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Code of Commerce

Code of Commerce

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I.

CODE OF COMMERCE

A.

OVERLAND TRANSPORTATION (Arts. 349-379)

Applicability 1. Domestic land and water/maritime transportation. (Pandect of Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.) 2. Domestic Air Transportation. (Commercial Law Review, Cesar Villanueva, 2004 ed.) IMPORTANT CONCEPTS: 1. Bill of lading 2. Obligations of the carrier 3. Right of abandonment 4. Notice of damage 5. Combined carrier agreement BILL OF LADING  The written acknowledgment of receipt of goods and agreement to transport them to a specific place to a person named or to his order.  Rules: 1. It is not indispensable for the creation of a contract of carriage. (Compania Maritima vs. Insurance Company of North America, 12 SCRA 213) 2. Ambiguity is construed against the carrier, the contract being one of adhesion. 3. The consignee, although the instrument is oftentimes drawn up only by the consignor and carrier, becomes bound by all the stipulations contained therein by making a claim for loss on the basis of said bill of lading. (Sea-Land Services Inc. vs. IAC) 4. The right of a party to recover for loss of shipment consigned to him under a bill of lading drawn up only by and between the shipper and the carrier, springs from either a relation of agency between him and the shipper, or his status as stranger in whose favor some stipulation is made in said contract, and who becomes a party thereto when he demands fulfillment of that stipulation. (Art. 1311 (2), (Mendoza vs. PAL Inc.) 5. Acceptance of the bill of lading without dissent raises the presumption that all the terms therein where brought to the knowledge of the shipper and agreed to by him and, in the absence of fraud or mistake; he is estopped from thereafter denying that he assented to such terms. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P.

2004 ed. p.261)

 Kinds: 1. On board - issued when the goods have been actually placed aboard the ship with very reasonable expectation that the shipment is as good as on its way. 2. Received - 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. 3. Negotiable - one in which it is stated that the goods referred to therein will be delivered to the bearer or to the order of any person named therein. 4. Non-negotiable - One in which it is stated that the goods referred to therein will be delivered to a specified person. 5. Clean – One which does not indicate any defect in the goods. 6. Foul – One which contains a notation thereon indicating that the goods covered by it are in bad condition. 7. 8.

Spent – One which covers goods that already have been delivered by the carrier without a surrender of a signed copy of the
bill.

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 bills. 9. Custody – One wherein the goods are already received by the carrier but the vessel indicated therein has not yet arrived in the port. 10. Port – One which is issued by the carrier to whom the goods have been delivered, and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment.  Functions: 1. Best evidence of the existence of the contract of carriage of cargo (Art. 353) 2. Document of title 3. Receipt of cargo 4. Contract to transport and deliver goods as stipulated 5. Symbol of the goods OBLIGATIONS OF THE CARRIER A. Duty to accept the goods GENERAL RULE: A common carrier cannot ordinarily refuse to carry a particular class of goods. EXCEPTION: For some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. (Fisher vs. Yangco Steamship Co. 31 Phil 1).  Instances when the carrier may validly refuse to accept the goods include the ff: 1.) Goods sought to be transported are dangerous objects, or substances including dynamite and other explosives 2.) Goods are unfit for transportation 3.) Acceptance would result in overloading

Through – One issued by the carrier who is obliged to use the facilities of other carriers as well as his own facilities for the

Partial non-delivery. ARTICLE 366 COGSA Sec.1747) RIGHT OF CONSIGNEE TO ABANDON GOODS  Instances: 1.) 5. Carrier remains duty bound to exercise extraordinary diligence c. action must be filed in court. 1. & Hernando. Lim Ponzo) Purpose of notice: To inform the carrier that the shipment has been damaged. Patent damage: shipper must file a claim against the carrier immediately upon delivery (it may be oral or written) b. Duty to deliver the goods  Not only to transport the goods safely but to the person indicated in the bill of lading. Civil Code rules on prescription apply.  The filing of notice of claim is a condition precedent for recovery. (Notes and Cases on the Law on Transportation and Public Utilities.P.1740) d.) transportation Note: subject to the 3. the carrier is exempted from liability if carriage is insisted upon by the shipper. the contract limiting the common carrier’s liability cannot be availed of in case of loss or deterioration of the goods (Art.4. Natural disaster shall not free the carrier from responsibility (Art. in such absence. and 3. Goods are rendered useless for sale or consumption for the purposes for which they are properly destined (Art.  Shorter period may be stipulated by the parties because it merely affects the shipper’s remedy and does not affect the liab ility of the carrier. water.) 7. 366)  Requisites for applicability: 1. (PHILAMGEN vs.) 6.  However. No bill of lading was issued: within 6 years 2. The goods should be delivered to the consignee or any other person to whom the bill of lading was validly transferred or negotiated. 2. Inc. and to give it an opportunity to make an investigation and fix responsibility while the matter is fresh. it takes the risk of delivering it in good condition as when it was loaded. Bill of lading was issued: within 10 years. International/ island/coastwise overseas/foreign (from transportation foreign country to 2. 2. (PAL vs. Sweetlines.  In case of carriage by railway. 371). Domestic/inter1. and it is charged with liability therefore. T. air Phils.) R.3 (6) Applicability 1. Merely suspends and generally does not terminate the contract of carriage b. Domestic/inter-island/coastwise transportation 2. Carrier is bound to forward them in the 1st shipment of the same or similar goods which he may make to the point of delivery. Aquino. p. Time of delivery Stipulated in Contract/Bill of Lading 1. Land. Within a reasonable time.) 9. Carrier is bound to fulfill the contract and is liable for any delay. provided its objections are stated in the bill of lading. If delay is without just cause. Goods shipped are damaged  Rules: a. CA) B. In case of delay through the fault of the carrier (Art. 365). capture by enemies and the like Goods like livestock will be exposed to disease Strike Failure to tender goods on time. the carrier refuses to pay. Water/maritime transportation . no matter from what cause it may have arisen. No stipulation 1. Latent damage: shipper should file a claim against the carrier within 24 hours from delivery. Carriage of goods rule on Paramount Clause 2. 363). Note: These rules does not apply to misdelivery of goods.68) Contrabands or illegal goods Goods are injurious to health Goods will be exposed to untoward danger like flood. NOTICE OF DAMAGE (ART. Thus. 358 Code of Commerce) Effects of delay a. where the goods are useless without the others (Art. 2004 ed. when a common carrier accepts cargo for shipment for valuable consideration. Carriage of goods 4.) 8.  If despite the notice of claim. (Roldan vs. (ART. Land/water/air transportation 3.) Prescriptive Period  Not provided by Article 366.

and 2) the right to retain the cargo and embargo and detention of the vessel (Luzon Stevedoring Corp v.3. (PNB vs. a jus in re. (PNB vs. Merchant vessel 2. whether foreign or otherwise. to ships. (Aboitiz Shipping Corp. 217 SCRA 359). Jorge Miravite.254) 1997 ed. Condition precedent 1. Justice Jose Vitug. The evidence of real nature is shown by: 1) the limitation of the liability of the agents to the actual value of the vessel and the freight money. as well as mortgage liabilities. Doctrine of limited liability 4. Accidents in maritime commerce MARITIME COMMERCE (Arts. Participants in maritime commerce 6. Civil One year from the date Code applies. Aquino & Hernando.  Arrastre service is not maritime in character. which stands as the guaranty for their settlement. Maritime lien and Preference of Credit 3. (Arts. (Ship Mortgage Decree of 1978) MARITIME LIEN  It constitutes a present right of property in the ship. their crews and navigation. 156 SCRA 169). each carrier is responsible for its particular leg in the contract. 320 SCRA 244) CHARACTERISTICS OF MARITIME TRANSACTION 1. (Rubiso vs. It refers to a contract for the unloading of goods from a vessel. EXCEPTION: A combined carrier agreement where a carrier makes itself liable assuming the obligations and acquiring as well the rights and causes of action of those which preceded it. p. General Accident Fire and Life Assurance Corp. vs. 585)  They are susceptible to maritime liens such as for the repair. Charter party 7. Real .  The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel. COMBINED CARRIER AGREEMENT (ART. 373) GENERAL RULE: In case of a contract of transportation of several legs. 337 SCRA 381)  If the maritime lien arose prior to the recording of a preferred mortgage. CA. They shall continue to be considered as personal property. Carriage of goods Notice of damage 1.similar to transactions over real property with respect to effectivity against third persons which is done through registration.)  Constitutes property which may be acquired and transferred by any of the means recognized by law. B. (ICTSI vs.)  Maritime laws apply only to maritime trade and sea voyages. (Pandect of Commercial Law and Jurisprudence. 72). Hypothecary . in satisfaction of which a vessel may be validly arrested and sold. it shall have priority over the said mortgage lien. IMPORTANT CONCEPTS: 1. 37 Phil. 573. (Notes and Cases on the Law on Transportation and Public Utilities. Rivera.the liability of the owner of the value of the vessel is limited to the vessel itself (Doctrine of Limited Liability). Causes of revocation of voyage 5. 2. (Bar Review Materials in Commercial Law. CA. 2002 ed. 337 SCRA 381) . MERCHANT VESSEL  Vessel engaged in maritime commerce. and to maritime conveyance of persons and property. of delivery (delivered but damaged goods). to be afterward enforced in admiralty by process in rem. Prudential Guarantee. citing Francisco. Not a condition 2. Loans on bottomry and respondentia 8. or date when the vessel left port or from the date of delivery to the arrastre (nondelivery or loss). 3-day period for claiming latent damage Prescriptive period None provided. CA. equipping and provisioning of the vessel in the preparation of a voyage. 573-869) MARITIME/ADMIRALTY LAW  It is the system of laws which particularly relates to the affairs and business of the sea. 24-hour period for precedent claiming latent damage 2.

except the claims against the following preferences in vessel. They will then be satisfied from the proceeds of the sale subject to the order of preference.  Effect of sale: All pre-existing claims in the vessel are terminated. Art. 2.A. CA 156 SCRA 169). General average. during its last voyage. 1521 Effectivity date 1969 1978 Applicability Overseas shipping only Both domestic and overseas shipping Kind of sale Judicial Judicial and extrajudicial Order of Preference A preferred mortgage The preferred shall have priority over mortgage lien shall all claims against the have priority over all vessel. Collision between two negligent vessels. 5. 590 – indemnities from negligent acts of the captain (not the shipowner or ship agent) 3. (Luzon Stevedoring v. San Diego 77 Phil 730). Expenses for repair on vessel completed before loss. including salvage including contract salvage. IAC. Crew of the vessel 2. 3. 4. Taxes due the allowed and costs Philippine Government. taxed by the court and 3. Costs of repair and registered prior in time. Maritime liens bottomry loans. Crew’s wages. 156 SCRA 169) The interest extends to: 1) the vessel itself. In case there is no total loss and the vessel is not abandoned. equipment of the vessel. and the consignee. General average or 4. Damages arising out were not delivered to of tort. (Chua v.ORDER OF PREFERENCE IN CASE OF SALE OF VESSEL R. Preferred mortgage 5. and 4) insurance proceeds. 643 – liability for wages of the captain and the crew and for advances made by the ship agent if the vessel is lost by shipwreck or capture GENERAL RULE: The liability of shipowner and ship agent is limited to the amount of interest in said vessel such that where vessel is entirely lost. Judicial costs of the in the order stated: proceedings. DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE)  Cases where applicable: 1. Art. the obligation is extinguished. 6. RIGHT OF SHIPOWNER OR SHIP AGENT TO ABANDON VESSEL  Instances: . CA 138 SCRA 553). contract salvage. Escano. 3) freightage.  Abandonment of the vessel is necessary to limit the liability of the shipowner. 2) equipments. Claims under Workmen’s Compensation (Abueg vs. The vessel is insured (Vasquez vs.D. Expenses and fees 2. supplies and fuel during its last voyage. and arising prior in time to indemnity due shippers the recording of the for the value of goods preferred mortgage. and provisioning of food. 1. Preferred mortgages registered prior in time. Salvage. 166 SCRA 183) EXCEPTIONS: 1. 7. Art. 837 – collision 4. 587 – civil liability for indemnities to third persons 2. Art. The only instance were abandonment is dispensed with is when the vessel is entirely lost (Luzon Stevedoring vs. Injury or damage due to shipowner or to the concurring negligence of the shipowner and the captain. and 6. 4. transported but which 6. 6106 P. 5. 3. except the the order stated: following preferences 1. Salaries and wages taxes due to the of the Captain and Government.

Discharge duties of the captain. Partial non-delivery. 3.  Not a mere agent under civil law. In case of civil liability from indemnities to third persons (Art. War or interdiction of commerce. 365). Code. Contract in the name of the owners with respect to repairs. . PARTICIPANTS IN MARITIME COMMERCE A. Insurance Code). Pilot A. control and management of the vessel and the consequent right to direct her navigation and receive freight earned and paid. Captains and masters of the vessel C. 371). Capacity to trade. Carrier should pay insurer must pay the the shipper the market insured as if there was value of the goods at actual total loss of the the point of vessel.609. 5. 4. while his possession continues. provisions of food and fuel. Blockade. the 2. 138. to the carrier. armament. 587). In case of constructive loss of the vessel (Sec. 687). 138. Embargo – A proclamation or order of a state. In case of leakage of at least ¾ of the contents of a cargo containing liquids (Art. Embargo. Goods are rendered 3. SHIPOWNERS AND SHIP AGENTS Shipowner (proprietario)  Person who has possession. 363).1. as far as human power can effect it. Ship agent (naviero)  Person entrusted with provisioning and representing the vessel in the port in which it may be found. 3. subject to Art. he is solidarily liable with the ship owner. and all that relate to the requirements of navigation.  Powers and functions: 1. prohibiting the departure of ships or goods from some or all the ports of such state until further order. Supercargoes E. (Art. 4. Prohibition to receive cargo at destination. Inability of the vessel to navigate. 2. and 3. 2. Blockade – A sort of circumvallation of a place by which all foreign connection and correspondence is. CAUSES OF REVOCATION OF VOYAGE 1. In case of delay through the fault of the carrier (Art. and freight of the vessel. 2. Effects 1. In case of leakage of useless for sale or at least ¾ of the consumption for the contents of a cargo purposes for which containing liquids (Art. In case of (2). Sec. 2. 3. Order a new voyage. 587). useless without the 2. make a new charter or insure the vessel after obtaining authorization from the shipowner or if granted in certificate of appointment. to be cut off. RIGHT OF ABANDONMENT SHIPOWNER OR SHIP CONSIGNEE AGENT What may be abandoned Vessel Goods shipped Instances 1. from indemnities to third where the goods are persons (Art. 2. Transfer of ownership 1. Interdiction of commerce – A governmental prohibition of commercial intercourse intended to bring about an entire cessation for the time being of all trade whatever. In case of civil liability 1. Shipowners and ship agents B. 640) Terms: 1. 2. destination. usually issued in time of war or threatened hostilities. they are properly 687) destined (Art. and 3. Transfer of of the vessel from the ownership on the shipowner to the goods from the shipper shippers or insurer. Officers and crew of the vessel D. details of equipment. Insurance others (Art. also includes the shipowner.

Damages due to misuse of power.e. but are particularly used in accordance with the size of the vessel governed and the scope of transportation. Habitual drunkenness. respectively. fail to comply with his orders or are wanting in discipline.  No liability for the following: 1. 605) B. 4. Order repair of vessel to enable it to continue its voyage. 620) Solidary 1. at the port of arrival. 3. Technical director of the vessel. b. 3. Keep a Log Book. 611)  Duties: 1. Stay on board during the loading and unloading of the cargo. OFFICERS AND CREW 1. 586) 2. Damage caused to the vessel or to its cargo through malice or manifest or proven negligence. Follow instructions of and render an accounting to the ship agent. except on the following grounds: a. (Art. c. 618) C. 3. (Art. Comply with the requirements of customs. 2. he may discharge them at his discretion. 5. Observe rules to avoid collision. i.. 4. General agent of the shipowner. 9. and 6. 3. 4. (Art. 6. 7. 2. equip and provision the vessel. 610)  Sources of funds to comply with the inherent powers of the captain (in successive order): 1. From the consignee of the cargo. and provisioning of the vessel unless he has expressly bound himself personally or has signed a bill of exchange or promissory note in his name. e. 609)  Inherent powers: 1. By a loan on bottomry. Leave the vessel last in case of wreck. Robbery. vs. Loss and damage to the goods loaded on the vessel without prejudice to their right to free themselves from liability by abandoning the vessel to the creditors. 4. From the consignee of the vessel.Civil Liabilities of the Shipowner And Ship Agent 1. 8. By drawing on the ship agent. and small and coastwise. Filipino citizen. while on board vessel. For deviations. CAPTAINS AND MASTERS  They are the chiefs or commanders of ships. 8. 3. Representative of the government of the country under whose flag he navigates. (Art. large and overseas. 11. For arrivals under stress. Examine the ship before the voyage. 5. 603)  If for a definite period. Liabilities of the Ship Agent/Shipowner for Acts Done by the Captain towards Passengers and Cargoes Damages to vessel and to cargo due to lack of skill and negligence. 612)  A ship’s captain must be accorded a reasonable measure of discretionary authority to decide what the safety of the ship and o f its crew and cargo specifically requires on a stipulated ocean voyage (Inter-Orient Maritime Enterprises Inc. Be on deck while leaving or entering the port. 587) Duty of Ship Agent to Discharge the Captain and Members of the Crew  If the seamen contract is not for a definite period or voyage. Damages caused to the vessel or to the cargo by force majeure. Command the crew and direct the vessel to its port of destination.  Nature of position (3-fold character): 1. Damages due to non-observance of marine regulations. Damages due to mutinies. to repair. (Art. 10. Thefts and robberies of the crew. (Art. and provision the vessel. Obligations contracted for the repair. 5. Appoint crew in the absence of ship agent. 6. Hold in custody properties left by deceased passengers and crew members. (Art. Legal capacity to contract. etc.  The terms have the same meaning. CA). equipment. 2. Theft. Sailing Mate/First Mate . whether authorized or not. All contracts of the captain. 2. Losses and fines for violation of laws. By sale of part of the cargo. Bring on board the proper certificate and documents and a copy of the Code of Commerce. 2. Accounting Book and Freight Book. 12. (Art. 2. Supply.  Qualifications: 1. health. (Art. Insubordination in serious matters. 3. 5. Protest arrivals under stress and in case of shipwreck. (Art. Impose correctional punishment on those who. equip. Must have passed the required physical and mental examinations required for licensing him as such. Demand a pilot while entering or leaving a port. 7. d. he may not discharge them until after the fulfillment of their contracts. Make contracts for the charter of vessel in the absence of ship agent. 2.

if captured in defense of vessel . Keep the Binnacle Book. Just Causes for the Discharge of Seaman While Contract Subsists 1. Not to change or repair the engine without authority of the captain. 627)  Duties: 1. and full. if after departure 2. spare parts.wages up to the date of the capture. By share of profits or freightage. and 3. 3. the sailing mates. 6.631) Second Mate  Takes command of the vessel in case of the inability or disqualification of the captain and the sailing mate. or a naval war with the power to which the vessel was destined occurs. Inventory the rigging and equipment of the vessel. By the voyage. (Arts. Crew  No liability under the following circumstances: 1. (Art. 5. In charge of the motor apparatus. thus including the crew. 645) Complement of the Vessel  All persons on board. Supervise all personnel maintaining the engine. If the vessel should change owner or captain. (Art. sickness. if captured due to carelessness . Provide himself with maps and charts with astronomical tables necessary for the discharge of his duties. before beginning voyage.full payment. If a disease breaks out and be officially declared an epidemic in the port of destination. 4.none. (Art. 3. from the captain to the cabin boy. full. Preserve the hull and rigging of the vessel. Change the course of the voyage on consultation with the captain and the officers of the boat. or the ship’s company. if laid up. he may take in foreigners. (Art. If death is natural: a. 3. 3. 2. if on voyage in c. 5. Habitual drunkenness. (Art. if death is due to defense of vessel . . 2. engineers. By the month. Engineers 4. Physical incapacity. 4. When two or more are hired. (Art. 2. and other instruments pertaining to the engines. and service. captain attempts to change it. Arrange well the cargo.half of amount if death occurs on voyage out. but not exceeding 1/5 of the crew. 2.2. 4. Responsible for all the damages caused to the vessel and the cargo by reason of his negligence. 3. If. if by voyage .  Duties: 1. one of them shall be the chief engineer. or death and shall assume all of his duties. Keep the engines and boilers in good condition. necessary for the management. 2. 632) Crew  The aggregate of seamen who man a ship.  Does not include the passengers or the persons whom the vessel is transporting. 628 . 6. following the decision of the captain in case of disagreement. assuming in such case their powers and responsibilities. 637) Rules in case of Death of a Seaman  The seaman’s heirs are entitled to payment as follows: 1. where he is present and in his absence. 4. (Art. 634) Classes of Seaman’s Contracts 1. Repeated incapacity and negligence. want of discipline. the captain hires them. 647) Sailing Mate/First Mate  Second chief of the vessel who takes the place of the captain in case of absence. maneuvers. 5. preferring Filipinos.  Third in command  Duties: 1. stokers and other employees on board not having specific designations. Perpetration of a crime. 632) Engineers  Officers of the vessel but have no authority except in matters referring to the motor apparatus. Desertion. Repeated insubordination. Discipline the crew. Keep an Engine Book. Inform the captain of any damage to the motor apparatus. 3. 2.  Hired by the ship agent. if by shares .full payment. compensation up to time of death if engaged on wage b. and in their absence. Assign work to crew members. if before departure. Second Mate 3. 4. powers and responsibilities.

11. There are occasions when the master may and should interfere and even displace the pilot. SUPERCARGOES  Persons who discharges administrative duties assigned to him by ship agent or shippers.  The term generally connotes a person taken on board at a particular place for the purpose of conducting a ship through a river. 689) Commercial law concept . Charter party 2.D. Contract of Affreightment – A contract whereby the owner of the vessel leases part or all of its space to haul goods for others. It transforms a common carrier into a private carrier. or from a port. Contract of transportation of passengers on sea voyages 4. and licensed.  The shipowner retains the possession. The charterer is liable as if he were the owner.  The charterer becomes the owner of the vessel pro hac vice. EXCEPT: 1. road or channel. Voyage or trip charter – the vessel is leased for one or series of voyages usually for purposes of transporting goods for charterer. the charterer assumes the customary rights and liabilities of the shipowner to third persons and is held liable for the expense of the voyage and the wages of the seamen. R. (Planters Products. command and navigation of the ship. Civil law concept CHARTER PARTY Charterer may rescind charter party by paying half of the freightage agreed upon. (Notes and Cases on the Law on Transportation and Public Utilities. LEASE If for a definite period. except when the cause arises from the unworthiness of the vessel. Countermand or overrule by the master of the vessel in which case the registered owner of the vessel is liable. Bill of lading 3. Marine insurance CHARTER PARTY  A contract by virtue of which the owner or agent binds himself to transport merchandise or persons for a fixed price. 226 SCRA 476)  Parties: 1. 649) E. The shipowner leases to the charterer the whole vessel. CA. Charterer  Classes: 1. lessee cannot give up the lease by paying a portion of the amount agreed upon. & Hernando.  A contract by which an entire ship. 2. or in certain waters. as when the pilot is obviously incompetent or intoxicated (Far Eastern Shipping Company vs. (Sec. the Harbor Pilot is responsible for damage to a vessel or to life or property due to his negligence. or some principal part thereof is let/leased by the owner to another person for a specified time or use. who thereby become the charter’s servants. Because the charterer is treated as owner pro hac vice.  While 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 the ship. the charterer merely having use of the space in the vessel in return for his payment of the charter hired.P. to conduct a vessel into or out of ports. food and fuel. If the leased property is sold to one who knows of the existence of the lease. 2. T. the master does not surrender his vessel to the pilot and the pilot is not the master. Bareboat or demise – The charterer provides crew. keeping an account and record of transaction as required in the accounting book of the captain. PILOT  A person duly qualified. including the master and the crew. possession and consequent control over the vessel’s navigation. vs. 518) Liablity of Pilot GENERAL RULE: On compulsory pilotage grounds. Art.III PPA Admin Order 03-85) SPECIAL CONTRACTS OF MARITIME COMMERCE 1. The new owner is not compelled to respect the charter party so long as he can load the vessel with his own cargo.  Kinds: a. Loan on bottomry 5. (Art. Loan on respondentia 6. Time charter – vessel is chartered for a fixed period of time or duration of voyage. Inc. (Art. the new owner must respect the lease. CA). b. Ship owner or ship agent 2. 2004 ed.  Master pro hac vice for the time being in the command and navigation of the ship.  Compulsory Pilotage – States possessing harbors have enacted laws or promulgated rules requiring vessels approaching their ports to take on board pilots licensed under the local laws. transferring to the latter the entire command. Accident caused by force majeure or natural calamity provided the pilot exercised prudence and extra diligence to prevent or minimize damages. p. Aquino. just for that one particular purpose only.

(Pandect of Commercial Law and Jurisprudence. the cargo shippers. (Art. either in whole or in majority part. who have legal control and possession of the vessel 2. (Art.609) REQUISITES OF A VALID CHARTER PARTY 1. Charterer may subcharter entire vessel to 3rd person only if not prohibited in original charter. Captain in the absence of the ship agent or consignee and only if he acts in accordance with the instructions of the agent or owner and protects the latter’s interests. Ship agent if authorized by the owner/s or given such power in the certificate of appointment. command and navigation of the ship Common carrier is not converted to a private carrier. consignees or owners shall contribute with the shipowner in general average. even though the transportation is domestic. Compliance with Art. contract or otherwise. Justice Jose Vitug. subject to the extent that any term of the bill of lading is repugnant to the COGSA or applicable law. 1997 ed. carrier is to private BILL OF LADING More like a private receipt which the captain gives to accredit goods received from persons Real contract CONTRACT OF AFFREIGHTMENT (TIME OR VOYAGE CHARTER) Owner remains liable as carrier and must answer for any breach of duty Charterer is not regarded as owner. 1997 ed.679) 3. Existing vessel which should be placed at the disposition of the shipper 3. Consent of the contracting parties 2. Owner or owners of the vessel. Consensual contract BAREBOAT OR DEMISE CHARTER Charterer becomes liable to others caused by its negligence Charterer regarded as owner pro hac vice for the voyage Owner of vessel relinquishes possession. The vessel owner retains possession. 652 of the Code of Commerce Clauses Which May Be Included In a Charter Party Jason clause A stipulation in a charter party that in case of a maritime accident for which the shipowner is not responsible by law. (Pandect of Commercial Law and Jurisprudence.) .) Clause paramount or paramount clause A clause in a charter party providing that the COGSA shall apply. PERSONS WHO MAY MAKE A CHARTER 1. command and navigation to charterer Common converted carrier. (Art. Freight 4.598) 4. then to the extent thereof the provision of the bill of lading is void. Justice Jose Vitug.CHARTER PARTY An entire or complete contract.

If the vessel is chartered wholly. Embargo.A. 4.F.free on board. Terms: 1. . Arrival at a port for repairs. 5.free alongside ship. 3. 2. 679-687) Rescission of a Charter Party At charterer’s request (Art 688) 1. To pay losses to others for loading uncontracted cargo and illicit cargo. 669-678) CHARTERER 1. 689) 1. 4. Lay Days . 3.bonus to be paid to the captain after the successful voyage. 2. To unload cargo clandestinely placed 4. not to accept cargo from others. Prohibition to receive cargo.I. 3. 2. To leave the port if the charterer does not bring the cargo within the lay days and extra lay days allowed.S. To pay expenses for deviation. 3. 2. (Arts. 7. Error in tonnage or flag. F. 2. insurance and freight. 5. 690) 1. Failure to place the vessel at the charterer’s disposal.days allowed to charter parties for loading and unloading the cargo. If the extra lay days terminate without the cargo being placed alongside the vessel. To substitute another vessel if load is less than 3/5 of capacity. At shipowner’s request (Art. . – cost. By abandoning the charter and paying half of the freightage. Demurrage – the sum fixed in the charter party as a remuneration to the owner of the ship for the detention of his vessel beyond the number of days allowed by the charter party for loading or unloading or for sailing. To pay freightage on unboarded cargo. Sale by the owner of the vessel before loading by the charterer. Blockade. To observe represented capacity. 2. 4. C. Fortuitous causes (Art. To wait if the vessel needs repair. To pay the agreed charter price. to bring cargo to nearest neutral port in case of war or blockade.Rights and Obligations of Parties SHIPOWNER OR SHIP AGENT 1. Inability of the vessel to navigate. 3. 3. 5.cost and freight. 2. and 4.B. To place in a vessel in a condition to navigate. Primage . Extra Lay Days – days which follow after the lay days have elapsed. & F. TRANSSHIPMENT OF GOODS . F. 4. C. and 5. USUAL FORMS OF CONSUMMATING CONTRACTS 1.O. enemies or bad weather. (Arts. Return of the vessel due to pirates. Deadfreight – the amount paid by or recoverable from a charterer of a ship for the portion of the ship’s capacity the latter contracted for but failed to occupy. 6. 5. War or interdiction of commerce. .

5. is a violation of contract and infringement of right of shipper and subjects carrier to liability if freight is lost event by cause otherwise excepted. which amount.726) . but rather on the fact of actual physical transfer of cargo from one vessel to another. Names. 719) Who may contract Shipowner or ship Only the owner of the agent. Common elements: Exposure of security to marine peril. 201 SCRA 102) LOAN ON BOTTOMRY AND RESPONDENTIA  A real. aleatory contract. 3. 719) destination. Time for repayment. 4.the captain. LOAN ON RESPONDENTIA Definition Loan made by Loan taken on security shipowner or ship of the cargo laden on a agent guaranteed by vessel. of vessel at (Art. 7.  It is not dependent on the ownership of the transporting ships or in the change of carriers. Forms: Public instrument Policy signed by the contracting parties and the broker taking part therein Private instrument (Art. 3. (Magellan Manufacturing vs. Lender loaned an amount larger than the value of the object due to fraudulent means employed by the borrower. 2. CA. Voyage during which the risk is run (Art. BOTTOMRY/ RESPONDENTIA Not subject to Usury Law Liability of the borrower is contingent on the safe arrival of the vessel or cargo at destination The last lender is a preferred creditor ORDINARY LOAN (MUTUUM) Subject to Usury Law Not subject to any contingency (absolute liability) The first lender is a preferred creditor WHEN LOAN ON BOTTOMRY OR RESPONDENTIA REGARDED AS SIMPLE LOAN 1. or the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached. The act of taking cargo out of one ship and loading it in another. 2. 1. 2. however competent and safe the vessel into which the transfer is made. surnames and domiciles of the borrower and the lender. Amount of the loan and the premium stipulated. Name. name and registry of the vessel. by virtue of which one person lends to another a certain amount of money or goods on things exposed to maritime risks. Outside of the cargo. surname and domicile of the captain. with its earnings. and repayable vessel itself and upon safe arrival of repayable upon arrival cargo at destination. residence of the owners . Obligation of the debtor conditioned only upon safe arrival of the security at the point of destination. or the transfer for further transportation from one ship or conveyance to another. is to be returned if the things are safely transported. unilateral. (ART. 720) Contents: Kind. (Art. Goods pledged to secure repayment.  If done without legal excuse. and which is lost if the latter are lost. 1.721) LOAN ON BOTTOMRY 1. 6.

and The cargo loaded on the vessel be different in from that agreed upon. and to the cargo from the port of loading to the port of consignment.727) If the effects on which the money is taken is not subjected to any risk. Agan. 809) known risk. The vessel was engaged in contraband. the obligation of the insurer becomes absolute Consensual contract LOAN ON BOTTOMRY OR RESPONDENTIA Indemnity is paid in advance by way of a loan In case of loss of the vessel due to a marine peril. L-6393. (ART. (Art. Justice Jose Vitug. may agree on any rate of interest. It is the safety of the property. which constitutes the true foundation of general average. Gross or General Average  Where both vessel and cargo are saved. (Art. Jan. (Art. 2. common safety factor. since a loan on bottomry partakes of the nature likewise of an insurance coverage to the extent of the loan accommodation. it is particular average. 101. do not constitute general average. Loss due to inherent defect. G. (Pandect of Commercial Law and Jurisprudence. in order to continue its voyage. 735) Note: If a vessel is hypothecated by bottomry only the excess is insurable. (CB Circular 905) MARINE INSURANCE Indemnity is paid after the loss has occurred In case of loss of the vessel due to a risk insured against.R. The value of what may be saved in case of shipwreck shall be divided between the lender and the insurer in proportion to the interest of each one. 4. vessel. Averages 2. and all damages or deterioration suffered by the vessel from departure to the port of destination. the balance will be considered a simple loan. where only the vessel or only the cargo is saved. 31. the parties to a loan. 811) .  Expenses incurred to refloat a vessel. 1955) PARTICULAR OR GROSS OR GENERAL SIMPLE Definition Damages or expenses Damages or expenses caused to the vessel or deliberately caused in cargo that did not inure order to save the to the common benefit. EXCEPTIONS: 1. Concurrence of Marine Insurance and Loan on Bottomry/Respondentia 1. (Art. vs. which accidentally ran aground. Arrival Under Stress 3. it is general average. Collision 4. The same rule would apply to the hypothecation of the cargo by respondentia. 1997 ed. vessel or both. Not only is there absence of a marine peril. The insurable interest of the owner of a ship hypothecated by bottomry is only the excess of the value over the amount secured by bottomry. Magsaysay. Inc.) ACCIDENTS IN MARITIME COMMERCE 1. and not the voyage. whether ordinary or maritime. during the voyage designated.729) Note: Under existing laws. Particular or Simple Average 2. 3. Loss due to the fault or malice of the borrower. 5. 3. 806)  The person whose property has been saved must contribute to reimburse the damage caused or expense incurred if the situation constitutes general average. its cargo or and borne by respective both from real and owners. the obligation of the borrower to pay is extinguished Real contract Hypothecary Nature of Bottomry/ Respondentia GENERAL RULE: The obligation of the borrower to pay the loan is extinguished if the goods given as security are absolutely lost by reason of an accident of the sea. Full amount of the loan is not used for the cargo or given on the goods if all of them could not have been loaded. and if it is proven that the goods were on board. and deliberateness. (A. Loss due to the barratry on the part of the captain. Shipwreck AVERAGE  An extraordinary or accidental expense incurred during the voyage in order to preserve the cargo. (Sec.2. (ART.No. Insurance Code) 2.  Classes: 1.

Deck cargo is allowed only in domestic/coastwise/inter-island shipping.  Order of goods to be cast overboard: 1. beginning with the one with greatest weight and smallest value. common danger. . Those which are on the deck. 810) the occurrence of the average shall contribute to satisfy this average.Requisites 1. Delivery of the minutes to the maritime judicial authority of the first port.732). (Art. 2. (ART. 2. Fuel for the vessel if there is more than sufficient fuel for the voyage. proper formalities and legal steps. Number of interests involved Only one interest Several interests involved involved Share in the damage or expense 100% share In proportion to the value of the owner’s property saved Right to recover No reimbursement There may be reimbursement Kinds (not exclusive) Art. 4. (Art.)  In order that the jettisoned goods may be included in the gross or general average. Assembly and deliberation 2. If deck cargo is loaded with the consent of the shipper on overseas trade. Justice Jose Vitug. the existence of the cargo on board should be proven by means of the bill of lading. 2. (ART. 3. 809 Art. (Arts. (Rule IX. (Art. Entry of the resolution in the logbook 4. Goods not recorded in the books or records of the vessel. Resolution of the captain 3. (Art. preferring the heaviest one with the least utility and value. 1997 ed. within 24 hours from arrival. Ratification by captain under oath. Goods carried on deck. (Pandect of Commercial Law and Jurisprudence. it must always contribute to general average.859) and lenders on bottomry and respondentia shall likewise contribute. and is prohibited in international/overseas/foreign shipping.855) 2. deliberate sacrifice. (Art.855 (2)) 3. 815)  Jettisoned goods are not res nullius nor deemed “abandoned” within the meaning of civil law so as to be the object of occupation by salvage. Those which are below the upper deck. York-Antwerp Rule) Jettison  Act of throwing cargo overboard in order to lighten the vessel. 816) York-Antwerp (Y-A) Rules on Determining Liability for Averages With Regard To Deck Cargo 1. 6. Detailed minutes 5. but should the same be jettisoned. it would not be entitled to reimbursement because there is violation of the Y-A Rules. 813-814) GOODS NOT COVERED BY GENERAL AVERAGE EVEN IF SACRIFICED 1. Liability The owner of the goods All the persons having which gave rise to the an interest in the expense or suffered the vessel and the cargo damage shall bear this therein at the time of average. success. 811 Procedure for recovery 1. 812)  The insurers (Art.

3. There is a presumption against a vessel which has no buoys to indicate the location of its anchors to prevent damage to vessels which may approach it. 819) When unlawful 1. But they shall not be liable for the damages caused by reason of a lawful arrival. Nautical Rules to Determine Negligence 1. 4. 9. 5. Malice. Captain should determine during the voyage if there is well founded fear of seizure. Objections and protests shall likewise be entered in the minutes. Allision  Impact between a moving vessel and a stationary one. the vessel is exposed for many days to perils of the sea. 6. lack of foresight or skill of captain. 5. there must first be an assembly before departure. There is a presumption against the vessel with spread sails which collides with another which is at anchor and cannot move. privateers. even when the crew of the latter has received word to lift anchor. The captain shall have the deciding vote. The officers shall determine and agree if there is well-founded reason after examining the circumstances. the farther one must allow the nearer to enter first. 825)  Steps: 1. the smaller should give the right of way to the larger one. Risk of enemy not well known or manifest 3. (Smith Bell v. 3. CA) . DOMESTIC Deck cargo is allowed INTERNATIONAL Deck cargo is not allowed With shipper’s consent General average Particular average Without shipper’s consent Captain is liable Captain is liable ARRIVAL UNDER STRESS (ARRIBADA)  The arrival of a vessel at the nearest and most convenient port instead of the port of destination.  Reason: In domestic shipping. or accidents of the sea disabling it to navigate. the fault is presumed to be imputable to the one who arrived later. 7. voyages are usually short and the seas are generally not rough. 2. (Art. 8. when there was not sufficient time to do so or there was fear of a greater damage or other legitimate reason. When two vessels are about to enter a port. pirates. negligence. if during the voyage the vessel cannot continue the trip to the port of destination. COLLISION  Impact of two vessels both of which are moving. 4. When lawful The inability to continue voyage is due to lack of provisions. well-founded fear of seizure. However. In overseas shipping. (Art. privateers and other valid grounds. The vessel which leaves later is presumed to have collided against one which has left earlier. unless it can be proved that there was no fault on its part. Captain shall assemble the officers and summon the persons interested in the cargo who may attend the meeting but without a right to vote. If deck cargo is loaded with the consent of the shipper on coastwise shipping. 2. The agreement shall be drafted and the proper minutes shall be signed and entered in the log book. There is a presumption against an improperly moored vessel. Vessels must have “proper look-outs” or persons trained as such and who have no other duty aside therefrom. There is a presumption against the vessel which sets sail in the night. Lack of provisions due to negligence to carry according to usage and customs. in case the cause has been risk of enemies. (Art. it must always contribute to general average and if jettisoned would be entitled to reimbursement. (Art. Defect of vessel due to improper repair. if they collide. 821)  It is the duty of the captain to continue the voyage without delay after the cause of the arrival under stress has ceased failing in such duty renders him liable. 820) Who bears expenses: The shipowner or ship agent is liable in case of unlawful arrival under stress. A vessel leaving port should leave the way clear for another which may be entering the same port. 2. and 4. When two vessels meet. 3.

P. v. (Art. Third zone – time when collision is certain and time of impact.  It is in this period where conduct of the vessels is primordial. 2004 ed. Second zone – time between moment when risk of collision begins and moment it becomes a practical certainty. such as a bridge post. It is not a civil tort governed by the Civil Code but a maritime one governed by Arts. T.  Error in Extremis . Insa Abdulhaman)  Doctrine of Last Clear Chance and Rule on Contributory Negligence cannot be applied in collision cases because of Art. Where a steamship and a sailing vessel are approaching each other from opposite directions. CA.sudden movement made by a faultless vessel during the third zone of collision with another vessel which is at fault during the 2nd zone. the steamship from the moment the sailing vessel is seen. 843). Baco River Plantation Co. 624). or running against an object in sea or on the coast. Aquino.) MARITIME PROTEST  Condition precedent or prerequisite to recovery of damages arising from collisions and other maritime accidents. Zones of Time in the Collision of Vessels 1. 26 PHIL 632) Cases Covered By Collision and Allision 1. Both vessels at fault  Each vessel must bear its own loss.827 of the Code of Commerce. (Art. 826) 2. but both should be solidarily liable for damage to the cargo of both vessels. both vessels bear their respective damage. Collision (Art. 827) 3. 836)  Cases applicable: 1. the owner of the vessel may demand indemnity from said captain. (Commercial Law Review. 3.  No rule is as yet applicable for none is necessary. (Art. Shipwrecks (Arts. negligence or lack of skill of the captain. (Art.  Who makes: Captain  When made: within 24 hours from the time the collision took place. or on intersecting lines. Arrival under stress (Art. 830)  The doctrine of res ipsa loquitur applies in case a moving vessel strikes a stationary object. 841)  The rules on collision or allision. if in the Philippines and to the Philippine consul. unless a departure therefrom becomes necessary to avoid imminent danger. & Hernando. R. for the purpose of recovering losses and damages.  It is a written statement made under oath by the captain of a vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or damaged. the defense of due diligence in the selection and supervision of employees is unavailing in case of a maritime tort resulting in collision. 835) SHIPWRECK  It is the loss of the vessel at sea as a consequence of its grounding. 612(8)).. 4.Nautical Rules as to Sailing Vessel and Steamship 1. (Art. One vessel at fault  Vessel at fault is liable for damage caused to innocent vessel as well as damages suffered by the owners of cargo of both vessels. First zone – all time up to the moment when risk of collision begins. can equally apply to shipwrecks.  Applicability: Overseas trade only. 2. but the shippers of both vessels may go against the shipowners who will be solidarily liable. Even if such sudden movement is wrong.  An error in this zone would no longer be legally consequential. dock. if the collision took place abroad. C. 2. (Far Eastern Shipping v. Fortuitous event/force majeure  No liability.  Before whom made: competent authority at the point of collision or at the first port of arrival. Each bears its own loss. 2. It occurs when the vessel sustains injuries due to a marine peril rendering her incapable of navigation. or navigational aid. (Manila Steamship vs. Villanueva. 3.  If the wreck was due to malice. no responsibility will fall on said faultless vessel. 2004 ed. 835). The sailing vessel is required to keep her course unless the circumstances require otherwise.) . 612(15). Luzon Stevedoring vs. CA)  Even if the cause of action against the common carrier is based on quasi-delict. and 2) on collision time. 826-839 of the Code of Commerce. 831) 5.  Excuses for not filing protest: 1) where the interested person is not on board the vessel. Third vessel at fault  The third vessel will be liable for losses and damages. (Art. 828)  Doctrine of Inscrutable Fault – In case of collision where it cannot be determined which between the two vessels was at fault. 4. (Art. Vessel at fault not known  Each vessel must bear its own loss. (Art. It is in this zone that vessels must strictly observe nautical rules. (Notes and Cases on the Law on Transportation and Public Utilities. shall watch with the highest diligence her course and movements so as to be able to adopt such timely means of precaution as will necessarily prevent the two boats from coming in contact. as may be pertinent. with respect to the circumstances attending such occurrence. but the shippers of both vessels may go against the shipowners who will be solidarily liable. SPECIAL CONCEPTS ARRASTRE SERVICE  A contract for the unloading of goods from a vessel. need not be protested. (Urrutia and Co. Where the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages (Art.

(Hartford Fire Insurance v. Comm. vs. Lazaro)  The loading on the ship of outgoing cargo is also part of stevedoring work.  Liability: 1. (Chief of Staff vs. E. Home Assurance) Note: In order to attribute to the carrier any damage to the shipment that may be found. which will then deliver the cargo to the importer. in case of unloading at sea. Of Customs. Similar to a common carrier (Northern Motors v. ICTSI v. Of Customs. Prince Line) 3. (Bankers vs. he cannot unload and deliver the cargo by himself. Similar to a warehouseman (Lua Kian v. 2004 ed. (Anglo-Fil Trading Corp. Phil. C. the consignee must prove that the damage was due to the negligence and while the goods are in the custody of the arrastre operator. description and conditions of the cargo inside the container is the sole responsibility of the shipper. (US Lines vs. inspection of the goods should be done at pier-side.)  Nature of business: It is a public utility. CIR)  As understood in the port business. The carrier does not participate in the counting of the merchandise for loading into the container. Solidary liability with the common carrier Note: In order that the arrastre operator may be held liable.) STEVEDORING SERVICE  The carriage of goods from the warehouse or pier to the holds of the vessel. Comm. discharging functions which are heavily invested with public interest. the term consists of the handling of cargo from the hold of the ship to the dock. or to a barge. Reyma Brokerage v. Prudential Guarantee)  The matter of quantity.) CONTAINERIZATION/ “SAID-TO-CONTAIN”/ “SHIPPER’S LOAD AND COUNT” SYSTEM  System whereby the shipper loads his cargoes in a specially designed container. unless there is stipulation to the contrary. CA) . Inc. seals the container and delivers it to the carrier for transportation. and the sealing of the container. (US Lines v. (Commercial Law Review. the actual loading. in case of pier-side unloading. (Ibid. Razon. Villanueva. Significance: When a person brings in cargo from abroad. The unloading must be done by the arrastre operator. Manila Railroad) 2.

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