Transportation and maritime law

Classes of charter party:
(1) as to extent of vessel hired

(a) total

(b) partial - the charterer does not as a rule acquire the right to fix the date when the vessel should depart, unless such right is expressly granted in the contract

(2) as to time

(a) until a fixed day or for a determined number of days or month

(b) for a voyage

(3) as to freightage

(a) for a fixed amount for the whole cargo

(b) for a fixed rate per ton

(c) for so much per month

Maritime Agencies vs CA 187 SCRA 346
F: Transcontinental Fertilizer Co. of London chartered from Hongkong Island Shipping Co. the motor vessel Hongkong Island for the shipment of bagged urea from Odessa, USSR to the Philippines. The parties signed a Uniform General Charter dated August 1979. The consignee was Atlas Fertilizer Co. while the insurer was the Union Insurance Society of Canton. Maritime Agencies was appointed as the charterer's agent and Macondray as the owner's agent. The vessel arrived in Manila to unload part of its cargo and then proceeded to Cebu to discharge the rest of the cargo. The consignee filed a formal claim for shortlanded bags. The consignee also filed a claim against Viva Customs Brokerage for the unrecovered spillage. These claims having been rejected, the consignee went to Union, which paid the total indemnity of P 113,123.86 pursuant to the insurance contract. As subrogee of the consignee, Union filed a claim for reimbursement against Hongkong Island Co., Maritime Agencies and/or Viva Customs Brokerage. Viva was dropped from the complaint while Macondray Co. was impleaded.

The RTC found Hongkong Island liable for the shortlanded bags while Maritime Agencies was held liable for the spillage during discharge. The RTC ordered Hongkong Island and its local agent Macondray to pay P 87,000+ and Maritime Agencies to pay P 36,000+ to Union Insurance. CA exempted Hongkong Island and Macondray exempt from liability. Thus this petition. Maritime pleads non-liability on the ground that it was only the charterer's agent and should not answer for whatever responsibility might have attached to the principal. Union asked that Maritime should be made solidarily liable since its principal had not been impleaded.

Held : There are 3 general categories of charters:

1. Demise or bareboat charter - involves the transfer of full possession and control of the vessel for the period covered by the contract, the charterer obtaining the right to use the vessel and carry whatever cargo it chooses, while manning and supplying the ship as well

2. Time Charter - contract to use a vessel for a particular period of time, the charterer obtaining the right to direct the movements of the vessel during the chartering period, although the owner retains possession and control

3. Voyage Charter - contract for the hire of a vessel for one or a series of voyages usually for the purpose of transporting goods for the charterer; the voyage charter is a contract of affreightment and is considered a private carriage

- being a private carriage, the parties may freely contract respecting liability for damages to the goods and other matters; responsibility for the cargo loss falls on the one who agreed to perform the duty involved in accordance with the terms of the voyage charter
This case involves a voyage charter.In the present case, the charterer was responsible for loading, stowage and discharging at the ports visited, while the owner was responsible for the care of the cargo. Par. 2 of the Uniform General Charter provided that the owner shall be responsible for loss or damage or delay in the delivery of goods caused by improper or negligent stowage of the goods or by personal want of due diligence in making the vessel seaworthy and properly manned. However, the owner shall not be liable for any other cause, even from the neglect of the captain or the crew or any other person employed by the owner on board, or for any unseaworthiness of the vessel on loading or commencement of the voyage.

In cases at bar, the TC found that there were shortlanded bags, which could only mean that they were damaged or lost on board the vessel before unloading of the shipment. The entire cargo was covered by a clean B/L. As the bags were in good order when received by the vessel, the presumption is that they were damaged or lost during the voyage as a result of their negligent improper storage. The shipowner should be held liable.

The filing of the claim must be within one year, in accordance with the COGSA. Otherwise, the carrier and the ship shall be discharged from liability. The one year period should commence from Oct. 20, 1979, the date when the last item was delivered to the consignee. Union filed the complaint against Hongkong within the one year period but tardily against Macondray. The action has prescribed with respect Macondray but not against the principal, Hongkong Island.

As regards the goods damaged or lost during unloading, the charterer is liable thereof, having assumed this activity under the charter party free of expense to the vessel. The difficulty is that Transcontinental has not been impleaded and so is beyond the court's jurisdiction. The liability imposed on it cannot be borne by Maritime which is a mere agent and is not answerable for the injury caused by its principal (unless the principal is undisclosed).

In this case, the charterer did not represent itself as a carrier and indeed assumed responsibility only for the unloading of the cargo. Maritime acted in representation of the charterer and not of the vessel. As a mere charterer's agent, it cannot be held solidarily liable with Transcontinental for the losses/damages to the cargo outside the custody of the vessel. Transcontinental was disclosed as the charterer's principal and Maritime only acted within the scope of its authority.

The TC's findings were upheld except for some modifications. The liability of Macondray can no longer be enforced because of prescription. Maritima cannot be held liable for the principal's acts.

c. Forms and Effects
Art. 652. A charter party must be drawn in duplicate and signed by the contracting parties, and when either does not know how or is not able to do so, by two witnesses at his request.

The charter party shall include, besides the condition stipulated, the following circumstances:

1. The kind, name, and tonnage of the vessel.

2. Her flag and port or registry.

3. The name, surname, and domicile of the captain.

4. The name, surname, and domicile of the agent, if the latter should make the charter party.

5. The name, surname, and domicile of the charterer, and if he states that he is acting by commission, that of the person for whose account he makes the contract.

6. The port of loading and unloading.

7. The capacity, number of tons or weight, or measure which they respectively bind themselves to load and transport, or whether it is the total cargo.

8. The freightage to be paid, stating whether it is to be a fixed amount for the voyage or so much per month, or for the space to be occupied, or for the weight or measure of the goods of which the cargo consists, or in any other manner whatsoever agreed upon.

9. The amount of primage to be paid the captain.

10. The days agreed upon for loading and unloading.

11. The lay days and extra lay days to be allowed and the rate of demurrage.

Art. 653. If the freight should be received without the charter party having been signed, the contract shall be under­stood as executed in accordance with what appears in the bill of lading, which shall be the only instrument with regard to the freight to determine the rights and obligations of the ship agent, of the captain, and of the charterer.

If the cargo is received without a charter party, the B/L shall be considered the contract of the parties

Q: If there is no charter party and B/L, would there be a valid contract?

A: Taking Art. 653 literally, the answer is no. However, if we take into account the fact that delivery of the cargo does not constitute the making of a contract but rather the partial performance thereof, the mere fact of delivery and receipt of such cargo, the GF and mutual consent with which they have been made, should be a better substitute for the charter party than is the B/L which is nothing more than the proof of such delivery.

Primage.-- Formerly, a small allowance or compensation payable to the master and marines of a ship; to the former for the use of his cables and ropes to discharge the goods of the merchant; to the latter for lading and unlading in any port of haven

Primage, at present, it is no longer a gratuity to the master, unless especially stipulated; but it belongs to owners or freighters and is nothing but an increase of the freight rate.

Demurrage.-- Sum which is fixed by the contract of carriage, or which is allowed, as remuneration to the owner of a ship for the detention of his vessel beyond the number of days allowed by the charter party for loading and unloading or for sailing; it is an extended freight or reward to the vessel in compensation for the earnings she is improperly caused to lose
Lay days.-- Days allowed to charter parties for loading and unloading the cargo

Art. 654. The charter parties executed with the interven­tion of a broker, who certifies to the authenticity of the signatures of the contracting parties made in his presence, shall be full evidence in court; and, if they should be conflicting, that which agrees with the one which the broker must keep in his registry, if kept in accordance with law, shall govern.

The contracts shall also be admitted as evidence, even though a broker has not taken part therein, if the contracting parties acknowledge the signatures of the same as their own.

Should no broker have taken part in the charter party and the signatures be not acknowledged, doubts shall be decided by what is provided for in the bill of lading, and, in the absence thereof, by the proofs submitted by the parties.

Art. 655. Charter parties executed by the captain in the absence of the ship agent shall be valid and effective, even though in executing them he should have acted in violation of the orders and instructions of the agent or shipowner; but the latter shall have a right of action against the captain to recover damages.

Art. 656. If in the charter party the time in which the loading and unloading are to take place is not stated, the usages of the port where these acts take place shall be observed. After the stipulated or customary period has passed, and should there not be in the freight contract an express provision fixing the indemnification for the delay, the captain shall be entitled to demand demurrage for the lay days and extra lay days which may have elapsed in loading and unloading.

Art. 657. If during the voyage the vessel should be rendered unseaworthy the captain shall be obliged to charter at his expense another one in good condition, to carry the cargo to its destination, for which purpose he shall be obliged to look for a vessel not only at the port of arrival but also in the neighboring ports within a distance of 150 kilometers.

If the captain, through indolence or malice, should not furnish a vessel to take the cargo to its destination, the ship­pers, after requesting the captain to charter a vessel within an unextendible period, may charter one and apply to the judicial authority for the summary approval of the charter party which they may have made.

The same authority shall judicially compel the captain to carry out for his account and under his responsibility the chart­er made by the shippers.

If the captain, notwithstanding his diligence, should not find a vessel to charter, he shall deposit the cargo at the disposal of the shippers, to whom he shall communicate the facts on the first opportunity, the freight being adjusted in such cases by the distance covered by the vessel, with no right to any indemnification whatsoever.

Articles 659 to 664 : Some of the goods being transported may : (1) be sold by the captain to pay for necessary repairs; (2) be jettisoned for the common safety; (3) be lost by reason of shipwreck or stranding; (4) be seized by pirates or enemies; (5) suffer deteriorations or dimunitions; or (6) increase by natural cause in weight or size

** Goods that shall not pay freightage:

(1) Art. 660 - goods jettisoned for the common safety but the amount of freightage that should have been paid shall be considered as a general average and shall be computed in proportion to the distance covered when they were jettisoned

(2) Art. 661 - merchandise lost by reason of shipwreck or stranding; if freight had been paid in advance, it shall be returned

(3) Art. 661 - goods seized by pirates or enemies; freight paid in advance shall be returned

** Goods required to pay freightage:

(1) Art. 659 - goods sold by the captain to pay for the necessary repairs to the hull, machinery or equipment or for unavoidable and urgent needs --> but the freight may not be required to be paid in full

(2) Art. 663 - goods which suffer deterioration or dimunition on account of (a) inherent defects or bad quality of packing, or of (b) fortuitous event

(3) Art. 644 - goods that increase in size or weight by natural cause

d. Rights and Obligations of Shipowners
Art. 669. The shipowner of the captain shall observe in charter parties the capacity of the vessel or that expressly designated in its registry, a difference greater than 2 per cent between that registered and her true capacity not being permissi­ble.

If the shipowner or the captain should contract to carry a greater amount of cargo than the vessel can carry, in view of her tonnage, they shall indemnify the shippers whose contracts they do not fulfill for the losses they may have caused them by reason of their default, according to the cases, viz:

If the vessel has been chartered by one shipper only, and there should appear to be an error or fraud in her capacity, and the charterer should not wish to rescind the contract, when he has a right to do so, the freightage shall be reduced in proportion to the cargo the vessel cannot receive, the person from whom the vessel is chartered being furthermore obliged to indemnify the charterer for the losses he may have caused him.

If, on the contrary, there should be several charter par­ties, and by reason of the want of space all the cargo contracted for cannot be received, and none of the charterers desires to rescind the contract, preference shall be given to the person who has already loaded and arranged the cargo in the vessel, and the rest shall take the place corresponding to them in the order of the dates of their contracts.

Should there be no priority, the charterers may load, if they wish, in proportion to the weight or space they may have engaged, and the person from whom the vessel was chartered shall be obliged to indemnify them for losses and damages.

Art. 670. If the person from whom the vessel is chartered, after receiving a part of the cargo, should not find sufficient to make up at least three fifths of the amount the vessel can hold, at the price he may have fixed, he may substitute for that transportation another vessel inspected and declared suitable for the same voyage, the expenses of transfer, and the increase in the price of the charter, should there be any, being for his account. Should he not be able to make this change, the voyage shall be undertaken at the time agreed upon; and should no time have been fixed, within fifteen days from the time the loading began, should nothing to the contrary have been stipulated.

If the owner of the part of the cargo already loaded should procure some more at the same price and under similar or propor­tionate conditions to those accepted for the freight received, the person from whom the vessel is chartered or the captain may not refuse to accept the rest of the cargo; and should he do so, the charterer shall have a right to demand that the vessel put to sea with the cargo she may have on board.
Art. 671. After three-fifths of the vessel is loaded, the person from whom she is chartered may not, without the consent of the charterers or shippers, substitute the vessel designated in the charter party with another one, under the penalty of making himself thereby liable for all the losses and damages occurring during the voyage to the cargo of those who did not consent to the change.

Art. 672. If the vessel has been chartered in whole, the captain may not, without the consent of the person chartering her, accept cargo from any other person; and should he do so, said charterer may oblige him to unload it and to indemnify him for the losses suffered thereby.

Art. 673. The person from whom the vessel is chartered shall be liable for all the losses caused the charterer by reason of the voluntary delay of the captain in putting to sea, accord­ing to the rules prescribed, provided he has been requested to put to sea at the proper time through a notary or judicially.

Art. 674. If the charterer should carry to the vessel more cargo than that contracted for, the excess may be admitted in accordance with the price stipulated in the contract if it can be well stowed without incurring the other shippers, but if in order to stow said cargo it should be necessary to stow it in such manner as to throw the vessel out of trim the captain must refuse it or unload it at the expense of its owner.

The captain may likewise, before leaving the port, unload the merchandise clandestinely placed on board, or transport it, it he can do so and keep the vessel in trim, demanding by way of freightage the highest price which may have been stipulated for said voyage.

Art. 675. If the vessel has been chartered to receive the cargo in another port, the captain shall appear before the consignee designated in the charter party, and should the latter not deliver the cargo to him, he shall inform the charterer and await his instructions, the lay days agreed upon, or those al­lowed by custom in the port, beginning to run in the meantime, unless there is an express agreement to the contrary.

Should the captain not receive an answer within the time necessary therefore, he shall make efforts to find cargo; and should he not find any after the lay days and extra lay days have elapsed, he shall make a protest and return to the port where the charter was made.

The charterer shall pay the freightage in full, discounting that which may have been earned on the merchandise which may have been carried on the voyage out or on the return trip, if carried for the account of third persons.

The same shall be done if a vessel, having been chartered for the round trip, should not be given any cargo for her return.

Art. 676. The captain shall lose the freightage and shall indemnify the charterers if the latter should prove, even against the certificate of inspection, if one has been made at the port of departure, that the vessel was not in a condition to navigate at the time of receiving the cargo.

Art. 677. The charter party shall subsist if the captain should not have any instructions from the charterer, and a decla­ration of war or a blockade should take place during the voyage.

In such case the captain must proceed to the nearest safe and neutral port, requesting and awaiting orders from the ship­per; and the expenses and salaries accruing during the detention shall be paid as general average.

If, by orders of the shipper, the cargo should be discharged at the port of arrival, the freightage for the voyage out shall be paid in full.

Art. 678. If the time necessary, in the opinion of the judge or court, to receive orders from the shippers should have elapsed without the captain having received any instructions, the cargo shall be deposited, and it shall be liable for the payment of the freightage and expenses incurred by reason of the delay, which shall be paid from the proceeds of the part first sold.

Obligations of shipowner:

1. Art. 669 - to observe in the charter parties, the capacity of the vessel, and to indemnify the shippers whose contracts are not fulfilled for the losses they may have suffered by the failure of the shipowner to observe the capacity of the vessel

2. Art. 670 - to undertake a voyage at the time agreed upon or within 15 days from loading if no time is stipulated, even if the shipowner should not find cargo sufficient to make up at least 3/5 of the amount which the vessel may hold, where he fails to exercise his right to change vessel

3. Art. 670 - where the shipowner should not find cargo sufficient to make up at least 3/5 of the amount which the vessel may hold, to accept other cargo procured by the owner of the freight already loaded under the same price and conditions

4. Art. 671- not to change the vessel after 3/5 of the vessel has been loaded, without the consent of the charterers or shippers

5. Art. 672 - if the vessel has been chartered in whole, not to accept cargo from any other person without the consent of the charterer

6. Art. 673 - to answer for losses arising from delay in putting to sea

7. Art. 676 - to have the vessel in a condition to navigate at the time of receiving the cargo

8. Art. 677 - in case of declaration of war or blockade during the voyage, where the captain has not received any instructions from the charterer, for the captain to proceed to the nearest safe and neutral port, requesting and awaiting orders from the shippers
Rights of Shipowner:

1. Art. 670 - where the cargo is not sufficient to make up at least 3/5 of the amount which the vessel may hold, he may substitute anohter vessel inspected and declared suitable for the voyage --> expenses of transfer and increase in price of the charter shall be paid by him

2. Art. 674 - to collect the freight in accordance with the price stipulated for cargo in excess of that agreed upon is such excess can be properly stowed 3. Art. 674 - to refuse and unload at the expense of the owner excess cargo that cannot be properly stowed

4. Art. 674 - to unload merchandise clandestinely placed on board, or to transport them if he can do so, demanding the highest freightage

5. Art. 675- to find freight to take place of freight not received, if the vessel has been chartered to receive cargo in another port, after he receives no cargo from the consignee and after he receives no answer from the charterer

6. Art. 675 - to receive freight in full, discounting that which may have been earned on the merchandise carried as substitute

7. Art. 677 - to have the charter party subsist notwithstanding the declaration of war or a blockade during the voyage, and to receive in such cases, the freightage in full where the shipper orders that the cargo should be discharged at the port of arrival

e. Obligations of charterers

Art. 679. The charterer of an entire vessel may subcharter the whole or part thereof for the amounts he may consider most convenient, the captain not being allowed to refuse to receive on board the cargo delivered by the second charterers, provided the conditions of the first charter are not changed, and that the price agreed upon is paid in full, even though the full cargo is not loaded, with the limitation established in the next article.