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MANILA STEAMSHIP v.

ABDULHAMAN
G.R. No. L-9534 Sept 29, 1956 JBL Reyes
petitioners Manila Steamship Co. Inc.
respondents Insa Abdulhaman (Moro) and Lim Hong To
summary 2 vessels collided at sea. Abdulhaman sued for damages. CA held that the officers of
both vessels were negligent, thus the owners are solidarily liable. MNL S argues that
it exercised the diligence of a good father of a family to the selection if its EEs. Held:
CC does not apply, since this is a maritime tort governed by the Code of Commerce.
Under such law, shipowners have a more direct responsibility as regards liability to
third persons.

facts of the case


One night, M/L Consuelo V (owned by Lim) whose route was from Zamboanga to Siokon collided with
M/S Bowline Knot (owned by MNL S) which was going to Zamboanga from Maribojoc. M/L Consuelo V
capsized, which resulted in the death of 9 passengers.
Abdulhaman filed this case for damages against the two shipowners for the death of his 5 children and the
loss of personal properties. He and his family were passengers in M/L Consuelo V. Before the collision, none
of the passengers were warned or informed of the impending danger as the collision was so sudden and
unexpected.

CA: Affirmed the findings of the Board of Marine Inquiry that the commanding officers of both vessels
were negligent in operating them. The shipowners are solidarily liable to Abdulhaman for the damages
caused to him by the collision under Art. 827 of the Code of Commerce. However, Lim is exempted from
liability by reason of the sinking and the total loss of his vessel.

MNL S: (1) Exempt from liability under Art 1903 CC because it exercised the diligence of a good father of a
family in the selection of its employees;
(2) Should not be held liable for the negligence of his agents and employees;
(3) Lim should not be exempt.

issue
(1) WoN MNL S is exempted from liability by virtue of Art 1903. NO.
(2) WoN it may be held liable for the negligence of its employees. YES.
(3) WoN Lim is exempt from liability because of the total loss of his ship. NO.

ratio
(1) Even if Abdulhaman’s action is based on a tort, the tort in question here is not a civil tort governed by
the CC but a maritime tort resulting in a collision at sea, governed by Arts 826-939 of the Code of
Commerce. Under Art 827, in case of collision between 2 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. By
making the vessels solidarily liable, the law emphasizes the direct nature of the responsibilities on account
of the collision incurred by the shipowner under maritime law, as distinguished from civil and mercantile
law in general. This direct responsibility is recognized in Art 618 of the same code 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, in maritime law and custom, that shipowners and ship agents are civilly liable
for the acts of the captain (Art 586) and for the indemnities due the third persons (Art 587), so that injured
parties may be immediately reimbursed by 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, limited by the owner’s
right of abandonment of the vessel and earned freight (587), has been declared to exists not only in breach of
contracts but also in tortuous negligence.

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To admit the defense of due diligence of a bonus pater familias in the selection and vigilance of the officers
and crew as an exemption would render nugatory the solidary liability established by Art 827. Shipowners
would be able to escape liability in practically every case, since the qualifications and licensing of ship masters
and officers are determined by the State. To compel the parties to look to the crew for indemnity and redress
would be an illusory remedy, for almost always the members of the crew are mere wage earners.

(2) Where the vessel is one of freight, a public concern or public utility, its owner or agents is liable for the
tortuous acts of his agents (587, 613, 618 Code of Commerce and 1902-03, 1908 CC).

(3) Lim should be held liable. Both the master and the engineer of his vessel were not duly licensed as such. In his
application for a permission to operate, Lim’s reason for it was that the income derived from the vessel is
insufficient to pay licensed officers who demand high salaries. Furthermore, he expressly declared: “That in
case of any accident, damage or loss, I shall assume full risk and responsibility for all the consequences
thereof.” This assumption of risk was also reiterated in his permit to operate.

CA: The application and the permit did not contain any waiver of the right of Lim to limit his liability to
the value of his vessel. He did not lose the statutory right to limit his liability by abandonment of the vessel.
SC: Disregarding the question of whether mere inability to meet the salary demands of licensed officers
would excuse noncompliance of the law, the fact remains that by operating with an unlicensed master, Lim
deliberately increased the risk to which the passengers and cargoes of the vessel would be subjected. His
liability cannot be identical to that of a shipowner who bears in mind the safety of his passengers and cargo by
employing duly licensed officers. To allow Lim to limit his liability would erase all the difference between
compliance with the law and the deliberate disregard thereof.
The international rule is that the right of abandonment of vessels, as a legal limitation of a shipowner’s
liability, does not apply to cases where the injury or the average is due to the shipowner’s fault.

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Abueg v. San Diego
G.R. No. L-773, 774, 775 Dec. 17, 1946 J. Padilla
petitioners Dionisia Abueg, Marciana de Salvacion, Rosario Oching
respondents Bartolome San Diego
summary Widows of crewmen who died in a storm filed claims against the shipowner under
the Workmen's Compansation Act. Employer claimed that is liability should be
limited as per the Code of Commerce. The Court held that the Code will not apply in
this case, as the Workmen's Compensation Act will govern since the said law was
enacted in abrogation of other existing laws and the purpose of such is to ensure that
the heirs and dependents are properly compensated when a worker dies or is injured
in the course of work.

facts of the case


Two vessels, the M/V San Diego and the M/S/ Bartolome were sunk during a typhoon while they were
engaged in fishing operations. Some of the crew members died, so their relatives filed for compensation for the
employers.

Employers denied liability, arguing that under the Code of Commerce, when the vessel is abandoned, or
totally lost, the liability of the shipowner for wages of the crew is extinguished.

issue
Are the owners liable? YES

ratio

Code of Commerce does not apply in this case - It is not the liability for the damage or loss of the cargo or
injury to, or death of, a passenger by or through the misconduct of the captain or master of the ship; nor the
liability for the loss of the ship as result of collision; nor the responsibility for wages of the crew, but a liability
created by a statute to compensate employees and laborers in cases of injury received by or inflicted upon
them, while engaged in the performance of their work or employment, or the heirs and dependents and
laborers and employees in the event of death caused by their employment. Such compensation has nothing to
do with the provisions of the Code of Commerce regarding maritime commerce.

The rights and responsibilities defined in said Act must be governed by its own peculiar provisions in
complete disregard of other similar mercantile law. If an accident is compensable under the Workmen's
Compensation Act, it must be compensated even when the workman's right is not recognized by or is in
conflict with other provisions of the Civil Code or the Code of Commerce. The reason behind this principle is
that the Workmen's Compensation Act was enacted by the Legislature in abrogation of the other existing laws.

Even if the ships were not engaged in interisland trade, the Workmen's Compensation Act will still apply -
Granting however, that the motor ships run and operated by the appellant were not engaged in the coastwise
and interisland trade, as contemplated in section 38 of the Workmen's Compensation Act, as amended, still the
deceased officers of the motor ships in question were industrial employees within the purview of section 39,
paragraph (d), as amended, for industrial employment "includes all employment or work at a trade,
occupation or profession exercised by an employer for the purpose of gain." The only exceptions recognized by
the Act are agriculture, charitable institutions and domestic service.

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YU CON v. IPIL, LAURON and SOLAMO
G.R. No. L-10195 Dec. 29, 1916 J. Araullo
summary Shipper: Yu Con Shipowner: Lauron Master: Ipil Supercargo: Solamo
Chinaman’s money amounting to P450 “disappeared”. The shipowner is liable for the acts of
the captain and the crew based on Arts. 587 and 618 of the Code of Commerce. The liability of
the shipowner stems from his capability to appoint the crew and the captain and from the rule
under the Partidas that he who derives benefit from a particular activity must also be liable for
losses occasioned by such activity.
facts of the case
Yu Con contracted with Narciso Lauron for the transportation of certain merchandise and some money
from the port of Cebu to Catmon. Yu Con chartered the banca Maria with Glicerio Ipil as master and Justo
Sulamo as supercargo for the said purpose. They had several times chartered before. On the afternoon of
October 18, 1911, Yu Con delivered a trunk containing P450, which was to be delivered to Yu Con’s shop in
Catmon for the purchase of corn. That same night, the trunk was lost and the thief was not identified despite
investigations. Yu Con filed a complaint to recover the sum of P450 while the defendants filed a counterclaim.

Surrounding circumstances:
1. Master and supercargo received from Yu Con the trunk containing P450. Said trunk was placed outside the
stateroom of the banca because there was no more space inside.
2. Master and supercargo later transferred the P450 to their trunk, which was inside the stateroom.
3. Yu Con charged the master and supercargo to take special care of the money. Master assured Yu Con that there
was no danger of the money being lost.
4. 2 other cabin boys knew of the existence of the money inside the stateroom.
5. 1 of the cabin boys slept inside the stateroom that night, while Master slept outside. There was 1 guard.
6. That night, the sum of P450 and the trunk containing it “disappeared.”

Yu Con’s argument: the disappearance of said sum was due to the abandonment, negligence, or voluntary
breach, on the part of the defendants, of the duty they had in respect to the safe-keeping of the aforementioned
sum.

Defendants’ arguments and bases for counter-claim3:


1. Denial of the allegations in the complaint
2. Yu Con chartered the banca for a fixed period of 3 days
3. The loss occurred through the misfortune, negligence, or abandonment of the plaintiff himself and was
caused by theft committed by unknown thieves
4. Defendant Lauron, the owner of the banca merely placed this craft at the disposal of the plaintiff and
did not go with the banca on its voyage from Catmon to Cebu

issue WON defendants are jointly and severally liable to Yu Con. YES.

ratio
1. MASTER AND SUPERCARGO LIABLE
They gave no satisfactory explanation with regard to the disappearance of the trunk and the money, thus the
fortuitous event argument is unavailing.
a. They merely testified that they did not know who the robbers were, for, when the robbery was committed, they were sound
asleep, as they were tired, and that he believed that the guard also fell asleep too.
b. Both of them testified that the trunk in which the money was contained could have been passed through the small window of
the stateroom, which was broken after the incident. They claimed that the window-blinds had been removed, as well as the
partition. However, no evidence (other than their bare claim) was offered to prove the veracity of such statement.
c. It was not proven, nor is there any circumstantial evidence to show, that the robbery in question was committed by persons
not belonging to the craft.
                                                                                                           
3 [COUNTERCLAIM] Plaintiff should pay the unpaid freight agreed upon amounting to P80, plus the sum of P70, as an indemnity for the losses

and damages caused them by the attachment of the banca, additional sum of P100, for the deterioration of the said banca, and also
that of P200 for other deterioration suffered by the same since Nov, 1911, and which had not been paid for.

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d. Not only did they fail the take the necessary precautions to properly guard the stateroom, but they also did not station some
person inside the stateroom in safekeeping the trunk since it was not duly proven that a cabin boy (see facts: SC #5) did in fact
sleep there. He was not presented to testify. What was proven was the fact that they all slept soundly, which is not an
acceptable explanation for the loss.
e. There were 6 crewmembers who were near or around the stateroom. It is very strange that none of them heard the noise
which the robbers must have made in breaking its window.

Therefore, is beyond doubt that the loss of the P450, which were in the possession of the defendants, occurred through
the manifest fault and negligence of the defendants. As depositaries of the sum in question, they are liable pursuant to
Arts. 1601 & 1602, in rel. to 1738 & 1784, as prescribed by 1770 of the CC.

2. (MAIN) SHIPOWNER ALSO LIABLE


Lauron, as the proprietor and owner of the craft of which the master and supercargo were held to be liable for
their fault & negligence resulting to the loss of Yu Con’s P450, is also civilly liable under Arts. 587 & 618 of
the Code of Commerce.

a. The court first determined whether the banca Maria falls under the meaning of vessel4 pursuant to the Code of
Commerce. It does. Also, Ipil as master of the banca must also be considered as captain in the legal contemplation
of the word since he was in-charge of the vessel
b. BEFORE Arts. 5875 and 6186 of the Code of Commerce, the agent or shipowner was in no wise liable
for any excesses which, during the navigation, may be committed by the captain and the crew. The
only recourse BEFORE was against the captain or crew.
c. But NOW we already have Arts. 587 and 618, which imputes civil liability to the agent or shipowner

Citing Estasen’s Institutes of Mercantile Law referring to the Code Commission, the ff. are the REASONS FOR THE SHIFT:
! Captain is the agent and subordinate of the shipowner – While the shipowner be not held criminally liable for such
crimes or quasi crimes; he cannot be excused from liability for the damage and harm which, in consequence of those
acts, may be suffered by the third parties who contracted with the captain, in his double capacity of agent and
subordinate of the shipowner himself.
! Trust of shippers & passengers to the shipowner - The shippers and passengers in making contracts with the
captain do so through the confidence they have in the shipowner who appointed him; they presume that the owner
made a most careful investigation before appointing him, and, above all, they themselves are unable to make such an
investigation, and even though they should do so, they could not obtain complete security, inasmuch as the
shipowner can, whenever he sees fit, appoint another captain instead. The shipowner is in the same case with respect
to the members of the crew, for, though he does not appoint directly, yet, expressly or tacitly, he contributes to their
appointment.
! Partidas - If the shipowner derives profits from the results of the choice of the captain and the crew, when the choice
turns out successful, it is also just that he should suffer the consequences of an unsuccessful appointment, by
application of the rule of natural law contained in the Partidas, viz., that he who enjoys the benefits derived from a
thing must likewise suffer the losses that ensue therefrom.
! Penal Code - declares that such persons who undertake any industry shall be civilly liable, in default of those who
may be criminally liable, for the misdemeanors and crimes committed by their subordinates in the discharge of their
duties.

                                                                                                           
4 “Ship” or “Vessel” = designate every craft, large or small, so long as it be not an accessory of another, such as the small boat of a vessel,

of greater or less tonnage. This definition comprises both the craft intended for ocean or for coastwise navigation, as well as the floating
docks, mud lighters, dredges, dumpscows or any other floating apparatus used in the service of an industry or in that of maritime
commerce. . . ."
5 The agent shall be civilly 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 freight he
may have earned during the trip.
6 The captain shall be civilly liable to the agent and the latter to the third persons who may have made contracts with the former —

1. For all the damages suffered 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 committed by the crew, reserving his right of action against the guilty parties.

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Lopez v. Duruelo
G.R. No. L-29166 October 22, 1928 Street, J.
petitioners Augusto Lopez
respondents Juan Duruelo, et al.; Albino Jison
summary Topic: Vessels; Meaning – In a case for damages against owner/operator of a motor
boat, defendant filed a demurrer on the ground that the complaint did not state that
plaintiff observed the condition precedent required under the Code of Commerce in
cases of collision (file a protest within 24 hours from accident). Ct held that CoC is not
applicable in the case at bar because what is involved here is a boat not within the
purview of said provision. Art. 835 Code of Commerce only applies to merchant
vessels or vessels engaged in maritime commerce and not to small boats engaged in
river and bay traffic. Other vessels of a minor nature are governed by CC or other
pertinent special laws.

facts of the case


The case is an action for damages instituted by Augusto Lopez against Juan Duruelo (patron) and Albino Jison (owner/operator)
due to the injuries sustained by the former which happened while on board the latter’s motor boat.
THE ACCIDENT: Lopez wanted to ride the interisland steamer San Jacinto to go to Iloilo. To get to the steamer
which was half a mile away from the port, he has to ride a motor boat. He embarked in motor boat Jison. The
engineer (maquinista) aboard was Rodolin Duruelo, a 16-year old boy who was a novice at running motor boats
(3rd day as apprentice). As the motor boat approached the San Jacinto in a perfectly quiet sea, it came too near
to the stern of the ship, and as the propeller of the ship had not yet ceased to turn, the blades of the propeller
struck the motor boat and sank it at once. It is alleged that the dangerous proximity with the propeller of San
Jacinto was due to the fault, negligence and lack of skill of Juan. Jison sank while Lopez was thrown against the
propeller which inflicted various injuries upon him.

NATURE OF THE BOAT: The boat Jison is used to transport passengers and baggages from the landing at
Silay to the ships in the harbor; it’s a boat propelled by a second-hand motor (originally used in a tractor plow)
and has an 8-person capacity. (at time of accident, it was alleged that Jison was carrying 14 people)

JISON’S DEFENSE: Demurrer is proper because the complaint failed to allege a cause of action.
o No allegation that a protest had been presented by Lopez within 24 hours after the
occurrence, to the competent authority at the port where the accident occurred as required
under Art. 835 of the Code of Commerce

issue
WON Art. 835 Code of Commerce is applicable to accidents involving a small motor boat - NO.

Ratio
! Art. 835 Code of Commerce only applies to merchant vessels or vessels engaged in maritime commerce
and not to small boats engaged in river and bay traffic.
• The provision is found in the section of Collisions under the Book III of CoC which deals with
Maritime Commerce
o vessels intended in Book III are such as are run by masters having special training, with the
elaborate apparatus of crew and equipment indicated in the Code; vessels which are
licensed to engage in maritime commerce, or commerce by sea, whether in foreign or
coastwise trade are regulated by CoC.
o other vessels of a minor nature not engaged in maritime commerce, such as river boats and
those carrying passengers from ship to shore, must be governed, as to their liability to
passengers, by the provisions of the Civil Code or other appropriate special provisions of
law
• Jurisprudence: Yu Con v Ipil and Mamie (5 Fed., 813)

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• Authors: Estasen and Blanco

! Application:
• A passenger on a boat like the Jison is not required to make protest as a condition precedent to his
right of action for the injury suffered by him in the collision. In other words, article 835 of the Code
of Commerce does not apply.
• But even if said provision had been considered applicable, a fair interpretation of the allegations of
the complaint indicates, that the injuries suffered by the plaintiff in this case were of such a nature
as to excuse protest; for, under article 836, it is provided that want to protest cannot prejudice a
person not in a condition to make known his wishes. He suffered compound fractures, duh???

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Rubiso v Rivera
G.R. No. L-11407 October 30, 1917 TORRES, J.
petitioners FAUSTO RUBISO and BONIFACIO GELITO
respondents FLORENTINO E. RIVERA
summary Timeline Jan. 4- Sy sold boat to Rivera; Jan. 23- case filed by Rubiso against Sy and
boat was levied upon and bought by Rubiso in public sale; Jan. 27- certificate of sale
issued to Rubiso and recorded in the office of the Collector of Customs; Mar. 14-
Rubiso sale registered; Mar. 17- Rivera sale registered.
Who owns the boat?
Rubiso, because his purchase was registered first. Registration is required to bind
third persons.

facts of the case


On April 10, 1915, Rubiso filed a complaint against Rivera for the recovery of a pilot boat (Valentina). He
alleged that he is the rightful owner of a pilot boat, which was stranded and recovered by Rivera. Ithas
been in bad condition since the year 1914 and, on the date of the complaint, was stranded in the place called
Tingloy in Batangas. Rubiso also claims that the boat is usually used for voyages and they can’t repair and
derived profit from it because it was in the hands of Rivera.
The latter refused to return the said boat as he alleged too that he was the owner thereof. His story is that
it used to be co-owned by Bonifacio Gelito, one of the petitioners (2/3) and Sy Qui (1/3). Gelito sold his share
to Sy, such sale being registered in the office of the Collector of Customs. Sy as absolute owner sold it to Rivera
for P2500 on Jan. 4, 1915. Deed of sale between Sy and Rivera was notarized and registered in the Bureau of
Customs on Mar 17.
After the sale of Sy to Rivera, a case was filed by Rubiso against Sy for money claims (January 23). The boat
was garnished and sold in public auction for P55.45 The certificate of sale and adjudication of the boat in
question was issued by the sheriff on behalf of Fausto Rubiso, in the office of the Collector of Customs, on
January 27 of the same year and was also entered in the commercial registry on the 14th of March.
issue
Who owns the boat? Rubiso; registration is controlling

ratio

Code of Commerce Art. 573


Merjant vessels constitute property which may be acquired and transferred by any of the means recognized by law. The acquisition of
a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if not recorded in
the commercial registry.

But that provision was amended by Act. No. 1900


Sec. 2:
The documenting, registering, enrolling, and licensing of vessels in accordance with the Customs Administrative Act and customs
rules and regulations shall be deemed to be a registry of vessels within the meaning of the title two of the Code of Commerce, unless
otherwise provided in said Customs Administrative Act or in said customs rules and regulations, and the Insular Collector of
Customs shall perform the duties of commercial register concerning the registering of vessels, as defined in title two of the Code of
Commerce.

The amendment solely consisted in charging the Insular Collector of Customs, as at present, with the
fulfillment of the duties of the commercial register concerning the registering of vessels; so that the registration
of a bill of sale of a vessel shall be made in the office of the insular Collector of Customs, who, since May 18,
1909, has been performing the duties of the commercial register in place of this latter official. Requirement of
registration to affect third persons was not amended.

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With respect to the indemnity for losses and damages, requested by the plaintiff, aside from the fact, as shown
by the evidence, that, subsequent to the date when the judgment appealed from was rendered, the vessel in
question emerged unharmed from the place where it was stranded, and was, at the time of the trial, anchored
in the port of Maricaban, the record certainly does not furnish any positive evidence of the losses and damages
alleged to have been occasioned. On the other hand, it cannot be affirmed that the defendant acted in bad faith
specifically because he acquired the vessel on a date prior to that of its acquisition at public auction by the
plaintiff Rubiso, who, for the reason aforestated, is the true and sole owner of said pilot boat.

Pursuant to article 582 of the Mercantile code, after the bill of the judicial sale at auction has been executed and
recorded in the commercial registry, all the other liabilities of the vessel in favor of the creditors shall be
considered canceled.

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ARROYO v. YU
G.R. No. L-31865 February 28, 1930 J. Malcolm
plaintiff-appellee Mariano B. Arroyo, Provincial Sheriff of Iloilo
defendants-appellants Maria Corazon Yu De Sane, Jose M. Po Pauco, and Po Suy Liong
defendant-appellee Philippine National Bank
summary Mortgages involving vessels should be recorded with the Bureau of Customs
and not with the Register of Deeds. This is to protect persons who deal with a
vessel on the strength of the record title. However, the attendant
circumstances of this case rendered the mortgagee’s title superior to the
judgment creditor’s title, even if the latter’s execution on the property subject
of the mortgage was registered with customs at an earlier date, because the
reason for the delay in recording the mortgage with customs was beyond the
control of the mortgagee; thus, his registration of the mortgage with the
register of deeds, recorded way earlier than the execution’s recording with
customs, gave him superior title to that of the judgment creditor.

facts of the case [ang gulo ng facts sa case, tried to simplify it as best as I could]
Lorchas China and Cuylim were owned by Lim Ponzo Navigation Co.
On November 6, 1918, these two lorchas were mortgaged to J. M. Po Pauco to guarantee a loan of P20,000
that Lim Ponzo owed Po Pauco. Two days later, the mortgage was duly registered in the office of the register
of deeds of Iloilo.
On November 28, 1919, Po Pauco executed a mortgage in favor of PNB to secure its loan of P50,000 with
said bank. The mortgage covered, among other things, the titles, rights, and interests which Po Pauco had in
the lorchas. One day later, or on November 29, 1919, this mortgage was registered in the office of the register
of deeds of Iloilo. However, it was not until March 5, 1929 that it was recorded in the office of the collector
of customs of Iloilo. Meanwhile, the obligation of Po Pauco allegedly ballooned to P131,994.95.
It appears that Maria Corazon Yu de Sane secured money judgment against Lim Ponzo. As judgment
creditor, Yu de Sane obtained a writ of attachment and an execution over the lorchas, with the writ of
execution being dated December 6, 1928. The notice of seizure was recorded by the collector of customs of
Iloilo on December 4, 1928, on which date the records of that office disclosed the vessels as free from
encumbrances (A/N: Note that the mortgage over the lorchas of Po Pauco in favor of PNB was only registered with said office on March 25,
1929.)
Obviously, the above events led to conflicting claims over the lorchas, which prompted herein plaintiff-
appellee sheriff, in order to protect himself from any liability in case of wrongful execution, to institute an
action for interpleader involving Ti, Liong & Co.; herein defendant-appellants, Po Suy Liong, J. M. Po Pauco,
and Maria Corazon Yu de Sane; and herein defendant-appellee, Philippine National Bank (PNB). Said parties
then presented their respective answers and complaints. (A/N: Di ko alam anong kinalaman ni Ti, Liong & Co., hindi sinabi sa
case; si Po Suy Liong, sabi sa ruling yung mortgage daw na hinahabol niya ay not on the lorchas themselves, so I guess he’s here because Lim Ponzo,
owner of the lorchas, was also indebted to him in some way)
The TC made the following rulings:
1. It upheld the mortgage between Po Pauco and PNB as legal and valid, even if the same was not
registered with the Bureau of Customs of the port of Iloilo until March 5, 1929. According to the TC, it
was proved that such deferred registration was due to certain doubts entertained by the collector of
customs of the port of Iloilo touching the applicability of Act No. 3324, amending section 1176 of the
Administrative Code; and that said collector only decided to admit and register said mortgage
upon the lorchas after receipt of advice from Manila regarding the applicability of Act No. 3324,
which took effect on Decmber 24, 1926, to a mortgage executed on November 6, 1918 in favor of a
Chinese subject — a prohibition not found in the original section 1176 of the Administrative Code,
but which went in to effect when the aforementioned Act No. 3324 became effective.
2. However, the above mortgage did not affect the ownership of Lim Ponzo over the lorchas, so that the
latter could be validly attached and levied upon by virtue of the writ of execution issued upon
petition of Yu de Sane as judgment creditor or Lim Ponzo. Nonetheless, both the attachment and

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execution are subject to all liens existing upon the lorchas on the date of the attachment, which liens
were the mortgages in favor of Po Pauco transferred by the same to PNB.
3. The sheriff erred in dissolving the attachment and delivering the lorchas to Po Pauco. At the time, those lorchas were under
the control of the trial court by virtue of the interpleader case. Thus, without authority of the court, said sheriff should not
have assumed to dispose of the lorchas as he did. (A/N: Sheriff wasn’t able to attach and execute because PNB filed a third-party
claim. Also, Yu de Sane, the judgment creditor, failed to give indemnity bond as required by the sheriff)
4. Yu de Sane may, if she so desires, ask for another order of execution, pursuant to the civil case she instituted, and may, by
virtue thereof, attach the lorchas and order their sale by public auction, subject to the mortgage executed thereon in favor of
PNB.
5. Damages claimed by Po Suy Liong, Ti Liong & Co., and Po Pauco through the counterclaim contained in their answer have
not been proved.
6. As to the cross-complaint of PNB against all the others, Po Pauco was adjudged liable to pay its indebtedness of P131,994.95 to
PNB with interest and attorney’s fees. If Po Pauco fails to pay within three months from judgment, sale of the mortgaged
property, as prayed for by PNB, will be decreed, and should the proceeds of the sale thereof fall short of the amount of
judgment, a writ of execution shall issue against whatsoever unexempted property said Po Pauco holds, until the whole
balance remaining is satisfied. Meanwhile, Maria Corazon de Sane, and Po Suy Liong & Co. were absolved.
7. PNB, Po Pauco, Po Suy Liong, and Ti Liong & Co. were absolved from the cross-complaint of Yu de Sane.
From the aforementioned decision, two appeals have been taken, one by Yu de Sane, and the other by Po
Pauco and Po Suy Liong.

issue
1. WON it was necessary for the mortgage of Po Pauco in favor of PNB to have been registered with the
Bureau of Customs – YES.
2. WON failure to do so until March 5, 1929, which came later than the registration of Yu de Sane’s attachment,
rendered PNB’s claim inferior to Yu de Sane’s claim – NO.

ratio
1. The relevant provision that should govern this case is Sec. 1171 of the Administrative Code, which
provides:
Record of documents affecting title. — In the record of transfers and incumbrances of vessels, to be kept at each principal port of
entry, shall be recorded at length all transfers, bills of sale, mortgages, liens, or other document which evidence ownership or
directly or indirectly affect the title of registered vessels, and therein shall be recorded all receipts, certificates, or acknowledgments
canceling or satisfying, whole or in part, any such obligation. No other record of any such document or paper shall be required
than such as is affected hereunder.
This provision modified the provisions of Sec. 4 of Act No. 1508, the Chattel Mortgage Law, insofar as it is
no longer necessary for a chattel mortgage of a vessel to be noted in the registry of the register of deeds.
Instead, it is essential that a record of documents affecting the title of a vessel be entered in the office of the
collector of customs, at a port of entry.
This change in the law was designed to protect persons who deal with a vessel on the strength of the
record title. Mortgages on vessels, although not recorded, are good as between the parties. But as against
creditors of the mortgagor, an unrecorded mortgage is invalid.

2. It is to be noted that PNB’s mortgage was only recorded in the office of the collector of customs on
March 5, 1929. However, prior to that, it had already recorded the mortgage with the register of deeds on
November 28, 1919.
Meanwhile, the execution sued out by Yu de Sane was dated December 6, 1928, and noted at the port of
entry two days prior thereto, or on December 4, 1928.
Applying the above rules to the circumstances, in which it is the registration with customs and not with the
register of deeds that should govern, Yu de Sane’s execution claim would have a prior right over PNB’s
mortgage, which was recorded with customs at a later date. This would be the case if not for a single fact
proven during trial.
In the decision of the trial court, the explanation of the delay was that the customs collector had doubts
relative to the applicability of Act No. 3324 to a mortgage executed in 1918 in favor of a Chinese subject (A/N:
refer to no.1 of the enumeration of TC rulings in the facts). This uncontradicted fact must be taken as curing the bank's
defective title. That the collector of customs did not perform his duty was no fault of the bank. Constructive
registration of the mortgage must, therefore, be accepted.

  5
Thus, as between Yu de Sane and PNB, the latter has a superior claim to the extent of 20,000, the amount of
the mortgage of Po Pauco which was transferred to the PNB.

[minor: appeal involving the rights of Po Pauco and Po Suy Liong on the one hand, and PNB on the other]
There is no particular merit in the arguments offered on behalf of Po Suy Liong, for his mortgage was not on the boats themselves,
and moreover his mortgage, so far as the record discloses, has never been recorded in the office of the collector of customs.
The foreclosure ordered by TC was improper because it was not shown that anyone other than the attorney for Po Pauco was
notified, that any summons was issued, or that an opportunity was afforded Po Pauco to interpose his defense, if he had any. The
procedure provided by law for the foreclosure of a mortgage must be substantially carried out. It is not enough for PNB to state that no
objection was interposed in the lower court. The question is one which goes to the jurisdiction of the court, and a question of this nature
may be raised for the first time on appeal.

  6
Standard Oil v Castelo
G.R. No. L-13695 Oct. 18, 1921 Street, J.
petitioners Standard Oil Company of New York (shipper)
respondents Manuel Lopez Castelo (shipowner)
summary Shipper contracted Castelo to deliver cases of petroleum. They were placed on deck.
Storm came and they needed to jettison such cargo. Now Standard Oil is suing
Castelo for the value of the lost cargo. Court held that although the Code of
Commerce pins the liability on the ship captain for failure to proceed with liquidation,
the shipper nevertheless has the option of going directly after the shipowner, since the
latter has the most amount of capital in the voyage.

facts of the case


On Feb 1915, shipper contracted with shipowner to deliver cases of petroleum from Manila to Casiguran,
Sorsogon via a small interisland steamer named Batangueño (contract was of affreightment). The said cargo
was placed on the deck (not in the hold). Take note that the bill of lading did not contain any provision with
respect to the storage of the petroleum.

While the boat was on her way to the port, a violent typhoon passed over that region, and while the storm
was at its height the captain was compelled for the safety of all to jettison the entire consignment of petroleum
consisting of 200 cases. When the storm abated, they were able to salvage only 13 cases.

Shipper then instituted a case against the shipowner. CFI sided with shipper.

There is no question that the act of jettisoning the cargo was a proper exercise of discretion in order to save
the ship. Now the shipper posits the following arguments (see issue section):

issue
WON the loss was a general or particular average. General average (meaning every cargo owner + the
shipowner contributes proportionately to the loss).
WON the ship captain should be liable to the shipper for the loss for failure to institute the liquidation
proceedings? YES BUT the shipper may go directly after the shipowner. See rationale below
WON the liquidation proceedings is a condition precedent for the liability to arise. NO. No specific explanation.
WON the shipowner is liable to only to its proportionate share in the loss. NO. No specific explanation too.

ratio
WRT type of loss
Old rule: Under the Spanish Code of Commerce and doctrines in England America, the rule is as follows:
“No jettison of deck cargo shall be made good as general average.” Rationale: deck cargo is in an extra-
hazardous position and, if on a sailing vessel, its presence is likely to obstruct the free action of the crew in
managing the ship. Naturally, it would be the first one to be jettisoned.

New rule: Because of the advent of steamships, it has been felt that the reason for the rule has become less
weighty, especially with reference to coastwise trade; and it is now generally held that jettisoned goods carried
on deck, according to the custom of trade, are entitled to contribution as a general average loss. There are
marine regulations (in PH) as to the manner in which cargo shall be bestowed and protected from the
elements. Gasoline, in particular, which from its inflammable nature is not permitted to be carried in the hold
of any passenger vessel, though it may be carried on the deck if certain precautions are taken. There is no
express provision declaring such manner of storage but by the known safety practices of shippers, gasoline
may be lawfully carried on deck.

  9
WRT who is liable
According to Articles 586 – 588 of the Code of Commerce, the shipowner 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.

According to 852, the shipowner/shipper may maintain an action against the ship captain for the
indemnification of the loss, in case the latter does not comply with the article relating to the adjustment,
liquidation, and distribution of the general average. BUT this does not mean that the shipper cannot go after
the shipowner anymore.

Rationale [Doctrine]: The shipowner ordinarily has vastly more capital embarked upon a voyage than has
any individual shipper of cargo. Moreover, the shipowner (personified through the agency of the ship captain)
has complete and exclusive control of the crew and of the navigation of the ship, as well as of the disposition of
the cargo at the end of the voyage. It is therefore proper that any person whose property may have been cast
overboard by order of the captain should have a right of action directly against the ship's owner for the breach
of any duty, which the law may have imposed on the captain with respect to such cargo. To adopt the
interpretation of the law for which the appellant contends would place the shipowner in a position to
escape all responsibility for a general average of this character by means of the delinquency of his own
captain. The evident intention of the Code is to place the primary liability upon the person who has actual
control over the conduct of the voyage AND who has most capital embarked in the venture, namely, the
owner of the ship, leaving him to obtain recourse, as it is very easy to do, from other individuals who have
been drawn into the venture as shippers.

Dissent of J. Araullo (concurred by J. Avanceña)


WRT who is liable
Although it is true that the ship captain is primarily the representative of the shipowner or agent, it cannot
in all cases, be deduced that the shipowner must be civilly responsible for all the acts of the captain.

The Code of Commerce clearly and positively specifies the cases in which such responsibility in
demandable from the agent or shipowner, and the cases in which he is not responsible, the responsible
attaching ONLY to the captain.
Title 2 of Book 3 Titles 4 and 5
Treats the shipowners and Specifically indicates the cases in which the
agents, the captains and responsibility may be:
masters of vessels and the • Enforceable against the captain;
officers and crew thereof, • Enforceable against shipowner/agent;
respectively. • Enforceable against both (jointly)
• Demanded only of the captain or of the
shipowner ALONE.

It is the special provisions under Titles 4 and 5 and not from the general provisions from title 2 that must
govern cases involving risks, damages, and accidents the maritime commerce; and gross average being among
them. Again, Art. 852 is clear and positive to the effect that in said case the agent or the shippers shall
demand of the captain the liquidation and may exercise against him the action to recover the proper
indemnity. This excludes all responsibility of the agent or owner of the vessel.
Rationale: Since the shipowner, as one of those who, jointly with the shippers, may ask the captain for the
liquidation and institute against him the corresponding action for indemnification, it would be absurd to
maintain that the shippers may also institute the same action against the agent or owner of the vessel, in this
manner converting him from plaintiff into defendant.

  10
Comment on the doctrine/rationale above on shipowners having plenty of capital
It is erroneous to hold that the shipowner must suffer the whole loss in case of gross average; and that the
provisions relating to the adjustment, liquidation, and distribution thereof are for the purpose of furnishing
him the means for evading and enabling himself to distribute it between the persons who should participate in
the average.
Rationale: This would run contrary to the written rule on general averages where the shippers contribute
to the loss  after the liquidation and approval thereof, and after hearing the interested parties or their
representatives; and all of these proceedings would surely be useless and unnecessary if the shipowner or the
agent should have to suffer all loss but may afterwards distribute it among those participants therein.

Comment on the rationale that shipowners have control over the crew and the sailing
Again, this is erroneous. The Code of commerce specifically shows that the shipowner does not have the
complete and exclusive control of the ship, crew and cargo:
Art. 610: it is an inherent power in the captain to appoint or make contracts with the crew in the absence of the agent
and to propose said crew if said agent be present, but without any right on the part of the latter to employ any individual
against the captain's express refusal. Also to direct the vessel to the port of destination.
Art. 619: captain shall be liable for the cargo from the time it is turned over to him at the dock, or afloat alongside the
ship, at the port of loading, until he delivers it on the shore or on the discharging wharf, of the port of unloading, unless
the contrary has been expressly agreed upon.
Art. 620: Captain is not liable for the damages caused to the vessel or to the cargo by reason of force majeure
Art. 625: The captain, under his personal liability, as soon as he arrives at the port of destination, upon obtaining the
necessary permission from the health and customs officers and fulfilling the other formalities required by the regulations
of the administration, shall turn over the cargo, without any defalcation, to the consignees and, in a proper case, the vessel,
rigging, and freights to the agent.
Art. 634: the captain may make up his crew with the number he may consider advisable, taking on resident foreigners,
in the absence of nationals, their number not to exceed one-fifth of the total crew, and may even, with the consent of the
consul or marine authorities, complete his crew with foreigners in foreign ports if he should not find sufficient number of
nationals, the captain being obliged to execute the contract with said members of the crew and others who compose the
complement of the vessel.
Art. 637: empowers the captain, for sufficient cause, to discharge a sailor during the time of his contract and to refuse,
before setting out on a voyage without giving any reason whatever, to permit a sailor he may have engaged from going on
board, in which case he will be obliged to pay him his wages as if he had rendered services, this indemnity to be paid from
the funds of the vessel only if the captain had acted for reasons of prudence and in the interests of safety and good service
of the vessel;
In sum, the captain directly exercises exclusively personal powers with respect to the crew and cargo and,
for this reason, he is personally and particularly responsible for his acts, except in the only case already
mentioned, in which he may have acted for the benefit of the vessel. It is now obvious that the owner of the
vessel or the agent does not have, through the captain, complete and exclusive control of the crew, cargo and
ship.

  11
Inter-Orient v. NLRC
G.R. No. 115286 Aug 11, 1994 J. Feliciano
petitioners Inter-Orient Maritime Enterprises, Inc., Sea Horse Ship, Inc. And Trenda World
Shipping (Manila), Inc.
respondents NLRC and Rizalino Tayong
summary Capt. Tayong assumed command of a vessel set for South Africa. The ship he was in
command of was old, and had leaks. On a stopover in Singapore, he elected to wait
for the supplies in order to plug the leaks. As a result, he got to South Africa behind
schedule, and he was repatriated by his employer and dismissed. He filed an illegal
dismissal complaint which was denied by the POEA. The NLRC reversed the POEA
holding that Capt. Tayong did not have an opportunity to be heard. The SC affirmed,
ruling that Capt. Tayong, as a managerial employee, could not be dismissed without
just cause. He was not guilty of arbitrary behavior (by choosing to stay in Singapore
and wait for repair supplies) because as the Captain, it was within his prerogative to
ensure the safety of the vessel, the passengers, and the goods.

facts of the case


© Capt. Tayong is a licensed Master Mariner employed for a period of one year by Trenda World Shipping,
Inc. and Sea Horse Mgmt., Inc. through Inter-Orient Maritime Enterprises, Inc., as the Master of the vessel
M/V Oceanic Mindoro. He assumed command of the vessel in Hong Kong, and 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.
© While in HK, Capt. Tayong followed up on the request by the previous Capt. for oxygen and acetylene,
which were necessary for the welding repair of the ship’s turbo-charger and economizer, both of which
had leaks. The supplies were not delivered. The ship set off for Singapore, and on the way it had to stop
mid-ocean because of the leaks, to which Capt. Tayong was instructed to shut down the economizer and
use the auxiliary boiler instead.
© The ship arrived in Singapore, and the supplies had yet to be delivered so Capt. Tayong called the
shipowner, Sea Horse, and informed the latter that the departure for South Africa may be affected because
of the delay in the supplies for repair. Sea Horse asked Capt. Tayong to contact Tech. Director Mr. Clark,
who could provide a solution for the leaks.
© Capt. Tayong called Mr. Clark, and the latter told Capt. that by just using the auxiliary boiler, they would
be fine. According to Mr. Clark, Capt. Tayong agreed, and set sail (yolo) for South Africa as scheduled on
0100 hours on Aug 1, 1989. However, according to Capt. Tayong, he express reservations to sailing, and
waited out for the supplies which were delivered on 0800 hours of Aug 1, 1989. Upon delivery, they
immediately sailed off.
© Upon arrival at South Africa on Aug 16, Capt. was instructed to turn over his post to a new captain # and
he was thereafter repatriated to the PHL. He wasn’t informed of the charges against him, so he instituted a
complaint for illegal dismissal before the Philippine Overseas Employment Association (POEA).
© Petitioners denied that Capt. was illegally dismissed. They claimed that the Capt. was the cause of the
delay and as a result, the charterers refused to pay them $15,500. POEA dismissed the complaint; there
was a valid cause for repatriation.
© The NLRC reversed the POEA decision. Capt. did not have an opportunity to be heard and no substantial
evidence was presented to establish loss of trust and confidence.
[Contentions]
Petitioners – NLRC acted with GAD. Sufficient evidence was given. Capt. Tayong, who must protect their
interests as shipowners, caused them damage. They cannot be compelled to keep someone in whom they have
lost their trust and confidence.

  25
issue
WON Capt. Tayong was illegally dismissed. YES.
[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.

ratio
© Confidential and managerial employees cannot be arbitrarily dismissed at ANY time, and without cause as
reasonably established in an appropriate investigation. A Captain of a vessel is a confidential and
managerial employee within the meaning of the doctrine. To the captain is committed the governance,
care, and management of the vessel.
o A master or captain in maritime commerce is one who has command of a vessel. He performs three
distinct roles.
1) General agent of the shipowner
2) Commander and technical director of the vessel
3) Representative of the country under whose flag he navigates
o Of these roles, it is as the COMMANDER of the vessel that is the most important (analogous to a
CEO). Such role has to do with the operation and preservation of the vessel during voyage, as well as
the safety of the passengers and cargo.
o As the general agent of the shipowner, the captain has authority to sign bills of lading, carry goods and
deal with the freight earned, agree upon rates, and decide WON to carry cargo. He 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.
o It is clear in this case that Capt. Tayong was denied any opportunity to defend himself. Petitioners
curtly dismissed him and summarily ordered his repatriation without informing him of the charges
against him and giving him a chance to refute the same.

© Captain Tayong was NOT guilty of arbitrary, capricious or grossly insubordinate behavior. He did not
perform acts inimical to petitioners’ interest, and thus his dismissal was unwarranted.
o A ship captain must be accorded a reasonable measure of discretionary authority to decide what the
safety of the ship and of its crew requires on a particular voyage, being in command of the vessel.
o It is the right and duty of the captain, in the exercise of sound discretion and in good faith, to do all
things with respect to the vessel and its equipment and conduct of the voyage which are reasonably
necessary for the protection and preservation of the interests under his charge, whether those be of the
shipowners, charterers, cargo owners or of underwriters.
o The Court cited Compagnie de Commerce vs Hamburg – in that case, the master of the vessel’s
discretionary authority and his right to exercise his best judgment with respect to the vessel he
commands was recognized.
! WWI had been declared. The ship carried the German flag. Captain deviated from its route to avoid
being captured.
! Doctrine -- Where by the force of circumstances, a man has the duty cast upon him of taking some
action for another, and under that obligation adopts a course which, to the judgment of a wise and
prudent man, is apparently the best for the interest of the persons for whom he acts in a given
emergency, it may properly be said of the course so taken that it was in a mercantile sense
necessary to take it.
o The aforementioned principles, as applied in this case – Capt. Tayong had reasonable ground to believe
that the safety of the vessel and the crew or the possibility of delay required him to wait for the
supplies needed for the ship’s repair (there was a freakin leak!! Malamang). The oxygen and acetylene
were needed to plug the leaks.
o It was within his discretionary authority to choose to wait in Singapore for the supplies in order to
ensure the safety of the vessel, the crew, and the goods on board on the way to South Africa.

  26
Caltex v. Sulpicio Lines
G.R. No. 131166 September 30, 1999 J. Pardo
petitioner Caltex (Philippines), Inc.
respondents Sulpicio Lines, Inc., Go Sioc So, Enrique S. Go, Eusebio S. Go, Carlos S. Go, Victoriano
S. Go, Dominador S. Go, Ricardo S. Go, Edward S. Go, Arturo S. Go, Edgar S. Go,
Edmund S. Go, Francisco Soriano, Vector Shipping Corporation, Teresita G. Cañezal
and Sotera E. Cañezal
summary Caltex shipped its fuel cargo aboard MT Vector via a voyage charter party. Said vessel
collided with MV Doña Paz, resulting to the death of almost all its crews and
passengers. Sulpicio, owner of the passenger ship, wants to hold Caltex liable for the
accident as well, for the latter’s alleged negligence in choosing to ship its cargo
through an unseaworthy ship. Court held that Caltex was under no obligation to
ensure the seaworthiness of the vessel because their contract was a mere voyage
charter, which did not transform the vessel from a common to a private carrier; as
such, it was incumbent upon the vessel to impliedly warrant its seaworthiness, and
Caltex had all the right to rely on this.

facts of the case


Motor tanker MT Vector is a tramping motor tanker, owned and operated by Vector Shipping Corporation,
a business engaged in transporting fuel products.
One fateful day, MT Vector left Limay, Bataan, carrying with it 8,800 barrels of petroleum products
shipped by herein petitioner Caltex. This was by virtue of a charter contract between MT Vector and Caltex.
During its voyage, MT Vector collided with MV Doña Paz, a passenger ship with a complement of 59
crew members and 1,493 passengers. MV Doña Paz is owned and operated by herein respondent Sulpicio
Lines.
As a result of the collision, all the crewmembers and most of the passengers of MV Doña Paz died, while
the two survivors from MT Vector claimed that they were sleeping at the time of the incident. Among those
who perished were relatives of the rest of herein respondents.
After its investigation, the Board of Marine Inquiry (BMI) found that MT Vector was responsible for the
collision, and consequently, its registered operator, Francisco Soriano; and owner and actual operator, Vector
Shipping Corporation, were responsible.
The relatives of some of the deceased, herein co-respondents of Sulpicio, filed with the RTC a complaint for
damages arising from breach of contract of carriage against Sulpicio Lines. In turn, Sulpicio filed a third party
complaint against Francisco Soriano, Vector Shipping Corporation and Caltex.
Sulpicio’s theory in impleading Caltex is that the latter chartered MT Vector with gross and evident bad
faith, knowing well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to safe
navigation. According to Sulpicio, these conditions of MT Vector resulted to the collision, which left MT
Vector’s highly flammable cargo, Caltex’s petroleum products, ablaze.
The RTC dismissed the third party complaint against Caltex and awarded damages to the respondent
relatives of the deceased. However, the CA modified the RTC’s ruling by including Caltex as one of those
liable for damages.

issue
1. [main]What kind of charter contract did MT Vector and Caltex have? – Voyage charter, which is a kind of
contract of affreightment.
2. WON such kind of charter party transformed MT Vector from a common into a private carrier – NO. The transfer of the element of
control from the carrier to the charterer is absent in a voyage charter, unlike in a demise or bareboat charter.
3. WON Caltex should be held liable – NO.

ratio
1. 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. It falls into two main categories: (1) demise or bareboat; and (2)

  50
contract of affreighment. The second type can be further categorized into: (1) time charter; and (2) voyage
charter.
Under a demise or bareboat charter, 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.
Meanwhile, under a contract of affreightment, the ship owner lets the whole or part of the vessel to a
merchant or other person for the conveyance of goods, on a particular voyage, in consideration of
the payment of freight. It can either be a time charter, in which the vessel is leased to the charterer for a fixed
period of time; or a voyage charter, in which the ship is leased for a single voyage. In both cases, the charter-
party leases the vessel only, either for a determinate period of time (time charter) or for a single or
consecutive voyage (voyage charter), while the shipowner retains control over the crew and operations of
the ship.
In this case, the charter party between Caltex and Vector is a contract of affreightment, particularly, a
voyage charter.

2. If the charter is a contract of affreightment, which leaves the shipowner in possession of the ship as owner for the voyage,
the rights and responsibilities of ownership rest on the shipowner. The charterer is free from liability to third persons in respect of
the ship. This is because a contract of affreightment does not change the character of a vessel as a common carrier; unlike in demise or
bareboat where such charter party turns the carrier into a private carrier. In short, there is no transfer of the element of control as would
justify such transformation. This is in consonance with the earlier rulings of Planters Products v. CA and Coastwise Lighterage v. CA.
The charter in this case being a voyage charter, which is but a kind of contract of affreightment, it did not change the character of
MT Vector from that of a common into a private carrier.

3. Since MT Vector is a common carrier, it was bound to observe extraordinary diligence, as required in the relevant provisions of
the NCC. Further, under Sec. 3 (1) of the Carriage of Goods by Sea Act, the carrier shall be bound before and at the beginning of the
voyage to exercise due diligence to: (a) make the ship seaworthy; and (b) properly man, equip, and supply the ship, among others.
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 Art.
1755 of the NCC.
Meanwhile, a passenger or a shipper of goods, which is Caltex in this case, is under no obligation to conduct an inspection of
the ship and its crew. This is because the carrier, as stated above, is obliged by law to impliedly warrant its seaworthiness. To
demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of maritime laws insofar as the
protection of the public in general is concerned.
27
From the foregoing, it can be concluded that Sulpicio’s arguments , coupled with its reliance on Arts. 20, 1173, and 2176 of the
NCC, that Caltex was negligent because it knowingly shipped its highly combustible fuel cargo aboard an unseaworthy vessel such
as the MT Vector is untenable. As charterer, Caltex had no obligation before transporting its cargo to ensure that the vessel it
chartered complied with all legal requirements. This duty rests solely upon the common carrier simply for its being engaged in
public service.
Further, it was shown that Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years
before the tragic incident. Past services rendered showed no reason for Caltex to observe a higher degree of diligence. It justifiably
relied on representations by Vector that it had a valid Certificate of Inspection that could be used for it to legally sail on that day when
it carried Caltex’s cargo but unfortunately met an accident. Also, as a mere voyage charterer, Caltex had the right and to assume that
the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness.
All things considered, there is no legal basis to hold Caltex liable for damages.

                                                                                                           
27According to Sulpicio, Caltex was negligent because it:
1. Did not take steps to have M/T Vector’s 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.
Further, Caltex allegedly chose MT Vector to transport its cargo despite these deficiencies:
1. The master of M/T Vector did not possess 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.

  51
Planters Products Inc. v. CA
G.R. No. 101503 September 15, 1993 J. Bellosillo
petitioners PLANTERS PRODUCTS INC.
respondents COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN
KABUSHIKI KAISHA
summary PPI ordered Urea from Mitsubishi who entered into a time charter-party with KKKK.
Wherein KKKK, as shipowner will loan to Mitsubishi (shipper/charterer) its boat
including its captain and crew. PPI sued KKKK because some of its urea was
damaged/lost. KKKK’s defense was that it was not a common carrier by virtue of the
time charter-party agreement and therefore the degree of diligence required by a
common carrier does not apply to them. Court held that the time charter-party in this
case is one of affreightment, meaning that the captain and crew was under the
employ/control of KKKK/shipowner, and therefore, KKKK remains a common
carrier. BUT since KKKK was able to prove extraordinary diligence, it is not liable.

facts of the case


Planters Products Inc. (PPI) purchased from Mitsubishi Urea fertilizer which was shipped in bulk aboard
M/V Sun Plum owned by Kyosei Kisen Kabushiki Kaisha (KKKK). A time charter was entered into between
Mitsubishi as shipper/charterer and KKKK as ship owner.
Before loading the fertilizer aboard the vessel, 4 of her holds were all presumably inspected by charterer’s
representative and found fit to take a load of urea in bulk. The steel hatches were closed with heavy iron lids,
covered with three layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly
sealed throughout the entire voyage.
Upon arrival, the hatches were opened. Petitioner unloaded the cargo into its dump trucks pursuant to the
terms and conditions of the charter-party. The hatches remained open throughout the duration of the
discharge. It took 11 days for PPI to unload the cargo. The survey report submitted by CSCI to the consignee
(PPI) dated 19 July 1974 revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea
fertilizer approximating 18 M/T was contaminated with dirt.
PPI sent a claim to Soriamont Steamship Agencies (SSA), resident agent of KKKK for P245k representing
the cost of the alleged shortage in goods and diminution in value said to have been contaminated w/ dirt.
SSA denied PPI’s request because they had nothing to do with the discharge of the shipment. Defendant
carrier argued that the strict public policy governing common carriers does not apply to them because they
have become private carriers by reason of the provisions of the charter-party.
CFI: KKKK is a common carrier and it failed to rebut the presumption of negligence.
CA: KKKK is a private carrier by reason of the time charterer-party, as such the burden of proof lies with
PPI as the one who alleges fault and it failed to prove negligence on the part of KKKK.

issue
[MAIN] WON the time charterer-party has converted defendant into a private carrier? NO.
WON defendant was able to prove that it exercised that degree of diligence required? YES. Extraordinary
diligence exercised.

Ratio

Charter-party Defined
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; Charter parties are of two types: (a)
contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or
as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the

  46
whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent
control over its navigation, including the master and the crew, who are his servants.
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 vessel only, either for a determinate period of time or for a single or
consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and the crew,
and defray the expenses for the maintenance of the ship.

Common Carrier Defined


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. The
distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the
business, such that if the undertaking is a single transaction, not a part of the general business or occupation,
although involving the carriage of goods for a fee, the person or corporation offering such service is a private
carrier.

Control of the ship was with KKKK (MAIN)


It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier,
transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum",
the ship captain, its officers and compliment were under the employ of the shipowner (KKKK) and therefore
continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to
the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of
the means in doing so. This is evident in the present case considering that the steering of the ship, the manning
of the decks, the determination of the course of the voyage and other technical incidents of maritime
navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner.
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 shipowner 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.

Respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption
of negligence.
Presumption of negligence on the part of the respondent carrier has been efficaciously overcome by
the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. As held by
the appellate court – Particularly, the following testimonies of plaintiff-appellee's own witnesses clearly show
absence of negligence by the defendant carrier; that the hull of the vessel at the time of the discharge of the
cargo was sealed and nobody could open the same except in the presence of the owner of the cargo and the
representatives of the vessel; that the cover of the hatches was made of steel and it was overlaid with
tarpaulins, three layers of tarpaulins and therefore their contents were protected from the weather; and, that to
open these hatches, the seals would have to be broken, all the seals were found to be intact.
The court also noted the testimony of a chemical engineer who said that losses of 1% for Urea was
normal or tolerable and the fact that it was raining and windy at the time when PPI was unloading the cargo
and that Urea is highly soluble in water.

  47
Magsaysay v. Agan
G.R. No. L-6393 January 31, 1955 J. Reyes
petitioners A. Magsaysay Inc.
respondents Anastacio Agan
summary Ship ran aground/got stuck in the mouth of the Cagayan River. Carrier incurred
expenses to have the vessel refloated. It then requested the shippers to pay their
contribution to the general average. However, respondent refused, stating that the
expenses did not constitute general average because the stranding of the ship was due
to the pilot’s negligence.
SC ruled in favor of respondent and stated that the expenses constitute a simple
average. Applying the four requisites of a general average: (1) the vessel and cargo
were not in imminent danger; (2) the expensive salvage operation was not needed due
to no imminent danger; (3) expenses were for the benefit of the vessel and not for the
purpose of saving the cargo; (4) no proof that proper legal procedure followed.

facts of the case


I. The Parties: Petitioner (carrier) owned the vessel S.S. San Antonio. Respondent (shipper) was one of the
shippers that had cargo in the vessel. SS San Antonio had a route from Manila to Cagayan to Batanes.

II. The Accident: Vessel reached Cagayan, where it had it had a day-long stopover. However, while in the
port, it ran aground at the mouth of the Cagayan River. After attempts to have the vessel refloated failed,
Petitioner hired the services of Luzon Stevedoring Co. to have it refloated at an agreed compensation. It was
successfully refloated and eventually reached Batanes, its port of destination. There the cargoes were delivered
to their respective owners. Each of the shippers/consignees, except herein Respondent, then respectively
made a deposit or signed a bond to answer for their contribution to the average.

III. The Case: Petitioner carrier filed a case to make Respondent pay its contribution to the average in the
amount of P841.40.

IV. The Arguments: Carrier argues that the expenses incurred in refloating the vessel constitute general
average to which both ship and cargo should contribute. On the other hand, Respondent argues that the
stranding of the vessel was due to the fault, negligence, and lack of skill of its master, and that the expenses in
putting it afloat did not constitute general average. He also argues that the liquidation of the average was not
in accordance with law.

CFI: ruled that Respondent should contribute to the general average. The vessel got stranded because of the
sudden shifting of sandbars at the mouth of the river, which could not have been anticipated by the ship pilot.

issue
WoN the refloating of a vessel unintentionally stranded inside a port constitute general average. NO.

Ratio

1) There are two kinds of averages under the Code of Commerce: simple/particular and general/gross.

Simple/particular -- includes all expenses and damages caused to the vessel or cargo which have not inured
to the common benefit of the persons interested in the cargo (Art. 809). These averages are borne by the
owner of the property that gave rise to the expenses (Art. 810).

  27
General/gross – 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,
these are borne by the owners of the articles saved (Art. 812).

2) Expenses incurred in this case can be classified as a simple/particular average and should therefore be
borne by the carrier alone.
Art. 809 and Art. 811 give specific examples of each kind of average. In this case, the expenses could be
classified as a simple/particular average under Art. 809(2) --- which refers to expenses suffered by the vessel
by reason of an accident of the sea or force majeure.
None of the specific instances of general averages under Art. 811 apply to this case. Although Art.
811(6) mentions “expenses caused in order to float a vessel”, this specifically applies to “a vessel intentionally
stranded for the purpose of saving it.” In this case, the vessel got stranded unintentionally.

3. Based on the commentaries of Tolentino, there are four requisites for expenses to be classified as general
average.

1. There must be a common danger. This means that both the ship and the cargo are subject to the same
danger, whether during the voyage or the port for loading/unloading. This danger must arise from
accidents of the sea, dispositions of the authority, or faults of men, provided that the circumstances
producing the peril should be certain and imminent or may rationally be said to be certain and
imminent. This means that expenses incurred against a distant peril are not included.
2. Part of the vessel or of the cargo are sacrificed deliberately for their common safety.
3. Expenses or damages caused follows the successful saving of the vessel and cargo.
4. Expenses or damages should have been incurred after taking proper legal steps and authority.

As applied:
1. The evidence does not disclose that the expenses were incurred to save vessel and cargo from a common
danger. The vessel ran aground in fine weather and in a shallow portion of the river. This shows that there
was no imminent danger. At the very least, there was a distant peril which did not need immediate action.
What does appear from the testimony of the vessel’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.

2. Again, expenses in question were not incurred for the common safety of vessel and cargo, since they 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.

3. 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. Therefore, the cargo owners are not liable.

4. No proof that the procedure under Art. 813 was followed.

  28
G. Urrutia & Co. v. Baco River Plantation
G.R. No. 7675 March 25, 1913 J. Moreland
petitioner G. Urrutia & Co. (owner of Nuestra)
Respondent Baco River Plantation Co.(defendant-appellee; Owner of Mangyan)
Intervener-appellant M. Garza
summary Topic: Accidents and Damages in Maritime Commerce: Collisions – Classes and Effects
A steamer which was sailing erratically collided with a sailing vessel (schooner). The latter
didn’t avoid the steamer until just before actual contact, resulting to the sinking of the steamer
and the deaths of 8 persons. The steamer’s owner sued the schooner owner. The court held
that the steamer was negligent and that the schooner couldn’t be faulted for its act of
continuing on its course. There are 3 dimensions of time/zones wrt the collision of vessels. It
was during the 3rd phase that the schooner changed its course to avoid the collision. This act
may be said to have been done in extremis, and, even if wrong, the sailing vessel is not
responsible for the result.

facts of the case


Steamship Nuestra Senora del Pillar figured in a collision with schooner Mangyan (a sailing ship). Before
the accident, the steamer was already seen sailing erratically by those on board schooner. The schooner
however, kept her on course steadily until just before the actual contact when her helsman threw her hard to
port in an effort to avoid the collision. It was unsuccessful and the schooner rammed the steamer on the
starboard. The steamer sank and 8 ppl died. Petitioner sued respondent for the value of the steamer and the
resulting damages alleging as basis the negligence of the said vessel. Respondent on the other hand, set up a
counterclaim for damages, imputing the injuries sustained to the gross negligence of the steamer’s handler.
M. Garza intervened, saying that the steamer was carrying his merchandise when it sank. He set up an
action against both parties (alleging negligence on their part) for the recovery of the value of his lost
merchandise and for damages.

TC: both negligent. Steamer’s negligent cos it didn't have a proper watch on board+sailing erratically.
Schooner is negligent for not changing its course to avoid the steamer even after seeing it sailing erratically.
Complaint of intervention is dismissed because the intervener had no legal interest in the matter in litigation.

issue
WoN the schooner was negligent in continuing its course without variation up to the moment that it found
itself in extremis – NO. (in short, kasalanan ni steamer dahil di cya umalis sa daan in the first place. The steamer has no right to
needlessly place herself in such close proximity to the schooner that the error or a moment would bring destruction)

ratio
The Court upheld the TC’s findings that the Steamer had been handled in a grossly negligent manner. It was
sailing erratically and didn’t even have a proper watch on board. On the other hand the schooner had its lights
properly on (as required by the rules) which would’ve been visible to the steamer if its crew had been on the
lookout for them. The Court said that respondent is entitled to recover upon its counterclaim. But why?

Pertinent Provisions
Art. 20 Int’l Rules for the Prevention of Collision at Sea states:
If 2 ships, one of which is a sailing ship and the other a steam ship, are proceeding in such directions as to
involve risk of collision, the steam ship shall keep out of the way, of the sailing ship.

Art. 21 of the same rule provides:


Where by any of these rules one of two vessels is to keep out of the way, the other shall keep her course and
speed.

[Important]
In collisions between vessels, there exist 3 dimensions of time, or zones:
  29  
(1) 1st division: covers all the time up to the moment when the risk of collision may be said to have begun. No
rule is applicable because none is necessary. Each vessel is free to direct its course as it deems best without
reference to the movements of the other vessel.
(2) 2nd division: covers the time between the moment when the risk of collision begins and the moment when
it has become a practical certainty. The burden is on the vessel required to keep away and avoid the danger.
(3) 3rd division: covers all the time between the moment when collision has become a practical certainty and
the moment of actual contact (when errors in extremis occur). The vessel which has forced the privileged
vessel into danger is responsible even if the privileged vessel has committed an error within that zone.

It was during the 3rd division that the schooner changed its course to port in order to avoid the collision. The
Court first stated the presumption under in favor of sail vessels:
“Subject to the general rules of evidence in collision cases as to the burden of proof, in the case of a
collision between a steam vessel and a sail vessel, the presumption is against the steam vessel, and she must
show that she took the proper measure to avoid a collision. (vol. 25 American and English Encyclopedia of Law)”

It further cited Hughes on Admiralty (summarized version):


“A steamer must keep out of the way of a sail vessel… the mere approach of the 2 vessels doesn’t bring
about risk of collision. The steamer may assume that the sail vessel will do her duty and do nothing to
embarrass her. Hence the steamer may shape her course so as to avoid the sail vessel…This rule that vessels
may assume that the other will obey the law is one of the most impt in the law of collision (otherwise,
navigation would be impossible). However, it must be kept in mind that a steamer must not approach so near
a sailing vessel, and on such a course as to alarm a man of ordinary skill and prudence. If the man on the
sailing vessel makes an improper maneuver, he isn’t responsible. This is called an error in extremis.

The duty of one vessel to keep her course isn’t intended as a privilege but as an obligation imposed, in
order to enable the other vessel with certainty to keep out of the way. Art. 21 renders it obligatory on the vessel
which has the right of way to pursue her course. She must rely on the other vessel to avoid the collision and not embarrass
her by any maneuver. All she need do is to do nothing. These rules are the law of laws in cases of collision. They
admit of no option or choice. No navigator is at liberty to set up his discretion against them, otherwise, they
would not only be useless, but worse than useless. These rules are imperative and yield only to actual and
obvious necessity. “

When does it become an obvious necessity to depart from the rules?


The Court cited vol. 25 of the American and English Encyclopedia of law: …it must be a strong case which
puts the sail vessels in the wrong for obeying the rule to hold her course… the ct must clearly see not only that:
(1) a deviation would have prevented the collision; but that
(2) the officer in charge of the sail vessel was guilty of negligence or a culpable want of seamanship in
not perceiving the necessity for a departure of the rule and acting accordingly.
These were not attendant in this case. (note: the vessel was sailing with a “fresh breeze dead astern, her sails
wing and wing…”). The Court also cited the case of St. John v Paine which provided the reason why steamers
are the ones to move out of the way (steamers have a greater facility of maneuvering over a sail vessel). In that
case, the presumption in favor of sail vessels was upheld and the general rule was applied. This was also the
tenor of the Genesee Chief v Fithugh and Lucille v Respass cases.

Wrt damages:
CoC 837 and 838 which provide that when a ship (which caused injury) was wholly lost by reason of the
accident it cannot be held responsible for damages DO NOT apply in this case because the lost vessel was
insured and the insurance was collected. (hence still need to pay!)

  30  
Government v. Philippine Steamship Co.
G.R. No. L-18957 January 16, 1923 Ponente
petitioners THE GOVERNMENT OF THE PHILIPPINE ISLANDS
respondents PHILIPPINE STEAMSHIP CO., INC., and FERNANDEZ HERMANOS, defendants.
PHILIPPINE STEAMSHIP CO., INC
summary A collision occurred between the vessel Isabel, which was then carrying the sacks of
rice owned by the Philippine Government, and the steamship Antipolo which was
owned by Phil. Steamship Co. Both vessels were found to be negligent by the
Supreme Court. Since Isabel was a complete loss, the Court ruled that Phil. Steamship
Co. should shoulder the entire loss suffered by the Phil. Government.
Where both vessels are to blame, both shall be solidarily responsible for the damage
occasioned to their cargoes. - Under Arts. 827 and 828 combined, the rule of liability
announced in Art. 827 is applicable not only to the case where both vessels may be
shown to be actually blameworthy but also to the case where it is obvious that only
one was at fault but the proof does not show which.

facts of the case


• The Government of the Philippines seeks to recover the sum of P14,648.25, the alleged value of 911 sacks of
rice which were lost at sea on February 11, 1920, as a result of a collision between the steamer Antipolo,
owned by the Philippine Steamship, and the vessel Isabel, upon which said rice was loaded.
• At around 10pm on Feb 10, 1920, the vessel Isabel, left the port of Manila towards Batangas, carrying, 911
sacks of rice belonging to the Gov and consigned to points in the south.
• En route, the watch and the mate on the bridge of the Isabel discerned the light of another vessel, which
proved to be the vessel Antipolo on its way to Manila and coming towards the Isabel.
• At about the same time both the watch and mate on the bridge of the Antipolo also saw the Isabel, the two
vessels being then about 2 miles apart.
• When the mate of the Antipolo, who was then at the wheel, awoke to the danger of the situation and saw
the Isabel "almost on top of him," to use the words of the committee on marine accidents reporting the
incident, he put his helm hard to the starboard10.
o If the helmsman of the Isabel had done likewise, all would apparently have been well, as in that
event the two vessels should have passed near to each other on the port side without colliding.
• The mate on the Isabel (having the right of way) lost his wits and, in disregard of the regulations and of
common prudence, at once placed his own helm hard to port11, with the result that his boat veered around
directly in the path of the other vessel and a collision became inevitable.
• The mate on the Antipolo stopped his engines, but the Isabel continued with full speed ahead, and the two
vessels came together near the bows. The Isabel immediately sank, with total loss of vessel and cargo,
though the members of her crew were picked up from the water and saved.
• TC held that both vessels were negligent
issue
WON the TC erred in holding both vessels liable? NO
                                                                                                           
10
 According to Jtexas in yahoo answers re: the question, “Why do they say ''hard to starboard'' on the movie titanic, and then the
ship turns left?”:

It's because in the old days (older than titanic), ships were steered with a tiller (some still are, but in the way back olden days, they
all were). In order to turn the ship to port, you move the tiller to starboard. The command is "helm hard to starboard." (The "helm"
being the actual steering mechanism.)

The British Navy (I guess, most all Navies), and by association, commerical ships, were very slow to change it's traditional jargon.
Even though the titanic was steered via a wheel, they were still using the traditional language.

The movie script is historically valid.

11 I don’t know, but I guess it’s towards the right?


  31
ratio
• Isabel was surely negligent for the incorrect and incompetent way in which this vessel was then handled.
o It was a fact that the mate on the Isabel had been on continuous duty during the preceding day and
night; and being exhausted, he probably was either dozing or inattentive to duty at the time the
other vessel approached.
• On the other hand, the mate of the Antipolo was clearly negligent in having permitted his vessel to
approach directly towards the Isabel until the two were in dangerous proximity.
• Both were liable (under Article 82712 of the code of commerce), although the negligence on the part of the
mate of Antipolo preceded the negligence on the part of the mate of the Isabela by an interval of time, the
first vessel cannot on that account be absolved from responsibility.
• Isabel was a total loss and cannot sustain any part of this liability, the burden of responding to the
Government of the Philippines, as owner of the rice, must fall wholly upon the owner of the other ship, the
Philippine Steamship Company, Inc.

                                                                                                           
12
 ART. 827. If both vessels may be blamed for the collision, each one shall be liable for its own damages, and both shall be jointly responsible
for the loss and damages suffered by their cargoes.

  32
Eastern Shipping Lines v. IAC
G.R. No. L-69044 and 71478 29 May 1987 Melencio-Herrera, J.
petitioners Eastern Shipping Lines, Inc.
respondents (G.R. No. L-69044) Intermediate Appelate Court and Development Insurance & Surety Corp.
(G.R. No. 71478) Nisshin Fire & Marine Insurance Co., and Dowa Fire & Marine Insurance Co.
summary Fire may not be considered a natural disaster or calamity. This must be so as it arises almost
invariably from some act of man or by human means. It does not fall within the category of an
act of God unless caused by lightning or by other natural disaster or calamity. It may even be
caused by the actual fault or privity of the carrier. The peril of the fire is not comprehended
within the exception in Art. 1734, CC.

facts of the case


G.R. No. L-69044
- A vessel operated by Eastern Shipping Lines (ESL), loaded at Kobe, Japan for transportation to Manila,
5000 pieces of calorized lance pipes in 28 packages consigned to Philippine Blooming Mills Co., Inc.,
and 7 cases of spare parts consigned to Central Textile Mills, Inc.
- Both sets of goods were insured with Development Insurance and Surety Corp. (DISC)
G.R. No. 71478
- The same vessel took on board 128 cartons of garment fabrics and accessories consigned to Mariveles
Apparel Corp., and 2 cases of surveying instruments consigned to Aman Enterprises.
- The 128 cartons were insured for their stated value by Nisshin Fire & Marine Insurance Co. (NISSHIN),
and the 2 cases by Dowa Fire & Marine Insurance Co., Ltd. (DOWA)

The vessel caught fire and sank, resulting in the total loss of ship and cargo.

G.R. No. L-69044


- DISC, having been subrogated unto the rights of the two insured companies, filed suit against Eastern
Shipping for the recovery of the amounts it had paid to the insured
- ESL denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event,
hence, it is not liable under the law.
- TC: Judgment in favor of DISC
G.R. No. 71478
- NISSHIN and DOWA, as subrogees of the insured, filed suit against ESL for the recovery of the insured
value of the cargo lost
- They imputed unseaworthiness of the ship and non-observance of extraordinary diligence by ESL.
- ESL denied liability on the principal grounds that:
o The fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of
the Carriage of Goods by Sea Act (COGSA)32; and
o When the loss of fire is established, the burden of proving negligence of the vessel is shifted to the
cargo shipper
- TC: Judgment in favor of NISSHIN and DOWA

issues + rationes decidendi


1. Which law should govern? The Civil Code provisions on Common carriers or the COGSA? Civil Code.
- 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.
- As the cargoes were transported from Japan to the Philippines, the liability of ESL is governed
primarily by the Civil Code.

                                                                                                           
32 Sec. 4(2)(b), COGSA. “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from xxx

(b) Fire, unless caused by the actual fault or privity of the carrier.”
  59
- However, 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 special laws.
- Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code.

2. Who has the burden of proof to show negligence of the carrier? Eastern Shipping Lines.

- As per the Art. 173533, the burden is upon ESL to prove that it has exercised the extraordinary diligence
required by law.

Note: Fire is not considered a natural disaster or calamity within the contemplation of Art. 173434 for it
arises almost invariably from some act of man or by human means; it does not fall within the category
of an act of God unless caused by lightning or by other natural disaster or calamity

- Having failed to discharge the burden of proving that it had exercised the extraordinary diligence
required by law, Eastern Shipping Lines cannot escape liability for the loss of the cargo
- As it was at fault, it cannot seek the protective mantle of Sec. 4(2), COGSA. (See footnote 1)
- There was actual fault of the carrier shown by lack of diligence in that when the smoke was noticed:
o the fire was already big and must have started 24 hours before the same was noticed;
o after the cargoes were stored in the hatches, no regular inspection was made as to their
condition during the voyage.

3. What is the extent of the carrier’s liability?

Art. 1749. A stipulation that the common carrier's liability as limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is binding.

G.R. No. L-69044


- No stipulation in the Bills of Lading limiting the carrier’s liability for the loss/destruction of the goods;
- No declaration of a higher value of the goods;
- Hence, Eastern Shipping Lines’ liability should not exceed US $500 per package (as provided in Sec.
4(5) of the COGSA35), or its peso equivalent, at the time of payment of the value of the goods lost, but in
no case more than the amount of damage actually sustained.

WHEREFORE, in G.R. No. L-69044, the judgment is modified as to the amount that ESL will pay DISC.
MODIFIED I tell you! In G.R. No. 71478, the judgment is hereby affirmed. AFFIRMED I tell you!

                                                                                                           
33 Art. 1735, CC. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are

lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as required in article 1733.
34 Art. 1734, CC. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is

due to any of the following causes only:


(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
35 Sec. 4(5), COGSA. (5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or

in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United
States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other
currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in
bill of lading. This declaration if embodied in the bill of lading shall be prima facie evidence, but all be conclusive on the
carrier.
By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount than
that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above
named. In no event shall the carrier be Liable for more than the amount of damage actually sustained. xxx
  60
NATIONAL DEVELOPMENT CO v. CA
G.R. No. L-49407 & L-49469 Aug 19, 1988 Paras
petitioners National Dev’t Co || Maritime Company of the Phils
respondents CA & Dev’t Insurance & Surety Corp
summary Ship owned by NDC and managed by MCP as NDC’s agent figured in a collision near
Japan. Insurer of cargo sues them for recovery. NDC argues that CA 65 should be
applied, which removes liability from shipowner when the captain is found at fault.
Held: liability of the carrier is governed primarily by the CC and, in all matters not
regulated by it, the rights and obligs of common carrier shall be governed by the Code
of Commerce and by-laws. CA 65 only suppletory to CC.

facts of the case


NDC was the first preferred mortgagee of 3 ocean going vessels, including one called “Doña Nati”. It
appointed MCP as its agent to manage and operate said vessel for and in its behalf and account by virtue of a
memorandum of agreement.
The vessel travelled from San Francisco, California bearing 1,200 bales of American raw cotton, stopped at Tokyo to load 200 cartons of SLS (oo
and finally figured in a collision en route to Manila while in Ise Bay,
yung sa shampoo) and 10 cases of aluminum foil,
Japan, with SS Yasushima Maru. As a result, most of the cargoes were lost and/or damaged. DISC, as insurer,
paid 364k to all the consignees/successors-in-interest. Hence, DISC filed this case for recovery against NDC
and MCP as owner and ship agent respectively. MCP filed a cross-claim against NDC.

CFI: MCP and NDC solidarily to DISC. Both captains of the vessel were negligent. CA affirmed in toto.

MCP: MTD as complaint states no cause of action and even if it does, the action has prescribed.
NDC: CA should have not applied Art. 827 of Code of Commerce, and instead should have applied Sec.
4(2a) of CA 65 (Carriage of Goods by Sea Act) in determining the liability for loss of cargoes resulting from
the collision. Under this provision, the carrier is not responsible for the loss/damage resulting from the “act, neglect,
or default of the master, mariner, pilot, or the servants of the carrier in the navigation or mgt of the ship.”

issue
Which law should govern loss or destruction of goods due to collision of vessels outside Philippine waters?
THE CIVIL CODE, SUPPLEMENTED BY THE CODE OF COMMERCE.

ratio
CA 65 merely suppletory to CC.
It has already been settled in Eastern Shipping Lines v IAC 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 (Art. 1753 CC). The rule was specifically laid down that for cargoes transported from Japan to
the Phils, the liability of the carrier is governed primarily by the CC and, in all matters not regulated by it,
the rights and obligs of common carrier shall be governed by the Code of Commerce and by-laws (Art. 1766
CC). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the provision of the CC.
Based on this ruling, it is immaterial that the collision occurred in foreign waters.

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence
in the vigilance over the goods & for the safety of the passengers transported by them accdg to all circumstances of each case (Art. 1733
CC). In all other cases than those mentioned in Art. 1734 thereof, the common carrier shall be presumed to have been at fault or to have
acted negligently, unless it proves that it has observed the extraordinary diligence required by law (Art. 1735).

Collisions governed by Arts. 826-839, Code of Commerce.


Since collisions fall among matters not specifically regulated by the CC, it was proper for the lower courts
to apply to the case at bar Arts. 826-839, Bk. 3 of the Code of Commerce, which deal exclusively with
collision of vessels. Art. 826 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 Art. 827 is
  18
more in point in this case, 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. Moreover, under Arts. 826-839, the shipowner/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/carrier in recognition of the universally accepted doctrine that the shipmaster/captain is merely
the representative of the owner who has the actual or constructive control over the conduct of the voyage.
Thus, it was wrong for NDC to argue that the Code of Commerce only applies to domestic trade and not to
foreign trade. Aside from the fact that CA 65 does not specifically provide for the subject of collision, it also
restricts its application “to all contracts for the carriage of goods by sea to and from Philippine ports in foreign
trade.” It also provided under Section 1 thereof, 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.”

MCP: can’t be solidarily liable with NDC since it is merely the manager and operator of the vessel, not a ship agent. As the the
general managing agent, it can only be held liable if it acted in excess of its authority.
SC: MoA shows that NDC appointed MCP as agent, a term broad enough to include the concept of Ship-agent in Maritime Law.
MCP was even conferred all the powers of the owner of the vessel, including the power to contract in the name of 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;
that in case of collision, both the owner and the agent are civilly responsible for the acts of the captain; and that both the owner and
agent (Naviero) shouled be declared jointly and severally liable, since the obligation which is the subject of the action had its origin in a
tortuous act and did not arise from contract.
Consequently, the agent is liable to the shippers and owners of the cargo transported by it, for losses and damages occasioned to
such cargo, without prejudice to his rights against the owner of the ship, to the extent of the value of the vessel, its equipment, and the
freight.

MCP: liability should be limited to 200/package or per bale of raw cotton as stated in the bills of lading. The law on averages (err
insurance) should be applied in determining their liability.
SC: The declared value of the goods was stated in the bills and corroborated by invoices. Common carriers cannot limit its liability
for injury to a loss of goods where such injury or loss was caused by its won negligence.

Re: Issue of prescription


The bills of lading issued allow trans-shipment—meaning that the date of arrival was merely tentative to give allowances for such
contingencies that said vessel might not arrive on schedule and therefore, would necessitate the trans-shipment of cargo, as what
happened in this case. Original date of arrival was April 18, 1964, but the goods arrived only on June 12, 13, 18, 20 & July 10, 13, & 15,
1964. Hence the filing of the case on April 22, 1965 was not barred by prescription since 1 year had not yet lapsed from the date the lost
or damaged cargo “should have been delivered”.

  19
F.H. Stevens v. Norddeuscher Lloyd
No. L-17730 29 September 1962 J. Concepcion
plaintiff F.H. Stevens & Co., Inc.
defendant Norddeuscher Lloyd
summary As all these cases go, F.H. shipped some cargo on Norddeuscher, most of which, upon
arrival, were either missing or damaged. F.H. sued within the one-year period
prescribed by CA No. 65, in relation to the Carriage of Goods by Sea Act, but when
the court dismissed its action on jurisdictional grounds, the period had expired.
F.H. thus brought this present action, and Norddeuscher moved to dismiss for
prescription. The Court held that because of Sec. 49 of Act No. 190 (see below), F.H.
has a new one-year period within which to commence a new action.

facts of the case


F.H. Stevens shipped 2000 pieces of prismatical thermometers (valued at $650) from Hamburg, Germany to
Manila, on board the MS Schwabenstein, a vessel of defendant Norddeuscher Lloyd. The vessel arrived on 15
May 1959. On May 21 the master of the vessel notified F.H. Stevens through its broker that the goods had been
delivered. Upon examination, however, a total of 1154 pieces (valued at $342.74) were either missing or
destroyed.
F.H. Stevens instituted an action before the Municipal Court of Manila on 27 April 1969 to recover the
value of the thermometers, plus unrealized profits as damages. The Municipal Court dismissed the case on
13 June 1960 merely on the ground of lack of jurisdiction over the subject matter, ruling that the case involved
an exercise of admiralty and maritime jurisdiction.
F.H Stevens then brought the present case before the Court of First Instance on 24 June 1960.
Norddeuscher then moved to dismiss, alleging that the filing of the action had been more than a year from
when F.H. Stevens received notice on 21 May 1959, and thus the action should be barred.

issue
Whether the present action should be barred because of prescription. NO.

ratio
Both the plaintiff and defendant base their claims on Commonwealth Act No. 65, in relation to the
Carriage of Goods by Sea Act, which prescribes a one (1) year period within which carriers who have
entered into a contract of carriage by sea may be sued to enforce liability.
The plaintiff, however, alleges that when it filed the action before the municipal court, the one-year
period was interrupted, and only resumed upon the dismissal of that action.
The Court agreed that the one-year period had been interrupted, and ruled further that plaintiff F.H.
Stevens had a new one-year period within which to initiate the present case, due to the provisions of Sec. 49
of Act No. 190:
“If, in an action commenced, in due time, a judgment for the plaintiff be reversed, or if the
plaintiff fail otherwise than upon the merits, and the time limited for the commencement of
such action has, at the date of such reversal or failure, expired, the plaintiff, or if he die and the
cause of action survive, his representatives may commence a new action within one year after
such date, and this provision shall apply to any claim asserted in any pleading by a defendant.”
TL;DR: If the action was instituted within the proper period, and it was decided
against the plaintiff on any ground other than the merits, and at the time the
decision is rendered, the period has expired, he has one year after the date of
the decision to commence a new action.
The action before the municipal court was instituted on 27 April 1960, and dismissed on 13 June 1960,
twenty (20) days after the expiration of the one-year period prescribed by CA No. 56. But under Sec. 49 of
Act No. 190, F.H. Stevens has a new one-year period, starting 14 June 1960. Therefore, when the present case
was instituted on 24 June 1960, it was properly within the new one-year period.

  63
ANG v. AMERICAN STEAMSHIP AGENCIES
G.R. No. L-22491 Jan 27, 1967 Bengzon, J.P.
petitioners Domingo Ang
respondents American Steamship Agencies, Inc
summary Carrier delivered goods to another person; cites COGSA provi limiting the period for
filing suits to within 1 year for loss or damage to the goods. Held: As per the CC
definition of “loss”, provi does not apply, there being no loss of the goods. The goods
were in fact delivered, albeit to the wrong person. CC rule on prescription applies.

facts of the case


Yau Yue Commercial Bank Ltd of Hong Kong agreed to sell 140 packages of galvanized steel durzinc
sheets to Herminio Teves. The agreement included the provisions that the payment should be covered by a
bank draft for the corresponding amount which should be paid by Teves by depositing the amount to HK &
Shanghai Bank of Manila; and that upon arrival of the articles in Manila, Teves would be notified and he would have
to pay the amount called for in the corresponding demand draft, after which the bill of lading would be delivered to him;
and he would present said bill of lading to the carrier’s agent, ASA which would then issue the corresponding “Permit to
Deliver Imported Articles” to the Bureau of Customs to obtain the release of the articles.
So Yau Yue shipped the articles from Japan to the Philippines via the Nissho Shipping Co., and such
articles were received in the Phils by the latter’s agent, ASA. Teves was notified of the arrival, but he did not
pay the demand draft, prompting the bank to make a protest. The bank returned the bill of lading and
demand draft to Yau Yue which indorsed the said bill of lading to Ang.
Despite his non-payment, Teves was able to secure a bank guaranty in favor of ASA, to the effect that he
would surrender the original bill of lading. So ASA issued the permit to Teves, which allowed him to have
the articles released to him. When Ang tried to claim the articles by presenting the bill of lading, ASA
informed him that it was already delivered to Teves.
Ang filed a case against ASA for having allegedly wrongfully delivered and/or converted the goods
covered by the bill of lading belonging to Ang.

ASA: MTD, Ang’s cause of action has prescribed, as per COGSA, Sec. 3 (6), par. 4: In any event, the carrier
and the ship shall be discharged from all liability in respect to loss or damage unless suit is brought within 1
year, after delivery of the goods or the date when the goods should have been delivered.
The vessel arrived in Manila on May 9, 1961. Ang’ action was commenced on Oct 3, 1963, way beyond the
1 year period.
CFI: MTD granted.

issue
WoN Ang’s cause of action had already prescribed. NO.
WoN there was “loss” of the goods to warrant the application of the COGSA provision. NO.

ratio
Definition of “loss”
“Loss” is not defined in the COGSA, thus recourse must be had to the CC, as per Art. 1836. Art. 1189 CC
defines the word “loss” in cases where conditions have been imposed with the intention of suspending the
efficacy of an oblig to give. The contract of carriage involved in this case contains an oblig to give or to deliver
the goods to the order of the shipper upon presentation of the bill of lading. Hence, the article can be applied
to this controversy, more specifically par. 2 which states that: “… it is understood that a thing is lost when it
perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be
recovered.”

                                                                                                           
36 In matters which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provis of this Code.
  61
Thus, “loss” contemplates a situation where no delivery at all was made by the shipper for the reasons
enumerated in the article. It does not include a situation where there was indeed delivery—but delivery to
the wrong person, or a misdelivery.

Non-delivery v. Misdelivery
The distinction has reference to bill of ladings. The SC cited the case of Tan Pho v Hassamal Dalamal,
which had similar facts with this case. The SC held in that case that the fact that the carrier delivered the goods
to the person without him paying for the same, constituted misdelivery and not non-delivery, because there
was in fact delivery of merchandise. It cannot be misdelivery to one, and non-delivery to another. If the goods
have been delivered, it cannot at the same time be said that they have not been delivered.

COGSA provi does not apply, there being no loss of the goods
It is well settled in our jurisdiction that when a defendant files a MTD, he thereby hypothetically admits
the truth of the allegation of fact contained in the complaint. By filing the MTD, ASA is deemed to have
admitted, hypothetically, pars. 6-8, which allege that ASA delivered the goods to Teves. There was no loss of
the goods. It is either delivery or misdelivery, but not non-delivery. Hence the COGSA provision does not
apply. The 1 year period in that provision was designed to meet the exigencies of maritime hazards. When the
goods are neither lost nor damaged, the situation is different, and the special need for the short period does
not obtain.

CC rule on prescription applies


For suits predicated not upon loss or damage but on alleged misdelivery (conversion) of goods, the
applicable rule on prescription is that found in the CC, either 10 yrs for breach of contract, or 4 yrs for quasi-
delict. (Arts 1144[1], 1146). In either case, Ang’s cause of action has not yet prescribed.

  62

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