PART III MARITIME LAW

Pre-Hispanic inhabitants
- Boatbuilding and seafaring
- Different kinds of seacraft
o Medium sized vessels barangays or binidays
o Large sized viyeres
o Larger sized bicoros (long voyages)
Spanish Period
- Principal mode of transportation by water
CHAPTER 10 General Concepts
1. Maritime Law: Defined the system of laws which particularly relates to the
affairs and business of the sea, to ships, their crews and navigation, and to
marine conveyance of persons and property
Corpus of rules, concepts, and legal practices governing certain centrally
important concerns of the business of carrying goods and passengers by
water
System of law which particularly relates to marine commerce and navigation,
to business transacted at sea or relating to navigation, to ships and shipping,
to seamen, to the transportation of persons and property by sea and to
marine affairs generally
Note: Philippine Maritime Law is of Anglo-American extraction, and is
governed by adherence to both international maritime conventions and
generally accepted practices relative to maritime trade and travel (p. 425)
a. Special Laws
i. Book III of the Code of Commerce Maritime Commerce
ii. Act No. 2616 Salvage Law
iii. Commonwealth Act No. 65 COGSA
iv. PD 1521 Ship Mortgage Decree of 1978
v. And other SPLs relating to Maritime Commerce
b. Civil Code Primary Law
i. Primary: NCC provisions on Common Carriers
ii. Secondary: Code of Commerce and SPLs
c. Treaties and Conventions adopts the generally accepted principles of
international law as part of the law of the land
i. United Nations Convention on the Law of the Sea (UNCLOS)
ii. International Maritime Organization
iii. International Conventions for the Safety of Life at Sea (SOLAS
1974)

iv. Tonnage Convention 1969

d. Convention for the International Regulations on the Prevention of Collision
at Sea 1972 (COLREGS 1972)*
i. Not yet been adhered to in this country
ii. But the provisions are being followed by Philippine vessels
iii. Reason: not only because they are already ratified by numerous
states but also because they form part of international customs
2. Real and Hypothecary Nature what distinguishes maritime from the civil law
and even from the mercantile law in general
Philippine Shipping Company, et al. v. Francisco Garcia Vergara
o The spirit of the Code of Commerce is accurately set forth in a treatise of
Madriaga on Maritime Law
o Real Nature of the Maritime Law
The limitation of the liability of the agents to the actual value of the
vessel and the freight money
The right to retain the cargo and the embargo and detention of the
vessel even in cases where the ordinary civil law would not allow
more than a personal action against the debtor or person liable
o This repeals the civil law to such an extent that, in certain cases, where
the mortgaged property is lost no personal action lies against the owner or
agent of the vessel
Where the vessel is LOST, the sailors and members of the crew
CANNOT recover their wages
In case of COLLISION, the liability of the agent is limited
In cases of SHIPWRECKS, those who LOAN their money on the
vessel and cargo LOSE all their rights and CANNOT claim
reimbursement under the law
o 2 reasons why it is IMPOSSIBLE to do away with these privileges
The risk to which the thing is exposed
The real nature of maritime law, exclusively real, according to
which the liability of the parties is LIMITED to a thing to which is at
mercy of the waves
Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance
Corportation Ltd.
o Real and Hypothecary Nature the liability of the carrier in connection
with losses related to maritime contracts is confined to the vessel which is
hypothecated for such obligations or which stands as the guaranty for the
settlement
Limited Liability Rule: No Vessel, No Liability
o The shipowners or agents liability is merely co-extensive with his interest
in the vessel such that a total loss results in its extinction

o The total destruction of the vessel EXTINGUISHES maritime liens,

because there is no longer any res to which it can attach.
o Designed to offset such adverse conditions and to encourage people and
entities to venture into maritime commerce despite the risks and
prohibitive cost of shipbuilding
Rationale
o The principle has not been rendered obsolete by the advances in modern
technology which considerably lessen the risks involved in maritime trade
o Monarch Insurance Co., Inc. v. CA (p. 426)
The doctrine is based on the REAL and HYPOTHECARY nature of
maritime law
Has its origin in the prevailing conditions of the maritime
trade and sea voyages during the medieval ages, attended
by innumerable hazards and perils
To offset against these adverse conditions and to encourage
shipbuilding and maritime commerce,
Necessary to confine the liability of the owner or agent
arising from the operation of a ship to the
o Vessel
o Equipment
o Freight
o Insurance
a. STATUORY PROVISIONS that provide for the Limited Liability Rule
Code of Commerce
i. Art. 587 (Liability to Third Persons)
ii. Collision Cases
1. Art. 643
2. Art. 837
b. COVERAGE OF THE LIMITED LIABILITY
i. Art. 587 the carrier CANNOT invoke Art. 1733 and 1735 of the
CC
1. The Civil Code contains NO provision regulating liability of
shipowners or agents in the event of total loss or destruction
of the vessel
ii. Guison v. Philippine Shipping Company (p. 428) application of
Art. 837 limiting the liability of the agent to the value of the vessel
1. A collision at the mouth of the Pasig River between the
motor launches Martha and Manila H
2. Manila H was found to be at fault
iii. Yangco v. Laserna (p. 428)
1. Yangco owned the steamer SS Negros which after 2 hours
of sailing from Romblon to Manila encountered rough seas
which resulted to:

a. The capsizing of the vessel

b. The death of many passengers
2. Its liability to the mishap is limited to the vessel and such
liability is merely co-extensive with his interest in the vessel
such that a total loss results in its extinction
iv. If the vessel is CO-OWNED, the limited liability to 3rd persons Art.
590
1. Co-owners of the vessel = civilly liable in the proportion of
their contribution to the common fun for the results of the
acts of the captain (referred to in Art. 587)
2. Each co-owner MAY exempt himself from this liability by the
abandonment, before a notary, of that part of the vessel
belonging to him
c. SHIPOWNER ENTITLED TO LIMITED LIABILITY
i. The charterer CANNOT invoke the LLR against the shipowner in a
case filed by the shipowner against the former
1. Hes the one benefitting from the rule
d. EXCEPTIONS to the LLR
i. Where the injury or death to a passenger is due either to the fault of
the shipowner or to the concurring negligence of the shipowner and
the captain
ii. Where the vessel is insured
iii. In workmens compensation
iv. Government of the Philippines v. Maritime the total destruction of
the vessel does not affect the liability of the owner for repairs of the
vessel completed BEFORE its loss
e. NEGLIGENCE of Shipowner and Agent
i. LLR applies if the captain or the crew caused the damage or injury
ii. Negros Navigation Co. v. CA the carrier is liable to the full extent
and not up to the value of the vessel
1. If it was established that the carrier was guilty of negligence
a. in allowing the captain and crew to play mahjong
during the voyage
b. in failing to maintain the ship as seaworthy
c. in allowing the ship to carry more passengers than it
as allowed to carry
iii. Failure to maintain the seaworthiness of the vessel cannot
invoke the LLR
1. Authorizing the voyage notwithstanding its knowledge of a
typhoon is tantamount to negligence
iv. Manila Steamship Company, Inc. v. Insa Abdulhaman and Lim
Hong To (p. 431)

1. A collision case between ML Consuelo V (capsized and lost)

and MS Bowline Knot = 9 passengers died or were missing
and all its cargoes were lost
2. Application of Art. 837 (Code of Commerce) where the
collision was imputable to BOTH of them, each vessel shall
suffer her own damages and both shall be SOLIDARILY
liable for the damages occasioned to their cargoes
v. The carrier or shipowner has the burden of showing that it
exercised extraordinary diligence in the transport of the goods it
had on board in order to invoke the LLR.
f. NOT applicable to Insurance Claim
i. Vasquez v. CA While typhoon was an inevitable occurrence, yet,
having been kept posted on the course of the typhoon by weather
bulletins at intervals of 6 hours, the captain and crew were well
aware of the risk they were taking as they hopped from island to
island from Romblon up to Tanguingui.
1. The total loss of the vessel DID NOT extinguish the liability
of the carriers insurer
2. Despite the loss of the vessel, its insurance answers for the
damages that a shipowner or agent, may be held liable for
by reason of the death of its passengers
ii. Applicable to Action of Insurer in Subrogation
1. LLR applies to the PAYING insurer when it exercises its right
of subrogation against the shipowner
2. Same cause of action as the shipowner so the insurer is
subject to the defenses available to the shipowner as if it
were the shipper who directly sued the same insurer
g. WORKMENS COMPENSATION
i. Abueg v. San Diego
1. MS San Diego and MS Bartolome were caught by a typhoon
= sunk and totally lost
2. A liability created by a statute to compensate employees and
laborers in cases of injury received by or inflicted upon them,
while engaged in the performance of their work or
employment or the heirs and dependents of such laborers
and employees in the event of death caused by their death
a. An item in the cost of production which must be
included in the budget of any well-managed industry
3. Under Art. 587 & 837, the liability of the shipowner or agent
is limited to the value of the vessel with all her equivalent
and freight earned during the voyage if the shipowner or
agent abandoned the ship with all the equipment and freight

a. DOES NOT APPLY to the liability under the WC in

the case where the vessel is lost, the liability is still
ENFORCEABLE against the employer or shipowner
ii. The present workmens compensation regime is not administered
by the Employees Compensation Commission (ECC) and is
governed by the provisions of the Labor Code
1. It is NOT the employer who will be liable but the ECC
h. ABANDONMENT
i. Before the shipowner or agent can enjoy the benefits of the limited
liability principle, abandonment of the vessel, its appurtenances and
freightage is an INDISPENSIBLE requirement
1. If the carrier DOES NOT want to abandon the vessel, then
he is liable even BEYOND the value of the vessel
ii. Philippine Shipping Company v. Garcia the only instance where
such abandonment is dispensed with is when the vessel was
entirely LOST the obligation is extinguished
iii. Ohta Development Company v. Steamship Pompey
i.

PROCEDURE FOR ENFORCEMENT

i. Aboitiz Shipping Corp. v. General Accident Fire and Life Assurance
Corp. Ltd.
1. The rights of a vessel owner or agent under the LLR are akin
to those of the rights of shareholders to limited liability under
our corporation law
2. As a matter of equity, the total proceeds of the insurance
and pending freightage should be deposited in trust.
ii. Lipana v. Development Bank of Rizal the stay of execution of
judgment is warranted by the fact the respondent bank was placed
under receivership
1. After the Monetary Board has declared that a bank is
insolvent and has ordered it to cease operations, the Board
becomes the trustee of its assets for the equal benefit of all
creditors, and after its insolvency, one cannot obtain an
advantage or preference over another by an attachment,
execution, or otherwise
Insolvency of a Corporation + Sinking of a Vessel
The claimants or creditors are LIMITED in their recovery
to the remaining value of accessible assets
Insolvent Corporation
Lost Vessel
These
are
the
These
are
the
RESIDUAL assets of
insurance
proceeds
the corporation left
and
pending
over
from
its
freightage
for
the

operations
particular voyage
iii. There is a need to collate all claims preparatory to their satisfaction
from the insurance proceeds on the vessel and its pending
freightage at the time of its loss
3. PROTESTS written statement by the master of a vessel or any authorized
officer, attested by proper officer or a notary, to the effect that damages has been
suffered by the ship
a. Required under the Code of Commerce in the ff. cases:
i. When the vessel makes an arrival UNDER STRESS
ii. Where the vessel is SHIPWRECKED
iii. Where the vessel has gone through a HURRICANE or the captain
believes that the cargo has SUFFERED DAMAGES or AVERAGES
iv. Maritime collisions
1. The maritime protest must be made within 24 hours AFTER
a collisions and the circumstances of the collision are
declared or made known before a competent authority at the
point of accident or the first port of arrival if in the Philippines
or the Philippine consul in a foreign country
4. Admiralty Jurisdiction [Sec. 19(3) of BP Blg. 129 (as amended by RA 7691)
Judiciary Reorganization Act]
a. The RTC has jurisdiction in ALL actions in admiralty and maritime
jurisdiction where the demand or claim EXCEEDS PHP 300,000.00 or, in
Metro Manila, where such demand or claim exceeds PHP 400,000.00
i. Less than the jurisdictional amount Metropolitan Trial Court,
Municipal Trial Court or Municipal Circuit Trial Court
b. Crescent Petroleum Ltd., v. M/V Lok Maheshwari, et al.
i. Two tests have been used to determine whether a case involving a
contract comes within the admiralty and maritime jurisdiction of a
court
1. Locational test [English Rule] maritime and admiralty
jurisdiction, with a few exceptions, is exercised ONLY on
contractions made upon the sea and to be executed thereon
2. Subject matter test [American Rule] where the criterion
in determining whether a contract is maritime depends on
the nature and subject matter of the contract having
reference to maritime service and transactions
c. International Harvester Company of the Philippines v. Aragon
i. The SC adopted the American rule
d. A contract for furnishing supplies may be considered maritime and within
the jurisdiction of admiralty.

i. May be invoked before our courts through an action in rem or quasi

in rem or an action in personam
5. Forfeiture Due to Smuggling
a. Penalty imposed under Sec. 2530 of the Tariff and Custom Code
provided that the ff. conditions are present:
i. The vessel is used unlawfully in the importation or exportation of
articles into or from the Philippines
ii. The articles are imported to or exported from any Philippine port or
place, except a port of entry
iii. If the vessel has a capacity of less than 30 tons and is used in the
importation of articles into any Philippine port or place other than a
port of the Sulu Sea, where importation in such vessel may be
authorized by the Commissioner, with the approval of the
department head
6. Marine Pollution
a. Marine Pollution Decree of 1976 declared a national policy to prevent
and control the pollution of seas by the dumping of wasted and other
matter which create hazards to human health, harm living resources and
marine life, damage amenities, or interfere with the legitimate uses of the
sea within the territorial jurisdiction of the Philippines
b. Prohibited Acts under Sec. 4
i. Discharge, dump, or suffer, permit the discharge of oil, noxious
gaseous and liquid substances and other harmful substances from
or out of any ship, vessel, barge or any other floating craft, or other
man-made structures at sea, by any method, means or manner,
into or upon the territorial and inland navigable waters of the
Philippines
ii. Throw, discharge or deposit, dump, or cause, suffer or procure to
be thrown, discharged, or deposited either from or out of any ship,
barge, or other floating craft or vessel of any kind, or from the short,
wharf, manufacturing establishment, or mill of any kind, any refuse
matter of any kind or description whatever other than that flowing
from streets and sewers and passing therefrom in a liquid state into
tributary of any navigable water from which the same shall float or
be washed into such navigable water
iii. Deposit or cause, suffer or procure to be deposited material of any
kind in any place on the bank of any navigable water, or on the
bank of any tributary of any navigable water, where the same shall
be liable to be washed into such navigable water, either by ordinary
or high tides, or by storms or floods, or otherwise, whereby
navigation shall or may be impeded or obstructed or increase the
level of pollution such water
iv. EXCEPTIONS

1. Cases of emergency imperiling life or property, or

unavoidable accident, collision, or stranding or in any cases
which constitute danger to human life or property or a real
threat to vessels, aircraft, platforms, or other man-made, or
2. If dumping appears to be the only way of averting the threat
and if there is possibility that the damage consequent upon
such dumping will be less than would otherwise occur
3. Except as otherwise permitted by regulations prescribed by
the National Pollution Control Commission or the Philippine
Coast Guard
c. Definitions under Sec. 3
i. DISCHARGE
1. includes, but is not limited to, any spilling, leaking, pumping,
pouring, emitting, emptying or dumping
2. but DOES NOT include discharge of effluent from industrial
or manufacturing establishments, or mill of any kind
ii. DUMPING
1. Any deliberate disposal at sea and into navigable waters of
wastes or other matter from vessels, aircraft, platforms or
other man-made structures at sea,
2. including the disposal of wastes or other matter directly
arising from or related to the exploration, exploitation and
3. associated off-shore processing of sea bed mineral
resources unless the same is permitted and/or regulated
under the decree
4. DOES NOT mean a disposition of any effluent from any
outfall structure to the extent that such disposition is
regulated under the provisions of RA 3931 nor does it mean
a routine discharge of effluent or other matter incidental to
the propulsion of, or derived from the normal operations of
vessels, aircraft, platforms or other man-made structures at
sea and their equipment
iii. OIL
1. Oil of any kind or in any form including, but not limited to,
petroleum, fuel oil, sludge, oil refuse, and oil mixed with
wastes other than dredge spoil
iv. NAVIGABLE WATERS
1. The waters of the Philippines, including the territorial sea
and inland waters which are presently, or be in the future
susceptible for use by watercraft
v. VESSEL
1. Every description of watercraft, or other artificial contrivance
used, or capable of being used, as a means of transportation
on water
vi. REFUSE

1. Garbage, waste, wood residues, sand, lime cinder ashes,

offal, nightsoil, tar, dye stuffs [srsly], acids, chemicals and
substances other than sewage and industrial wastes that
may cause pollution
d. Pollution Insurance
i. The liability of the ship owners and operators of ships plying
DOMESTIC trade are required under Marina Memorandum Circular
No. 1, Series of 2009 to secure insurance coverage for pollution
liability
ii. Requirement limited to ALL persons, corporations, partnerships,
cooperatives and entities:
1. Operating any type of ships
a. 20 GT and above
b. Wooden hulled ships 35 GT and above
2. For hire or compensation in the domestic trade
3. Tankers which require coverage (as stipulated in MARINA
MC 184)
iii. SHIPS NOT COVERED
1. Government owned ships NOT engaged in commerce
2. Non-motorized wooden hulled ships
3. Yachts and pleasure crafts
7. Marine Insurance
a. Governed by the ff:
i. Sec. 99 166 of the Insurance Code of 1978
ii. Sec. 14 of the Domestic Shipping Development Act of 2004
requires mandatory insurance coverage for passengers to meet the
financial responsibility of domestic ship operator for breach of
contract of carriage
iii. Sec. 15 of the DSDA Maritime Industry Authority shall have the
power to require every ship operator to obtain such other
compulsory Insurance coverage necessary to adequately cover
claims for damages
b. MARINA MC No. 09-18 and 09-21 domestic shipping operators are
REQUIRED to secure insurance coverage for maritime accidents
i. Covers domestic carriers and operators of passenger ships
engaged in domestic shipping who are carrying passengers
ii. Compulsory coverage includes:
Persons Covered Amount
of Risk
Insured
Coverage
Against/ Nature of
Compensations
Passengers
PHP 200k / Death
passenger
Unmanifested
PHP 200k / Death

Passengers
Survivors

passenger
PHP 50k

Survivorship
Coverage
/
Monetary Assistance
/ Monetary Assistance

Surviving
PHP
50k
Passengers
passenger
iii. Survivorship Insurance Coverage (survivors) + Monetary
Assistance (surviving passengers) shall be OVER and ABOVE the
medical and hospitalization expenses and reasonable incidental
expenses for burial, travel, transfer, food, clothing, board and
lodging expenses covered by receipts
c. Passengers include any person while embarking on, on board, or
disembarking from the ship
i. Includes passengers who are:
1. Ticketed
2. Unticketed
3. Manifested
4. Unmanifested
5. Paying
6. Non-paying
7. Minor
8. Holding discounted or complimentary tickets
9. Accommodated passengers including those accompanying
cargoes, animals or vehicle covered by a contract of
transportation
d. Maritime accidents an event which involves a fire, explosion,
groundling, collision / contact / capsizing / tilting, sinking, and other similar
occurrences resulting in death
e. Wreck Recovery and Pollution Liability Insurance [MARINA MC No. 1,
Series of 2009]
i. Separate Requirement to secure insurance to insurance
coverage for pollution liability and liabilities arising from
wreck removal
1. Secured from a P&I Mutual Club a group of shipowners
and bareboat charterers grouped together by becoming
members of a Protection and Indemnity Mutual Association
to cover any liabilities arising out of the management or
navigation of their vessels