COGSA (Carriage of Goods by Sea Act)

 Applied suppletorily.
 Prescriptive period – 1 year; cannot be reduced by stipulation.

Federal Express

 The period to file a claim regarding the cargo had lapsed. It is stipulated in the Airway Bill
that 14 days after the cause of action arises, the claim must be filed.
 Since the filing was beyond the stipulated period, the filing of the suit is barred by
prescription.

Maritime Commerce
Merchant vessels

 They are considered property under Art. 573 of the Code of Commerce.
 They are personal property (Art. 585, Code of Commerce).
 They are subject to lien.

Maritime lien

 It is the right of a particular person to compel the sale of a ship because he has not been
paid a debt owed to him on account of such vessel.
 It is a lien designed to furnish security to a creditor and to enable a person to obtain repairs
and supplies even in the event that the ship is a distance away from its owners and no
significant amount of money is on board to pay for the goods and services that are provided.
 It constitutes a present right of property in the ship, a jus in re, to be afterward enforced in
admiralty by process in rem.
 From the moment the claim or privilege attached, it is inchoate, and when carried into effect
by legal process, by a proceeding in rem, it relates back to the period when it first attached.
 Any person furnishing repairs, supplies, or other necessaries to a vessel on credit will have
a maritime lien on the said vessel (Sec. 17 and 21, Ship Mortgage Decree).
 Such maritime lien, if it arose to the recording of a preferred mortgage lien, shall have
priority over the said mortgage lien.
 A maritime lien must be registered to bind everyone.

Hypothecary and real nature of maritime lien

 The liability of the carrier in connection with losses related to maritime contract is limited
to his interest in the vessel which is hypothecated for such obligations, or which stands as
the guaranty for the settlement.
Real nature

 It is akin to transactions over real property with respect to their effectivity against third
persons which must be recorded in the commercial registry pursuant to Art. 573 of the
Code of Commerce.

Hypothecary nature

 To pledge property to answer for a debt.

 Used as collateral.
 The vessel itself will stand as guaranty for the settlement.
 Liability of the owner for the value of the vessel is limited to the vessel itself.

No vessel, no liability rule / Limited liability rule

 Based on the hypothecary nature of maritime law.

 The ship owner or agent’s liability is merely co-extensive with his interest in the vessel such
that a total loss thereof results in its extinction.
 The total destruction of the vessel extinguishes maritime liens as there is no longer any res
to which it can attach.
 The liability of the ship owner or ship agent arising from the operation of a ship is limited to
the vessel, equipment, and freight during the voyage, so that if the ship owner or agent
would abandon the vessel, equipment, and freight during the voyage, his liability would be
extinguished.

Application of limited liability rule:

1. Civil liability of the ship agent for indemnities in favor of third persons (Art. 587)
2. Civil liability of the co-owners from the negligent acts of the ship captain (Art. 590)
3. Liability for the wages of the ship captain and crew as well as for the advances made by the
ship agent if the vessel is totally lost by reason of capture or shipwreck (Art. 643)
4. Civil liability of the ship owners arising from collision (Art. 837)

Exceptions to limited liability rule:

1. Expenses for repairs contracted before the vessel is lost.
 Dela Torres v. CA: In case of a lost vessel, the claimants may go after the proceeds of
the insurance covering the vessel.
2. When the injury or death of the passenger is due to the fault of the shipowner, or the
negligence of the shipowner and the captain. This does not apply in the following cases:
 When the shipowner reconfigured the bulkhead of the deck of the ship to load
excessive amount of cargo which made the vessel unseaworthy.
  When the shipowner himself was guilty of such fault or negligence in not making
certain that the passenger vessel is not overloaded, as well as in failing to provide
sufficient life belts on board the vessel.
 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
Art. 837 by abandoning the vessel. He is personally liable for the damages arising
thereby.
 When the shipowner is at fault or negligent in not maintaining a seaworthy vessel
and in having allowed its vessel to sail despite knowledge of an approaching
typhoon.
3. Claims of the crew under the Workmen’s Compensation Act.
4. When the vessel is insured, in which case, the liability of the shipowner or ship agent is
limited to the extent of the insurance proceeds.
5. When the vessel is not abandoned.
 Abandonment is only necessary in case of constructive total loss.
 There is no need to abandon if the vessel has sunk.
6. In case the voyage is not maritime but only in river, bay, or gulf.
7. In case the vessel is not a common carrier.
In all of these cases, the shipowner and/or ship agent shall be liable in case of loss or damage to
goods or death or injury to passengers despite the loss of the vessel.

If vessel sinks

 Liability is not extinguished, but the liability of the shipowner or ship agent is limited to the
extent of the insurance proceeds.
 If the vessel is insured, check the extent of the proceeds.

Kinds of loss:
1. Total loss
a. Actual
b. Constructive
2. Partial loss