IX. MARITIME LAW (Art.

573- 869, Code of Commerce)

a. Concept of Maritime Law

b. Limited liability rule

Article 837
The civil liability contracted by the shipowners in the cases prescribed in this
section, shall be understood as limited to the value of the vessel with all her
appurtenances and all the freight earned during the voyage.

(Arts. 587, 590, 643 & 837, Ibid.)

Concept
Exceptions

1. Claim under workmen’s compensation

2. Collision between 2 negligent vessel

3. Expenses for repair and provisioning of the ship before its loss

4. In case there is no total loss and vessel is not abandoned

5. vessel is Insured

6. Injury or death to a passenger is due to either to the fault of shipowner or his

negligence or captain

iii. Abandonment

Article 587
The agent shall also be civilly liable for the indemnities in favor of third persons
which arise from the conduct of the captain in the care of the goods which the
vessel carried; but he may exempt himself therefrom by abandoning the vessel
with all her equipments and the freight he may have earned during the voyage.
Article 590
The owners of a vessel shall be civilly liable in the proportion of their
contribution to the common fund, for the results of the acts of the captain,
referred to in Article 587.
Each part owner may exempt himself from this liability by the abandonment
before a notary of the part of the vessel belonging to him.

Article 643
If the vessel and her freight should be totally lost, by reason of capture or wreck,
all rights of the crew to demand any wages whatsoever shall be extinguished, as well as
that of the agent for the recovery of the advances made.
If a portion of the vessel or freight should be saved, or part of either, the crew
engaged on wages, including the captain, shall retain their rights on the
salvage, so far as they go, on the remainder of the vessel as well as value of the
freightage or the cargo saved; but sailors who are engaged on shares shall not have any
right whatsoever to the salvage of the hull, but only on the portion of the freightage
saved. If they should have worked to collect the remainder of the ship-wrecked vessel,
they shall be given an award in proportion to the efforts made and to the risks
encountered in order to accomplish the salvage.

VESSELS
i. Acquisition

 By prescription (Arts. 573 &

575)

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 be included in a written
instrument, which shall not produce any effect with regard to third persons if not
recorded in the mercantile registry.
The ownership of a vessel shall also be acquired by the possession thereof in good
faith for three years, with a good title duly recorded.
In the absence of any of these requisites, uninterrupted possession for ten years
shall be necessary in order to acquire ownership.
A captain can not acquire by prescription the ship of which he is in command.
Article 574
The builders of vessels may employ the material and with regard to their construction
and rigging may follow the system which is most convenient to their interests. Ship
agents and seamen shall be subject to the provisions of the laws and regulations of the
public administration on navigation, customs, health, safety of the vessels, and other
similar provisions.
Article 575
Part owners of vessels shall enjoy the right of option of purchase and withdrawal in the
sales made to strangers; but they can only exercise it within the nine days following the
record of the sale in the registry and by delivering the price at once.

 By sale (Arts.

576-578)

Article 576
The rigging, tackle, stores, and engine of a vessel, if it is a steamer, shall always
be understood as included in the sale thereof if they are owned by the vendor at
the time of the sale.
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
certificate of the record of the vessel in the registry up to the date of the sale.
Article 577
If the alienation of the vessel should take place while said vessel is on a voyage, the
purchaser shall receive all the freights it earns from the time it received its
last cargo, and the payment of the crew and other persons which go to make up
its complement shall be paid by the purchaser for the said voyage.
If the sale takes place after the arrival of the vessel at the port of its
destination, the freights shall belong to the vendors and he shall pay the crew
and other persons which go to make up its complement, unless there is an
agreement to the contrary in either case.
Article 578
If, the steamer being on a voyage or in a foreign port, her owner or owners should
voluntarily alienate her either to Spaniards * 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 Spain *
of the port where she terminates her voyage, and said instrument shall have no effect
with regard to third persons if it is not recorded in the registry of the consulate. The
consul shall immediately forward a true copy of the bill of purchase of the vessel to the
[commercial registry] of the port where said vessel is recorded and registered.
In every case the alienation of the vessel must be stated, indicating whether the vendor
receives the full price or part thereof, or whether he retains any interest in said vessel in
full or in part. In case the sale is made to a Spaniard, * this fact shall be stated in the
certificate of navigation.
When, the ship being on a voyage, it should be rendered useless for navigation, the
captain shall apply to the judge or court of competent jurisdiction of the port of arrival,
should it be a foreign port, to the consul of Spain, * should there be one or to the judge,
or court, or local authority in the absence of the former; and the consul, or the judge, or
court, or in their absence, the local authority, shall order an examination of the vessel to
be made.
If the consignee or the underwriter should reside at said port, or should have
representatives there, they must be cited in order to take part in the proceedings for the
account of whom it may concern.

 Registration
 Ship’s manifest (Secs. 1203 and

1204, CMTA)

a declaration of the entire cargo

-  object is to furnish customs officers with a list to check against, to inform the revenue officers
what goods are being brought into a port of the country on a vessel

ii. Mortgage of vessels

(Pres. Dec. No. 1521)

d. PERSONS WHO TAKE PART IN MARITIME COMMERCE

I. SHIPOWNERS AND

Ship agents (Arts. 586-588)

Article 586
The owner of a vessel and the 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 therein.
By agent is understood the person intrusted with the provisioning of a vessel,
or who represents her in the port in which she happens to be.
Article 587
The agent shall also be civilly liable for the indemnities in favor of third
persons which arise from the conduct of the captain in the care of the goods
which the vessel carried; but he may exempt himself therefrom by abandoning
the vessel with all her equipments and the freight he may have earned
during the voyage.
Article 588
Neither the owner of the vessel nor the agent shall be liable for the
obligations contracted by the captain if the latter exceeds his powers and
privileges which are his by reason of his position or have been conferred upon him by
the former.
However, if the amounts claimed were made use of for the benefit of the vessel,
the owner or agent shall be liable.

Rules in case of part-owners (Arts. 589-594)

Article 589
If two or more persons should be part owners of a merchant vessel, an association
shall be presumed as established by the part owners.
This association shall be governed by the resolutions of a majority of the
members.
A majority shall be the relative majority of the voting members.
If there should be only two part owners, in case of disagreement the vote of the
member having the largest interest shall be decisive. If the interests are equal,
it shall be decided by lot.
The representation of the smallest part 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 can not be detained, attached or levied upon execution in her entirety
for the private debts of a part owner, but the proceedings shall be limited to the
interest the debtor may have in the vessel, without interfering with her navigation.
Article 590
The owners of a vessel shall be civilly liable in the proportion of their
contribution to the common fund, for the results of the acts of the captain,
referred to in Article 587.
Each part owner may exempt himself from this liability by the abandonment
before a notary of the part of the vessel belonging to him.
Article 591
All the part owners shall be liable, in proportion to their respective ownership, for the
expenses of repairs to 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 of maintenance,
equipment, and provisioning of the vessel, necessary for navigation.
Article 592
The resolutions of the majority with regard to the repair, equipment, and provisioning of
the vessel in the port of departure shall bind the majority unless the partners in the
minority renounce their participation therein, which must be acquired by the other part
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 association and sale of
the vessel shall also be binding on the minority.
The sale of the vessel must take place at a public auction, subject to the provisions of the
law of civil procedure unless the part owners unanimously agree otherwise, the right of
option to purchase and to withdraw mentioned in Article 575 being always reserved in
favor of said part owners.
Article 593
The owners of a vessel shall have preference in her charter to other persons, offering
equal conditions and price. If two or more of the former should claim said right the one
having greater interest shall be preferred, and should they have an equal interest it shall
be decided by lot.
Article 594
The part owners shall elect the manager who is to represent them in the capacity
of agent.
The appointment of director or agent shall be revocable at the will of the members.

 Rules in case of shipagents

(Arts.595-602)

Captains and masters of vessels

Qualifications (Art. 609)

Article 609
Captains and masters of vessels must be Spaniards * having legal capacity to bind
themselves in accordance with this Code, and must prove that they have the skill,
capacity, and qualifications required to command and direct the vessel, as established
by marine laws, ordinances, or regulations, or by those of navigation, and that they are
not disqualified according to the same for the discharge of the duties of that position.
If the owner of a vessel desires to be the captain thereof and does not have the
legal qualifications therefor, he shall limit himself to the financial
administration of the vessel, and shall intrust her navigation to a person
possessing the qualifications required by said ordinances and regulations.


 Powers and functions (Arts. 610-612)
 Discretionary Powers

iii. Pilot
• Concept

iv.

• Relationship to master and shipowner

Officers and crew of the vessel

CHARTER PARTIES

i. Concept
ii. Kinds: bareboat and contract of

affreightment

iii. Persons qualified to

charter

iv. Requisites for a

valid charter (Art. 652)

Article 652
A charter party must be drawn in duplicate and signed by the contracting parties, and
when either does not know how or can not do so, by two witnesses at their request.
The charter party shall include, besides the conditions unrestrictedly stipulated, the
following statements:
1. The kind, name, and tonnage of the vessel.
2. Her flag and port of registry.
3. The name, surname, and domicile of the captain.
 4. The name, surname, and domicile of the 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 weight, or measure which they respectively bind
themselves to load and transport, or whether it is the total cargo.
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 rate of demurrage.

v. Concept of and liability for demurrage

vi. Rights and obligations of charter parties

LOANS ON BOTTOMRY AND RESPONDENTIA

i. Definition (Art. 719)

ii. Distinctions against

ordinary loans

iii. Parties
iv. Formalities required

(Art. 720)

v. Effect of loss (Art. 731)

vi. Cases where loan is regarded as simple loan (Arts. 726-729)

g. AVERAGES

iv. i.

(Arts. 826 to 832; doctrine of inscrutable fault)

Limited liability rule (Art. 837)
Article 837
The civil liability contracted by the shipowners in the cases prescribed in this section,
shall be understood as limited to the value of the vessel with all her appurtenances and
all the freight earned during the voyage.

i. ii.

Concept (Art. 806) Classes of average and the persons liable

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
navigation for the preservation of the vessel or cargo, or both.
2. All damages or deterioration the vessel may suffer from the time she puts to sea
from the port of departure until she casts anchor in the port of destination, and
those suffered by the merchandise from the time it is loaded in the port of
shipment until it is unloaded in the port of consignment.

 i. Simple average (Arts.

809-810)

Article 809
Simple or particular averages shall be, as a general rule, all the expenses and
damages caused to the vessel or to her cargo which have not redounded to
the benefit and common profit of all the persons interested in the vessel and her
cargo, and especially the following:
1. The damages suffered by the cargo from the time of its embarkation
until it is unloaded, either on account of the nature of the goods or by reason
of an accident at sea or force majeure, and the expenses incurred to avoid and
repair the same.
2. The damages suffered by the vessel in her hull, rigging, arms, and
equipment, for the same causes and reasons, from the time she puts to sea from
the port of departure until she anchored in the port of destination.
3. The damages 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 should be detained or
embargoed by a legitimate order or force majeure, if the charter should have been
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 cover
any other requirement of the vessel against which the proper amount shall be
charged.
7. The victuals and wages of the crew during the time the vessel is in
quarantine.
8. The damage suffered by the vessel or cargo by reason of an impact or
collision with another, if it were accidental and unavoidable. If the
accident should occur through the fault or negligence of the captain,
the latter shall be liable for all the damage caused.
9. Any damage suffered by the cargo through the faults, 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 freight.
Article 810
The owner of the goods which gave rise to the expense or suffered the damage shall bear
the simple or particular averages.

 ii. General average (Arts. 811-813, 816-

818, 732 & 859- 861)

h. COLLISIONS

i. Definition
ii. Zones in collisions

(doctrine of error in

extremis)

iii. Rules on liability

ARRIVAL UNDER STRESS

i. Concept (Art. 819)

ii. When improper (Art. 820)

iii. Expenses (Arts. 821 to 822)
iv. Custody of cargo

(Arts. 823 to 824)

 v. Captain’s liability

(Art. 825)

vi. Shipwreck (Arts. 840

to 845)

j. SALVAGE
i. Definition

ii. Rights and obligations of salvors and owners (Salvage Law)

k. Carriage of goods by Sea Act

AIR TRANSPORTATION

X. Aviation Law

1. The aircraft and civil

aviation.

2. Obligations of Carrier in

air transportation.

3. Warsaw Convention.

Q: When is this law applicable?

A: This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It applies
equally to gratuitous carriage by aircraft performed by an air transport undertaking. (Art. 1[1])

Q: What is an international transportation?

A: Any carriage in which, according to the contract made by the parties, the place of departure and the place of destination,
whether or not there be a break in the carriage or a transshipment, are situated either:

1. Within the territories of two High Contracting Parties; or

2. Within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to
the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to the
Convention. (Art. 1[2])

Q: What are the limitations to the liability of air carriers?

 1. In the carriage of persons – 250,000 francs for each passenger. Nevertheless, by special contract, the carrier and the
passenger may agree to a higher limit of liability.
2. In the carriage of registered baggage and of cargo – Two hundred and fifty (250) francs per kilogramme, unless the
passenger or consignor has made, at the time when the package was handed over to the carrier, a special declaration
of interest in delivery at destination and has paid a supplementary sum if the case so requires.

Note: In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained therein, the weight
to be taken into consideration in determining the amount to which the carrier's liability is limited shall be only the total weight
of the package or packages concerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage or
cargo, or of an object contained therein, affects the value of other packages covered by the same baggage check or the same air
waybill, the total weight of such package or packages shall also be taken into consideration in determining the limit of liability.

3. As regards objects of which the passenger takes charge himself – Five thousand (5,000) francs per passenger. (Art. 22)

Note: Carrier is not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part (Art. 25)

Q: Is a stipulation relieving the carrier from or limiting its liability valid?

A: No. Any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this
Convention shall be null and void but the nullity of such provision does not involve the nullity of the whole contract. (Art. 23[1])

Q: What are the exceptions to these limitations? A:

1. Willful misconduct
2. Default amounting to willful misconduct
3. Accepting passengers without ticket
4. Accepting goods without airway bill or

baggage without baggage check

Q: When will one’s right to damages be extinguished?

A: The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at
the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

Note: Despite the express mandate that an action for damages should be filed within 2 years from the arrival at the place of
destination, such rule shall not be applied where delaying tactics were employed by airline itself in a case where a passenger
wishes to settle his complaint out‐of‐court but the airline gave him the runaround, answering the passenger’s letters but not
giving in to his demands, hence, giving the passenger no time to institute the complaint within the reglamentary period. (United
Airlines v. Uy, G.R. No. 127768, Nov. 19, 1999)

Q: Could a person recover a claim covered by Warsaw Convention after the lapse two years?

A: No. A claim covered by the Warsaw Convention can no longer be recovered under local law, if the statute of limitations of
two years has already lapsed. (PAL. v. Savillo, 557 SCRA 66)

Q: What constitutes willful misconduct?

A: The definition of "willful misconduct" depends in some measure on which court is deciding the issue. Some common factors
that courts will consider are:

1. Knowledge that an action will probably result in injury or damage

2. Reckless disregard of the consequences of an action, or
3. Deliberately failing to discharge a duty related to safety. Courts may also consider other factors
Q: Is the failure of the carrier to deliver the passenger’s luggage at the designated time and place ipso facto constitutes wilful
misconduct?

A: No. There must be a showing that the acts complained of were impelled by an intention to violate the law, or were in
persistent disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper conduct (Luna vs. CA,
GR No. 100374‐75, November 27, 1992).

Q: Is the carrier’s guessingof which luggage contained the firearms constitutes willful misconduct?

A: Yes. The guessing of which luggage contained the firearms amounted to willful misconduct under Section 25(1) of the
Warsaw Convention. (Northwest Airlines vs. CA, GR No. 120334, January 20, 1998)

Q: Is the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the realm of Warsaw
Convention?

A: Yes. A cause of action based on tort did not bring the case outside the sphere of the Warsaw Convention. (Lhuiller vs. British
Airways, GR No. 171092, March 15, 2010).