PART II- SHIPPING LAW
investment in maritime commerce.
CHAPTER I. GENERAL CONCEPTS
1. MARITIME LAW; ADMIRALTY LAW
1.1 Definition; Distinction
-it is the system of laws which particularly relates
to the affairs and business of the sea, to ships, their
crews and navigation, and to marine conveyance of
persons and property.
- Maritime Law and Admiralty Law are synonymous.
1.2 History; Largely judge made and evolved from
commercial practice
2. CHARACTERISTICS OF MARITIME TRANSACTIONS;
REAL AND HYPOTHECARY
- “ that which distinguishes the Maritime from the civil
law and even from the mercantile law in general is the
real and hypothecary nature of the former, and the
many securitoes of a real nature that maritime
customsxxx
“REAL” signifies that the extent of the liability of those
involved in maritime commerce and also the claims of
their counterparties are both determined by the value
of the ship and its load, the very res or real property
involved in the endeavor.
“HYPOTHECARY” implies that shipowner can free
himself from liability arising from maritime commerce
by hypothecating the ship in favor of the claiming
parties. To hypothecate means to pledge as a security.
“As evidence of this “real” nature of the maritime
law we have (1) the limitation of the liability of the
agents to the actual value of the vessel and the freight
money,and (2) the right to retain the cargo and the
embargo and detention of the vessel even in cases
where the ordinary civil law would not allow more than
a personal action against the debtor or person liable.
“ The ral 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, which is hypothecated for such
obligations or which stands as guaranty for their
settlement.
2.1 LIMITED LIABILITY RULE; Nature and Rationale
- “NO VESSEL, NO LIABILITY”
-The shipowner;s liability is merely co-extensive
with his interest in the vessel such that a total loss
thereof results in its extinction.
RATIONALE: To offset against adverse conditions and to
encourage shipbuilding and maritime commerce, it was
deemed necessary to confine the liability of the owner
or agent arising from the operation of a ship to the
vessel, equipment arising from the operation of a ship
to vessel, equipment, and freight, or insurance, if any.
(Monarch Insurance Co., Inc. v. CA, through Justice
Sabino R. De Leon, Jr.)
In Yangco v. Laserna, through Justice Moran,it was
said that “The policy which the rule is designed to
promote is the encouragement of shipbuilding and
2.2 Statutory Provisions
[LIABILITY TO THIRD PERSONS]
ART. 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 equipment and the freight it may have
earned during the voyage.
[COLLISION CASES]
Art. 590.The co-owners of the vessel shall be civilly
liable in the proportion of their interests in the common
fund for the results of the acts of the captain referred
to in Art. 587.
Each co-owner may exempt himself from this liability by
the abandonment, before a notary, of the part of the
vessel belonging to him.
Art. 837. The civil liability incurred by the shipowner 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.
A cursory examination will disclose that the
principle of limited liability of a shipowner or agent is
provided for in but three articles of the Code of
Commerce - article 587 aforequoted and articles 590
and 837. Article 590 merely reiterates the principle
embodied in article 587, where the vessel is owned by
several persons. Article 837 applies the same principle
in cases of collision, and it has been observed that said
article is but "a necessary consequence of the right to
abandon the vessel given to the shipowner in article 587
of the Code, and it is one of the many superfluities
contained in the Code." (Lorenzo Benito, Lecciones 352,
quoted in Philippine Shipping Co. vs. Garcia, 6 Phil., 281,
282.)
In effect, therefore, only articles 587 and 590 are
the provisions contained in our Code of Commerce on
the matter, and the framers of said code had intended
those provisions to embody the universal principle of
limited liability in all cases.
2.3 Scope; When not applicable
- limited liabilty covers only:
(1) liability to third persons,
(2) Acts of the captain, and
(3) Collisions.
EXCEPTIONS TO LIMITED LIABILTY,
(1) where the injury or death to a passenger is due
either to the fault of the shipowner, or to the
concurring negligence of the shipowner and the captain,
(2) Where the vessel is insured; and
(3) In workmen’s compensation claims
(4) Total destruction of the vessel does not affect
the liability of the owner for repairs of yhe vessel
completed before its loss.
2.4 Abandonment; When required; Exceptions
- GR. Abandonment of the vessel, its appurtenances and
freightage is an indispensablerequirement before the
shipowner or ship agent can enjoy the benefits of the
limited liability principle.
EXCEPTIONS:
(1)When the vessel is totally lost in which case
there is no vessel to abandon, abandonment is not
required. Because of such total loss the liability of the
shipowner or agent for damages is
extinguished. However, despite the total loss of the
vessel, its insurance answers for the damages for which
a shipowner or agent may be held liable.
(2)the right of abandonment of vessels, as a legal
limitation of a shipowner's liability, does not apply to
cases where the injury or average was occasioned by the
shipowner's own fault.
2.5 Computing the Limit of Liability
2.5.1 What are Included?
2.5.2 “Offending Vessel” in Tug and Tow Scenario;
Flotilla Rule
2.6 Procedure for Enforcement; Concursus Proceeding
2.7 CASES
2.7.1 LUZON STEVEDORING CORP VS CA [ NO
ABANDONMENT, PETITIONER AT FAULT]]
RULING: There is no question that the action arose from
a collision and the fault is laid at the doorstep of LSCO
"Cavite" of petitioner. Undeniably petitioner has not
abandoned the vessel. Hence petitioner can not invoke
the benefit of the provisions of Article 837 of the Code
of Commerce to limit its liability to the value of the
vessel, all the appurtenances and freightage earned
during the voyage.
RULES IN CASE OF COLLISION; ABANDONMENT;
EXCEPTIONS;
The rule is that in case of collision there should be
abandonment of the vessel by the shipowner or agent in
order to enjoy the limited liability provided for under
said Article 837.
The exception to this rule is when the vessel is totally
lost in which case there is no vessel to abandon so
abandonment is not required. Because of such total loss
the liability of the shipowner or agent for damages is
extinguished. Nevertheless, the shipowner or agent is
personally liable for claims under the Workmen's
Compensation Act and for repairs of the vessel before
its loss.
In case of illegal or tortious acts of the captain the
liability of the shipowner and agent is subsidiary. In such
instance the shipowner or agent may avail of the
provisions of Article 837 of the Code by abandoning the
vessel.
However, if the injury or damage is caused by the
shipowner's fault as where he engages the services of an
inexperienced and unlicensed captain or engineer, he
cannot avail of the provisions of Article 837 of the Code
by abandoning the vessel. He is personally liable for the
damages arising thereby.
2.7.2. GOVT. OF THE PHIL. ISLANDS VS INSULAR
MARITIME CO. [TOTAL DESTRUCTION DOES NOT AFFECT
REPAIR LIABILITIES]
Facts.
The Government of the Philippine Islands terminated
repairs on the motor ship Insular on November 29, 1919.
The Insular suffered a total loss by fire on April 15,
1920. Collection of claim was attempted by the
Government on April 30, 1921, that is, after the loss of
the vessel.
Held: That the loss of the vessel Insular did not
extinguish the obligation and that the owners of the
vessel are still liable for the repairs.
LIABILITY OF OWNERS OF A VESSEL FOR REPAIRS TO
VESSEL AFTER LOSS OF THE VESSEL. —
The total destruction of the vessel does not affect the
liability of the owners for repairs on the vessel
completed before its loss.
As a general rule, the owners of a vessel and the
vessel itself are liable for necessary repairs. Naturally
the total destruction of the vessel extinguishes a
maritime lien, as there is no longer any res to which it
can attach. But the total destruction of the vessel
does not affect the liability of the owners for repairs
on the vessel completed before its loss.
2.7.3. DELA TORRE V. CA [Vessel lost not by the
owner]
Facts
Roland, entered into an Agreement with Concepcion for
the dry-docking and repair of LCT-Josephine. The vessel
was not returned to Concepcion after the repairs
because of the provision in the Preliminary Agreement
that the same "should" be used by Roland for the first
two years. Before the vessel could be returned, it was
lost due to the negligence of Agustin to whom Roland
chose to sub-charter or sublet the vessel.
Issue: Can Roland and Agustin invoke limited liability
doctrine?
Held. No.
Art 587 is clear on which indemnities may be confined or
restricted to the value of the vessel pursuant to the said
Rule, and these are 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." Thus, what is contemplated is the liability to
third persons who may have dealt with the shipowner,
the agent or even the charterer in case of demise or
bareboat charter.
The only person who could avail of this is the shipowner,
Concepcion.
CHARTERER OR SUBCHARTERE CAN NEVER SET UP
LIMITED LIABILITY RULE;
“Even if the contract is for a bareboat or demise charter
where possession, free administration and even
navigation are temporarily surrendered to the
charterer, dominion over the vessel remains with the
shipowner. Ergo, the charterer or the sub-charterer,
whose rights cannot rise above that of the former, can
never set up the Limited Liability Rule against the very
owner of the vessel. “
2.7.4 CENTRAL SHIPPING CO. INC VS INSURANCE CO
OF NORTH AMERICA [Concurrence of fault]
The limited liability rule does not apply to situations in
which the loss or the injury is due to the concurrent
negligence of the shipowner and the captain. It has
already been established that the sinking of M/V
Central Bohol had been caused by the fault or
negligence of the ship captain and the crew, as shown
by the improper stowage of the cargo of logs. "Closer
supervision on the part of the shipowner could have
prevented this fatal miscalculation." As such, the
shipowner was equally negligent. It cannot escape
liability by virtue of the limited liability rule.
2.7.5. ABOITIZ SHIPPING CORP VS CA
There are exceptional circumstances wherein the ship
agent could still be held answerable despite the
abandonment of the vessel, (1) as where the loss or
injury was due to the fault of the shipowner and the
captain. (2) it does not apply to cases where the injury
or average was occasioned by the shipowner's own
fault. (3)Likewise, the shipowner may be held liable for
injuries to passengers if fault can be attributed to the
shipowner.
As a general rule, a ship owner's liability is merely
co-extensive with his interest in the vessel, except
where actual fault is attributable to the shipowner.
Thus, as an exception to the limited liability doctrine, a
shipowner or ship agent may be held liable for damages
when the sinking of the vessel is attributable to the
actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel. The instant
petitions cannot be spared from the application of the
exception to the doctrine of limited liability in view of
the unanimous findings of the courts below that both
Aboitiz and the crew failed to ensure the seaworthiness
of the M/V P. Aboitiz. aE
2.7.6. ALLIED BANKING CORP. VS CHENG YONG
Allied Bank's foreclosure of the chattel mortgage
constituted over the vessel "Jean III" was justified.
On this score, we also rule that the loss of the
mortgaged chattel brought about by its sinking must be
borne not by Allied Bank but by the spouses Cheng. As
owners of the fishing vessel, it was incumbent upon the
spouses to insure it against loss. Thus, when the vessel
sank before the chattel mortgage could be foreclosed,
uninsured as it is, its loss must be borne by the spouses
Cheng.
2.7.7 YANGCO VS LASERNA
May the shipowner or agent, notwithstanding the total
loss of the vessel as a result of the negligence of its
captain, be properly held liable in damages for the
consequent death of its passengers?
CIVIL LIABILITY OF SHIPOWNER FOR INJURY TO OR
DEATH OF PASSENGERS ARISING FROM NEGLIGENCE OF
CAPTAIN. — If the shipowner 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.
In arriving at this conclusion, the fact is not ignored
that the ill-fated S. S. Negros, as a vessel engaged in
interisland trade, is a common carrier, and that the
relationship between the petitioner and the
passengers who died in the mishap rests on a contract
of carriage. But assuming that petitioner is liable for a
breach of contract of carriage, the exclusively "real
and hypothecary nature" of maritime law operates to
limit such liability to the value of the vessel, or to the
insurance thereon, if any. In the instant case it does
not appear that the vessel was insured.
2.7.8 GOVT OF PHIL ISLANDS VS PHIL STEAMSHIP CO.
ADMIRALTY AND MARITIME LAW; COLLISION; SOLIDARY
LIABILITY OF COLLIDING VESSELS. — Under articles 827
and 828 of the Code of Commerce, in case of a
collision between two vessels at sea, both are
solidarily liable for the loss of cargo carried by either,
not only in the case where both vessels may be shown
to be actually blameworthy but also in the case where
it is obvious that only one was at fault but the proof
does not show which.
RESPONSIBILITY OF VESSEL SURVIVING COLLISION. —
Where two ships approaching each other at sea are
both negligently managed, with the result that a
collision occurs and one is sunk with total loss of both
ship and cargo, the owner of the other vessel is liable
to any shipper of cargo aboard the sunken vessel to
the full extent of the value thereof; and it makes no
difference that the negligence imputable to the two
vessels may have differed somewhat in character and
degree and that the negligence of the sunken ship was
somewhat more marked than that of the other.
2.7.9. LOPEZ VS DURUELO
Facts
A person desirous of embarking on a ship which was
some distance away from the shore in a Philippine port
took passage upon a small motor boat, which was used
in conveying passengers and luggage to and fro between
the shore and the shipside. Owing to the negligence of
thepatron or incompetence of the person in charge — so
the complaint averred — the boat approached too near
to the stern of the ship, with the result that the
propeller of the ship, which was still turning, struck the
motor boat and sunk it, injuring the plaintiff.
Held: Upon demurrer, that the failure of the
complaint to allege that the plaintiff had made
protest according to article 835 of the Code of
Commerce was no impediment to the maintenance of
a civil action, under articles 1902 and 1903 of the Civil
Code, to recover damages for the tort.
PROTEST. — The protest required by article 835 of the
Code of Commerce in case of collision between
vessels is not necessary to preserve the rights of a
person aboard a motor boat engaged in conveying
passengers between ship and shore who is injured in a
collision between the motor boat and the larger
vessel.
2.7.10 PHIL. AMERICAN GENERAL INS. CO. VS CA
VESSELS' PROXIMATE CAUSE OF SINKING WAS ITS BEING
TOP-HEAVY. — The proximate cause of the sinking of
"MV Asilda" was its being top-heavy. Evidence shows
that approximately 2,500 cases of softdrink bottles
were stowed on deck. Several days after "MV Asilda"
sank, an estimated 2,500 empty Coca-Cola plastic cases
were recovered near the vicinity of the sinking.
Considering that the ship's hatches were properly
secured, the empty Coca-Cola cases recovered could
have come only from the vessel's deck cargo. It is
settled that carrying a deck cargo raises the
presumption of unseaworthiness unless it can be shown
that the deck cargo will not interfere with the proper
management of the ship. However, in this case it was
established that "MV Asilda" was not designed to carry
substantial amount of cargo on deck. The inordinate
loading of cargo deck resulted in the decrease of the
vessel's metacentric height thus making it unstable. The
strong winds and waves encountered by the vessel are
but the ordinary vicissitudes of a sea voyage and as such
merely contributed to its already unstable and
unseaworthy condition. DEI
ART. 587 ON ABANDONMENT OF VESSEL; NOT
APPLICABLE WHERE SHIP AGENT IS ALSO LIABLE FOR THE
NEGLIGENT ACTS OF THE CAPTAIN IN THE CARE OF
GOODS. — Art. 587, of the Code of Commerce is not
applicable to the case at bar. The ship agent is liable for
the negligent acts of the captain in the care of goods
loaded on the vessel. This liability however can be
limited through abandonment of the vessel, its
equipment and freightage as provided in Art. 587.
Nonetheless, there are exceptional circumstances
wherein the ship agent could still be held answerable
despite the abandonment, as where the loss or injury
was due to the fault of the shipowner and the captain.
The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a
shipowner's liability, does not apply to cases where the
injury or average was occasioned by the shipowner's
own fault. It must be stressed at this point that Art. 587
speaks only of situations where the fault or negligence
is committed solely by the captain. Where the
shipowner is likewise to be blamed, Art. 587 will not
apply, and such situation will be covered by the
provisions of the Civil Code on common carrier.
PRESUMPTION IN CASE OF LOSS. — Under Art. 1733 of
the Civil Code, "(c)ommon carriers, from the nature of
their business and for reasons of public policy, are
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case . . . ." In the event of loss of
goods, common carriers are presumed to have acted
negligently. FELMAN, the shipowner, was not able to
rebut this presumption.
3. Maritime Contracts, in General
4. Maritime Torts, in General
-civil wrongs committed on navigable waters.
- any conduct which is tortuous under general law
and which is connected with the ship or its uses creates
a maritime lien, e.g collision claims and personal injury
claims.
- Personal injuries resulting from defective
appliances, improper construction or negligence of the
ship’s crew give rise to maritime lien.
5. Admiralty jurisdiction
-All actions in admiralty and maritime jurisdiction
where the demands or claims exceeding P300,000, or
if in Manila and exceeds P400,000, RTC has
jurisdiction, if less, with the Metropolitan Trial Court,
Municipal Trial Court, or Municipal Circuit Trial Court
5.1 Importance
5.2 Torts: Maritime Locus and Maritime Nexus Criteria
5.3 Contracts: location Tests vs Subject Matter Tests
5.3.1 International Harvester Co. Of the Philippines
vs Aragon
Admiralty has jurisdiction over all maritime
contracts, in whatever form, wherever they were
executed or are to be performed, but not over
non-maritime contracts.
MARITIME CONTRACTS DEPEND ON THE SUBJECT
MATTER THEREOF. — Whether or not a contract is
maritime depends not on the place where the
contract is made and is to be executed, making the
locality the test, but on the subject matter of the
contract, making the true criterion a maritime service
or a maritime transaction.
CONTRACT OF AFFREIGHTMENT; PROCEEDING "IN REM"
OR "IN PERSONAM." — Admiralty has jurisdiction of a
proceeding in rem or in personam for the breach of a
contract of affreightment, whether evidenced by a bill
of lading or a charter party. And typical of a controversy
over contracts of affreightment is a suit of one party
against the other for loss of or damage to the cargo.
5.3.2 Crescent Petroleum vs MV Lok Maheshwari
In a nutshell, this case is for the satisfaction of unpaid
supplies furnished by a foreign supplier in a foreign port
to a vessel of foreign registry that is owned, chartered
and sub-chartered by foreign entities.
Under Batas Pambansa Bilang 129, as amended
by Republic Act No. 7691, RTCs exercise exclusive
original jurisdiction "(i)n all actions in admiralty and
maritime where the demand or claim exceeds two
hundred thousand pesos (P200,000) or in Metro Manila,
where such demand or claim exceeds four hundred
thousand pesos (P400,000)." Two (2) tests have been
used to determine whether a case involving a contract
comes within the admiralty and maritime jurisdiction of
a court — the locational test and the subject matter
test. The English rule follows the locational test
wherein maritime and admiralty jurisdiction, with a few
exceptions, is exercised only on contracts made upon
the sea and to be executed thereon. This is totally
rejected under the American rule where the criterion in
determining whether a contract is maritime depends on
the nature and subject matter of the contract, having
reference to maritime service and
transactions. In International Harvester Company of
the Philippines v. Aragon, we adopted the American
rule and held that "(w)hether or not a contract is
maritime depends not on the place where the contract
is made and is to be executed, making the locality the
test, but on the subject matter of the contract, making
the true criterion a maritime service or a maritime
transaction."
A contract for furnishing supplies like the one involved
in this case is maritime and within the jurisdiction of
admiralty. 6 It may be invoked before our courts
through an action in rem or quasi in rem or an action in
personam. "Articles 579 and 584 [of the Code of
Commerce] provide a method of collecting or enforcing
not only the liens created under Section 580 but also for
the collection of any kind of lien whatsoever." 8 In the
Philippines, we have a complete legislation, both
substantive and adjective, under which to bring an
action in rem against a vessel for the purpose of
enforcing liens. The substantive law is found in Article
580 of the Code of Commerce. The procedural law is to
be found in Article 584 of the same Code. The result is,
therefore, that in the Philippines any vessel — even
though it be a foreign vessel —found in any port of this
Archipelago may be attached and sold under the
substantive law which defines the right, and the
procedural law contained in the Code of Commerce by
which this right is to be enforced. 9 . . . But where
neither the law nor the contract between the parties
creates any lien or charge upon the vessel, the only way
in which it can be seized before judgment is by pursuing
the remedy relating to attachment under Rule 59 [now
Rule 57] of the Rules of Court.
CHAPTER II. MERCHANT VESSELS
(ART 573-585 CODE OF COMMERCE)
1. GENERAL CONCEPT:DEFINITION
- Vessel or watercraft is any barge, lighter, bulk
carrier, passenger ship freighter, tanker, container
ship, fishing boat or other artificial contrivance
utilizing any source of motive power, designed, used
or capable of being used as a means of transportation
operating either as a common contract carrier,
EXCEPT,
(i) those owned and 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 toms capacity and
not motorized. (PD No. 474 and PD no. 43)
1.1 Lopez vs Duruelo
-Protests related to Art 835 deals with collisions
involving sea-going vessels and cannot be applied to
small boats engaged in river and bay traffic.
LOPEZ v. DURUELO
MEANING OF WORD VESSEL. — The word "vessel "
(Spanish, "buque," "nave") used in the Third Section of
Title IV, Book Third, of the Code of Commerce,
dealing with collisions, does not include all ships,
craft or floating structures of any kind without
limitation. The provisions of said section do not apply
to minor craft engaged in river and bay traffic.
As a general rule,the provisions which relate
exclusively to maritime and not to fluvial navigation;
and that the word 'ship,' when it is found in these
provisions, ought to be understood in the sense of a
vessel serving the purpose of maritime navigation or
seagoing vessel, and not in the sense of a vessel
devoted to the navigation of rivers."
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.
1.2 Reasonable Observer Test
Lozman v. City of Riviera [ Floating Home is not a
vessel]
The definition of “transportation,” the conveyance of
persons or things from one place to another, must be
applied in a practical way. Consequently, a structure
does not fall within the scope of the statutory phrase
unless a reasonable observer, looking to the home’s
physical characteristics and activities, would consider it
designed to a practical degree for carrying people or
things over water.
But for the fact that it floats, nothing about Lozman’s
home suggests that it was designed to any practical
degree to transport persons or things over water. It had
no steering mechanism, had an unraked hull and
rectangular bottom 10 inches below the water, and had
no capacity to generate or store electricity. It also
lacked self-propulsion, differing significantly from an
ordinary houseboat.
This view of the statute is consistent with its text,
precedent, and relevant purposes. The statute’s
language, read naturally, lends itself to that
interpretation: The term “contrivance” refers to
something “employed in contriving to effect a
purpose”; “craft” explains that purpose as “water
carriage and transport”; the addition of “water” to
“craft” emphasizes the point; and the words, “used, or
capable of being used, as a means of transportation on
water,” drive the point home.
1.3 Are Oil Rigs considered Vessels in Admiralty?
Yes.
1.4 Dead Ship Doctrine
-is a principle in applied in Maritime law whereby
admiralty law is no longer made applicable to a ship
whose purpose has so changed that it is no longer
considered a vessel as it has no further navigation
function.
1.5 Importance of determining “Merchant Vessel” Status
1.6 Definition of “Vessel” by “Convention on the
International Regulations for Preventing Collisions at
Sea(COLREGS)”
2. DOCTRINE OF VESSEL PERSONIFICATION
The most fundamental concept justifying maritime
liens and in rem arrest procedure is that a vessel is a
legal entity distinct from its owner. This legal fiction,
also known as the theory of vessel personification,
pervades all aspects of U.S. admiralty law and remains
essential to the proper functioning of our country’s
maritime industry.
2.1 United States vs Steamship Rubi
Facts.
Insular Collector of Customs in imposed an
administrative fine on the steamship Rubi for bringing
unmanifested cargo (opium and morphine) into the port
of Manila. trial judge dismissed the petition on the
ground that "there was no knowledge on the part of the
master of the vessel of the opium and morphine, and so
far as he was concerned it was not cargo. He being the
master of the vessel, who should make manifests of all
cargo, could not manifest that which he did not know
of, and the vessel could not know more or have
knowledge of more than he had, for his knowledge was
that of the vessel.
Held. Vessel is liable.
In order to bring the vessel within the penalizing clause
of the law it would be necessary to show some
knowledge and intent for the carrying of unmanifested
cargo, or such carelessness as to create the presumption
of knowledge or intention, which does not appear from
the evidence in this case, but on the contrary the
evidence clearly discloses that the defendant vessel,
through its specific agent mentioned in the law, had no
knowledge of such cargo. The law does not contemplate
penalizing the inanimate vessel or its owner for doing
that of which it had no knowledge.
3. VESSELS ARE PERSONAL PROPERTY
ART 585. For all purposes of law not modified or
restricted by the provisions of this Code, vessels shall
continue to be considered as personal property.
(Code of Commerce)
3.1 Rubiso and Calixo v. Rivera [1917]
- “ships or vessels, whether moved by steam, or by sail,
partake, to a certain extent, of the nature and
conditions of real property, on account of their value
and conditions of real property, on account of their
value and importance in the world of commerce.” e.g.
transfer of vessels should be in writing and must be
recorded in the appropriate registry.
3.2 Phil. Refining Co. Vs Jarque
ISSUE: Are vessels personal property, which can be the
subject of a chattel mortgage?
HELD. Yes.
Vessels are considered personal property under
the civil law and the common law.
Vessels are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law.
The only difference between a chattel mortgage of
a vessel and a chattel mortgage of other personality is
that it is not now necessary for a chattel mortgage of
a vessel to be noted in the registry of the register of
deeds, but it is essential that a record of documents
affecting the title to a vessel be entered in the record
of the Collector of Customs at the port of entry.
Otherwise a mortgage on a vessel is generally like
other chattel mortgages as to its requisites and
validity.
4. BLUE WATER VESSEL VS. BROWN WATER VESSEL
BLUE WATER VESSEL BROWN WATER VESSEL
-”brown water” meant to
describe Inland
waterways, inside the land
boundaries of the country.
5. VESSEL ARREST; PROCEDURE
SECTION 11. Arrest of Vessels. — Upon the
filing of the petition for the judicial foreclosure of
a Preferred Ship Mortgage, or immediately
thereafter, the applicant may apply ex-parte for
an order for the arrest of the mortgaged vessel or
vessels and the judge shall immediately issue the
same, provided that it is made to appear by
affidavit of the applicant, or of some other person
who personally knows the facts that a default in
the mortgage has occurred and that applicant files
a bond executed to the adverse party in an amount
to be fixed by the judge, not exceeding the
applicant's claim, conditioned that the latter will
pay all the costs which may be adjudged to the
adverse party and all damages which he may
sustain by reason of such arrest, if the court shall
finally adjudge that the applicant was not entitled
thereto.
SECTION 12. Discharge of Order of
Arrest; Counterbond. — At any time after an order
of arrest has been granted, the party whose vessel
or vessels had been arrested, or the person
appearing in his behalf, may, upon reasonable
notice to the applicant, apply to the judge who
granted the order, or to the judge of the court in
which the action is pending, for an order
discharging the order of arrest. That judge shall
order the discharge of the arrest if a cash deposit is
made, or counterbond executed to the creditor is
filed, on behalf of the adverse party, with the clerk
or judge of the court where the application is made
in an amount double the value of the claim to
secure the payment of any judgment that the
creditor may recover in the action. Upon the filing
of such counterbond, copy thereof shall forthwith
be served on the creditor or his lawyer. Upon
discharge of the order of arrest, the property
arrested or seized shall be delivered to the party
making the deposit or giving the counterbond, or
the person appearing in his behalf, the deposit or
counterbond aforesaid standing in place of the
vessel or vessels released. Should such deposit or
counterbond for any reason be found to be, or
become insufficient, and the party furnishing the
same fails to file an additional co-counterbond, the
attaching creditor may apply for a new order of
arrest or seizure.
SECTION 13. Discharge of Order of Arrest for
Improper or Irregular Issuance. — The party whose
vessel/s has been arrested may also, at any time
either before or after the release of the arrested
vessel, or before any arrest or seizure has been
effected, upon reasonable notice to the creditor,
apply to the judge who granted the order, or to the
judge of the court in which the action is pending,
for an order to discharge the order of arrest or
seizure on the ground that the same was
improperly or irregularly issued. After hearing, the
judge shall order the discharge of the order of
arrest or seizure if it appears that it was
improperly or irregularly issued and the defect is
not cured forthwith.
SECTION 14. Extrajudicial Foreclosure. —
The provisions of the Chattel Mortgage Law on the
remedy of extra-judicial foreclosure of mortgages
in so far as they are not inconsistent herewith shall
still apply. For the purpose of taking possession of
the vessel or vessels, the foreclosing creditor may
secure from a judge of the Court of First Instance
of the province where the vessel may be found or
where the creditor or debtor resides an order for
the arrest or seizure of the vessel. Upon such order
of seizure or arrest being issued, the sheriff shall
immediately take possession of the vessel or
vessels for the purpose of foreclosure and sale. The
vessel may only be released in accordance with the
provisions of Section 13 of this Act, or when the
debtor pays the outstanding obligation.
5.1 CRESCENT PETROLEUM LTD. VS MV LOK
MAHESGWARI
5.2 QUASHA ASPERILLA ANCHETA VALMONTE PENA &
MARCOS VS HON. JUAN
A PROPERTY UNDER CUSTODIA LEGIS; EXTENT OF
COURT'S JURISDICTION; CASE AT BAR. — Indeed,
petitioner should have maintained its action in
respondent's court. After all, a court which has in its
possession, control or equivalent dominion, property or
funds involved in litigation may exercise exclusive
jurisdiction over such property or funds to determine
the rights therein, such as questions respecting the
title, possession or control, management and
disposition thereof and another court of concurrent or
coordinate jurisdiction cannot interfere with such
possession or control (21 C.J.S. 755-757). The rights to
be determined by said court necessarily include the
attorney's fees due to the lawyers who represented the
parties.
5.3 COMMISIONER OF CUSTOMS VS CA
5.4. SISTER SHIPS; SUSCEPTIBILITY TO ARREST
Art 3 Sec 3. of International Convention on Arrest of
Seagoing Ships
“xxx and if a ship has been arrested in any such
jurisdiction, or bail or other security has been given in
such jurisdiction either to release a ship or to avoid a
threatened arrest, any subsequent arrest of the ship or
of any ship in the same ownership by the same claimant
for the maritime claim shall be set aside, and the ship
released by the Court or other appropriate judicial
authority of that State,xxx”
6. MARITIME LIENS
6.1 Distinguished from Non-Maritime Liens; Importance
6.1.1 Conflict of Law Problem in Enforcing Maritime
Lien; Test
6.1.1.1 Crescent Petroleum vs MV Lok Maheshwari
The various tests used in the U.S. to determine whether
a maritime lien exists are the following:
One. "In a suit to establish and enforce a maritime lien
for supplies furnished to a vessel in a foreign port,
whether such lien exists, or whether the court has or
will exercise jurisdiction, depends on the law of the
country where the supplies were furnished, which
must be pleaded and proved."
Two. The Lauritzen-Romero-Rhoditis trilogy of cases,
which replaced such single-factor methodologies as the
law of the place of supply.
In Lauritzen v. Larsen, a Danish seaman, while
temporarily in New York, joined the crew of a ship of
Danish flag and registry that is owned by a Danish
citizen. He signed the ship's articles providing that the
rights of the crew members would be governed by
Danish law and by the employer's contract with the
Danish Seamen's Union, of which he was a member.
While in Havana and in the course of his employment,
he was negligently injured. He sued the shipowner in a
federal district court in New York for damages under the
Jones Act. In holding that Danish law and not the Jones
Act was applicable, the Supreme Court adopted
a multiple-contact test to determine, in the absence of
a specific Congressional directive as to the statute's
reach, which jurisdiction's law should be applied. The
following factors were considered: (1) place of the
wrongful act; (2) law of the flag; (3) allegiance or
domicile of the injured; (4) allegiance of the
defendant shipowner; (5) place of contract; (6)
inaccessibility of foreign forum; and (7) law of the
forum.
Three. The factors provided in Restatement (Second)
of Conflicts of Law have also been applied, especially
in resolving cases brought under the Federal Maritime
Lien Act. Their application suggests that in the absence
of an effective choice of law by the parties, the forum
contacts to be considered include: (a) the place of
contracting; (b) the place of negotiation of the
contract; (c) the place of performance; (d) the location
of the subject matter of the contract; and (e) the
domicile, residence, nationality, place of incorporation
and place of business of the parties.
IN THE CASE AT BAR;
Finding guidance from the foregoing decisions, the
Court cannot sustain petitioner Crescent's insistence on
the application of P.D. No. 1521 or the Ship Mortgage
Decree of 1978 and hold that a maritime lien exists.
First. Out of the seven basic factors listed in the case
of Lauritzen, Philippine law only falls under one — the
law of the forum. All other elements are foreign —
Canada is the place of the wrongful act, of the
allegiance or domicile of the injured and the place of
contract; India is the law of the flag and the allegiance
of the defendant shipowner. Balancing these basic
interests, it is inconceivable that the Philippine court
has any interest in the case that outweighs the interests
of Canada or India for that matter.
Second. P.D. No. 1521 or the Ship Mortgage Decree of
1978 is inapplicable following the factors under
Restatement (Second) of Conflict of Laws. Like the
Federal Maritime Lien Act of the U.S., P.D. No. 1521 or
the Ship Mortgage Decree of 1978 was enacted primarily
to protect Filipino suppliers and was not intended to
create a lien from a contract for supplies between
foreign entities delivered in a foreign port.
Third. Applying P.D. No. 1521 or the Ship Mortgage
Decree of 1978 and rule that a maritime lien exists
would not promote the public policy behind the
enactment of the law to develop the domestic shipping
industry. Opening up our courts to foreign suppliers by
granting them a maritime lien under our laws even if
they are not entitled to a maritime lien under their laws
will encourage forum shopping.
Finally. The submission of petitioner is not in keeping
with the reasonable expectation of the parties to the
contract. Indeed, when the parties entered into a
contract for supplies in Canada, they could not have
intended the laws of a remote country like the
Philippines to determine the creation of a lien by the
mere accident of the Vessel's being in Philippine
territory.
6.2 Executory Contracts Doctrine
6.3. Assignment and Subrogation
PNB vs CA
Those who provide credit to a master of a vessel for the
purpose of discharging a maritime lien also acquire a
lien over the said vessel. Under American
jurisprudence, "(f)urnishing money to a master in good
faith to obtain repairs or supplies or to remove liens, in
order to forward the voyage of the vessel, raises a lien
just as though the things (for which) money was
obtained to pay for had been furnished by the
lender." Likewise, "(a)dvances to discharge maritime
liens create a lien on the vessel, and one advancing
money to discharge a valid lien gets a lien of equal
dignity with the one discharged."
There is no reason why these doctrines cannot be given
persuasive application in the instant case considering
that they do not violate or contravene any of our
existing laws. Moreover, as pointed out by the appellate
court, these doctrines are in accord with our provisions
on subrogation particularly Art. 1302, paragraph 2 of
the New Civil Code which provides that there is legal
subrogation "when a third person, not interested in the
fulfillment in the obligation, pays with the express or
tacit approval of the debtor."
Under these doctrines, a person who extends credit for
the purpose of discharging a maritime lien is not
entitled to the said lien "where the funds were not
furnished to the ship on the order of the master and
there was no evidence that the money was actually used
to pay debts secured by the lien."
6.4 Enforceability During Corporate Rehabilitation
Negros Navigation Co. Vs CA
ISSUE: Arguing that in in rem proceedings to enforce
maritime liens, the vessels alone may be impleaded as
defendants, hence THI has the substantive statutory
right under PD 1521 to insist on the vessel’s
responsibility because it is an in rem proceeding against
the ship itself. Should maritime liens over the vessels of
Negros Navigation Co. (NNC) be upheld?
HELD. NO.
True enough, a maritime lien is not affected by
bankruptcy or reorganization. However, in the instant
case, we are not dealing with bankruptcy or
reorganization; rather, we are confronted with NNC's
rehabilitation. If we follow the argument of THI and
allow the continued enforcement of its claims against
NNC, we would, in effect, violate provisions of PD
902-A. To reiterate, the rationale behind PD 902-A is
to effect a feasible and viable rehabilitation of an
ailing corporation.
There is no conflict between PD 1521 and
 PD 902-A. The Manila RTC acting as a rehabilitation
court merely suspended the proceedings in the
admiralty case in the Cebu RTC. It did not divest the
Cebu RTC of its jurisdiction over the maritime
claims of THI against NNC. The preferred maritime
lien of THI can still be enforced upon the
termination of the rehabilitation proceedings, or if
it such be unsuccessful, upon the dissolution of the
corporation.
_Rizal Commercial Banking Corporation v.
Intermediate Appellate Court, enumerates the
guidelines in the treatment of claims involving
corporations undergoing rehabilitation, viz.:
1. All claims against corporations, partnerships, or
associations that are pending before any court,
tribunal, or board, without distinction as to whether or
not a creditor is secured or unsecured, shall be
suspended effective upon the appointment of a
management committee, rehabilitation receiver,
board, or body in accordance with the provisions of
Presidential Decree No. 902-A.
2. Secured creditors retain their preference over
unsecured creditors, but enforcement of such
preference is equally suspended upon the appointment
of a management committee, rehabilitation receiver,
board, or body. In the event that the assets of the
corporation, partnership, or association are finally
liquidated, however, secured and preferred credits
under the applicable provisions of the Civil Code will
definitely have preference over unsecured ones.
6.5 Writ of Attachment Not Necessary to Enforce Lien
Quasha vs Hon Juan
JURISDICTION OVER THE RES; WHERE PROPERTY IS
BURDENED BY LIEN; WRIT OF' ATTACHMENT NOT
NECESSARY TO OBTAIN JURISDICTION OVER THE
PROPERTY; RATIONALE.— As regards jurisdiction over
the res, We hold that respondent acquires jurisdiction
over it. Where a property is burdened by a lien, a writ of
attachment is no longer necessary in order that
jurisdiction over the property may be obtained by the
court. The reason for the rule is obvious. An attachment
proceeding is for the purpose of creating a lien on the
property to serve as security for the payment of the
creditors' claim. Hence, where a lien already exists, as
in the case, a maritime lien, the same is already
equivalent to an attachment. Moreover, since the
property subject of the actions for the enforcement of
the maritime liens was already in the possession of
private respondent, there is no need for seizure for the
court to obtain jurisdiction over the res.
In the Banco Español case, it was clarified:
"In an ordinary attachment proceeding, if the
defendant is not personally served, the preliminary
seizure is to be considered necessary in order to confer
jurisdiction upon the court. In this cast the lien on the
property acquired by seizure; and the purpose of the
proceeding is to subject the property to that lien. If a
lien already exists, whether created by mortgage,
contract, or statute, the preliminary seizure is not
necessary, and the court proceeds to enforce such lien
in the manner provided by law precisely as though the
property had been seized upon attachment. (Roller v.
Holly, 176 U.S. 398, 405; 44 L. ed. 520)."
The reason for the rule is obvious. An attachment
proceeding is for the purpose of creating a lien on the
property to serve as security for the payment of the
creditors' claim. Hence, where a lien already exists, as
in this case a maritime lien, the same is already
equivalent to an attachment. Moreover, since the
property subject of the action for the enforcement of
the maritime liens was already in the possession of
private respondent, there is no need for seizure for the
court to obtain jurisdiction over the res.
6.6 PREFERENCE AND CONCURRENCE OF LIENS
6.6.1 Inverse Order Rule (Qui Prior Est Tempore, Potior
Est Jure: Last in Time, First in Right)
6.6.2 Special Time Rules
6.6.2.1 Order of Preference per Ship Mortgage Decree
(PD No. 1521)
SECTION 17. Preferred Maritime Lien, Priorities,
Other Liens. — (a) Upon the sale of any mortgaged
vessel in any extra-judicial sale or by order of a district
court of the Philippines in any suitin rem in admiralty
for the enforcement of a preferred mortgage lien
thereon, all pre-existing claims in the vessel, including
any possessory common-law lien of which a lienor is
deprived under the provisions of Section 16 of this
Decree, shall be held terminated and shall thereafter
attach, in like amount and in accordance with the
priorities established herein to the proceeds of the
sale. The preferred mortgage lien shall have priority
over all claims against the vessel, except the following
claims in the order stated:
(1) expenses and fees allowed and costs taxed by
the court and taxes due to the Government;
(2) crew's wages;
(3) general average;
(4) salvage; including contract salvage;
(5) maritime liens arising prior in time to the
recording of the preferred mortgage;
(6) damages arising out of tort; and
(7) preferred mortgage registered prior in
time.
(b) If the proceeds of the sale should not be sufficient
to pay all creditors included in one number or grade,
the residue shall be divided among them pro rata. All
credits not paid, whether fully or partially shall subsist
as ordinary credits enforceable by personal action
against the debtor. The record of judicial sale or sale by
public auction shall be recorded in the Record of
Transfers and Encumbrances of Vessels in the port of
documentation.
6.6.2.2 Common Law (Damage Lien Preferred, Voyage
Rule, Calendar year rule)
7. CARRIER’S LIEN
7.1 OVERSEAS FACTOR INC VS SOUTH SEA SHIPPING
FREIGHT INCLUDED IN GOODS' PURCHASE PRICE;
CARRIER'S LIEN EXIST IF FREIGHT WAS NOT PAID. — The
fact that the freight was already included in the
purchase price of the goods paid by the purchaser to the
appellees did not free the cargo of rice from the
carrier's lien as provided for in article 665 of the Code of
Commerce, if the freight has not yet been fully paid by
the charterer.
7.2 OUANO VS CA
FREIGHT CHARGES' LIEN ON CARGO FOR UNPAID
FREIGHT; UNCONDITIONAL RELEASE OF CARGO
CONSTITUTES WAIVER THEREOF. — even on the
assumption that petitioner had a lien on the cargo for
unpaid freight, the same was deemed waived when the
goods were unconditionally released to the consignee at
the port of destination. A carrier has such a lien only
while it retains possession of the goods, so that delivery
of the goods to the consignee or a third person
terminates, or constitutes a waiver of, the lien. The lien
of a carrier for the payment of freight charges is nothing
more than the right to withhold the goods, and is
inseparably associated with its possession and
dependent upon it. The shipowner's lien for freight is
not in the nature of a hypothecation which will remain a
charge upon the goods after he has parted with
possession, but is simply the right to retain them until
the freight is paid, and is therefore lost by an
unconditional delivery of the goods to the consignee.
CASE OF OVERSEAS FACTORS, INC. INAPPLICABLE. —
Petitioner's invocation of Overseas Factors, Inc., et al.
vs. South Sea Shipping Co., et al., (4 SCRA 400 [1962])
therefore, is ineffectual and unavailing. In said case,
the cargo was still in the possession of the carrier whose
officers and crew refused to unload the same unless the
balance of the freight was paid. In this case before us,
the cargo had already been unconditionally delivered to
the consignee SMCI without protest.
7.3 Who Bears Costs Arising from Retention of Cargo in
the Exercise of Carrier’s Lien?
8. OWNER OF MERCHANT’S VESSEL
8.1 Acquisition
8.1.1 Prescription
8.1.2 Sale
8.2 Registration
RUBISO VS RIVERA
8.3 MARINA Rules
8.2.2 Flags of Convenience; Open Registers
8.3 Ship Manifest
8.4 Ship Mortgage
8.4.1 Ship Mortgage Decree
8.4.1.1 POLIAND INDUSTRIAL LTD VS NAIONAL
DEVELOPMENT COMPANY
ARTICLE 378 THEREOF GOVERNS THE SALE OF VESSELS
IN A FOREIGN PORT; NOT APPLICABLE IN CASE AT BAR. —
NDC cites Articles 578 and 580 of the Code of Commerce
to bolster its argument that the foreclosure of the
vessels extinguished all claims against the vessels
including POLIAND's claim. Article 578 of the Code of
Commerce is not relevant to the facts of the instant
case because it governs the sale of vessels in a foreign
port. Said provision outlines the formal and registration
requirements in order that a sale of a vessel on voyage
or in a foreign port becomes effective as against third
persons. On the other hand, the resolution of the
instant case depends on the determination as to which
creditor is entitled to the proceeds of the foreclosure
sale of the vessels. Clearly, Article 578 of the Code of
Commerce is inapplicable.
PRESIDENTIAL DECREE NO. 1521 (SHIP MORTGAGE
DECREE OF 1978); PREFERRED MORTGAGE LIEN;
SECTION 17 THEREOF REPEALED ARTICLE 580 OF THE
CODE OF COMMERCE. — Article 580, while providing for
the order of payment of creditors in the event of sale of
a vessel, had been repealed by the pertinent provisions
of Presidential Decree (P.D.) No. 1521, otherwise known
as the Ship Mortgage Decree of 1978. In particular,
Article 580 provides that in case of the judicial sale of a
vessel for the payment of creditors, the debts shall be
satisfied in the order specified therein. On the other
hand, Section 17 of P.D. No. 1521 also provides that in
the judicial or extrajudicial sale of a vessel for the
enforcement of a preferred mortgage lien constituted in
accordance with Section 2 of P.D. No. 1521, such
preferred mortgage lien shall have priority over all
pre-existing claims against the vessel, save for those
claims enumerated under Section 17, which have
preference over the preferred mortgage lien in the
order stated therein. Since P.D. No. 1521 is a
subsequent legislation and since said law in Section 17
thereof confers on the preferred mortgage lien on the
vessel superiority over all other claims, thereby
engendering an irreconcilable conflict with the order of
preference provided under Article 580 of the Code of
Commerce, it follows that the Code of Commerce
provision is deemed repealed by the provision of P.D.
No. 1521, as the posterior law.
IF IT IS CONSTITUTED FOR THE PURPOSE STATED UNDER
SECTION 2 THEREOF, THE MORTGAGE OBTAINS A
PREFERRED STATUS. — If the mortgage on the vessel is
constituted for the purpose stated under Section 2, the
mortgage obtains a preferred status provided the formal
requisites enumerated under Section 4 are complied
with. Upon enforcement of the preferred mortgage and
eventual foreclosure of the vessel, the proceeds of the
sale shall be first applied to the claim of the mortgage
creditor unless there are superior or preferential liens,
as enumerated under Section 17[.]
ITS PROVISION ON THE ORDER OF PREFERENCE IN THE
SATISFACTION OF THE CLAIMS AGAINST THE VESSEL IS
MORE APPLICABLE COMPARED TO THE CIVIL CODE
PROVISIONS ON THE CONCURRENCE AND PREFERENCE
OF CREDITS. — The provision of P.D. No. 1521 on the
order of preference in the satisfaction of the claims
against the vessel is the more applicable statute to the
instant case compared to the Civil Code provisions on
the concurrence and preference of credit. General
legislation must give way to special legislation on the
same subject, and generally be so interpreted as to
embrace only cases in which the special provisions are
not applicable.
MARITIME LIEN ARISING PRIOR IN TIME TO THE
RECORDING OF THE PREFERRED MORTGAGE IS
CONSIDERED TO BE SUPERIOR TO THE LATTER. — Before
POLIAND's claim may be classified as superior to the
mortgage constituted on the vessel, it must be shown to
be one of the enumerated claims which Section 17, P.D.
No. 1521 declares as having preferential status in the
event of the sale of the vessel. One of such claims
enumerated under Section 17, P.D. No. 1521 which is
considered to be superior to the preferred mortgage
lien is a maritime lien arising prior in time to the
recording of the preferred mortgage. Such maritime lien
is described under Section 21, P.D. No. 1521[.] . . .
Under the aforequoted provision, the expense must be
incurred upon the order of the owner of the vessel or its
authorized person and prior to the recording of the ship
mortgage. Under the law, it must be established that
the credit was extended to the vessel itself.
EXPENSE ON THE VESSEL INDISPENSABLE TO THE
MAINTENANCE AND NAVIGATION OF THE VESSEL MAY
PROPERLY BE TREATED AS A MARITIME LIEN FOR
NECESSARIES. — As stated in Section 21, P.D. No. 1521,
a maritime lien may consist in "other necessaries spent
for the vessel." The ship modification cost may properly
be classified under this broad category because it was a
necessary expenses for the vessel's navigation. As long
as an expense on the vessel is indispensable to the
maintenance and navigation of the vessel, it may
properly be treated as a maritime lien for necessaries
under Section 21, P.D. No. 1521. With respect to the
claim for salary and wages of the crew, there is no
doubt that it is also one of the enumerated claims under
Section 17, P.D. No. 1521, second only to judicial costs
and taxes due the government in preference and, thus,
having a status superior to DBP's mortgage lien.
8.4.2 MARINA RULES
8.5 Other Code of Commerce Provisions
CHAPTER III - PERSONS IN MARITIME COMMERCE
(ARTS 586-651)
1. SHIPOWNERS AND SHIPAGENTS
1.1 Partowners (Proprietario)
1.2 Shipagents (Naviero); Difference with Ordinary
Agent
1.2.1 Solidary Liability with Shipowners
1.2.1.1 Versoza vs Lim
DOCTRINES: LIABILITY OF OWNER AND OPERATING
COMPANY. — Where a collision occurs between two
seagoing vessels, caused exclusively by the
carelessness of the navigating officers in charge of
one of the vessels, both the owner and the operating
company (casa naviera) directly in charge of the
offending vessel are liable for the damage done.
OBLIGATIONS; APPORTIONABILITY OF OBLIGATION;
JOINT AND SEVERAL LIABILITY OF TORTFEASORS. —
The rule that joint obligations are apportionable
unless otherwise specially provided has no application
to obligations arising from tort (ex delicto). Persons
who cooperate in the tortious infliction of damage are
jointly and severally liable.
1.2.1.2 National Development Co. Vs CA
MERCANTILE LAW; CODE OF COMMERCE; COLLISION OF
VESSELS; LIABILITY FOR DAMAGES SUFFERED. — More
specifically, Article 826 of the Code of Commerce
provides that where collision is imputable to the
personnel of a vessel, the owner of the vessel at fault,
shall indemnify the losses and damages incurred after
an expert appraisal. But more in point to the instant
case is Article 827 of the same Code, which provides
that if the collision is imputable to both vessels, each
one shall suffer its own damages and both shall be
solidarily responsible for the losses and damages
suffered by their cargoes.
PRIMARY LIABILITY OF SHIPOWNER OF CARRIER. —
Significantly, under the provisions of the Code of
Commerce, particularly Articles 826 to 839, the
shipowner or carrier, is not exempt from liability for
damages arising from collision due to the fault or
negligence of the captain. Primary liability is imposed
on the shipowner or carrier in recognition of the
universally accepted doctrine that the shipmaster or
captain is merely the representative of the owner who
has the actual or constructive control over the conduct
of the voyage (Yeung Sheng Exchange and Trading Co. v.
Urrutia & Co., 12 Phil. 751 [1909]).
APPLICABILITY OF THE CODE OF COMMERCE; NOT
REPEALED NOR LIMITED BY THE CARRIAGE OF GOODS BY
SEA ACT. — There is, therefore, no room for NDC's
interpretation that the Code of Commerce should apply
only to domestic trade and not to foreign trade. Aside
from the fact that the Carriage of Goods by Sea
Act (Com. Act No. 65) does not specifically provide for
the subject of collision, said Act in no uncertain terms,
restricts its application "to all contracts for the carriage
of goods by sea to and from Philippine ports in foreign
trade." Under Section 1 thereof, it is explicitly 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." By such
incorporation, it is obvious that said law not only
recognizes the existence of the Code of Commerce, but
more importantly does not repeal nor limit its
application.
LIABILITY FOR LOSS OF GOODS; SOLIDARY LIABILITY OF
THE OWNER AND AGENT OF THE OFFENDING VESSEL. —
It is well settled that both the owner and agent of the
offending vessel are liable for the damage done where
both are impleaded; that in case of collision, both the
owner and the agent are civilly responsible for the acts
of the captain; that while it is true that the liability of
the naviero in the sense of charterer or agent, is not
expressly provided in Article 826 of the Code of
Commerce, it is clearly deducible from the general
doctrine of jurisprudence under the Civil Code but more
specially as regards contractual obligations in Article 2.5 Code of Commerce Provisions on Captain
586 of the Code of Commerce. Moreover, the Court held 2.5.1 Sweet Lines v. CA
that both the owner and agent (Naviero) should be
declared jointly and severally liable, since the
obligation which is the subject of the action had its 3. PILOT
origin in a tortious act and did not arise from contract. 3.1 Master and Pilot
Consequently, the agent, even though he may not be 3.1.1 Master pro Hac Vice; Limitation
the owner of the vessel, is liable to the shippers and 3.2 Shipowner and Pilot
owners of the cargo transported by it, for losses and 3.3.Pilot and Pilot Association
damages occasioned to such cargo, without prejudice, 3.4 Compulsory Pilotage
however, to his rights against the owner of the ship, to FAR EASTERN SHIPPING V CA
the extent of the value of the vessel, its equipment, and
the freight. 3.5.Liability of Pilot and Pilot Association
3.5.1 High Standard of Care
WHERE LIABILITY FOR LOSS OF GOODS CANNOT BE
LIMITED. — MCP's contention is devoid of merit. The
declared value of the goods was stated in the bills of
lading and corroborated no less by invoices offered as 4. OFFICERS AND CREW
4.1 Regulation of Merchant Marine Profession and
evidence during the trial. Besides, common carriers, in
Employment
the language of the court in Juan Ysmael & Co., Inc. v.
Barretto et al., (51 Phil. 90 [1927]) "cannot limit its 4.2Minimum Safe Manning
4.3 Crew Negligence vs Crew imcompetence;
liability for injury to a less of goods where such injury or
Importance of Distinction
loss was caused by its own negligence." Negligence of
4.5 Fleet Seaman Doctrine
the captains of the colliding vessel being the cause of
the collision, and the cargoes not being jettisoned to 4.6 Code of Commerce Provisions
4.7 Officers (Deck and Engine)
save some of the cargoes and the vessel, the trial court
4.8 Ratings (Deck and Engine)
and the Court of Appeals acted correctly in not applying
the law on averages (Articles 806 to 818, Code of
Commerce).
5. SUPERCARGO (SOBRECARGO)

6. PURSER
1.3 Powers
1.4 Limitations of Powers 7. SUPERNUMERARY

1.5 General Duties CHAPTER IV -- MARITIME CONTRACTS;

1.5.1 Duty to Account CHARTERPARTIES
1.5.2 Duty to Provide Seaworthy Vessel; Doctrine of (ART 652-718)
Unseaworthiness
1.5.3 Reimbursement and Liabilities 1. DEFINITION AND CONCEPT
1.5.3.1 Doctrine/Principle of Maintenance and Cure 1.1 Implied Terms
1.1.1 Seaworthiness
1.6 Discharge of Captain and Crew Santiago Lighterage Corporation vs CA
1.6.1 Yu Con vs Ipil

1.6.2 Wing Kee Compadoring Co. Vs the Bark 1.1.2 Reasonable Dispatch
“Monongahela” 1.1.3 Against Improper Deviation

1.6.3 Walter Smith &Co. Vs Cadwaller Gibson Lumber 2. KINDS

2.1 Bareboat Charter
1.6.4 Manila Steamship Co vs Insa Abdulhaman 2.1.1 Beneficial Owner vs Disponent Owner; Owner Pro
Hac Vice
1.6.5 Yu Biao Santua & Co. Vs Osorio 2.1.2 LITONJUA SHIPPING VS NATIONAL SEAMEN BOARD

2.2 Time Charter

2. CAPTAINS, MASTERS AND SKIPPERS
2.1 Concept; Distinction
2.2 Qualifications
2.3 Powers, Functions and Duties
2.3.1 “Captain Goes Down with His Ship”
2.3.2. INTER-ORIENT MARITIME ENTERPRISES V. NLRC
2.3 Voyage Charter
2.4 Special Types: Slot or Space Charter, Cross Charter,
trip Charter, Tonnage Contract, etc
PHILAM INSURANCE CO. VS HEUNG-A SHIPPING CORP

2.4 Discretion of Captain or Master

Inter-orient Maritime Enterprises vs NLRC 3. EFFECT ON CARRIER’S CHARACTER
4. PERSON WHO MAY MAKE CHARTERPARTY

5. REQUISITES; FORM

6. RELATED CONCEPTS AND OTHER TYPICAL

CHARTER CLAUSES
6.1 Safe Port/ Safe Berth Clause
6.2 Cancellation Clause
6.3 Jupiter Clause
6.4 Freight and Hire
6.5 Deadfreight
6.6 Laytime and Notice of readiness
6.7 Demurrage Clause
6.8 Dispatch Clause
6.9 Inclusion/exclusion of Sundays and Holidays in
Computing Laytime
6.10 Cesser Clause
6.11 F.I.O.S Clause
6.12 Arbitration Clause
NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURG VS
STOLT NIELSEN PHILS.

7. CHARTER PARTY RIGHTS AND OBLIGATIONS OF;

7.1 SHIP OWNER OR CAPTAIN
7.2 CHARTERER

8. CHARACTER OF BILL OF LADING IN CHARTERPARTY

ARRANGEMENTS

9. CODE OF COMMERCE PROVISIONS

9.1 Subcharterer
9.2 O’Farrel y Cia vs Manila Electric Co

9.3 Caltex Phils vs Sulpicio Lines

10. CHARTERPARTY CHAIN

11. CHARTERPARTY INDEMNITY