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Transportation law

ATTY. VELEZ
Definition of terms:
1) Moral Damages
Purpose
Awarded only to enable the injured party to
obtain means, diversion or amusement that will
alleviate the moral suffering he has undergone,
by reason of defendants culpable action.
(Robleza v. CA, 174 SCRA 354)

L-20081, Feb. 27,1968; People v. Manero, G.R.


Nos. 86883-85, Jan. 29, 1993).
Exception: Criminal cases. Moral damages may
be awarded to the victim in criminal
proceedings in such amount as the court
deems just without need for pleading or proof of
the basis thereof (People v. Paredes, July 30,
1998).

Manner of Determination
Claimant must produce competent proof or
the best evidence obtainable such as
receipts to justify an award therefore.
Actual or compensatory damages cannot
be presumed but must be proved with
reasonable certainty. (People v. Ereno,
Feb. 22, 2000)

Special/Ordinary

Special/Ordinary

Special

Ordinary

NOTE: Special Damages are those which exist


because of special circumstances and for
which a debtor in good faith can be held liable if
he had been previously informed of such.
circumstances.

NOTE: Ordinary Damages are those generally


inherent in a breach of a typical contract

Manner of Determination
No proof of pecuniary loss is necessary. The
assessment is left to the discretion of the court
according to the circumstances of each case.
However, there must be proof that the
defendant caused physical suffering etc.
(Compania Maritima v. Allied Free Workers
Union, G.R. No. L-31379, Aug. 29, 1988). GR:
Factual basis must be alleged. Aside from the
need for the claimant to satisfactorily prove the
existence of the factual basis of the damages, it
is also necessary to prove its causal relation to
the defendants act (Raagas v. Trava, G.R. No.

2) Actual or Compensatory Damages


Purpose
Actual or compensatory damages simply make
good or replace the loss caused by the wrong.

3) Irrelic

4) Salvage
The law of salvage is a concept in maritime
law which states that a person who recovers
another person's ship or cargo after peril or loss
at sea is entitled to a reward commensurate

with the value of the property so saved. The

The law seeks to do what is fair to both the

The

concept has its origins in antiquity, with the

property owners and the salvors. The right to

English common law on towage was Re The

basis that a person would be putting himself

salvage may not necessarily arise out of an

and his own vessel at risk to recover another

actual contract but is a legal liability arising out

and thus should be appropriately rewarded. A

of the fact that property has been recovered.

related consideration was widespread piracy; a

The property owner who had benefit of the

vessel in peril could very well be left for pirates

salvor's efforts must make remuneration,

Princess Alice in which it was stated that:


"(W)ithout attempting any definition that may be
universally applied, towage service may be
described as the employment of onevessel to
expedite the voyage of another when nothing
more is required that the accelerating (of) her
progress."

if the owner did not generously reward a

regardless of whether he had formed a contract

potential honest salvor.

or not. The assumption here is that when faced

Towage implies that there is no danger at hand

with the loss of his vessel and cargo, a

or, to use the words of the 1875 case The

The right to be rewarded for salvage at sea

reasonable

Strathnaver no "actual (or) imminent probable

under common law is based both on equitable

accepted salvage terms offered, even if time did

danger."

principles

not permit such negotiations.

In The Reward, the Court stated that towage

and public

policy and

is

not

prudent

owner

would

have

contractual in origin. Historically, salvage is a


right in law, when a person, acting as a
volunteer (that is, without any pre-existing
contractual or other legal duty so to act)
preserves or contributes so to preserving at sea

5) Towage
An act by which one vessel, known as the tug,
supplies power in order to draw another vessel,
called the tow.

any vessel, cargo, freight, or other recognized


subject of salvage from danger. This is the
typical case of salvage and is distinct from Prize
law, which is the rescuing of property from the
enemy at a time of war, for which a reward is
made by the Court of Admiralty sitting as
a Prize Court.

Towing involves dragging a vessel forward in th


e water through the use of a rope or cable attac
hed to another vessel. Various state lawsrequire
that bright lights be placed upon vessels that ar
e towing or being towed.

earliest

firm

decision

in

the

was:
"... confined to vessels that have received no
injury or damage...."
Towage is usually, but not always, provided by
specialized vessels commonly referred to as
tugs or tug boats and towage can also refer to
the money due for towage services as in
"towage fees".
Finally, salvage is to be distinguished from
towage,

the

distinction

being

of

great

importance.
In Westrup, lawyers argued vigourously for a
finding that there was a maritime lien in regards

to towage but the Court ruled against the then-

charter.In a time charter, the vessel is hired for

novel proposal.

a specific amount of time. The owner still

In the result, as stated in Volume 1(1)

manages the vessel but the charterer gives

of Halsbury's Laws of England - Admilralty Law:


"Although there is a maritime lien in respect of
salvage, there is no maritime lien in respect of
towage."

orders for the employment of the vessel, and

6) Charter Party
Charter party (Latin: charta partita; a legal
paper or instrument, divided, i.e. written in
duplicate so that each party retains half), a
written, or partly written and partly printed,
contract between a shipowner and a merchant,
by which a ship is let or hired for the
conveyance of goods on a specified voyage, or
for a defined period. A vessel might also be
chartered to carry passengers on a journey.
A charter party is the contract between the
owner of a vessel and the charterer for the use
of a vessel. The charterer takes over the vessel
for either a certain amount of time (a time
charter) or for a certain point-to-point voyage (a
voyage charter), giving rise to these two main
types of charter agreement. There is a subtype
of time charter called the demise or bareboat

may sub-charter the vessel on a time charter or


voyage charter basis.
The demise or bareboat charter is a subtype of
time charter in which the charterer takes
responsibility for the crewing and maintenance
of the ship during the time of the charter,
assuming the legal responsibilities of the owner
and is known as a disponent owner.
In a voyage charter, the charterer hires the
vessel for a single voyage, and the vessel's
owner (or disponent owner) provides the
master, crew, bunkers and supplies.
A contract of affreightment in writing, by which t
he owner of a ship or other vessel lets the whol
e, or a part ofher, to a merchant or other person
for the conveyance of goods, on a particular vo
yage, in consideration of the payment of freight.
This termis derived from the fact, that the contra
ct which bears this name, was formerly written o
n a card, and afterwards the card was cut into t
woparts from top to bottom, and one part was d

elivered to each of the parties, which was produ


ced when required, and by this meanscounterfe
its were prevented.
This instrument ought to contain, 1. the name a
nd tonnage of the vessel; 2. the name of the ca
ptain; 3. the names of the letter tofreight and th
e freighter; 4. the place and time agreed upon f
or the loading and discharge; 5. the price of the
freight; 6. the demurrage orindemnity in case of
delay; 7. such other conditions as the parties m
ay agree upon.
7) Loan on bottomry
A contract, in maritime law, by which money is b
orrowed for a specified term by the owner of a s
hip for its use, equipment, or repair for whichthe
ship is pledged as collateral. If the ship is lost in
the specified voyage or during the limited time, t
he lender will lose his or her moneyaccording to
the provisions of the contract. A contract by whi
ch a ship or its freight is pledged as security for
a loan, which is to be repaidonly in the event th
at the ship survives a specific risk, voyage, or p
eriod.
A bottomry bond is the instrument that embodie
s the contract or agreement of bottomry.
A contract, in nature of a mortgage of a ship, o
n which the owner borrows money to enable hi
m to fit out the ship,or to purchase a cargo, for a

voyage proposed: and he pledges the keel or b


ottom of the ship, pars pro toto, as a security for
the repayment;and it is stipulated that if the ship
should be lost in the course of the voyage, by a
ny of the perils enumerated in the contract, the l
ender alsoshall lose his money but if the ship sh
ould arrive in safety, then he shall receive back
his principal, and also the interest agreed upon,
whichis generally called marine interest, howev
er this may exceed the legal rate of interest. Not
only the ship and tackle, if they arrive safe, buta
lso the person of the borrower, is liable for the
money lent and the marine interest.

se the money is lent on the personal responsibil


ity of the borrower. It differs principally frombotto
mry, in the following circumstances: bottomry is
a loan on the ship; respondentia is a loan upon t
he goods. The money is to be repaid tothe lend
er, with maritime interest, upon the arrival of the
ship, in the one case and of the goods, in the ot
her. In all other respects thecontracts are nearly
the same, and are governed by the same princi
ples. In the former, the ship and tackle, being hy
pothecated, are liable, aswell as the person of t
he borrower; in the latter, the lender has, in gen
eral, only the personal security of the borrower.
LOAN ON BOTTOMRY made by shipowner/ship
agent guaranteed by vessel itself, repayable upon
arrival at destination
LOAN ON RESPONDENTIA taken on security of
the cargo repayable upon the safe arrival at cargo
destination

8) Loan on Respondent
A loan of money on maritime interest, on goods
laden on board of a ship, which, in the course of
the voyagemust, from their nature, be sold or ex
changed, upon this condition, that if the goods s
hould be lost in the course of the voyage, by an
y of theperils enumerated in the contract, the le
nder shall lose his money; if not, that the borrow
er shall pay him the sum borrowed, with the inte
restagreed upon,
2. The contract is called respondentia, becau

REQUISITES OF A LOAN ON BOTTOMRY/


RESPONDENTIA
1. Ship owner borrows money for use, equipment or
repair of vessel.
2. For a definite term and with extraordinary interest
called premium
3. secured by pledge of vessel or portion thereof in
the case of loan on bottomry or pledge of goods with
respect to respondentia.
4. Loan repayment depends or conditioned on the
safe arrival of the vessel for bottomry or safe arrival
of goods for respondentia and obligation to repay is

extinguished if pledged goods are lost.


5. Obligation to repay is extinguished if vessel is lost
due to specified marine perils in the course of
voyage or within limited time.

9) Average in Maritime Commerce


Introduction
Long before the existence of maritime
insurance, general average has been used as
an ancient form of spreading risk in the sea
transport.[1] General average is said to date
from the Rhodian Law of approximately 800
B.C., which stipulated that if a ship was in
danger and cargo was jettisoned to save the
ship, then the ship and the remaining cargo
were required to make a contribution to the
owner of the lost cargo.[2] What remains of the
Rhodian law is found in Roman law, which in
turn was adopted in the Rles of Olron and all
the subsequent sea codes until the present day.
General average is still a sui generis subject. It
likewise relevant to contracts of carriage of
goods by sea, and the damages resulting
therefrom are insurable. Under Philippine law,
the provisions on general averages are
contained in the Code of Commerce.
Definition

General averages refer to all the damages and

provided that the circumstances producing the

the maritime judicial authority of the first port,

expenses which are deliberately caused in

peril should be ascertained and imminent or

within 24 hours from arrival; and (f) ratification

order to save the vessel, its cargo, or both at

may rationally be said to be certain and

the same time, from a real and known risk.[3]

imminent. This last requirement excludes

of the captain under oath.


Expenses; by whom borne

The Code classifies averages into simple or

measures undertaken against a distant peril.

Under the Code of Commerce, all the persons

particular and general or gross. In contrast to


general averages, simple or particular averages
refer to all expenses and damages caused to
the vessel or cargo which have not inured to the
common benefit,[4] which are, therefore, borne
only by the owner of the property giving rise to
same.[5] They are not for the common benefit,
and are therefore not borne by the owners of
the articles saved. The distinction is better
appreciated by looking into the requisites of
general average.
Requisites
According to Tolentino, the following are the
requisites for general average:[6]
First, there must be a common danger. This
means, that both the ship and the cargo, after it
has been loaded, are subject to the same
danger, whether during the voyage, or in the
port of loading or unloading; that the danger
arises from the accidents of the sea,
dispositions of the authority, or faults of men,

having an interest in the vessel and the cargo


Second, that for the common safety part of the

therein at the time of the occurrence of the

vessel or of the cargo or both is sacrificed

average shall contribute to satisfy this average.

deliberately. As a general rule, sacrifice is made

[9] The

through the jettison of the cargo or part of the

bottomry and respondentia shall likewise

ship is thrown overboard during the voyage.

contribute.[11] Several interests are involved

Exceptions are: (a) where the sinking of a

and their share of expense or damage shall be

vessel is necessary to extinguish a fire in a port,

in proportion to the value of the owners

roadsteads, creek or bay; and (b) where cargo

property saved.

insurers[10] and

the

lenders

on

is transferred to lighten the ship on account of a


storm to facilitate entry into a port.[7]

It must however be pointed out that a claimant


(ship or cargo) is not entitled to obtain

Third, that from the expenses or damages

contribution from the other parties even if there

caused follows the successful saving of the

is common danger when he or his employees

vessel and cargo.

are at fault, or negligent in law.

Fourth, that the expenses or damages should

Examples

have been incurred or inflicted after taking


proper

legal

steps

and

authority.[8] The

procedure for recovery includes: (a) assembly


and deliberation; (b) resolution of the captain;
(c) entry of the resolution in the logbook; (d)
detailed minutes; (e) delivery of the minutes to

A. Magsaysay Inc. v. Anastacio Agan,


G.R. No. L-6393 (January 31, 1955)
Facts: The S S San Antonio vessel (plaintiff)
with general cargo for different ship owners left

Manila and was bound for Basco, Batanes, vis

but it specifically refers to a vessel intentionally

for the benefit of the vessel and not for the

Aparri, Cagayan. It reached Aparri, had a

stranded for the purpose of saving it. In the

purpose of saving the cargo, the cargo owners

stopover, and as it would proceed to Basco but

present case, the stranding was not intentional.

are not in law bound to contribute to the

still in port, it accidentally ran aground at the


mouth of the Cagayan River. Plaintiff have it
refloated by the Luzon Stevedoring Co.. The
vessel returned to Manila to refuel and then
proceeded to Basco, where the cargoes were
delivered to their respective owners or
consignees, who, with the exception of
defendant, made a deposit or signed a bond to
answer for their contribution to the average.
Thus, the plaintiff brought an action to make
defendant pay his contribution. Defendant
denies liability. The lower court decided against
the defendant, thus the appeal.
Issue: Whether the expenses incurred in
floating a vessel so stranded should be
considered general average and shared by the
cargo owners.
Held: The expenses should not be considered
as general average.

The expenses also lack the requisites of


general average. First, the expenses sought to
be recovered from defendant were not incurred
to save vessel and cargo from a common
danger. The vessel ran aground in fine weather
inside the port at the mouth of a river, a place
described as very shallow. There was no
imminent danger. It is, of course, conceivable
that, if left indefinitely at the mercy of the
elements, they would run the risk of being
destroyed. But as stated at the above quotation,
this last requirement excludes measures
undertaken against a distant peril. What does
appear from the testimony of plaintiffs manager
is that the vessel had to be salvaged in order to
enable it to proceed to its port of destination.
But as was said in the case just cited it is the
safety of the property, and not of the voyage,

expenses. And fourth, the procedure was not


followed.
Philippine Home Assurance Corp. v. CA and
Eastern Shipping Lines, Inc.
Facts: Eastern Shipping Lines, Inc (ESLI)
loaded on board SS Eastern Explorer in Kobe,
Japan, shipment for carriage to Manila and
Cebu, freight pre-paid and in good order and
condition. While the vessel was off Okinawa,
Japan, a small flame was detected on the
acetylene

cylinder

located

in

the

accommodation area near the engine room on


the main deck. The acetylene cylinder exploded
sending flame throughout the accommodation
area, thus causing death and severe injuries to
the crew and instantly setting fire to the whole
superstructure of the vessel. The ship was
abandoned by the master and the crew.

which constitutes the true foundation of the

The vessel was towed by Fukuda Salvage Co.

The said expenses do not fit into any of the

general average. Second, the cargo could,

to the port of Naha, Japan. The fire was

specific cases of general average enumerated

without need of expensive salvage operation,

eventually extinguished at the said port and the

in article 811. No. 6 of this article does mention

have been unloaded by the owners if they had

cargoes which were saved were loaded to

expenses caused in order to float a vessel,

been required to do so. Third, the sacrifice was

another vessel for delivery to their original ports

of destination. ESLI charged the consignees

General averages include all damages and

several amounts corresponding to additional

expenses which are deliberately caused in

freight and salvage charges, which were paid

order to save the vessel, its cargo, or both at

by

Corp

the same time, from real and known risk. The

(PHAC)under protest for and in behalf of the

formalities prescribed under the law were not

consignees. PHAC filed an action for recovery

complied with. ESLI must return to PHAC the

of sum paid. The trial court ruled in favor of

amount paid under protest in behalf of the

ESLI which was affirm on appeal by the CA.

consignees.

Philippine

Home

Assurance

Issue: Whether or not the expenses incurred in


saving the cargo are considered general
average.
Held: There was no general average.
The goods subject of the controversy were
neither lost nor damaged in transit by the fire
that razed the carrier. Thus the issue is who
among the carrier, consignee or insurer is liable
for the additional charges or expenses incurred
by the owner of the ship in the salvage
operations and in the transshipment of the
goods via a different carrier.
Moreover, fire is not considered a natural
disaster or calamity since it almost always
arises from some act of man or by human
means. It cannot be an act of God unless
caused by lightning.

10) Particular or Simple Average


In maritime law, damage sustained by a
ship, cargo, or freight that is not recompe
nsed by contribution from all interests in t
he venture butmust be borne by the own
er of the damaged property.
Particular average loss is the opposite of
general average loss, which denotes con
tribution by the various interests engaged
in a maritimeundertaking to recoup the lo
ss of one of them for the voluntary sacrifi
ce of a portion of the ship or cargo in ord
er to save the remainingproperty and the
lives of those on board, or for extraordina
ry expenses necessarily incurred for the
common benefit and safety of all.

11) Gross or general average


The law of general average is a legal principle
of maritime law according to which all parties in
a sea venture proportionally share any losses
resulting from a voluntary sacrifice of part of the
ship or cargo to save the whole in an
emergency. In the exigencies of hazards faced
at sea, crew members often have precious little
time in which to determine precisely whose
cargo they are jettisoning. Thus, to avoid
quarrelling that could waste valuable time, there
arose the equitable practice whereby all the
merchants whose cargo landed safely would be
called on to contribute a portion, based upon a
share or percentage, to the merchant or
merchants whose goods had been tossed
overboard to avert imminent peril. While general
average traces its origins in ancient maritime
law, still it remains part of the admiralty law of
most countries.
12) Jettison
The act of throwing overboard from a vessel
part of the cargo, in case of extreme danger, to
lighten the ship. The same name is also given
to the thing or things so cast out. Gray v. Wain,
2 Serg. & It. (Pa.) 254, 7 Am. Dec. 042; Butler v.
Wildman, 3 Barn. & Aid. 320; Baruard v. Adams,
10 How. 303, 13 L. Ed. 417. A carrier by water
may, when in case of extreme peril it is
necessary for the safety of the ship or cargo,

throw overboard, or otherwise sacrifice, any or


all of the cargo or appurtenances of the ship.
Throwing property overboard for such purpose
is called "jettison," and the loss incurred thereby
is called a "general average loss." Civil Code
Cal.
jettison (jtsn, zn) [key] [O.Fr., = throwing],
in maritime law, casting all or part of a ship's
cargo overboard to lighten the vessel or to meet
some danger, such as fire. Such cargo, when
found later, is known as jetsam (see flotsam,
jetsam, and ligan). The master of the ship has the
absolute right to jettison cargo when he
reasonably believes it to be necessary, and the
owners of the ship incur no liability. If the vessel
carries goods of more than one shipper, the rule
of general average provides for apportioning the
loss among all the shippers because all have
benefited by the master's action. On the other
hand, if some cargo is lost by accident, the
shippers who suffered no loss do not contribute to
indemnification.

14) Collision

ARRIVAL UNDER STRESS an arrival of the


vessel at a port not of destination on account of
(a)
lack
of
provisions; (b) well-founded fear of seizure; (c)
by reason of accident of the sea disabling it to
navigate
when:

pressed against by a second vessel lying alongside of her. in consequence of a collision


against such second vessel by a third one
under way, may be compensated for, under the
general head of "collision." as well as an injury
which is the direct result of a "blow." properly so
called. The Moxey, Abb. Adm. 73, Fed. Cas. No.

In maritime law. The act of ships or vessels

9,S94

striking together. In its strict sense, collision


means the impact of two vessels both moving,
and is distinguished from allision, which
designates the striking of a moving vessel
against one that is stationary. But collision is
used in a broad sense, to include allision, and
perhaps other species of encounters between
vessels. Wright v. Brown, 4 Ind. 9T, 58 Am. Dec.
G22; London Assur. Co. v. Compauhia De
Moageus, G8 Fed. 258, 15 C. C. A. 379; Towing
Co. v. TLtna Ins. Co., 23 App. Div. 152, 48 N. Y.

13) Arrival under stress

Unlawful

1. Lack of provisions due to negligence to carry


according
to
usage
and
customs
2. Risk of enemy not well known or manifest
3. Defect of vessel due to improper repair
4. Malice, negligence, lack of foresight or skill of
captain

Supp. 927. The term is not inapplicable to


cases where a stationary vessel is struck by
one under way. strictly termed "allision or where
one vessel is brought into contact with another
by swinging at anchor. And even an injury
received by a vessel at her moorings,
in consequence of being violently rubbed or

When two or more object run into each other as


in a car collision.
Maritime Law. It takes place when two ships or
other vessels run foul of each other, or when
one runs foul of the other. In such cases there
is almost always a damage incurred.
There are four possibilities under which an
accident of this sort may occur.
1. It may happen without blame being imputable
to either party, as when the loss is occasioned
by a storm, or any other vis major; in that case
the loss must be borne by the party on whom it
happens to light, the other not being
responsible to him in any degree.
2. Both parties may be to blame, as when there
has been a want of due diligence or of skill on
both sides; in such cases the loss must be
apportioned between them as having been
occasioned by the fault of both of them.

3. The suffering party may have been the cause


of the injury, then he must bear the loss.

In Evergreen, the Justice Hamilton of the United

4. It may have been the fault of the ship which


ran down the other; in this case the injured
party would be entitled to an entire
corapensation from the other. The same rule is
applied to steamers.

before him:

5. Another case has been put, namely, when


there has been some fault or neglect, but on
which side the blame lies is uncertain. In this
case it does not appear to be settled whether
the loss shall be apportioned or borne by the
suffering party.

States Court of Appeals noted that the claims

"... stem from an allision between a container


ship, the M/V Ever Reach, and a submerged
dredge spoil pipeline located outside the
federally marked navigational channel of the
Cooper River in Charleston, South Carolina."

reports, are a moving ship slamming into a

ALLISION, maritime law. The running of one ve


ssel against another. It is
distinguished from collision in this, that the latter
means the runningof
two vessels against each other; this latter term i
s frequently used for allision.
"An allision is a collision between
moving vessel and a stationary object."

cable.

COLLISION the impact of two vessels both


of
which
are
moving

15) Allission

16) Zone of time of volition of vessel


1. First zone all time up to the moment when
risk of collision begins.

Other examples of allision, taken from the law


bridge or rupturing or damaging a submarine

A collision between two ships on the high seas,


whether it be the result of accident or
negligence is, in all cases, to be deemed a peril
of the seas within the meaning of a policy

3. It cannot be determined which of the 2


vessels caused the collision - each vessel shall
suffer its own damages, and both shall be
solidarily responsible for the losses and
damages occasioned to their cargoes
(Inscrutable Fault)

ALLISION the striking of a moving vessel


against
one
that
is
stationary.
CASES
OF
COLLISION
1. Due to the fault, negligence or lack of skill of
the captain, sailing mate or the complement
of the vessel - ship owner liable for the losses
and
damages
(Culpable
Fault)
2. Due to fortuitous event or force majeure each vessel and its cargo shall bear its own
damages
(Fortuitous)

Note: One vessel is a privileged vessel and the


other is a vessel required to take action to avoid
collision.
2. Second zone time between moment when
risk of collision begins and moment it becomes
practically a certainty.
Note: In this zone, the conduct of the vessels
are primordial. It is in this zone that vessels
must observe nautical rules, unless a departure
therefrom becomes necessary to avoid
imminent danger. The vessel which does not
make such strict observance is liable.
3. Third Zone time when collision is certain
and up to the time of impact. Note: An error at
this point no longer bears any consequence.

17) Error in extremis


The sudden movement made by a faultless
vessel during the third zone of collision with
another vessel which is at fault under the
second zone. Even if sudden movement is
wrong, no responsibility will fall on the faultless
vessel.
ERROR IN EXTREMIS where a navigator,
suddenly realizing that a collision is imminent by
no
fault of his own, in confusion and excitement of
the moment, does something which contributes
to
the
collision or omits to do something by which the
collision might be avoided, such act or omission
is
ordinarily considered to be in extremis and the
ordinary rules of strict accountability does not
apply.

ship owners interest over the vessel.


Consequently, in case of loss, the ship owners
liability is also extinguished. Limited liability
likewise extends to ships appurtenances,
equipment, freightage, and insurance proceeds.
The ship owners or agents liability is merely
co-extensive with his interest in the vessel, such
that a total loss of the vessel results in the
liabilitys extinction. The vessels total
destruction extinguishes maritime liens because
there is no longer any res to which they can
attach. (Monarch Insurance v. CA, G.R. No.
92735, June 8, 2000)

3. Workmens Compensation cases (now


Employees Compensation under the Labor
Code); (Oching v. San Diego, G.R. No. 775,
Dec. 17, 1946)

What are the exceptions to the doctrine of


limited liability?

liability of ship owner is confined to that which


he is entitled to abandon the vessel with
all her equipments and the freight he may have
earned during the voyage and if they are
lost, it suffices for his discharge. [No ship, no
liability]

1. Repairs and provisioning of the vessel before


the loss of the vessel; (Art. 586)
18) Vessel at Fault

19) Doctrine of limited liability


What is the Doctrine of Limited Liability?
Also called the no vessel, no liability doctrine,
it provides that liability of ship owner is limited to

2. Insurance proceeds. If the vessel is insured,


the proceeds will go to the persons entitled to
claim from the shipowner; (Vasquez v. CA, G.R.
No. L-42926, Sept. 13, 1985)

4. When the shipowner is guilty of fault or


negligence; Note: But if the captain is the one
who is guilty, doctrine may still be invoked,
hence, abandonment is still an option.
5. Private carrier; or
6. Voyage is not maritime in character.

Exceptions:
1. Vessel is not abandoned (when the ship
owner does acts inconsistent with
abandonment e.g. salvage)
2. Ship owner agent/ agent allows his vessel to
embark in an unseaworthy condition.
3. Claims under workmens compensation
4. Injury/damage due to ship owners fault
5. Vessel is insured

6. In case the voyage is not maritime but only in


river or gulf
7. In case of the expenses for equipping,
repairing or provisioning the vessel
NOTE: The doctrine also applies for claims due
to death or injuries to passengers, aside from
claims for
goods. In abandoning the vessel, there is no
procedure to be followed. There is neither a
prescriptive period within which the ship owner
can make the abandonment. He may do so for
so long as he is not estopped from invoking the
same or do acts inconsistent with
abandonment.

20) Instances where both vessels are at


fault
Both to Blame collision clause. This is a
clause found in both voyage and time
charterparties and also in bills of lading. It is a
protective clause, to give protection to one side.
For example, a typical clause in a charterparty
can
state:
"Both
to
blame
collision
clause:
If the ship comes into collision with another ship
as a result of the negligence of the other ship

and any act, neglect or default of the Master,


mariner, pilot or servants of the Carrier in the
navigation or in the management of the ship,
the owners of the goads earned hereunder will
indemnify the Carrier against all loss or liability
to the other or non-carrying ship or her owners
in so far as such loss or liability represents loss
of, or damage to, or any claim whatsoever of
the owners of said goods, paid or payable by
the other or non-carrying ship or her owners to
the owners of said goods and set off, recouped
or recovered by the other or non-carrying ship
or her owners as pan of their claim against the
carrying
ship
or
carrier."
The purpose of such clauses is to restore the
position of the shipowner/carrier who was
traditionally not liable to compensate the owner
of the cargo on board the vessel for errors in
navigation or management of the vessel. Under
United States case law, however, the cargo
owner could bring a successful action against
the non-carrying vessel for 100 per cent
recovery (from The Atlas, 1875) and the owner
of this vessel could then seek indemnity from
the
carrying
vessel.
Before 1910 and the "International Convention
for the Unification of Certain Rules of Law with
Respect to Collisions between Vessels"
adopted in Brussels in that year, if both ships
were at fault, the damages were divided

equally. This was called the "divided damages


rule". This Rule was applied in the United
States where the cargo was allowed to claim
100 per cent of its loss from the non-carrying
vessel, which was then able to claim back 50
per cent from the carrying vessel.
This means that if vessel A was only 5 per cent
to blame, its liability was allocated as 50 per
cent. This led to the carrying vessel having to
partly compensate one cargo, indirectly, if the
vessel's fault in a collision was less than 100
per cent but not if the fault was 100 per cent
owing to the old rule of no liability for errors in
navigation. Collision can be such an error.
If the cargo interest was permitted to recover
100 per cent from the non-carrying vessel and
this vessel could then claim indemnity from the
carrying vessel, this led to absurd results in
relation to the position under shipping law and
the exception of liability for errors in navigation.
Carriers and shipowners attempted to insert
"Both to blame collision" clauses into bills of
lading where claims and disputes were to be
decided in United States courts. 'The effect of
such clauses is to require the cargo interest to
indemnify the carrying vessel for any
compensation this vessel may have to pay the
non-carrying
vessel.
Initially, however, such clauses were held to be

invalid in United States v. Atlantic Mutual


Insurance Co., 1952, by the U.S. Supreme
Court. In American Union Transport v. U. S.A.,
1976, the clause was held to be valid in private
contracts such as charterparties and bills of
lading connected only with charterparties.
However, if such a clause is inserted into a bill
of lading that is used by a public carrier or a bill
that can be endorsed to third parties, the bothto-blame collision clause is invalid.
When the Brussels Collision Convention was
adopted, the "proportionate damages rule" in
the Convention allowed an apportionment of
liability depending on the actual fault. The
United States has not adopted the Brussels

Collision Convention, whereas other major


maritime
countries
have.
In the United States the divided damage rule
applied until 1975 and this caused much
uncertainty in Contents Index shipowners if a
claim from cargo interests was to be decided in
that country. In United States v. Reliable
Transfer Co., 1975, the U.S. Supreme Court
permitted the proportional damages rule to be
applied unless the two vessels are equally at
fault or when it is impossible to determine
precisely the comparative degree of their fault.
21) What is Inscrutible Fault

Case in which it cannot be decided which of the


two vessels had caused the collision; court
determines that collision is caused by fault but
cannot determine which of the vessels is at
fault.
The term inscrutable fault signifies a judicial
finding that a fault has occurred but the court is
unable to locate the source, or to clearly identify
a tort-feasor due to conflict of testimony or
absence of corroborating evidence. The term is
used in maritime law with regard to the tort
liability resulting from collision of vessels. In
such cases, both the parties are not entitled to
recovery.