Marx Notes - Mercantile Law Review 2 (Dimayuga)

7/24/2019 Marx Notes - Mercantile Law Review 2 (Dimayuga)

1/62

Transcribers:

Marc Roby de Chavez (MARX)Marc Roby de Chavez (MARX)Marc Roby de Chavez (MARX)Marc Roby de Chavez (MARX)

Professor:Dean Amado L. Dimayuga DCL


2/62

MERC

Historical Background of Insurance in the Ph

During the Spanish regime, we h

called contract of insurance.

What was the governing law at that time?

During that time, the governin

Spanish Code of Commerce and

Code. There were provisions fou

governing contracts of insurance.

When the Americans came, the first In

enacted into law in a year 11!, it w

legislature that enacted a piece of legi

insurance.

Then in 1#$, the "hil. %egislature enacted "

And finally in 1#', we had the so called I

the "hil. This is the present law on insuranc

of 1#'). The Insurance Code is the primary

the other hand, the Civil Code ap

(Supplemental %aw). "rovisions relative t

Contracts are applicale insurance case

applicale provision in the Insurance Code.

Insurance is a contact wherein the two c

namely the oligor and oligee a -uridical r

So any if there is no provision in the Insuran

can e made to the general provision oContracts

Another repository of applicale principles i

nited States Court and more particularly t

of California. When the Insurance of th

eing drafted, it was used as the principal

the laws that can e used in resolving insura

In the year 1'/, there was already a ran

company here in the name of %loyd0s of %on

first life insurance company estalished to

in our country was the Sun %ife Insura

Canada. In 12, 3e4 Tong %in 5ire andCompany. In 11, another life insurance

%ife.

Insurance is a contract. There are 3 essen

contract namel:

consent

o-ect

cause or consideration

The same three elements are duly presen

insurance. In the asence of one element,

valid contract of insurance. 7ememer

NTILE LAW REVIEW 2 NOTES by MAR

"age 8 1

ilippines:

d already the so

laws were the

the Spanish Civil

nd in two Codes

surance Act was

s the "hilippine

slation governing

.D&.

nsurance Code of

e (Insurance Code

*principal law. +n

lies suppletorily

+ligations and

if there is no

ntracting parties

elation is created.

ce Code, recourse

+ligations and

s Decisions of the

e Insurance Code

"hilippines was

odel. These were

nce cases.

h of an Insurance

don. In 1'', the

do usiness here

nce Company of

6arine Insurancecompany, Insular

ial elements of a

in a contract of

ou cannot have a

that the three

elements found in the Civ

and cause or considerati

contracts.

!onsent " is the meetin

parties. There is consent

offer and acceptance

who are the parties in a co

Insurer

Insured

9eneficiary :::

They are the main parti

only the insurer and ins

meeting of the minds et

is a consent.

When is there a meeting

insured in a contract of in

offeree?

$fferor; the on

insurance. The i

insurance. Thus,

applicant.

who solicits?

the agent of the I

But who signs and accepts

the insurer is

application.

9ut the Insurer

for the insuranc

processed y the

insurer whether

effect, the offe

accepts the app

When the insur

insured will e no

How is the insured notifie

has #een accepted?

through the issua

When the policy is deliv

meeting of the minds. Wh

4nowledge of the offero

application has come to t

the time that you can say

when does it come to his p

either constructiv

il Code namely the consent, o-ect

n must e present in all 4inds of

of the minds of the contracting

when there is the concurrence of

ntract of Insurance?

s. 9ut the contracting parties are

red. The moment that there is a

een the insurer and insured, there

of the mind #etween insurer and

urance? who is the offeror and the

e who applies for contract of

sured is the one who applies for

the insured is the offeror and

nsurer

the application

the one who accomplish the

ill accomplish the application form

e policy. The application will e

office of the Insurer. It is up for the

to accept or to turn down. So in

ee is insurer. When the insurer

lication, it ecomes the offeror.

er approves the application, the

tified.

# the insurer that the application

nce of insurance policy

ered to the insured, there is the

en the acceptance has come to the

and when the acceptance of his

e 4nowledge of the insured, that is

hat there is a meeting of the mind.

ersonal knowledge?

ely or actually


3/62

MERC

There is actual knowledge when the poli

him.

There is constructive knowledge if the peen mailed ut not yet received y the ins

$fferor" insured $fferee" insurer

Acceptance of the offer is made 4nown to

the conventional way to convey this is thro

the policy.

$#%ect; the contract of Insurance is a speci

not li4e a contract of sale wherein you can

what is the o-ect. In a contract of sale,

su-ect matter to e sold. It is the thing that

in a contract of insurance, what is the o-ect

There are two kinds of insurance

%ife Insurance

e life of a person.

insured e.g. car,

It is not only there is a =ualifying

interest in the

son for instance if

nsured must have

ithout insurale

valid contract of

nterest, no valid

of insurance e it

art of the insurer

sured.

the part of the

the insurer

of insurance is

d

red.

.

!haracteristics(features o

Aleatory

"ersonal

?@ecutory and Co tmost Confiden

Contract of Adhe

When can we say that a c

The liaility of

contingent event

The insurance is

is an assumption

Is sale an aleator contrac

not an aleator

assumption of ris

insurance is a highly perso

if a person has to insure

e@amination. 9ac4ground

health, status in life. All

evaluation for a life insura

how a#out in a non"life ins

highl personal? Will pers

3es. It also highly

Illustration: 3ou will insur

you figured in several car

$ years. 7ecords show tha

If you figured in several c

higher than a regular pre

B has a ldg. Insurer fo

arson. Insurer will thin4 t

B has a warehouse. 9ut

heavily indeted. Insure

application.

)*ecutor and !onditional

in so far as the i

insurance is e@ec

if the peril insure

to pay. So it eco

conditional eca

of the contingenc

a !ontract of Insurance

nditionale

ion

ntract is aleatory>

the insurer depends upon a

which may or may not happen.

an aleatory contract ecause there

of ris4.

t?

contract ecause there is no

4.

nal contract.

his life, he has to undergo medical

of insured his age, wor4, state of

l these will come to play in the

nce y the insurer.

urance? Will it still #e considered as

nal circumstances come into pla?

personal.

e your car. Insurer found out that

accidents every year during the last

you are rec4less driver.

ar accidents, your premium will e

ium.

nd out that you are convicted of

ice.

the insurer found out that he is

will thin4 twice regarding your

surer is concerned, the contract of

tory and conditional.

d against happened, the insurer has

mes e@ecutory

se it depends upon the happening

y insured against.


4/62

MERC

insofar as the insured is concer

e@ecuted ecause he has already

e has complied already with his p

as the insured is concerned, the insfully e@ecuted ecause he has don

+tmost !onfidence ,+#errima -ides'

contract that involves utmost goo

of oth parties

when there is an application f

applicant must divulge info li4e w

hospitalied efore, the insurer

personal statement. The insuranc

mandated y law to conduct an in

a policy is issued.

This is somethinWith respect to

insure a vessel, t

event can e the

)*ample:when t

no oligation to

e on the high

insured here y

was insured, the

san4 efore the is

9ut the owner o

does not have avessel has alrea

loss or not loss. I

There is a provis

say, it applies to

The insurance h

acted in good fai

was lost.

When we spea4 of ins

property, which is mortg

secure an oligation to ayou orrow money e@. i

collateral. 3ou give as coll

the an4 do> The an4 wi

policy and ma4e the an4

loan.

there can e two cases i

e@isting insurance over hi

the an4. e gave as colla

he is applying for loan, th

already insured in his na

policy should e the an4

#e necessar on the partpolic to get another polic

There is no more

policy. B can

assignment of p

assignment of t

assignment is for

proceeds shall g

an4. Assignmen

to the an4.

Code says, past or future. Does it

ent can e the su-ect matter of an

peculiar to a maritime insurance.maritime insurance, when you

he liaility against a future or past

su-ect matter.

e vessel is insured, the insurer has

@amine the vessel ecause it might

eas. A vessel in


5/62

MERC

0upposing there is no polic et1 what will 4

6r. B will procure an insurance

policy the eneficiary should e t

the loan.

In the case of a mortgage e@ecuted t

oligation, the mortgagee has insurale int

of the loan he e@tended. The an4 can sec

name to secure the credit. "roperty is mort

So the an4 y itself can otain a policy. Th

e the an4. What the an4 will e insurin

the mortgaged property.

0upposing the mortgagee is the one who a

of mortgagor1 the #eneficiar is the #ank.

name of the mortgagor #ut assigned to th

#e the effect in case of loss?The insurance is still elieved to

of the mortgagor. The real party

mortgagor. Whatever the mortg

affect the insurance policy. I f he v

even though he designated the

or has already assigned the polic

an4, still the mortgagor is a party

What if he violates a provision in the polic

is a cause for the annulment(avoidance of t

Any act which can e performed

can e performed y the mortgagepayment of the premium. The an

the payment of the premiums. Wh

of renewal, the an4 advances

ehalf of the mortgagor. This ca

mortgagee.

In case of loss1 to whom shall the proceeds

the mortgagee shall e entitled t

the e@tent of the credit e@tended.

What will #e the effect of the pament of t

mortgagee? What will #e the effect on th

the loan o#ligation #e e*tinguished?the whole oligation is already e@ti

he has already een paid, alre

e=uivalent to the insurer. The an

to the mortgagor.


6/62

MERC

(d) +f any person upon whose life any es

in him depends.

$f an person upon whose life an estate o

in him depends.

9y e@press provision of the la

insurale interest over himself.


7/62

MERC

nder the 5amily Code, an auntie is no

support a niece or nephew.


8/62

MERC

also surrender ut with the

irrevocale eneficiary.

In life insurance, there are several privileginsurer to the insured. 5irst, can orrow m

policy as a collateral. Second, can also assig

after / years as a rule, can surrender the

cash surrender value; refers to the comput

the value of the policy upon reaching a parti

.

During the first two years, it does not

surrender value. 3ou cannot collect and sur

After / years, the policy has already a cas

The longer the year, the higher is the cash s

0upposing it is the matter of paing the pre

has #een delaed in paing the premium1 ta#out to e*pire1 and when the grace per

happens to the polic?

The policy lapses. nli4e in propert

is what we called grace period. If

the policy ecomes null and void.

4a the irrevoca#le polic compel the in

premium?


9/62

MERC

e*isting interest

?@ample owner of a property

inchoate interest founded on an e*isting int)*ample: stoc4holder has inchoa

property of the corporation

e*pectanc1 coupled with an e*isting interes

)*ample: future harvest of your

that you are the owner or lessee

B custom1 ou have a part in the harvest #

owner. =o ou have an insura#le interes

harvest?

rememer that e@pentancy must

interest. 3ou are not the owner e

you have share over the harvest

If our parents do not #elieve in insuranc

their properties?


10/62

MERC

(staying e

accommodati

different if th

lease?@istence of Insurale

interest at the time of the

loss (life, health) Insurale

interest must e@ist at the

time of the inception

insurance ut need not

e@ist thereafter or when

the time of loss

Insurale int

not only at t

inception o

insurance ut

loss occurs,

not e@isting m

In a valued polic, the insured and insurer a

as to the amount*value.

In an open polic, there is no value. In ca

ad-usted to the necessary appraisal on to

loss

Cannot recover more than the value in the

a contract of indemnity. If you are allowe

than your insurale interest, it ecomes a

with respect to the e@cess. If the value of yo

you insure it for 1.!6, that is a wagering

e@cess is concern;!K.

Sec. ". ?@cept in the cases specified in the ne@t fou

cases of life, accident, and health insurance, a change

of a thing insured unaccompanied y a correspondin

the insurance, suspends the insurance to an e=uiva

interest in the thing and the interest in the insurance

person.

#R$any change in the interest in a property

y corresponding change in the policy, you

)*ample:B has a car, he sold to 3

the policy.


11/62

MERC

RE1UISIES 2R NEAL/EN

party 4nows the fact which

communicate or disclose

has personal 4nowledge li4e hospitaliation

such party concealing is duty oun

fact to the other

the fact must e mat

insured. If it is not materi

oligation on the part o

disclose

such party concealing ma4es no w

concealed

the other party has not the mea

the fact concealed

Is it necessar that the concealment intentio


12/62

MERC

In property insurance, this is important not

ris4 ut the fi@ing of a premium. If it is a

the insurer will accept it ut the premium

higher.

In life insurance, it is not a =uestion of fi@in

=uestion is whether to accept or not.

RE&RESENAINS

What is representation in a contract of insur

+ral or written factual stateme

insured to induced the insurer

contract of insurance to accept t

insurance

Where is it written? where do we find the re

In the application

The insurer will give the insured an appli

accomplished and any statement or fact

application is a representation (written)

Whenever the insured is interviewed y

there is oral representation. Whatever f

that may e given y the insured during hi

underwriter, that will form under the cla

representation

/re representations considered as part

contract?


13/62

MERC

)*ample: there is no security guard. The

that he will employ security guards

If the promise is incorporated in the policy, ithe contract. 9ut if the same is not incor

effect is that when the promissory repr

fulfilled and the same is material, it can

rescission

!an representation 5ualif as an e*press pro


14/62

MERC

There are cases where the incontesta#ilit

appl:


15/62

MERC

The contract of insurance is perfec

the acceptance of the offer y th

4nown to the insured

The acceptance ma #e made known to the i

Constructive delivery

Actual delivery

/ctual deliver

"hysical delivery to the insured

!onstructive deliver

The delivery of the policy to the

deliver the same to the insured.

when the insured died and the p

hands of the agent ut the policy i

y the insurer, there is already con

If the policy is delivered thru mail

If the policy has already een

insurer for delivery to the insured

constructive delivery

0ometimes1 it takes time to evaluate th

insurance.


16/62

MERC

What is a valued polic?Sec. 0!. A valued policy is one which e@

agreement that the thing insured shall e v

%et0s say a uilding is going to e

Aside from the !4, there is valu

valued of the policy is !4 ecaus

thing is already agreed upon and t

in the policy

In case of loss, there is no need fo

company will not engage the servi

anymore to evaluate how much

thing at the time ecause there is

valuation.

The valuation is different from

insurance

$pen policSec. 0". An open policy is one in which t

insured is not agreed upon, ut is left to e

loss.

There is an open policy when th

valuation in the policy

If there is loss or damage, there

insurance ad-uster to inspect the pan estimate of the value of the da

7unning PolicSec. 0. A running policy is one which co

insurances, and which provides that the o

e from time to time defined, especially

insurance, y additional statements or indor

sually in stoc4 insurance li4e i

store, the same has inventories

nder the Insurance code, there should e

Sec. *". The policy shall e in printed for

lan4 spaces and any word, phrase, claus

signature, numer, or word necessary to co

insurance shall e written on the lan4 spac

Any rider, clause, warranty or endorsement

of the contract of insurance and which is

said policy is not inding on the insured,

title or name of the rider, clause, warranty

mentioned and written on the lan4 spaces

nless applied for y the insured or ow

warranty or endorsement issued after the

countersigned y the insured or owner, w

shall e ta4en as his agreement to the c

clause, warranty or endorsement.


"age 8 1!

resses on its face an

lued at a specific sum.

insured for !4.

tion already. It is

e the value of the

he same is stated

r an ad-uster. The

ces of an ad-uster

the value of the

already an agreed

the amount of

he value of the thing

ascertained in case of

ere is no agreed

is a need for an

roperty. To ma4eage.

templates successive

-ect of the policy may

as to the su-ects of

sements.

a department

printed policy

m which may contain

e, mar4, sign, symol,

mplete the contract of

es provided therein.

purporting to e part

pasted or attached to

unless the descriptive

r endorsement is also

provided in the policy.

er, any rider, clause,

original policy shall e

hich countersignature

ntents of such rider,

Nroup insurance and

typewritten and need

The policy cannot e is

approval of the office of t

In the policy, aside from

there are what we call e@

These are 4ey devices e

themselves

)*ample of )*ceptions:

In fire insurance

So if the pro@i

recovery

)*ample of !ondiitons

The residential h

7ound the cloc4 s

5ire e@tinguishers


17/62

MERC

When the insured accomplishes the appli

insured is interviewed y the underwriter,

of the offer to the insurer. And the insurer

then the insurer will issue the policy containconditions agreed upon y the parties

So the e@press warranties should e found

any other incorporated instrument signed

Sec. +".Without pre-udice to section fifty;one, every e

at or efore the e@ecution of a policy, must e contai

or in another instrument signed y the insured and re

as ma4ing a part of it.

According to the insurance Code, there is

warranty what we called implied warranty

What is an implied warrant? Where can w

warrant?

There is an implied warranty in ma

The classic e@ample of implied warranty i

seaworthiness of the vessel

Another e@ample of an implied warranty i

warrants the nationality or neutrality of th

an implied warranty that the vessel

necessary documents to show its neutralit

the case may e

How do we define warrant?

It is a statement or promise set f

where incorporated with it, the

fulfillment of which in any respect

or not the insurer renders the poli

option of the insurer

How do we classif the warrant?

?@press

Implied

Affirmative

"romissory

What is an affirmative warrant?Sec. +!.A statement in a policy of matter re

thing insured, or to the ris4, as a fact, is

thereof.

)*ample of warranties ,person'

With respect to the person, age is v

A statement y the insured that

hospitalied during the past 1 y

warranty


"age 8 12

cation, when the

his will form part

accepts the offer,

ing the terms and

in the policy or in

the insured

press warranty, made

ed in the policy itself,

ferred to in the policy

another 4ind of

e find this implied

ine insurance

the warranty of

that the insured

e vessel. There is

ill carry all the

or nationality as

orth in the policy

untruth or non;

whether affecting

cy voidale at the

lating to the person or

an e@press warranty

ery material

he has not een

ars is an e@press

The e@press war

4ind of employm

also an e@press w

)*ample of warranties Wi

Insurance of a

whether the uil

uilding is tenan

present is an e@p

The age of a uil

The age of the ve

The fact that the

The course of the

Any statement o

that it can ta4e ri

a warranty

Promissor warrant

A statement in

that he is going t

material to the ri

)*ample:


18/62

MERC

Sec. +3.When, efore the time arrives for the perfo

relating to the future, a loss insured against hap

ecomes unlawful at the place of the contract, or impo

fulfill the warranty does not avoid the policy.

In section #G, when the performance

impossile or loss ta4es place will not affect

policy

)*ample:there is a warranty in the policy t

from the date of policy that the uilding

Nuards will e employed y the owner of th

If loss ta4es place within the G d

agency (during the grace period

ta4es place, there is no violat

ecause the loss ta4es place ef

performance)

)*ample ,when it #ecomes unlawful'

There is a promissory warranty tha

the premises will e vacated and

residence y the owner. In other

vacate the premises and the own

to use it for his residence. Then

prohiiting for a certain peri

e-ectment of tenants within

promissory warranty ecomes unl

will e no violation of the same

)*ample ,when it #ecomes impossi#le'In a factory, there is a promissory

e=uipments, manufactured in

installed within 2 months. A wa

insured cannot do the importat

e=uipments, it ecomes impossile

Sec. +).The violation of a material warranty, or other

policy, on the part of either party thereto, entitles the

0upposing there is a warrant that no e*plo

material will #e deposited in the premises.

destroed # a fire. The pro*imate cause o

the e*plosives deposited in the premises. It ithat caused the fire. 0o it is not the violatio

that caused the loss of the propert1 ma t

from the insurer?

It is not necessary that the pro@i

loss or damage a violation of a wa

pro@imate cause is some other cau

violation of the warranty, still that

on the part of the insurer to deny li


"age 8 1#

rmance of a warranty

ens, or performance

ssile, the omission to

comes unlawful,

the validity of the

at within G days

will e guarded.

e uilding

ys to loo4 for an

of G days, loss

ion of warranty

re the promised

within / months,

shall e used as

ords, tenants will

r will e the one

law was passed

d of time the

that area, the

awful, then there

arranty that new

ermany will e

r ro4e out, the

ion of the new

material provision of a

ther to rescind.

ives or haardous

The #uilding was

the fire was not

s electrical failuren of the warrant

e insured recover

ate cause of the

ranty. ?ven if the

se other than the

is a good ground

aility

Sec. +0. A reach of warranty

from the time that it occurs, or

the policy from attaching to the

The violation of warrantynot. Supposing, it is fraud

warranty. Supposing tha

round the cloc4 security

employment of the securi

is a fraudulent violation of

)*ample of violation of wa

The insurer e@pe

premises within

insured made a

leave the premis

/s to legal effects ,violatio

w*o fraud L the i

the period prior t

e*ample: promis

security guards.

agency is termina

loo4ing for anoth

violation of warra

if the violation i

ro4en, prevents

ris4

&RE/IU/S

"remiums (payment there

of an insurance contract.

the consideration is the

insured. Insofar as t

consideration is the pro

insured in case of loss

Sec. ++. An insurer is entitled t

thing insured is e@posed to the

agreement to the contrary, noinsurance company is valid and

has een paid, e@cept in the cas

the grace period provision applie

Without payment of prem

What is Cash and Carry ru

This is a rule

commissioner th

there is no valid i

#eneral Rule$without pa

insurance contract

ithout fraud merely e@onerates an insurer

where it is ro4en in its inception, prevents

is4.

may either e tainted with fraud orulent, there is fraud in ma4ing the

the insured said that there are

guards, ut it turns out that the

y guards is only for daytime. There

the warranty.

rrant without fraud:

cts that the tenants will leave the

2 days. There is no fraud, the

assurance that the tenants will

s

n with fraud or without fraud'

nsurer is merely e@onerated during

o the violation

sory warranty of employment of

After one month, the contract of

ted. So the owner of the uilding is

er agency. %oss ta4es place. This is a

nty without fraud

fraudulent upon inception L it is

the policy from attaching to the

of) is one of the essential elements

Insofar as the insurer is concerned,

premium to e received from the

e insured is concerned, the

ise of the insurer to damnify the

o payment of the premium as soon as the

peril insured against.


19/62

MERC

E;ce'tions$

In case of li fe and industrial insu

the grade period. In life insurance,

given to the insured for the payme If the insurer ac4nowledges th

premium, although in truth and i

payment yet. That will not, in a

validity of the policy without pre-u

the insurer to collect premiums

In case of surety onds. A surety

of insurance. When a surety ond

ond is already in the hands

regardless of the payment of pre

ond is considered valid. This is for

a Grd

person

In case of motor vehicle insurance

insurance) when a car is regist

mandatory re=uirement that there

Grd

party liaility insurance. This

insurance is in favor of Grd

perso

insured. Although there is no pay

yet, if there is a Grd

party liailit

e@ception to the rule ecause if we

rule, innocent Grd

person will e aff

In 6a4ati Tuscany case, in this

agreement etween the insurer

payment of premium y installme

that the same is valid. It is an e@

-urisprudence Cover notes

In cover notes1 does the law re5uire an imm

cover note?

The premium is not yet computed.

is a holder of a cover note may not

single centavo ut the same is valid

=o we consider pament of premiums as an

part of the insured?

In case of life insurance, it is for m

After payment of premium for the

a need to pay for premium for the

=o we consider the insured as

pament of premiums for the succe

das. 8o polic is

as

red is entitled for the return of the


20/62

MERC

+ver insurance, if there is over insu

=oes the law prohi#it dou#le ,over' insuranc

#e insured with & or more insurer?3es

In case of over insurance, the insured can

than what his insurale interest is

If the insurale interest is only 16, ther

return of premium from all insurance comp

e@cess, he is entitled.

If there is a provision in the contract of ins

doule insurance, violation thereof is

recancellation

LSS

Sec. 3. An agreement not to transfer the claim of t

insurer after the loss has happened, is void if made e

otherwise provided in the case of life insurance.

nder sec 'G, the law says that any agre

transfer of claim after loss is void. It may

parties prior to the loss

What is meant # this?

This is prohiiting the assignmen

case of loss, after the loss

Wh does the law declares the same is void?

This is against pulic policy ecau

the claim is already a monetary cl

entitled to it is free to transfer it in

How a#out prohi#iting the transfer of claim

It is valid ut there is a need for t

insurer. The personal circumstanc

will come into play. So the insure

the claim without the consent of th

There are some factors to e ta4en into

consider the term loss

What is loss in insurance? When do we sa

entitled to indemnification #ecause there w

In insurance, there are certain ris4s cover

There are certain ris4 that are e@cepted

The most common ris4 in property insura

policy is only against fire and the property


"age 8 1

rance

e? !an a propert

not recover more

will e pro;rata

any whatever the

rance prohiiting

a ground for

e insured against the

ore the loss e@cept as

ment prohiiting

e made y the

t of the claim in

se after the loss,

im and the party

favor of anyody.

rior to the loss?

he consent of the

es of the parties

d cannot transfer

e insurer.

account were we

hat the insured is

s a valid loss?

ed y the policy.

nce is fire. If the

is lost ecause of

theft, the insured cannot

peril insured against


21/62

MERC

5riendly

ostile

When is fire consideredfriendly?

When a fire remains in the place oror where it is ought to e

)*ample:fire in a fire place or in a stove

9ut the moment the fire escapes or spread

friendly. It ecomes


22/62

MERC

If the insured has a piece of property and th

y an insurance and the property has ee

the insured has to notify immediately thunnecessary delay, otherwise, the claim fo

denied

Wh is it that notice of loss should

unnecessar dela?

5or the protection of the insurer. S

can ta4e all the necessary ste

interest. If there is unnecessary d

used y the insurer to e@onerate its

There are policies that re=uire sumissi

proof

Sec. 7.When a preliminary proof of loss ithe insured is not ound to give such proof

in a court of -ustice ut it is sufficient for

evidence which he has in his power at the ti

Insofar as preliminary proof is concerned,

materials that the agent will furnished,

documents to e accomplished.

=UBLE INSURANE

Sec. 73. A doule insurance e@ists where the same

several insurers separately in respect to the same su-

Is dou#le insurance prohi#ited # law?


23/62

MERC

So that there will e an aut

whatever e@cess

-acultative 7einsurance

A voluntary reinsurance contract e

insurer from time to time when a n

)*ample:B insurer, a small insura

writing capacity is only for !6 (th

is determined y the capitaliatio

company is going to write a policy

to reinsure. Supposing there is an

of /6. B insurer cannot solely uhas to loo4 for reinsurer who are

the e@cess 1!6

In case of facultative reinsurance, whateve

informations that might have een receive

should e communicated y the reinsurer

separate policy. It is not an automatic cover

In a reinsurance contract1 is the original insu


24/62

MERC

)*ample:

the value of the vessel is !!6, the

and the owner was ale to recove

of the vessel can still recover frcompany !6 (partial)

9ut if the full value of the vessel

charterer or it is the assumption of

the vessel cannot recover an

insurance company

So only to the e@tent that the am

to receive from the charterer is d

the full value of the vessel is conc

insurale interest of the owner

0upposing the vessel is the su#%ect matter o,contract of #ottomr' does the owner of th

insura#le interest in the vessel? The goods

contract of #ottomr. What is the essence

#ottomr?

In a contract of ottomry, the los

the loss of the goods e@tinguishes t

There is a loan of 16, loan of ottomry,

the owner of the vessel is not liale

If there is a loan on #ottomr1 the vessel or

does the owner of the vessel or goods stinterest?

3es, to the e@tent that the am

ottomry is OO insofar as the valu

vessel is concerned

)*ample:if the vessel is worth /9 and the

is 19, the owner of the vessel has an i

e=uivalent to 19

But if the entire value of the vessel is cover

#ottomr1 does the owner of the vessel has i


25/62

MERC

Is there an difference or distinction #et

interpretation in marine as against other no

The application of the rules withare stricter.

Wh stricter?

9ecause in marine, the insurer d

opportunity to inspect the su-ect

may e in South America, the ow

will insure it in 6anila. There is

the vessel. The insurer -ust

representations made y the owne

The vessel had alread #een lost in the howner of the vessel does not have a

communication whatsoever that the vessel

this #e a su#%ect matter of marine insurance

3es, provided that the owner of t

good faith

This is an insurance covering a pas

for as long as the insured acted in g

Sec. !".In marine insurance, information of the eli

third person, in reference to a material fact, is material.

This is a mere information, e@pectationmarine insurance, if the insured has this 4i

he has to disclose it to the insurer

)*ample: the owner of the vessel receive

from a correspondent of a vessel re

conditions, this is material, ut this must e

the insurer y the insured despite of th

information which the insured has no actu

merely communicated to him

In ordinary non;life insurance, informati

third persons, the insured is not ound to di

/nother e*ample: the owner of the shipy

vessel. The shipyard owner told the owner

the vessel needs some repairs ecause cert

good for G months, this 4ind of information

must e communicated to the insurer.

Sec. !!". A concealment in a marine insurance, in

following matters, does not vitiate the entire

e@onerates the insurer from a loss resulting from the ri

(a)

The national character of the insured

()

The liaility of the thing insured to capture

(c) The liaility to seiure from reach of foreig

(d)

The want of necessary documents


"age 8 /$

een the rules on

"life insurance?

espect to marine

es not have the

atter. The vessel

ner of the vessel

o way to inspect

relies on the

r of the vessel.

igh seas1 #ut the knowledge or

as #een lost. !an

?

e vessel acted in

t event. It is valid

ood faith

ef or e@pectation of a

or elief, ut ind of information,

d communication

garding weather

communicated to

e fact that such

al 4nowledge ut

n received from

sclose the same.

rd inspected the

of the vessel that

ain parts are only

is material which

espect to any of the

ontract, ut merely

4 concealed

nd detention

n laws of trade

(e) The use of false and si

!ases where concealmen

entire contract

(a)

The national char

() The liaility of

detention

(c) The liaility to sei

trade

(d) The want of nece

(e) The use of false a

Any misrepresentation rel

of the entire contract not

cause of the loss . . .

Sec. !!.The eventual falsity ofin the asence of fraud, avoid a c

The e@pectation disclose

and it did not materialie

insurance, in the asence

We said that warranties

This is different from repr

found in the policy. There

the e@press and the implie

In fire insurance1 is there a


26/62

MERC

It does not refer merely to the 4ind of OO t

ut it include OO OO. %i4e for e@ample, the v

a complete complement as prescrie in its

registration says that the vessel should havcomplements.

If the master of the vessel does not have

re=uired y law to ecome a master, t

seaworthy

The vessel is properly e=uipped with

necessary for navigation. That the vessel

provision for a particular voyage.

Sec. !!0.A warranty of seaworthiness e@tends not o

the structure of the ship itself, ut re=uires that it

provided with a competent master, a sufficient n

officers and seamen, and the re=uisite appurtenances

as allasts, cales and anchors, cordage and sails, food,

and other necessary or proper stores and implements f

With respect to seaworthiness of the vessel

factor that must e ta4en into account.

seaworthy insofar as ocean navigation is

river navigation, it is not seaworthy.

If the voyage re=uires not only open se

includes navigation to reach its destination

e seaworthy in oth odies of water.

How a#out the cargo? / cargo ma #e a

marine insurance. =oes seaworthiness of t

appl to cargo? This is a marine insurance c

=oes the implied warrant of sea worthines

cargo?

There is an implied warranty that

employed for shipment of my carg

if it turns out that the vessel is not

not e ale to collect

Sec. !!.When the ship ecomes unseaworthy durin

an insurance relates, an unreasonale delay in

e@onerates the insurer on ship or shipownerEs interest

loss arising therefrom.

When the vessel ecomes unseaworth

unreasonale delay in repairing, the

e@onerated

When should the vessel #e seaworth? =oe

of seaworthiness e*tend from point of dep

destination?

When the vessel leaves the p

seaworthy.


"age 8 /!

hat the vessel has

essel should have

egistration. If the

a master and /

the =ualification

at vessel is not

all instruments

carries sufficient

ly to the condition of

e properly laden, and

umer of competent

and e=uipment, such

water, fuel and lights,

or the voyage.

l, there is another

A vessel may e

concerned ut in

a navigation ut

, the vessel must

su#%ect matter of

he vessel likewise

vering the cargo.

likewise appl to

the vessel I have

is seaworthy. So

seaworthy, I may

the voyage to which

repairing the defect

from liaility from any

y and there is

insurer will e

s the re5uirement

arture to point of

ort, it must e

There must e

when the voyag

ecomes unsea

unreasonale del

So the re=uirem

long as there is

commences the v

the moment the

unreasonale del

o(age and deviation

Insofar as voage and d

cases of deviation:

Departure from c

usageThe first

fi@ed y

from tha

Departure from

advantageous ro

So in th

most n

route

nreasonale del

Commencement

Sec. !!.When the voyagis descried y the places

in one which conforms t

usage etween those place

Sec. !. If the course of

voyage insured y a marin

places specified, which to

would mean the most natu

Sec. !3. Deviation is a

insured, mentioned in the

in pursuing the voyage or

voyage.

A deviation may either e

When is it proper?Sec. !).A deviation is pro

(a) When caused

master nor the

()

When necessar

peril, whether o

(c) When made in

elief in its nece

(d) When made in

life or relieving

)*ample of no. 9 typhoon

roof that the vessel is seaworthy

was commenced. The moment it

orthy, the law says that no

ay in repairing the vessel.

nt of seaworthiness is met for as

a showing that when the vessel

oyage, it must e seaworthy. When

vessel ecomes unseaworthy, no

ay in repairing the same.

eviation is concerned1 there are

ourse of sailing fi@ed y mercantile

rule is you have to follow the route

mercantile usage, if you depart

t , there is deviation.

the most natural, direct and

te.

asence of mercantile usage, the

atural, direct and advantageous

ay in pursuing a voyage

of an entirely different voyage

contemplated y a marine insurance policyf eginning and ending, the voyage insured

the course of sailing fi@ed y mercantile

s.

sailing is not fi@ed y mercantile usage, the

e insurance policy is that way etween the

a master of ordinary s4ill and discretion,

ral, direct and advantageous.

departure from the course of the voyage

last two sections, or an unreasonale delay

the commencement of an entirely different

proper or improper.

per

y circumstances over which neither the

wner of the ship has any control

to comply with a warranty, or to avoid a

r not the peril is insured against

ood faith, and upon reasonale grounds of

ssity to avoid a peril or

ood faith, for the purpose of saving human

nother vessel in distress.


27/62

MERC

0uppose a vessel receives an 0$0 from ano

vessel make a proper deviation to help anot

Saving a vessel is not found in the e

there are human lives in that vesproper deviation

0upposing the vessel made an improp

improper deviation lasted for more that 9 h

mistake on the part of the master of the

than 9 hour1 it is improper deviation.

realied that the are deviating from the

corrected1 if the vessel is lost or damage a

deviation1 can the insured recover?

Any loss ta4ing place after impro

insurer is e@onerated. The improp

not e the cause of the loss.


28/62

MERC

/6 ut the insured may collect only for 1

the thing is agreed upon and the same is

policy that is a valued policy. With respe

valuation, the same is conclusive as etwthe asence of fraud.

If there is no valuation of the thing that is

policy, the same is an o'en 'olic(. What is

policy is only the amount of insurance.

insurance.


29/62

MERC

property is 14, you cannot recover more t

is recovery eyond the value of the proper

against the law. It ecomes a wagering cont

Insofar as fire insurance is concerned,

against is fire. In other words, if the pro@ima

fire, there is recovery. And the su-ect matt

In some cases, we may have what w

insurance?.

)*ample of e*tended fire insurance:

If there are other properties

insured that got damage or loss

occurrence of a fire, although no

insurance policy, these may e in

e@tended coverage. That is indirect

If it is a store, another indirect los

su-ect of fire insurance is profit lo

These are what we call e@tended coverage,

any provision relative to e@tended covera

damages caused y fire are recoverale.

direct losses

It is important also know that there are &

generall:

%ife


30/62

MERC

Without the consent of the insurer

Increases the ris4

Within the control the insured

0upposing the fire did not start in that

started in an ad%oin #uilding #ut it spread o

insured. In other words1 the cause of the

related to the alteration? Is the insurer lia#l

The insurer is not liale although t

unauthoried alteration

0upposing there is a limitation1 the #uildin

owner of the #uilding insured such #uildin

#eing leased. The #uilding was #eing used #

the polic1 there is a limitation as to the u

This was violated # the T)8/8T. Will the

the tenant #e considered also as a violation


31/62

MERC

There are policies where e@ceptions are

earth=ua4e, flood, typhoon or e@plosions a

the pro@imate is earth=ua4e, flood, typhoo

the immediate cause is fire, no recovercause should e hostile fire.

ASUAL6 INSURANE

!asualt InsuranceL it includes all forms of

from accident or mishap which are not i

4inds of policy

Sec. !+).Casualty insurance is insurance covering loss

accident or mishap, e@cluding certain types of loss w

are considered as falling e@clusively within the sco

insurance such as fire or marine. It includes, ut is not

liaility insurance, motor vehicle liaility insurance,

urglary and theft insurance, personal accident anwritten y non;life insurance companies, and other su

of insurance.

?@ample Insurance coverage of a motor ve

damage. This is casualty insurance

Aut


32/62

MERC

A claim may e made against one

If the victim is an occupant of a

shall lie against the insurer of the v

is riding, mounting or dismounting In any other case, the claim sha

insurer of the directly offending ve

%imited to 1!4

The same does not apply if the claim is da

The same applies only in cases of in-ury or d

SURE6SDI&

Sec. !+*.A contract of suretyship is an agreement whe

surety guarantees the performance y another party

oligor of an oligation or underta4ing in favor of a

oligee. It includes official recogniances, stipulations,

issued y any company y virtue of and under the pro

as amended y Act


33/62

MERC

Insured

Insurer

9eneficiary if any

The insured is considered the owner of the

who insured his life is the owner of the pol

for the rights appertaining to an owner of a

e can name eneficiaries, he can change

e is entitled to the cash surrender valu

from the insurer or use the policy as collat

his policy. These rights are limited or curta

irrevocale eneficiary.

What is an irrevoca#le #eneficiar?

When the insured waives e@pre

change the eneficiary and it is

policy

If that is the case, the insured can

eneficiaries he cannot get the cas

without he consent of the enefici

the same as collateral nor transfer

As irrevocale eneficiary, he cannot com

pay the premiums. The irrevocale enefic

paying the premiums.

%ife insurance is also an e@ception to the ca

In life insurance, there is what we call a grac

Insurale interest in the life of the enefic

insurale interest.

Insurale interest in life should e@ist upon i

not necessary at the time of loss


34/62

MERC

They are classified as common car

have limited clientele. So it is not

mar4et is for the general pulic.

!olorum letDs sa some#od owns a ve

hire. Its services can #e engaged. The vehicl

one da for a particular trip. There is no c

convenience. Is a colorum a common carrie

owns a motor vehicle and he offers it for hir

common carrier?

It depends

The real distinction #etween a com

private carrier is this:

o44on carrier L owe

general pulic. The ge

employ the common carri

right. The common car

down the re=uest

&rivate carrier; although

choose his clients and t

common carrier

9ut if the colorum without a certificate of p

is offered to the general pulic so that any

and the same is a common carrier


35/62

MERC

9ut in this article, there is a presumption o

the in-ured party goes to court, he only n

way of evidence is the loss, damage or de

goods. There is already a presumption ofpart of the carrier.

What ma #e the defense of the carrier?

That they e@ercised e@traordinary d

In the matter of e*tra ordinar diligence

stipulate limiting the degree of diligen

e*traordinar? 0upposing that the voage is

like during the rain season. $ne of the con

carrier will e*ercise ordinar diligence and

diligence. !an the parties agree?

3es in a transportation of goods,

e signed y the shipper the consother than the service rendered

carrier 7easonale, -ust and not

policy.

Art. !+)). A stipulation etween the common carri

owner limiting the liaility of the former for the

deterioration of the goods to a degree less than e@tra

e valid, provided it e

(1)

In writing, signed y the shipper or owner

(/) Supported y a valuale consideration o

rendered y the common carrier and

(G) 7easonale, -ust and not contrary to pulic

There are & contracts of transportation Transportation of good

Transportation of persons

Parties in a contract of transportation

Noods the carrier and shipper or c

"ersons the carrier and the passen

In our stud of transportation law1

classification. This involves a contract of t

there are & o#%ects of the contracts:

Transportation of goods

Transportation of passengers

There is also what we call classification of

of carrier is #eing used in transportation:

9y land

9y sea

9y air

There is a part in this section in the new civ

common carriers, this transportation of goo

contract. When we spea4 of transportation

a contract of transportation.


"age 8 G$

negligence. So if

eeds to prove y

terioration of the

egligence on the

iligence

can the parties

ce to less than

5uite dangerous1

ditions is that the

not e*traordinar

ut the same must

ideration must ey the common

ontrary to pulic

r and the shipper or

loss, destruction, or

rdinary diligence shall

her than the service

olicy.

nsignee

ger

remem#er the

ansportation and

rticles1 what tpe

il code relative to

ds. This involves a

of goods, there is

What kind of contract is

transportation?

It may either e

If it is written contract of

contract ill of lading

The #ill of lading ma eith


36/62

MERC

There is a presumption of negligence not

transportation of goods ut also in the

person. In other words, in the case of

goods, the in-ured party or the plaintiff hacase there is loss, damage or deterior

presumption of negligence. The carrier was

In the case of transportation of persons, in

in-ury, there is a presumption of negligence

carrier.

As a general rule, negligence should e pro

on common carriers is an e@ception.

Art. !+)*. Any of the following or similar stipulatio

unreasonale, un-ust and contrary to pulic policy

(1)

That the goods are transported at the

shipper

(/) That the common carrier will not e

destruction, or deterioration of the goods

(G) That the common carrier need not oserv

custody of the goods

($)

That the common carrier shall e@ercise a d

than that of a good father of a family, or

prudence in the vigilance over the movales

(!) That the common carrier shal l not e resp

omission of his or its employees

(2) That the common carrierEs liaility for acts

or of roers who do not act with grave

violence or force, is dispensed with or dimin

(#) That the common carrier is not resp

destruction, or deterioration of goods on ac

condition of the car, vehicle, ship, airplanused in the contract of carriage.

There are certain Stipulations conside

unreasonale, un-ust and against pulic pol

reason, these stipulations are considered

effective or not valid.

What are these cases provided # law?

Noods transported are at the ris4 o

What does it mean?

Whatever e the pro@imate ca

damage or deterioration, it shall of the shipper, that is null and vo

pulic policy.

Item E1 supposing part of the goods were s

goods is entrusted to the carrier?

It depends

If there is evidence to that effect t

not act with irresistile cause or th

liale. 9ut if the carrier was

irresistile force or threat, the carri

if there is a stipulation that even


"age 8 G!

only in a case of

transportation of

transportation of

to prove only intion, there is a

t fault

case of death or

on the part of the

en ut in the law

s shall e considered

is4 of the owner or

liale for any loss,

e any diligence in the

egree of diligence less

of a man of ordinary

transported

nsile for the acts or

committed y thieves,

or irresistile threat,

ished

nsile for the loss,

count of the defective

or other e=uipment

red y law as

icy. And for which

null and void not

the shipper.

se of the loss,

e on the accountid, that is against

tolen.


37/62

MERC

If there is a stipulation in the ill of lading li

of the carrier and there is 4nowledge an

effect that the carrier refused to transport

the shipper agreed to that stipulation, the lstipulation shall e considered as null a

words the stipulation goes li4e this Fwe will

so much, ta4e it or leave itQ

Art. !+)+. If the common carrier, without -us

transportation of the goods or changes the stipulat

contract limiting the common carrierEs liaility cannot

the loss, destruction, or deterioration of the goods.

In this article, there is a stipulation limi

liaility ut there was a delay in the com

trip or there is a change in the stipulated r

change in the usual or customary route,

damage the provision regarding the limitat

may not e availed of y the carrier.

neutralied the limitation of the carrierDs lia

a delay in the commencement of t

there is a change in the stipulated r

there was a change in the usual or

Art. !+*".A contract fi@ing the sum that may e recov

shipper for the loss, destruction, or deterioration of th

reasonale and -ust under the circumstances, and has

agreed upon.

!an there #e an agreement limiting the lia

on a certain amount?The law says that it is valid pr

reasonale, -ust, ased on

circumstances

If the voage to #e undertaken is 5uit

voage' like transportation of goods to #

during the tphoon season. The carrier said

transport the goods in one condition1 if so

his lia#ilit shall not #e more than so much.

The same is valid if freely giv

reasonale in accordance

circumstances

There are various cases where under the la

allowed to limit his lia#ilit.Art. !+*!.The fact that the common carri

along the line or route, or a part thereof,

refers shall e ta4en into consideration

whether or not a stipulation limiting the co

is reasonale, -ust and in consonance with p

Supposing that a particular route is a mo

one transportation company and no com

will e ta4en consideration in

reasonaleness of a provision limiting the lia


"age 8 G2

miting the liaility

evidence to the

the goods unless

aw says that suchd void. In other

only e liale for

cause, delays the

d or usual route, the

e availed of in case of

ting the carrier0s

encement of the

oute, there was a

in case of loss,

ion of the liaility

o these 3 cases

ilit:

e trip

oute

ustomary route

ered. y the owner or

e goods is valid, if it is

een fairly and freely

ilit of the carrier

ovided that it is

the attendant

dangerous ,sea

Batanes islands

the he is willing to

ething happens1

n and -ust and

with attendant

w1 there carrier is

ier has no competitor

to which the contract

on the =uestion of

mon carrierEs liaility

ulic policy.

opoly route of a

etitor, the same

etermining the

ility.

Art. !+*. ?ven when there is

common carrier in the vigilanc

disputaly presumed to have e

or deterioration.

In this article, the stipul

effect, the presumption o

is a presumption limitin

presumption of negligencArt. !+*). The provisions of

passengerEs aggage which is n

employee. As to other aggage,

concerning the responsiility of

nder Art 1#!$, the law

remain in possession of t

aggage in transit to the c

5or aggage in transit to t

(1#GG;1#2G) will apply

5or aggage remains in t

employees, the provision

4eepers shall apply. The

necessary depositaries. I

deposit.

What degree of diligence s

It is no longer e

liaility of the carcarrier anymore.

Regarding trans'ortation

applica#le to transportati

%and common ca

the primary law i

is the code of co

0upposing it is not a co

what law shall appl?

The provision of t

0upposing it involves tran

shall appl? !ommon

transportation

If it is coastwis

archipelago), the

common carriers

commerce.

If it is from a &

laws of the count

If it is from forei

code is the prima

an agreement limiting the liaility of the

e over the goods, the common carrier is

n negligent in case of their loss, destruction

ation limiting the liaility will not

f negligence. 9y the fact that there

g the liaility of the carrier, the

remains.rticles 1#GG to 1#!G shall apply to the

ot in his personal custody or in that of his

the rules in Articles 1' and / to /G

otel;4eepers shall e applicale.

spea4s of / cases, aggage which

e shipper or of his employees and

rrier.

he carrier, the provision of the law

e possession of the shipper or his

s of the new civil code on hotel

carrier should e considered as

will e considered as a necessary

hall #e measured?

traordinary diligence ecause the

rier in that situation is not that of a

of 'assenger, what are the laws

n of passenger?

rrier in an overland transportation,

s the civil code. The suppletory law

merce

mon carrier #ut a private carrier1

he civil code on contracts

portation # sea1 what law or laws

carriers ,vessel' involving sea

e s


38/62

MERC

the carriage of goods y sea act

law.

How a#out /ir travel? =o4estic$ civil code on commo

primary law

International$ civil code on comm

primary law. The warsaw co

suppletory law

Art. !+**.A common carrier is ound to carry the pas

human care and foresight can provide, using the ut

cautious persons, with a due regard for all the circumst

The / principles discussed earlier is

transportation of passengers

What kind of contract is a contract of

passengers? =oes the law prescri#e an p

for the contract of transportation of passen

The law does not provide

The contract may either e written

e@press or implied

Who is a passenger?

A "assenger is a person who

consent of the carrier to travel i

provided y the latter otherwise t

the carrier as such

e is the one who underta4es

transported y a conveyance provi

with the consent of the carrier.

Any person who entrust himself t

operating a carrier with the conse

transportation in a particular place

passenger.

!an ou #e classified as a passenger if

ticket? Is a ticket necessar in order thac5uired the categor of a passenger under

A tic4et is not necessary to =uali

although it may e an evidence

transportation

How a#out pament of the fare? Is a p

necessar element or essential condition

person ma 5ualif as a passenger in the e

"ayment of fare is not necessary to

passenger may e a gratuito

passenger may e allowed to ride f


"age 8 G#

is the suppletory

n carriers is the

on carriers is the

vention is the

engers safely as far as

ost diligence of very

ances.

also applied in

transportation of

articular contract

er?

or oral. It may e

underta4es with

the conveyance

hat the service of

or agrees to e

ed y the carrier,

o another person

t of the latter for

of destination is a

u do not have a

t a person mathe law?

y as a passenger

of a contract of

ment of a fare

in order that a

s of the law?

=ualify ecause a

s passenger. A

r free

/ passenger ma either #e

"aying passenger

Nratuitous passe

When does a person #ec

#ecomes a passenger wh

after #oarding the veh

passenger even #efore #o

Actual oarding

the contract of tr

The issuance of the tic4

eginning of the com

transportation.

The payment of the far

commencement of the co

When does the contrac

commence?

The contract

commences wh

himself under t

consent of the lat

)*ample: when a person

goes to the us terminal,

us terminal, and goes to

person is already consie@traordinary diligence

in the us station, there is

intention, he already pla

carrier.

8owadas1 there is what

ticket 3 months ahead for

contract of transportation


39/62

MERC

It depends, if the transportation

his employee a certain amount fo

from the office (he is paying som

deduction), he is a passenger

9ut if it is asolutely for free, as pa

is not a passenger, he is an emplo

may, although he is not classified a

fact remains that he has the prot

insofar as the e@ercise of e@traor

concerned. In other words, emplo

e@traordinary diligence insofar as

concerned although he is no

passenger

The 4ind of passenger involve in a contract

is immaterial insofar as the / general pricommon carrier is concerned.

It is not a defense on the part of the carri

non;paying passenger and hence the carri

oserve e@traordinary diligence. The carrie

e@traordinary diligence is for paying passe

against pulic policy

The re=uirement of the law that a co

oserves e@traordinary diligence in its

oligation as an oligor or conveyor appli

non;paying passengers

If a passenger is in-ured or dies caused y

the common carrier, the in-ured p

presumption of negligence. The only thin

party has to proved is evidence that the pa

or has died. The urden of proof t

presumption is on the part of the carrier.

prove that he e@ercised e@traordinary dilige

The / general principles that we have disc

in Art 1#!! and 1#!2

Art. !+**. A common carrier is ound tosafely as far as human care and foresight

utmost diligence of very cautious persons,

all the circumstances.

Art. !+*0.In case of death of or in-uries to

carriers are presumed to have een at f

negligently, unless they prove that they o

diligence as prescried in Articles 1#GG and

Art 1#!! spea4s of e@traordinary diligence

transportation of passengers.

What kind of contract is a contract of trans

consider this as a consensual contract or


"age 8 G'

company charges

r the ride to and

thing or a salary

rt of the per4s, he

yee. 9e that as it

s a passenger, the

ection of the law

inary diligence is

yer shall e@ercise

his employee is

t considered a

of transportation

ciples relating to

er that you are a

r is not ound to

r cannot say that

gers only. That is

mon carrier still

discharge of its

es to paying and

the negligence of

rty en-oys the

that the in-ured

ssenger is in-ured

overcome this

he carrier should

ce.

ssed is contained

carry the passengersan provide, using the

with a due regard for

passengers, common

ult or to have acted

served e@traordinary

#!!.

ith respect to the

portation? =o we

a real contract?

When does a contract of t

the consent? The moment

parties?

Strictly spea4ing,to causes of a

transporting of t

not delivered hi

there is no contra

When does the contract

upon #oarding the carrie

passenger inside the carri


40/62

MERC

the goods are alread loaded in the carrier

or even #efore?

?ven efore the loading of the go

the duty of e@traordinary diligencmoment the shipper has delivered

goods to the possession of the car

is going to leave for tomorrow or

e@ample, and the shipper delivere

carrier and it was stored in the

carrier, the duty of e@traordinary

e@ist.

If there is transshipment and the goods

stored pending transshipment, the duty

diligence susist.

In transportation of goods1 when does itupon arrival of the goods to the point of des


41/62

MERC

This liaility of the common carriers does not cease

e@ercised all the diligence of a good father of a famil

supervision of their employees.

%i4e in a us, there is a driver and a conduct

0upposing1 in a #us station1 there was a

5uarrel #etween & passengers within the pr

drivers of the #us compan arrives and he tr

5uarreling parties. In solving the issue1 h

them. =id the #us driver acted within

authorit?


42/62

MERC

he survived. According to the mortality rat

years, how much could he earn net income

/ years>

There is what we call unrealied pmortality rate.

Is the carrier lia#le for moral damages?

With respect to moral damages, there

There are onl & instances where a pa

to moral damages:

In case of death

When the carrier is guilty of f

even though death did not res

in-ury, the law =ualifies, there

on the part of the common car

This is different from culpa a=uilana, even ior ad faith, the in-ured party is entitled t

ut if the cause of action is culpa contract

not a ground for moral damages, it must

with ad faith or fraud.

If a passenger is in%ured or died1 there are

of action:

Culpa contractual ased on

transportation

Culpa A=uilana ased on tortuous a

Culpa Criminal ased on a penal cla

The choice elong to the in-ured party

If the cause of action is culpa contractual1

transportation compan1 @ is a passenger1

of the #us. There was an accident. @ got in

contractual1 who will #e the respondents?

B, the transportation company L th

Will ou include the driver if the cause

contractual?

e cannot e included, he is n

contract of transportation.

So of the cause of action availed of

is culpa contractual, there is onl

and that is the common carrie

cannot include the driver ecause

privy to the contract of transportat

0upposing the cause of action is culpa a5u

the respondents? !an the driver #e include

of culpa a5uilana?

3es, ecause there is what we calle

?mployer and employee are solidar


"age 8 $1

, he may have /

early for the ne@t

ofit ased on the

is a =ualification.

senger is entitled

raud or ad faith

ult. So if there is

must e ad faith

rier

there is no fraudo moral damages

al, in-ury alone is

e accompanied

availa#le causes

he contract of

ct

use

letDs sa is the

the K is the driver

ured. If it is culpa

e carrier

f action is culpa

t a privy to the

y the passenger

one respondent

r, the passenger

he driver is not a

ion

ilana1 who will #e

if the case is one

d -oint tortfeasor.

ily liale. So if it is

culpa a=uilana, it

respondents

If it is culpa criminal1 #respondents?

The driver ut in

the carrier is su

driver is convicte

is susidiary lial

The difference #etween cu

ul'a ontractua

a contract

ul'a AGuiliana

or omission, th

damage or in-ury

ul'a ontract

e@traordinary dili

to asolve the ca

ul'a AGuiliana

diligence of good

and supervision o

ul'a ontractu

negligence (contr

ul'a AGuiliana

negligence. 3ou h

ul'a ontractua

a passenger to re

there must e fra

ul'a AGuiliana

faith, moral da

ad faith or fraud

ERLAN= RANS&RA

The code of commerce

waterways transportation

transportation y air.

Wh is there no provision

transportation # air?

9ecause when t

to law, it was ye

for commercial tr

9ut nonetheless,

provision in overl

may have su

transportation is

is the carrier and the driver are the

sed on the 7P!1 who will #e the

sofar as civil liaility is concerned,

sidiary liale. nder the 7"C, if the

d and he is insolvent, the employer

.

lpa contractual and culpa a5uiliana

lL there is an agreement. There is

there is no agreement. It is an act

re eing no agreement, causing

to another, that is a tort.

al 5 in matter of diligence,

gence (contract of transportation)

rier

L to asolve the employer, due

father of a family in the selection

f its employees, that is a defense

al L there is a presumption of

act of transportation)

L there is no presumption of

ave to prove negligence

lL in matter of moral damages, for

cover moral damages in case in-ury,

ud or ad faith

there is no need for fraud or ad

ages is recoverale even without

IN ode of o44erceF

pea4s of overland transportation,

and maritime commerce ut never

in the code of commerce relative to

e code of commerce was enacted

r 1''. Airplanes are not yet used

ansportation during that time.

the SC said, the


43/62

MERC

ARILE 3)7. A contract of transportation y land

4ind shall e considered commercial

1. When it has for its o-ect merchandi

commerce./.

When, whatever its o-ect may e, the carr

haitually engaged in transportation for the

9?5+7? the If

we apply the code of commerce. If it is civil,

code

This dual system has een aandoned

commission when they drafted the 1!


44/62

MERC

It is considered as a receipt meani

of the receipt of the goods y the c

of the functions of a ill of lading.

It can e considered as a contract the terms and conditions. If there

involving the terms and cond

evidence is the ill of lading

4aterial matters contained in a #ill of ladin

Description of the OO

Terms and conditions

ow much is the freightage

Who is the consignee

"lace of departure

"lace of destination

The code of commerce speaks of & kinds of B


45/62

MERC

law on common carrier in the


46/62

MERC

other carriers who may have received the goods

reservation.

owever, the reservation made y the latter shall not

responsiilities which they may have incurred y their

In this article, there is what we call Ftransp

y comined carriersQ

When there is transportation of goods y c

there is what we call FtransshipmentQ

If there are / carriers, there is a transshipm

to the second. It may even involved G carrie

from /nd

to Grd

The code of commerce is ver clear in /rt

lia#le? /ssuming that there are 3 carriers inB and !. If there are 3 carriers involved1 who

The last carrier, the carrier who d

may e held liale y the consigne

the last carrier was not the neglig

without pre-udice to the right of

hold the guilty carrier liale.

In spite the fact that the law says t

shall assume the responsiility, th

pre-udice to right of the consignee

of them. So either A, 9 or C ca

consignee

Rig


47/62

MERC

Affidavit of good faith must e registered

third persons

How is ownership ac5uired over a vessel?Any of the mode provided for

ac=uisition of property e it real

apply to the ac=uisition of vessels

nder the code of commerce, possession in

G years continuously with a good title tha

ownership, in any other case, continuous

years. With respect to a captain of the ves

the vessel cannot ac=uire the vessel y pres

Article *+3. 6erchant Jessels constitute property w

and transferred y any of the means recognied y la

vessel must appear in a written instrument, which

effect with respect to third persons if not inscried in t

The ownership of a vessel shall li4ewise e ac=uired

faith, continued for G years, with a -ust title duly record

In the asence of any of these re=uisites, continuous p

shall e necessary in order to ac=uire ownership.

A captain may not ac=uire y prescription the ves

command

There are several provisions governing

vessels. 7ight now, vessels are co;owned y

vessel may e co;owned y / or more

management shall e that through a resowners. 6a-ority vote of the co;owners

A7TIC%? !'. If two or more persons should e part

vessel, a partnership shall e presumed as estalished

This partnership shall e governed y the resolutions

memers.

If the part owners should not e more than two, the d

if any, shall e decided y the vote of the mem

interest. If the interests are e=ual, it should e decided

The person having the smallest share in the ownershi

and proportionately the other part owners as many vo

e=ual to the smallest one.

!an a co"owner assume the position of capt

3es. nder the code of commerce

=ualified to occupy that positio

should e given preference

5or whatever e the vessel figured in an ac

conduct of the captain, indemnity is OOO in f

arose, the partners are liale in proportion

co;ownership


"age 8 $2

in order to ind

y law with the

or personal will

good faith within

t will give rise to

possession for 1

el, the captain of

ription.

hich may e ac=uired

. The ac=uisition of a

hall not produce any

e registry of vessels

y possession in good

ed

ssession for ten years

sel of which he is in

co;ownership of

ig companies. A

persons and the

lution of the co;

wners of a merchant

y the co;owners.

of the ma-ority of the

isagreement of views,

er having the largest

y lot.

p shall have one vote

tes as they have parts

in of the vessel?

, if a co;owner is

, that co;owner

ident or with the

avor of Grd

person

f the share in the

ARILE *7".The co;owners of a

of their interests in the comm

captain, referred to in Article !'#

?ach co;owner may e@empt himefore a notary, of the part of th

ARILE *+.The ship agent sh

favor of third persons which may

care of the goods which he load

therefrom y aandoning the v

it may have earned during the vo

In maritime commerce1

participating in maritime c

The owner of the

Ship agent

Captain of the ve

+ther officers an

Ship owner has the right o

Ship agent, -ust li4e in a c

mere e@tension of the per

and in ehalf of his princip

!an the agent act alone in

e cannot, he ha

not disclose his p

In ordinar agenc in 8!!1The agent is a m

the principal. So

powers given to

within the power

is not personally l

Is an agent su#sidiaril lia

no

+nder the maritime laws1

Is the concept the same as

Art !'2, !'# m

shipping agent

ARILE *0.The shipowner an

acts of the captain and for the o

e=uip, and provision the vess

amount claimed was invested fo

9y ship agent is understood t

representing the vessel in the po

So rememer, the owner

practically on e=ual footin

%iale for the contracts o

contract redound for the

vessel shall e civilly liale in the proportion

n fund, for the results of the acts of the

.

self from this liaility y the aandonment,e vessel elonging to him.

ll also e civilly liale for the indemnities in

arise from the conduct of the captain in the

d on the vessel ut he may e@empt himself

ssel with all her e=uipments and the freight

yage.

who are the important persons

ommerce?

vessel

sel

crew

f dominion.

ntract of agency, the agent is -ust a

sonality of the principal. e acts for

al

his own name?

to disclose his principal. If he does

incipal, he is liale

is the agent personall lia#le?ere e@tension of the personality of

much so, if he does not e@ceed the

him, he acts in accordance and

granted to him y his principal, he

iale.

le in case his principal fails to L?

hat is the concept of a ship agent?

what in the 8!!?

ntioned aout the liaility of the

the ship agent shall e civilly liale for the

ligations contracted y the latter to repair,

l, provided the creditor proves that the

the enefit of the same.

he person entrusted with provisioning or

rt in which it may e found.

nd the ship agent is liale, they are

g. %iale for the acts of the captain.

f the captain unless the same said

enefit of the vessel, the shipping


48/62

MERC

agent in maritime commerce assumes prim

as the shipowner

Wh is there a difference #etween the lia#ian ordinar contract of agenc under 8!

commerce?

9ecause of the peculiar nature

operating a merchant vessel. In ma

the vessels have ship agents in ev

they go. The ship agent ta4es of t

the vessel. If there are e=uipment

ac=uired, the ship agent needs it

ship owner. The manning of the v

the crew and the master of the

elongs to the ship agent.

The ship agent is the one who swhenever the shipowner is not a

cannot e readily attached or levi

the vessel is in one port. What is t

other part? -or e*ample1 the vess

While it was is south /merica1 ther

damages was incurred1 the guilt p

to make repairs. How can the innoc

/merica1 get hold of the vessel?

They have to hold the ship

!onsidering the responsi#ilit of the shippin

#e the remed of the ship agent in case hlia#le?

The remedy provided for y la

aandonment or right of reimurs

The shipping agent is given y

aandon the vessel including its

himself from liaility

The shipping agent, if he is made

reimursement from the ship own

What are the lia#ilities of the shipowner an

ARILE *0. The shipowner and the shipliale for the acts of the captain and for the

y the latter to repair, e=uip, and provisio

the creditor proves that the amount claime

enefit of the same.

9y ship agent is understood the pe

provisioning or representing the vessel in th

e found.

ARILE *+. The ship agent shall also

indemnities in favor of third persons whic

conduct of the captain in the care of the g

on the vessel ut he may e@empt h

aandoning the vessel with all her e=uipm

may have earned during the voyage.


"age 8 $#

ary liaility, same

lit of an agent inand in maritime

of the usiness

ritime commerce,

ry port wherever

e provisioning of

s necessary to e

to clear with the

ssel, the hiring of

vessel, that -o

igns the contractound. The vessel

ed upon ecause

he securit of the

l is 4anila #ased.

e was an incident1

art was not a#le

ent part in 0outh

ping a

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Marx Notes - Mercantile Law Review 2 (Dimayuga)

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