2017 Mercantile Law, Q12

Onassis Shipping, Inc. (Onassis) operated passenger vessels and cargo trucks, and offered its services to the general public. In line with its vision and mission to protect the environment, Go-Green Asia (Go-Green), an NGO affiliated with Greenpeace, entered into a contract with Onassis whereby Go-Green would operate with its own crew the MN Dolphin, an ocean-going passenger vessel of Onassis.
While on its way to Palawan carrying Go-Green’s invited guests who were international and local observers desirous of checking certain environmental concerns in the area, the MN Dolphin encountered high waves and strong winds caused by a typhoon in the West Philippine Sea. The rough seas led to serious physical injuries to some of the guests.
Discuss the liabilities of Onassis and Go-Green to the passengers of the M/V Dolphin. Explain briefly your answer. (3%)

Quick check

Under Philippine maritime law, what type of charter occurs when the charterer mans, equips, and navigates the vessel with its own crew?

What is the legal status of a bareboat charterer during the period of the charterparty?

Why is Onassis Shipping, Inc. not liable for the physical injuries suffered by the passengers on board M/V Dolphin?

Under what capacity is Go-Green Asia liable for the safety and injuries of its invited guests during the voyage?

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Which primary statute governs common carrier liability and extraordinary diligence toward passengers in the Philippines?

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1. Bareboat Charter Nature
Under Philippine maritime law, a bareboat or demise charter is a contract whereby the shipowner surrenders complete possession, command, and navigation of the vessel to the charterer. Under this arrangement, the charterer provides its own master and crew, equips and victuals the vessel, and assumes operational control over the voyage. Consequently, the charterparty transforms the charterer into the owner pro hac vice for the duration of the charter agreement, while the original shipowner becomes a mere lessor of the vessel.

2. Demise Charter Liability
Under a bareboat charter, because the charterer becomes the owner pro hac vice, it assumes full legal liability for the operation and navigation of the vessel. The charterer acts as a common or private carrier depending on whether it offers services to the general public or holds the vessel for exclusive private use. Any civil liability for personal injuries or property damage caused to passengers or cargo during the voyage attaches exclusively to the charterer in command, completely absolving the vessel's registered owner from operational liability.

3. Common Carrier Diligence
Under Article 1755 and Article 1756 of the Civil Code of the Philippines (Republic Act Number 386), common carriers are bound to observe extraordinary diligence for the safety of passengers using the utmost care and foresight of very cautious persons. In case of death or physical injuries to passengers during carriage, common carriers are presumed to have been at fault or to have acted negligently unless they prove extraordinary diligence. However, this statutory presumption of negligence applies strictly against the entity acting as carrier in command of the vessel.

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The questions reproduced here are the official texts of the Philippine Bar Examinations, published by the Supreme Court. They are reproduced for study purposes.The suggested answers are the author’s own.

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Where a question comes from an earlier examination, the suggested answer applies the law as it now stands, which may differ from the law in force when the question was given, and may therefore differ from what would have been the correct answer at that time. Where the difference is material, the answer notes it.The practice scoring feature measures wording overlap with the suggested answer. It is not a grade, carries no official weight, and says nothing about whether your reasoning is sound.Errors are possible. If you find one, please tell me and I will correct it.Last reviewed: October 2026