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d) when in good faith, for the purpose of saving human life, or relieving another vessel in distress. (Sec. 124,Insurance Code)
Average; Particular Average vs. General Average (2003)
M/V Ilog de Manila with a cargo of 500 tons of iron ore left the Port of Zamboanga City bound for Manila. For one reason or Carriage of Goods; Exercise Extraordinary Diligence(2005)
another, M/V Ilog de Manila hit a submerged obstacle causing it to sink along with its cargo. A salvor, Salvador, Inc., was Star Shipping Lines accepted 100 cartons of sardines from Master to be delivered to 555 Company in Manila. Only 88 cartons
contracted to refloat the vessel for P1 Million. were delivered, however, these were in bad condition. 555 Company claimed from Star Shipping Lines the value of the missing
What kind of average was the refloating fee of P1 million, and for whose account should it be? Why? (4%) goods, as well as the damaged goods. Star Shipping Lines refused because the former failed to present a bill of
SUGGESTED ANSWER: lading. Resolve with reasons the claim of 555 Company. (4%)
Particular Average. The owner of the vessel shall shoulder the average. Generally speaking, simple or particular averages SUGGESTED ANSWER:
include all expenses and damages caused to the vessel or cargo which have not inured to the common benefit (Art. 809, and The claim of 555 Company is meritorious, even if it fails to present a bill of lading. Although a bill of lading is the best evidence
are, therefore, to be borne only by the owner of the property which gave rise to the same (Art. 810) while general or gross of the contract of carriage for cargo, nevertheless such contract can exist even without a bill of lading. Like any other contract,
averages include "all the damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both a contract of carriage is a meeting of minds that gives rise to an obligation on the part of the carrier to transport the goods.
at the same time, from a real and known risk"(Art. 811). Being for the common benefit, gross averages are to be borne by the Jurisprudence has held that the moment the carrier receives the cargo for transport, then its duty to exercise extraordinary
owners of the articles saved (Art.812). In the present case there is no proof that the vessel had to be put afloat to save it from diligence arises
an imminent danger. . (Cia. Maritima v. Insurance Co. of North America,G.R. No. L-18965, October 30, 1964; Negre v. Cabahug Shipping &Co.,
G.R. No. L-19609, April 29, 1966)
ALTERNATIVE ANSWER:
Bottomry (1994) Star Shipping Lines can refuse to honor 555 Company's claim for the missing and damaged goods. The Bill of Lading is the
Gigi obtained a loan from Jojo Corporation, payable in installments. Gigi executed a chattel mortgage in favor document of title that legally establishes the ownership of 555 Company over said goods. 555 needs to present the Bill of
of Jojo whereby she transferred in favor of Jojo, its successors and assigns, all her title, rights ... to a vessel of which Gigi is Lading to legally claim said goods.
the absolute owner. The chattel mortgage was registered with the Philippine Coast Guard pursuant to PD 1521. Gigi defaulted (National Union Fire Insurance of Pittsburg v. Stolt-Nielaen, G.R. No.87958, April 26, 1990)
and had a total accountability of P3M. But Jojo could not foreclose the mortgage on the vessel because it sank during a
typhoon. Meanwhile, Lutang Corporation which rendered salvage services for refloating the vessel sued
Gigi. Whose lien should be given preference, that of Jojo orLutang? Charter Party (1991)
SUGGESTED ANSWER: The Saad Dev Co enters into a voyage charter with XYZ over the latters vessel, the MV Lady Love. Before the Saad could
Lutang Corporations lien should be given preference. The lien of Jojo by virtue of a loan of bottomry was extinguished when load it, XYZ sold Lady Love to Oslob Maritime Co which decided to load it for its own account.
the vessel sank. Under such loan on bottomry Jojo acted not only as creditor but also as insurer. Jojos right to recover the a) May XYZ Shipping Co validly ask for the rescission of the charter party? If so, can Saad recover damages? To what
amount of the loan is predicated on the safe arrival of the vessel at the port of destination. The right was lost when the vessel extent?
sank (Sec17 PD 1521) b) If Oslob did not load it for its own account, is it bound by the charter party?
c) Explain the meaning of owner pro hac vice of the vessel. In what kind of charter party does this obtain?
SUGGESTED ANSWER:
Carriage of Goods: Deviation: Liability (2005) a) XYZ may ask for the rescission of the charter party if,as in this case, it sold the vessel before the charterer has begun to
On a clear weather, M/V Sundo, carrying insured cargo, left the port of Manila bound for Cebu. While at sea, load the vessel and the purchaser loads it for his own account. Saad may recover damages to the extent of its losses (Art 689
the vessel encountered a strong typhoon forcing the captain to steer the vessel to the nearest island where it stayed for seven Code of Commerce)
days. The vessel ran out of provisions for its passengers. Consequently, the vessel proceeded to Leyte to replenish its b) If Oslob did not load Lady Love for its own account, it would be bound by the charter party, but XYZ would have to indemnify
supplies. Assuming that the cargo was damaged because of suchdeviation, who between the insurance company and the Oslob if it was not informed of the Charter Party at the time of sale. (Art 689 Code of Commerce)
owner of the cargo bears the loss? Explain. c) The term Owner Pro Hac Vice of the Vessel, is generally understood to be the charterer of the vessel in the case of
SUGGESTED ANSWER: bareboat or demise charter
The insurance company should bear the loss to the cargo because the deviation of the vessel was proper in order to avoid a (Litonjua Shipping Cov National Seamens Board GR 51910 10Aug1989)
peril, which was the strong typhoon. The running out of provisions was a direct consequence of the proper deviation in order to
avoid the peril of the typhoon.
ALTERNATIVE ANSWER: Charter Party (2004)
The owner of the cargo bears the loss because in the case at bar, they stayed too long at the island, making it an improper Under a charter party, XXO Trading Company shipped sugar to Coca-Cola Company through SS Negros Shipping Corp.,
deviation. Every deviation not specified in Sec.124 is improper. (Sec. 125, Insurance Code) insured by Capitol Insurance Company. The cargo arrived but with shortages. Coca-Cola demanded from Capitol Insurance
Co. P500.000 in settlement for XXO Trading. The MM Regional Trial Court, where the civil suit was filed, "absolved the
insurance company, declaring that under the Code of Commerce, the shipping agent is civilly liable for damages in favor of
Carriage of Goods; Deviation; When Proper (2005) third persons due to the conduct of the carrier's captain, and the stipulation in the charter party exempting the owner from
Under what circumstances can a vessel properly proceed to a port other than its port of destination? Explain. (4%) liability is not against public policy. Coca-Cola appealed. Will its appeal prosper? Reason briefly. (5%)
SUGGESTED ANSWER: SUGGESTED ANSWER:
Deviation is proper: a) when caused by circumstances over which neither the master nor the owner of the ship has any No. The appeal of Coca-Cola will not prosper. Under Article 587 of the Code of Commerce, the shipping agent is civilly liable
control; b) when necessary to comply with a warranty or avoid a peril, whether or not the peril is insured against; for damages in favor of third persons due to the conduct of the carrier's captain, and the shipping agent can exempt himself
c) when made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril; or therefrom only by abandoning the vessel with all his equipment and the freight he may have earned during the voyage. On the
other hand assuming there is bareboat charter, the stipulation in the charter party exempting the owner from liability is not COGSA; Prescriptive Period (1995)
against public policy because the public at large is not involved (Home Insurance Co. v. American Steamship Agencies, Inc.,23 What is the prescriptive period for actions involving lost or damaged cargo under the Carriage of Goods by Sea Act?
SCRA25 (1968). SUGGESTED ANSWER:
ONE YEAR after the delivery of the goods or the date when the goods should have been delivered (Sec 3(6),COGSA)