SIMPLE OR PARTICULAR

DEFINITIONS - ARTICLE 809

WHAT ARE SIMPLE OR PARTICULAR AVERAGES?

Simple of particular averages shall include all the expenses and damages caused to vessel or to her cargo which have not inured to the common benefit and profit of all persons interested in the vessel and her cargo (Article 808). If a damage is not general average, the same can be considered a particular average.

As a general rule, simple or particular averages shall include all the expenses and damages caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the persons interested in the vessel and her cargo, and especially the following:

1. The losses suffered by the cargo from the time of its embarkation until it is unloaded, either on account of inherent defect of the goods or by reason of an accident of the sea or force majeure, and the expenses incurred to avoid and repair the same.

2. The losses and expenses suffered by the vessel in its hull, rigging, arms, and equipment, for the same causes and reasons, from the time it puts to sea from the port of departure until it anchors and lands in the port of destination.

3. The losses suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it.

4. The wages and victuals of the crew when the vessel is detained or embargoed by legitimate order or force majeure, if the charter has been contracted for a fixed sum for the voyage.

5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions.

6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to meet any other need of the vessel, against which the proper amount shall be charged.

7. The victuals and wages of the crew while the vessel is in quarantine.

8. The loss inflicted upon the vessel or cargo by reason of an impact or collision with another, if it is accidental and unavoidable.

If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the losses caused.

9. Any loss suffered by the cargo through the fault, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freightage (Article 809).

(A) EFFECTS - ARTICLE 810

WHO BEARS SIMPLE AND PARTICULAR AVERAGES?

Since simple or particular averages do mot inure to the common benefit, the owner of the goods that suffered the damage bears the loss. Article 810 of the Code of Commerce provides that “the owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular averages.” This rule on simple or particular average is consistent with the maxim res perit domino.

However, under Article 732 of the Code of Commerce, if the vessel or goods are hypothecated by a loan on bottomry or respondentia, the lender shall also bear the loss in proportion to his interest.

(1) GROSS GENERAL

(A) DEFINITIONS - ARTICLES 811, 817,

818

WHAT ARE GENERAL OR GROSS AVERAGES?

As a general rule, general or gross averages shall include all the damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real and known risk, and particularly the following:

1. The goods or cash invested in the redemption of the vessel or of the cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the settlement or redemption is being made.

2. The goods jettisoned to lighten the vessel, whether they belong to the cargo, to the vessel, or to the crew, and the damage suffered through said act by the goods which are kept on board.

3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned, in order to save the cargo, the vessel, or both.

4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place it in condition to enter a port or roadstead, and the damage resulting there from to the goods removed or transferred.

5. The damage suffered by the goods of the cargo by the opening made in the vessel in order to drain it and prevent its sinking.

6. The expenses caused in order to float a vessel intentionally stranded for the purpose of saying it.

7. The damage caused to the vessel which had to be opened, scuttled or broken in order to save the cargo.

8. The expenses for the treatment and subsistence of the members of the crew who may have been wounded or crippled in defending or saying the vessel.

9. The wages of any member of the crew held as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it.

10. The wages and victuals of the crew of a vessel chartered by the month, during the time that it is embargoed or detained by force majeure or by order of the government, or in order to repair the damage caused for the common benefit.

11. The depreciation resulting in the value of the goods sold at arrival under stress in order to repair the vessel by reason of gross average.

12. The expenses of the liquidation of the average.

(B) ESSENTIAL REQUISITES - ARTICLES 813, 814, 860

WHAT ARE THE REQUISITES OF GENERAL AVERAGE?

In A. Magsaysay, Inc. vs. Agan, No. L-6393, January 31, 1955, the Supreme Court adopted the requisites of general averages stated by Senator Tolentino in his commentaries on the Code of Commerce:

1. There must be a common danger;

2. That for the common safety part of the vessel or of the cargo or both is sacrificed deliberately;

3. That from the expenses or damage caused follows the successful saving of the vessel and cargo; and

4. That the expenses or damages should have been incurred or inflicted after taking proper legal steps and authority.

FIRST REQUISITE: COMMON DANGER

The requirement that there must be common means:

1. That both the ship and the cargo, after it has been loaded, are subject to the same danger, whether during the voyage, or in the port of loading or unloading;

2. That the danger arises from the accidents from the sea, dispositions of the authority, or faults of men;

3. That the circumstances producing the peril should be ascertained and imminent or may rationally be said to be certain and imminent (A. Magsaysay, Inc. vs. Agan, supra).SECOND REQUISITE: DELIBERATE SACRIFICE

There must be voluntary sacrifice of a part for the benefit of the whole in order to justify general average. For example, it may involve a voluntary jettison or casting away of some portion of the associated interests for the purpose of avoiding a common peril from the whole to a particular portion of those interests (Compagnie de Commerce vs. Hamburg Amerika, supra). It cannot involve a damage which resulted beyond the contract of the captain and crew without any intention on their part. As a matter of fact, the Code of Commerce prescribes a procedure in deciding whether a sacrifice should be made (See Article 813).

Normally, the sacrifice is made though the jettison of the cargo or part of the ship is thrown overboard during the voyage. However, there can also be general averages even if the sacrifice was not made during the voyage in at least two cases:

1. Where the sinking of a vessel is necessary to extinguish a fire in a port, roadstead, creek or bay; and

2. Where cargo is transferred to lighten the ship on account of a storm to facilitate entry into the port. These cases are covered by Articles 816, 817 and 818.

ARTICLE 816. In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary insofar as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory prepared before the departure in accordance with the first paragraph of Article 812.

ARTICLE 817. If in lightening a vessel on account of a storm, in order to facilitate its entry into a port or roadstead, part of the cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss had originated from a gross average, the amount thereof being distributed between the vessel and cargo from which it came.

If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability may be demanded of the salvage.

ARTICLE 818. If, as a necessary measure to extinguish a fire in a port, roadstead, creek, or bay, it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute.

It should be noted that the loss can no longer be considered a general average if the thing was inevitably lost. Consistently, Rule IV of the York-Antwerp Rules provides that “loss or damage sustained by cutting away wreck or parts of the ship which have been previously carried away or are effectively lost by accident shall not be made good as general average.

THIRD REQUISITE: SACRIFICE MUST BE SUCCESSFUL

NO general contribution can be demanded if the vessel and other cargo that are sought to be saved were in fact not saved. Consistently, Article 860 of the Code of Commerce provides:

ARTICLE 860. If, notwithstanding the jettison of merchandise, breakage of masts, ropes, and equipment, the vessel shall be lost running the same risk, no contribution whatsoever by jettison of gross average shall be proper.

The owners of the goods saved shall not be liable for the indemnification of those jettisoned, lost, or damaged.

For example, goods belonging to Mr. A were sacrificed to save the ship from sinking because of a typhoon. There will be no general average contribution if the ship still sank because of the same typhoon. Hence, the sacrifice was not successful in saving the ship.

However, if the ship was saved from the typhoon, there will be liability for general average contribution even if the vessel will be subsequently lost for some other reason during the voyage. Thus, Article 861 of the Code of Commerce provides:

ARTICLE 861. If, after the vessel has been saved from the risk which gave rise to the jettison, it should be lost through another accident taking place during the voyage, the goods saved and existing from the first risk shall continue liable to contribution by reason of the gross average according to their value in the condition in which they may be found, deducting the expenses incurred in saving them.

FOURTH REQUISITE: COMPLIANCE WITH LEGAL STEPS

The expenses or damages should have been incurred or inflicted after taking proper legal steps and authority under Articles 813 to 815 of the Code of Commerce which provide:

ARTICLE 813. In order to incur the expenses and cause the damages corresponding to gross average, there must be a resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and after hearing the persons interested in the cargo who may be present.

If the latter shall object, and the captain and officers or a majority of them, or the captain, if opposed to the majority, should consider certain measures necessary, they may be executed under his responsibility, without prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they can prove that he acted with malice, lack of skill, or negligence.

If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not contribute to the gross average, their share being chargeable against the captain, unless the urgency of the case should be such that the time necessary for previous deliberations was wanting.

ARTICLE 814. The resolution adopted to cause the damages which constitute general average must necessarily be entered in the log book, stating the motives and reasons for the dissent, should there

be any, and the irresistible and urgent causes which impelled the captain if he acted of his own accord.

In the first case the minutes shall be signed by all the persons present who could do so before taking action, if possible; and if not, at the first opportunity. In the second case, it shall be signed by the captain and by the officers of the vessel.

In the minutes, and after the resolution, shall be stated in detail all the goods jettisoned, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these minutes to the maritime judicial authority of the first port he may make, within twenty-four hours after his arrival, and to ratify it immediately under oath.

ARTICLE 815. The captain shall direct the jettison, and shall order the goods cast overboard in the following order:

1. Those which are on deck, beginning with those which embarrass the maneuver or damage of the vessel, preferring, if possible, the heaviest ones with the least utility and value.

2. Those which are below the upper deck, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable.

(C) EFFECTS - ARTICLE 812

WHO BEARS THE GROSS OR GENERAL AVERAGE?

Gross or general average shall be borne by those who benefited from the sacrifice. These include the ship owner and the owners of the cargoes that were saved. Contribution may also be imposed on the insurers of the vessel or cargoes that were saved as well as lenders on bottomry or respondetia (Articles 732 and 859).

ARTICLE 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute.

(D) JETTISON - ARTICLES 815, 816

HOW SHALL JETTISON BE MADE?

ARTICLE 815. The captain shall direct the jettison, and shall order the goods cast overboard in the following order:

1. Those which are on deck, beginning with those which embarrass the maneuver or damage of the vessel, preferring, if possible, the heaviest ones with the least utility and value.

2. Those which are below the upper deck, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable.

ARTICLE 816. In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary insofar as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory prepared before the departure in accordance with the first paragraph of Article 812.

(E) JASON CLAUSES (SEE YORK-ANTWERP RULES, RULE D)

Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure, but this shall not prejudice any remedies which may be open against that party for such fault.

Although the Code of Commerce provisions on averages are still in force, the parties may, by stipulation in the charter party or any written agreement, agree that the York-Antwerp Rules shall be applied. In addition, the York-Antwerp Rules may also be used to solve controversies where no provision in the Code of Commerce is in point because the said rules embody the custom of maritime states. Jason clause is a standard provision in maritime commerce. It provides for uniform rules on adjustment of averages in maritime accidents to address the varied systems of determining the same.

(B) PROOF AND LIQUIDATION OF AVERAGES

(1) MODES - ARTICLES 846, 847, 848

ARTICLE 846. Those interested in the proof and liquidation of averages may mutually agree and bind themselves at any time with regard to the liability, liquidation, and payment thereof. cdt

In the absence of agreements, the following rules shall be observed:

1. The proof of the average shall take place in the port where the repairs are made, should any be necessary, or in the port of unloading.

2. The liquidation shall be made in the port of unloading, if it is a Philippine port.

3. If the average occurred outside of the jurisdictional waters of the Philippines, or the cargo has been sold in a foreign port by reason of an arrival under stress, the liquidation shall be made in the port of arrival.

4. If the average has occurred near the port of destination, so that said port can be made, the proceedings mentioned in Rules 1 and 2 shall be held there.

ARTICLE 847. In the case where the liquidation of the averages is made privately by virtue of agreement, as well as when a judicial authority intervened at the request of any of the parties interested who do not agree thereto, all of them shall be cited, and heard, should they not have renounced this right.

Should they not be present or should the have no legal representative, the liquidation shall be made by the Consul in a foreign port, and where there is none, by the competent judge or court, according to the laws of the country and for the account of the proper party.

When the representative is a person well known in the place where the liquidation is made, his intervention shall be admitted and shall produce legal effects, even though he be authorized only by a letter of the ship agent, the shipper, or the insurer.

ARTICLE 848. Claims for averages shall not be admitted if they do not exceed 5 per cent of the interest which the claimant may have in the vessel or in the cargo if it be gross average and 1 per cent of the goods damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an agreement to the country.

(2) APPRAISAL OF GENERAL AVERAGE - ARTICLES 855; 857

ARTICLE 855. The merchandise loaded on the upper deck of the vessel shall contribute to the gross average should they be saved; but there shall be no right to indemnity if they should be lost by reason of having been jettisoned for common safety, except when the marine ordinances allow their shipment in this manner in coastwise navigation.

The same shall take place with that which is on board and is not included in the bills of lading or inventories, according to the cases.

In any case the shipowner and the captain shall be liable to the shippers for the damages from the jettison, if the storage on the upper deck was made without the consent of the latter.

ARTICLE 857. After the appraisement of the goods saved and of those lost which constitute the gross average, has been concluded by the experts, the repairs, if any, made on the vessel, and in this case, the accounts of the same approved by the persons interested or by the judge or court, the entire record shall be turn over to the liquidator appointed, in order that he may proceed with the distribution of the average.

(3) LIQUIDATION OF GENERAL AVERAGE - ARTICLES 858, 865 TO 869

ARTICLE 858. In order to effect the liquidation, the liquidator shall examine the protest of the captain, comparing it, if necessary, with the log book, and all the contracts which may have been made among the persons interested in the average, the appraisements, expert examinations, and accounts of repairs made. If, as a result of this examination, he should find any defect in the procedure which might injure the rights of the person interested or affect the liability of the captain, he shall call attention thereof in order that it may be corrected, if possible, and otherwise he shall include it in the exordial of the liquidation.

Immediately thereafter he shall proceed with the distribution of the amount of the average, for which purpose he shall fix:

1. The contributing capital, which he shall determine by the value of the cargo, in accordance with the rules established in Article 854.

2. That of the vessel in her actual condition, according to the statement of experts.

3. The 50 per cent of the amount of the freightage, deducting the remaining 50 per cent for wages and maintenance of the crew.

After the amount of the gross average has been determined in accordance with the provisions of this Code, it shall be distributed pro rata among the goods which are to cover the same. cdasia

ARTICLE 865. The distribution of the gross average shall not be final until it has been agreed to, or in the absence thereof, until it has been approved by the judge or court, after an examination of the liquidation and a hearing of the persons interested who may be present or of their representatives.

ARTICLE 866. After the liquidation has been approved, it shall be the duty of the captain to collect the amount of the contributions, and he shall be liable to the owners of the goods averaged for the damages they may suffer through his delay or negligence.

ARTICLE 867. If the person contributing should not pay the amount of the contribution at the end of the third day after having been required to do so, the goods saved shall be proceeded against, in the

request of the captain, until payment has been made from their proceeds.

ARTICLE 868. If the person interested in receiving the goods saved should not give security sufficient to answer for the amount corresponding to the gross average, the captain may defer the delivery thereof until payment has been made. aisadc

(4) LIQUIDATION OF PARTICULAR AVERAGE - ARTICLE 869

ARTICLE 869. The experts whom the court or the person interested may appoint, as the case may be, shall proceed with the examination and appraisement of the averages in the manner prescribed in Articles 853 and 854, Rules 2 to 7, insofar as they are applicable.

1. ARRIVALS UNDER STRESS

WHAT IS ARRIVAL UNDER STRESS?

A definition of “arrival under stress” can be derived from Article 819 of the Code of Commerce. Under the said provision, “arrival under stress” is the arrival of a vessel at the nearest and most convenient port which was decided upon after determining that there is well-founded fear of seizure, privateers, or pirates or by reason of any accident of the sea disabling it to navigate, or by lack of provisions.

Lack of provision should not be due from the failure to take necessary provisions according to usage and customs.

WHY IS IT IMPORTANT TO DETERMINE WHETHER ARRIVAL IS UNDER STRESS OR NOT?

Because as a general rule, the captain and the ship owner are made liable for deviation from route during the voyage. Arrival under stress is an exception.

(A) CAUSES - ARTICLES 819 AND 820

WHAT ARE THE CAUSES FOR ARRIVAL UNDER STRESS?

ARTICLE 819. If during the voyage the captain should believe that the vessel can not continue the trip to the port of destination on account of the lack of provisions, well-founded fear of seizure, privateers, or pirates, or by reason of any accident of the sea disabling it to navigate, he shall assemble the officers and shall summon the persons interested in the cargo who may be present, and who may attend the meeting without the right to vote; and if, after examining the circumstances of the case, the reason should be considered well-founded, the arrival at the nearest and most convenient port shall be agreed upon, drafting and entering the proper minutes, which shall be signed by all, in the log book.

The captain shall have the deciding vote, and the persons interested in the cargo, may make the objections and protests they may deem proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable.

ARTICLE 820. An arrival shall not be considered lawful in the following cases:

1. If the lack of provisions should arise from the failure to take the necessary provisions for the voyage according to usage and customs, or if they should have been rendered useless or lost through bad stowage or negligence in their care.

2. If the risk of enemies, privateers, or pirates should not have been well known, manifest, and based on positive and provable facts.

3. If the defect of the vessel should have arisen from the fact that it was not repaired, rigged, equipped, and prepared in a manner suitable for the voyage, or from some erroneous order of the captain.

4. When malice, negligence, want of foresight, or lack of skill on the part of the captain exists in the act causing the damage.

(B) FORMALITIES - ARTICLES 819, 822

WHAT FORMALITIES MUST BE OBSERVED IN ARRIVAL UNDER STRESS?

ARTICLE 819. If during the voyage the captain should believe that the vessel can not continue the trip to the port of destination on account of the lack of provisions, well-founded fear of seizure, privateers, or pirates, or by reason of any accident of the sea disabling it to navigate, he shall assemble the officers and shall summon the persons interested in the cargo who may be present, and who may attend the meeting without the right to vote; and if, after examining the circumstances of the case, the reason should be considered well-founded, the arrival at the nearest and most convenient port shall be agreed upon, drafting and entering the proper minutes, which shall be signed by all, in the log book.

The captain shall have the deciding vote, and the persons interested in the cargo, may make the objections and protests they may deem proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable.

ARTICLE 822. If in order to make repairs to the vessel or because there is danger that the cargo may suffer damage, it should be necessary to unload, the captain must request authorization from the competent judge or court for the removal, and carry it out with the knowledge of the person interested in the cargo, or his representative, should there be any.

In a foreign port, it shall be the duty, of the Philippine Consul, where there is one, to give the authorization.

In the first case, the expenses shall be for the account of the ship agent or owner, and in the second, they shall be chargeable against the owners of the merchandise for whose benefit the act was performed.

If the unloading should take place for both reasons, the expenses shall be divided proportionately between the value of the vessel and that of the cargo.

(C) EXPENSE - ARTICLES 821, 822

ARTICLE 821. The expenses of an arrival under stress shall always be for the account of the shipowner or agent, but they shall not be liable for the damages which may be caused the shippers by reason of the arrival provided the latter is legitimate.

Otherwise, the ship agent and the captain shall be jointly liable.

ARTICLE 822. If in order to make repairs to the vessel or because there is danger that the cargo may suffer damage, it should be necessary to unload, the captain must request authorization from the competent judge or court for the removal, and carry it out with the knowledge of the person interested in the cargo, or his representative, should there be any.

In a foreign port, it shall be the duty, of the Philippine Consul, where there is one, to give the authorization.

In the first case, the expenses shall be for the account of the ship agent or owner, and in the second, they shall be chargeable against the owners of the merchandise for whose benefit the act was performed.

If the unloading should take place for both reasons, the expenses shall be divided proportionately between the value of the vessel and that of the cargo.

(D) RESPONSIBILITY OF CAPTAIN - ARTICLES 823 – 825

WHAT ARE RESPONSIBILITES OF THE CAPTAIN IN CASE OF ARRIVAL UNDER STRESS?

ARTICLE 823. The custody and preservation of the cargo which has been unloaded shall be intrusted to the captain, who shall be responsible for the same, except in cases of force majeure.

ARTICLE 824. If the entire cargo or part thereof should appear to be damaged, or there should be imminent danger of its being damaged, the captain may request of the competent judge or court, or of the consul in a proper case, the sale of all or of part of the former, and the person taking cognizance of the matter shall authorize it, after an examination and declaration of experts, advertisements, and other formalities required by the case, and an entry in the book, in accordance with the provisions of Article 624.

The captain shall, in a proper case, justify the legality of his conduct, under the penalty of answering to the shipper for the price the merchandise would have brought if they had arrived in good condition at the port of destination.

ARTICLE 825. The captain shall be responsible for the damages caused by his delay, if after the cause of the arrival under stress has ceased, he should not continue the voyage.

If the cause of arrival should have been the fear of enemies, privateers, or pirates, a deliberation and resolution in a meeting of the officers of the vessel and persons interested in the cargo who may be present, in accordance with the provisions contained in Article 819, shall precede the departure.

2. COLLISIONS

DEFINE COLLISION.

Collision is defined as an impact or sudden contact of a moving body with an obstruction in its line of motion, whether both bodies are in motion or one stationary and the other, no matter which, in motion.

As applied to maritime commerce, collision is therefore an impact or sudden contact of a vessel with another whether both are in motion or stationary.

Strictly speaking, collision refers to the contact of two moving vessels. If one vessel is moving while the other is stationary, the same is more appropriately called “allision”. Nevertheless, for purposes of applying the provisions of the Code of Commerce, collision includes collision per se and allision.

WHAT ARE THE 3 ZONES IN COLLISION?

In collision of vessels, there exists 3 DIVISION OF TIME or ZONES:

(A) FIRST DIVISION – covers all the time up to the moment when the risk of collision may be said to have begun. Within this time zone, no rule is applicable because none is necessary. Each vessel

is free to direct its course as it deems best without reference to the movement of the other vessel.

(B) SECOND DIVISION – covers the time between the moment when the risk of collision begins and the moment when it has become a practical certainty. The burden is on the vessel required to keep away and avoid the danger

(C) THIRD DIVISION – covers the time between the moment of actual contact. This is the period where error in extremis may occur, and the rule is that the vessel which has forced the privileged vessel into danger is responsible even if sthe privileged vessel committed an error within that zone (A. Urrutia & Co. vs. Baco River Plantation, Co., No. 7675, March 25, 1913).

WHAT IS ERROR IN EXTREMIS?

Where a navigator, suddenly realizing that a collision is imminent by no fault of his own, in confusion and excitement of the moment does something which contributes to the collision or omits to do something by which the collision might be avoided, such act or omission is ordinarily considered in extremis and the ordinary rules of strict accountability do not apply.

Thus, when it was during the time when the said vessel was passing through the third zone that it changed its course to port in order to avoid, if possible, the collision, the act may be said to have been done in extremis, and even if wrong, the sailing vessel is not responsible for the result.

(A) CLASSES AND EFFECTS

WHAT ARE THE CLASSES OF COLLISION?

a. Fortuitousb. Culpablec. Inscrutable

A) FORTUITOUS - ARTICLES 830, 832

WHO BEARS THE DAMAGE IN CASE THE COLLISION IS THROUGH A FORTUITOUS EVENT?

If a vessel should collide with another, through fortuitous event or force majeure, each vessel and its cargo shall bear its own damages (Article 830).

WHAT KIND OF AVERAGE IS A DAMAGE CAUSED BY A COLLISION DUE TO A STORM OR FORCE MAJEURE?

If by reason of a storm or other cause of force majeure, a vessel which is properly anchored and moored should collide with those nearby, causing them damages, the injury occasioned shall be considered as particular average of the vessel run into (Article 832).

B) CULPABLE - ARTICLES 826, 827 AND 831

IF A VESSEL SHOULD BE FORCED BY A THIRD VESSEL TO COLLIDE WITH ANOTHER, WHAT IS THE RESPONSIBILITY OF THE THIRD VESSEL?

If a vessel should be forced by a third vessel to collide with another, the owner of the third vessel shall indemnify the losses and damages caused, the captain thereof being civilly liable to said owner (Article 831).

WHO BEARS THE DAMAGE IN CASE A VESSEL SHOULD COLLIDE WITH ANOTHER, THROUGH THE FAULT, NEGLIGENCE, OR WANT OF SKILL OF THE CAPTAIN, SAILING MATE, OR ANY OTHER MEMBER OF THE COMPLEMENT?

If a vessel should collide with another, through or the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the complement, the owner of the vessel at fault shall indemnify the

losses and damages suffered, after an expert appraisal (Article 826).

WHO SHALL BEAR THE DAMAGE IN CASE THE COLLISION IS IMPUTABLE TO BOTH VESSELS?

If the collision is imputable to both vessels, each one shall suffer its own damages, and both shall be solidarily responsible for the losses and damages occasioned to their cargoes (Article 827).

NAUTICAL RULES IN DETERMINING WHETHER COLLISION IS FORTUITOUS OR DUE TO THE NEGLIGENCE OF THE CAPTAIN:

When two vessels collide while entering the port, the latter vessel is presumed to be at fault.

Smaller vessels should give right of way to large vessels.

Vessels leaving the port should leave the way clear for another which may be entering the same port.

There is a presumption against the vessel which sets sail in the night.

In case of collision between sailing vessel and a steamship, the latter is presumed to be at fault.

Steam vessels towing have a right of way over steam vessels not towing

C) INSCRUTABLE FAULT - ARTICLE 828

WHAT IS THE DOCTRINE OF “INSCRUTABLE FAULT”?

The doctrine of “inscrutable fault” means that the court can see that a fault has been committed, but is unable, from the conflict of testimony, or otherwise to locate it. Hence, when it is impossible to determine to what direct and specific acts the collision is attributable, it is a case of damage arising from a cause that is inscrutable.

WHO SHALL BEAR THE DAMAGE IN CASE IT CANNOT BE DETERMINED WHICH IF THE TWO VESSELS CAUSED THE COLLISION?

The provisions of the preceding article are applicable to the use in which it cannot be determined which of the two vessels has caused the collision (Article 828). This is an extension of Article 827, which applies when (a) both vessels are shown to be blameworthy; or (b) there is no proof as to which vessel was at fault. There is solidary liability of the vessels, despite the fact that one vessel is more negligent than the other.

IS THE DOCTRINE OF LAST CLEAR CHANCE APPLICABLE IN THIS CASE?

The doctrine of last clear chance is not applicable in this case where both vessels are blameworthy.

SUMMARY:

1. FORTUITOUS:

Vessels collide with each other through fortuitous event or force majeure – each vessel and each cargo bears its own damage.

A vessel which is properly anchored and moored may collide with those nearby by reason of storm or force majeure – vessel run into suffers its own damage.

2. CULPABLE:

Collision due to fault, negligence or lack of skill of the captain, sailing mate, or any other member of the complement – owner of the vessel at fault is liable for the losses and damages.

Collision due to the fault of both vessels – each vessel suffers its own loss; and both owners shall be jointly and severally liable for loss or damage to cargoes.

Two vessels collide with each other without their fault but by reason of the fault if a third vessel – owner of the third vessel is liable.

3. INSCRUTABLE:

Where it cannot be determined which of the two vessels is at fault – each of the vessel suffers its own loss and both shall be solidarily liable for losses and damages to their cargoes.

(b) PRESUMPTION OF LOSS BY COLLISION - ARTICLE 833

WHEN IS LOSS BY COLLISION PRESUMED?

A vessel which, upon being run into, sinks immediately, as well as that which, having been obliged to make a port to repair the damages caused by the collision, is lost during the voyage or is obliged to be stranded in order to be saved, shall be presumed as lost by reason of collision (Article 833).

(C) LIABILITIES

(1) SHIP OWNER OR AGENT - ARTICLES 837, 838

WHAT IS THE LIMIT OF THE LIABILITY OF THE SHIP OWNER IN CASES OF COLLISION?

The civil liability incurred by the shipowners in the case prescribed in this section, shall be understood as limited to the value of the vessel with all its appurtenances and freightage earned during the voyage (Article 837).

WHAT CLAIM SHALL BE PREFERRED WHEN THE VALUE OF THE VESSEL AND HER APPURTENANCES SHOULD NOT BE SUFFICIENT TO COVER ALL LIABILITIES?

When the value of the vessel and her appurtenances should not be sufficient to cover all the liabilities, the indemnity due by reason of the death or injury of persons shall have preference (Article 838).

(2) CAPTAIN, PILOT, OTHERS - ARTICLES 829, 834

WHAT IS THE REMEDY OF THE OWNER AGAINST THE PERSONS CAUSING THE INJURY?

In the cases above mentioned the civil action of the owner against the person causing the injury as well as the criminal liabilities, which may be proper, are reserved (Article 829).

NOTES:

Liability for negligence in the absence of contract is governed by Article 2176 of the Civil Code – the provision on quasi-delict. However, the liabilities of ship owners and ship agents as well as the captain or crew in collision cases is still governed by the provisions of the Code of Commerce on Collision (National Development Company vs. The Court of Appeals, et al., Nos. L-

49407 and L-49469, August 19, 1988, 164 SCRA 593, 603).

Although the liability with respect to collision is not governed by quasi-delict, liability in collision cases are still negligence based. In other words, courts are still called upon to determine the negligence of the persons involved in order to impose liability. The person who caused the injury is both criminally and civilly liable under Article 829 of the Code of Commerce.

In the determination of negligence, the same test of a reasonable man in the position of an expert that applies in quasi-delict should also be applied although with due consideration to the expertise of the persons involved including the carrier itself, the captain, officers and crew of the vessel. Thus, it is still required to determine if a reasonable man with the same expertise would have done what the party in question did under the circumstances. It is still relevant to determine if the collision is sufficiently foreseeable such that a reasonable man with the same expertise could have avoided the impact.

In some respect, however, the rules that apply to quasi-delict cannot be applied in collision case like:

1. The doctrine of the last clear chance

2. The rule on contributory negligence of the other vessel (Article 827)

3. Proof that the plaintiff was negligent will bar recovery from the defendant in collision cases even if the plaintiff’s negligence can be classified as merely contributory (Gorgonio De Sarasola vs. Yu Biao Sontua, G.R. No. 22630, January 31, 1925).

WILL THE PRESENCE OF A PILOT AT THE TIME OF THE COLLISION EXEMPT THE CAPTAIN FROM LIABILITY?

If the vessels colliding with each other should have pilots on board discharging their duties at the time of the collision, their presence shall not exempt the captains from the liabilities they incur, but the latter shall have the right to be indemnified by the pilots, without prejudice to the criminal liability which the latter may incur (Article 834).

(3) Conditions; Protests - Articles 835, 836, 839

What formal requirement must be fulfilled to be able to recover damages caused by collision? What is the effect of failure to comply therewith?

The action for the recovery of losses and damages arising from collisions cannot be admitted if a protest or declaration is not presented within twenty-four hours before the competent authority of the point where the collision took place, or that of the first port of arrival of the vessel, if in Philippine territory, and to the consul of the Republic of the Philippines if it occurred in a foreign country (Article 835).

With respect to damages caused to persons or to the cargo, the absence of protest may not prejudice the persons interested who were not on board or were

not in a condition to make known their wishes (Article 836).

Reason for requiring protest: to prevent fictitious collisions or improper indemnities.

Vessels to which rules on collision apply: Collisions of sea-going vessels; merchant vessels or merchant ships; those run by masters having a special training, with elaborate apparatus of crew and equipment.

Officers to whom protest must be made: Competent authority where the collision took place; or competent authority at first port of arrival, if in Philippine territory, and to consul, if in a foreign port.

What are the instances where protest is required?

1. Vessel making arrival under stress (Article 612)2. Vessel is shipwrecked (Articles 612, 624 and

843) 3. Vessel which has gone through a hurricane or

when the captain believes that the cargo has suffered damages or averages (Article 624)

4. Maritime collisions (Article 835)

What are the instances when protest after a collsion is not necessary?

1. In case the basis of the action is quasi-delict (Lopez vs. Duruelo, 52 Phil. 229).

2. In case of collision of a motor boat engaged in conveying passengers between the ship and the shore, and a larger vessel, since the provision on collision is intended to cover collisions of sea-going vessels (Lopez vs. Duruelo, supra).

3. In case the person interested in the damage was not on board or was not in a condition to make known his wishes (Article 836).

What must the Philippine consul do in case a Philippine vessel should have a collision in foreign waters or open seas?

If the collision should take place between Philippine vessels in foreign waters, or if having taken place in the open seas, and the vessels should make a foreign port, the Consul of the Republic of the Philippines in said port shall hold a summary investigation of the accident, forwarding the proceedings to the Secretary of the Department of Foreign Affairs for continuation and conclusion (Article 839).

3. Shipwrecks, Articles 840 to 843

Define shipwreck.

Shipwreck has been defined as the “demolition or shattering of a vessel caused by her driving ashore or on rocks and shoals in the midseas, or by the violence of winds and waves in tempests”.

Who shall bear the damage suffered by the vessel and her cargo due to shipwreck or stranding?

The losses and deteriorations suffered by a vessel and her cargo by reason of shipwreck or stranding shall be individually for the account of the owners, the part which may be saved belonging to them in the same proportion (Article 840).

What is the liability of the ship captain in case the wreck or stranding of the vessel is caused by malice, negligence or lack of skill of the captian?

The general rule is that the damage due to shipwreck or stranding shall be borne by the respective owners (Article 840), except in case of malice, negligence or lack of skill of the captain, or because the vessel put to sea was insufficiently repaired and equipped, in which case the captain shall be liable for the damage caused to the vessel or the cargo. Thus, Article 841 provides that:

“If the wreck or stranding should be caused by the malice, negligence, or lack of skill of the captain, or because the vessel put to sea was insufficiently repaired and equipped, the ship agent or the shippers may demand indemnity of the captain for the damages caused to the vessel or to the cargo by the accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621 (Article 841).”

Who shall bear the expenses of the salvage?

The goods saved from the wreck shall be specially bound for the payment of the expenses of the respective salvage, and the amount thereof must be paid by the owners of the former before they are delivered to them, and with preference over any other obligation if the merchandise should be sold (Article 842).

In case the shipwreck occurs while the vessel is in a convoy, how should sthe saved cargo be distributed?

If several vessels sail under convoy, and any of them should be wrecked, the cargo saved shall be distributed among the rest in proportion to the amount which each one is able to take.

If any captain should refuse, without sufficient cause, to receive what may correspond to him, the captain of the wrecked vessel shall enter a protest against him, before two sea officials, of the losses and damages resulting therefrom, ratifying the protest within twenty-four hours after arrival at the first port, and including it in the proceedings he must institute in accordance with the provisions contained in Article 612.If it is not possible to transfer to the other vessels the entire cargo of the vessel wrecked, the goods of the highest value and smallest volume shall be saved first, the designation thereof to be made by the captain with the concurrence of the officers of his vessel (Article 843).

(a) Salvage Law (Act No. 2616)

What is salvage and its concept?

In general, salvage may be defined as a service which one person renders to the owner of a ship or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are unable to protect and secure (Erlanger & Galinger vs. Swedish East Asiatic Co., Ltd., 34, Phil. 178 [1916]).

Salvage is founded on the equity of remunerating private and individual services performed in saving, in whole or in part, a ship or its cargo from impending peril, or recovering them after actual loss. It is a compensation for actual services rendered to the property charged with it, and is allowed for meritorious conduct of the salvor, and in consideration of a benefit conferred upon the person whose property he has saved. A claim of salvage rests on the principle that, unless the property is in fact saved by those who claim the compensation, it cannot be allowed, however benevolent their intention and however heroic their conduct (ibid).

What is a derelict?

It is a condition of a ship or her cargo which is abandoned and deserted at sea by those who are in charge of it, without any hope of recovering it, or without any intention of returning it. If those in charge of the property left it with the intention of finally leaving it, it is derelict and the change of their intention and an attempt to return to it will not change its nature.

What are the rights of a finder of a derilict?

The finder who takes possession, with the intention of saving the ship, gains a right of possession over the same, which he can maintain against the true owners. The owner thus abandons temporarily his right of possession, which is transferred to the finder who becomes bound to preserve the property with good faith and bring it to a safe place for the owner’s use; in return, he acquires a right to be paid for his services a reasonable and proper compensation out of the property itself. He is not bound to part with the possession thereof until he is paid or the property is taken into the possession of the law preparatory to the amount of salvage being legally asserted.

What are the kinds of salvage?

1. Voluntary, wherein the compensation is dependent upon success. This is the most ancient class of pure salvage.

2. Rendered upon a contract for a per diem or per horam wage, payable at all events. This is the most common upon the Great Lakes.

3. Under a contract for a compensation payable only in case of success (C.S. Robinson, et al. vs. The Ship “Alta”, et al., No. 3488, August 10, 1907).

When can there be a valid salvage?

1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or shall have been abandoned by them, and picked up and conveyed to a safe place by other persons, the latter shall be entitled to a reward for the salvage. Those who, not being included in the above paragraph, assist in saving a vessel or its cargo from shipwreck, shall be entitled to a like reward (Section 1).

2. If the captain of the vessel, or the person acting in his stead, is present, no one shall take from the sea, or from the shores or coast merchandise or effects proceeding from a shipwreck or proceed to the salvage of the vessel, without the consent of such captain or person acting in his stead (Section 2).

Notes on towage:

A vessel, though not abandoned, may be the subject of a salvage, if at the time the services were rendered, there was a probable, threatening danger to the vessel and its cargo. If the vessel towed is aided in escaping a present or prospective danger, the services is one of salvage and the towage is merely incidental.

Distinction between a salvage and towage is of importance to the crew of the salvaging ship because if the contract is one of towage, the crew does not have any interest or right to the remuneration pursuant to the contract; but if the service rendered is one of salvage, the crew can look to the salvaged vessel for its share.

The towing vessel cannot invoke cannot invoke equity in quasi-contract of towage. There is an express provision of law (Article 2124 NCC) that is applicable to the relationship of quasi-

contract of towage, where the crew is not entitled to compensation separate from that of the vessel.

What are the elements of salvage?

1. There must be a marine peril;2. The service is voluntarily rendered and is not

required as an existing duty or from a special contract; and

3. There must be success in whole or in part or that the service rendered contributed to such success (Barrios vs. Go Thong & Company, No. L-17192, March 30, 1963, 7 SCRA 535);

4. The vessel is shipwrecked beyond the control of the crew or shall have been abandoned (Section 1, Savage Law).

What is the obligation of a person who has saved or picked up a vessel or merchandise at sea in the absence of the captain of the vessel, owner or representative?

He who shall save or pick up a vessel or merchandise at sea, in the absence of the captain of the vessel, owner, or a representative of either of them, they being unknown, shall convey and deliver such vessel or merchandise, as soon as possible, to the Collector of Customs, if the port has a collector, and otherwise to the provincial treasurer or municipal mayor (Section 3).

What is the right and obligation of the owner after the salvage?

After the salvage is accomplished, the owner or his representative shall have a right to the delivery of the vessel or things saved, provided that he pays, or gives a bond to secure, the expenses and the proper reward.

The amount and sufficiency of the bond, in the absence of agreement, shall be determined by the Collector of Customs or by the Judge of the Court of First Instance of the province in which the things saved may be found (Section 4).

If, while the vessel or things saved are at the disposition of the authorities, the owner or his representative shall claim them, such authorities shall order their delivery to such owner or his representative, provided that there is no controversy over their value, and a bond is given by the owner or his representative to secure the payment of the expenses and the proper reward. Otherwise, the delivery shall nor be made until the matter is decided by the Court of First Instance of the province (Section 6).Notes:-The salvor has an interest in the property, a lien, though this is not considered a debt due by the owner to the salvor for the services rendered upon the principle that the service creates a property in the thing being saved. The salvor becomes, for all intents and purposes, a joint owner, and if the property is lost, he must bear his share like the other joint owners.-Where the ship or its cargo is saved together, payment of compensation should be charged against the ship and cargo in the proportion of their respective value, as in the case of general average.

What are the duties of the Collector of Customs, provincial treasurer or municipal mayor after the salvage?

The Collector of Customs, provincial treasurer, or municipal mayor, to whom a salvage is reported, shall order:

1. That the things saved be safeguard and inventoried.

2. The sale at public auction of the things saved which may be in danger of immediate loss or of those whose conservation is evidently prejudicial to the interests of the owner, when no objection is made to such sale.

3. The advertisement within the thirty days subsequent to the salvage, in one of the local newspapers or in the nearest newspaper published, of all the details of the disaster, with a statement of the mark and number of the effects requesting all interested persons to make their claims.

What is the procedure to be followed if there is no claim over the salvaged goods?

No claim being presented in the three months subsequent to the publication of the advertisement prescribed in sub-section (c) of Section five, the things save shall be sold at public auction, and their proceeds, after deducting the expenses and the proper reward shall be deposited in the insular treasury. If three years shall pass without anyone claiming it, one-half of the deposit shall be adjudged to him who saved the things, and the other half to the insular government (Section 7).

Who are the persons who have no right to a reward for a salvage?

The following shall have no right to a reward for salvage or assistance:

1. The crew of the vessel shipwrecked or which was is danger of shipwreck;

2. He who shall have commenced the salvage in spite of opposition of the captain or his representative; and

3. He who shall have failed to comply with the provisions of Section three (Section 8).

What are the rules as to reward?

1. If, during the danger, an agreement is entered into concerning the amount of the reward for salvage or assistance, its validity may be impugned because it is excessive, and it may be required to be reduced to an amount proportionate to the circumstances (Section 9).

2. In a case coming under the last preceding section, as well as in the absence of an agreement, the reward for salvage or assistance shall be fixed by the Court of First Instance of the province where the things salvaged are found, taking into account principally the expenditures made to recover or save the vessel or the cargo or both, the zeal demonstrated, the time employed, the services rendered, the excessive express occasioned the number of persons who aided, the danger to which they and their vessels were exposed as well as that which menaced the things recovered or salvaged, and the value of such things after deducting the expenses (Section 10).

3. From the proceeds of the sale of the things saved shall be deducted, first, the expenses of their custody, conservation, advertisement, and auction, as well as whatever taxes or duties they should pay for their entrance; then there shall be deducted the expenses of salvage; and from the net amount remaining shall be taken the reward for the salvage or assistance which shall not exceed fifty per cent of such amount remaining (Section 11).

4. If in the salvage or in the rendering of assistance different persons shall have intervened the reward shall be divided between them in proportion to the services which each one may have rendered, and, in case of doubt, in equal parts. Those who, in

order to save persons, shall have been exposed to the same dangers shall also have a right to participation in the reward (Section 12).

5. If a vessel or its cargo shall have been assisted or saved, entirely or partially, by another vessel, the reward for salvage or for assistance shall be divided between the owner, the captain, and the remainder of the crew of the latter vessel, so as to give the owner a half, the captain a fourth, and all the remainder of the crew the other fourth of the reward, in proportion to their respective salaries, in the absence of an agreement to the contrary. The express of salvage, as well as the reward for salvage or assistance, shall be a charge on the things salvaged on their value (Section 13).