1.

WING KEE COMPRADORING CO VS BARK MONONGAHELA

GAB
FACTS:
The plaintiff in this case, Wing Kee Compradoring Company,
seeks to recover from the defendants, principally the Admiral
Line, as agent for the Bark Monongahela, the sum of P17,675.64,
with interest and costs, on account of goods, wares, and
merchandise sold and delivered by the plaintiff to the defendants
for the use of the crew of theBark Monongahela.
The debt was due from the Admiral Line, the agent; C. G.
Lothigius, the captain of the boat; and the owners of the boat,
either Victor S. Fox & Co., Inc., or the United States Shipping
Board Emergency Fleet Corporation. Captain Lothigius and the
Admiral Line answered. The owners were not cited to appear. No
action against the bark was taken. Following the trial, judgment
was rendered dismissing the complaint, without special finding
as to costs. Turning next to the facts, the exhibits of record show
that beginning with March 16, 1921, and ending with August 16,
1921, various supplies were furnished the Bark Monongahela by
Wing Kee Compradoring Company. Most of the bills for these
goods are made out against the "Admiral Line, S.S. Monongahela."
The first requisitions for the supplies are on forms headed "The
Admiral Line." Then follows Manila, the date, and the name,
"Wing Kee Compradoring Co." Next is the order, reading: "Please
deliver to S. S. Monongahela now lying at Bay, the following goods
and send bills to the Admiral Line:". After this goods are named.
At the foot is found, "United States Shipping Board Emergency
Fleet Corporation," although these words are erased in a few of
the requisitions, "The Admiral Line (Pacific Steamship Co.)
Operating Agents. By J. J. Armstrong." On the side of the
requisitions in red ink is the following: "Note: This requisition
must be receipted by either Chief Officer, Chief Steward or Chief
Engineer and returned to the Admiral Line, with six copies of
invoice immediately after delivery of goods." After May 4, 1921,
the requisitions seem to have been made out by the steward and
the master. We deduce from these documents that the Admiral
Line was the operating agent for Monongahela
In the Manila Daily Bulletin for August 2, 1921, appeared the
following:
"Notice Bark Monongahela The undersigned hereby give
notice that they are not responsible in any manner whatsoever
for any indebtedness incurred by the Bark Monongahela, its
Master and/or Crew The Admiral Line." The trial judge found
as a fact that on or before August 4, 1921, the Admiral Line
had ceased to act as agent for theMonongahela. Nevertheless,
supplies were furnished the Monongahela after these dates
by the plaintiff.
ISSUE: can Wing Kee sue Admiral Line?
HELD: Admiral line is liable only with regard to the supplies
furnished before the agency of Admiral Line ceased.
section 1 of Title 2 of our Code of Commerce refers to"Owners of
Vessels and Their Agents." The first article in this section (art.
586), and the provision of law which in our judgment is
controlling, reads:
The owner of a vessel and the agent shall be civilly liable for the
acts of the captain and for the obligations contracted by the latter
to repair, equip, and provision the vessel, provided the creditor
proves that the amount claimed was invested therein.
By agent is understood the person intrusted with the
provisioning of a vessel, or who represents her in the port in
which she happens to be.
agents buy in their own names, but really for the account of their
principal, the seller has an option to look to either for payment,
unless (1) he trusted the agent exclusively; or (2) by the usage
and understanding of the business the agent only is held; or (3)
unless the special circumstances of the case show that only the
agent was intended to be bound and the seller knew it or was

chargeable with knowledge of it. Although the English rule that,

where the agents buys in his own name for the account of a
foreign principal, the agent only is bound appears not to have
been followed in the United States
Not only this, but the plaintiff has made no effort to bring the
owner of the bark into the case and has pushed with no
enthusiasm its case against the captain of the boat. What
apparently the plaintiff wants is for the Admiral Line, as the agent
for the Bark Monongahela, to pay the claim, leaving the latter to
reimburse itself, if sees fit, from the owners.
To all this appellee answers that as the agency has ceased, action
cannot be brought against the Admiral Line. To our minds this is
a rather far-fetched argument, for, pursued to its logical
conclusion, every agent for a vessel could thus avoid
responsibility pursuant to article 568 of the Code of Commerce,
by giving up its agency when threatened with suit to enforce the
obligations of third parties. Moreover, the bills were presented
when the Admiral Line was yet the agent.
However, Admiral line is liable only with regard to the supplies
furnished before the agency of Admiral Line ceased.

2. FAR EASTERN SHIPPING CO VS CA NIKKI

1. Far Eastern Shipping v. CA
Doctrine:
A pilot, in maritime law, is a person duly qualified, and licensed,
to conduct a vessel into or
out of ports, or in certain waters. In a broad sense, the term
"pilot" includes both (1) those
whose duty it is to guide vessels into or out of ports, or in
particular waters and (2) those
entrusted with the navigation of vessels on the high seas.
However, the term "pilot" is more
generally understood as a person taken on board at a particular
place for the purpose of
conducting a ship through a river, road or channel, or from a port
Under English and American authorities, generally speaking,
the pilot supersedes the
master for the time being in the command and navigation of the
ship, and his orders must
be obeyed in all matters connected with her navigation. He
becomes the master pro hac
vice and should give all directions as to speed, course,
stopping and reversing
anchoring, towing and the like. And when a licensed pilot is
employed in a place where
pilotage is compulsory, it is his duty to insist on having
effective control of the vessel,
or to decline to act as pilot. Under certain systems of foreign
law, the pilot does not take
entire charge of the vessel, but is deemed merely the adviser of
the master, who retains
command and control of the navigation even in localities where
pilotage is compulsory
The master is not wholly absolved from his duties while a pilot
is on board his vessel, and
may advise with or offer suggestions to him. He is still in
command of the vessel, except so
far as her navigation is concerned, and must cause the ordinary
work of the vessel to be
properly carried on and the usual precaution taken. He does not
cede his authority when a
pilot is onboard pursuant to compulsory pilotage.
Even though the pilot is compulsory, if his negligence was not
the sole cause of the injury,
but the negligence of the master or crew contributed thereto, the
owners are liable. But the
liability of the ship in rem does not release the pilot from the
consequences of his own
negligence. The rationale for this rule is that the master is not
entirely absolved of
responsibility with respect to navigation when a compulsory
pilot is in charge
Facts:
The MV PAVLODAR (from USSR), owned by Far Eastern
Shipping (FESC) arrived at the
Port of Manila. Senen GAVINO was tasked by the Manila Pilots
Association to conduct
docking maneuvers for the safe berthing of the vessel (berthing =
parking the boat in the
pier) KAVANKOV, the ships master, was there to brief him and to
relay his orders.
o Note: GAVINO piloted the boat pursuant to compulsory
pilotage
When the boat was near the berthing station, GAVINO ordered
the anchor to be dropped.
However, the anchor did not take hold as expected and the boat
did not slow down. The
boat eventually hit the pier and damaged it.

The Manila Port Authority sued MPA, FESC and GAVINO for the
damage to the pier. The
trial court held all the defendants solidarily liable for the
damages. Thus, FESC appealed,
arguing that GAVINO, the pilot under compulsory pilotage, was
the one at fault
Issue: Is GAVINO liable for his negligence? Is KAVANKOV liable
for his negligence?
Gavino negligent
Pursuant to an ADMIN ORDER requiring compulsory pilotage,
Capt. GAVINO was
assigned to pilot MV Pavlodar into the port. Upon assuming such
office as compulsory pilot,
Capt. Gavino is held to the universally accepted high standards of
care and diligence
required of a pilot, whereby he assumes to have skill and
knowledge in respect to
navigation in the particular waters over which his license
extends superior to and
more to be trusted than that of the master
In this case, the Court found that GAVINO was negligent
because he was late in ordering
the dropping of the anchor. Moroever, when he realized that the
anchor did not attach
properly, Gavino ordered merely "half-astern". It took Gavino
another minute to order a
"full-astern". By then, it was too late. The vessel's momentum
could no longer be slowed
and, barely a minute thereafter, the bow of the vessel hit the
apron of the pier
Kavankov also negligent
The master is not wholly absolved from his duties while a pilot
is on board his vessel, and
may advise with or offer suggestions to him. He is still in
command of the vessel, except so
far as her navigation is concerned, and must cause the ordinary
work of the vessel to be
properly carried on and the usual precaution taken.
In this case, while the pilot Gavino may indeed have been
charged with the task of docking
the vessel in the berthing space the master of the vessel had
the corresponding duty to
countermand any of the orders made by the pilot, and even
maneuver the vessel
himself, in case of imminent danger to the vessel and the
port. This, KAVANKOV
failed to do.
Liability of Shipowners
Even though the pilot is compulsory, if his negligence was not
the sole cause of the injury,
but the negligence of the master or crew contributed thereto, the
owners are liable. But the
liability of the ship in rem does not release the pilot from the
consequences of his own
negligence. The rationale for this rule is that the master is not
entirely absolved of
responsibility with respect to navigation when a compulsory
pilot is in charge.

3. NATIONAL STEEL CORP VS CA EM

2. National Steel Corporation v. CA
Doctrine:
A stevedore company engaged in discharging cargo has the
duty to load the cargo in a
prudent manner, and it is liable for injury to, or loss of, cargo
caused by its negligence and
where the officers and members and crew of the vessel do
nothing and have no
responsibility in the discharge of cargo by stevedores, the vessel
is not liable for loss of,
or damage to, the cargo caused by the negligence of the
stevedores
Facts:
Vlasons Shipping owns MV Vlasons I, a vessel which renders
tramping service and as
such, does not transport for the general public. Its services are
available only to specific
persons. It entered into a contract of affreightment/contract of
voyage charter hire with
National Steel Corporation (NSC), wherein Vlasons was tasked to
transport tin plates and
hot rolled sheets to Manila.
o The charter party provides that the shipowner shall not be
responsible for
damage to the goods unless caused by the negligence of the
master and crew.
Upon arrival in Manila, it was found that the cargo was wet and
rusty. It was found that the
rusting was due to contact with SEA WATER sustained while on
board the vessel. THUS,
NSC sued Vlasons for the damage to the cargo. Vlasons argue that
the SEA WATER
seeped in because of rough seas, and not because of the
negligence of its master and
crew, hence it should not be held liable.
The TC ruled that the damage was due to a fortuitous event,
that the damage was due to
the inherent nature of the goods and that the stevedores were the
ones liable for being
negligent. Thus, NSC appealed.
Issue: Were the officers/crew of VLASONS negligent? NO
Shipowners not liable
The court found that the ship used old tarpaulin to cover the
hatches, but only in addition
to the new ones used primarily to make the hatches of the
ship watertight. Due
diligence was exercised by the officers and the crew of the MV
Vlasons I. It was
demonstrated by the fact that, despite encountering rough
weather twice, the new tarpaulin
did not give way and the ship's hatches and cargo holds remained
waterproof.
NSC failed to discharge its burden to show negligence on the
part of the officers and the
crew of MV Vlasons I. On the contrary, the records reveal that it
was the stevedores of
NSC who were negligent in unloading the cargo from the ship.
The stevedores employed
only a tent-like material to cover the hatches when strong rains
occasioned by a passing
typhoon disrupted the unloading of the cargo. This tent-like
covering, however, was clearly
inadequate for keeping rain and seawater away from the hatches
of the ship.
The fact that NSC actually accepted and proceeded to remove
the cargo from the ship

during unfavorable weather will not make VSI liable for any
damage caused thereby. In
passing, it may be noted that the NSC may seek
indemnification, subject to the laws on
prescription, from the stevedoring company at fault in the
discharge operations.
o A stevedore company engaged in discharging cargo has the
duty to load the
cargo in a prudent manner, and it is liable for injury to, or loss of,
cargo caused
by its negligence and where the officers and members and crew
of the vessel do
nothing and have no responsibility in the discharge of cargo by
stevedores the
vessel is not liable for loss of, or damage to, the cargo caused by
the negligence
of the stevedores
Optional (demurrage)
The Court defined demurrage in its strict sense as the
compensation provided for in the
contract of affreightment for the detention of the vessel beyond
the laytime or that period of
time agreed on for loading and unloading of cargo. It is given to
compensate the shipowner
for the nonuse of the vessel
Laytime runs according to the particular clause of the charter
party. . . . If laytime is
expressed in "running days," this means days when the ship
would be run continuously,
and holidays are not excepted. A qualification of "weather
permitting" excepts only those
days when bad weather reasonably prevents the work
contemplated.
In this case, the contract of voyage charter hire provided for a
four-day laytime; it also
qualified laytime as WWDSHINC or weather working days
Sundays and holidays included.
The running of laytime was thus made subject to the
weather, and would cease to
run in the event unfavorable weather interfered with the
unloading of cargo.
Consequently, NSC may not be held liable for demurrage as the
four-day laytime allowed it
did not lapse, having been tolled by unfavorable weather
condition
Vlasons won, NSC lost
Do Tin Plates Sweat? Yes, due to moisture outside the boat.
However, in this case the
damage to the tinplates was occasioned not by airborne moisture
but by contact with rain
and seawater.
DOCTRINE: A stevedore company engaged in discharging cargo
has the duty to load the cargo in a prudent manner, and it is liable
for injury to, or loss of, cargo caused by its negligence and where
the officers and members and crew of the vessel do nothing and
have no responsibility in the discharge of cargo by stevedores,
the vessel is not liable for loss of, or damage to, the cargo caused
by the negligence of the stevedores
FACTS:
Plaintiff National Steel Corporation (NSC) as Charterer and
defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a
Contract of Voyage Charter Hire (Affreightment) whereby NSC
hired VSIs vessel, the MV VLASONS I to make one (1) voyage to
load steel products at Iligan City and discharge them at North
Harbor, Manila. VSI carried passengers or goods only for those it
chose under a special contract of charter party.

The vessel arrived with the cargo in Manila, but when the vessels
three (3) hatches containing the shipment were opened, nearly
all the skids of tin plates and hot rolled sheets were allegedly
found to be wet and rusty.
Plaintiff NSC filed its complaint against defendant before the CFI
wherein it claimed that it sustained losses as a result of the act,
neglect and default of the master and crew in the management of
the vessel as well as the want of due diligence on the part of the
defendant to make the vessel seaworthy -- all in violation of
defendants undertaking under their Contract of Voyage Charter
Hire.
In its answer, defendant denied liability for the alleged damage
claiming that the MV VLASONS I was seaworthy in all respects
for the carriage of plaintiffs cargo; that said vessel was not a
common carrier inasmuch as she was under voyage charter
contract with the plaintiff as charterer under the charter party.
The trial court ruled in favor of VSI; it was affirmed by the CA on
appeal.
ISSUE: Whether or not the officers/crew of VLASONS are
negligent thus making the ship owners liable to the plaintiff.
HELD: NO The Ship owners are not liable
The court found that the ship used old tarpaulin to cover the
hatches, but only in addition to the new ones used primarily to
make the hatches of the ship watertight. Due diligence was
exercised by the officers and the crew of the MV Vlasons I. It was
demonstrated by the fact that, despite encountering rough
weather twice, the new tarpaulin did not give way and the ship's
hatches and cargo holds remained waterproof.
NSC failed to discharge its burden to show negligence on the part
of the officers and the crew of MV Vlasons I. On the contrary, the
records reveal that it was the stevedores of NSC who were
negligent in unloading the cargo from the ship. The stevedores
employed only a tent-like material to cover the hatches when
strong rains occasioned by a passing typhoon disrupted the
unloading of the cargo. This tent-like covering, however, was
clearly inadequate for keeping rain and seawater away from the
hatches of the ship.
The fact that NSC actually accepted and proceeded to remove the
cargo from the ship during unfavorable weather will not make
VSI liable for any damage caused thereby. In passing, it may be
noted that the NSC may seek indemnification, subject to the laws
on prescription, from the stevedoring company at fault in the
discharge operations.
A stevedore company engaged in discharging cargo has the duty
to load the cargo in a prudent manner, and it is liable for injury
to, or loss of, cargo caused by its negligence and where the
officers and members and crew of the vessel do nothing and
have no responsibility in the discharge of cargo by
stevedores the vessel is not liable for loss of, or damage to,
the cargo caused by the negligence of the stevedores
The Court defined demurrage in its strict sense as the
compensation provided for in the contract of affreightment for
the detention of the vessel beyond the laytime or that period of
time agreed on for loading and unloading of cargo. It is given to
compensate the shipowner for the nonuse of the vessel
Laytime runs according to the particular clause of the charter
party. . . . If laytime is expressed in "running days," this means
days when the ship would be run continuously, and holidays are
not excepted. A qualification of "weather permitting" excepts
only those days when bad weather reasonably prevents the work
contemplated.
In this case, the contract of voyage charter hire provided for a
four-day laytime; it also qualified laytime as WWDSHINC or
weather working days Sundays and holidays included.
The running of laytime was thus made subject to the weather,
and would cease to run in the event unfavorable weather
interfered with the unloading of cargo.

Consequently, NSC may not be held liable for demurrage as the

four-day laytime allowed it did not lapse, having been tolled by
unfavorable weather condition
http://karlmagz.blogspot.ca/2011/02/case-digesttransportation-law-vlasons.html

4.
SWITZERLAND GENERAL INSURANCE VS RAMIREZ
EUNICE
Switzerland General Insurance v. Ramirez2
Doctrine:
The ship agent is solidarily liable with the shipowner for the
damage caused to the goods
due to the negligence of the captain and crew.
Facts:
On 1974, 60k bags of urea nitrogen were shipped from Japan to
Manila by CITADEL
LINES (local agent of OYAMA LINES). The goods were
discharged by MABUHAY
BROKERAGE. However, when the consignee, BORDEN
INTERNATIONAL, received the
goods, they were found to have been damaged (the bags were
torn)
SWITZERLAND GEN INSURANCE (SGI) paid BORDEN the value
of the goods and in turn
sued OYAMA, CITADEL and MABUHAY BROKERAGE.
CITADEL argued that it was not liable since it was merely an
AGENT of
OYAMA and not a ship agent. OYAMA alleged that the claim could
not be
entertained because it was already been declared insolvent by a
court in Japan.
The TC found OYAMA to be liable, and exonerated CITADEL
and MABUHAY
BROKERAGE. Hence, the insurer appealed.
Issue: Should CITADEL, the local agent, also be held liable? YES. It
is a ship agent.
Considering the relationship of the parties, respondent Citadel
Lines, Inc. cannot be
considered as a "mere agent" under the civil law on agency as
distinguished from a ship
agent, within the context of the Code of Commerce.
o This is because in Yu Biao Sontua & Co. v. Ossorio, it was held
that the
doctrines having reference to the relations between
principal and agent
cannot be applied in the case of ship agents and ship owners.
In this case, CITADEL is clearly the ship agent of OYAMA. As
provided in the law, a ship
agent is the person entrusted with the provisioning of a vessel or
who represents her in the
port in which she happens to be. CITADEL took charge of the
unloading of the goods and
issued cargo receipts in its own name. Therefore, it is clear that
CITADEL is the ship
agent.
Being a ship agent, it is liable for the indemnities in favor of 3rd
persons which arise from
the conduct of the captain in the care of the goods (Art 587 and
618) It is therefore
solidarily liable with OYAMA for the value of the goods paid for
by the insurer.
Moreover, the insolvency of Oyama Lines has no bearing on the
case insofar as the liability
of Citadel is concerned. The law does does not make the liability
of the ship agent
dependent upon the solvency or insolvency of the ship owner.
Note: As to the liability of charterer
In this case, the charterer represented itself on the face of the bill
of lading as the carrier.
The vessel owner and the charterer did not stipulate in the
Charter party on their separate
respective liabilities for the cargo. The loss/damage to the cargo
was sustained while it was

still on board or under the custody of the vessel. As the charterer

was itself the carrier, it
was made liable for the acts of the ship captain who was
responsible for the cargo while
under the custody of the vessel.
As for the charterer's agent, the evidence showed that it
represented the vessel when it
took charge of the unloading of the cargo and issued cargo
receipts (or tally sheets) in its
own name. Claims against the vessel for the losses/damages
sustained by that cargo were
also received and processed by it. As a result, the charterer's
agent was also considered a
ship agent and so was held to be solidarily liable with its
principal.
FACTS:
On December 24, 1975, the petitioner filed an admiralty case
against Oyama Shipping Co., Ltd. and its agent Citadel Lines, Inc.
through the petitioners agent F.E. Zuellig, Inc. The complaint
alleged that on December 21, 1974, 60,000 bags of urea nitrogen
were shipped from Ninama, Japan on board the S/S St. Lourdes,
owned and operated by Citadel Lines, Inc(def.s agent). and
insured by the petitioner for the sum of Php 9,319,105.00 against
all risks. The shipment was discharged from the vessel S/S St.
Lourdes shipside into lighters owned by Mabuhay Brokerage
Company, Inc. but when the same was subsequently delivered to
and acknowledged by the consignee, it was found out to have
sustained losses and or damage amounting to Php 38,698.94. The
amount was paid by petitioner insurance company to the
consignee by virtue of which payment became subrogated to the
rights of the latter.
Insurance company filed a case against Oyoma, Citadel and
Manila Brokerage Co., as alternative defendants to determine
their liability.
As a defense, Citadel claimed that as an agent of Oyoma, it should
not be held liable for the damages incurred by the goods.
Oyoma on the other hand, claimed that it has no agent to
represent it in the Philippines, since it has been declared
insolvent by the Tokyo court, and so the Insurance Company
should file its claim there. It also raised the defense that the
negligence was attributable to the shipper, Sumitomo Shoji
Kaisha, Ltd for not having placed the goods in a seaworthy
package.It also stated that it was Manila Brokerage who failed to
exercise the diligence required.
RTC: ruled that ONLY Oyoma should be held liable because
Citadel is only an agent as contemplated by the Civil Code, hence,
it should not be made liable for the damages incurred. Oyoma
raised the defense of prescription, but it was not substantiated by
any evidence. Insolvency would not in any way affect his liability.
Manila Brokerage had exercised diligence, as soon as they saw
the damages, it tied the goods and sewed the torn portions of the
package.
ISSUE:
Whether or not Citadel Lines, Inc. may be held primarily liable for
the loss/damage found to have been sustained by subject
shipment while on board and / or still in the custody of the said
vessel?
HELD:
YES. The lower court erred in applying the law on agency under
the Civil Code. The Code of Commerce provides, among others
that the ship agent shall also be liable for the indemnities in favor
of third persons which arise from the conduct of the captain in
the care of the goods which the vessel carried; but he may

exempt himself therefrom by abandoning the vessel with all her

equipment and the freightage he may have earned during the
voyage. Citadel Lines, Inc. as the ship agent is liable to the
petitioner, solidarily with its principal Oyama Shipping Co, Ltd.
RATIO:
A ship agent, according to Article 586 of the Code of Commerce,
is the person entrusted with the provisioning
It is not disputed by the private respondent that it is the local
representative in the Philippines of the Oyama Shipping Co., Ltd.
and, as alleged by petiti oner, upon arrival of the vessel S/S "St.
Lourdes" in Manila, it took charge of the unloading of the cargo
and issued cargo receipts (or tally sheets) in its own name, as an
evidence of the discharge of cargoes and the conditions thereof
from the vessel to the arrastre operators and /or unto
barges/lighters, and that claims against the vessel S/S "St.
Lourdes" for losses/damages sustained by shipments were in fact
filed and processed by respondent Citadel Lines, Inc. These facts
point to the inevitable conclusion that private respondent is the
entity that represents the vessel in the port of Manila and hence
is a ship agent within the meaning and context of Article 586 of
the Code of Commerce.
The Code of Commerce provides, among others, that the ship
agent shall also be liable for the indemnities in favor of third
persons which arise from the conduct of the captain in the care of
the goods which the vessel carried; but he may exempt himself
therefrom by abandoning the vessel with all her equipments and
the freightage he may have earned during the voyage. (Article
587).
In addition, Article 618 of the same Code states:
Art. 618. The captain shall be civilly liable to the ship agent and
the latter to the third persons who may have made contracts with
the former
1. For all the damages sufferred by the vessel and its cargo by
reason of want of skill or negligence on his part. If a
misdemeanor or crime has been committed he shall be liable in
accordance with the Penal Code.
2. For all the thefts and robberies committed by the crew,
reserving his right of action against the guilty parties.
3. For the losses, fines, and confiscations imposed on account of
violation. of the laws and regulations of customs, police, health,
and navigation
4. For the losses and damages caused by mutinies on board the
vessel or by reason of faults committed by the crew in the service
and defense of the same, if he does not prove Chat, he made full
use of his authority to prevent or avoid them.
5. For those arising by reason of a misuse of powers and nonfulfillment of the duties which pertain to him in accordance with
Articles 610 and 612.
6. For those arising by reason of his going out of his course or
taking a course which, in the opinion of the officers of the vessel,
at a meeting attended by the shippers or super cargoes who may
be on board, he should not have taken without sufficient cause.
No exception whatsoever shall exempt him from his obligation.
7. For those arising by reason of his voluntarily entering a port
other than his destination, with the exception of the cases or
without the formalities referred to in Article 612.
8. For those arising by reason of the non-observance of the
provisions contained in the regulations for lights and maneuvers
for the purpose of preventing collisions.
At any rate, the liabilities of the ship agent are not disputed by
private respondent. It appearing that the Citadel Lines is the ship
agent for the vessel S/S "St. Lourdes" at the port of Manila, it is,
therefore, liable to the petitioner, solidarily with its principal,
Oyama Shipping Co., Ltd., in an amount representing the value of

the goods lost and or damaged, amounting to P38,698.94, which

was likewise the amount paid by petitioner, as insurer, to the
insured consignee As found by the court a quo, there has been no
proof presented to show that the officers of the vessel, in whose
custody the goods were lost or damaged, are exempt from
liability therefrom and that the damage was caused by factors
and circumstances exempting them from liability.
The insolvency of Oyama Lines has no bearing on the instant case
insofar as the liability of Citadel Lines, Inc. is concerned. The law
does does not make the liability of the ship agent dependent upon
the solvency or insolvency of the ship owner.
WHEREFORE, the decision appealed from is modified, and
private respondent Citadel Lines, Inc. is hereby ordered to pay,
solidarily with its principal, Oyama Lines (Oyama Shipping Co.,
LTD.), the amount of P38,698.94, with interest thereon at the
legal rate from the date of the filing of the complaint on
December 24, 1975 until fully paid, P5,000.00 as attorney's fees
and the costs of suit. The rest of the decision is affirmed. No
pronouncement as to costs.

5. SWEET LINES VS CA VANESSA

4. Sweet Lines v. CA, Bacatan, Quintos, Cabras, Veloso
(private respondents)
Doctrine:
In this case, the voyage to Catbalogan was "interrupted" by the
captain upon instruction of
management. The "interruption" was not due to fortuitous event
or for majeure nor to
disability of the vessel. Having been caused by the captain
upon instruction of
management, the passengers' right to indemnity from the
ship owner. The owner of a
vessel and the ship agent shall be civilly liable for the acts of
the captain.
Under Article 2220 of the Civil Code, moral damages are justly
due in breaches of contract
where the defendant acted fraudulently or in bad faith. In this
case there was bad faith as
the shipowner did not give notice to the respondents as to the
change in schedule and in
fact bypassed them to comply with its schedule. However, no
exemplary damages were not
awarded.
The owner of a vessel is liable in damages arising from the act
of its captain in by-passing
a pre-scheduled port of call
Mechanical defects in a common carrier (e.g. boats, vehicles)
are not considered fortuitous
events.
Facts:
The 4 private respondents in this case bought 4 first class
tickets from SWEET LINES to go
to CATBALOGAN, SAMAR. The boat failed to leave on the stated
time (12MN) and instead
left at 8AM due to engine trouble.
The boat did not dock at CATBALOGAN, the first port of call and
instead proceeded to
TACLOBAN. The respondents had no choice but to disembark at
TACLOBAN and they had
to board a ferryboat to CATBALOGAN. Hence, they sued SWEET
LINES for damages.
Issue: Is Sweet Lines liable for damages? YES
Pertinent Provisions
ART. 614. A captain who, having agreed to make a voyage, fails to
fulfill his undertaking, without
being prevented by fortuitous event or force majeure, shall
indemnify all the losses which his
failure may cause, without prejudice to criminal penalties which
may be proper.
ART. 698. In case of interruption of a voyage already begun, the
passengers shall only be
obliged to pay the fare in proportion to the distance covered,
without right to recover damages if
the interruption is due to fortuitous event or force majeure, but
with a right to indemnity, if the
interruption should have been caused by the captain exclusively.
If the interruption should be
caused by the disability of the vessel, and the passenger should
agree to wait for her repairs, he
may not be required to pay any increased fare of passage, but his
living expenses during the
delay shall be for his own account.
As found by both Courts below, there was no fortuitous event
or force majeure which
prevented the vessel from fulfilling its undertaking of taking
private respondents to
Catbalogan. In the first place, mechanical defects in the
carrier are not considered

a caso fortuito that exempts the carrier from responsibility

In the second place, even granting arguendo that the engine
failure was a fortuitous event,
it accounted only for the delay in departure. When the vessel
finally left there was no longer
anyforce majeure that justified by-passing a port of call. The
vessel was completely
repaired the following day.
The reason for by-passing the port of Catbalogan, as admitted
by SWEET LINEs General
Manager, was to enable the vessel to catch up with its schedule
for the next week. The
record also discloses that there were 50 passengers for Tacloban
compared to 20
passengers for Catbalogan, so that the Catbalogan phase could
be scrapped without
too much loss for the company.
In this case, the voyage to Catbalogan was "interrupted" by the
captain upon instruction of
management. The "interruption" was not due to fortuitous event
or for majeure nor to
disability of the vessel. Having been caused by the captain
upon instruction of
management, the passengers' right to indemnity from the
ship owner is evident. The
owner of a vessel and the ship agent shall be civilly liable for
the acts of the captain.
RESOLUTION
DOCTRINE: The "interruption" was not due to fortuitous event or
force majeure nor to disability of the vessel. Having been caused
by the captain upon instruction of management, the passengers'
right to indemnity is evident. The owner of a vessel and the ship
agent shall be civilly liable for the acts of the captain.
FACTS:
PRs (Quintos, Bacatan Cabras and Veloso) purchased first- class
tickets from petitioner at its office in Cebu City. They were to
board petitioner's vessel, M/V Sweet Grace, bound for
Catbalogan, Western Samar. Instead of departing at the
scheduled hour of about midnight on July 8, 1972, the vessel set
sail at 3:00 A.M. of July 9, 1972 only to be towed back to Cebu due
to engine trouble, arriving there at about 4:00 P.M. on the same
day. Repairs having been accomplished, the vessel lifted anchor
again on July 10, 1972 at around 8:00 A.M.
Instead of docking at Catbalogan, which was the first port of
call, the vessel proceeded direct to Tacloban at around 9:00
P.M. of July 10, 1972. Private respondents had no recourse but to
disembark and board a ferryboat to Catbalogan.
Hence, this suit for damages for breach of contract of carriage.
TC& CA: NO FORTUITOUS EVENT. MECHANICAL DEFECTS ARE
NOT CONSIDERED CASO FORTUITO. Even granting arguendo that
the engine failure was a fortuitous event, it accounted only for
the delay in departure. When the vessel finally left the port of
Cebu on July 10, 1972, there was no longer any force majeure
that justified by-passing a port of call. The vessel was
completely repaired the following day after it was towed back
to Cebu. Ordered Sweet Lines to pay PRs. MD = 175k to be
divided among them, ED = 30k, and AF = 5k.
ISSUE: Whether Sweet Lines is liable? YES.
HELD:
REASON FOR BY-PASSING CATBALOGAN: (As admitted by
petitioner's General Manager) was to enable the vessel to catch
up with its schedule for the next week. The record also discloses

that there were 50 passengers for Tacloban compared to 20

passengers for Catbalogan, so that the Catbalogan phase could be
scrapped without too much loss for the company.
Sweet Lines cannot rely on the conditions in small bold print at
the back of the ticket reading.
The passenger's acceptance of this ticket shall be considered as an
acceptance of the following conditions:
3. In case the vessel cannot continue or complete the trip for any
cause whatsoever, the carrier reserves the right to bring the
passenger to his/her destination at the expense of the carrier or to
cancel the ticket and refund the passenger the value of his/her
ticket;
11. The sailing schedule of the vessel for which this ticket was
issued is subject to change without previous notice.
Even assuming that those conditions are squarely applicable to
the case at bar, petitioner did not comply with the same. It did
not cancel the ticket nor did it refund the value of the tickets
to private respondents. Besides, it was not the vessel's sailing
schedule that was involved. Private respondents' complaint is
directed not at the delayed departure the next day but at the bypassing of Catbalogan, their destination. Had petitioner notified
them previously, and offered to bring them to their destination at
its expense, or refunded the value of the tickets purchased,
perhaps, this controversy would not have arisen.
The governing provisions are found in the Code of Commerce and
read as follows:
ART. 614. A captain who, having agreed to make a voyage, fails to
fulfill his undertaking, without being prevented by fortuitous
event or force majeure, shall indemnify all the losses which his
failure may cause, without prejudice to criminal penalties which
may be proper.
ART. 698. In case of interruption of a voyage already begun, the
passengers shall only be obliged to pay the fare in proportion to
the distance covered, without right to recover damages if the
interruption is due to fortuitous event or force majeure, but with
a right to indemnity, if the interruption should have been caused
by the captain exclusively. If the interruption should be caused by
the disability of the vessel, and the passenger should agree to
wait for her repairs, he may not be required to pay any increased
fare of passage, but his living expenses during the delay shall be
for his own account.
The crucial factor then is the existence of a fortuitous event or
force majeure. Without it, the right to damages and indemnity
exists against a captain who fails to fulfill his undertaking or
where the interruption has been caused by the captain
exclusively.
The voyage to Catbalogan was "interrupted" by the captain
upon instruction of management. The "interruption" was not
due to fortuitous event or for majeure nor to disability of the
vessel. Having been caused by the captain upon instruction of
management, the passengers' right to indemnity is evident.
The owner of a vessel and the ship agent shall be civilly
liable for the acts of the captain.
Under Article 2220 of the Civil Code, moral damages are justly
due in breaches of contract where the defendant acted
fraudulently or in bad faith.
TC & CA found that there was bad faith on the part of petitioner
in that:
- did not give notice to plaintiffs- appellees as to the change of
schedule of the vessel;

- despite knowing fully well that it would take no less than

fifteen hours to effect the repairs of the damaged engine, Sweet
Lines instead made announcement of assurance that the vessel
would leave within a short period of time, and when PRs wanted
to leave the port and gave up the trip, Sweet Lines employees
would come and say, 'we are leaving, already.'
- did not offer to refund plaintiffs-appellees' tickets nor provide
them with transportation from Tacloban City to Catbalogan.
Under the circumstances, however, award of MD excessive and
accordingly reduce them to 3k, respectively, for each of the
private respondents.
The total award of AF of 5k is in order.
Insofar as ED are concerned, although there was bad faith, the
Court is not inclined to grant them in addition to moral damages.
Exemplary damages cannot be recovered as a matter of right; the
Court decides whether or not they should be adjudicated. The
objective to meet its schedule might have been called for, but
petitioner should have taken the necessary steps for the
protection of its passengers under its contract of carriage.
DISPOSITIVE PORTION: ACCORDINGLY, the judgment appealed
from is hereby modified in that petitioner is hereby sentenced to
indemnify private respondents in the sum of P3,000.00 each,
without interest, plus P1,250.00, each, by way of att/rney's fees
and litigation expenses. Costs against petitioner.

6. INTER-ORIEN MARITIME ENTERPRISES VS NLRC KIKOY

5. Inter-orient v. NLRC
Doctrine:
Compagnie de Commerce vs. Hamburg is instructive and
wherein the Court recognized the discretionary authority of the
master of a vessel and his right to exercise his best judgment,
with respect to navigating the vessel he commands
The captain has control of all departments of service in the
vessel, and reasonable discretion as to its navigation
A captain commonly performs three (3) distinct roles: (1) he is
a general agent of the shipowner; (2) he is also commander and
technical director of the vessel; and (3) he is a representative of
the country under whose flag he navigates. The most important
role has to do with the operation and preservation of the vessel
during its voyage.
Facts:
CAPTAIN TAYONG was employed by TRENDA WORLD
SHIPPING through INTERORIENT
MARITIME ENTERPRISES for 1 year. On 1989, he assumed
command of the vessel of TRENDA with instructions to sail to
SOUTH AFRICA to load 120k tons of coal.
TAYONG encountered problems during the voyage, such as the
lack of oxygene and acetylene. These were necessary for the
welding repair of the turbo-charger and the economizer. He was
not immediately given these supplies and instead ordered to shut
down the economizer, and instead use the auxiliary boilers.
TAYONG decided to not immediately proceed to S.A. until the
supplies were eventually delivered.
The supplies eventually arrived after 7 hours and the ship was
able to proceed to S.A.
However, upon arrival, TAYONG was relieved of his position and
thereafter repatriated for not following orders. He then filed a
complaint for illegal dismissal with the POEA. The
POEA granted his claim and awarded him his unpaid salary.
Issue: Was there sufficient basis to dismiss TAYONG? No.
The captain of a vessel is a confidential and managerial
employee within the meaning of
the above doctrine. Hence, he cannot be dismissed without just
cause.
Moreover, a master or captain, for purposes of maritime
commerce, is one who has command of a vessel. A captain
commonly performs three (3) distinct roles: (1) he is a general
agent of the shipowner; (2) he is also commander and technical
director of the
vessel; and (3) he is a representative of the country under whose
flag he navigates. The
most important role has to do with the operation and
preservation of the vessel during its
voyage.
In this case, the captain was dismissed without due process.
More importantly, there is no
basis for terminating him. A captain must be accorded a
reasonable measure of
discretionary authority to decide to promote the safety of the
ship and its crew. In this case,
TAYONG was convinced that the ship should not sail unless the
economizer and tubrocharger
were completely repaired. There being no basis to terminate him,
it follows that he
was illegally dismissed3
IMPORTANT: A "turbo-charger" is a centrifugal blower driven by
exhaust gas turbines and
used to supercharge an engine, or to supply a charge to the intake
of an internal-combustion
engine at a pressure higher than that of the surrounding
atmosphere (Webster's New World
Dictionary (1974), p. 1532.

An "economizer" is a device in which water is heated preliminary

to entering the boiler proper.
The heat which was used in raising the temperature of the water
contained in the boiler to boiling
point is utilized, instead of being wasted, for the purpose of
raising the water in the economizer
to a high temperature before it enters the boiler. An increase in
the feed water temperature will
raise boiler efficiency. (Ithaca Traction Corp. vs. Traveler's
Indemnity Co., 177 N.Y.S. 753
[1919]).

G.R. No. 115286 August 11, 1994

INTER-ORIENT MARITIME ENTERPRISES, INC., SEA HORSE SHIP,
INC. and TRENDA WORLD SHIPPING (MANILA), INC., petitioners,
vs.NATIONAL LABOR RELATIONS COMMISSION and RIZALINO
D. TAYONG, respondents.
Sorry mahaba yung facts, ang daming technical shiz kasi. Pero to
cut the facts short, Si Toyong yung captain ng ship(Biyahe is from
hong kong South Africa), nagkaproblema yung ship at tumirik
during the voyage, nagrequest siya ng supplies to repair the ship,
late dumating yung supplies. Sinabihan siya na pwede naman
daw bumiyahe yung ship, pero di pumayag si tayong kasi baka di
kayanin. So ayun pag dating niya sa destination, tayong got fired
dahil daw sa delay di nagbayad yung charterer. Hence the Illegal
dismissal case.
Doctrine: a ship's captain must be accorded a reasonable
measure of discretionary authority to decide what the safety of
the ship and of its crew and cargo specifically requires on a
stipulated ocean voyage. The captain is held responsible, and
properly so, for such safety. He is right there on the vessel, in
command of it and (it must be presumed) knowledgeable as to
the specific requirements of seaworthiness and the particular
risks and perils of the voyage he is to embark upon. The
applicable principle is that the captain has control of all
departments of service in the vessel, and reasonable discretion as
to its navigation.
The captain of a vessel is a confidential and managerial employee
within the meaning of the above doctrine. A master or captain,
for purposes of maritime commerce, is one who has command of
a vessel. A captain commonly performs three (3) distinct roles:
(1) he is a general agent of the shipowner; (2) he is also
commander and technical director of the vessel; and (3) he is a
representative of the country under whose flag he navigates.
Facts:
Private respondent Captain Rizalino Tayong, a licensed Master
Mariner with experience in commanding ocean-going vessels,
was employed on 6 July 1989 by petitioners Trenda World
Shipping (Manila), Inc. and Sea Horse Ship Management, Inc.
through petitioner Inter-Orient Maritime Enterprises, Inc. as
Master of the vessel M/VOceanic Mindoro, for a period of one (1)
year, as evidenced by an employment contract.
On 15 July 1989, Captain Tayong assumed command of
petitioners' vessel at the port of Hongkong. His instructions were
to replenish bunker and diesel fuel, to sail forthwith to Richard
Bay, South Africa, and there to load 120,000 metric tons of coal.
On 16 July 1989, while at the Port of Hongkong and in the process
of unloading cargo, Captain Tayong received a weather report
that a storm code-named "Gordon" would shortly hit Hongkong.
Precautionary measures were taken to secure the safety of the
vessel, as well as its crew, considering that the vessel's turbocharger was leaking and the vessel was fourteen 14 years old.
Tayong followed-up the requisition by the former captain of the
Oceanic Mindoro for supplies of oxygen and acetylene, necessary
for the welding-repair of the turbo-charger and the economizer. 1
This requisition had been made upon request of the Chief
Engineer of the vessel and had been approved by the shipowner.

the vessel sailed from Hong Kong for Singapore. In the Master's
sailing message, Captain Tayong reported a water leak from M.E.
Turbo Charger No. 2 Exhaust gas casing. He was subsequently
instructed to blank off the cooling water and maintain reduced
RPM unless authorized by the owners.
while the vessel was en route to Singapore, Captain Tayong
reported that the vessel had stopped in mid-ocean for six (6)
hours and forty-five (45) minutes due to a leaking economizer.
He was instructed to shut down the economizer and use the
auxiliary boiler instead.
On 31 July 1989 at 0607 hrs., the vessel arrived at the port of
Singapore. 5 The Chief Engineer reminded Captain Tayong that
the oxygen and acetylene supplies had not been delivered. 6
Captain Tayong inquired from the ship's agent in Singapore about
the supplies. The ship agent stated that these could only be
delivered at 0800 hours on August 1, 1989 as the stores had
closed.
Captain Tayong called the shipowner, Sea Horse Ship
Management, Ltd., in London and informed them that the
departure of the vessel for South Africa may be affected because
of the delay in the delivery of the supplies.
Sea Horse advised Captain Tayong to contact its Technical
Director, Mr. Clark, who was in Tokyo and who could provide a
solution for the supply of said oxygen and acetylene.
On the night of 31 July 1989, Mr. Clark received a call from
Captain Tayong informing him that the vessel cannot sail without
the oxygen and acetylene for safety reasons due to the problems
with the turbo charger and economizer. Mr. Clark responded that
by shutting off the water to the turbo chargers and using the
auxiliary boiler, there should be no further problems. According
to Mr. Clark, Captain Tayong agreed with him that the vessel
could sail as scheduled on 0100 hours on 1 August 1989 for
South Africa.
According to Captain Tayong, however, he communicated to Sea
Horse his reservations regarding proceeding to South Africa
without the requested supplies, 11 and was advised by Sea Horse
to wait for the supplies at 0800 hrs. of 1 August 1989, which Sea
Horse had arranged to be delivered on board the Oceanic
Mindoro. 12 At 0800 hours on 1 August 1989, the requisitioned
supplies were delivered and Captain Tayong immediately sailed
for Richard Bay.
When the vessel arrived at the port of Richard Bay, South Africa
on 16 August 1989, Captain Tayong was instructed to turn-over
his post to the new captain. He was thereafter repatriated to the
Philippines, after serving petitioners for a little more than two
weeks. 13 He was not informed of the charges against him.
Tayong instituted a complaint for illegal dismissal before the
Philippine Overseas Employment Administration ("POEA"),
claiming his unpaid salary for the unexpired portion of the
written employment contract, plus attorney's fees.
Petitioners, in their answer to the complaint, denied that they had
illegally dismissed Captain Tayong. Petitioners alleged that he
had refused to sail immediately to South Africa to the prejudice
and damage of petitioners. According to petitioners, as a direct
result of Captain Tayong's delay, petitioners' vessel was placed
"off-hire" by the charterers for twelve (12) hours. This meant
that the charterers refused to pay the charter hire or
compensation corresponding to twelve (12) hours, amounting to
US$15,500.00, due to time lost in the voyage. They stated that
they had dismissed private respondent for loss of trust and
confidence.
POEA dismissed Captain Tayong's complaint and held that there
was valid cause for his untimely repatriation. The decision of the
POEA placed considerable weight on petitioners' assertion that
all the time lost as a result of the delay was caused by Captain
Tayong and that his concern for the oxygen and acetylene was
not legitimate as these supplies were not necessary or
indispensable for running the vessel.

National Labor Relations Commission ("NLRC") reversed and set

aside the decision of the POEA. The NLRC found that Captain
Tayong had not been afforded an opportunity to be heard and
that no substantial evidence was adduced to establish the basis
for petitioners' loss of trust or confidence in the Captain. The
NLRC declared that he had only acted in accordance with his
duties to maintain the seaworthiness of the vessel and to insure
the safety of the ship and the crew.
Issue/s: Was the NLRC correct in affirming the POEA decision? YES

Held:
It is well settled in this jurisdiction that confidential and
managerial employees cannot be arbitrarily dismissed at any
time, and without cause as reasonably established in an
appropriate investigation. 15 Such employees, too, are entitled to
security of tenure, fair standards of employment and the
protection of labor laws.
The captain of a vessel is a confidential and managerial employee
within the meaning of the above doctrine. A master or captain,
for purposes of maritime commerce, is one who has command of
a vessel. A captain commonly performs three (3) distinct roles:
(1) he is a general agent of the shipowner; (2) he is also
commander and technical director of the vessel; and (3) he is a
representative of the country under whose flag he navigates. 16 Of
these roles, by far the most important is the role performed by
the captain as commander of the vessel; for such role (which,
to our mind, is analogous to that of "Chief Executive Officer"
[CEO] of a present-day corporate enterprise) has to do with the
operation and preservation of the vessel during its voyage and
the protection of the passengers (if any) and crew and cargo. In
his role as general agent of the shipowner, the captain has
authority to sign bills of lading, carry goods aboard and deal with
the freight earned, agree upon rates and decide whether to take
cargo. The ship captain, as agent of the shipowner, has legal
authority to enter into contracts with respect to the vessel and
the trading of the vessel, subject to applicable limitations
established by statute, contract or instructions and regulations of
the shipowner. 17 To the captain is committed the governance,
care and management of the vessel. 18 Clearly, the captain is
vested with both management and fiduciary functions.
It is plain from the records of the present petition that Captain
Tayong was denied any opportunity to defend himself.
Petitioners curtly dismissed him from his command and
summarily ordered his repatriation to the Philippines without
informing him of the charge or charges levelled against him, and
much less giving him a chance to refute any such charge.
a ship's captain must be accorded a reasonable measure of
discretionary authority to decide what the safety of the ship
and of its crew and cargo specifically requires on a
stipulated ocean voyage. The captain is held responsible, and
properly so, for such safety. He is right there on the vessel, in
command of it and (it must be presumed) knowledgeable as
to the specific requirements of seaworthiness and the
particular risks and perils of the voyage he is to embark
upon. The applicable principle is that the captain has control
of all departments of service in the vessel, and reasonable
discretion as to its navigation.
Dispositive: ACCORDINGLY, petitioners having failed to show
grave abuse of discretion amounting to loss or excess of
jurisdiction on the part of the NLRC in rendering its assailed
decision, the Petition for Certiorari is hereby DISMISSED, for lack
of merit. Costs against petitioners.

7.
TABACALERA INSURANCE CO VS NORTH FRONT
SHIPPING JEROME
6. Tabacalera Insurance v. North Front
Doctrine:
A charter party between a shipper and a carrier does not
convert the carrier into a private
carrier.
Failure on the part of the consignee to start unloading
operations upon notice constitutes
contributory negligence
Facts:
On August 1990, 20k sacks of corn grains were shipped on
board NORTH FRONT 777, a
ship owned by NORTH FRONT SHIPPING. It was consigned to
REPUBLIC FLOUR
MILLS, and insured with TABACALERA insurance.
When the cargo reached its destination, it was found that the
merchandise was already
moldy and deteriorating. It was found that the goods were
damaged due to contact with
SALT WATER. The insurers paid REPUBLIC FLOUR the value of
the goods and thereafter
sued NORTH FRONT SHIPPING for damages.
o The TC dismissed the complaint on the ground that the contract
entered into was
a charter-party agreement. As such, only ordinary diligence was
required of
NORTH FRONT. The inspection of the barge by the shipper and
the
representatives of the shipping company before actual loading,
coupled with the Permit to Sail issued by the Coast Guard,
sufficed to meet the degree of
diligence required of the carrier.
o CA affirmed but found that NORTH FRONT was a common
carrier and it
complied with its duty to exercise extraordinary diligence.
Issue: Was NORTH FRONT a COMMON CARRIER? Yes.
NORTH FRONT is a COMMON CARRIER
The charter-party agreement between North Front Shipping
Services, Inc., and Republic
Flour Mills Corporation did not in any way convert the common
carrier into a private carrier
North Front Shipping Services, Inc., is a corporation engaged in
the business of
transporting cargo and offers its services indiscriminately to the
public. It is without doubt a
common carrier. As such it is required to observe
extraordinary diligence in its
vigilance over the goods it transports.
Extraordinary diligence was NOT exercised
North Front Shipping Services, Inc., proved that the vessel was
inspected prior to actual
loading by representatives of the shipper and was found fit to
take a load of corn grains..
However, having been in the service since 1968, the master of the
vessel should have
known at the outset that corn grains that were farm wet and
not properly dried would
eventually deteriorate when stored in sealed and hot
compartments as in hatches of
a ship.
With this knowledge, the master of the vessel and his crew
should have undertaken
precautionary measures to avoid or lessen the cargo's
possible deterioration as they
were presumed knowledgeable about the nature of such
cargo. But none of such
measures was taken.

However, the consignee REPUBLIC FLOUR is also guilty of

contributory negligence.
It was seasonably notified of the arrival of the goods but it
did not immediately start
unloading operations. This led to the further deterioration of
the goods in question.
Insurers win.
DOCTRINE: A 'charter-party' is defined as a contract by which an
entire ship, or some principal part thereof, is let by the owner to
another person for a specified time or use; a contract of
affreightment by which the owner of a ship or other vessel lets
the whole or a part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of
the payment of freight x x x x Contract of affreightment may
either be time charter, wherein the vessel is leased to the
charterer for a fixed period of time, or voyage charter, wherein
the ship is leased for a single voyage. In both cases, the charterparty provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage,
the ship owner to supply the ship's store, pay for the wages of the
master of the crew, and defray the expenses for the maintenance
of the ship.
FACTS
sacks of corn grains valued at P3,500,640.00 were shipped on
board North Front 777
The cargo was consigned to Republic Flour Mills Corporation
It was insured with the herein petitioners
The vessel was inspected prior to actual loading by
representatives of the shipper and was found fit to carry the
merchandise
The cargo was covered with tarpaulins and wooden boards.
The hatches were sealed and could only be opened by
representatives of Republic Flour Mills Corporation.
The vessel left Cagayan de Oro City on 2 August 1990 and arrived
Manila on 16 August 1990. Republic Flour Mills Corporation was
advised of its arrival but it did not immediately commence the
unloading operations
There were days when unloading had to be stopped due to
variable weather conditions and sometimes for no apparent
reason at all. When the cargo was eventually unloaded there was
a shortage of 26.333 metric tons
. The remaining merchandise was already moldy, rancid and
deteriorating. The unloading operations were completed on 5
September 1990 or twenty (20) days after the arrival of the barge
at the wharf of Republic Flour Mills Corporation in Pasig City.
Precision Analytical Services, Inc., was hired to examine the corn
grains and determine the cause of deterioration A Certificate of
Analysis was issued indicating that the corn grains had 18.56%
moisture content and the wetting was due to contact with salt
water. The mold growth was only incipient and not sufficient to
make the corn grains toxic and unfit for consumption. In fact the
mold growth could still be arrested by drying. Republic Flour
Mills Corporation rejected the entire cargo and formally
demanded from North Front Shipping Services, Inc., payment for
the damages suffered by it. The demands however were
unheeded. The insurance companies were perforce obliged to
pay Republic Flour Mills Corporation P2,189,433.40.
insurance companies lodged a complaint for damages against
North Front Shipping Services, Inc., claiming that the loss was
exclusively attributable to the fault and negligence of the carrier.
The Marine Cargo Adjusters found:

found cracks in the bodega of the barge

did not notice any seals in the hatches
tarpaulins were not brand new as there were patches

bulkhead of the barge was rusty.

North Front Shipping Services, Inc defenses:

Captain Solomon Villanueva, master of the vessel,

reiterated that the barge was inspected prior to the actual
loading and was found adequate and seaworthy

Was issued a permit to sail by the Coast Guard.

tarpaulins were doubled and brand new and the

hatches were properly sealed.

did not encounter big waves

corn grains were farm wet and not properly dried when
loaded.
court below dismissed the complaint
It ruled that the contract entered into between North Front
Shipping Services, Inc., and Republic Flour Mills Corporation was
a charter-party agreement. As such, only ordinary diligence in
the care of goods was required of North Front Shipping Services,
Inc.
Court of Appeals ruled that as a common carrier required to
observe a higher degree of diligence North Front 777
satisfactorily complied with all the requirements hence was
issued a Permit to Sail after proper inspection. Consequently, the
complaint was dismissed and the motion for reconsideration
rejected.
So dismissed parin
ISSUE: WON NORTH front 777 should be considered a private
carrier due to the charter agreement? NO
Or WON the dismissal was proper? NO
HELD: WHEREFORE, the Decision of the Court of Appeals of 22
December 1994 and its Resolution of 16 February 1995 are
REVERSED and SET ASIDE. Respondent North Front Shipping
Services, Inc., is ordered to pay petitioners Tabacalera Insurance
Co., Prudential Guarantee & Assurance, Inc., and New Zealand
Insurance Co. Ltd., P1,313,660.00 which is 60% of the amount
paid by the insurance companies to Republic Flour Mills
Corporation, plus interest at the rate of 12% per annum from the
time this judgment becomes final until full payment. SO
ORDERED.
RATIO: The charter-party agreement between North Front
Shipping Services, Inc., and Republic Flour Mills Corporation did
not in any way convert the common carrier into a private carrier
A 'charter-party' is defined as a contract by which an entire ship,
or some principal part thereof, is let by the owner to another
person for a specified time or use; a contract of affreightment
by which the owner of a ship or other vessel lets the whole or a
part of her to a merchant or other person for the conveyance of
goods, on a particular voyage, in consideration of the payment of
freight x x x x Contract of affreightment may either be time
charter, wherein the vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein the ship is leased for a
single voyage. In both cases, the charter-party provides for the
hire of the vessel only, either for a determinate period of time or
for a single or consecutive voyage, the ship owner to supply the
ship's store, pay for the wages of the master of the crew, and
defray the expenses for the maintenance of the ship.
Upon the other hand, the term 'common or public carrier' is
defined in Art. 1732 of the Civil Code. The definition extends to
carriers either by land, air or water which hold themselves out as
ready to engage in carrying goods or transporting passengers or
both for compensation as a public employment and not as a
casual occupation x x x x
It is therefore imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited to
the ship only, as in the case of a time-charter or voyage-charter
North Front Shipping Services, Inc., proved that the vessel was
inspected prior to actual loading by representatives of the

shipper and was found fit to take a load of corn grains. They
were also issued Permit to Sail by the Coast Guard. The master
of the vessel testified that the corn grains were farm wet when
loaded. However, this testimony was disproved by the clean bill
of lading issued by North Front Shipping Services, Inc., which did
not contain a notation that the corn grains were wet and
improperly dried. Having been in the service since 1968, the
master of the vessel would have known at the outset that corn
grains that were farm wet and not properly dried would
eventually deteriorate when stored in sealed and hot
compartments as in hatches of a ship. Equipped with this
knowledge, the master of the vessel and his crew should have
undertaken precautionary measures to avoid or lessen the
cargo's possible deterioration as they were presumed
knowledgeable about the nature of such cargo. But none of such
measures was taken.
the carrier failed to observe the required extraordinary diligence
in the vigilance over the goods placed in its care. The proofs
presented by North Front Shipping Services, Inc., were
insufficient to rebut the prima facie presumption of private
respondent's negligence, more so if we consider the evidence
adduced by petitioners.
It is not denied by the insurance companies that the vessel was
indeed inspected before actual loading and that North Front 777
was issued a Permit to Sail. They proved the fact of shipment and
its consequent loss or damage while in the actual possession of
the carrier. Notably, the carrier failed to volunteer any
explanation why there was spoilage and how it occurred. On the
other hand, it was shown during the trial that the vessel had
rusty bulkheads and the wooden boards and tarpaulins bore
heavy concentration of molds. The tarpaulins used were not
new, contrary to the claim of North Front Shipping Services, Inc.,
as there were already several patches on them, hence, making it
highly probable for water to enter.
Laboratory analysis revealed that the corn grains were
contaminated with salt water. North Front Shipping Services,
Inc., failed to rebut all these arguments.
However, we cannot attribute the destruction, loss or
deterioration of the cargo solely to the carrier. We find the
consignee Republic Flour Mills Corporation guilty
of
contributory negligence.
It was seasonably notified of the
arrival of the barge but did not immediately start the unloading
operations. No explanation was proffered by the consignee as to
why there was a delay of six (6) days. Had the unloading been
commenced immediately the loss could have been completely
avoided or at least minimized. As testified to by the chemist who
analyzed the corn samples, the mold growth was only at its
incipient stage and could still be arrested by drying. The corn
grains were not yet toxic or unfit for consumption. For its
contributory negligence, Republic Flour Mills Corporation should
share at least 40% of the loss.[7]

8. A. MAGSAYSAY VS AGAN GAB

7. A. Magsaysay v. Agan
Doctrine:
Requisites for gross/general averages:
(1) there must be a common danger.
(2), that for the common safety part of the vessel or of the
cargo or both is sacrificed
deliberately.
(3), the ship and cargo are saved after the expenses and
damage caused.
(4), that the expenses or damages should have been
incurred or inflicted after taking
proper legal steps and authority
Facts:
SS Antonio was owned and operated by A. MAGSAYSAY It was
bound for BATANES and
APARRI with general cargo belonging to different shippers (with
AGAN among one of
them)
When the vessel reached APARRI, the ship ran aground at the
mouth of the river due to
the shifting of sandbars. It had to be refloated by Luzon
Stevedoring for an agreed amount.
The cargoes were eventually delivered to their owners, except for
AGAN, who was the only
one who did not make a deposit to answer for its contribution to
the average.
THUS, A. MAGSAYSAY sued AGAN for his contribution to the
average. AGAN argued that
he should not be held liable as the stranding of the vessel was due
to the negligence of the
ships master.
Issue: Should a general average be allowed for floating a vessel
that was accidentially
stranded? In other words, should AGAN contribute to the
average?
The law on averages is contained in the Code of Commerce.
Under that law, averages are
classified into simple or particular and general or gross.
Generally speaking, simple or particular averages include all
expenses and damages
caused to the vessel or cargo which have not inured to the
common benefit (Art. 809), and
are, therefore, to be borne only by the owner of the property
gave rise to same (Art.
810); while general or gross averages include "all the damages
and expenses which are
deliberately caused in order to save the vessel, its cargo, or both
at the same time, from a
real and known risk" (Art. 811). Being for the common benefit,
gross averages are to be
borne by the owners of the articles saved (Art. 812).
In this case, the The requisites for general and gross averages
are as follows::
First, there must be a common danger. This means, that both
the ship and the cargo,
after has been loaded, are subject to the same danger, whether
during the voyage, or in
the port of loading or unloading; that the danger arises from the
accidents of the sea,
dispositions of the authority, or faults of men, provided that the
circumstances producing
the peril should be ascertained and imminent or may rationally
be said to be certain and
imminent. This last requirement exclude measures undertaken
against a distant peril.
Second, that for the common safety part of the vessel or of
the cargo or both is

sacrificed deliberately.
Third, that from the expenses or damages caused follows the
successful saving of
the vessel and cargo.
Fourth, that the expenses or damages should have been
incurred or inflicted after
taking proper legal steps and authority
In this case, the 1st requisite was not fulfilled as the evidence
does not show that the
expenses sought to be recovered were incurred to save the ship.
The vessel ran aground
in fine weather and merely at the mouth of the river, which was
very shallow. It is the deliverance from an immediate, impending
peril, by a common sacrifice, that constitutes the
essence of general average. In the present case there is no
proof that the vessel had
to be put afloat to save it from imminent danger. What does
appear from the testimony
of plaintiff's manager is that the vessel had to be salvaged in
order to enable it "to proceed
to its port of destination." But as was said in the case just cited it
is the safety of the
property, and not of the voyage, which constitutes the true
foundation of the general
average
The 2nd requisite was also not fulfilled as the cargo did not
have to be sacrificed. It couldve
been unloaded by the owners if they were required to do so.
With respect to the third requisite, the salvage operation, was a
success. But as the
sacrifice was for the benefit of the vessel to enable it to
proceed to destination
and not for the purpose of saving the cargo, the cargo owners
are not in law bound to
contribute to the expenses.
The 4th requisite has not been proved, for it does not appear
that the expenses here in
question were incurred after following the procedure laid down
in article 813 et seq.
In conclusion A. MAGSAYSAY has not made out a case for
general average, with the
result that its claim for contribution against the defendant
cannot be granted
IF you are a shipper, and your goods are jettisoned, why do
you want a general
average loss? General average loss is a rule of equity. So that
others (other shipper and
ship owner) will pay you for your loss
G.R. No. L-6393
January 31, 1955
A. MAGSAYSAY INC., plaintiff-appellee,
vs.
ANASTACIO AGAN, defendant-appellant.
The S S "San Antonio", vessel owned and operated by plaintiff, left
Manila on October 6, 1949, bound for Basco, Batanes, vis Aparri,
Cagayan, with general cargo belonging to different shippers,
among them the defendant. The vessel reached Aparri on the
10th of that month, and after a day's stopover in that port,
weighed anchor to proceed to Basco. But while still in port, it ran
aground at the mouth of the Cagayan river, and, attempts to
refloat it under its own power having failed, plaintiff have it
refloated by the Luzon Stevedoring Co. at an agreed
compensation. Once afloat the vessel returned to Manila to refuel
and then proceeded to Basco, the port of destination. There the
cargoes were delivered to their respective owners or consignees,
who, with the exception of defendant, made a deposit or signed a
bond to answer for their contribution to the average.

On the theory that the expenses incurred in floating the vessel

constitute general average to which both ship and cargo should
contribute, plaintiff brought the present action in the Court of
First Instance of Manila to make defendant pay his contribution,
which, as determined by the average adjuster, amounts to
P841.40. Defendant, in his answer, denies liability to his amount,
alleging, among other things, that the stranding of the vessel was
due to the fault, negligence and lack of skill of its master, that the
expenses incurred in putting it afloat did not constitute general
average.
TC ruled in favor of plaintiff Magsaysay inc so defendant Agan
appealed to SC.
ISSUE: should defendant contribute?
The law on averages is contained in the Code of Commerce.
Under that law, averages are classified into simple or particular
and general or gross. Generally speaking, simple or particular
averages include all expenses and damages caused to the vessel
or cargo which have not inured to the common benefit (Art. 809),
and are, therefore, to be borne only by the owner of the property
gave rise to same (Art. 810); while general or gross averages
include "all the damages and expenses which are deliberately
caused in order to save the vessel, its cargo, or both at the same
time, from a real and known risk" (Art. 811). Being for the
common benefit, gross averages are to be borne by the owners of
the articles saved (Art. 812).
In classifying averages into simple o particular and general or
gross and defining each class, the Code (Art. 809 and 811) at the
same time enumerates certain specific cases as coming specially
under one or the other denomination. Going over the specific
cases enumerated we find that, while the expenses incurred in
putting plaintiff's vessel afloat may well come under number 2 of
article 809-which refers to expenses suffered by the vessel "by
reason of an accident of the sea of the force majuere" and
should therefore be classified as particular average, the said
expenses do not fit into any of the specific cases of general
average enumerated in article 811. No. 6 of this article does
mention "expenses caused in order to float a vessel," but it
specifically refers to "a vessel intentionally stranded for the
purpose of saving it" and would have no application where, as in
the present case, the stranding was not intentional.
olentino, in his commentaries on the Code of Commerce, gives the
following requisites for general average:
First, there must be a common danger. This means, that both the
ship and the cargo, after has been loaded, are subject to the same
danger, whether during the voyage, or in the port of loading or
unloading; that the danger arises from the accidents of the sea,
dispositions of the authority, or faults of men, provided that the
circumstances producing the peril should be ascertained and
imminent or may rationally be said to be certain and imminent.
This last requirement exclude measures undertaken against a
distant peril.
Second, that for the common safety part of the vessel or of the
cargo or both is sacrificed deliberately.
Third, that from the expenses or damages caused follows the
successful saving of the vessel and cargo.
Fourth, that the expenses or damages should have been incurred
or inflicted after taking proper legal steps and authority. (Vol. 1,
7th ed., p. 155.)
With respect to the first requisite, the evidence does not disclose
that the expenses sought to be recovered from defendant were
incurred to save vessel and cargo from a common danger. The
vessel ran aground in fine weather inside the port at the mouth of
a river, a place described as "very shallow". It would thus appear
that vessel and cargo were at the time in no imminent danger or a
danger which might "rationally be sought to be certain and
imminent." It is, of course, conceivable that, if left indefinitely at
the mercy of the elements, they would run the risk of being

destroyed. But as stated at the above quotation, "this last

requirement excludes measures undertaken against a distant
peril." It is the deliverance from an immediate, impending peril,
by a common sacrifice, that constitutes the essence of general
average. (The Columbian Insurance Company of Alexandria vs.
Ashby & Stribling et al., 13 Peters 331; 10 L. Ed., 186). In the
present case there is no proof that the vessel had to be put afloat
to save it from imminent danger. What does appear from the
testimony of plaintiff's manager is that the vessel had to be
salvaged in order to enable it "to proceed to its port of
destination." But as was said in the case just cited it is the safety
of the property, and not of the voyage, which constitutes the true
foundation of the general average.
Also,the cargo, were not in imminent peril. The cargo could,
without need of expensive salvage operation, have been unloaded
by the owners if they had been required to do so.
The final requisite has not been proved, for it does not appear
that the expenses here in question were incurred after following
the procedure laid down in article 813 et seq.
There was no average; dEfendant need not contribute

9. STANDARD OIL CO VS CASTELO NIKKI

8. Standard Oil v. Castelo
Doctrine:
the captain is primarily the representative of the owner; and
article 586 of the Code of
Commerce expressly declares that both the owner of the
vessel and the charterer,
shall be civilly liable for the acts of the master and the owner
of the vessel is civilly
liable for the acts of the captain; and he can only escape from
this civil liability by
abandoning his property in the ship and any freight that he
may have earned on the
voyage
In this case, Sir will ask again for the requisites of general
average. What happens if there
is no general average loss? Then it will be a simple/particular
average. Its a fancy way of
saying that the shipper will bear his own loss.
Facts:
CASTELO (owner) leased his interisland steamer Batangueno
to CHUMBUQUE
(charterer) for use in the conveying of cargo within the PH. In
this contract, it was stipulated
that the officers and crew of the Batangueo should be supplied
by the owner, and that the
charterer should have no other control over the captain,
pilot, and engineers than to
specify the voyages that they should make and to require the
owner to discipline or
relieve them as soon as possible in case they should fail to
perform the duties
respectively assigned to them.
The boat was hired by STANDARD OIL to deliver petroleum to
Sorsogon. The petrol was
placed on the deck of the ship and not on the hold. During its
voyage, the boat encountered
a storm. The captain was forced to jettison the petroleum. Thus,
STANDARD OIL sued
CASTELO, the shipowner. CASTELO argues that the loss was a
particular loss that should
be borne solely by STANDARD OIL.
Issue: Is the loss of the petrol a particular loss or a general
average loss? General Average
Petrol is not allowed to be stored in the hold. Hence, it is legal
to carry such product on the
ships deck. Since it was legal to carry such petrol on the deck of
the ship and the captain
had to jettison the goods to save the ship and the other goods
loaded on board, it follows
that the loss of the petrol is a GENERAL AVERAGE.
HENCE, STANDARD OIL may recover from the OWNER of the
ship (also against the
captain). This is because it is universally recognized that the
captain is primarily the
representative of the owner; and article 586 of the Code of
Commerce expressly
declares that both the owner of the vessel and the charterer,
shall be civilly liable for
the acts of the master and the owner of the vessel is civilly
liable for the acts of the
captain; and he can only escape from this civil liability by
abandoning his property in
the ship and any freight that he may have earned on the
voyage
Moreover, the captain is required to take the necessary steps to
effect the adjustment,

liquidation, and distribution of the general average. In this case,

the captain of the vessel
did not take those steps; consequently, the failure of the captain
to take those steps gave
rise to the shipowners liability.
Shipowner ordered to contribute. Shipowner loses.

10. PHIL. HOME ASSURANCE CORP VS CA EM

9. Phil Home Assurance v. CA, Eastern Shipping
Doctrine:
Where the formalities prescribed under Articles 813 and 814 of
the Code of Commerce in
order to incur the expenses and cause the damage corresponding
to gross average were
not complied with, the carrier cannot claim for contribution from
the consignees for
additional freight and salvage charges
Fire is generally not a fortuitous event
Facts:
While in KOBE, JAPAN, Eastern Shipping (ESLI) loaded to it
ship engine parts to WILLIAM
LINES, ammonium chloride to ORCAs COMPANY, glue consigned
to PAN ORIENTAL and
garments consigned to DING VELAYO.
While the vessel was off OKINAWA, JAPAN, the acetylene
cylinder in the accommodation
area of the ship exploded and this explosion set fire to the whole
ship. As a result, the
master and crew had to abandon the ship. The cargoes of the
consignees were saved and
they were subsequently charged for additional freight and
salvage costs. These charges
were all paid by PHAC, the insurer of all the consignees
PHAC in turn sued ESLI, alleging that the money it paid to the
consignees were actually
damages caused by the fault and negligence of ESLI. ESLI argued
that the fire was due to
a fortuitous event. The complaint was dismissed by the RTC on
the ground of fortuitous
event. Further, it added that the expenses incurred in saving the
cargo were considered
general average so the consignees must contribute. CA affirmed.
Issue: Was the fire a fortuitous event? NO Was the loss a general
average? NO
There is sufficient evidence to show that that the cylinder
caught fire because of the
fault/negligence of ESLI, its master and its crew. The cylinder
should not have been near
the engine room as the heat generated therefrom could cause an
explosion. It follows
therefore that the loss was not caused by a fortuitous event.
As a rule, general or gross averages include all damages
and expenses which are
deliberately caused in order to save the vessel, its cargo, or
both at the same time,
from a real and known risk (Art. 811)
While the instant case may technically fall within the purview
of Art 811, the formalities
prescribed under Articles 813 1and 814 of the Code of
Commerce in order to incur
the expenses and cause the damage corresponding to gross
average were not
complied with. Consequently, ESLI's claim for contribution
from the consignees of
the cargo at the time of the occurrence of the average must
be denied.
It follows therefore that the cargo consignees cannot be made
liable to the carrier for
additional freight and salvage charges. Consequently, carrier
must refund to the insurer the
amount it paid under protest for additional freight and salvage
charges in behalf of the
consignees. Carrier loses.
DOCTRINE:

Where the formalities prescribed under Articles 813 and 814 of

the Code of Commerce in order to incur the expenses and cause
the damage corresponding to gross average were not complied
with, the carrier cannot claim for contribution from the
consignees for additional freight and salvage charges.
Fire is generally not a fortuitous event.
FACTS:
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern
Explorer in Kobe, Japan, the following shipment for carriage to
Manila and Cebu, freight pre-paid and in good order and
condition, viz: (a) two (2) boxes internal combustion engine
parts, consigned to William Lines, Inc. under Bill of Lading
042283; (b) ten (10) metric tons (334 bags) ammonium chloride,
consigned to Orcas Company under Bill of Lading KCE-12; (c)
two hundred (200) bags Glue 300, consigned to Pan Oriental
Match Company under Bill of Lading KCE-8; and (d) garments,
consigned to Ding Velayo under Bills of Lading Nos. KMA-73 and
KMA-74. While the vessel was off Okinawa, Japan, a small flame
was detected on the acetylene cylinder located in the
accommodation area near the engine room on the main deck
level. As the crew was trying to extinguish the fire, the acetylene
cylinder suddenly exploded sending a flash of flame throughout
the accommodation area, thus causing death and severe injuries
to the crew and instantly setting fire to the whole superstructure
of the vessel. The incident forced the master and the crew to
abandon the ship. Thereafter, SS Eastern Explorer was found to
be a constructive total loss and its voyage was declared
abandoned. Several hours later, a tugboat under the control of
Faked Salvage Co. arrived near the vessel and commenced to tow
the vessel for the port of Naha, Japan. Fire fighting operations
were again conducted at the said port. After the fire was
extinguished, the cargoes which were saved were loaded to
another vessel for delivery to their original ports of destination.
ESLI charged the consignees several amounts corresponding to
additional freight and salvage charges, as follows: (a) for the
goods covered by Bill of Lading 042283, ESLI charged the
consignee the sum of P1,927.65, representing salvage charges
assessed against the goods; (b) for the goods covered by Bill of
Lading KCE-12, ESLI charged the consignee the sum of P2,980.64
for additional freight and P826.14 for salvage charges against the
goods; (c) for the goods covered by Bill of Lading KCE-8, ESLI
charged the consignee the sum of P3,292.26 for additional freight
and P4,130.68 for salvage charges against the goods; and (d) for
the goods under Bills of Lading KMA-73 and KMA-74, ESLI
charged the consignee the sum of P8,337.06 for salvage charges
against the goods. The charges were all paid Philippine Home
Assurance Corporation (PHAS) under protest for and in behalf of
the consignees.
PHAC, as subrogee of the consignees, thereafter filed a complaint
before the RTC of Manila, Branch 39, against ESLI to recover the
sum paid under protest on the ground that the same were
actually damages directly brought about by the fault, negligence,
illegal act and/or breach of contract of ESLI.
The trial court dismissed PHACs complaint and ruled in favor of
ESLI.
The Court of Appeals affirmed the trial courts findings and
conclusions.
Hence, the present petition for review.
ISSUES:
Whether or not fire is a fortuitous event. NO
Whether or not the loss was a general average. NO
HELD:
The Supreme Court reversed and set aside the judgment
appealed from, and order Eastern Shipping Lines, Inc. to return to
Philippine Home Assurance Corporation the amount it paid
under protest in behalf of the consignees herein.
There is sufficient evidence to show that that the cylinder caught
fire because of the fault/negligence of ESLI, its master and its

crew. The cylinder should not have been near the engine room as
the heat generated therefrom could cause an explosion. It follows
therefore that the loss was not caused by a fortuitous event.
As a rule, general or gross averages include all damages and
expenses which are deliberately caused in order to save the
vessel, its cargo, or both at the same time, from a real and known
risk (Art. 811)
While the instant case may technically fall within the purview of
Art 811, the formalities prescribe under Articles 813 1and 814 of
the Code of Commerce in order to incur the expenses and cause
the damage corresponding to gross average were not complied
with. Consequently, ESLI's claim for contribution from the
consignees of the cargo at the time of the occurrence of the
average must be denied.
It follows therefore that the cargo consignees cannot be made
liable to the carrier for additional freight and salvage charges.
Consequently, carrier must refund to the insurer the amount it
paid under protest for additional freight and salvage charges in
behalf of the consignees.

11. MECENAS VS CA EUNICE

10. Mecenas v. CA (mah-jong)
Doctrine:
A captain is grossly negligent if he is discovered to have been
playing mah-jong at the time
of his ships collision. It does not matter w/n he was off-duty at
that time. This in turn entitles
the victims of the collision to ACTUAL, MORAL and EXEMPLARY
damages.
Facts:
The M/T Tacloban City, a barge-type oil tanker owned by
PNOC, headed towards Bataan.
During its voyage, it collided with M/V DON JUAN, owned by
NEGROS NAVIGATION. The
DON JUAN rammed the TACLOBAN near the starboard bow. Due
to the collision, the MV
DON JUAN sank and hundreds of its passengers died.
Two of the victims were the spouses MECENAS. Thus, their
children sued NEGROS
NAVIGATION and the captain of DON JUAN.
NEGROS and CAPTAIN SANTISTEBAN were found to be liable
for the deaths and the TC
awarded 400,000 for the death of their parents This was
affirmed by the CA but the CA
reduced the damages to 100k as actual damages The Mecenas
children appealed,
assailing the reduction of damages and praying for the award of
exemplary damages.
Issue: Was NEGROS NAVIGATION and its captain grossly
negligent? YES
The evidence shows that both M/T TACLOBAN and M/V DON
JUAN were equally at fault
in the collision. M/ V Don Juan and Tacloban City became aware
of each other's presence
in the area by visual contact at a distance of 6 miles from each
other. They were fully aware
that if they continued on their course, they will meet head on.
Don Juan - steered to the
right; Tacloban City continued its course to the left. There can be
no excuse for them not
to realize that, with such maneuvers, they will collide. They
executed inadequate
maneuvers and were too late in reacting to avoid collision.
o Moreover, it was found that the CAPTAIN was playing mah-jong
up to the time of
the collision and that the DON JUAN was carrying more
passengers than it was
allowed to carry (864, when the limit was 810)
Under these circumstances, a presumption of gross negligence
on the part of the vessel
(her officers and crew) and of its ship-owner arises; this
presumption was never rebutted by
NEGROS NAVIGATION. HENCE, NEGROS and its captain are
grossly negligent and
should be held liable.
As to the issue of damages, RTC merely made the mistake of
lumping all damages
together. They must be separated. SC granted actual, moral and
exemplary and attys fees.
NEGROS lost.
4 One case was filed by SMITH BELL and another and the other
by SMITH BELL also, with
TOKYO MARINE in separate RTCs. The TOKYO Marine Case was
handled by then Judge
Serafin Cuevas
5 Its a long and complicated case concerning res judicata. Check
orig if you want.
**same story with negros case (case no. 11 week 12)

Facts:
M/T Tacloban (barge-type oil tanker) collided with M/V Don Juan
( inter-island vessel carrying 750 passengers). When the collision
occurred, the sea was calm, the weather fair and visibility good.
As a result, M/V Don Juan sank and the passengers perished.
Petitioners are the children of the Macenas spouses who perished
due to the coliision. They file an action for damages alleging the
negligence of Capt. Santisteban (captain of Don Juan) and Negros
Navigation (owner of Don Juan).
RTC:
M/ V Don Juan and Tacloban City became aware of each other's
presence in the area by visual contact at a distance of something
like 6 miles from each other. They were fully aware that if they
continued on their course, they will meet head on. Don Juan steered to the right; Tacloban City continued its course to the left.
There can be no excuse for them not to realize that, with such
maneuvers, they will collide. They executed maneuvers
inadequate, and too late, to avoid collision.
The Court is of the considered view that the defendants are
equally negligent and are liable for damages. (p. 4, decision). RTC
ordered Negros Navigation and its capital jointly and severally
liable to pay damages to the petitioners.
The Court of Appeals, for its part, reached the same conclusion.
However, the CA deducted the damages awarded from 400k to
100k.
Issue:
1. Who was negligent?
2. Whether or not Capt. Santisteban and Negros Navigation was
negligent.
Held:
1. Both vessels were at fault.
Rule 18 of the International Rules of the Road which requires 2
power-driven vessels meeting end on or nearly end on each to
alter her course to starboard so that each vessel may pass on the
port side of each other.
In the case, M/V Tacloban, as held by the report of the
Commandant of the Philippine Coast Guard, failed to follow the
Rules. Hence, she was deemed negligent.
However, route observance of the International Rules of the Road
will not relieve a vessel from responsibility if the collision could
have been avoided by proper skill on her part or even a
departure from the rules.
M/V Don Juan having sighted M/V Tacloban when it was still a
long way off was negligent in failing to take early preventive
action and in allowing the 2 vessels to come into close quarters as
to render the collision inevitable when there was no necessity for
passing so near M/V Tacloban for Don Juan could choose its own
distance. It is noteworthy that M/V Tacloban upon turning hard
to port shortly before the moment of collision, signaled its
intention to do so by giving 2 short blasts with its horn. Don Juan
gave no answering horn blast to signal it's own intention and
proceeded to turn hard to starboard.
In an action based upon a breach of the contract of carriage, the
carrier under our civil law is liable for the death of passengers
arising from the negligence or wilful act of the carrier's
employees although such employees may have acted beyond the
scope of their authority or even in violation of the instructions of
the carrier, which liability may include liability for moral
damages. It follows that petitioners would be entitled to moral
damages so long as the collision with the "Tacloban City" and the

sinking of the "Don Juan" were caused or attended by negligence

on the part of private respondents.
Whether petitioners are entitled to exemplary damages as
claimed must depend upon whether or not private respondents
acted recklessly, that is, with gross negligence. We believe that
the behaviour of the captain of the "Don Juan" in this instance
playing mahjong "before and up to the time of collision"
constitutes behaviour that is simply unacceptable on the part of
the master of a vessel to whose hands the lives and welfare of at
least seven hundred fifty (750) passengers had been entrusted.
There is also evidence that the "Don Juan" was carrying more
passengers than she had been certified as allowed to carry. We
conclude that Capt. Santisteban and Negros Navigation are
properly held liable for gross negligence )capacity was only 864,
BUT it carried 1004 passengers). We find no necessity for passing
upon the degree of negligence or culpability properly attributable
to PNOC and PNOC Shipping or the master of the "Tacloban City,"
since they were never impleaded here.
2. Yes. The behavior of the captain -playing mahjong "before and
up to the time of collision" constituted gross negligence. This
behavior is unacceptable on the part of the master of a vessel to
whose hands the lives of at least 750 passengers were entrusted.
It does not matter that the Captain was off-duty or on-duty.
Realistically speaking, there is no such thing as off-duty hours for
the master of the vessel at sea that is a common carrier who is
required extraordinary diligence. Hence, Negros Navigation in
permitting or in failing to discover and correct such behavior is
also grossly negligent.
ON DAMAGES
the Court of Appeals apparently relying upon Manchester
Development Corporation V. Court of Appeals 27 reduced the
P400,000.00 lump sum award into a P100,000.00 for actual and
compensatory damages only.
SC believes that the Court of Appeals erred in doing so, It is true
that the petitioners' complaint before the trial court had in the
body indicated that the petitioner-plaintiffs believed that moral
damages in the amount of at least P1,400,000.00 were properly
due to them (not P12,000,000.00 as the Court of Appeals
erroneously stated) as well as exemplary damages in the sum of
P100,000.00 and that in the prayer of their complaint, they did
not specify the amount of moral and exemplary damages sought
from the trial court. We do not believe, however, that the
Manchester doctrine, which has been modified and clarified in
subsequent decision by the Court in Sun Insurance Office, Ltd.
(SIOL), et al. v. Asuncion, et al. 28 can be applied in the instant
case so as to work a striking out of that portion of the trial court's
award which could be deemed nationally to constitute an award
of moral and exemplary damages. Manchester was promulgated
by the Court on 7 May 1987. Circular No. 7 of this Court, which
embodied the doctrine in Manchester, is dated 24 March 1988.
Upon the other hand, the complaint in the case at bar was filed on
29December 1980, that is, long before either Manchester or
Circular No. 7 of 24 March 1988 emerged. The decision of the
trial court was itself promulgated on 17 July 1986, again, before
Manchester and Circular No. 7 were promulgated. We do not
believe that Manchester should have been applied retroactively
to this case where a decision on the merits had already been
rendered by the trial court, even though such decision was then
under appeal and had not yet reached finality. There is
noindication at all that petitioners here sought simply to evade
payment of the court's filing fees or to mislead the court in the
assessment of the filing fees. In any event, we apply Manchester
as clarified and amplified by Sun Insurance Office Ltd. (SIOL), by

holding that the petitioners shall pay the additional filing fee that
is properly payable given the award specified below, and that
such additional filing fee shall constitute a lien upon the
judgment.
We consider, finally, the amount of damages-compensatory,
moral and exemplary-properly imposable upon private
respondents in this case. The original award of the trial court of
P400,000.00 could well have been disaggregated by the trial
court and the Court of Appeals in the following manner:
1.
actual or compensatory damages proved in the course
of trial consisting of actual expenses
incurred by petitioners
in their search for their
parents' bodies- -P126,000.00
2.
actual or compensatory
damages in case of
wrongful death
(P30,000.00 x 2) -P60,000.00 29
(3) moral damages -P107,000.00
(4) exemplary damages -P107,000.00
Total -P400,000.00
Considering that petitioners, legitimate children of the deceased
spouses Mecenas, are seven (7) in number and that they lost both
father and mother in one fell blow of fate, and considering the
pain and anxiety they doubtless experienced while searching for
their parents among the survivors and the corpses recovered
from the sea or washed ashore, we believe that an additional
amount of P200,000.00 for moral damages, making a total of
P307,000.00 for moral damages, making a total of P307,000.00 as
moral damages, would be quite reasonable.
Exemplary damages are designed by our civil law to permit the
courts to reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or deterrents
against such behaviour. In requiring compliance with the
standard of extraordinary diligence, a standard which is in fact
that of the highest possible degree of diligence, from common
carriers and in creating a presumption of negligence against
them, the law seeks to compel them to control their employees, to
tame their reckless instincts and to force them to take adequate
care of human beings and their property. Both the demands of
substantial justice and the imperious requirements of public
policy compel us to the conclusion that the trial court's implicit
award of moral and exemplary damages was erroneously deleted
and must be restored and augmented and brought more nearly to
the level required by public policy and substantial justice.
SC: damages restored to 400k, other damages augmented as
follows
(a) P 126,000.00 for actual damages;
(b) P 60,000.00 as compensatory damages for wrongful death;
(c) P 307,000.00 as moral damages;
(d) P 307,000.00 as exemplary damages making a total of P
800,000.00; and
(e) P 15,000.00 as attorney's fees

12. SMITH BELL VS CA VANESSA

11. Smith Bell v. CA (look-out)
Doctrine:
Failure to provide a look-out constitutes negligence on the part
of the shipowner.
The doctrine of last clear chance is inapplicable in maritime
navigation
Facts:
In the early morning of MAY 1970, a collision took place
between the MV DON CARLOS,
owned by GO THONG and MS YOTAI MARU, a Japanese merchant
vessel. The collision
caused damage to the cargo of YOTAI MARU. The insurance
companies paid the
consignees of the cargo in YOTAI MARU and in turn sued GO
THONG (2 separate cases)4
o Starboard: right / Portside: left
Both judges found the crew of DON CARLOS to be negligent. GO
THONG was held liable
for damages. THUS, GO THONG appealed to the SC5
Issue: Was MV DON CARLOS the proximate cause of the accident?
YES. 1) faulty overtake 2)
no look-out
Evidence shows that YOTAI MARUs headlights indicated that
both vessels were sailing on
exactly opposite paths. Despite this, the course of DON CARLOS
was changed by 5
degrees to the left instead of to the right to overtake another
vessel, the DON
FRANCISCO. THIS was the cause of the collision.
Moreover, another indicator of negligence was the fact that
DON CARLOS failed to have a
proper look out as required by the Rules. The look-outs purpose
is precisely that, to look
out for other vessels.
A "proper look-out" is one who has been trained as such and who
is given no other duty
save to act as a look-out and who is stationed where he can see
and hear best and
maintain good communication with the officer in charge of the
vessel, and who must, of
course, be vigilant
In the case at bar, the failure of the "Don Carlos" to recognize in
a timely manner the risk of
collision with the "Yotai Maru" coming in from the opposite
direction, was at least in part
due to the failure of the "Don Carlos" to maintain a proper lookout.
It follows therefore that DON CARLOS was the sole and
proximate cause of the collision
and it should be held liable to the insurers.
FACTS:
In the early morning of 3 May 1970at exactly 0350 hours, on
the approaches to the port of Manila near Caballo Island, a
collision took place between the M/V "Don Carlos," an interisland vessel owned and operated by private respondent Carlos
A. Go Thong and Company, and the M/S "Yotai Maru," a merchant
vessel of Japanese registry. The "Don Carlos" was then sailing
south bound leaving the port of Manila for Cebu, while the "Yotai
Maru" was approaching the port of Manila, coming in from Kobe,
Japan. The bow of the "Don Carlos" rammed the portside (left
side) of the "Yotai Maru" inflicting a 3 cm. gaping hole on her
portside near Hatch No. 3, through which seawater rushed in and
flooded that hatch and her bottom tanks, damaging all the cargo
stowed therein.

The consignees of the damaged cargo got paid by their insurance

companies. The insurance companies in turn, having been
subrogated to the interests of the consignees of the damaged
cargo, commenced actions against private respondent Go Thong
for damages sustained by the various shipments in the then Court
of First Instance of Manila.
Two cases were filed in the CFI of Manila.
FIRST case, Civil Case No. 82567, was commenced on 13 March
1971 by Smith Bell and Sumitomo Marine and Fire Insurance
Company Ltd., against Go Thong, in Branch 3, which was presided
over by Judge Bernardo P. Fernandez.
SECOND case, Civil Case No. 82556, was filed on 15 March 1971
by Smith Bell and Tokyo Marine and Fire Insurance Company,
Inc. Go Thong in Branch 4, which was presided over by then
Judge, later Associate Justice of this Court, Serafin R. Cuevas.
BOTH were tried under the same issues and evidence relating
to the collision between the "Don Carlos" and the "Yotai Maru"
the parties in both cases having agreed that the evidence on the
collision presented in one case would be simply adopted in the
other.
CFI: held that the officers and crew of the "Don Carlos" had
been negligent that such negligence was the proximate cause
of the collision and held Go Thong liable for damages to the
plaintiff insurance companies.

Judge Fernandez awarded the insurance companies

P19,889.79 with legal interest plus 3K as AF;;
Judge Cuevas awarded the plaintiff insurance
companies on two claims US $ 68,640.00 or its
equivalent in Philippine currency plus AF 30k and
P19,163.02 plus 5k AF, respectively.

Both cases were appealed to the CA.

FERNANDEZ CASE: (Presided by REYES, L.B., J.) affirmed the
decision of the TC. MoR denied! Go Thong went to the SC via
Petition for Review denied for lack of merit. MoR denied!
Became final and executory.
CUEVAS CASE: (2 years after the Fernandez case. Now through
SISON P.V., J.) reversed the TC and held that it was the officers of
Yotai Maru which was at fault. It dismissed the insurance
companies complaint. MoR no avail.
ISSUE:
W/N Don Carlos is the proximate cause of the collision? YES.
Sisons decision is reversed and set aside. Cuevas decision (RTC)
reinstated.
HELD: (yung main issue nasa pinaka dulo. linagyan ko lang ng iba
para if ever magtanong si sir.)
****as to res judicata****
Go Thong argues also that the rule of res judicata cannot be
invoked in the instant case for the reason that there was no
identity of parties and no identity of cause of action between the
two cases.

1st Case

Petitioners

Respondent

Smith Bell &

Go Thong

(Fernandez)

Sumitomo Marine and

Fire Insurance

2nd Case
(Cuevas)

Smith Bell & Tokyo

Marine and Fire
Insurance

Go Thong

bar, was promulgated. Applying the rule of conclusiveness of

judgment, the question of which vessel had been negligent in the
collision between the 2 vessels, had long been settled by this
Court and could no longer be relitigated in C.A.-G.R. No. 61206- R.
Private respondent Go Thong was certainly bound by the ruling
or judgment of Reyes, L.B., J. and that of this Court.
**** as to the alleged COMPROMISE AGREEMENT****

In other words, there was a common petitioner in the 2 cases,

although the co-petitioner in one was an insurance company
different from the insurance company co-petitioner in the other
case. It should be noted, moreover, that the co-petitioner in
both cases was an insurance company arid that both
petitioners in the 2 cases represented the same interest cargo
owners interest as against the hull interest or the interest of the
shipowner). More importantly, both cases had been brought
against the same defendant, private respondent Go Thong, the
owner of the vessel "Don Carlos." In sum, BOTH exhibited
substantial identity of parties.
It is conceded by petitioners that the subject matters of the 2
suits were not identical, in the sense that the cargo which had
been damaged in the one case and for which indemnity was
sought, was not the very same cargo which had been damaged
in the other case indemnity for which was also sought.
The cause of action was, however, the same in the 2 cases, i.e.,
the same right of the cargo owners to the safety and integrity of
their cargo had been violated by the same casualty, the ramming
of the "Yotai Maru" by the "Don Carlos."
SC: Under the circumstances, the absence of identity of subject
matter, there being substantial identity of parties and
identity of cause of action, will not preclude the application of
res judicata.
The doctrine of res judicata has two aspects.
The first is the effect of a judgment as a bar to the prosecution of
a second action upon the same claim, demand or cause of action.
The second aspect is that it precludes the relitigation of a
particular fact or issues in another action between the same
parties on a different claim or cause of action.
The general rule precluding the relitigation of material facts or
questions which were in issue and adjudicated in former action are
commonly applied to all matters essentially connected with the
subject matter of the litigation. Thus, it extends to questions
"necessarily involved in an issue, and necessarily adjudicated, or
necessarily implied in the final judgment, although no specific
finding may have been made in reference thereto, and although
such matters were directly referred to in the pleadings and were
not actually or formally presented. Under this rule, if the record of
the former trial shows that the judgment could not have been
rendered without deciding the particular matter it will be
considered as having settled that matter as to all future actions
between the parties, and if a judgment necessarily presupposes
certain premises, they are as conclusive as the judgment itself.
Reasons for the rule are that a judgment is an adjudication on all
the matters which are essential to support it, and that every
proposition assumed or decided by the court leading up to the final
conclusion and upon which such conclusion is based is as
effectually passed upon as the ultimate question which is finally
solved.
The Reyes Decision became final and executory approximately 2
years before the Sison Decision, which is assailed in the case at

Private respondent Go Thong also argues that a compromise

agreement entered into between Sanyo Shipping Company as
owner of the "Yotai Maru" and Go Thong as owner of the "Don
Carlos," under which the former paid P268,000.00 to the latter,
effectively settled that the "Yotai Maru" had been at fault.
argument is wanting in both factual basis and legal substance.
True, it is that by virtue of the compromise agreement, the owner
of the "Yotai Maru" paid a sum of money to the owner of the "Don
Carlos." Nowhere, however, in the compromise agreement
did the owner of the "Yotai Maru " admit or concede that the
"Yotai Maru" had been at fault in the collision.
RULE: "an offer of compromise is not an admission that
anything is due, and is not admissible in evidence against the
person making the offer."
A compromise is an agreement between 2 or more persons who,
in order to forestall or put an end to a law suit, adjust their
differences by mutual consent, an adjustment which everyone of
them prefers to the hope of gaining more, balanced by the danger
of losing more. An offer to compromise does not, in legal
contemplation, involve an admission on the part of a defendant
that he is legally liable, nor on the part of a plaintiff that his claim
or demand is groundless or even doubtful, since the compromise
is arrived at precisely with a view to avoiding further controversy
and saving the expenses of litigation. It is of the very nature of an
offer of compromise that it is made tentatively, hypothetically
and in contemplation of mutual concessions. The above rule on
compromises is anchored on public policy of the most insistent
and basic kind; that the incidence of litigation should be reduced
and its duration shortened to the maximum extent feasible.
****main issue****
Examining the facts as found by Judge Cuevas, the Court believes
that there are 3 principal factors which are constitutive of
negligence on the part of the "Don Carlos," which negligence was
the proximate cause of the collision.
1. Failure of the "Don Carlos" to comply with the requirements of
Rule 18 (a) of the International Rules of the Road:
(a) When two power-driven vessels are meeting end on, or
nearly end on, so as to involve risk of collision, each shall alter her
course to starboard, so that each may pass on the port side of
the other.
This Rule only applies to cases where vessels are meeting end on
or nearly end on, in such a manner as to involve risk of collision,
and does not apply to two vessels which must, if both keep on
their respective course, pass clear of each other. The only cases to
which it does apply are when each of two vessels is end on, or
nearly end on, to the other; in other words, to cases in which, by
day, each vessel sees the masts of the other in a line or nearly in a
line with her own; and by night to cases in which each vessel is in
such a position as to see both the sidelights of the other. It does
not apply, by day, to cases in which a vessel sees another ahead
crossing her own course; or, by night, to cases where the red light
of one vessel is opposed to the red light of the other or where the
green light of one vessel is opposed to the green light of the other

or where a red light without a green light or a green light without

a red light is seen ahead, or Where both green and red lights are
seen anywhere but ahead.

ART 663 The second mate shall take command of the vessel in
case of the inability or disqualification of the captain and sailing
mate, assuming, in such case, their powers and liability.

EVIDENCE: Each vessel made a visual sighting of each other

ten minute before the collision which occurred at 0350.
German's version of the incident that followed, was that "Don
Carlos" was proceeding directly to a meeting on an "end-on or
nearly end-on situation". He also testified that "Yotai Maru's'
headlights were "nearly in line at 0340 A.M clearly indicating that
both vessels were sailing on exactly opposite paths. Rule 18 (a) of
the International Rules of the Road provides as follows:
As the "Yotai Maru" found herself on an "end-on" or a "nearly
end-on" situation vis-a-vis the "Don Carlos, " and as the distance
between them was rapidly shrinking, the "Yotai Maru" turned
starboard (to its right) and at the same time gave the required
signal consisting of one short horn blast. The "Don Carlos" turned
to portside (to its left), instead of turning to starboard as
demanded by Rule 18 (a). The "Don Carlos" also violated Rule
28 (c) for it failed to give the required signal of two (2) short
horn blasts meaning "I am altering my course to port." When
the "Yotai Maru" saw that the "Don Carlos" was turning to port,
the master of the "Yotai Maru" ordered the vessel turned "hard
starboard" at 3:45 a.m. and stopped her engines; at about 3:46
a.m. the "Yotai Maru" went "full astern engine." The collision
occurred at exactly 3:50 a.m.

Second Mate German simply did not have the level of experience,
judgment and skill essential for recognizing and coping with the
risk of collision as it presented itself that early morning when the
"Don Carlos," running at maximum speed and having just
overtaken the "Don Francisco" then approximately one mile
behind to the starboard side of the "Don Carlos," found itself
head-on or nearly head on vis-a-vis the "Yotai Maru. " It is
essential to point out that this situation was created by the "Don
Carlos" itself.

2. Failure to have on board that night a "proper look-out" as

required by Rule I (B) Under Rule 29 of the same set of Rules, all
consequences arising from the failure of the "Don Carlos" to keep
a "proper look-out" must be borne by the "Don Carlos." Judge
Cuevas' summary of the evidence said:
EVIDENCE: "Don Carlos" did not have "look-out" whose sole and
only duty is only to act as such.
A "proper look-out" is one who has been trained as such and who
is given no other duty save to act as a look-out and who is
stationed where he can see and hear best and maintain good
communication with the officer in charge of the vessel, and who
must, of course, be vigilant.
In the case at bar, the failure of the "Don Carlos" to recognize in a
timely manner the risk of collision with the "Yotai Maru" coming
in from the opposite direction, was at least in part due to the
failure of the "Don Carlos" to maintain a proper look-out.
3. Second Mate Benito German was, immediately before and
during the collision, in command of the "Don Carlos."
EVIDENCE: A second mate although its captain, Captain
Rivera, was very much in the said vessel at the time. The
defendant's evidence appears bereft of any explanation as to why
second mate German was at the helm of the aforesaid vessel
when Captain Rivera did not appear to be under any
disability at the time. Worst still, aside from German's being only
a second mate, is his apparent lack of sufficient knowledge of the
basic and generally established rules of navigation. For instance, he
appeared unaware of the necessity of employing a "look- out"
which is manifest even in his testimony before the BMI. There is,
therefore, every reasonable ground to believe that his inability to
grasp actual situation and the implication brought about by
inadequacy of experience and technical know-how was mainly
responsible and decidedly accounted for the collision of the vessels
involved in this case

NOTE: What Sison, P.V., J. actually did was to disregard all the
facts found by Judge Cuevas, and found a duty on the "Yotai
Maru" alone to avoid collision with and to give way to the
"Don Carlos.
SISON: At a distance of 8 miles and with 10minutes before the
impact, [Katoh] and Chonabayashi had ample time to adopt
effective precautionary measures to steer away from the
Philippine vessel, particularly because both [Katoh] and
Chonabayashi also deposed that at the time they had first
eyesight of the "Don Carlos" there was still "no danger at all" of a
collision. Having sighted the "Don Carlos" at a comparatively safe
distance"no danger at all" of a collisionthe Japanese ship
should have observed with the highest diligence the course and
movements of the Philippine interisland vessel as to enable the
former to adopt such precautions as will necessarily present a
collision, or give way, and in case of a collision, the former is prima
facie at fault. Four minutes after first sighting the "Don Carlos", or
6 minutes before contact time, Chonabayashi revealed that the
"Yotai Maru" gave a one-blast whistle to inform the Philippine
vessel that the Japanese ship was turning to starboard or to the
right and that there was no blast or a proper signal from the "Don
Carlos".The absence of a reply signal from the "Don Carlos"
placed the "Yotai Maru" in a situation of doubt as to the course the
"Don Carlos" would take. Such being the case, it was the duty of the
Japanese officers "to stop, reverse or come to a standstill until the
course of the "Don Carlos" has been determined and the risk of a
collision removed.
The Court is unable to agree with the view thus taken by Sison,
P.V., J. By imposing an exclusive obligation upon one of the
vessels, the "Yotai Maru, " to avoid the collision, the Court of
Appeals not only chose to overlook all the above facts
constitutive of negligence on the part of the "Don Carlos;" it also
in effect used the very negligence on the part of the "Don Carlos"
to absolve it from responsibility and to shift that responsibility
exclusively onto the "Yotai Maru" the vessel which had observed
carefully the mandate of Rule 18 (a).
DISPOSITIVE PORTION: FOR ALL THE FOREGOING, the Decision
of the Court of Appeals dated 26 November 1980 in C.A.-G.R. No.
61206-R is hereby REVERSED and SET ASIDE. The decision of the
trial court dated 22 September 1975 is hereby REINSTATED and
AFFIRMED in its entirety. Costs against private respondent.

13. MANILA STEAMSHIP VS ABDULHAMAN KIKOY

Manila Steamship v. Abdulhaman
Doctrine:
In maritime torts, the shipowners liability is direct. It cannot
use the defense of ordinary
diligence in selection and supervision
The owner of a vessel who had caused the same to sail without
licensed officers is liable
for the injuries caused by the collision over and beyond the value
of his vessel; hence, he
cannot escape liability because of the sinking of the vessel.
(Limitation of liability does not
apply)
Facts:
On the evening of MAY 1948, the ML CONSUELO V, owned by
LIM TONG TO was
carrying ABDULHAMAN and his family.
During its voyage, the ML CONSUELO collided with M/S
BOWLINE KNOT, owned by
MANILA STEAMSHIP. As a result, the boat capsized and the
family of ABDULHAMAN
died.
Therefore, ABDULHAMAN sued LIM TONG TO for damages. The
TC found both the ML
CONSUELO and ML BOWLINE KNOT were negligent and they
were ordered to solidarily
pay ABDULHAMAN damages. However, LIM TONG TO was
exempted from liability by
reason of the sinking and the total loss of the vessel.
MANILA STEAMSHIP appealed, arguing that that it exercised
ordinary diligence in the
selection and supervision of its employees.
Issue: Is Manila Steamship liable? YES. Should LIM TONG TO be
held liable also? YES.
Manila Steamships Liability for the MARITIME TORT is DIRECT,
under the CODE OF
COMMERCE
MANILA STEAMSHIPs defense of diligence in selection and
supervision is untenable.
While it is true that ABDULHAMANs action against MANILA
STEAMSHIP is based on a
tort or quasi-delict, the tort in question is not a civil tort
under the Civil Code but a
maritime tort resulting in a collision at sea, governed by
Articles 826-939 of the Code
of Commerce.
Under Article 827 of the Code of Commerce, in case of collision
between two vessels
imputable to both of them, each vessel shall suffer her own
damage and both shall be
solidarily liable for the damages occasioned to their cargoes.
This direct responsibility
is recognized in Article 618 of the Code of Commerce under
which the captain shall be
civilly liable to the ship agent, and the latter is the one liable to
third persons,
LIM TONG TO should not be exonerated because as shipowner, he
was also
negligent. Limitation of liability is inapplicable.
In this case, both the master and the engineer of the motor
launch Consuelo V were not
duly licensed as such. The right of abandonment of vessels, as a
legal limitation of a
shipowners liability, does not apply to cases where the injury or
the average is due to
shipowners own fault. LIM TONG TO and MANILA STEAMSHIP
solidarily liable.

[G.R. No. L-9534. September 29, 1956.]

MANILA STEAMSHIP CO., INC., Petitioner, vs. INSA
ABDULHAMAN (MORO) and LIM HONG TO,Respondents.
Doctrine: The international rule is to the effect that the right
of abandonment of vessels, as a legal limitation of a
shipowners liability, does not apply to cases where the
injury or the average is due to shipowners own fault.

Facts:
Respondent Abdulhaman filed a case against Manila
Steamship Co Inc, owner of MS Bowline Knot, and Lim Hong
To, owner of M/L Consuelo V to recover damages for the
death of his 5 children and loss of personal properties on
board the M/L Consuelo V as a result of a maritime
collision between the 2 vessels
In 1948, the M/L Consuelo V left the port of Zamboanga City
for Siokon. On the same night, The M/S Bowline Knot was
heading to Zamboanga City. The weather was good and fair.
Abdulhaman, his wife and 5 children had paid their fare
beforehand
It began raining and there were strong winds for an hour.
This weather lasted for an hour then it became fair although
it was showering and the visibility was good enough.
The two vessels collided while the passengers were sleeping.
M/L Consuelo V capsized quickly (before the passengers
realized it, they were already floating and swimming) 9 died
and the cargo was lost.
Before the collision, none of the passengers were warned or
informed of the impending danger as the collision was so
sudden and unexpected. All those rescued at sea were
brought by the M/V Bowline Knot to Zamboanga City.
The Board of Marine Inquiry found that the commanding
officer of the colliding vessels had both been negligent in
operating their respective vessels. It held the owners of both
vessels solidarily liable to Abdulhaman for the damages
caused to him by the collision, under Article 827 of the Code
of Commerce; but exempted Defendant Lim Hong To from
liability by reason of the sinking and total loss of his vessel,
the M/L Consuelo V. CA affirmed.
Manila Steamship appealed because it was the one who was
ordered to pay damages.
o it is exempt from any liability under Article
1903 of the Civil Code because it had
exercised the diligence of a good father of a
family in the selection of its employees,
particularly Third Mate Simplicio Ilagan,
the officer in command of its vessels, the
M/S Bowline Knot, at the time of the
collision.
o It shouldnt be liable for the actions of its
agent (captain) and employees
Issue: WON Manila Steamship is liable YES
Ratio:
DUE DILIGENCE
The defense of due diligence is untenable. While it is true
that Plaintiffs action is based on a tort or quasi-delict, the
tort in question is not a civil tort under the Civil Code but a
maritime tort resulting in a collision at sea, governed by
Articles 826-939 of the Code of Commerce. Under Article 827
of the Code of Commerce, in case of collision between two
vessels imputable to both of them, each vessel shall suffer
her own damage and both shall be solidarily liable for the
damages occasioned to their cargoes. The characteristic
language of the law in making the vessels solidarily liable

for the damages due to the maritime collision emphasizes

the direct nature of the responsibilities on account of the
collision incurred by the shipowner under maritime law, as
distinguished from the civil law and mercantile law in
general. This direct responsibility is recognized in Article
618 of the Code of Commerce under which the captain shall
be civilly liable to the ship agent, and the latter is the one
liable to third persons
It is a general principle, well established maritime law and
custom, that shipowners and ship agents are civilly liable for
the acts of the captain (Code of Commerce, Article 586) and
for the indemnities due the third persons (Article 587); so
that injured parties may immediately look for
reimbursement to the owner of the ship, it being universally
recognized that the ship master or captain is primarily the
representative of the owner. This direct liability, moderated
and limited by the owners right of abandonment of the
vessel and earned freight (Article 587), has been declared to
exist, not only in case of breached contracts, but also in cases
of tortious negligence
ACT OF AGENT
It is proven that the agents and employees, through whose
negligence the explosion and fire in question occurred, were
agents, employees and mandatories of Manila Steamship.
Where the vessel is one of freight, a public concern or public
utility, its owner or agents is liable for the tortious acts of his
agents (Articles 587, 613, & 618 Code of Commerce; & Article
1902, 1903, 1908, Civil Code).
Manila Steamship cites cases which are about principals and
agents in general BUT this case is about the relations
between ship agent and his agents and employees.
It is easy to see that to admit the defense of due diligence of a
bonus paterfamilias (in the selection and vigilance of the
officers and crew) as exempting the shipowner from any
liability for their faults, would render nugatory the solidary
liability established by Article 827 of the Code of Commerce
for the greater protection of injured parties. Shipowners
would be able to escape liability in practically every case,
considering that the qualifications and licensing of ship
masters and officers are determined by the State, and that
vigilance is practically impossible to exercise over officers
and crew of vessels at sea. To compel the parties prejudiced
to look to the crew for indemnity and redress would be an
illusory remedy for almost always its members are, from
captains down, mere wage earners.
Liability of Lim Hong To HE IS LIABLE
Both the master and the engineer of the motor launch
Consuelo V were not duly licensed as such. In applying for
permission to operate, despite the lack of properly trained
and experienced, crew, Lim Hong To gave as a reason that
the income derived from the vessel is insufficient to pay
licensed officers who demand high salaries, and expressly
declared That in case of any accident, damage or loss, I shall
assume full risk and responsibility for all the consequences
thereof.
His permit to operate, in fact, stipulated that in case of
any accident, damage or loss, the registered owner thereof
shall assume full risk and responsibility for all the
consequences thereof, and that said vessel shall be held
answerable for any negligence, disregard or violation of any
of the conditions herein imposed and for any consequence
arising from such negligence, disregard or violations.
CA held that his permit and letter didnt contain waivers of
his right to limit his liability to the value of his motor launch
and that he did not lose the statutory right to limit his
liability by abandonment of the vessel. WRONG

By operating with an unlicensed master, Lim Hong To

deliberately increased the risk to which the passengers and
shippers of cargo aboard the Consuelo V would be
subjected. In his desire to reap greater benefits in the
maritime trade, Lim Hong To willfully augmented the
dangers and hazards to his vessels unwarry passengers,
who would normally assume that the launch officers
possessed the necessary skill and experience to evade the
perils of the sea. Hence, the his liability cannot be the
identical to that of a shipowner who bears in mind the safety
of the passengers and cargo by employing duly licensed
officers.
The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a
shipowners liability, does not apply to cases where the
injury or the average is due to shipowners own fault.
Lim Hong To expressly assumed the full risk and
responsibility of such a collision

14. CALTEX OHILS VS SULPICIO LINES JEROME

Caltex v. Sulpicio
Doctrine:
A charter party is a contract by which an entire ship, or some
principal part thereof, is let by
the owner to another person for a specified time or use; a
contract of affreightment is one
by which the owner of a ship or other vessel lets the whole or
part of her to a merchant or
other person for the conveyance of goods, on a particular voyage,
in consideration of the
payment of freight.
A contract of affreightment may be either time charter, wherein
the leased vessel is leased
to the charterer for a fixed period of time, or voyage charter,
wherein the ship is leased for a
single voyage. In both cases, the charter-party provides for the
hire of the vessel only,
either for a determinate period of time or for a single or
consecutive voyage, the ship owner
will supply the ship's store, pay for the wages of the master of the
crew, and defray the
expenses for the maintenance of the ship.
Under a demise or bareboat charter on the other hand, the
charterer mans the vessel with
his own people and becomes, in effect, the owner for the voyage
or service stipulated,
subject to liability for damages caused by negligence. It is only
when the charter
includes both the vessel and its crew, as in a bareboat or
demise that a common
carrier becomes private, at least insofar as the particular
voyage covering the
charter-party is concerned
If the charter is a contract of affreightment, which leaves the
general owner in possession
of the ship as owner for the voyage, the rights and the
responsibilities of ownership rest on
the owner. The charterer is free from liability to third persons in
respect of the ship.
The charterer is not liable for damages to 3rd persons
under a contract of
affreightment (voyage charter/time charter)
Facts:
ON DEC 1987, the MT VECTOR, owned by VECTOR SHIPPING
left for MASBATE. It was
loaded w/ petrol products shipped by CALTEX by virtue of a
charter party. During its
voyage, it collided with MV DONA PAZ, owned by SULPICIO. At
the time of the collision,
the DONA PAZ was carrying 4,000 passengers. All the crew
members MV DONA PAZ died
and only 24 passengers survived.
The heirs of the deceased sued SULPICIO, based on breach of
contract of carriage.
SULPICIO in turn filed a third party complaint against VECTOR
due to the finding of the
BMI that VECTOR was negligent and its negligence was the
proximate cause of the
collision.
SULPICIO also sued CALTEX under the 3rd party complaint,
alleging that
Caltex chartered MT Vector with gross and evident bad faith
knowing fully
well that MT Vector was improperly manned, ill-equipped,
unseaworthy and a
hazard to safe navigation; as a result, it rammed against MV Doa
Paz in the

open sea setting MT Vector's highly flammable cargo ablaze

o RTC dismissed the 3rd party complaint but CA modified,
ordering VECTOR and
CALTEX to reimburse SULPICIO for whatever it may be ordered
to pay to the
heirs of the victims. Hence, CALTEX appealed.
Issue: Should CALTEX, as charterer, also be held liable? NO. Does
a charter party convert a
common carrier to a private carrier? No.
The charterer has no liability for damages under Philippine
Maritime laws.
The respective rights and duties of a shipper and the carrier
depends not on whether the
carrier is public or private, but on whether the contract of
carriage is a bill of lading or
equivalent shipping documents on the one hand, or a charter
party or similar contract on
the other.
CALTEX and Vector entered into a contract of affreightment,
also known as a voyage
charter. If the charter is a contract of affreightment, which leaves
the general owner in
possession of the ship as owner for the voyage, the rights and the
responsibilities of
ownership rest on the owner. The charterer is free from liability
to third persons in respect
of the ship. In this case, therefore, CALTEX should not be held
liable to 3rd persons.
Moreover, the charterer of a vessel has no obligation before
transporting its cargo to
ensure that the vessel it chartered complied with all legal
requirements. The duty rests
upon the common carrier simply for being engaged in "public
service." Only VECTOR
should be held liable.
The contract of affreightment did not turn VECTOR into a private
carrier
A common carrier shall remain as such, notwithstanding
the charter of the whole
portion of a vessel of one or more persons, provided the
charter is limited to the ship
only, as in the case of a time-charter or the voyage charter.
It is only when the charter includes both the vessel and its
crew, as in a bareboat or
demise that a common carrier becomes private, at least
insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a
ship-owner in a time or
voyage charter retains possession and control of the ship,
although her holds may, for the
moment, be the property of the charterer. In this case, since the
contract was one of
affreightment, it follows that VECTOR remained to be a common
carrier, and hence, it had
the duty to exercise extraordinary diligence.
As a common carrier, VECTOR is deemed to warrant impliedly
the seaworthiness of the
ship. For a vessel to be seaworthy, it must be adequately
equipped for the voyage and
manned with a sufficient number of competent officers and crew.
The failure of a common
carrier to maintain in seaworthy condition the vessel involved in
its contract of carriage is a
clear breach of its duty prescribed in Article 1755 of the Civil
Code Caltex won,
exonerated from liability, VECTOR did not appeal so its liability
was affirmed.

DOCTRINE: the conversion of a common carrier to a private

carrier will depend on the kind of the charter agreement agreed
upon
FACTS:
On December 19, 1987, motor tanker MT Vector left Limay,
Bataan, at about 8:00 p.m., enroute to Masbate, loaded with 8,800
barrels of petroleum products shipped by petitioner Caltex
MT Vector is a tramping motor tanker owned and operated by
Vector Shipping Corporation
During that particular voyage, the MT Vector carried on board
gasoline and other oil products owned by Caltex by virtue of a
charter contract between them
On December 20, 1987, at about 6:30 a.m., the passenger ship MV
Doa Paz left the port of Tacloban headed for Manila
The MV Doa Paz is a passenger and cargo vessel owned and
operated by Sulpicio Lines, Inc. plying the route of Manila/
Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila,
making trips twice a week.
At about 10:30 p.m. of December 20, 1987, the two vessels
collided in the open sea within the vicinity of Dumali Point
between Marinduque and Oriental Mindoro.
All the
crewmembers of MV Doa Paz died, while the two survivors from
MT Vector claimed that they were sleeping at the time of the
incident.
The MV Doa Paz carried an estimated 4,000 passengers; many
indeed, were not in the passenger manifest. Only 24 survived the
tragedy after having been rescued from the burning waters by
vessels that responded to distress calls.[5] Among those who
perished were public school teacher Sebastian Caezal (47 years
old) and his daughter Corazon Caezal (11 years old), both
unmanifested passengers but proved to be on board the vessel.
the board of marine inquiry found that the MT Vector were at
fault
, Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife
and mother respectively, filed with the Regional Trial Court,
Branch 8, Manila, a complaint for Damages Arising from Breach
of Contract of Carriage against Sulpicio
Sulpicio, in turn, filed a third party complaint against Francisco
Soriano, Vector Shipping Corporation and Caltex (Philippines),
Inc. Sulpicio alleged that Caltex chartered MT Vector with gross
and evident bad faith knowing fully well that MT Vector was
improperly manned, ill-equipped, unseaworthy and a hazard to
safe navigation; as a result, it rammed against MV Doa Paz in the
open sea setting MT Vectors highly flammable cargo ablaze
the trial court rendered decision dismissing the third party
complaint against petitioner.
On appeal to the Court of Appeals interposed by Sulpicio Lines,
Inc., on April 15, 1997, the Court of Appeal modified the trial
courts ruling and included petitioner Caltex as one of the those
liable for damages
Issue: Is the charterer of a sea vessel liable for damages resulting
from a collision between the chartered vessel and a passenger
ship? NO.
HELD: First: The charterer has no liability for damages under
Philippine Maritime laws.
The respective rights and duties of a shipper and the carrier
depends not on whether the carrier is public or private, but on
whether the contract of carriage is a bill of lading or equivalent
shipping documents on the one hand, or a charter party or
similar contract on the other.[9]
Petitioner and Vector entered into a contract of affreightment,
also known as a voyage charter.[10]
A charter party is a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a
specified time or use; a contract of affreightment is one by which

the owner of a ship or other vessel lets the whole or part of her to
a merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight.[11]
A contract of affreightment may be either time charter, wherein
the leased vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter-party provides for the hire of
the vessel only, either for a determinate period of time or for a
single or consecutive voyage, the ship owner to supply the ships
store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.[12]
Under a demise or bareboat charter on the other hand, the
charterer mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated, subject to
liability for damages caused by negligence.
If the charter is a contract of affreightment, which leaves the
general owner in possession of the ship as owner for the voyage,
the rights and the responsibilities of ownership rest on the
owner. The charterer is free from liability to third persons in
respect of the ship.[13]
Second : MT Vector is a common carrier
Charter parties fall into three main categories: (1) Demise or
bareboat, (2) time charter, (3) voyage charter. Does a charter
party agreement turn the common carrier into a private one? We
need to answer this question in order to shed light on the
responsibilities of the parties.
In this case, the charter party agreement did not convert the
common carrier into a private carrier. The parties entered into a
voyage charter, which retains the character of the vessel as a
common carrier.
In Planters Products, Inc. vs. Court of Appeals,[14] we said:
It is therefore imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited to
the ship only, as in the case of a time-charter or voyage charter.
It is only when the charter includes both the vessel and its crew,
as in a bareboat or demise that a common carrier becomes
private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a ship-owner in a time
or voyage charter retains possession and control of the ship,
although her holds may, for the moment, be the property of the
charterer.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of
Appeals:[15]
Although a charter party may transform a common carrier into a
private one, the same however is not true in a contract of
affreightment xxx
Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the beginning
of the voyage to exercise due diligence to (a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
xxx
xxx
xxx
Thus, the carriers are deemed to warrant impliedly the
seaworthiness of the ship. For a vessel to be seaworthy, it must
be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of
a common carrier to maintain in seaworthy condition the vessel
involved in its contract of carriage is a clear breach of its duty
prescribed in Article 1755 of the Civil Code.[18]
The provisions owed their conception to the nature of the
business of common carriers. This business is impressed with a
special public duty. The public must of necessity rely on the care
and skill of common carriers in the vigilance over the goods and
safety of the passengers, especially because with the modern
development of science and invention, transportation has
become more rapid, more complicated and somehow more
hazardous.[19] For these reasons, a passenger or a shipper of

goods is under no obligation to conduct an inspection of the ship

and its crew, the carrier being obliged by law to impliedly
warrant its seaworthiness.
This aside, we now rule on whether Caltex is liable for damages
under the Civil Code.
Third: Is Caltex liable for damages under the Civil Code?
We rule that it is not.
Sulpicio argues that Caltex negligently shipped its highly
combustible fuel cargo aboard an unseaworthy vessel such as the
MT Vector when Caltex:
1. Did not take steps to have M/T Vectors certificate of
inspection and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by Mr. Carlos
Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and
certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector to transport
its cargo despite these deficiencies:
1. The master of M/T Vector did not posses the required Chief
Mate license to command and navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor
Patron, authorized to navigate only in bays and rivers when the
subject collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate
the engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and a
lookout; and
5. The vessel had a defective main engine.[20]
As basis for the liability of Caltex, the Court of Appeals relied on
Articles 20 and 2176 of the Civil Code, which provide:
Article 20. - Every person who contrary to law, willfully or
negligently causes damage to another, shall indemnify the latter
for the same.
Article 2176. - Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
And what is negligence?
The Civil Code provides:
Article 1173. The fault or negligence of the obligor consists in
the omission of that diligence which is required by the nature of
the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows
bad faith, the provisions of Article 1171 and 2201 paragraph 2,
shall apply.
If the law does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a
family shall be required.
In Southeastern College, Inc. vs. Court of Appeals,[21] we said
that negligence, as commonly understood, is conduct which
naturally or reasonably creates undue risk or harm to others. It
may be the failure to observe that degree of care, precaution, and
vigilance, which the circumstances justly demand, or the
omission to do something which ordinarily regulate the conduct
of human affairs, would do.
The charterer of a vessel has no obligation before transporting its
cargo to ensure that the vessel it chartered complied with all
legal requirements. The duty rests upon the common carrier
simply for being engaged in public service.[22] The Civil Code
demands diligence which is required by the nature of the
obligation and that which corresponds with the circumstances of
the persons, the time and the place. Hence, considering the
nature of the obligation between Caltex and MT Vector, the
liability as found by the Court of Appeals is without basis.
The relationship between the parties in this case is governed by
special laws.
Because of the implied warranty of
seaworthiness,[23] shippers of goods, when transacting with

common carriers, are not expected to inquire into the vessels

seaworthiness, genuineness of its licenses and compliance with
all maritime laws. To demand more from shippers and hold them
liable in case of failure exhibits nothing but the futility of our
maritime laws insofar as the protection of the public in general is
concerned. By the same token, we cannot expect passengers to
inquire every time they board a common carrier, whether the
carrier possesses the necessary papers or that all the carriers
employees are qualified. Such a practice would be an absurdity
in a business where time is always of the essence. Considering
the nature of transportation business, passengers and shippers
alike customarily presume that common carriers possess all the
legal requisites in its operation.
Thus, the nature of the obligation of Caltex demands ordinary
diligence like any other shipper in shipping his cargoes.
A cursory reading of the records convinces us that Caltex had
reasons to believe that MT Vector could legally transport cargo
that time of the year.
Atty. Poblador: Mr. Witness, I direct your attention to this
portion here containing the entries here under VESSELS
DOCUMENTS
1. Certificate of Inspection No. 1290-85, issued December 21,
1986, and Expires December 7, 1987, Mr. Witness, what steps
did you take regarding the impending expiry of the C.I. or the
Certificate of Inspection No. 1290-85 during the hiring of MT
Vector?
Apolinar Ng: At the time when I extended the Contract,
I did nothing because the tanker has a valid C.I. which will expire
on December 7, 1987 but on the last week of November, I called
the attention of Mr. Abalos to ensure that the C.I. be renewed and
Mr. Abalos, in turn, assured me they will renew the same.
Q: What happened after that?
A: On the first week of December, I again made a
follow-up from Mr. Abalos, and said they were going to send me a
copy as soon as possible, sir.[24]
xxx
xxx
xxx
Q: What did you do with the C.I.?
A: We did not insist on getting a copy of the C.I. from
Mr. Abalos on the first place, because of our long business
relation, we trust Mr. Abalos and the fact that the vessel was able
to sail indicates that the documents are in order. xxx[25]
On cross examination Atty. Sarenas: This being the case, and this being an
admission by you, this Certificate of Inspection has expired on
December 7. Did it occur to you not to let the vessel sail on that
day because of the very approaching date of expiration?
Apolinar Ng: No sir, because as I said before, the
operation Manager assured us that they were able to secure a
renewal of the Certificate of Inspection and that they will in time
submit us a copy.[26]
Finally, on Mr. Ngs redirect examination:
Atty. Poblador: Mr. Witness, were you aware of the
pending expiry of the Certificate of Inspection in the coastwise
license on December 7, 1987. What was your assurance for the
record that this document was renewed by the MT Vector?
Atty. Sarenas: xxx
Atty. Poblador: The certificate of Inspection?
A: As I said, firstly, we trusted Mr. Abalos as he is a
long time business partner; secondly, those three years, they
were allowed to sail by the Coast Guard. That are some that
make me believe that they in fact were able to secure the
necessary renewal.
Q: If the Coast Guard clears a vessel to sail, what would
that mean?
Atty. Sarenas: Objection.
Court:
He already answered that in the cross
examination to the effect that if it was allowed, referring to MV
Vector, to sail, where it is loaded and that it was scheduled for a

destination by the Coast Guard, it means that it has Certificate of

Inspection extended as assured to this witness by Restituto
Abalos. That in no case MV Vector will be allowed to sail if the
Certificate of Inspection is, indeed, not to be extended. That was
his repeated explanation to the cross-examination. So, there is no
need to clarify the same in the re-direct examination.[27]
Caltex and Vector Shipping Corporation had been doing business
since 1985, or for about two years before the tragic incident
occurred in 1987. Past services rendered showed no reason for
Caltex to observe a higher degree of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to
presume that the ship was seaworthy as even the Philippine
Coast Guard itself was convinced of its seaworthiness. All things
considered, we find no legal basis to hold petitioner liable for
damages.
As Vector Shipping Corporation did not appeal from the Court of
Appeals decision, we limit our ruling to the liability of Caltex
alone. However, we maintain the Court of Appeals ruling insofar
as Vector is concerned .
WHEREFORE, the Court hereby GRANTS the petition and SETS
ASIDE the decision of the Court of Appeals in CA-G. R. CV No.
39626, promulgated on April 15, 1997, insofar as it held Caltex
liable under the third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. the damages the latter is adjudged
to pay plaintiffs-appellees. The Court AFFIRMS the decision of
the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay
the heirs of Sebastian E. Caezal and Corazon Caezal damages as
set forth therein.
Third-party defendant-appellee Vector
Shipping Corporation and Francisco Soriano are held liable to
reimburse/indemnify defendant Sulpicio Lines, Inc. whatever
damages, attorneys fees and costs the latter is adjudged to pay
plaintiffs-appellees in the case.

15. NATIONAL DEVELOPMENT COMPANY VS CA GAB

14. NDC v. CA
Doctrine:
Under the provisions of the Code of Commerce, particularly
Articles 826 to 839, the
shipowner or carrier, is not exempt from liability for damages
arising from collision due to
the fault or negligence of the captain. Primary liability is
imposed on the shipowner or
carrier in recognition of the universally accepted doctrine
that the shipmaster or
captain is merely the representative of the owner who has
the actual or constructive
control over the conduct of the voyage
Before the COGSA can be applied, Civil Code provisions should
be applied first, then the
Code of Commerce. (CC CODE OF COMMERCE COGSA)
Facts:
NDC, as the mortgagee of DONA NATI, appointed Maritime
Company of the PH (MCP) as
its agent to manage and operate the aforesaid vessel. Thus, on
1964, the E PHILIPP
Corporation loaded a total of 1200 bales of raw cotton in the
DONA NATI. The shipment
was consigned to Manila Banking Corporation. Other cargoes
were also loaded for
consignment to persons in the PH
En route to Manila from SAN FRANCISCO, the DONA NATI
collided with YASUSHIMA
MARU, a japanese vessel. As a result, 550 bales of cotton were
damaged and lost. The
other cargoes were also damaged. Consequently, the insurers
paid the consignees. In turn,
they sued NDC and MCP for damages.
NDC and MCP were held solidarily liable for the damage as it
found that the DONA NATI
was the one at fault. The RTC based its findings on the rules of
collision under the CODE
OF COMMERCE. CA affirmed so both appealed to the SC. NDC
argues that the COGSA
should apply and not the Civil Code or Code of Commerce.
o Under Section 4 (2) of said Act, the carrier is not
responsible for the loss or
damage resulting from the "act, neglect or default of the
master, mariner,
pilot or the servants of the carrier in the navigation or in the
management
of the ship."
o Thus, NDC insists that based on the findings of the lower courts
that both pilots
of the colliding vessels were at fault and negligent, NDC should be
relieved of
liability under the Carriage of Goods by Sea Act.
Issue: Should the COGSA apply? No
The law of the country to which the goods are to be
transported governs the liability of the
common carrier in case of their loss, destruction or
deterioration" (Article 1753, Civil Code).
In this case, since the goods were intended to be transported
to the Philippines, the
liability of the carrier is governed primarily by the Civil Code
and in all matters not
regulated by said Code, the rights and obligations of common
carrier shall be
governed by the Code of commerce (first) and (then) by
special laws (Article 1766,
Civil Code).

suppletory to the provision of the Civil Code. It is immaterial that

the collision
occurred in foreign waters.
It appears, however, that collision falls among matters not
specifically regulated by
the Civil Code, so the CA did not err in its application to the case
at bar of Articles 826 to
839 which deal exclusively with collision of vessels.
More specifically, Article 826 of the Code of Commerce
provides that where collision is
imputable to the personnel of a vessel, the owner of the vessel at
fault, shall indemnify the
losses and damages incurred after an expert appraisal. But more
in point to the present
case is Article 827 of the same Code, which provides that if the
collision is imputable to
both vessels, each one shall suffer its own damages and both shall
be solidarily
responsible for the losses and damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce,
particularly Articles 826 to
839, the shipowner or carrier, is not exempt from liability for
damages arising from collision
due to the fault or negligence of the captain. Primary liability is
imposed on the
shipowner or carrier in recognition of the universally
accepted doctrine that the
shipmaster or captain is merely the representative of the
owner who has the actual
or constructive control over the conduct of the voyage
There is, therefore, no room for NDC's interpretation that
the Code of Commerce
should apply only to domestic trade and not to foreign trade.
Aside from the fact that
the Carriage of Goods by Sea Act (Com. Act No. 65) does not
specifically provide for the
subject of collision, said Act in no uncertain terms, restricts its
application "to all contracts
for the carriage of goods by sea to and from Philippine ports in
foreign trade." Under
Section I thereof, it is explicitly provided that "nothing in this Act
shall be construed as
repealing any existing provision of the Code of Commerce which
is now in force, or as
limiting its application." By such incorporation, it is obvious that
said law not only recognizes
the existence of the Code of Commerce, but more importantly
does not repeal nor limit its
application. MDC loses, insurers win
G.R. No. L-49407 August 19, 1988
NATIONAL DEVELOPMENT COMPANY, petitioner-appellant,
vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE &
SURETY CORPORATION, respondents-appellees.
No. L-49469 August 19, 1988
MARITIME COMPANY OF THE PHILIPPINES, petitioner-appellant,
vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE &
SURETY CORPORATION, respondents- appellees.
The evidence before us shows that in accordance with a
memorandum agreement entered into between defendants NDC
and MCP on September 13, 1962, defendant NDC as the first
preferred mortgagee of three ocean going vessels including one
with the name 'Dona Nati' appointed defendant MCP as its agent
to manage and operate said vessel for and in its behalf and
account (Exh. A). Thus, on February 28, 1964 the E. Philipp

Corporation of New York loaded on board the vessel "Dona Nati"

at San Francisco, California, a total of 1,200 bales of American
raw cotton consigned to the order of Manila Banking
Corporation, Manila and the People's Bank and Trust Company
acting for and in behalf of the Pan Asiatic Commercial Company,
Inc., who represents Riverside Mills Corporation (Exhs. K-2 to
K7-A & L-2 to L-7-A). Also loaded on the same vessel at Tokyo,
Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to
the order of Manila Banking Corporation consisting of 200
cartons of sodium lauryl sulfate and 10 cases of aluminum foil
(Exhs. M & M-1). En route to Manila the vessel Dofia Nati figured
in a collision at 6:04 a.m. on April 15, 1964 at Ise Bay, Japan with
a Japanese vessel 'SS Yasushima Maru' as a result of which 550
bales of aforesaid cargo of American raw cotton were lost and/or
destroyed, of which 535 bales as damaged were landed and sold
on the authority of the General Average Surveyor for Yen 6,045,500 and 15 bales were not landed and deemed lost (Exh. G). The
damaged and lost cargoes was worth P344,977.86 which amount,
the plaintiff as insurer, paid to the Riverside Mills Corporation as
holder of the negotiable bills of lading duly endorsed (Exhs. L-7A, K-8-A, K-2-A, K-3-A, K-4-A, K-5-A, A- 2, N-3 and R-3}. Also
considered totally lost were the aforesaid shipment of Kyokuto,
Boekui Kaisa Ltd., consigned to the order of Manila Banking
Corporation, Manila, acting for Guilcon, Manila, The total loss was
P19,938.00 which the plaintiff as insurer paid to Guilcon as
holder of the duly endorsed bill of lading (Exhibits M-1 and S-3).
Thus, the plaintiff had paid as insurer the total amount of
P364,915.86 to the consignees or their successors-in-interest, for
the said lost or damaged cargoes. Hence, plaintiff filed this
complaint to recover said amount from the defendants-NDC and
MCP as owner and ship agent respectively, of the said 'Dofia Nati'
vessel.
Development insurance and surety co. filed a case for recovery
vs MCP (maritime co. of the Phils.) of 364k
MCP filed its answer with counterclaim and cross-claim against
NDC. TC ordered MCP and NDC(National development Corp.) to
pay NDC jointly and solidarily. It also ordered NDC to pay MCP.
ISSUE:
1. which laws govern loss or destruction of goods due to collision
of vessels outside Philippine waters, and the extent of liability as
well as the rules of prescription provided thereunder. - Code of
Commerce
2.w/n MCP and NDC should be solidarily liable to DISC - Yes
HELD:
The main thrust of NDC's argument is to the effect that the
Carriage of Goods by Sea Act should apply to the case at bar and
not the Civil Code or the Code of Commerce. Under Section 4 (2)
of said Act, the carrier is not responsible for the loss or damage
resulting from the "act, neglect or default of the master, mariner,
pilot or the servants of the carrier in the navigation or in the
management of the ship." Thus, NDC insists that based on the
findings of the trial court which were adopted by the Court of
Appeals, both pilots of the colliding vessels were at fault and
negligent, NDC would have been relieved of liability under the
Carriage of Goods by Sea Act.
that the law of the country to which the goods are to be
transported governs the liability of the common carrier in case of
their loss, destruction or deterioration" (Article 1753, Civil Code).
Thus, the rule was specifically laid down that for cargoes
transported from Japan to the Philippines, the liability of the
carrier is governed primarily by the Civil Code and in all matters
not regulated by said Code, the rights and obligations of common
carrier shall be governed by the Code of commerce and by laws
(Article 1766, Civil Code). Hence, the Carriage of Goods by Sea
Act, a special law, is merely suppletory to the provision of the
Civil Code.
In the case at bar, it has been established that the goods in
question are transported from San Francisco, California and

Tokyo, Japan to the Philippines and that they were lost or due to
a collision which was found to have been caused by the
negligence or fault of both captains of the colliding vessels.
Hence,laws of the philippines will apply. the fact that collission
occurred in foreign waters is immaterial
Common carriers are presumed negligent unless they proved
they exercise extra ordinary diligence
Since there is no provision with regard to collission in the civil
code, resort to Articles 826 to 839, Book Three of the Code of
Commerce, which deal exclusively with collision of vessels, will
be had
More specifically, Article 826 of the Code of Commerce provides
that where collision is imputable to the personnel of a vessel, the
owner of the vessel at fault, shall indemnify the losses and
damages incurred after an expert appraisal. But more in point to
the instant case is Article 827 of the same Code, which provides
that if the collision is imputable to both vessels, each one shall
suffer its own damages and both shall be solidarily responsible
for the losses and damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce,
particularly Articles 826 to 839, the shipowner or carrier, is not
exempt from liability for damages arising from collision due to
the fault or negligence of the captain. Primary liability is imposed
on the shipowner or carrier in recognition of the universally
accepted doctrine that the shipmaster or captain is merely the
representative of the owner who has the actual or constructive
control over the conduct of the voyage (Y'eung Sheng Exchange
and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).
There is, therefore, no room for NDC's interpretation that the
Code of Commerce should apply only to domestic trade and not
to foreign trade. Aside from the fact that the Carriage of Goods by
Sea Act (Com. Act No. 65) does not specifically provide for the
subject of collision, said Act in no uncertain terms, restricts its
application "to all contracts for the carriage of goods by sea to
and from Philippine ports in foreign trade." Under Section I
thereof, it is explicitly provided that "nothing in this Act shall be
construed as repealing any existing provision of the Code of
Commerce which is now in force, or as limiting its application."
By such incorporation, it is obvious that said law not only
recognizes the existence of the Code of Commerce, but more
importantly does not repeal nor limit its application.
The records show that the Riverside Mills Corporation and
Guilcon, Manila are the holders of the duly endorsed bills of
lading covering the shipments in question and an examination of
the invoices in particular, shows that the actual
consignees/subrogers of the said goods are the aforementioned
companies. Moreover, no less than MCP itself issued a
certification attesting to this fact.
MCP next contends that it can not be liable solidarity with NDC
because it is merely the manager and operator of the vessel Dona
Nati not a ship agent. As the general managing agent, according to
MCP, it can only be liable if it acted in excess of its authority.
As found by the trial court and by the Court of Appeals, the
Memorandum Agreement of September 13, 1962 (Exhibit 6,
Maritime) shows that NDC appointed MCP as Agent, a term broad
enough to include the concept of Ship-agent in Maritime Law. In
fact, MCP was even conferred all the powers of the owner of the
vessel, including the power to contract in the name of the NDC
It is well settled that both the owner and agent of the offending
vessel are liable for the damage done where both are impleaded
(Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281 [1906]);
that in case of collision, both the owner and the agent are civilly
responsible for the acts of the captain (Yueng Sheng Exchange
and Trading Co. v. Urrutia & Co., supra citing Article 586 of the
Code of Commerce; Standard Oil Co. of New York v. Lopez

Castelo, 42 Phil. 256, 262 [1921]); that while it is true that the
liability of the naviero in the sense of charterer or agent, is not
expressly provided in Article 826 of the Code of Commerce, it is
clearly deducible from the general doctrine of jurisprudence
under the Civil Code but more specially as regards contractual
obligations in Article 586 of the Code of Commerce. Moreover,
the Court held that both the owner and agent (Naviero) should be
declared jointly and severally liable, since the obligation which is
the subject of the action had its origin in a tortious act and did not
arise from contract (Verzosa and Ruiz, Rementeria y Cia v. Lim,
45 Phil. 423 [1923]). Consequently, the agent, even though he
may not be the owner of the vessel, is liable to the shippers and
owners of the cargo transported by it, for losses and damages
occasioned to such cargo, without prejudice, however, to his
rights against the owner of the ship, to the extent of the value of
the vessel, its equipment, and the freight.
As to the extent of their liability, MCP insists that their liability
should be limited to P200.00 per package or per bale of raw
cotton as stated in paragraph 17 of the bills of lading.
common carriers, in the language of the court in Juan Ysmael &
Co., Inc. v. Barrette et al., (51 Phil. 90 [1927]) "cannot limit its
liability for injury to a loss of goods where such injury or loss was
caused by its own negligence." Negligence of the captains of the
colliding vessel being the cause of the collision, and the cargoes
not being jettisoned to save some of the cargoes and the vessel,
the trial court and the Court of Appeals acted correctly in not
applying the law on averages (Articles 806 to 818, Code of
Commerce).

16. KRAMER JR. VS CA - NIKKI

15. Kramer v. CA
Doctrine:
in an action for damages arising from the collision of two (2)
vessels, the four (4) year
prescriptive period must be counted from the day of the
collision. The aggrieved party
need not wait for a determination by an administrative body like
a Board of Marine Inquiry,
that the collision was caused by the fault or negligence of the
other party before he can file
an action for damages.
4 kinds of maritime accidents: 1) general average 2)
shipwreck (derelict) 3) collision 4)
arrival under stress (ship can still sail)
Facts:
ON 1976, the F/B MARJOLEA, owned by the KRAMERS,
collided with MV ASIA
PHILIPPINES owned by TRANS-ASIA. As a result, the MARJOELA
sank. On 1981 The
BMI found that the cause of the collision was the negligence of
the employees of TRANSASIA.
Thus, on 1985, the KRAMERS sued TRANS-ASIA for damages.
TRANS-ASIA filed a
motion to dismiss on the ground of prescription.
it was argued that under Article 1146 of the Civil Code, the
prescriptive period for instituting
a Complaint for damages arising from a quasi-delict like a
maritime collision is four years.
He maintained that the petitioners should have filed their
Complaint within four years from
the date when their cause of action accrued (1976, date of
collision)
Issue: What is the reckoning point for the prescriptive period for
filing claims based on maritime
collisions?
Under Article 1146 of the Civil Code, an action based upon a
quasi-delict must be instituted
within four (4) years. The prescriptive period begins from the
day the quasi-delict is
committed.
The prescriptive period must be counted when the commission
of an act or omission
violative of the right of the plaintiff, which is the time when the
cause of action arises.
It is therefore clear that in this action for damages arising from
the collision of two (2)
vessels the four (4) year prescriptive period must be counted
from the day of the collision.
The aggrieved party need not wait for a determination by an
administrative body like a
Board of Marine Inquiry, that the collision was caused by the fault
or negligence of the other
party before he can file an action for damages. The ruling in
Vasquez does not apply in this
case. Immediately after the collision the aggrieved party can seek
relief from the courts by
alleging such negligence or fault of the owners, agents or
personnel of the other vessel.
In this case, since the collision took place on 1976, and the
complaint was only filed on
1985, the cause of action has prescribed. KRAMER lost.