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PORT OF LOADING AND UNLOADING:

- Where cargoes will be unloaded


- Stipulated in the charter party
- Charterer may be given an option to discharge at one or more ports within a geographic range
based on sound commercial reason that the charterer may not know the best market for his
goods at the time the charter is fixed.
- safe-ports clause ship owner may reserve the right to decline to risk his vessel in an unsafe
port

DEMURRAGE:

lay days - number of days allowed by the charter party for loading or unloading a vessel without
demurrage. Computation of lay days begin to run against the consignee when the vessel has arrived at
berth or other usual and customary place for loading or unloading, and is in actual readiness to
discharge its cargo.

- A charge for the detention of the vessel in loading or unloading of cargo beyond the number of
days agreed upon in the charter. In such case, the charterer shall pay for the demurrage
incurred, the sum of which is by the parties in the charter party
- If the time for loading or unloading is not stated in the charter party, it is understood that the
charterer will unload and discharge the cargoes within a reasonable time or with reasonable
diligence
- After the stipulated or customary period has passed and no fixed indemnity for delay is stated in
the charter party, the captain shall be entitled to demand demurrage for the lay days and extra
lay days which may have elapsed in loading or unloading.

Republic Flour Mills Corp. v. Forbes Factors, Inc.

In a contract Forbes was appointed as the exclusive Philippine indent


representative of Richco Rotterdam B.V. (Richco), a foreign corporation, in the
sale of the latters commodities. Under one of the terms of the contract, Forbes
was to assume the liabilities of all the Philippine buyers, should they fail to honor
the commitments on the discharging operations of each vessel, including the
payment of demurrage and other penalties. In such instances, Richco shall have
the option to debit the account of Forbes corresponding to the liabilities of the
buyers, and Forbes shall then be deemed to be subrogated to all the rights of
Richco against these defaulting buyers.
Petitioner purchased Canadian barley and soybean meal from Richco. The latter
thereafter chartered four (4) vessels to transport the products to the Philippines.
Each of the carrier bulk cargoes was covered by a Contract of Sale. The four
contracts specifically referred to the charter party in determining demurrage or
dispatch rate. The contract further provided that petitioner guarantees to settle
any demurrage due within one (1) month from respondents presentation of the
statement. Upon delivery of the barley and soybean meal, petitioner failed to
discharge the cargoes from the four (4) vessels at the computed allowable period
to do so. Thus, it incurred a demurrage amounting to a total of US$193,937.41.
Consequently, Richco sent a communication to Forbes, informing it that the
demurrage due from petitioner had been debited from the Forbes account.
petitioner assails the right of respondent to demand payment of demurrage.
Petitioner asserts that, by definition, demurrage is the sum fixed by the contract
of carriage as remuneration to the ship owner for the detention of the vessel
beyond the number of days allowed by the charter party.[5] Thus, since
respondent is not the ship owner, it has no right to demand the payment of
demurrage and has no personality to bring the claim against petitioner.
ISSUE:
Whether Forbes has the right to demand payment of demurrage since, by
definition, demurrage is a remuneration to the ship owner for the detention of
the vessel beyond the number of days allowed by the charter party.

HELD:
YES. The facts are undisputed. The delay incurred by petitioner in discharging
the cargoes from the vessels was due to its own fault. Its obligation to demurrage is
established by the Contracts of Sale it executed, wherein it agreed to the conditions
to provide all discharging facilities at its expense in order to effect the immediate
discharge of cargo; and to place for its account all discharging costs, fees, taxes,
duties and all other charges incurred due to the nature of the importation.[6]
Meanwhile, respondent unequivocally established that Richco charged to it
the demurrage due from petitioner. Thus, at the moment that Richco debited the
account of respondent, the latter is deemed to have subrogated to the rights of the
former, who in turn, paid demurrage to the ship owner. It is therefore immaterial that
respondent is not the ship owner, since it has been able to prove that it has stepped
into the shoes of the creditor.
Subrogation is either legal or conventional. Legal subrogation is an equitable
doctrine and arises by operation of the law, without any agreement to that effect
executed between the parties; conventional subrogation rests on a contract, arising
where an agreement is made that the person paying the debt shall be subrogated to
the rights and remedies of the original creditor.[7] The case at bar is an example of
legal subrogation, the petitioner and respondent having no express agreement on the
right of subrogation. Thus, it is of no moment that the Contracts of Sale did not
expressly state that demurrage shall be paid to respondent. By operation of law,
respondent has become the real party-in-interest to pursue the payment of
demurrage.

DEADFREIGHT:
- Amount paid by the charter to the ship owner for failure to occupy the
leased portion of the vessel.
RIGHTS AND OBLIGATIONS OF CHARTER PARTIES:
I. SHIP OWNER OR CAPTAIN
- Evident failure or refusal of the ship owner or of his agents to receive the cargo which had been
contracted to be transported under the charter party constitutes a sure breach of the charter
party, as to warrant a suit for damages by the charterer
- Shipowner is bound to observe, relative to the charter party, the capacity of the vessel of that
which is indicated expressly in the registry, a margin greater than 2% between that represented
and her actual capacity which is not allowable
- Generally, the ship owner shall indemnify shipper for any loss incurred by a shipper whose cargo
is refused due to the receipt by the ship owner of a greater amount of cargo belonging to other
persons. If there is only one shipper and there was apparent fraud or error in the vessels
capacity, the charterer may have the freight reduced if he does not chose to rescind the charter,
with a further right to be indemnified.
- If not all charter parties could be accommodated due to lack of space and not one would want
to rescind the charter, preference shall be given to the persons WHO IS FIRST IN LOADING THE
CARGO, and the others shall have preference in order of the dates of their charter. In absence of
priority, the charterers may choose to load in proportion to the amounts of weight or space
that they may have contracted, with a right to be indemnified for the loss
- The ship owner, under certain conditions, substitute the vessel initially chartered with another
vessel, as long as the substitute vessel had been duly inspected and is seaworthy
- After 3/5 of the vessel is loaded, the ship owner may not substitute the chartered vessel unless
there is consent from the charterers or shippers. Otherwise he is liable for all the damages
suffered during the voyage by those who did not give their consent.
- If the vessel has been chartered in whole, the captain may not accept cargo from any other
person without the consent of the charterer. Otherwise the captain may be compelled to unload
the said cargo and pay the charterer any damage that he may suffer.
- Shipowner may also be generally liable for damages incurred by the charterer due to voluntary
delay of the captain in putting to sea, provided he was requested, by way of notarial or judicial
notice, to put to sea at the proper time.

The shipowner may replace the vessel in the following instances:

1. If, after receiving a part of the freight, should not find sufficient to make up at least 3/5 of the
amount which the vessel may hold, at the price he may have fixed, he may substitute the vessel.
the shipowner shall be liable for the expense of transfer and the increase in the price of the
charter
2. After 3/5 of the vessel is loaded, the ship owner may not substitute the chartered vessel unless
there is consent from the charterers or shippers. Otherwise he is liable for all the damages
suffered during the voyage by those who did not give their consent.

II. CHARTERER
- Charterer has the right to subcharter the vessel to a third person if authorized by the shipowner.
Otherwise, he shall be liable for any damage
- A charterer who loads goods different from that contracted upon, without the knowledge of the
shipowner or captain, and in which results to damage due to confiscation, embargo, detention
and other causes, to the shipowner, shall be liable to indemnify the parties injured.
- Charterer shall be jointly liable with the shipowner for all damages caused to the other shipper
should illicit cargo be shipped by the charterer with the knowledge of the shipowner of the
captain
- The charterers and shippers may not, for the payment of freight and other expnsesincurred,
abandon the goods damaged due to fortuitous event. Abandonment is proper if the cargo
consisting of liquid may have leaked out and none remains except of their contents

III. LIABILITY OF CHARTERER TO SHIPOWNER IN CASE OF BAREBOAT CHARTER

De La Torre v. CA

The charterer under bareboat charter is bound to return the vessel and shall be liable for deterioration
or loss of the same.

A subcharterer, although he is not a privy to the contract between the charterer and the shipowner,
shall be bound to preserve the chartered vessel for the owner.

EFFECT OF BILL OF LADING:

The bill of lading is used as proof of receipt of goods and the charter party shall still govern the rights of
the shipowner and charterer
- The bill of lading constitute as a contract between the vessel and the consignee, and neither he
nor his endorsee is bound by the terms of the charter party of which he has no notice or
knowledge.
- If the bill of lading that is issued by the shipowner is a negotiable document of title, the bill of
lading is binding in favor of a subsequent holder for value. As this 3rd person, there is no other
contract but the bill of lading.
- If the cargo should be received without the charter party having been signed, the contract shall
be understood as executed in accordance with what appears in the bill of lading
- In a bareboat charter, the bills of lading are issued just as they would be if the ship were under
the hand of her general owner. The personal liability, however, is that of the demise charter.

FREIGHT

- Charterer pays the amount agreed upon to the shipowner


- Goods loaded shall be liable for the freight and expenses during the 30 days to be counted from
the date of delivery or deposit.
- Any natural increase in weight or size of the merchandise shall accrue to the benefit of the
owner, and shall pay the proper freightage fid in the contract.

LIEN ON CARGOES

Cargo shall especially be liable for the payment of:

a. Freightage
b. Expenses and duties arising therefrom which must be reimbursed by the shippers
c. Part of general average which may correspond to it.
- It is illegal for the captain to delay unloading due to suspicion this obligation may not be
complied with. The judge, or court, at the instance of the captain, may order the deposit of the
merchandise until it has been paid in full.
- The fact that the freight was already included in the purchase price paid by it, did not free the
cargo from the carriers lien. The fact that bond may have been given for the payment of such
freight does not make it compulsory for the carrier to deliver the cargo before freight has
actually been paid. (NARIC v. Macadaeg)
- In connection with the carriers lien, the cargo may be sold to the amount necessary to pay the
freightage, expenses and averages.
- The goods loaded shall be liable in the first place for the freight and expenses thereof during the
30 days. During this period, the sale of the same may be requested, even though there be other
creditors and the bankruptcy of the shipper or consignee should occur. Except on the goods
which, after being delivered, were turned, were turned over to third 3rd persons without malice
for valuable consideration.
- The judge or court may order the deposit and sale of the merchandise to pay for the necessary
freightage and other expenses if the consignee should not be found or should refuse to receive
the cargo.
- Sale shall also be allowed if the goods deposited run the risk of deteriorating, or by reason of
their condition or other circumstances the expenses of preservation and custody should be
disproportionate.

TOTAL OR PARTIAL RECISSION