vovision i in the ticket limiting liability onk tite but that liabije 8 Ow duct is not enough to rel iabil mn Sorlines 0. Chiok, G.R. No. 152122, July 30, 2003) (Ching B. MARITIME LAW 42, GENERAL CONCEPTS 12.01. DEFINITION OF MARITIME LAW 12.02. Maritime law is the sy whi INES of thy Cea) E if crews And Mavigati to mating conveyance of persons and property” (Franc, p. 254). : VESSEL A ship or vessel is any kind, class or type of craft or artificial contrivance capable of floating in wate, designed to be used or capable of being used aa means of water transport for the carriage of passenges or cargo or both, utilizing its own motive power 0! that of another (Sec. 3[f], R.A. No. 9295, and Sec. PD. No. 474). a). Vessels, any interest thereto as well as co” yances, transfers or mortgages registered with the Maritime Indus A -. (MARINA for short) (Sec. 10, RA. No. Sec. 14, E.O. No..125.and 125-A). F b) Any iesiiied cause aiacon ale persons but is considered bindings c) A Philippine flag vessel or waterera Si i is registered under Philippine laws P90 No. 474). It entitles the vessel to Pp!of a) ay ; *. LIMITED “LIABILITY RULE: _— ~~ Litt ane ee ae mu B. Maritime Lo AND PUBLICUT TEs 575 authorities and fla joh 8 Of the Phij;, and.on.the high seas (54° aug ne in all ports a UStoms gAL AND HYPOTHECARY Natype In maritime law, obligations ar by the vessel. The security ic °°: hypothecateg follows the vessel; Ao vessel No liabiity SPligation areal nature provides for the i ecurities of Ve = maritime expeditions, such as the ij : i and of the agent, those of the owners ea consignees, those who salvage the ship, those who male loans upon the cargo, those of the Sailors and members of the crew as to their wages, and those of a constructor as to repairs made to the vessel (Chuq Yek Hong v. IAC, G.R. No. 74811, September 30, 1988), The real and hypothecary nature of maritime law does not merely benefit the shipowner. Thus, “as evidence of this ‘real’ nature of the maritime law we have((1))the limitation of the liability of value of the vessel and the freight maney, 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 --ot allow more than a personal action agai -btor or person liable. It will be ae that these oe re lative, and naturally so, because if the aj eon cal from liability by abandoning ee — and freight money, thus avoiding the possibility . shat a his whole fortune in the business, it is also ee peat itcritime creditor may for any reason attach 1 Ter 'tself to secure his claim without waiting i a rejudice of sthis rights by a final judgment, even tothe Prep * third person.” (Phil. Shipping.Co. v. Vergara, "9061; Chua Yek Hong v. IAC, ibid) OF MARITIME Law, ‘Cured or at is your ed liability? Commerce? 1989, 1991, . imite Uiderstanding of the doctrine of i of en is it applicable under the Co 5, at are the exceptions? (1978, (11 Bar) 1894, 1997, 1998, 1999, 2008, and 2576 L LAW REVIEWER ON COMMERCIA! i nature The exclusive’y ies to limit the liability of the of ain a Sea ame eghi sipownerte he nsranc, ay. "NO VESSE a Ty,” expresses in a nutshell the limited NO LIAB Monarch Ins. Co. v. CA, GR. No, 92735, liability 5000), The total destruction of the vegse Jane os maritime lien, as there is no longer any ia tewhich it can attach. The limited liability rule is embodied in Articles 587, 590, and_837,of the Code of Commerce (Aboitiz Shipping Corp. v. Gen. Accident Fire and Life Assurance Corp., 217 SCRA 359 [1993]). a) When applicable The Code of Commerce sanctions the application of the doctrine in the following cases; 1) Civil liabili ities in favor of third pers i e is ithe captain in the care of the goods which vessel carried (Art. 587, Code of Commerce or CC); aes 2) Civil liability arising from élisions) (Ar. : 837, CC); 3) Unpaid wages of the captain and the crew if the Co” eptatetorsshipsurete( Ar. 68, CC). The exceptions based on jurisprudence are: a) b) When the injury to or death of a passenger's due either tothe fault of the shiposnes o e concurrin, negligence of the shij ownel and the captain; of When the vessel is insured (to the extent ‘© Msurance proceeds); and 2)phe 0 da) cee eee ies a 3) In Workmen’s ¢; SF Laserna, 73 De etsation claim ae 73 Phil. 330 od Ga ek {angen , 166 SCRA 183; Monarch j ek Hong v, CA, supra). ns. Co,, Inc. v, Additional Exceptions; 1) ‘Thelimited liability rule does iabili : carrier fail ifthe to overcome the i FF assTiee ea pee some the presumption of negligence, The first exception — when shipowner is negligent — applies (Monarch ims. Co. v. CA, supra; Aboitiz Shippi Ins. C : G ipping v. Ne India Ins. Co., Ltd., 488 SCRA 563 72006); ] 2) The claim for death benefits under the POEA-SEC (POEA Standard Employment Contract) is the same species as the workmen's compensation claims under the Labor Code — both of which belong to a different realm from that of Maritime Law. Therefore, the the POEA-SEC (PI pon Kyoei Gudelosao, No. 181375, July 13, 2016, the 3) The t im is no ; I collision claim is not maritime; Examp! u of vessels that are used for transportation goods in rivers; OF (ii) or oad “PPE - ainst the arrastre opera fOr; aims the arrastre operator against the Oe @ claims for cost of repairs ma voyage. 4) Abandonment f Commerce . f the Code ° mpt Under Article st agents may oer e the shipowners OF y_abandonre nt it themselves for + eq ipment and a there is Vessel with all het may have earn ring13.02. REVIEWER ON COMMERCIAL LAW insurance over the vessel, abandonment covers is jnsurance proceeds while the Vessel itsele hall be abandoned in favor of the insurer, sl Who can invoke the Limited Liability Rule It is the shipowner who can invoke the limited liability rule. He is the person for whom the rule has been conceived. The charterer cannot invoke the limited liability tule as a defense especially against the shipowner (De Ia CA, 653 SCRA 714 [2011]). How claims are satisfied under the Limited Liability Rule Allclaims should be collated before they cant satisfied from what remains of the insurance Proceeds and freightage at the time of the loss. No claimant should be given preference over the others by the simple expedience of having filed or completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even those already final and executory, must be stayed pending completion of all cases occasioned by the vessel’s sinking. Then and only then can all such claims be simi i either completely or pro rata should the insurance Proceeds and freightage be not enough to satisfy the claim (Aboitiz Shipping Co. v. General Accident Fire ax Life Ins. Corp. Ltd., supra). e) Torre y, 14. CO-LOADING AND CABOTAGE (R.A. No. 10668) a) b) Republic Act No, 10668 which is the “Act Allowing Foreign Vessels to Transport and Co-Load Foreign fot Domestic Transshipment and for Other Purposes.” Thisis th Cabotage” law for Tnarine transportation. Two impor'a" limitations imposed under the law are the transportation should iny e Olve foreign vessels and the cargo must ‘romabr ipped ti ther c: j i d A forel ; . ing, 2 cabota: oe ait that is undertaking co-loading Be as enumerated above is NOT consis co} mn. i the and the carriage shall be governed bysant VE De ON ONSPORTATION ti B. Maritime Lay NO PUBLIC UTILITIES 559 Carriage of Goods by Sea Act (C No. 10668). ssa) (Secs. 6and7,R 4 44.01. DEFINITIONS a) b) ¢) qd) e) 8) h) Co-loading refers to agreements betwe or more international or domestic sea i whereby a sea carrier bound for a specified T cargo of destination; Container van refers to a Standardized reusable steel box used for the Safe, efficient and secure storage and movement of materials and products within an intermodal freight transport system where the cargo carried in the container van can be moved from one mode of transport to another without having to unload or reload the contents of such container van; bound for the same Domestic cargo refers to goods, articles, commodities or merchandise which are intended to be shipped from one Philippine port to another Philippine port, even if, in the carriage of such cargo, there may be an intervening foreign port; Export cargo refers to goods, articles, commodities ren < "1 or merchandise carried in foreign vessels an duly declared before the Bureau of Custom = the port of origin as cargoes for up arp port outside the jurisdiction of the Philipp! 0 Foreign cargo refers to import or export carB carried by a foreign vessel; i Foreign container van refers to af Pe pets whether empty or loaded we . which belongs to a foreign ve e on Foreign port refers to a jurisdiction of the Philippi" : ste 2 tae, Foreign ship operator rele! re ign oF 4 ther foreign ji oration, whe! ai partnership, or corp’ foreign ve ‘1 a local, owning or chartering tside the580 REVIEWER ON COMMERCIAL LAW ign vessel refers to a ship registereg on eeumented ina flag registry other than that of the Philippines; ds, articles, co " rt cargo refers to good icles, commog. ied a merchandise of foreign origin cartieg ing foreign vessel which are intended to be cleareg before the Bureau of Customs for delivery to the port of final destination within the Jurisdiction of the Philippines; Philippine port refers to any port within Philippines authorized by a government conan to handle domestic import or export cargo; and Transshipment refers to the transfer of cargo from one vessel or conveyance to another Vessel for further transit to complete the voyage and carry the cargo to its final destination, 14.02, ALLOWED CARRIAGE (SEC. 4, R.A. No. 10668). A foreign vessel is allowed to do the following: (1) Arriving from a foreign port, shall be allowed to (2) (3) carry a foreign cargo to its Philippine port of fina destination, after being cleared at its Port of entry; Arriving from a foreign port, shall be allowed to carry a foreign cargo by another foreign vessel calling at the same Port of entry to the Philippine Port of final destination of such foreign cargo; Departing from a Philippine port of origin ugh another Philippine port to its foreign Part of final destination, shall be allowed toc a foreign cargo intended for export; and Departing from a Phili ine port of origin, shallbe allowed to carry a foreign eae by ate foreign are athtough a domestic transshipment Pot pose eansferted at such domestic wapsshipm™ Porto its foreign port of inal destination. Note: In additi reign conta St Van going to op coming ony i a Pott, or going to or coming from a foreign P1668). A wed to of final if entry; wed to 1 vessel lippine 190; origit foreig" to co JART VE LAWS ON TRANSPORTATION ny B, Maritime Law NO PUBLIC Urns 51 and being trangshi : ‘sshipped ports shall be alloweel sone ‘wo Philippine ‘A. No, 10668), 6 pROTEST Maritime protest is the written stat avessel or an authorized officer attested bene maser of notary, to the€ffectthat damages has bey eoPetotficer ora (1977 Bar). Protest is required under the C i the following cases: 'e Code of Commerce in 1) When the vessel makes an arrival ee stress (Ar! , 612, CC). : 2) Where the vessel is shipwr (Arts. 612, 624, 843, : + 843, 3) Where the vessel has gone through a hurricane or the captai lieves that the cargo has suffered damages or averages (Art. 624, CC). 4) - Maritime-collisions (Art. 835, CC) (1977 and 2007 Bar). 16. COLLISION 16.01. DOCTRINE OF INSCRUTABLE FAULT ision, the vessel at fault shal indemnify Ss ed (Art. 826, curr ge: sustained_or losses in cohen both vessels were at fault, each shall suffer its own damages, and poth shall be solidarily Table others (Arts. 827-828, cc) /this solidarity es in Article 827 of the Commerce held to preclude a common cartier operal i i f from interposing a defense > selection a supervision of its ep ding against it by a shiPPE in liabilities for distinguished from the ordinary rule tort or culpa aquiliana. 528, 830, Rules on collision of vessels (arts. 826, 827, 831, and 832, CC) ae eto the fault, negligs ae isi be a 2) These ape arr ae16.03. b) °) d) e) sytEWER ON COMMERCIAL LAW RE ther member of the complement of the Vessel o : . mer of ; haaues oF damages (Art. 826, CC). for The collision may be due to the fault of 1s. Each vessel sI . veeards the owner of the cargoes, both vent shall be jointly and severally liable (Art, 827,06 Note: As a consequence, the doctrine of the len clear chance and contributory negligence rye in relation to the claims of both carriers shalj eh apply (1980 Bar). If it cannot be determined which vessel is at fault each vessel shall also suffer its own losses and boy}, shall be solidarily liable for losses or damages on the cargoes (Art. 828, CC). Under the “Doctrine of Inscrutable Fault,” where fault is established byt jf cannot be determined which of the two vessels were at fault, both sl en at fault (1987, 1991, and 1997 Bar). The vessels may collide with each other through fortuitous event or force majeure. In this case, each shall bear its own damage (Art. 830, CC). ‘Two vessels may collide with each other without their fault but by reason of a third vessel. The third i! i (Art. 831, CC). A vessel which is propery anchored and moored may collide with those nearby by reason of stom or other cause of force majeure. The vessel-runinto shall suffer its own damage or expense (Art. 632, CC). DOCTRINE OF ERROR IN EXTREMIS There are three zones in collision: (a) first zo"¢— time up to the moment when risk of collision begi (b) second zone — time between moment when tisk? collision begins up to the moment it becomes practic? certainty; and (c) third zone — time when collision ® certain up to the time of impact. gd© Maritime Lay “ND PuByc unumg Ifa vessel hay; peabeeaaaiy ding ing Way sudden imminent collisio, es ian effort ye CRS such act may be gaia’ the fault eyo avid an wong carinpe oe tobe done in exten he ves ‘€sponsibili , ; vessel with the right ote ne on the ond even it qt. ARRIVAL UNDER STRESS is the arriv: aaenedt te e a ead jest and mos ; continue the trip to the Port of destination due Ra cannot a) Lack of provisions; b) ve founded fear of seizure, privateers or pirates, an c) By reason of any accident e sea disabling it to navigate. 18. PERSONS INVOLVED IN MARITIME COMMERCE a) Shipowners and ship agents; b) Captains and masters of the vessel; c) Officers and crew of the vessel; d) Supercargoes. 18.01. SHIP AGENTS The ship agent is entrusted with ihe Pro and_representing the vessel in the pore pe may be found. His liability t P9o°%h hipownet owners for loss or injury is Ue ene for such loss or He is solidarily liable vy ihe i reimbuens damage sbi pen ca Soe ‘om the shipow: (1981 Bar). $ OF 1802. CAPTAINS AND MASTER . 5 0} a) What are the triple 70l* “owner (re cal shipowne! \ 1) The eneral agent ot, upon freight rates ing, a sign bills of lading,“= 18.03, b) 0 a) b) , er to take cargo; ente, ard Sci oped to the vessel), ander_and tec! i ta The oral (considered the most important because it has to do with the operation of the vessel and the protection of the Passeng, crew and cargo); t representativi the coy Maritime Enterprises, Inc. v. NLRC, 235 SCRA 268 [1994]). Notes: (i) The captain has management ang fiduciary functions and as such has a reasonable measure of discretionary authority to decide what the safety of the ship and of its crew ang cargo specifically requires on a stipulated ocean voyage (Ibid.). (i) The responsibility. of the captain remains even if the vessel is on a compulsory pilotage (Wildvalley Shipping Co. v. CA, G.R. No, 119602, October 6, 2000). T into 2) ers, What are the grounds for discharge of a captain? 1) Insubordination in serious matters; 2) Robbery or theft; 3) Habitual drunkenness; and 4) Damage caused to the vessel or to its cargo through “malice or manifest or proven negligence, The shipowner shall be liable for contracts made by the captain (1) when duly authorized, (2) ship repairs, equipping or provisioning the ves for the latter's benefit even if there was n0 xP" authority (Art. 586, Code of Commerce) (1989 Bar) OFFICERS AND CREW OF THE VESSEL Sailing Mate/First Mate; Second Mate;ee ~B. Matitime TON AND Pup; Unumes ; time Le LIC me 585 c) Engineers; ang d) Members of the crew, 304. SUPERCARGOES Supercargo is a Person who 4 : a i nistrative duties assi i pischarges admi- shippers, keeping an account and a as required in the accounting ook of cs =o 18.05. DESERTION Desertion is an act by which a se abandons a ship or vi aoe fore the expiration of his term of dui ithout leave and without intention to return (Singa Ship Management Phils. v. NLRC, 276 SCRA 201 [1997]). 19. GENERAL AVERAGE vs. PARTICULAR AVERAGE 19.01. General average This includes all damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time from real and known tisk (Phil. Home Assurance Corp. v. CA, 257 SCRA 468 [1996]). a) Requisites of General Average (1982, 1983, 2000, 2003, and 2009 Bar). i after to ship and the cargo on danger I or port of loading and unloading; art of the 2) That for the common safe ? ot oad vessel or the cargo or bo deliberately; ae ses or damag' St 3) That from the exp sug fv and cargo; an amages should have © di 4) That the expenses OF SARS aking le been in: steps and authorsREVIEWER ON COMMERCIAL LAW Article 811 of the Code of Commer, provides that general averages include; 1) The goods or cash investeg in the redemption of the vessel or the ¢ captured by enemies, privateers, or Pirates, and the provisions, wages, and e : of the vessel detained during the time the arrangement or redemption is taking Place; 2) The goods jettisoned to lighte the se whether they belong en the vessel, to the cargo, or to the ‘Crew, and the damage suffered through said act by the goods which are kept on board; 3) The cables or masts which are cut or rendered useless, the anchors ang the chains which are abandoned, in order tg save the cargo, the vessel or both; 4) The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place her in condition to enter a port of roadstead, and the damage resulting therefrom to thé goods removed or transferred; 5) The damage suffered by the goods through the opening made in the vessel in order to drain her and prevent her sinking; 6) The “expenses caused through floating a vessel intentionally stranded for the purpose of saving her; 7) The damage caused to the vessel which had to be opened, scuttled or broken in order to save the cargo; 8) The expenses of curing and maintaining the members of the crew who may have been wounded or crippled in defending or saving the vessel; 9) ~The wages of any member of the crew detained as hostage by enemiespast = LAWOMIN ENANSPORTATIO) b) B Mann ATION Maritime Lay" ND PUBLIC Unumes 587 privateers or pj Pirates, expense: i mand on ans S which he ma the necess os en until he ie, cur in his essel or to his domicile, should he’ a 10) The Wages and - ere crew ned pelts oe chartered oan ote ime it shoul aie or dens uld be a ne by force majeure or by same the 6 tment, or in order to tepai nthe ‘age caused for the common is ° 11) The loss suffered i fered in the val the. goods sold at. arrivals under in order to repair the vessel because of gross average; and 12) The expenses of the liquidation of the average. Formalities (Arts. 813 and 814, CC) the formalities pre 814 are not complies CA, ibid.). The formal 2) 2) The claim for contribution will not prosper if scribed under Articles 813 and d with (Phil. Home Assurance 0. ities are as follows: There must pectésolutiop of the captain, adopted after acdaliberatiop with e 0 e officers of the vessel and after Beane i i Ss. persons interested in the a apein disagree, the decision : , eee ee shall register their should prevail, but they sha! objections. a ,d in The resolution must be entemsives fF i it logbook, stating the Te” le an i fhe irresistible 274 own the dissent captain) 2 ed ab ee toed A reast be SBMS caring tad it accor ersons Preset O captai all the by contain a C8" og and those injure588 19.02. P: REV Ee articular average i th imple or particular averages are all the ey, id oe = caused to the vessel or to her cay, wh re not nue fo he Bene and comm Il the persons interes in the vessel ang her (Art, 809, CC). Article 809 of the Code of Com provides that particular averages include: ce 1) The losses suffered by the cargo from the tine its embarkation until it is unloaded on aceouny of inherent defects of the goods, accident at pid or fortuitous event and any expense incurreg "= avoid or repair the same; 2) The lossés and expenses suffered by the Vessel her hull, rigging, arms, and equipment, fo, the same causes or reasons, from the time she Puts ip sea from the point of departure until she anchors in the port of destination; 3) Losses to merchandise loaded on deck, except in coastwise navigation if the maritime Ordinances allow it; 4) Wages and victuals of the crew when the vesslis detained or embargoed by a legitimate order or force majeure, if the charter has been contracted for a fixed sum for the voyage; 5) The necessary expenses on arrival at a port in order to make Tepairs or secure provisions; 6) The lowest value of the goods sold by the captain in arrival under stress for the paymet! of provisions and in order to save the crew, bie cover any other requirement of the vessel agai! which the Proper amount shall be charged; TRE Vietuals and wages of the crew whi vessel is in quarantine; The loss Suffered by of 7) 8) : 'y the vessel or cargo ye re ebact OF collision with the oe were accidental and unavoidable. If the # aso" if itast BM. eee a TATION AND p si ‘UBLI aritime La ic Ww UTIuTEs 589 should occur through the f the captain, the latter losses caused; and Wi OF negligence of fa shall be liable for all the 9) Any loss suffered by the cay negligence, or barratry of ie ‘Rough the fault, crew, without prejudice to the right or Or of the f th to recover the corresponding i were zi 8 indemni captain, the vessel, and the freightage, from the PROBLEM: . 1. Avessel owned and operated by AM, Ine. (AM ) left Mani October 6, 2003 bound for Basco, Batanes via Aparri, left Manila on general cargo belonging to different shippers, among them Mr. A. The vessel reached Aparri on the 10th of the month, and after « day's stopover in that port, weighed anchor to proceed to Basco. While in the port, it ran aground at the mouth of the Cagayan river, and, attempts to refloat it under its own power having failed, plaintiff had it refloated by LS Co. at an agreed compensation. Once afloat, the vessel returned to Manila to refuel and then proceeded to Basco. It was established that the stranding of the vessel was due to the sudden shifting of the sandbars at the mouth of the river which the port pilot did not anticipate. Mr. A claims that he is not liable for general average contribution. Are the expenses incurred in refloating the vessel general averages? Cagayan, with No. The facts do not disclose that the expenses were incurred save the vessel and cargoes from a common danger. The ves was refloated to enable it to proceed to its port of ie oe ft Hence, there was no general average because it s the ht the property, and not of the voyage, we she cargoes could foundation of general average. It appears Nat Oo To ediodo have been unloaded by the owners if they have i ions (A. Magsaysay 80 without need of expensive refloating operations Inc. v, Anastacio Agan, 96 Phil. 504). a, CHARTER PARTY of charter kinds 2001, Whatis a charter party? What are he party? (or owner to another or use.f charter parties: two types 0 There are i t which involve; t of Affreightmen' es the y a) A ae leased by the Owner in - of 3} ee le, to carry goods for others: Time Chartey as ae .d for a fixed period of time; and Voyag ee for a single voyage. x by Demise or Bareboat — by the ten b) fark the whole vessel is let to the charters which transfers to him its entire command ossession and consequent control Over its pvigation, including the master and crew who are his servants. The charterer is treated ag ; ae hac vice of the vessel. In such Case, a common carrier becomes a private carrier ( Planters Products, Inc. v. CA, et al., 226 SCRA 476), 20.02. Rescission a) Requested by the Shipowner. At the Tequest of the person from whom the vessel is chartered the charter party may be rescinded (Art. 689, Code of Commerce): 1) Ifthe charterer, at the termination of the extra lay days, does not place the cargo alongside the vessel. In such case the charterer must pay half the freight stipulated, besides the demurrage due for the lay days and extra lay days, 2) If the Person from whom the vessel was chartered should sell it before the charterer S begun to load it, and the purchaser should load it for his own account. In such case the vendor shall indemnify the charteret for the losses he may suffer (1991 Bar). b) If the new owner Of the vessel should not load it for his own account, the charter party shall be respected, and the vendor shall indemnify Purchaser if the former did not inform him of charter pending at the time of making the sale.592 REVIEWER ON COMMERCIAL LAW 21.01. Functions of a Bill of Lading a) b) °) i tract of carri: idence of the existence of the cont aris a (it provides its terms and conditj fadeding the consignee, the route, destin, freight, and other rights and obligations), age ions ‘ation, ercial document (a symbol of the go ods) Saaby if negotiable, ownership may be transferred by negotiation; and Receipt of cargo (Telengtan Bros. 0. CA, supra; seg also Keng Hua Paper Products v. CA, 286 SCRA 257 1998] and Belgian Overseas Chartering ® Phil. First ie a supra, where the.Court-mentioned only la} and [c]). 21.02. Types of Bills of Lading a) b) CC) “On Board” Bill of Lading — it states that the goods have been received on board the specified vessel that will carry them. pvense “Received Shipment” Bill of Lading — it states that the goods hav. i x shipment with or without i e_vessel on which they are to be shipped (Magellan Manufacturing Corp. v. CA, 201 SCRA 102 [1991]). Clean Bill of Lading — it has no notation of any defect or damage j ds; a Clean bill oflading Constitutes prima facie evidence of the receipt by the ‘carrier of the goods as therein described (Eastern Shipping Lines v, BPI/MS Insurance Corp, GR No. 182864, January 12, 2015). 22. LOANS ON BOTTOMRY AND RESPONDENTIA 22.01. DEFINITIONS a) Bottomry —loan Secured by the shipowner or ship Sent guaranteed by the vessel itself and payable only upon arrival of vessel at destination. can also be secured by the captain outside thepakT VI—TAWS ON TRANSPORTATION axyp PI B. Maritime Lay UBLIC UTILIriEg : and 2003 Bar), °®* 0 ship agent (1975 b) Respondentia — joan se Cured by th i cargo payable ‘Upon safe cain Het lestination. The shipowner, ship agent pet cannot secure this loan, Bent or capt 02, DISTINGUISHED FROM ORDINARY ne AND RESPONDENTIA Usury law if applicable | Usury law is i i ae ry law is inapplicable ORDINARY LOAN | LOAN ON ON | Right to —recover| Right to recover is from debtor is not | extinguished if the thing extinguished if thing | put up as security is lost put up as security is lost | or destroyed or destroyed » PROCEDURE AND PRESCRIPTIVE PERIOD FOR CLAIMS 23.01. Coastwise or within the Philippines (Example: Manila to Cebu) a) When to file a claim with carrier — condition precedent for court action. Under Article 366 of the Code of Commerce, if goods arrived in damaged condition claim il hipper within the followin; = fed oy heal is barred (1984 Bar): eriod, otherwise recover 1) Immediately if damage is apparent; or 2) Within 24 hour from delivery if damage is eae iptive ? hen to file a case in court — prescrip Period if no bill of lading has been 1) Within six years, issued; or594 23.02. ~ 23.03. REVIEWER ON COMMERCIAL LAW Within 10 years, if a bill of lading has been jgsued or if there is a written contract (2094 Bar). International carriage from foreign port to the Philippines (COGSA) a) When to file a claim with carrier — Noy condition precedent 1) YU on discharge of goods, if the dama; e is apparent, claim should be filed immediately, or 2) If damage is not apparent, claim should be filed within three days from delivery (1975 Bar). Note: The filing of claim is not condition precedent. b) When to file court case — prescriptive period 1) Within a period of one year from discharge (1992 and 2010 Bar). 2) Under the Carriage of Goods by Sea Act, a prescriptive period of one year is expressed: a) When does the period start? b) Does the rule apply to collision cases? c) Is the period suspended by a letter-demand made by the shipper’s lawyer to the carrier? d) Is the prescriptive period applicable to an insurer who is enforcing his right of subrogation? e) Is it applicable to the claim against the insurer for the insurance proceeds? f) Is the period applicable in case of damage caused by delay or late delivery of the goods? a) 2 I io of one year starts after the delivery-of the- late the goods period does not apply to conversions of misdeliveries (1992 Bar). (It starts from delivery to the arrastre operator, not to the consignee. stipulation reducing the one-year period is ™ and void, but a written agreement to suspend itis— LAWS ON TRANSPORTATION vi A paRT B. Maritime Lay N° PUBLIC UTLITrEs 595 valid. (Note: The arrastre Operator cannot j ke Invoke the one [1] year ipti - eae hte Ho? eli Perio.) b) Yes. The rule applies in cased Of collisioy i the date of the col mn, But it the goods should have been deli on outwhen cargoes been saved (Maritime Comp ee ne eepines CA, 164 SCRA go, “PMY of the b | A UBT OF Day See EME Meo eg noe extrajudicial demand (Dole Philippines v. Maritim po ub de SSRA U8 1987), ° & M MRDYLAAE To fy Jn d) The insurer who is excreting mat eit ot ean subrogation is also bound by the_one-yes prescriptive period (Fj, Merchants v, Alejandro, KW ITE CABIN HOAKINGT THe 1 INsapanue PRehcns e) It does not ‘apply to claim’ ps iad insurer for the insurance proceeds, The claim against the insurer which is based on a written contract £xpires in 10 years (Mayer Steel Pipe Corp. v. CA, 274 SCRA 432 [1997]). fale) Prpuceni Dan coo oo ee perl OF 0) oa me 4 ate de! ay io hee at is not the damage or loss contemplated under the COGSA. The goods are not actually lost or damaged. The applicable period is 10 years (Mitsui v. CA, 287 SCRA 366 [1998]). THE SHIP MORTGAGE DECREE (SMD) OF 1978 (PD. No. 1521) The provisions of PD. No. 1521 with respect to preferred Tortgage prevail over the Civil Code provisions on mortgage “Swell as the provisions of the Code of Commerce. General ‘slation must give way to special legislation on the same test and generally be so interpreted as to embrace only Inggit Which the special provisions are not applicable (Polian “strial Lid. v. NDC, 467 SCRA 500). “OL. WHO MAY CONSTITUTE A SHIP MORTGAGE Any citizen of the Philippines, or any association f the °T corporation organized under the laws o}596 24.02. ERCIAL LAW ON COMM! REVIEWER of the capital of which is Philippines, at least OF Philippines may, for the owned by Encl the construction, acquisition, purpose ot ls ‘or initial operation of vessels purchase 0! stitute a mortgage or any other Tien or may freely a his or its vessels and its equipment ea er other financial institutions, domestic with a1 or foreign (Sec. 2, SMD). FORMAL REQUIREMENTS i ded or regist, ort; age must be rec: re cred ( oo tat MARINA), otherwise the same is yoig (no except as to the parties or their heirs and assigns or eacns with actual notice (Sec. 3, SMD). ip mortgage shall be. considered a . dem mongaue or shall have a preferred status only if the following Tequirements under Section 4 of the SMD are complied with. In other words, it is required that: 1)__ The mortgage is recorded; 2) An affidavit is filed with the record of such mortgage to the effect that the mortgage is made in good faith and without any design to hinder, delay, or defraud any existing or future creditor of the mortgagor or any lien or of the mortgaged vessel; and The mortgage does not stipulate that the mortgagee waives th ferred status ereof (Sec. 4, SMD; Poliand Industrial Ltd. v. NDC, supra). 3) b) When preferred mortgage covers two of mote vessels 1) The mortgage may provide for separte discharge of each vessel by the payment . @ portion of mortgage indebtedness. at amount of such portion of such paymen, shall be endorsed upon the documents the vessel (Sec. 4[b], SMD).part VE 24.03. _— LAWS ON TRANSPORTATION Al B. Maritime Law» ND PUBLIC UTILITIEg 597 2) In case such mort, for the Separate dike se Baal the vessel is to be sold upon the od a court of competent jurisdiction in a it = rem in admiralty, the court shall aos ne the portion of the mortgage indebtedness increased by 20% (1) which, in the opinion of the court, the appioximate value of all the vessels covered by the mortgage, and (2) upon the payment of which the vessel shall be discharged from the mortgage. ARREST AND FORECLOSURE Upon default of the obligor, the preferred ship tgage may be foreclosed in a suit in admiralty (Sec. 10, SMD). Upon filing of a petition for foreclosure, the CourPmay order the arrest of the vessel upon ex parte 24.04, application duly supported by an affidavit of a person who knows the facts and upon filing of a bond (Sec. 11, SMD). Note: The mortgagee may likewise avail of the alternative remedy of specific performance in a suit in personam in admiralty (Sec. 18, SMD). CONCURRENCE AND PREFERENCE OF CREDITS Upon the sale of any mortgaged vessel in any extrajudicial sale or by order of a Court of competent jurisdiction, all pre-existing claims in the vessel shal? be held terminated and shall thereafter attach in ke amount and i i Preference (Sec. 17, SMB): a) The prefer is : over all claims against the vesse's- i Exception: The referred monere ie inferior to the following claims IN T! iT Be taxedby 1) Expensesand fees allowed and: cae the court and taxes due to the Go Ceili598 24.05. REVIEWER ON COMMERCIAL LAW 3) General average; ; including contract salvage; 4) Salvage; inc ritime liens. arising prior in time to the 7 ding of the preferred mortgage; 6) Damages arising out of tort; and 7) Preferred mortgage registered prior in time, When proceeds not sufficient. If the procee da 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 (Sec. 17, SMD). Ordinary credits. All credits not paid, whether fully or partially, shall subsist as ordinary credits enforceable by personal action against the debto; (Sec. 17, SMD). MARITIME LIEN Amaritime lien is No. 5 in the order of preference, It is akin to a mortgage lien in that in spite of the transfer of ownership, the lien is not extinguished. The maritime lien is inseparable from the vessel and until discharged, it follows the vessel, Hence, the enforcement of a maritime lien is in the nature and character of a proceeding quasi in rem (Poliand Industrial Ltd. v. NDC, supra), a) The maritime liens that’ are superior to the preferred mortgage include maritime lien for necessaries (Sec, 21, SMD). 1) Necessaries — repairs, supplies, towage, ‘use of dry- dock or marine railway, or other necessaries to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, 2) For example, expenses for the payment of bunker oil/fuel, unused stores and oilBe Mag ATION B. Maritime Lay AND PUBLic UTTumigg bonded Stores, Provisio, and dockin © Vessel are. © Pref and because Y are pe, Prefered claims Industrial Ltd. v, NDc, somes (Poliang 3) The costs of modi, under Section 21 is a Necessary ex Navigation, As lon; Maritime lien for Necessaries under Section 21, PD. No. 1521 (Tbid.), 8. SALVAGE LAW (SL) The applicable law is Act No. 2616, otherwise known as the “Salvage Law.” 3.01. DEFINITION if Note: However, there can also be a omit A h sige that may be voluntarily agreed up. Salvi Parties. ATION 9502. REQUIREMENTS FOR COMPENS. led i ay be award Asalvage claim or ae eee cents par to the salvor if the following. requi (1977 Bar): 7 7 ri; 1) There.must bea oe ond the control of is shipwrecked beyont 2 hes eal pee ee, the e cre’ . : ice of picking up ane © voluntarily 9) The service oto a safe P vessel of carg' rendered; and25.03. 25.04. REVIEWER ON COMMERCIAL LAW i + have been successful in whole 7 parkenipars the service rendered contributed arise success (Sec. 1, SL; Barrios v. Go Thong, 7 SCRA 535). AMOUNT OF REWARD OR COMPENSATION sunt of compensation shall be fixed by the cai Lig nto account the following (1975 Bar); 1) The expenditures made to er or save the vessel or the cargo or both; 2) The zeal demonstrated; 3) The time employed; 4) The services rendered; 5) The excessive expenses occasioned the number of persons who aided; 6) The danger to which they and their vessels were exposed as well as that which menaced the things recovered or salvaged; and 7) The value_of such things after deducting the expenses (Sec. 10,-SL). WHO Is ENTITLED TO REWARD The-salvor}s entitled to reward or compensation. The rew ‘salvage or for assistance shall be divided between the owner, the captain, and the remainder of the crew of the latter vessel, so as to give the owner a half, the captain a fourth, and all the remainder of the crew the other fourth of the reward, in proportion to their respective salaries, in the absence of an agreement to the contrary (See. 13, SL). a) If two or more persons — divide between them in proportion to the services which each one may have rendered, and, in case of doubt, in equal parts (Those who, in order to save persons, shall have been exposed to the same dangers shall also have a right to participation in the reward.) (Se 12, SL).