INTERNATIONAL HARVESTER v ARAGON contract), making the true criterion a maritime service or a

maritime transaction (NOT where the contract is made and is to

[1949] be executed = locality test).

Concept of Admiralty; Jurisdiction over Admiralty cases
FACTS:
Manila Terminal Co. Inc. is in charge of the custody and
delivery to the respective owners of cargoes discharged
at the Government piers in Manila.
Petitioner International Harvester Company (IHC) is the
agent in the Philippines of the vessel S/S Belle of the Sea.
Admiralty has jurisdiction of a proceeding in rem or in personam
for the breach of a contract of affreightment, whether evidenced
by a bill of lading or a charter party. And a typical controversy over
contracts of affreightment is a suit for recovery of loss or damage
cargo.
Hence, under Sec 56(4) of Act No 136 of the Philippine
Commission, reproduced in Sec 43(d) of RA 296, it is the CFI who
has original jurisdiction over admiralty or maritime and not the
municipal courts.

S/S Belle of the Sea arrived in Manila and discharged its

cargo at the Government piers under the supervision
and custody of Manila Terminal. However, the cargo
(value of P200) of respondent Yaras & Company Far East
was not delivered to it.

Because of this, respondent Yaras filed a complaint in

the Municipal Court of Manila against Manila Terminal
and IHC for the lost cargo due to the alleged negligence
of both of them.

Petitioner IHC filed a motion to dismiss on the ground

that the Municipal Court of Manila had no jurisdiction
over the case because the action involves admiralty or
maritime, thus it should be filed with the CFI of Manila.

Municipal Court denied the motion.

Respondent Yaras contends that admiralty jurisdiction is

not involved since the contract in question was made
upon land and to be terminated upon land (English
Rule).

ISSUE:

WON the Municipal Court of Manila had jurisdiction over cases

involving admiralty or maritime.

HELD:

NO. SHOULD BE FILED WITH THE CFI OF MANILA.

Admiralty has jurisdiction over all maritime contracts, in whatever

form, wherever they were executed or are to be performed, but
not over non-maritime contracts.

Whether or not a contract is maritime depends on the subject

matter of the contract (i.e. the nature and character of the
1
 LOPEZ v DURUELO
[1928]
Vessels Meaning
FACTS:
Plaintiff Augusto Lopez wanted to board the steamer
San Jacinto in Negros Occidental in order to go to
Iloilo.
San Jacinto was in the anchoring-ground of the port of
Silay in Negros some half a mile distant from the port.
A motor boat Jison was then engaged in conveying
passengers and luggage back and forth from the landing
to boats at anchor. This was owned and operated by
defendant Albino Jison with Juan Duruelo as patron. The
engineer aboard was one Rodolin Duruelo, who was at
time time only 16 years old and was said to have been
on the third day of his apprenticeship.
Plaintiff rode Jison in order to go to San Jacinto.
However, when the motor boat approached the San
Jacinto, it came too near to the stern of the ship, thus
the blades of the propeller struck the motor boat and
sank it at once.
Plaintiff was thrown into the water and the revolving
blades inflicted various injuries upon him.
Plaintiff then filed, with the CFI of Negros Occidental, an
action to recover damages for personal injuries due to
the negligence and lack of skill of the defendants.
intended are those of sea going vessels. It cannot be applied to
small boats engaged in river and bay traffic.
VESSELS (Spanish buque, nave) refer to those which are
licensed to engage in maritime commerce, which are regulated by
Book III of the Code of Commerce. They refer solely and
exclusively to merchant ships. And are run by masters having
special training, with the elaborate apparatus of crew and
equipment indicated in Code.
This does not refer to other vessels of a minor nature not engaged
in maritime commerce (which is governed, as to their liability to
passengers, by the provisions of the Civil Code or other
appropriate special provisions of law). They are not referring to
pleasure craft, yachts, pontoons, health service and harbor police
vessels, floating storehouses, warships, coast guard vessels,
fishing vessels, towboats, and other craft destined for other uses,
such as those small craft which are engaged in transporting
passengers and baggage from ship to shore.
In this case, a passenger on a boat like the Jison, is not required to
make protest a as a condition precedent to his right of action for
the injury suffered by him in the collision described in the
complaint. Hence, Art 935 does not apply.
And 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 were of such a nature as to
excuse protest. An individual who has suffered a compound
fracture of the femur and received other physical injuries
sufficient to keep him in the hospital for months, cannot be
supposed to have been in a condition to make protest within 24
hours of such occurrence.

The defendants filed a demurrer stating that the

complaint does not allege that plaintiff made a protest
within 24 hrs after the incident to the competent
authority at the port. Thus, under art 835 of the Code of
Commerce, the plaintiff has shown no cause of action.

ISSUE:

WON a protest is required for the maintenance of plaintiffs cause

of action

HELD:

NO.

The article relied upon by the defendants is found in the section

dealing with collisions, and the context shows the collisions

2
 ARROYO v YU
[1930]
Vessels Significance of registration of transactions affecting
vessels
FACTS:
This case involves the mortgage of 2 lorchas: China and
Cuylim, which were owned by Lim Ponzo Navigation Co.
LIM obtained a loan from J.M. Po Pauco and executed a
mortgaged (1st mortgage) on the two lorchas to secure
the loan (P20k). This was registered in the register of
deeds in Iloilo 2 days after the execution of the
mortgage.
PAUCO executed a mortgage (2nd mortgage) on Nov. 28,
1919 in favor of PNB in order to secure a loan (P50k).
This was registered also in the register of deeds one day
later. The credit of PAUCO was increased to P131,994.
This was recorded only in the office of the collector of
customs of Iloilo on March 5, 1929.
Meanwhile, Maria Corazon Yu de Sane secured a
judgment against LIM for 7k, she was able to secure a
writ of attachment and an execution on Dec. 6, 1928.
The sheriff of Iloilo instituted an action with the CFI of
Iloilo to compel these parties with claims to the lorchas
to interplead with one another to determine their
conflicting rights.
CFI ruled in favor of PNB
On appeal, MARIA contends that she has preference on
the two lorchas between herself and PNB since she was
able to secure a writ of attachment and an execution on
1928.
ISSUE:
Whether MARIA should have preference over the lorchas as
against PNB
HELD:
NO.
The registration of vessels is now governed by the Administrative
Code. Section 1171 thereof 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
documents 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, in 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."
It is clear that section 1171 of the Administrative Code has
modified the provisions of the Chattel Mortgage Law, Act No.
1508, particularly section 4 thereof. It is now not necessary for a
chattel mortgage of a vessel to be noted in the registry of the
register of deeds. On the other hand, 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 (Rubiso and Gelito
i>s. Rivera [1917], 37 Phil., 72; 2 Araneta, Administrative Code,
note to section 1171). The law as now existing is 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 (37 Cyc, 54).
Consolidating the facts, we find the mortgage of the Philippine
National Bank dated November 28, 1919, but not recorded in the
office of the collector of customs until March 5, 1929. The
execution sued out by Maria Corazon Yu de Sane was dated
December 6, 1928, and noted at the port of entry two days prior
thereto. Under these facts, the execution holder would have a
prior right over the un recorded mortgage. HOWEVER, in the
decision of the trial court, we find an explanation of the delay
which appears to have been proved at the trial, and which we
must accept since there is nothing in the record to the contrary.
His Honor states that the fact that the mortgage was not
registered in the office of the collector of customs of Iloilo until
March, 5, 1929, was because of the doubts entertained by the
collector relative to the applicability of Act No. 3324 to a mortgage
executed in 1918 in favor of a Chinese subject. 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.
We rule that PNB has a superior claim in the amount of P20,000,
the amount of the mortgage of PAUCO which was transferred to
the Philippine National Bank.
3
 WING KEE v BARK MONONHAELA
[1923]
Persons participating in Maritime Commerce Shipowners and
shipagents Responsibilities and liabilities
FACTS:
The plaintiff in this case, Wing Kee Compradoring
Company, seeks to recover from the defendants,
principally the Admiral Line, as agent for the Bark
Monongahela, the sum of P17,675.64, with interest and
costs, on account of goods, wares, and merchandise sold
and delivered by the plaintiff to the defendants for the
use of the crew of the Bark Monongahela.
The exhibits of record show that beginning with March
16, 1921, and ending with August 16, 1921, various
supplies were furnished to Bark Monongahela by Wing
Kee Compradoring Company. Most of the bills for these
goods are made out against the "Admiral Line, S. S.
Monongahela" All are countersigned by the master and
the first steward.
And In the Manila Daily Bulletin for August 2, 1921,
appeared the following: "NoticeBark Monongahela
The undersigned hereby give notice that they are not
responsible in any manner whatsoever for any
indebtedness incurred by the Bark Monongahela, its
Master and/or CrewThe Admiral Line." The trial judge
found as a fact that on or before August 4, 1921, the
Admiral Line had ceased to act as agent for the
Monongahela. Nevertheless, supplies were furnished
the Monongahela after these dates by the plaintiff.
names, but really for the account of their principal, the seller has
an option to look to either for. payment, unless (1) he trusted the
agent exclusively; or (2) by the usage and understanding of the
business the agent only is held; or (3) unless the special
circumstances of the case show that only the agent was intended
to be bound and the seller knew it or was chargeable with
knowledge of it. Although the English rule that, where the agent
buys in his own name for the account of a foreign principal, the
agent only is bound appears not to have been followed in the
United States, yet the general doctrine is the same, that the seller
has an option to resort to either.
However, Admiral Line now contends that the agency has
ceased, hence an action cannot be brought against it.
SC NO.
To our minds this is a rather far-fetched argument, for, pursued to
its logical conclusion, every agent for a vessel could thus avoid
responsibility pursuant to article 586 of the Code of Commerce,
by giving up its agency when threatened with suit to enforce the
obligations of third parties. Moreover, the bills were presented
when the Admiral Line was yet the agent.
Hence, Admiral Line, as agent for the Bark Monongahela, is liable
to the plaintiff for supplies furnished the Monongahela between
March 16, 1921 and August 2, 1921, but is not responsible for
supplies furnished after that date. The mathematical additions
show that the debt of the Admiral Line to the plaintiff amounts to
P16,526.29.

TC dismissed the case

ISSUE:

WON Admiral Line is liable as agent against Plaintiff

HELD:

YES.

Art 586 of the Code of Commerce provides:

"The owner of a vessel and the agent shall be civilly liable

for the acts of the captain and for the obligations
contracted by the latter to repair, equip, and provision
the vessel, provided the creditor proves that the amount
claimed was invested therein.

"By agent is understood the person intrusted with the

provisioning of a vessel, or who represents her in the
port in which she happens to be."

. By the general law of the United States, as well as of England and

of Europe, it has been held, that when the agents buy in their own

4
 NATIONAL DEVELOPMENT COMPANY v CA
[1988]
Persons participating in Maritime Commerce Shipowners and
shipagents Responsibilities and liabilities
FACTS:
National Development Company (NDC) and Maritime
Company of the Philippines (MCP) entered into a
memorandum agreement where NDC as the first
preferred mortgagee of three ocean going vessels
including one with the name Dona Nati. Pursuant to
this, NDC appointed MCP as its agent to manage and
operate said vessel.
The E. Philipp Corp of New York and Kyokuto Boekui
Kaisa Ltd of Tokyo both loaded and consigned their
goods on the Dona Nati going to Manila.
However, en route to Manila, the Dona Nati figured in a
collision with a Japanese vessel.
Thus, Development Insurance and Surety Corporation,
as insurer, paid to both a total amount of P364, 915
representing the lost or damages cargoes.
Hence, Dev Insurance filed an action to recover such
amount with the CFI of Manila against NDC and MCP.
MCP filed its answer with counterclaim and cross-claim
against NDC
CFI found NDC and MCP jointly and severally liable to
Dev Insurance; and granted the cross-claim of MCP
against NDC
ISSUE:
WON NDC and MCP are liable to Development Insurance for the
lost or damaged cargoes
HELD:
YES.
1. NDC argued that what should be applied is the Carriage
of Goods by Sea Act and not the Civil Code or the Code
of Commerce. Under the CGSA, NDC is relieved from
liability for the loss or damage resulting from the
negligence of the master, mariner, or servants of the
carrier, and in this case, both vessels were at fault.
SC Civil Code / Code of Commerce
The Court citing Eastern Shipping Lines v IAC said that "the law of
the country to which the goods are to be transported governs the
liability of the common carrier in case of their loss, destruction or
deterioration" (Article 1753, Civil Code). Thus, the rule was spe-
cifically laid down that for cargoes transported from Japan to the
Philippines, the liability of the carrier is governed primarily by the
Civil Code and in all matters not regulated by said Code, the rights
and obligations of common carrier shall be governed by the Code
of Commerce and by special laws (Article 1766, Civil Code). Hence,
the Carriage of Goods by Sea Act, a special law, is merely
suppletory to the provisions of the Civil Code.
In the case at bar, it has been established that the goods in
question are transported from San Francisco, California and
Tokyo, Japan to the Philippines and that they were lost or
damaged due to a collision which was found to have been caused
by the negligence or fault of both captains of the colliding vessels.
Under the above ruling, it is evident that the laws of the
Philippines will apply, and it is immaterial that the collision
actually occurred in foreign waters, such as Ise Bay, Japan.
Civil Code basis
Under Article 1733 of the Civil Code, 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 and for the
safety of the passengers transported by them according
to all circumstances of each case.
Accordingly, under Article 1735 of the same Code, in all
cases other than those mentioned in Article 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.
However, collision falls matters not specifically regulated by the
Civil Code, hence, Arts 826 to 839 of the Code of Commerce, which
deal exclusively with collision of vessels shall also be applied.
More specifically, Article 826 of the Code of Commerce provides
that where collision is imputable to the personnel of a vessel, the
owner of the vessel at fault, shall indemnify the losses and
damages incurred after an expert appraisal. But more in point to
the instant case is Article 827 of the same Code, which provides
that if the collision is imputable to both vessels, each one shall
suffer its own damages and both shall be solidarily responsible for
the losses and damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce,
particularly Articles 826 to 839, the shipowner or carrier, is not
5
exempt from liability for damages arising from collision due to the
fault or negligence of the captain. Primary liability is imposed on
the shipowner or carrier in recognition of the universally accepted
doctrine that the shipmaster or captain is merely the
representative of the owner who has the actual or constructive
control over the conduct of the voyage (Yueng Sheng Exchange
and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).

2. MCP contends that it cannot be liable solidarily with

NDC because it is merely the manager and operator of
the vessel Dona Nati, not a ship agent. As the general
managing agent, according to MCP, it can only be liable
if it acted in excess of its authority.

As shown in the Memorandum Agreement entered into by both

NDC and MCP, NDC appointed MCP as agent. This term is broad
enough to include the concept of ship-agent in Maritime Law. In
fact, MCP was even conferred all the powers of the owner of the
vessel, including the power to contract in the name of the NDC.

It is well settled that both the owner and agent of the offending
vessel are liable for the damage done where both are impleaded
(Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281 [1906]);
that in case of collision, both the owner and the agent are civilly
responsible for the acts of the captain (Yueng Sheng Exchange and
Trading Co. v. Urrutia & Co., supra citing Article 586 of the Code
of Commerce; Standard Oil Co. of New YOrk v. Lopez Castelo, 42
Phil. 256, 262 [1921]);

DISPOSITIVE PORTION:

PREMISES CONSIDERED, the subject petitions are DENIED for lack

of merit and the assailed decision of the respondent Appellate
Court is AFFIRMED.