How Ship Agent may Exempt Himself from Liability:

By ABANDONING:

1. the vessel, and

2. ALL:
a. her equipment, and
b. the freightage it may have earned during the voyage

Why is the Ship owner given the right of abandonment?

As correctly stated by the appellate court, "(t)his rule is found necessary to offset
against the innumerable hazards and perils of a sea voyage and to encourage
shipbuilding and marine commerce. (Delos Santos v CA)

What distinguishes Maritime Law from Civil Law or Mercantile Law?

The REAL and HYPOTHECARY nature of Maritime Law

A shipping transportation contract is ―REAL & HYPOTHECARY in nature under

Art. 587 which accords a ship owner or agent the right of abandonment; and by
necessary implication, his liability is confined to that which he is entitled as of right
to abandon - "the vessel with all her equipments and the freight it may have
earned during the voyage." [Yangco v. Laserna, Oct 29, 1941]

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.

When ABANDONMENT is made in the instances provided by law, it cannot be

refused.

Note: When the right to abandonment exists, the shipper/consignee/pax cannot invoke Art. 1733
and 1755 of the Civil Code.

While the primary law governing maritime commerce is the Civil Code, in all matters not regulated
by said Code, the Code of Commerce and other special laws shall govern.

Since the Civil Code contains no provision regulating the liability of shipowners in the event of total
loss or destruction of the vessel, it is the provisions of the Code of Commerce, particularly Art. 587
that governs.[Chua Yek Hong v. IAC, 14 Dec 1988]

When ABANDONMENT can be made:

1. For civil liability to third persons arising from the conduct of the captain in the vigilance
over the goods which the vessel carried [Art. 587]
2. For the proportionate contribution of co-owners or the vessel to a common fund for the
results of the acts of the captain [Art. 590]
3. For civil liability incurred by the ship owner in case of
collision [Art.837]
When the ship owner or ship agent may be held liable for MORE than the value of the vessel:

1. When the vessel is PROPERLY INSURED – the insurance will take care of the liability the value
of w/c could be more than the value of the vessel
2. When the liability for REPAIRS of the vessel was incurred BEFORE the loss of such vessel
3. When the liability is one that arises from the provisions of the LABOR CODE

When Abandonment CANNOT be Made

1. When the ship owner or ship agent is at FAULT – he is deemed at fault when the incident
arose because of lack of proper equipment of the vessel and technical training of officers
and crew
2. When the voyage is NOT maritime, but only in a river bay, of gulf
3. When the vessel is NOT acting as a common carrier but a private carrier

Can a CHARTERER make an abandonment?

NO. He cannot be regarded as being in the place of the owner or agent in matters relating to the
responsibility pertaining to ownership and possession of the vessel [Yeung Sheung
Exchange v. Urrutia, 12 PHIL 747]

Special Contracts of Maritime Commerce

1. CHARTER PARTY
2. BILL of LADING

CHARTER PARTY[Art. 652-692]

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, inconsideration of the payment of a fee.

Kinds of Charter Parties:

1. CONTRACT OF AFFREIGHTMENT– owner retains control of the vessel; involves merely the
use of shipping space on a vessel, leased by the owner in part or as a whole, to carry
goods for others, and may either be a:

a. TIME CHARTER– a contract to use the vessel for a particular period of time

b. VOYAGE CHARTER– a contract for the hire of a vessel for one or a series of voyage

1. BAREBOAT OR DEMISE– involves the transfer of full possession and control of the vessel for
the period covered by the contract; the entire command of the vessel, possession and
control over its navigation, including the master and crew are turned over to the charterer

Effect of Charter Party Agreement

1. Common Carrier

a. Voyage or Time Charter – retains its status as a common carrier

b. Bareboat or Demise Charter – it becomes a private carrier for the particular charter
2. Private Carrier – retains its status as a private carrier

What is meant by ―owner pro hac vice of the vessel?

He is a demise or bareboat charterer to whom the owner of the vessel has completely and
exclusively relinquished possession, command and navigation of the vessel

Formal Requirements of a Charter Party [Art. 652]

Can a CHARTERER make an abandonment?

NO. He cannot be regarded as being in the place of the owner or agent in matters relating
to the responsibility pertaining to ownership and possession of the vessel [Yeung Sheung
Exchange v. Urrutia, 12 PHIL 747]

Special Contracts of Maritime Commerce

1. CHARTER PARTY
2. BILL of LADING

CHARTER PARTY [Art. 652-692]

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, inconsideration of the payment of a fee.

Kinds of Charter Parties:

1. CONTRACT OF AFFREIGHTMENT– owner retains control of the vessel; involves merely the
use of shipping space on a vessel, leased by the owner in part or as a whole, to carry goods
for others, and may either be a:

a. TIME CHARTER– a contract to use the vessel for a particular period of time

b. VOYAGE CHARTER– a contract for the hire of a vessel for one or a series of
voyage

2. BAREBOAT OR DEMISE– involves the transfer of full possession and control of the vessel for
the period covered by the contract; the entire command of the vessel, possession and control
over its navigation, including the master and crew are turned over to the charterer

Formal Requirements of a Charter Party [Art. 652]

1. Must be drawn in duplicates,

2. Signed by the contracting parties [or by two witnesses at the request of party who does
not know or is not able to sign]

Substantial Requirements of a Charter Party [Art. 652]

1. Conditions freely stipulated

2. Kind, name and tonnage of vessel
 3. Flag and port of registry
4. Name, surname and domicile of captain, ship agent, and charterer
5. Port of loading or unloading
6. Capacity, weight or measure the parties respectively bind themselves to load and
transport, or whether it is total cargo
7. Freightage to be paid
8. Primage to be paid by captain
9. Days agreed for loading or unloading
10. Lay days and extra days to be allowed and the rate of demurrage

Definition of Terms:

1. PRIMAGE – a small allowance or compensation payable:

a. to the master or owner of the vessel for the use of his cables and ropes to discharge the
goods, and
b. to the mariners for lading and unlading in any port

2. DEMURRAGE – an 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

3. LAYDAYS – number of days between loading and departure

Who can Rescind a Charter Party

1. Charterer [Art. 688]

2. Ship owner [Art. 689]

Distinctions

ORDINARY LEASE CONTRACT CHARTER PARTY

If the charter is for a definite period, the

If the lease is for a definite
charterer may rescind the charter party by
period, the lessee cannot give terminate the
paying half of the freightage
lease by just paying a portion of the amount
agreed upon

If the leased property is sold to one who knows If the vessel is sold to another, the new
of the existence of the lease contract, the new owner cannot be compelled to respect the
owner of the property must respect the lease CP for as long as the new owner can load
the vessel with his own cargo

Risks, Damages and Accidents of Maritime Commerce Averages[Art. 806-816, 665-677, 732]

What are considered as Averages [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:

b. from the time she puts to sea at the port of departure
c. until she casts anchor at the port of destination
d. suffered by the goods:
e. from the time they are loaded in the port of shipment
f. until they are unloaded in the port of their consignment

What are Considered Ordinary or Petty Expenses [Art. 807]

The petty and ordinary expenses incident to navigation such as those of:
1. pilotage of coast and ports,
2. lighterage,
3. towage,
4. anchorage,
5. inspection,
6. health,
7. quarantine,
8. lazaretto, and
9. other so called port expenses, costs of barges, and unloading, until the goods are placed
on the wharf, and
10. Other usual expenses of navigation

Who Shall Defray or Reimburse the Ordinary or Petty Expenses [Art. 807]

General Rule: the Ship owner

Exception: unless there is an express agreement to the contrary

Kinds of Averages [Art. 808]

1. Simple or Particular
2. General Particular Average

Simple or Particular Definition [Art. 809]

All the expenses and damage 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

Who bears the loss?

The OWNER of the things which gave rise to the expenses or suffered the damage

General Average Definition [Art. 811]

All the damages and expenses which are DELIBERATELY CAUSED in order to save the vessel,
her cargo, or both at the same time from a REAL KNOWN risk
Risks, Damages and Accidents of Maritime Commerce Averages[Art. 806-816, 665-677, 732]

What are considered as Averages [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:

b. from the time she puts to sea at the port of departure
c. until she casts anchor at the port of destination
d. suffered by the goods:
e. from the time they are loaded in the port of shipment
f. until they are unloaded in the port of their consignment

What are Considered Ordinary or Petty Expenses [Art. 807]

The petty and ordinary expenses incident to navigation such as those of:

Who bears the loss? All the persons having an interest in the vessel and cargo therein at the
time of the occurrence of the average shall contribute

Requisites of a General Average

1. There must be a common danger, a danger in which ship, cargo and crew all participate
2. For the common safety or for the purpose of avoiding an imminent peril, part of the vessel
or cargo or both is sacrificed deliberately
3. This attempt to avoid the imminent peril must be successful in a sense that the vessel and
some of the cargo are saved
4. The expenses were incurred or damages were afflicted after taking the proper legal steps
and authority

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 which may be open against that party for such clause

Distinctions

GENERAL PARTICULAR

Deliberately caused in order to save the
vessel or cargo or both
Inures to the benefit of those interested in
the vessel or her cargo
Shall be shared and contributed to by all
persons benefited
May be due to causes other than a
deliberate act
Does not inure to the common benefit of
all persons interested in the vessel and
her cargo
Shall be borne by the owner of the things
damaged
Art. 677. Effect of a Declaration of War or Blockade on a Charter Party:

• The charter party shall remain in force – if the captain should not have any instruction from
the charterer

• Captain must proceed to the nearest safe and neutral port

• At said port- captain must request and await orders from the shippers

• Expenses and salaries accruing during detention in said port shall be paid as general
average

• If, by order of the shipper, the cargo should be discharged at the port of arrival, the freight
for the voyage out shall be paid in full

Arrival Under Stress[Art. 819-821]

• The arrival of the vessel at the nearest and most convenient port
• Because the vessel CANNOT continue the trip to the port of destination
• On account of:

o Lack of provisions,
o Well founded fear of seizure, privateers or pirates, or
o By reason of any accident of the sea disabling the vessel to navigate

First Ground: Lack of provisions; When Not Considered Lawful [Art. 820]

• If the lack of provisions should arise from the failure to take the necessary provisions for the
voyage according to the usage and customs, or

• If they should have been rendered useless or lost through bad stowage or negligence in
their care

Second Ground: Well-founded fear of seizure, privateers or pirates; When Not Considered
Lawful [Art. 820]

If the risk of the enemies, privateers, or pirates should not have been:

1. well known,
2. manifest, and
3. based on positive and provable acts

Third Ground: By reason of any accident of the sea disabling the vessel to navigate; When Not
Considered Lawful [Art. 820]

• If the defect of the vessel should have arisen from the fact that she was not repaired,
rigged, equipped, and prepared in a manner suitable for voyage, or from some erroneous
orders of the captain
• Whenever malice, negligence, lack of foresight, or want of skill on the part of the captain
exists in actually causing the damage
Collisions[Art. 827-838]

Definitions:

1. In a strict sense:

a. Collision – the impact of 2 vessels, both or which are moving

b. Allision - the striking of a moving vessel
against one that is stationary

2. In a broad sense – collision includes allision, and perhaps another species of encounters
between vessels, or a vessel and other floating, though non-navigable object

Liability in Case of Collision; Who is at Fault: One vessel Said vessel shall be liable for:
1. damage caused to the innocent vessel, and
2. damages suffered by the owners of the cargo of:
a. the innocent vessel, and
b. its own vessel

Who is at Fault: Both vessels[Art. 827]&It cannot be determined which vessel[Art. 831]

1. Each vessel must bear its own loss, and

2. Both shipowners shall be solidarily liable to the shippers for damages suffered

Who is at Fault: A 3rd vessel [Art. 831]

Said vessel shall be liable for:

1. damage caused to 2 the innocent vessels, and

2. damages suffered by the owners of the cargo of:

a. the 2 innocent vessels, and

b. its own vessel

Who is at Fault: None [Fortuitous event] [Art. 830]

None – each one must bear his own loss

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
When does the rule of ―error in extremis‖ apply?

It must appear that there was an imminent danger and it is the actual risk of danger and not
apprehension merely that determines the question whether the error is one in extremis

Doctrine of Inscrutable Fault:

• The court can see that a fault has been committed,

• But is unable from the conflict of testimony, or otherwise,
to locate it [the fault]
• Hence, when it is impossible to determine to what direct and specific acts the collision is
attributable, it is a case of damage arising from a cause that is inscrutable

What kind of AVERAGE is damage caused by a collision due to a storm or force majeure?

The injury shall be considered as a particular average of the vessel run into [Art. 832]

Can the ship owner raise the defense that he exercised the diligence of Good Father Of a
Family in the selection and supervision of the captain?

• Culpa Contractual – NO
• Culpa Aquiliana – YES except in cases of collision when both parties or vessel are at fault
• Culpa Criminal – NO