Transportation and maritime law

Art. 360. The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided that at the time of making the change of the consignee the bill of lading subscribed by the carrier, if one were issued, be returned to him, exchanging it for another con­taining the novation of the contract.

The expenses arising from the change of consignment shall be defrayed by the shipper.

Art. 365. If, on account of the damage, the goods are rendered useless for sale or consumption for the use for which they are properly destined the consignee shall not be bound to receive them, and may leave them in the hands of the carrier, demanding payment of their value at the current market price that day.

If among the goods damages there should be some in good condition and without any defect whatsoever, the foregoing provi­sion shall be applicable with regard to the damaged ones, and the consignee shall receive those which are sound, this separation being made by distinct and separate articles, no object being divided for the purpose, unless the consignee proves the impos­sibility of conveniently making use thereof in this form.

The same provision shall be applied to merchandise in bales or packages, with distinction of the packages which appear sound.

Art. 363. With the exception of the cases prescribed in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods transported in the same condition in which, according to the bill of lading, they were at the time of their receipt, without any damage or impairment, and should he not do so, he shall be obliged to pay the value of the goods not delivered at the point where they should have been and at the time the delivery should have taken place.

If part of the goods transported should be delivered the consignee may refuse to receive them, when he proves that he cannot make use thereof without the others.
Cases where consignee may abandon goods :

1. Art. 363, in case of partial non-delivery where the consignee proves that he cannot make use of the goods capable of delivery independently of those not delivered

2. Art. 365, where the goods are rendered useless for sale and consumption for the purposes for which they are properly destined

3. Art. 371, where there is delay through the fault of the carrier

2. Right to change consignment
Art. 360. The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided that at the time of making the change of the consignee the bill of lading subscribed by the carrier, if one were issued, be returned to him, exchanging it for another con­taining the novation of the contract.

The expenses arising from the change of consignment shall be defrayed by the shipper.
3. Obligation to pay transportation charges
Art. 374. The consignees to whom the remittance may have been made may not defer the payment of the expenses and transportation charges on the goods that they received after twenty-four hours have elapsed from the time of the delivery; and in case of delay in making this payment, the carrier may demand the judicial sale of the goods he transported to a sufficient amount to cover the transportation charges and the expenses incurred.
Railroad corporations have the power to detain freight, goods or luggage, to answer for the freight, storage and other transportation charges

In case of failure of the shipper, owner or consignee to pay for such charges, the CC has the power to sell such freight, goods, or luggage at public auction following the procedure under the law

Art. 375. The goods transported shall be specifically bound to answer for the transportation charges and for the expenses and fees caused by the same during their transportation, and until the time of their delivery.
This special right shall be limited to eight days after the delivery has been made, and after said prescription the carrier shall have no further right of action than that corresponding to an ordinary creditor.

Art. 376. The preference of the carrier to the payment of what is due him for the transportation and expenses of the goods delivered to the consignee shall not be affected by the bankrupt­cy of the latter, provided the action is brought within the eight days mentioned in the foregoing article.

Art. 2241. With reference to specific movable property of the debtor, the ff. claims or liens shall be preferred :

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(9) Credits for transportation, upon the goods carried, for the price of the contract and incidental expenses, until their delivery and for thirty days thereafter. (New Civil Code.)

Two sanctions for the enforcement by the CC of the payment of expenses and transpo charges :

1. Art. 374 - judicial sale of the goods transported

2. Art. 375 - creating a lien in favor of the CC on the goods transported --> 8 day period has been increased to 30 days by the NCC

The purpose of the lien and time limit: Reciprocal to that established in favor of the shipper under
Art. 372(par. 2); time limit rests on the necessity which the consignee must have for alienation of the goods, by which the CC is given a period relatively urgent pertaining to the said goods transported --> after the time has prescribed, his preference prescribes and his only remedy is by ordinary action
The mere fact that the goods remain in the possession of the CC because they have not been removed by the consignee, and the right of the CC to demand the sale of the goods to satisfy the cost of transportation and other expenses, do not deprive the CC of its right to demand in a proper action the amounts owing to it by reason of the contract of transpo
The bankruptcy of the consignee shall not cut off the preference of the CC, provided that the claim is made w/in 30 days from date of delivery (NCC)

5. Obligation to return bill of lading

Art. 353. The legal basis of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which all disputes which may arise with regard to their execution and fulfillment shall be decided, no exceptions being admissible other than forgery or material errors in the drafting thereof.

After the contract has been complied with, the bill of lading shall be returned to the carrier who may have issued it, and by virtue of the exchange of this title for the article transported, the respective obligations and actions shall be considered canceled, unless the same act the claims which the contracting parties desire to reserve are reduced to writing, exception being made of the provisions of Article 366.

In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, due to its loss or for any other cause, he shall give said carrier a receipt for the goods delivered, this receipt producing the same effect as the return of the bill of lading.

Under par. 2, Art. 353, after the contract of transpo has been complied with, the B/L shall be returned to the issuing CC in exchange for the goods transported which are delivered to the shipper or consignee

Where the consignee upon receiving the goods cannot return the B/L to the CC by reason of its loss or any other cause, par. 3, Art. 353 provides that he must give the CC a receipt of the goods delivered
Effect of return of the B/L or giving of the receipt: The respective obligations and actions of the parties against each other shall be considered canceled, except where in the same act of return or giving of a receipt the claims of the parties be reduced to writing subject to the provisions of Art. 366

G. Applicability of Provisions

Art. 379. The provisions contained in Article 349 et seq. shall also be understood as relating to persons who, although they do not personally effect the transportation of commercial goods, contract to do so through others, either as contracts for a special and fixed transaction or as freight and transportation agents.

In either case they shall be subrogated to the place of the carriers with regard to the obligations and liability of the latter, as well as with regard to their right.

IV. ADMIRALTY AND MARITIME COMMERCE
A. Concept of Admiralty; Jurisdiction over Admiralty Cases
BP 129, Sec. 19. Regional Trial Courts shall exercise exclusive original jurisdiction:

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(3) In all actions in admiralty and maritime jurisdiction where the demand or claim exceeds one hundred thousand pesos (P100,000) xxx.

BP 129, Sec. 33. Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases, where the value of the personal property, estate or amount of the demand does not exceed one hundred thousand pesos (P100,000), or in Metro Manila where such personal property, estate, or amount of the demand does not exceed Two hundred thousand pesos (P200,000), exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That interest, damages of whatever kind, attorney's fees, litigation expenses, and costs shall be included in the determination of the filing fees: Provided, further, That where there are several claims or causes of action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different actions.

International Harvester vs Aragon 84 Phil 363
F: The S/S Belle of the Sea took on board in LA, goods for shipment to Manila and covered by B/L No. 105. The S/S Belle of the Sea arrived in Manila and discharged her cargo at the govt. piers under the supervision and custody of the defendant Manila Terminal Inc. Of the entire shipment, one carton of assorted samples with a stipulated value of P200 was not delivered to plaintiff Yaras and Co. The latter filed a complaint with the Municipal Court of Manila against International Harvester, as agent of the S/S Belle of the Sea and Manila Terminal Inc. The complaint charged that the merchandise was lost through the negligence of either of the defendants. Before trial could proceed, the International Harvester Inc. (IH) filed a motion to dismiss on the ground that the court had no jurisdiction. The motion was denied. Prohibition proceedings were instituted before the CFI of Manila to stop the judge from proceeding with the action. The petition was granted and the respondents now appeal.

Held : It is clear from the complaint that IH is being held liable only on the assumption that the goods had been lost in transit or before being discharged at the pier. The liability of IH is predicated on the contract of carriage by sea between IH and Yaras & Co. as evidenced by the B/L, independently of the liability of the Manila Terminal Co. as operator of an arrastre service.

Admiralty has jurisdiction over all maritime contracts, in whatever form, wherever they were executed or are to be performed, but not over non-maritime contracts. Whether or not a contract is maritime depends not on the place where the contract is made and is to be executed, making the locality the test, but on the subject matter of the contract, making the true criterion a maritime service or a maritime transaction. Specifically, admiralty has jurisdiction of a proceeding in rem or in personam for the breach of a contract of affreightment, whether evidenced by a B/L or a charter party. And typical of a controversy over contracts of affreightment is a suit of one party against the other for loss or damage to the cargo. This is the very case before us, because the respondent Yaras & Co. seeks to recover from the petitioner IH the value of certain lost cargo.

The contention of Yaras that the admiralty jurisdiction is not involved because the contract in question was made upon land and to be terminated upon land, merely reflects the English rule which had long been rejected in the US. It is now well-settled in the latter country that the jurisdiction of admiralty in matters of contract depends upon the subject matter, i.e., the nature and character of the contract and that the English rule which conceded jurisdiction only to contracts made upon and to be performed upon navigable waters, is inadmissible, the true criterion being that the contract has reference to maritime service or maritime transaction. Under the law, the CFI has jurisdiction over admiralty cases.

B. Vessels

1. Meaning

Lopez vs Duruelo 52 Phil 229
F: Augusto Lopez, of Silay, Occidental Negros, wanted to embark on the interisland steamer San Jacinto bound for Iloilo. The steamer was anchored some half a mile from the shore or port of Silay. In order to board the steamer, Lopes boarded the motor boat Jison at the landing which was then engaged in conveying passengers and luggage to and from the steamer. Whether due to negligence or incompetence of Duruelo, the engineer of Jison aged 16, as alleged, the boat approached too near to the stern of the steamer wherein it was struck by the still turning propeller of the steamer. The boat sunk and Lopez was thrown into the water against the propeller wherein he suffered a bruise in the breast, two serious fractures of the bones of the left leg and a compound fracture of the left femur. As a result, Lopez was hospitalized from February 28 to October 19, 1927 or eight months. Lopez filed a complaint and sought damages amounting to P120,000 alleging that he suffered injuries due to the negligence and inexperience having only been in its third day of apprenticeship on the day of the accident. It was also alleged that Jison was overloaded when it carried 14 passengers instead of its capacity for eight or nine. The defendants assigned in it demurrer that the plaintiff did not show a right of action since the complaint did not allege that a protest had been presented by the plaintiff within 24 hours after the occurrence, to the competent authority of the port where the accident occurred as provided under the Code of Commerce. CFI dismissed the complaint, hence the appeal.
Held : Assuming that article 835 of the Code of Commerce states a condition precedent to the maintenance of an action in a case requiring protest, such as protest is nevertheless not necessary in the case at bar. The article is found in the section dealing with collisions and the context shows the collisions intended are collisions of sea-going vessels. Said article cannot be applied to small boats engaged in river and bay traffic. The vessels intended in the Third Book of the Code of Commerce which deals with maritime commerce and in which Art. 865 is found was evidently intended to define the law relative to merchant vessels and marine shipping, and the vessels intended in that Book are such as are run by masters having special training with the elaborate apparatus of crew and equipment indicated in the Code. The word "vessel" used in the section was not intended to include all ships, craft, or floating structures of every kind without limitation, and the provision of that section should not be held to include minor craft engaged only in river or bay traffic. Vessels of minor nature, such as river boats and those carrying passengers from ship to shore are governed as to their liability in passengers, by the Civil Code.

The word ship and vessel, in their grammatical sense are applied to designate every kind of craft, large or small, merchant or war, a signification which does not differ essentially from its juridical meaning according to which vessels for the purpose of the Code of Commerce, are considered not only those engaged in navigation whether coastwise or high seas, but also floating docks, pontoons,dredges, scows, and other floating apparatus for the service of the industry or maritime commerce.

Yet notwithstanding these principles from which it would seem that any floating apparatus which serves directly for the transportation of things or persons or which indirectly is related to this industry, ought to be subjected to the principles of the Code with reference to ownership, transfer, rights, registrations, etc. they are not applicable to small craft which are only subject to administrative regulations in the matter of port service and in the fishing industry.

But even if The Code Of Commerce was applicable, a protest still need not be made since under Art. 836, want of protest cannot prejudice a person not in a condition to make known his wishes. A person who has suffered injuries like that of the plaintiff cannot be supposed to be in a condition to make a protest.

2. Nature and acquisition of vessels
Art. 573. Merchant vessels constitute property which may be acquired and transferred by any of the means recognized by law. The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if not recorded in the registry of vessels. The ownership of a vessel shall also be acquired by the possession thereof in good faith for three years, with a good title duly recorded.

In the absence of any of these requisites, uninterrupted possession for ten years shall be necessary in order to acquire ownership.

A captain cannot acquire by prescription the ship of which he is in command.

Vessels: Those engaged in navigation , whether coastwise or on the high seas, including floating docks, pontoons, dredges, scows and any other floating apparatus destined for the services of the industry or maritime commerce
Vessels engaged in the business of carrying or transporting passengers or goods for compensation, offering their services to the public are common carriers --> governed primarily by the Civil Code provisions on common carriers and subsidiarily by the Code of Commerce and special laws

The Code of Commerce regulates merchant ships or those engaged in the transportation of passengers and freight from one port to another or from place to another

The Code of Commerce does not refer to pleasure ships, yachts, pontoons, health service and harbor police vessels, floating storehouses, warships or patrol vessels, coast guard vessels, fishing vessels, towboats and other craft destined to other uses, such as coast and geodetic survey, scientific research and exploration, crafts engaged in the loading and the discharge of vessels, or transhipments from one vessel to another

Vessels of a minor nature not engaged in maritime commerce, such as, river boats and those carrying passengers from ship to shore, must be governed as to their liability to passengers, by the provisions of the Civil Code

Modes of acquisition: (1) purchase and sale, (2) prescription, (3) construction, (4) capture, (5) donation, (6) succession, and (7) other means, such as barter

Possession in GF will ripen into ownership in 3 years; if the possession is otherwise, it will ripen into ownership in 10 years

There can be no prescription in favor of the captain because the nature of the possession of the captain is such that he is only an agent of the owner, a depositary of the vessel
The acquisition of a vessel must appear in a written instrument and such instrument must be registered in order that the transfer may affect third persons
Art. 574. Builders of vessels may employ the material and follow with regard to their construction and rigging the systems most suitable to their interest. Ship owners and seamen shall be subject to the provisions of the laws and regulations of the public administration on navigation, customs, health, safety of vessels, and other similar matters.

The business of constructing and repairing vessels or parts thereof shall not be considered a public utility and no CPC shall be required thereof

Art. 585. For all purposes of law not modified or restricted by the provisions of this Code, vessels shall continue to be considered as personal property.
Vessels are considered personal or movable property; but they partake to a certain extent, of the nature and conditions of real property, on account of their value and importance in the world of commerce

Art. 712. Ownership is acquired by occupation and by intellectual creation.

Ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition.

They may also be acquired by means of prescription. (New Civil Code.)

3. Registration; certificates issued; distinctions

Tariff and Customs Code, Sec. 802
(1) vessels - every sort of boat, craft or other artificial contrivance used, or capable of being used, as a means of transportation on water

(2) duly registered - person, natural or juridical, registered with the proper govt. agencies, as Bureau of Commerce, SEC, NACIDA, BOI, Export Incentives Board or Oil Commission, as now or may hereafter be required by law.

PD 761 as amended by PD 1064, 1521
Sec. 806. Upon registration of a vessel of domestic ownership, and of more than 15 tons gross, a certificate of Philippine registry shall be issued for it. If the vessel is of domestic ownership and of 15 tons gross or less, the taking of the certificate of Philippine registry shall be optional with the owner.

Domestic ownership means ownership vested in the citizens of the Philippines or corporations or association organized under the laws of the Philippines at least 60% of the C/S or capital of which is wholly owned by citizens of the Philippines, and in the case of corporations or associations which will engage in coastwise trade the president and managing directors thereof shall be such citizens xxx

xxx an enterprise duly registered with the Board of Investments WON entirely owned by foreign nationals, may register its own vessels xxx if such vessels are to be used exclusively to transport its own raw materials and finished products in Philippine waters as an incident to its manufacturing, processing or business activity registered with the BOI and certified to by said Board as an essential element in the operation of the registered project.

Rule III, Marina Rules and Regulations:

Subjects of Registration:

1) All vessels used in Phil. waters, not being transients of foreign registry, shall be registered with the MARINA. To this end, it shall be the duty of the master, owner and agent of every such vessel to make application to the proper MARINA district office for registration thereof within 15 days after the vessel becomes subject to such registration.

2) A vessel of 3 tons gross or less shall not be registered unless the owner shall so desire, nor shall documents licenses of any kind be required for such vessel, but the proper fee shall be charged for measurement when measurement is necessary, except when the same is engaged in towing or carrying of articles and passengers for hire.

3) All undocumented vessels shall be numbered in such form as may be prescribed by the Administrator.
Vessels exempt from Registration :

AFP vessels, vessels owned and/or operated by the AFP or by foreign govt. for military purposes, and bancas, sail boats and other water craft which are not motorized of less than 3 gross tons shall not be subject to the requirements of these rules and regulations relative to registration and navigation, except in so far as may be prescribed by regulations of MARINA.
The Phil. Coast Guard is vested with exclusive authority over the registration and documentation of Phil. vessels, as well as the issuance of all certificates, licenses, or other documents necessary or incident to such registration

The registration shall be effected at its home port or at the nearest Coast Guard district or station when the home port does not have such

Certificates of Philippine register: upon registration of a vessel of domestic ownership and of more than 15 tons gross, a certificate of Phil. register shall be issued for it

The purpose of certificates of register of vessels : to declare the nationality of a vessel engaged in trade with foreign nations and to enable her to assert that nationality wherever found

Privileges of certificate: It confers upon the vessel the right to engage, consistently with law, in the Philippines coastwise trade and entitles it to the protection of the authorities and the flag of the Philippines in all ports and on the high seas, and at the same time secures to it the same privileges and subjects it to the same disabilities as, under the laws of the Philippines, pertain to foreign built vessels transferred abroad to citizens of the Philippines

Certificates of ownership : upon registration of a vessel of more than 5 tons gross, a certificate of ownership shall be issued for it

4. Significance of registration of transactions affecting vessels
Presumption of ownership from registration : the presumption is that the person in whose name a vessel is registered has legal title thereto --> but such is not conclusive proof against the real owners

It is essential that a record of documents affecting the title of a vessel be entered in the Philippine Coast Guard

Arroyo vs Yu 54 Phil 511
F: The appeal of Yu relates to the preferences to the ten lorchas as between herself and the PNB. Among the facts found by the trial judge is that they were owned by Lim Ponzo Navigation Co. They were mortgaged to Po Pauco to guarantee a loan of P20,000. This was duly registered with the register of deeds. Po Pauco later mortgaged them in favor of PNB and registered with the register of deeds but was recorded in the Office of Collector of Customs much later. Meanwhile, Yu secured a judgment against Lim Ponzo Navigation Co. The notice of seizure was recorded by the collector of customs of Iloilo on which date the records of the office disclosed the vessels as free from encumbrances.
HELD : Sec. 1171 of AC has modified the provisions of the Chattel Mortgage Law, particularly Sec. 4 thereof. It is now not necessary for a chattel mortgage of a vessel to be noted in the register of deeds. But it is essential that a record of documents affecting the title of a vessel be entered in the office of the collector of customs at a port of entry. This is designed to protect persons who deal with a vessel on the strength of the record title. Mortgages on vessels., although not recorded, are good as between the parties. But as against creditors of the mortgagor, an unrecorded mortgage is valid.
However, we find an explanation of the delay of registration with the collector of customs-because of doubts entertained by the latter relative to the applicability of Act No. 3324 to a mortgage executed in 1918 in favor of a Chinese subject. This uncontradicted fact must be taken as curing the bank's defective title. That the collector did not perform his duty was no fault of PNB.

Judgment affirmed in part in the sense that as between Yu and PNB, the latter has a superior right to its claim for P20,000, and set aside in part in the sense that the record is remanded for further proceedings.

Rubiso vs Rivera 37 Phil 72
F: Defendant Rivera acquired by purchase the pilot boat Valentina on a date prior to that of the purchase and adjudication at public auction by plaintiff Rubiso. But the sale at public auction to Rubiso was recorded in the office of the collector of customs on Jan. 27, 1915 and in the commercial registry on March 4, 1915, while the sale to Rivera was entered in the customs registry only on March 17, 1915. Lower court decided for plaintiff. Defendant appealed.
HELD : The requisite of registration in the registry of the purchase of a vessel is necessary and indispensable in order that the purchaser's rights may be maintained against a claim filed by a third person. Such registration is required both Art. 573 of the Code of Commerce in connection with Sec 2 of Act No. 1900 which Act amended said article. The amendments solely consisted in charging the Insular Collector of Customs, as at present, with the fulfillment of the duties of the commercial register concerning the registering of vessels, so that the registration of a bill of sale of a vessel shall be made in the Insular Collector of Customs, who, since May 18, 1909, has been performing the duties of the commercial registry in place of this latter official. In view of said legal provisions, it is undeniable that defendant's rights cannot prevail over those acquired by plaintiff in the ownership of said boat, in as much as defendant's registration came after plaintiff's registration.

C. Persons Participating in Maritime Commerce

1. Shipowners and shipagents
Art. 586. The owner of a vessel and ship agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditors proves that the amount claimed was invested therein.

By agent is understood the person entrusted with the provisioning of a vessel, or who represents her in the port in which she happens to be.
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freightage he may have earned during the voyage.

Art. 588. Neither the owner of the vessel nor the agent shall be liable for the obligations contracted by the captain if the latter exceeds his powers and privileges inherent in his position or those which may have been conferred upon him by the former.

However, if the amounts claimed were made use of for the benefit of the vessel, the owner or agent shall be liable.

Liability of shipowner and shipagent :

(1) under Art. 857, for the acts of the captain

(2) for contracts entered into by the captain to repair, equip and provision the vessel, provided that the amount claimed was invested for the benefit of the vessel

(3) for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods transported, as well as for the safety of passengers transported

(4) for damages to third persons for tort or quasi-delict committed by the captain, except collision with another vessel

(5) under Art. 826, for damages in case of collision due to the fault, negligence, or want of skill of the captain, sailing mate, or any other member of the complement

The agent is liable to the shippers and owners of the cargo transported by it, for losses and damages occasioned to such cargo without prejudice to his rights against the owner of the ship, to the extent of the value of the vessel, its equipment and the freight

Under 588, the shipowner and the shipagent are not liable for the obligations contracted by the captain if he exceeds his authority, unless the amounts claimed were invested for the benefit of the vessel --> however under Art. 1759, NCC, the ship owner is liable for the death of or injuries to the passengers which are caused by the negligence or wilful acts of his EEs although such EEs may have acted beyond the scope of their authority or in violation of the orders of the shipowner

Art. 589. If two or more persons should be part owners of a merchant vessel, an association shall be presumed as established by the part owners.

This association shall be governed by the resolutions of a majority of the members.

A majority shall be the relative majority of the voting members.

If there should be only two part owners, in case of disagreement the vote of the member having the largest interest shall be decisive. If the interests are equal, it shall be decided by lot.

The representation of the smallest part in the ownership shall have one vote; and proportionately the other part owners as many votes as they have parts equal to the smallest one.
A vessel cannot be detained, attached or levied upon execu­tion in her entirety for the private debts of a part owner, but the proceedings shall be limited to the interest the debtor may have in the vessel, without interfering with her navigation.

Art. 590. The co-owners of a vessel shall be civilly li­able, in the proportion of their contribution to the common fund, for the results of the acts of the captain, referred to in Arti­cle 587.

Each part owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belong­ing to him.

Art. 591. All the part owners shall be liable, in propor­tion to their respective ownership, for the expenses which are incurred by virtue of a resolution of the majority.

They shall likewise be liable in the same proportion for the expenses of maintenance, equipment, and provisioning of the vessel, necessary for navigation.

Art. 592. The resolutions of the majority with regard to the repair, equipment, and provisioning of the vessel in the port of departure shall bind the minority, unless they renounce their participation therein, which must be acquired by the other part owners after a judicial appraisement of the value of the portion or portions assigned.

The resolutions of the majority relating to the dissolution of the association and sale of the vessel shall also be binding on the minority.

The sale of the vessel shall be made at a public auction, subject to the provisions of the law of civil procedure unless the part owners unanimously agree otherwise, subject always to the right of pre-emption and redemption mentioned in Article 575.

Art. 593. The owners of a vessel shall have preference in her charter over other persons, offering equal conditions and price. If two or more of the former should claim said right the one having greater interest shall be preferred, and should they have an equal interest it shall be decided by lot.

Art. 594. The part owners shall elect the manager who is to represent them in the capacity of agent.

The appointment of director or agent shall be revocable at the will of the partners.

Art. 595. The agent, be he at the same time an owner of a vessel or a manager for an owner or for an association of co- owners, must be qualified to trade and must be recorded in the merchant's registry of the province.

The agent shall represent the ownership of the vessel, and may in his own name and in such capacity take judicial and extra­judicial steps in all that relates to commerce.

Art. 596. The agent may discharge the duties of captain of the vessel, subject, in every case, to the provisions contained in Article 609.

If two or more co-owners request the position of captain, the disagreement shall be decided by a vote of the members; and if the vote should result in a tie, the position shall be given to the part owner having the larger interest in the vessel.

If the interest of the petitioners should be the same, and there should be a tie, the matter shall be decided by lot.

Art. 597. The agent shall select and enter into an agree­ment with the captain, and shall contract in the name of the owners, who shall be bound in all that refers to repairs, details of equipment, armament, provisions, fuel, and freight of the vessel, and, in general, in all that relates to the requirements of navigation.

Art. 598. The agent cannot order a new voyage, nor make contracts for a new charter, nor insure the vessel, without the authority of her owner or by virtue of a resolution of the majority of the co-owners, unless these powers were granted him in the certificate of his appointment.

If he should insure the vessel without authority therefor he shall be subsidiarily liable for the solvency of the underwriter.

Art. 599. The managing agent of an association, shall give his co-owners an account of the results of each voyage of the vessel, without prejudice to always having the books and corre­spondence relating to the vessel and to its voyages at their disposal.

Art. 600. After the account of the managing agent has been approved by a relative majority, the co-owners shall satisfy the expenses in proportion to their interest, without prejudice to the civil or criminal actions which the minority may deem fit to institute afterwards.

In order to enforce the payment, the managing agents shall be entitled to an executory action, which shall be instituted by virtue of a resolution of the majority, and without further proceedings than the acknowledgment of the signatures of the persons who voted for the resolution.
* Note : an executory action is no longer recognized in this jurisdiction
Art. 601. Should there be any profits, the co-owners may demand of the managing agent the amount due them, by means of an executory action without further requisite than the acknowledgment of the signatures in the instrument approving the account.

Art. 602. The agent shall indemnify the captain for all the expenses he may have made from his own funds or from those of other persons, for the benefit of the vessel.

Art. 603. Before a vessel goes out to sea the agent may at his discretion, discharge the captain and members of the crew whose contract did not state a definite period nor a definite voyage, paying them the salaries earned according to their con­tracts, and without any indemnity whatsoever, unless there is an expressed and specific agreement in respect thereto.

Art. 604. If the captain or any other member of the crew should be discharged during the voyage, they shall receive their salary until their return to the place where the contract was made, unless there are good reasons for the discharge, all in accordance with Art. 636 et seq. of this Code.
Art. 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence.

Art. 606. If the captain should be a part owner in the vessel, he may not be discharged unless the agent returns to him the amount of his interest therein, which, in the absence of an agreement between the parties, shall be appraised by experts appointed in the manner established in the law of civil proce­dure.

Art. 607. If the captain who is a part owners should have obtained the command of the vessel by virtue of a special agree­ment contained in the articles of copartnership, he cannot be deprived thereof except for the reasons mentioned in Article 605.

Art. 608. In case of the voluntary sale of the vessel, all contracts between the agent and captain shall terminate, reserv­ing to the latter his right to the indemnity which may be proper, according to the agreements made with the agent.

The vessel sold shall remain subject to the security of the payment of said indemnity if, after the action against the vendor has been instituted, the latter should be insolvent.

Art. 618. The captain shall be civilly liable to the ship agent and the latter to the third persons who may have made contracts with the former -

1. For all the damages suffered by the vessel and its cargo by reason of want of skill or negligence on his part. If a misdemeanor or crime has been committed he shall be liable in accordance with the Penal Code.

2. For all the thefts and robberies committed by the crew, reserving his right of action against the guilty parties.

3. For the losses, fines, and confiscations imposed on account of violation of the laws and regulations of customs, police, health, and navigation.

4. For the losses and damages caused by mutinies on board the vessel, or by reason of faults committed by the crew in the service and defense of the same, if he does not prove that he made full use of his authority to prevent or avoid them.

5. For those arising by reason of a misuse of powers and nonfulfillment of the duties which pertain to him in accordance with Articles 610 and 612.

6. For those arising by reason of his going out of his course or taking a course which, in the opinion of the officers of the vessel, at a meeting attended by the shippers or supercargoes who may be on board, he should not have taken with­out sufficient cause.

No exception whatsoever shall exempt him from his obliga­tion.

7. For those arising by reason of his voluntarily entering a port other than his destination, with the exception of the cases or without the formalities referred to in Article 612. 8. For those arising by reason of the nonobservance of the provisions contained in the regulations for lights and maneuvers for the purpose of preventing collisions.

Art. 618 provides for the direct responsibility of the shipowner and shipagent to third persons; the captain shall be civilly liable to the ship agent and the latter is the one liable to third persons This article applies to breaches of contract and tortious negligence of the captain

But where the vessel is totally chartered for use of a single party, the shipowner and that party may validly stipulate that the latter shall be exempt from liability for the negligence of the captain and crew
Reason for imposition of liability on owner for damages suffered by third persons occasioned by the acts of the captain: To place the primary liability upon the person who has actual control over the conduct of the voyage and who has the most capital embarked in the venture, namely, the owner of the ship, leaving him to obtain recourse, from other individuals who have been drawn into the venture as shippers

The shippers and passengers in making contracts with the captain do so through the confidence they have in the shipowner who appointed him --> they presume that the owner made a most careful investigation before appointing him

Distinction between liability for lawful and unlawful acts :

The lawful acts and obligations of the captain beneficial to the vessel may be enforced as against the agent/owner for the reason that such obligations arise from the contract of agency ( provided that the captain does not exceed his authority)

As to any liability incurred by the captain through his unlawful acts, the ship agent is simply subsidiarily liable
Liabilities of captain: the responsibility of the captain extends to every fraudulent or negligent act of any person in the complement, in the execution of his employment --> he does not respond for personal injuries of the crew arising from personal quarrels but he is liable for damages to persons or property occasioned by a maneuvering of the vessel, for failure to follow international rules and regulations, for failure to take the precautions to prevent every damage possible to the vessel which has suffered an average

Standard Oil vs Castelo 42 Phil 256
F: Castelo, owner of the interisland steamer Batangueno, contracted with Chumbuque stipulating that for a term of one year, the latter shall use it in conveying cargo; that the crew should be supplied by the owner; and that the charterer should have no control over the captain and crew than to specify the voyages. Plaintiff delivered petroleum which was placed on deck. While the steamer was on her way, a typhoon came, compelling the captain to jettison the petroleum. When the storm abated, the ship made port and 13 cases of petroleum were recovered, but the remainder was wholly lost. Plaintiff brought action to recover the petroleum value against the shipowner. CFI rendered judgment for plaintiff.
Held : Ordinarily, the loss of cargo carried on deck shall not be considered as general average loss, as expressed in the York- Antwerp Rules. This rule, first made during the days of sailing vessels has changed and it is now generally held that jettisoned goods carried on deck, according to the customs of trade, by steam vessels navigating coastwise and inland waters, are entitled to contribution as general average loss. The reason for this, in coastwise trade, is that boats are small and voyages are short, with the result that the coasting vessel can use more circumspection about the condition of the weather at departure time. It is evident therefore, that the loss of the petroleum is a general average with the result that plaintiff is entitled to recover an amount bearing such proportion to its total loss as the value of both ship and cargo bears to the value of ship and entire cargo before jettison was effected.

It is universally recognized that the captain is the representative of the owner and both under Art. 586 of the Code of Commerce, are civilly liable for the acts of the master. When jettison of cargo occurs, it is the duty of the captain to effect the adjustment, liquidating and distribution of the general average; his failure gave rise to liability for which the owner of the ship must answer.

The owner of the ship ordinarily has vastly more capital embarked upon a voyage than has any shipper of cargo. Moreover, the shipowner, in captain's person, has complete and exclusive control of the crew and ship navigation. It is therefore proper that any person whose property may have been cast should have a right of action directly against the shipowner for breach of duty which the law imposed on the captain with respect to such cargo. The evident intention of the Com. Code is to place primary liability upon the person who has actual control over the conduct of the voyage and who has most capital in the venture, namely, the shipowner, leaving him to obtain recourse, as it is very easy to do, from other individuals who have been drawn into the venture as shippers. Defendant is therefore liable.
Araullo, and Avancena, dissenting :

Action for recovery, if any, should be brought not against the defendant owner but against the captain thereof.

(a) Responsibilities and liabilities

Yu Con vs Ipil 41 Phil 770
F: Yu delivered to Ipil and Solamo P 450 for delivery from Catmon to Cebu aboard a banca named Maria of which Lauron was the owner and Ipil and Solamo, the master and supercargo, respectively. The money together with various merchandise belonging to plaintiff was to be carried from the port of Cebu to Catmon in Cebu. The money was placed by Yu in his trunk and was transferred to that of Ipil. That night, the window of the stateroom in which the trunk containing the money was kept was broken through by persons not identified and through which the said trunk was stolen. It was found at the trial that Ipil and Solamo were negligent in guarding the money because they were sound asleep at the time of the theft and they assigned no one to stand guard during the night. Their defense was that Yu chartered and had control and responsibility of the banca and that the theft was due to Yu's negligence. The CFI held Ipil and Solamo negligent and held Lauron liable as ER and shipowner under Articles 586, 587 and 618 of the Code of Commerce.
Held : Ipil and Solamo, as carriers and depositories of the money were liable under the Civil Code, the theft not being a fortuitous event or of force majeure and they being manifestly negligent and at fault.

As to the liability of Lauron, the SC proceeded by first defining the banca "Maria" as within the meaning of the term "vessel." Thus, according to the foregoing definitions (by the Mercantile Code, by Reus in Commentaries on the Code of Commerce, and by Blanco) we hold that the banca "Maria" chartered by Yu Con from Lauron, was a "vessel" under Mercantile Law and the Code of Commerce. Ipil, the master of the banca, was also held to be the captain (masters are to small vessels as captains are to big ones). Under Arts. 587 and 618, the shipowner shall be civilly liable to third persons when the captain of the vessel causes the damage or loss to goods entrusted to him by said third persons under a contract to carry said goods. Thus, it is well and god that the shipowner be not held criminally liable for such crimes or quasi crimes but he cannot be excused from liability for the damage and harm which in consequence of those acts may be suffered by the third parties who contracted with the captain in his double capacity of agent and subordinate of the shipowner himself. In maritime commerce, the shippers and passengers in making contracts with the captain do so through the confidence they have in the shipowner who appointed him.

The owner of a minor craft who has equipped and victualed it for the purpose of using it in the transportation of merchandise from one port to another is under the law a shipowner and the master of the craft is to be considered as its captain in the legal acceptation of this word, and the former must be held civilly liable for indemnities in favor of third parties to which the conduct of the master/captain may give rise in the custody of the effects laden on the craft, and for all losses which, through his fault or negligence, may occur to the merchandise or effects delivered to him for their transportation as well as for the damages suffered by those who contracted with him, in consequence of misdemeanors and crimes committed by him or by the members of the crew of the craft.

Manila Steamship vs Abdulhaman 100 Phil 32
F: At around 7 p.m., M/L Consuelo V, owned by Lim Hong To, laden with cargoes and passengers left Zamboanga City bound for Siokon under the command of Faustino Macrohon. Among her passengers were plaintiff Insa Abdulhaman, his wife, and their 5 kids. On the same night, the M/S Bowline Knot owned by the Manila Steamship Co. were navigating from Maribojoc towards Zamboanga City. The weather then was considered fair.

At around 10 PM, without any warning to the resting passengers, both vessels collided. M/L Consuelo V capsized, resulting in the death of Abdulhaman's five children. The above facts found by the Board of Marine Inquiry, was used by the CFI to hold the owners of both vessels solidarily liable to Abdulhaman for P 20,784 as damages. The CA, however, exempted Lim from liability by reason of the sinking and total loss of his vessel. Hence, this petition by the Manila Steamship Co. questioning the exemption of Lim while also alleging its exemption having had exercised due diligence in the selection of its EEs.

Held : (1) While it is true that plaintiff's action against petitioner is based on a tort or quasi-delict, the tort in question is not a civil tort under the Civil Code but is a maritime tort resulting in a collision at sea, governed by Arts. 826-939 of the Code of Commerce, while the owners of both colliding vessels are solidarily liable for damages caused. This direct responsibility is recognized in Art. 618 of the Code of Commerce, under which the captain shall be civilly liable to the ship agent, and the latter is the one liable to third persons.

In fact it is a general principle well established in the maritime law and custom, that shipowners and shipagents are civilly liable for the acts of the captain (Art. 586) and for the indemnities due to the third persons (Art. 587). This direct liability moderated and limited by the owner's right of abandonment of the vessel and earned freight (Art. 587) has been declared to exist not only in the case of breached contracts but also in cases of tortious negligence.

It is easy to see that to admit the defense of the diligence of a bonus pater familias in the selection and vigilance of the officers and crew as exempting the shipowner from any liability for their faults, would render nugatory the solidary liability in Art. 827 for the greater protection of injured parties.

(2) It is to be noted that Macrohon was not duly licensed as a shipmaster and Lim knew of this fact when it hired the former, thus deliberately increasing the risk to which the unknowing passengers would be subjected. The liability of Lim, cannot, therefore be identical to that of a shipowner who bears in mind the safety of the passengers by employing duly licensed officers. To hold, as the CA had done, that Lim may limit his liability to the value of his vessels, is to erase all differences between compliance with law and the deliberate disregard thereof.

The international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a shipowner's liability, does not apply to cases where the injury of the average is due to shipowner's own fault.

(b) The doctrine of limited liability

* Doctrine of limited liability is provided for in Arts. 587, 590 and 837
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freightage he may have earned during the voyage.

A shipagent is liable notwithstanding the insolvency of the principal/owner

BUT the ship agent may exempt himself from liability by abandoning the vessel with all her equipment and the freight it may have earned during the voyage --> the effect of abandonment is to extinguish the liability of the shipagent

The ship agent's liability is confined to that which he is entitled as a matter of right to abandon : the vessel with all her eqpt. and the freight it may have earned during the voyage and to the insurance thereof

Limited liability is not applicable when no abandonment of vessel is made
Effect of abandonment: An abandonment amounts to an offer of the value of the vessel, of her equipment, and freight money earned --> results in the cessation of the responsibility of the owner/agent

Abandonment cannot be refused by creditors

This applies to all cases where the owner/agent may be held liable for the negligent or illicit acts of the captain
Effect of loss or destruction of vessel: The shipagent's liability is merely co-extensive with his interest in the vessel such that the total loss thereof results in its extinction --> the total destruction of the vessel extinguishes a maritime lien as there is no longer any res to which it can attach.
Thre (3) cases where the loss of the vessel extinguishes the liability of the shipowner:

(1) under 587, liability arising from the conduct of the captain in the vigilance of the goods and for the safety of the passengers and for any liability arising from the negligent or illicit acts of the captain for which the shipowner or ship agent may be held liable

(2) under 643, liability for the wages of the captain and the crew and for advances made by the shipagent if the vessel is lost by shipwreck or capture

(3) under 837, liability for collision

Exceptions:

(1) Doctrine does not apply where shipowner is at fault : the doctrine is premised on the condition that the death or injury to the passenger occurred by reason of the fault or negligence of the captain only

(2) Doctrine does not apply in cases of Workmen's Compensation --> such compensation has nothing to do with maritime commerce; it is an item in the cost of production which must be included in the budget of any well-managed industry

(3) Total destruction of the vessel does not affect the liability of the owner for repairs on the vessel completed before its loss --> owners of a vessel are liable for necessary repairs; its liability for repairs remains unaffected by the loss of the thing

Reason for limited liability: This doctrine had its origin when maritime trade and sea voyage was attended by innumerable hazards and perils --> to offset against these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, eqpt. and freight or insurance, if any
Limited liability is evidence of the real and hypothecary nature of maritime law:

(1) limitation of liability to the actual value of the vessel and freight; (2) right to retain the cargo and the embargo and detention of the vessel in cases where the ordinary civil law would not allow more than a personal action against the debtor or personal liable --> the maritime creditor may attach the vessel itself to secure his claim without waiting for a settlement of his rights by a final judgment, even to the prejudice of a third person

Manila Steamship vs Abdulhaman 100 Phil 32
Issue : How is the doctrine of limited liability applied in this case with M/V Consuelo?
Held : The direct liability may be moderated or limited by the shipowner's right to abandon the vessel and earned freight. However, this right of abandonment of vessels, as a legal limitation of a shipowner's liability does not apply to cases where the injury or the average is due to shipowner's fault. Thus, the owner of Consuelo is solidarily liable with Manila Steamship, the former having caused the vessel to sail without licensed officers, for injuries caused by the collision over and beyond the value of the said vessel.

In the application for permission to operate, despite lack of trained crew, Lim Hong To even declared expressly, "that in case of any accident, damage, or loss, I shall assume full risks and responsibility for all consequences, thereof." Hence, Lim cannot escape liability because of the sinking of the vessel. Operating with an unlicensed shipmaster constitutes such negligence as would prevent the shipowner from claiming the benefit of limited liability under Art. 587.

Yangco vs Laserna 73 Phil 330
F: Petitioner Yangco's vessel SS Negros left Romblon for Manila. The captain was duly advised and his attention was called by the passengers that typhoon Signal No. 2 was up. But the boat proceeded to sail after some loading. The boat was overloaded with cargo and passengers (180 instead of only 123). After two weeks of sailing, the sea became too dangerous. The captain ordered that they return to Romblon and while turning, a big wave caught them on the side causing it to capsize. Among the passengers who perished were the relatives of respondents Laserna.

In the separate civil action for damages for the death of the passengers, the CFI held Yangco liable for a total of P3,180. After the rendition of the judgment, Yangco sought to abandon the vessel to plaintiffs/respondents with all its equipments. Abandonment was denied. The CA affirmed the judgment.

Held : Art. 587 accords a shipowner or agent the right of abandonment; and by necessary implication, his liability is confined to that which he is entitled as of right to abandon -- the vessel with all her equipments and the freight it may have earned during the voyage. In other words, such liability is limited to the value of the vessel and other things appertaining thereto such that a total loss thereof results in its extinction. Although the article appears to deal only with the limited liability of shipowners or agents for damages arising from the misconduct of the captain in the care of the goods which the vessel carries, this is a mere deficiency of language and in no way indicates the true extent of such liability, to wit, the benefit of limited liability applies in all cases (as regards both goods and passengers of the vessel) wherein the shipowner or agent may properly be held for the negligent or illicit acts of the captain.

The reason for the limited liability is the real and hypothecary nature of maritime law as distinguished from civil law and mercantile law in general. As evidence of this real nature, we have (1) the limitation of the liability of the agents to the actual value of the vessel and the freight money and (2) the right of the maritime creditor to retain the cargo, and the embargo and detention of the vessel in cases where the ordinary civil law would not allow more than a personal action against the debtor or person liable. Thus, even assuming that Yangco is liable for breach of contract because his relationship to the passengers rests on a contract of carriage, the exclusively real and hypothecary nature of maritime law still operates to limit his liability to the value of the vessel or to the insurance thereon, if any. In this case, the vessel was not insured. Whether the abandonment of the vessel sought by the petitioner in instant case was in accordance with law or not, is immaterial. The vessel having totally perished, any act of abandonment would be an idle ceremony. Petitioner is absolved from all complaints.

Abueg vs San Diego 77 Phil 730
F: Bartolome San Diego was the owner of 2 motorships, San Diego II and Bartolome S. Dionisia Abueg is the widow of Amado Nunez, who was a machinist on board the M/S San Diego II. Marciana de Salvacion is the widow of Victoriano Salvacion, who was a machinist on board the M/S Bartolome S. Rosario Oching is the widow of Francisco Oching, who was the captain of the M/S Bartolome S. The 2 ships, while engaged in fishing operations around Mindoro Island on October 1941, were caught by a typhoon as a consequence of which they were sunk and totally lost. Nunez, Salvacion and Oching while acting in their capacities perished in the shipwreck. The vessels were not covered by any insurance. The widows were awarded compensation under the Workmen's Compensation Act by the CFI.
Held : The real and hypothecary nature of the liability of the shipowner or agent embodied in the provisions of the Maritime Law, had 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, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or insurance, if any, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was extinguished.

The provisions of the Code of Commerce regarding maritime commerce have no room in the application of the Workmen's Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers and EEs. Said Act creates a liability to compensate EEs 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 EEs in the event of death caused by their employment.

The officers of motor ships engaged in fishing are industrial EEs and are entitled to the benefits of the Workmen's Compensation Act. If an accident is compensable under the WCA, it must be compensated even when the workman's right is not recognized by or is in conflict with other provisions of the Civil Code or Code of Commerce. The reason is that the WCA was enacted in abrogation of existing laws.

Heirs of Amparo de los Santos vs CA 186 SCRA 649
F: M/V Mindoro owned by Compania Maritima sailed from Manila bound for New Washington, Aklan. Said vessel met typhoon Welming on the Sibuyan Sea, causing the death of many of its passengers, although about 136 survived. Mauricio de los Santos declared that he, his wife and 4 children were aboard the boat together with their household utensils valued at P 1,000, with the intention of living in Aklan permanently. His wife and his children were among the casualties. The Board of Marine Inquiry found that the captain and some officers of the crew were negligent in operating the vessel and imposed upon them a suspension and/or revocation of their license certificates. This decision could not be executed against the captain who perished with the vessel. The shipowner alleged that no negligence was ever established and in fact they took all the necessary precautions in operating the vessel. Furthermore, the loss of lives as a result of the drowning of some passengers, including the relatives of the plaintiffs, was due to force majeure because of the strong typhoon Welming. It also presented the findings of the Board of Marine Inquiry recommending that the captain be exonerated and that the ship was in seaworthy condition. The CFI dismissed the complaint in view of lack of sufficient evidence. The CA ruled that while concurring negligence on the part of the captain is imputable to Maritima, Maritima could not be held liable in damages based on the principle of limited liability of the shipowner or shipagent under Art. 587 of the Code of Commerce.
Held : There is no dispute as to the finding of the captain's negligence. The present controversy centers on the questions of Maritima's negligence and of the application of Art. 587 of the Code of Commerce. Under this provision, a shipowner or agent has the right of abandonment; and by necessary implication, his liability is confined to that which he is entitled as of right to abandon -- the vessel with all her equipments and the freight it may have earned during the voyage. This rule is found necessary to offset against the innumerable hazards and perils of a sea voyage and to encourage shipbuilding and marine commerce. The limited liability doctrine applies not only to the goods but also in all cases like death or injury to passengers wherein the shipowner of agent may properly be held liable for the negligent or illicit acts of the captain. Art. 587 speaks only of situations where the fault or negligence is committed solely by the captain. In cases where the shipowner is likewise to be blamed, Art. 587 does not apply. Such a situation will be covered by the Civil Code provisions on CCs. Owing to the nature of their business and for reasons of public policy, they are required to observe EO diligence.

Maritima's claim that it had no information of typhoon Welming until after the boat was at sea is untenable in light of modern technology which enables it to detect any incoming atmospheric disturbances. In fact, the Weather Bureau issued a total of 17 warnings or advisories of typhoon Welming. In allowing the ship to depart late from Manila despite the typhoon advisories, Maritima displayed lack of foresight and minimum concern for the safety of its passengers taking into account the surrounding circumstances of the case.

While the captain was negligent for overloading the ship, Maritima shares equally in his negligence. M/V Mindoro was cleared for departure at 2 PM by the Bureau of Customs and the Coast Guard but its departure was delayed for 4 hours. Maritima could not account for the delay because it neither checked from the captain the reasons behind the delay. It was due to this interim that there is great probability that unmanifested cargo and passengers were loaded.

Maritima presented evidence of the seaworthy condition of the ship prior to its departure, including the installation of life saving equipment and other navigational instruments. But it could not present evidence that it specifically installed a radar which could have allowed the vessel to navigate safely for shelter during the storm. An important device such as the radar could have enabled the ship to pass through the river and to safety.

Maritima's lack of EO diligence coupled with the negligence of the captain were the proximate causes of the sinking of M/V Mindoro. Maritima is liable for the deaths and injury of the victims. It was ordered to pay death indemnities to the heirs of the victims, moral damages, actual damages and attorney's fees.

(c) Specific rights and prerogatives

Art. 575.