Lopez vs.

Duruelo
52 Phil 229

Facts: On February 10, 1927, plaintiff Augusto Lopez was desirous of embarking upon the interisland steamer San
Jacinto in order to go to Cebu, the plaintiff embarked at the landing in the motorboat Jison which was engaged in
conveying passengers and luggage back and forth from the landing to the boats at anchor.

As the motorboat approached 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 strucked the motorboat and sank it
at once. As it sank, the plaintiff was thrown into the water against the propeller, and the revolving blades inflicted
various injuries upon him. The plaintiff was hospitalized. He filed a complaint seeking to recover damages from the
defendant. The defendant however alleged that the complaint does not have a right of action, a demurrer was
submitted directed to the fact that the complaint does not allege that the protest had been presented by the
plaintiff, within twenty-four hours after the occurrence to the competent authority at the port where the accident
occurred as provided for Article 835 of the Code of Commerce.

Issue: Whether the motorboat Jison is a vessel provided for by Article 835 of the Code of Commerce?

Held: The word vessel as used in the third section of tile IV, Book III of the Code of Commerce, dealing with
collisions, does not include all ships, craft or floating structures of any kind without limitation. The said section
does not apply to minor craft engaged in a river and bay traffic.Therefore, a passenger on 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 described in the complaint.Article 835 of the Code of Commerce does not apply.

RUBISO VS. RIVERA

(27PHIL72) G.R. No. L- 11407 October 30, 1917

Facts: The counsel of plaintiff brought a suit alleging that his clients were the owners of the pilot boat named
Valentine, which has been in bad condition and on the date of the complaint, was stranded in the place called
Tingly, of the municipality of Battings. The defendant Rivera took charge or took possession of the said boat
without the knowledge or consent of the plaintiff and refused to deliver it to them, under the claim that he was the
owner thereof. The refusal on the part of the defendant has caused the plaintiff damages because they were unable
to derive profit from the voyages for which the said pilot boat was customarily used. The defendant, on the other
hand, alleged that they purchased the subject pilot boat. The plaintiff alleged that the sale on behalf of the
defendant Rivera was prior to that made at public auction to Rubio, but the registration of this latter sale was prior
to the sale made to the defendant.

Issue: Whether or not, the plaintiff still has the better right over the subject vessel?

Held: Under the Code of Commerce, Art 573 provides:

Merchant vessels constitute property that 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.

The requisite of registration in the registry of the purchase of a vessel is necessary and indispensable in order that
the purchaser’s rights may be maintained against a claim filed by third person. It is undeniable that Rivera’s right
cannot prevail over those acquired by Rubiso in the ownership of the pilot boat, thought the latter’s acquisition of
the vessel at public auction was subsequent to its purchase by the defendant, Rivera.

RUBISO VS RIVERA

FACTS:
Rubiso filed a complaint against Rivera for the recovery of a pilot boat. He
alleged that he is the rightful owner of a pilot boat, which was stranded and recovered by Rivera. The latter
refused to return the said boat as he alleged too that he was the owner thereof. It was known that the original
owners of the boat had secretly sold the pilot boat to Rivera on an earlier date than the sale in a public auction to
Rubiso. Nonetheless, material is the fact that the entry into the customs registry of the sale of the boat was later
than the recording of the sale to Rubiso.

HELD:
The requisite of registration in the registry, of the purchase of the vessel, is
necessary and indispensable in order that the purchaser’s rights may be
maintained against a third person. Such registration is required both by the Code of Commerce and Act
1900. It is undeniable, ergo, that Rivera doesn’t have a better right than Rubiso over the pilot boat.

Ships and vessels, whether moved by steam or by sail, partake, to a certain extent of the nature and
conditions of real property, on account of their value and importance in world commerce; and for this, the
provisions of the Code of Commerce are nearly identical with Article 1473 of the CC.

[G.R. No. 128661. August 8, 2000]

PHILIPPINE NATIONAL BANK/NATIONAL INVESTMENT DEVELOPMENT
CORPORATION, petitioners, vs. THE COURT OF APPEALS, CHINA BANKING CORPORATION, respondents.

Facts: To finance the acquisition of 7 shipping vessels, the Philippine International Shipping Corporation
(PISC) applied for and was granted by National Investment Development Corporation (NIDC) guaranty
accomodations. As security for these guaranty accomodations, PISC executed chattel mortgages on the
vessels to be acquired by it. Meanwhile, PISC entered into a contract with Hong Kong United Dockyards, Ltd. for the
repair and conversion of one of the vessels, M/V Asean Liberty. The Central Bank of the Phils. authorized PISC to
open with China Banking Corporation (CBC) a standby letter of credit for S$545,000 in favor of Citibank, N.A. to
cover the repair and partial conversion of the vessel M/V Asean Liberty. PISC executed an Application and
Agreement for Commercial Letter of Credit for US$545,000 with CBC in favor of Citibank. CBC then issued its
Irrevocable Standby Letter of Credit for US$545,000 in favor of
Citibank for the account of PISC. PISC executed a promissory note for US$545,000 in favor of Citibank
pursuant to the Loan Agreement between PISC and Citibank. Upon failure of PISC to fulfill its obligations,
Citibank sent CBC a letter drawing on the Letter of Credit. CBC then instructed its correspondent Irving
Trust Co. to pay to Citibank the amount of US$242,225. Subsequently, for failure of PISC to settle its obligations
under the guaranty accommodations, the Philippine National Bank (PNB) conducted an auction sale of the
mortgaged vessels. NIDC emerged as the highest bidder in these auctions. PISC, claiming that the foreclosure sale of
its mortgaged vessels was illegal and irregular, instituted a civil case for the annulment of the foreclosure and
auction sale. CBC filed a complaint in intervention for recovery upon a maritime lien against the proceeds of the
sale of the foreclosed vessels.

Issue: Whether or not CBC’s claim as evidenced by its Irrevocable Letter of Credit is in the nature of a maritime lien
under the provisions of P.D. No. 1521; and if so, whether or not said maritime lien is preferred over the mortgage
lien of PNB/NIDC on the foreclosed vessel M/V Asean Liberty

Held: Under the provisions of P.D. No. 1521, any person furnishing repairs, supplies, or other necessities to a vessel
on credit will have a maritime lien. Such maritime lien, if it arose prior to the recording of a preferred mortgage
lien, shall have priority over the said mortgage lien. In this case, it was Hongkong United Dockyards, Ltd. which
originally possessed a maritime lien over the vessel M/V Asean Liberty by virtue of its repair of the said vessel on
credit. CBC, however, stands as guarantor of the loan extended by Citibank to PISC. It was Citibank which advanced
the money to PISC. It was only upon the failure of PISC to fulfill its obligations under its promissory note to
Citibank that CBC was called upon by Citibank to exercise its duties under the Standby Letter of Credit. The
applicable law, which is the Shipping Mortgage Decree of 1978, was patterned closely after the U.S. Ship Mortgage
Act of 1920. Being of foreign origin, the provisions of the Ship Mortgage Decree of 1978 may thus be construed
with the aid of foreign jurisprudence. Under American jurisprudence, “furnishing money to a master in good faith
to obtain repairs or supplies or to remove liens, in order to forward the voyage of the vessel, raises a lien just as
though the things for which money was obtained to pay for had been furnished by the lender”. This is in accord
with Art5 1302 of the Civil Code which provides that there is legal subrogation “when a third person, not
interested in the fulfillment of the obligation, pays with the express or tacit approval of the debtor”. In this case, the
amount for the repair of vessel M/V Asean Liberty was advanced by Citibank and
was used for the purpose of paying off the original maritime lienor, Hongkong United Dockyards, Ltd. As a person
not interested in the fulfillment of the obligation between PISC and Hongkong United Dockyards, Ltd., Citibank was
subrogated to the rights of Hongkong United Dockyards, Ltd. as maritime lienor over the vessel. CBC, as guarantor,
was itself subrogated to all the rights of Citibank as against PISC, the latter’s debtor. Art. 2067 of the civil Code
provides that “the guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had
against the debtor”. When CBC honored its contract of guaranty with Citibank on March 30, 1983, it also acquired
by subrogation the maritime lien over the vessel which attached to it on March 12, 1979 in favor of Hongkong
United Drydocks, Ltd. The maritime lien of CBC thus arose prior to the recording of PNB/NIDC’s mortgage on
September 25, 1979. As such, the said maritime lien has priority over the said mortgage lien.

CRESCENT PETROLEUM, LTD., Petitioner, vs. M/V "LOK MAHESHWARI," THE SHIPPING CORPORATION OF
INDIA, and PORTSERV LIMITED
G.R. No. 155014 November 11, 2005
FACTS:
Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing vessel of Indian registry that is owned by
respondent Shipping Corporation of India (SCI), a corporation organized and existing under the laws of India and
principally owned by the Government of India. It was time-chartered by respondent SCI to Halla Merchant Marine
Co. Ltd. (Halla), a South Korean company. Halla, in turn, sub-chartered the Vessel through a time charter to
Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to Portserv Limited (Portserv).
Both Transmar and Portserv are corporations organized and existing under the laws of Canada.
On or about November 1, 1995, Portserv requested petitioner Crescent Petroleum, Ltd. (Crescent), a
corporation organized and existing under the laws of Canada that is engaged in the business of selling petroleum
and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the
Vessel. Petitioner Crescent granted and confirmed the request through an advice via facsimile dated November 2,
1995. As security for the payment of the bunker fuels and related services, petitioner Crescent received two (2)
checks in the amounts of US$100,000.00 and US$200,000.00. Thus, petitioner Crescent contracted with its
supplier, Marine Petrobulk Limited (Marine Petrobulk), another Canadian corporation, for the physical delivery of
the bunker fuels to the Vessel.
On or about November 4, 1995, Marine Petrobulk delivered the bunker fuels amounting to US$103,544
inclusive of barging and demurrage charges to the Vessel at the port of Pioneer Grain, Vancouver, Canada. The
Chief Engineer Officer of the Vessel duly acknowledged and received the delivery receipt. Marine Petrobulk issued
an invoice to petitioner Crescent for the US$101,400.00 worth of the bunker fuels. Petitioner Crescent issued a
check for the same amount in favor of Marine Petrobulk, which check was duly encashed.
Having paid Marine Petrobulk, petitioner Crescent issued a revised invoice dated November 21, 1995 to
"Portserv Limited, and/or the Master, and/or Owners, and/or Operators, and/or Charterers of M/V ‘Lok
Maheshwari’" in the amount of US$103,544.00 with instruction to remit the amount on or before December 1,
1995. The period lapsed and several demands were made but no payment was received. Also, the checks issued to
petitioner Crescent as security for the payment of the bunker fuels were dishonored for insufficiency of funds. As a
consequence, petitioner Crescent incurred additional expenses of US$8,572.61 for interest, tracking fees, and legal
fees.
On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent instituted before
the RTC of Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of
preliminary attachment" against respondents Vessel and SCI, Portserv and/or Transmar.
On May 3, 1996, the trial court issued a writ of attachment against the Vessel with bond at P2,710,000.00.
Petitioner Crescent withdrew its prayer for a temporary restraining order and posted the required bond.
On May 18, 1996, summonses were served to respondents Vessel and SCI, and Portserv and/or Transmar
through the Master of the Vessel. On May 28, 1996, respondents Vessel and SCI, through Pioneer Insurance and
Surety Corporation (Pioneer), filed an urgent ex-parte motion to approve Pioneer’s letter of undertaking, to
consider it as counter-bond and to discharge the attachment. On May 29, 1996, the trial court granted the motion;
thus, the letter of undertaking was approved as counter-bond to discharge the attachment.
ISSUE:
Whether the Philippine court has or will exercise jurisdiction and entitled to maritime lien under our laws on
foreign vessel docked on Philippine port and supplies furnished to a vessel in a foreign port?
RULING:
In a suit to establish and enforce a maritime lien for supplies furnished to a vessel in a foreign port,
whether such lien exists, or whether the court has or will exercise jurisdiction, depends on the law of the country
where the supplies were furnished, which must be pleaded and proved.
The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such single-factor methodologies as the
law of the place of supply. The multiple-contact test to determine, in the absence of a specific Congressional
directive as to the statute’s reach, which jurisdiction’s law should be applied. The following factors were
considered: (1) place of the wrongful act; (2) law of the flag; (3) allegiance or domicile of the injured; (4) allegiance
of the defendant shipowner; (5) place of contract; (6) inaccessibility of foreign forum; and (7) law of the forum.
This is applicable not only to personal injury claims arising under the Jones Act but to all matters arising under
maritime law in general
The Court cannot sustain petitioner Crescent’s insistence on the application of P.D. No. 1521 or the Ship
Mortgage Decree of 1978 and hold that a maritime lien exists. Out of the seven basic factors listed in the case of
Lauritzen, Philippine law only falls under one – the law of the forum. All other elements are foreign – Canada is the
place of the wrongful act, of the allegiance or domicile of the injured and the place of contract; India is the law of
the flag and the allegiance of the defendant shipowner. Applying P.D. No. 1521,a maritime lien exists would not
promote the public policy behind the enactment of the law to develop the domestic shipping industry. Opening up
our courts to foreign suppliers by granting them a maritime lien under our laws even if they are not entitled to a
maritime lien under their laws will encourage forum shopping. In light of the interests of the various foreign
elements involved, it is clear that Canada has the most significant interest in this dispute. The injured party is a
Canadian corporation, the sub-charterer which placed the orders for the supplies is also Canadian, the entity which
physically delivered the bunker fuels is in Canada, the place of contracting and negotiation is in Canada, and the
supplies were delivered in Canada.

GR No. 163156, December 10, 2008

NEGROS NAVIGATION CO. vs. CA

Facts: Private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin tickets
for his wife, daughter, son and niece who were going to Bacolod City to attend a family reunion boarding the Don
Juan. Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil tanker owned by the
Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport Corporation (PNOC/STC). As a
result, the M/V Don Juan sank. Several of her passengers perished in the sea tragedy. The bodies of some of the
victims were found and brought to shore, but the four members of private respondents' families were never found.

Issue: Whether or not the petitioners exercised the extraordinary diligence required?

Held: No. As with the Mecenas case, this Court found petitioner guilty of negligence in (1) allowing or
tolerating the ship captain and crew members in playing mahjong during the voyage, (2) in failing to maintain the
vessel seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry. Also, the duty
to exercise due diligence includes the duty to take passengers or cargoes that are within the carrying capacity of
the vessel.