| Part I. General Provisions | Part 3. Arrest of a Vessel, Cargo, or Freight |
| Part 2. Civil Procedure | Part 5. Common Provisions |
PART IV
SPECIAL PROCEEDINGS
RULE 8
LIMITATION ACTION
Section 1. Purpose. – In a limitation action, the plaintiff, who may be a ship-owner, charterer, or other person in control or possession of a ship, seeks to limit his or her liability to the full amount of a limitation fund constituted for the purpose of satisfying claims in respect of a marine casualty involving the ship, which claims have not been otherwise settled by marine insurance or other means.
Section 2. When available. – A plaintiff may initiate a limitation action only in the following cases:
- (a) collisions;
- (b) injuries to a third party; and
- (c) acts of the captain or master of a ship.
Provided, that the plaintiff abandons the vessel with all her appurtenances and equipment and freightage earned, or part thereof belonging to such plaintiff, during the last voyage.
Limitation action is not available in the following cases:
- (a) injury or death to a passenger is due either to the fault of the shipowner, charterer, or other person in possession or control of the vessel;
- (b) injury or death of a passenger due to the concurring fault of said person and the captain or master of the vessel;
- (c) the vessel is insured and the injury or damage to persons or property, or death of a passenger, is covered by a separate insurance; and
- (d) workmen’s compensation claims.
Section 3. How initiated. – The plaintiff may file a limitation action by a verified complaint, impleading any and all known defendants any time after a marine casualty that causes damage, injury, or death, and subsequent abandonment of the vessel, by notarial act filed with the Ship Registry, or total loss thereof in which case abandonment by notarial act is no longer necessary.
The complaint must be supported by judicial affidavit/s stating the plaintiff’s cause of action, the names of the known defendants, and the addresses of each of those persons if known to the plaintiff. The complaint shall likewise be directed against any and all defendants whose names and personal circumstances may be unknown but are described generally and identifiable as a certain class, such as ship chandlers, cargo-owners, or passengers of a vessel at a specific time and place. The plaintiff shall disclose any and all contracts with third parties which may form the basis of liability relating to the ship involved in the action.
Separate summons shall be directly sent to the defendants specifically named in the complaint, at their residential or business address/es known to the plaintiff.
Notice of and summons to the limitation action against all other defendants, whether or not named in the complaint, shall be published in at least two (2) newspapers of general circulation, stating the title and purpose of the action, and the court where the same is pending.
The summons shall state a time and place for appearance of the defendants before the court at the hearing, which in no case shall be less than one (1) month from the date of filing of the complaint. No pre-trial is necessary, given the nature of the action.
Section 4. Defendants. – Upon receipt of notice and summons and at any time prior to the hearing, a defendant may enter an appearance as such by written notice of appearance, accompanied by a judicial affidavit setting forth the basis and substance of the claim as defendant.
Where the appearing defendant was not previously named specifically by the plaintiff and was apprised of the complaint only through published notice and summons, the defendant shall further state that he or she is submitting to the jurisdiction of the court, and provide the necessary address/es for purposes of service of all subsequent orders and processes of the court.
Section 5. Hearing. – At the hearing, the plaintiff shall submit a judicial affidavit setting forth his or her liability, the relevant facts and legal basis of his or her claim to a limitation thereof, the total amount of the limitation fund to be constituted and payments offered to be allocated to those whom the plaintiff admits to be liable.
Appearing defendants shall likewise submit their judicial affidavits setting forth the substance and basis of their respective claims. They may dispute only the plaintiff’s right to limit his or her liability; in no case may the defendant dispute the total amount of the limitation fund. If it appears that the defendant does not have sufficient information to enable the court to decide whether or not to dispute the plaintiff’s right to limit his or her liability, the court shall give such directions as may be appropriate to enable the defendant to obtain the necessary information and adjourn the hearing for that purpose.
Non-appearance at the hearing despite notice, by a defendant specifically named in the complaint and to whom summons had been served, shall be deemed a waiver of the right to dispute the plaintiff’s right to limit his or her liability.
After reception of the plaintiffs’ and defendants’ respective evidence, the court shall conclude the hearing and submit the case for decision within fifteen (15) calendar days. The court shall decide whether or not the plaintiff is entitled to a limitation of liability, whether or not to constitute a limitation fund, and, if so, the terms and conditions for disbursement thereof.
Section 6. Constitution of the Limitation Fund. – The plaintiff may, upon order of the court, constitute a limitation fund by making a deposit to the court, or by producing a letter of undertaking from a Protection and Indemnity Club acceptable to the court. The fund may be constituted during the hearing, but not later than thirty (30) calendar days after the conclusion of the hearing.
Failure to constitute a sufficient limitation fund to satisfy claims within the said period shall be deemed a withdrawal of the action and warrants dismissal thereof. No amount shall be paid out of the limitation fund except upon the order of the court.
Section 7. Order of the court limiting the plaintiff’s liability. – If it appears from the hearing that the plaintiff has the right to his or her limit liability, the court shall, within fifteen (15) calendar days after due consideration of the plaintiffs’ and defendants’ claims, issue an order limiting the plaintiff’s liability and direct the defendants, and any other persons who may have claims, to file their respective claims against the limitation fund.
The order shall be served upon the plaintiff and the appearing defendants, and shall operate to protect the plaintiff with respect of claims by the appearing defendants, or persons claiming through or under them. The order shall also fix a time and place for the acceptance of claims filed by persons with claims against the plaintiff with respect of the casualty to which the action relates, but who were not properly summoned, or were unknown defendants, and who did not enter an appearance prior to the issuance of the order.
Section 8. Publication of the Order. – The court shall order the plaintiff to cause the publication of the order constituting the limitation fund in two (2) newspapers of general circulation, identifying the action, the casualty and the relation of the plaintiff thereto (whether as owner of a ship involved in the casualty or otherwise); stating that the order has been issued and specifying the amounts fixed thereby as the limit of the plaintiff’s liability and the time allowed thereby for the filing of claims.
In no case shall claims be filed and accepted more than six (6) months from publication thereof.
Section 9. Satisfaction of claims. – Claims filed within the time specified in the order of the court shall be duly recorded by the plaintiff or his or her duly authorized representative, and reported to the court at the end of the period for entering of appearances and making of claims, with proposals for their satisfaction through payment from the limitation fund. The court, upon review of the report and proposal for satisfaction, and finding the same to be in due and proper form, and within fifteen (15) calendar days from receipt, shall order payment of the claims under such terms and conditions as may be appropriate.
Section 10. Closure of the Limitation Action. – Upon final payment of all claims of all defendants or claimants, the plaintiff and the Sheriff shall make a report to the court, setting forth the complete list of appearing defendants with their respective claims, the payments made, and proof of receipt of such payments. The court shall thereafter issue an order declaring the limitation action closed.
Any amounts remaining after payment of the claims shall be released and returned, upon motion, to the plaintiff or his or her duly authorized representative. The closure of the limitation action shall become final and executory, upon the expiration of fifteen (15) calendar days from receipt by the plaintiff/s and the defendant/s of the order of closure. Such order shall be final and unappealable, and forever bar any and all claims against the plaintiff/s in respect of the casualty subject of the action. Closure of a limitation action, however, does not bar remedies against actions in fraud of creditors.
| Part I. General Provisions | Part 3. Arrest of a Vessel, Cargo, or Freight |
| Part 2. Civil Procedure | Part 5. Common Provisions |
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