In Magellan Manufacturing v.
CA,  the seller has no obligation to see loading for upon delivered
What is a Bill of Lading? -> it is a written acknowledgement signed by
the Master or the authorized agent of the carrier that he has received
the goods from the shipper.
 It is a LEGAL EVIDENCE of the contract between the
consignee and the shipper.
 Provides the terms and conditions of the agreement between
the parties, rates, freight charges, route, destination or other
charges and rights and obligations.
 A Bill of Lading is only inadmissible if there is FALSITY and
MATERIAL ERROR in drafting.
Functions of a Bill of Lading:
 a receipt of the goods received.
 Contract which the parties undertake obligations.
 Legal evidence of the contract between the shipper and
carrier.
Kinds of Bill of Lading:
 Clean Bill of Lading -> does not contain anything.
 Foul Bill of Lading -> contains notation of the defect in the
goods.
 Spent Bill of Lading -> goods are already delivered by the
carrier but there was NO SIGNED COPY of the Bill of Lading.
 Through Bill of Lading-> issued by the carrier obliged to
use the facilities of other carriers as well as his own for the
transport of the goods. Such Bill of Lading is honored by the
second and other interested carriers who do not issue their
own bills.
 On-board Bill of Lading -> goods are placed aboard the
ship with expectation that the shipment is good as on its
way.
 Received for Shipment Bill-> goods are received for
shipment with or without specifying by which the goods are
to be shipped.
 Custody Bill of Lading -> goods are already received by the
carrier but the vessel indicated in the Bill has not arrived at
the port.
 Port Bill-> issued by the carrier where the vessel indicated in
the Bill is already in the port.
 Said to Contain Bill -> General Rule: carrier having no
actual knowledge of the kind, quantity or conditions of the
contents of the container, the carrier issues the BOL based
on the declaration of the shipper and the bill of lading simply
states the contents of the container either as advised by
shipper or preface (said to contain)
Exception: if the BOL covers containers if its additionally
stated by the carrier that it is a receipt for the number of
packages “as shown above” that phrase explicitly admitted
that the containerized shipment in the bill of lading and the
carrier is then liable for the shortage of the cargo delivered
due to the admission.
 Negotiable or Non-negotiable Bill of Lading
What is Freight on Board (FOB)? -> seller assumes the risk until the
goods arrive at a point of destination.
 seller must see to it that the goods are loaded as his
responsibility does not cease until the loading in the cargo
on the vessel is complete.
 only an on-board bill of lading will signify that the
completion of the loading of the goods have been made.
What is Freight alongside Vessel (FAS) -> seller relinquishes the
risk from the moment the goods are delivered alongside the vessel.
alongside the vessel, he relinquishes liability.
 seller need only make delivery to the wharf
What is Cost, Insurance, Freight (CIF)?
Cost- indicates that the price quoted includes the invoice price, plus
insurance and freight. The seller completes
such by procuring necessary documents.
Freight, Insurance -The insurance is payable to the buyer and thus the
buyer bears the risk of loss when goods are in transit.
What is Cost and Freight (C.F)? -> if there is no insurance, there is
only cost and freight which means the seller’s liability remains.
What will happen if there is NO FIXED PERIOD TO DELIVER
GOODS?(Art. 358) -> the carrier shall be under the obligation to
forward them in the first shipment of the same or similar merchandise
which he makes to the point of delivery and should he not do so, the
damages caused by delay shall be borne by him.
If there is a period fixed? -> It must then be made within the period
otherwise the carrier shall pay the indemnity agreed upon in the BOL,
if there is no indemnity agreed upon then the carrier shall be liable to
the damages which the delay has caused.
EFFECTS OF DELAY:
1. Payment of indemnity or damages;
2. Suspends the contract of carriage;
3. Natural disaster shall not free carrier from responsibility
4. If delay is without just cause, the contract limiting liability cannot
be availed of in case of loss or deterioration.
REMEDY OF DELAY: DEMAND FOR CONVERSION.
 Due to such delay, they can no longer make use of the goods
 the remedy of the shipper or consignee is then to
demand for a conversion
CONVERSION -> the monetary form of the goods will then be
delivered in lieu of the goods that cannot be used anymore because of
delay.
REQUIREMENTS OF CONVERSION:
1. Demand to deliver;
2. Delay by carrier;
3. Carrier refused the delivery.
NOTE: Consignee may waive all title to the property and sue for
conversion which results to tender not being available as a defense.
However, if the goods are tendered before suit is brought, conversion
is no longer allowed but the remedy is now to sue for damages.
What if the contract has ended what will happen to the Bill of
Lading? -> the Bill of Lading shall be returned to the carrier. If the Bill
of Lading is lost by the consignee, he shall in return give receipt that
was the same as the Bill producing the same effects to the carrier.
What is a Parole Evidence? -> it is an evidence not incorporated or
stated in the contract which renders it inadmissible.
 All things negotiated prior to the execution of the Bill of
Lading should be incorporated in the Bill. This will help the
 court determine what is indicated in the Bill of Lading if any
dispute arises.
Bill of Lading is NOT NECESSARY FOR THE PERFECTION OF A
CONTRACT.
 Other legal proofs may be used to support their claims based
on the contract.
 Electronic commercial documents can be admitted to be
used.
What will happen if there is damage to the vessel and there is
already impossibility of her being repaired?
ARTICLE 579. After the damage to the vessel and the impossibility of
her being repaired, in order to continue the voyage had been shown,
its sale at public auction shall be ordered, subject to the following rules:
 
1.The hull of the vessel, its rigging, engines, stores, and other articles
shall be appraised, after making an inventory, said proceedings to be
brought to the notice of the persons who may wish to take part in the
auction.
 
2.The order or decree ordering the auction to be held shall be posted
in the usual places, an announcement thereof to be inserted in the
Official Gazette and in two of the newspapers of the largest circulation
of the port where the auction is to be held, should there be any. The
period which may be fixed for the auction shall not be less than twenty
days.
3. These announcements shall be repeated every ten days, and their
publication shall be made to appear in the records.
 
4. The auction shall be held on the day fixed, with the formalities
prescribed in the common law for judicial sales.
5. If the sale should take place while the vessel is in a foreign country,
the special provisions governing such cases shall be observed.
  
Art. 580 provides the preferential creditors in case of a judicial
sale, who will be paid first?   3. It includes the right to sell the ship and to use the proceeds
This should be followed in this order however 580 is now superseded
by sec 17 of PD 1521, otherwise known as ship mortgage decree of
1978 so article 580 to 584 of the code of commerce, deals with
preferred credit.  extinguished. It is carried over to the subsequent owner of the vessel.
For example 580 enumerates the preferred claims that should be
satisfied in case of judicial sale, we have to distinguish whether the sale
was through judicial sale or through extra judicial sale.
However section 17 of the Ship Mortgage Decree is now applicable and
no longer article 580 of the code of commerce.
 
Article 580 while it provides for the order of payment to creditors,
under what circumstance?
 
In particular 580 provides that in case of a judicial sale, the debts shall
be satisfied in the order as specified therein.    When it is a quasi action in rem, it is an action that deals with
1. First preferred debt is the mortgage lien, shall have priority
over all existing claims over the vessel.   The action only operates on those issues only as between the
This means that the vessel was sold but there is an encumbrance that
there is a mortgage to be satisfied prior to the sale. Those annotated - 
“the mortgage lien” will have priority over all other subsisting claims,
except those enumerated under section 17 which have preference over
the preferred mortgage lien in the order as stated under section 17. 
What does it mean? It follows that the code of commerce provision is
deemed repealed by the provisions of PD 1521, being a posterior law
or a later law.
 
Why is the Ship Mortgage Decree significant, what is the history
and why this was enacted? 
It was enacted purposely to accelerate the growth and development of 
the shipping industry. And to extend the benefits accorded to overseas
shipping under PD 2214  limited only to domestic shipping. Because
the Philippines, at that time, was still infant in the shipping industry,
while other countries already had ship mortgage decree. 
It was only in 1978 that the Ship Mortgage Decree was promulgated.
Presidential Decree 1521 is patterned closely from the United State's
Ship Mortgage Act of 1920 and Liberian maritime law on preferred
mortgages.
 
Why is mortgage significant? -> because of the value of the vessel. It
is so large that it needs funding to operate.
Note that Sections 21, 22, and 23 of the Presidential Decree 1521 are
identical with subsections (p), (q), and (r) of the United States' Ship
Mortgage Act. The Ship Mortgage Act is part of the Federal Maritime
Lien Act.
Hence, American jurisprudence is relevant in determining whether or
not Presidential Decree 1521 applies in cases involving its application.
Maritime Lien -> encumbrances against the vessel.
 it is a privilege claim against the vessel for some service
rendered to facilitate the use of the vessel in navigation.
 
Characteristics of Maritime Lien
1. It is a special property right at a ship which is given to a
creditor by law.
2. It is also a security for the debt and claims subsisting from
the moment the debt arises.
to pay the debt.
 
In the Philippines, the maritime lien is similar to a real property
mortgage lien. In spite of the transfer of ownership, the lien is not
Hence, the maritime lien cannot be separated from the vessel.
 
That's the same way how real property mortgages work. In the title,
you can find the encumbrance to the property through an annotation.
Until the vessel is discharged through the settlement of the principal
debt, it follows the vessel. So again, this is just a repeat of what I said:
the maritime lien follows the vessel until the principal debt to the
creditor is paid which discharges the lien.
Enforcement of Maritime Lien Are Quasi In Rem
 
the status, ownership or liability of a particular property.
parties to the proceedings.
 
Preferred Claims Under Section 17 of the Ship Mortgage Decree
 
Section 17 provides that the preferred mortgage lien shall have priority
over all claims against the vessel.
 
But take note there are exceptions, which can supersede the lien:
(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.
 
The above claims are therefore maritime liens that attaches to the
vessel.
 Notice of their existence is not necessary because it is
provided by law.
 These maritime liens do not arise from specific agreement.
Even though there is a contract, in the event of claims,
Section 17 will prevail.
 
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 suit in 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.
Although they may arise out of contract (charter party and other
contracts), or even in the absence of a contract, they are imposed even
in the absence of specific contractual provision providing for a lien.
Similarly, the parties may not impose a maritime lien by agreement if
one is not provided by law.
 
In other words, claim must be one of those enumerated under Section
17 of the Ship Mortgage Decree. The claims are likewise not based on
the possession of the vessel. Possession of the vessel is not necessary
for the maritime liens under Section 17 to be attached to the vessel.
 
The nature of the claims does not originate in possession of the vessel
but as provided by law.
 
Section 17 of the Ship Mortgage Decree of 1978 repealed Article
580 of the Code of Commerce. In addition, enumeration of preferred
claims under Section 17 controls with claims over mortgaged vessels.
 
The provision of Presidential Decree 1521 in the order of preference in
the satisfaction of the claims against the vessel is a more applicable
statute to the instant case compared to the Civil Code provisions on
the concurrence and preference of credits.
 
The rationale behind this is the general legislation must give way to
special legislation on the same subject. Generally, be so interpreted as
to embrace only cases in which the special provisions are not
applicable.
What about the Statute of Frauds? – INAPPLICABLE.
 
This is because the claim on maritime lien is based on law, more
specifically Presidential Decree 1521 and not on any contract or
agreement.
 
EXECUTORY CONTRACT DOCTRINE -> A contract under which an
unperformed obligation remains on both sides or where both parties
have continuing obligations to perform.
 
What is the relevance of the Executory Doctrine or its relation to a
maritime lien? -> If you recall in your oblicon, a contract under which
unperformed obligations remain on both sided or where both parties
have continuing obligations to perform.
What is the relevance? The relation of maritime lien.
A lien does not attach for breach of an executory contract even though
the contract is the type which normally gives rise to a lean, because
liability arises in admiralty for breach of contract but if the parties have
performed his obligation, the remedy against the other is only for
breach of an action in personam. He will now file for the breach of
contract and the damages. 
For example there is no lien in favor of a person who has not yet
delivered the supplies to the vessel even if there is already a valid
contract. There is a valid contract but it will not apply or it will not be
considered a maritime lien even if there is a valid contract and the lien
will not be in favor of a person who has not yet delivered the supplies
to the vessel. Even if there is already a valid contract. 
 
Who are the officers and crew in a vessel?
1. Ship owner
2. Ship agent
3. the captain or the master of the vessel
4. the officers other than the captain and or the master of the
vessel such as the first-mate or sailing mate
5. the second mate or the quartermaster
6. the engineers
7. the seaman or sailors or crew and other persons who make
up the complement of the vessel. 

What is the job of a Ship Agent? (Art. 586)
 a person particularly entrusted with the provisioning of the
vessel,
 the person who represents the vessel in the port. where she
happens to be under Article 586, as held in the case of
Macondray and company vs Provident Insurance
Corporation.  Article 604
 
Macondray and Company vs Provident Insurance Corporation.
Please see digest in the annex.
 
The SC said that a ship agent whether acting as agent of the owner of
the vessel or as agent of the charterer is to be considered as the ship
agent and maybe held liable as such as long as the latter, the ship
agent, is the one who provisions or represents the vessel. 
THE POWERS OF THE SHIP AGENTS IS PROVIDED UNDER ARTICLE
596-599.
What duties can the ship agent do?
Article 596
The agent may discharge the duties of captain of the vessel, subject, in
every case, to the provisions contained in Article 609.
If two or more co-owners request the position of captain, the
disagreement shall be decided by a vote of the members; and if the
vote should result in a tie, the position shall be given to the part owner
having the larger interest in the vessel.
If the interest of the petitioners should be the same, and there should
be a tie, the matter shall be decided by lot.
What is the ship agent allowed to do?
Article 597
The agent shall select and come to an agreement with the captain, and
shall contract in the name of the owners, who shall be bound in all that
refers to repairs, details of equipment, armament, provisions, fuel, and
freight of the vessel, and, in general, in all that relates to the
requirements of navigation.
What can the ship agent not allowed to do?
Article 598
The agent cannot order a new voyage, nor make contracts for a new
charter, nor insure the vessel, without the authority of her owner or by
virtue of a resolution of the majority of the co-owners, unless these
privileges were granted him in the certificate of his appointment. cdasia
If he should insure the vessel without authority therefore he shall be
secondarily liable for the solvency of the underwriter.
Article 599
The managing agent of an association, shall give his co-owners an
account of the results of each voyage of the vessel, without prejudice
to always having the books and correspondence relating to the vessel
and to its voyages at the disposal of the same.
 
ARTICLE 603-608 PROVIDES FOR THE DISCHARGE OF THE
CAPTAIN AND THE CREW.
 
When can the agent discharge the captain and crew?
Article 603
Before a vessel goes out to sea the agent shall have at his discretion, a
right to discharge the captain and members of the crew whose contract
did not state a definite period nor a definite voyage, paying them the
salaries earned according to their contracts, and without any indemnity
whatsoever, unless there is a special and specific agreement in respect
thereto.
What are the effects of the discharge?
If the captain or any other member of the crew should be discharged
during the voyage, they shall receive their salary until the return to the
place where the contract was made, unless there are good reasons for
the discharge, all in accordance with Articles 636 et seq. of this Code.
What if the contracts of the captain and crew members is for a
definite period?
Article 605
If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged
until the fulfilment of their contracts, except for reasons of
insubordination in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel or to its cargo by
malice or manifest or proven negligence.
What if the captain is part owner of the vessel, what are the
effects?
Article 606
If the captain should be a part owner in the vessel, he cannot be
discharged without the agent returning him the amount of his interest
therein, which, in the absence of an agreement between the parties,
shall be appraised by experts appointed in the manner established in
the law of civil procedure.
Article 607
If the captain who is a part owner should have obtained the command
of the vessel by virtue of a special agreement contained in the articles
of co-partnership, he cannot be deprived thereof except for the
reasons mentioned in Article 605.
Article 608
In case of the voluntary sale of the vessel, all contracts between the
agent and captain shall terminate, the right to proper indemnity being
reserved in favor of the captain, according to the agreements made
with the agent.
 The vessel sold shall remain subject to the security of the
payment of said indemnity if, after the action against the
vendor has been instituted, the latter should be insolvent. 
 This provisions of the Code of Commerce on the discharge of
the captain and the crew is subject to the provisions of the
Labor Code of the Philippines, more specifically for those
employed for domestic transportation or commerce as well
as the rules promulgated the Philippine Overseas
Employment Administration for seamen who are hired for
overseas employment. 
Every worker in the Philippines has a constitutionally protected right to
security of tenure. Consequently, an employee cannot be dismissed
without just or lawful cost and without affording the employee of due
process. As provided in the constitution, no person shall be deprived of
life, liberty or property without due process of the law. Our work is our
property therefore you cannot just be dismissed without due process
or opportunity to be heard.
 
The labor code provisions also apply to officers and crew of merchant
vessels engaged in domestic trade or coast wide shipping. Therefore
matters concerning their dismissal or disciplinary action must be in
accordance with the provisions of the labor code.
Regarding Exam
If the question is what law will govern, for transportation by sea, you
have to qualify.  Qualify if it is a coastwide shipping or overseas
shipping.
If the question is for overseas shipping, from Philippine port to
foreign port: Article 1753 of the Civil Code provides that “the law of
the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction, or
deterioration.” Hence, from foreign ports to Philippine ports, the
New Civil Code of the Philippines governs.  be entitled to indemnity.  Otherwise stated, if there is no specific
 
For air transportation, classify if it is domestic, what will apply, or if it
is international, what will apply.  Be specific.  Do not lump it in one
paragraph.
 
Officers and Crews Working in Foreign Vessels
They are involved in overseas shipping.  There must be compliance
with the applicable laws on overseas employment as well as regulations
issued by the POEA such as those embodied under the standard
contract for seafarers employed abroad.
 
Nature of Position of a Captain
The CAPTAIN OF A VESSEL IS A CONFIDENTIAL AND MANAGERIAL
EMPLOYEE within the meaning of the doctrine that confidential and
managerial employees cannot be arbitrarily dismissed at any time
without just cause as reasonably established in an appropriate
investigation. In relation to the constitutionally guaranteed security of
tenure.  DISCHARGED DURING VOYAGE
In the case of Inter-Orient Maritime Enterprises, Inc. v. NLRC [G.R.
No. 115286 (1994)], the Supreme Court held that:
 
A captain commonly performs three (3) distinct roles:
 
(1) he is a general agent of the shipowner;
(2) he is also commander and technical director of the vessel;
and
(3) he is a representative of the country under whose flag he
navigates because every vessel has a flag.
 
If it is a Philippine flag, he represents the Philippines because
the vessel carries the Philippine flag.
Can the Captain Be Discharged?
You will have to qualify.
Article 603 (applicable when the captain is not a co-owner)
 Before a vessel goes out to sea the agent shall have at his discretion, a
right to discharge the captain and members of the crew whose
contract did not state a definite period nor a definite voyage,
paying them the salaries earned according to their contracts, and
without any indemnity whatsoever, unless there is a special and specific
agreement in respect thereto.
 
How to qualify when the discharge was made?
 
DISCHARGED BEFORE THE VESSEL SETS SAIL
 
If the discharge was made before the vessel sets sail, the shipowner
may, at his discretion, discharge the captain and members of the crew.
Under what circumstances?
You have to qualify whether a contract is with a fixed period or without
a fixed or specific period.
 
Article 603 of the Code of Commerce provides that the shipowner
may discharge the ship captain before the vessel sets sail provided
their contract does not state a definite or specific period or
voyage.
What is required of the shipowner
The shipowner has to pay them the salaries earned according to their
contract and without indemnity whatsoever unless as an exception
there is an express and specific agreement in the contract that they will
agreement, they will only receive the salaries that they have earned.
 
ARTICLE 605
If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged
until the fulfillment of their contracts, except for reasons of
insubordination in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel or to its cargo by
malice or manifest or proven negligence.
When is there indemnification?
General rule: The shipowner is not obliged to indemnify them.
 
Exception: There is an express and specific agreement in the contract
that they will be entitled to indemnity.
 
If the captain and members of the crew should be discharged during
the voyage, they shall continue to receive their salary until they return
to the port where the contract was made.  There should be just motive
for the discharge in accordance with Articles 604 and 605 of the Code
of Commerce.
 
Article 604 (applicable when the captain is not a co-owner)
If the captain or any other member of the crew should be discharged
during the voyage, they shall receive their salary until the return to the
place where the contract was made, unless there are good reasons for
the discharge, all in accordance with Articles 636 et seq. of this Code.
 
N.B.  The provisions of Articles 603 and 604 shall apply only when
the captain is not a co-owner.
What if the captain is a co-owner or being a co-owner and in
command of the vessel by virtue of an agreement contained in the
articles of partnership-> the provisions of Articles 606 and 607 shall
apply.
ARTICLE 606
If the captain should be a part-owner in the vessel, he cannot be
discharged without the agent returning him the amount of his interest
therein, which, in the absence of an agreement between the parties,
shall be appraised by experts appointed in the manner established in
the law of civil procedure. 
 He cannot be discharged without the agent returning him he
amount of his interest.
 If no agreement as to the amount of interest it shall be
appraised by the experts.
  He cannot be deprived of his office except for
insubordination and other grounds under Art. 607 in relation
to Art. 605.
 
If there is no agreement as to the amount of interest, there is an
appraiser. But if there is an agreement with respect to his investment or
interest in the vessel, that will be returned to him by the ship owner or
ship agent.
 
Who are considered as compliments?
ARTICLE 648
By the complement of a vessel shall be understood all the persons
embarked, from the captain to the cabin boy, necessary for the
management, evolutions, and service, and there shall, therefore, be
understood as included in the complement the crew, sailing mates,
engineers, stokers, and other persons not having a specific name; but
there shall not be included the passengers nor the persons the vessel is
only transporting.
 
UNDER THE RULES OF THE MARINA
International Trade
The MARINA PROVIDES FOR WHO SHALL BE THE COMPLEMENTS.
Under RA 8544 more specifically Memo Cir. No. 137 of the MARINA
provides for who are the persons in connection with safe manning for
international trade. It includes the master, deck officer, desk officer,
chief engineer, engineer officer, radio officer, ratings man, among
others.
Domestic Trade
It enumerates that these are the officers, designated as such national
law or regulation or in the absence of such designation, by collective
agreement or custom.
Master, chief mate, desk officer, chief engineer officer, second engineer
officer, engineer officer, medical practitioner, radio officer, paramedics,
major patron, minor patron, boat captain, marine diesel mechanic
electrician, rating officer, etc. There are more in domestic rather than
international trade.
Charter Party -> written contract wherein the entire ship or some
principal part thereof is lent by the owner to another person for a
specified time or use, in consideration for a payment of a fee. (lease
being referred here is Ordinary Lease)
Another definition: a contract entered by the charterer and ship owner
to lease the entire ship or a principal part thereof for a specified time or
use.
 The time that the charterer is allowed to use the vessel is for
a determinate period.
 The ship owner must ASSURE THAT THE VESSEL IS SHIP
WORTHY.
How to determine that the ship is ship worthy?
 seaworthiness cannot be subject to agreement as it is a fact
that must be proven.
 To be seaworthy, a vessel must have that degree of fitness
which an ordinary, careful and prudent owner would require
his vessel to have at the commencement of her voyage,
having regard to all probable circumstances to it.
 The vessel must: [1] be efficient as an instrument of
transport and [2] as a storehouse for her cargo.
When can the Charter Party be rescinded? (Art. 689)
NOTE: Charter Party may be RESCINDED by the Charterer, ship owner
or causes independent of the will of the parties.
a. The charterer does not place the cargo alongside the vessel
after the termination of the extra pay days. If this happens
then the charterer MUST PAY HALF THE CARRIAGE agreed IN
ADDITION to the lay-days and demurrage accrued.
b. The person who the vessel was chartered to sold it before
the charterer has begun to load it the purchases should load
it for his own account.
When can the Charter Party be rescinded if before the vessels puts
to sail from the port of departure? (Art. 690)
a) declaration of war or interdiction of commerce with the
power to whose ports the vessel was to make its voyage;
b) A condition of blockade of the port of destination of said
vessel, or the breaking out of an epidemic after the contract
was executed
c) The prohibition to receive at the said port the merchandise
constituting the cargo of the vessel.
d) Indefinite detention, by reason of an embargo of the vessel
by the order of the government or for any other reason
independent of the will of the ship agent.
e) The inability of the vessel to navigate, without fault of the
captain or ship agent
Duration of a Charter Party
Time Charter- the vessel may be used for a fixed period of time.
Voyage Charter- the ship is used for a single voyage only
Nevertheless, in these periods given the ship owner has the
responsibility under the contract of the following:
A. Supply the ship’s stores
B. Pay for the wages of the master and crew
C. Defray the expenses for the maintenance of the ship.
What are the KINDS OF CHARTER PARTY?
Contract of Affreightment -> owner of the ship or other vessels
allows the use of it either a whole or a part of it to a MERCHANT or
OTHER PERSON for the CONVEYANCE OF GOODS on a PARTICULAR
VOYAGE in consideration of the payment of freight.
 Ship owner retains control of the vessel;
 owner provides the crew and WHAT IS BEING LEASED IS
ONLY THE SPACE OF THE VESSEL.
 The shipowner provides for the provisions of the ship, wages
and master of the crew as well as the expenses and the
maintenance of the vessel.
 shipowner retains the possession, command and navigation
of the ship, the charterer merely having the use of the
space in the vessel in return for his payment of the charter
hired.
 Owner remains liable as carrier and must answer for any
breach of duty.
 Still remains as a common carrier
Demise or Bareboat Charter -> the charterer has the ownership of
the vessel (pro hac vice) in the meantime for the period covering the
charter party. (Charterer becomes the owner for a period of time).
  The ship owner must completely and exclusively relinquish
the possession, command, and navigation of the vessel to
the charterer.
 The stipulations in the charter written will govern the rights
and obligations of the parties and NOT THE LAW ON
COMMON CARRIERS.
 There is a conversion from a common carrier to a private
carrier.
 Charterer becomes liable to others caused by negligence
except for unseaworthiness
In a Bareboat charter what are the obligations of the parties?
a. Ship owner assures that the vessel is SEA WORTHY
b. Charter is the owner in the meantime subject to liability for
damages caused by negligence.
c. Charter hires the captain and staff of the bareboat charter.
What are the effects if a Bill of Lading is issued under a carrier
covered by a Charter Party?
a. It only operates as the receipt of the goods, document of
title passing the property of goods.
b. The bill of lading is not a contract of carriage because the
contract is now the Charter Party.
What if a Charter Party was executed without the permission of
the ship owner?
If a Charter Party was executed by the Captain of the Ship in the
absence of the ship agent, such charter is still valid and effective but
the Captain will be held liable for damages.
What if the Charter party has no date or time stated?
 The usage of the port where these acts take place shall be
observed.
 If the customary period has passed but there is still no time
or date and there is no provision fixing the indemnity for the
delay the captain shall be entitled to DEMAND DEMURRAGE
for the lay days that could have lapsed in loading and
unloading.
What if the vessel is unseaworthy?
 The captain shall be obliged to charter another one at his
expense in good condition.
 If the captain failed to furnish another vessel either through
indolence or malice the freighters may demand from the
captain and if they still failed, the freighters may apply to
charter to the judicial authority requesting that the charter
party be immediately approved.
 If the captain should not find a vessel to charter, captain shall
deposit the cargo at the disposal of the freighters, there
being no right to any indemnification whatsoever.
When should freight accrue?
 According to the terms stipulated in the contract
 If the terms are not specific or doubtful and the ship has
been chartered by months or days the fees shall accrue
FROM THE DATE ON WHICH THE SHIP IS LOADED.
 If there is a specific period of time it shall accrue from that
same day.
 If the fees are based on weight, payment shall me made by:
GROSS WEIGHT this includes the packaging, barrels or any
object which the cargo is contained.
When is a Cargo NOT REQUIRED TO PAY FREIGHT? -> these are
JETTISONED when certain goods are thrown overboard for the
common safety, to preserve the vessel and the crew or suffers for
deterioration or diminution or increase in weight or size by natural
causes.
What are Jettisoned?-> These are cargos thrown away in order to
avoid the danger of sinking, in order to lighten the vessel (for the
common safety). The amount of the latter shall be considered as
general average computing the same in proportion to the distance
covered.
General average is sort of an expense that shall be paid by the shippers
who were benefited by the jettisoned of the cargo.
 Those that are lost due to shipwreck or stranding.
 Those seized by pirates or enemies
 If there was already advance payment in both instances it
shall be returned unless otherwise agreed upon.
What will then happen to the owners of the cargoes that were
Jettisoned?
 The owners will be compensated by the shippers of the
cargos that were saved by the Jettison.
 In order for the owners of the Jettison be compensated they
will pay the general average .
What will happen to the shippers who own the cargoes?
 Owners of the cargoes that was saved will contribute to the
general fund in proportion or pro rate to the value of their
cargo which is considered as general average which shall be
paid to the shippers whose cargoes were jettisoned as well.
When will there be cargoes THAT ARE REQUIRED TO PAY
FREIGHTAGE? (Art. 659)
 These are the goods sold by the Master in order to fix
indispensable repair of the hull, engine or other unavoidable
and urgent needs.
 The freightage may or may not be paid in full. It shall be paid
in proportion to the distance covered until the vessel is lost.
 The freightage need be paid in full, if the vessel reaches port
of destination, the freightage shall be paid in proportion to
the distance covered until the vessel is lost
 These are also goods that suffered DETERIORATIONS OR
SHRINKAGE on account of inherent defects or bad quality of
packing or fortuitous events.
How will the price of the goods be set? -> according to the success
of the expedition.
1. If the ship safely reaches the destination port, the Master
shall pay them at the price obtained for those of the same
class as those sold;
2. If the ship is lost, at that which would have been obtained
from sale of the goods.
When will the FULL CARRIAGE FEES ACCRUE? -> goods that suffer
deterioration or shrinkage due to bad quality and the condition of the
packaging or through fortuitous causes.
What will happen if there is a NATURAL INCREASE IN THE WEIGH
OR MEASUREMENT OF THE FREIGHT? -> it will benefit the owner When will the obligation of the borrower not
then the cargo shall be paid by the proper freightage fixed in the extinguished if there is loss?
contract
1) Inherent defect thing;
What will happen if the vessel or the goods should be redeemed? 2) Fault or Malice of borrower;
-> there will be the payment of freightage corresponding to the 3) Barratry (willful misconduct in pursuance of some
distance covered by the vessel transporting the cargo. unlawful or fraudulent purpose without the consent of the owner
and to the prejudice of the owner’s interest) of master/captain;
 If the agreed amount of freightage is 1000 and pirates seize 4) Damage to the vessel as a consequence of its engaging
the goods when the vessel has gone halfway, no need to pay in Contraband;
the half of the freightage. He can pay only 500. 5) Difference in merchandise loaded and that agreed to
 If the cargoes were redeemed from the pirates, they must be loaded, unless change is due to force majeure.
pay the balance of the freightage, which was in proportion to
the distance covered by the vessel.
 If the vessel is repaired after it has been shipwrecked and the
goods lost but later salvaged are transported but with the
same vessel, the full freight shall be paid without prejudice to
what may be due by reason of the average.

Who are considered PREFERRED CREDITORS IN cases of extra-

judicial foreclosure of the vessel?

Loan on Bottomry-> Loan by which the owner of the ship pledges

the vessel as a security for its repayment, with maritime or
extraordinary interest on account of the maritime risks to be borne by
the lender, it being stipulated that if the ship be lost in course of the
specific voyage, or during the limited time, by any of the perils
enumerated in the contract, the lender shall also lose his money

 Who may contract? -> Shipowner or ship agent. Outside of

the residence of the owners - the captain.

Loan on Respondentia -> Loan made on the goods laden on board

the ship, and which are sold or exchanged in the course of the voyage,
the borrower’s personal responsibility being the principal security of
the performance of the contract. The lender must be paid his principal
and interest, though the ship perishes, provided that the goods are
saved.

 Who may contract? -> owner of the cargo.

What are the common conditions under Loan on Respondentia and

Bottomry? -> security is exposed to marine peril, which is an essential
part of those loans. The obligation of the debtor is conditioned only
upon the safe arrival of the security at the point of destination.

What will happen if there is loss of collateral in these 2 types of

loan? (Art. 731)
 If there is absolute loss of the goods on which the loan was
made, the lender can no longer file an action if the loss was
made DURING THE VOYAGE DESIGNATED IN THE
CONTRACT if there was proof that the said cargo was on
board.
 Total loss of the collateral of the loan under respondentia,
extinguishes the loan, if it arose from an accident or peril of
the sea at the time and during the voyage designated in the
contract.

The obligation of the borrower to pay is extinguished by (From

2017 notes):

a) absolute loss of the goods

b) by reason of accident of the sea during the designated
voyage; and
c) proven that such goods were on board