Feb.

This action was brought to recover the value of the launch.

Issue:
206. Baer Sr. & Co.'s Successors v. La Cia Maritima 6 Phil
215

What is the nature of the liability of the Defendant, who towed

the launch? May the Defendant be deemed a carrier of goods
required to exercise extraordinary diligence, and presumed to
be negligent unless force majeure is proven? NO.

Facts:
Plaintiff, owner of the launch Mascota, made a contract with the
Defendant by the terms of which the Defendant agreed to tow
the launch from Aparri to Manila.

Doctrine: A contract of towage is not a contract for the carriage of

In the case of The J. P. McDonaldson (167 U. S., 599, 602, 603) held that:

The launch was accordingly delivered to the Defendant, and the

Defendant's steamer Churruca left Aparri with the launch in
tow. The steamer, with the launch in tow, arrived safely at
Vigan.

While the tug is performing its contract of towing the barges the barge
regarded as part of tug, in the sense that tugs master is bound to
provide for the barges safety as well as tugs own and to avoid collis
barges or of tugs, with other vessels. But the barges in tow are by
under the control of the master of the tug to the same ext
herself, and the cargo, if any, on board of her.

However a few hours after leaving Vigan, the wind increased in

violence, with a rough sea. The speed of the streamer was
decreased so that the tow might travel more easily.

Accordingly, an engagement to tow does not impose either an obligatio

liability of common carriers. The burden, as a rule, is upon him who al
of such a contract to show either that there has been no attempt at
that there has been negligence or unskillfulness to his injury in the per
the case of common carriers, damage sustained by the tow does not
presumption that the tug has been in fault.

Sometime later, the lookout stationed in the stern of the

steamer for the purpose of watching the launch, reported to the
officer of the deck that the launch had disappeared. The
steamer was stopped and search was made the rest of the night
for the launch, but without success, and in the morning the
steamer proceeded on her way to Manila.

Under Article 1173 (then Article 1104), the Defendant was simply boun
ordinary diligence, taking into consideration the nature of the obl
circumstances of persons, time, and place.

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Issue:
Did Defendant exercise ordinary diligence? Yes.

exposed, which it is the duty of the master of the tug to know

and to guard against not only by giving proper instructions for
the management of the tow, but by watching her, when in a
dangerous locality, to see that his instructions are obeyed. The
duty of the tug to a tow is a continuous one from the time
service commences until it is completed.

Held:
Evidence in the case shows that the Defendant did exercise the
diligence required of it by law, there was proof that towing lines
were fastened to a post in the bow of the launch commonly
used for fastening ropes in cases of towing and even for the
purpose of fastening the launch to the wharf.

At the time the loss occurred, the towing line did not break,
but this post did, and was found fastened to the towing lines
when they were pulled on board the steamer.

The Court did not give weight to a testimony of plaintiffs

witness that he suggested to the captain to tow the lines in a
different manner, considering that said witness admitted that
he had no experience in the matter of towing.

Fallo: Defendant absolved from complaint.

207. Limpangco & Sons v. Yangco S/S Co. 34 Phil 597

Doctrine:
A vessel which undertakes a towage service is liable for the
reasonable care of the tow. That reasonable care is measured
by the dangers and hazards to which the tow is or may be

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Facts:
On the 3rd day of August, 1913, plaintiff employed defendant to
tow from Guagua to Manila two cascos loaded with 2,041.80
piculs of sugar, a property of the plaintiff. On that date the
cascos left Guagua towed by the launches Tahimic and Matulin,
belonging to the defendant. When the launches, together with
their tows, arrived off the Malabon River, the patron of the
launch Matulin decided to leave the cascos in the Malabon
River. The launch Tahimic towed the cascos into the Malabon
River and the launch Matulin continued the trip to Manila. The
reason why this was done was that, at that time, the weather
was threatening, as to make it dangerous for the cascos, heavily
loaded as they were, to continue the voyage to Manila.

On Friday following, the launch Matulin was in the Malabon

River and the patron talked to the men in charge of the two
cascos, which were at that time tied up at Tansa, and told them
that on the following day, the 9th of August, at daybreak, he
would await them off the mouth of the Malabon River, outside
the bar, and that, if the weather was then favorable, he would
tow them to Manila. It was agreed between the patron of the
Matulin and the patrones of the cascos that the latter should
move out of the river by means of their tikines or bamboo poles
and, thus propelled, proceed to the place where the launch
Matulin was to be waiting for them

In accordance with the agreement with the patron 'of the

Matulin and under his instructions, the crews poled their cascos
out of the river following the channel. When they passed the
shallow water they were met with high seas and strong winds.
They were driven ashore or on the shoals and their cargoes lost.
The patron of the Matulin testified that he was unable to render
assistance to the cascos by reason of the shallow water in which
they were at the time they were caught by the winds and waves
and washed ashore.

the season of the year and the fact that it was the period of
typhoons and strong southwest winds, and to guard the tow
accordingly. While the captain of the Matulin would not have
been responsible for an act of God by which the cascos were
lost, it was his duty to foresee what the weather was likely to
be, and to take such precautions as were necessary to protect
his tow. It was not an act of God by which the cascos were lost;
but it was the direct result of the failure of the captain of the
Matulin to meet the responsibilities which the occasion placed
on him

Issue:
W/N a vessel which undertakes a towage service is liable for the
reasonable care of the tow.

Held:
YES. That reasonable care is measured by the dangers and
hazards to which the tow is or may be exposed, which it is the
duty of the master of the tug to know and to guard against not
only by giving proper instructions for the management of the
tow, but by watching her, when in a dangerous locality, to see
that his instructions are obeyed. The duty of the tug to a tow is
a continuous one from the time service commences until it is
completed. The responsibility of the tug includes not only the
proper and safe navigation of the tug on the journey, but to
furnish safe, sound, and suitable appliances and
instrumentalities for the service to be performed. It is the duty
of the tug also to give proper instruction as to the management
of the tow, and if the locality in which the tow finds itself at any
given time is more than ordinarily dangerous, the tug is held to
a proportionately higher degree of care and skill.

It is negligence to leave two heavily loaded cascos in Manila

Bay, exposed to weather likely to exist in the month of August,
for a distance of 1,500 meters with no other motive power than
bamboo poles. The captain of the tug was bound to take note of

To be exempt from liability because of an act of God, the tug

must be free from any previous negligence or misconduct by
which that loss or damage may have been occasioned; for,
although the immediate or proximate cause of the loss in any
given instance may have been what is termed an act of God,
yet, if the tug unnecessarily exposed the tow to such accident
by any culpable act or omission of its own, it is not excused.

208. Standard Vacuum Oil v. Luzon Stevedoring Co.

Doctrine:
CARRIERS; MERCHANDISE TRANSPORTED AT RISK OF SHIPPERS;
WHEN SHIPOWNER LIABLE.Under Article 361 of the Code of
Commerce, merchandise transported in the sea by virtue of a
contract entered into between the shipper and the carrier, is
deemed transported at the risk and venture of the shipper, if
the contrary is not stipulated, and all damages suffered by the
merchandise during the transportation by reason of accident or
force majeure shall be for the account and risk of the shipper,
but the proof of these accidents is incumbent on the carrier. In
the present case, the gasoline was delivered in accordance with
the contract but defendant failed to transport it to its place of
destination, not because of accident or force majeure or cause
beyond its control, but due to the unseaworthiness of the
tugboat towing the barge carrying the gasoline, lack of

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necessary spare parts on board, and deficiency or

incompetence in the man power of the tugboat. The loss was
also caused because the defendant did not have in readiness
any tugboat sufficient in tonnage and equipment to attend to
the rescue. Under the circumstances, defendant is not exempt
from liability under the law.

limited contract of carriage in the sense that it chooses its

customers and is not opened to the public. nevertheless, the
continuity of its operations in this kind of business have earned
for it the level of a public utility. The contract between the
plaintiff and defendant comes therefore under Article 361 of the
Code of Commerce.1

Facts:

2.) The facts and circumstances of the case showed defendants

lack of diligence

Pursuant to an agreement, the tugboat (Snapper) of Luzons

Stevedoring picked up the barge of Standard Vacuum Oil which
contains gasoline. The barge was placed behind the tugboat, it
being connected to the latter by a tow rope. While passing
Santiago Point in Batangas, the tugboat came to a dead stop
due to broken idler. It immediately radioed Manila station. After
finding out from other shipping companies that there were no
other vessels near the vicinity, Luzon sent out its another
tugboat it owns. That other tugboat, however, came too late, as
the rough condition of the sea caused Snapper to sink. The
gasoline in the barge has already leaked out.

a. The boat was a surplus property, and was put into

operation without first submitting it to an overhaul in
a dry-dock.
b. It was inadequately equipped.
c. There was failure to carry on board the necessary
spare parts.
d. There was deficiency or incompetence in the man
power of the tugboat. (some were even unlicensed)
e. It did not have in readiness any tugboat sufficient in
tonnage and equipment to attend to the rescue.

209. Cargolift Shipping Inc. v. L. Acvario Marketing

Corp.

Issue:
1.) Is Luzon Stevedoring a public utility (common carrier)? YES.
2.) Has Luzon Stevedoring proven that its failure to deliver the
gasoline to its place of destination is due to accident or force
majeure or to a cause beyond its control? NO.

Doctrine:
A tug and its owners must observe ordinary diligence in the

Held:

1 Art. 361. The merchandise shall be transported at the risk and

1.) Defendant is a private stevedoring company engaged in

transporting local products, including gasoline in bulk and has a
fleet of about 140 tugboats and about 90 per cent of its
business is devoted to transportation. Though it is engaged in a

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venture of the shipper, if the contrary was not expressly stipulated.

Therefore, all damages and impairment suffered by the goods during
the transportation, by reason of accident, force majeure, or by virtue of
the nature or defect of the articles, shall be for the account and risk of
the shipper. The proof of these accidents is incumbent on the carrier.

performance of its obligation under a contract of towage; While

adverse weather has always been a real threat to maritime
commerce, the least that the tug owner could do is to ensure
that its tugboats would be able to secure the barge at all times
during the engagement.
Considering that a barge has no power of its own and is totally
defenseless against the ravages of the sea, it is incumbent on
the tug owner to see to it that it could secure the barge by
providing a seaworthy tugboat.

Facts:
Respondent L. Acuario Marketing Corp., ("Acuario") and
respondent Skyland Brokerage, Inc., ("Skyland") entered into a
time charter agreement whereby Acuario leased to Skyland its
L. Acuario II barge for use by the latter in transporting electrical
posts from Manila to Limay, Bataan. At the same time, Skyland
also entered into a separate contract with petitioner Cargolift,
for the latters tugboats to tow the aforesaid barge.

third-party complaint against petitioner alleging that it was

responsible for the damage sustained by the barge.

Issue:
W/N petitioner should be held liable.

Held:
YES. Thus, in the performance of its contractual obligation to
Skyland, petitioner was required to observe the due diligence of
a good father of the family. This much was held in the old but
still relevant case of Baer Senior & Co.s Successors v. La
Compania Maritima where the Court explained that a tug and its
owners must observe ordinary diligence in the performance of
its obligation under a contract of towage. The negligence of the
obligor in the performance of the obligation renders him liable
for damages for the resulting loss suffered by the obligee. Fault
or negligence of the obligor consists in his failure to exercise
due care and prudence in the performance of the obligation as
the nature of the obligation so demands.

After the whole operation was concluded, the barge was

brought to Acuarios shipyard where it was allegedly discovered
by that the barge was listing due to a leak in its hull. It was
informed by the skipper of the tugboat that the damage was
sustained in Bataan. It was learned later the due to strong
winds and large waves, the barge repeatedly hit its hull on the
wall, thus prompting the barge patron to alert the tugboat
captain of the M/T Count to tow the barge farther out to sea.
However, the tugboat failed to pull the barge to a safer distance
due to engine malfunction, thereby causing the barge to sustain
a hole in its hull.

In the case at bar, the exercise of ordinary prudence by

petitioner means ensuring that its tugboat is free of mechanical
problems. While adverse weather has always been a real threat
to maritime commerce, the least that petitioner could have
done was to ensure that the M/T Count or any of its other
tugboats would be able to secure the barge at all times during
the engagement. This is especially true when considered with
the fact that Acuarios barge was wholly dependent upon
petitioners tugboat for propulsion. The barge was not equipped
with any engine and needed a tugboat for maneuvering.

Acuario spent the total sum of P97,021.20 for the repairs, and,
pursuant to the contract, sought reimbursement from Skyland,
failing which, it filed a suit before the RTC which was granted.
On appeal, it was affirmed by the CA. Skyland, in turn, filed a

Needless to say, if petitioner only subjected the M/T Count to a

more rigid check-up or inspection, the engine malfunction could
have been discovered or avoided. The M/T Count was
exclusively controlled by petitioner and the latter had the duty
to see to it that the tugboat was in good running condition.
There is simply no basis for petitioners assertion that Skyland

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contractually assumed the risk of any engine trouble that the

tugboat may encounter. Skyland merely procured petitioners
towing service but in no way assumed any such risk.

210. US vs. Quinajon and Quitoriano

Doctrine:
A common carrier is a person or corporation whose regular
business is to carry passengers or property for all persons who
may choose to employ and remunerate him. A common carrier
is a person or corporation who undertakes to carry goods or
persons for hire.

Facts:
In the months of June, July and September of 1912, the accused,
Pascual Quinajon and Eugenio Quitoriano, by means of virayes
and employees, did unload in the port of Currimao, Ilocos Norte,
5,986 sacks of rice belonging to the provincial government that
had come from Manila. The sacks were unloaded from the
steamers in which they had been shipped and carried to the
storages warehouses in which they were deposited. The
accused demanded and collected from the provincial treasurer
for the unloading of each one of the said sacks of rice 10
centavos instead of 6 centavos that they have been regularly
charging for such services of unloading of the same kind of
merchandise and under virtually the same circumstances and
conditions.

Issue:
Whether the act of collecting 10 centavos instead if the usual 6
centavos violated Act No. 98.

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Held:
Yes. Act No. 98 is An Act to regulate commerce in the
Philippine islands. Its purpose is to compel common carriers to
render all persons exactly the same or analogous service for
exactly the same price, to the end that there may be no unjust
advantage or unreasonable discrimination. It applies to persons
or corporations engaged as common carriers of passengers or
property. A common carrier is a person or corporation whose
regular business is to carry passengers or property for all
persons who may choose to employ and remunerate him. A
common carrier is a person or corporation who undertakes to
carry goods or persons for hire.

In this case, there is no pretense that it actually cost more to

handle the rice for the province than it did for the merchants
with who, the special contracts were made. It was clear that
there was discrimination made against the province.

211. De Villata v. Stanley

Doctrine:
Vessels licensed to engage in the interisland trade are common
carriers; and as to them, there is an extensive field of regulation
and control which may properly be exercised by the state
without centravention of the provisions of the Philippine Bill of
Rights or the Constitution of the United States; and this
notwithstand ing the fact that the enforcement of such
regulations may tend to restrict their liberty, and to control the
free exercise of their discretion in the conduct of their business
to a degree and in a form and manner which would not be
tolerated under the constitutional guarantees with relation to
the private business of a private citizen.

Issue:
The nature of the business in which they are engaged as a
public employment, is such that it is clearly within the power of
the state to impose such just and reasonable regulations
thereon as in the interest of the public it may deem proper. Of
course such regulations must not have the effect of depriving
an owner of this property without due process of law, nor of
confiscating or appropriating private property without just
compensation, nor of limiting or prescribing irrevocably vested
rights or privileges lawfully acquired under a charter or
franchise.
A regulation requiring all coasting vessels licensed to engage in
the interisland trade to carry the mails and give prompt
advance notice in all cases of intended sailings in ample time to
permit dispatch of mails, and of changes of sailing hours,
(manifestly with a view to make it possible for the post-office
officials to tender mail for transportation at the last practicable
moment prior to the hour of departure) is a reasonable
regulation, made in the interests of the public, which the states
has a right to impose when it grants licenses to the vessels
affected thereby.

W/N Philippine Government, through its appropriate agents, has

the power to enact and enforce a regulation requiring all vessels
licensed to engage in the interisland trade to transport the
mails and to give timely notice of their sailing hours to the local
postal authorities.

Held:
There is nothing in the Philippine Bill of Rights which deprived
the Philippine Government of the power to make and enforce
reasonable regulations of this nature with which it was clothed
prior to the enactment of that statute. It is contended that to
require the master of a vessel to transport the mails and to give
timely notice to the postal authorities of the hour of his
departure may in some instances cause grave loss and serious
inconvenience to her owner by preventing her departure at an
earlier hour; and that in all instances it imposes an obligation
upon the owner to render services which the Government has
no power to require in the absence of a contract, and without
just compensation.

Facts:
Joaquin de Villata is the master of SS Vizcaya of the coastwise
trade. As such captain, on 6 July 1912, when sailing from the
port of Gubat to the port of Legaspi, Philippine Islands, he failed
to notify the postmaster of the former port, in advance, of his
intended sailing, and therefore failed to carry the mails between
said ports. The Collector of Customs (JS Stanley, Acting Insular
Collector of Customs) was threatening to suspend or revoke the
license of de Villata by reason of said facts, under and by virtue
of the terms of Customs Administrative Circular 627. De Villata
filed an application for a writ of prohibition directed against the
Collector of Customs to restrain him from enforcing Customs
Administrative Circular 627 against de Villata.

It must not be forgotten, however, that vessels licensed to

engage in the interisland trade are common carriers; and that
as to them, there is an extensive field of regulation and control
which may properly be exercised by the state without
contravention of the provisions of the Philippine Bill of Rights or
the Constitution of the United states; and this notwithstanding
the fact that the enforcement of such regulations may tend to
restrict their liberty and to control the free exercise of their
discretion in the conduct of their business to a degree and in a
form and manner which would not be tolerated under the
constitutional guarantees with relation to the private business
of a private citizen.

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It is only when the owner of a vessel enters the quasi-public

employment of a common carrier that regulations of this kind
begin to affect or control the conduct of his business, and he
cannot be heard to complain that he is deprived of his property
without due process of law when he elects, of his own free will
and accord, to secure a license as a common carrier in
Philippine waters, and to engage in a business, one of the
conditions of which is that he will comply with such regulations.
Under the law in force in these Islands at the time of the change
of sovereignty, and of the enactment of the Act of Congress the
owners of all licensed coasting vessels were required to comply
with regulations of this character, as one of the conditions upon
which they were permitted to engage in the quasi-public
employment of carriers in the interisland trade. Manifestly there
is no merit in a claim by the owner of one of these vessels that
the enforcement of these regulations amounts to a deprivation
of property without due process of law. The owner of every
coasting vessels in these Islands licensed to engage in the
interisland trade, prior to the promulgation of Customs
Administration Circular No. 627, took out his license and
dedicated his vessel to the quasi-public employment of a
common carrier with full knowledge of the existence of
regulations such as that now under consideration, and of the
assertion and assumption by the Government of power to
promulgate and enforce such regulations. It is futile, therefore,
for any such owner to contend that the promulgation or
enforcement by the Government through its proper agencies of
any reasonable order of this kind, deprives him of property
without due process of law. No one is compelled to comply with
these regulations unless he voluntarily enters upon the business
which they affect, and if he does enter such business he cannot
claim that he is unlawfully deprived, without due process of law,
of that which he voluntarily agrees to surrender.

author of the circular had in mind a lawful tender of mails when

we wrote this paragraph. If a vessels may not be required to
carry mail without direct compensation, or a contract providing
for such compensation, it must be presumed that the Collector
did not intend to require vessels to accept mail without tender
of reasonable compensation for such services or provision for
payment by contract or otherwise, and that this paragraph was
intended merely as a regulation requiring the acceptance of all
mail thus lawfully tendered and the safe transportation of such
mail when accepted for transportation.

Customs Administrative Circular No. 627 consists of a body of

reasonable regulations controlling and prescribing the conduct
of vessels licensed to engage in the coastwise trade, and of
licensed officers aboard such vessels, with reference to the
transportation of mail, the Insular Collector was clothed with the
necessary authority at the date of the circular for its
preparation, promulgation and enforcement. The circular (aside
perhaps from its third paragraph, as to which no real contention
is involved in these proceedings) is, when correctly construed,
such a body of reasonable regulations, touching the conduct of
coastwise vessels and their officers with reference to the
transportation of mails. The SC had, therefore, no doubt as to
the authority of the defendant collector in the premises.
212. Lastimoso vs. Doliente 1 CAR 769

Doctrine:

The real contention arises over the provisions of paragraph I of

the Customs Administrative Circular 627, which require trading
vessels to carry mails tendered for transportation in a safe and
a secure manner. But this does not necessarily require these
vessels to accept and to carry mail free of charge. It is only
when goods are lawfully tendered that common carriers may be
compelled to carry them, and it must be presumed that the

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Characteristic of a Common Carrier:

Undertakes to carry for all people indifferently and thus

is liable for refusal without sufficient reason.

213. Home Insurance Co. v. American S/S Agencies 23

SCRA 24

Doctrine:
The Civil Code provisions on common carriers should not apply
where the common carrier is not acting as such but as a private
carrier. Under American jurisprudence, a common carrier
undertaking to carry a special cargo or chartered to a special
person only, becomes a private carrier. As a private carrier, a
stipulation exempting the owner from liability for the negligence
of its agent is valid.
The stipulation in the charter party absolving the owner from
liability for loss due to the negligence of its agent would be void
only if the strict public policy governing common carriers is
applied. Such policy has no force where the public at large is
not involved, as in the case of a ship totally chartered for the
use of a single party. The stipulation exempting the owner from
liability for the negligence of its agent is not against public
policy and is deemed valid.
In a charter of the entire vessel, the bill of lading issued by the
master to the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of title, not a
contract, for the contract is the charter party.

amounting to P12,033.85, causing the latter to lay claims

against Luzon Stevedoring Corporation, Home Insurance
Company and the American Steamship Agencies, owner and
operator of SS Crowborough. Home Insurance Company (HIC)
paid the insurance value of the loss. Then, as subrogee to the
consignee, HIC filed a complaint for recovery against Luzon
Stevedoring Corporation and American Steamship Agencies.
The trial court absolved Luzon Stevedoring from liability and
thus ordered American Steamship to pay. The latter appealed
directly to SC.

Issue:
Is the stipulation in the charter party of the owners non-liability
valid so as to absolve the American Steamship Agencies from
liability for loss?

Held:
YES.

The charter party contract is one of affreightment over the

whole vessel rather than a demise. As such, the liability of the
shipowner for acts or negligence of its captain and crew would
remain in the absence of stipulation.

Facts:
Consorcio Pesquero del Peru of South America (Consorcio)
shipped freight pre-paid at Peru 21,740 jute bags of Peruvian
fish meal through SS Crowborough, covered by clean B/L. The
cargo, consigned to San Miguel Brewery, Inc., now San Miguel
Corporation, and insured by Home Insurance Company, arrived
in Manila and was discharged into the lighters of Luzon
Stevedoring Company. When the cargo was delivered to
consignee San Miguel Brewery, Inc., there were shortages

Under American jurisprudence, a common carrier undertaking

to carry a special cargo or chartered to a special person only,
becomes a private carrier. As a private carrier, a stipulation
exempting the owner from liability for the negligence of
its agent is not against public policy, and is deemed
valid.

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The Civil Code provisions on common carriers should not be

applied where the carrier is not acting as such but as a private
carrier. The stipulation in the charter party absolving the owner
from liability for loss due to the negligence of its agent would be
void only if the strict public policy governing common carriers is
applied. Such policy has no force where the public at large is
not involved, as in the case of a ship totally chartered for the
use of a single party.

The consignee may not claim ignorance of said charter party

because the bills of lading expressly referred to the same.
Accordingly, the consignees under the bills of lading must
likewise abide by the terms of the charter party. And as stated,
recovery cannot be had thereunder, for loss or damage to the
cargo, against the shipowners, unless the same is due to
personal acts or negligence of said owner or its manager, as
distinguished from its other agents or employees. In this case,
no such personal act or negligence has been proved.

215. Consolidated Cases (187 SCRA 346)

Maritime Agencies & Services Inc. v. Court of Appeals
and Union Insurance Society of Canton / Union Insurance
v. CA, HK Island Co. Ltd., Maritime Agencies & Services,
and Viva Customs

Agency; As regards the goods damaged or lost during unloading, the chart
therefor, having assumed this activity under the charter party free of expe
vessel.

Facts:
Transcontinental Fertilizer Company of London chartered from
Hongkong Island Shipping Company of HK the motor vessel
named "Hongkong Island" for the shipment of 8073.35 MT
(gross) bagged urea from Novorossisk, Odessa, USSR to the
Philippines, the parties signing for this purpose a Uniform
General Charter dated August 9, 1979. Of the total shipment,
5,400.04 MT was for the account of Atlas Fertilizer as consignee,
3,400.04 to be discharged in Manila and the remaining 2,000
MT in Cebu. The goods were insured by the consignee with the
Union Insurance Society of Canton, Ltd. for P6M against all risks.
Maritime Agencies & Services, Inc. was appointed as the
charterer's agent and Macondray Company, Inc. as the owner's
agent.

The vessel arrived in Manila on October 3, 1979, and unloaded

part of the consignee's goods, then proceeded to Cebu on
October 19, 1979, to discharge the rest of the cargo. On
October 31, 1979, the consignee filed a formal claim against
Maritime, copy furnished Macondray, for the amount of P87K,
representing C&F value of the 1,383 shortlanded bags. On
January 12, 1980, the consignee filed another formal claim, this
time against Viva Customs Brokerage, for the amount of P36K,
representing the value of 574 bags of net unrecovered spillage.

Doctrine:
The responsibility for cargo loss falls on the one who agreed to perform the duty involved in
accordance with the terms of most voyage charters.A voyage charter being a private
having been rejected, the consignee then went to
carriage, the parties may freely contract respecting liability for damage These
to the claims
goods and
Union,
which
on
demand paid the total indemnity of
other matters. The basic principle is that the responsibility for cargo loss falls on the
P113,123.86
who agreed to perform the duty involved in accordance with the terms
of mostpursuant to the insurance contract. As subrogee of
the consignee, Union then filed on September 19, 1980, a
voyage charters.

10

TRANSPO DIGESTS 3-D 2014-2015

complaint for reimbursement of this amount, with legal interest

and attorney's fees, against Hongkong Island Company, Ltd.,
Maritime Agencies & Services, Inc. and/or Viva Customs
Brokerage. On April 20, 1981, the complaint was amended to
drop Viva and implead Macondray Company, Inc. as a new
defendant.

In G.R. No. 77638, Maritime pleads non-liability on the ground

that it was only the charterer's agent and should not answer for
whatever responsibility might have attached to the principal. It
also argues that the respondent court erred in applying Articles
1734 and 1735 of the Civil Code in determining the charterer's
liability.

In G.R. No. 77674, Union asks that Maritime be held solidarily

and solely liable, its principal not having been impleaded and so
not subject to the jurisdiction of our courts.

Held:
In the cases at bar, the trial court found that 1,383 bags were
shortlanded, which could only mean that they were damaged or
lost on board the vessel before unloading of the shipment. As
the bags were in good order when received in the vessel, the
presumption is that they were damaged or lost during the
voyage as a result of their negligent improper stowage. For this
the ship owner should be held liable.

But we do agree that the period for filing the claim is one year,
in accordance with the Carriage of Goods by Sea Act. The oneyear period in the cases at bar should commence on October
20, 1979, when the last item was delivered to the
consignee. Union's complaint was filed against Hongkong on
September 19, 1980, but tardily against Macondray on April 20,
1981. The consequence is that the action is considered
prescribed as far as Macondray is concerned but not against its
principal, which is what matters anyway.

Issue:
Who, in this kind of charter, shall be liable for the cargo?
HK Island Co. (shipowner) liable
Macondray (local agent of HK Island) liable, but the liability
can no longer be enforced because the claim against it has
prescribed
Transcontinental (charterers principal) liable, but was not
impleaded
Maritime (charterers agent) cannot be held liable for the acts
of its known principal resulting in injury to Union.

As regards the goods damaged or lost during unloading, the

charterer is liable therefor, having assumed this activity under
the charter party "free of expense to the vessel." The difficulty
is that Transcontinental has not been impleaded in these cases
and so is beyond our jurisdiction. The liability imposable upon it
cannot be borne by Maritime which, as a mere agent, is not
answerable for injury caused by its principal. It is a well-settled
principle that the agent shall be liable for the act or omission of
the principal only if the latter is undisclosed.

In this case, the charterer did not represent itself as a carrier

and indeed assumed responsibility ability only for the unloading
of the cargo, i.e, after the goods were already outside the

TRANSPO DIGESTS 3-D 2014-2015

11

custody of the vessel. In supervising the unloading of the cargo

and issuing Daily Operations Report and Statement of Facts
indicating and describing the day-to-day discharge of the cargo,
Maritime acted in representation of the charterer and not of the
vessel. It thus cannot be considered a ship agent. As a mere
charterer's agent, it cannot be held solidarily liable with
Transcontinental for the losses/damages to the cargo
outside the custody of the vessel. Notably, Transcontinental
was disclosed as the charterer's principal and there is no
question that Maritime acted within the scope of its authority.

216. Philippine American General Insurance Co. vs. PKS

Shipping Co.

Facts:
Davao Union Marketing Corp. (DMUC) contracted the services of
PKS Shipping Corporation (PKS Shipping) to transport 75,000
bags of cement valued at P3 million plus pesos to Tacloban City.
DMUC insured the goods with Phil. American General Insurance
Co. (Philamgen) for the value of the cement. Along the way the
barge carrying the cement sank resulting in the total loss of the
goods.

DMUC collected payment from Philamgen by virtue of the

insurance agreement. Philamgen thereafter demanded
reimbursement from PKS Shipping which refused and this
resulted in a suit.

Doctrine:
Article 1732 of the Civil Code carefully avoids making any
distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled
basis, and neither does it distinguish between a carrier offering
its services to the general public, i.e., the general community
or population, and one who offers services or solicits business
only from a narrow segment of the general population.

The trial court dismissed the complaint after finding that the
total loss of the cargo could have been due to fortuitous event
for which the shipping company was not liable. Or if through the
negligence of the captain and crew, under the limited liability
rule under Art. 487 of the Code of Commerce, the ship owner is
still not liable if it abandoned the vessel, which it did.

Much of 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 an isolated transaction,
not a part of the business or occupation, and the carrier does
not hold itself out to carry the goods for the general public or to
a limited clientele, although involving the carriage of goods for
a fee, the person or corporation providing such service could
very well be just a private carrier; The concept of a common
carrier does not change merely because individual contracts are
executed or entered into with patrons of the carriersuch
restrictive interpretation would make it easy for a common
carrier to escape liability by the simple expedient of entering
into those distinct agreements with clients.

On appeal to the Court of Appeals, it affirmed in toto the

decision. It however noted that the evidence to establish that
PKS Shipping was a common carrier was wanting because the
peculiar method of the shipping companys carrying goods for
others was not generally held out as a business but as a casual
occupation. Thus the CA concluded that the PKS Shipping was
not a common carrier and was not duty bound to exercise
extraordinary diligence in the care of goods transported by it.
Besides, it also found that the loss was due to fortuitous event
typhoon that hit the area.

12

TRANSPO DIGESTS 3-D 2014-2015

barge to sink. This situation was considered as a fortuitous

event as a natural calamity.
Issue:
Is the PKS Shipping a common carrier or private carrier?
217. Bascos vs. CA

Held:
It is a common carrier. Much of 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 an isolated transaction, not part of the business
or occupation, and the carrier does not hold itself out to carry
the goods for the general public or to a limited clientele,
although involving the carriage of goods for a fee, the person or
corporation providing such service could very well be just a
private carrier. x x x

Contrary to the conclusions made by the appellate

court, its factual findings indicate that PKS Shipping has
engaged itself in the business of carrying goods for
others, although for a limited clientele, undertaking to
carry such goods for a fee. The regularity of its activities
in this area indicates more than just casual activity on its
part.

But then, even as the High Court held that the PKS Shipping is a
common carrier which reversed the conclusion of the CA that it
was a private carrier, it still absolved the latter from liability. It
found that under Art. 1734 a common carrier is absolved from
any liability if the loss of goods is due, but not limited to the
following causes: (1) Flood, storm, earthquake, lightning, or
other natural disaster or calamity. It found that the waves were
unusually high and the winds very strong which caused the

Doctrine:
No distinction between person offering service on regular basis
and one offering service on occasional basis In referring to
Article 1732 of the Civil Code, it held thus: The above article
makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local
idiom, as a sideline). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier
offering its services to the general public, i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population.
Court believed that Article 1732 deliberately refrained from
making such distinctions.
Liability arising from hijacking.To exculpate the carrier from
liability arising from hijacking, he must prove that the robbers
or the hijackers acted with grave or irresistible threat, violence,
or force. This is in accordance with Art.1745.

Facts:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE) entered into a hauling contract with Jibfair Shipping
Agency Corp. whereby the former bound itself to haul the
latters 2,000 m/tons of soya bean meal from Magallanes Drive,
Del Pan, Manila to the warehouse of Purefoods Corporation in

TRANSPO DIGESTS 3-D 2014-2015

13

Calamba, Laguna. To carry out its obligation, CIPTRADE, through

Rodolfo Cipriano, subcontracted with Estrellita Bascos to
transport and to deliver 400 sacks of soya bean meal worth
P156,404.00 from the Manila Port Area to Calamba, Laguna at
the rate of P50.00 per metric ton. Bascos failed to deliver the
said cargo. As a consequence of that failure, Cipriano paid Jibfair
Shipping Agency the amount of the lost goods in accordance
with the contract. Cipriano demanded reimbursement from
Bascos but the latter refused to pay. In her answer, petitioner
interposed the following defenses: that there was no contract of
carriage since CIPTRADE leased her cargo truck to load the
cargo from Manila Port Area to Laguna; that CIPTRADE was
liable to petitioner for loading the cargo; that the truck carrying
the cargo was hijacked and that hijacking, being a force
majeure, exculpated petitioner from any liability to CIPTRADE.

Issue:
Whether the contractual relationship between petitioner and
private respondent was carriage of Goods and not lease of
cargo truck.

Whether petitioner should not be held liable since the loss of

the cargo was due to force majeure, namely, hijacking.

2. No. Liability arising from hijacking.To exculpate the carrier

from liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or irresistible threat,
violence, or force. This is in accordance with Article 1745 of the
Civil Code which provides: Art. 1745. Any of the following or
similar stipulations shall be considered unreasonable, unjust
and contrary to public policy: (6) That the common carriers
liability for acts committed by thieves, or of robbers who do not
act with grave or irresistible threat, violence or force, is
dispensed with or diminished. The affidavits of the petitioner did
not overcome the presumption

218. Planters Products Inc. v. Court of Appeals 226 SCRA

476

Held:
1. Yes. No distinction between person offering service on regular
basis and one offering service on occasional basis.Petitioner
argues that there was only a contract of lease because they
offer their services only to a select group of people and because
the private respondents, plaintiffs in the lower court, did not
object to the presentation of affidavits by petitioner where the
transaction was referred to as a lease contract. Regarding the
first contention, the holding of the Court in De Guzman vs.

14

Court of Appeals is instructive. In referring to Article 1732 of the

Civil Code, it held thus: The above article makes no distinction
between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only
as an ancillary activity (in local idiom, as a sideline). Article
1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular
or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services to the
general public, i.e., the general community or population, and
one who offers services or solicits business only from a narrow
segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions.

TRANSPO DIGESTS 3-D 2014-2015

Doctrine:
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 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 therefore imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited
to the ship only, as in the case of a time-charter or voyagecharter. 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.
In an action for recovery of damages against a common carrier
on the goods shipped, the shipper or consignee should first
prove the fact of shipment and its consequent loss or damage
while the same was in the possession, actual or constructive, of
the carrier. Thereafter, the burden of proof shifts to respondent
to prove that he has exercised extraordinary diligence required
by law or that the loss, damage or deterioration of the cargo
was due to fortuitous event, or some other circumstances
inconsistent with its liability.

Facts:
Planters Products, Inc. (PPI), purchased from Mitsubishi
International Corporation (MITSUBISHI) of New York, U.S.A.,
9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the
latter shipped in bulk on 16 June 1974 aboard the cargo vessel
M/V "Sun Plum" owned by private respondent Kyosei Kisen

Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro

Point, San Fernando, La Union, Philippines, as evidenced by Bill
of Lading No. KP-1 signed by the master of the vessel and
issued on the date of departure.

On 17 May 1974, or prior to its voyage, a time charter-party on

the vessel M/V "Sun Plum" pursuant to the Uniform General
Charter was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in Tokyo, Japan.

Before loading the fertilizer aboard the vessel, four (4) of her
holds were all presumably inspected by the charterer's
representative and found fit to take a load of urea in bulk
pursuant to par. 16 of the charter-party.

After the Urea fertilizer was loaded in bulk by stevedores hired

by and under the supervision of the shipper, the steel hatches
were closed with heavy iron lids, covered with three (3) layers of
tarpaulin, then tied with steel bonds. The hatches remained
closed and tightly sealed throughout the entire voyage.

Upon arrival of the vessel at her port of call on 3 July 1974, the
steel pontoon hatches were opened with the use of the vessel's
boom. Petitioner unloaded the cargo from the holds into its
steelbodied dump trucks which were parked alongside the
berth, using metal scoops attached to the ship, pursuant to the
terms and conditions of the charter-partly (which provided for
an F.I.O.S. clause). The hatches remained open throughout the
duration of the discharge.

TRANSPO DIGESTS 3-D 2014-2015

15

Each time a dump truck was filled up, its load of Urea was
covered with tarpaulin before it was transported to the
consignee's warehouse located some fifty (50) meters from the
wharf. Midway to the warehouse, the trucks were made to pass
through a weighing scale where they were individually weighed
for the purpose of ascertaining the net weight of the cargo. The
port area was windy, certain portions of the route to the
warehouse were sandy and the weather was variable, raining
occasionally while the discharge was in progress. The
petitioner's warehouse was made of corrugated galvanized iron
(GI) sheets, with an opening at the front where the dump trucks
entered and unloaded the fertilizer on the warehouse floor.
Tarpaulins and GI sheets were placed in-between and alongside
the trucks to contain spillages of the ferilizer.

It took eleven (11) days for PPI to unload the cargo, from 5 July
to 18 July 1974 (except July 12th, 14th and 18th). A private
marine and cargo surveyor, Cargo Superintendents Company
Inc. (CSCI), was hired by PPI to determine the "outturn" of the
cargo shipped, by taking draft readings of the vessel prior to
and after discharge. 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. The same
results were contained in a Certificate of Shortage/Damaged
Cargo dated 18 July 1974 prepared by PPI which showed that
the cargo delivered was indeed short of 94.839 M/T and about
23 M/T were rendered unfit for commerce, having been polluted
with sand, rust and dirt.

Consequently, PPI sent a claim letter dated 18 December 1974

to Soriamont Steamship Agencies (SSA), the resident agent of
the carrier, KKKK, for P245,969.31 representing the cost of the
alleged shortage in the goods shipped and the diminution in
value of that portion said to have been contaminated with dirt.

Respondent SSA explained that they were not able to respond

to the consignee's claim for payment because, according to
them, what they received was just a request for shortlanded
certificate and not a formal claim, and that this "request" was
denied by them because they "had nothing to do with the
discharge of the shipment." Hence, on 18 July 1975, PPI filed an
action for damages with the Court of First Instance of Manila.

The 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.

The trial court however sustained the claim of the plaintiff

against the defendant carrier for the value of the goods lost or
damaged.

On appeal, respondent Court of Appeals reversed the lower

court and absolved the carrier from liability for the value of the
cargo that was lost or damaged. Relying on the 1968 case of
Home Insurance Co. v. American Steamship Agencies, Inc., the
appellate court ruled that the cargo vessel M/V "Sun Plum"
owned by private respondent KKKK was a private carrier and
not a common carrier by reason of the time charterer-party.
Accordingly, the Civil Code provisions on common carriers which
set forth a presumption of negligence do not find application in
the case at bar.

Issue:
W/N a charter-party between a shipowner and a charterer
transform a common carrier into a private one as to negate the

16

TRANSPO DIGESTS 3-D 2014-2015

civil law presumption of negligence in case of loss or damage to

its cargo?

Ruling:
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 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 therefore imperative that a public carrier shall remain as

such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited
to the ship only, as in the case of a time-charter or voyagecharter. 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.

In an action for recovery of damages against a common carrier

on the goods shipped, the shipper or consignee should first

prove the fact of shipment and its consequent loss or damage

while the same was in the possession, actual or constructive, of
the carrier. Thereafter, the burden of proof shifts to respondent
to prove that he has exercised extraordinary diligence required
by law or that the loss, damage or deterioration of the cargo
was due to fortuitous event, or some other circumstances
inconsistent with its liability.

Although it is considered a common carrier, respondent has

sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence.

The master of the carrying vessel, Captain Lee Tae Bo, in his
deposition taken on 19 April 1977 before the Philippine Consul
and Legal Attache in the Philippine Embassy in Tokyo, Japan,
testified that before the fertilizer was loaded, the four (4)
hatches of the vessel were cleaned, dried and fumigated. After
completing the loading of the cargo in bulk in the ship's holds,
the steel pontoon hatches were closed and sealed with iron lids,
then covered with three (3) layers of serviceable tarpaulins
which were tied with steel bonds. The hatches remained close
and tightly sealed while the ship was in transit as the weight of
the steel covers made it impossible for a person to open without
the use of the ship's boom.

It was also shown during the trial that the hull of the vessel was
in good condition, foreclosing the possibility of spillage of the
cargo into the sea or seepage of water inside the hull of the
vessel. When M/V "Sun Plum" docked at its berthing place,
representatives of the consignee boarded, and in the presence
of a representative of the shipowner, the foreman, the
stevedores, and a cargo surveyor representing CSCI, opened the
hatches and inspected the condition of the hull of the vessel.
The stevedores unloaded the cargo under the watchful eyes of
the shipmates who were overseeing the whole operation on
rotation basis.

TRANSPO DIGESTS 3-D 2014-2015

17

Verily, the 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.

carriers; Mere proof of delivery of goods in good order to a

carrier and the subsequent arrival of the same goods at the
place of destination in bad order makes for a prima facie case
against the carrier.
Same; Same; Same; Code of Commerce; It may logically
follow that a person without license to navigate lacks not just
the skill to do so but also the utmost familiarity with the usual
and safe routes taken by seasoned and legally authorized ones.

219. Coastwise Lighterage Corp. v. Court of Appeals 245

SCRA 796

Doctrine:
Contract of Affreightment vs Demise; Common Carrier:
Under the demise or bareboat charter of the vessel, the
charterer will generally be regarded as the owner for the
voyage or service stipulated. The charterer mans the vessel
with his own people and becomes the owner pro hac vice,
subject to liability to others for damages caused by negligence.
To create a demise, the owner of a vessel must completely and
exclusively relinquish possession, command and navigation
thereof to the charterer, anything short of such a complete
transfer is a contract of affreightment (time or voyage charter
party) or not a charter party at all. On the other hand a contract
of affreightment is one in which the owner of the vessel leases
part or all of its space to haul goods for others. It is a contract
for special service to be rendered by the owner of the vessel
and under such contract the general owner retains the
possession, command and navigation of the ship, the charterer
or freighter merely having use of the space in the vessel in
return for his payment of the charter hire.
In a contract of affreightment a common carrier is not
converted into a private carrier but remains as a common
carrier and still liable as such. Coastwise Lighterage, by the
contract of affreightment, was not converted into a private
carrier, but remained a common carrier and was still liable as
such.
Same; Evidence; Presumption of negligence of common

18

TRANSPO DIGESTS 3-D 2014-2015

Facts:
Pag-asa Sales, Inc. entered into a contract to transport molasses
from the province of Negros to Manila with Coastwise
Lighterage Corporation (Coastwise), using the latters dumb
barges. The barges were towed in tandem by the tugboat MT
Marica, which is likewise owned by Coastwise.

Upon reaching Manila Bay, one of the barges struck an unknown

sunken object. The forward buoyancy compartment was
damaged, and water gushed in through a hole. The molasses at
the cargo tanks were contaminated and rendered unfit for the
use it was intended. This prompted the consignee, Pag-asa
Sales, Inc. to reject the shipment of molasses as a total loss.
Thereafter, Pag-asa Sales, Inc. filed a formal claim with the
insurer of its lost cargo, herein private respondent, Philippine
General Insurance Company (PhilGen) and against the carrier

Issue:
W/N Coastwise Lighterage was transformed into a private
carrier, by virtue of the contract of affreightment which it
entered into with the consignee, Pag-asa Sales, Inc. NO. If it
were in fact transformed into a private carrier, W/N it exercise
the ordinary diligence to which a private carrier is in turn bound.
NO.

Held:
The charter party contract is one of affreightment over the
whole vessel, rather than a demise. As such, the liability of the
shipowner for acts or negligence of its captain and crew, would
remain in the absence of stipulation. The distinction between
the two kinds of charter parties (i.e. bareboat or demise and
contract of affreightment) is more clearly set out in the case of
Puromines, Inc. vs. CA: Under the demise or bareboat charter
of the vessel, the charterer will generally be regarded as the
owner for the voyage or service stipulated. The charterer mans
the vessel with his own people and becomes the owner pro hac
vice, subject to liability to others for damages caused by
negligence. To create a demise, the owner of a vessel must
completely and exclusively relinquish possession, command and
navigation thereof to the charterer, anything short of such a
complete transfer is a contract of affreightment (time or voyage
charter party) or not a charter party at all. On the other hand a
contract of affreightment is one in which the owner of the vessel
leases part or all of its space to haul goods for others. It is a
contract for special service to be rendered by the owner of the
vessel and under such contract the general owner retains the
possession, command and navigation of the ship, the charterer
or freighter merely having use of the space in the vessel in
return for his payment of the charter hire. An owner who retains
possession of the ship though the hold is the property of the
charterer, remains liable as carrier and must answer for any
breach of duty as to the care, loading and unloading of the
cargo.

Although a charter party may transform a common carrier into a

private one, the same however is not true in a contract of
affreightment on account of the aforementioned distinctions
between the two. Petitioner admits that the contract it entered
into with the consignee was one of affreightment. Pag-asa
Sales, Inc. only leased three of petitioners vessels, in order to
carry cargo from one point to another, but the possession,
command and navigation of the vessels remained with

petitioner Coastwise Lighterage. Coastwise Lighterage, by the

contract of affreightment, was not converted into a private
carrier, but remained a common carrier and was still liable as
such. The law and jurisprudence on common carriers both hold
that the mere proof of delivery of goods in good order to a
carrier and the subsequent arrival of the same goods at the
place of destination in bad order makes for a prima facie case
against the carrier. It follows then that the presumption of
negligence that attaches to common carriers, once the goods it
transports are lost, destroyed or deteriorated, applies to the
petitioner.

This presumption, which is overcome only by proof of the

exercise of extraordinary diligence, remained unrebutted in this
case. The records show that the damage to the barge which
carried the cargo of molasses was caused by its hitting an
unknown sunken object as it was heading for Pier 18. The object
turned out to be a submerged derelict vessel. Far from having
rendered service with the greatest skill and utmost foresight,
and being free from fault, the carrier was culpably remiss in the
observance of its duties. Jesus R. Constantino, the patron of the
vessel admitted that he was not licensed. Clearly, petitioner
Coastwise Lighterages embarking on a voyage with an
unlicensed patron violates this rule. It cannot safely claim to
have exercised extraordinary diligence, by placing a person
whose navigational skills are questionable, at the helm of the
vessel which eventually met the fateful accident. It may also
logically, follow that a person without license to navigate, lacks
not just the skill to do so, but also the utmost familiarity with
the usual and safe routes taken by seasoned and legally
authorized ones. Had the patron been licensed, he could be
presumed to have both the skill and the knowledge that would
have prevented the vessels hitting the sunken derelict ship that
lay on their way to Pier 18. As a common carrier, petitioner is
liable for breach of the contract of carriage, having failed to
overcome the presumption of negligence with the loss and
destruction of goods it transported, by proof of its exercise of
extraordinary diligence.

TRANSPO DIGESTS 3-D 2014-2015

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TRANSPO DIGESTS 3-D 2014-2015