Published 28 January 2022, The Daily Tribune

Maritime affairs are something of great interest nowadays. Maritime laws are greatly relevant to businesses, consumers and even governments given the role that sea transport plays in the area of commerce, logistics, and international trade. It provides a uniform way of dealing with sea-related incidents that impact the financial position and legal obligations of many.

One of the distinctive features of maritime law is the limited liability rule which allows the ship owner or his agent certain limitations on his/her liability for damage caused to a third person.

The principle is enunciated in the Code of Commerce. Under Art. 587, the ship owner or his agent shall indemnify those who may incur damage as a result of the conduct of the captain in the care of goods which he loaded on the vessel. However, such ship agent may exempt himself therefrom by abandoning the vessel with all the equipment and the freight it may have earned during the voyage.

Co-owners of a vessel, on the other hand, are liable in the proportion of their interests in the common fund for the results of the acts of the captain whose acts may have caused damage to third persons. Each co-owner may exempt himself from his liability by the abandonment, before a notary, of the part of the vessel belonging to him (Art. 588).

These provisions provide the universal principle of limited liability in all cases. Art. 587 accords a shipowner or agent the right of abandonment. Necessarily, such liability is limited to what he entitled as a matter of right to abandon which is the vessel, the equipment, and freight earned during the voyage. There has been a consensus to the effect that the benefit of limited liability under this Article applies in all cases wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain, and not necessarily limited only to conduct relating to the care of goods [Yangco vs Laserna, 73 Phil. 330 (1941)].

For events of a collision resulting in damage, Art. 837 provides that the civil liability incurred by ship owners is limited to the value of the vessel with all its appurtenances and the freightage served during the voyage. In other words, “no vessel, no liability” is the name of the game.

The shipowner’s or agent’s liability corresponds only to the extent of his interest in the vessel. A total loss of the vessel results in the extinction of his liability, justified by the real and hypothecary nature of maritime law.

This doctrine recognizes the many hazards and perils faced by a maritime voyage, hence it was deemed necessary to limit the liability of the owner or agent. While there may already be advances in technology that would arguably make maritime voyages relatively safer, the Supreme Court continues to apply the said rule in appropriate cases subject to exceptions, such as:

(1) where the injury or death to a passenger is due either to the fault of the ship owner, or to the concurring negligence of the shipowner and the captain;

(2) where the vessel is insured; and

(3) in workmen’s compensation claims. In other words, it 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.

For instance, in Phil-Nippon Kyoei Corp. vs Rosalia T. Gudelosao (G.R. 181375, 13 July 2016), a claim for death benefits was filed by the heirs of the crew members of a vessel that had sunk due to extremely bad weather conditions. The Supreme Court ruled that the claim for death benefits under the Philippine Overseas Employment Administration Standard Employment Contract (POEA-SEC) is the same species as the workmen’s compensation claims under the Labor Code — both of which belong to a different realm from that of Maritime Law. Therefore, the limited liability rule does not apply to liability under the POEA-SEC. (To be continued)

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