CARRIAGE OF GOODS BY SEA ACT (C.A. No.

65)
-Applies suppletorily to the Civil Code if the goods are to be
shipped form a foreign port to the Philippines
-COGSA is applicable in international maritime commerce. It
can be applied in domestic sea transportation if agreed
upon by the parties. (paramount clause)
-Under the Sec. 4 (5), the liability limit is set at $500 per
package unless the nature and value of such goods is
declared by the shipper. This is deemed incorporated in
the bill of lading even if not mentioned in it (Eastern
Shipping v. IAC, 150 SCRA 463).
-If by agreement, another maximum amount than that
mentioned may be fixed provided that such maximum
shall not be less than $500 and in no event shall the
carrier be liable for more than the amount of damage
actually sustained
Note that Art. 1749 of the NCC applies to inter-island trade.
Meaning of Package
-If the goods are shipped in cartons, each carton is
considered a package even if they are stored in container
vans
-When what ordinarily be considered packages are shipped in
a container supplied by the carrier and the number of
such units is disclosed in the shipping documents, each
of those units and not the container constitutes the
package.
Prescriptive periods
-Suit for loss or damage to the cargo should be brought
within one year after:
a. delivery of the goods; or
b. the date when the goods should be delivered. (Sec.
3[6])
The one-year prescriptive period is suspended by:
1. express agreement of the parties (Universal Shipping
Lines, Inc. v. IAC, 188 SCRA 170)
2. when an action is filed in court until it is dismissed.
(Stevens & Co. v. Nordeutscher Lloyd, 6 SCRA 180)
Things to Remember:
1. Article 1757 provides
that the responsibility of a
common carrier to exercise utmost diligence for the
safety of PASSENGERS CANNOT be dispensed with or
lessened by stipulation or statement on tickets or
otherwise
2. Article 1750 of the Civil Code provides that a contract
fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the
GOODS is VALID, if it is REASONABLE and JUST under the
circumstances, and has been FAIRLY AND FREELY
AGREED UPON
3. It is unfair to deny the shipper the right to declare the
actual value of his cargos and to recover such true value
in case of loss or damage
Note: it has been suggested that the signature of the
shipper in the bill of lading with regards to the limitation
applies only to reduction of diligence and not to the
stipulated amount to be paid.
4. It is unjust and contrary to public policy if the common
carriers 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
5. The common carrier may EXEMPT itself from liability if he
can prove that:
a. He observed extraordinary diligence
b. The proximate and only cause of the incident is a
fortuitous event or force majeure
c. The proximate and only cause of the loss is the character
of the goods or defects in the packing or in the
containers
d. The proximate and only cause of the loss is the order or
act of competent public authority
Note: to limit its liability or at least mitigate the same, the
carrier can cite CONTRIBUTORY NEGLIGENCE of the
plaintiff
and
the
DOCTIRNE
OF
AVOIDABLE
CONSEQUENCES
Case: Sea-Land Service Inc. vs. IAC
-Liability of a common carrier for loss of or damage to goods
transported by it under a contract of carriage is governed
by the laws of the country of destination

-COGSA is applicable up to the final port of destination and

that the fact that transshipment was made on an
interisland vessel did not remove the contract of carriage
of goods from the operation of said Act.
Case: Citadel Lines Inc. vs. CA
-The duty of the consignee is to prove merely that the goods
were lost. Thereafter, the burden is shifted to the carrier
to prove that it has exercised the extraordinary diligence
required by law. And, its extraordinary responsibility lasts
from the times that goods are unconditionally placed in
the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the
person who has the right to receive them
Case: Everett Steamship Corporation vs. CA
-Considering that the shipper did not declare a higher
valuation it had itself to blame for not complying with the
situations
-The trial courts ratiocination that private respondent could
not have fairly and freely agreed to the limited liability
clause in the bill of lading because the said conditions
were printed in small letters does not make the bill of
lading invalid
MARITIME LAW (CHAPTER 6)
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

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)

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)
Art. 837: civil liability incurred by the ship owner: liability
limited to value 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 still exists, 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 are 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

Limited liability rule does not apply to insurance claims

Case: Vasquez vs. CA
-The total loss of the vessel did not extinguish the liability of
the carriers 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 workmens compensation claims (WORKERS

COMPENSATION)

The provisions of the Code of Commerce have no room in

the application of the Workmens 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 Workmens
Compensation Act, it must be compensated even when
the workmans 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 Workmens 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 ship agent 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?
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.
- if less MTC
1. real and hypothecary --- the supreme court did not
explain the literal meaning of it.
- real: refers to the risk in maritime thats 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 Kon g- there being no exceptions, the court upheld
limited liability
The more critical issue is on the EXCEPTIONS in the LLRule:
1. workmens 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 liability, 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 plaintiffby 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. Because
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 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 ship captain.
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
- the shipowner is aware of the typhoon
- 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 liability
- 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 QUASIDELICT 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
Section17: priority of claims
Q: are there claims in maritime law over and above
preferred
mortgage?
A: yes. Look at section 17.

navigation of rivers
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 maritime 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)

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.

Under section 22: persons authorize to procure repairs

(presumed):
1. managing agent
2. ships husband --- agent of the vessel

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.

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 1521the 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 (Chapter 7)

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, 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

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 chattel 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
-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.
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.

LOANS ON BOTTOMRY AND RESPONDENTIA (CHAPTER

11)
LOAN ON BOTTOMRY loan made by shipowner or ship
agent guaranteed by vessel itself and repayable upon
arrival of vessel at destination; vessel/portion
LOAN ON RESPONDENTIA loan, taken on security of the
cargo laden on a vessel, and repayable upon safe arrival
of cargo at destination; cargo/goods
COMMON ELEMENTS OF LOANS ON BOTTOMRY AND
RESPONDENTS:
1.
Exposure of security to marine peril;
2.
Obligation of the debtor conditioned only upon safe
arrival of the security at the point of destination.
Requisites of a Loan on Bottomry/Respondentia:
1.
Shipowner borrows money for use, equipment
or repair of vessel
2.
For a definite term and with extraordinary
interest called premium
3.
Secured by pledged of vessel or portion
thereof in the case on loan on Bottomry; or pledge
of goods in case of Respondentia
4.
Loan repayment depends or conditioned on
the safe arrival of goods for respondentia and
obligation to repay is extinguished if pledged
goods are lost (Respondentia)
5.
Obligation to repay is extinguished if vessel is
lost due to specified marine perils in the course of
voyage or within limited time (Bottomry)
FORMS OF A LOAN ON BOTTOMRY/RESPONDENTIA:
May be executed by means of:
1.
public instrument
2.
policy signed by the contracting parties and the broker
taking part therein
3.
private instrument (Art. 720)

GR:
The
captain
cannot
contract
loans
on
respondentia secured by the cargo, and should he
do so, the contract shall be void. Neither can he
borrow
money
or
Bottomry
for
his
own
transactions.

have been saved but only after deducting the costs of

the salvage.
4. If the loan should be on the vessel or any of her parts, the
freight earned during the voyage for which the loan was
contracted shall also be liable for its payment, as far as it
may reach.

EXCEPTIONS:
1. On the portion of the vessel he owns, provided no
money has been previously borrowed on the whole
vessel, nor exists any other kind of lien or
obligation chargeable against her.
2. When he is permitted to do so, he must necessarily
state what interest he has in the vessel.
CONTENTS OF THE LOAN CONTRACT:
1.
kind, name and registry of the vessel;
2.
name, surname and domicile of the captain;
3.
names, surnames and domiciles of the borrower and the
lender;
4.
amount of the loan and the premium stipulated;
5.
time for repayment;
6.
goods pledged to secure repayment;
7.
voyage during which the risk is run (Art.721)

5. If the same vessel or cargo should be the object of the

loan of Bottomry or respondentia and maritime
insurance, the value of what may be saved in case of
shipwreck shall be divided between the lender and the
insurer, in proportion to the legitimate interest of each
one, taking in consideration, for this purpose only, the
principal with respect to the
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..

WHO MAY CONTRACT:

1. Bottomry by the ship owner or ship agent; outside of
the residence of the owners, the captain.
2. Respondentia only the owner of the cargo
DISTINCTIONS:
BOTTOMRY/
RESPONDENTIA
1. Not subject to Usury Law

1. Subject to Usury Law

2.

4. Must have a collateral

4. May or may not have

collateral
5. Maybe property, real or
personal

7. To be binding on third
person must be recorded
in the registry of vessels
of port of registry of the
vessel
8.
Loss
of
collateral
extinguishes the same

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)

ORDINARY LOAN

2. Liability of the borrower is

contingent on the safe
arrival of the vessel or
cargo at destination
3. The last lender is a
preferred creditor

5. Collateral is the vessel or

cargo
subject
to
maritime risk
6. Must be in writing

General provisions in contracts will govern

Not subject
contingency

to

any

3. The first lender is a

preferred creditor

6. Need not be in writing

but interest shall not
be
due
unless
expressly stipulated in
writing
7. Need not be registered

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)
-

8. Does not extinguished if

there is a loss of the
collateral (if any)

Consequences of loss of effects of the loans

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 contract and proven that the
cargo was on board
- lender losses the right to institute the action which
would pertain to him
Except: when the loss was
1. caused by inherent defect of the thing
2. through fault or malice of the borrower
3. through barratry on the part of the captain
4. caused by damages suffered by the vessel as a
consequence of being engaged in a contraband
5. loaded the goods on a vessel different from that
designated in the contract unless the change was caused
by force majeure
2. The lenders on bottomry or respondentia shall suffer in
proportion to their respective interest, the general
average which may take place in the things upon which
the loans were made.
3. In case of shipwreck, the amount for payment of the loan
shall be deduced to the proceeds of the effects which

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 (CHAPTER 12)
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
A. Particular or Simple Average
Damage or expenses caused to the vessel or cargo that
did not inure to common benefit, and borne by respective
owners. (809)
The owner of the goods which gave rise to the expense or
suffered th e 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 cargos existence on board be proven
by a bill of lading; and with regard to those belonging to the
vessel, by means of an inventory 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

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

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

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

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 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

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

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.

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

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
negligent.

does

not

apply

if

the

CC

Q: is the duty of captain to initiate a condition precedent?

A: no. even if ship captain 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 ship captain invoked gen aver
they should be the one to prove. Failure to prove, they
cannot ask for contribution from owners of the goods.

is

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 YA 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

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.
H. ARRIVAL UNDER STRESS (CHAPTER 14)
* 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 founded fear of seizure, privateers of other valid
grounds
2.
captain shall then assemble the officers
3.
captain shall summon the persons interested in the
cargo who may be present and who may attend but
without right to vote
4.
the officers shall determine and agree if there is well
founded reason after examining the circumstances;
Captain shall have the deciding vote
5.
agreement shall be drafter and the proper minutes
shall be signed and entered into the log book
6.
objections and protests shall likewise be entered in
the minutes
- Absence of one of the steps, can still be considered
arrival under stress.
When not lawful:
1.
lack of provisions due to negligence to carry according
to usage and customs;
2.
risk of enemy not well known or manifest
3.
defect of vessel due to improper repair; and
4.
malice, negligence, want of foresight or lack of skill of
captain. (Art. 820)
Who bears expenses:
if arrival under stress is proper shipowner or ship
agent will only be liable for the expenses of the arrival
if arrival under stress is improper shipowner and ship
agent will be liable for the same expenses and, in
addition, they shall be solidarily liable for damages
caused to the cargoes by such arrival under stress
(Art. 821)
NOTE:
- After cessation of the cause of the arrival under
stress, captain should continue voyage or else he
shall be liable.
Unloading of cargoes to make repairs:
-in order to make repairs to the vessel or because there is
danger that cargo may suffer damage necessary to
unload; captain must request authorization from
competent judge or court for removal, and carry it out w/
knowledge of the person interested in the cargo
-in a foreign port Philippine Consul
-in case of the vessel expenses shall be for the account of
the ship owner or agent
-in case of the cargo chargeable against the owners of the
merchandise for whose benefit the act was performed
-if both expenses to be divided proportionately between
the value of the vessel and cargo
(Art. 822)
Custody of cargo:
intrusted to the captain (except in cases of force
majeure)
(Art. 823)
if entire cargo or part thereof should appear to be
damaged, or there should be imminent danger of its
being damaged
captain may request judge of competent court / consul,
the sale of all or part of the cargo
person taking cognizance shall authorize it (after
examination and declaration)
captain shall justify the legality of his conduct, answering
to the shipper for the price of the merchandise would
have brought if they had arrived in good condition
(Art. 824)
Liability of captain:

captain responsible for the damages caused by his delay

if cause of arrival under stress ceases he should not
continue the voyage
if cause of arrival should have been the fear of enemies
deliberation and resolution (in a meeting of officers of
the vessel and persons interested in the cargo) shall
precede the departure
(Art. 825)
* Shipwreck the demolition or shattering of a vessel
caused by her driving ashore or on rocks and shoals in
the midseas, or by the violence of winds or waves in
tempests
- loss of the vessel at sea as a consequence of its grounding,
or running against an object in sea or on the coast

Loss or deteriorations of vessel or cargo caused by

shipwreck or stranding individually account of the
owners; part which may be saved belonging to them,
same proportion. (Art. 840)
If the wreck was due to malice, negligence or lack of skill
of the captain, the owner of the vessel may demand
indemnity from said captain. (Art. 841)
The goods saved from the wreck to be specially bound for
the payment of the expenses of the respective salvage.
(Art. 842)
If several vessels sail under convoy, and any of them
should be wrecked, the cargo saved will be distributed
among the rest in proportion to the amount which each
one is able to take. If any captain should refuse,
without sufficient cause, to receive what may correspond
to him, the captain of the wrecked vessel to enter a
marine protest against him. If it is not possible to
transfer to the other vessels the entire cargo of the
vessel wrecked, the goods of the highest value and
smallest volume to be saved first. Designation to be
made by the captain with concurrence of his officers.
(Art. 843)
The captain taking on-board the goods saved from the
wreck to continue his course to the port of destination
and upon arrival he should deposit the goods for disposal
to their owners. In case the captain changes his
course, and if he can unload them at the port of which
they were consigned, he may make said port if the
shippers or supercargoes present and the officers and
passengers of the vessel consent thereto. But he is not
required to do so even if he has the consent during time
of war or when the port is difficult and dangerous to
make. The owners of the cargo to defray all the
expenses of this arrival and the payment of the
freightage. (Art. 844)
If cannot be, proceed to judicial sale complying with the
formalities and on publicity. (Art. 845)
I. SALVAGE LAW (Act No. 2616) (CHAPTER 15)
* SALVAGE services one person renders to the owner of a
ship or goods, by his own labor, preserving the goods or
the ship which the owner or those entrusted with the
care of them have either abandoned in distress at sea, or
are unable to protect or secure.
Kinds of Salvage:

Voluntary compensation is dependent on the

success.

Under contract for a per diem or per horam wage

payable at all events.

Under contract for compensation payable only in

case of success.
Claim for valid salvage:
-Provides for a reward for voluntary salvage
-Other persons who assist in saving the vessel or its cargo
from shipwreck shall be entitled to a similar award
Persons not entitled to salvage compensation:
1. Crew of the vessel shipwrecked or which was in danger of
shipwreck
2. He who shall have commenced the salvage in spite of
opposition of the captain or of his representatives
3. He who shall have failed to comply with the provisions of
Section 3 (Section 3. Tthe 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.)
Requisites of compensation or salvage reward:
1. Object must have been exposed to marine peril (fire, acts
of pirate, thieves)
2. Salvage services rendered voluntarily and is not required
as an existing duty or a form of contract (See Sec. 8)
* Pilots are not entitled to a reward (Atty. Capanas)
3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of
the crew or shall have been abandoned (not necessary)
* Courts will not interfere in the agreement of the parties
except but where there is no agreement or it is excessive
the reward is fixed by the RTC judge.
* Derelict a ship or cargo which is abandoned and
deserted at sea by those who were in charge of it,
without any hope of recovering it or without any intention
of returning to it
- determined by ascertaining what was the intention and
expectation of those in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on the
sea without hope or intention of recovery or return by the
master or the crew, whether resulting from wreck,
accident, necessity, or voluntary abandonment
JETSAM, FLOTSAM, LIGAN:

Jetsam goods that were thrown off a ship which was in

danger

Flotsam goods that floated off the ship while ship was
in danger or when it sank

Ligan goods left as sea on the wreck or tied to a buoy A.

so that they can be recovered later
B.
Basis
of
entitlement
to
salvage
reward
(Circumstances to consider):
1. The labor expended by the salvors in rendering the
salvage service
C.
2. The promptitude, skill and energy displayed in rendering
the service and saving the property
3. The value of the property employed by the salvors in
rendering the service, and danger to which such property
was exposed
4. The risk incurred by the salvors in rescuing the property
from the impending peril
5. The value of the property salved
6. The degree of danger which the property was rescued
Rights and obligations of salvors and owners:
Salvor is entitled to compensation for services rendered.
He has, under the Salvage Law, a lien upon the property
salvaged.
On the other hand, the owner does not denounce his
right to the property. There is no presumption of an
intention to abandon such property rights.
Maritime Lien
A salvor, in maritime law, has an interest in the property;
called a lien, but it never goes, in the absence of a
contract expressly made, upon the idea of debt due from
the owner to the salvor but upon the principle that the
service creates a property in the thing saved.
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
SALVAGE LAW
Section 1. When in case of shipwreck, the vessel or its
cargo shall be beyond the control of the crew, or shall have
been abandoned by them, and picked up and conveyed to a

safe place by other persons, the latter shall be entitled to a

reward for the salvage.
Those who, not being included in the above paragraph,
assist in saving a vessel or its cargo from shipwreck, shall be
entitled to a like reward.
Sec. 2. If the captain of the vessel, or the person acting in
his stead, is present, no one shall take from the sea, or from
the shores or coast merchandise or effects proceeding from
a shipwreck or proceed to the salvage of the vessel, without
the consent of such captain or person acting in his stead.
Sec. 3. He who shall save or pick up a vessel or
merchandise at sea, in the absence of the captain of the
vessel, owner, or a representative of either of them, they
being unknown, shall convey and deliver such vessel or
merchandise, as soon as possible, to the collector of
customs, if the port has a collector, and otherwise to the
provincial treasurer or municipal mayor.
Sec. 4. After the salvage is accomplished, the owner or his
representative shall have a right to the delivery of the vessel
or things saved, provided that he pays, or gives a bond to
secure, the expenses and the proper reward.
The amount and sufficiency of the bond, in the absence of
agreement, shall be determined by the collector of customs
or by the judge of the court of first instance of the province
in which the things saved may be found.
Sec. 5. The collector of customs, provincial treasurer, or
municipal mayor, to whom a salvage is reported, shall order:
That the things saved be safeguard and inventoried.
The sale at public option of the things saved which may be
in danger of immediate loss or of those whose conservation
is evidently prejudicial to the interests of the owner, when
no objection is made to such sale.
The advertisement within the thirty days subsequent to the
salvage, in one of the local newspapers or in the nearest
news-paper published, of all the details of the disaster, with
a statement of the mark and number of the effects
requesting all interested persons to make their claims.
Sec. 6. If, while the vessel or things saved are at the
disposition of the authorities, the owner or his representative
shall claim them, such authorities shall order their delivery
to such owner or his representative, provided that there is
no controversy over their value, and a bond is given by the
owner or his representative to secure the payment of the
expenses and the proper reward. Otherwise, the delivery
shall nor be made until the matter is decided by the court of
first instance of the province.
Sec. 7. No claim being presented in the three months
subsequent to the publication of the advertisement
prescribed in sub-section (c) of section five, the things save
shall be sold at public auction, and their proceeds, after
deducting the expenses and the proper reward shall be
deposited in the insular treasury. If three years shall pass
without anyone claiming it, one-half of the deposit shall be
adjudged to him who saved the things, and the other half to
the insular government.
Sec. 8. The following shall have no right to a reward for
salvage or assistance:
A. The crew of the vessel shipwrecked or which was is
danger of shipwreck;
B. He who shall have commenced the salvage in spite of
opposition of the captain or his representative; and
C. He who shall have failed to comply with the provisions of
section three.
Sec. 9. If, during the danger, an agreement is entered into
concerning the amount of the reward for salvage or
assistance, its validity may be impugned because it is
excessive, and it may be required to be reduced to an
amount proportionate to the circumstances.
Sec. 10. In a case coming under the last preceding section,
as well as in the absence of an agreement, the reward for
salvage or assistance shall be fixed by the court of first
instance of the province where the things salvaged are

found, taking into account principally the expenditures made

to recover or save the vessel or the cargo or both, the zeal
demonstrated, the time employed, the services rendered,
the excessive express occasioned the number of persons
who aided, the danger to which they and their vessels were
exposed as well as that which menaced the things recovered
or salvaged, and the value of such things after deducting the
expenses.
Sec. 11. From the proceeds of the sale of the things saved
shall be deducted, first, the expenses of their custody,
conservation, advertisement, and auction, as well as
whatever taxes or duties they should pay for their entrance;
then there shall be deducted the expenses of salvage; and
from the net amount remaining shall be taken the reward for
the salvage or assistance which shall not exceed fifty per
cent of such amount remaining.
Sec. 12. If in the salvage or in the rendering of assistance
different persons shall have intervened the reward shall be
divided between them in proportion to the services which
each one may have rendered, and, in case of doubt, in equal
parts.
Those who, in order to save persons, shall have been
exposed to the same dangers shall also have a right to
participation in the reward.
Sec. 13. If a vessel or its cargo shall have been assisted or
saved, entirely or partially, by another vessel, the reward for
salvage or for assistance shall be divided between the
owner, the captain, and the remainder of the crew of the
latter vessel, so as to give the owner a half, the captain a
fourth, and all the remainder of the crew the other fourth of
the reward, in proportion to their respective salaries, in the
absence of an agreement to the contrary. The express of
salvage, as well as the reward for salvage or assistance,
shall be a charge on the things salvaged on their value.
COGSA (CARRIAGE OF GOODS BY SEA ACT)(CHAPTER
16)
-Adopted by the Philippines on October 22, 1936 through
Commonwealth Act No. 65
-New Civil Code primary law on goods that are being
transported from a foreign port to the Philippines
-COGSA remains to be a suppletory law for such type of
transportation international shipping
ART. 1753, NCC: THE LAW OF THE COUNTRY TO WHICH
THE GOODS ARE TO BE TRANSPORTED SHALL
GOVERN THE LIABILITY OF THE COMMON CARRIER
FOR
THEIR
LOSS,
DESTRUCTION
OR
DETERIORATION.
* Goods includes goods, wares, merchandise, and articles
of every kinds whatsoever
- does not include live animals and cargo which by the
contract of carriage is stated as being carried on deck
and is so carried
Parties:

Carrier, and

Shipper
- They are given their respective rights and obligations
under COGSA.
- Carrier (covered by COGSA) not limited to the
shipowner; includes charterer who enters into a contract
of carriage with the shipper
- Charterer charters a vessel and conducts his own
business for his own account
after chartering the vessel, he uses the vessel to
conduct a business of transportation obtaining goods
from 3rd persons to transport the latters goods
Duties of the carrier:
Civil Code requires international carriers to exercise
extraordinary diligence in the performance of their
contractual obligations
Section 2 of COGSA carriers obligation and liabilities
in relation to the loading, handling, stowage, carriage,
custody, care and discharge of such goods
Section 3 of COGSA responsibilities of the carrier
under COGSA
Document of title required
- evidenced by the Bill of Lading

- BOL serves as prima facie evidence of the receipt by the

carrier of the goods
Notice of claim and prescriptive period
* Notice of claim must be made within 3 days from
delivery if the damage is not apparent; not mandatory
* Prescriptive period 1 year from delivery for the filing
of the case is a condition precedent or mandatory; does
not apply to cases of misdelivery or conversion
Defenses and immunities
- provided for by Section 4 of COGSA
- Section 49(1) of COGSA carrier shall not be liable for
loss or damages arising from unseaworthiness
- New Civil Code carrier will not be liable only if it can
present proof that the unseaworthiness was caused
exclusively by any of the circumstances specified in Art.
1734 of the NCC
Waiver - The shipowner and the ship agent may waive the
benefit of any of the defenses in its favor provided not only
under COGSA but also under other laws
Limiting provision
- COGSA contains a provision that allows the shipper to
recover only US$500 per package unless there is a
special declaration unless there the real value of the
goods is declared
- declaration made by the shipper stating an amount bigger
than $500 per package will make the carrier liable for
such bigger amount but only if the amount so declared is
the real value of the goods
Right to discharge dangerous cargo
- COGSA allows the carrier to discharge the good of the
carrier discovers that the goods are dangerous,
inflammable or are explosives.
PART III AVIATION LAW/
THE AIRCRAFT AND CIVIL AVIATION (CHAPTER 17)
Applicable Laws

New Civil Code provisions on common carriers apply

to transportation on air.

Civil Aviation Authority Act of 2008 (RA No 9497)

governs civil aviation

Treaties and Conventions:

-WARSAW Convention applies to liabilities of carriers
in international transportation by air.
- Chicago Convention
Aeronautics or aviation the science and art of flight.
Civil aviation operation of any civil aircraft for the
purpose of general aviation operations, aerial work or
commercial air transport operations.
Aircraft any machine that can derive support in the
atmosphere from the reactions of the air other than the
reactions of the air against the earths surface; civil aircraft
only (state or public aircraft excluded).
Art. 17, Chapter III, Chicago convention: aircraft have the
nationality of the State in which they are registered.
State of Registry State on whose register the aircraft is
entered
.
Civil Aviation Authority of the Philippines (CAAP) issues
certificate of registration; has sole authority to register
aircraft and liens, mortgages or other interests in aircraft or
aircraft engines.
No aircraft can be operated in the Philippines unless it
displays nationality and registration marks.
Philippine nationality mark : RP
Marine Insurance covers insurance over aircrafts
Air Commerce or Commercial air transport operation
includes scheduled or non-scheduled services for pay or
hire, the navigation of aircraft in furtherance of a business,
the navigation of aircraft from one place to another for
operation in the conduct of a business, or an aircraft

operation involving the transport of passengers, cargo or

mail for remuneration or hire.
Domestic Air Commerce air commerce within the limits of
Philippine Territory
Domestic Air Transport air transportation within the limits
of the Philippine Territory
Foreign air transport air transportation between the
Philippines and any place outside it or wholly outside the
Philippines.
International Commercial air transport carriage by aircraft
of persons or property for remuneration or hire or the
carriage of mail between any two or more countries.
Persons Involved in Maritime Transportation
1. Air carrier or operator
2. Philippine air carrier
3. foreign air carrier or foreign air operator
4. airman
Charter of Aircraft
Charter trips or charter flights air transportation performed
by an air carrier where the entire capacity of one or more
aircraft, or less than the entire capacity of an aircraft has
been engaged for the movement of persons and their
personnel baggage or for the movement of property on a
time, mileage or trip basis:
1. by a person for his own use;
2. by a representative; or
3. by an airfreight forwarded holding a currently effective
permit.
Classifications
1. On-route service performed by an air carrier between
points between which carrier is authorized to provide
service pursuant to its certificate of public convenience
and necessity or foreign air carrier permit.
2. Off-route any charter not on-route
3. Pro-rata charter cost is divided among the passengers
4. Single-entity charter cost is borne by the charterer and
not by individual passengers, directly or indirectly
5. Mixed charter cost borne partly by the charter
participants and partly by the charterer.
Freedoms of the air air traffic rights as agreed in the Air
Services Agreement; as enumerated in the International Civil
Aviation Organization (ICAO):
First Freedom of the Air right to fly across territory without
landing
Second Freedom of the Air right to land in the territory of
the other state for non-traffic purposes
Third Freedom of the Air right of one state to put down, in
the territory of the other state, traffic coming from the
home state of the carrier
Fourth Freedom of the Air - right of one state to take on, in
the territory of the other state, traffic destined for the
home state of the carrier
Fifth Freedom of the Air - right of one state to put down and
take on, in the territory of the other state, traffic
coming from or destined to a third state
Sixth Freedom of the Air right of transporting, via home
state of the carrier, traffic moving between two other
states
Seventh Freedom of the Air right of transporting traffic
between the territory f the granting state and any
third state with no requirement to include on such
operation any point in the territory of the recipient
state
Eighth Freedom of the Air right of transporting cabotage
traffic between two points in the territory of the
granting state on a service which originates or
terminates in the home country of the foreign carrier
or outside the territory of the granting state.
Ninth Freedom of the Air right of transporting cabotage
traffic of the granting state on a service performed
entirely within the territory of the granting state
OBLIGATIONS OF CARRIER IN AIR TRANSPORTATION
Extraordinary Diligence in Air Transportation includes the
obligation to make sure that the aircraft is airworthy, that

the vessel has competent captain and crew, and tht the
captain and his crew exercised extraordinary diligence in
operating the aircraft
airworthiness an aircraft, its engines, propellers, and other
components and accessories , are of proper design and
construction, and are safe for air navigation purposes, such
design and construction being consistent with accepted
engineering practice and in accordance with aerodynamic
laws and aircraft science.
Breach of contract failure without legal reason to comply
with he terms of a contract; i.e. when a passenger with
confirmed reservation is bumped off or when the passenger
seat/ accommodation is downgraded or upgraded
Obligations of the Passengers
1. to present himself on time in the airline counter of the
airport
2. to secure appropriate travel documents
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
-Applies to all international transportation of person, baggage
or goods performed by aircraft for hire.
- International transportation means any transportation in
which the place of departure and the place of destination
are situated either:
o
within the territories of two High Contracting Parties
regardless of whether or not there be a break in the
transportation or transshipment, or
o
within the territory of a single High Contracting Party, if
there is an agreed stopping place within a territory
subject to the sovereignty, mandate or authority of
another power, even though that power is not a party to
the Convention.
Transportation to be performed by several successive air
carriers shall be deemed to be one undivided transportation,
if it has been regarded by the parties as a single operation,
whether it has been agreed upon under the form of a single
contract or of a series of contracts, and it shall not lose its
international character merely because one contract or a
series of contracts is to be performed entirely within a
territory subject to the sovereignty, suzerainty, mandate, or
authority of the same High Contracting Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of Court
and all laws in the Philippines since an international law
prevails over general law.
WHEN NOT APPLICABLE:
1. If there is willful misconduct on the part of the carriers
employees. The Convention does not regulate, much
less exempt, carrier from liability for damages for
violating the rights of its passengers under the contract
of carriage (PAL v. CA, 257 SCRA 33). --- if the damage
is similarly caused by any agent of the carrier acting
within the scope of his employment
2. when it contradicts public policy;
3. if the requirements under the Convention are not
complied with.
When International carrier is liable:
when the passengers injury was inflicted
1. on board the aircraft; or
2. in the course of any of the operations of embarking; or
3. in the course of disembarking; or
4. when there was or because of delay.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident causing it
took place on board the aircraft or in the course of its
operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if it
took place during the carriage; (Art. 18) and
3. Delay in the transportation of passengers, luggage or
goods. (Art. 19)
NOTE: The Hague Protocol amended the Warsaw
Convention by removing the provision that if the airline took
all necessary steps to avoid the damage, it could exculpate
itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)

Remember: The said provisions merely declare the carrier

liable for damages in the enumerated cases if the conditions
therein specified are present. Neither said provisions nor
others in the aforementioned Convention regulate or
exclude liability for OTHER BREACHES of contract of carrier.
The Convention does not thus operate as an exclusive
enumeration of the instances of an airlines liability, or as an
absolute limit of the extent of that liability.
LIMIT OF LIABILITY
1. passengers - limited to 250,000 francs;

except: agreement to a higher limit

2. goods and checked-in baggage - 250 francs/kg

except: consigner declared its value and paid a

supplementary sum, carrier liable to not more than the
declared sum unless it proves the sum is greater than its
actual value.
3. hand-carry baggage - limited to 5,000 francs/passenger
An agreement relieving the carrier from liability or fixing a
lower limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the damage is
caused by willful misconduct or default on its part. (Art. 25)
Case: China Airlines vs. Daniel Chiok
The ticket-issuing airline acts as principal in a contract of
carriage and is thus liable for the acts and the omissions of
any errant carrier to which it may have endorsed any sector
of the entire, continuous trip.
Place of Destination- within the meaning of the Warsaw
Convention, is determined by the terms of the contract of
carriage, or specifically the ticket between the passenger
and the carrier. It is the destination and not an agreed
stopping place that controls for the purpose of ascertaining

jurisdiction under the Convention. (Case: Santos III vs.

Northwest Orient Airlines and CA)
ACTION FOR DAMAGES
1. Condition precedent
A written complaint must be made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of baggage/goods
F otherwise the action is barred except in case of fraud on
the part of the carrier. (Art. 26)
2. Jurisdiction governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business through which the
contract has been made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped. (Art. 29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers the action is filed
only against the carrier in which the accident or delay
occurred unless there is an agreement whereby the first
carrier assumed liability for the whole journey.
b. In case of transportation of baggage or goods
i. the consignor can file an action against the first carrier
and the carrier in which the damage occurred
ii. the consignee can file an action against the last carrier
and the carrier in which the damage occurred. These
carriers are jointly and severally liable. (Art. 30)
Nota Bene: COGSA/WARSAW applies to foreign vessels or
airplane or international travel
Code of Commerce applies to inter-island or domestic travel.