Transportation and maritime law



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Art. 680. A charterer who does not complete the full cargo he bound himself to ship shall pay the freightage of the amount he fails to load, if the captain does not take other freight to complete the load of the vessel, in which case he shall pay the first charterer the difference should there be any.

Art. 681. If the charterer should ship goods different from those indicated at the time of executing the charter party, without the knowledge of the person from whom the vessel was chartered or of the captain, and should thereby give rise to losses, by reason of confiscation, embargo, detention, or other causes, to the person from whom the vessel was chartered or to the shippers, the person giving rise thereto shall be liable with the value of his shipment and furthermore with his property, for the full indemnity to all those injured through his fault.

Art. 682. If the merchandise should have been shipped for the purpose of illicit commerce, and was taken on board with the knowledge of the person from whom the vessel was chartered or of the captain, the latter, jointly with the owner of the merchan­dise, shall be liable for all the losses which may be caused to other shippers, and even though it may have been agreed, they cannot demand any indemnity whatsoever from the charterer for the damage caused the vessel.

Art. 683. In case of making a port to repair the hull, machinery, or equipment of the vessel, the shippers must wait until the vessel is repaired, being permitted to unload her at their own expense should they deem it advisable. If, for the benefit of cargo which runs the risk of deterio­ration, the shippers or the court, or the consul, or the competent authority in a foreign land should order the merchandise to be unloaded, the expenses of unloading and reload­ing shall be for the account of the former.

Art. 684. If the charterer, without the occurrence of any

of the cases of force majeure mentioned in the foregoing article, should wish to unload his merchandise before arriving at the port of destination, he shall pay the full freightage, the expenses of the arrival made at his request, and the losses and damages caused the other shippers, should there be any.

Art. 685. In charters for transportation of general freight any of the shippers may unload the merchandise before the begin­ning of the voyage, paying one half the freightage, the expense of stowing and restoring the cargo, and any other damage which may be caused the other shippers.

Art. 686. After the vessel has been unloaded and the cargo placed at the disposal of the consignee, the latter must immediately pay the captain the freightage due and the other expenses for which the cargo may be liable.

The primage must be paid in the same proportion and at the same time as the freightage, all the changes and modifications to which the latter should be subject also governing the former.

Art. 687. The charterers and shippers may not abandon merchandise damaged on account of its own inherent defect or of fortuitous event for the payment of the freightage and other expenses.

The abandonment shall be proper, however, if the cargo should consist of liquids which may have leaked out, there re­maining in the containers not more than one-fourth of their contents.

Obligations of the charterer:

1. Art. 680 - to pay the freight in full even if the charterer does not complete the full cargo he bound himself to ship

2. Art. 681- to answer with the value of his shipment and other property for the losses suffered by the shipowner, captain or other shippers arising from confiscation, embargo, detention, or other causes, where the charterer loads goods different from those stated at the time of the execution of the charter party

3. Art. 682 - to be jointly liable with the captain for losses which may be caused to the other shippers where the charterer ships goods for illicit commerce with the knowledge of the shipowner or captain

4. Art. 682 - in case of making a port to repair the hull, machinery or equipment of the vessel, to wait until the vessel is repaired or to pay for the expenses of unloading should the charterer choose to unload

5. Art. 684 - where the charterer unloads goods before arriving at port of destination without any force majeure occurring, to pay (1) expenses of arrival, (2) full freight and (3) for the damages and losses caused to other shippers, if any

6. Art. 685 - where the charterer unloads before the beginning of the voyage, (1) to pay 1/2 of the freight, (2) to pay for the expenses of stowing and restowing the cargo, (3) to pay any other damage which he may have caused other shippers

7. Art. 686 - to pay for freight, other expenses and the primage after the vessel has been unloaded and the cargo placed at the disposal of the consignee

8. Art. 687 - not to abandon merchandise damaged on account of inherent defect or fortuitous event, for the payment of the freight and other expenses

f. Rescission


Art. 688. A charter party may be annulled at the request of the charterer:

1. If before loading the vessel he should abandon the charter, paying half the freightage agreed upon.

2. If the capacity of the vessel should not agree with that stated in the certificate of tonnage, or if there be an error in the statement of the flag under which she sails.

3. If the vessel should not be placed at the disposal of the charterer within the period and in the manner agreed upon.

4. If, after the vessel has put to sea, she should return to the port of departure, on account of risk from pirates, enemies, or bad weather, and the shippers should agree to unload her.

In the second and third cases the person from whom the vessel was chartered shall indemnify the charterer for the losses he may suffer.

In the fourth case the person from whom the vessel was chartered shall have a right to the freightage in full for the voyage out.

If the charter should have been made by the month, the charterers shall pay the full freightage for one month, if the voyage is for a port in the same waters; and two months, if for a port in different waters.

(From one port to another of the Peninsula (Philippines) and adjacent islands, the freightage for one month only shall be paid.)

5. If a vessel should make a port during the voyage in order to make urgent repairs and the charterers should prefer to dispose of the merchandise.

When the delay does not exceed thirty days, the shippers shall pay the full freightage for the voyage out.

Should the delay exceed thirty days, they shall pay the freight in proportion to the distance covered by the vessel.

Art. 689. At the request of the person from whom the vessel is chartered the charter party may be rescinded:

1. If the charterer at the termination of the extra lay days does not place the cargo alongside the vessel.

In such case the charterer must pay half of the freightage stipulated besides the demurrage due for the lay days and extra lay days.

2. If the person from whom the vessel was chartered should sell it before the charterer has begun to load it and the pur­chaser should load it for his own account.

In such case the vendor shall indemnify the charterer for the losses he may suffer.

If the new owner of the vessel should not load it for his own account the charter party shall be respected, and the vendor shall indemnify the purchaser if the former did not inform him of the charter pending at the time of making the sale.

Art. 690. The charter party shall be rescinded and all action arising therefrom shall be extinguished if, before the vessel puts to sea from the port of departure, any of the follow­ing cases should occur:

1. A declaration of war or interdiction of commerce with the power to whose ports the vessel was to make its voyage.

2. A condition of blockage of the port of destination of said vessel, or the breaking out of an epidemic after the con­tract was executed.

3. The prohibition to receive at the said port the mer­chandise constituting the cargo of the vessel.

4. An indefinite detention, by reason of an embargo of the vessel by order of the government, or for any other reason inde­pendent of the will of the ship agent.

5. The inability of the vessel to navigate, without fault of the captain or ship agent.

The unloading shall be made for the account of the charter­er.

Art. 691. If the vessel cannot put to sea on account of the closing of the port of departure, or any other temporary cause, the charter shall remain in force without right of either of the contracting parties to claim damages.

The subsistence and wages of the crew shall be considered as general average.

During the interruption the charterer may, at the proper timer and for his own account, unload and load the merchandise, paying demurrage if the reloading should continue after the cause for the detention has ceased.

Art. 692. A charter party shall be partially rescinded, unless there is an agreement to the contrary, and the captain shall only be entitled to the freightage for the voyage out, if, by reason of a declaration of war, closing of ports, or interdiction of commercial relations during the voyage, the vessel should make the port designated for such a case in the instructions of the charterer.

2. Loans on Bottomry and Respondentia


a. Loan on Bottomry, defined
A contract in the nature of a mortgage, by which the owner of the ship borrows money for the use, equipment and repair of the vessel and for a definite term, and pledges the ship (or the keel or bottom of the ship) as a security for its repayment, with maritime or extraordinary interest on account of the maritime risks to be borne by the lender, it being stipulated that if the ship be lost in the course of the specific voyage or during the limited time, by any of the perils enumerated in the contract, the lender shall also lose his money.

b. Loan on Respondentia, defined


One made on the goods laden on board the ship, and which are to be sold or exchanged in the course of the voyage, the borrower's personal responsibility being deemed the principal security for the performance of the contract, which is therefore called respondentia. The lender must be paid his principal and interest, thought the ship perishes, provided that the goods are saved.
c. Character of Loan
Art. 719. A loan in which, under any condition whatever, the repayment of the sum loaned and of the premium stipulated depends upon the safe arrival in port of the goods on which it is made, or of the price they may receive in case of accident, shall be considered a loan on bottomry or respondentia.
Real, unilateral, aleatory contract:

1. delivery of the amount loaned is necessary for the perfection of the contract

2. although there are reciprocal benefits, the contract produces obligations only for one party, the borrower who must return the amount borrowed plus premium

3. lender really runs known risks

Distinguished from ordinary loans:
Ordinary loan loan on bottomry and respondentia

1. first lender has preference last lender has preference over

over subsequent lenders previous ones
2. must be paid absolutely loan is required to be paid only upon

at all events, WON thing safe arrival of the thing given as

given as security is lost or security at port of destination

destroyed


3. subject to Usury Law no limit as to rate of interest in

view of diff. classes and various

risks in a maritime voyage
Marine insurance vs Bottomry and Respondentia Loans:
The borrower is in effect indemnified for his loss, at least, to the extent of the loan --> in case of loss of the thing given as security, the borrower is under no obligation to pay the loan
Marine insurance bottomry/respondentia loans

1. indemnity is paid after the indemnity is paid in advance by way of loan

loss has occurred
2. when marine peril occurs, when marine peril causes the loss of the

the obligation of the insurer vessel or cargo, the obligation of the

becomes absolute borrower to pay is extinguished
3. consensual contract real contract --perfected from the

* governed by Insurance Act moment of delivery of the thing loaned



When loss does not extinguish loan: (Art. 731)

1. where the loss is caused by inherent defect of the thing

2. where the loss is caused by fault or malice of borrower

3. where loss is caused by barratry on the part of the captain

4. where loss is caused by damage to the vessel as a consequence of its

engaging in contraband

5. where loss arose from having loaded the merchandise on a vessel different from that designated in the contract, except if change is due to force majeure

d. Forms and Requisites


Art. 720. Loans on bottomry or respondentia may be execut­ed:

1. By means of a public instrument.

2. By means of a policy signed by the contracting parties and the broker taking part therein.

3. By means of a private instrument.

Under whichever of these forms the contract is executed, it shall be entered in the certificate of the registry of the vessel and shall be recorded in the registry of vessels, without which requisites the credits of this kind shall not have, with regard to other credits, the preference which, according to their na­ture, they should have, although the obligation shall be valid between the contracting parties.

The contracts made during a voyage shall be governed by the provisions of Articles 583 and 611, and shall be effective with regard to third persons from the date of their execution, if they should be recorded in the registry of vessels of the port of registry of the vessel before the lapse of eight days following its arrival. If said eight days should elapse without the record having been made in the registry of vessels, the contracts made during the voyage of a vessel shall produce no effect with regard to third persons, except from the day and date of their inscrip­tion.

In order that the policy of the contracts executed in accor­dance with No.2 may have binding force, they must conform to the registry of the broker who took part therein. With respect to those executed in accordance with No. 3 the acknowledgment of the signature shall be required.

Contracts which are not reduced in writing shall not give rise to judicial action.


Effect of registration:
1. the loan shall have, with regard to other credits, the preference which, according to its nature, it should have (Art. 580 - 8th in the order of preference)

2. effective against third persons from the time of execution/registration


Art. 721. In a contract on bottomry or respondentia the following must be stated:

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

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

3. The names, surnames, and domiciles of the person giving and the person receiving the loan.

4. The amount of the loan and the premium stipulated.

5. The time for repayment.

6. The goods pledged to secure repayment.

7. The voyage during which the risk is run.

Art. 722. The contracts may be made to order, in which case they shall be transferable by indorsement, and the indorsee shall acquire all the rights and shall incur all the risks correspond­ing to the indorser.
e. On What Constituted
Art. 724. The loans may be constituted jointly or separate­ly:

1. On the hull of the vessel.

2. On the rigging.

3. On the equipment, provisions, and fuel.

4. On the engine, if the vessel is a steamer.

5. On the merchandise loaded.

If the loan is constituted on the hull of the vessel, the rigging, equipment and other goods, provisions, fuel, steam engines, and the freightage earned during the voyage on which the loan is made, shall also be considered as included in the liabil­ity for the loan.

If the loan is made on the cargo, all that which constitutes the same shall be subject to the repayment; and if on a particu­lar object of the vessel or of the cargo, only the object con­cretely and specifically mentioned shall be liable.

Art. 725. No loans on bottomry may be made on the salaries of the crew or on the profits expected.
f. Amount
Art. 723. Loans may be made in goods and in merchandise, fixing their value in order to determine the principal of the loan.
Art. 726. If the lender should prove that he loaned an amount larger than the value of the object liable for the bottom­ry loan, on account of fraudulent measures employed by the bor­rower, the loan shall be valid only for the amount at which said object is appraised by experts.

The surplus principal shall be returned with legal interest for the entire time required for repayment.

Art. 727. If the full amount of the loan contracted in order to load the vessel should not be used for the cargo, the balance shall be returned before clearing.

The same procedure shall be observed with regard to the goods taken as loan, if they were not loaded.

The excess shall be valid only as an ordinary loan



g. By whom
Art. 728. The loan which the captain takes at the point of residence of the owners of the vessel shall only affect that part thereof which belongs to the captain, if the other owners or their agents should not have given their express authorization therefor or should not have taken part in the transaction.

If one or more of the owners should be requested to furnish the amount necessary to repair or provision the vessel, and they should not do so within twenty-four hours, the interest which the parties in default may have in the vessel shall be liable for the loan in the proper proportion.

Outside of the residence of the owners, the captain may contract loans in accordance with the provisions of Articles 583 and 611.

Art. 617. The captain may not contract loans on responden­tia secured by the cargo, and should he do so the contract shall be void.

Neither may he borrow money on bottomry for his own transactions, except on the portion of the vessel he owns, pro­vided no money has been previously borrowed on the whole vessel, and provided there does not exist any other kind of lien or obligation chargeable against the vessel. When he is permitted to do so, he must necessarily state what interest he has in the vessel.

In case of violation of this article the principal, interest, and costs shall be charged to the private account of the captain, and the ship agent may furthermore discharge him.

Art. 611. In order to comply with the obligations mentioned in the foregoing article, and when he has no funds and does not expect to receive any from the agent, the captain shall procure the same in the successive order stated below:

1. By requesting said funds of the consignees of the vessel or the correspondents of the ship agent.

2. By applying to the consignees of the cargo or to the persons interested therein. 3. By drawing on the ship agent.

4. By borrowing the amount required by means of a bottomry loan.

5. By selling a sufficient amount of the cargo to cover the amount absolutely necessary to repair the vessel and to equip her to pursue the voyage.

In the two last cases he must apply to the judicial authori­ty of the port, if in the Philippines and to the Filipino consul, if in a foreign country; and where there should be none, to the local authority, proceeding in accordance with the prescriptions of Article 583, and with the provisions of the law of civil procedure.

Art. 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Philippine territory, and otherwise to the Filipino consul, should there be one, and in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contract­ed.

The judge or court, the consul or the local authority as the case may be in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness.

The lack of this formality shall make the captain personally liable to the creditors who may be prejudiced through his fault.
h. Effects of Contract
Art. 719. A loan in which, under any condition whatever, the repayment of the sum loaned and of the premium stipulated depends upon the safe arrival in port of the goods on which it is made, or of the price they may receive in case of accident, shall be considered a loan on bottomry or respondentia.

Art. 729. Should the goods on which money is taken not be subjected to risk, the contract shall be considered a simple loan, with the obligation on the part of the borrower to return the principal and interest at the legal rate, if that agreed upon should not be lower.

Art. 726. If the lender should prove that he loaned an amount larger than the value of the object liable for the bottom­ry loan, on account of fraudulent measures employed by the bor­rower, the loan shall be valid only for the amount at which said object is appraised by experts.

The surplus principal shall be returned with legal interest for the entire time required for repayment.

Art. 727. If the full amount of the loan contracted in order to load the vessel should not be used for the cargo, the balance shall be returned before clearing.

The same procedure shall be observed with regard to the goods taken as loan, if they were not loaded.

Art. 730. Loans made during the voyage shall have prefer­ence over those made before the clearing of the vessel, and they shall be graduated in the inverse order of their dates.

The loans for the last voyage shall have preference over prior ones.

Should several loans have been made at the same port of arrival under stress and for the same purpose, all of them shall be paid pro rata.

F. BILL OF LADING


B/L operates both as a receipt and as a contract; it is a receipt for the goods shipped and a contract to transport and deliver the same as stipulated
A stipulation that a CC's liability is limited to the value of the goods appearing in the B/L, unless the owner declares a greater value, is valid and binding
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