MARITIME COMMERCE

IMPORTANT
• Merchant vessel

• Maritime lien and preference of credit

• Doctrine of limited liability

• Causes of revocation of voyage

• Participants in maritime commerce

• Charter party

• Loans on bottomry and respondentia

• Accidents in maritime commerce

 CHARACTERISTICS OF MARITIME
TRANSACTION

• Real-effectivity against third persons is done thru registration

• Hypothecary (doctrine of limited liability)- liability of the

owner of the value of the vessel is limited to the vessel itself
ABOITIZ VS GAFLA
The real and hypothecary nature of
maritime law simply means that the
liability of the carrier in connection with
losses related to maritime contracts is
confined to the vessel, which stands as
the guaranty for their settlement.
 MERCHANT VESSEL

• Vessel engaged in maritime commerce, whether foreign or otherwise

• Considered personal property

• Susceptible to maritime liens e.g. repair, equipments, mortgage

liabilities
 MARITIME LIEN

• Pnb vs CA A present right of property in the ship, a jus in re, to be

afterward enforced in admiralty process in rem.

• Effect of sale: all pre-existing claims in the vessel are terminated

 DOCTRINE OF LIMITED
LIABILITY
• Applicable to: indemnities to 3rd persons; negligence of captain;
collision ; wages of captain and crew; advances made by the ship

• Abandonment of the vessel is necessary to limit the liability of the

shipowner.

• Abandonment is dispensed with when vessel is entirely lost. (Luzon

Stevedoring vs CA)
 RIGHT OF ABANDONMENT

• On the vessel

• In case of civil liability from indemnities to third persons

• In case of constructive loss of the vessel

• In case of leakage of 3/4 of the contents of the cargo containing

liquids
 EFFECT

• Transfer of ownership of vessel from shipowner to shipper or insurer

• The insurer must pay the insured as if there was actual loss of the
vessel
 CAUSES OF REVOCATION OF
VOYAGE
• War or interdiction of commerce

• Blockade

• Prohibition to receive cargo at destination

• Embargo

• Inability of the vessel to navigate

 PARTICIPANTS IN MARITIME
COMMERCE
• Shipowner and ship agents

• Captains and masters of the vessel

• Officers and crew of the vessel

• Supercargoes

• Pilot
 CHARTER PARTY

• A contract by virtue of which the owner or agent binds himself to

transport merchandise or persons for a fixed price

• Planters products inc. vs CA a contract by which an entire

ship, or some principal part thereof is let/leased by the owner to
another person for a specified time or use.
 CLASSES

• Bareboat or demise (charterer is treated as owner pro hac vice)

• Contract of affreightment (shipowner retains possession of ship,

charterer only use/lease space) (kinds: 1. time charter 2. Voyage or
trip charter)
 REQUISITES FOR A VALID CHARTER
PARTY
• Consent of contracting parties

• Existing vessel which should be placed at the disposition of the shipper

• Freight

• Compliance with art 652 of the Code of Commerce (drawn in

duplicate and signed by the parties, etc.)
 CLAUSES WHICH MAY BE INCLUDED IN
A CHARTER PARTY

• Jason clause

• A stipulation in a charter party that in case of a maritime accident for

which the shipowner is not responsible by law, contract or otherwise,
the cargo shippers, consignees or owners shall
contribute with the shipowner in general average.
• Clause paramount or paramount clause

• A clause in a charter party providing that the COGSA shall

apply, even though the transportation is domestic,
subject to the extent that any term of the bill of lading is repugnant
to the COGSA or applicable law, then to the extent thereof the
provision of the bill of lading is void.
 LOAN ON BOTTOMRY AND
RESPONDENTIA

• A real, unilateral, aleatory contract, by virtue of which one person

lends to another a certain amount of money or goods on things
exposed to maritime risks, which amount, with its earnings, is to be
returned if the things are safely transported, and which is lost if the
latter are lost.
 LOAN ON BOTTOMRY

• Loan made by shipowner or ship agent guaranteed by vessel

itself and repayable upon arrival of vessel at destination.
 LOAN ON RESPONDENTIA

• Loan taken on security of the cargo laden on a vessel, and repayable

upon safe arrival of cargo at destination.
 ELEMENTS

• Exposure of security to marine peril.

• Obligation of the debtor conditioned only upon safe arrival of the

security at the point of destination.
 LOAN REGARDED AS SIMPLE LOAN
• Lender loaned an amount larger than the value of the object due to
fraudulent means employed by the borrower.

• Full amount of loan is not used for cargo or given on the

goods if all of them could not have been loaded, the balance will e
considered a simple loan.

• If the effects on which the money is taken is not subjected to any

risk.
 HYPOTHECARY NATURE OF BOTTOMRY/
RESPONDENTIA
• GR: obligation of the borrower to pay the loan is extinguished if the goods given as
security are absolutely lost by reason of an accident on the sea, during voyage designated, and if it is
proven that the goods were on board.

• Exceptions:

• Loss due to inherent defects

• Loss due to barratry on the part of the captain

• Loss due to the fault or malice of the borrower

• The vessel was engaged in contraband and

• The cargo loaded on the vessel be different in from that agreed upon.
 ACCIDENTS IN MARITIME
COMMERCE
• Averages

• Arrival under stress

• Collision

• Shipwreck
 AVERAGE

• An extraordinary or accidental expense incurred during the voyage

in order to preserve the cargo, vessel or both and all damages or
deterioration suffered by the vessel from departure to the port of
destination, and to the cargo from the port of loading to the port of
consignment.
 CLASSES
• Particular or simple average only the vessel or cargo is saved (damages or expenses
caused to the vessel or cargo that did not inure to the common benefit, and borne by
respective owners) liable: owner of the goods

• Gross or general average both vessel and cargo are saved (damages or expenses
deliberately caused in order to save the vessel, its cargo or both from real and known risk)
liable: all the persons having interest in the vessel and the cargo, insurers and lenders on
bottomry and respondentia

• Requisites for general average: common danger, deliberate sacrifice, success, proper
formalities and legal steps
 GOODS NOT COVERED BY GENERAL
AVERAGE EVEN IF SACRIFICED

• Goods carried on deck

• Goods not recorded in the books or records of the vessel

• Fuel for the vessel if there is more than sufficient fuel for the voyage
 MAGSAYSAY VS AGAN

• Expenses incurred to refloat a vessel, which accidentally ran aground,

in order to continue its voyage, do not constitute general
average. Not only there is absence of a marine peril, common
safety factor, and deliberateness. It is the safety of the property,
and not the voyage, which constitutes the true foundation of
general average.
 JETTISON

• Act of throwing cargo overboard in order to lighten the vessel

 YORK-ANTWERP RULES
ON DETERMINING FOR AVERAGES WITH REGARD TO
DECK CARGO
• Deck cargo is prohibited in international/overseas/foreign shipping.

• If loaded with consent on overseas trade, it must contribute to

general average. If jettisoned, no reimbursement because there is
violation of Y-A rules.

• If loaded with consent on coastwise shipping, must contribute to

general average. If jettisoned would be entitled to reimbursement.
 ARRIVAL UNDER STRESS

• The arrival of a vessel at the nearest and most convenient port

instead of the port of destination, if during the voyage the vessel
cannot continue the trip to the port of destination.
 COLLISION

• Impact of two vessels both of which are moving.

• Allision impact between a moving vessel and a stationary one.

NAUTICAL RULES RO DETERMINE NEGLIGENCE
• Fault presumed to the one who arrived later.

• Smaller should give right of way to the larger one.

• Vessel which leaves later presumed to have collided .

• Sail in the night.

• Spread sails

• Improperly moored vessel

• No buoys

• Proper look-outs
 ERROR IN EXTREMIS

• Sudden movement made by a faultless vessel during the third zone of

collision with another vessel which is at fault during the 2nd zone.

• Even if such sudden movement is wrong, no responsibility will fall on

said faultless vessel. Urrutia vs Baco
DOCTRINE OF INSCRUTABLE FAULT

• In case of collision where it cannot be determined which between

the two vessels was at fault, both vessels bear the their respective
damage, but both should be solidarily liable for damage to the cargo
of both vessels.
 DOCTRINE OF RES IPSA LOQUITOR

• This doctrine applies in case a moving vessel strikes a stationary

object, such as a bridge post, dock, or navigational aid. Far Eastern
Shipping vs CA
 DOCTRINE OF LAST CLEAR CHANCE &
RULE ON CONTRIBUTORY NEGLIGENCE

• This cannot be applied in collision cases because of Art 827 of the

Code of Commerce.
 MANILA STEAMSHIP VS INSA

• Even if the cause of action against the common carrier is based on

quasi-delict, the defense of due diligence in the selection and
supervision of employees is unavailing in case of a maritime tort
resulting in collision. It is not a civil tort governed by the civil code but
a maritime one governed by arts 826-839 of the Code of
Commerce.
• Maritime protest condition precedent or prerequisite to
recovery of damages arising from collisions and other maritime
accidents.

• Written and made under oath

 SHIPWRECK

• Loss of the vessel at sea as a consequence of its grounding, or

running against an object in sea or on the coast.

• It occurs when the vessel sustains injuries due to a marine peril

rendering her incapable of navigation.
 SPECIAL
CONCEPTS
Arrastre service
Stevedoring service
Containerization
 ARRASTRE SERVICE
• A contract for unloading of goods from a vessel.

• Applies to overseas trade only.

• Cargo from abroad must be unloaded by the arrastre operator, not the person himself.

• Public utility

• Liability: similar to a warehouseman, common carrier , with solidary liability with the
common carrier

• Arrastre operator is liable if the consignee proves negligence while the goods are in
custody of the arrastre operator.
 STEVEDORING SERVICE
• The carriage of goods from the warehouse or pier to the holds of
the vessel.

• Handling of cargo from the hold of the ship to the dock (pier side) to
the barge (unloading at sea).

• Loading on the ship of outgoing cargo is also part of stevedoring

work.
 CONTAINERIZATION
SAID-TO-CONTAIN
SHIPPER’S LOAD AND COUNT SYSTEM
• System whereby the shipper loads his cargoes in a specially designed container,
seals the container and delivers it to the carrier for transportation.

• Carrier does not participate in the counting of the merchandise for loading, and
the sealing of the container.

• Conditions of the cargo inside the container is the sole responsibility of the shipper.

• To attribute to the carrier any damage to the shipment, inspection of the

goods should be done at pier-side.Bankers vs CA