MARITIME LAW

GENERAL CONCEPTS
 MARITIME LAW
■ It is the system of laws which particularly relates to the affairs of the
sea, to ships, their crews and navigation, and to marine conveyance of persons
and property.
■ Governing laws:
– New Civil Code;
– Code of Commerce;
– CA 65, or the Carriage of Goods by Sea Act;
– PD 474, “Providing for the Reorganization of Maritime Functions
in the Phil., Creating the MARINA and for other Purposes”;
– RA 1937, Tariff and Customs Code;
– Act 2616, Salvage Law.
 MARITIME LAW –
Real and Hypothecary Nature
■ That which distinguishes the maritime from the civil law and even from the
mercantile law in general.
■ This simply means that the liability of the carrier (vessel owner and
agent) in connection with losses related to maritime contracts (or arising
from operation of such vessel) is confined (or limited) to the vessel (as well
as its equipment, freight, insurance, if any).
■ It has its origin by reason of the conditions and risks attending maritime
trade in its earliest years when such trade was replete with innumerable and
unknown hazards since vessels had to go through largely unchartered waters to
ply their trade; it was designed to offset such adverse conditions and to
encourage parties to venture into maritime commerce despite the risks and
prohibitive costs.
VESSELS
 VESSEL, defined
■ It is any barge, lighter, bulk carrier, passenger ship freighter, tanker,
container ship, fishing boats, or other artificial contrivance utilizing any
source of motive power, designed, used or capable of being used as a
means of water transportation operating either as common contract carrier,
including fishing vessels covered under PD 43, except:
i. Those owned and/or operated by the Armed Forces of the
Philippines and by foreign governments for military purposes, and
ii. Bancas, sailboats and other waterborne contrivance of less than
three gross tons capacity and not motorized.
(Section 3 [b], PD 474)
VESSEL, defined
“… only vessels engaged in what is ordinarily known as maritime
commerce are within the provisions of law conferring limited liability on
the owner in case maritime disaster. xxx the word ‘vessel’ in these codes is
limited to ships and other sea-going vessels.
XXX
It is therefore clear that a passenger on a boat like the Jison, in the case
before us, is not required to make protest as a condition precedent to his
right of action for the injury suffered by him in the collision described in
the complaint. In other words, article 835 of the Code of Commerce does
not apply. xxx”
(Lopez v. Duruelo, 1928)
VESSELS: General Concepts
■ Construction, Equipment and Manning
– Article 574, Code of Commerce
■ Considered as Personal Property
– Article 585, Code of Commerce
■ Ownership; How acquired
– Article 573 (Acquisition/Prescription), 575 (Repurchase and
redemption by co-owners), 576 (Inclusions), 577 (Rule on
Freightage, etc.), 578-579 (Judicial and Voluntary Sale), Code of
Commerce; Article 712, Civil Code
■ Registration
– With the MARINA; Article 573, Code of Commerce; Rubiso v.
Rivera (1917)
VESSELS: General Concepts
“Article 573 of the Code of Commerce provides, in its first paragraph:
Merchant vessels constitute property which may be acquired and transferred by any of the means recognized by law. The
acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third
persons if not recorded in the commercial registry.
So that, pursuant to the above-quoted article, inscription in the commercial registry was indispensable, in order that said
acquisition might affect, and produce consequences with respect to third persons.
However, since the enactment of Act No. 1900, on May 18, 1909, said article of the Code of Commerce was amended, as appears
by section 2 of that Act, here below transcribed.
The documenting, registering, enrolling, and licensing of vessels in accordance with the Customs Administrative Act and
customs rules and regulations shall be deemed to be a registry of vessels within the meaning of the title two of the Code of
Commerce, unless otherwise provided in said Customs Administrative Act or in said customs rules and regulations, and the
Insular Collector of Customs shall perform the duties of commercial register concerning the registering of vessels, as defined in
title two of the Code of Commerce.
The requisite of registration in the registry, of the purchase of a vessel, is necessary and indispensable in order that the
purchaser's rights may be maintained against a claim filed by a third person. Such registration is required both by the
Code of Commerce and by Act No. 1900. The amendment solely consisted in charging the Insular Collector of Customs, as at
present, with the fulfillment of the duties of the commercial register concerning the registering of vessels; so that the registration
of a bill of sale of a vessel shall be made in the office of the insular Collector of Customs, who, since May 18, 1909, has been
performing the duties of the commercial register in place of this latter official.”
(Rubiso v. Rivera, 1917)
PERSONS WHO TAKE
PART IN MARITIME
COMMERCE
 SHIPOWNERS AND SHIP AGENTS
■ Shipowner
➢ the owner of the vessel;
➢ the person liable for acts of the captain and for damages in the
operation of the vessel (Art. 586)
■ Ship Agent
➢ the person:
a) entrusted with provisioning of the vessel, or
b) who represents the vessel in the port in which it may be found
(Art. 586)
➢ also liable for acts of the captain and for damages in the operation of
the vessel (Art. 586)
 SHIPOWNERS AND SHIP AGENTS
■ Shipowner and Ship Agent
– Not liable for the obligations contracted by the
captain if the latter exceeds his powers and
privileges pertaining to him by reason of his
position or conferred upon him by the former
(Art. 587)
– Liable if the amounts claimed were made use of
for the benefit of the vessel (Art. 587)
SHIPOWNERS AND SHIP AGENTS
“…Who is the person, or persons, who are liable to make good this loss, and what are the conditions under
which the action can be maintained?
That the owner of the ship is a person to whom the plaintiff in this case may immediately look for
reimbursement to the extent above stated is deducible not only from the general doctrines of admiralty
jurisprudence but from the provisions of the Code of Commerce applicable to the case. It is universally
recognized that the captain is primarily the representative of the owner; and article 586 of the Code of
Commerce expressly declares that both the owner of the vessel and the naviero, or charterer, shall be civil
liable for the acts of the master. In this connection, it may be noted that there is a discrepancy between the
meaning of naviero, in articles 586 of the Code of Commerce, where the word is used in contradistinction to
the term "owner of the vessel" ( propietario), and in article 587 where it is used alone, and apparently in a
sense broad enough to include the owner. Fundamentally the word "naviero" must be understood to refer to
the person undertaking the voyage, who in one case may be the owner and in another the charterer. But this is
not vital to the present discussion. The real
point to which we direct attention is that, by the express provision of the Code, the owner of the vessel is
civilly liable for the acts of the captain; and he can only escape from this civil liability by abandoning
his property in the ship and any freight that he may have earned on the voyage (arts. 587, 588, Code of
Comm.).” (Standard Oil v. Lopez, 1921)
 SHIPOWNERS AND SHIP AGENTS
■ Ship Agent
– Civilly liable for indemnities in favor of third persons
which arise from the conduct of the captain in the care
of the goods which the vessel carried (Art. 587); The
term "ship agent" as used in Art. 587 is broad enough
to include the ship owner (Standard Oil Co. vs. Lopez
Castelo, 42 Phil. 256 [1921]).
– Qualifications: Must be qualified to trade, and must be
recorded in the merchant's registry of the province
(Art. 595)
SHIPOWNERS AND SHIP AGENTS
“Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with
provisioning or representing the vessel in the port in which it may be found."
Hence, whether acting as agent of the owner of the vessel or as agent of the charterer, petitioner will
be considered as the ship agent and may be held liable as such, as long as the latter is the one that
provisions or represents the vessel.
xxx
As ship agent, it may be held civilly liable in certain instances. The Code of Commerce provides:
"Article 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and
for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the
creditor proves that the amount claimed was invested for the benefit of the same."
"Article 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons
which may arise from the conduct of the captain in the care of the goods which he loaded on the
vessel; but he may exempt himself therefrom by abandoning the vessel with all her equipments and
the freight it may have earned during the voyage.".” (Macondray v. Provident, 2004)
SHIPOWNERS AND SHIP AGENTS
■ Ship Agent: Powers and Duties
– Represent ownership of vessel, and may, in his own name and in such capacity take
judicial/extrajudicial steps in all that relates to commerce (Art. 595)
– Discharge the duties of the captain, if qualified (Art. 596)
– Select the captain; enter into an agreement with the captain; contract in the name of
the owners (Art. 597)
– If so authorized, order a new voyage, make contracts for a new charter, insure the
vessel (Art. 598)
– Render an account of the results of the voyage (Art. Art. 599)
– Give the profits due the co-owners (Art. 601)
– Indemnify the captain for all the expenses incurred from his own funds or from other
persons, for the benefit of the vessel (Art. 602)
– Discharge, at his discretion, the captain and members of the crew (Art. 603-607)
DOCTRINE OF LIMITED LIABILITY
“…both the ship owner and ship agent are civilly and directly liable for the indemnities in favor of third persons, which
may arise from the conduct of the captain in the care of goods transported, as well as for the safety of passengers
transported…
However, under the same Article, this direct liability is moderated and limited by the ship agent's or ship owner's
right of abandonment of the vessel and earned freight. This expresses the universal principle of limited liability
under maritime law. The most fundamental effect of abandonment is the cessation of the responsibility of the ship
agent/owner (Switzerland General Insurance Co., Ltd. vs. Ramirez, L-48264, February 21, 1980, 96 SCRA 297). It has
thus been held that by necessary implication, the ship agent's or ship owner's liability is confined to that which he is
entitled as of right to abandon the vessel with all her equipment and the freight it may have earned during the
voyage," and "to the insurance thereof if any" (Yangco vs. Lasema, supra). In other words, the ship owner's or
agent's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its
extinction. "No vessel, no liability" expresses in a nutshell the limited liability rule. The total destruction of the
vessel extinguishes maritime liens as there is no longer any res to which it can attach (Govt. Insular Maritime Co.
vs. The
Insular Maritime, 45 Phil. 805, 807 [1924]).
As this Court held:
If the ship owner 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...” (Chua Yek Hong v. IAC, 1988)
DOCTRINE OF LIMITED LIABILITY
ABANDONMENT
■ It is equivalent to an offer of the value of the vessel, her
equipment and freight earned in return for an exemption from
liability.
■ It is an indispensable requirement before the shipowner or ship
agent may enjoy the benefits of the doctrine of limited liability.
■ It can only be made by the shipowner and the ship agent.
■ When abandonment is made in the instances provided by law, it
cannot be refused.
 DOCTRINE OF LIMITED LIABILITY

■ Statutory provisions: Articles 587, 590, 643, 837,

Code of Commerce
■ Articles 837, 587, and 590 cover only:
1. Liability to third persons;
2. Acts of the Captain;
3. Collisions.
DOCTRINE OF LIMITED LIABILITY
LIABILITIES TO THIRD PERSONS
ACTS OF THE CAPTAIN
Article 587: The ship agents shall be civilly liable for the indemnities in favor of third persons which arise from the
conduct of the captain in the care of the goods which the vessel carried.
He may exempt himself therefrom by abandoning the vessel with all her equipments and the freightage it may have
earned during the voyage.
Article 590:
The co-owners of the vessel shall be civilly liable in the proportion of their contribution to the common fund for the
results of the acts of the captain, referred to in Article 587.
Each co-owner may exempt himself from this liability by the abandonment, before a notary, of that part of the vessel
belonging to him.
COLLISIONS
Article 837:
The civil liability incurred by the shipowners in the cases prescribed in this section, shall be understood as
limited to the value of the vessel with all her appurtenances and freight earned during the voyage.
DOCTRINE OF LIMITED LIABILITY
“xxx
The limited liability rule, however, is not without exceptions, namely:
– where the injury or death to a passenger is due either to the fault of the
ship owner, or to the concurring NEGLIGENCE of the ship owner and
the captain (Manila Steamship Co., Inc. v. Abdulhaman) ;
– where the vessel is INSURED; and
– in WORKMEN'S COMPENSATION CLAIMS (Abueg v. San Diego).”
(Chua Yek Hong v. IAC, 1988)

Also:
– for liability of owner for repairs of the vessel completed before its loss.
(Gov. v. Maritime, 45 Phil 805)
DOCTRINE OF LIMITED LIABILITY
Salient points in Aboitiz v. GAFLAC (1993):
■ The “‘(l)imited liability’ issue (on) … package limitation clauses in the bills of
lading” is different from “the limited liability doctrine arising from the real and
hypothecary nature of maritime trade”.
■ “(I)t could not have been (properly) made (as a defense) since it (is) not relevant...
The only time it could come into play is when any of the cases involving the mishap
were to be executed... Then, and only then, could the matter have been raised”.
■ “The rights of a vessel owner or agent under the Limited Liability Rule are akin to
those of the rights of shareholders to limited liability under our corporation law. Both
are privileges granted by statute, and while not absolute, must be swept aside only in
the established existence of the most compelling of reasons.”
DOCTRINE OF LIMITED LIABILITY
Salient points in Aboitiz v. GAFLAC (1993):
■ “…the rights of parties to claim against an agent or owner of a vessel
may be compared to those of creditors against an insolvent corporation
whose assets are not enough to satisfy the totality of claims as against
it...”
■ “In both insolvency of a corporation and the sinking of a vessel, the
claimants or creditors are limited in their recovery to the remaining value
of accessible assets. In the case of an insolvent corporation, these are the
residual assets of the corporation left over from its operations. In the case
of a lost vessel, these are the insurance proceeds and pending freightage for
the particular voyage.”
CAPTAINS AND MASTERS OF
VESSELS
CONCEPT:
■ Captain - one who governs vessels:
a. that navigate the high seas, or
b. of large dimensions and importance (although engaged in
coastwise trade).
■ Master - one who commands smaller ships engaged exclusively in the
coastwise trade.
For purposes of Maritime Commerce, “captain” and “master” have the
same meaning, both being the chiefs and commanders of vessels.
CAPTAINS AND MASTERS OF
VESSELS
QUALIFICATIONS:
1. Filipinos;
2. Have the legal capacity to contract in accordance with the law;
3. Must prove the skill, capacity, and qualifications necessary to
command and direct the vessel, as established by marine or navigation
laws, ordinances or regulations
4. Must not be disqualified according to the same, for the discharge
of the duties of the position.
(Art. 609, Code of Commerce)
 CAPTAINS AND MASTERS OF VESSELS
POWERS/FUNCTIONS/DUTIES:
“The captain of a vessel is a confidential and managerial employee within the meaning of the above doctrine. A
master or captain, for purposes of maritime commerce, is one who has command of a vessel. A
captain commonly performs three (3) distinct roles:
(1) he is a general agent of the shipowner;
(2) he is also commander and technical director of the vessel; and
(3) he is a representative of the country under whose flag he navigates.
Of these roles, by far the most important is the role performed by the captain as commander of the vessel;
for such role (which, to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day
corporate enterprise) has to do with the operation and preservation of the vessel during its voyage and the
protection of the passengers (if any) and crew and cargo. In his role as general agent of the shipowner, the
captain has authority to sign bills of lading, carry goods aboard and deal with the freight earned, agree upon rates
and decide whether to take cargo. The ship captain, as agent of the shipowner, has legal authority to enter into
contracts with respect to the vessel and the trading of the vessel, subject to applicable limitations established by
statute, contract or instructions and regulations of the shipowner. To the captain is committed the governance,
care and management of the vessel. Clearly, the captain is vested with both management and fiduciary functions.”
(Inter-Orient v. NLRC, 1994)
CAPTAINS AND MASTERS OF VESSELS
POWERS/FUNCTIONS/DUTIES:
➢ Article 610, Code of Commerce – Powers inherent in the position of the
captain/master/patron:
1. Appoint or make contracts with the crew;
2. Command the crew and direct the vessel;
3. Discipline or Impose punishment;
4. Make contracts for the charter of the vessel;
5. Adopt measures to maintain vessel;
6. Order repairs.
 CAPTAINS AND MASTERS OF
VESSELS
POWERS/FUNCTIONS/DUTIES:
➢ Article 612 – Obligations inherent in the office of the captain:
1. On detailed Inventory;
2. Copy of Code of Commerce;
3. On three books – log book, accounting book, and freight book;
4. On examination of vessel;
5. Remain on board;
6. Demand a pilot when required;
7. On deck;
8. Distress;
9. Record of vessel;
10. On papers and belongings of crew who died on vessel;
11. On his conduct in rel. to instructions of ship agent;
12. On arrival;
13. On collisions;
14. In case of danger;
15. In case of wreck;
16. On compliance with laws and regulations.
CAPTAINS AND MASTERS OF
VESSELS

POWERS/FUNCTIONS/DUTIES:
➢ Articles 622, 623, 624, 625, Code of Commerce
 CAPTAINS AND MASTERS OF VESSELS
MARITIME PROTEST: Article 624, Code of Commerce
Definition:
It is a written statement under oath, made by the captain or master of the vessel, after the
occurrence of an accident or disaster, in which the vessel or cargo is lost or injured, with respect
to circumstances attending such occurrence.
Purpose(s):
1. It is usually intended to show that the loss or damage resulted from:
a. a peril of the sea, or
b. some other cause for which neither the master or owner was responsible.
2. It concludes with the protestation against any liability of the owner for such loss or damage
CAPTAINS AND MASTERS OF VESSELS
MARITIME PROTEST:
When is a protest required?
1. Arrival under stress; (Art. 612 [8]);
2. Shipwreck (Arts. 612 [15], 843);
3. If the vessel has gone through a hurricane or where the
captain believes that the cargo has suffered damages or averages
(Art. 624); and
4. Maritime collision (Art. 835).
CAPTAINS AND MASTERS OF VESSELS
MARITIME PROTEST: Article 624, Code of Commerce
Procedure - Duties of the Captain whose Vessel has gone through a
hurricane or whose cargo has suffered damages or averages:
1. He shall make a PROTEST thereon before a competent authority at
the first port he touches within 24 hours following his arrival;
2. He must RATIFY it within 24 hours when he arrives at the place of
destination where he must proceed immediately with the proof of the facts;
3. He must not open the hatches until all of the above is done.
CAPTAINS AND MASTERS OF
VESSELS
PROHIBITED ACTS:
Articles 613, 615, 617, 621, Code of Commerce

LIABILITIES:
Articles 614, 615, 618, 619, 620, Code of Commerce

DURATION OF LIABILITY: Article 619, Code of Commerce

FROM – the time it is turned over to him at the dock or afloat along side the vessel
at the port of loading
UNTIL – he delivers it on the shore or on the discharging wharf at the port of
unloading
UNLESS –otherwise expressly agreed upon
 CAPTAINS AND MASTERS OF VESSELS
DISCHARGE BY SHIPOWNER OR SHIP AGENT:
Articles 603-607, Code of Commerce
Rules –
If their contracts did not state a definite period or a definite voyage:
Captain (and members of crew) may be discharged, at the discretion of the shipowner/ship
agent, without indemnity whatsoever -
▪ Before the vessel goes out to sea;
▪ They are paid their salaries earned according to their contracts.

If their contracts state a definite period or a definite voyage:

Captain (and members of crew) cannot be discharged until the fulfillment of the contract.
▪habitual drunkenness,
Except for reasons of: a. insubordination in serious matters; b. robbery; c. theft; d.
and e. damage caused to the vessel or to its cargo, by malice or
manifest/proven negligence.
CAPTAINS AND MASTERS OF VESSELS
DISCHARGE BY SHIPOWNER OR SHIP AGENT:

“The services of the respondents were engaged by the petitioner to man its vessel for a determinate
time or voyage, with an express stipulation that "this contract expires on the arrival of this boat at
the port of Manila." Article 605 of the Code of Commerce provides:
If the contracts of the captain and members of the crew with the ship agent should he for a
definite period or voyage, they may not be discharged until after the fulfillment of their
contracts except by reason of insubordination in serious matters, robbery, theft, habitual
drunkenness, or damage caused to the vessel or its cargo through malice or manifest or
proven negligence.
Not having been discharged for any of the causes enumerated in the foregoing article, the
respondents are entitled to the amounts they respectively seek to collect from the petitioner.”
(Madrigal v. Ogilvie, 1958)
 CAPTAINS AND MASTERS OF
VESSELS
DISCHARGE BY CAPTAIN: Article 637, Code of Commerce
Grounds for Discharging a Sailor or Crew Member by the Captain:
1. Perpetration of a crime which disturbs order on the vessel;
2. Repeated offenses of insubordination, or want or discipline, or non-fulfillment of
service;
3. Incapacity and repeated negligence in the fulfillment of the service he should render;
4. Habitual drunkenness;
5. Any occurrence which incapacitates the sailor to perform the work under his charge
[except Art. 644]:
– when illness of sailor is not due to his own fault, or
– when sailor is injured in the service or defense of the vessel;
6. Desertion.
HARBOR PILOTS
“A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a
vessel into or out of ports, or in certain waters. In a broad sense, the term
"pilot" includes both (1) those whose duty it is to guide vessels into or out of
ports, or in particular waters and (2) those entrusted with the navigation of
vessels on the high seas. However, the term "pilot" is more generally understood
as a person taken on board at a particular place for the purpose of conducting a
ship through a river, road or channel, or from a port.
XXX
It is quite common for states and localities to provide for compulsory pilotage, and
safety laws have been enacted requiring vessels approaching their ports, with certain
exceptions, to take on board pilots duly licensed under local law. The purpose of
these laws is to create a body of seamen thoroughly acquainted with the harbor, to
pilot vessels seeking to enter or depart, and thus protect life and property from the
dangers of navigation.” (Far Eastern Shipping v. CA, 1998)
MASTER AND PILOT
“Under English and American authorities, generally speaking, the pilot supersedes the master for the time
being in the command and navigation of the ship, and his orders must be obeyed in all matters
connected with her navigation. He becomes the master pro hac vice and should give all directions as to
speed, course, stopping and reversing, anchoring, towing and the like. And when a licensed pilot is
employed in a place where pilotage is compulsory, it is his duty to insist on having effective control of the
vessel, or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take entire charge
of the vessel, but is deemed merely the adviser of the master, who retains command and control of the
navigation even on localities where pilotage is compulsory.
XXX
While it is indubitable that in exercising his functions a pilot is in sole command of the ship and supersedes the
master for the time being in the command and navigation of a ship and that he becomes master pro hac vice of
a vessel piloted by him, there is overwhelming authority to the effect that the master does not surrender his
vessel to the pilot and the pilot is not the master. The master is still in command of the vessel
notwithstanding the presence of a pilot. There are occasions when the master may and should interfere and
even displace the pilot, as when the pilot is obviously incompetent or intoxicated and the circumstances may
require the master to displace a compulsory pilot because of incompetency or physical incapacity. If, however,
the master does not observe that a compulsory pilot is incompetent or physically incapacitated, the master is
justified in relying on the pilot, but not blindly…
MASTER AND PILOT
“The master is not wholly absolved from his duties while a pilot is on board his vessel, and may advise
with or offer suggestions to him. He is still in command of the vessel, except so far as her navigation is
concerned, and must cause the ordinary work of the vessel to be properly carried on and the usual
precaution taken. Thus, in particular, he is bound to see that there is sufficient watch on deck, and that
the men are attentive to their duties, also that engines are stopped, towlines cast off, and the anchors clear
and ready to go at the pilot's order.
XXX
In sum, where a compulsory pilot is in charge of a ship, the master being required to permit him to
navigate it, if the master observes that the pilot is incompetent or physically incapable, then it is
the
duty of the master to refuse to permit the pilot to act. But if no such reasons are present, then the
master is justified in relying upon the pilot, but not blindly. Under the circumstances of this case, if a
situation arose where the master, exercising that reasonable vigilance which the master of a ship should
exercise, observed, or should have observed, that the pilot was so navigating the vessel that she was
going, or was likely to go, into danger, and there was in the exercise of reasonable care and vigilance an
opportunity for the master to intervene so as to save the ship from danger, the master should have acted
accordingly. The master of a vessel must exercise a degree of vigilance commensurate with the
circumstances.” (Far Eastern Shipping v. CA, 1998)
SHIPOWNER AND PILOT
“In general, a pilot is personally liable for damages caused by his own negligence or default to the owners of
the vessel, and to third parties for damages sustained in a collision. Such negligence of the pilot in the
performance of duty constitutes a maritime tort. At common law, a shipowner is not liable for injuries inflicted
exclusively by the negligence of a pilot accepted by a vessel compulsorily. The exemption from liability for such
negligence shall apply if the pilot is actually in charge and solely in fault. Since, a pilot is responsible only for his
own personal negligence, he cannot be held accountable for damages proximately caused by the default of others, or,
if there be anything which concurred with the fault of the pilot in producing the accident, the vessel master and
owners are liable.
Since the colliding vessel is prima facie responsible, the burden of proof is upon the party claiming benefit of the
exemption from liability. It must be shown affirmatively that the pilot was at fault, and that there was no fault on the
part of the officers or crew, which might have been conducive to the damage. The fact that the law compelled the
master to take the pilot does not exonerate the vessel from liability. The parties who suffer are entitled to have their
remedy against the vessel that occasioned the damage, and are not under necessity to look to the pilot from whom
redress is not always had for compensation. The owners of the vessel are responsible to the injured party for the acts
of the pilot, and they must be left to recover the amount as well as
they can against him. It cannot be maintained that the circumstance of having a pilot on board, and acting in
conformity to his directions operate as a discharge of responsibility of the owners. Except insofar as their liability is
limited or exempted by statute, the vessel or her owner are liable for all damages caused by the negligence or
other wrongs of the owners or those in charge of the vessel. Where the pilot of a vessel is not a compulsory one
in the sense that the owner or master of the vessel are bound to accept him, but is employed voluntarily, the
owners of the vessel are, all the more, liable for his negligent act.” (Far Eastern Shipping v. CA, 1998)
 OFFICERS AND CREW, ETC.
“… the complement of a vessel shall be understood all the persons on board, from the
captain to the cabin boy, necessary for the management, maneuvers, and service, and
therefore, the complement shall include the crew, the sailing mates, engineers, stokers
and other employees on board not having specific designations; but it shall not
include the passengers or other persons whom the vessel is transporting”. (Article
648, Code of Commerce)
■ SAILING MATE – the second chief of the vessel
➢ Articles 627-631, Code of Commerce – Duties and/or liabilities
■ SECOND MATE
➢ Articles 632, 633 Code of Commerce
■ MARINE ENGINEERS
➢ Article 632, Code of Commerce
OFFICERS AND CREW, ETC.
■ CREW
➢ Article 634, Code of Commerce – Formalities of contract
➢ Article 635 – Duties and liabilities
➢ Articles 644, 645 – Rights in case of sickness, injury or death

➢ Articles 636, 637 - Rights in case of Dismissal; Causes for discharge

➢ Articles 638, 640, 641 – Revocation of voyage

➢ Article 636 (4) – Change of destination
➢ Article 643 – Loss of vessel
➢ Article 647 – Rescission of contract
 OFFICERS AND CREW, ETC.

■ SUPERCARGOES – Articles 649-651, Code of

Commerce

➢ He/she is a person specially employed by the owner of the cargo to

take charge of and to sell, to the best advantage, merchandise which have
been shipped, to purchase returning cargoes, and to receive freight.
SPECIAL CONTRACTS
IN MARITIME
COMMERCE
1. CHARTER PARTIES
“A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to
another person for a specified time or use, a contract of affreightment by which the owner of the ship or other vessel lets
the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight.
Charter parties are of two (2) types:
1. CONTRACT OF AFFREIGHTMENT, which involves the use of shipping space on vessels leased by the owner in
part or as a whole, to carry goods for others; and,
2. CHARTER BY DEMISE OR BAREBOAT CHARTER, by the terms of which the whole vessel is let to the charterer
with a transfer to him of its entire command and possession and consequent control over its navigation, including the
master and the crew, who are his servants.
Contract of affreightment may either be:
1. TIME CHARTER, wherein the vessel is leased to the charterer for a fixed period of time, or
2. VOYAGE CHARTER, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the
hire of vessel only, either for a determinate period of time or for a single or consecutive voyage, the shipowner to supply
the ship's stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship.
XXX
It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of
a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-
charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a
shipowner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment,
be the property of the charterer. (Planters Products v. Court of Appeals, 1993)
 CHARTER PARTIES: PERSONS WHO MAY
MAKE CHARTER
■ Owner of the vessel, who has legal control and possession of the vessel, may enter into a
charter with a charterer
■ Broker may intervene in the execution of the charter between the principals (Art. 654, Code
of Commerce)
■ Charterer of an entire vessel, by himself, may subcharter the whole or part thereof (Art. 679,
Code of Commerce)
■ Part-owners are not precluded from chartering the vessel. Such part-owners shall enjoy
preference in the charter of the vessel over other persons who offer equal conditions and freight (Art.
593, Code of Commerce)
■ Ship agent may make contracts for a new charter, if authorized (Art. 598, Code of
Commerce)
■ Captain or master may enter into valid and binding charter parties, but only in the event of
absence of ship agent or consignee, and only in accordance with the instructions received and
protecting the owner’s interests (Art. 610 [4])
 CHARTER PARTIES: REQUISITES FOR
VALIDITY
1. CONSENT of the contracting parties;
2. An EXISTING VESSEL which should be placed at the
disposition of the shipper;
3. FREIGHT;
4. Compliance with the requirements of Art. 652, Code
of Commerce:
CHARTER PARTIES: REQUISITES FOR
VALIDITY

Formal requirements:
– (a) In writing; (b) drawn in duplicate, and (3)
signed by the parties.
– It shall contain the conditions freely stipulated,
AND the circumstances stated in Article 652 of
the Code of Commerce.
CHARTER PARTIES:
1. Primage – payment for the use of the equipment belonging to the captain.
2. Freight – charter price or money; compensation to be paid for the utilization of
the vessel by the charterer
– Article 659, Code of Commerce, as to when freight shall accrue ---
General Rule: According to the conditions of the charter party.
Otherwise: (1) the freight shall begin to run from the day of the loading on the vessel; (2) in
charters with a fixed period, it shall begin upon that very day; and (3) if the freight is charged
according to weight, payment thereof shall be made according to gross weight, including
weight of containers.
3. Laydays – the period or time stipulated for loading and unloading.
4. Demurrage – sum of money due by express contract for the detention of the
vessel in loading or unloading, beyond the time allowed for that purpose in the charter
party; amount stipulated in the charter party to be paid by the charterer or shipper to the
shipowner for any delay in the sailing of his ship.
5. Deadfreight – liability of the charterer to the shipowner, where the former failed
to occupy the leased portion of the vessel.
 CHARTER PARTIES: RIGHTS AND
OBLIGATIONS

■ Shipowner or Captain – Articles 669-678, Code of

Commerce

■ Charterer – Articles 679-687, Code of Commerce

 CHARTER PARTIES: RESCISSION
WHO CAN RESCIND?
1. The CHARTERER – Article 688, Code of
Commerce
2. The SHIPOWNER – Article 689, Code of Commerce

OTHER GROUNDS: Article 690, Code of Commerce

CHARTER PARTIES: RESCISSION BY
CHARTERER
GROUND
Abandonment of charter before loading
Capacity of vessel not found to be in conformity
with that stated in certificate of tonnage
Error in the statement of the flag under which
vessel navigates
Non-placement of vessel at disposal of
charterer within period and manner agreed
upon
Vessel returns to port of departure on account
of risk from pirates, enemies or bad weather,
and the shipper should agree to unload her
Vessel makes port in order to make urgent
EFFECT
He must pay ½ of freight agreed upon
He will be indemnified by owner for damages
suffered
He will be indemnified by owner for damages
suffered
He shall have the right to the freightage in full
for the voyage out
He shall have the right to the freightage in full
for the voyage out
He must dispose of the merchandise/goods
repairs
CHARTER PARTIES: RESCISSION
GROUND
Failure of charterer to place cargo alongside
vessel at the termination of extra lay days
Sale of vessel before the charterer has begun to
load the vessel
EFFECT
Charter is rescinded but he must pay the
charterer:
a. ½ of the freight stipulated, and
b. demurrage for the lay days and extra lay days
a. Charter is rescinded if the buyer of the vessel
has loaded the vessel for his own account BUT
seller/owner must indemnify charterer for
damages suffered
b. Charter is NOT rescinded if buyer has NOT
loaded the vessel for his own account BUT the
seller shall indemnify the buyer if he did not
inform the buyer of the charter at the time of
making the sale
2. BILL OF LADING
BILL OF LADING: Definition

■ It is a written acknowledgment, signed by the master of

a vessel or other authorized agent of the carrier, that he has
received the described goods from the shipper, to be
transported on the expressed terms to the described place
of destination, and to be delivered there to the designated
consignee or parties.
BILL OF LADING: Kinds
1. Negotiable, or non-negotiable
2. Clean, and foul
▪ Clean bill of lading – one which does not contain any notation indicating any defect in the goods;
▪ Foul bill of lading – one that contains such notation.

3. “On Board Bill” or “Received for Shipment Bill”

▪ “On Board” – one in which it is stated that the goods have been received on board the vessel which is to carry the
goods.
▪ “Received for Shipment” – one in which it is stated that the goods have been received for shipment with or without
specifying the vessel by which the goods are to be shipped.
4. Spent – the goods were already delivered but the bill of lading was not returned.
5. Through – one issued by a carrier who is obliged to use the facilities of other carriers as well as his own
facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which
bill of lading is honored by the second and other interested carriers who do not issue their own lading.
6. Custody – the goods are already received by the carrier but the vessel indicated therein has not yet
arrived in the port.
7. Port – the vessel indicated in the bill of lading that will transport the goods is already in the port.
BILL OF LADING
■ It operates as a (a) RECEIPT, (b) CONTRACT, (c)
DOCUMENT OF TITLE.
– It is a receipt of the goods shipped and a contract to transport
and deliver the same as therein stipulated.
– As a contract, it stipulates the rights and obligations assume
by the parties. Being a contract, it is the law between the
parties who are bound by its terms and conditions, provided
they are not contrary to law, morals, good customs, public
order and public policy.
– It constitutes a class of contracts of adhesion. Thus, it is
normally construed liberally in favor of the shipper.
BILL OF LADING as EVIDENCE
■ It is the legal evidence of the contract, but it is not necessary
for its perfection.
“ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of
lading, by the contents of which the disputes which may arise regarding their execution and performance shall
be decided, no exceptions being admissible other than those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and
by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be
considered cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing,
with the exception of that provided for in Article 366.
In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of
its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same
effects as the return of the bill of lading.”

“ARTICLE 709. A bill of lading drawn up in accordance with the provisions of this title shall be proof as
between all those interested in the cargo and between the latter and the insurers, proof to the contrary being
reserved for the latter.”
BILL OF LADING as EVIDENCE
■ It is the legal evidence of the contract, but it is not necessary
for its perfection.

ARTICLE 354. In the absence of a bill of lading, disputes shall be

determined by the legal proofs which the parties may present in
support of their respective claims, according to the general
provisions established in this Code for commercial contracts.
BILL OF LADING as EVIDENCE
■ It is an actionable document.

“As petitioners are suing upon SLI's contractual obligation under the
contract of carriage as contained in the bills of lading, such bills of lading
can be categorized as actionable documents which under the Rules
must be properly pleaded either as causes of action or defenses, and the
genuineness and due execution of which are deemed admitted unless
specifically denied under oath by the adverse party. The rules on
actionable documents cover and apply to both a cause of action or
defense based on said documents.” (Philamgen v. Sweet Lines, 1992)
BILL OF LADING as EVIDENCE
■ It is covered by the parol evidence rule.
“Under the parol evidence rule, the terms of a contract are rendered conclusive upon the parties, and
evidence aliunde is not admissible to vary or contradict a complete and enforceable agreement embodied
in a document, subject to well defined exceptions which do not obtain in this case. The parol evidence rule
is based on the consideration that when the parties have reduced their agreement on a particular matter into
writing, all their previous and contemporaneous agreements on the matter are merged therein. Accordingly,
evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or
defeat the operation of a valid instrument. The mistake contemplated as an exception to the parol evidence
rule is one which is a mistake of fact mutual to the parties. Furthermore, the rules on evidence, as
amended, require that in order that parol evidence may be admitted, said mistake must be put in issue by
the pleadings, such that if not raised inceptively in the complaint or in the answer, as the case may be, a
party can not later on be permitted to introduce parol evidence thereon. Needless to say, the mistake
adverted to by herein petitioner, and by its own admission, was supposedly committed by private
respondents only and was raised by the former rather belatedly only in this instant petition. Clearly then,
and for failure to comply even only with the procedural requirements thereon, we cannot admit evidence to
prove or explain the alleged mistake in documentation imputed to private respondents by petitioner.”
(Magellan v. CA, 1991)
BILL OF LADING

Articles 350-352, Code of Commerce – formalities/stipulations

for overland transportation

Articles 706-718, Code of Commerce –

formalities/stipulations/other rules that apply to bills of lading
for maritime commerce
BILL OF LADING
When to file a claim against the carrier (Art. 366, Code of
Commerce)

1. IMMEDIATELY UPON RECEIPT of the package – if damage is

APPARENT (for such purpose, a VERBAL CLAIM made
immediately is SUFFICIENT compliance with the law)
2. WITHIN 24 HOURS following RECEIPT of package – if the
damage CANNOT BE ASCERTAINED from the outside part of
package

Note: All Claims are EXTINGUISHED – if consignee RECEIVES the

merchandise, and PAYS the freight charges WITHOUT PROTEST
“It has long been held that Article 366 of the Code of Commerce applies not only to overland and river
transportation but also to maritime transportation. Moreover, we agree that in this jurisdiction, as
viewed from another angle, it is more accurate to state that the filing of a claim with the carrier
within the time limitation therefor under Article 366 actually constitutes a condition precedent to
the accrual of a right of action against a carrier for damages caused to the merchandise. The
shipper or the consignee must allege and prove the fulfillment of the condition and if he omits such
allegations and proof, no right of action against the carrier can accrue in his favor. As the requirements
in Article 366, restated with a slight modification in the assailed paragraph 5 of the bills of lading, are
reasonable conditions precedent, they are not limitations of action. Being conditions precedent, their
performance must precede a suit for enforcement and the vesting of the right to file spit does not take
place until the happening of these conditions… Performance or fulfillment of all conditions precedent
upon which a right of action depends must be sufficiently alleged, considering that the burden of proof
to show that a party has a right of action is upon the person initiating the suit. More particularly, where
the contract of shipment contains a reasonable requirement of giving notice of loss of or injury to
the goods, the giving of such notice is a condition precedent to the action for loss or injury or the
right to enforce the carrier's liability. Such requirement is not an empty formalism. The fundamental
reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to
inform it that the shipment has been damaged and that it is charged with liability therefor, and to give it
an opportunity to examine the nature and extent of the injury. This protects the carrier by affording it an
opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to
safeguard itself from false and fraudulent claims…” (Philamgen v. Sweet Lines, 1992)
“Stipulations in bills of lading or other contracts of shipment which require notice of claim for loss
of or damage to goods shipped in order to impose liability on the carrier operate to prevent the
enforcement of the contract when not complied with, that is, notice is a condition precedent and the
carrier is not liable if notice is not given in accordance with the stipulation, as the failure to comply
with such a stipulation in a contract of carriage with respect to notice of loss or claim for damage
bars recovery for the loss or damage suffered. On the other hand, the validity of a contractual
limitation of time for filing the suit itself against a carrier shorter than the statutory period therefor
has generally been upheld as such stipulation merely affects the shipper's remedy and does not affect
the liability of the carrier. In the absence of any statutory limitation and subject only to the
requirement on the reasonableness of the stipulated limitation period, the parties to a contract of
carriage may fix by agreement a shorter time for the bringing of suit on a claim for the loss of or
damage to the shipment than that provided by the statute of limitations. Such limitation is not
contrary to public policy for it does not in any way defeat the complete vestiture of the right to
recover, but merely requires the assertion of that right by action at an earlier period than would be
necessary to defeat it through the operation of the ordinary statute of limitations. In the case at bar,
there is neither any showing of compliance by petitioners with the requirement for the filing of a
notice of claim within the prescribed period nor any allegation to that effect. It may then be said that
while petitioners may possibly have a cause of action, for failure to comply with the above condition
precedent they lost whatever right of action they may have in their favor or, token in another sense,
that remedial right or right to relief had prescribed.” (Philamgen v. Sweet Lines, 1992)
“Article 366 of the Commercial Code is limited to cases of claims for
damage goods actually turned over by the carrier and received by the
consignee, whether those damages be apparent from the examination of
the packages in which the goods are delivered, or of such a character
that the nature and extent of the damage is not apparent until the
packages are opened and the contents examined.

Clearly it has no application in such cases wherein the goods

entrusted to the carrier are not delivered by the carrier to the
consignee. In such cases there can be no question of a claim for
damages suffered by the goods while in transport, since the claim for
damages arises exclusively out of the failure to make delivery.” (Roldan
v. Ponzo, 1917)
“The object sought to be attained by the requirement of the submission of claims
in pursuance of this article is to compel the consignee of goods entrusted to a
carrier to make prompt demand for settlement of alleged damages suffered by the
goods while in transport, so that the carrier will be enabled to verify all such
claims at the time of delivery or within twenty-four hours thereafter, and if
necessary fix responsibility and secure evidence as to the nature and extent of the
alleged damages to the goods while the matter is still fresh in the minds of the
parties. To this end of provision is made in Article 367 of the Code for the prompt
settlement of disputes as to the nature and extent of the alleged damages, and for
the final disposition of the damaged goods, which is wholly inconsistent with the
contention that these articles are applicable in cases wherein the claim against the
carrier is founded upon his failure to make delivery of the goods entrusted to
him.” (Roldan v. Ponzo, 1917)
BILL OF LADING
When to file a case in court against the carrier:

1. If there is a bill of lading – 10 years [Art. 1144 – based on a

written contract]
2. If there is no bill of lading – 6 years [Art. 1145 – based on a an
oral or quasi-contract]
3. If it involves overseas trading – 1 year [COGSA]
3. LOANS ON
BOTTOMRY AND
RESPONDENTIA
LOAN ON BOTTOMRY OR RESPONDENTIA (Art. 719, Code of Commerce)
A loan in which under any condition whatsoever, the repayment of the sum loaned
and of the premium stipulated, depends upon the safe arrival of the goods in which
it is made, or of the price they may receive in case of accident.

– BOTTOMRY – a contract whereby the owner of a ship borrows for the use,
equipment, or repair of the vessel, for a definite term, and pledges the ship
(or the keel or the bottom of the ship) as 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 lender shall lose his money.

– RESPONDENTIA – where the goods, or some part thereof, are hypothecated

as security for a loan, the repayment of which is dependent upon maritime
risks
LOAN ON BOTTOMRY OR
RESPONDENTIA
There must be a marine risk, the
existence of which must be established
It must be executed in accordance with
the form and manner required in Art.
720-721 of the Code of Commerce
It must be recorded in the registry of
vessels in order to bind third persons
Preference is extended to the last lender
if there be several lenders
It must have collateral, which must be the
ship or the goods subject to marine risk
Loss of collateral extinguishes loan,
under Art. 731 of the Code of Commerce
SIMPLE LOAN
There need not be such risks involved
The formal requisites regarding contracts
in general will apply
No such registration is required in simple
loans
In simple loan, the first lender, as a
general rule, enjoys preference over
subsequent ones
It may or may not have collateral, which
may be any real or personal property
Loss of collateral does not extinguish
loan
 PASSENGERS
ON SEA VOYAGES
ARTS. 693-705, CODE OF
COMMERCE
RISKS, DAMAGES, AND
ACCIDENTS IN
MARITIME COMMERCE
 AVERAGES: In General (Art. 806)
1. All extraordinary or accidental expenses which may be
incurred during the voyage for the preservation of the vessel, cargo, or
both.
2. All damages or deterioration:
a) which the vessel may suffer from the time she puts to sea at
the port of departure until she casts anchor at the port of destination,
and
b) those suffered by the goods from the time they are loaded in
the port of shipment until they are unloaded in the port
of their consignment
Not AVERAGES: (Art. 807)
“The petty and ordinary expenses incident to navigation,
such as those of pilotage costs and ports, lighterage and
towage, anchorage, inspection, health, quarantine, lazaretto,
and other so-called port expenses, costs of barges and
unloading until the merchandise is place on the wharf, and
any other expenses common to navigation, shall be
considered as ordinary expenses…”

BORNE BY THE SHIPOWNER, UNLESS

THERE IS A
SPECIAL AGREEMENT TO THE CONTRARY.
 AVERAGES: Kinds
1. SIMPLE OR PARTICULAR
– Definition: It 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.
– By whom borne: Owner of the goods which gave rise
to the expense or suffered the damage bears the loss
– Examples: Article 809, Code of Commerce
 AVERAGES: Kinds
2. GENERAL
– Definition: It shall include all the expenses and
damages which are deliberately caused in order to save
the vessel, its cargo, or both, at the same time, from a
real and known risk.
– By whom borne: By those who benefited from the
sacrifice
– Examples: Article 811, Code of Commerce
GENERAL AVERAGE
“Let us now see whether the expenses here in question could come within the legal concept of the
general average. Tolentino, in his commentaries on the Code of Commerce, gives the following
requisites for general average:
First, there must be a common danger. This means, that both the ship and the cargo, after has
been loaded, are subject to the same danger, whether during the voyage, or in the port of loading or
unloading; that the danger arises from the accidents of the sea, 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 and imminent. This last requirement exclude
measures undertaken against a distant peril.
Second, that for the common safety part of the vessel or of the cargo or both is sacrificed
deliberately.
Third, that from the expenses or damages caused follows the successful saving of the vessel
and cargo.
Fourth, that the expenses or damages should have been incurred or inflicted after taking
proper legal steps and authority. (Vol. 1, 7th ed., p. 155.)” (Magsaysay v. Agan)
GENERAL AVERAGE
Common Danger – both the ship and the cargo, after being loaded, are
subject to the same danger, whether during voyage or in the port of
loading/unloading.

Deliberate/Voluntary Sacrifice, instances – see Articles 816, 817, 818,

Code of Commerce

Sacrifice must be successful – see Articles 860, 861, Code of Commerce

Compliance with Legal Steps – see Articles 813 to 815, Code of

Commerce
GENERAL AVERAGE
Articles 815, Code of Commerce: ORDER OF JETTISON
AVERAGES: EFFECT
Article 812, Code of Commerce: In order to satisfy the
amount of the gross or general averages, all the persons
having an interest in the vessel and the cargo therein at
the time of the occurrence of the average shall contribute.
AVERAGES: EFFECT
“Decisive in this case in whether the loss suffered by the cargo in question is a "particular
average."

Particular average, is a loss happening to the ship, freight, or cargo which is not be
(sic) shared by contributing among all those interested, but must be borne by the owner
of the subject to which it occurs. (Black's Law Dictionary, Revised Fourth Edition, p. 172,
citing Bargett v. Insurance Co. 3 Bosw. [N.Y.] 395).

As distinguished from general average which is a contribution by the several interests

engaged in the maritime venture to make good the loss of one of them for the
voluntary sacrifice of a part of the ship or cargo to save the residue of the property and the
lives of those on board, or for extraordinary expenses necessarily incurred for the common
benefit and safety of all (Ibid., citing California Canneries Co. v. Canton Ins. Office 25
Cal. App. 303, 143 p. 549-553).” (Trial court ruling in American Home v. CA, 1992)
AVERAGES
“But more importantly, the Court ruled that common carriers
cannot limit their liability for injury or loss of goods where such
injury or loss was caused by its own negligence. Otherwise stated,
the law on averages under the Code of Commerce cannot be
applied in determining liability where there is negligence
(Ibid., p. 606).
Under the foregoing principle and in line with the Civil Code's
mandatory requirement of extraordinary diligence on common
carriers in the car care of goods placed in their stead, it is but
reasonable to conclude that the issue of negligence must first be
addressed before the proper provisions of the Code of Commerce
on the extent of liability may be applied.” (American Home v.
CA, 1992)
 YORK-ANTWERP RULES
■ Although the Code of Commerce provisions on averages are still in
force, the parties may, by stipulation in the charter party or any written
agreement, agree that the York-Antwerp Rules shall be applied.
■ “Jason Clause” – Rule D of the Rules, which states that “rights to
contribution in general average shall not be affected, though the event which
gave rise to the sacrifice or expenditure may have been due to the fault of one
of the parties to the adventure, but this shall not prejudice any remedies or
defences which may be open against or to that party in respect of such fault”.
– It is a protective clause inserted into a charter party or bill of
lading which provides that the shipowner is entitled to recover in
general average even when the loss is caused by negligent
navigation.
 AVERAGES
■ Articles 815-816, Code of Commerce – Jettison

■ Article 848, Code of Commerce – Claims not admissible

■ Articles 846-869, Code of Commerce - Proof and

liquidation of averages
 ARRIVAL UNDER STRESS
■ Definition: It is the arrival of a vessel at the nearest
and most convenient port, which was decided upon after
determining that there is lack of provisions, or a well-
founded fear of seizure, privateers, or pirates, or by
reason of any accident of the sea, disabling it to
navigate.
 ARRIVAL UNDER STRESS
■ Steps (Article 819):
1. The captain should determine during the voyage if there is lack of
provisions, or well-founded fear of seizure, privateers or pirates, or other valid
grounds;
2. The captain shall then assemble the officers;
3. The captain shall summon the persons interested in the cargo who
may be present and who may attend but without right to vote;
4. The officers shall examine and agree if there is a well-founded
reason after examining the circumstances. The captain shall have the deciding
vote;
5. The agreement shall be drafted and the proper minutes shall be
signed and entered in the log book;
6. Objections and protests shall likewise be entered in the minutes.
ARRIVAL UNDER STRESS
VALID GROUNDS IMPROPER GROUNDS (ARTICLE 820)
LACK OF PROVISIONS If it should arise from the failure to take the necessary
provisions for the voyage, according to usage and
customs, or

If they should have been rendered useless or lost through

bad stowage or negligence in the care
WELL-FOUNDED FEAR OF SEIZURE, PRIVATEERS,
OR If the risk should not have been well-known, manifest, and
PIRATES based on positive and justifiable facts
ANY ACCIDENT OF THE SEA DISABLING HER TO
NAVIGATE If the defect of the vessel should have been caused by
reason of her not being repaired, rigged, equipped, and
arranged in a convenient manner for the voyage

If the defect of the vessel should have been caused by

reason of some erroneous order of the captain

Whenever malice, negligence, want of foresight, or lack of

skill on the part of the captain exists in the act causing
the damage.
 ARRIVAL UNDER STRESS
■ Article 821, Code of Commerce – Responsibility
for Expenses

■ Article 822 – Formalities

■ Articles 823-825 – Custody of cargo;

Responsibility/liability of captain
 COLLISIONS
■ An impact or sudden contact of a vessel with another
whether both are in motion or one stationary.
■ Strictly speaking, collision refers to the contact of two
moving vessels. If one vessel is moving while the other is
stationary, the same is called ALLISION.
■ For purposes of applying the provisions of the Code of
Commerce, collision includes collision per se and allision.
COLLISIONS: Three Divisions of
Time/Zones
1. All the time up to the moment when the risk of collision may be said
to have begun – No rule is applicable because none is necessary. Each vessel us
free to direct its course as it deems best without reference to the movement of the
other vessel.
2. The time between the moment when the risk of collision begins and
the moment when it has become a practical certainty. – Here, the burden is
on the vessel required to keep away and avoid the danger; the vessel which had
the last clear chance to avoid collision but did not do so is liable.
3. The time between the moment of actual contact. – This is the period in
which errors in extremis occur; and the rule is that the vessel which has forced
the privileged vessel into danger is responsible even if the privileged vessel has
committed an error within that zone.
COLLISIONS
Error in Extremis - where a navigator, suddenly realizing that a
collision is imminent by no fault of his own, in confusion and
excitement of the moment, does something which contributes to the
collision, or omits to do something by which the collision may be
avoided.
Such act or omission is ordinarily considered to be in extremis, and the
ordinary rules of strict accountability do NOT apply.
COLLISIONS: RULES ON LIABILITY (Arts.
826-831)
1. ONE VESSEL AT FAULT
– The owner of the vessel at fault shall indemnify the losses and
damages suffered, after an expert appraisal.
2. BOTH VESSELS AT FAULT
– Each one shall suffer its own damages, and both shall be
solidarily responsible for the losses and damages occasioned to
their cargoes
3. PARTY AT FAULT CANNOT BE DETERMINED
– Each one shall suffer its own damages, and both shall be
solidarily responsible for the losses and damages occasioned to
their cargoes
COLLISIONS: RULES ON LIABILITY (Arts.
826-831)
4. CAUSE IS FORTUITOUS EVENT
– Each vessel and its cargo shall bear its own damages.
– The injury occasioned shall be considered as particular average.
5. THIRD PERSON AT FAULT
– The owner of the third vessel shall indemnify the losses and
damages caused, the captain thereof being civilly liable to said
owner.
COLLISIONS: OTHER RULES

■ Article 835 – the need for a protest or declaration made

within 24 hours, for actions for recovery of losses or damages
arising from collisions

■ Article 837 – limited liability rule

 SHIPWRECKS
■ The demolition or shattering of a vessel caused by her
driving ashore or on rocks and shoals in the midseas, or by the
violence of winds and waves in tempests.

■ Articles 840-845, Code of Commerce

COGSA
COGSA: APPLICABILITY

Section 1. That the provisions of Public Act No. 521 of the

7th Congress of the United States, approved on April
16, 1936, be accepted, as it is hereby accepted to be made
applicable to all contracts for the carriage of goods by
sea to and from Philippine ports in foreign trade:
Provided, that nothing in this Act shall be construed as
repealing any existing provision of the Code of Commerce
which is now in force, or as limiting its application.
 COGSA: APPLICABILITY
“We do not see that the use of the term "forwarding agent of the shipper" is decisive of the issue. According to
paragraph 4 of the amended complaint the cargo was loaded on board the "M/S TOREADOR" in New York,
"freight prepaid to Cebu City . . . pursuant to the bill of lading No. 13." In other words, the action is based on the
contract of carriage up to the final port of destination, which was Cebu City, for which the corresponding freight
had been prepaid. The following provisions of the bill of lading are the ones directly in point:
1. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United
States of America, approved April 16, 1936, which shall be deemed to be incorporated herein and nothing herein
contained shall be deemed a surrender by the Carrier of any of its rights or immunities or an increase of any of its
responsibilities or liabilities under said Act. The provisions stated in said Act (except as may be otherwise
specifically provided herein) shall govern before the goods are loaded on and after they are discharged from the ship
and throughout the entire time the goods are in the custody of the Carrier. . . .
19. In any event the Carrier and the ship shall be discharged from all liability in respect of loss or damage unless
suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. . . .
The transshipment of the cargo from Manila to Cebu was not a separate transaction from that originally
entered into by Macondray, as general agent for the "M/S TOREADOR". It was part of Macondray's
obligation under the contract of carriage and the fact that the transshipment was made via an inter-island
vessel did not operate to remove the transaction from the operation of the Carriage of Goods by Sea Act.
(See Go Chang & Co., Inc. vs. Aboitiz & Co., Inc., 98 Phil. 197).” (American v. Compania Maritima, 1967)
 COGSA: FILING OF A CLAIM AND
PRESCRIPTION
Section 3.
(6) Unless notice or loss or damage and the general nature of such loss or damage be given in writing to
the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody
of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie
evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage
is not apparent, the notice must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking
delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their receipt been the
subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage
unless suit is brought within one year after delivery of the goods or the date when the goods should
have been delivered: Provided, that, if a notice of loss or damage, either apparent or concealed, is not
given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to
bring suit within one year after the delivery of the goods or the date when the goods should have been
delivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable
facilities to each other for inspecting and tallying the goods.
COGSA: FILING OF A CLAIM AND
PRESCRIPTION

“It would therefore appear from the above that a carrier can only be
discharged from liability in respect of loss or damage if the suit is
not brought within one year after the delivery of the goods or the
date when the goods should have been delivered, and that, even if a
notice of loss or damage is not given as required, "that fact shall not
affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods." In other words, regardless of whether
the notice of loss or damage has been given, the shipper can still
bring an action to recover said loss or damage within one year after
the delivery of the goods...” (E.E. Elser v. CA, 1954)
COGSA: FILING OF A CLAIM AND
PRESCRIPTION
“In Ang v. American Steamship Agencies, Inc., the question was whether an action for the value of goods which had been
delivered to a party other than the consignee is for loss or damage within the meaning of 3(6) of the COGSA. It was held
that there was no loss because the goods had simply been misdelivered. Loss refers to the deterioration or
disappearance of goods.
As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the Carriage of Goods by Sea Act, loss
contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be
recovered.
xxx
In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carriers breach of
contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or
disappearance because they had been damaged in transit.
Indeed, what is in issue in this petition is not the liability of petitioner for its handling of goods as provided by 3(6) of the
COGSA, but its liability under its contract of carriage with private respondent as covered by laws of more general
application.
Precisely, the question before the trial court is not the particular sense of damages as it refers to the physical loss or damage
of a shippers goods as specifically covered by 3(6) of COGSA but petitioner’s potential liability for the damages it has
caused in the general sense and, as such, the matter is governed by the Civil Code, the Code of Commerce and COGSA, for
the breach of its contract of carriage with private respondent.” (Mitsui v. CA, 1998)
COGSA: FILING OF A CLAIM AND
PRESCRIPTION
“…in a case governed by the Carriage of Goods by Sea Act, the general
provisions of the Code of Civil Procedure on prescription
should not be made to apply. (Chua Kuy vs. Everett Steamship Corp.,
G.R. No. L-5554, May 27, 1953.) Similarly, we now hold that in such a
case the general provisions of the new Civil Code (Art. 1155) cannot
be made to apply, as such application would have the effect of
extending the one-year period of prescription fixed in the law. It is
desirable that matters affecting transportation of goods by sea be
decided in as short a time as possible; the application of the
provisions of Article 1155 of the new Civil Code would
unnecessarily extend the period and permit delays in the settlement
of questions affecting transportation, contrary to the clear intent
and purpose of
the law...” (DOLE v. Maritime, 1987)
COGSA: FILING OF A CLAIM AND
PRESCRIPTION

“This provision of the law admits of an exception: if the one-year

period is suspended by express agreement of the parties (Chua Kay
vs. Everett Steamship Corporation, L-5554, May 27,1953; Tan Liao vs.
American President Lines, Ltd., L-7280, January 20, 1956) for in such a
case, their agreement becomes the law for them. (Phoenix Assurance
Co., Ltd. vs. United States Lines, 22 SCRA 674; Baluyot vs. Venegas, 22
SCRA 412; Lazo vs. Republic Surety & Insurance, Co., Inc., 31 SCRA
329; Philippine American General Insurance Co., Inc. vs. Mutuc, 61
SCRA 22-23).…”(Universal v. IAC, 1990)
 COGSA: LIMITATION OF LIABILITY
Section 4.
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or
damage to or in connection with the transportation of goods in an amount exceeding $500 per
package of lawful money of the United States, or in case of goods not shipped in packages, per
customary freight unit, or the equivalent of that sum in other currency, unless the nature and
value of such goods have been declared by the shipper before shipment and inserted in the bill of
lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall
not be conclusive on the carrier.
By agreement between the carrier, master or agent of the carrier, and the shipper another
maximum amount than that mentioned in this paragraph may be fixed: Provided, that such
maximum shall not be less than the figure above named. In no event shall the carrier be liable for
more than the amount of damage actually sustained.
Neither the carrier nor the ship shall be responsible in any event for loss damage to or in connection
with the transportation of the goods if the nature or value thereof has been knowingly and
fraudulently misstated by the shipper in the bill of lading.