CHAPTER 6
Art. 590. The co-owners of the vessel shall be civilly liable in the
MARITIME LAW
I. MARITIME LAW: DEFINED.
Maritime Law is 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.
Includes:
Book III of the Code of Commerce entitled Maritime Commerce, Act
No. 2616 otherwise known as the “Salvage Law”
CA No. 65 otherwise known as the “Carriage of Goods by the Sea Act”
PD No. 1521 known as the “Ship Mortgage Decree of 1978”
Other special laws relating to Maritime Commerce
Civil Code provisions on common carriers – primary law Code of
Commerce and special laws – suppletory only
II. REAL AND HYPOTHECARY NATURE.
A. NATURE AND RATIONALE.
SC said that the spirit of the Code of Commere is set forth in a treatise
of Madriaga on maritime law.
Maritime law is distinguished from civil and mercantile law by its real
and hypothecary nature, and the many securities of a real nature that
maritime customs time immemorial have provided for the protection
of various and conflicting interest which are ventured and risked in
maritime expeditions.
[MEMAID]
1. Real.
Similar to transactions over real property with respect to effectivity
against third persons which is done through registration.
The evidence of real nature is shown by:
the limitation of the liabiltiy of the agents to the actual value of the
vessel and the freight money; and
the right to retain cargo and embargo and detention of the vessel
2. Hypothecary.
The real and hypothecary nature of maritime law simply means that
the liabiltiy of the carrier in connection with losses related to maritime
contracts is confined to the vessel which stands as the guaranty for
their settlement.
B. STATUTORY PROVISIONS.
Statutory provisions that provide for the limited liability rule.
Art. 587. The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise from the
conduct of the captain in the care of the goods which he loaded on
the vessel; but he may exempt himself therefrom by abandoning the
vessel with all her equipment and the freight it may have earned
during the voyage.
proportion of their interests in the common fund for the results of the
acts of the captain referred to in Art. 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.
Art. 643. 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.
If a portion of the vessel or of the cargo, or of both, should be saved, 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 on the amount the freightage of the cargo saved; but sailors who are
engaged on shares shall not have any right whatsoever on the salvage of
the hull, but only on the portion of the freightage saved. If they 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 risks, encountered in order to accomplish
the salvage.
Art. 837. The civil liability incurred by shipowners in the case
prescribed in this section, shall be understood as limited to the value of
the vessel with all its appurtenances and freightage served during the
voyage.
C. COVERAGE.
Art. 837 – applies the principle of limited liabilty in cases of collission
Arts. 587 and 590 – employ the universal principle of limited liability in all
cases.
Taken together with related articles, Arts 837, 587 and 590 cover only:
liability to third persons
acts of the captain
collisions
In connection with Art. 587, the carrier cannot invoke Arts. 1733 and 1735
of the Civil Code. In all matters not regulated by NCC, the Code of
Commerce and other special laws shall govern. No provision in NCC
regulating liability of shipowners or agents in the event of total loss or
destruction of vessel. Art. 587 governs.
“No vessel, no liability” - the limited liability rule. The shipowner's or
agent's liability is merely co -extensive with his interest in the vessel such
that a total loss thereof results in its extinction. Total destruction of vessel
extinguishes maritime liens.
GUISON V. PHILIPPINE SHIPPING COMPANY
F: Collission at the mouth of Pasig River between the motor launches of
Martha and Manila H
H: Manila H was found at fault, applying Art. 837 limited the liability of
the agent to its value
YANGCO VS. LASERNA
F: Steamers SS Negros belonging to Yangco, after 2 hrs of sailing from
Romblon to Manila encountered rough seas. It capsized and many
passengers died. Several actions for damages were filed against Yangco.
After rendition of judgment of damages against Yangco, he sought to H: If shipowner or agent may be held civilly liable at all for injury to or
abandon vessel to plaintiffs in the 3 cases together with all equipment
w/o prejudice to right to appeal.
Notes in Transportation Laws | MA. ANGELA B. BONIFACIO 1

death if passengers arising from negligence of captain in cases of b. Insurance.

collissions and shipwrecks, his liability is merely co-extensive w/ his
interest in the vessel such that total loss thereof results in its extinction.
Limited liability rule does not apply to insurance claims.
Assuming that petitioner is liable for a breach of contract of carriage,
the exclusively 'real and hypothecary nature' of maritime law operates
to limit such liability to the value of the vessel, or to the insurance
thereon, if any. In the instant case it does not appear that the vessel
was insured.

Whether the abandonment of the vessel sought by petitioner was in

accordance with law is immaterial. The vessel having totally perished,
any act of abandonment would be an idle ceremony.

EXCEPTIONS.

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;

where the vessel is injured; and

in workmen's compensation claims.

total destruction destruction of the vessel does not affect liability of

owner for repairs of the vessel completed before its loss

a. Negligence.

Limited liability rule applies if captain or crew caused damage or

injury.

Carrier is liable for damages to the full extent and not up to value of
vessel if it was established that carrier was guilty of negligence.

Illustration:

Shipowner or shipagent's liability is limited to the value of the vessel if

the damage was caused by the unseaworthiness of the vessel caused
by negligence of captain or crew during voyage.

However, if failure to maintain seaworthiness of vessel can be ascribed

to shipowner/shipowner with captain, the limited liability principle
cannot be invoked.

MANILA STEAM SHIP CO. V. INSA ABDULHAMAN

F: ML Consuelo V and MS Bowline Knot collided. ML Consuelo V

capsized and was lost. Passengers died or were missing and cargoes
were lost.

H: In such case where collision was imputable to both of them, each

vessel shall suffer her own damages and both shall be solidarily liable
for the damages to cargoes. Manila Steamship co is not exempt from
liability for the collision with the ML Consuelo V for the defense of
absence of negligence on its part in the selection and supervision of the
officers and crew of MS Bowline Knot.

However, insofar as Lim Hong, owner of ML Consuelo V, is

concerned, liability was not limited because he who admittedly
employed unlicensed master and engineer and in his application
assumed full risk and responsibility. The right of abandonment of
vessels as a legal limitation of shipowner's liability, does not apply to
cases where injury or average is due to shipowner's own fault.
Total loss of the vessel did not extinguish the liability of the carrier's
insurer. Despite loss of the vessel, its insurance answers for damages
that a shipowner or agent, may be held liable for by reason of the
death of its passengers.
c. Worker's compensation.
ABUEG V. SAN DIEGO
F: Action for claim for compensation under the Workmen's
Compensation Act (WCA) for the deceased members of the crew of the
2 vessels which were caught by a typhoon in the vicinity of Mindoro
Island and as a consequence of which they were sunk and totally lost.
H: Arts. 587, 643 and 837 of the Code of Commerce have no room in
the application of the WCA w/c seeks to improve condition of
laborers/employees. It is not liability for damage/loss of cargo or
injury/death, for collission, or responsibility for wages, but liability
created by statute to compensate employees and laborers in cases of
injury received by them while engaged in the performance of their
work, or their heris and dependents in case of death. It is an item w/c
must be included in the budget of any well-managed industry. In
WCA, the employer need not be guilty of neglect or fault, in order that
responsibility may attach to him.
 Arts. 587 and 837 of the Code of Commerce does not apply to
liability under the WCA where even if vessel was lost, liability is still
enforceable against employer or shipowner.
E. ABANDONMENT.
Abandonment of vessel, its appurtenances and the freightage is
indispensable before shipowner or shipagent can enjoy the benefits of
the limited liability principle.
1. Q: Capt. P was drunk. MV Don rammed another vessel. Both sank
completely and became total losses. The cargo owner of both sunken
vessels sued owner of MV Don liable?
A: No. Shipowner is no longer liable because of the total loss of the
vessel. Generally, he is liable for negligence of captain in collision cases.
However, liability is limited to value of vessel. Thus, civil liablility for
collision is co-existent w/ his interest in the vessel; since there was total
loss, his liability is also extinguished.
2. Q: Toni loaded 1,000 sacks of copra on board MV Tonichi which
capsized and sank with all its cargo. When Toni sued Ichi for damages
based on breach of contract, the latter invoked the “limited liability
rule.” a) What is this rule?; b) Are there exceptions?
A: a) “Limited liability rule” means that the liability of a shipowner for
damages in case of loss is limited to the value of his vessel. If the ship
was totally lost, his liability is extinguished. If the ship or part thereof is
still existing, he can escape liability by abandoning the vessel, its
appurtenances and its freight. The other properties of the shipowner
cannot be reached by the persons entitled to damages.
b.) Yes. The exceptions to the limited liability rule are:
where the injury or death to a passenger is due either to the fault of
shipowerm or to the concurring negligence of the shipowner and
captain
where the vessel is insured
in workmen's compensation claims
If the carrier does not want to abandon vessel, he is liable even beyond
value of vessel.
In case of collision, abandonment of vessel is necessary in order to
limit liability of shipowner or agent to the value of the vessel, its
appurtenances and freightage earned in the voyage in acc with Art. 837.
Exception: When vessel was entirely lost. Thence, obligation is
extinguished.
F. PROCEDURE FOR ENFORCEMENT.
The claimants or creditors are limited in their recovery to the remaining
value of accessible assets. These are the insurance proceeds and pending
freightage for the particular voyage.
Hence, there is need to collate all claims for satisfaction from the
insurance proceeds and its pending freightage at the time of loss. No
claimant can be given precedence (even if they filed claim earlier).
Execution of judgment in earlier final cases must be stayed pending
completion of all cases re subject sinking. Only then can all claims be
simultaneously settled completely or pro-rate should insurance proceeds
and freightage not be enough to satisfy all claims.
ABOITIZ SHIPPING CASE - H: In fairness to the claimants and as a
matter of equity, the total proceeds of insurance and pending freightage
should be deposited in trust. Claimant should institute necessary
limitation and distribution action before the proper admiralty court and
thereafter deposit with the proceeds from the insurance company and
pending freightage to safeguard the same pending final resolution of all
incidencts, for final pro-rating and settlement thereof.
PROBLEMS:
Notes in Transportation Laws | MA. ANGELA B. BONIFACIO 2
expenses for repairs and provisioning of the ship prior to the departure
thereof
3. Q: X boarded MV Cebu owned by Y which was overloaded and had
no sufficient life belts. It totally sunk, X died. Y raised defense of limited
liability. Decide.
A: Y cannot invoke the defense of limited liability. This doctrine does
not apply when death or injury or damage sustained is attributable to
the fault or negligence of the ship owner or ship agent and the captain
(or patron) of the vessel. In this case, the shipowner appears to be guilty
of fault or negligence because he did not make certain that the passenger
vessel is not overloaded and he failed to provide sufficient life belts on
board the vessel.
4. Q: Capt Hook, overloaded MV Peter Pan. It sank and nothing was
recovered. Cargo owners and passengers' heirs owned Mr Wendy, the
owner. Will the action prosper?
A: No. The shipowner can escape liability by abadoning the vessel. This
right of abandonment applies not only to collisions and shipwreck but in
the latter case only for unpaid wages (Arts 643 and 838, Code of
Commerce) . However, if the shipowner or shipagent knew or are
expected to know the overloaing, then this limited liability rule cannot
be applied.
CASES:
PHILIPPINE SHIPPING COMPANY V. FRANCISCO VERGARA
GOVT OF PHIL ISLANDS V. INSULAR MARITIME CO TEODORO
YANGCO V. MANUEL LASERNA
LUZON STEVEDORING CORP V. CA, HIJOS DE F. ESCANO, INC. &
DOMESTIC INSURANCE COMPANY OF THE PHILS
CHUA YEK HONG V. IAC, GUNO & OLIT
HEIRS OF AMPARO DE LOS SANTOS V. CA & COMPANIA
MARITIMA
III. PROTESTS.
PROTEST is the 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. Protest is required under
the Code of Commerce in the ff cases:
Notes in Transportation Laws | MA. ANGELA B.
BONIFACIO 3
when the vessel makes an arrival under stress
where the vessel is shipwrecked
where the vessel has gone through a hurrican or the captain believes that
the cargo has suffered damages or averages
maritime collisions
IV. ADMIRALTY JURISDICTION.
 RTC has jurisdiction in all actions in admiralty and maritime
jurisdiction where the demand or claim exceeds P300,000 or in Metro
Manila, where such demand or claim exceeds P400,000
In all other cases, the jurisdiction are with the Metropolitan Trial
Court, Municipal Trial Court or Municipal Trial Court as the case may
be.