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SEC. 92. Marine insurance is an insurance against risks connected with navigation, to which a ship, cargo, freightage, profits, or other insurable interest in movable property, may be exposed during a certain voyage or a fixed period of time. INSURABLE INTEREST.
SEC. 93. The owner of a ship has in all cases an insurable interest in it, even when it has been chartered by one who covenants to pay him its value in case of loss: Provided, That in this case the insurer shall be liable for only that part of the loss which the insured can not recover from the charterer.
SEC. 94. The insurable interest of the owner of a ship hypothecated by bottomry is only the excess of its value over the amount secured by bottomry.
SEC. 95. Freightage, in the sense of a policy of marine signifies all the benefit derived by the owner, either from the chartering of the ship or its employment for the carriage of his own goods or those of others.
SEC. 96. The owner of a ship has an insurable interest in expected freightage which according to the ordinary and probable course of things he would have earned but for the intervention of a peril insured against or other peril incident to the voyage.
SEC. 97. The interest mentioned in the last section exists, in the case of a charter party, when the ship has broken ground on the chartered voyage, and if a price is to be paid for the carriage of goods when they are actully on board, or there is some contract for putting them on board, and both ship and goods are ready for the specified voyage.
SEC. 98. One who has an interest in the thing from which profits are expected to proceed, has an insurable interest in the profits.
SEC. 99. The charterer of a ship has an insurable interest in it, to the extent that he is liable to be damnified by its loss. CONCEALMENT.
SEC. 100. In marine insurance each party is bound to communicate, in addition to what is required by section twenty-seven, all the information which he possesses, material to the risk, except such as is mentioned in section twenty-nine, and to state the exact and whole truth in relation to all matters that he represents, or upon inquiry discloses or assumes to disclose.
SEC. 101. In marine insurance, information of the belief or expectation of a third person, in reference to a material fact, is material.
SEC. 102. A person insured by a contract of marine insurance is presumed to have had knowledge, at the time of insuring, of a prior loss, if the information might possibly have reached him in the usual mode of transmission, and at the usual rate of communication.
SEC. 103. A concealment in a marine insurance, in respect of to any of the following matters, does not vitiate the entire contract, but merely exonerates the insurer from a loss resulting from the risk concealed: (a) The national character of the insured; (b) The liability of the thing insured to capture and detention; (c) The liability to seizure from breach of foreign laws of trade; (d) The want of necessary documents; and (e) The use of false and simulated papers. REPRESENTATIONS.
SEC. 104. If a representation, by a person insured by a contract of marine insurance, is intentionally false in any material respect, or in respect of any fact on which the character and nature of the risk depends the insurer may rescind the entire contract.
SEC. 105. The eventual falsity of a representation as to expectation does not, in the absence of fraud, avoid a contract of insurance. IMPLIED WARRANTIES.
SEC. 106. In every marine insurance upon a ship or freight, or freightage, or upon anything which is the subject of marine insurance, a warranty is implied that the ship is seaworthy.
SEC. 107. A ship is seaworthy, when reasonably fit to perform the services, and to encounter the ordinary perils of the voyage, contemplated by the parties to the policy.
SEC. 108. An implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk except in the following cases: (a) When the insurance is made for a specified length of time, the implied warranty is not complied with unless the ship be seaworthy at the commencement of every voyage she may undertake during that time; and (b) When the insurance is upon the cargo, which, by the terms of the policy, or the description of the voyage, or the established custom of the trade, is to be transshipped at an intermediate port, the implied warranty is not complied with, unless each vessel upon which the cargo is shipped, or transshipped, be seaworthy at the commencement of its particular voyage.
SEC. 109. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurtenances and equipments, such as ballast, cables, and anchors, cordage and sails, food, water, fuel, and lights, and other necessary or proper stores and implements for the voyage.
SEC. 110. Where different portions of the voyage contemplated by a policy differ in respect to the things requisite to make the. ship seaworthy therefor, a warranty of seaworthiness is complied with if, at the commencement of each day in repairs is seaworthy with reference to that portion.
SEC. 111. When a ship becomes unseaworthy during the voyage to which an insurance relates, an unreasonable delay in repairing the defect exonerates the insurer from liability from any loss arising therefrom.
SEC. 112. A ship which is seaworthy for the purpose of Ship and an insurance upon the ship may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the purpose of insurance upon the cargo.
SEC. 113. Where the nationality or neutrality of a ship or cargo is expressly warranted, it is implied that the ship will carry the requisite documents to show such nationality or neutrality, and that it will not carry any documents which cast reasonable suspicion thereon. THE VOYAGE AND DEVIATION.
SEC. 114. When the voyage contemplated by a policy is described by the places of beginning and ending, the voyage insured is one which conforms to the course of sailing fixed by mercantile usage between those places.
SEC. 115. If the course of sailing is not fixed by mercantile usage, the voyage insured by a policy is the way between the places specified which, to a master, of ordinary skill and discretion, would seem the most natural, direct, and advantageous.
SEC. 116. Deviation is a departure from the course of the voyage insured, mentioned in the last two sections, or an unreasonable delay in pursuing the voyage, or the commencement of an entirely different voyage.
SEC. 117. A deviation is proper: (a) When caused by circumstances over which neither the master nor the owner of the ship has any control; (b) When necessary to comply with a warranty, or to avoid a peril whether insured against or not; (c) When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril; or (d) When made in good faith, for the purpose of saving human life, or relieving another vessel in distress.
SEC. 118. Every deviation not specified in the last section is improper.
SEC. 119. An insurer is not liable for any loss happening to a thing insured subsequently to an improper deviation. proper deviation. LOSS.
SEC. 120. A loss may be either total or partial.
SEC. 121. Every loss which is not total is partial.
SEC. 122. A total loss may be either actual or constructive.
SEC. 123. An actual total loss is caused by: (a) A total destruction of the thing insured; (b) The loss of the thing by sinking, or by being broken up; (c) Any damage to the thing which renders it valueless to the owner for the purposes for which he held it; or (d) Any other event which entirely deprives the owner of the possession, at the port of destination, of the thing insured.
SEC. 124. A constructive total loss is one which gives to a person insured a right to abandon, under section one hundred and thirty-two.
SEC. 125. An actual loss may be presumed from the continued absence of a ship without being heard of; and the length of time which is sufficient to raise this presumption depends on the circumstances of the case.
SEC. 126. When a ship is prevented, at an intermediate port, from completing the voyage, by the perils insured against, the master must make every exertion to procure, in the same or a contiguous port, another ship, for the purpose of conveying the cargo to its destination; and the liability of a marine insurer thereon continues after they are thus reshipped.
SEC. 127. In addition to the liability mentioned in the last section a marine insurer is bound for damages, expenses of discharging, storage, reshipment, extra freightage, and all other expenses incurred in saving cargo reshipped pursuant to the last section, up to the amount insured.
SEC. 128. Upon an actual total loss, a person insured is entitled to payment without notice of abandonment.
SEC. 129. Where it has been agreed that an insurance upon a particular thing, or a class of things, shall be free from particular average, a marine insurer is not liable for any particular average loss not depriving the insured of the possession, at the port destination, of the whole of such thing, or class of things, even though it become entirely worthless; but he is liable for his proportion of all general average loss assessed upon the thing insured.
SEC. 130. An insurance confined in terms to an actual total loss, does not cover a constructive total loss, but covers any loss which necessarily results in depriving the insured of the possession, at the port of destination, of the entire thing insured. ABANDONMENT.
SEC. 131. Abandonment is the act by which, after a constructive total loss, a person insured by contract of marine insurance declares to the insurer that he relinquishes to him his interest in the thing insured.
SEC. 132. A person insured by a contract of marine insurance may abandon the thing insured, or any particular portion thereof separately valued by the policy, or otherwise separately insured and recover for a total loss thereof, when the cause of the loss is a peril insured against: (a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from the peril; (b) If it is injured to such an extent as to reduce its value more than three-fourths. (c) If the thing insured, being a ship, the contemplated voyage cannot be lawfully performed without incurring an expense to the insured of more than three-fourths the value of the thing abandoned, or without incurring a risk which a prudent man would not take under the circumstances; or (d) If the thing insured, being cargo or freightage the voyage cannot be performed nor another ship procured by the master, within a reasonable time and with reasonable diligence, to forward the cargo, without incurring the like expense or risk. But freightage cannot in any case be abandoned, unless the ship is also abandoned.
SEC. 133. An abandonment must be neither partial nor conditional.
SEC. 134. An abandonment must be made within a reasonable time after receipt of reliable information of the loss but where the information is of a doubtful character the insured is entitled to a reasonable time to make inquiry.
SEC. 135. Where the information upon which an abandonment has been made proves incorrect, or the thing insured was so far restored when the abandonment was made that there was then in fact no total loss, the abandonment becomes ineffectual.
SEC. 136. Abandonment is made by giving notice thereof to the insurer, which may be done orally, or in writing.
SEC. 137. A notice of abandonment must be explicit, and must specify the particular cause of the abandonment, but need state only enough to show that there is probable cause therefor, and need not be accompanied with proof of interest or of loss.
SEC. 138. An abandonment can be sustained only upon the cause specified in the notice thereof.
SEC. 139. An abandonment is equivalent to a transfer, by the insured of his interest, to the insurer, with all the chances of recovery and indemnity.
SEC. 140. If a marine insurer pays for a loss as if it for actual were an actual total loss, he is entitled to whatever may remain of the thing insured, or its proceeds or salvage, as if there had been a formal abandonment.
SEC. 141. Upon an abandonment, acts done in good faith by those who were agents of the insured in respect to the sure thing insured, subsequent to the loss, are at the risk of the insurer, and for his benefit.
SEC. 142. Where notice of abandonment is properly given, the rights of the insured are not prejudiced by the fact that the insurer refuses to accept the abandonment.
SEC. 143. The acceptance of an abandonment may be either express or implied from the conduct oi the insurer. The mere silence of the insurer after notice is not to be construed as an acceptance.
SEC. 144. The acceptance of an abandonment, whether upon express or implied, is conclusive upon the parties, and admits the loss and the sufficiency of the abandonment.
SEC. 145. An abandonment once made and accepted is irrevocable, unless the ground upon which it was made proves to be unfounded.
SEC. 146. On an accepted abandonment of a ship, freightage earned previous to the loss belongs to the insurer of said freightage; but freightage subsequently earned belongs to the insurer of the ship.
SEC. 147. If an insurer refuses to accept a valid abandonment, refusal to he is liable as upon an actual total loss, deducting from the amount any proceeds of the thing insured which may have come to the hands of the insured.
SEC. 148. If a person insured omits to abandon, he may nevertheless recover his actual loss. MEASURE OF INDEMNITY.
SEC. 149. A valuation in a policy of marine insurance is conclusive between the parties thereto in the adjustment of either a partial or total loss, if the insured has some interest at risk, and there is no fraud on his part; except that when a thing has been hypothecated by bottomry or respondentia, before its insurance, and without the knowledge of the person actually procuring the insurance, he may show the real value. But a valuation fraudulent in fact entitles the insurer to rescind the contract.
SEC. 150. A marine insurer is liable upon a partial loss, only for such proportion of the amount insured by him as the loss bears to the value of the whole interest of the insured in the property insured.
SEC. 151. Where profits are separately insured in a contract marine jnsurance, the insured is entitled to recover, in case of loss, a proportion of such profits equivalent to the proportion which the value of the property lost bears to the value of the whole.
SEC. 152. In case of a valued policy of marine insurance on freightage or cargo, if a part only of the subject is exposed to risk the valuation applies only in proportion to such part.
SEC. 153. When profits are valued and insured by a contract of marine insurance, a loss of them is conclusively presumed from a loss of the property out of which they were expected to arise, and the valuation fixes their amount.
SEC. 154. In estimating a loss under an open policy of marine insurance the following rules are to be observed : (a) The value of a ship is its value at the beginning of the risk including all articles or charges which add to its permanent value, or which are necessary to prepare it for the voyage insured; (b) The value of cargo is its actual cost to the insured, when laden on board, or where that cost cannot be ascertained, its market value at the time and place of lading, adding the charges incurred in purchasing and placing it on board, but without reference to any losses incurred in raising money for its purchase, or to any drawback on its exportation, or to the fluctuations of the market at the port of destination, or to expenses incurred on the way or on arrival; (c) The value of freightage is the gross freightage, exclusive of primage, without reference to the cost of earning it; (d) The cost of insurance is in each case to be added to the value thus estimated.
SEC. 155. If cargo insured against partial loss arrives at the port of destination in a damaged condition, the loss of the insured is deemed to be the same proportion of the value which the market price at that port, of the thing so damaged, bears to the market price it would have brought if sound.
SEC. 156. A marine insurer is liable for all the expenses attendant upon a loss which forces the ship into port to be repaired; and where it is stipulated in the policy that the insured shall labor for the recovery of the property, the insurer is liable for the expense incurred thereby, such expense, in either case, being in addition to a total loss, if that afterwards occurs.
SEC. 157. A marine insurer is liable for a loss falling upon the insured, through a contribution in respect to the thing insured, required to be made by him towards a general average loss called for by a peril insured against.
SEC. 158. When a person insured by a contract of marine insurance has a demand against others for contribution, he may claim the whole loss from the insurer, subrogating him to his own right to contribution. But no such claim can be made upon the insurer after the separation of the interests liable to contribution, nor when the insured, having the right and opportunity to enforce contribution from others, has neglected or waived the exercise of that right.
SEC. 159. In the case of a partial loss of a ship or its cost of repairs, equipments, the old materials are to be applied towards payment for the new, and unless other conditions are stipulated in the policy, a marine insurer is liable for the remaining cost of repairs, less deductions from such cost to be made in accordance with the following rules: 1. In the case of iron or steel ships, from date of original register to the date of accident: (a) Up to one year old.—All repairs to be allowed in full, except painting or coating of bottom, from which one-third is to be deducted. (b) Between one and three years.— between one and ducted off repairs to and renewal of woodwork of hull, three years' masts, and spars, furniture, upholstery, crockery, metal and glassware, also sails, rigging, ropes, sheets, and hawsers (other than wire and chain), awnings, covers and painting. One-sixth to be deducted off wire rigging, wire ropes, and wire hawsers, chain cables and chains, donkey engines, steam winches and connections, steam cranes and connections ; other repairs in full. (c) Between three and six years.—Deductions as above under clause (b), except that one-sixth be deducted off iron-work of masts and spars and machinery (inclusive of boilers and their mountings). (d) Between six and ten years.—Deductions as above under clause (c), except that one-third be deducted off ironwork of masts and spars, repairs to and renewal of all machinery (inclusive of boilers and their mountings), and all hawsers, ropes, sheets, and rigging. (e) Between ten and fifteen years.—One-third to be deducted off all repairs and renewals, except ironwork of hull and cementing and chain cables, from which one-sixth to be deducted. Anchors to be allowed in full. (f) Over fifteen years.—One-third to be deducted off all repairs and renewals. Anchors to be allowed in full. One-sixth to be deducted off chain cables. (g) Generally.—The deductions (except as to provisions and stores, machinery, and boilers) to be regulated by the age of the ship, and not the age of the particular part of her to which they apply. No painting bottom to be allowed if the bottom has not been painted within six months previous to the date of accident. No deduction to be made in respect of old material which is repaired without being replaced by new, and provisions and stores which have not been in use. 2. In the case of wooden or composite ships: When a ship is under one year old from date of original register at the time of accident no deduction new for old shall be made. After that period a deduction of one-third shall be made, with the following exceptions: Anchors shall be allowed in full. Chain cables shall be subject to a deduction of one-sixth only. No deduction shall be made in respect of provisions and stores which had not been in use. Metal sheathing shall be dealt with by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus the proceeds of the old metal. Nails, felt, and labor metalling are subject to a deduction of one-third. Fire insurance.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).