TRANSPORTATION LAWS

Professor: Atty. R. Palacios

Source: Martin, Teodorico C. (1989). COMMENTARIES AND JURISPRUDENCE ON THE PHILIPPINE COMMERCIAL LAWS (Vol. 3). Manila:
Central Book Supply, Inc.

Contents
DEFINITION OF TERMS ........................................................................... 1 DEFINITION OF TERMS
INTRODUCTION ...................................................................................... 2
NEW CIVIL CODE..................................................................................... 2
SECTION 4. - Common Carriers (n) .................................................... 2 1. Charter party—a contract between the charterer and
SUBSECTION 1. - General Provisions ............................................ 2 the ship owner in which the former hires from the
SUBSECTION 2. - Vigilance Over Goods ....................................... 3 latter the use of ship for certain length of time (TIME
SUBSECTION 3. - Safety of Passengers ......................................... 6 CHARTER) or for a shorter period (VOYAGE CHARTER).
SUBSECTION 4. - Common Provisions .......................................... 7 a. Time charter—charter which involves the
REPUBLIC ACT NO. 6235 ......................................................................... 8 lease of common carriers for a certain
AN ACT PROHIBITING CERTAIN ACTS INIMICAL TO CIVIL AVIATION, period of time.
AND FOR OTHER PURPOSES.............................................................. 8
b. Voyage charter—contract is for a particular
COMMONWEALTH ACT NO. 65 .............................................................. 9
CARRIAGE OF GOODS BY SEA ACT..................................................... 9 voyage.
CODE OF COMMERCE........................................................................... 12 c. Demise or bareboat charter—charter is
TITLE VII—COMMERCIAL CONTRACT FOR TRANSPORTATION bare, no complements, no equipments,
OVERLAND OR WATERWAYS .......................................................... 12 stripped of all necessary equipments and
MARITIME COMMERCE ........................................................................ 19 personnel.
Title I—VESSELS .............................................................................. 19
TITLE TWO—PERSONS WHO TAKE PART IN MARITIME COMMERCE TIME/ VOYAGE CHARTER DEMISE/ BAREBOAT CHARTER
........................................................................................................ 22
SECTION ONE—SHIPOWNERS AND SHIP AGENTS ..................... 22 Complexion of carrier does Complexion is changed from
SECTION TWO—CAPTAINS AND MASTERS OF VESSELS ............. 26 not change common to private carrier
SECTION THREE—OFFICERS AND CREW OF VESSELS ................. 31
SECTION FOUR—SUPERCARGOES ............................................. 36 Any provision limiting the Any provision limiting the
TITLE THREE—SPECIAL CONTRACTS OF MARITIME liability of the owner is invalid liability of the owner is
COMMERCESECTION ONECHARTER PARTIES .................................. 37 as against public policy binding for there’s no public
PART I—FORMS AND EFFECTS OF CHARTER PARTIES ................ 37 interest involved
PART 2—RIGHTS AND OBLIGATIONS OF SHIPOWNERS ............. 40
PART 3—OBLIGATIONS OF CHARTERERS ................................... 41 Characteristics
PART 4—TOTAL OR PARTIAL RESCISSION OF CHARTER PARTIES 41 Owner of the vessel continues Entire ownership is
PART 5—PASSENGERS ON SEA VOYAGES .................................. 42 to operate the carrier transferred to the charterer
PART 6—BILLS OF LADING ......................................................... 43
SECTION TWO—LOANS ON BOTTOMRY AND RESPONDENTIA .. 45
SECTION THREE—MARINE INSURANCE ..................................... 47
What is leased is the USE of The charterer is the one who
TITLE FOUR—RISKS, DAMAGES AND ACCIDENTS OF MARITIME
COMMERCE .................................................................................... 47
vessel provides the entire
SECTION ONE—AVERAGES ........................................................ 48 equipment
SECTION TWO—ARRIVALS UNDER STRESS ................................ 50
SECTION THREE—COLLISIONS ................................................... 50 Management is still with the
SECTION FOUR—SHIPWRECKS .................................................. 53 owner Owner divests itself of the
TITLE FIVE—PROOF AND LIQUIDATION OF AVERAGES ................... 54 right to manage the vessel
SECTION ONE—PROVISIONS COMMON TO ALL KINDS OF and surrenders it to the
AVERAGES ................................................................................. 54 Owner still remains to be the charterer
SECTION TWO—LIQUIDATION OF GROSS AVERAGES ................ 54 navigator and manager of the
SECTION THREE—LIQUIDATION OF ORDINARY AVERAGES ....... 57 vessel
Presidential Decree No. 1521 ............................................................... 58 Carrier becomes PRIVATE
THE SHIP MORTGAGE DECREE OF 1978 .......................................... 58 CARRIER
ACT NO. 2616 ....................................................................................... 63 The carrier remains to be a
THE SALVAGE LAW .......................................................................... 63 COMMON CARRIER
COMMONWEALTH ACT NO. 146 .......................................................... 64 Stipulation that the owner
PUBLIC SERVICE ACT ....................................................................... 64
shall not be liable—VALID for
WARSAW CONVENTION.................................................................. 64 Public interest applies it does not affect public
interest
Stipulation limiting the
liability of the carrier is
against public policy—in
contravention of Art. 1745
because the owner did not
divest of its ownership and it’s
still a common carrier

2. Bill of Lading—the writing signed by the master of the

vessel acknowledging the receipt of goods
 transported from a certain point to a given consignee
authorized to receive the goods. It is a commitment
of the owner of the vessel that he will transport the
goods from a certain port to deliver it to a consignee.
Note: whoever holds the B/L is presumed the owner
of the goods.
a. Evidence of contract of carriage between
the owner of the vessel and the shipper of
the goods as well as the consignee
b. Evidence of receipt of goods by the owner
of the vessel from the shipper. Contents: (a)
states the apparent condition of the goods
at the time of loading; and (b) date of
loading of the goods on the port.
c. Evidence of title over the goods, e.g. “X” is
the shipper thereby this would entitle him
to endorse the B/L to someone else. Note:
B/L is disputable for they are not conclusive
as evidence.
3. Paramount clause—a stipulation or clause either on
the B/L or charter party stipulating the laws that the
parties agreed to be used of that particular transport.
In the event that there will be breach, follow the law
stipulated in the paramount clause. It dictates the law
that should be followed in the event f a dispute
between the parties (as long as it’s reasonable, fair
and not against public policy).
4. Demurrage—a penalty stipulated in the B/L or charter
party which is to be paid either by the shipper,
consignee or charterer to the owner of the vessel for
FAILING TO LOAD AND DISCHARGE the cargo [within]
the period agreed upon in the contract of carriage. It
can be assigned to shipper, consignee or charterer by
the owner of the vessel.
5. Despatched money—the sum of money that is agreed
upon to be paid to the MASTER of the vessel for
discharging the cargo within the time agreed upon in
the contract (applies also for loading the cargo). It is a
reward so that the goods will be timely loaded and
discharged. If not met, pay the demurrage.
6. Primage—a reward stipulated in the charter party
that is supposed to be paid to the master of the
vessel for TAKING GOOD CARE of the cargo during the
voyage. The master should see to it that the goods
are well-stored.
7. Sea-worthy—vessel that has the degree of fitness
which an ordinary, careful and prudent man/owner
would require to have at the commencement of the
voyage having regard to all probable circumstances of
it. In accordance with the surrounding circumstances
of the vessel and voyage
8. Cargo-worthy—if the vessel is built sufficiently and
equipped to carry a particular kind of cargo which it
contracted to carry and the same is loaded safely.
Note: Common carrier must always be sea-worthy
and cargo-worthy.
INTRODUCTION
Laws governing contracts of transportation by land, sea or air,
within the Philippines—
a) The New Civil Code;
b) The Code of Commerce;
c) Special laws like the “Customs and Tariff Code,”
“Public Service Act,” and the “Civil Aeronautics Act”;
d) “Carriage of Goods by Sea Act.”
Contracts of transportation for goods—
a) If within the Philippines, or if for the transportation of
goods from foreign countries to the Philippines, the
laws mentioned in the preceding paragraph are
applicable; and
b) If the goods are to be transported from the
Philippines to a foreign country, the law of the latter
country shall govern the liability of the common
carrier for their loss, destruction or deterioration.
NEW CIVIL CODE
SECTION 4. - Common Carriers (n)
SUBSECTION 1. - General Provisions
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.
________
Art. 1733. Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to
all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is
further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6,
and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in Articles 1755 and 1756.
________
Instances when common carrier is allowed to refuse the
service:
1. No space in the vessel
2. No capacity to carry the cargo
COMMON CARRIER PRIVATE CARRIER
Offers services to the public at Only to special/particular
large voyage
Extraordinary diligence is Ordinary diligence only
required
Liable when it refuses to Not liable when refuses
render services—by nature of
their business, they are bound
to carry the goods
“Unconditionally placed in the possession of and received by
the common carrier”—shipper has made up hi mind, no
conditions attached
When would the charterer or shipper pay the total amount of
goods?—
1. Declaration of value on the face of the B/L
2. Payment of additional freight if the carrier so
demands
2|P LATON
Meaning of “all circumstances”—includes all circumstances
such as weather, terrain of the road, conditions of the
passengers.
Deterrence of common carrier (presumptions)—
1. Exercise of extraordinary diligence;
2. In cases of lost, destruction and deterioration of the
goods and that the passengers were not safely
transported, the common carrier is presumed to be
AT FAULT or NEGLIGENT—but rebuttable if the
common carrier can prove otherwise.
Evidence of negligence—
1. GOODS—when the goods were placed in good order
condition but was received in bad order.
2. PASSENGER—death of the passenger—upon
presentation of a death certificate (proof that the
common carrier did not exercise extraordinary
diligence) and ticket (evidence of a complete contract
of carriage).
Is there a need for additional evidence to prove the negligence
of the common carrier? No. When already established through
the ticket and death certificate, the burden of proof shifts to
the common carrier immediately.
Defenses of common carrier—
1. Fortuitous event (Art.1734)
2. Exercise of extraordinary diligence
Note: Civil Code provision on common carriers should not apply
where the common carrier is NOT acting as such as a private
carrier. In such case, a stipulation exempting the owner from
liability for negligence of its agent is VALID or it is not contrary
to public policy since the public at large is not involved.
Reason for requiring common carriers to observe extraordinary
diligence—
1. Nature of the business of common carrier
2. Exigencies of public policy
Purpose of the Code Commission and Congress in incorporating
the duty of the common carrier to observe extraordinary
diligence—due to the recklessness of their drivers which is the
common sight even in crowded areas, and particularly, on the
highways throughout the country may, somehow, be curbed.
Three (3) remedies of the common carrier if the defect is
apparent (in packing)—
1. Inform the shipper to prepare the packing of the
goods
2. Pack the goods itself and ask the shipper for payment
3. Refuse to accept the package
________
SUBSECTION 2. - Vigilance Over Goods
Art. 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same is
due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international or
civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in
the containers;
(5) Order or act of competent public authority.
________
Requirements for natural disaster or calamity—
1. Natural disaster must be the proximate cause
2. Must have been the only cause
3. Common carrier must have exercised due diligence to
prevent or minimize the loss BEFORE, DURING, &
AFTER the natural disaster
4. Common carrier has not incurred delay in
transporting the goods. Reason: Common carrier
could have prevented the loss of the goods had it not
been for the delay
Requirements for act of public enemy—
1. Act of the public enemy must be the proximate cause
2. Only cause
3. Exercise of due diligence BEFORE, DURING, & AFTER
the act of public enemy at war
Requirement for act or omission of shipper—
1. Proximate cause
2. Only cause
Requirement for character of goods, or fault in packing or
containers—
1. That the loss, destruction or deterioration of the
goods was caused by the character of the goods, or
the faulty nature of the packing or of the containers
2. That the common carrier had exercised due diligence
to forestall or lessen the loss
Requirement for the act of public authority—
1. Seizure or destruction of the goods by order of public
authority does NOT ipso facto exempt the common
carrier from responsibility, unless the common carrier
should prove that the public authority had power to
issue the order
2. Even if the carrier is in good faith, that the public
authority has power to issue such order and it
resulted to LDD of the goods, common carrier is still
liable (no mitigation) for he must have fully exercised
extraordinary diligence
Note: when the proximate cause of the loss is caused by the
owner of the goods, common carrier is NOT liable.
________
Art. 1735. In all cases other than those mentioned in Nos. 1, 2,
3, 4, and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as required in
Article 1733.
________
3|P LATON
Art. 1736. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed
in the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice to the
provisions of Article 1738.
________
Art. 1737. The common carrier's duty to observe extraordinary
diligence over the goods remains in full force and effect even
when they are temporarily unloaded or stored in transit, unless
the shipper or owner has made use of the right of stoppage in
transitu.
________
Stoppage in transit, explained—when the buyer of goods is or
becomes insolvent, the unpaid seller who has parted with the
possession of the goods has the right of stopping them in
transitu, that is to say, he may resume possession of the goods
at any time while they are in transit, and he will then become
entitled to the same rights in regard to the goods as he would
have had if he had never parted with the possession.
In the event of the exercise by the shipper of the right of
stoppage in transit, the carrier thereafter holds the goods in the
capacity of an ordinary bailee or warehouseman and is liable
only as such, upon the theory that the exercise of such right
terminates the contract of carriage.
How exercised—Give notice to the captain; if by land,
instruction is given to the office, then to the common carrier.
Note: Notice to the captain—ceases the responsibility of
common carrier)
Elements of the exercise of stoppage in transitu—
1. Notice to the common carrier that there’s a stoppage
because consignee is insolvent
2. Contract of carriage ceases upon the acceptance of
notice
3. At the time of notice, the goods must still be in the
possession of the carrier and NOT yet delivered to the
consignee
Note: If the goods were delivered already and notice was
subsequently received, common carrier is liable as such
because there is nothing to stop anymore.
Bare warehouse—owned by the government; if goods were
deposited, the common carrier is NOT liable anymore.
________
Art. 1738. The extraordinary liability of the common carrier
continues to be operative even during the time the goods are
stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods
and has had reasonable opportunity thereafter to remove them
or otherwise dispose of them.
________
Notice of arrival of the goods when it was given to the
consignee—
1. Does responsibility cease? No.
2. What if reasonable opportunity has passed and the
goods were lost and destroyed? There is
responsibility on the part of the common carrier as
bailee or warehouseman
Admiralty jurisdiction extends over all maritime contracts in
whatever form entered into, whether executed or still to be
performed. As long as the subject matter thereof is maritime
service or maritime transaction, then it is embraced within such
a concept.
________
Art. 1739. In order that the common carrier may be exempted
from responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or
deterioration of the goods. The same duty is incumbent upon
the common carrier in case of an act of the public enemy
referred to in Article 1734, No. 2.
________
Due diligence, explained—due diligence is that which is
required by the nature of the obligation and corresponds with
the circumstances of the persons, of the time and of the place.
If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good
father of a family shall be required.
________
Art. 1740. If the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free such
carrier from responsibility.
________
Negligence, explained—the fault or negligence of the obligor
consists in the omission of the diligence which is required by
the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place.
________
Art. 1741. If the shipper or owner merely contributed to the
loss, destruction or deterioration of the goods, the proximate
cause thereof being the negligence of the common carrier, the
latter shall be liable in damages, which however, shall be
equitably reduced.
________
Contributory negligence, explained—contributory negligence is
the failure of a person who has been exposed to injury by the
fault or negligence of another, to use such degree of care for
his safety and protection as ordinarily prudent men would use
under the circumstances.
________
Art. 1742. Even if the loss, destruction, or deterioration of the
goods should be caused by the character of the goods, or the
faulty nature of the packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the
loss.
________
Explanation—the common carrier must still exercise due
diligence to forestall or lessen the loss caused by the character
4|P LATON
of the goods or faulty nature of the containers to exempt him
from liability.
If the fact of improper packing is known to the carrier or his
servants, or apparent upon ordinary observation, but it accepts
the goods notwithstanding such condition, it is not relieved of
liability for loss or injury resulting thereform.
________
Art. 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible,
provided said public authority had power to issue the order.
________
Art. 1744. A stipulation between the common carrier and the
shipper or owner limiting the liability of the former for the loss,
destruction, or deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
________
Is limiting the performance of extraordinary diligence of the
common carrier or shipper for the LDD of the goods valid? Yes.
Subject to the conditions under Article 1744.
Who gives the valuable consideration?—by the common
carrier, to compensate for the reduction of common carrier’s
responsibility; in exchange for the exercise of lesser diligence to
that which is required; should be FAIR AND REASONABLE, as to
benefit both the common carrier and the shipper.
Result—
1. Goods and passengers will be brought safely to the
point of destination
2. Will obligate the common carrier to bring the
passengers safely as well as the goods to point of
destination
________
Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or
shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in
the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence
less than that of a good father of a family, or of a man of
ordinary prudence in the vigilance over the movables
transported;
(5) That the common carrier shall not be responsible for the
acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
________
The Civil Code provisions on common carriers should not be
applied where the carrier is not acting as such but as a private
carrier.
Reason for common carrier’s liability under paragraph 7—
passenger is prejudiced because he is not the one who
purchased the equipment of the common carrier; the fact that
the passenger has neither choice nor control over the carrier in
the selection and use of the equipment and appliances in use
by the carrier.
________
Art. 1746. An agreement limiting the common carrier's liability
may be annulled by the shipper or owner if the common carrier
refused to carry the goods unless the former agreed to such
stipulation.
________
When the common carrier refuses to carry the goods, the
shipper should first annul the contract before he can sue; if he
does not annul, he cannot sue and cannot ask for damages and
the validity of the contract is still presumed.
The carrier’s refusal is tantamount to BREACH OF CONTRACT
OF CARRIAGE.
________
Art. 1747. If the common carrier, without just cause, delays the
transportation of the goods or changes the stipulated or usual
route, the contract limiting the common carrier's liability
cannot be availed of in case of the loss, destruction, or
deterioration of the goods.
________
Explanation—under the above provisions, the annulment of the
agreement is not necessary; the carrier cannot simply avail for
himself the benefit or defense of limited liability.
________
Art. 1748. An agreement limiting the common carrier's liability
for delay on account of strikes or riots is valid.
________
Art. 1749. A stipulation that the common carrier's liability is
limited to the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value, is binding.
________
Art. 1750. A contract fixing the sum that may be recovered. by
the owner or shipper for the loss, destruction, or deterioration
of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
________
Can parties limit the liability of the common carrier? Yes.
5|P LATON
 1. In case of riots or strikes;
2. When the shipper declares a greater value of the
goods and pays additional amount of freight
3. When the parties fix the sum or amount of liability.
Note: amount should be equivalent to the value of
the goods.
How can you frustrate the 3 limitations?
1. If the common carrier incurred UNJUST DELAY in
shipping the goods
2. When it CHANGES THE STIPULATED USUAL ROUTE of
the common carrier and it results to the loss of the
goods
Effect: (1) cannot avail of the limitations stipulated, and (2)
payment of damage to its full value
________
Art. 1751. The fact that the common carrier has no competitor
along the line or route, or a part thereof, to which the contract
refers shall be taken into consideration on the question of
whether or not a stipulation limiting the common carrier's
liability is reasonable, just and in consonance with public policy.
________
Art. 1752. Even when there is an agreement limiting the liability
of the common carrier in the vigilance over the goods, the
common carrier is disputably presumed to have been negligent
in case of their loss, destruction or deterioration.
________
Art. 1753. 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.
________
New amendment as to admiralty and maritime actions—All
admiralty and maritime actions, where the demand or claim
exceeds Twenty Thousand Pesos (P20,000.00), shall be under
the exclusive jurisdiction of the Regional Trial Courts.
________
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to
the passenger's baggage which is not in his personal custody or
in that of his employee. As to other baggage, the rules in
Articles 1998 and 2000 to 2003 concerning the responsibility of
hotel-keepers shall be applicable.
________
SUBSECTION 3. - Safety of Passengers
Art. 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for
all the circumstances.
________
Principles governing the liability of the common carrier—
1. The liability of the common carrier is CONTRACTUAL
and arises upon the breach of its obligations, and
there is breach if it fails to exercise extraordinary
diligence according to all the circumstances of each
case
2. A carrier is obliged to carry its passengers with the
utmost diligence of a very cautious persons, having
due regard for all the circumstances
3. A carrier is presumed to be at fault or have acted
negligently in case of death of, or injury to
passengers, it being its duty to prove that it exercised
extraordinary diligence
4. A carrier is NOT an insurer of all risks of travel.
Reason: Common carrier’s liability upon negligence
only
5. The carrier is not responsible for events which could
not be foreseen, or which, though foreseen, are
inevitable
Effect of fortuitous event—common carrier cannot be held
liable when it is the primary result for it prevented the former
from performing his normal duty.
Common carriers are required to observe extraordinary, and
not merely ordinary, diligence.
When is the passenger considered to have reached his destination
safely?
1. Safely alighted at the place of destination from common
carrier;
2. Common carrier has fully stopped and turned off the engine
while alighting; or
3. Common carrier must only move from place to place upon
signal of the conductor. (La Mallorca v. Ca, 17 SCRA 739)
When a passenger dies or is injured, the presumption is that
the common carrier is at fault or that it acted negligently (Art.
1756). This presumption is only rebutted by proof on the
carrier’s part that it observed the “extraordinary diligence
required in Article 1733 and the “utmost diligence of very
cautious persons” required in Article 1755.
Defective equipment—an accident caused by the defects of the
automobile is NOT a caso fortuito which will exempt the carrier
from liability.
Defect of equipment—carrier liable if defect is the proximate cause,
regardless of any defense put up by the common carrier. Note: Cannot
put the blame on the passengers (no control over selection and use)
Factory defect of the appliance—carrier is liable for the injury
resulting from the defect in an appliance purchased from a
manufacturer, whenever it appears that the defect could have
been discovered by the carrier if it had exercised the degree of
care under the circumstances, with regard to inspection and
application of the necessary tests. The manufacturer is
considered the agent or servant of the carrier. The good repute
of the manufacturer will not relieve the carrier from liability.
Reason for the carrier’s liability when flaws are discoverable—
the passengers has neither choice not control over the carrier
in the selection and use of the equipment and appliances used
by the carrier
________
Art. 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
________
6|P LATON
Presumption of negligence—applicable only to common carrier
This is an exception to the general rule that negligence must be
proved, and it is therefore incumbent upon the carrier to prove
that it has exercised extra-ordinary diligence as prescribed in
Articles 1733 and 1755 of the New Civil Code.
If it’s a private carrier, there is a need for abundance of
evidence, because there is no presumption of negligence over
the same
________
Art. 1757. The responsibility of a common carrier for the safety
of passengers as required in Articles 1733 and 1755 cannot be
dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.
________
Art. 1758. When a passenger is carried gratuitously, a
stipulation limiting the common carrier's liability for negligence
is valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the
common carrier's liability.
________
Art. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or wilful acts of
the former's employees, although such employees may have
acted beyond the scope of their authority or in violation of the
orders of the common carriers.
This liability of the common carriers does not cease upon proof
that they exercised all the diligence of a good father of a family
in the selection and supervision of their employees.
________
Reason: because the employer has still the capacity to control
the act of the employee and the latter is still within the
company’s premises and the act was committed in the course
of his employment.
________
Art. 1760. The common carrier's responsibility prescribed in the
preceding article cannot be eliminated or limited by stipulation,
by the posting of notices, by statements on the tickets or
otherwise.
________
Effect of negotiation for compromise—negotiation between
the carrier and the injured passengers for the settlement of the
latter’s claim may indicate that the carrier is really liable for
damages.
________
Art. 1761. The passenger must observe the diligence of a good
father of a family to avoid injury to himself.
________
Provisions, construed—if the injury to the passenger has been
proximately caused by his own negligence, the carrier cannot
be held liable.
________
Art. 1762. The contributory negligence of the passenger does
not bar recovery of damages for his death or injuries, if the
proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably reduced.
________
Who has the burden of proof that shipper or passenger
contributed negligence—since it will be for the common
carrier’s benefit that contributory negligence on the part of the
shipper or passenger be shown, the burden of proof must
necessarily lie on the part of the carrier.
Contributory negligence of injured passenger only justifies
reduction of damages—while contributory negligence on the
part of the injured party justifies the reduction of damages on a
breach of contract of carriage, it does not justify the exemption
from liability of the carrier.
________
Art. 1763. A common carrier is responsible for injuries suffered
by a passenger on account of the wilful acts or negligence of
other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good
father of a family could have prevented or stopped the act or
omission.
________
SUBSECTION 4. - Common Provisions
Art. 1764. Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning
Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common
carrier.
________
Art. 1765. The Public Service Commission may, on its own
motion or on petition of any interested party, after due
hearing, cancel the certificate of public convenience granted to
any common carrier that repeatedly fails to comply with his or
its duty to observe extraordinary diligence as prescribed in this
Section.
________
Art. 1766. In all matters not regulated by this Code, the rights
and obligations of common carriers shall be governed by the
Code of Commerce and by special laws.
________
Accident between common carrier and private carrier—
1. Defense that it had exercised due diligence in the
selection and supervision of his employee is NOT
available in case of a common carrier
2. Breach of contract of carriage is NOT available against
a passenger of common carrier (culpa contractual) for
it is against public policy
3. Defense is now available against the owner of private
car (culpa aquiliana) for it is more of an action of tort
and no public policy is involved
Probative value of a defense over the selection and supervision
of the employees—not a useless defense but may MITIGATE
the liability of the common carrier but will not absolutely erase
its liability
________
7|P LATON

REPUBLIC ACT NO. 6235
AN ACT PROHIBITING CERTAIN ACTS INIMICAL TO CIVIL
AVIATION, AND FOR OTHER PURPOSES
Section 1. It shall be unlawful for any person to compel a
change in the course or destination of an aircraft of Philippine
registry, or to seize or usurp the control thereof, while it is in
flight. An aircraft is in flight from the moment all its external
doors are closed following embarkation until any of such doors
is opened for disembarkation.
It shall likewise be unlawful for any person to compel an aircraft
of foreign registry to land in Philippine territory or to seize or
usurp the control thereof while it is within the said territory.
________
Section 2. Any person violating any provision of the foregoing
section shall be punished by an imprisonment of not less than
twelve years but not more than twenty years, or by a fine of
not less than twenty thousand pesos but not more than forty
thousand pesos.
The penalty of imprisonment of fifteen years to death, or a fine
of not less than twenty-five thousand pesos but not more than
fifty thousand pesos shall be imposed upon any person
committing such violation under any of the following
circumstances:
1. Whenever he has fired upon the pilot, member of the crew
or passenger of the aircraft;
2. Whenever he has exploded or attempted to explode any
bomb or explosive to destroy the aircraft; or
3. Whenever the crime is accompanied by murder, homicide,
serious physical injuries or rape.
________
Section 3. It shall be unlawful for any person, natural or
juridical, to ship, load or carry in any passenger aircraft
operating as a public utility within the Philippines, and
explosive, flammable, corrosive or poisonous substance or
material.
________
Section 4. The shipping, loading or carrying of any substance or
material mentioned in the preceding section in any cargo
aircraft operating as a public utility within the Philippines shall
be in accordance with regulations issued by the Civil
Aeronautics Administration.
________
Section 5. As used in this Act
(1) "Explosive" shall mean any substance, either solid or liquid,
mixture or single compound, which by chemical reaction
liberates heat and gas at high speed and causes tremendous
pressure resulting in explosion. The term shall include but not
limited to dynamites, firecrackers, blasting caps, black powders,
bursters, percussions, cartridges and other explosive materials,
except bullets for firearm.
(2) "Flammable" is any substance or material that is highly
combustible and self-igniting by chemical reaction and shall
include but not limited to acrolein, allene, aluminum dyethyl
monochloride, and other aluminum compounds, ammonium
chlorate and other ammonium mixtures and other similar
substances or materials.
(3) "Corrosive" is any substance or material, either liquid, solid
or gaseous, which through chemical reaction wears away,
impairs or consumes any object. It shall include but not limited
to alkaline battery fluid packed with empty storage battery,
allyl chloroformate, allytrichlorosilane, ammonium dinitro-
orthocresolate and other similar materials and substances.
(4) "Poisonous" is any substance or materials, except medicinal
drug, either liquid, solid or gaseous, which through chemical
reactions kills, injuries or impairs a living organism or person,
and shall include but not limited to allyl isothiocyanate,
ammunition (chemical, non-explosive but containing Class A, B
or poison), aniline oil, arsine, bromobenzyle cyanide,
bromoacetone and other similar substances or materials.
________
Section 6. Any violation of Section three hereof shall be
punishable by an imprisonment of at least five years but not
more than ten years or by a fine of not less than ten thousand
pesos but not more than twenty thousand pesos: Provided,
That if the violation is committed by a juridical person, the
penalty shall be imposed upon the manager, representative,
director, agent or employee who violated, or caused, directed,
cooperated or participated in the violation
thereof: Provided, further, That in case the violation is
committed in the interest of a foreign corporation legally doing
business in the Philippines, the penalty shall be imposed upon
its resident agent, manager, representative or director
responsible for such violation and in addition thereto, the
license of said corporation to do business in the Philippines
shall be revoked.
Any violation of Section four hereof shall be an offense
punishable with the minimum of the penalty provided in the
next preceding paragraph.
________
Section 7. For any death or injury to persons or damage to
property resulting from a violation of Sections three and four
hereof, the person responsible therefor may be held liable in
accordance with the applicable provisions of the Revised Penal
Code.
________
Section 8. Aircraft companies which operate as public utilities
or operators of aircraft which are for hire are authorized to
open and investigate suspicious packages and cargoes in the
presence of the owner or shipper, or his authorized
representatives if present; in order to help the authorities in
the enforcement of the provisions of this Act: Provided, That if
the owner, shipper or his representative refuses to have the
same opened and inspected, the airline or air carrier is
authorized to refuse the loading thereof.
________
Section 9. Every ticket issued to a passenger by the airline or air
carrier concerned shall contain among others the following
condition printed thereon: "Holder hereof and his hand-carried
luggage(s) are subject to search for, and seizure of, prohibited
materials or substances. Holder refusing to be searched shall
not be allowed to board the aircraft," which shall constitute a
part of the contract between the passenger and the air carrier.
8|P LATON
 ________
Section 10. The Civil Aeronautics Administration is hereby
directed to promulgate within one month after the approval of
this Act such regulations as are provided in Section four hereof
and cause the publication of such rules and regulations in the
Official Gazette and in a newspaper of national circulation for at
least once a week for three consecutive weeks. Such
regulations shall take effect fifteen days after publication in the
Official Gazette.
________
Section 11. This Act shall take effect after the publication
mentioned in the preceding section.
________
COMMONWEALTH ACT NO. 65
CARRIAGE OF GOODS BY SEA ACT1
WHEREAS, the Seventy-fourth Congress of the United States
enacted Public Act Numbered Five hundred and twenty-one,
entitled:
"Carriage of Goods by Sea Act";
WHEREAS, the primordial purpose of the said Acts is to bring
about uniformity in ocean bills of lading and to give effect to
the Brussels Treaty, signed by the United States with other
powers;
WHEREAS, the Government of the United States has left it to
the Philippine Government to decide whether or not the said
Act shall apply to carriage of goods by sea in foreign trade to
and from Philippine ports;
WHEREAS, the said Act of Congress contains advanced
legislation, which is in consonance with modern maritime rules
and the practices of the great shipping countries of the world;
WHEREAS, shipping companies, shippers, and marine insurance
companies, and various chambers of commerce, which are
directly affected by such legislation, have expressed their desire
that said Congressional Act be made applicable and extended
to the Philippines; therefore,
Be it enacted by the National Assembly of the Philippines:
Section 1. That the provisions of Public Act Numbered Five
hundred and twenty-one of the Seventy-fourth Congress of the
United States, approved on April sixteenth, nineteen hundred
and thirty-six, be accepted, as it is hereby accepted to be made
applicable to all contracts for the carriage of goods by sea to
and from Philippine ports in foreign trade: Provided, That
nothing in the Act shall be construed as repealing any existing
provision of the Code of Commerce which is now in force, or as
limiting its application.
________
Section 2. This Act shall take effect upon its approval.
Approved: October 22,1936.
An Act Relating to the Carriage of Goods by Sea.
1 See Transcribed Notes on COGSA.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That every bill
of landing or similar document of title which is evidence of a
contract for the carriage of goods by sea to or from ports of the
United States, in foreign trade, shall have effect subject to the
provisions of the Act.
TITLE I
Section 1. When used in this Act —
(a) The term "carrier" includes the owner or the charterer who
enters into a contract of carriage with a shipper.
(b) The term "contract of carriage" applies only to contracts of
carriage covered by a bill of lading or any similar document of
title, insofar as such document relates to the carriage of goods
by sea, including any bill of lading or any similar document as
aforesaid issued under or pursuant to a charter party from the
moment at which such bill of lading or similar document of title
regulates the relations between a carrier and a holder of the
same.
(c) The term "goods" includes goods, wares, merchandise, and
articles of every kind whatsoever, except live animals and cargo
which by the contract of carriage is stated as being carried on
deck and is so carried.
(d) The term "ship" means any vessel used for the carriage of
goods by sea.
(e) The term "carriage of goods" covers the period from the
time when the goods are loaded on to the time when they are
discharged from the ship.
________
RISKS
Section 2. Subject to the provisions of section 6, under every
contract of carriage of goods by sea, the carrier in relation to
the loading handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the responsibilities
and liabilities and entitled to the rights and immunities
hereinafter set forth.
________
RESPONSIBILITIES AND LIABILITIES
Section 3. (1) The carrier shall be bound, before and at the
beginning of the voyage, to exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers, and all
other parts of the ship in which goods are carried, fit and safe
for their reception carriage and preservation.
(2) The carrier shall properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods carried.
(3) After receiving the goods into his charge the carrier, or the
master or agent of the carrier, shall, on demand of the shipper,
issue to the shipper a bill of lading showing among other things
—
(a) The leading marks necessary for identification of the goods
as the same are furnished in writing by the shipper before the
loading of such goods starts, provided such marks are stamped
or otherwise shown clearly upon the goods if uncovered, or on
the cases or coverings in which such goods are contained, in
such a manner as should ordinarily remain legible until the end
of the voyage.
9|P LATON
(b) Either the number of packages or pieces, or the quantity or
weight, as the case may be, as furnished in writing by the
shipper.
(c) The apparent order and condition of the goods: Provided,
That no carrier, master, or agent of the carrier, shall be bound
to state or show in the bill of lading any marks, number,
quantity, or weight which he has reasonable ground for
suspecting not accurately to represent the goods actually
received, or which he has had no reasonable means of
checking.
(4) Such a bill of lading shall be prima facie evidence of the
receipt by the carrier of the goods as therein described in
accordance with paragraphs (3) (a), (b), and (c) of this section:
Provided, That nothing in this Act shall be construed as
repealing or limiting the application of any part of the Act, as
amended, entitled "An Act relating to bills of lading in interstate
and foreign commerce," approved August 29, 1916 (U. S. C. title
49, secs. 81-124), commonly known as the "Pomerene Bills of
Lading Act."
(5) The shipper shall be deemed to have guaranteed to the
carrier the accuracy at the time of shipment of the marks,
number, quantity, and weight, as furnished by him; and the
shipper shall indemnify the carrier against all loss damages, and
expenses arising or resulting from inaccuracies in such
particulars. The right of the carrier to such indemnity shall in no
way limit his responsibility and liability under the contract of
carriage or to any person other than the shipper.
(6) Unless notice of loss or damage and the general nature of
such loss or damage be given in writing to the carrier or his
agent at the port of discharge before or at the time of the
removal of the goods into the custody of the person entitled to
delivery thereof under the contract of carriage, such removal
shall be prima facie evidence of the delivery by the carrier of
the goods as described in the bill of lading. If the loss or
damage is not apparent, the notice must be given within three
days of the delivery.
Said notice of loss or damage maybe endorsed upon the receipt
for the goods given by the person taking delivery thereof.
The notice in writing need not be given if the state of the goods
has at the time of their receipt been the subject of joint survey
or inspection.
In any event the carrier and the ship shall be discharged from
all liability in respect of loss or damage unless suit is brought
within one year after delivery of the goods or the date when
the goods should have been delivered: Provided, That if a
notice of loss or damage, either apparent or concealed, is not
given as provided for in this section, that fact shall not affect or
prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods
should have been delivered
In the case of any actual or apprehended loss or damage the
carrier and the receiver shall give all reasonable facilities to
each other for inspecting and tallying the goods.
(7) After the goods are loaded the bill of lading to be issued by
the carrier, master, or agent of the carrier to the shipper shall,
if the shipper so demands, be a "shipped" bill of lading
Provided, That if the shipper shall have previously taken up any
document of title to such goods, he shall surrender the same as
against the issue of the "shipped" bill of lading, but at the
option of the carrier such document of title may be noted at
the port of shipment by the carrier, master, or agent with name
or name the names of the ship or ships upon which the goods
have been shipped and the date or dates of shipment, and
when so noted the same shall for the purpose of this section be
deemed to constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a contract of carriage
relieving the carrier or the ship from liability for loss or damage
to or in connection with the goods, arising from negligence,
fault, or failure in the duties and obligations provided in this
section, or lessening such liability otherwise than as provided in
this Act, shall be null and void and of no effect. A benefit of
insurance in favor of the carrier, or similar clause, shall be
deemed to be a clause relieving the carrier from liability.
________
RIGHTS AND IMMUNITIES
Section 4. (1) Neither the carrier nor the ship shall be liable for
loss or damage arising or resulting from unseaworthiness
unless caused by want of due diligence on the part of the
carrier to make the ship seaworthy, and to secure that the ship
is properly manned, equipped, and supplied, and to make to
the holds, refrigerating and cool chambers, and all other parts
of the ship in which goods are carried fit and safe for their
reception, carriage, and preservation in accordance with the
provisions of paragraph (1) of section 3. Whenever loss or
damage has resulted from unseaworthiness, the burden of
proving the exercise of due diligence shall be on the carrier or
other persons claiming exemption under the section.
(2) Neither the carrier nor the ship shall be responsible for loss
or damage arising or resulting from —
(a) Act, neglect, or default of the master, mariner, pilot, or the
servants of the carrier in the navigation or in the management
of the ship;
(b) Fire, unless caused by the actual fault or privity of the
carrier;
(c) Perils, dangers, and accidents of the sea or other navigable
waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or seizure
under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the goods, his
agent or representative;
(j) Strikes or lockouts or stoppage or restraint of labor from
whatever cause, whether partial or general; Provided, That
nothing herein contained shall be construed to relieve a carrier
from responsibility for the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at sea;
(m) Wastage in bulk or weight or any other loss or damage
arising from inherent defect, quality, or vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due diligence; and
(q) Any other cause arising without the actual fault and privity
of the carrier and without the fault or neglect of the agents or
servants of the carrier, but the burden of proof shall be on the
person claiming the benefit of this exception to show that
neither the actual fault or privity of the carrier nor the fault or
neglect of the agents or servants of the carrier contributed to
the loss or damage.
(3) The shipper shall not be responsible for loss or damage
sustained by the carrier or the ship arising from any cause
without the act, fault, or neglect of the shipper, his agents, or
servants.
(4) Any deviation in saving or attempting to save life or
property at sea, or any reasonable deviation shall not be
10 | P LATON
deemed to be an infringement or breach of this Act or of the
contract of carriage, and the carrier shall not be liable for any
loss or damage resulting therefrom: Provided, however, That if
the deviation is for the purpose of loading cargo or unloading
cargo or passengers it shall, prima facie, be regarded as
unreasonable.
(5) Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
the transportation of goods in an amount exceeding $600 per
package lawful money of the United States, or in case of goods
not shipped in packages, per customary freight unit, or the
equivalent of that sum in other currency, unless the nature and
value of such goods have been declared by the shipper before
shipment and inserted in the bill of lading. This declaration, if
embodied in the bill of lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.
By agreement between the carrier, master, or agent of the
carrier, and the shipper another maximum amount than that
mentioned in this paragraph may be fixed: Provided, That such
maximum shall not be less than the figure above named. In no
event shall the carrier be liable for more than the amount of
damage actually sustained.
Neither the carrier nor the ship shall be responsible in any
event for loss or damage to or in connection with the
transportation of the goods if the nature or value thereof has
been knowingly and fraudulently misstated by the shipper in
the bill of lading.
(6) Goods of an inflammable, explosive, or dangerous nature to
the shipment whereof the carrier, master or agent of the
carrier, has not consented with knowledge of their nature and
character, may at any time before discharge be landed at any
place or destroyed or rendered innocuous by the carrier
without compensation, and the shipper of such goods shall be
liable for all damages and expenses directly or indirectly arising
out of or resulting from such shipment. If any such goods
shipped with such knowledge and consent shall become a
danger to the ship or cargo, they may in like manner be landed
at any place, or destroyed or rendered innocuous by the carrier
without liability on the part of the carrier except to general
average, if any.
________
SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF
RESPONSIBILITIES AND LIABILITIES
Section 5. A carrier shall be at liberty to surrender in whole or
in part all or any of his rights and immunities or to increase any
of his responsibilities and liabilities under this Act, provided
such surrender or increase shall be embodied in the bill of
lading issued to the shipper.
The provisions of this Act shall not be applicable to charter
parties; but if bills of lading are issued in the case of a ship
under charter party, they shall comply with the terms of this
Act. Nothing in this Act shall be held to prevent the insertion in
a bill of lading of any lawful provision regarding general
average.
________
SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of the preceding
sections, a carrier, master or agent of the carrier, and a shipper
shall, in regard to any particular goods be at liberty to enter
into any agreement in any terms as to the responsibility and
liability of the carrier for such goods, and as to the rights and
immunities of the carrier in respect of such goods, or his
obligation as to seaworthiness (so far as the stipulation
regarding seaworthiness is not contrary to public policy), or the
care or diligence of his servants or agents in regard to the
loading, handling stowage, carriage, custody, care, and
discharge of the goods carried by sea: Provided, That in this
case no bill of lading has been or shall be issued and that the
terms agreed shall be embodied in a receipt which shall be a
non-negotiable document and shall be marked as such.
Any agreement so entered into shall have full legal
effect: Provided, That this section shall not apply to ordinary
commercial shipments made in the ordinary course of trade but
only to other shipments where the character or condition of
the property to be carried or the circumstances, terms, and
conditions under which the carriage is to be performed are
such as reasonably to justify a special agreement.
________
Section 7. Nothing contained in this Act shall prevent a carrier
or a shipper from entering into any agreement, stipulation,
condition, reservation, or exemption as to the responsibility
and liability of the carrier or the ship for the loss or damage to
or in connection with the custody and care and handling of
goods prior to the loading on and subsequent to the discharge
from the ship on which the goods are carried by sea.
________
Section 8. The provisions of this Act shall not affect the rights
and obligations of the carrier under the provisions of the
Shipping Act, 1916, or under the provisions of section 4281 to
4289, inclusive, of the Revised Statutes of the United States, or
of any amendments thereto; or under the provisions of any
other enactment for the time being in force relating to the
limitation of the liability of the owners of seagoing vessels.
________
TITLE II
Section 9. Nothing contained in this Act shall be construed as
permitting a common carrier by water to discriminate between
competing shippers similarly place in time and circumstances,
either (a) with respect to the right to demand and receive bills
of lading subject to the provisions of this Act; or (b) when
issuing such bills of lading, either in the surrender of any of the
carrier's rights and immunities or in the increase of any of the
carrier's responsibilities and liabilities pursuant to section 6,
title I, of this Act or (c) in any other way prohibited by the
Shipping Act, 1916, s amended.
________
Section 10. Section 25 of the Interstate Commerce Act is
hereby amended by adding the following proviso at the end of
paragraph 4 thereof: "Provided, however, That insofar as any
bill of lading authorized hereunder relates to the carriage of
goods by sea, such bill of lading shall be subject to the
provisions of the Carriage of Goods by Sea Act."
________
Section 11. Where under the customs of any trade the weight
of any bulk cargo inserted in the bill of lading is a weight
ascertained or accepted by a third party other than the carrier
or the shipper, and the fact that the weight is so ascertained or
accepted is stated in the bill of lading, then, notwithstanding
any thing in this Act, the bill of lading shall not be deemed to be
prima facie evidence against the carrier of the receipt of goods
of the weight so inserted in the bill of lading, and the accuracy
11 | P LATON
thereof at the time of shipment shall not be deemed to have on which this Act is approved, nor to any bill of lading or similar
been guaranteed by the shipper. document of title issued, whether before or after such date of
________ approval in pursuance of any such contract as aforesaid.
________
Section 12. Nothing in this Act shall be construed as
superseding any part of the Act entitled "An act relating to Section 16. This Act may be cited as the "Carriage of Goods by
navigation of vessels, bills of lading, and to certain obligations, Sea Act."
duties, and rights in connection with the carriage of property," ________
approved February 13,1893, or of any other law which would
be applicable in the absence of this Act, insofar as they relate to
the duties, responsibilities, and liabilities of the ship or carrier
prior to the time when the goods are loaded on or after the
time they are discharged from the ship.
________

Section 13. This Act shall apply to all contracts for carriage of
goods by sea to or from ports of the United States in foreign CODE OF COMMERCE
trade. As used in this Act the term "United States" includes its
districts, territories, and possessions: Provided, however, That TITLE VII—COMMERCIAL CONTRACT FOR TRANSPORTATION
the Philippine legislature may by law exclude its application to OVERLAND OR WATERWAYS
transportation to or from ports of the Philippine Islands. The
term "foreign trade" means the transportation of goods ARTICLE 349. A contract of transportation by land or water
between the ports of the United States and ports of foreign ways of any kind shall be considered commercial:
countries. Nothing in this Act shall be held to apply to contracts
for carriage of goods by sea between any port of the United 1. When it has for its object merchandise or any article of
States or its possessions, and any other port of the United commerce.
States or its possession: Provided, however, That any bill of
lading or similar document of title which is evidence of a 2. When, whatever its object may be, the carrier is a
contract for the carriage of goods by sea between such ports, merchant or is habitually engaged in transportation for the
containing an express statement that it shall be subject to the public.
provisions of this Act, shall be subjected hereto as fully as if ________
subject hereto as fully as if subject hereto by the express
provisions of this Act: Provided, further, That every bill of lading There is no more distinction between a commercial and a civil
or similar document of title which is evidence of a contract for contract of transportation overland and waterways
the carriage of goods by sea from ports of the United States, in
foreign trade, shall contain a statement that it shall have effect Annual licenses authorizing vessels of any tonnage to engage in
subject to the provisions of this Act. the business of towing or carrying articles or passengers in the
________
bays, harbor, rivers and inland waters navigable from the sea
shall be issued by the Collector of the various ports of entry
Section 14. Upon the certification of the Secretary of
under the conditions prescribed; and except as otherwise
Commerce that the foreign commerce of the United States in
expressly provided, no vessel shall be permitted to engage in
its competition with that of foreign nations is prejudiced the
this character of business until the proper license therefor has
provisions, or any of them, of Title I of this Act, or by the laws of
been procured.
any foreign country or countries relating to the carriage of
goods by sea, the President of the United States, may, from
A bay and river license shall specify the particular port or body
time to time, by proclamation, suspend any or all provisions of
of water in which the vessel in question may engage in business
Title I of this Act for such periods of time or indefinitely as may
as aforesaid.
be designated in the proclamation. The President may at any
time rescind such suspension of Title I hereof, and any
To be eligible for the bay and river license, a vessel must be
provisions thereof which may have been suspended shall
built in the Philippines, and the ownership of such vessel must
thereby be reinstated and again apply to contracts thereafter
be vested in:
made for the carriage of goods by sea. Any proclamation of
a) Citizens of the Philippines;
suspension or rescission of any such suspension shall take
b) Domestic corporations or companies 75% of whose
effect on a date named therein, which date shall be not less
corporate capital belongs to citizens of the
than ten days from the issue of the proclamation.
Philippines.
Any contract for the carriage of goods by sea, subject to the
provisions of this Act, effective during any period when title I
XPN to the bay and river license requirement:
hereof, or any part thereof, is suspended, shall be subject to all
1. Vessels of 3 tons net or less;
provisions of law now or hereafter applicable to that part of
2. Yachts, launches and other crafts used exclusively for
Title I which may have thus been suspended.
________ pleasure and recreation;
3. Ship’s boats and launches bearing the name and
Section 15. This Act shall take effect ninety days after the date home port of the vessel plainly marked thereon; and
of its approval; but nothing in this Act shall apply during a 4. Vessels owned by the Government of the Philippines.
period not to exceed one year following its approval to any
contract for the carriage of goods by sea, made before the date

12 | P LATON
Note: The exemption of any vessel shall at once cease if it
engages in the business of transporting cargo or passengers for
hire.
Air transportation is clearly similar or analogous to land and
water transportation.
A contract of towage is NOT a contract for the carriage of
goods; thus, an agreement by virtue of which a party binds
itself to tow another vessel by means of a steamer, and for
certain consideration, from one port to another, is not a charter
party but a contract for the hire of services.
It would be a contract of carriage of goods, however, if the
barge towed (toe) and its tugboat belong to the same owner
and the barge is used continuously in the business of
transporting another’s goods.
________
ARTICLE 350. The shipper as well as the carrier of
merchandise or goods may mutually demand that a bill of
lading be made, stating:
1) The name, surname and residence of the shipper.
2) The name, surname and residence of the carrier.
3) The name, surname and residence of the person to whom
or to whose order the goods are to be sent or whether
they are to be delivered to the bearer of said bill.
4) The description of the goods, with a statement of their
kind, of their weight, and of the external marks or signs of
the packages in which they are contained.
5) The cost of transportation.
6) The date on which shipment is made.
7) The place of delivery to the carrier.
8) The place and the time at which delivery to the consignee
shall be made.
9) The indemnity to be paid by the carrier in case of delay, if
there should be any agreement on this matter.
________
A bill of lading is an instrument in writing, signed by a carrier on
his agent, describing the freight so as to identify it, stating the
name of the consignor, the terms of the contract of carriage,
and agreeing or directing that the freight be delivered to the
order or assigns of a specified person at a specified place.
In the new Civil Code, the bill of lading is included in the term
“document of title to goods” under the law on sales.
A bill of lading is two-fold in its character:
1. It is a receipt specifying the quantity, character and
condition of the goods received; and
2. It is also a contract, by which the carrier agrees to
transport the goods therein described to a place
named, and there deliver them to a designated
consignee upon the terms and conditions specified in
the instrument.
In a charter of the entire vessel, the bill of lading issued by the
master to the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of title, not a
contract, for the contract is the charter party.
A bill of lading in which it is stated that the goods referred to
therein will be delivered to the bearer, or to the order of any
person named in such bill is a negotiable bill of lading.
A bill of lading in which it is stated that the goods referred to
therein will be delivered to s specified person named in such
bill is a non-negotiable bill of lading.
Bill of lading include freight tickets or bus receipts for cargo
Bill of lading issued to specified person cannot be transferred
by means of a mere indorsement by the consignee directing
delivery of the gods and in purporting to convey the property.
If the bill of lading was issued to the order of the shipper, the
carrier was under a duty not to deliver the merchandise
mentioned in the bill of lading, except upon presentation of the
bill of lading duly indorsed by the shipper.
Bill of lading is not indispensable to contract of carriage
The bill of lading is juridically a documentary proof of the
stipulations and conditions agreed upon by both parties.
________
ARTICLE 351. In transportation made by railroads or other
enterprises subject to regulation rate and time schedules, it
shall be sufficient for the bills of lading or the declaration of
shipment furnished by the shipper to refer, with respect to the
cost, time and special conditions of the carriage, to the
schedules and regulations the application of which he requests;
and if the shipper does not determine the schedule, the carrier
must apply the rate of those which appear to be the lowest,
with the conditions inherent thereto, always including a
statement or reference to in the bill of lading which he delivers
to the shipper.
ARTICLE 352. The bills of lading, or tickets in cases of
transportation of passengers, may be diverse, some for persons
and others for baggage; but all of them shall bear the name of
the carrier, the date of shipment, the points of departure and
arrival, the cost, and, with respect to the baggage, the number
and weight of the packages, with such other manifestations
which may be considered necessary for their easy
identification.
________
Passenger’s contract is a complete contract having all the
elements, namely, consent, cause or consideration, and object.
________
ARTICLE 353. The legal evidence of the contract between the
shipper and the carrier shall be the bills of lading, by the
contents of which the disputes which may arise regarding their
execution and performance shall be decided, no exceptions
being admissible other than those of falsity and material error
in the drafting.
After the contract has been complied with, the bill of lading
which the carrier has issued shall be returned to him, and by
virtue of the exchange of this title with the thing transported,
the respective obligations and actions shall be considered
cancelled, unless in the same act the claim which the parties
may wish to reserve be reduced to writing, with the exception
of that provided for in Article 366.
13 | P LATON

In case the consignee, upon receiving the goods, cannot return
the bill of lading subscribed by the carrier, because of its loss or
of any other cause, he must give the latter a receipt for the
goods delivered, this receipt producing the same effects as the
return of the bill of lading.
________
The delivery of goods shipped to specific consignees without
requiring payment of the drafts upon the consignees and
surrender of the original bills of lading, not being a violation of
the terms thereof, an action by the shipper against the carrier
to recover the goods and for damages does not lie, but if the
bill of lading has been issued to the order of the shipper, the
goods cannot be delivered without previous payment of the
value thereof and without the presentation of the bill of lading
duly indorsed by the shipper.
Three kinds of stipulations have often been made in a bill of
lading:
1. One exempting the carrier from any and all liability
for loss or damage occasioned by its own negligence
(invalid);
2. One providing for an unqualified limitation of such
liability to an agreed valuation (invalid); and
3. One limiting the liability of the carrier to an agreed
valuation unless the shipper declare a higher value
and pays a higher rate of freight (valid).
It is a general rule that parties to a contract of shipment may
agree on a limitation on time shorter than the statutory period,
and such a contractual limitation will be enforced if reasonable.
________
ARTICLE 354. In the absence of a bill of lading, disputes shall
be determined by the legal proofs which the parties may
present in support of their respective claims, according to the
general provisions established in this Code for commercial
contracts.
ARTICLE 355. The responsibility of the carrier shall commence
from the moment he receives the merchandise, personally or
through a person charged for the purpose, at the place
indicated for receiving them.
________
Having accepted the goods for transportation, the duty of the
carrier was to carry them safely to their destination and to
deliver the transported articles in as good order and condition
as when received, and for failure to do so, the carrier is liable
for the corresponding damages, unless proven that the loss or
injury was due to some circumstance inconsistent with its
liability.
________
ARTICLE 356. Carriers may refuse packages which appear unfit
for transportation; and if the carriage is to be made by railway,
and the shipment is insisted upon, the company shall transport
them, being exempt from all responsibility if its objections, is
made to appear in the bill of lading.
ARTICLE 357. If by reason of well-founded suspicion of falsity
in the declaration as to the contents of a package the carrier
should decide to examine it, he shall proceed with his
investigation in the presence of witnesses, with the shipper or
consignee in attendance.
If the shipper or consignee who has to be cited does not attend,
the examination shall be made before a notary, who shall
prepare a memorandum of the result of the investigation, for
such purposes as may be proper.
If the declaration of the shipper should be true, the expense
occasioned by the examination and that of carefully repacking
the packages shall be for the account of the carrier and in a
contrary case for the account of the shipper.
ARTICLE 358. If there is no period fixed for the delivery of the
goods the carrier shall be bound to forward them in the first
shipment of the same or similar goods which he may make
point where he must deliver them; and should he not do so, the
damages caused by the delay should be for his account.
________
If there is a stipulation as to the period of time, the obligation
of the carrier is to deliver the foods within the said time; and in
the absence of agreement, the carrier is under obligation to
include them in the first shipment of the same or similar kind of
goods.
________
ARTICLE 359. If there is an agreement between the shipper
and the carrier as to the road over which the conveyance is to
be made, the carrier may not change the route, unless it be by
reason of force majeure; and should he do so without this
cause, he shall be liable for all the losses which the goods he
transports may suffer from any other cause, beside paying the
sum which may have been stipulated for such case.
When on account of said cause of force majeure, the carrier
had to take another route which produced an increase in
transportation charges, he shall be reimbursed for such
increase upon formal proof thereof.
________
Should there be no agreement pertaining to the route, the
carrier must select one which may be the shortest, least
expensive and practically passable; but if there is an established
fixed route, the carrier has no right to change it without the
consent of the shipper except in case of force majeure.
________
ARTICLE 360. The shipper, without changing the place where
the delivery is to be made, may change the consignment of the
goods which he delivered to the carrier, provided that at the
time of ordering the change of consignee the bill of lading
signed by the carrier, if one has been issued, be returned to
him, in exchange for another wherein the novation of the
contract appears.
The expenses which this change of consignment occasions shall
be for the account of the shipper.
________
The merchandise must necessarily be delivered to the
consignee at the place agreed upon and mentioned in the bill of
lading, but Article 360 gives to the shipper the right to change
the consignment of the merchandise.
14 | P LATON
The shipper may change the consignee provided that:
1. No change on the place of delivery
2. BOL Subscribed by the carrier be returned and
exchanged for another as a result of NOVATION of
the contract.
If there is a change in the consignee and also a change of place
of delivery (destination of goods), the contract is TERMINATED,
not merely novated.
If only time of arrival and departure is changed, the contract is
not cancelled.
The expenses occasioned by the change of consignment shall
be paid by the shipper.
________
ARTICLE 361. [The merchandise shall be transported at the
risk and venture of the shipper, if the contrary has not been
expressly stipulated.
As a consequence, all the losses and deteriorations which the
goods may suffer during the transportation by reason of
fortuitous event, force majeure, or the inherent nature and
defect of the goods, shall be for the account and risk of the
shipper.
Proof of these accidents is incumbent upon the carrier.
________
Having accepted the goods for transportation, the duty of the
carrier was to carry them safely to their destination; and having
failed in this obligation, he is liable if he could not prove that
the damage or impairment was due to accident, force majeure,
or the nature or defect of the articles; proof of the delivery of
goods in good order to a carrier, and of their arrival at the place
of destination short or in bad order, makes out a prima facie
case; and it is incumbent on the carrier, in order to exonerate
itself, to prove that the loss or injury was due to some
circumstances inconsistent with its liability.
Reason for the rule—As to when and how goods were damage
in transit is a matter peculiarly within the knowledge of the ship
owner and his employees, and to require the plaintiff t prove as
to when and how the damage was done would force him to rely
upon the employees of the defendant’s ship which in legal
effect would be to say that he cannot recover damages for any
reason.
Q: What do you have to prove in order to have a COA?
A: Prove that:
1. The goods have been delivered in GOOD CONDITION
to the carrier.
2. The goods arrived at a DAMAGED CONDITION to the
consignee.
The carrier has the burden of proof that the goods are
damaged due to causes which exempt it from liability.
Ratio: As to when and how goods were damaged in transit is a
matter peculiarly within the knowledge of the shipowner or his
employees, and to require the plaintiff to prove as to when and
how the damage was done would force him to rely upon the
employees of the carrier which in legal effect would be to say
that he cannot recover damages at all.
________
ARTICLE 362. Nevertheless, the carrier shall be liable for the
losses and damages resulting from the causes mentioned in the
preceding article if it is proved, as against him, that they arose
through his negligence or by reason of his having failed to take
the precautions which usage has established among careful
persons, unless the shipper has committed fraud in the bill of
lading, representing the goods to be of a kind or quality
different from what they really were.
If, notwithstanding the precautions referred to in this article,
the goods transported run the risk of being lost, on account of
their nature or by reason of unavoidable accident, there being
no time for their owners to dispose of them, the carrier may
proceed to sell them, placing them for this purpose at the
disposal of the judicial authority or of the officials designated
by special provisions.
________
If the fact of improper packing is known to the carrier or its
servants, or apparent upon ordinary observation, but it accepts
the goods notwithstanding such condition, it is not relieved
therefrom.
Defenses of carrier in case of loss, deterioration or damage:
1. Extraordinary diligence
2. Loss, deterioration or damage is due to the nature of
the goods.
3. Fortuitous events
Exemption to the liability of the common carrier:
a. Natural disaster
b. Act of the public enemy in war
c. Act or omission of the shipper
d. Defect in the packing and character of the goods
e. Order of competent public authority
But improper packing of goods is apparent, and the carrier
accepts it, then the carrier cannot claim exemption.
________
ARTICLE 363. Outside of the cases mentioned in the second
paragraph of Article 361, the carrier shall be obliged to deliver
the goods shipped in the same condition in which, according to
the bill of lading, they were found at the time they were
received, without any damage or impairment, and failing to do
so, to pay the value which those not delivered may have at the
point and at the time at which their delivery should have been
made.
If those not delivered form part of the goods transported, the
consignee may refuse to receive the latter, when he proves that
he cannot make use of them independently of the others.
ARTICLE 364. If the effect of the damage referred to in Article
361 is merely a diminution in the value of the goods, the
obligation of the carrier shall be reduced to the payment of the
amount which, in the judgment of experts, constitutes such
difference in value.
15 | P LATON
ARTICLE 365. If, in consequence of the damage, the goods are
rendered useless for sale and consumption for the purposes for
which they are properly destined, the consignee shall not be
bound to receive them, and he may have them in the hands of
the carrier, demanding of the latter their value at the current
price on that day.
If among the damaged goods there should be some pieces in
good condition and without any defect, the foregoing provision
shall be applicable with respect to those damaged and the
consignee shall receive those which are sound, this segregation
to be made by distinct and separate pieces and without dividing
a single object, unless the consignee proves the impossibility of
conveniently making use of them in this form.
The same rule shall be applied to merchandise in bales or
packages, separating those parcels which appear sound.
________
If only PART of the goods is delivered- the consignee may
refuse to receive it when he proves that he cannot make use of
it without the others.
If there is only a DIMUNITION OF THE VALUE- the carrier shall
only pay the diminution of value as appraised by the expert.
If the goods are RENDERED USELESS for sale or for
consumption for particular purpose- Consignee may refuse to
accept them and demand the payment of their value at the
current market price on that day.
If SOME are in good condition, and others not- segregate (but
one article cannot be divided) unless the consignee proves the
impossibility of conveniently utilizing them in this form.
Q: When may a consignee of goods abandon the goods and
recover the value thereof from the carrier?
1. Under Art. 363, in case of PARTIAL NON-DELIVERY,
where the consignee proves that he cannot make use
of the goods capable of delivery independently of
those not delivered.
2. Under Art. 365, where the goods are RENDERED
USELESS for sale and consumption for the purpose for
which they are properly destined; or
Under Art. 371, where there is DELAY through the fault of the
carrier.
________
ARTICLE 366. Within the twenty-four hours following the
receipt of the merchandise, the claim against the carrier for
damage or average be found therein upon opening the
packages, may be made, provided that the indications of the
damage or average which gives rise to the claim cannot be
ascertained from the outside part of such packages, in which
case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim shall be
admitted against the carrier with regard to the condition in
which the goods transported were delivered.
________
Three periods can be established regarding the right of claim
against the carrier and outside of those periods the said claim
cannot prosper, to wit:
a) Until the time of receipt of the goods if delivered
uncovered or in packages with indications of damage
or average;
b) Until the payment of its freight charges; and
c) During the 24 hours following the delivery of the
goods if the average or damage can only be
ascertained by opening the packages.
Thus, under the Article, claims for damages must be made at
the time the goods are delivered unless the indications of the
damage cannot be ascertained from the exterior of the
package, in which case such claims must be made within 24
hours after delivery, such that a written claim within 24 hours is
necessary only when the packages do not show exterior signs of
damage but when there are exterior signs of damage, a verbal
claim made immediately is sufficient compliance with law; and,
when the consignee receives the merchandise transported and
indemnity for the delay, paying the freight charges without
protest, all actions against the carrier are extinguished.
Payment of the transportation charges precludes the
presentation of any claim against the carrier.
Purpose of the law—to verify all such claims at the time of the
delivery or within 24 hours thereafter, and if necessary fix
responsibility and secure evidence as to the goods while the
matter is still fresh in the minds of the parties.
In order that the condition therein provided may be demanded,
there should be a consignment of goods through common
carrier, by a consignor in one place to a consignee in another
place, and there must be delivery of the merchandise by the
carrier to the consignee at the place of destination.
Section 43 of Act 190, relating solely to limitations of actions,
does not repeal by implication Article 366 treating of the
condition precedent, to the accruing of the right of action
against the carrier for damages “in transitu”; neither do the
provisions on prescription of the new Civil Code have any effect
on the above Article.
Recovery of Damages from carriers for carriage of goods:
1. If damage is APPARENT, the shipper must file a claim
immediately.
2. If damage is NON-APPARENT, he should file a claim
within 24 HOURS from delivery.
Effect of payment of transportation charges:
1. If paid before checking goods- right to file claim not
waived.
2. If paid after goods were checked- WAIVED. Deemed
as CONDONATION.
The filing of claim is a condition precedent for recovery.
If the claim is filed but the carrier refuses to pay, enforce
carrier’s liability in court by filing case:
 Within 6 years, if no bill of lading was issued.
 Within 10 years, if bill of lading was issued.
________
ARTICLE 367. If doubts and disputes should arise between the
consignee and the carrier with respect to the condition of the
16 | P LATON
goods transported at the time their delivery to the former is
made, the goods shall be examined by experts appointed by the
parties, and, in case of disagreement, by a third one appointed
by the judicial authority, the results to be reduced to writing;
and if the interested parties should not agree with the expert
opinion and they do not settle their differences, the
merchandise shall be deposited in a safe warehouse by order of
the judicial authority, and they shall exercise their rights in the
manner that may be proper.
________
 The goods shall be examined by 2 experts, each
appointed by the parties.
 In case of disagreement, a third expert may be
appointed by judicial authority. The result of the
examination shall be reduced in writing.
 If there is still no settlement of disputes, the goods
may be ordered to be deposited to a safe warehouse
and the parties interested may make use of their
rights in the proper manner.
Q: Who shall bear the expenses?
A: Both parties, but depending on how strong the
evidence would be, the losing party may be made to
shoulder the expenses.
________
ARTICLE 368. The carrier must deliver to the consignee,
without any delay or obstruction, the goods which he may have
received, by the mere fact of being named in the bill of lading
to receive them; and if he does not do so, he shall be liable for
the damages which may be caused thereby.
ARTICLE 369. If the consignee cannot be found at the
residence indicated in the bill of lading, or if he refuses to pay
the transportation charges and expenses, or if he refuses to
receive the goods, the municipal judge, where there is none of
the first instance, shall provide for their deposit at the disposal
of the shipper, this deposit producing all the effects of delivery
without prejudice to third parties with a better right.
________
It is the duty of a carrier to exercise due diligence to give the
consignor notice, within a reasonable time, of the consignee’s
failure or refusal to accept the goods.
Order of the court for the deposit of the goods proper when:
1. The consignee cannot be found at the residence
indicated in the BOL.
2. He refuses to pay the transportation charges and
expenses.
3. Refused to receive the goods.
________
ARTICLE 370. If a period has been fixed for the delivery of the
goods, it must be made within such time, and, for failure to do
so, the carrier shall pay the indemnity stipulated in the bill of
lading, neither the shipper nor the consignee being entitled to
anything else.
If no indemnity has been stipulated and the delay exceeds the
time fixed in the bill of lading, the carrier shall be liable for the
damages which the delay may have caused.
________
The damages due to nonperformance of what has been
stipulated, on account of the delay of the transportation
without justifiable cause, must be indemnified to the shipper or
consignee who shall have right of recourse against the
company.
Mere delay in the delivery of goods by a common carrier, no
matter how long continued, is not a conversion thereof, but is
only a breach of the contract of carriage. Therefore, where a
carrier fails to deliver goods within a reasonable time, although
he thereby makes himself liable for damages incurred by
reason of the delay, the consignee cannot refuse to accept the
goods from him. However, where property in the hands of a
common carrier is not delivered within a reasonable time after
is has reached its destination, the carrier, in absence of any
legal exemption and after demand has been made and delivery
refused, is liable for a conversion of the property.
________
ARTICLE 371. In case of delay through the fault of the carrier,
referred to in the preceding articles, the consignee may leave
the goods transported in the hands of the former, advising him
thereof in writing before their arrival at the point of
destination.
When this abandonment takes place, the carrier shall pay the
full value of the goods as if they had been lost or mislaid.
If the abandonment is not made, the indemnification for losses
and damages by reason of the delay cannot exceed the current
price which the goods transported would have had on the day
and at the place in which they should have been delivered; this
same rule is to be observed in all other cases in which this
indemnity may be due.
________
Should there be a delay in the delivery of the goods to the
consignee (based on the agreed time in BOL), the carrier shall
pay indemnity stipulated in the BOL (penal clause)
If there is no indemnity agreed upon, the carrier shall be
liable for the damage which may have been caused by the delay
(damages).
But, this is applicable only when there is DELAY IN DELIVERY,
not when there is DELAY IN CONVERSION.
Delay in Delivery- only a breach of contract, the consignee
cannot refuse to accept the goods from him.
Delay in Conversion- the goods are in the hands of the carrier
and is not delivered within reasonable time after it has reached
the port of destination and after the demand has been made by
the consignee. Carrier is liable for damages and estafa.
When there is abandonment of the goods on the part o the
consignee on account of delay, the carrier shall be liable to the
value of the goods as if they were lost or mislaid.
If there is no abandonment, indemnity for damages on account
o delay shall not exceed the current price of the goods on the
day and place of delivery.
________
17 | P LATON
ARTICLE 372. The value of the goods which the carrier must
pay in cases if loss or misplacement shall be determined in
accordance with that declared in the bill of lading, the shipper
not being allowed to present proof that among the goods
declared therein there were articles of greater value and
money.
Horses, vehicles, vessels, equipment and all other principal and
accessory means of transportation shall be especially bound in
favor of the shipper, although with respect to railroads said
liability shall be subordinated to the provisions of the laws of
concession with respect to the property, and to what this Code
established as to the manner and form of effecting seizures and
attachments against said companies.
________
The value of the goods to be paid in case of delay or conversion
is only that which is declared in the BOL.
________
ARTICLE 373. The carrier who makes the delivery of the
merchandise to the consignee by virtue of combined
agreements or services with other carriers shall assume the
obligations of those who preceded him in the conveyance,
reserving his right to proceed against the latter if he was not
the party directly responsible for the fault which gave rise to
the claim of the shipper or consignee.
The carrier who makes the delivery shall likewise acquire all the
actions and rights of those who preceded him in the
conveyance.
The shipper and the consignee shall have an immediate right of
action against the carrier who executed the transportation
contract, or against the other carriers who may have received
the goods transported without reservation.
However, the reservation made by the latter shall not relieve
them from the responsibilities which they may have incurred by
their own acts.
________
Combined Services- all involved in the transaction jointly.
 The carrier who delivered the goods to the consignee
shall assume the obligation, rights and actions of
those who preceded him in the conveyance of the
goods.
 But the creditor has the right to proceed against them
if the one really responsible is the other.
 The shipper or the consignee should proceed against
the one who executed the contract or against the
others who received the goods without reservation.
 But even if there’s a reservation, he is not exempted
from liabilities that they may have incurred by reason
of their own acts.

rd
The carrier may then file a 3 party complain against
the one who is really responsible
 The carrier is an indispensible party.
But the better remedy is to sue all of them as alternative
defendants.
________
ARTICLE 374. The consignees to whom the shipment was
made may not defer the payment of the expenses and
transportation charges of the goods they receive after the lapse
of twenty-four hours following their delivery; and in case of
delay in this payment, the carrier may demand the judicial sale
of the goods transported in an amount necessary to cover the
cost of transportation and the expenses incurred.
________
When the goods are delivered, consignees can’t defer payment
after 24 hours from such delivery.
In case he delays, the carrier may demand the judicial sale o the
goods for an amount sufficient to cover the transportation
charges and expenses incurred.
________
ARTICLE 375. The goods transported shall be especially bound
to answer for the cost of transportation and for the expenses
and fees incurred for them during their conveyance and until
the moment of their delivery.
This special right shall prescribe [thirty] days after the delivery
has been made, and once prescribed, the carrier shall have no
other action than that corresponding to him as an ordinary
creditor.
ARTICLE 376. The preference of the carrier to the payment of
what is owed him for the transportation and expenses of the
goods delivered to the consignee shall not be cut off by the
bankruptcy of the latter, provided it is claimed within the
[thirty] days mentioned in the preceding article.
________
The goods transported (security) will answer for
transportation charges and for the expenses and fees caused by
the delivery of the goods.
This right shall prescribe within 30 days from delivery (basis:
replevin). After such period, he loses his right but he is still
considered as an ordinary creditor.
rd
If the goods were already bought by 3 persons, then he
cannot exercise this right.
This right is not affected by the insolvency of the consignee.
________
ARTICLE 377. The carrier shall be liable for all the
consequences which may arise from his failure to comply with
the formalities prescribed by the laws and regulations of the
public administration, during the whole course of the trip and
upon arrival at the point of destination, except when his failure
arises from having been led into error by falsehood on the part
of the shipper in the declaration of the merchandise. If the
carrier has acted by virtue of a formal order of the shipper or
consignee of the merchandise, both shall become responsible.
________
The carrier is liable for non-compliance on his part with the
formalities prescribed by laws and regulations of the
government.
Exception: If the omission arises from his having been
led into error by false statements of the shipper in
BOL.
18 | P LATON
 If the carrier just complied with the formal order received
from the shipper or consignee, then both are liable.
Exception: Art. 704. The carrier may retain the personal effects
of the passenger.
________
ARTICLE 378. Agents for transportation shall be obliged to
keep a special registry, with the formalities required by Article
36, in which all the goods the transportation of which is
undertaken shall be entered in consecutive order of number
and dates, with a statement of the circumstances required in
Article 350 and others following for the respective bills of
lading.
ARTICLE 379. The provisions contained in Articles 349 and
following shall be understood as equally applicable to those
who, although they do not personally effect the transportation
of the merchandise, contract to do so through others, either as
contractors for a particular and definite operation, or as agents
for transportations and conveyances.
In either case they shall be subrogated in the place of the
carriers themselves, with respect to the obligations and
responsibility of the latter, as well as with regard to their rights.
—oOo—
MARITIME COMMERCE
Title I—VESSELS
Common carriers include even those engaged in maritime
commerce; hence, in all matters not regulated by the new Civil
Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by special laws.
________
ARTICLE 573. Merchant vessels constitute property which may
be acquired and transferred by any of the means recognized by
law. The acquisition of a vessel must appear in a written
instrument, which shall not produce any effect with respect to
third persons if not inscribed in the registry of vessels. The
ownership of a vessel shall likewise be acquired by possession
in good faith, continued for three years, with a just title duly
recorded. In the absence of any of these requisites, continuous
possession for ten years shall be necessary in order to acquire
ownership. A captain may not acquire by prescription the vessel
of which he is in command.
________
Vessels refer solely and exclusively to those merchant ships
which are engaged in the transportation of passengers and
freight from one port to another or from one place to another.
Requisites in order to be a “maritime” or “merchant” vessel:
1. Being not an accessory to another vessel;
2. Must be licensed to engage in the transportation of
passengers and/or freight;
3. By sea (not merely in rivers, inlets, lakes, coves or
bays), whether in foreign or in coastwise trade
Vessels do not include warships, those accessory to another as
in the kinds of launches, life boats, etc., to pleasure craft,
pontoons, health service and harbor police vessels, floating
storehouse, warships or patrol vessels, coast guard vessels,
fishing vessels, tow boats, and any other craft destined to other
uses.
Meaning of “vessels,” for purposes of registration under the
“Tariff and Customs Code of the Philippines”—Vessels include
every sort of boat, or other artificial contrivance used, or
capable of being used, as a means of transportation on water.
Requisites in order to acquire vessel on three years possession:
1. Continuous possession for 3 years
2. Based upon good faith
Although ships or vessels, whether mover by steam or by sail,
partake to a certain extent, of the nature and conditions of real
property, on account of their value and importance in the world
of commerce, but vessels shall be considered as personal
property under the civil law and common law.
It is NOT now necessary for a chattel mortgage of a vessel to be
noted in the registry of the register of deeds, but it is essential
that a record of documents affecting the title to a vessel be
entered, including an affidavit of good faith appended to the
mortgage and recorded therewith, in the record of the
Collector of Customs at the port of entry. Otherwise, it is
unenforceable against third persons.
The person in whose name a vessel is registered and to whom
is issued a certificate of ownership is presumed to have the
legal title thereto, but said documents issued by the Collector
of Customs relating to the proprietorship of a vessel are not
conclusive, but only prima facie, proof against the real owner.
In the absence of stipulation to the contrary, the ownership of
the thing sold passes to the vendee upon actual or constructive
delivery thereof.
There is nothing in the law that prohibits the parties from entering into
agreement that violation of the terms of the contract would cause
cancellation thereof, even without court intervention. In other words, it
is not always necessary for the injured party to resort to court for
rescission of the contract. As already held judicial action is needed
where there, is absence of special provision in the contract granting to
a party the right of rescission.
The requisite of registration in the registry, of the purchase of a
vessel, is necessary and indispensable in order that the
purchaser’s right may be maintained against a claim filed by a
third person.
A captain cannot acquire by prescription the ship of which he is
in command. This provision prohibits the prescription of the
vessel in favor of the captain, because the nature of the
possession of the captain is such that he is only an agent of the
owner, a depositary of the vessel, and a depositary can never
acquire the thing deposited by prescription.
Vessels- refer solely and exclusively to those merchant ships
which are engaged in the transportation of passengers and
freight from one place to another
For purposes of registration under Tariffs and Customs Code-
it is every sort of boat or other artificial contrivance used or
capable of being used as a means of transportation on water.
Requisites of a Maritime or Merchant Vessel:
1. Being not an accessory to another vessel
19 | P LATON
 2. Must be licensed to engage in the transportation of
passengers and/or freight
3. By sea (not merely by rivers, inlet, lakes, coves or
bays), whether in foreign or coastwise trade.
Requisites to acquire vessels by prescription:
1. Continuous possession for 3 years
2. Possession in good faith; (10yrs if in BF)
Vessels are personal properties.
They must be registered in the Collector of Customs at the
port of entry if it will be placed under a contract of Chattel
rd
Mortgage, in order for it to be enforceable against 3 parties.
If not registered, it will be valid only between the parties.
Additional requirement of affidavit of good faith.
The certificate of ownership of vessels is only prima facie
proof of title, thus it may be rebutted.
A captain cannot acquire the vessel by prescription because he
is an agent of the vessel and regarded as a mere depository of
the vessel.
________
ARTICLE 574. Builders of vessels may employ the materials and
follow, with respect to their construction and rigging, the
systems most suitable to their interests. Ship owners and
seamen shall be subject to what the laws and regulations of the
public administration on navigation, customs, health, safety of
vessels, and other similar matters.
ARTICLE 575. Co-owners of vessels shall have the right of
repurchase and redemption in sales made to strangers, but
they may exercise the same only within the nine days following
the inscription of the sale in the registry, and by depositing the
price at the same time.
________
See Republic Act No. 1407, otherwise known as “The Philippine
Overseas Act of 1955”
Documents not recorded in the registry do not produce legal
effect against third persons; hence, the time does not run
except from the same date in which the corresponding
inscription is made.
________
ARTICLE 576. In the sale of a vessel it shall always be
understood as included the rigging, masts, stores and engine of
a streamer appurtenant thereto, which at the time belongs to
the vendor. The arms, munitions of war, provisions and fuel
shall not be considered as included in the sale. The vendor shall
be under the obligation to deliver to the purchaser a certified
copy of the record sheet of the vessel in the registry up to the
date of the sale.
________
In case of sale of vessels, the following are included:
a. Rigging
b. Tackle
c. Stores
d. Engine
e. Steamer
The following are not included, (ratio: expensive)
a. Arms
b. Munitions of war
c. Provisions
d. Fuel
The vendor is under the obligation to deliver a certificate of the
record of the vessel to the purchaser
________
ARTICLE 577. If the alienation of the vessel should be made
while it is on a voyage, the freightage which it earns from the
time it receives its last cargo shall pertain entirely to the
purchaser, and the payment of the crew and other persons who
make up its complement for the same voyage shall be for his
account. If the sale is made after the vessel has arrived at the
port of its destination, the freightage shall pertain to the
vendor, and the payment of the crew and other individuals who
make up its complement shall be for his account, unless the
contrary is stipulated in either case.
________
Sale took place while on voyage:
 All the freightage she earns from the time she
received the last cargo shall belong to the BUYER.
 The buyer shall pay the crew and other persons who
go to make up her complement for the said voyage.
Sale took place after arrival at the port of destination:
 Freightage shall belong to the seller
 The seller shall pay the crew and other persons who
go to make up her complement for the said voyage.
Exception: if there is an agreement to the contrary.
________
ARTICLE 578. If the vessel being on a voyage or in a foreign
port, its owner or owners should voluntarily alienate it, either
to Filipinos or to foreigners domiciled in the capital or in a port
of another country, the bill of sale shall be executed before the
consul of the Republic of the Philippines at the port where it
terminates its voyage and said instrument shall produce no
effect with respect to third persons if it is not inscribed in the
registry of the consulate. The consul shall immediately forward
a true copy of the instrument of purchase and sale of the vessel
to the registry of vessels of the port where said vessel is
inscribed and registered. In every case the alienation of the
vessel must be made to appear with a statement of whether
the vendor receives its price in whole or in part, or whether he
preserves in whole or in part any claim on said vessel. In case
the sale is made to a Filipino, this fact shall be stated in the
certificate of navigation. When a vessel, being on a voyage,
shall be rendered useless for navigation, the captain shall apply
to the competent judge on court of the port of arrival, should it
be in the Philippines; and should it be in a foreign country, to
the consul of the Republic of the Philippines, should there be
one, or, where there is none, to the judge or court or to the
local authority; and the consul, or the judge or court, shall
order an examination of the vessel to be made. If the consignee
or the insurer should reside at said port, or should have
representatives there, they must be cited in order that they
may take part in the proceedings on behalf of whoever may be
concerned.
________
20 | P LATON
While on voyage, the owner or owners voluntarily sell the
vessel to the Filipinos or a foreigner domiciled in the capital or
port of another country.
The bill of sale shall be executed before the consul of the
Philippines at the port where she terminates her voyage.
Should be registered at the registry of the consulate which in
turn will forward a copy to the port of registry and entry of the
rd
vessel, otherwise, it won’t affect 3 parties.
If while on voyage, the vessel becomes useless for navigation,
the captain shall report the matter to the judge of the port of
destination, or to the consul of the port of destination if it is not
within the country, for the judicial sale of the vessel.
If it can be repaired, there must be no judicial sale.
However, the damage of the vessel and impossibility of being
repaired must be proven.
The sale of the vessel solicited by the captain must not be
affected or consented to, unless the said vessel is in the
condition of being useless for navigation, nor it can be sold in
an amount less than ¾ of its appraised value.
________
READ ARTICLES 579-586: JUDICIAL SALE AND CONSTRUCTIVE
NOTICE!
________
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.
________
ARTICLE 580. In all judicial sales of any vessel for the payment
of creditors, the following shall have preference in the order
named:
1. The credit in favor of the public treasury proven by means of
an official certificate of competent authority.
2. The judicial costs of the proceedings, according to an
appraisement approved by the judge or court.
3. The pilotage charges, tonnage dues, and the other sea or
port charges, proven by means of proper certificates of the
officers intrusted with the collection thereof.
4. The salaries of the depositaries and keepers of the vessel and
any other expenses for its preservation from the time of arrival
at the port until the sale, which appear to have been paid or be
due by virtue of an account verified and approved by the judge
or court.
5. The rent of the warehouse where the rigging and stores of
the vessel have been taken care of, according to contract.
6. The salaries due the captain and crew during its last voyage,
which shall be verified by means of the liquidation to be made
in view of the lists and of the books of account of the vessel,
approved by the chief of the Bureau of Merchant Marine,
where there is one, and in his absence by the consul or judge
or court.
7. The reimbursement for the goods of the freight which the
captain may have sold in order to repair the vessel, provided
that the sale has been ordered through a judicial proceedings
held with the formalities required in such cases, and recorded
in the certificate of registry of the vessel.
8. The part of the price which has not been paid to the said
vendor, the unpaid credits for materials and labor in the
construction of the vessel, when it has not navigated, and those
arising from the repair and equipment of the vessels and from
its provisioning with victuals and fuel during the last voyage.
In order that the credits provided for in this subdivision may
enjoy this preference, they must appear by contracts recorded
in the registry of vessels, or if they were contracted for the
vessel while on a voyage and said vessel has not returned to the
port where it is registered, they must be made with the
authorization required for such cases and annotated in the
certificate of registration of the vessel.
9. The amounts borrowed on bottomry on the hull, keel, tackle,
and stores of the vessel before its departure, proven by means
of the contract executed according to law and recorded in the
registry of vessels; those borrowed during the voyage with the
authorization mentioned in the preceding subdivision,
satisfying the same requisites; and the insurance premium,
proven by the insurance policy or a certificate taken from the
books of the broker.
10. The indemnity due the shipper for the value of the goods
shipped which were not delivered to the consignees, or for
averages suffered for which the vessel is liable, provided that
either appear in a judicial or arbitration decision.
________
ARTICLE 581. If the proceeds of the sale should not be sufficient
to pay all the creditors included in one number or grade, the
residue shall be divided among them pro rata.
________
21 | P LATON
ARTICLE 582. After the bill of the judicial sale at public auction
has been executed and inscribed in the registry of vessels, all
the other liabilities of the vessel in favor of the creditors shall
be considered extinguished. But if the sale should have been
voluntary and should have been made while the vessel was on
a voyage, the creditors shall preserve their rights against the
vessel until it returns to the port of her registry, and three
months after the inscription of the sale in the registry of vessel
or the arrival.
________
ARTICLE 583. If while on a voyage the captain should find it
necessary to contract one or more of the obligations
mentioned in subdivisions 8 and 9 of Article 580, he shall apply
to the judge or court if he is in Philippine territory, and
otherwise to the consul of the Republic of the Philippines,
should there be one, and, in his absence, to the judge or court
or proper local authority, presenting the certificate of the
registration sheet treated of in Article 612 and the instruments
proving the obligation contracted. The judge or court, the
consul, or the local authority, as the case may be, in view of the
result of the proceedings instituted, shall make a temporary
memorandum of their result in the certificate, in order that it
may be recorded in the registry when the vessel returns to the
port of its registry, or so that it can be admitted as a legal and
preferred obligation in case of sale before its return, by reason
of the sale of the vessel on account of a declaration of
unseaworthiness. The omission of this formality shall make the
captain personally liable for the credits prejudiced on his
account.
________
Reason of the law—generally the captain of the vessel is not its
real owner, but a person of confidence of the shipowner,
possessing further the technical requisites which in his duties
are required. The captain, once in a voyage, is the supreme
chief of embarkation, and for this reason he would be
prejudicing seriously the creditors of the vessel should he incur
unjustifiable indebtedness. In order that this abuse may be
avoided, the Code establishes the limitation in the above
article.
________
[ARTICLE 584. The vessels subject to liability for the credits
mentioned in Article 580 may be attached and judicially sold in
the manner prescribed in Article 579, in the port in which they
may be found, at the instance of any of the creditors; but if
they should be loaded and ready to sail, the attachment may
not be effected except for debts contracted to prepare and
provision the vessel for the same voyage, and even then the
attachment shall be dissolved if any person interested in its
sailing should give a bond for the return of the vessel within the
period fixed in the certificate of navigation binding himself to
pay the indebtedness insofar as it may be legal, should it fail to
do so, even if this failure be due to fortuitous event. For debts
of any other kind whatsoever not comprised within the said
Article 580, the vessel may be attached only in the port of her
registry.]
________
Action to be brought against natural or juridical person—no
action can be brought against the ship being neither a natural
nor a juridical person. It was absolutely indispensable for the
maintenance of contentious action in the courts of justice to
have as defendant some natural or juridical person.
However, an action brought against the captain and the vessel
at the same time may be maintained.
________
ARTICLE 585. For all purposes of law not modified or restricted
by the provisions of this Code, vessels shall continue to be
considered as personal property.
________
Vessels and real property, compared—although vessels are not
real properties, yet a vessel and real property are similar in the
following:
1. That the ownership of both is evidenced by a
certificate of ownership; and
2. That any conveyance of both, to be effective against
third persons, must be registered in their respective
proper registry.
________
TITLE TWO—PERSONS WHO TAKE PART IN MARITIME
COMMERCE
SECTION ONE—SHIPOWNERS AND SHIP AGENTS
ARTICLE 586. The ship owner and the ship agent shall be civilly
liable for the acts of the captain and for the obligations
contracted by the latter to repair, equip, and provision the
vessel, provided the creditor proves that the amount claimed
was invested for the benefit of the same. By ship agent is
understood the person entrusted with provisioning or
representing the vessel in the port in which it may be found.
________
Shipowner and Ship agent are civilly liable for:
1. Acts of the captain
2. Obligations contracted by the captain for the repair,
equipping, and provisions of the vessel (provided that
the creditor prove that the amount claimed was
invested therein).
3. Also under Art. 587, damages arising from the
vigilance of the goods and safety of the passengers.
Note: This means they are liable for the CONTRACTUAL
obligations made by the captain.
Ship agent- person entrusted with the provisioning of a vessel.
He represents the vessel in her port. He is the person
undertaking the voyage, who may be the owner or the
charterer.
Persons participating in Maritime Commerce:
1. Shipowners
2. Ship agent
3. Captain or master of the vessel (sailing mate, second
mate, engineers)
4. Seamen (sailors or crew)
5. Other persons who make up the complement of the
vessels
Liability in TORT or culpa aquiliana of the SHIPOWNER:
22 | P LATON
  The owner may use as a defense that he exercised
the care and diligence of a good father of a family in Two things to prove for abandonment to apply:
selecting the captain.
1. There is casualty
 Hence, the persons who was in command may be 2. There is abandonment
held liable, and not the shipowner.
Total destruction of the vessel extinguishes a maritime lien as
The agent may solely be held liable for the contractual there is no longer a res to which it can attach.
obligations by the seller in the following cases: If the vessel is insured, the insurance proceeds should also be
1. He trusted the agent exclusively abandoned and the owner shall be liable to the extent of the
2. By the usage and understanding of the business, the amount, collected because it represents the vessel.
agent only is held
3. Special circumstances where the agent is the only
ABANDONMENT, when applicable:
one bound by the contract and is the only one
chargeable of the knowledge. 1. For damages arising from the conduct of the captain
in the vigilance over the goods and safe transport of
the passengers.
If the repairs, etc, were done and completed before the voyage
and the loss of the vessel, the loss or total destruction is no 2. Article 570 (delay in delivery)
defense in action to enforce contractual liability of the owner. 3. Maritime collision (Art. 637)
If the repairs were done after the voyage and the ship was
subsequently lost, it is considered as maritime lien and the Not allowed for the contractual obligations contracted by the
liability will be extinguished. captain under Art. 586.
No abandonment is allowed here to limit or extinguish the
liability.
Who can make abandonment:
Even if the shipowner is insolvent, he is still liable.
1. Shipowner
2. Ship agent
1. Husbanding agent- a general agent of the owner in 3. Co-owner- but only with regard to the part belonging
relation to the ship with the power to engage the to him
vessel for general freight. It is termed as husbanding 4. Bareboat charterer
because it is compared to a husband who sustains his
wife. He earns by commission. Principle of Real and Hypothecary nature of Maritime Law
________
Abandonment is allowed to offset the enumerable hazards and
perils in sea voyages and to encourage ship building and marine
ARTICLE 587. The ship agent shall also be civilly liable for the
commerce.
indemnities in favor of third persons which may arise from the
conduct of the captain in the care of the goods which he loaded Exceptions, when abandonment is not allowed:
on the vessel; but he may exempt himself therefrom by 1. Voyage is not maritime, but only in river, bay or gulf.
abandoning the vessel with all her equipments and the freight 2. In cases of equipping, repairing or provisioning of the
it may have earned during the voyage. vessel before the start of the voyage because this is
________ contemplated as a contractual claim under Art. 586.
Shipowner and Ship agent shall also be liable for the 3. The vessel is private or special carrier.
DAMAGES arising from the conduct of the captain in the 4. The vessel’s total sinking/loss was due to the
vigilance over the goods and for the safety of the passengers shipowner or ship agent’s own fault.
which the vessel carried (considered as maritime lien).
They are liable even to the loss of life of passengers for the
negligent acts of the captain.
This is not applicable to common carrier which later acted as
private carrier (Home Insurance)

Abandonment in Maritime Commerce vs. Marine Insurance

How to Limit Liability in Art. 587:
MARITIME COMMERCE MARINE INSURANCE
ABANDONMENT
Made by the insured, not
 Shipowner or ship agent must abandon ALL his property in Made by the shipowner or
necessarily the 2 persons
the ship and any freight that he may have earned on the ship agent
mentioned
voyage. No partial abandonment. Thing abandoned is the vessel Things insured
 The shipowner’s liability is co-extensive with his interest in Constructive loss which
the vessel and its freight, and ceases by his abandonment Basis is maritime contract should be more than ¾ of the
and surrender of these to the parties sustaining the loss. value of the thing
 Notice of abandonment is necessary. No notice = no formal Purpose is to indemnify total
abandonment. Acceptance is not necessary because, in Purpose is to limit the liability loss, although does not suffer
reality, no claimant will accept. actual total loss

23 | P LATON

Requisites for Abandonment in MARINE INSURANCE:
1. Actual relinquishment of claim of ownership of the
thing abandoned
2. There must be constructive total loss (3/4 of the value
of the thing insured)
3. Must be partial or conditional
4. Made within reasonable time after receipt of reliable
information of constructive loss
5. Notice of abandonment to the insurer (oral/writing)
________
ARTICLE 588. Neither the ship owner nor the ship agent shall be
liable for the obligations contracted by the captain, if the latter
exceeds the powers and privileges pertaining to him by reason
of his position or conferred upon him by the former.
Nevertheless, if the amounts claimed were invested for the
benefit of the vessel, the responsibility therefor shall devolve
upon its owner or agent.
________
The shipowner or ship agent shall not be liable for the
obligations contracted by the captain when he exceeded his
power unless the vessel benefited from it.
________
ARTICLE 589. If two or more persons should be part owners of a
merchant vessel, a partnership shall be presumed as
established by the co-owners. This partnership shall be
governed by the resolutions of the majority of the members. If
the part owners should not be more than two, the
disagreement of views, if any, shall be decided by the vote of
the member having the largest interest. If the interests are
equal, it should be decided by lot. The person having the
smallest share in the ownership shall have one vote; and
proportionately the other part owners as many votes as they
have parts equal to the smallest one. A vessel may not be
detained, attached or levied upon in execution in its entirety,
for the private debts of a part owner, but the proceedings shall
be limited to the interest which the debtor may have in the
vessel, without interfering with the navigation.
ARTICLE 590. The co-owners of a vessel shall be civilly liable in
the proportion of their interests in the common fund, for the
results of the acts of the captain, referred to in Article 587.Each
co-owner may exempt himself from this liability by the
abandonment, before a notary, of the part of the vessel
belonging to him.
________
Co-Ownership of a Vessel
 Shall be presumed to be a partnership between the
owners.
 In case of disagreement, the matter shall be decided
by the majority in proportion to the number of shares
they own.
 If the interest is equal, it shall be decided by lot.
 Co-owners shall be civilly liable in the proportion of
their contribution under Art. 587.
May abandon that part of the vessel belonging to them before
a notary.
________
ARTICLE 591. All the part owners shall be liable, in proportion
to their respective ownership, for the expenses for repairing
the vessel, and for other expenses which are incurred by virtue
of a resolution of the majority. They shall likewise be liable in
the same proportion for the expenses for the maintenance,
equipment, and provisioning of the vessel, necessary for
navigation.
________
Refers to the liability of the co-owners for the expenses
incurred or arising from contracts as contemplated by Art. 587.
Abandonment is not allowed, just like under Art. 586.
________
ARTICLE 592. The resolution of the majority with regard to the
repair, equipment, and provisioning of the vessel in the port of
departure shall bind the minority, unless the minority members
renounce their interests, which must be acquired by the other
co-owners, after a judicial appraisement of the value of the
portion or portions assigned. The resolutions of the majority
relating to the dissolution of the partnership and sale of the
vessel shall also be binding on the minority. The sale of the
vessel must be made at public auction, subject to the provisions
of the law of civil procedure, unless the co-owners unanimously
agree otherwise, saying always the right of repurchase and
redemption provided for in Article 575.
________
ARTICLE 593. The owners of a vessel shall have preference in
her charter over other persons, under the same conditions and
price. If two or more of them should claim this right, the one
having the greater interest shall be preferred; and should they
have equal interests, the matter shall be decided by lot.
ARTICLE 594. The co-owners shall elect the manager who is to
represent them in the capacity of ship agent. The appointment
of director or ship agent shall be revocable at the will of the
members.
ARTICLE 595. The ship agent, whether he is at the same time
the owner of the vessel, or a manager for an owner or for an
association of co-owners, must have the capacity to trade and
must be recorded in the merchant's registry of the province.
The ship agent shall represent the ownership of the vessel, and
may, in his own name and in such capacity, take judicial and
extrajudicial steps in matters relating to commerce.
ARTICLE 596. The ship agent may discharge the duties of
captain of the vessel, subject in every case to the provision of
Article 609.If two or more co-owners apply for the position of
captain, the disagreement shall be decided by a vote of the
members; and if the vote should result in a tie, it shall be
decided in favor of the co-owner having the larger interest in
the vessel. If the interests of the applicants should be equal,
and there should be a tie, the matter shall be decided by lot.
ARTICLE 597. The ship agent shall designate and come to terms
with the captain, and shall contract in the name of the owners,
who shall be bound in all that refer to repairs, details of
equipment, armament, provisions of food and fuel, and freight
of the vessel, and, in general, in all that relate to the
requirements of navigation.
________
24 | P LATON
The owners of the vessel shall have preference over other
persons provided they shall offer the same price and
conditions.
If two or more of the co-owners want to charter the vessel-
the one with the greater interest shall be preferred.
Should they have equal interest- decide by lot.
The co-owners shall elect their manager who shall act as the
ship agent but such appointment is REVOCABLE at the will of
the co-owners.
Qualifications of an Agent:
1. Must have the capacity to engage in commerce
2. Must be recorded in the merchant’s registry of the
province
Attributes which may be exercised by the Ship agent:
 Those having relation with the vessel as to its
administration, charterage, and voyage.
 But not to its cargo.
The owner may likewise be a ship agent and a captain at the
same time provided he possess all the qualifications of a
captain.
If 2 or more co-owners want to be a captain, it shall be decided
according to the rules laid down in Article 580 (according to
interest owned).
________
ARTICLE 598. The ship agent may not order a new voyage, or
make contracts for a new charter, or insure the vessel, without
the authorization of its owner or resolution of the majority of
the co-owners, unless these powers were granted him in the
certificate of his appointment. If he insures the vessel without
authorization therefore, he shall be subsidiarily liable for the
solvency of the insurer.
________
The ship agent may be held solely liable, if without the
authority of the owners he shall:
1. Make contracts for new charter
2. Order a new voyage
3. Insure the vessel
If however, he is granted the privileges in the certificate of
appointment, he shall not be liable.
If however, the owners shall avail of the benefits therein,
they will be ESTOPPED from denying the authority of the agent,
hence they can be held liable.
If he insured the vessel without authority, and the insurer
cannot pay by reason of insolvency, the agent shall be
SUBSIDIARILY liable.
________
ARTICLE 599. The ship agent managing for an association shall
render to his associates 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 their disposal.
ARTICLE 600. After the account of the managing agent has been
approved by a relative majority, the co-owners shall pay the
expenses in proportion to their interest, without prejudice to
the civil or criminal actions which the minority may deem fit to
institute afterwards. In order to enforce the payment, the
managing agent shall be entitled to an executory action
("accion ejecutiva"), which shall be instituted by virtue of a
resolution of the majority, and without further proceedings
than the acknowledgment of the signatures of the persons who
voted for the resolution.
ARTICLE 601. Should there be any profits, the co-owners may
demand of the managing agent the amount corresponding to
their interests by means of an executory action ("accion
ejecutiva"), without any other requisite than the
acknowledgment of the signatures on the instrument approving
the account.
ARTICLE 602. The ship agent shall indemnify the captain for all
the expenses he may have incurred with funds of his own or of
others, for the benefit of the vessel.
________
The MANAGING AGENT shall render account to his co-
owners and after it has been approved by the majority, the
other co-owners shall pay the expenses in proportion to his
interest.
If there be profits, the co-owners shall be entitled to such
profits.
The captain shall likewise be reimbursed for all the expenses he
may have incurred from his own funds or from other persons
for the benefit of the vessel.
________
ARTICLE 603. Before the vessel sets out to sea the ship agent
may at his discretion discharge the captain and members of the
crew whose contracts are not for a definite period or voyage,
paying them the salaries earned according to their contracts,
and without any indemnity whatsoever, unless there is an
express and specific agreement in respect thereto.
ARTICLE 604. If the captain or any other member of the crew
should be discharged during the voyage, they shall receive their
salary until they return to the port where the contract was
made, unless there should be just cause for the discharge, all in
accordance with Article 636 and following of this Code.
ARTICLE 605. If the contracts of the captain and members of
the crew with the ship agent should be for a definite period or
voyage, they may not be discharged until after the fulfillment of
their contracts, except by reason of insubordination in serious
matters, robbery, theft, habitual drunkenness, or damage
caused to the vessel or to its cargo through malice or manifest
or proven negligence.
________
Rights and Liabilities of Ship agent to discharge a captain or any
member of the crew:
1. There is NO FIXED CONTRACT
a. Before the start of the voyage- he shall pay the
salaries earned according to their contracts
without any indemnity.
i. Exception: if these is an agreement that they
shall be entitled.
b. During the voyage- shall continue to receive the
salary until their return to the port where the
25 | P LATON
 contract was made. Here, the discharged
employee cannot be asked to go down. They
should stay on board, although not as a member
of the crew.
i. Exception: if there is a just motive to
discharge them.
2. There is a FIXED CONTRACT.
They shall not be discharged except for the ff reasons
(DIRTH):
a. Insubordination in serious matters
b. Robbery
c. Theft
d. Habitual drunkenness
Damage caused to the vessel or to her cargo by malice or
manifest or proven negligence.
________
ARTICLE 606. If the captain should be a co-owner of the vessel,
he may not be discharged unless the ship agent returns to him
the amount of his interest therein, which, in the absence of
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 co-owner should have
obtained the command of the vessel by virtue of a special
agreement contained in the articles of association, he may not
be deprived of his office except for the causes mentioned in
Article 605.
________
Rights and Liabilities of the Ship agent to Discharge a Captain
who is also a CO-OWNER of the vessel:
1. Not designated in the articles of co-partnership- he
may be discharged provided the ship agent will return
to him the amount of his interest in the vessel.
2. Appointed in the articled of co-partnership- he
cannot be discharged except for causes mentioned in
Art. 605 (DIRTH).
 The other co-owners must also return to
him the amount of his interest.
________
ARTICLE 608. In case of the voluntary sale of the vessel, all
contracts between the ship agent and the captain shall
terminate, reserving to the latter his right to the indemnity
which may pertain to him, according to the agreements made
with the ship agent. They 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 is found to be
insolvent.
________
In cases of voluntary sale of the vessel:
1. All contracts shall terminate
2. The captain shall be indemnified according to the
agreements made with the ship agent.
3. The purchaser of the vessel shall be liable to
indemnify what is due to the captain in case of the
insolvency of the seller.
This is a case of maritime lien wherein it attaches to the vessel
even if it is sold to other persons. But, there must be a formal
declaration of insolvency.
________
SECTION TWO—CAPTAINS AND MASTERS OF VESSELS
ARTICLE 609.Captains, masters or patrons of vessels must be
Filipinos, have legal capacity to contract in accordance with this
code, and prove the skill, capacity, and qualifications necessary
to command and direct the vessel, as established by marine or
navigation laws, ordinances, or regulations, and must not be
disqualified according to the same for the discharge of the
duties of the position. If the owner of a vessel desires to be the
captain thereof, without having the legal qualifications
therefor, he shall limit himself to the financial administration of
the vessel, and shall intrust the navigation to a person
possessing the qualifications required by said ordinances and
regulations.
________
Qualifications:
1. Filipino
2. Legal Capacity to obligated themselves in accordance
with this Code.
3. Skill, qualifications and capacity required to command
and direct the vessel
Captain- governs vessels that navigate the high seas or ships of
large dimensions and importance, although they be engaged in
the coast wide trade.
Master of the Vessel- those who command smaller ships
engaged exclusively in the coast wide trade.
Note: But for the purposes of this Code, there is no distinction
between Captains and Masters.
Characteristics of a Captain’s position:
 General agent of the shipowner
 Technical director of the vessel
Representative of the government of the country under whose
flag he navigates (he cannot navigate the flag of another
country.
________
ARTICLE 610. The following powers shall be inherent in the
position of captain, master or patron of a vessel:
1. To appoint or make contracts with the crew in the absence of
the ship agent, and to propose said crew, should said agent be
present; but the ship agent may not employ any member
against the captain's express refusal.
2. To command the crew and direct the vessel to the port of its
destination, in accordance with the instructions he may have
received from the ship agent.
3. To impose, in accordance with the contracts and with the
laws and regulations of the merchant marine, and when on
board the vessel, correctional punishment upon those who fail
to comply with his orders or are wanting in discipline, holding a
preliminary hearing on the crimes committed on board the
vessel on the seas, which crimes shall be turned over to the
26 | P LATON
authorities having jurisdiction over the same at the first port
touched.
4. To make contracts for the charter of the vessel in the
absence of the ship agent or of its consignee, acting in
accordance with the instructions received and protecting the
interests of the owner with utmost care.
5. To adopt all proper measures to keep the vessel well
supplied and equipped, purchasing all that may be necessary
for the purpose, provided there is no time to request
instruction from the ship agent.
6. To order, in similar urgent cases while on a voyage, the
repairs on the hull and engines of the vessel and in its rigging
and equipment, which are absolutely necessary to enable it to
continue and finish its voyage; but if he should arrive at a point
where there is a consignee of the vessel, he shall act in
concurrence with the latter.
________
ARTICLE 611. In order to comply with the obligations
mentioned in the preceding article, the captain, when he has
no funds and does not expect to receive any from the ship
agent, shall obtain the same in the successive order stated
below:
1. By requesting said funds from the consignee of the vessel or
correspondents of the ship agent.
2. By applying to the consignees of the cargo or to those
interested therein.
3. By drawing on the ship agent.
4. By borrowing the amount required by means of a loan on
bottomry.
5. By selling a sufficient amount of the cargo to cover the sum
absolutely indispensable for the repair of the vessel and to
enable it to continue its voyage.
In these two last cases he must apply to the judicial authority of
the port, if in the Philippines, and to the consul of the Republic
of the Philippines if in a foreign country, and where there is
none, to the local authority, proceeding in accordance with the
provisions of Article 583, and with the provisions of the law of
civil procedure.
________
If the captain needs to comply with his obligations as
mentioned in Art. 610 and he has no funds and does not expect
to receive funds from the ship agent, he may obtain such
expenses in the following cases:
1. Request funds from the consignee of the vessel or
correspondents of the ship agent.
2. Apply to the consignees of the cargo or to the
persons interested therein.
3. Draw on the ship agent
4. Borrow through loans of bottomry
5. Sell sufficient quantity of the cargo
Note: The order stated must be followed.
________
ARTICLE 612. The following obligations shall be inherent in the
office of captain:
1. To have on board before starting on a voyage a detailed
inventory of the hull, engines, rigging, spare-masts, tackle, and
other equipment of the vessel; the royal or the navigation
certificate; the roll of the persons who make up the crew of the
vessel, and the contracts entered into with them; the lists of
passengers; the bill of health; the certificate of the registry
proving the ownership of the vessel and all the obligations
which encumber the same up to that date; the charter parties
or authenticated copies thereof; the invoices or manifests of
the cargo, and the memorandum of the visit or inspection by
experts, should it have been made at the port of departure.
2. To have a copy of this code on board.
3. To have three folioed and stamped books, placing at the
beginning of each one a memorandum of the number of folios
it contains, signed by the maritime authority, and in his absence
by the competent authority.
In the first book, which shall be called "log book," he shall enter
day by day the condition of the atmosphere, the prevailing
winds, the courses taken, the rigging carried, the power of the
engines used in navigation, the distances covered, the
maneuvers executed, and other incidents of navigation; he shall
also enter the damage suffered by the vessel in her hull,
engines, rigging, and tackle, no matter what its cause may be,
as well as the impairment and damage suffered by cargo, and
the effect and importance of the jettison, should there be any;
and in cases of serious decisions which require the advice or a
meeting of the officers of the vessel, or even of the crew and
passengers, he shall record the decisions adopted. For the
information indicated he shall make use of the binnacle book
and of the steam of engine book kept by the engineer.
In the second book called the "accounting book," he shall
record all the amounts collected and paid for the account of the
vessel, entering specifically article by article, the source of the
collection and the amounts spent for provisions, repairs,
acquisitions of equipment or goods, fuel, food, outfits, wages,
and other expenses of whatever nature they may be. He shall
furthermore enter therein a list of all the members of the crew,
stating their domiciles, their wages and salaries, and the
amounts they may have received on account, directly or by
delivery to their families.
In the third book, called "freight book," he shall record the
loading and discharge of all the goods, stating their marks and
packages, names of the shippers and of the consignees, ports of
loading and unloading, and the freightage they give. In this
same book he shall record the names and places of sailing of
the passengers, the number of packages in their baggage, and
the price of passage.
4. Before receiving cargo, to make with the officers of the crew
and two experts, if required by the shippers and passengers, an
examination of the vessel, in order to ascertain whether it is
water-tight, with the rigging and engines in good condition, and
with the equipment required for good navigation, preserving
under his responsibility a certificate of the memorandum of his
inspection, signed by all those who may have taken part
therein. The experts shall be appointed, one by the captain of
27 | P LATON
the vessel and another by those who request its examination,
and in case of disagreement a third shall be appointed by the
marine authority of the port or by the authority, exercising his
functions.
5. To remain constantly on board the vessel with the crew while
the cargo is being taken on board and to carefully watch the
stowage thereof; not to consent to the loading of any
merchandise or matter of a dangerous character, such as
inflammable or explosive substances, without the precautions
which are recommended for their packing, handling and
isolation; not to permit the carriage on deck of any cargo which
by reason of its arrangement, volume, or weight makes the
work of the sailors difficult, and which might endanger the
safety of the vessel; and if, on account of the nature of the
merchandise, the special character of the shipment, and
principally the favorable season in which it is undertaken,
merchandise may be carried on deck, he must hear the opinion
of the officers of the vessel and have the consent of the
shippers and of the ship agent.
6. To demand a pilot at the expense of the vessel whenever
required by the navigation, and principally when he has to
enter a port, canal, or river, or has to take a roadstead or
anchoring place with which neither he nor the officers and crew
are acquainted.
7. To be on deck on reaching land and to take command on
entering and leaving ports, canals, roadsteads, and rivers,
unless there is a pilot on board discharging his duties. He shall
not spend the night away from the vessel except for serious
causes or by reason of official business.
8. To present himself, when making a port in distress, to the
maritime authority if in the Philippines and to the consul of the
Republic of the Philippines if in a foreign country, before
twenty-four hours have elapsed, and to make a statement of
the name registry, and port of departure of the vessel, of its
cargo, and the cause of arrival which declaration shall be vised
by the authority or the consul, if after examining the same it is
found to be acceptable, giving the captain the proper certificate
proving his arrival in distress and the reasons therefor. In the
absence of the maritime authority or of the consul, the
declaration must be made before the local authority.
9. To take the necessary steps before the competent authority
in order to record in the certificate of the vessel in the registry
of vessels the obligations which he may contract in accordance
with Article583.
10. To place under good care and custody all the papers and
belongings of any members of the crew who might die on the
vessel, drawing up a detailed inventory, in the presence of
passengers, or, in their absence, of members of the crew as
witnesses.
11. To conduct himself according to the rules and precepts
contained in the instructions of the ship agent, being liable for
all that which he may do in violation thereof.
12. To inform the ship agent from the port at which the vessel
arrives, of the reason of his arrival, taking advantage of the
semaphore, telegraph, mail, etc., as the case may be; to notify
him of the cargo he may have received, stating the names and
domiciles of the shippers, freightage earned, and amounts
borrowed on bottomry loan; to advise him of his departure,
and of any operation and date which may be of interest to him.
13. To observe the rules with respect to situation, lights and
maneuvers in order to avoid collisions.
14. To remain on board, in case the vessel is in danger, until all
hope to save it is lost, and before abandoning it, to hear the
officers of the crew, abiding by the decision of the majority;
and if the boats are to be taken to, he shall take with him,
before anything else, the books and papers, and then the
articles of most value, being obliged to prove, in case of the loss
of the books and papers, that he did all he could to save them.
15. In case of wreck, to make the proper protest in due form at
the first port of arrival, before the competent authority or the
Philippine consul, within twenty-four hours, specifying therein
all the incidents of the wreck, in accordance with subdivision 8
of this article.16.To comply with the obligations imposed by the
laws and regulations on navigation, customs, health, and
others.
________
Four Books required to be on board the vessel:
1. Code of Commerce
2. Logbook, contains:
 All the incidents of the navigation (weather).
 Damages suffered by the vessel
 Imperfections and averages of the cargoes
 Effects and consequences of the jettison
 Grave resolutions undertaken by the officers of the
vessel
Note: If there is collision, the book that has to be
checked is the logbook.
3. Accounting Book, contains:
 All the amounts collected and paid for the account
of the vessel
 Sources of collections and expenses
 List of all the members of the crew and their wages
and salaries.
4. Freight Book, contains:
 Entry and exit of ALL goods and ALL information of
such goods
 Prices of the passage of the passengers
 Number of packages of the passengers
The captain is duty bound to always stay on board the
vessel.
Exception: He has to go down because of serious
matters and other official duties.
The captain may likewise demand another pilot if he is not
fully acquainted or familiar with the port.
The expenses shall be chargeable to the vessel.
If a civil liability is incurred by the pilot (whether
voluntary of compulsory), the damages shall be borne by the
ship owner since the pilot is just an agent of the owner.
The criminal liability incurred by the pilot will always be
personal as to the pilot; that is why he alone can be held liable.
28 | P LATON
 At the time of sighting of land, the captain should be on
deck and shall take command on entering and leaving the
ports.
In case the vessel is in danger, he must be the last to leave
the vessel.
In cases of shipwreck, he must make the proper protest in
due form at the first port reached before the competent
authority or Filipino consul within 24 hours.
Maritime Protest- a written statement by the master of the
vessel, attested by a proper judicial officer or notary, to the
effect that the damage suffered by the ship on her voyage was
caused by the storms or other perils of the sea without any
negligence or misconduct on his part. A condition precedent
when the captain invokes limited liability.
________
ARTICLE 613. A captain who navigates for freight in common or
on shares may not make any separate transaction for his own
account; and should he do so, the profit which may accrue shall
belong to the other persons interested, and the losses shall be
borne by him exclusively.
________
The captain is prohibited to make any separate business which
will surely produce something to the prejudice of others.
________
ARTICLE 614. A captain who, having made an agreement to
make a voyage, fails to perform his undertaking, without
prevented by fortuitous accident or force majeure, shall
indemnify for all the losses which he may cause without
prejudice to the criminal penalties which may be proper.
________
A captain who doesn’t want to discharge the duties as such
cannot be compelled to continue.
However, he shall be liable for damages without prejudice to
any criminal liabilities that may be imposed upon him.
Exception: If the cause of discharge is force majeure.
________
ARTICLE 615. Without the consent of the agent, the captain
cannot have himself substituted by another person; and should
he do so, besides being liable for all the acts of the substitute
and bound to the indemnities mentioned in the foregoing
articles, the captain as well as the substitute may be discharged
by the ship agent.
________
The captain cannot just substitute another for himself without
the consent of the ship agent.
If he does so, the following are the consequences:
1. Liable for all the damages and acts done by the
substitute.
He and the substitute shall be discharged by the ship agent.
________
ARTICLE 616. If the provisions and fuel of the vessel should be
consumed before arriving at the port of destination, the captain
shall order, with the consent of the officers of the same, the
arrival at the nearest port to get a supply of either; but if there
are persons on board who have provisions of their own, he may
force them to deliver said provision for the common
consumption of all those who may be on board, paying the
price thereof at the same time, or at the latest, at the first port
reached.
________
If before the arriving that the port of destination, the provisions
and fuel of the vessel are consumed, the following are the
remedies of the captain:
1. Go to the nearest port to get supply
Compel persons on board who have the supplies to turn them
over, then pay the price at the same time or at the first port
where the vessel may arrive.
________
ARTICLE 617. The captain may not contract loans on
respondentia secured by the cargo; and should he do so, the
contracts shall be void. Neither may he borrow money on
bottomry for his own transactions, except on the portion of the
vessel he owns, provided no money has been previously
borrowed on the whole vessel, and there does not exist any
other kind of lien or obligation chargeable against the vessel. If
he may do so, he must state what interest he has in the vessel.
In case of violation of this article, the principal, interest, and
costs shall be for the personal account of the captain, and the
ship agent may furthermore discharge him.
________
The captain cannot contract loans on respondentia secured by
the cargo.
He cannot also borrow money on bottomry except on the
portion of the vessel he owns.
If he violates his article, he shall be personally responsible for
the loan\ and he may be discharged by the ship agent.
Ratio: He is not the owner of the vessel.
________
ARTICLE 618. The captain shall be civilly liable to the ship agent,
and the latter to the third persons who may have made
contracts with the former:
1. For all the damages suffered by the vessel and its cargo by
reason of want of skill or negligence on his part. If a
misdemeanor or crime has been committed, he shall be liable
in accordance with the Penal Code. Cda
2. For all the thefts committed by the crew, reserving his right
of action against the guilty parties.
3. For the losses, fines, and confiscations imposed an account of
violation of customs, police, health, and navigation laws and
regulations.
4. For the losses and damages caused by mutinies on board the
vessel or by reason of faults committed by the crew in the
service and defense of the same, if he does not prove that he
made timely use of all his authority to prevent or avoid them.
29 | P LATON
5. For those caused by the misuse of the powers and the non-
fulfillment of the obligations pertaining to him in accordance
with Articles 610 and 612.
6. For those arising by reason of his going out of his course or
taking a course which he should not have taken without
sufficient cause, in the opinion of the officers of the vessel, at a
meeting with the shippers or supercargoes who may be on
board. No exceptions whatsoever shall exempt him from this
obligation.
7. For those arising by reason of his voluntarily entering a port
other than that of his destination, outside of the cases or
without the formalities referred to in Article 612.
8. For those arising by reason of non-observance of the
provisions contained in the regulations on situation of lights
and maneuvers for the purpose of preventing collisions.
________
rd
Captain  ship agent  ship owner  3 person.
________
ARTICLE 619. The captain shall be liable for the cargo from the
time it is delivered to him at the dock or afloat alongside the at
the port of loading, until he delivers it on the shore or on the
discharging wharf at the port of unloading, unless the contrary
has been expressly agreed upon.
________
Responsibility of the Captain starts, unless otherwise expressly
agreed upon:
 From the time the cargo is turned over to him at the
dock or afloat alongside the vessel
 Up to the time he delivers it on the shore or on the
discharging wharf at the port of unloading.
Extraordinary diligence lasts from the time the goods are
placed in its possession until they are delivered, actually or
constructively, to the consignee or to the person who has a
right to receive them (amended by this). Note: Relate with
Article 366.
________
ARTICLE 620. The captain shall not be liable for the damages
caused to the vessel or to the cargo by force majeure; but he
shall always be so for those arising through his own fault, no
agreement to the contrary being valid. Neither shall he be
personally liable for the obligations he may have contracted for
the repair, equipment, and provisioning of the vessel, which
shall devolve upon the ship agent, unless the former has
expressly bound himself personally or has signed a bill of
exchange or promissory note in his name.
________
The captain shall not be liable for damages arising from
fortuitous events but not those arising from his own
negligence.
Requisites for the captain to be absolved from liability:
1. Natural disaster must have been the proximate cause
of the loss
2. The common carrier must have exercised due
diligence to prevent or minimize loss before, during
and after the natural disaster.
3. The common carrier has not negligently incurred in
delay in transporting the goods
The captain has made a protest before a competent authority
st
at the 1 port he touched, within 24 hours.
________
ARTICLE 621. A captain who borrows money on the hull,
engine, rigging or tackle of the vessel, or pledges or sells
merchandise or provisions outside of the cases and without the
formalities prescribed in this Code, shall be liable for the
principal, interests, and costs, and shall indemnify for the
damages he may cause. He who commits fraud in his accounts
shall pay the amount defrauded and shall be subject to the
provisions of the Penal Code.
________
The captain may borrow money from the HULL, ENGLINE,
RIGGING or TACKLE, or may pledge the merchandise if it is for
the interest of the vessel.
If he is co-owner of the vessel, his share may be levied but the
_______ shall continue the vessel.
If he should commit fraud in his account, he shall reimburse the
amount defrauded without prejudice to his criminal liability
under the RPC.
________
ARTICLE 622. If while on a voyage the captain should learn of
the appearance of privateers or men of war against his flag, he
shall be obliged to make the nearest neutral port, inform his
agent or shippers, and await an occasion to sail under convoy,
or until the danger is over or he has received express orders
from the ship agent or the shippers.
________
If the captain should receive news of the appearance of corsairs
(pirates, privateers, etc). or men of war against his flag, he shall
be obliged to:.
1. Go to the nearest neutral port
2. Inform the ship agent or shippers
Await until the danger is over or until ordered by the ship agent
or shipper.
________
ARTICLE 623. If he should be attacked by a privateer, and, after
having tried to avoid the encounter and having resisted the
delivery of the effects of the vessel or its cargo, they should be
forcibly taken away from him, or he should be obliged to
deliver them, he shall make an entry thereof in his freight book
and shall prove the fact before the competent authority at the
first port he touches. After the force majeure has been proved,
he shall be exempted from liability.
________
If after having tried to avoid the danger, still the cargoes were
forcible taken or if he should be obligated to deliver them, the
captain should:
1. Make an entry of such fact in the freight book and
also in the log book.
30 | P LATON

2. Make a marine protest (Article 612). This article is
also needed in cases of hurricane, shipwreck, or
damages to the cargo (Article 624).
If it is proven, he shall be free from liability.
________
ARTICLE 624. A captain whose vessel has gone through a
hurricane or who believes that the cargo has suffered damages
or averages, shall make a protest thereon before the
competent authority at the first port he touches, within twenty-
four hours following his arrival and shall ratify it within the
same period when he arrives at his destination, immediately
proceeding with the proof of the facts, and he may not open
the hatches until after this has been done. The captain shall
proceed in the same manner, if, the vessel having been
wrecked; he is saved alone or with part of his crew, in which
case he shall appear before the nearest authority, and make a
sworn statement of facts. The authority or the consul shall
verify the said facts receiving sworn statements of the
members of the crew and passengers who may have been
saved; and taking such other steps as may assist in arriving at
the facts he shall make a statement of the result of the
proceedings in the log book and in that of the sailing mate, and
shall deliver to the captain the original record of the
proceedings, stamped and folioed, with a memorandum of the
folios, which he must rubricate, in order that it may be
presented to the judge or court of the port of destination. The
statement of the captain shall be accepted if it is in accordance
with those of the crew and passengers; if they disagree, the
latter shall be accepted, always saying proof to the contrary.
________
ARTICLE 625. The captain, under his personal responsibility as
soon as he arrives at the port of destination, should get the
necessary permission from the health and customs officers, and
perform the other formalities required by the regulations of the
administration, delivering the cargo without any defalcation, to
the consignee, and in a proper case, the vessel, rigging, and
freightage to the ship agent. If by reason of the absence of the
consignee or on account of the nonappearance of a legal holder
of the bills of lading, the captain should not know to whom he
is to legally make the delivery of the cargo, he shall place it at
the disposal of the proper judge or court or authority, in order
that he may determine what is proper with regard to its
deposit, preservation and custody.
________
Duties of the captain upon arrival at the port of destination:
1. Obtain necessary permits from the offices of the
health and customs authorities.
2. Comply with formalities required by law
 Manifest- presentation of the vessel to
customs authority.
3. After these duties are complied with, he should
deliver the cargoes to the consignees without any
delay.
The goods transported (security) will answer for the
transportation charges and for the expenses and fees caused by
the delivery of the goods.
This right shall prescribe after 30 days from delivery (basis:
replevin). After such period, he loses his right but he is still
considered as ordinary creditor.
rd
If the goods were already bought by 3 persons, then he
cannot exercise this right. The right is not affected by the
insolvency of the consignee.
Fees to be paid by the vessel:
1. Tonnage dues- fees collected for the coming to and
from the ports of the Philippines.
2. Harbour fees- entrance into or departure from a port
of entry.
3. Berthing charges- fees for coming or mooring within
specified places or waters of a port.
4. Wharfage dues- assessed against the cargo
discharged by the vessel engaged in foreign trade. It
may be assessed even against a private wharf and
even against a lighter.
If these dues are not paid, they become part of the marine lien.
Collector of Customs has jurisdiction for smuggling cases.
________
SECTION THREE—OFFICERS AND CREW OF VESSELS
ARTICLE 626. In order to be a sailing mate it shall be necessary:
1. To have the qualifications required by the marine or
navigation laws or regulations.
2. Not to be disqualified in accordance therewith for the
discharge of his duties.
ARTICLE 627. The sailing mate, as the second chief of the vessel,
and unless the agent orders otherwise, shall take the place of
the captain in cases of absence, sickness, or death, and shall
then assume all his powers, duties, and responsibilities.
ARTICLE 628. The sailing mate must provide himself with charts
of the seas in which he will navigate with the astronomical
tables and instruments for observation which are in use and
which are necessary for the discharge of his duties, being liable
for the accidents which may arise by reason of his omission in
this regard.
ARTICLE 629. The sailing mate shall particularly and personally
keep a book, folioed and stamped on all its pages, denominated
"Binnacle Book" with a memorandum at the beginning stating
the number of folios it contains, signed by the competent
authority, and shall enter therein daily the distance, the course
travelled, the variations of the needle, the leeway, the direction
and force of the wind, the condition of the atmosphere and of
the sea, the rigging set, the latitude and longitude observed,
the number of furnace heated, the steam pressure, the number
of revolutions, and under the title "incidents," the maneuvers
made, the meeting with other vessels, and all the details and
incidents which. may occur during the voyage.
________
nd
Sailing Mate- The 2 chief. He shall take the place of the
captain in case of absence, sickness or death, unless the ship
agent orders otherwise.
He must provide himself of the charts of the sea.
He shall keep the Binnacle Book- contains the same
information required for the log book.
31 | P LATON
 ________
ARTICLE 630. In order to change the course and to take the one
most convenient for a good voyage of the vessel, the sailing
mate shall come to an agreement with the captain. If the latter
should object, the sailing mate shall state to him the proper
observations in the presence of the other officers of the sea. If
the captain should still insist on his negative decision, the
sailing mate shall make the proper protest, signed by him and
by one other officer, in the log book, and shall obey the captain,
who alone shall be responsible for the consequences of his
decision.
________
If the sailing mate wants to change the course of the voyage, he
shall first confer it with the captain.
If the latter opposes, he must make a protest in the presence of
the other officers and such protest shall be entered in the log
book and he shall obey the decision of the captain.
________
ARTICLE 631. The sailing mate shall be responsible for all the
damages caused to the vessel and the cargo by reason of his
negligence or want of skill without prejudice to the criminal
liability which may arise, if a felony or misdemeanor has been
committed.
________
The sailing mate shall be liable for tall the damages caused to
the vessel and cargo by reason of his negligence or want of skill
without prejudice to this criminal liability, if any.
________
ARTICLE 632.The following shall be the obligations of the
second mate:
1. To watch over the preservation of the hull and rigging of the
vessel, and to take charge of the preservation of the tackle and
equipment which make up her outfit, suggesting to the captain
the repairs necessary and the replacement of the goods and
implements which are rendered useless and are lost.
2. To take care that the cargo is well arranged, keeping the
vessel always ready for maneuver.
3. To preserve order, discipline, and good service among the
crew, requesting the necessary orders and Instructions of the
captain, and giving him prompt information of any occurrence
in which the intervention of his authority may be necessary.
4. To assign to each sailor the work he is to do on board, in
accordance with the instruction received and to see that it is
promptly and accurately carried out.
5. To take charge under inventory of the rigging and all the
equipment of the vessel, if it should be laid up, unless the ship
agent has ordered otherwise.
With regard to engineers the following rules shall govern:
1. In order to be taken on board as a marine engineer forming
part of the complement of a merchant vessel, it shall be
necessary to have the qualifications which the laws and
regulations require, and not be disqualified in accordance
therewith for the discharge of his duties. Engineers shall be
considered officers of the vessel but they shall have no
authority or intervention except in matters referring to the
motor apparatus.
2. When there are two or more engineers on board a vessel,
one of them shall be the chief, and the other engineers and all
the personnel of the engines shall be under his orders; he shall
also have charge of the motor apparatus, the spare parts, the
instruments and tools pertaining thereto, the fuel, the
lubricating material and, finally, whatever is entrusted to an
engineer on board a vessel.
3. He shall keep the engines and boilers in good condition and
state of cleanliness, and shall order what may be proper in
order that they may always be ready to work with regularity,
being liable for the accidents or damages which his negligence
or want of skill may cause to the motor apparatus, to the vessel
and to the cargo, without prejudice to the criminal liability
which may be proper if there has been a felony or
misdemeanor.
4. He shall not make any change in the motor apparatus, or
proceed to repair the averages he may have noticed in the
same, or change the normal speed of its movement without the
prior authorization of the captain., to whom, if he should object
to their being made, he shall state the proper observations in
the presence of the other engineers or officers; and if,
notwithstanding this, the captain should insist on his objection,
the chief engineer shall make the proper protests, entering the
same in the engine book, and shall obey the captain, who,
alone shall be responsible for the consequences of his decision.
5. He shall inform the captain of any average which may occur
in the motor apparatus, and shall advise him whenever it may
be necessary to stop the engines for some time, or when any
other incident occurs in his department of which the captain
should be immediately informed, besides frequently advising
him of the consumption of fuel and lubricating material.
6. He shall keep a book or registry called the "engine book," in
which shall be entered all the date referring to the work of the
engines, such as, for example, the number of furnaces heated,
the vacuum in the condenser, the temperature, the degree of
saturation of the water in the boilers the consumption of fuel
and lubricating material, and under the heading of "noteworthy
occurrences," the averages and maladjustments which occur in
the engines and boilers, the causes thereof and the means
employed to repair the same likewise, the force and direction
of the wind, the rigging set and the speed of the vessel shall be
stated, taking the information from the Binnacle Book.
________
rd
Duties of the second mate, the 3 officer of the board. Note:
See page 181.
Engineers
 Shall have no authority or intervention except
matters referring to the motor apparatus.
 He shall make no change in the motor apparatus, nor
repair the averages, nor change the normal speed of
its movement, without prior authorization from the
captain.
32 | P LATON
  If he should oppose, the procedure is the same with
that of the sailing mate, although it should be entered
in the Engine Book- contains data referring to the
work of the engine.
Noteworthy Occurrences- averages and imperfections that
happened in the engines and boilers.
________
ARTICLE 633. The second mate shall take command of the
vessel in case of the inability or disqualification of the captain
and the sailing mate, assuming in such case their powers and
responsibility.
________
ARTICLE 634. The captain may make up the crew of his vessel
with such number of men as he may consider proper, and in
the absence of Filipino sailors, he may take on foreigners
residing in the country, the number thereof not to exceed one-
fifth of the crew. If in foreign ports the captain should not find a
sufficient number of Filipino sailors, he may complete the crew
with foreigners, with the consent of the consul or marine
authorities. The agreement which the captain may make with
the members of the crew and others who go to makeup the
complement of the vessel, to which reference is made in Article
612, must be reduced to writing in the account book, without
the intervention of a notary public or clerk of court
("escribano"), signed by the parties thereto and vised by the
marine authority if they be executed in Philippine territory or
by the consuls or consular agents of the Republic of the
Philippines if executed abroad, stating therein all the
obligations which each one contracts and all the rights he
acquires said authorities taking care that these obligations and
rights are recorded in a clear and definite manner which give no
room for doubts or claims. The captain shall take care to read
to them the articles of this Code which concern them, stating in
said document that they were read. If the book contains the
requisites prescribed in Article 612, and there should not
appear any signs of alterations in its entries, it shall be admitted
as evidence in questions which may arise between the captain
and the crew with respect to the agreements contained therein
and the amounts paid on account of the same. Every member
of the crew may demand of the captain a copy, signed by the
latter, of the agreement and of the liquidation of his wages, as
they appear in the book.
________
The captain shall make up his crew.
In the absence of Filipinos, he may procure the services of the
th
foreigners but is shall not exceed 1/5 of the total crew.
If in the foreign pots, he cannot find sufficient number of
Filipinos, he may make up the crew with the foreigners, with
the consent of the consul or marine authorities.
Shall be entered in the Account Book.
Crew- the aggregate of seamen who man a ship or vessel,
including the masters and officers.
May also mean the ship’s company, exclusive of the master and
all other officers.
Kinds of Contracts of the Crew:
1. For each voyage- compensation is fixed to a certain
sum for the entire voyage whatever may be its
duration.
2. By the month- compensation is fixed to a certain sum
for each month (maximum is 12 months).
3. On Shares- the seaman is promised to be paid a part
of the resultant profits of the voyage.
On Freight- compensation is determined by a part on the
profits to be obtained from the transportation of passengers
and cargo.
________
ARTICLE 635. A seaman who has been contracted to serve on a
vessel may not rescind his contract or fail to comply therewith
except by reason of a legitimate impediment which may have
happened to him. Neither may he transfer from the service of
one vessel to another without obtaining the written permission
of the captain of the vessel on which he may be. If, without
obtaining said permission, the seaman who has signed for one
vessel should sign for another one, the second contract shall be
void, and the captain may choose between forcing him to fulfill
the service to which he first bound himself, or at his expense to
look for a person to substitute him. Furthermore, he shall lose
the wages earned on his first contract, to the benefit of the
vessel for which he had signed. A captain who, knowing that a
seaman is in the service of another vessel, should have made a
new agreement with him without having required of him the
permission referred to in the preceding paragraphs, shall be
subsidiarily responsible to the captain of the vessel to which
the seaman first belonged, for that part of the indemnity,
referred to in the third paragraph of this article, which the
seaman may not be able to pay.
________
A sailor who contracted to serve on vessel cannot rescind this
contract, except by reason of legitimate impediment which may
have occurred to him.
He cannot also substitute another person without the
permission of the captain of the vessel.
In case he contracted with another company, the following
are the consequences:
1. The second contract is VOID.
2. The captain may choose to force him to fulfill the
service or procure another person at his expense.
3. The sailor shall lose the wages to the benefit of the
contract formerly signed.
nd
IF the captain of the 2 contract knew that the sailor has no
st
permission from the 1 captain, he shall be subsidiarily liable.
________
ARTICLE 636. If there is no fixed period for which a seaman has
been contracted he may not be discharged until the end of the
return voyage to the port where he enlisted.
________
If there is no fixed period for which a sailor has been
contracted, he may not be discharged until the termination of
the return voyage to the port he is enlisted.
33 | P LATON
Note: The same rule applies when the ship agent is exercising
this right to discharge the captain and other members of the
crew.
________
ARTICLE 637. Neither may the captain discharge a seaman
during the time of his contract except for just cause, the
following being considered as such:
1. The perpetration of a crime which disturbs order on the
vessel.
2. Repeated insubordination, want of discipline, or non-
fulfillment of the service.
3. Repeated incapacity and negligence in the fulfillment of the
service he should render.
4. Habitual drunkenness.
5. Any occurrence which incapacitates the seaman to perform
the work entrusted to him, with the exception of that provided
in Article 644.
6. Desertion.
The captain may, however, before getting out on a voyage and
without giving any reason, refuse to permit a seaman whom he
may have engaged to go on board, and leave him on land, in
which case he will be obliged to pay him his wages as if he had
rendered services. This indemnity shall be paid from the funds
of the vessel if the captain should have acted for reasons of
prudence and in the interest of the safety and good services of
the farmer. Should this not be the case, it shall be paid by the
captain personally. After the voyage has begun, during the
same, and until the conclusion thereof, the captain may not
abandon any member of his crew on land or on sea, unless, by
reason of some crime, his imprisonment and delivery to the
competent authority in the first port touched should be proper,
a matter obligatory for the captain.
________
If there is a fixed contract, the captain can discharge a sailor
only for JUST CAUSES:
1. Perpetration of a crime which disturbs the order on
vessel.
2. Repeated offenses of insubordination, of want of
discipline or of non-fulfillment of the service.
3. Incapacity and repeated negligence in the fulfilment
of the service he should render.
4. Habitual drunkenness.
5. Any occurrences which incapacitates the sailor to
perform the work under his charge. (Except Article
644).
6. Desertion (no intention to return.
Discharge was made BEFORE THE START of the voyage:
 The captain shall have the right to discharge
regardless of any reason but he shall pay the salaries
earned according to their contracts.
 If the captain acted without reason and prudence, he
shall be liable personally for the indemnity
 If the captain acted in good faith, indemnity shall be
borne by the funds of the vessel.
Discharge was made DURING the voyage:
 The discharge employee shall continue to receive the
salary until he returns to the port where the contract
was made.
 The discharged employee cannot be asked to go
down. He should stay on board although not as a
member of the crew.
 The only exception is that the captain has to deliver
the sailor by reason of the crime committed by the
latter.
In case of discharge in a foreign country, he shall produce a
certificate in the consul, etc, showing that the discharge was
effected with the consent of the Philippines.
________
ARTICLE 638. If, after the crew has been engaged, the voyage is
revoked by the will of the ship agent or of the charterers before
or after the vessel has put to sea, or if the vessel is for the same
reason given a destination different from that fixed in the
agreement with the crew, the latter shall be indemnified on
account of the rescission of the contract, according to the cases
follows:
1. If the revocation of the voyage should be decided upon
before the departure of the vessel from the port, each sailor
engaged shall be given one month's salary, besides what may
be due him, in accordance with his contract, for the services
rendered to the vessel up to the date of the revocation.
2. If the agreement should have been for a fixed amount for the
whole voyage, that which may be due for said month and days
shall be determined in proportion to the approximate number
of days the voyage should have lasted, in the judgment of
experts, in the manner established in the law of Civil Procedure;
and if the proposed voyage should be of such short duration
that it is calculated at approximately one month, the indemnity
shall be fixed for fifteen days, discounting in all cases the sums
advanced.
3. If the revocation should take place after the vessel has put to
sea, the seamen engaged for a fixed amount for the voyage
shall receive in full the salary which may have been offered
them as if the voyage had terminated; and those engaged by
the month shall receive the amount corresponding to the time
they might have been on board and to the time they may
require to arrive at the port of destination, he captain being
obliged, furthermore, to pay the seamen in both cases, the
passage to the said port or to the port of sailing of the vessel, as
may be convenient for them.
4. If the ship agent or the charterers of the vessel should give it
a destination different from that fixed in the agreement, and
the members of the crew should not agree thereto, they shall
34 | P LATON
be given by way of indemnity half the amount fixed in case No. indemnify the crew for the damages suffered, always without
1, besides what may be owed them for the part of the monthly prejudice to the criminal liability which may be proper.
wages corresponding to the days which have elapsed from the ________
date of their agreements. If they accept the change, and the
voyage, on account of the greater distance or of other reasons, JUST CAUSES RIGHTS
should give rise to an increase of wages, the latter shall be Wages up to the time of
adjusted privately or through amicable arbitrators incase of Declaration of war or occurrence.
disagreement. Even though the voyage should be shortened to interdiction of commerce If the voyage shall continue,
a nearer point, this shall not give rise to a reduction in the they may enforce the contract
wages agreed upon. If the revocation or change of the voyage Blockade of the port of
should come from the shippers or charterers, the agent shall Same
Destination
have a right to demand of them the indemnity which may be Prohibitions to receive the
justly due. goods in the port of Same
________ destination
Half wages if by month
ARTICLE 639. If the revocation of the voyage should arise from Detention or embargo or any If it exceeds 3 months, the
a just cause independent of the will of the ship agent and other cause beyond the contract shall be rescinded
charterers, and the vessel should not have left the port, the control of the ship agent and wages earned shall be
members of the crew shall have no other right than to collect paid.
the wages earned up to the day on which the revocation took Only the wages earned except
place. if it is due to the officers of
________ Inability to navigate
the vessel, in which case they
may recover indemnity.
If the just cause for revocation of the voyage is beyond the ________
control of the ship agent, the members have no other right
than to collect the wages earned up to the day of revocation. ARTICLE 642. If the crew have been engaged on shares, they
________ shall not be entitled, by reason of the revocation, delay, or
greater extension of the voyage, to anything but the
ARTICLE 640. The following shall be just causes for the proportionate part of the indemnity which way be paid into the
revocation of the voyage. common funds of the vessel by the persons liable for said
occurrences.
1. A declaration of war or interdiction of commerce with the ________
power to whose territory the vessel was bound.
ARTICLE 643.If the vessel and her cargo should be totally lost,
2. The blockade of the port of its destination, or the breaking by reason of capture or wreck, all rights shall be extinguished,
out of an epidemic after the agreement. both as regards the crew to demand any wages whatsoever,
and as regards the ship agent to recover the advances made. If
3. The prohibition to receive in said port the goods which make a portion of the vessel or of the cargo, or of both, should be
up the cargo of the vessel. saved, the crew engaged on wages, including the captain, shall
retain their rights on the salvage, so far as they go, on the
4. The detention or embargo of the same by order of the remainder of the vessel as well as on the amount of the
government, or for any other reason independent of the will of freightage of the cargo saved; but sailors who are engaged on
the ship agent. shares shall not have any right whatsoever on the salvage of
the hull, but only on the portion of the freightage saved. If they
5.The inability of the vessel to navigate. should have worked to recover the remainder of the
________ shipwrecked vessel they shall be given from the amount of the
salvage an award in proportion of the efforts made and to the
ARTICLE 641. If, after a voyage has been begun, any of the first risks, encountered in order to accomplish the salvage.
three causes mentioned in the foregoing article should occur, ________
the sailors shall be paid at the port which the captain may
deem advisable to make for the benefit of the vessel and cargo, If there is total loss by reason of capture or shipwreck, all
according to the time they may have served thereon; but if the contractual relations and rights shall be extinguished.
vessel is to continue its voyage, the captain and the crew may
mutually demand the enforcement of the contract. n case of But this does not affect the provision on Workmen
the occurrence of the fourth cause, the crew shall continue to Compensation.
be paid half wages, if the agreement is by month; but if the ________
detention should exceed three months, the contract shall be
rescinded and the crew shall be paid what they should have ARTICLE 644. A seaman who falls sick shall not lose his right to
earned according to the contract if the voyage had been wages during the voyage, unless the sickness is the result of his
concluded. And if the agreement should be for a fixed sum for own fault. At any rate, the costs of the attendance and cure
the voyage, the contract must be complied within the terms shall be defrayed from the common funds, in the form of a
agreed upon. In the fifth case, the crew shall have no other loan. If the sickness should come from an injury received in the
right than to collect the wages earned; but if the disability of service or defense of the vessel, the seaman shall be attended
the vessel should have been caused by the negligence or lack of and cured at the expense of the common funds deducting,
skill of the captain, engineer, or sailing mate, they shall

35 | P LATON
before anything else, from the proceeds of the freightage the 3. If the vessel should change owner or captain.
cost of the attendance and cure.
Note: However, the rescission is allowed only before the
________
departure of the vessel or before the vessel has started the
voyage.
If a sailor falls sick, the following rules shall be applied:
________
1. He shall not lose his wages unless the sickness is due
to his fault.
ARTICLE 648. By the complement of a vessel shall be
2. Cost of medical treatment shall be defrayed by the understood all the persons on board, from the captain to the
common fund in the form of a loan. cabin boy, necessary for the management, maneuvers, and
service, and therefore, the complement shall include the crew,
If the injury is received by reason of his service in the vessel,
the sailing mates, engineers, stokers and other employees on
cost of medical treatment shall be defrayed by the common
board not having specific designations; but it shall not include
fund.
the passengers or the persons whom the vessel is transporting.
________
________
ARTICLE 645. If a seaman should die during the voyage, his heirs
SECTION FOUR—SUPERCARGOES
will be given the wages earned and not received according to
his contract and the cause of his death, namely — If he died a
ARTICLE 649.Supercargoes shall discharge on board the vessel
natural death and was engaged on wages, that which may have
the administrative duties which the ship agent or the shippers
been earned up to the date of his death shall be paid. If the
may have assigned to them; they shall keep an account and
contract was for a fixed sum for the whole voyage, half the
record of their transactions in a book which shall have the same
amount earned shall be paid if the seamen died on the voyage
conditions and requisites as required for the accounting book
out, and the whole amount if he died on the return voyage.
of the captain, and they shall respect the latter in his capacity
And if the contract was on shares and death occurred after the
as chief of the vessel. The powers and responsibilities of the
voyage was begun, the heirs shall be paid the entire portion
captain shall cease, when there is a supercargo, with regard to
due the seaman; but if the latter died before the departure of
that part of the administration legitimately conferred upon the
the vessel from the port, the heirs shall not be entitled to claim
latter, but shall continue in force for all acts which are
anything. If death occurred in the defense of the vessel, the
inseparable from his authority and office.
seaman shall be considered as living, and his heirs shall be paid,
________
at the end of the voyage, the full amount of wages or the
integral part of the profits which may be due him as to others
The supercargoes shall discharge on board the vessel the
of his class. In the same manner, the seaman captured while
administrative duties which the ship agent or shippers may
defending the vessel shall be considered present so as to enjoy
have assigned to them.
the same benefits as the rest; but should he have been
captured on account of carelessness or other accident not Required to record the transactions in a book just like the
related to the service, he shall only receive the wages due up to Accounting Book.
the day of his capture.
Supercargo- an agent of the owner of the goods shipped as
________
cargo on a vessel, who has charge of the cargo on board, sells
the same to the best advantage in the foreign market, buys a
ARTICLE 646.The vessel with her engines, rigging, equipment,
cargo to be brought back on the return of the voyage of the
and freightage shall he liable for the wages earned by the crew
ship, and comes home with it.
engaged per month or for the trip, the liquidation and payment
to take place between one voyage and the other. After a new ________
voyage has been undertaken, credits of such kind pertaining to
the preceding voyage shall lose their right of preference. ARTICLE 650. All the provisions contained in the second section
________ of Title III, Book II, with regard to capacity, manner of making
contracts, and liabilities of factors, shall be applicable to
ARTICLE 647. The officers and the crew of the vessel shall be supercargoes.
free from all obligations if they deem it proper, in the following ________
cases:1.If, before beginning the voyage, the captain attempts to
change it, or a naval war with the power to which the vessel ARTICLE 651. Supercargoes may not, without special
was destined occurs.2.If a disease should break out and be authorization or agreement, make any transaction for their
officially declared an epidemic in the port of destination.3.If the own account during the voyage, with the exception of the
vessel should change owner or captain. ventures which, in accordance with the custom of the port of
________ destination, they are permitted to do. Neither shall they be
permitted to invest in the return trip more than the profits
Instances when the officers and the crew of the vessel can from the ventures, unless there is an express authorization
disregard the contract without liability: from the principals.
________
1. If before the voyage, the captain attempts to change
it, or if there occurs a naval war with the nation to
As a rule, supercargoes cannot make transactions for their own
which the vessel was destined.
account.
2. If a disease should break out and be officially declared
Exceptions:
an epidemic in the port of destination.

36 | P LATON
 1. They are authorized to the contrary
2. They make such transactions involving ventures
which in accordance with the customs of the port of
destination, they are permitted to do.
They can invest in the return voyage, but not more than the
profit from the venture, unless there is a stipulation to the
contrary.
________
TITLE THREE—SPECIAL CONTRACTS OF MARITIME
COMMERCESECTION ONECHARTER PARTIES
PART I—FORMS AND EFFECTS OF CHARTER PARTIES
ARTICLE 652. A charter party must be drawn in duplicate and
signed by the contracting parties, and when either does not
know how or is not able to do so, by two witnesses at his
request. The charter party shall contain, besides the conditions
freely stipulated, the following circumstances:
1. The kind, name, and tonnage of the vessel.
2. Its flag and port of registry.
3. The name, surname, and domicile of the captain.
4. The name, surname, and domicile of the ship agent, if the
latter should make the charter party.
5. The name, surname, and domicile of the charterer; and if he
states that he is acting by commission, that of the person for
whose account he makes the contract.
6. The port of loading and unloading.
7. The capacity, number of tons or the weight or measurement
which they respectively bind themselves to load and to
transport, or whether the charter party is total.
8. The freightage to be paid, stating whether it is to be a fixed
amount for the voyage or so much per month, or for the space
to be occupied, or for the weight or measure of the goods of
which the cargo consists, or in any other manner whatsoever
agreed upon.
9. The amount of primage to be paid to the captain.
10. The days agreed upon for loading and unloading.
11. The lay days and extra lay days to be allowed and the
demurrage to be paid for each of them.
________
Charter party, defined—a contract by virtue of which the owner
or the agent of the vessel leases for a certain price of the whole
or a portion of the vessel for the transportation of goods or
persons from one port to another.
Requisites of a charter party—
1. The consent of the contracting parties;
2. Existence of the vessel which will be placed at the
disposition of the shipper for the object of
transportation;
3. The freight; and
4. The requisites mentioned by the Code in Article 652;
but the omission of some of the requisites in said
Article which may not give rise to the doubts as to the
nature and scope of the contract will not invalidate
the charter party.
Classes of charter party—
a) As to capacity of the vessel, the charter party may be
either—
a. Total, when the whole vessel is chartered,
or
b. Partial, when only a portion of it;
b) As regards the time, the charter party may last—
a. Up to a fixed day or for a determined
number of days or moths, or
b. For a voyage, either an outward or return or
a round trip; and
c) As to the freight, it is entered for whole voyage or so
much per month during the period of navigation—
a. For a single amount for the whole cargo, or
b. So much per ton or volume
Lay days, and Extra lay days, explained—
1. Lay days—the days of detention or delay suffered by
a vessel in a given port while waiting for the loading
of the cargo;
2. Extra lay days—the days which follow after the lay
days have elapsed
Demurrage, explained—an amount stipulated in the charter
party to be paid by the charterer or shipper to the shipowner
for any delay in the sailing of his ship.
Primage, explained—an amount stipulated in the charter party
to be paid by the charterer or shipper as compensation to the
captain or master for his particular care of the goods.
Stipulations governing the charter party—the law leaves to the
discretion of the contracting parties to provide for the
conditions of the charter, which, according to this article of the
Code, must be drawn up in a contract.
Contract of towage, defined—towage of a lorcha is a contract
for the hire of services by virtue of which a steamer is engaged
to tow it from one port to another for a consideration. The
provisions of Arts. 652 et seq. of the Code of Commerce with
reference to charter parties are not applicable in this case
because the lorcha was not shipped or placed on board the
steamer, but, as had been agreed to, should have been towed.
A contract of towage is not a contract of goods, nor a charter
party, but a contract for the hire of services. It would be
otherwise, however, if the barge is used continuously in the
business of transporting another’s goods.
The towing vessel is variously referred to as a “tug” or
“tugboat,” while the vessel towed or pulled is referred to as the
“tow.”
If the affreightment was partial and not the charter of the
entire vessel, the charterer does not acquire the right to fix the
date for the departure of the vessel, unless so expressly
stipulated in the contract.
37 | P LATON
When a lorcha with apparatus for unloading cargo was
furnished by the agent or owner thereof for the use of another
person, who hired the same for a certain purpose, the purpose
and the proposed use being first known to the person who
furnished the vessel and thereafter, upon using the lorcha and
apparatus for the purpose for which they were hired, and
without negligence or carelessness on the part of the person
hiring the same, or of his agents or employees, an accident
occurred which resulted in an injury to the lorcha, damages
cannot be recovered for such injury.
________
ARTICLE 653. If the cargo should be received without the
charter party having been signed, the contract shall be
understood as executed in accordance with what appears in the
bill of lading, the sole evidence of title with regard to the cargo
for determining the rights and obligations of the ship agent, of
the captain, and of the charterer.
________
Charter party has for its object the fixing of the conditions for
the lease of the vessel, while the bill of lading serves only to
indicate the goods loaded for transportation and make the
captain responsible for the objects he has received.
________
ARTICLE 654. The charter parties executed with the
intervention of a broker, who certifies to the authenticity of the
signatures of the contracting parties because they were signed
in his presence, shall be full evidence in court; and if they
should be conflicting, that which accords with one which the
broker must keep in his registry, if kept in accordance with law,
shall govern. The contracts shall also be admitted as evidence,
even though a broker has not taken part therein, if the
contracting parties acknowledge the signatures to be the same
as their own. If no broker has intervened in the charter party
and the signatures are not acknowledged, doubts shall be
decided by what is provided for in the bill of lading and in the
absence thereof, by the proofs submitted by the parties.
ARTICLE 655. Charter parties executed by the captain in the
absence of the ship agent shall be valid and effective, even
though in executing them he should have acted in violation of
the orders and instructions of the ship agent or ship owner; but
the latter shall have a right of action against the captain for
indemnification of damages.
________
Charter parties executed by the captain in the absence of the
shipagent shall be valid and effective.
Even though in executing them, he should have acted in
contravention of the orders and instructions of the shipagent or
shipowner, such charter parties are nevertheless valid and
effective.
In the last case, the shipagent or shipowner shall have a right of
action against the captain for damages.
________
ARTICLE 656. If in the charter party the time in which the
loading and unloading are to take place is not stated, the
usages of the port where these acts take place shall be
observed. After the stipulated or the customary period has
passed, and there is no express proviso in the charter party
fixing the indemnity for the delay, the captain shall be entitled
to demand demurrage for the lay days and extra lay days which
may have elapsed in loading and unloading.
________
A special stipulation determining the order of loading will make
the foregoing article inapplicable.
________
ARTICLE 657. If during the voyage the vessel should be
rendered unseaworthy, the captain shall be obliged to charter
at his expense another one in good condition to receive the
cargo and carry it to its destination, for which purpose he shall
be obliged to look for a vessel not only at the port of arrival but
also in the neighborhood within distance of 150 kilometers. If
the captain, through indolence or malice, should not furnish a
vessel to its destination, the shippers, after requiring the
captain to charter a vessel within an inextendible period, may
charter one and petition the judicial authority to summarily
approve the charter party which they may have made. The
same authority shall judicially ("por la via de appremio")
compel the captain, to carry out, for his account and under his
responsibility, the charter made by the shippers. If the captain,
notwithstanding his diligence, should not find a vessel for the
charter, he shall deposit the cargo at the disposal of the
shippers, to whom he shall communicate the facts on the first
opportunity which presents itself, the freight being adjusted in
such cases by the distance covered by the vessel, with no right
to any indemnification whatsoever.
________
Where a master relinquishes the attempts either to carry on
the goods on his own ship or to send them to their destination
in another ship, he thereby wholly abandons any claim for
freight in respect to them, unless it has been made payable in
advance, or irrespective of delivery; where freight is only
payable on delivery, no part is earned until it is delivered.
While the outbreak of war absolved the ship carrying the flag of
a belligerent nation form its obligation to carry the cargo
belonging to a subject of a neutral power to the port of another
belligerent nation, it was nevertheless liable for the cost of
forwarding the cargo to another line, if the full freight had been
received by the ship at the commencement of the voyage.
________
ARTICLE 658. The freightage shall accrue according to the
conditions stipulated in the contract, and should they not be
expressed, or should they be ambiguous, the following rules
shall be observed:
1.If the vessel has been chartered by months or by days, the
freightage shall begin to run from the day the loading of the
vessel is begun.
2.In charters made for a fixed period, the freightage shall begin
to run from that very day.
3.If the freightage is charged according to weight, the payment
shall be made according to gross weight, including the
containers, such as barrels or any other objects in which the
cargo is contained.
ARTICLE 659. The merchandise sold by the captain to pay for
the necessary repairs to the hull, machinery or equipment, or
38 | P LATON
for unavoidable and urgent needs, shall pay freightage. The
price of this merchandise shall be fixed according to the result
of the voyage, namely:
1. If the vessel should arrive safely at the port of destination,
the captain shall pay the price which the sale of merchandise of
the same kind brings at that port.
2. If the vessel should be lost, the captain shall pay the price
realized from said merchandise in the sale. The same rule shall
be observed in the payment of the freightage, which shall be in
full if the vessel arrives at her destination, and in proportion to
the distance covered if she should be lost before arrival.
ARTICLE 660. Merchandise jettisoned for the common safety
shall not pay freightage; but the amount of the latter shall be
considered as general average computing the same in
proportion to the distance covered when they were jettisoned.
ARTICLE 661. Neither merchandise lost by reason of shipwreck
or stranding nor those seized by the pirates or enemies, shall
pay freightage. If the freightage should have been paid in
advance, it shall be returned, unless there is an agreement to
the contrary.
________
Cases in which the goods carried on a vessel are not liable to
pay the freight—
1. Goods jettisoned for the common safety and never
recovered;
2. Goods lost by reason of shipwreck or stranding;
3. Goods seized by pirates or enemies
________
ARTICLE 662. If the vessel or the merchandise should be
redeemed, or the effects of the shipwreck be salvaged, the
freightage corresponding to the distance covered by the vessel
transporting the cargo shall be paid; and should the vessel,
after being repaired, transport said merchandise to the port of
destination, the full freightage shall be paid, without prejudice
to what may be due by reason of the average.
ARTICLE 663. Merchandise which suffer deterioration or
diminutions on account of inherent defects or bad quality and
condition of the packing, or because of fortuitous event, shall
pay freightage in full and as stipulated in the charter party.
ARTICLE 664.The natural increase in weight or size of the
merchandise loaded on the vessel shall accrue to the benefit of
the owner, and shall pay the proper freightage fixed in the
contract for the same.
ARTICLE 665. The cargo shall be specially liable for the payment
of the freightage, expenses and duties arising therefrom, which
must be reimbursed by the shippers, as well as for the part of
the general average which may correspond to it; but it shall not
be legal for the captain to delay unloading on account of
suspicion that this obligation may not be complied with. Should
there be reasons for distrust, the judge or court, at the instance
of the captain, may order the deposit of the merchandise until
he has been paid in full.
________
Expenditures for which the cargo is liable—
1. Payment of freight;
2. For expenses and duties arising therefrom which
must be reimbursed by the shippers;
3. For the part of the general average which they
correspond to it
Although freight already included in purchase price of goods,
carrier’s lien exists, if freight not yet paid
Stevedoring, explained—the carriage of goods from the
warehouse or pier to the holds of the vessel. It is a necessary
operation in the transportation of goods by sea. Accordingly,
the expenses incurred therefor in the form or wages are
necessary expenditures in the carriage of the goods.
As to tonnage dues, harbor fees, wharfage dues, and berthing
charges, See Article 625 of the Code of Commerce.
________
ARTICLE 666. The captain may request the sale of the cargo to
the amount necessary to pay the freightage, expenses, and
averages due him, reserving the right to demand the balance
due him therefor if the proceeds of the sale should not suffice
to cover his credit.
ARTICLE 667. The goods loaded shall be liable in the first place
for the freight and expenses thereof during [twenty days], to be
counted from the date of their delivery or deposit. During this
period, the sale of the same may be requested, even though
there be other creditors and the bankruptcy of the shipper or
consignee should occur. This right may not he made use of,
however, on the goods which, after being delivered, were
turned over to a third person without malice on the part of the
latter and for a valuable consideration.
________
“Credits for transportation upon the goods carried, for the price
of the contract and incidental expenses, until their delivery and
for thirty days thereafter.”
________
ARTICLE 668. If the consignee should not be found or should
refuse to receive the cargo, the judge or court, at the instance
of the captain, shall order its deposit and the sale of what may
be necessary to pay the freightage and other expenses on the
same. The sale shall likewise be allowed when the goods
deposited run the risk of deteriorating, or by reason of their
condition or other circumstances the expenses of preservation
and custody should be disproportionate.
________
Cases where the captain may request the sale of the cargo—
1. To pay the freight;
2. To pay the expenses and duties due the cargo;
3. To pay the expenses and averages due the cargo;
4. When the goods deposited run the risk of
deteriorating or on account of their condition or for
other reasons, the expenses of preservation and
custody should be disproportionate to the value
thereof; and
5. Should the consignee be not found or should refuse
to receive the cargo, in which case the judge or Court
at the instance of the captain, must order its deposit
and the sale of what may be necessary to pay freight
and other expenses on the sale
39 | P LATON
 PART 2—RIGHTS AND OBLIGATIONS OF SHIPOWNERS
ARTICLE 669. The ship owner or the captain shall observe in
charter parties the capacity of the vessel or that expressly
designated in its registry, a difference greater than 2 per cent
between that stated and her true capacity not being
permissible. If the ship owner or the captain should contract to
carry a greater amount of cargo than the vessel can carry in
view of her tonnage, they shall indemnify the shippers whose
contracts they do not fulfill for the losses they may have caused
when by reason of their default, according to the following
cases, viz:
If the vessel has been chartered by one shipper only, and there
should appear to be an error or fraud in her capacity, and the
charterer should not wish to rescind the contract, when he has
a right to do so, the freightage shall he reduced in proportion to
the cargo which the vessel cannot receive, the person from
whom the vessel is chartered being furthermore obliged to
indemnify the charterer for the losses he may have caused him.
If, on the contrary there should be several charter parties, and
by reason of want of space all the cargo contracted for cannot
be loaded, and none of the charterers desires to rescind the
contract, preference shall be given to the person who has
already loaded and arranged the freight in the vessel, and the
rest shall take the places corresponding to them in the order of
the dates of their contracts. Should there be no priority, the
charterers may load, if they wish, in proportion to the amounts
of weight or space for which each may have contracted, and
the person from whom the vessel was chartered shall he
obliged to indemnify them for losses and damages.
ARTICLE 670. If the person from whom the vessel is chartered,
after receiving a part of the freight, should not find sufficient to
make up at least three-fifths of the amount which the vessel
may hold, at the price he may have fixed, he may substitute for
the transportation another vessel inspected and declared
suitable for the same voyage, the expenses of transfer and the
increase in the price of the charter, should there be any, being
for his account. Should he not be able to make this change, he
shall undertake the voyage at the time agreed upon; and
should no time have been fixed, within fifteen days from the
time the loading began, unless otherwise stipulated. If the
owner of the part of the freight already loaded should procure
some more at the same price and under similar or
proportionate conditions to those accepted for the freight
received, the person from whom the vessel is chartered or the
captain cannot refuse to accept the rest of the cargo; and
should he do so, the shipper shall have a right to demand that
the vessel put to sea with the cargo which it may have on
board.
ARTICLE 671. After three-fifths of the vessel has been loaded,
the person from whom she is chartered may not, without the
consent of the charterers or shippers, substitute the vessel
designated in the charter party by another one, under the
penalty of making himself thereby liable for all the losses and
damages occurring during the voyage to the cargo of those who
did not consent to the change.
ARTICLE 672. If the vessel has been chartered in whole, the
captain may not, without the consent of the charterer, accept
cargo from any other person; and should he do so, said
charterer may oblige him to unload it and to indemnify him for
the losses suffered thereby.
ARTICLE 673. The person from whom the vessel is chartered
shall he liable for all the losses caused to the charterer by
reason of the voluntary delay of the captain in putting to sea,
according to the rules prescribed, provided he has been
requested, notarially or judicially, to put to sea at the proper
time.
ARTICLE 674. If the charterer should carry to the vessel more
cargo than that contracted for, the excess may be admitted in
accordance with the price stipulated in the contract, if it can be
well stowed without injuring the other shippers; but if in order
to load it, the vessel would be thrown out of trim, the captain
must refuse it or unload it at the expense of its owner. In the
same manner, the captain may, before leaving the port, unload
merchandise clandestinely placed on board, or transport them,
if he can do so with the vessel in trim, demanding by way of
freightage the highest price which may have been stipulated for
said voyage.
ARTICLE 675. If the vessel has been chartered to receive the
cargo in another port, the captain shall appear before the
consignee designated in the charter party; and, should the
latter not deliver the cargo to him, he shall inform the charterer
and wait his instructions, the lay days agreed upon or those
allowed by custom in the port beginning to run in the
meantime, unless there is an express, agreement to the
contrary. Should the captain not receive an answer within the
time necessary therefor, he shall make efforts to find freight;
and should he not find any after the lay days and extra lay days
have elapsed, he shall make a protest and return to the port
where the charter was made. The charterer shall pay the
freightage in full, discounting that which may have been earned
on the merchandise which may have been carried on the
voyage out or on the return trip, if carried for the account of
third persons. The same shall be done if a vessel, having been
chartered for the round trip, should not be given any cargo on
its return.
ARTICLE 676. The captain shall lose the freightage and shall
indemnify the charterers if the latter should prove, even against
the certificate of inspection, if one has been made at the port
of departure, that the vessel was not in a condition to navigate
at the time of receiving the cargo.
ARTICLE 677. The charter party shall subsist if a declaration of
war or a blockade should take place during the voyage, the
captain not having any instructions from the charterer. In such
case the captain must proceed to the nearest safe and neutral
port, requesting and awaiting orders from the shipper, and the
expenses and salaries paid during the detention shall be paid as
general average. If, by orders of the shipper, the cargo should
be discharged at the port of arrival, the freightage for the
voyage out shall be paid in full.
________
Neutral cargo on interned vessel not subject to general
average.
In such case there is no common danger to vessel and cargo,
and hence no case for general average.
________
ARTICLE 678. If the time necessary, in the opinion of the judge
or court, to receive the orders of the shipper should have
40 | P LATON
elapse, without the captain having received any instructions,
the cargo shall be deposited, and it shall be liable for the
payment of the freightage and expenses on its account during
the delay, which shall be paid from the proceeds of the part
first sold.
________
PART 3—OBLIGATIONS OF CHARTERERS
ARTICLE 679. The charterer of an entire vessel may sub-charter
the whole or part thereof on such terms as he may consider
most convenient, the captain not being allowed to refuse to
receive on board the freight delivered by the second charterers,
provided that the conditions of the first charter are not change,
and that the price agreed upon is paid in full to the person from
whom the vessel is chartered, even though the full cargo is not
embarked, with the limitation established in the next article.
ARTICLE 680. A charterer who does not complete the full cargo
he bound himself to ship shall pay the freightage of the amount
he fails to ship, if the captain does not take other freight to
complete the load of the vessel, in which case the first
charterer shall pay the difference, should there be any.
ARTICLE 681 .If the charterer should load goods different from
those stated at the time of executing the charter party, without
the knowledge of the person from whom the vessel was
chartered or of the captain, and should thereby give rise to
losses, by reason of confiscation, embargo, detention, or other
causes, to the person from whom the vessel was chartered or
to the shippers, the person giving rise thereto shall be liable
with the value of his shipment and furthermore with his
property, for the full indemnity to all those injured through his
fault.
ARTICLE 682.If the merchandise should have been shipped for
the purpose of illicit commerce, and were taken on board with
the knowledge of the person from whom the vessel was
chartered or of the captain, the latter, jointly with the owner of
the same, shall be liable for all the losses which may be caused
the other shippers; and even though it may have been
stipulated, they cannot demand any indemnity whatsoever
from the charterer for the damaged caused to the vessel.
ARTICLE 683. In case of making a port to repair the hull,
machinery, or equipment of the vessel, the shippers must await
until the vessel is repaired, being permitted to unload it at their
own expense should they deem it proper. If, for the benefit of
the cargo subject to deterioration, the shippers or the court, or
the consul, or the competent authority in a foreign country,
should order the merchandise to be unloaded, the expenses of
unloading and reloading shall be for the account of the former.
ARTICLE 684. If the charterer, without the occurrence of any of
the cases of force majeure mentioned in the foregoing article,
should wish to unload his merchandise before arriving at the
port of destination, he shall pay the full freightage, the
expenses of the arrival made at his request, and the losses and
damages caused the other shippers, should there be any.
________
Contract made in foreign lands enforceable in the Philippines if
not in violation of our law or public policy.
Civil Code: 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.
________
ARTICLE 685. In charters for transportation of general freight,
any of the shippers may unload the merchandise before the
beginning of the voyage, paying one-half of the freightage, the
expense of stowing and restowing the cargo, and any other
damage which for his reason he may cause the other shippers.
ARTICLE 686. After the vessel has been unloaded and the cargo
placed at the disposal of the consignee, the latter must
immediately pay the captain the freightage due and the other
expenses for which said cargo may be liable. The primage must
be paid in the same proportion and at the same time as the
freightage, all the changes and modifications to which the latter
should be subject also governing the former.
ARTICLE 687.The charterers and shippers may not abandon
merchandise damaged on account of inherent defect or
fortuitous event, for the payment of the freightage and other
expenses. The abandonment shall be proper, however, if the
cargo should consist of liquids and they have leaked out,
nothing remaining in the containers but one-fourth part of their
contents.
________
PART 4—TOTAL OR PARTIAL RESCISSION OF CHARTER PARTIES
(MEMORIZE!!!)
ARTICLE 688.A charter party may be rescinded at the request of
the charterer:
1. If before loading the vessel he should not agree with that
stated in the certificate of tonnage, or if there should be an
error in the statement of the flag under which she sails.
2. If the vessel should not be placed at the disposal of the
charterer within the period and in the manner agreed upon.
3. If after the vessel has put to sea, she should return to the
port of departure, on account of risk from pirates, enemies, or
bad weather, and the shippers should agree to unload her. In
the second and third cases the person from whom the vessel
was chartered shall indemnify the charterer for the voyage out.
4. If the charter should have been made by the months, the
charterers shall pay the full freightage for one month, if the
voyage is for a port in the same waters, and for two months, if
for a port indifferent waters. From one port to another of the
Philippines and adjacent islands, the freightage for one month
only shall be paid.
5. If the vessel should make a port during the voyage in order to
make urgent repairs, and the charterers should prefer to
dispose of the merchandise. When the delay does not exceed
thirty days, the shippers shall pay the full freightage for the
voyageout. Should the delay exceed thirty days, they shall only
pay the freightage in proportion to the distance covered by the
vessel.
________
ARTICLE 689.At the request of the person from whom the
vessel is chartered the charter party may be rescinded:
41 | P LATON
1.If the 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 has begun to load it, and the purchaser
should load it for his own account. In such case the vendor shall
indemnify the charterer for the losses he may suffer. 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 the purchaser if the former did not inform him of the
charter pending at the time of making the sale.
________
ARTICLE 690. The charter party shall be rescinded and all
actions arising therefrom shall be extinguished, if, before the
vessel puts to sea from the port of departure, any of the
following cases should occur:
1.A declaration of war or interdiction of commerce with the
power to whose ports the vessel was to make its voyage.
2.A condition of blockade of the port of destination of said
vessel, or the breaking out of an epidemic after the contract
was executed.
3.The prohibition to receive at the said port the merchandise
constituting the cargo of the vessel.
4.An indefinite detention, by reason of an embargo of the
vessel by order of the government, or for any other reason
independent of the will of the ship agent.
5.The inability of the vessel to navigate, without fault of the
captain or ship agent. The unloading shall be made for the
account of the charterer.
________
ARTICLE 691. If the vessel cannot put to sea on account of the
closing of the port of departure or any other temporary cause,
the charter shall remain in force, with neither one of the
contracting parties having a right to claim damages. The
subsistence and wages of the crew shall be considered as
general average. During the interruption, the charterer may at
the proper time and for his own account, unload and load the
merchandise, paying demurrage if he delays the reloading after
the cause for the detention has ceased.
________
ARTICLE 692.A charter party shall be partially rescinded, unless
there is an agreement to the contrary, and the captain shall
only be entitled to the freightage for the voyage out, if, by
reason of a declaration of war, closing of ports, or interdiction
of commercial relations during the voyage, the vessel should
make the port designated for such a case in the instructions of
the charterer.
________
PART 5—PASSENGERS ON SEA VOYAGES
ARTICLE 693. If the passage price has not been agreed upon,
the judge or court shall summarily fix it, after a declaration of
experts.
ARTICLE 694. Should the passenger not arrive on board at the
time fixed, or should leave the vessel without permission from
the captain when the latter is ready to leave the port, the
captain may continue the voyage and demand the full passage
price.
ARTICLE 695. The right to passage, if issued to a specified
person, may not be transferred without the consent of the
captain or of the consignee.
ARTICLE 696. If before beginning the voyage the passenger
should die, his heirs shall only be obliged to pay half of the fare
agreed upon. If the expenses of subsistence are included in the
price stipulated, the judge or court, after hearing experts if he
considers it necessary, shall fix the amount which has to be left
for the benefit of the vessel. Should another passenger be
received in the place of the deceased, no payment shall be
made by said heirs.
ARTICLE 697. If before the voyage is begun it is suspended
through the exclusive fault of the captain or ship agent, the
passengers shall have the right to a refund of their fares and to
recover losses and damages; but if the suspension is due to
fortuitous events, or to force majeure, or to any other cause
independent of the captain or ship agent, the passengers shall
only be entitled to the return of the fare.
ARTICLE 698. In case a voyage already begun should be
interrupted, the passengers shall be obliged to pay the fare in
proportion to the distance covered, without right to recover for
losses and damages if the interruption is due to fortuitous
event or to force majeure, but with a right to indemnity if the
interruption should have been caused by the captain
exclusively. If the interruption should be caused by the
disability of the vessel, and a passenger should agree to await
the repairs, he may not be required to pay any increased price
of passage, but his living expenses during the stay shall be for
his own account. In case of delay in the departure of the vessel,
the passengers have the right to remain on board and to be
furnished with food for the account of the vessel unless the
delay is due to fortuitous events or to force majeure. If the
delay should exceed ten days, passengers requesting the same
shall be entitled to the return of the fare; and if it is due
exclusively to the fault of the captain or ship agent, they may
also demand indemnity for losses and damages. A vessel
exclusively devoted to the transportation of passengers must
take them directly to the port or ports of destination, no matter
what the number of passengers may be, making all the stops
indicated in its itinerary.
________
Shipowner not required to publish schedule of arrivals and
departures of their vessels.
________
ARTICLE 699. If the contract is rescinded, before or after the
commencement of the voyage, the captain shall have a right to
claim payment of what he may have furnished the passengers.
ARTICLE 700. In all matters pertaining to the preservation of
order and discipline on board the vessel passengers shall be
subject to the orders of the captain, without any distinction
whatsoever.
42 | P LATON
ARTICLE 701. The convenience or the interest of the passengers
shall not obligate or empowers the captain to stand in shore or
enter places which may take the vessel out of her course, or to
remain in the ports he must or in under necessity of touching
for a period longer than that required by the needs of
navigation.
ARTICLE 702. In the absence of an agreement to the contrary, it
shall be understood that the subsistence of the passengers
during the voyage is included in the price of the passage; but
should it be for the account of the latter, the captain shall be
under obligation, in case of necessity, to furnish the supply of
food necessary for their sustenance at a reasonable price.
ARTICLE 703. A passenger shall be considered a shipper insofar
as the goods he carries on board are concerned, and the
captain shall not be responsible for what the former may keep
under his immediate and special custody, unless the damage
arises from an act of the captain or of the crew.
ARTICLE 704. The captain, in order to collect the passage-
money and expenses of sustenance, may retain the goods
belonging to the passenger, and in case of the sale of the same
he shall be given preference over other creditors acting the
same way as in the collection of freightage.
ARTICLE 705.In case of the death of a passenger during the
voyage, the captain shall be authorized, with regard to the
body, to take the steps required by the circumstances, and shall
carefully take care of the papers and goods which may be on
board belonging to the passenger, observing the provisions of
case No. 10 of Article 612 with regard to members of the crew.
________
PART 6—BILLS OF LADING
ARTICLE 706. The captain of the vessel and the shipper shall
have the obligation of drawing up the bill of lading in which
shall be stated:
1. The name, registry, and tonnage of the vessel.
2. The name of the captain and his domicile.
3. The port of loading and that of unloading.
4. The name of the shipper.
5. The name of the consignee, if the bill of lading is issued in the
name of a specified person.
6. The quantity, quality, number of packages and marks of the
merchandise.
7. The freightage and the primage stipulated.
The bill of lading may be issued to bearer, to order, or in the
name of a specified person, and must be signed within twenty-
four hours after the cargo has been received on board, the
shipper being entitled to demand the unloading at the expense
of the captain should the latter not sign it, and, in every case,
the losses and damages suffered thereby.
________
Each bill of lading is a contract and the parties thereto are
bound by its terms, but subject to the provisions of Articles
1733 to 1754 of the new Civil Code.
The shipper has the sole responsibility for the quantity,
description and condition of the cargoes shipped in container
vans, each container can considered as a unit of transport.
Containerization is in line with the government policy, resulting
in the laudable decongestation of ports of entry.
Under this system, the shipper loads his cargoes in a specially designed
container, seals the container and delivers it to the carrier for
transportation. The carrier does not participate in the counting of the
merchandise for loading into the container, the actual loading thereof
nor the sealing of the container. Having no actual knowledge of the
kind, quantity or condition of the contents of the container, the carrier
issues the corresponding bill of lading based on the declaration of the
shipper. The bill of lading describes the cargo as a container simply and
it states the contents of the container either as advised by the shipper
or prefaced by the phrase "said to contain." Clearly then, the matter
quantity, description and conditions of the cargo is the sole
responsibility of the shipper.
A stipulation that the carrier’s liability for loss or damage from
any cause or for any reason is limited to a specified sum is
invalid, being contrary to public policy, unless the carrier could
prove that it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.
Defective and irregular bill of lading ay be cured by other
complementary documents
Stipulation limiting jurisdiction of court of Philippines, void.
Whether or not a contract is maritime depends not on the place where
the contract is made and is to be executed, making the locality the test,
but on the subject-matter of the contract, making the true criterion a
maritime service or a maritime transaction. Specifically, admiralty has
jurisdiction of a proceeding in rem or in personam for the breach of a
contract of affreightment, whether evidenced by a bill of lading or a
charter party. And typical of a controversy over contracts of
affreightment is a suit of one party against the other for loss of or
damage to the cargo. Admiralty has jurisdiction over all maritime
contracts, in whatever form, wherever they were executed or are to be
performed, but not over non-maritime contracts.
All admiralty and maritime actions, where the demand or claim
exceeds P20,000.00 shall be under the exclusive original
jurisdiction of the Regional Trial Courts.
 Maritime contract should be essentially and fully
maritime in character.
 Even action to recover lighterage charges is admiralty.
 Action based upon oral contract for transportation of
goods by water, an action in admiralty.
A shipper may be held liable for freightage on bills of lading
signed by another person where the shipper appears as shipper
or consignee, bills of lading where persons other than the
former appear as shipper, and bills of lading not signed by the
shipper where the testimonial evidence shows that the goods
shipped actually belong to him as shipper.
Where the original bill of lading has been lost or destroyed,
evidence of freightage may be taken from a carbon copy
thereof and the ship’s cargo manifest.
________
43 | P LATON

ARTICLE 707. Four true copies of the original bill of lading shall
be made, and all of them shall be signed by the captain and the
shipper. Of these, the shipper shall keep one and send another
to the consignee; the captain shall take two, one for himself
and another for the ship agent. There may also be drawn up as
many copies of the bill of lading as may be considered
necessary by the person interested; but when they are issued
to order or to bearer, they shall be stated in all the copies, be
they the first four or the subsequent ones, the destination of
each one, stating whether it is for the agent, for the captain, for
the shipper, or for the consignee. If the copy sent to the latter
should have a duplicate, this circumstance and the fact that it is
not valid except in default of the first one must be stated
therein.
ARTICLE 708. Bills of lading issued to bearer and sent to the
consignee shall be transferable by actual delivery of the
instrument; and those issued to order, by virtue of an
indorsement. In either case, the person to whom the bill of
lading is transferred shall acquire all the rights and actions of
the transferor or indorser with regard to the merchandise
mentioned in the same.
________
Bill of lading issued to specified person is not negotiable and
cannot be negotiated by indorsement.
The rightful holder of bill of lading drawn to the order of the
shipper, with drafts attached for collection, all of them properly
indorsed, has the legal title to the shipment covered by the said
documents and is entitled to maintain an action, as real party in
interest, to recover the same.
“C.I.F.” price, explained—
As to the meaning of “C.I.F. price, in relation as to who shall
bear the risk of the shipment of the cargo—whether the seller
or the buyer, there is no question that under an ordinary C.I.F.
agreement, delivery to the buyer is complete upon delivery of
the goods to the carrier and tender of the shipping and other
documents required by the contract and the insurance policy
taken in the buyer’s behalf. There is equally no question that
the parties may, by express stipulation or impliedly (by making
the buyer’s obligation depend on arrival and inspection of the
goods), modify a CIF contract and throw the risk upon the seller
until arrival in the port of destination
“F.O.B.” price, explained—
Art. 1503. When there is a contract of sale of specific goods, the seller
may, by the terms of the contract, reserve the right of possession or
ownership in the goods until certain conditions have been fulfilled. The
right of possession or ownership may be thus reserved notwithstanding
the delivery of the goods to the buyer or to a carrier or other bailee for
the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading the goods are
deliverable to the seller or his agent, or to the order of the seller or of
his agent, the seller thereby reserves the ownership in the goods. But, if
except for the form of the bill of lading, the ownership would have
passed to the buyer on shipment of the goods, the seller's property in
the goods shall be deemed to be only for the purpose of securing
performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are
deliverable to order of the buyer or of his agent, but possession of the
bill of lading is retained by the seller or his agent, the seller thereby
reserves a right to the possession of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and
transmits the bill of exchange and bill of lading together to the buyer to
secure acceptance or payment of the bill of exchange, the buyer is
bound to return the bill of lading if he does not honor the bill of
exchange, and if he wrongfully retains the bill of lading he acquires no
added right thereby. If, however, the bill of lading provides that the
goods are deliverable to the buyer or to the order of the buyer, or is
indorsed in blank, or to the buyer by the consignee named therein, one
who purchases in good faith, for value, the bill of lading, or goods from
the buyer will obtain the ownership in the goods, although the bill of
exchange has not been honored, provided that such purchaser has
received delivery of the bill of lading indorsed by the consignee named
therein, or of the goods, without notice of the facts making the transfer
wrongful. (n)
________
ARTICLE 709. A bill of lading drawn up in accordance with the
provisions of this title shall be proof as between all those
interested in the cargo and between the latter and the insurers,
proof to the contrary being reserved for the latter.
________
Bill of lading issued by ship agent not proof that goods were
placed on vessel.
________
ARTICLE 710. If the bills of lading do not agree, and no change
or erasure can be observed in any of them, those possessed by
the shipper or consignee signed by the captain shall be proof
against the captain or ship agent in favor of the consignee or
shipper; and those possessed by the captain or ship agent
signed by the shipper shall be proof against the shipper or
consignee in favor of the captain or ship agent.
ARTICLE 711. The legitimate holder of a bill of lading who fails
to present it to the captain of the vessel before the unloading
obliging the latter thereby to unload it and place it in deposit,
shall be responsible for the expenses of warehousing and other
expenses arising therefrom.
________
Duty of the holder of bill of lading to present it before
unloading cargo.
The foregoing article does not require carrier to give notice to
consignee of arrival of goods.
________
ARTICLE 712. The captain may not by himself change the
destination of the merchandise. In admitting this change at the
instance of the shipper, he must first take up the bill of lading
which he may have issued, under pain of being liable for the
cargo to the legitimate holder of the same.
________
This article has for its objection the prevention of frauds which
the captain of the vessel may commit by changing the
destination of the goods.
Destination of goods cannot be changed without surrendering
all copies of the bill of lading to the captain; otherwise, the
latter will be held liable for the goods to the legitimate holder
of the bill of lading.
________
44 | P LATON

ARTICLE 713. If before the delivery of the cargo a new bill of
lading should be demanded of the captain, on the allegation
that the failure to present the previous ones is due to their loss
or to any other just cause, he shall be obliged to issue it,
provided that security for the value of the cargo is given to his
satisfaction, but without changing the consignment, and stating
therein the circumstances prescribed in the last paragraph of
Article 707, under penalty, should he not so state, of being held
liable for said cargo if improperly delivered through his fault.
ARTICLE 714. If before the vessel puts to sea the captain should
die or should cease to hold his position through any cause, the
shippers shall have the right to demand of the new captain the
ratification of the first bills of lading, and the latter must do so,
provided that all the copies previously issued be presented or
returned to him, and it should appear from all examination of
the cargo that they are correct. The expenses arising from the
examination of the cargo shall be defrayed by the ship agent,
without prejudice to the right of action of the latter against the
first captain if he ceased to be such through his own fault.
Should said examination not be made, it shall be understood
that the new captain accepts the cargo as it appears from the
bills of lading issued.
ARTICLE 715. Bills of lading will give rise to a most summary
action or to judicial, compulsion ("accion sumarisima o de
apremios"), according to the case, for the delivery of the cargo
and the payment of the freightage and the expenses thereby
incurred.
accident, shall be considered a loan on bottomry or
respondentia.
________
Loan on bottomry—a contract in the nature of a mortgage, by
which the owner of a ship borrows money for the use,
equipment, or repair of the vessel, and for a definite term, and
pledges the ship (or the keel and bottom of the ship, pars pro
toto) as a security for its repayment, with maritime or
extraordinary interest on account of the marine risks to be
borne by the lender; it being stipulated that if the ship be lost in
the course of the specified voyage, or during the limited time,
by any of the perils enumerated in the contract, the lender shall
also lose his money.
Loan on respondentia—when the loan is not made upon the
ship, but on the goods laden on board, and which are to be
sold, or exchanged in the course of the voyage, the borrower’s
personal responsibility is deemed the principal security for the
performance of the contract, which is therefore called
“respondentia.”
 The lender must be paid his principal and interest
though the ship perish, provided the goods are saved.
In most other respects the contracts of bottomry and of
respondentia stand substantially upon the same footing.

ARTICLE 716. If several persons should present bills of lading

issued to bearer or to order, indorsed in their favor, demanding
the same merchandise, the captain shall prefer, in making
delivery the person who presents the copy first issued, except
when the latter one was issued on proof of the loss of the first,
and both are presented by different persons. In such case, as Loan on bottomry or respondentia and simple loan,
well as when only second subsequent copies, issued without distinguished—
this proof, are presented, the captain shall apply to the judge or
court, so that he may order the deposit of the merchandise and LOAN ON BOTTOMRY OR
SIMPLE LOAN
their delivery, through him, to the proper person. RESPONDENTIA
The rate of interest although The rate of interest is subject
ARTICLE 717. The delivery of the bill of lading shall effect the
beyond the lawful rate of to the said law
cancellation of all the provisional receipts of prior date given by
interest is not subject to
the captain or his subordinates for partial deliveries of the
Usury Law
cargo which may have been made.
There must necessarily exist a The existence of a marine risk
ARTICLE 718. After the cargo has been delivered the bill of bona fide marine risk or uncertainty of transactions
lading which the captain signed, or at least the copy by reason is not necessary
of which the delivery is made, shall be returned to him, with When the loan is made during The prior lender has a right of
the receipt for the merchandise mentioned therein. The delay the voyage the last lender has preference on the security
on the part of the consignee shall make him liable for the preference over the previous over the subsequent ones
damages which such delay may cause the captain. one; Reason: the last loan
________ contributes in the
preservation of the things
Delivery of a copy of the bill of lading plus receipt of the goods pledged
sufficient compliance by consignee under the article.
________ The contract must be reduced Said requisite is not always
at least to writing to give rise necessary
SECTION TWO—LOANS ON BOTTOMRY AND RESPONDENTIA to judicial action
The action pertaining to the Not extinguished, the lender
ARTICLE 719. A loan in which under any condition whatever, lender is extinguished by the being reduced merely to
the repayment of the sum loaned and of the premium absolute loss of the effects on unsecured creditor
stipulated depends upon the safe arrival in port of the goods on which the loan is made
which it is made, or of the price they may receive in case of

45 | P LATON
The loan should be recorded Registration is not necessary
in the registry of vessels, to be
effective against third persons
Marine insurance compared with and distinguished from loan
on bottomry or respondentia—
LOAN ON BOTTOMRY OR
MARINE INSURANCE
RESPONDENTIA
They pertain to marine risks or perils enumerated in the
contracts
Consensual contracts Real contracts
If the marine perils to be The amount loaned with the
avoided should take place, the interest or premium agreed
value of loss or damage of upon shall not be paid by
subject matter as insured is to borrower to lender
be paid by the insurer to the
assured
The premiums or interest on bottomry and respondentia loans
although beyond the lawful rate of interest, not subject to
Usury Law.
________
ARTICLE 720. Loans on bottomry or respondentia may be
executed:
1. By means of a public instrument.
2. By means of a policy signed by the contracting parties and
the broker taking part therein. cdt3.By means of a private
instrument. Under whichever of these forms the contract is
executed, it shall be entered in the certificate of the registry of
the vessel and shall be recorded in the registry of vessels,
without which requisites the credits of this kind shall not have,
with regard to other credits, the preference which, according to
their nature, they should have, although the obligation shall be
valid between the contracting parties. The contracts made
during a voyage shall be governed by the provisions of Articles
583 and 611, and shall be effective with regard to third persons
from the date of their execution, if they should be recorded in
the registry of vessels of the port of registry of the vessel
before the lapse of eight days following its arrival. If said eight
days should elapse without the record having been made in the
corresponding registry, the contracts made during the voyage
of a vessel shall produce no effect with regard to third persons,
except from the day and date of their inscription. In order that
the policy of the contracts executed in accordance with No. 2
may have binding force, they must conform to the registry of
the broker who took part therein. With respect to those
executed in accordance with No. 3 the acknowledgment of the
signature shall be required. Contracts which are not reduced to
writing shall not give rise to judicial action.
ARTICLE 721. In a contract on bottomry or respondentia the
following must be stated:
1. The kind, name, and registry of the vessel.
2. The name, surname, and domicile of the captain.
3. The names, surnames, and domiciles of the person giving and
the person receiving the loan.
4. The amount of the loan and the premium stipulated.5.The
time for repayment.6.The goods pledged to secure
repayment.7.The voyage during which the risk is run.
________
The requisites mentioned in the above article are
INDISPENSABLE under penalty of being void, except those
indicated in Nos. 1 and 5.
________
ARTICLE 722. The contract may be made to order, in which case
they shall be transferable by indorsement, and the indorsee
shall acquire all the rights and shall incur all the risks
corresponding to the indorser.
ARTICLE 723. Loans may be made in goods and in merchandise,
fixing their value in order to determine the principal of the loan.
ARTICLE 724. The loans may be constituted jointly or
separately:
1. On the hull of the vessel.
2. On the rigging.
3. On the equipment, provisions, and fuel.4.On the engine, if
the vessel is a steamer.5.On the merchandise loaded. If the
loan in constituted on the hull of the vessel, the rigging,
equipment and other goods, provisions, fuel, steam engines,
and the freightage earned during the voyage on which the loan
is made shall also be considered as included in the liability for
the loan. If the loan is made on the cargo, all that which
constitutes the same shall be subject to the repayment; and if
on a particular object of the vessel or of the cargo, only the
object concretely and specifically mentioned shall be liable.
ARTICLE 725.No loans on bottomry may be made on the
salaries of the crew or on the profits expected.
________
The provisions of this article is just because the salaries of the
crew are not capital of the shipowner, nor future profits
commercial effects.
________
ARTICLE 726.If the lender should prove that he loaned an
amount larger than the value of the object liable for the
bottomry loan, on account of fraudulent measures employed
by the borrower, the loan shall be valid only for the amount at
which said object is appraised by experts. The surplus principal
shall be returned with legal interests for the entire time
required for repayment.
ARTICLE 727. If the full amount of the loan contracted in order
to load the vessel should not be used for the cargo, the balance
shall be returned before clearing.
The same procedure shall be observed with regard to the goods
taken as loan, if they were not loaded.
________
The rule of this article is reasonable because the amount to
which it refers has not been applied, voluntarily or involuntarily
for the purpose of the contract, and because by this way other
46 | P LATON
contracts of different nature are avoided in being included
under the name of loan on bottomry.
________
ARTICLE 728. The loan which the captain takes at the point of
residence of the owners of the vessel shall only affect that part
thereof which belongs to the captain, if the other owners or
their agents should not have given their express authorization
therefor or should not have taken part in the transaction. If one
or more of the owners should be requested to furnish the
amount necessary to repair or provision the vessel, and they
should not do so within twenty-four hours, the interest which
the parties in default may have in the vessel shall be liable for
the loan in the proper proportion. Outside of the residence of
the owners the captain may contract loans in accordance with
the provisions of Articles 583 and 611.
ARTICLE 729. Should the goods on which money is taken not be
subjected to risk, the contract shall be considered a simple
loan, with the obligation on the part of the borrower to return
the principal and interest at the legal rate, if that agreed upon
should not be lower.
________
Cases in which a loan on bottomry or respondentia may be
considered a simple loan—
1. If the amount loaned is proved to be larger than the
value of the object liable for the loan on account of
fraudulent means employed by the borrower, the
surplus principal is considered as simple loan to be
returned with legal interest;
2. If the full amount of the loan given in order to load
the vessel should not be used for the cargo, or given
on the goods if all of them could not have been
loaded, the balance is considered as simple loan to be
returned before starting the voyage;
3. If the effects on which the loan is taken be not
subjected to risk, the principal shall be considered
loan to be returned with legal interest.
________
ARTICLE 730. Loans made during the voyage shall have
preference over those made before the clearing of the vessel,
and they shall be graduated in the inverse order of their dates.
The loans for the last voyage shall have preference over prior
ones. Should several loans have been made at the same port of
arrival under stress and for the same purpose, all of them shall
be paid pro rata.
________
By virtue of these subsequent loans, the previous ones could
exist and subsist, and without the former, the loans with the
vessel and its effects would have gone into the bottom of the
sea
________
ARTICLE 731. The actions pertaining to the lender shall be
extinguished by the absolute loss of the goods on which the
loan was made, if it arose from an accident of the sea at the
time and during the voyage designated in the contract, and it is
proven that the cargo was on board; but this shall not take
place if the loss was caused by the inherent defect of the thing,
or through the fault or malice, of the borrower, or barratry on
the part of the captain, or if it was caused by damages suffered
by the vessel as a consequence of being engaged in
contraband, or if it arose from having loaded the merchandise
on a vessel different from that designated in the contract,
unless this change should have been made by reason of force
majeure. Proof of the loss as well as of the existence in the
vessel of the goods declared to the lender as the object of the
loan is incumbent upon him who received the loan.
________
Under this article the money lender has agreed to run the
proper risks of the sea, but not those caused by the captain or
by the crew. The simple barratry of the captain having been not
distinguished from the fraudulent one, it must be understood
that the exception includes both of them.
________
ARTICLE 732. Lenders on bottomry or respondentia shall suffer,
in proportion to their respective interest, the general average
which may take place in the goods on which the loan is made.
In particular averages, in the absence of an express agreement
between the contracting parties, the lender on bottomry or
respondentia shall also contribute in proportion to his
respective interest, should it not belong to the kind of risks
excepted in the foregoing article.
ARTICLE 733. Should the period during which the lender shall
run the risk not have been stated in the contract, it shall last,
with regard to the vessel, engines, rigging, and equipment,
from the moment said vessel puts to sea until she drops anchor
in the port of destination; and with regard to the merchandise,
from the time they are loaded at the shore or wharf of the port
of shipment until they are unloaded in the port of consignment.
ARTICLE 734. In case of shipwreck, the amount liable for the
payment of the loan shall be reduced to the proceeds of the
goods saved, after deducting the costs of the salvage. If the
loan should be on the vessel or any of its parts, the freightage
earned during the voyage for which said loan was contracted
shall also be liable for its payment, as far as it may reach.
ARTICLE 735. If the same vessel or cargo should be the object of
a loan on bottomry or respondentia and marine insurance, the
value of what may be saved in case of shipwreck shall be
divided between the lender and the insurer, in proportion to
the legitimate interest of each one, taking into consideration,
for this purpose only, the principal with respect to the loan, and
without prejudice to the right of preference of other creditors
in accordance with Article 580.
ARTICLE 736.If there should be delay in repayment of the
principal and premiums of the loan, only the former shall bear
of legal interest.
________
SECTION THREE—MARINE INSURANCE
ARTICLES 737 to 805.(These provisions are expressly repealed
by Section 204 of Act No. 2497,otherwise known as "The
Insurance Act.") The new law of governing insurance is PD No.
612, as amended, which took effect on Dec. 18, 1974.
________
TITLE FOUR—RISKS, DAMAGES AND ACCIDENTS OF
MARITIME COMMERCE
The risks, damages and accidents of maritime commerce are:
47 | P LATON
 a) Averages;
b) Arrivals under stress;
c) Collisions; and
d) Shipwrecks.
SECTION ONE—AVERAGES
ARTICLE 806. For the purposes of this code the following shall
be considered averages:
1.All extraordinary or accidental expenses which may be
incurred during the voyage in order to preserve the vessel, the
cargo, or both.
2.Any damages or deteriorations which the vessel may suffer
from the time it puts to sea from the port of departure until it
casts anchor in the port of destination, and those suffered by
the merchandise from the time they are loaded in the port of
shipment until they are unloaded in the port of their
consignment.
ARTICLE 807.The petty and ordinary expenses incident to
navigation, such as those of pilotage of coasts and ports, those
of lighterage and towage, anchorage, inspection, health,
quarantine, lazaretto, and other so-called port expenses, costs
of barges and unloading until the merchandise is placed on the
wharf, and any other usual expenses of navigation, shall be
considered ordinary expenses to be defrayed by the ship
owner, unless there is an express agreement to the contrary.
________
The foregoing enumerated expenses may be considered also as
averages when there is an express agreement including them as
averages.
________
ARTICLE 808.Averages shall be:
1. Simple or particular.
2. General or gross.
ARTICLE 809.As a general rule, simple or particular averages
shall include all the expenses and damages caused to the vessel
or to her cargo which have not inured to the common benefit
and profit of all the persons interested in the vessel and her
cargo, and especially the following:
1. The losses suffered by the cargo from the time of its
embarkation until it is unloaded, either on account of inherent
defect of the goods or by reason of an accident of the sea or
force majeure, and the expenses incurred to avoid and repair
the same.
2. The losses and expenses suffered by the vessel in its hull,
rigging, arms, and equipment, for the same causes and reasons,
from the time it puts to sea from the port of departure until it
anchors and lands in the port of destination.
3. The losses suffered by the merchandise loaded on deck,
except in coastwise navigation, if the marine ordinances allow
it.
4. The wages and victuals of the crew when the vessel is
detained or embargoed by 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
repairs or secure provisions.
6. The lowest value of the goods sold by the captain in arrivals
under stress for the payment of provisions and in order to save
the crew, or to meet any other need of the vessel, against
which the proper amount shall be charged.
7. The victuals and wages of the crew while the vessel is in
quarantine.
8. The loss inflicted upon the vessel or cargo by reason of an
impact or collision with another, if it is accidental and
unavoidable. If the accident should occur through the fault or
negligence of the captain, the latter shall be liable for all the
losses caused.
9. Any loss suffered by the cargo through the fault, negligence,
or barratry of the captain or of the crew, without prejudice to
the right of the owner to recover the corresponding indemnity
from the captain, the vessel, and the freightage.
ARTICLE 810. The owner of the goods which gave rise to the
expense or suffered the damage shall bear the simple or
particular averages.
ARTICLE 811. As a general rule, general or gross averages shall
include all the damages and expenses which are deliberately
caused in order to save the vessel, its cargo, or both at the
same time, from a real and known risk, and particularly the
following:
1. The goods or cash invested in the redemption of the vessel
or of the cargo captured by enemies, privateers, or pirates, and
the provisions, wages, and expenses of the vessel detained
during the time the settlement or redemption is being made.
2. The goods jettisoned to lighten the vessel, whether they
belong to the cargo, to the vessel, or to the crew, and the
damage suffered through said act by the goods which are kept
on board.
3. The cables and masts which are cut or rendered useless, the
anchors and the chains which are abandoned, in order to 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 it in condition to
enter a port or roadstead, and the damage resulting therefrom
to the goods removed or transferred.
5. The damage suffered by the goods of the cargo by the
opening made in the vessel in order to drain it and prevent its
sinking.
6. The expenses caused in order to float a vessel intentionally
stranded for the purpose of saying it.
7. The damage caused to the vessel which had to be opened,
scuttled or broken in order to save the cargo.
8. The expenses for the treatment and subsistence of the
members of the crew who may have been wounded or crippled
in defending or saying the vessel.
48 | P LATON

9. The wages of any member of the crew held as hostage by
enemies, privateers, or pirates, and the necessary expenses
which he may incur in his imprisonment, until he is returned to
the vessel or to his domicile, should he prefer it.
10. The wages and victuals of the crew of a vessel chartered by
the month, during the time that it is embargoed or detained by
force majeure or by order of the government, or in order to
repair the damage caused for the common benefit.
the captain and by the officers of the vessel. In the minutes,
and after the resolution, shall be stated in detail all the goods
jettisoned, and mention shall be made of the injuries caused to
those kept on board. The captain shall be obliged to deliver one
copy of these minutes to the maritime judicial authority of the
first port he may make, within twenty-four hours after his
arrival, and to ratify it immediately under oath.
ARTICLE 815. The captain shall direct the jettison, and shall
order the goods cast overboard in the following order:

11. The depreciation resulting in the value of the goods sold at 1. Those which are on deck, beginning with those which
arrival under stress in order to repair the vessel by reason of embarrass the maneuver or damage of the vessel, preferring, if
gross average. possible, the heaviest ones with the least utility and value.

12. The expenses of the liquidation of the average. 2. Those which are below the upper deck, always beginning
________ with those of the greatest weight and smallest value, to the
amount and number absolutely indispensable.
Requisites for general averages— ________
1. There must be a common danger—both the ship and
the cargo, after it has been loaded, are subject to the General or gross averages and simple or particular averages,
same danger, whether during the voyage, or in the distinguished—
port of loading or unloading, that the danger arises
from accidents of the sea, dispositions of the GENERAL OR GROSS SIMPLE OR PARTICULAR
authority, or faults of men;
AVERAGES AVERAGES
2. That for the common safety part of the vessel or of
the cargo or both is sacrificed deliberately; Both the ship and cargo are There is no such common
3. That from the expenses or damages caused follows subject to the same danger danger in both the vessel and
the successful saving of the vessel and cargo; which is real and known the cargo
4. That the expenses or damages should have been Part of the vessel or of the The expenses and damage
incurred or inflicted after taking proper legal steps cargo or both is sacrificed caused to the vessel or to her
and authority. deliberately cargo are neither deliberately
________ made nor subject to any legal
step or authority
ARTICLE 812. In order to satisfy the amount of the gross or
general averages, all the persons having an interest in the From the expenses or damage The expenses or damage
vessel and cargo therein at the time of the occurrence of the caused follows the successful suffered have not injured to
average shall contribute. saving of the vessel and her such common benefit
cargo
ARTICLE 813. In order to incur the expenses and cause the All the persons having an The owner of the things which
damages corresponding to gross average, there must be a interest in the vessel and gave rise to the expenses or
resolution of the captain, adopted after deliberation with the cargo saved shall contribute suffered the damages shall
sailing mate and other officers of the vessel, and after hearing to indemnify the expenses or bear the same
the persons interested in the cargo who may be present. If the damages caused
latter shall object, and the captain and officers or a majority of
________
them, or the captain, if opposed to the majority, should
consider certain measures necessary, they may be executed
ARTICLE 816. In order that the goods jettisoned may be
under his responsibility, without prejudice to the right of the
included in the gross average and the owners thereof be
shippers to proceed against the captain before the competent
entitled to indemnity, it shall be necessary insofar as the cargo
judge or court, if they can prove that he acted with malice, lack
is concerned that their existence on board be proven by means
of skill, or negligence. If the persons interested in the cargo,
of the bill of lading; and with regard to those belonging to the
being on board the vessel, have not been heard, they shall not
vessel, by means of the inventory prepared before the
contribute to the gross average, their share being chargeable
departure in accordance with the first paragraph of Article 812.
against the captain, unless the urgency of the case should be
such that the time necessary for previous deliberations was
ARTICLE 817. If in lightening a vessel on account of a storm, in
wanting.
order to facilitate its entry into a port or roadstead, part of the
cargo should be transferred to lighters or barges and be lost,
ARTICLE 814. The resolution adopted to cause the damages
the owner of said part shall be entitled to indemnity, as if the
which constitute general average must necessarily be entered
loss had originated from a gross average, the amount thereof
in the log book, stating the motives and reasons for the dissent,
being distributed between the vessel and cargo from which it
should there be any, and the irresistible and urgent causes
came. If, on the contrary, the merchandise transferred should
which impelled the captain if he acted of his own accord. In the
be saved and the vessel should be lost, no liability may be
first case the minutes shall be signed by all the persons present
demanded of the salvage.
who could do so before taking action, if possible; and if not, at
the first opportunity. In the second case, it shall be signed by

49 | P LATON
ARTICLE 818. If, as a necessary measure to extinguish a fire in a
port, roadstead, creek, or bay, it should be decided to sink any
vessel, this loss shall be considered gross average, to which the
vessels saved shall contribute.
________
SECTION TWO—ARRIVALS UNDER STRESS
ARTICLE 819. If during the voyage the captain should believe
that the vessel cannot continue the trip to the port of
destination on account of the lack of provisions, well-founded
fear of seizure, privateers, or pirates, or by reason of any
accident of the sea disabling it to navigate, he shall assemble
the officers and shall summon the persons interested in the
cargo who may be present, and who may attend the meeting
without the right to vote; and if, after examining the
circumstances of the case, the reason should be considered
well-founded, the arrival at the nearest and most convenient
port shall be agreed upon, drafting and entering the proper
minutes, which shall be signed by all, in the log book.
The captain shall have the deciding vote, and the persons
interested in the cargo, may make the objections and protests
they may deem proper, which shall be entered in the minutes
in order that they may make use thereof in the manner they
may consider advisable.
________
“Arrival under stress”—the arrival of a vessel at the nearest and
most convenient port, if during the voyage the vessel cannot
continue the trip to the port of destination on account of the
lack of provisions, well-founded fear of seizure, privateers or
pirates, or by reason of any accident of the sea disabling it to
navigate.
Legitimate causes for such arrival—
1. Lack of provisions;
2. Well-founded fear of seizure, privateers, or pirates;
3. By reason of any accident of the sea disabling the
vessel to navigate
See Article 612, paragraph 8, Code of Commerce for the protest
to be made by the captain within 24 hours before maritime
authority or Filipino consul (if in a foreign country), when
making a port in distress or arrival under stress.
________
ARTICLE 820. An arrival shall not be considered lawful in the
following cases:
1. If the lack of provisions should arise from the failure to take
the necessary provisions for the voyage according to usage and
customs, or if they should have been rendered useless or lost
through bad stowage or negligence in their care.
2. If the risk of enemies, privateers, or pirates should not have
been well known, manifest, and based on positive and provable
facts.
3. If the defect of the vessel should have arisen from the fact
that it was not repaired, rigged, equipped, and prepared in a
manner suitable for the voyage, or from some erroneous order
of the captain.
4. When malice, negligence, want of foresight, or lack of skill on
the part of the captain exists in the act causing the damage.
ARTICLE 821. The expenses of an arrival under stress shall
always be for the account of the ship owner or agent, but they
shall not be liable for the damages which may be caused the
shippers by reason of the arrival provided the latter is
legitimate. Otherwise, the ship agent and the captain shall be
jointly liable.
ARTICLE 822. If in order to make repairs to the vessel or
because there is danger that the cargo may suffer damage, it
should be necessary to unload, the captain must request
authorization from the competent judge or court for the
removal, and carry it out with the knowledge of the person
interested in the cargo, or his representative, should there be
any. In a foreign port, it shall be the duty, of the Philippine
Consul, where there is one, to give the authorization.
In the first case, the expenses shall be for the account of the
ship agent or owner, and in the second, they shall be
chargeable against the owners of the merchandise for whose
benefit the act was performed. If the unloading should take
place for both reasons, the expenses shall be divided
proportionately between the value of the vessel and that of the
cargo.
ARTICLE 823. The custody and preservation of the cargo which
has been unloaded shall be intrusted to the captain, who shall
be responsible for the same, except in cases of force majeure.
ARTICLE 824. If the entire cargo or part thereof should appear
to be damaged, or there should be imminent danger of its
being damaged, the captain may request of the competent
judge or court, or of the consul in a proper case, the sale of all
or of part of the former, and the person taking cognizance of
the matter shall authorize it, after an examination and
declaration of experts, advertisements, and other formalities
required by the case, and an entry in the book, in accordance
with the provisions of Article 624.The captain shall, in a proper
case, justify the legality of his conduct, under the penalty of
answering to the shipper for the price the merchandise would
have brought if they had arrived in good condition at the port
of destination.
ARTICLE 825. The captain shall be responsible for the damages
caused by his delay, if after the cause of the arrival under stress
has ceased, he should not continue the voyage. If the cause of
arrival should have been the fear of enemies, privateers, or
pirates, a deliberation and resolution in a meeting of the
officers of the vessel and persons interested in the cargo who
may be present, in accordance with the provisions contained in
Article 819, shall precede the departure.
________
SECTION THREE—COLLISIONS
ARTICLE 826. If a vessel should collide with another, through or
the fault, negligence, or lack of skill of the captain, sailing mate,
or any other member of the complement, the owner of the
vessel at fault shall indemnify the losses and damages suffered,
after an expert appraisal.
________
50 | P LATON
Example—If vessels A and B collided with each other and the
collision was caused through the fault and negligence of the
captain of vessel B, the owner (naviero) of vessel B shall
indemnify the damage suffered by vessel A, and all damages
suffered.
Collision—in its strict sense, collision means the impact of two
vessels both moving and is distinguished from allusion, which
designates the striking of a moving vessel against one that is
stationary. But collision is used in a broad sense to include
allusion, and perhaps another species of encounters between
vessels.
Vessel (meaning, under this section)—“maritime” vessel, and in
order to be such, the vessel being not an accessory to another
vessel, must be licensed to engage in the transportation of
passengers and/or freight by sea (not merely in rivers, inlets,
coves or bays).
Naviero—owner and is further to be inferred from Article 837,
which limits the civil liability expressed in Article 826 to the
value of the vessel with all her appurtenances and all the
freight earned during the voyage.
In the term naviero, both the shipowner and the shipagent are
liable solidarily for collisions, being tortious act.
Zones (or divisions) of time in collision of vessels—
1. All the time up to the moment when the risk of
collision may be said to have begun. Each vessel is
free to direct its course as it deems best without
reference to the movements of the other vessel;
2. The time between the moment when the risk of
collision begins and the moment when it has become
a practical certainty.
 The burden is on the vessel required to keep
away and avoid the danger;
3. The time between the moment when collision has
become a practical certainty and the moment of
actual contact.
 The rule is that the vessel which has forced the
privileged vessel into danger is responsible even
if the privileged vessel has committed an error
within that zone.
Error in extremis—a vessel must not approach so near a
privileged vessel and in such a course as to alarm a man of
ordinary skill and prudence. If the man on the privileged vessel
makes an improper maneuver, he is not responsible. This is
what is called an error “in extremis.”
Foreign corporation although not engaged in business or not
registered in the Philippines can maintain action for damages
on collision.
Passengers not allowed to intervene in action between vessels
in collision.
When shipowner and shipagent shall be liable for the acts of
the captain—
1. For the obligations contracted by the captain to
repair, equip, and provision the vessel, provided the
creditor proves that the amount claimed was
invested therein.
2. For damages arising from(culpa contractual in marine
transportation) the conduct of the captain in the
vigilance over the goods and for the safety of
passengers, transported by the vessel.
3. For those enumerated in Article 618 of the Code of
Commerce, including the captain’s misuse of powers
and non-fulfillment of his duties.
4. For damages to third persons for culpa aquiliana or
tort committed by the captain (except in collision with
another vessel), unless the shipowner or shipagent
prove that they observed all the diligence of a good
father of a family to prevent the damage.
5. For damages if the vessel should collide with another
through the fault, negligence, or want of skill of the
captain, sailing mate, or any other member of the
complement.
________
ARTICLE 827. If the collision is imputable to both vessels, each
one shall suffer its own damages, and both shall be solidarily
responsible for the losses and damages occasioned to their
cargoes.
________
Example—If vessel A and B collided with each other through
the fault of their respective captains, each owner of the
respective vessel shall suffer his own damages but both shall be
solidarily liable for the damage occasioned to their cargoes.
________
ARTICLE 828. The provisions of the preceding article are
applicable to the use in which it cannot be determined which of
the two vessels has caused the collision.
________
Example—If vessels A and B collided with each other and it is
not shown by proof which of the two vessels is blameworthy,
each owner of the respective vessel shall suffer his own
damage but both shall be solidarily liable for the damage
occasioned to their cargoes. Reason: this case is deemed as if
the collision is imputable to both vessels, since it cannot be
determined which one of the two vessels was the cause of the
collision.
The doctrines of “last clear chance” and “contributory
negligence” in tort are not applicable in collisions of vessels at
sea.
________
ARTICLE 829. In the cases above mentioned the civil action of
the owner against the person causing the injury as well as the
criminal liabilities, which may be proper, are reserved.
ARTICLE 830. If a vessel should collide with another, through
fortuitous event or force majeure, each vessel and its cargo
shall bear its own damages.
________
Example—If vessel A collided with vessel B because of the
strong hurricane which caused the collision, each owner of the
respective vessel and his cargo shall suffer their respective
damage.
________
51 | P LATON
ARTICLE 831. If a vessel should be forced by a third vessel to
collide with another, the owner of the third vessel shall
indemnify the losses and damages caused, the captain thereof
being civilly liable to said owner.
________
Example—If vessel A collided with vessel B through the fault of
the captain of vessel C, the shipowner of vessel C shall
indemnify the damage caused. The captain of the third vessel
shall be civilly liable to the owner thereof.
________
ARTICLE 832. If by reason of a storm or other cause of force
majeure, a vessel which is properly anchored and moored
should collide with those nearby, causing them damages, the
injury occasioned shall be considered as particular average of
the vessel run into.
________
Example—If vessel A which was properly anchored at the port
collided with and caused damage to vessel B, because of storm
or force majeure, vessels A and B shall suffer their own
respective damage. The injury occasioned in this case shall be
considered as a particular average of the vessel run into.
________
ARTICLE 833. A vessel which, upon being run into, sinks
immediately, as well as that which, having been obliged to
make a port to repair the damages caused by the collision, is
lost during the voyage or is obliged to be stranded in order to
be saved, shall be presumed as lost by reason of collision.
ARTICLE 834.If the vessels colliding with each other should have
pilots on board discharging their duties at the time of the
collision, their presence shall not exempt the captains from the
liabilities they incur, but the latter shall have the right to be
indemnified by the pilots, without prejudice to the criminal
liability which the latter may incur.
ARTICLE 835. The action for the recovery of losses and damages
arising from collisions cannot be admitted if a protest or
declaration is not presented within twenty-four hours before
the competent authority of the point where the collision took
place, or that of the first port of arrival of the vessel, if in
Philippine territory, and to the consul of the Republic of the
Philippines if it occurred in a foreign country.
________
Cases where protest within 24 hours is required as condition
precedent—
1. When the vessel makes arrival under stress;
2. In case of shipwreck;
3. In case the vessel has gone through a hurricane or
when the captain believes that the cargo has suffered
damages or averages;
4. In case of maritime collisions of vessels
Cases where protest within 24 hours is not required as
condition precedent—
1. Not necessary to preserve the rights of a person
aboard a motor boat engaged in conveying
passengers between ship and shore who is injured in
a collision between boat and the larger vessel;
2. Nor to the recovery of damages sustained by a group
of fishermen as a result of a collision between the
boats manned by them and a steamer, occasioned by
the negligence of the latter;
Note: Failure to make protest is not an impediment to the
maintenance of a civil action under Article 2176 and 2180 of
the new Civil Code.
Protest is only required when the civil action is brought under
the provisions on “collisions” of the Code of Commerce.
Justice of the peace and in his absence an auxiliary justice of
the peace, competent persons to admit protest.
________
ARTICLE 836. With respect to damages caused to persons or to
the cargo, the absence of protest may not prejudice the
persons interested who were not on board or were not in a
condition to make known their wishes.
________
Excusable condition of a person for making protest—a person
who on account of a collision has suffered physical injuries
sufficient to keep him in a hospital for many months is excused
from the requirement to make protest within 24 hours from
collision.
________
ARTICLE 837. The civil liability incurred by the ship owners in
the case prescribed in this section, shall be understood as
limited to the value of the vessel with all its appurtenances and
freightage earned during the voyage.
________
Cases in which total loss of vessel will exempt shipowner or
agent from civil liability—
a) Extinction of civil liability for the indemnities which
arises from the conduct of the captain in the vigilance
over the goods and for the safety of passengers in
maritime transportation;
b) Extinction of rights both as regards the right of the
crew (including the captain) to demand wages and
the right of the shipowner or agent to recover
advances made, if the vessel and her cargo should be
totally lost by reason of capture or shipwreck; and
c) Extinction of civil liability incurred by the shipowner
or agent in cases of maritime collisions.
Note: Not applicable to river and bay traffic because—
a) They are provisions found only under “Maritime
Commerce” of the Code; and
b) They were adopted to offset the adverse conditions
of innumerable hazards and peril attending maritime
trade and sea voyage which conditions are not
present in river and bay traffic.
Loss of the vessel extinguishes the liability if no insurance or
freight—where, however, such vessel is insured and the
insurance is collected by the owner, the insurance substitutes
the vessel and the owner becomes responsible for the injuries
caused to the extent of the insurance collected; if the vessel
was not insured, then the freights earned shall answer for the
civil liability of the shipowner.
Liability of shipowner or shipagent for collision or shipwrecks in
conection with their contract of carriage—merely co-existent
52 | P LATON
with his interest in the vessel such that a total loss thereof
results in its extinction.
Exception—the international rule is to the effect that the right
of abandonment of vessels, as a legal limitation of a
shipowner’s liability, does not apply to cases where injury or
the average is due to shipowner’s own fault.
But the shipowner or shipagent may still be liable under the
Workmen’s Compensation Act inspite of loss of vessel—the law
was enacted in abrogation of the other existing laws.
________
ARTICLE 838. When the value of the vessel and her
appurtenances should not be sufficient to cover all the
liabilities, the indemnity due by reason of the death or injury of
persons shall have preference.
ARTICLE 839. If the collision should take place between
Philippine vessels in foreign waters, or if having taken place in
the open seas, and the vessels should make a foreign port, the
Consul of the Republic of the Philippines in said port shall hold
a summary investigation of the accident, forwarding the
proceedings to the Secretary of the Department of Foreign
Affairs for continuation and conclusion.
________
SECTION FOUR—SHIPWRECKS
Shipwreck—in a popular sense, it means a ship which has
received injuries rendering her incapable of navigation. It is also
defined as the loss of a vessel at sea, either by being swallowed
up by the waves, by running against a thing at sea, or on the
coast.
________
ARTICLE 840. The losses and deteriorations suffered by a vessel
and her cargo by reason of shipwreck or stranding shall be
individually for the account of the owners, the part which may
be saved belonging to them in the same proportion.
ARTICLE 841. If the wreck or stranding should be caused by the
malice, negligence, or lack of skill of the captain, or because the
vessel put to sea was insufficiently repaired and equipped, the
ship agent or the shippers may demand indemnity of the
captain for the damages caused to the vessel or to the cargo by
the accident, in accordance with the provisions contained in
Articles 610, 612, 614, and621.
________
Persons bearing the loss in shipwreck—
1. Owners
2. Captain, in cases where the wrecking or stranding of
the vessel occurred through his malice, carelessness
or lack of skill and in the remaining cases indicated in
Article 841 of the Code of Commerce.
Note: there is no provision whatever by which the agent or
shipowner is made responsible.
The other effects of shipwreck—
1. In case of wreck, the captain shall make the proper
protest in due form at the first port reached before
the competent authority or Filipino consul within
twenty-four hours, specifying therein all the incidents
of the wreck.
2. If the vessel and her cargo should be totally lost, by
reason of capture or wreck, all rights shall be
extinguished, both as regards the crew to demand
any wages whatsoever, and as regards the ship agent
to recover the advances made.
3. Neither merchandise lost by reason of shipwreck or
stranding nor those seized by the pirates or enemies,
shall pay freightage. If the freightage should have
been paid in advance, it shall be returned, unless
there is an agreement to the contrary.
4. In case of shipwreck, the amount liable for the
payment of the loan shall be reduced to the proceeds
of the goods saved, after deducting the costs of the
salvage.
5. If the same vessel or cargo should be the object of a
loan on bottomry or respondentia and marine
insurance, the value of what may be saved in case of
shipwreck shall be divided between the lender and
the insurer, in proportion to the legitimate interest of
each one, taking into consideration, for this purpose
only, the principal with respect to the loan, and
without prejudice to the right of preference of other
creditors in accordance with Article 580.
________
ARTICLE 842. The goods saved from the wreck shall be specially
bound for the payment of the expenses of the respective
salvage, and the amount thereof must be paid by the owners of
the former before they are delivered to them, and with
preference over any other obligation if the merchandise should
be sold.
________
Where the ship and her cargo are saved together, the salvage
allowance should be charged against the ship and cargo in the
proportion of their respective values, the same as in the case of
general average; and neither is liable for the salvage due from
the other. Therefore, where personal action is brought by the
salvor against the owner of the ship, the liability of the latter is
limited to such part of the salvage compensation due for the
entire service as is proportionate to the value of the ship.
________
ARTICLE 843. If several vessels sail under convoy, and any of
them should be wrecked, the cargo saved shall be distributed
among the rest in proportion to the amount which each one is
able to take. If any captain should refuse, without sufficient
cause, to receive what may correspond to him, the captain of
the wrecked vessel shall enter a protest against him, before
two sea officials, of the losses and damages resulting
therefrom, ratifying the protest within twenty-four hours after
arrival at the first port, and including it in the proceedings he
must institute in accordance with the provisions contained in
Article 612.If it is not possible to transfer to the other vessels
the entire cargo of the vessel wrecked, the goods of the highest
value and smallest volume shall be saved first, the designation
thereof to be made by the captain with the concurrence of the
officers of his vessel.
ARTICLE 844. A captain who may have taken on board the
goods saved from the wreck shall continue his course to the
port of destination, and on arrival shall deposit the same, with
judicial the intervention, at the disposal of their legitimate
53 | P LATON
owners. In case he changes his course, if he can unload them at
the port of which they were consigned, the captain may make
said port if the shippers or supercargoes present and the
officers and passengers of the vessel consent thereto; but he
may not do so, even with said consent, in time of war or when
the port is difficult and dangerous to make. The owners of the
cargo shall defray all the expenses of this arrival as well as the
payment of the freightage which, after taking into
consideration the circumstances of the case, may be fixed by
agreement or by a judicial decision.
ARTICLE 845. If on the vessel there should be no person
interested in the cargo who can pay the expenses and
freightage corresponding to the salvage, the competent judge
or court may order the sale of the part necessary to cover the
same. This shall also be done when its preservation is
dangerous, or when in a period of one year it should not have
been possible to ascertain who are its legitimate owners. In
both cases the proceedings shall be with the publicity and
formalities prescribed in Article 579, and the net proceeds of
the sale shall be safely deposited, in the discretion of the judge
or court, so that they may be delivered to the legitimate owner
thereof.
________
TITLE FIVE—PROOF AND LIQUIDATION OF AVERAGES
SECTION ONE—PROVISIONS COMMON TO ALL KINDS OF
AVERAGES
ARTICLE 846. Those interested in the proof and liquidation of
averages may mutually agree and bind themselves at any time
with regard to the liability, liquidation, and payment thereof. In
the absence of agreements, the following rules shall be
observed:
1. The proof of the average shall take place in the port where
the repairs are made, should any be necessary, or in the port of
unloading.
2. The liquidation shall be made in the port of unloading, if it is
a Philippine port.
3. If the average occurred outside of the jurisdictional waters of
the Philippines, or the cargo has been sold in a foreign port by
reason of an arrival under stress, the liquidation shall be made
in the port of arrival.
4. If the average has occurred near the port of destination, so
that said port can be made, the proceedings mentioned in
Rules 1 and 2 shall be held there.
ARTICLE 847. In the case where the liquidation of the averages
is made privately by virtue of agreement, as well as when a
judicial authority intervened at the request of any of the parties
interested who do not agree thereto, all of them shall be cited,
and heard, should they not have renounced this right. Should
they not be present or should they have no legal
representative, the liquidation shall be made by the Consul in a
foreign port, and where there is none, by the competent judge
or court, according to the laws of the country and for the
account of the proper party. When the representative is a
person well known in the place where the liquidation is made,
his intervention shall be admitted and shall produce legal
effects, even though he be authorized only by a letter of the
ship agent, the shipper, or the insurer.
ARTICLE 848. Claims for averages shall not be admitted if they
do not exceed 5 per cent of the interest which the claimant
may have in the vessel or in the cargo if it be gross average and
1 per cent of the goods damaged if particular average,
deducting in both cases the expenses of appraisal, unless there
is an agreement to the country.
ARTICLE 849. The damages, averages, loans on bottomry and
respondentia and their premiums and any other losses, shall
not earn interest by reason of delay until after the lapse of the
period of three-days, to be counted from the day on which the
liquidation may have been concluded and communicated to the
persons interested in the vessel, in the cargo, or in both at the
same time.
ARTICLE 850. If by reason of one or more accidents of the sea,
particular and gross averages of the vessel, of the cargo, or of
both, should take place on the same voyage, the expenses and
damages corresponding to each average shall be determined
separately in the port where the repairs are made, or where
the merchandise are discharged, sold, or utilized. For this
purpose the captains shall be obliged to demand of the expert
appraisers and of the contractors making the repairs, as well as
of those appraising and taking part in the unloading, repair,
sale, or utilization of the merchandise, that in their
appraisements or estimates and accounts they set down
separately and accurately the expenses and damages pertaining
to each average, and in those of each average those
corresponding to the vessel and to the cargo, also stating
separately whether or not there are damages proceeding from
inherent defect of the thing and not from accident of the sea;
and in case there should be expenses common to the different
averages and to the vessel and its cargo, the amount
corresponding to each must be estimated and stated distinctly.
________
SECTION TWO—LIQUIDATION OF GROSS AVERAGES
ARTICLE 851. At the instance of the captain, the adjustment,
liquidation, and distribution of gross averages shall be held
privately, with the consent of all the parties in interest. For this
purpose, within forty-eight hours following the arrival of the
vessel at the port, the captain shall convene all the person
interested in order that they may decide as to whether the
adjustment or liquidation of the gross average is to be made by
experts and liquidators appointed by themselves, in which case
it shall so done if the interested parties agree. If an agreement
is not possible, the captain shall apply to the competent judge
or court, who shall be the one in the port where these
proceedings are to be held in accordance with the provisions of
this code, or to the consul of the Republic of the Philippines
should there be one, and should there be none, to the local
authority when they are to be held in a foreign port.
________
Captain required to initiate proceeding for liquidation,
adjustment and distribution of gross average
________
ARTICLE 852. If the captain does not comply with the provisions
of the preceding article, the ship agent or the shippers shall
54 | P LATON
demand the liquidation without prejudice to the action they
may bring to demand indemnity from him. ARTICLE 854. The valuation of the objects which are to
________ contribute to the gross average, and that of those which
constitute the average, shall be subject to the following rules:
Cases in maritime transportation where the shipowner or
shipagent will not be liable for the acts of the captain— 1. The merchandise saved which are to contribute to the
1. For the damages caused to the vessel or to the cargo payment of the gross average shall be valued at the current
due to shipwreck or stranding of the vessel caused by price at the port of unloading, deducting the freightage,
the malice, negligence, or lack of skill of the captain, customs duties, and expenses of unloading, as may appear
from a material inspection of the same, without taking the bills
or because the vessel put to sea was insufficiently
of lading into consideration unless there is an agreement to the
repaired and equipped. contrary.
2. For the contracts made during the voyage the
referring to one or more of the obligations mentioned 2. If the liquidation is to be made in the port of departure, the
in subdivisions 8 and 9 of Article 580 (like those for value of the merchandise loaded shall be determined by the
the repair and equipment of the vessel and its purchase price, including the expenses until they are placed on
provisioning with victuals and fuel during the last board, the insurance premium excluded.
voyage, and bottomry bonds, but now governed by
3. If the merchandise should be damaged, they shall be
R.A. No. 6106), the omission of the captain to take appraised at their true value.
the formality of applying to the judge or court if he is
in Philippine territory, and otherwise to the Filipino 4. If the voyage having been interrupted, the merchandise
consul, should there be any, and, in his absence, to should have been sold in a foreign port, and the average cannot
the judge or court or proper local authority, shall be estimated, the value of the merchandise in the port of
make the captain personally liable for the creditors arrival, or the net proceeds obtained at the sale thereof, shall
be taken as the contributing capital.
who may be prejudiced through his fault.
3. For the obligations contracted by the captain if the 5. Merchandise lost, which constitute the gross average, shall
latter exceeds the powers and privileges pertaining to be appraised at the value which merchandise of its kind may
him by reason of his position or conferred upon him have in the port of unloading, provided that its kind and quality
by the shipowner or shipagent, and the amounts appear in the bill of lading; and should they not appear, the
claimed are not used for the benefit of the vessel. value shall be that stated in the invoices of the purchase issued
in the port of shipment, adding thereto the expenses and
4. For the subsidiary liability of the captain who,
freightage subsequently arising.
knowing that a sailor is in the service of another
vessel, should have made a new agreement with him,
6. The masts cut down, the sails, cables, and other equipment
without having required of him the permission of the
of the vessel rendered useless for the purpose of saying it, shall
captain of the other vessel in which he may be, for
be appraised at the current value, deducting one-third by
that part of the indemnity which the sailor could not
reason of the difference between new and old. This deduction
pay.
shall not be made with respect to anchors and chains.
5. For the loan which the captain takes at the point of
residence of the owners of the vessel and which shall
7. The vessel shall be appraised at its true value in the condition
only affect that part thereof which belongs to the
in which it is found.
captain, if the other owners or their agents should
not have given their express authorization therefor or
8. The freightage shall represent 50 per cent by way of
should not have taken part in the transaction.
contributing capital.
________
ARTICLE 855. The merchandise loaded on the upper deck of the
ARTICLE 853. After the experts have been appointed by the
vessel shall contribute to the gross average should they be
persons interested, or by the court, and after the acceptance,
saved; but there shall be no right to indemnity if they should be
they shall proceed to the examination of the vessel and of the
lost by reason of having been jettisoned for common safety,
repairs required and to the appraisal of their cost, separating
except when the marine ordinances allow their shipment in this
these losses and damages from those arising from the inherent
manner in coastwise navigation. The same shall take place with
defect of the things.
that which is on board and is not included in the bills of lading
or inventories, according to the cases. In any case the ship
The experts shall also declare whether the repairs may be made
owner and the captain shall be liable to the shippers for the
immediately, or whether it is necessary to unload the vessel in
damages from the jettison, if the storage on the upper deck
order to examine and repair it.
was made without the consent of the latter.
________
With regard to the merchandise, if the average should be
visible at a mere glance, the examination thereof must be made
Rules as to loss or damage of cargoes on upper deck—As to the
before they are delivered. Should it not be visible at the time of
liability for the loss or damage of the cargoes loaded on the
unloading, said examination may be made after the delivery,
upper deck of the vessel, distinction shall be made between the
provided that it is done within forty-eight hours from the
case of sea-going vessels or ocean borne traffic, and the storage
unloading and without prejudice to the other proofs which the
experts may deem proper.
55 | P LATON
on the upper deck or interisland vessels, as hereunder
explained.
Rules in the case of sea-going vessels or ocean borne traffic—In
the case of sea-going vessels or ocean borne traffic, there are
two rules, namely:
1. The rule as to the storage of goods on the upper deck
made without the consent of the shipper—
 The master who carries goods on deck without
the consent of the shipper does it at his own
risk; if they are damaged or lost in consequence
of their being thus exposed, he cannot protect
himself from responsibility by showing that they
are damaged or lost by the dangers of the sea.
2. The rule with the consent of the shipper—
 When he shipper consents to his goods being
carried on deck, he takes the risk upon himself of
these peculiar perils; any damage, such as those
caused by rain or splashing aboard of sea water,
or where said goods were jettisoned or lost
during storm at sea, will be borne by the owner
of the goods, and will be considered as particular
average
Rules in the case of coastwise or interisland vessels—in the case
of coastwise or interisland vessels, there are also two rules,
namely:
1. The rule as to the storage of goods on the upper deck
without the consent of the shipper—
 Same as in the case of sea-going vessels, where
the master is responsible.
2. The rule with the consent of the shipper—
 If the marine ordinances allow the cargo to be
laden on deck in coastwise navigation, then the
loss or damage suffered by such goods will be
dealth with as general average, and if otherwise,
said loss or damage will be considered as
particular average only.
________
ARTICLE 856. Provisions and munitions of war which the vessel
may have on board, and the clothing used by the captain,
officers, and crew, shall not contribute to the gross average.
The clothing used by the shipper, supercargoes, and passenger
who may be on board at the time of the jettison, shall also be
accepted. Neither shall the goods jettisoned contribute to the
payment of the gross averages which may occur to the
merchandise saved to a different and subsequent risk.
ARTICLE 857. After the appraisement of the goods saved and of
those lost which constitute the gross average, has been
concluded by the experts, the repairs, if any, made on the
vessel, and in this case, the accounts of the same approved by
the persons interested or by the judge or court, the entire
record shall be turn over to the liquidator appointed, in order
that he may proceed with the distribution of the average.
ARTICLE 858. In order to effect the liquidation, the liquidator
shall examine the protest of the captain, comparing it, if
necessary, with the log book, and all the contracts which may
have been made among the persons interested in the average,
the appraisements, expert examinations, and accounts of
repairs made. If, as a result of this examination, he should find
any defect in the procedure which might injure the rights of the
person interested or affect the liability of the captain, he shall
call attention thereof in order that it may be corrected, if
possible, and otherwise he shall include it in the exordial of the
liquidation. Immediately thereafter he shall proceed with the
distribution of the amount of the average, for which purpose he
shall fix:
1. The contributing capital, which he shall determine by the
value of the cargo, in accordance with the rules established in
Article 854.
2. That of the vessel in her actual condition, according to the
statement of experts.
3. The 50 per cent of the amount of the freightage, deducting
the remaining 50 per cent for wages and maintenance of the
crew. After the amount of the gross average has been
determined in accordance with the provisions of this Code, it
shall be distributed pro rata among the goods which are to
cover the same.
ARTICLE 859. The insurers of the vessel of the freightage and of
the cargo shall be obliged to pay for the indemnification of the
gross average, insofar as is required of each one of the objects
respectively.
________
The article is mandatory in its terms, and the insurer, whether
for the vessel or for the freight or for the cargo, is bound to
contribute to the indemnity of the general average.
It places the insurer on the same footing as other persons who
have interest in the vessel, or the cargo therein, at the time of
the occurrence of the general average and who are compelled
to contribute.
________
ARTICLE 860. If, notwithstanding the jettison of merchandise,
breakage of masts, ropes, and equipment, the vessel shall be
lost running the same risk, no contribution whatsoever by
jettison of gross average shall be proper. The owners of the
goods saved shall not be liable for the indemnification of those
jettisoned, lost, or damaged.
ARTICLE 861. If, after the vessel has been saved from the risk
which gave rise to the jettison, it should be lost through
another accident taking place during the voyage, the goods
saved and existing from the first risk shall continue liable to
contribution by reason of the gross average according to their
value in the condition in which they may be found, deducting
the expenses incurred in saving them.
ARTICLE 862. If, in spite of having saved the vessel and the
cargo in consequence of the cutting down of masts or of any
other damage deliberately done to the vessel for said purpose,
the merchandise should subsequently be lost or stolen, the
captain cannot demand of the shippers or consignees that they
contribute to the indemnity for the average, unless the loss
should occur by reason of an act of the owner or consignee
himself.
56 | P LATON
ARTICLE 863. If the owner of the jettisoned goods should
recover them after having received the indemnity for gross
average, he shall be obliged to return to the captain and to the
other persons interested in the cargo the amount he may have
received, deducting the amount of the damage caused by the
jettison and of the expenses incurred in their recovery. In this
case, the amount returned shall be distributed among the
vessel and the persons interested in the cargo in the same
proportion in which they contributed to the payment of the
average.

ARTICLE 864. If the owner of the goods jettisoned should

recover them without having demanded any indemnity, he
shall not be obliged to contribute to the payment of the gross
average which may have been suffered by the rest of the cargo
after the jettison.

ARTICLE 865. The distribution of the gross average shall not be

final until it has been agreed to, or in the absence thereof, until
it has been approved by the judge or court, after an
examination of the liquidation and a hearing of the persons
interested who may be present or of their representatives.

ARTICLE 866. After the liquidation has been approved, it shall

be the duty of the captain to collect the amount of the
contributions, and he shall be liable to the owners of the goods
averaged for the damages they may suffer through his delay or
negligence.

ARTICLE 867. If the person contributing should not pay the

amount of the contribution at the end of the third day after
having been required to do so, the goods saved shall be
proceeded against, in the request of the captain, until payment
has been made from their proceeds.

ARTICLE 868. If the person interested in receiving the goods

saved should not give security sufficient to answer for the
amount corresponding to the gross average, the captain may
defer the delivery thereof until payment has been made.
________

SECTION THREE—LIQUIDATION OF ORDINARY AVERAGES

ARTICLE 869. The experts whom the court or the person

interested may appoint, as the case may be, shall proceed with
the examination and appraisement of the averages in the
manner prescribed in Articles 853 and 854, Rules 2 to 7, insofar
as they are applicable.
________

57 | P LATON
 Presidential Decree No. 1521 port in which the vessel is found, if such Coast Guard District or Station
THE SHIP MORTGAGE DECREE OF 19782 Commander is directed to make the endorsement by the Coast Guard
District or Station Commander of the port of documentation. The Coast
Guard District or Station Commander of the port of documentation
Section 2. Who may Constitute a Ship Mortgage. Any citizen of the
shall give such direction by wire of letter at the request of the
Philippines, or any association or corporation organized under the laws
mortgagee and upon the tender of the cost of communication of such
of the Philippines, at least sixty per cent of the capital of which is
direction. Whenever any new document is issued for the vessel, such
owned by citizens of the Philippines may, for the purpose of financing
endorsement shall be transferred to and endorsed upon the new
the construction, acquisition, purchase of vessels or initial operation of
document by the Coast Guard District or Station Commander.
vessels, freely constitute a mortgage or any other lien or encumbrance
on his or its vessels and its equipment with any bank or other financial
In the case of a vessel holding a provincial certificate of Philippine
institutions, domestic or foreign.
Registry, the endorsement shall be made by the Philippine consul
abroad upon direction by wire or letter from the Maritime Industry
Section 3. Mortgage of Vessel of Domestic Ownership; records.
Authority at the request of the mortgagee and upon tender of the cost
(a) No mortgage, which at the time such mortgage is made includes a
of communication of such direction. A certificate of such endorsement,
vessel of domestic ownership as this term is defined in Presidential
giving the place, time and description of the endorsement, shall be
Decree No. 761, or any portion thereof, as the whole or any part of the
recorded with the records of registration to be maintained at the
property mortgaged, shall be valid, in respect to such vessel, against
Philippine Consulate.
any person other than the mortgagor, his heir or assign, and a person
having actual notice thereof, until such mortgage is recorded in the
(e) A mortgage which includes property other than a vessel shall not be
office of the Philippine Coast Guard of the port of documentation of
held a preferred mortgage unless the mortgage provides for the
such vessel.
separate discharge of such property by the payment of a specified
portion of the mortgage indebtedness. If a preferred mortgage so
(b) The Coast Guard District or Station Commander shall record
provides for the separate discharge, the amount of the portion of such
mortgages delivered to him, in the order of their reception, in books to
payment shall be endorsed upon the documents of the vessel.
be kept for that purpose and indexed to show
1. The name of the vessel;
(f) A preferred mortgage includes more than one vessel and provides
2. The names of the parties tot he mortgage;
for the separate discharge of each vessel by the payment of a portion of
3. The time and date of reception of the instrument;
mortgage indebtedness, the amount of such portion of such payment
4. The interest in the vessel so mortgaged;
shall be endorsed upon the documents of the vessel. In case such
5. The amount and date of maturity of the mortgage;
mortgage does not provide for the separate discharge of a vessel and
6. Name, citizenship, nationality and residence of owner, and
the vessel is to be sold upon the order of a district court of the
7. Any material change of condition in respect to any of the preceding
Philippines in a suit in rem in admiralty, the court shall determine the
items.
portion of the mortgage indebtedness increased by 20 per centum (1)
which, in the opinion of the court, the approximate value of all the
A copy of the instrument or mortgage shall be furnished the Central
vessels covered by the mortgage, and (2) upon the payment of which
Bank of the Philippines.
the vessel shall be discharged from the mortgage.
Section 4. Preferred Mortgages
Section 5. Certified Copies of Mortgage; exhibition. The Coast Guard
(a) A valid mortgage which at the time it is made includes the whole of
District or Station Commander upon the recording of a preferred
any vessel of domestic ownership shall have, in respect to such vessel
mortgage shall deliver two certified copies thereof to the mortgagor
and as of the date of recordation, the preferred status given by the
who shall place, and use due diligence to retain, one copy on board the
provisions of Section 17 hereof, if
mortgaged vessel notice of which shall be posted in a conspicuous
1. The mortgage is recorded as provided in Section 3 hereof;
place thereat and cause such copy and the documents of the vessel to
2. An affidavit is filed with the record of such mortgage to the effect
be exhibited by the master to any person having business with the
that the mortgage is made in good faith and without any design to
vessel, which give rise to a maritime lien upon the vessel or to the sale,
hinder, delay, or defraud any existing or future creditor of the
conveyance, or mortgage thereof. The master of the vessel shall upon
mortgagor or any lien or of the mortgaged vessel;
the request of any such person, exhibit to him the documents of the
3. The mortgage does not stipulate that the mortgagee waives the
vessel placed on board thereof. The requirement of this Section that a
preferred status thereof;
copy of a preferred mortgage be placed and retained on board the
mortgaged vessel shall not apply in the case of a mortgaged vessel
(b) Any mortgage which complies with the above conditions is
which is not self-propelled (including but not limited to, barges, scors,
hereafter called a "preferred mortgage". For purposes of this Decree, a
lighters, and car floats).
vessel holding a Provisional Certificate of Philippine Registry is
considered a vessel of domestic ownership such that it can be subject
If the master of the vessel willfully fails to exhibit the documents of the
of preferred mortgage. The Philippine Coast Guard is hereby authorized
vessel or the copy of any preferred mortgage thereof, the Philippine
to enter a vessel holding a Provisional Certificate of Philippine Registry
Coast Guard may suspend or cancel the master's license.
in the Registry of Vessels and to record any mortgage executed
thereon. Such mortgage shall have the preferred status as of the date
Section 6. Prior and Subsequent Maritime Liens on Mortgaged Vessel.
of recordation upon compliance with the above conditions.
The mortgagor (1) shall, upon request of the mortgagee, disclose in
writing to him prior to the execution of any preferred mortgage, the
(c) There shall be endorsed upon the documents of a vessel covered by
existence of any maritime lien, prior mortgage, or other obligation or
a preferred mortgage
liability upon the vessel to be mortgaged, that is known to the
1. The names of the mortgagor and mortgagee;
mortgagor, and (2) without the consent of the mortgagee, shall not
2. The time and date the endorsement is made;
incur, after the execution of such mortgage and before the mortgagee
3. The amount and date of maturity of the mortgage; and
has had a reasonable time in which to record the mortgage and have
4. Any amount required to be endorsed by the provisions of paragraphs
indorsements in respect thereto made upon the documents of the
(e) or (f) of this Section.
vessel, any contractual obligation creating a lien upon the vessel other
than a lien for wages of stevedores when employed directly by the
(d) Such endorsement shall be made (1) by the Coast Guard District or
owner, operator, master, ship's husband, or agent of the vessel, for
Station Commander of the port of documentation of the mortgaged
wages of the crew of the vessel, for general average, or for salvage,
vessel, or (2) by the Coast Guard District or Station Commander of any
including contract salvage, in respect to the vessel, tonnage dues and
2 See Transcribed Notes on Ship Mortgaged Decree of 1978.
58 | P LATON
all other charges (not to exceed P20,000) of the Philippine Government
in respect to the vessel.
A mortgagor, who, with intent to defraud, violates the above provision
and if the mortgagor is a corporation or association, the president or
other principal executive officer of the corporation or association, shall
be punished by a fine of not, more than P5,000 or imprisonment of not
more than two years, or both. The mortgage indebtedness shall
thereupon become immediately due and payable at the election of the
mortgagee.
Section 7. Record of Notice of Claim of Lien on Mortgaged Vessel;
discharge of lien
(a) The Coast Guard District or Station Commander of the port of
documentation shall, upon the request of any person, record notice of
his claim of a lien upon a vessel covered by a preferred mortgage,
together with the nature, date of creation, and amount of the lien, and
the name and address of the person. Any person who has caused notice
of his claim of lien to be so recorded shall, upon a discharge in whole or
in part of the indebtedness, forthwith file with the Coast Guard District
or Station Commander a certificate of such discharge. The Coast Guard
District or Station Commander shall thereupon record the certificate.
(b) The mortgagor upon a discharge in whole or in part of the mortgage
indebtedness, shall forthwith file with the Coast Guard District or
Station Commander for the port of documentation of the vessel, a
certificate of such discharge duly executed by the mortgagee. Such
Coast Guard District or Station Commander shall there upon record the
certificate. In case of a vessel covered by a preferred mortgage, the
Coast Guard District or Station Commander at the port of
documentation shall endorse upon the documents of the vessel, or
direct the Coast Guard District or Station Commander at any port in
which the vessel is found, to so endorse, the fact of such discharge.
A certificate of such endorsement, giving the time, place and
description of the endorsement, shall be recorded with the Philippine
Coast Guard. Where the endorsement is made by a person other than
the Coast Guard District or Station Commander such certificate shall be
promptly forwarded to the Philippine Coast Guard.
Section 8. Conditions Precedent to Record; interest on Preferred
Mortgage
(a) No mortgage shall be recorded unless it states the interest of the
mortgagor in the vessel, and the interest so mortgaged.
(b) No mortgage, notice of claim of lien, or certificate of discharge
thereof, shall be recorded unless previously acknowledged before the
Coast Guard District or Station Commander of the port of
documentation or a notary public or other officer authorized by a law
of the Philippines to take acknowledgment of deeds or before a
Philippine consul or consular agent.
(c) In case of a change in the port of documentation of a vessel of the
Philippines, no mortgage shall be recorded at the new port of
documentation unless there is furnished to the Coast Guard District or
Station Commander of such port, together with the copy of the
mortgage to be recorded, a certified copy of the record of the vessel at
the former port of documentation furnished by the Coast Guard District
or Station Commander of such port. The Coast Guard District or Station
Commander at the new port of documentation is authorized and
directed to record such certified copy.
Section 9. Inspection of the Copies for Records; fees. Each Coast Guard
District or Station Commander shall permit records made under the
provisions of this decree to be inspected during office hours, under
such reasonable regulation as the Philippine Coast Guard may establish.
Upon the request of any person the Coast Guard District or Station
Commander shall furnish him from the records of the Coast Guard's
office (1) a certificate setting forth the names of the owners of any
vessel, the interest held by each owner, and the material facts as to any
mortgage covering, or any lien or other encumbrance upon, a specified
vessel, (2) a certified copy of any mortgage, notice of claim of lien, or
certified copy discharge in respect to such vessel, or (3) a certified copy
as required by subsection (c) of Section 8 hereof. The Philippine Coast
Guard shall collect the fees as provided for under existing laws and
regulations for any mortgage recorded, or any certificate or certified
copy furnished by it.
Section 10. Lien of preferred Mortgage; foreclosure; jurisdiction;
procedure A preferred mortgage shall constitute a lien upon the
mortgaged vessel in the amount of the outstanding mortgage
indebtedness secured by such vessel. Upon the default of any term or
condition of the mortgage such lien may be enforced by the mortgagee
by suit in remaining admiralty, wherein the vessel itself may be made a
partly defendant and be arrested in the manner as provided in Section
11 hereof. Original jurisdiction of all such suits is granted to the Court of
First Instance of the Philippines exclusively. In addition to any notice by
publication, actual notice of commencement of any such suit shall
direct, to (1) the master, other ranking officer, or caretaker of the
vessel, and (2) any person who has recorded a notice of claim of an
undischarged lien upon the vessel, as provided in Section 7 hereof,
unless after search by the mortgage satisfactory to the court, such
mortgagor, master, other ranking officer, caretaker, or claimant is not
found within the Philippines. Failure to give notice to any such person,
as required by this Section, shall be liable to such person for damages in
the amount of his interest in the vessel terminated by the suit.
In case of judicial foreclosure as provided herein, the provisions of Rule
68 of the New Rules of Court, if not inconsistent herewith, shall apply.
The lien of a preferred ship mortgage may also be enforced by a suit in
rem in admiralty or otherwise in any foreign country in which the vessel
may be found pursuant to the procedure of said country for the
enforcement of ship mortgages constituting maritime liens on vessels
documented under the laws of said country.
Section 11. Arrest of Vessels Upon the filing of the petition for the
judicial foreclosure of a Preferred Ship Mortgage, or immediately
thereafter, the applicant may apply ex-parte for an order for the arrest
of the mortgaged vessel or vessels and the judge shall immediately
issue the same, provided that it is made to appear by affidavit of the
applicant, or of some other person who personally knows the facts that
a default in the mortgage has occurred and that applicant files a bond
executed to the adverse party in an amount to be fixed by the judge,
not exceeding the applicant's claim, conditioned that the latter will pay
all the costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of such arrest, if the court
shall finally adjudge that the applicant was not entitled thereto.
Section 12. Discharge of Order of Arrest; Counterbond At any time after
an order of arrest has been granted, the party whose vessel or vessels
had been arrested, or the person appearing in his behalf, may, upon
reasonable notice to the applicant, apply to the judge who granted the
order, or to the judge of the court in which the action is pending, for an
order discharging the order of arrest. That judge shall order the
discharge of the arrest if a cash deposit is made, or counterbond
executed to the creditor is filed, on behalf of the adverse party, with
the clerk or judge of the court where the application is made in an
amount double the value of the claim to secure the payment of any
judgment that the creditor may recover in the action. Upon the filing of
such counterbond, copy thereof shall forthwith be served on the
creditor or his lawyer. Upon discharge of the order of arrest, the
property arrested or seized shall be delivered to the party making the
deposit or giving the counterbond, or the person appearing in his
behalf, the deposit or counterbond aforesaid standing in place of the
vessel or vessels released. Should such deposit or counterbond for any
reason be found to be, or become insufficient, and the party furnishing
the same fails to file an additional co-counterbond, the attaching
creditor may apply for a new order of arrest or seizure.
Section 13. Discharge of Order of Arrest for Improper or Irregular
Issuance The party whose vessel/s has been arrested may also, at any
time either before or after the release of the arrested vessel, or before
any arrest or seizure has been effected, upon reasonable notice to the
creditor, apply to the judge who granted the order, or to the judge of
the court in which the action is pending, for an order to discharge the
59 | P LATON
order of arrest or seizure on the ground that the same improperly or
irregularly issued. After hearing, the judge shall order the discharge of
the order of arrest or seizure if it appears that it was improperly or
irregularly issued and the defect is not cured forthwith.
Section 14. Extrajudicial Foreclosure The provisions of the Chattel
Mortgage Law on the remedy of extra-judicial foreclosure of mortgages
in so far as they are not inconsistent herewith shall still apply. For the
purpose of taking possession of the vessel or vessels, the foreclosing
creditor may secure from a judge of the Court of First Instance of the
province where the vessel may be found or where the creditor or
debtor resides an order for the arrest or seizure of the vessel. Upon
such order of seizure or arrest being issued, the sheriff shall
immediately take possession of the vessel or vessels for the purpose of
foreclosure and sale. The vessel may only be released in accordance
with the provisions of Section 13 of this Act, or when the debtor pays
the outstanding obligation.
Section 15. Foreign Ship Mortgages As used in Sections 10 to 18 hereof,
the term "preferred mortgage" shall include, in addition to a preferred
mortgage made pursuant to the provisions of this Decree, any
mortgage, hypothecation, or similar charge created as security upon
any documented foreign vessel if such mortgage, hypothecation, or
similar charge has been duly and validly executed in accordance with
the laws of the foreign nation under the laws of which the vessel is
documented and has been duly registered in accordance with such laws
in a public register either at the port of registry of the vessel or at a
central office; and the term "preferred mortgage lien" shall also include
the lien of such mortgage, hypothecation, or similar charge: Provided,
however, That such "preferred mortgage lien" in the case of a foreign
vessel shall be subordinate to maritime liens for repairs, supplies,
towage, use of drydock or marine railway, or other necessaries,
performed or supplied in the Philippines.
Section 16. Receiver in Foreclosure; possession by sheriff In any suit in
rem in admiralty for the enforcement of the preferred mortgage lien,
the court may appoint a receiver and, in its discretion, authorize the
receiver to operate the mortgaged vessel. The sheriff may be
authorized and directed by the court to take possession of the
mortgaged vessel notwithstanding the fact that the vessel is in the
possession or under the control of any person claiming a possessory
common law lien.
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.
Section 18. Suit in Personam in Admiralty on Default
(a) Upon the default of any term or condition of a preferred mortgage
upon a vessel, the mortgagee may, in addition to all other remedies
granted by this Decree, bring suit in personal in admiralty in a district
court of the Philippines, against the mortgagor for the amount of the
outstanding mortgage indebtedness secured by such vessel or any
deficiency in the full payment thereof.
(b) This Decree shall not be construed, in the case of a mortgage
covering, in addition to vessels, realty or personality other than vessels,
or both, to authorize the enforcement by suit in rem in admiralty of the
rights of the mortgage in respect to such realty or personality other
than vessels.
Section 19. Surrender of Documents; termination of mortgagee's
interest; sale of mortgaged vessel
(a) The documents of a vessel of the Philippines covered by a preferred
mortgaged may not be surrendered (except in the case of the forfeiture
of the vessel or its sale by the order of any court of the Philippines or
any foreign country) without the approval of the Maritime Industry
Authority. The Administrator shall not grant such approval without the
mortgagee's consent.
(b) The interest of the mortgage in a vessel of the Philippines covered
by a mortgage, shall not be terminated by the forfeiture of the vessel
for a violation of any law of the Philippines, unless the mortgage
authorized, consented, or conspired to effect the illegal act, failure, or
omission which constituted such violation. Neither shall the chance by
the shipowner in the use or character of the vessel or in the business of
the mortgagor, without the consent of the mortgagee, nor the failure
by the mortgagor to comply with the provisions of Section 5 hereof
affect the validity or preference of the preferred ship mortgage as
against third persons.
(c) Upon the sale of any vessel of the Philippines covered by a preferred
mortgage in any extrajudicial sale or by order of a district court of the
Philippines in any suit in rem in admiralty for the enforcement of a
maritime lien other than a preferred maritime lien, the vessel shall be
sold free from all pre-existing claims thereon; but the court shall, upon
the request of the mortgagee, the plaintiff, or any intervenor, require
the purchase at such sale to give and the mortgagee to accept a new
mortgage of the vessel for the balance of the term of the original
mortgage. The conditions of such new mortgage shall be the same, so
far as practicable, as those of the original mortgage and shall be subject
to the approval of the court. If such new mortgage is given, the
mortgagee shall not be paid from the proceeds of the sale and the
amount payable as the purchase price shall be held diminished in the
amount of the new mortgage indebtedness.
(d) No vessel of domestic ownership shall be mortgaged, nor, any rights
under said mortgage shall be assigned, to any person not a citizen of
the Philippines without the approval of the Maritime Industry
Authority. The penalties and sanctions provided for under
Commonwealth Act No. 606 shall apply in case of any violation hereof.
(e) The foreclosure sale of vessels mortgaged under the provisions of
this Decree, whether judicially or extra- judicially, shall not require the
approval of the Maritime Industry Authority.
Section 20. Who May Bid in the Foreclosure Sale The following persons
are qualified to bid in the foreclosure sale of the mortgaged vessel:
(a) Citizens of the Philippines or corporations 60% of the capital of
which is owned by Filipino citizens.
(b) A foreign mortgagee or foreign national whose country has
diplomatic relations with the Philippines or whose country grants
reciprocal rights to Filipino citizens.
In case the purchaser is a foreign individual or entity, the Philippine
Coast Guard shall, upon presentation of the certificate of sale, cancel
the registration of the vessel and issue a certificate to that effect upon
request.
Section 21. Maritime Lien for Necessaries; persons entitled to such lien
Any person furnishing 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, shall have a maritime lien on the vessel,
60 | P LATON
which may be enforced by suit in rem, and it shall be necessary to
allege or prove that credit was given to the vessel.
Section 22. Persons Authorized to Procure Repairs, Supplies, and
Necessaries The following persons shall be presumed to have authority
from the owner to procure repairs, supplies, towage, use of dry dock or
marine railway, and other necessaries for the vessel: The managing
owner, ship's husband, master or any person to whom the
management of the vessel at the port of supply is entrusted. No person
tortuously or unlawfully in possession or charge of a vessel shall have
authority to bind the vessel.
Section 23. Notice to Person Furnishing Repairs, Supplies, and
Necessaries The officers and agents of a vessel specified in Section 22
of this Decree shall be taken to include such officers and agents when
appointed by a character, by an owner pro hac vice, or by an agreed
purchaser in possession of the vessel; but nothing in this Decree shall
be construed to confer a lien when the furnisher know, or by exercise
of reasonable diligence could have ascertained, that because of the
terms of a charter party, agreement for sale of the vessel, or for any
other reason, the person ordering the repairs, supplies, or other
necessaries was without authority to bind the vessel therefor.
Section 24. Waiver of Right to Lien Nothing in this Decree shall be
construed to prevent the furnisher of repairs, supplies, towage, use of
dry dock or marine railway, or other necessaries, or the mortgagee,
from waiving his right to a lien, or in the case of a preferred mortgage
lien, to the preferred status of such lien, at any time by agreement or
otherwise.
Section 25. Existing Mortgages Not Affected; exception This Decree
shall not apply (1) to any existing mortgage, or (2) to any mortgage
hereafter placed at any vessel under an existing mortgage, so long as
such existing mortgage remains undischarged. The Decree shall,
however, apply to mortgages executed pursuant to Presidential Decree
No. 214, provided, that no vested rights of third parties are affected
thereby.
Section 26. Rules and Regulations by Philippine Coast Guard and the
Maritime Industry Authority The Philippine Coast Guard and the
Maritime Industry Authority are hereby authorized to make such rules
and regulations within their respective spheres of jurisdiction, as they
may deem necessary for the efficient execution of the provisions of this
Decree.
Section 27. Port of Documentation Whenever in the Ship Mortgage
Decree of 1978 the words "port of documentation" are used, they shall
be deemed to mean the port of registry of the vessel.
Section 28. Instruments and Acts Validated All mortgages of any vessel
of any part thereof, and all documentations, recordations,
indorsements and indexing thereof, and proceedings incidental thereto
made or done, prior to the effectivity of this Decree are declared valid
to the extent they would have been valid if the port or ports at which it
should have been documented in accordance with law; and this Section
is declared retroactive so as to accomplish such validations: Provided,
That nothing herein contained shall be construed to deprive any person
of any vested right.
________
2 Types of Mortgage in PD 1521:
1. Ordinary (Chattel Mortgage)
2. Preferred Mortgage
Persons bound by Ordinary Mortgage;
1. Mortgagor
2. Mortgagee
3. Heirs/Assignees
rd
4. 3 parties with actual knowledge
Who may constitute a ship mortgage:
1. Any citizen of the Philippines
2. Any association or corporation, at least 60% of the
capital of which is owned by citizens of the
Philippines
Purpose of Mortgage: Financing the CONSTRUCTIONS,
ACQUISITION, or PURCHASE of vessels or INITIAL OPERATION of
vessels.
The mortgage must be recorded in the Philippine Coast
Guard (now in Marine Industry Authority). If not recorded, it
will only be valid between the parties and cannot be enforced
rd
against 3 parties except those who have actual notice thereof.
Q: What is created by registration?
A: A preferred mortgage, which is a maritime lien on the
vessel itself (res), so vessel could be sold in an
auction.
Maritime Lien- those attached to the vessel itself (res)
regardless of transfer of ownership
It is also not a preferred mortgage. It shall be a PREFERRED
MORTGAGE, only when:
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.
3. The mortgage does not stipulate that the mortgagee
waives the preferred status thereof.
2 Grounds for vessel to be arrested:
1. Failure to comply with the preferred mortgage
conditions
2. Non-payment of necessaries and maritime liens (e.g.
fuel)
Procedure:
1. File a petition for the judicial foreclosure of Preferred
Ship Mortgage. This is an action in rem in admiralty
which is an action against the vessel itself.
2. Applicant may then apply, ex-parte, for an order for
the arrest of the mortgaged vessel or vessels.
3. Attach affidavits that the preferred mortgage or
maritime liens were violated or unpaid and should
also file a bond (amount should be equal to the claim
or less, depending on the judge).
4. The court shall issue the order of arrest.
Q: Can there be foreclosure without order of arrest? Is there
an automatic issuance of an order of arrest?
A: The order of arrest is not essential. It can be foreclosed
without arrest because the vessel may not be found.
If the vessel is owned by several persons, no need to include
the name of all the owners in the petition.
Advantage: Owners are hard to find, it will facilitate the arrest.
61 | P LATON

Discharge of Order of Arrest
Q: Can you discharge the order of arrest?
A: Yes. 3 Situations:
1. If properly arrested – by posting counterbond or
cash deposit (but must double the amount of
claim).
 Ratio: The bond takes the place of the
vessel.
2. If Arrest Order improperly or irregularly issued-
but this time, no counterbond is necessary
because the vessel is not deemed to have been
arrested.
 Q: What should Prayer for Discharge
contain?
 A: That the order was not based on any of
the 2 grounds, therefore void.
3. In cases where the mortgagor can prove that he
has not violated the terms and conditions of the
mortgage or there was payment of
necessaries/liens.
Purpose of counterbond: Furnish security other than the
vessel. Function: Takes the place of the vessel. It is not just for
security. It stands for the vessel.
 If posted by a fake insurance company, the vessel will be
arrested
 If insufficient to cover the amount? Order the mortgagor
to correct the deficiencies.
 If there are pre-existing claims on the vessel, all will be
removed and attached to the proceeds. Therefore,
purchaser of vessel in the auction will receive the vessel
free from all liens and encumbrances.
Who may bid in the foreclosure sale?
1. Citizens of the Philippines or corporations 60% of the
capital of which is owned by Filipino citizens.
2. A foreign mortgagee or foreign national whose
country has diplomatic relations with the Philippines
or whose country grants reciprocal rights to Filipinos.
Maritime Lien for Necessaries:
 Any person furnishing 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, shall have a maritime lien
on the vessel, which may be enforced by suit in rem,
and it shall be necessary to allege or prove that credit
was given to the vessel.
 If this is the ground used, the person who repaired,
supplied, etc, should file the action. The defendant
will be the VESSEL itself, because it is an action in
rem.
 Legal Form: “M/V Manila, not a
natural/juridical person, but obtained
necessaries and that this is an action in
rem.”
2 Procedures Mortgagee could avail of if Vessel’s proceed’s
are not enough:
1. Claim in personam (maritime action in personam)
against the original owner of the vessel.
Mortgagee can ask the court to order purchaser to make a new
mortgage, the creditor being the new mortgagor and the
purchaser the mortgagee.
________

Section 17. MANNER OF PAYMENT AND PREFERENCE OF

CREDIT.
In case of extra-judicial or judicial sale of vessel, the following
shall have priority of payment:
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
7. Preferred mortgage registered prior in time

The preferred mortgage lien or the amount of the mortgage

will then be paid AFTER the above items have already been
complied with.
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.

62 | P LATON
 ACT NO. 2616 a. The crew of the vessel shipwrecked or which was is danger of
THE SALVAGE LAW3 shipwreck;

b. He who shall have commenced the salvage in spite of opposition of

Section 1. When in case of shipwreck, the vessel or its cargo shall be
the captain or his representative; and
beyond the control of the crew, or shall have been abandoned by them,
and picked up and conveyed to a safe place by other persons, the latter
c. He who shall have failed to comply with the provisions of Section
shall be entitled to a reward for the salvage.
three.
Those who, not being included in the above paragraph, assist in saving
Sec. 9. If, during the danger, an agreement is entered into concerning
a vessel or its cargo from shipwreck, shall be entitled to a like reward.
the amount of the reward for salvage or assistance, its validity may be
impugned because it is excessive, and it may be required to be reduced
Sec. 2. If the captain of the vessel, or the person acting in his stead, is
to an amount proportionate to the circumstances.
present, no one shall take from the sea, or from the shores or coast
merchandise or effects proceeding from a shipwreck or proceed to the
Sec. 10. In a case coming under the last preceding section, as well as in
salvage of the vessel, without the consent of such captain or person
the absence of an agreement, the reward for salvage or assistance shall
acting in his stead.
be fixed by the Court of First Instance of the province where the things
salvaged are found, taking into account principally the expenditures
Sec. 3. He who shall save or pick up a vessel or merchandise at sea, in
made to recover or save the vessel or the cargo or both, the zeal
the absence of the captain of the vessel, owner, or a representative of
demonstrated, the time employed, the services rendered, the excessive
either of them, they being unknown, shall convey and deliver such
express occasioned the number of persons who aided, the danger to
vessel or merchandise, as soon as possible, to the Collector of Customs,
which they and their vessels were exposed as well as that which
if the port has a collector, and otherwise to the provincial treasurer or
menaced the things recovered or salvaged, and the value of such things
municipal mayor.
after deducting the expenses.
Sec. 4. After the salvage is accomplished, the owner or his
Sec. 11. From the proceeds of the sale of the things saved shall be
representative shall have a right to the delivery of the vessel or things
deducted, first, the expenses of their custody, conservation,
saved, provided that he pays, or gives a bond to secure, the expenses
advertisement, and auction, as well as whatever taxes or duties they
and the proper reward.
should pay for their entrance; then there shall be deducted the
expenses of salvage; and from the net amount remaining shall be taken
The amount and sufficiency of the bond, in the absence of agreement,
the reward for the salvage or assistance which shall not exceed fifty per
shall be determined by the Collector of Customs or by the Judge of the
cent of such amount remaining.
Court of First Instance of the province in which the things saved may be
found.
Sec. 12. If in the salvage or in the rendering of assistance different
persons shall have intervened the reward shall be divided between
Sec. 5. The Collector of Customs, provincial treasurer, or municipal
them in proportion to the services which each one may have rendered,
mayor, to whom a salvage is reported, shall order:
and, in case of doubt, in equal parts.
a. That the things saved be safeguard and inventoried.
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.
b. The sale at public auction of the things saved which may be in danger
of immediate loss or of those whose conservation is evidently
Sec. 13. If a vessel or its cargo shall have been assisted or saved,
prejudicial to the interests of the owner, when no objection is made to
entirely or partially, by another vessel, the reward for salvage or for
such sale.
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
c. The advertisement within the thirty days subsequent to the salvage,
half, the captain a fourth, and all the remainder of the crew the other
in one of the local newspapers or in the nearest newspaper published,
fourth of the reward, in proportion to their respective salaries, in the
of all the details of the disaster, with a statement of the mark and
absence of an agreement to the contrary. The express of salvage, as
number of the effects requesting all interested persons to make their
well as the reward for salvage or assistance, shall be a charge on the
claims.
things salvaged on their value.
Sec. 6. If, while the vessel or things saved are at the disposition of the
Sec. 14. This Act shall take effect on its passage.
authorities, the owner or his representative shall claim them, such
authorities shall order their delivery to such owner or his
representative, provided that there is no controversy over their value,
and a bond is given by the owner or his representative to secure the
payment of the expenses and the proper reward. Otherwise, the
delivery shall nor be made until the matter is decided by the Court of
First Instance of the province.

Sec. 7. No claim being presented in the three months subsequent to the

publication of the advertisement prescribed in sub-section (c) of
Section five, the things save shall be sold at public auction, and their
proceeds, after deducting the expenses and the proper reward shall be
deposited in the insular treasury. If three years shall pass without
anyone claiming it, one-half of the deposit shall be adjudged to him
who saved the things, and the other half to the insular government.

Sec. 8. The following shall have no right to a reward for salvage or

assistance:

3 See Transcribed Notes on Salvage Law.

63 | P LATON
 COMMONWEALTH ACT NO. 146
PUBLIC SERVICE ACT4

WARSAW CONVENTION5

4 See Transcribed Notes on Public Service Act.

5 See Transcribed Notes on Warsaw Convention.
64 | P LATON