Paolo, the owner of an ocean-going vessel, offered to transport the logs of Constantino from Manila to Nagoya. Constantino accepted the offer, not knowing that the vessel was manned by an irresponsible crew with deep-seated resentments against Paolo, their employer.
Constantino insured the cargo of logs against both perils of the sea and barratry. The logs were improperly loaded on one side, thereby causing the vessel to tilt on one side. On the way to Nagoya, the crew unbolted the sea valves of the vessel causing water to flood the ship hold. The vessel sank.
Constantino tried to collect from the insurance company which denied liability, given the unworthiness of both the vessel and its crew.
Constantino countered that he was not the owner of the vessel and he could therefore not be responsible for conditions about which he was innocent.
a. Is the insurance company liable? Why or why not? (3%)
b. What is “barratry” in marine insurance? (2%)
Suggested answer only. Not an official answer and not legal advice.
No, the insurer is not liable to Constantino, and barratry is willful misconduct by the crew without the owner's consent to his prejudice. Under Section 115 of R.A. 10607 and Roque v. IAC, every marine
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Quick check
What does the implied warranty of seaworthiness under Section 115 of the Insurance Code mandate?
Section 115 requires that every insured vessel be fit, properly loaded, and manned by a competent crew.
Does the implied warranty of seaworthiness apply to cargo owners who insure their goods under a marine policy?
In Roque v. IAC, the Supreme Court held that the implied warranty of seaworthiness binds cargo owners.
How is barratry defined in marine insurance law?
Barratry refers to willful misconduct or fraudulent acts committed by the master or crew without the owner's consent.
What is the legal effect on a marine insurance policy if a vessel is improperly loaded and manned by an incompetent crew?
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Which landmark Supreme Court decision affirmed that a cargo owner's innocence does not excuse a breach of seaworthiness?
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Learn more about these topics
1. Implied Seaworthiness Warranty
Under Section 115 of the Insurance Code (Republic Act Number 10607), an implied warranty of seaworthiness exists in every contract of marine insurance. Seaworthiness requires that the vessel be fit, properly loaded, and equipped with a competent master and crew to withstand the ordinary perils of the sea. In Roque v. Intermediate Appellate Court, the Supreme Court ruled that this implied warranty applies to cargo owners taking out marine insurance on their cargo, regardless of whether they own the vessel or are innocent of the crew's incompetency or improper loading.
2. Marine Insurance Barratry
Under Philippine marine insurance law, barratry is defined as any willful misconduct, fraud, or illegal act committed by the master or crew of a vessel for an unlawful or fraudulent purpose, without the consent of the shipowner, causing injury or loss to the owner or charterer. Barratry requires a willful or fraudulent act done with criminal intent rather than mere negligence or incompetence. Where a vessel's loss is fundamentally caused by a breach of the implied warranty of seaworthiness, coverage for barratry cannot be invoked to override the policy's failure.
3. Cargo Owner Responsibility
Under Section 115 of Republic Act Number 10607, a cargo owner who insures his goods under a marine policy warrants that the transporting vessel is seaworthy at the commencement of the voyage. The law makes no exception for cargo owners who have no control over the vessel's crew or loading operations. When a vessel sinks because it was improperly loaded or manned by an incompetent crew, the breach of the implied warranty of seaworthiness releases the insurer from liability, regardless of the cargo owner's personal innocence or lack of knowledge.