year. So, applicable ba ang
COGSA or ang Civil Code? So check first, what is the ground
for filing a claim against the carrier. LOSS. Is it physical loss
or loss of income? Loss of income is not the loss
contemplated under the law so COGSA will not apply. So the
applicable prescriptive period is 10 years and the case was
filed within the 10-year period.
What is the effect of the prescriptive period under the
COGSA on the liability of the insurer? Will the filing of the
case against the insurer also has a prescriptive period? Do
you also have to file a case against the insurer within the 1
year period such that if you will not file a case against the
insurer, you are already barred from claiming under the
insurance contract?
MAYER STEEL vs CA (1997)

FACTS
Hong Kong Government Supplies Department contracted
Mayer Steel Pipe Corporation to manufacture and supply
various steel pipes and fittings. Prior to the shipping, Mayer
insured these pipes and fittings against all risks with South

RULING
No. Sec. 3(6) of the COGSA states that the carrier and the
ship shall be discharged from all liability for loss or damage to
the goods if no suit is filed within one year after delivery of
the goods or the date when they should have been delivered.
Under this provision, only the carriers liability is extinguished
if no suit is brought within one year. But the liability of the
insurer is not extinguished because the insurers liability is
based not on the contract of carriage but on the contract of
insurance.
An insurance contract is a contract whereby one party, for a
consideration known as the premium, agrees to indemnify
another for loss or damage which he may suffer from a
specified peril. An all risks insurance policy covers all kinds
of loss other than those due to willful and fraudulent act of
the insured. Thus, when private respondents issued the all
risks policies to Mayer, they bound themselves to indemnify
the latter in case of loss or damage to the goods insured.
Such obligation prescribes in ten years, in accordance with
Article 1144 of the New Civil Code.
Kaya maraming insurance2x sa carrier kasi mas mabilis
kumolekta sa insurance kesa sa carrier. The first one sued is
really the insurer. Then the latter will later on sue the carrier.
In this case, COGSA 1-year prescriptive period is not
applicable such that if you did not file a claim within a 1 yr
period against the insurer, the claim is not extinguished. The
rule on extinguishment of liability is only applicable in cases
filed against the carrier and not the insurer.
TRANSPORTATION LAWS
FILIPINO MERCHANTS vs CA (1989)
FACTS
Choa Tiek Seng, consignee of the shipment of fishmeal
loaded, insured in "all risks policy" 600 metric tons of
fishmeal in new gunny bags of 90 kilos each from Bangkok,
Thailand to Manila against all risks under warehouse to
warehouse terms but only 59.940 metric tons was imported
When it was unloaded unto the arrastre contractor E. Razon,
Inc. and Filipino Merchants's surveyor ascertained and
certified that in such discharge 105 bags were in bad order
condition which was reflected in the survey report of Bad
Order cargoes.
Before delivery to Choa, E. Razon's Bad Order Certificate
showed that a total of 227 bags in bad order condition.
Choa brought an action against Filipino Merchants Insurance
Co. who brought a third party complaint against Compagnie
Maritime Des Chargeurs Reunis and/or E. Razon, Inc. alleging
that it is the carrier who must be held liable.
However, the carrier contended that Filipino Merchants is
already barred from filing such claim on the ground that
under the COGSA, the suit against the carrier must be filed
within one year after the delivery of the goods.
ISSUE
WON the action instituted by the insurer has prescribed?
RULING
Yes. COGSA does not only apply to the claims filed by the
shipper/consignee but also to those filed by the insurer.
Filipino Merchants filed the case beyond the 1 year period.
If you are filing a suit against the insurer, 1 year period under
COGSA will not apply. But if you are filing the suit against the
carrier, regardless of who is the plaintiff (shipper, consignee,
insurer), the 1 year prescriptive period under COGSA will
apply.
Sec. 4.5 of COGSA -- note that under the COGSA, there is no
need to provide for a stipulation limiting liability.
Section 4 (5). Neither the carrier nor the ship shall in any
event be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount
exceeding $500 per package of lawful money of the United
States, or in case of goods not shipped in packages, per
customary freight unit, or the equivalent of that sum in
other currency, unless the nature and value of such goods

have been declared by the shipper before shipment and
inserted in the bill of lading. This declaration, if embodied
in the bill of lading, shall be prima facie evidence, but shall
not be conclusive on the carrier.
By agreement between the carrier, master or agent of the
carrier, and the shipper another maximum amount than
that mentioned in this paragraph may be fixed: Provided,
that such maximum shall not be less than the figure above
named. In no event shall the carrier be liable for more than
the amount of damage actually sustained.
Neither the carrier nor the ship shall be responsible in any
event for loss, damage to or in connection with the
transportation of the goods if the nature or value thereof
has been knowingly and fraudulently misstated by the
shipper in the bill of lading.
Previously, in your first exam coverage, when it comes to
stipulations limiting the liability of the carrier, the stipulations
will apply if you did not declare the actual value or did not
declare a higher freight. If walang stipulations about liability
or the stipulations are void, apply suppletorily the
provisions under the COGSA as follows:
1. The liability is limited to US$500 per package
unless the nature and value of such goods have been
declared by the shipper before shipment and inserted in the
bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
2. The carrier and shipper may agree for another
maximum amount but not be less than US$500 per package.
In no event shall the carrier be liable for more than the
amount of damage actually sustained.
3. The carrier or the ship shall not be responsible in
any event for loss, damage to or in connection with the
transportation of the goods if the nature or value thereof has
been knowingly and fraudulently misstated by the shipper in
the bill of lading.
EASTERN SHIPPING vs IAC (1987)

FACTS
A vessel operated by petitioner Eastern Shipping Lines, Inc.,
loaded at Kobe, Japan for transportation to Manila, 5000
pieces of calorized lance pipes in 28 packages consigned to
Philippine Blooming Mills Co., Inc., and 7 cases of spare parts
consigned to Central Textile Mills, Inc.; both sets of goods
were insured with Development Insurance and Surety Corp.
TRANSPORTATION LAWS
The vessel caught fire and sank, resulting in the total loss of
ship and cargo.
Steel sheets for transportation to Manila consigned to the

Philippine Steel Trading Corporation.
ISSUE
On July 28, 1990, M/V Anangel Sky arrived at the port of

Manila and, within the subsequent days, discharged the
subject cargo. Four (4) coils were found to be in bad order.
What is the extent of the carriers liability?

RULING
Note: fire not considered a natural disaster or calamity
within the contemplation of Art. 1734 for 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 having failed
to discharge the burden of proving that it had exercised the
extraordinary diligence required by law, Eastern Shipping
Lines cannot escape liability for the loss of the cargo.
As it was at fault, it cannot seek the protective mantle of Sec.
4(2) of Carriage of Goods by Sea Act which provides:
Neither the carrier nor the ship shall be responsible for loss
or damage arising or resulting from x x x (b) Fire, unless
caused by the actual fault or privity of the carrier.
There was actual fault of the carrier shown by lack of
diligence in that when the smoke was noticed, the fire was
already big; that the fire must have started 24 hours before
the same was noticed; and that after the cargoes were stored
in the hatches, no regular inspection was made as to their
condition during the voyage.
Theres no stipulation in the Bills of Lading limiting the
carriers liability for the loss or destruction of the goods; no
declaration of a higher value of the goods. Hence, Eastern
Shipping Lines liability should not exceed US$500 per
package (as provided in 4(5) of the COGSA), or its peso
equivalent, at the time of payment of the value of the goods
lost, but in no case more than the amount of damage actually
sustained.
Though the provisions of COGSA are not provided for in the
Bill of Lading, SC said that such provisions of COGSA regarding
the carriers limited liability are as much a part of the bill of
lading as though placed in it by agreement of the parties.
BELGIAN vs FIRST INSURANCE (2002)

FACTS
CMC Trading A.G. shipped on board the M/V Anangel Sky at
Hamburg, Germany 242 coils of various Prime Cold Rolled
Finding the four (4) coils in their damaged state to be unfit for
the intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.
Philippine First Insurance paid the claim of Philippine Steel
and was thus subrogated. Philippine First then instituted a
complaint for recovery of the amount paid to the consignee
as insured.
Belgian claims that the damage and/or loss was due to preshipment damage, to the inherent nature, vice or defect of
the goods, or to perils, danger and accidents of the sea, or to
insufficiency of packing thereof, or to the act or omission of
the shipper of the goods or their representatives. Belgian
further argued that their liability, if there be any, should not
exceed the limitations of liability provided for in the bill of
lading and other pertinent laws. Finally, Belgian averred that,
in any event, they exercised due diligence and foresight
required by law to prevent any damage/loss to said shipment.
The RTC dismissed the complaint. The CA reversed and ruled
that Belgian were liable for the loss or the damage of the
goods shipped, because they had failed to overcome the
presumption of negligence imposed on common carriers. As
to the extent of Belgians liability, the CA held that the
package limitation under COGSA was not applicable, because
the words "L/C No. 90/02447" indicated that a higher
valuation of the cargo had been declared by the shipper.
ISSUE
Whether the package limitation of liability under COGSA is
applicable. (Belgian contends that assuming that they are
liable their liability should be limited to US$500 per package
as provided in the Bill of Lading and by Section 4(5) of COGSA)
RULING
Yes. In this case, there was no stipulation in the Bill of Lading
limiting the carrier's liability. Neither did the shipper declare a
higher valuation of the goods to be shipped. This fact
TRANSPORTATION LAWS
notwithstanding, the insertion of the words "L/C No.
90/02447 cannot be the basis for Belgians liability.
First, a notation in the Bill of Lading which indicated the
amount of the Letter of Credit obtained by the shipper for the
importation of steel sheets did not effect a declaration of the
value of the goods as required by the bill. That notation was
made only for the convenience of the shipper and the bank
processing the Letter of Credit.
Second, a bill of lading is separate from the Other Letter of
Credit arrangements. Thus, Belgians liability should be
computed based on US$500 per package and not on the per
metric ton price declared in the Letter of Credit.
Additional cases cited by Maam Resci:
PCIC vs NEPTUNE (2008)

Shipper claimed for the whole amount of the cargo. Carrier
invoked exemption from liability because the loss was due to
fortuitous even, and that if theres any liability on the part of
the carrier, it should not be liable for the whole amount of
the cargo but only limited to the US$500 per package. SC
said that said COGSA provisions will apply.
The rights and obligations of respondent common carrier,
Neptune are thus governed by the provisions of the Civil
Code, and the COGSA, which is a special law, applies
suppletorily.
UNSWORTH TRANSPORT vs CA (2010)

Is a freight forwarder a common carrier? Normally NO.
Check the circumstances of the case. If it assumes the
responsibility of a common carrier, it will be held liable.
A freight forwarders liability is limited to damages arising
from its own negligence, including negligence in choosing the
carrier; however, where the forwarder contracts to deliver
goods to their destination instead of merely arranging for
their transportation, it becomes liable as a common carrier
for loss or damage to goods.
provided under COGSA. SC said that such limitation of

liability also applies in this case.
What is an arrastre?
Arrastre - Arrastre is the verb, it is the unloading and loading
of goods from a vessel. In Mercantile Law, the term arrastre
has a technical meaning, it applies only to overseas trade of
goods.
The biggest arrastre company in the Philippines is Enrique
Razon. The consignee cannot unload the cargo by itself. It is
the arrastre who will pass on the cargo to the customs
warehouse. The parties to an arrastre contract are the
Republic of the Philippines, and the party awarded with the
arrastre service. This is done by bidding. The arrastre
operator does not deal with the shipper or the consignees,
not even the carriers. It is the government which is the
contracting party. Therefore, this is not a contract of carriage
with shippers and consignees. The arrastre operator is
technically not a common carrier. It does not offer its
services to the public, the Government is its only client. But it
is required to observe the same due diligence.
When you enter into these maritime shipping contracts
bananas, and all these items, you enter with the:
F.0.B. (Freight on Board) / FAS it presumes that the seller
will comply with his obligation to deliver the cargoes to the
vessel. Once the cargo is delivered to the vessel, the custody
is transferred to the carrier. It is the buyer who will pay the
freightage. So if the loss incurred while the cargo is in the
custody of the carrier under this shipping agreement, the
carrier is considered as the agent of the buyer, such that in
case of loss, damage, deterioration, the shipper is no longer
liable.
C.I.F. (Cost, Packaging, Insurance) the shipper shall
shoulder the costs of crating, packaging, insurance , and
freightage. The seller will shoulder the cost of the packaging.
The carrier is deemed the agent of the seller. During the
entire trip, ownership is retained by the seller and passes only
to the buyer upon reaching the place of destination. So, res
perit domino. If there something happens to the cargo before
the carrier reaches its destination, the seller assumes liability.
In case of loss, carrier is liable as the agent of the seller.
A freight forwarder assumes the responsibility of a carrier,

which actually executes the transport, even though the
forwarder does not carry the merchandise itself.
The freight forwarder in this case alleged that if in any case it
is liable, it will only be limited to the US$500 per package as
-END OF MARCH 9 DISCUSSION-

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TRANSPORTATION LAWS

Governing Laws on Maritime Commerce

Other Applicable Laws

Governing Body in Maritime Transportation

General Functions of MARINA

based on the lectures of ATTY. RIZADA

Code of Commerce on Vessels (Art. 573-585)]

How ownership of a vessel may be acquired

2. Register and issue certificates, licenses, or documents

What is the requirement for a carrier to operate

Requisites for Legal Acquisition of a Merchant Vessel

Certificate of Public Convenience (CPC)

1. The mode of transfer must appear in a written instrument

2. It must be recorded in the registry or vessels to bind 3rd

Any barge, lighter, bulk carrier, passenger ship freighter,

What kind of property is a vessel?

based on the lectures of ATTY. RIZADA

RUBISO vs RIVERA (1920)

Obligations of the Captain if Repair and

The counsel of plaintiff (Rubiso) brought a suit alleging that

Art. 583. If the ship being on a voyage the captain should

The defendant, on the other hand, alleged that they

The judge or court, the consul or the local authority as the

based on the lectures of ATTY. RIZADA

4. Sailing Mate the second chief of the vessel

Ship Owner and Ship Agent

MACONDRAY vs PROVIDENT INSURANCE (2004)

Yes. Although petitioner is not an agent of Trade & Transport,

Powers and Duties of a Ship Agent

based on the lectures of ATTY. RIZADA

armament, provisions, fuel, freight, and in general that

a. marine laws, ordinances or regulations

4. Art. 602 Indemnify the captain for all expenses he may

4. Not disqualified according to the same for the discharge of

COASTWISE LIGHTERAGE vs CA (1995)

Captain and Master of the Vessel

Art. 609. Captains and masters of vessels must be Filipino

Qualifications of a Captain under Art 609 of the Code

2. Legal capacity to bind himself

based on the lectures of ATTY. RIZADA

vessel, correctional punishment upon those who do not

INTER-ORIENT MARITIME vs NLRC (1994)

General Functions of a Captain

1. General agent of the shipowner

3. Representative of the government of the country under

Art. 610. The following powers are inherent in the position

2. To command the crew and direct the vessel to the port

Captain Tayong was hired by Trenda World Shipping and

supplies had not been delivered.

based on the lectures of ATTY. RIZADA

captain has authority to sign bills of lading, carry goods

FAR EASTERN SHIPPING vs CA (1998)

The captain of a vessel is a confidential and managerial

M/V PAVLODAR, a Russian vessel owned and operated by Far

based on the lectures of ATTY. RIZADA

Upon assuming such office as compulsory pilot, Capt. Gavino

Is the pilot of a commercial vessel (Capt. Gavino), under

Yes. The negligence on the part of Capt. Gavino is evident;

While it is indubitable that in exercising his functions a pilot-is

Yes. A pilot, in maritime law, is a person duly qualified, and

The master is not wholly absolved from his duties while a

based on the lectures of ATTY. RIZADA

thoroughly acquainted with the harbor, to pilot vessels