LAW OF TRANSPORTATION AND PUBLIC UTILITIES
REVIEWER (FINALS)
I. MARITIME LAW
A. CONCEPTS
Maritime Law – is the system of laws which particularly relates to the
affairs and business of the sea, to ships, their crews and navigation and to
marine conveyance of persons and property
Governing Laws:
1. New Civil Code – primary law on maritime commerce
2. Book III Code of Commerce – applied suppletorily
3. Special Laws
a. Salvage Law (Act no. 2616)
b. Carriage of Goods by Sea Act (CA no. 65)
c. Ship Mortgage Decree of 1978 (PD 1521)
REAL AND HYPOTHECARY NATURE OF MARITIME LAW
Case: Philippine Shipping Company, et al vs. Francisco Garcia Vergara
 That which distinguishes the maritime from the civil law and
even from the mercantile law in general is the real and
hypothecary nature of the former
 Evidence of this “real “ nature of maritime law:
o The limitation of the liability of the agents to the
actual value of the vessel and the freight money
o The right to retain the cargo and the embargo and
detention of the vessel even cases where the ordinary
civil law would not allow more than a personal action
against the debtor or person liable
 This repeals the civil law to such extent that, in certain cases
where the mortgaged property is lost no personal action lies
against the owner or agent of the vessel
 Two reasons why it is impossible to do away with these
privileges:
o The risk to which the thing is exposed
o The real nature of maritime law, exclusively real,
according to which the liability of the parties is limited
to a thing to which is at mercy of the waves
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life
Assurance Corporation, Ltd.
 The real and hypothecary nature of maritime law simply
means that the liability of the carrier in connection with losses
related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the
guaranty for their settlement
 Purpose: It was designed to offset such adverse conditions and
to encourage people and entities to venture into maritime
commerce despite the risks and prohibitive cost of shipbuilding
 Thus, the liability of the vessel owner and agent arising from
the operation of such vessel were confined to the (1) vessel
itself, (2) its equipment, (3) freight, (4) and insurance if any,
which limitation served to induce capitalists into effectively
wagering their resources against the consideration of the large
profits attainable in trade
Real – similar to transactions over real property where to effect against
third persons, registration is necessary
Hypothecary – the liability of the owner of the value of the vessel is
limited to the vessel itself
STATUTORY PROVISIONS
Article 837, 587, 590 and 643 – provides for limited liability of
shipowner. (read full provision: page 422 of book)
Art. 837: civil liability incurred by the ship owner: liability limited to value
1 angel‘s notes
of the vessel + appurtenances + freightage earned during voyage
Art. 643: vessel and cargo lost by reason of capture or wreck: all rights
shall be extinguished, both as regards the crew to demand any wages
whatsoever, and as regards the ship agent to recover the advances
made
If a portion of the vessel or of the cargo, or both, should be
saved, the crew engaged on wages, including the captain, shall retain
their rights on the salvage, so far as they go, on the remainder of the
vessel as well on the amount of the freightage of the cargo saved; but
sailors who are engaged on shares shall not have any right whatsoever
on the salvage of the hull, but only the portion of the freightage saved.
If they should have worded to recover the remainder of the
shipwrecked vessel they shall be given from the amount of the salvage
an award in proportion of the efforts made and to the risks
encountered in order to accomplish the salvage
Art 587: ship agent may exempt himself of the civil liabilities for the
indemnities in favor of third persons by abandoning vessel with all
equipments and freight it earned during voyage
Art. 590: co-owners civilly liable in proportion to their interest and
may exempt liability by abandonment of the part of the vessel
belonging to him
Limited liability rule – means that the liability of a shipowner for
damages in case of loss is limited to the value of his vessel.
 No vessel, no liability
 The civil liability for collision is merely co-existent with the
interest in the vessel; if there was total loss, liability is also
extinguished
GR: If the ship is totally lost, liability is extinguished. If the ship or part
thereof is still existing, he can escape liability by abandoning the
vessel, its appurtenances and its freight.
Case: Monarch Insurance Co., Inc. vs. Court of Appeals
 The total destruction of the vessel extinguishes maritime
liens because there is no longer any res to which it can
attach. This doctrine is based on the real and hypothecary
nature of maritime law.
Note: since the civil code contains no provision regulating liability of
shipowners or agents in the event of total loss or destruction of the
vessel, Article 587 of the Code of Commerce governs
Article 837, 587 and 590 of Code of Commerce cover only:
1. Liability to third persons
2. Acts of the captain
3. Collisions
EXCEPTIONS TO THE LIMITED LIABILITY RULE
1. Where the injury or death to a passenger is due either to the
fault of the shipowner, or to The concurring negligence of
the shipowner and the captain (NEGLIGENCE)
GR: Shipowner is liable for the negligence of the captain in
collision cases
---- liability is limited to value of the vessel
 Limited liability rule applies if the captain or the crew caused
the damage or injury as when unseaworthiness of the vessel
was caused by the negligence of the captain or crew during
the voyage
 However, if the failure to maintain the seaworthiness of the
vessel can be ascribed to the shipowner alone or the
shipowner concurrently with the captain, then the limited
liability principle cannot be invoked --- LIABILITY FOR THE
DAMAGES IS TO THE FULL EXTENT (ex. Overloading,
unseaworthiness even at the time of departure)
2. Where the vessel is insured (INSURANCE)
 Limited liability rule does not apply to insurance claims
Case: Vasquez vs. CA
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updated notes of room 405 (2010)
 - The total loss of the vessel did not extinguish the liability of
the carrier’s insrured
- Despite the loss of the vessel, therefore, its insurance
answers for the damages that a shipowner or agent, may
be held liable for by reason of the death of its passengers.
3. In the workmen’s compensation claims (WORKER’S
COMPENSATION)
 The provisions of the Code of Commerce have no room in the
application of the Workmen’s Compensation Act which seeks to
improve, and aims at the amelioration of, the condition of
laborers and employees
 If an accident is compensable under the Workmen’s
Compensation Act, it must be compensated even when the
workman’s right is not recognized by or is in conflict with other
provisions of the Civil Code or of the Code of Commerce
 Liability under the Workmen’s compensation Act, even if the
vessel was lost, is still enforceable against the employer or
shipowner.
4. Expenses for repairs and provisioning of the ship prior to the
departure thereof
5. The vessel is not abandoned (ABANDONMENT)
 Abandonment of the vessel, its appurtenances and the
freightage is an indispensable requirement before the
shipowner or shipagent can enjoy the benefits of the limited
liability rule. If the carrier does not want to abandon the vessel,
he is still liable even beyond the value of the vessel
 The only instance where abandonment is dispensed with is
when the vessel was entirely lost. In such case, the obligation is
extinguished.
 Only shipowner and ship agent can make an abandonment
PROCEDURE FOR ENFORCEMENT
Case: Aboitiz Shipping Corporation vs. General Accident Fire and Life
Assurance Corporation, Ltd.
- Rights of the parties to claim against an agent or owner of vessel
may be compared to those of creditors against an insolvent
corporation whose assets are not enough to satisfy the totality
of claims as against it.
- Creditors must limit their recovery to what is left in the name of
the corporation
- In the sinking of a vessel, the claimants or creditors are limited
in their recovery to the remaining value of accessible assets. In
the case of lost vessel, these assets are the insurance proceeds
and pending freightage for the particular voyage
PROTESTS
- is the written statement by the master of a vessel or any
authorized officer, attested by proper officer or a notary, to the
effect that damages has been suffered by the ship
Required under the following cases:
1. When the vessel makes an arrival under stress
2. Where the vessel is shipwrecked
3. Where the vessel has gone through a hurricane or the captain
believe that the cargo has suffered damages or averages
4. Maritime collisions
Q: when is it not required?
A:
1. when it does not fall under the four cases mentioned above
2. when what is not involve is not a vessel
ADMIRALTY JURISDICTION (RTC)
- Section 19 (3) of BP 129 as amended by RA 7691
(3) In all actions in admiralty and maritime jurisdiction
where the demand or claim exceeds 300, 000 or in
Metro manila, where such demand or claim exceeds
400,000.
2 angel‘s notes
- if less  MTC
3 concepts (they are the same)
1. real and hypothecary --- the supreme court did not explain the
literal meaning of it.
- real: refers to the risk in maritime that’s why there are privileges for
the shipowner. RiskS are certain to happen
- hypothecary: remember guaranty and collateral which is the vessel.
For the particular voyage, the guaranty is the vessel wherein if the
vessel is lost, the shipowner no longer has the liability
2. limited liabililty rule --- no literal explanation
- limited: it means that the liability is limited to the value of the vessel
-liability: assumption that the shipowner is liable for the losses. There
are no valid defenses that shipowner can invoke to escape liability.
Same concept with 1479. Difference is that there is a fixed amount and
there is qualification
-under the limited liability – no fixed amount but amount is confined
on the vessel
The question here: is this a right to limit the liability?
A: admittedly it is a right that only shipowner can exercise
Q; how to exercise?
A: by way of pleading. But do not follow the way it was filed in yangco.
Here it was after judgment that the shipowner sought to abandon the
ship to abandon liability
But right now, it is a matter of procedure. To limit liability by
abandoning the vessel; IF it is a matter of procedure, you check the
rules of civil procedure
Q: so when does shipowner inform the court the right to limit liability?
A: in a pleading and normally in an answer. IT will be raised as a
defense. If shipownver cannot allege, then that defense is deemed
waiver. Therefore you cannot seek abandonment after judgment was
been rendered.
CASES:
Yangco vs. Lacerna
- even captain was aware of the typhoon and the vessel capsized, SC
upheld limited liability
Chua Hek kong
- there being no exceptions, the court upheld limited liability
The more critical issue is on the EXCEPTIONS in the LLRule
1. workmen’s compensation (Abueg case: the repairs constitue
maritime lient)
2. insurance coverage--- if the vessel is lost in the course of voyage and
it is insured, is it automatic that the limited liability rule does not
apply?
A: No. the basis of supreme court (Vasquez vs. CA --- court mentioned
very little about insurance: if the vessel is insured, the insurance
proceeds shall answer the credit)
If the plaintiff was injured or heirs will file action from insurance
company, and since shipowner cannot avail of limited liabilty, this is
not advisable to the plaintiff because it has no privity of contract with
the insurance company
Q: when does insurance argument come in?
A: only when the shipowner will bring the insurance company to the
case filed by the plaintiff—by way of third party complaint. Once
insurance company is impleaded then this can be used: that the owner
cannot avail of limited liability.
But no shipowner will ever implead the insurance. Bec. They will be
the one who will claim the insurance without telling the plaintiffs. In
the case, there is no proof that the vessel is insured. Even if we know
outside court, it is insured because in the court, there is no proof that
the vessel is insured. Court will not identify evidence not properly
identified and recoded in court.
Q: is it really an exception in its strict sense?
A: Not really (CAPANAS). What is the implication if you properly invoke
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updated notes of room 405 (2010)
the LLRule – the plaintiff cannot avail beyond the value of the vessel.
If not apply – plaintiff will recover more than the value of vessel subject to
rules on claiming of damages.
But question, if vessel if covered with insurance, does this mean that
plaintiff can recover to the amount applied? No, they can only recover
until the coverage of the insurance proceeds.
3. Negligence
- common carrier is presumed negligent if common carrier. However, this
does not apply when there is an invocation on limited liability. (in all cases
except MONARCH vs. CA) --- the rest of the case, the court has found
negligence based on the facts presented. You cannot invoke presumption
of negligence so that limited liability rule will not apply.
Monarch _-- SC: since there is a presumption of negligence then LLR will
not apply. But SC also said that if LLR is invoked, the initial burden to
invoke negligence shifts to the shipowner. They should prove that there is
no privity or knowledge on the negligence of the shipcaptain..
Q: what is the relationship of Civil code and LLR?
A: There is none. Under 1766 in all matters not provided by Civil Code,
Code of Commerce or Special law will apply. There is no rule in Civil Code
in limited liability rule thus Code of Commerce will apply. (but in
monarch, this was not applied--- all the negligence was related to the
absence of exercising extraordinary diligence)
Note: that in the subsequent cases, Consolidated of Aboitiz case: there
were findings of facts of the negligence of Aboitiz. The point is when it
comes to LLR, the Code of Commerce apply. You cannot invoke
presumption of negligence. In order to refute, petitioner should prove
negligence.
REMEMBER: PROVE THE FACTS OF NEGLIGENCE. Not presumption
Loadstar case
- aware ang shipowner of the bagyo
insufficient manning – negligent
Captain playing mahjong—there was negligence. But SC said that it was
negligent because the shipowner did not prove that it was the first.
Supposedly facts are established in court proceedings and not on
presumption
3. no vessel, no lialbity
- they all mean one and the same such that the liability of the shipowner
for the losses is confined to the value of the vessel and the freight, if any.
MARITIME PROTEST (4 INSTANCES) –REQUIRED (LOOK AT CODE OF
COMMERCE and above notes
INSTANCES WHEN IT DOES NOT APPLY
1. NOT based CODE OF COMMERCE AND BASED ON QUASI-DELICT THEN
NOT MARITIME PROTEST
2. when what was is involve is not a vessel (Lopez vs. Duruel: the motor
boat is not a vessel under maritime law, it is only engaged in bay traffic. A
vessel in maritime law, should be engaged in transporting goods, persons,
or both from one port to another)
(But to be sure: you file maritime and allege such bahala dili kelangan coz
otherwise dismiss ang case
Since a vessel is a personal property, it can be mortgaged…
Same concept with mortgage but different rule
- PD 1521:
Q: what about process of extra judicial foreclosure of vessel?
A: chattel mortgage law should govern
Q: what to remember under PD 1521?
A:
Section 4
registration, non waiver
3 angel‘s notes
Section17: priority of claims…
Q: are there claims in maritime law over and above preferred
mortgage?
A: yes. Look at section 17.
Case: poliand industrial
- facts shows that the proceeds debted from hardwood was for the
modification of the vessel (extended for vessels benefit), for crews
wage
Characteristics of maritme lien
1. maritime property
2. travels with the property--- it cannot be extinguished
3. enforceable in an action in rem--- action directed to the property
(crescent case: ang gi kiha ang vessel)
Under section 22: persons authorize to procure repairs (presumed):
1. manageing agent
2. ship’s husband --- agent of the vessel
If mortgagor does not pay
1. judicial foreclosure – file actual case and implead the vessel as party
defendant (served to captain or authorized person); you can ask the
court order to arrest the vessel.
2. extrajudicial
- the problem with vessel, mortgagee is not in possession of the vessel.
It is with the mortgagor, you cannot sell the property not in your
possession.
In PD 1521—the order of arrest can be asked
Grounds to discharge
1. irregularly issued (mortgagee na ilad. Wala pa diay due obligation
2. posting of a bond to discharge..the bond to be posted is double the
value of the claim.
Maritime lien on necessaries (5 requisites) – brief yourself cresent
petroleum case
(look at book for requisites)
B. VESSELS
1. General Concepts
 A vessel or watercraft is defined under PD No. 447 as any
barge, lighter, bulk carrier, passenger ship freighter, tanker,
container ship, fishing boats, or other artificial contrivance
utilizing any source of motive power, designed use or capable of
being used as a means of transportation operating either as a
common carrier, including fishing vessels covered under PD No.
43,
Except:
1. Those owned and/or operated by the Armed Forces of the
Philippines and by the Foreign Government for its Military
Purpose.
2. Bancas, sailboat and other waterbone contrivance of less than
three tons capacity and not motorized.
Case: Yu Con vs. Ipil
- The word vessel serves to designate every kind of craft by
whatever particular or technical name it may not be known
or which nautical advancements may give it in the future
- The court held that a small vessel used for the transportation
of merchandise by sea and for the making of voyages from
one port to another of these Islands, equipped and victualed
for this purpose by its owner, is a vessel, within the purview
of the Code of Commerce, for the determination of the
character and effect of the relations created between the
owners of the merchandise laden on it and its owner
 When the mercantile code speaks of vessels, they refer
solely and exclusively to mercantile ships, as they do not include
warships, and furthermore, they almost always refer to craft
which are not accessory to another as in the case of launches,
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updated notes of room 405 (2010)
 lifeboats and etc.
 Further, they refer exclusively to those which are engaged in the
transportation of passengers and freight from one port to another or
from one place to another
 They refer to merchant vessels and in NO WAY can they or
should they be understood as referring to pleasure craft, yachts,
pontoons, health service and harbor police vessels, etc.
 Ships ought to be understood in the sense of vessel serving the
purpose of maritime navigation or seagoing vessel, and not in the
sense of vessel devoted to the navigation of rivers
 The third book of the code of commerce, dealing with maritime
commerce, was evidently intended to define laws relative to
merchant vessels and maritime shipping; and as appears from said
code, the vessel intended in that book are such run by masters
having special training with elaborate apparatus of crew and
equipment indicated in the code.
 Only vessels engaged in what is ordinarily known as maritime
commerce are within the provision of law conferring limited liability
on the owner in case of maritime disaster.
 Other vessel of minor nature not engaged in maritime
commerce, such as river boats and those carrying passengers from
ship to shore, must be governed, as to their liability to passenger, by
the provision of the civil code or other appropriate special provisions
of law.
Case: Augusto Lopez vs. Juan Duruelo, et. al
- The code of commerce are not applicable to small craft which
are only subject to administrative (customs) regulations in the
matter of port service and in the fishing industry
- Only vessels engaged in what is ordinarily known as maritime
commerce are within the provisions of law conferring limited
liability on the owner in case of maritime disaster
- It is therefore clear that a passenger on a boat like the Jison, in
the case before use, is not required to make protest as a
condition precedent to his right of action for the injury suffered
by him in the collision described in the complaint – article 835
of the Code of Commerce does not apply
CONSTRUCTION, EQUIPMENT AND MANNING
The Construction, equipment and manning of vessel are subject to the
rules issued by the Maritime Industry Authority (MARINA) and consistent
with Article 574 of the Code of Commerce
Article 574. Builders of vessels may employ the materials and follow, with
respect to their construction and rigging, the systems most suitable to
their interests. Ship owners and seamen shall be subject to what the laws
and regulations of the public administration on navigation, customs,
health, safety of vessels, and other similar matters.
PERSONAL PROPERTY
Vessels are considered personal property under the Civil Law. The Code of
Commerce likewise expressly acknowledges the special nature of a vessel
as personal property.
Case: Philippine Refining Company vs. Jargue
- Vessels are personal property although occasionally referred to
as a peculiar kind of personal property
- They are subject to mortgage agreeably to the provisions of the
Chattel Mortgage Law
- The only difference between a chatter mortgage of a vessel and
a chattel mortgage of other personality is that it is not now
necessary for a chattel mortgage of a vessel to be noted in the
registry of the register of deeds, but it is essential that a record
of documents affecting the title to a vessel be entered in the
record of the Collector of Customs at the port of entry
Case: Rubiso and Calixto vs. Rivera
4 angel‘s notes
- Ships or vessels, whether moved by steam or by sail, partake,
to a certain extent, of the nature and conditions of real
property, on account of their value and importance in the
world of commerce
- Transfer of vessels should be in writing and must be recorded
in the appropriate registry
2. OWNERSHIP
ACQUISITION
 Vessel may be acquired or transferred by any means recognized
by laws. Thus, vessel may be sold, donated and may even be
acquired through prescription.
 Under the present laws, vessels that are under the jurisdiction of
MARINA can be transferred only with notice to said
administrative agency.
A. Prescription (Code of Commerce)
Article 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.
ARTICLE 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.
B. Sale (Code of Commerce)
Article 576. In the sale of a vessel it shall always be understood as
included the rigging, masts, stores and engine of a streamer
appurtenant thereto, which at the time belongs to the vendor.
The arms, munitions of war, provisions and fuel shall not be
considered as included in the sale.
The vendor shall be under the obligation to deliver to the purchaser a
certified copy of the record sheet of the vessel in the registry up to the
date of the sale.
Article 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.
Article 578. If the vessel being on a voyage or in a foreign port, its
owner or owners should voluntarily alienate it, either to Filipinos or to
foreigners domiciled in the capital or in a port of another country, the
bill of sale shall be executed before the consul of the Republic of the
Philippines at the port where it terminates its voyage and said
instrument shall produce no effect with respect to third persons if it is
not inscribed in the registry of the consulate. The consul shall
immediately forward a true copy of the instrument of purchase and
sale of the vessel to the registry of vessels of the port where said
vessel is inscribed and registered.
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updated notes of room 405 (2010)
In every case the alienation of the vessel must be made to appear with a
statement of whether the vendor receives its price in whole or in part, or
whether he preserves in whole or in part any claim on said vessel. In case
the sale is made to a Filipino, this fact shall be stated in the certificate of
navigation.
When a vessel, being on a voyage, shall be rendered useless for
navigation, the captain shall apply to the competent judge on court of the
port of arrival, should it be in the Philippines; and should it be in a foreign
country, to the consul of the Republic of the Philippines, should there be
one, or, where there is none, to the judge or court or to the local
authority; and the consul, or the judge or court, shall order an
examination of the vessel to be made.
If the consignee or the insurer should reside at said port, or should have
representatives there, they must be cited in order that they may take part
in the proceedings on behalf of whoever may be concerned.
REGISTRATION
 Vessels are now registered through MARINA. It is a long
standing rule that the person who is the registered owner of the
vessel is presumed to be the owner of the vessel.
 It is a settled rule that the sale or transfer of the vessel is not
binding on the third person unless the same is registered.
SHIP'S MANIFEST
 Vessels are required to carry manifest coast-wise trade.
 A manifest is a declaration of the entire cargo. The object of a
manifest is to furnish custom officers with list of check against, to
inform the revenue officers what goods are being brought into a
port of the country on a vessel.
 The requirement that a vessel must carry a manifest is not
complied with even if a bill of lading can be presented. A bill of
lading is just a declaration of a specific cargo rather than the entire
cargo
 Sec 906 of the Tariff and Custom Code provides that “manifest
shall be required for cargo and passengers transported from one
place to another only when one or both of such place is a port of
entry.”
MORTGAGE
 Since the term personal property includes vessel, they are
subject to mortgage agreeably to the provisions of the Chattel
Mortgage Law.
 Mortgage and other encumbrances over vessels are governed
by the provisions of presidential decree 1521 (Ship Mortgage Decree
of 1978)
OTHER CODE OF COMMERCE PROVISIONS
 The provisions of the Code of Commerce reproduced hereunder are
deemed modified not only by the Civil Code but also by special laws
 Read page 486-488 of book
SAFETY REGULATIONS
 On February 23, 2000, the Maritime Industry Authority directed
all domestic shipowners and operators under Memorandum
Circular No. 154 to strictly comply with existing Safety-Related
Policies, Guidelines, Rules and Regulations
 Rules include: (read book page 488-489)
 Monitoring of compliances shall be undertaken by the Authority
and its Maritime Regional Offices, together with the needed
coordination with the Philippine Coast Guard
 The MARINA shall have the power to inspect vessels and all
equipment on board to ensure compliance with safety standards
C. PERSONS WHO TAKE PART IN MARITIME COMMERCE
In sum, the following are persons who take part in Maritime Commerce:
 SHIPOWNERS and SHIP AGENTS;
 CAPTAINS and MASTERS OF VESSELS;
 OFFICERS and CREW OF VESSELS
SHIPOWNER V. SHIP AGENT
5 angel‘s notes
SHIPOWNER – the person who is primarily liable for damages
sustained in the operation of vessel.
Code of Commerce – places the primary responsibility on the owner of
the vessel.
(Uses the term naviero which has been construed to include
shipowner, ship agent and even the charterer who is considered as
owner pro hac vice.)
SHIP AGENT (Code of Commerce) – the person entrusted with
provisioning of the vessel, or who represents her in the port in
which she happens to be. There is also the intention under the
Code of Commerce to make the ship agent solidarily liable with
the owner. The solidary liability applies both for breach of
contract and extra-contractual obligations such as tort. The ship
agent, even though he is not the owner, is liable in every way to
the creditor for losses and damages without prejudice to his right
against the owner, the vessel and its equipment and freight. But
his liability, however is subject to the LIMITED LIABILITY RULE
(Chapter 6 of the Aquino book).
CAPTAINS V. MASTERS OF VESSELS
For purposes of Maritime Commerce:
The words “captain” and “master” have the same meaning; both
being chiefs or commanders of ships. Thus, the terms “captain”
and “master” are used synonymously in the Code of Commerce.
MARINA regulations:
MASTER – the person having command of the ship. The same term is
being used both for domestic trade and international trade.
BOAT CAPTAIN – a person authorized by the MARINA to act as officer
and/or in command of a boat/ship or has the qualification/license
to act as such.
3 Distinct Roles a captain commonly performs:
(Inter-Orient Maritime case)
1. He is a GENERAL AGENT OF THE SHIPOWNER;
2. He is a COMMANDER and TECHNICAL DIRECTOR of the vessel
(most important role for this has something 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);
3. He is a REPRESENTATIVE OF THE COUNTRY under whose flag he
navigates.
Based on the first aforementioned role, the captain is regarded as the
GENERAL AGENT of the shipowner and as such, he:
a. Has authority to sign bills of lading;
b. Carry goods aboard and deal with the freight earned;
c. Agree upon rates and decide whether to take cargo;
d. 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.
All aforementioned functions verily commits to the captain the
governance, care, and management of the vessel. Clearly then, the
captain is vested with both MANAGEMENT and FIDUCIARY functions.
POWERS AND OBLIGATIONS INHERENT TO THE CAPTAIN AND THE
MASTER: (See Arts. 610-612 of the Code of Commerce)
DISCRETION OF CAPTAIN AND MASTER
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.
Presumption: A captain is knowledgeable as to the specific
requirements of seaworthiness and the particular risks and perils of
the voyage he is to embark upon.
Applicable Principle: The captain has control of ALL departments of
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service in the vessel, and reasonable discretion as to its navigation.
Basic Principle in Admiralty Law: In navigating the vessel, the master
must be left free to exercise his own best judgment.
Requirements of Safe Navigation: The judgment and discretion of the
captain of a vessel may be confined within a straitjacket, even in this age
of electronic communications.
PILOTAGE: Who is a pilot?
Maritime Law: a person duly qualified, and licensed, to conduct a vessel
into or out of ports , or in certain waters.
Broad sense: 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.
General understanding: 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.
COMPULSORY PILOTAGE. In compulsory pilotage, states possessing
harbors enacted laws or promulgated rules requiring vessels approaching
their ports to take on board pilots licensed under local law. In the
Philippines, compulsory pilotage is being implemented in the Port of
Manila, the latter being within the Manila Pilotage District.
a. Master and Pilot (See Far Eastern Shipping case on page 520 of
the Aquino book for the SC discussion on the duties of a pilot)
b. Shipowner and Pilot
GENERAL RULE: the pilot is PERSONALLY LIABLE for damages caused
by his own negligence or default to the OWNERS of the vessel, and
to THIRD PARTIES for damages sustained in a collision. Such
negligence of the pilot in the performance of duty constitutes a
MARITIME TORT.
In cases of COLLISION: the COLLIDING VESSEL is prima facie
responsible, hence, the burden of proof is upon the party claiming
benefit of the exemption from liability. Thus, it must be shown
affirmatively that the pilot was at fault, and that there was no fault
on the part of the officers or crew, which might have been conducive
to the damage. The fact that the law compelled the master to take
the pilot does not exonerate the vessel from liability. The injured
party shall seek redress from the vessel. The owners of the vessel
are responsible to the injured party for the acts of the pilot, and
they must be left to recover the amount as well as they can against
him.
c. Pilot and his Association
The fact that the pilot is a member of an association does not make
the association jointly and severally liable. Article 2180 of the Civil
Code does not apply because there is NO EMPLOYER-EMPLOYEE
Relationship.
Well-established is the rule that pilot associations are immune to
vicarious liability for the tort of their members. They are not the
employer of their members and exercise no control over them once
they take the helm of the vessel. They are also not partnerships
because the members do not function as agents for the association
or for each other. Pilots’ associations are also not liable for
negligently assuring the competence of their members because as
PROFESSIONAL ASSOCIATIONS, they made no guarantee of the
professional conduct of their members to the general public.
CODE OF COMMERCE PROVISIONS ON CAPTAINS (See page 528 of the
Aquino book)
OFFICERS AND CREW OF VESSELS
COMPLEMENT OF A VESSEL (Art. 648, Code of Commerce)
6 angel‘s notes
-- all the persons on board from the captain to the cabin boy,
necessary for the management, maneuvers, and service, and
therefore, it includes the CREW, the SAILING MATES, ENGINEERS,
STOKERS, and OTHER EMPLOYEES ON BOARD not having specific
designations; but it SHALL NOT INCLUDE the passengers or the persons
whom the vessel is transporting.
REGULATION OF MERCHANT MARINE PROFESSION
The practice of marine profession is now governed by special laws and
pertinent rules issued by the:
- MARINA;
- BOARD OF MARINE DECK OFFICERS;
- BOARD OF MARINE ENGINEER OFFICERS
MINIMUM SAFE MANNING
It is not enough that the officers manning the merchant vessel
have all the qualifications imposed by the Philippine Merchant
Marine Officers Act and other special laws or regulations. It is also
required that there is sufficient number of officers and crew that
are serving in the vessel. (Quality and Quantity)
SECURITY OF TENURE
The Labor Code provisions apply to OFFICERS and CREW of
merchant vessels in DOMESTIC Trade or COASTWISE Shipping.
Hence, matters concerning their dismissal or disciplinary action
must be in accordance with provisions of the Labor Code. For
officers and crew who are working in foreign vessels who are
involved in overseas shipping, there must be compliance with the
applicable laws on overseas employment as well as regulations
issued by the Philippine Overseas Employment Administration
(POEA).
CODE OF COMMERCE PROVISIONS on Sailing Mates, Second Mate and
Marine Engineer, Crew, and Captain (See pages 552-560 of the Aquino
book).
Parties --- those provided above… plus seamen, other members of the
complement including the stokers (incharge of boilers) and supercargo
(agent of the shippers who has authority to sell goods while on
voyage)
4 maritime contracts
1. charter parties
2. Botomry
3. Repondentia
4. Marine insurance (incorporated in the subject insurance
ON PERSONS
Shipowner
- he has the privilege to invoke limited liability rule
- what if with a charter party with charterer, who can invoke
the LLR? No jurisprudence. Personal opinion of sir:
distinguish on the type of charter party. If affreightment,
shipower retains possession, command and navigation of the
vessel. If bareboat it is vested upon the charterer.
- Jurisprudence: except for registration, the charterer is the
temporary owner of the vessel. With this, the charterer can
invoke LLR (this part no juris)
Note: there is not distinction of liability of shipowner and ship agent.
They are civilly liable
There is a situation in maritime law that shipower and agent they are
held liable for the act or omission of a third person which is the ship
captain or master.
ACTS of CAPTAIN
Case: Yucon case and Sweetlines case
- In Yucon, money was entrusted to the captain and the
money was lost. SC concluded that shipowner was liable for
the lost because the captain failed to put up measures while
in custody of the money. It may not technically to an act but
may refer to admission but would fall under the term acts
- In sweetlines, bound for catbalogan but the captain chose to
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updated notes of room 405 (2010)
 allow the passengers to disembark in tacloban. This time, this is
the act of captain. The SC concluded that the damages sustained
by passengers bound for catbalogan are to shouldered by the
shiponwer
Indemnities in Favor of 3 rd person: OTTA devt case sited in walter smith
case
- In OTTA the owner of the pier was at the same time the owner
of the goods. SC, because there was a relationship of owner of
vessel and goods, then there is presumption of negligence new
civil code prevails
- Walter smith case: There was no relationship. Owner of port
and owner of goods are different. What was applied by court
was the law on torts. No presumption of negligence. There
should be proof of negligence. The owner of vessel proved that
he exercised ordinary diligence (required in ports). What was
presented was the competence of shipcaptain. The shipowner
proved ordinary diligence in choosing the ship captain
Contracts entered into by shipcaptain or master
Inter orient case: one role is they are the general agent of the shipowener.
But if the obligation contracted by the captain does not enure to the
benefit of the vessel, then the shipowner has no liability. There is no
conflict bec. 586 obligations contracted by the shipper while 1759 death
or injury of passenger as result of contract of carriage.
The case in point with the contracts entered into was the case Wing Kee.
There were supplies delivered. Shipagent was said to be liable. SC said at
the time you were still an agent you were liable but at the time agency
was terminated you are no longer liable.
If both SO and SA are sued, being solidarily liable, the SA has right of
recourse over SO.
Shipcaptain or master
- The difference is with regard to the tonnage of the vessel
(higher: captain; lower: master; major patron and minor patron)
- The question on the shipcaptain or master is the exercise of
discretion
- Inter orient case: captain tayong did not want to proceed with
the voyage from Singapore to Africa bec. Of lack of oxygen and
acetylene. But because of order of management he proceeded.
He was then ordered to repatriated and then another captain
took his place. He filed for illegal dismissal. The issue was the
discretion exercised by the captain. WON he has the discretion
not to proceed bec. Of lack of supply. SC said you should
emphasize reasonable discretion--- it is the captain’s duty
- Inter Orient: triple roles of the captain --- general agent,
commander and technical manager, representative of country
Shipcaptain and harbor pilot
- Harbor pilot: distinguish if voluntary or compulsory
- Case cited by SC on proper relationship of captain and pilot. In
far eastern shipping case 521 3rd par --- ther are occasion when
the master may and should interfere and even displace the pilot
when he is obviously incapacitate and intoxicated…. (look at the
book)
- In this case, there is relevance on when the captain should
interfere. If it is voluntary (pilot engaged by shipowner) ---
damages caused by pilot, shipowner is liable. If compulsory,
shipowner can escape liability
- If compulsory distinguish whether there was circumstances that
would require the shipcaptain to interfere with the ship pilot. If
there are circumstances but captain did not interfere then
shipowner is liable. If there are circumstances and captain
interfere but still there is damage, the shipowner will not be
liable.
- Cebu Port Authority --- covered by compulsory pilotage
Chiefmate or sailing mate (then there are engineers)
- 2008 case, citing the article the code of commerce specifying
the functions of chiefmate being second in command of the
vessel… Chiefmate is a managerial employee (as provided in
labor code --- loss of trust and confidence
7 angel‘s notes
-
Seaman
- On security of tenure: distinguish DOMESTIN (labor code)
abroad (POEA).. there is a standard contract (poea prepared
and drafted it and every seaman shall comply with this ---
this is to protect filipino seaman working abroad) that will be
signed by every seaman stipulating the security of tenure,
repatriation, benefits, etc.
- Difference for abroad: bigger income but contractual (after
contract go home).. DOMEstic, you can be a regular
employee in accordance with the labor code
- JumpShip scenario: it is a valid ground to terminate a
seaman
Shipcaptain should conduct preliminary investigation for crimes
conducted on board
D. CHARTER PARTIES
Charter Parties
- a contract whereby the entire ship, or some of the principal
part, is let by the owner to a merchant or other person for a
specified time or use for the conveyance of goods, consideration
of payment of freight
- it is a contract, hence, parties are free to stipulate upon such
terms and conditions that would suit their purposes subject to
the caveat that these should not be contrary to law or public
policy
Parties
1. Charterer- merchant or a person who desire s to lease ship or vessel
owned by another by transport of his or her goods for commercial
purposes or persons from one port to another
2. Shipowner (SO)
KINDS:
1. bareboat or demise charterer – shipowner leases to the charterer
the whole vessel, transferring to the charterer the entire command,
possession and consequent control over the vessel’s navigation,
including the master and the crew, who becomes the charterer’s
“servants”
- charterer becomes an owner “pro hac vice”
2. Contract of affreightment – charterer hires the vessel only, either for
a determinate period of time or for a single or consecutive voyage,
with the SO providing for the provision of the ship, wages of the
master and crew, and expenses for maintenance of the vessel
a. time charter – vessel is leased to a charterer for a fixed
period of time
b. voyage charter – vessel is leased for a single or particular
voyage
REQUISITES OF A VALID CHARTER PARTY
1. consent of the contracting parties
2. an existing vessel which should be placed at the disposition
of the shipper
3. the freight
4. compliance with requirements of art 652 of Code of
commerce
(Aticle 652 of the Code of Commerce provides that the
charter party shall contain, among others, the name,
surname, and domicile of the charterer, and if he states that
he is acting by commission, that of the person for whose
account he makes the contract.)
Caltex v. Sulpicio Lines
There was a voyage charter; collision between MT Vector (tanker) and
Doña Paz (owned by Sulpicio) ; breach of contract filed by the
passengers’s heirs against Sulpicio ; 3d party complaint against
registered owner of the tanker including Caltex ( that they were
negligent and in bad faith by not seeing to it that the tanker was
seaworthy)
Issue: WON charterer shall be liable under Maritime Law?
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updated notes of room 405 (2010)
Ruling: Liability cannot be attached to Caltex; the charter did not affect
the business of Sulpicio as a common carrier ; rights and responsibilities
of ownership still rested on the owner
Planters Product v CA
- time charter; Planters purchased fertilizers from the US; voyage
to the Philippines ; upon arrival, shortage in the cargo was
discovered ; filed actions against carrier fro damages ( breach of
Contract) ; RTC ruled in favor of the Planters; Ca reversed &
absolved carrier as it was converted from common carrier to
private ;
- Ruling : It cannot become a private carrier ; bareboat charter
can become a private carrier but in contract of affreightment
remains as common carrier ( action based on contract of
carriage ; presumption of negligence ) ; carrier was able to rebut
the presumption of negligence ( result the inherent character of
the fertilizers)
Coastwise Lighterage v. CA
- WON private carrier would convert to a common carrier;
contract of affreightment
- Ruling : reiterated Planters ruling ; but was not able to rebut
presumption of negligence ; did not exercise EO diligence ( hired
unlicensed patron)
Home Insurance v. American Steamship
- case mostly used by the common carrier as defense ; Home
Insurance is subrogee (paid SMC of loss cargo shipped thru
American Steamship ; no reference as to what contract but
there was a mention that it was in affreightment
- Ruling : Common Carrier undertaking to carry special cargo
(chartered to special person only ) become a private carrier and
stipulation exempting owner from liability for loss due to the
negligence of its agents is valid;
Shipowner can appoint senior officers for the vessel even if bareboat
contract. But technically it is an affreightment. Most conflicts will occur if
these various principles will have to be mixed.
The whereabouts of the vessel is important to know the time for loading
and unloading…
Policy – marina
Implementing or enforcement --- Coastguard
2 conditions implied in charter party
1. seaworthiness (Caltex Phil Case) --- it need not be written in the charter
party
2. --- look at book (ala kaapas)
JURISDICTION OF ADMIRALTY CASES
- depends on the jurisdictional amount
- important element of the contract =the subject matter of the
contract ( nature and character)
International Harvester v Aragon
-involves loss of cargo shipped from LA to Manila; cargo owner filed an
action against common carrier
-SC said liability of petitioner was predicated upon the contract of carriage
; admiralty would involve all maritime contract in whatever form and
wherever made
Macondry v Delgado Brothers
- Delgado was an operator of a pier service ; WON operator
exercised its duty in loading and unloading of cargos ; no
contract of carriage ; obligation was only to load the to the ship ;
no application of admiralty
FRIEGHT OR FREIGHTAGE
- price of carriage
- shall accrue according to what is stipulated in the contract
- should there be no stipulation or if it is ambiguous , rules shall
be
a. freight shall begin to run from the day of loading
on the vessel
8 angel‘s notes
b. in charters with fixed period, the freight shall
begin to run upon that very day
c. If freight is charged according o weight ,
payment shall be made according to gross weight ,
including the weight of the containers
LAST DAYS- period of time stipulated fro loading and unloading
( provided for in charter party ) ; if no lay days provided for in the
charter party, it is understood that the charterer will unload and
discharge cargoes within a reasonable time or with reasonable
diligence
Demurrage – a sum of money due by express contract for detention of
the vessel in loading , beyond time allowed for that purpose in that
charter party ; sum of which is usually fixed by the parties in the
charter party ; liability for this exists only when expressly stipulated
Deadfreight – where the charterer failed to occupy the leased portion
of the vessel, he may thereby be liable by the shipowner for the
deadfreight that occurred
STIPULATION IN CHARTER PARTIES
GR: parties are free to stipulate subject to art 1744 t01754 0f NCC
Art. 1744. A stipulation between the common carrier and the shipper
or owner limiting the liability of the former for the loss, destruction,
or deterioration of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner
or shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence
in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family, or of a
man of ordinary prudence in the vigilance over the
movables transported;
(5) That the common carrier shall not be responsible for the
acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed
by thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or
other equipment used in the contract of carriage.
Art. 1746. An agreement limiting the common carrier's liability may
be annulled by the shipper or owner if the common carrier refused to
carry the goods unless the former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays the
transportation of the goods or changes the stipulated or usual route,
the contract limiting the common carrier's liability cannot be availed
of in case of the loss, destruction, or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's liability for
delay on account of strikes or riots is valid.
Art. 1749. A stipulation that the common carrier's liability is limited
to the value of the goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the
owner or shipper for the loss, destruction, or deterioration of the
TRANSPORTATION LAW
updated notes of room 405 (2010)
goods is valid, if it is reasonable and just under the circumstances, and
has been fairly and freely agreed upon. CONTENTS OF THE LOAN CONTRACT:
Art. 1751. The fact that the common carrier has no competitor along the 1. kind, name and registry of the vessel;
line or route, or a part thereof, to which the contract refers shall be 2. name, surname and domicile of the captain;
taken into consideration on the question of whether or not a stipulation 3. names, surnames and domiciles of the borrower and the lender;
limiting the common carrier's liability is reasonable, just and in 4. amount of the loan and the premium stipulated;
consonance with public policy. 5. time for repayment;
6. goods pledged to secure repayment;
Art. 1752. Even when there is an agreement limiting the liability of the 7. voyage during which the risk is run (Art.721)
common carrier in the vigilance over the goods, the common carrier is
disputably presumed to have been negligent in case of their loss, WHO MAY CONTRACT:
destruction or deterioration. 1. Bottomry – by the ship owner or ship agent. Outside of the
residence of the owners, the captain.
Art. 1753. The law of the country to which the goods are to be 2. Respondentia – only the owner of the cargo.
transported shall govern the liability of the common carrier for their
loss, destruction or deterioration. DISTINCTIONS:
BOTTOMRY/ RESPONDENTIA ORDINARY LOAN
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the 1. Not subject to Usury Law 1. Subject to Usury Law
passenger's baggage which is not in his personal custody or in that of his
employee. As to other baggage, the rules in Articles 1998 and 2000 to 2. Liability of the borrower is 2. Not subject to any
2003 concerning the responsibility of hotel-keepers shall be applicable. contingent on the safe arrival of contingency
the vessel or cargo at destination
ART. 653. if the cargo should be received without the charter party having 3. The last lender is a preferred 3. The first lender is a preferred
been signed, the contract shall be understood as executed In accordance creditor creditor
with what appears in the bill of lading, the sole evidence of title with
regard to the cargo for determining the rights and obligations of the ship 4.must have a collateral 4.may or may not have
agent, captain and charterer collateral
5.collateral is the vessel or cargo 5. maybe property, real or
- If there is charter party or bill of lading (BOL) = no contract at all; but subject to maritime risk personal
according to Blanco, if there is delivery and receipt of cargo combined 6.must be in writing 6. need not be in writing but
with the GF and mutual consent = contract present , better than BOL interest shall not be due unless
expressly stipulated in writing
E. LOANS ON BOTTOMRY AND RESPONDENTIA 7. to be binding on third person 7. need not be registered
must be recorded in the registry
LOAN ON BOTTOMRY - loan made by shipowner or shipagent guaranteed of vessels of port of registry of
by vessel itself and repayable upon arrival of vessel at destination. the vessel
LOAN ON RESPONDENTIA – loan, taken on security of the cargo laden on 8. Loss of collateral extinguishes 8. does not extinguished if
a vessel, and repayable upon safe arrival of cargo at destination. the same there is a loss of the
collateral(if any)
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND RESPONDENTS:
1. Exposure of security to marine peril; Consequences of loss of effects of the loans
2. Obligation of the debtor conditioned only upon safe arrival of the
security at the point of destination. 1. Effects of loans be lost due to accident of the sea during the time,
and on the occasion of the voyage which has been designated in the
Requisites of a Loan on Bottomry/ Respomdentia contract and proven that the cargo was on board
1. Shipowner borrows money for use, equipment or repair of - lender losses the right to institute the action which would pertain to
vessel him
2. For a definite term and with extraordinary interest called Except: when the loss was
premium 1. caused by inherent defect of the thing
3. secured by pledged of vessel or portion thereof in the case on 2. through fault or malice of the borrower
loan on Bottomry or pledge of goods in case of Respondentia 3. through barratry on the part of the captain
4. Loan repayment depends or conditioned on the safe arrival of 4. caused by damages suffered by the vessel as a
goods for respondentia and obligation to repay is extinguished if consequence of being engaged in a contraband
pledged goods are lost 5. loaded the goods on a vessel different from that
5. obligation to repay is extinguished if vessel is lost due to designated in the contract unless the change was caused by
specified marine perils in the course of voyage or within limited force majeure
time
2. The lenders on bottomry or respondentia shall suffer in proportion
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA: to their respective interest, the general average which may take place
 May be executed by means of: in the things upon which the loans were made.
1. public instrument
2. policy signed by the contracting parties and the broker taking part 3. In case of shipwreck, the amount for payment of the loan shall be
therein deduced to the proceeds of the effects which have been saved but
3. private instrument (Art. 720) only after deducting the costs of the salvage.

GR: The captain cannot contract loans on respondentia secured by the 4. If the loan should be on the vessel or any of her parts, the freight
cargo, and should he do so, the contract shall be void. Neither can he earned during the voyage for which the loan was contracted shall also
borrow money or bottomry for his own transactions be liable for its payment, as far as it may reach.

EXCEPTIONS: 5. If the same vessel or cargo should be the object of the loan of
1. On the portion of the vessel he owns, provided no money has been Bottomry or respondentia and maritime insurance, the value of what
previously borrowed on the whole vessel, nor exists any other kind of may be saved in case of shipwreck shall be divided between the lender
lien or obligation chargeable against her and the insurer, in proportion to the legitimate interest of each one,
2. When he is permitted to do so, he must necessarily state what taking in consideration, for this purpose only, the principal with
interest he has in the vessel. respect to the
9 angel‘s notes
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updated notes of room 405 (2010)
Maritime contracts include charter parties… and loans on bottomry and
respondentia are considered maritime contracts
Q: why do we have to study this topic? Are these relevant?
A: they are hardly used at present. However, we have to study this just in
case this will be asked in the bar. Especially in the unique terms used in
this topic..
General provisions in contracts will govern
Basic provision you should not forget:
1. there should be a marine risk
2. the condition that the vessel or the goods has perished then the right
of the lender to collect everything as well as stipulated interest is
extinguished
(not sure if there are other more.. basin ala ko kaapas)
BOTTOMRY
- It may refer to the vessel
- The bottom or the hull or the kill of the vessel can be pledged in
this case
- The whole vessel can be a subject of a security or collateral
- PD. 1521: (is this different) --- loan is the principal, mortgage is
the accessory.
- The contract of bottomry is principal, the mortgage under pd
1521 is merely a security
- In pd 1521 under section 4 it is a requirement that the whole of
the vessel must be mortgaged (no jurisprudence on this matter
whether a part of the vessel can be mortgaged)
- In bottomry the whole or the part of the vessel can be the
subject
- IF the part of the vessel can be pledged, is it necessary that
there should be goods? No. no need for goods.
RESPONDENTIA
- The vessel should have goods. The goods must be laden in the
vessel
- Is it necessary that the boat is on voyage? The vessel must be in
the actual course of voyage because this is the objective of the
law. Because if the vessel is docked in the port the owner can
simply obtain loans. And besides there is no risk when the
vessel is docked (but no jurisprudence)
Distinction of this two types of loan vs. SIMPLE LOAN (for purposes of the
bar) --- 5 differences
1. with respect to form --- can you validly execute a bottomry or
respondentia verbally? You cannot. Bec under the code of commerce no
judicial action can arise when the contract is not reduced in writing. But
this is not the case in simple loan. But in simple loan you take note the
statute of frauds… if not in writing B and R, you can dismiss case due to
failure to state cause of action.
Q: why hardly used at present?
A: because of sophistication. Captains can just call up any agent the
shipowner to deliver anything for the use of the vessel to deliver. … this
contract was recognized in medieval times.
F. AVERAGES AND COLLISIONS
ACCIDENTS IN MARITIME COMMERCE:
1. Averages
2. Arrival Under Stress
3. Collision
4. Shipwreck
Averages - an extra-ordinary or accidental expense incurred during the
voyage in order to preserve the cargo, vessel or both; and all damages or
deterioration suffered by the vessel from departure to the port of
destination, and to the cargo from the port of loading to the port
consignment. (Art. 806)
CLASSES OF AVERAGES:
A. Particular or Simple Average
B. Gross or General Average
10
A. Particular or Simple Average
Damage or expenses caused to the vessel or cargo that did not
inured to common benefit, and borne by respective owners. (809)
 The owner of the goods which gave rise to the expense or suffered
the damage shall bear this average. (Art. 810)
res perit domino applies
if the vessel or goods are hypothecated by loan on bottomry and
respondentia, the lender shall bear the loss in proportion to his
interest
Examples: see article 809 of the code of commerce
RULES ON AVERAGES:
1. Averages is defined as damage deliberately caused or an expense
deliberately incurred due to a marine peril and which has resulted
in saving both vessel and cargo or only the vessel or cargo.
2. Where both vessel and cargo are saved, it is general average;
where only the vessel or only the cargo is saved, it is particular
average.
3. The person whose property has been saved must contribute to
reimburse the damage caused or expense incurred if the situation
constitutes general average.
B. Gross or General Average
 Damage or expenses deliberately caused in order to save the vessel,
its cargo or both from real and known risk. (Art. 811)
 All the persons having an interest in the vessel and the cargo
therein at the time of the occurrence of the average shall contribute to
satisfy this average. (Art. 812)
REQUISITES
1. common danger present
2. arising from accidents of sea, disposition of authority
3. peril imminent and ascertained
4. part of vessel or cargo deliberately sacrificed
5. intended to save vessel or cargo
6. proper legal steps and authority taken
Common danger
- means both the ship and the cargo, after has been loaded, are
subject to the same danger, whether during the voyage, or in the port
of loading or unloading, that the danger arises from the accidents of
the sea, disposition of authority, or faults of men, provided that
circumstances producing the peril should be ascertained and imminent
or may rationally be said to be certain and imminent
- When the measure of precaution adopted solely and exclusively for
the preservation of the vessel from the danger of seizure or capture
and not for the common safety is not considered as common danger
Deliberate Sacrifice
- voluntary sacrifice of a part for the benefit of the whole in order to
justify the average contribution
- voluntary jettison- the casting away of some portion of the
associated interests for the purpose of avoiding the common peril
from the whole to a particular portion of those interests
-the goods on board refer to in jettison should be proven by means of
bill of lading and with regards to those belonging to vessel by means of
inventory prepared before the departure
2 cases where there can also be general averages even if the sacrifice
was not made during the voyage:
a. where the sinking of the vessel is necessary to extinguish a
fire in a port, roadstead, creek or bay
b. where cargo is transferred to lighten the ship on account
of a storm to facilitate entry into a port
Art. 816: in order that the goods jettisoned may be included in the
gross average and the owners entitled to indemnity – it is necessary
that the cargo’s existence on board be proven by a bill of lading; and
with regard to those belonging to the vessel, by means of an inventory
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prepared before departure.
Art. 817: if in lightening of a vessel on account of a storm to facilitate its
entry to a port or roadstead, part of the cargo should be transferred to
barges or lighters and be lost, the owner of the said part is entitled to
indemnity as if the loss originated from a gross average, the amount being
distributed between the vessel and cargo from which it came.
If on the contrary the merchandise transferred should be saved and the
vessel should be lost, no liability may be demanded of the salvage.
Art. 818: if, as a necessary measure to extinguish a fire in a port,
roadstead, creek, or bay, it should be decided to sink any vessel, this loss
shall be considered gross average, to which the vessels saved should
contribute.
Note: the loss or damage sustained by cutting away wreck or parts of the
ship which have been previously carried away or effectively lost by
accident shall not be made good as general average
Sacrifice must be Successful
- no general contribution can be demanded if the vessel and other cargo
that are sought to be saved were in fact not saved (art. 860)
- owners of the goods saved shall not be liable for the indemnification of
those jettisoned, lost or damaged
- hence when the sacrifice was not successful in saving the ship, there will
be no general contribution
Compliance with Legal Steps
- Procedure for recovery: (Art. 813-814)
1. There must be a resolution of the captain, adopted after a
deliberation with the other officers of the vessel and after hearing all
persons interested in the cargoes. If the latter disagree, the decision
of the captain should prevail but they shall register their objections.
2. The resolution must be entered in the logbook, stating the reasons
and motives for the dissent, and the irresistible and urgent causes if
he acted in his own accord. It must be signed, in the first case, by all
persons present in the hearing. In the second case, by the captain
and all the officers of the vessel.
3. The minutes must also contain a detail of all the goods jettisoned and
those injuries caused to those on board.
4. The captain shall deliver it to the maritime judicial authority of the
first port he may make, within 24 hours after his arrival, and to ratify
it immediately under oath.
-ORDER OF GOODS TO BE CAST OVERBOARD IN CASE OF JETTISON:
1. those which are on the deck, preferring the heaviest one with the
least utility and value;
2. those which are below the upper deck, beginning with the one with
greatest weight and smallest value. (Art. 815)
Examples of General Average
Read Art 811 of the Code of Commerce
By Whom Borne
- shall be borne by those who benefited from the sacrifice; the shipowner
and the owner of the cargoes that were saved
Contribution may be imposed to;
a. insurers ( Insurance Code of the Philippines)
- they are obliged to pay for the indemnification of the gross average
provided that the liability shall be limited to the proportion of
contribution attaching to his policy value where this is less than the
contributing value of the thing insured
b. lenders of bottomry and respondentia (Code of Commerce)
-obliged to pay in proportion to their respective interest, the general
average which may take place in the goods which the loan is made
Who is entitled to indemnity?
Owner of the goods which were sacrificed is entitled to receive the
general contribution
Except;
1. goods carried on desk unless the rule
11
special law or customs of the place allow the same
2. goods that are not recorded in the
books or records of the vessel
3. fuel of the vessel if there is more
than sufficient fuel for the voyage
American Home Insurance v. CA
Art 848 states that claims shall not be admitted if they do not exceed
5% of the interest which the claimant may have in the vessels or cargo
if it is general average, and 1% of the goods damaged if particular
average… deducting in both cases the expenses of appraisal, unless
there is an agreement to the contrary.
It is clear that the damage of the cargo is particular average since the
loss is less than 1% to the value of the cargo and there appears to be
no allegations as to any agreement defendants and consignee of the
goods to the contrary, by express provision of law, plaintiff is barred
from suing for recovery.
Law on averages does not apply if the CC is negligent.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR
CONTRIBUTION ON AVERAGES
 Under the rule, deck cargo is permitted in coastwise shipping but
prohibited in overseas shipping.
1. If deck cargo is located with the consent of the shipper on
overseas trade, it must always contribute to general average,
but should the same be jettisoned, it would not be entitled to
reimbursement because there is violation of the Y-A Rules.
2. If deck cargo is loaded with the consent of the shipper on
coastwise shipping, it must always contribute to general average
and if jettisoned would be entitled to reimbursement.
- may also be used to solve controversies where no provision
of the code of commerce is in point because the said rules
embody the custom of maritime states
AVERAGES
- the same concept that was existing in medieval times can be applied
at present
Relevance of averages (take note these ex. Connected to expenses
under 806)
← under 806 --- averages are:
o Extraordinary expenses – ex. If machine does not
work, you have to ask help of a tugboat… the
expenses on the use of tugboat is a question of
averages. This is extraordinary because it is not
foreseen. --- assuming the engine of the vessel was
defective, can that be considered an average? YES.
(question now if it is particular or general)
o Damages or deterioration suffered – refer to the
physical feature or attribute of the goods.
- these two are different
DISTINCTION OF PARTICULAR AND GENERAL AVERAGES
Hernandez – averages are losses. If there is a loss incurred, the loss will
be shouldered on where it falls. (ex. If you have goods transported
from origin to destination but in process it was damaged by sea water.
The shipper or owner will shoulder the loss. What will shipper do to
recover loss? If insured go after insurance. Insurance then files action
against common carrier due to negligence) --- if general average, there
is special circumstance, the loss will not be shouldered on where it
falls but wil be shouldered proportionately by persons who have
benefited the circumstance
4 reqs for general averages (see above notes) – MEMORIZE;
MAGSAYSAY VS. AGAN
1. common danger TO Both vessel and cargo
2. deliberate sacrifice
3. successful saving
4. compliance with the proper steps
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If no special circumstance, it is a particular or simple average --- the owner
of the vessel will be the one who will shoulder the loss. The negligence of
captain, the owner of the vessel will shoulder. But if there is special
circumstance, the loss will be shouldered proportionately by those who
benefited
Standard oil case – the ship captain will not release goods to the shipper
unless the shipper will contribute their share. The issue was the duty of
the captain to liquidate – he did not file for the appropriate proceeding,
you should result to legal liquidation. Captain here failed TO INITIATE
proper proceeding thus shipowner is liable for actions of captain
Q: is the duty of captain to initiate a condition precedent?
A: no. even if shipcaptain does not initiate, the shipowner can still file the
appropriate proceeding in court.
COMMON DANGER – both to vessel and cargo. If one invokes general
average then that person must prove what he allege. In standard oil since
shipcaptain invoked gen aver – they should be the one to prove. Failure
to prove, they cannot ask for contribution from owners of the goods.
It is also possible that there are no goods involved. Only extraordinary
expense PHil. Home assurance case --- discussed also in chapter 3 ---
when it exploded, vessel got burned, another vessel came to the rescue to
extinguish the fire and towed the vessel to the nearest destination. Goods
were saved from the subject vessel. The shipowner asked for contribution
to the owner of the goods which were saved. SC said, shipowner did not
comply legal steps 813-815 thus you cannot allege general averages.
If the averages are not general, it is particular. the shipowner will be solely
liable… in the case of Magsaysay, there was no deliberate sacrifice.
SUCCESSFUL SAVING
- Both vessel and goods must be saved
- If vessel not saved, no general averages. Even if goods were
saved
- You have to start with resolution, placing of reso in the log book,
accounting of goods thrown away starting those on deck and to
follow from those not on deck (read 83-815)
American Home insurance (take note this case--- bar)
- Transportation of tv sets, the shipcapatain was uprised of the
typhoon. Still captain continued with the journey. Then na abot
ang typhoon captain directed that the tv sets should be jettison.
Saved vessel. Reklamo owner. Is there general average? No. if
the shipowner is negligent, the law on general averages does
not apply.
Note that examples of the two types of averages are not exclusive. There
is a word “especially” thus there may be other example that may fall
under this two type of averages.
YORK AND TURP RULES
- THIS CAN be stipulated in a contract that this rule will apply in
respect to averages
- In the absence of stipulation in the contract in applying this rule,
such rule is inapplicable
Q: ordinary expenses are not averages bec. They are foreseeable, are
there instance that they can be considered to be extraordinary ave
A; if the parties agree that the averages will cover ordinary expenses. The
code of commerce does not prohibit the inclusion of other expenses
under averages.
G. COLLISIONS
Collisions - impact of 2 vessels both of which are moving.
Allision - impact between a moving vessel and a stationary one.
 3 Zones of Time in the Collision of vessels:
1. First zone – all time up to the moment when risk of collision begins;
2. Second zone – time between moment when risk of collision begins
and moment it becomes a practical certainty;
3. Third zone – time when collision is certain and time of impact.
12
 Error in Extremis - sudden movement made by a faultless vessel
during the 3rd zone of collision with another vessel which is at fault
during the 2nd zone. Even if such sudden movement is wrong, no
responsibility will fall on said faultless vessel. (Urrutia and Co. v. Baco
River Plantation Co., 26 PHIL 632).
 Rules on Collision of Vessels under Code of Commerce:
1. The collision may be due to the fault, negligence or lack of skill of
the captain, sailing mate, or any other member of the
complement of the vessel. The owner of the vessel at fault be
liable for losses or damage. (Art. 826)
2. The collision may be due to the fault of both vessels. Each vessel
shall suffer its own losses, but as regards the owner of cargoes
both vessels shall be jointly and severally liable. (Art. 827)
3. If it cannot be determined which vessel is at fault. Each vessel
shall also suffer its own losses and both shall be solidarily liable
for losses o damages on the cargoes. (Art. 828)
4. The vessels may collide with each other through fortuitous event
or force majeure. In this case each shall bear its own damage.
(Art. 830)
5. Two vessels may collide with each other without their fault by
reason of a third vessel. The third vessel will be liable for losses
and damages. (Art. 831)
6. A vessel which is properly anchored and moored may collide with
those nearby reasons of storm or other cause of force majeure.
The vessel run into shall suffer its own damage and expense. (Art.
832)
 Cases covered by collision and allision:
1. One vessel at fault – such vessel is liable for damage caused to
innocent vessel as well as damages suffered by the owners of
cargo of both vessels.
2. Both vessels at fault – each vessel must bear its own loss, but the
shippers of both vessels may go against the ship owners who will
be solidarily liable.
3. Vessel at fault not known – same as rule as (2). (Doctrine of
Inscrutable Fault)
4. Third vessel at fault – same rule as (1).
5. Fortuitous event – no liability. Each bears its own loss.
Prerequisite to recovery:
 Protest should be made within 24 hours before the competent
authority at the point of collision or at the first port of arrival, if in the
Philippines and to the Philippine consul, if the collision took place
abroad. (Art. 835)
 Injuries to persons and damage to cargo of owners not on board on
collision time need not be protested. (Art. 836)
DOCTRINE OF LAST CLEAR CHANCE OR CONTRIBUTORY NEGLIGENCE
NOT APPLICABLE.
DOCTRINE OF “INSCRUTABLE FAULT”
 In case of collision where it cannot be determined which between
the two vessels was at fault, both vessels bear their respective
damage, but both should be solidarily liable for damage to the cargo of
both vessels.
NOTE: The Doctrine of Limited Liability applies in case of collisions,
but it shall be limited only to the value of the vessel with all its
appurtenances and freightage earned during the voyage. When the
latter is not sufficient to cover all the liabilities, the indemnity due by
reason of the death or injury of persons shall have preference. (Arts.
837 and 838)
H. ARRIVAL UNDER STRESS
Arrival under Stress - arrival of a vessel at a port of destination on
account of lack of provision, well founded fear of seizure, privateers,
pirates, or accidents of sea disabling navigation. (Art. 819)
NOTE: Captain must make a protest
Steps to be taken in the determination of the propriety of arrival
under stress
1. captain should determine during the voyage if there is a well
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 founded fear of seizure, privateers of other valid grounds Q: difference between collision and allusion?
2. captain shall then assemble the officers Q: within what period should captain report the collision?
3. captain shall summon the persons interested in the cargo who A: 24 hours
may be present and who may attend but without right to vote
4. the officers shall determine and agree if there is well founded I. SALVAGE LAW (Act No. 2616)
reason after examining the circumstances; Captain shall have the
deciding vote
SALVAGE - services one person render to the owner of a ship or goods,
5. agreement shall be drafter and the proper minutes shall be
by his own labor, preserving the goods or the ship which the owner or
signed and entered into the log book
those entrusted with the care of them have either abandoned in
6. objections and protests shall likewise be entered in the minutes
distress at sea, or are unable to protect or secure.
- Absence of one of the steps, can still be considered arrival under stress
CONTRACT OF TOWAGE - contract whereby one vessel, usually
motorized, pulls another, whether loaded or not with merchandise,
When not lawful:
from one place to another, for a compensation. It is a contract for
1. lack of provisions due to negligence to carry according to usage and
services rather than a contract of carriage.
customs;
2. risk of enemy not well known or manifest
3. defect of vessel due to improper repair; and DISTINCTIONS:
4. malice, negligence, lack of foresight or skill of captain. (Art. 820) SALVAGE TOWAGE
1. governed by special law (Act 1. governed by Civil Code on
Who bears expenses: No. 2616) contract of lease
The shipowner or ship agent shall be liable but they shall not be 2. requires success, otherwise no 2. success not required
liable for the damages caused by the shippers by reason of a lawful payment
arrival. (Art. 821) The captain shall be liable for damages caused by his 3. must be done with the 3. only the consent of the tugboat
delay, if after the cause of the arrival under stress has ceased, he continue consent of the owner is needed
the voyage. (Art. 825) captain/crewmen
4. vessel must be involved in an 4. vessel need not be involved in an
NOTE: accident accident
- After cessation of the cause of the arrival under stress, captain should
5. fees distributed among 5. fees belong to the tugboat owner
continue voyage or else he shall be liable
crewmen
Shipwreck - loss of the vessel at sea as a consequence of its grounding, or
REQUISITES FOR SALVAGE REWARD:
running against an object in sea or on the coast. 1. Object must have been exposed to marine peril (fire, acts of pirate,
 If the wreck was due to malice, negligence or lack of skill of the thieves)
captain, the owner of the vessel may demand indemnity from said 2. Salvage services rendered voluntarily and is not required as an existing
captain. (Art. 841) duty or a form of contract (See sec 8)
Pilots are not entitled to a reward – atty. capanas
- a demolition or shattering of vessel caused by her driving ashore or on 3. Salvage services are successful in whole or in part
the rocks or shoals in the midseas, or by violence of winds and waves in 4. Valid vessel which is shipwrecked beyond the control of the crew or shall
tempests have been abandoned (not necessary)
-courts will not interfere in the agreement of the parties except but where
- cause of shipwreck must be force majeure or accident there is no agreement or it is excessive the reward is fixed by the RTC judge

-liability for loss – owners of vessel or cargo EXCEPT if the wreck was
caused by malice, negligence or lack of skill of the captain or because
the vessel put to sea was insufficiency repaired and equipped
= shipowner may demand indemnity from the captain for the damage
caused to the vessel or cargo
Shipowner is liable in case of in excess of authority given to the captain.
ORAL RECITATION
Q: Rules that govern collision?
A: art. 826-831 of Code of Commerce
826 – 1 vessel at fault
827 – 2 vessels at fault
828 – party at fault cannot be determined (inscrutable doctrine)
- cause is fortuitous even
832 – the reason for the collision is force majeure, properly anchored
vessel resulted to injury: particular damage
Q: is a protest required?
A: GR is yes. EXC: 836: with respect to persons or damages caused to
person … (look at book)
Q: what if the vessel hit the portion of the port, is that collision?
A: under the definition it is not. (look at definition.. it is contact of one
vessel to another)
Q: what is meant by error on extremise?
A: (look at book or notes)
Q: What are the grounds of arrival under stress?
Q; components of unlawful arrival under stress?
A: the lack of provisions are due to lack….
Q: Is arrival under stress a deviation from the usual route?
13
SEC 1 states that when in case of shipwreck, the vessel or its cargo shall be
beyond the control of the crew, or shall have been abandoned, and picked up
and conveyed to a safe place by other persons, the latter shall be entitled to a
reward for the salvage = this is only an element for valid claims of salvage
(Atty. Capanas)
Persons who have no right to a reward
1. crew of the shipwrecked or which was in danger of shipwreck
2. he who shall have commenced the salvage in spite of opposition of
the captain or his representatives
3. he who shall have failed to comply with the provisions of section 3
(Sec. 3 the salvor who saves or picks up a vessel or merchandise at sea, in
the absence of the ship captain, ship owner or a representative of either
of them, they being unknown, shall convey and deliver the vessel or
merchandise ASAP to the collector of customs if the port has a collector
and otherwise to the provincial treasurer or municipal mayor)
RULE ON SALVAGE REWARD:
1. The reward is fixed by the RTC judge in the absence of agreement or
where the latter is excessive (Sec. 9).
2. If sold (no claim being made within 3 months from publication), the
proceeds, after deducting expenses and the salvage claim, shall go to the
owner; if the latter does not claim it within 3 years, 50% of the said
proceeds shall go to the salvors, who shall divide it equitably, and the
other half to the government (Secs. 11-12).
3. If a vessel is the salvor, the reward shall be distributed as follows:
a. 50% to the shipowner;
b. 25% to the captain; and
c. 25% to the officers and crew in proportion to their salaries
COGSA
Hague Rules…
Q: what is the meaning of Sec. 3(6) “xxx in respect of loss or damage xxx”
Hague-Visby
Sec. 3(6) “xxx in respect of goods xxx”
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A: note that the statement below the loss or damage was replaced with goods.. the
one in cogsa is the one stated above.
3 maritimeCodes
1. hague rules – adopted in netherlands
2. Hague-visby – in sweden
3. hamburt – in germany
In the first page of cogsa only 2 sec. for CA 65 because it merely adopted PLA 521
of U.S. --- (US Cogsa)
- Under the US regime we adopted US cogsa patterned under hague
rules. The hague-visby is not applicable in so far as US is concerned
more so in the Philippines. Also in hamburg because this code is more
on reforms that the shipper wants because of their experience under
hague rules and hague visby
Hamburg rules is disadvantageous to the carrier.
The limited liability of 500 US dollars per package..
The policies is if countries will adopt a uniform rules, this wil limit liabilities of
carriers to encourage trade between nations.
WHAT WE HAVE ADOPTED IS THE HAGUE RULES
Case: Mitsui vs. CA
- Goods from manila to france. Because of delay consignee wants to pay
half because it is already off season
- Shipper files case against shipper. Shipper defense action ws filed
beyond 1 year
- SC: there was no loss because goods were delivered. No damage
because the goods did not suffer physical damage. Only, the consignee
did not pay the full amount of the goods. With this, since there is no
physical damage the prescription under COGSA does not apply
Case: Liao vs. American President (en banc)
- NY to Manila – eggs broke when they arrived to manila
- Consignee filed case against carrier
- Defense of carrier is prescriptive period
- SC: there was damaged. But it was argued that there must be a
distinction between damage to goods vs. damage to shipper. If goods, it
is under COGSA if shipper, not cogsa.. but SC does not agree to this
distinction. Thus if physical or economic damage, it is both under
COGSA. There is no distinction.
Q: why is it that the phrase was amended to goods?
A: goods here will both apply to physical and economic laws (hague-visby)
For purposes of discussion: apply MITSUI CASE
APPLICABILITY OF COGSA
- IF There is a charter party with no bill of lading, COGSA will not apply.
NCC will apply (section 1 b of COgsa --- applies only to contract of
carriage covered only by bill of lading)
- What is the reason? To prevent fraud. Because the agreement are
already contained in the bill. This is to encourage international trade
- Under sec 1 of CA 65: applicable to all contracts to and from phil ports in
foreign trade.
- COGSA – to and from phil ports. Impliedly in the case of mistui, from
phil to foreign, there was no argument on the applicability of COGSA.
What cases where cogsa held inapplicable?
A: case of Mayer steel --- based on liability on the contract of insurance because
what is involve in cogsa is contract of carriage and not insurance
Ang case – misdelivery of goods cogsa does not apply
Am insu vs. com. Mar – transshipment was immaterial. There was only one bill of
lading. Carriage from abroad to manila transshipped and deliver to port of
destination. But one bill only , thus there is no termination of the carriage from
abroad to port of destination. It would have different if there has been another bill.
Because cogsa does not apply if from manila to port of destination (be careful on
the issue on transshipment)
For prescription, note mitsue and Union Carbide – to avoid confusion as to where
damage is caused, tehn it will be fixed in the arrastre operator. But if there is port
not covered by arastre then it would be on the consignee. The one who suffered
damage can immediately file action. Why one year? To avoid fraudulent claims.
With respect to international, they want to settle it at once.
INTERACTION OF DEFENSES between NCC and COGSA
Ncc cogsa
14
Diligence/absolutory Extraordinary diligence. Due diligence/18
causes 1734/ fortuitous event
Period of responsibility 1736/1737/1738 Sec. 1(e) [tackle to
tackle rule] – tackle
referring to the side of
the ship
Notice of claim Bars the right of action Does not bar the right
of action
Limitation 1749/1750 but there is $500/package
no fix amount. Subject (remember discussion
to agreement of parties on package) – if you
declare more, pay more
Time bar or prescriptive 10 wri/6 no wri/ 4 quasi 1 year.
period delict
Q: is it the shipper alone who can file?
A: no. consignee can also file.
J. Public Utilities
Public Utility- privately owned and operated business whose service are
essential to generic public; impressed with public interest and concern
Public service – (Sec 13 of the Public service Act) includes every person that
may own, operate, manage or control in the Philippines, for hire or for
compensation, with general or limited clientele, whether permanent,
occasional/ accidental, & done with general business purposes, any common
carrier, etc; will not only refer to land transpo. but also include
telecommunications, railroads, vessels etc.
OWNERSHIP V. OPERATION
What constitutes a public utility is not their ownership but their use to serve
the public x x x x The Constitution, in no uncertain terms, requires a franchise
for the operation of a public utility. However, it does not require a franchise
before one can own the facilities needed to operate a public utility so long as it
does not operate them to serve the public x x x x In law, there is a clear
distinction between the "operation" of a public utility and the ownership of
the facilities and equipment used to serve the public. The exercise of the
rights encompassed in ownership is limited by law so that a property cannot
be operated and used to serve the public as a public utility unless the
operator has a franchise x x x x The right to operate a public utility may exist
independently and separately from the ownership of the facilities thereof. One
can own said facilities without operating them as a public utility, or conversely,
one may operate a public utility without owning the facilities used to serve the
public. The devotion of property to serve the public may be done by the owner
or by the person in control thereof who may not necessarily be the owner
thereof x x x x Indeed, a mere owner and lessor of the facilities used by a public
utility is not a public utility x x x x Even the mere formation of a public utility
corporation does not ipso facto characterize the corporation as one operating a
public utility (Tatad v. Garcia)
B. DISCRIMINATION
-it is well noted by the law that common carriers required to carry all persons,
either passengers or property, for exactly the same charge for a like and
contemporaneous service in the transportation of like kind of traffic under
substantially similar circumstances or conditions
- a common carrier may discriminate between shippers when the amount of
goods shipped by one actually costs less to handle and transport , but he
cannot discriminate upon the ground simply that he carries all the goods of one
shipper, while he does not carry all of the goods of another.
FRANCHISE AND CERTIFICATE OF PUBLIC CONVENIENCE (CPC)
Franchise- regulation through the legislative department
CPC – a from of regulation through the administrative agencies
 it is not a right but only privilege, thus can be revoked by the
agency
 not a franchise nor a contract , confers no property right, and is
a mere license or privilege
 on a broader scope: CPC is a property since it can be sold and
transferred
Phil Airlines v CAB – SC ruled that a legislative franchise is not necessary for the
operation of domestic air transport because there is nothing in the law nor in
the constitution which indicates that a legislative franchise is an indispensable
requirement for an entity to operate as a domestic air transport operator
3 BASIC REQUIREMENTS IN FILING CPC:
1. Filipino Citizen, if a corporation at least 60% owned by Filipinos - the
applicant must be a citizen of the Philippines , or a corporation or co-
partnership, association or joint stock company constituted and organized
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under the laws of the Philippines, 60 per centum at least of the stock or paid-up
capital of which belong entirely to citizens of the Philippines
2. Financial Capacity - the applicant must be financially capable of undertaking the
proposed service and meeting the responsibility incident to its operation
3. Public need - the applicant must prove that the operation of the public service
proposed and the authorization to do business will promote the public interest in
a proper and suitable manner
While public interest, convenience and necessity is the controlling policy in the
issuance of a CPC, the administrative body may also consider:
a. prior operator rule - Public Service Commission (PSC) protects the first
licensee’s investment and will not subject it to ruinous competition
- PSC will not issue CPC to a second operator who is rendering sufficient,
adequate and satisfactory service, and who in all things and respects is
complying with the rules and regulations of the commission
b. prior applicant rule – provides that the priority in the filing of the
application of the CPC is, other conditions being equal, an important
factor in determining the rights of the public service companies
c. third operator rule – a variation of prior operator rule; instead of one
operator, there are two prior operates who are rendering sufficient
service
d. protection investment rule – protects not only the public but also the
operators from unfair, unjustified and ruinous competition
INSTANCES WHEN CPC IS NOT REQUIRED
 WAREHOUSES
 VEHICLES DRAWN BY ANIMALS AND BANCAS MOVED BY OAR OR SAIL,
AND TUGBOATS ANG LIGHTER
 AIRSHIPS WITHIN THE PHILIPPINES EXCEPT AS REGARDS THE FIXING OF
THEIR MAXIMUM RATES ON FRIEGHT AND PASSENGERS
 RADIO COMPANIES EXCEPT WITH RESPECT TO THE FIXING OF RATES
 PUBLIC SERVICES OWNED BY ANY INSTRUMENTALITY OF THE NATIONAL
GOVERNMENT OR BY ANY GOVERNMENT-OWNED OR CONTROLLED
CORPORATION, EXCEPT WITH RESPECT TO THE FIXING OF RATES.
REVOCATION OF CERTIFICATE
1. holder has violated or willfully and maliciously refused to comply the
provision of Public Service ACT
2. holder is a mere dummy
3. the operator ceased operations and placed his vehicles in a storage
4. the operator totally abandoned the service
Prior or Old Operator Rule – an existing franchise may claim priority right to render
the public service within the authorized territory as long as he does so satisfactorily
and economically. Normally, it prevails over “Prior Applicant Rule” in case of
conflict, so long as the interest of the public is best served.
Note difference of public utility and public service
In public utility there is a need of a franchise on top of cpc. In public service there is
only cpc..
As to who issues --- difference of franchise and cpc.. franchise issued by congress.
Cpc by admin agencies pursuant to delegated powe
Basic Reqs for cpc (land and water) – you can have additional requirement
1. citizenship
2. 60-40 corp
3. Financial capacity – the latest req for land is just 10 thou for taxi unit
4. Public need.
The applicant of a cpc must prove the three requirement. The burden of proof lies
upon the applicant
Vs. honorable Garcia – SC there is no presumption of public need. Applicant will be
the one to prove
Agency must consider the grant cpc
1. prior operator rule.. (look at book for 2-4)
Franchise
MCDWD vs. agala case – grantee of water permit. SC clarified that MCWD does not
hold exclusivefranchise to operate water. Provded in MCWD charter, it has the
exclusive franchise. The validity of this provision was challenged before SC. That
provision violated of section 11 of constitution. As of now applicants or grantees
cpc to extract or sell water they don’t need to pay of 1/c.m for those who would
intend to extract and supply water.
What MCWD does right now, they entered into MOA its not the law that compels
the grantee to pay. The MOA serves as the law between parties that compel party
to remit per cubic meter as water level.
Is a CPC a property?
Two perspective
15
State – not a property thus the stat e can revoke it, amend, or take it back. The
grantee cannot go to court and compel the state or agency to grant him the CPC
for whatever even if there conditions not met
View point of another person – cpc is a property because it can be sold and
conveyed to another person. If you have CPC of vessel, you can sell CPC
separate and distinct from the vessel. You can also sell CPC together with the
carrier.
How many years is the duration of CPC --- 5 years.
A cpc is gratned to a particular person or corporation. And there are number of
units of carriers.
Q: What about vessels?
A: before it used to be 20, 15, 10 --- then reduced to 5 years. 1 cpc for one
vessel. And then it was changed. What is existing is the cpc is per company per
owner or per operator. Depende how many vessels you have. Number of years
is 25. But this is a problem. If one of your vessel sank, then all vessels ma
damay. They want to go back 5 years per vessel.
Q: what about land?
A: one cpc per person , 5 years for land.
INDIVIDUAL AGENCIES
1. DOTC – department and incharged with the promulgation of rules and regulation of
transporation and communication. With railroad cpc are issued by dotc. That is why light
rail transit in manila it is operated by dotc. (foreign company constructed, but operation is
to be done by the dotc --- by consti
2. LTFRB – 2 words: franchising; regulatory – regulation of rates..
You have regulation in land. Rates of jeepneys, bus, all the rest except by tricycles. For
tricycles LGU regulates --- under DOTC (attached agency ang LTFRB)
3. LTO – registration of vehicles. Reg of drivers and conductors.
A trailer(10 wheel, 6 etc) they are supposed to be registered under LTO RA 3146 (province
vs. city of cebu --- one of the defenses is that it has no registration, and technically it was
not registered under the law)
Enforcing arm of the LTFRB.
4. Marina – issuance of franchise. Before it used to regulate fair but now no more because
it has been deregulated.
5. Coast Guard – enforcement. Marina is policy making. Recently there was coastguard act
expressly stating powers of coastguard. Enforcement and detain vessels which are found
unseaworthey. Environement concerns of wather. Maritime collision coast guards will
investigate. The board will investigate what caused and who is responsible. They will come
up with finding. And then the question is WON the findings are binding upon the court.
Usuall BMI holds invest and carrier uses this for the case in court. But admin agencies
ruling or findings are not binding
6. National Telecommunication Communication – cel phones, etc. ; mandaue
7. energy regularoty board or commission – increase of rates in elec. ; gorordo avenue
8.– dept of energy
10. natural water resources board - the moment you sell the water to neighbors not
serviced by MCWD, you have to obtain CPC to this agency even if your rates are lower than
the district. Not reason for you that the rquest was made by your neightbor. This agency
will check through the DOH that your water is clean . this is the purpose of regulation. But
no office here in cebu, only in manila. Hearing is in manila. But for actual inspection manila
will send engr to check. The key here is in every application of water permit there is
opposition of MCWD. The paramount ground of MCWD is public need. 3 rd requisite for
issuance of CPC. The area applied for is within their area thus there is adequate supply. So
the applicant should prove that there is no adequate water. Normally, they will grant CPC
will really see the need
11. civil aeronautics board – agency that deals with the economic aspect of air
transportation. The other aspect fall with the civil avaiation authority with the Philippines
(CAAP). CAB deals with rates. But they have issued a regulation deregulatin g the rates.
Wso what is there function? More on the air service agreements. Open sky policies (EO 28
and 29) --- the objective is to boost toursm. 28 reorganize composition in the negotiation
and consultative panels of the Philippines to agree with the air service. Ther is regulation,
trade, econmy, labor and tourism. 29 pnoy is sayin got the panels to take note of the
policies. You need to liberalized open skies policy --- pwede na mu land ang foreign carriers.
Other airports do not have open skies. Panels you can negotiate with other countries, and
you may consider other airport as subject to open sky policies. Recall the airs freedom – 1 st
freedom the right ot fly; 2nd technical issues. 3rd – othe country land to ours. 4th – we land
to another country 5th – foreign to ours to foreign.
But take note the cabottage rights – not given tby the Philippines. Only in
Europe. There is a foreign carrier that can service domestically. Most countries do not grant
this right because of protectionism nd public regulation.
12. CAAP – 9497; the air transpo office of phli. Whose category 1 downgraded to category
2 by US. The reasons is the non-compliance with international air safety, incompetent
officials,--- pag categorize ani, gi pass ang 9497 to abolish ATO and changed by CAAP but
you have to show again safety and competence to be categorized again to category 1.
Q: what is the implication?
A: it has precautions on the economic business.. because PAL purchased bowing
547 to service long routes. You cannot enter to long routes conditions if you are
category 2.
13. Philippines Port Authority – port ooperation, pilotage fees. But for special law creating
an authority within the port area this is not under PPA. You have cebu ports authority to
handle this… if there is a special charter PPA has no jurisdiction. But in other ports like
bantayan, san Fernando, bato --- under the jurisdiction PPA. InTERNAITONal ports are
under PPA.
EO 712 – this applies only to land transportation; this came out when the chair
of LTFRMB came and had dialog with operators. There has been routes and fees
angel‘s notes
TRANSPORTATION LAW
updated notes of room 405 (2010)
for terminals which are excessive. This order imposed on suspension to reroute and
imposition of fees while DOTC reviews all this regulation.

GT express and M.. – took the place of vhire. They can only load and unload
passengers at point of origin and point of desination and not in between.

16 angel‘s notes
TRANSPORTATION LAW
updated notes of room 405 (2010)