1.

Give a concise definition for the following terms in maritime transportation law:
a. averages c. particular average e. collission
b. general average d. shipwreck

a.) An average is any extraordinary or accidental expense incurred during the voyage for the
preservation of the vessel, cargo, or both and all damages to the vessel or cargo from the time it is
loaded and the voyage commenced until it ends and the cargo is unloaded.
b.) A general average includes all the damages and expenses which are deliberately caused in order
to save the vessel, its cargo, or both at the same time, from a real and known risk.
c.) A particular average includes all damages or expenses caused to the vessel or cargo that did not
inure to the common benefit, and profit of all the persons interested in the vessel and her cargo.
d.) A shipwreck is the demolition or shattering of a vessel caused by her driving ashore or on rocks
and shoals in the mid seas, or the violence of winds waves in tempests.
e.) A collision is an impact or sudden contact of a vessel with another where both are in motion or one
stationary.

2. Discuss the character of a non-negotiable and non-transferrable Bill of Lading

A bill of lading that is “negotiable” is not a negotiable instrument in the true sense. Its essence is
that its transfer by indorsement and delivery operates to transfer the symbolic possession of the goods, and
the carrier is entitled to deliver to the party to whom the bill of lading has been so transferred. The bill of
lading therefore lacks the most important and characteristic element of negotiability: it may not give to a
transferee a better title than that possessed by the transferor. With this, the shipper is as if not transferring
anything to the transferee. In fact, the shipper can only be an agent of the seller or the buyer.

3. Two ships are approaching each other in the night. One vessel MV BAT-TIT (30,000 tons) is approaching
port under tow by tugboats commanded from the ship’s bridge by a pilot under a valid pilotage contract.
The other vessel MV DAKKEL (3,000 tons) is under its own power and leaving port. The captain of MV
DAKKEL sighted MV BAT-TIT by radar five nautical miles away. He sounded his foghorn and flashed his
signal light to claim right of way through the mouth of the bay. But the captain of MV BAT-TIT, who had
relinquished control of the ship to the pilot, was below decks in his cabin sleeping. Minutes later, the two
vessels collided, resulting in the sinking of MV DAKKEL.

a. Who had right of way through the mouth of the bay?

-(No idea sorry)

b. Is the captain of MV BAT-TIT relieved from any liability by the fact that his vessel was under the
control of the pilot at the time of collision?

-No, Under Article 834 of the Code of Commerce, if the vessels colliding with each other
should have pilots on board discharging their duties at the time of the collision, their
presence shall not exempt the captains from the liabilities they incur.

c. Is the captain of MV DAKKEL relieved of any liability because he sounded his foghorn and flashed
his signal light prior to collision?

-No, Under Article 827 of the Code of Commerce, each must suffer its own damage if both
are negligent. Although the negligence on the part of a vessel preceded the negligence of
the other vessel, the first vessel cannot be absolved from liability. In this case, merely
 flashing the signal light and using the foghorn does not mean that the captain of MV
DAKKEL is no longer negligent.

d. From whom can cargo owners of cargo aboard MV DAKKEL recover their losses?

-They can claim against both parties. Under Article 828 of the Code of Commerce, each
party shall bear his own damage in cases in which it cannot be determined which of the
two vessels has caused the collision. They are also solidarily responsible for the losses
and damages occasioned to their cargoes. In this case, it cannot be determined which of
the vessels has caused the collision.

e. Mr. X, owns cargo aboard MV DAKKEL. He learned of the collision from ABS-CBN news while at his
home. Until when can he file his claim against his insurance company for the loss of his cargo?

-Under Article 853 of the Code of Commerce, the action for recovery of losses and
damages arising from collisions cannot be admitted if a protest or declaration is presented
within 24 hours before the competent authority of the point where the collision took place,
or that of the first point of arrival of the vessel, if in the Philippine territory, and to the consul
of the Republic of the Philippines if it occurred in a foreign country

4. Some law students from BCF chartered Philippine Rascal Bus No. 323 for a three-day field trip through
the Ilocos coastline. On the second day, while they were in Vigan, Ilocos Sur, the bus driver got a call from
their central office on his cellphone. He was told that another bus, Bus No. 464, was on its way to replace
Bus No. 323 and that he should bring Bus No. 323 to Dagupan after the substitution. Bus No. 323 proceeded
towards Dagupan and on its way picked up some paying passengers bound for Dagupan. At the junction
of Damortis, Bus No. 323 collided with a PNR Train, resulting in the death of Abe, a passenger on the bus.

a. The heirs of Abe sued Philippine Rascal for the wrongful death of Abe. Philippine Rascal put up the
defense that Bus No. 323 was returning from a chartered run and therefore, was not functioning as a
common carrier at the time. Is Philippine Rascal correct?

Philippine Rascal’s defense is not tenable. Despite the fact that the bus carried the passengers
based on a special agreement (chartering of the bus) and that the passengers are limited to a certain group
(law students from BCF), the bus company is still a common carrier during the incident. Article 1732 makes
no distinction between one whose principal business activity is the carrying of persons or goods, or both,
and one does who does such carrying only as an ancilliary activity (or locally known as “sideline).

b. Meanwhile, Bus No. 464 fell off a bridge in Pagudpud, Ilocos Norte resulting in the death of 5 law students
about to take the bar exam. Their parents sued Philippine Rascal and again, the bus company put up the
defense that Bus No. 464 was a private carrier, because it replaced Bus. No. 323 earlier chartered by the
law students. Is Philippine Rascal correct?

Philippine is still a common carrier despite putting up the defense of being a private carrier. Article
1732 makes no distinction between one whose principal business activity is the carrying of persons or
goods, or both, and one does who does such carrying only as an ancilliary activity (or locally known as
“sideline). Hence despite putting up the defense that it merely substituted the other chartered bus, it is liable
as a common carrier. Besides, Bus No. 323 is also a common carrier.

c. Why doesn’t it matter whether the bus was on a chartered run or not? Explain convincingly.
It does not matter that the bus carried the passengers based on a special agreement and that
the passengers are limited to a certain group. Article 1732 makes no distinction between one whose
principal business activity is the carrying of persons or goods, or both, and one does who does such carrying
only as an ancilliary activity (or locally known as “sideline).
 Article 1732 also carefully avoids making distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional,
episodic, or unscheduled basis. Neither does article 1732 distinguish between a carrier offering its service
to the “general public “i.e. the general community or population , and one who offers services or solicits
business only from a narrow segment of the general population. Article 1732 deliberately refrained from
making such distinctions.
(Fabre, Jr. v. CA, GR. 111127, July 26,1996)

5. MV KARGADOR is a cargo vessel hired by Abe to haul 10,000 tons of corn from Cagayan, navigating
through the Cagayan River one fine day. The captain ignored the advise of Abe, who was from Cagayan
and was aboard the ship, to take a wider turn around one of the river’s bends. As a result, the vessel hit a
sandbar and ran aground. To refloat the ship, some of the corn was thrown overboard, and a tugboat was
hired to tow the vessel back to deep waters. The owner of the vessel charged Abe for the additional
expenses incurred in transporting his corn. Abe hired you as his lawyer to repudiate the additional charges.
How will you argue against those charges?

The cost of refloating the boat by towage cannot be considered as a general average. For an
expense to be considered a general average, the following requisites must concur:
1.Common danger present;
2.Deliberate sacrifice of part of the vessel or cargo;
3.Successful saving of vessel and/or cargo; and
4.Proper procedure and legal steps.

Both the cargo and the ship were at the time in no imminent danger or a danger that might rationally be
sought to be certain and imminent.
The fact that refloating is necessary does not make it a general average because it is the safety of the
property, not the voyage, which constitutes the true foundation of the general average.
The second and third requisite are not present because the expenses incurred were not in imminent peril.
The cargo were not saved from a common danger. (Magsaysay, Inc v. Agan, GR 6393, January 31,1955)

(pp 622-623, Essentials of Transportation, Aquino,2016)

6. Which of the following extraordinary expenses can be charged against all persons having interest in the
vessel and cargo aboard such vessel (general average) and which must be borne exclusively by the person
benefited (particular average)? For each sub-number, indicate type of average and the reason why.
CODE OF COMMERCE. Article 811. General Average. A general or gross average shall include
all the damages and expenses which are deliberately caused in order to save the vessel, its cargo or both
at the same time, from real and known risk. The requisites for general average are the following:
1.Common danger present;
2.Deliberate sacrifice of part of the vessel or cargo;
3.Successful saving of vessel and/or cargo; and
4.Proper procedure and legal steps.
(Magsaysay, Inc v. Agan, GR 6393, January 31,1955)
a. Cost of employing pilots to ensure the safety of the vessel when navigating through unfamiliar
coastal waters. (particular average) Measure undertaken against a distant peril is not general average.
b. Sale of perishable cargo to defray costs of repairs to the ship after arrival under stress. (particular
average) Article 809. No. 6. The value of the goods sold by the captain in arrivals under stress for the
payment of provisions and in order to save the crew, or to meet any other need of the vessel, against which
the proper amount shall be charged.
c. Salaries of the vessel’s crew for days added to the voyage due to inclement weather (particular)
Article 809. No. 4. The wages and victuals of the crew when detained or embargoed by legitimate order or
force majeure, if the charter has been contracted for a fixed sum for the voyage.
 d. Cost of replacing a corroded radar tower which is part of the ship’s early warning detection
system. (particular) No. 2 The losses and expenses suffered by the vessel in its hull, rigging, arms, and
equipment, for the same causes and reasons, from the time it puts to sea from the port departure until it
anchors and lands in the port of destination.
e. Value of cargo thrown overboard after the crew discovered its hazardous nature.
(particular)York-Antwerp Rule XIX. Undeclared or Wrongfully Declared Cargo
Damage or loss caused to goods loaded without the knowledge of the shipowner or his agent or to
goods wilfully misdescribed at the time of shipment shall not be allowed as general average, but such goods
shall remain liable to contribute if saved.
(see page 641, Aquino)

7. What is the REAL AND HYPOTHECARY RULE in maritime contracts?

The real and hypothecary nature of maritime law is also known as limited liability rule. It simply
means that the liability of the carrier in connection with losses related to maritime contracts is confined to
the vessel, which stands as the guaranty for their settlement. (Aboitiz Shipping Corp. vs. General Accident
Fire and Life Assurance Corp. 217 SCRA 359).

The liability of shipowner and ship agent is limited to the amount of interest in said vessel such that
where vessel is entirely lost, the obligation is extinguished. (Luzon Stevedoring v. Escano, 156 SCRA 169)
The interest extends to: 1) the vessel itself; 2) equipments; 3) freightage; and 4) insurance proceeds. (Chua
v. IAC, 166 SCRA 183)

a. When is it applicable?
It is applicable in the following cases:
1. Art. 587 – civil liability for indemnities to third persons
2. Art. 590 – indemnities from negligent acts of the captain (not the shipowner or ship agent)
3. Art. 837 – collision

b. What is a BILL OF LADING?

Bill of Lading is a written acknowledgement, signed by the master of a vessel or other
authorized agent of the carrier that he has received the described goods from the sipper, to be
transported on the expressed terms, to the described place of destination, and to be delivered there
to the designated consignee or parties.

c. What are the kinds/types of CHARTER PARTIES?

Charter parties are of two types:
(a) contract of affreightment which involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others; contract of affreightment may either be time
charter, wherein the only the vessel is leased to the charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single voyage. The shipowner provides for the provision of
the ship, the wages of the master and crew, and the expenses for the maintenance of the vessel.

(b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the
charterer with a transfer to him of its entire command and possession and consequent control over
its navigation, including the master and the crew, who are his servants.

d. What are the distinctions between the kinds/types of CHARTER PARTIES?

As to liability when negligent

Bareboat (BB): Charterer becomes liable to others caused by its negligence
Contract of Affreightment (CA) Owner remains liable as carrier and must answer for any breach
of duty.
 As to ownership
BB: Charterer regarded as owner pro hac vice for the voyage.
CA: Charterer is not regarded as owner.

As to possession of the ship

BB: Owner of vessel relinquishes possession, command and navigation to charterer
CA: The vessel owner retains possession, command and navigation of the ship

As to (character) of the vessel.

BB: Common carrier is converted to private carrier.
CA: Common carrier is not converted to a private carrier.

8. M/V Cordillera, an oil tanker owned by DATAKO Shipping Company, filled with 20,000 barrels of oil worth
Php5M, collided under good weather conditions, with M/V Amianan, an oil tanker owned by ABAGATAN
Shipping Company, likewise filled with 10,000 barrels of oil worth Php2.5M. An investigation on the collision
ensued, however, it cannot be determined which vessel was at fault.

a. By way of Damages, how much can each shipping company claim from the other? Why?

SUGGESTED ANSWER:

None. They shall suffer from their own damages.

Art. 827 of the Code of Commerce provides that, if both vessels may be blamed for the
collision, each one shall suffer its own damages, and both shall be solidarily responsible for the
losses and damages suffered by their cargoes. The provision in this article is applicable to cases
in which it cannot be decided which of the two vessels had caused the collision. (Art.828 of the
same law)

Under our present case, since it cannot be determined which vessel was at fault, we apply
the rule, each one must be held may be blamed for its own damages, and the owner of neither one
can recover from the other in an action for damages to his vessel.

b. Suppose DATAKO Shipping Company paid the owner of the 20,000 barrels of oil worth Php5M,
can it recover the same from ABAGATAN Shipping Company? Why?

SUGGESTED ANSWER:

No. DATAKO Shipping Company can only recover Php 2.5M from ABAGATAN.

Under articles 827 and 828 of the Code of Commerce, in case of a collision between two
vessels at sea, both are solidarily liable for the loss of cargo carried by either, not only in the case
where both vessels may be shown to be actually blameworthy but also in the case where it is
obvious that only one was at fault but the proof does not show which.
 Applying this rule to the current situation, DATAKO can only recover the amount of 2.5M
as the reimbursement from the share of ABAGATAN in their liability of paying the amount of the
lost barrels of oil.

c. Under the said circumstances, would you consider the collision a GENERAL AVERAGE or a
PARTICULAR AVERAGE? Why?

SUGGESTED ANSWER:

This event is considered as simple or particular average.

Under the law, particular averages are all the expenses and damages caused to the vessel
or to her cargo which have not inured to the common benefit and profit of all the persons interested
in the vessel and her cargo. Compared to a general averages which include all the damages and
expenses which are deliberately caused in order to save the vessel, its cargo or both at the same
time, from real and known risk.

Under the said circumstance, the loss or damage was caused by the collision between the
two vessels. There was no deliberate intent to sacrifice the barrels of oil to save the vessel, her
cargoes or both. Hence it is a simple or particular average.

9. M/V Cordillera was loaded with a cargo belonging to Mr. Con Siler. In the Bill of Lading, Mr. Con Siler
placed, indicated, declared and answered the question: WHAT IS THE NATURE/DESCRIPTION OF THE
CARGO? – as “Luxury Cars”. The owner of M/V Cordillera suspected that the cargo really consisted of
surplus engine parts and requested Mr. Con Siler to inspect the container vans. The latter refused. Upon
arrival at the port of destination, the consignee, Mr. Maysa Met refused to receive the cargo because when
the container vans were opened, the contents thereof were all surplus engine parts, as suspected by the
owner of M/V Cordillera. Mr. Maysa Met brought an action for recovery of damages due to conversion or
loss of cargo, anchoring his position on the description as stated in the Bill of Lading. The owner of M/V
Cordillera put up the defense of misrepresentation and/or misdeclaration. The case was brought before
your sala, decide and rule on the matter.

SUGGESTED ANSWER:

The owner of M/V Cordillera is required to pay Mr. Maysa, but with right to indemnity from the
shipper, Mr. Con Siler.

Under par. 5 Section 3 of the Carriage of Goods by Sea (COGSA) The shipper shall be deemed to
have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and
weight, as furnished by him; and the shipper shall indemnify the carrier against all loss, damages, and
expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such
indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person
other than the shipper.