Syllabus for

The Law on Transportation and Public Utilities

MARITIME LAW

General Concepts
I. Definition
It is the system of laws which “particularly relates to the affairs and business of the
sea, ships, their crews and navigation, and to marine conveyance of persons and
property.”

Laws Included:
Primary Law - New Civil Code of the Philippines provisions on common carriers
Suppletory Laws
Book III of Code of Commerce –Maritime Commerce
Act No. 2616 –Salvage Law
CA No. 65 COGSA
PD No. 1521 Ship Mortgage o Decree of 1978

II. Real and Hypothecary Nature

A. Nature and Rationale

Cases:
Philippine Shipping Co. et al V Francisco Garcia Vergara
No. 1600 June 1 1906
6 Phil 281
NB. Make sure you understand the meaning of hypothecary.

B. Statutory Provisions
CODE OF COMMERCE – Arts 587, 590, 643, 837

C. Coverage
Monarch Insurance Co. Inc V CA
GR Nos. 92735, 94867, 95578 June 8 2000
333 SCRA 71, 94
Arts 837 applies the principle of limited liability in cases of collision while arts
587, 590 embody the universal principle of limited liability in all cases.

Aboitiz Shipping Corp. V General Accident Fire and Life Assurance

Corporation Ltd.
No. 100446 January 21 1993
217 SCRA 359, 366-367
Taken together with related articles, Arts 837, 587, and 590 cover only 1.
Liability to third persons 2. Acts of captains 3. Collisions

Guison V Philippine Shipping Co.

69 Phil 536
SC apllied Art 587 of the Code of Commerce limited the liability of the agent
to its value.

Yangco V Laserna
73 Phil 330
 In the light of all the foregoing, we, therefore, hold that if the shipowner or
agent may in any way be held civilly liable at all for injury to or death of
passengers arising from the negligence of the captain in cases of collisions or
shipwrecks, his liability is merely co-extensive with his interest in the vessel
such that a total loss thereof results in its extinction.

D. Exceptions
Cases:
Manila Steamship V Abdulhaman
100 Phil 32 (1956)
There are exceptions to the limited liability rule, namely: 1. Where the injury
or death to a passenger is either due to the fault of the shipowner, or to the
concurring negligence of the shipowner and the captain

2. the vessel is insured

3. In workmen’s compensation claim
Abueg V San Diego
77 Phil 730 (1946)

a. Negligence
Aboitiz shipping Corp. V General Accident Fire and Life Assurance
Corporation Ltd.
No. 100446 January 21 1993
217 SCRA 359, 366-367
The limited liability rule applies if the captain or the crew caused the damage
or injury. The shipowner’s or ship agent’s liability is limited to the value of the
vessel if the damage was caused by the unseaworthiness of the vessel caused
by the negligence of the captain or the crew during the voyage.

Monarch Insurance Co. Inc V CA

GR Nos. 92735, 94867, 95578 June 8 2000
333 SCRA 71, 94
If the failure to maintain the seaworthiness of the vessel can be ascribed to the
shipowner alone or the the shipowner concurrently with the captain, then the
limited liability principle can not be invoked.

No. 110398 Nov 7 1998

281 SCRA 534, 544
The carrier is liable for the damages to the full extent and not up to the value
of the vessel if it was established that the carrier was guilty of negligence, in
failing to maintain the ship as seaworthy and in allowing the ship to carry more
passengers than it was allowed to carry.

Philippine American General Insurance Co. Inc. V CA

No 116940 June 11 1997
273 CRA 262, 271-272
The sinking of the vessel was due to its unseaworthiness even at the time of its
departure because it was top heavy. The carrier is liable for damages to the full
extent and not up to the value of the vessel.
Manila Steamship Co. Inc. V Insa Abdulhaman and Lim Hong To
(previously cited)
Collision case. In an action for damages from the collision applying Art 837
of the Code of Commerce, the SC held that in such case where the collision
 was imputable to both of them, each vessel shall suffer their own damages and
both shall solidarily be liable for the damages occasioned to their own cargoes

b. Insurance
Cases:
Vasquez V CA
138 SCRA 553, 559
The SC held that the loss of the vessel did not extinguish the liability of the
carrier’s insurer. “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.”

c. Worker’s compensation

Abueg V San Diego

77 Phil 730 (1946
Involved a claim under the Workmen’s Compensation Act for the deceased
members of the crew of 2 ships which sank after it was caught by a typhoon.
SC reiterated that the liability of the shipowner or agent under Arts 587 and
837 of the Code of Commerce is limited to the value of the vessel with all her
equivalent and freight earned during the voyage if the shipowner abandon the
ship with all the equipment and freight. HOWEVER, it does not apply to
Workmen’s Compensation Act where even as in said case vessel was lost, the
liability thereunder is still enforceable under against the employer or
shipowner.
E. Abandonment
Cases:
Philippine Shipping Co V Garcia
A damage suit. In case of collision. abandonment is necessary in order to limit
the liability of the shipowner or the agent to the value of the vessel, its
appurtenances and freightage earned in the voyage in accordance with Art 837
of the Code of Commerce. The only instance where such abandonment is
dispensed is where the vessel was entirely lost. In such case the obligation is
thereby extinguished.

VESSELS
I. General Concepts

A. Definitions
A vessel or watercraft is defined under PD No. 474 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, used or
capable of being used as a means of transportation operating either as a
common contract carrier, including fishing vessels covered under PD No. 43
except: i. those owned and/or operated by the AFP and by foreign governments
for military purposes, and ii. bancas, sailboats and other waterborne
contrivance of less than 3 gross tons capacity and not motorized.

Case:
Yu Con V Ipil
41 Phil 770
A small vessel used for 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.

B. Construction, Equipment, and Manning

Art 574 Code of Commerce

C. Personal Property
Art 416 New Civil Code of Commerce
Art 585 Code of Commerce
Cases;
Phil. Refining Co. V Jarque
No. 41506, march 25 1935
Vessels are considered personal property under Civil law.
Rubiso and Calixto V Rivera
37 Phil 72
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.

III. Ownership
A. Acquisition
a. Prescription
Art 573 , 575 Code of Commerce
b. Sale
Art 576, 577, 578
IV. Ship’s Manifest
Case:
Macondray and Co. Inc. V Acting Commissioner of Customs
62 SCRA 427 1975
A manifest is a declaration of the entire cargo. The object of the manifest is to
furnish the customs officers with a list to check against, to inform the revenue
officers what goods are being brought into a port of the country on a vessel.
NB. Differentiate it from a bill of lading.

CHARTER PARTIES
I. Definition and Concept
Case:
Caltex (Phil), Inc V Sulpicio Lines, Inc
315 SCRA 709
A charter party is essentially defined as a contract whereby a entire ship, or
some principal part thereof is let by the owner thereof to a merchant or other
person for a specified time or use for the conveyance of goods, in consideration
of the payment of freight.
Terms to remember; freight, carta partita

II. Different Kinds of Charter Parties

A. Bareboat Charter
Cases:
Coastwise Lighterage Corp. V CA et al
245 SCRA 796
The charterer becomes the owner “pro hac vice” of the vessel since he mans the
vessel with his own set of master and crew, effectively becoming the owner for
 the voyage or service stipulated, subject however to any liability for damages
arising from negligence.

Litonjua Shipping Co. V national seamen Board

176 SCRA 189
It is the the charterer or owner “pro hac vice” and not the general owner of the
vessel, who is liable for the expenses of the voyage including the wages of the
seamen. ( in this case, the master of the vessel is the agent of the charterer and
not of the shipowner)

B. Contract of Affreightment
Planter’s Products, Inc V CA, et al
226 SCRA 478
In both time and voyage charters, which are said to be contracts of
affreightment, the charterer hires the vessel only, either for a determinate
period of time or for a single or consecutive voyage, with the shipowner
providing for the provisions of the ship, the wages of the maser and crew, and
the expenses for the maintenance of the vessel.

Litonjua Shipping Co. Inc. V NSB (previously cited)

Litonjua, a duly appointed crewing managing office of Fairwind Shipping
Corp which chartered M/V Dufton Bay was held liable for damages for the
illegal dismissal of a 3rd engineer Candongo. . The contract entered into here
was a bareboat charter.

III. Effect of Charter on Character of Carrier

Caltex (Phil.), Inc V Sulpicio Lines, Inc. (previously cited)
In Caltex ‘s lease via a voyage charter of MT Vector owned by Sulpicio, the
SC characterized the said specie of charter party as one which does not affect
at all the business of Sulpicio Lines Inc. as a common carrier. Consequently,
the rights and responsibilities of ownership still rested on the owner, and the
charterer was thereby free from any liability to 3rd persons in respect to the
vessel.

Planter’s products Inc V CA (previously cited)

Since the parties in the charter entered into a time charter-party, the common
carrier remained a common carrier.

IV. Persons Who May Make Charter

Art 654, 679, 593, 598, 609 no. 4, 655 Code of Commerce

V. Requisites of a Valid Charter Party

Art 1306 New Civil Code of the Philippines
As the charter party is a contract, it is therefore to be governed by the general
principle governing ordinary contracts. Subject to the caveat that it should not
be contrary to law or public policy.

Requisites of a charter party:

1. The consent of the contracting parties
2. An existing vessel which may be placed at the disposition of the shipper
3. The freight
4. Compliance with the requirements of Art 652 of the Code of Commerce
5. NB. What is primage?
Art 652 Code of Commerce
VI. Freight
Arts 659, 660, 661 Code of Commerce
Case: Compagnie de Commerce V Hamburg America
36 Phil 590
The failure of the captain or master to carry goods on his ship or to send them
to the point of destination in another vessel resulted in the abandonment upon
any claim for freight thereon, except where it has been made payable in
advance.

VII. Demurrage and Deadfreight

Art 652 (para 10) the time for loading and unloading shall be provided in the
Charter Party
NB. What are “lay days”?
Demurrage (definition) a sum of money due by express contract for the
detention of the vessel in loading and unloading, beyond the time allowed for
that purpose in the charter party.
Case:
National Food Authority VCA
311RA 700
A. Computation of Lay days?
B. The stipulated lay days do not begin to run against the consignee until the
vessel has arrived at berth or other usual or customary place for loading or
unloading and is in actual readiness to discharge its cargo in accordance with
its legal obligation, unless the contrary intention appears in the charter party.

VIII. Rights and Obligations of the Charter Parties

A. Shipowner or Captain
Arts. 669, 679 , 649, 670, 672, Code of Commerce

Case:
Behn, Meyer and Co. V Banco- Español
11Phil 253
The evident failure or refusal of the shipowner or his agent s to receive cargo
which had been contracted to be transported under the charter party constitutes
a sure breach of the charter party, as to warrant a suit for damages by the
charterer for such breach.

B. Charterer
Arts. 679, 681,682, 687 Code of Commerce

IX. Effect of a Bill of Lading

If the bill of lading was issued by the shipowner to the charterer, the charter
party still governs the rights and the bill of lading may be used as proof of the
receipt of goods.
However, while the bill of lading does not operate as a new contract or modify
the charter party as between the shipowner and charterer, the bill of lading does
not constitute a contract between the vessel and the consignee and neither he
nor his endorsee is bound by the terms of the charter party of which he has no
notice or knowledge.
X. Code of Commerce Provisions
XI. Arts 652-692 (please read on your own)
LOANS ON BOTTOMRY AND RESPONDENTIA
I. Definition and Concept
Bottomry , in maritime law, is a contract whereby the owner of a ship borrows
for the use, equipment and repair of the vessel, for a definite term, and pledges
the ship( or the keel or bottom of the ship pars pro toto) as a security with the
stipulation that if the ship is lost during the voyage or during the limited time
on account of the perils enumerated, the loans shall lose his money.

II. Distinguished from Simple Loan

5 differences
a. Usury law application
b. Risks requirement
c. Form
d. Record/ Registration Requirement
e. Preference in case there are many lenders
Arts 726, 727 Code of Commerce

III. Parties to the Loan

a. Bottomry - Shipowner, Captain in some instance
b. Respondentia – Cargo Owner
Arts. 729, 728, 725, 617

IV. Form of Loans

Art 720, 721 Code of Commerce

V. Consequences of Loss of Effects of the Loans

Arts 731, 732, 734, 735

VI. Code of Commerce Provisions

Arts. 719 - 736 (read on your own)

AVERAGES
I. Averages in General
Arts 806 , 807, 808 Code of Commerce
II. Simple Average
Simple or particular average shall include all the expenses and damages caused
to the vessel or to her cargo which have not inured to the common benefit and
profit of all the persons interested in the vessel and her cargo.
Art 809 Code of Commerce
a. Definition
b. By whom borne

III. General Average

A. Definition and Requisites
Art 811 Code of commerce
Case: A. Magsaysay Inc. V Agan
No. L- 6393 January 11, 1955
SC stated that there are 4 requisites
1. There must be a common danger
2. That for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately
3. That from the expenses caused follows the successful saving of the vessel
and cargo
4. That the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority

Compagnie de Commerce et al V Hamburg America et al

36 Phil 636
SC enumerated only 3 requisites as Magsaysay case
a. Common danger
Cases:
Magsaysay Inc. V Agan (previously cited)
Common danger means that both the ship and the cargo, after it 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, dispositions of the authority, or faults of
men, provided that the circumstances producing the peril should be
ascertained and imminent or may rationally be said to be certain or
imminent.

International harvester Co. V Hamburg-American Line

42 Phil 845
Action for recovery of the goods plus damages. Happened war broke
out in Europe and vessel sought refuge in Manila. Ruling: Cargo in
question was not subject to general average. The agricultural
machinery was not contraband in war. It was neutral goods and
therefore not liable to forfeiture in the event of capture by the enemies
of the ship’s flag. There was no common danger to the ship and cargo
and therefore it was not a case for general average.

National Development Company V CA

No L- 49407 Au 19 1988
164 SCRA 593 606
SC ruled that the law on averages does not apply in collision cases
where the same was caused by the negligence of the captains of the
colliding vessels and the cargoes were not jettisoned to save some of
the cargoes and the vessel.

b. Deliberate Sacrifice
Cases:
Compagnie de Commerce V Hamburg Amerika (previously cited)
There must be voluntary sacrifice of a part for the benefit of the whole
order to justify general average distribution
Art 813 Code of Commerce describes a procedure in deciding whether
a sacrifice should be made.
Arts 816-818 Cases when sacrifice was not made during the voyage
and yet it is still considered as general average, in 2 cases:
1. Where the sinking of the vessel is necessary to to extinguish a fire
in a p[ort, roadstead, creek or bay
2. Where the cargo is transferred to lighten the ship on account of a
storm to facilitate entry into a port.
Rule IV York-Antwerp Rules provides the loss or damage
sustained by cutting away wreck or parts of the ship which have
been previously carried away or are effectively lost by accident
shall not be made good as general average.
c. Sacrifice must be successful
Art 860 – 861 Code of Commerce
 d. compliance with legal steps
Arts. 813-815

B. Examples of General Average

Art 811 Code of Commerce

C. By Whom Borne
Art 812
a. Insurers
Arts 732 859 Code of Commerce Contributions may also be imposed on
the insurers of the vessel or cargoes that were saved as well as lenders on
bottomry and respondentia.

Arts 164 -165 Insurance Code The insurer is liable for any general average
in proportion to the contribution attaching to his policy value where the
said value is less than the contributing value of the thing insured.
b. Lenders on Bottomry and Respondentia

Art 732 Code of Commerce Lenders on bottomry or respondentia shall

suffer, in proportion to their respective interest, the general average which
may take place in the goods on which the loan is made.
c. Who is Entitled to Indemnity
Art 855 Code of Commerce
Goods carried on deck unless the rule, special law or customs of the place
allow the same
Art 855 2nd para.
Goods that are not recorde in the books or records of the vessel
Rule IX New York – Antwerp Rule
Fuel for the vessel if there is more than sufficient for the voyage.

IV. Proof and Liquidation of Average: Code of Commerce

Arts 846 – 869 Code of Commerce (Please read on your own)

V. York-Antwerp Rules, 1974

Adopted by the maritime Committee at the Hamburg Conference of April 1974

Case:
Eatern Shipping Lines V Margarine- Ver kaufs – Union,
No. L – 31087 Sept 27 1979

COLLISIONS
I. Concept
A. Definition
B. Zones of collision

II. Applicable Law

Code of Commerce
Case:
National Development Co. V CA et al
No. L - $9 407 and L – 49469 Aug 19 1988
164 SCRA 593 603
 The liability of shipowners and shipagents as well as the captain or crew in
collision cases is still governed by the provisions of the code of commerce on
Collision.

III. Rules in Liability

Art 829 Code of Commerce
Cases:
CB Williams V Teodoro Yanco
No. 8325 March 10 1914
If both vessels are were negligently operated, it does not matter if the other has
the last clear chance of avoiding the injury because art 827 of the Civil Code
each must bear its own damage if both of them are negligent.

The Government of the Philippine Islands V Phil. Steamship Co. Inc. et al

No. 18957 January 16 1923
Although the negligence on the part of the mate of the oncoming vessel
precede the negligence on the part of the mate of the outgoing vessel by an
appreciable interval of time, the first vessel cannot on that account be absolved
from responsibility.

Gorgonio de Sarasola V Biao Sontua

GR No. 22630 January 31 1925
Proof that the plaintiff was negligent will bar recovery from the defendant in
collision cases even if the plaintiff’s negligence can be classified as
contributory.

A. Specific Rules under the Code of Commerce

a. One vessel at fault Art 826
b. Both vessels at fault Art 827
c. Party at fault can not be determined Art 828
d. Cause is fortuitous event Arts 830 and 832
e. Third person at fault Art 831

IV. Other Rules

Arts 833 834 838 839 Code of Commerce

V. Protest
Art 835 – 836 Code of Commerce

VI. Limited Liability Rule

Art 837 Code of Commerce
Case: Luzon Stevedoring Corp V CA et al
GR No. L – 58897 Dec 3, 1987
Undeniably, the petitioner can not invoke the the benefit of the provisions of
art 837 of the Code of commerce to limit its liability to the value of the vessel,
all the appurtenances and freightage earned during the voyage.

ARRIVAL UNDER STRESS AND SHIPWRECKS

I. Arrival under Stress
A. Definition
It is the arrival of the vessel at the nearest and most convenient port which
was decided upon after determining that there is well-founded fear of seizure,
 privateers, or pirates or by reason of any accident of the sea disabling it to
navigate.
B. Steps (6)
C. Code of Commerce provisions
D. Arts 819 - 825

II. Shipwrecks
A. Definition
The demolition or Shattering of a vessel caused by her driving ashore or on
rocks and shoal in the midseas or by the violence of winds and waves in
tempests
B. Code of Commerce
Arts 840 - 845

SALVAGE
I. Governing Law
Act No. 2616 The Salvage Law Feb 4, 1916

II. Definition and Concept of Salvage

Cases;
Erlanger & Galinger V Swedish East Asiatic Co. Ltd
34 Phil 178 (1916)
Salvage may be defined as a service which one renders to the owner of a ship
or goods, by his own labor, preserving the goods or the ship, which the owner
or those entrusted with the care of them have either abandoned in distress at
sea , or are unable to protect and secure.
Salvage is founded on the equity of remunerating private and individual
services performed in saving, in whole or in part, a ship or its cargo from
impending peril or recovering them after actual loss.
A. Kinds of Salvage Services
1. Voluntary, wherein the compensation is dependent on the success
2. Rendered under a contract for a per diem or per horam wage, payable at all
events
3. Under a contract for a compensation payable only in case of success.
Case:
CS Robinson et al V The Ship Alta et al
No. 3488 Aug 10 1907

III. Claim for Valid Salvage and its Elements

Case:
Barrios V Go Thong & Co.
No. L – 17192 March 30 1963
7 SCRA 535

A. Abandonment
Erlanger & Galinger V Swedish East Asiatic Co. Ltd. (previously cited)
If those in charge left with the intention of returning, or, of procuring
assistance, the property is not derelict, but if they quitted the property with the
intention of finally leaving it, it is derelict, and a change of their intention will
not change its nature.
Nevertheless, if it is clear that the intention to return is slight, the salvage which
was done thereafter is considered valid. Whether the intention to return in a
particular case is always difficult to determine. It is indeed a rare case when
 the master of the ship will leave without the intention of returning, if there is
the slightest hope of saving his vessel.
A derelict is defined as a ship or her cargo which is abandoned at sea by those
who were in charge of it, without any hope of recovering it(sine spe recurandi)
, or without any intention of returning to it (animo revertendi).

IV. Basis for Entitlement to Salvage Reward

Sec 10 of Act 2616
Cases:
Atlantic Gulf & Pacific Co. V Uchida Kisen Kaisha
42 Phil 320 (1921)
Compensation to be paid by the owners of the ship and owner of the cargo to
the salvors is in proportion to the value of the vessel and the value of the cargo
saved.
Wallace V Pujalte & Co. , and Pujalte
34 Phil 511 (1915)
The expenses incurred in carrying out the salvage must be shown to be
necessary and reasonable in amount before they will be allowed to the salvors.
Erlanger & Galinger V Swedish East Asiatic Co. Ltd, (previously cited)
Compensation on salvage should not be viewed merely as pay on the principle
of quantum meruit or as a remuneration pro opera et labore, but as reward
given for perilous services, voluntarily rendered, and as an inducement to
mariners to embark in such dangerous enterprises to save life and property.
Sec 13 Salvage law
Reward is due not only to the owner of the salving vessel but the captain and
the crew as well. ½ owner; ¼ captain ; ¼ to the crew.

V. Rights and Obligations of Salvors and Owners

Cases:
Fernandez, et al V Thompson et al
No. 12475 march 21 1918
37 Phil 850
The salvor is entitled to compensation for services rendered and in the
enforcement of that right, he has, under the salvage law, a lien upon the
property salvaged whereby he is not bound to part with the possession of the
vessel salvaged or the cargo saved until he is paid his due compensation.

CARRIAGE OF GOODS BY SEA

Commonwealth Act No. 65
CARRIAGE OF GOODS BY SEA ACT Oct 22, 1936
New Civil Code of the Philippines Aug 30 1950became the primary law
Art 1753 NCCP. 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 and deterioration.