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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
The shipowner and the 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 creditor proves that the amount claimed was invested for the benefit of the same. (Article 586, Civil Code)
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 equipment and the freightage he may have earned during the voyage. (Article 587, Civil Code)
In cases of collision, the civil liability incurred by the shipowners in the cases 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, Civil Code)
The Civil Code provides for the liability of shipowners and ship agents, to wit:
The shipowner and the 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 creditor proves that the amount claimed was invested for the benefit of the same. (Article 586, Civil Code)
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 equipment and the freightage he may have earned during the voyage. (Article 587, Civil Code)
In cases of collision, the civil liability incurred by the shipowners in the cases 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, Civil Code)
Jurisprudence says:
The limited liability rule, also known as the real or hypothecary nature of maritime law, simply means that the liability of the carrier in connection with losses related to maritime contract is limited to his interest in the vessel which is hypothecated for such obligations or which stands as the guaranty for their settlement. (Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, G.R. No. 100446, January 21, 1993)
What is the reason behind the Limited Liability Rule?
The Limited Liability Rule has its origin by reason of the conditions and risks attending maritime trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to go through largely uncharted waters to ply their trade. It was designed to offset such adverse conditions and to encourage people and entities to venture into maritime commerce despite the risks and the prohibitive cost of shipbuilding. (Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Id.)
Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance, if any, which limitation served to induce capitalists into effectively wagering their resources against the consideration of the large profits attainable in the trade. (Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Id.)
In a bareboat or demise charter, who pays for the wage of seamen and laborers on board the vessel?
In a demise or bareboat charter, the charterer is treated as the owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the master of the vessel is the agent of the charterer and not the shipowner. The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage, including wages of seamen. (Litonjua Shipping Company v. National Seamen Board, G.R. No. L-51910, August 10, 1989)
In case of injury received or inflicted upon employees and laborers while engaged in the performance of their work in a ship or vessel, can the employer invoke the Limited Liability Rule?
The Supreme Court ruled NO. In the case of Philippine Nippon Kyoei v. Rosalia Gudelosao (G.R. No. 181375, July 13, 2016), citing the case of Abueg v. San Diego (77 Phil. 730, 1946), the limited liability rule under the Civil Code is inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and dependents, in cases of injury received by or inflicted upon them while engaged in the performance of their work or employment, to wit:
[The] provisions of the Code of Commerce invoked by appellant 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 employees. It is not the liability for the damage or loss of the cargo or injury to, or death of, a passenger by or through the misconduct of the captain or master of the ship; nor the liability for the loss of the ship as a result of collision; nor the responsibility for wages of the crew, but a liability created by a statute to compensate employees 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 employees in the event of death caused by their employment. Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce. It is an item in the cost of production which must be included in the budget of any well-managed industry.
Related Article/s:
Liability of Carriers for Baggage in Possession of Passengers
What is the liability of carriers for checked-in baggage of passengers?
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