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CHUA YEK HONG v.

IAC

G.R. No. L74811 December 14, 1988

Facts:
Petitioner filed a Motion for Reconsideration of the Supreme Court’s Decision dated
30 September 1988 affirming the judgment of the Court of Appeals dismissing the complaint against private
respondents and absolving them from any and all liability arising from the loss of 1000 sacks of copra
shipped by petitioner aboard private respondents' vessel. Private respondents filed an opposition thereto.
Petitioner argues that the Supreme Court failed to consider the Trial Court's finding that the loss of the
vessel with its cargo was due to the fault of the ship owner or to the concurring negligence of the ship owner
and the captain, invoking Articles 1733and 1735 of the Civil Code, and that the ruling laid down in
Eastern Shipping Lines vs. IAC, et al . (150 SCRA 464 [1987]) should be made to apply in the instant case.

Issue:
Whether or not petitioner’s Motion for Reconsideration is meritorious.

Ruling:
No. The Appellate Court Decision, however, mentions only the ship captain as having been negligent in the
performance of his duties. For the exception to the limited liability rule (Article 587, Code of Commerce) to
apply, the loss must be due to the fault of the ship owner, or to the concurring negligence of the ship owner
and the captain. As we held, there is nothing in the records showing such negligence.

The invocation by petitioners of Articles 1733 & 1735 of the Civil Code is
misplaced. As was stated in the Decision sought to be reconsidered, while the primary lawgoverning the
instant case is the Civil Code, in all matters not regulated by said Code, the Code of Commerce and other
special laws shall govern. Since the Civil Code contains no provisions regulating liability of ship owners or
agents in the event of total loss or destruction of the vessel, it is the provisions of the Code of Commerce,
particularly Article 587, that governs. Petitioner further contends that the ruling laid down in
Eastern Shipping Lines vs. IAC, et al. should be made to apply in the instant case. That case, however,
involved foreign maritime trade while the present case involves local inter-island shipping.

MONARCH INSURANCE CO., INC vs. COURT OF APPEALS and ABOITIZ SHIPPING CORPORATION
G.R. No. 92735. June 8, 2000

FACTS:
Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers and were
consequently subrogated to their rights, interests and actions against Aboitiz, the cargo carrier. Because
Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz which were consolidated
and jointly tried.

Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to
force majeure or an act of God. Aboitiz was subsequently declared as in default and allowed Monarch and
Tabacalera to present evidence ex-parte.

ISSUE:
Whether or not the doctrine of limited liability applies in the instant case.

HELD:
Yes.
The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence in the
sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that Aboitiz was
concurrently at fault and/or negligent with the ship captain and crew of the M/V P. Aboitiz. [This is in
accordance with the rule that in cases involving the limited liability of shipowners, the initial burden of proof
of negligence or unseaworthiness rests on the claimants. However, once the vessel owner or any party
asserts the right to limit its liability, the burden of proof as to lack of privity or knowledge on its part with
respect to the matter of negligence or unseaworthiness is shifted to it. This burden, Aboitiz had unfortunately
failed to discharge.] That Aboitiz failed to discharge the burden of proving that the unseaworthiness of its
vessel was not due to its fault and/or negligence should not however mean that the limited liability rule will
not be applied to the present cases. The peculiar circumstances here demand that there should be no strict
adherence to procedural rules on evidence lest the just claims of shippers/insurers be frustrated. The rule
on limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation v.
General Accident Fire and Life Assurance Corporation, Ltd.,] promulgated on January 21, 1993, that
claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the
totality of claims against it."

G.R. No. 116940 June 11, 1997


The Phil. American Gen. Insurance Co., Inc. vs. CA and Felman Shipping Lines

Facts:

July 6, 1983 Coca-cola loaded on board MV Asilda, owned and operated by Felman, 7,500 cases of 1-liter
Coca-Cola soft drink bottles to be transported to Zamboanga City to Cebu. The shipment as insured with
Philamgen.

July 7, the vessel sank in Zamboanga del Norte. July 15, cocacola filed a claim with respondent Felman for
recovery of damages. Felman denied thus prompted cocacola to file an insurance claim with Philamgen.
Philamgen later on claimed its right of subrogation against Felman which disclaimed any liability for the
loss.

Philamgen alleged that the sinking and loss were due to the vessel's unseaworthiness, that the vessel was
improperly manned and its officers were grossly negligent. Felman filed a motion to dismiss saying that
there is no right of subrogation in favor of Philamgen was transmitted by the shipper.

RTC dismissed the complaint of Philamgen. CA set aside the dismissal and remanded the case to the lower
court for trial on the merits. Felman filed a petition for certiorari but was denied.

RTC rendered judgment in favor of Felman. it ruled that the vessel was seaworthy when it left the port of
Zamboanga as evidenced by the certificate issued by the Phil. Coast Guard and the ship owner’s surveyor.
Thus, the loss is due to a fortuitous event, in which, no liability should attach unless there is stipulation or
negligence.

On appeal, CA rendered judgment finding the vessel unseaworthy for the cargo for being top-heavy and
the cocacola bottles were also improperly stored on deck. Nonetheless, the CA denied the claim of
Philamgen, saying that Philamgen was not properly subrogated to the rights and interests of the shipper
plus the filing of notice of abandonment had absolved the ship owner from liability under the limited liability
rule.

Issues:

(a) Whether the vessel was seaworthy,

(b) whether limited liability rule should apply and

(c) whether Philamgen was properly subrogated to the rights against Felman.
Ruling:

(a) The vessel was unseaworthy. The proximate cause thru the findings of the Elite Adjusters, Inc., is the
vessel's being top-heavy. Evidence shows that days after the sinking coca-cola bottles were found near the
vicinity of the sinking which would mean that the bottles were in fact stowed on deck which the vessel was
not designed to carry substantial amount of cargo on deck. The inordinate loading of cargo deck resulted
in the decrease of the vessel's metacentric height thus making it unstable.

(b) Art. 587 of the Code of Commerce is not applicable, the agent is liable for the negligent acts of the
captain in the care of the goods. This liability however can be limited through abandonment of the vessel,
its equipment and freightage. Nonetheless, there are exceptions wherein the ship agent could still be held
answerable despite the abandonment, as where the loss or injury was due to the fault of the ship owner
and the captain. The international rule is that the right of abandonment of vessels, as legal limitation of
liability, does not apply to cases where the injury was occasioned by the fault of the ship owner. Felman
was negligent, it cannot therefore escape liability.

(c) Generally, in marine insurance policy, the assured impliedly warrants to the assurer that the vessel is
seaworthy and such warranty is as much a term of the contract as if expressly written on the face of the
policy. However, the implied warranty of seaworthiness can be excluded by terms in writing in the policy of
the clearest language. The marine policy issued by Philamgen to cocacola has dispensed that the
"seaworthiness of the vessel as between the assured and the underwriters in hereby admitted."

The result of the admission of seaworthiness by Philamgen may mean two things: (1) the warranty of
seaworthiness is fulfilled and (2) the risk of unseaworthiness is assumed by the insurance company. This
waiver clause would mean that Philamgen has accepted the risk of unseaworthiness, therefore Philamgen
is liable.

On the matter of subrogation, it is provided that;

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract. If the amount paid by the insurance company does not fully cover the injury
or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or
injury.

Pan Malayan Insurance Corp. vs CA: The right of subrogation is not dependent upon, nor does it grow out
of any privity of contract or upon payment by the insurance company of the insurance claim. It accrues
simply upon payment by the insurance company of the insurance claim.

Therefore, the payment made by PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the
right to bring an action as subrogee against FELMAN. Having failed to rebut the presumption of fault, the
liability of FELMAN for the loss of the 7,500 cases of 1-liter Coca-Cola soft drink bottles is inevitable.

WHEREFORE, the petition is GRANTED. Respondent FELMAN SHIPPING LINES is ordered to pay
petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC.

YU CON v. IPIL (Master), LAURON (Owner), and SOLAMO (Supercargo)G.R. No. L-


10195 December 29, 1916
41 Phil 770

Facts:

On October 17, 1911, the Plaintiff Yu Con chartered the banca from the defendant Lauron for the delivery
of money and transportation of various merchandise belonging to the Plaintiff from the port of Cebu to the
town of Catmon of the Province of Cebu, at the price of P45 for the round trip. However, on October 18,
1911, the money disappeared from the said banca, and was not afterward found. The plaintiff alleged that
the disappearance of his money was due to the abandonment and negligence on the part of the defendants.
As such, an action to recover the said sum was filed.

Issues: Are the defendants liable for the loss of the plaintiff? Is Lauron, liable for the negligence of his crew
and captain?

Ruling:
Yes, the evidence showed that Mr. Yu Con had several times chartered from the defendant Lauron, a banca
belonging to the latter, of whom Ipil was a master and Salamo supercargo, for the transportation of certain
merchandise and money to Catmon and from the port of Cebu. Under Article 587 of the Code of Commerce,
the agent shall be civilly liable for the indemnities in favor of third persons which arise from the conduct of
the captain in the vigilance of the goods which the vessel carried; but he may exempt himself therefrom by
abandoning the vessel with all her equipment and the freight he may have earned during the
trip. Also, Article 618 of the same Code provides, the captain shall be civilly liable to the agent and the
latter to the third persons who may have made contracts with the former: For all the damages suffered by
the vessel and its cargo by reason of want of skill or negligence on his part, xxxx. For all the thefts committed
by the crew, reserving his right of action against the guilty parties.

FAR EAST SHIPPING CO V CA (PPA) REGALADO; October 1, 1998

NATURE
Review on certiorari the CA decision affirming TC decision holding FESC and Gavino solidarily liable.

FACTS
On June 20, 1980, the M/V PAVLODAR, flying under the flagship of the USSR, owned and operated by the
Far Eastern Shipping Company (FESC), arrived at the Port of Manila from Vancouver, British Columbia at
about 7:00 o'clock in the morning. The vessel was assigned Berth 4 of the Manila International Port, as its
berthing space. Captain Roberto Abellana was tasked by the Philippine Port Authority to supervise the
berthing of the vessel. Appellant Senen Gavino was assigned by the Appellant Manila Pilots' Association
(MPA) to conduct docking maneuvers for the safe berthing of the vessel to Berth No. 4. Gavino boarded
the vessel at the quarantine anchorage and stationed himself in the bridge, with the master of the vessel,
Victor Kavankov, beside him. After a briefing of Gavino by Kavankov of the particulars of the vessel and its
cargo, the vessel lifted anchor from the quarantine anchorage and proceeded to the Manila International
Port. The sea was calm and the wind was ideal for docking maneuvers.

When the vessel reached the landmark (the big church by the Tondo North Harbor) one-half mile from the
pier, Gavino ordered the engine stopped. When the vessel was already about 2,000feet from the pier,
Gavino ordered the anchor dropped. Kavankov relayed the orders to the crew of the vessel on the bow.
The left anchor, with 2 shackles, were dropped. However, the anchor did not take hold as expected. The
speed of the vessel did not slacken. A commotion ensued between the crewmembers. A brief conference
ensued between Kavankov and the crew members. When Gavino inquired what was all the commotion
about, Kavankov assured Gavino that there was nothing to it.

After Gavino noticed that the anchor did not take hold, he ordered the engines half-astern. Abellana, who
was then on the pier apron noticed that the vessel was approaching the pier fast. Kavankov likewise noticed
that the anchor did not take hold. Gavino thereafter gave the "full-astern" code. Before the right anchor and
additional shackles could be dropped, the bow of the vessel rammed into the apron of the pier causing
considerable damage to the pier. The vessel sustained damage too. Kavankov filed his sea protest. Gavino
submitted his report to the Chief Pilot who referred the report to the Philippine Ports Authority. Abellana
likewise submitted his report of the incident.

The rehabilitation of the damaged pier cost the Philippine Ports Authority the amount of P1,126,132.25.

PERTINENT RULES on PILOTAGE

The Port of Manila is within the Manila Pilotage District which is under compulsory pilotage pursuant to
Section 8, Article III of Philippine Ports Authority Administrative Order No. 03-85:

SEC. 8.Compulsory Pilotage Service.


For entering a harbor and anchoring thereat, or passing through rivers or straits within a pilotage district,
as well as docking and undocking at any pier/wharf, or shifting from one berth or another, every vessel
engaged in coastwise and foreign trade shall be under compulsory pilotage.

In case of compulsory pilotage, the respective duties and responsibilities of the compulsory pilot and the
master have been specified by the same regulation:
SEC. 11. Control of vessels and liability for damage.
On compulsory pilotage grounds, the Harbor Pilot providing the service to a vessel shall be responsible for
the damage caused to a vessel or to life and property at ports due to his negligence or fault. He can only
be absolved from liability if the accident is caused by force majeure or natural calamities provided he has
exercised prudence and extra diligence to prevent or minimize damage.

The Master shall retain overall command of the vessel even on pilotage grounds whereby he can
countermand or overrule the order or command of the Harbor Pilot on board. In such event, any damage
caused to a vessel or to life and property at ports by reason of the fault or negligence of the Master shall
be the responsibility and liability of the registered owner of the vessel concerned without prejudice to
recourse against said Master Such liability of the owner or Master of the vessel or its pilots shall be
determined by competent authority in appropriate proceedings in the light of the facts and circumstances
of each particular case.

SEC. 32.Duties and responsibilities of the Pilot or Pilots' Association.

The duties and responsibilities of the Harbor Pilot shall be as follows: xxx xxx xxxf) a pilot shall be
held responsible for the direction of a vessel from the time he assumes his work as a pilot thereof until he
leaves it anchored or berthed safely; Provided, however, that his responsibility shall cease at the moment
the Master neglects or refuses to carry out his order.- Customs Administrative Order No. 15-65 issued
twenty years earlier likewise provided in Chapter I thereof for the responsibilities of pilots: Par. XXXIX.

A Pilot shall be held responsible for the direction of a vessel from the time he assumes control thereof until
he leaves it anchored free from shoal; Provided, That his responsibility shall cease at the moment the
master neglects or refuses to carry out his instructions.xxx xxx xxxPar. XLIV.

Pilots shall properly and safely secure or anchor vessels under their control when requested to do so by
the master of such vessels.

ISSUE
WON both the pilot and the master were negligent

HELD
YES.
-
The SC started by saying that in a collision between a stationary object and a moving object, there is a
presumption of fault against the moving object (based on common sense and logic). It then went on to
determine who between the pilot and the master was negligent.

PILOT - A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or out of
ports, or in certain waters. He is an expert who’s supposed to know the seabed, etc. that a master of a ship may not
know because the pilot is familiar with the port. He is charged to perform his duties with extraordinary care
because the safety of people and property on the vessel and on the dock are at stake.

-Capt. Gavino was found to be negligent. The court found that his reaction time (4 minutes) tothe anchor
not holding ground and the vessel still going too fast was too slow. As an expert he
should’ve been reacting quickly to any such happenings.

MASTER - In compulsory pilotage, the pilot momentarily becomes the master of the vessel. The master,
however may intervene or countermand the pilot if he deems there is danger to the vessel because of the
incompetence of the pilot or if the pilot is drunk.

- Based on Capt. Kavankov’s testimony, he never sensed the any danger even when the anchor didn’t hold and
they were approaching the dock too fast. He blindly trusted the pilot. This is negligence on his part. He was
right beside the pilot during the docking, so he could see and hear everything that the pilot was seeing
and hearing.

The master’s negligence translates to unseaworthiness of the vessel, and in turn means
negligence on the part of FESC.
CONCURRENT TORTFEASORS

As a general rule, that negligence in order to render a person liable need not be the sole cause of an injury.
It is sufficient that his negligence, concurring with one or more efficient causes other than plaintiff's, is the
proximate cause of the injury. Accordingly, where several causes combine to produce injuries, person is
not relieved from liability because he is responsible for only one of them, it being sufficient that the
negligence of the person charged with injury is an efficient cause without which the injury would not have
resulted to as great an extent, and that such cause is not attributable to the person injured. It is no defense
to one of the concurrent tortfeasors that the injury would not have resulted from his negligence alone,
without the negligence or wrongful acts of the other concurrent tortfeasor. Where several causes producing
an injury are concurrent and each is an efficient cause without which the injury would not have happened,
the injury may be attributed to all or any of the causes and recovery may be had against any or all of the
responsible persons although under the circumstances of the case, it may appear that one of them was
more culpable, and that the duty owed by them to the injured person was not the same. No actor's
negligence ceases to be a proximate cause merely because it does not exceed the negligence of other
actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole
cause of the injury. - There is no contribution between joint tortfeasors whose liability is solidary since both
of them are liable for the total damage. Where the concurrent or successive negligent acts or omissions of
two or more persons, although acting independently, are in combination the direct and proximate cause of
a single injury to a third person, it is impossible to determine in what proportion each contributed to the
injury and either of them is responsible for the whole injury. Where their concurring negligence resulted in
injury or damage to a third party, they become joint tortfeasors and are solidarily liable for the resulting
damage under Article 2194 of the Civil Code.

Disposition

Petition denied. CA affirmed. Capt. Gavino and FESC are solidarily liable.

CALTEX [PHILIPPINES], INC. VS. SULPICIO LINES, INC.


Facts:

On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex, collided in the
open sea with passenger ship MV Doña Paz, causing the death of all but 25 of the latter’s passengers.
Among those who died were Sebastian Canezal and his daughter Corazon Canezal. On March 22, 1988,
the board of marine inquiry found that Vector Shipping Corporation was at fault. On February 13, 1989,
Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife and mother respectively, filed with the
Regional Trial Court of Manila a complaint for damages arising from breach of contract of carriage against
Sulpicio Lines. Sulpicio filed a third-party complaint against Vector and Caltex. The trial court dismissed the
complaint against Caltex, but the Court of Appeals included the same in the liability. Hence, Caltex filed this
petition.

Issue:

Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel
and a passenger ship?

Held:

First: The charterer has no liability for damages under Philippine Maritime laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to
another person for a specified time or use; a contract of affreightment is one by which the owner of a ship
or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on
a particular voyage, in consideration of the payment of freight. A contract of affreightment may be either
time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire
of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship
owner to supply the ship’s store, pay for the wages of the master of the crew, and defray the expenses for
the maintenance of the ship. If the charter is a contract of affreightment, which leaves the general owner in
possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the
owner. The charterer is free from liability to third persons in respect of the ship.

Second: MT Vector is a common carrier

The charter party agreement did not convert the common carrier into a private carrier. The parties entered
into a voyage charter, which retains the character of the vessel as a common carrier. It is imperative that a
public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one
or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage
charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship,
although her holds may, for the moment, be the property of the charterer. 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 to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of
the Civil Code.

The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods
and safety of the passengers, especially because with the modern development of science and invention,
transportation has become more rapid, more complicated and somehow more hazardous. For these
reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and
its crew, the carrier being obliged by law to impliedly warrant its seaworthiness.

Third: Is Caltex liable for damages under the Civil Code?


The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it
chartered complied with all legal requirements. The duty rests upon the common carrier simply for being
engaged in "public service." The relationship between the parties in this case is governed by special laws.
Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common
carriers, are not expected to inquire into the vessel’s seaworthiness, genuineness of its licenses and
compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure
exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is
concerned. Such a practice would be an absurdity in a business where time is always of the essence.
Considering the nature of transportation business, passengers and shippers alike customarily presume that
common carriers possess all the legal requisites in its operation.

PLANTERS PRODUCTS, INC. V. CA

Facts:

Planters Products, Inc. purchased from Mitsubishi International Corporation 9,329.7069 metric tons of Urea
46% fertilizer, which the latter shipped aboard the cargo vessel M/V Sun Plum on June 16, 1974. Prior to
its voyage, a time-charter party was entered into between Mitsubishi as shipper, and Kyosei Kisen
Kabushiki Kaisha as shipowner. Before loading the fertilizer aboard the vessel, four of her holds were
presumably inspected by the charterer’s representative and found it fit to take the load. After loading the
cargo, the steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin then tied with
steel bonds. It remained sealed throughout the entire voyage.

Upon arrival of the vessel, petitioner unloaded the cargo, which took 11 days. A private marine and cargo
surveyor, Cargo Superintendents Company, Inc. (CSCI) was hired by petitioner to determine the outturn of
the cargo shipped. CSCI reported shortage of 106.726 metric tons, and contamination of 18 metric tons
due to dirt. PPI sent a claim letter against Soriamont Steamship Agencies, the resident agent of KKKK. The
request was denied, hence, PPI filed an action for damages before the CFI Manila. The lower court
sustained the petitioner’s claim, but such decision was reversed by the appellate court, which absolved the
carrier from liability. The appellate court ruled that the vessel was a private carrier and not a common carrier
by reason of the charter party.

Issues:

(1) Whether a common carrier becomes a private carrier by reason of a charter party

(2) Whether the ship owner was able to prove the exercise of the diligence required under the circumstances

Held:

(1) A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let
by the owner to another person for a specified time or use; Charter parties are of two types: (a) contract of
affreightment which involves the use of shipping space on vessels leased by the owner in part or as a
whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to him of its entire command and possession and
consequent control over its navigation, including the master and the crew, who are his servants. Contract
of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period
of time, or voyage charter, wherein the ship is leased for a single voyage.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as a public employment and not as a
casual occupation. The distinction between a "common or public carrier" and a "private or special carrier"
lies in the character of the business, such that if the undertaking is a single transaction, not a part of the
general business or occupation, although involving the carriage of goods for a fee, the person or corporation
offering such service is a private carrier. Article 1733 of the New Civil Code mandates that common carriers,
by reason of the nature of their business, should observe extraordinary diligence in the vigilance over the
goods they carry. In the case of private carriers, however, the exercise of ordinary diligence in the carriage
of goods will suffice. Moreover, in case of loss, destruction or deterioration of the goods, common carriers
are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests
on them. On the contrary, no such presumption applies to private carriers, for whosoever alleges damage
to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the
carrier.

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 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.

(2) 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. To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence.

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.

The period during which private respondent was to observe the degree of diligence required of it as a public
carrier began from the time the cargo was unconditionally placed in its charge after the vessel's holds were
duly inspected and passed scrutiny by the shipper, up to and until the vessel reached its destination and
its hull was re-examined by the consignee, but prior to unloading. A shipowner is liable for damage to the
cargo resulting from improper stowage only when the stowing is done by stevedores employed by him, and
therefore under his control and supervision, not when the same is done by the consignee or stevedores
under the employ of the latter.

Common carriers are not responsible for the loss, destruction or deterioration of the goods if caused by the
character of the goods or defects in the packaging or in the containers. The primary cause of these spillages
is the clamped shell which does not seal very tightly. Also, the wind tends to blow away some of the
materials during the unloading process. The probability of the cargo being damaged or getting mixed or
contaminated with foreign particles was made greater by the fact that the fertilizer was transported in "bulk,"
thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of
equipment used in transporting and hauling it. If there was loss or contamination of the cargo, it was more
likely to have occurred while the same was being transported from the ship to the dump trucks and finally
to the consignee's warehouse.

Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage, more so, with
a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper
or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent
character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its
packaging which further contributed to the loss. On the other hand, no proof was adduced by the petitioner
showing that the carrier was remiss in the exercise of due diligence in order to minimize the loss or damage
to the goods it carried.
MAGSAYSAY INC. VS. AGAN
Transportation – General Averages – Stranding of a Vessel
FACTS:
In 1949, SS San Antonio, owned by AM Inc, embarked on its voyage to Batanes via Aparri. It was carrying
various cargoes, one of which was owned by Agan. One fine weather day, it accidentally ran aground the
mouth of the Cagayan River due to the sudden shifting of the sands below. SS San Antonio then needed
the services of Luzon Stevedoring Co. to tow the ship and make it afloat so that it can continue its journey.
Later, AMInc required the cargo owners to pay the expenses incurred in making the ship afloat (P841.40
each). The expenses, AMInc claims, fall under the General Averages Rule under the Code of Commerce,
which is to be shared by ship owner and cargo owners as well.

ISSUE: Whether or not general averages exist in the case at bar.


HELD: No. General averages contemplate that the stranding of the vessel is intentionally done in order to
save the vessel itself from a certain and imminent danger. Here, the stranding was accidental and it was
made afloat for the purpose of saving the voyage and not the vessel. Note that this happened on a fine
weather day. Also, it cannot be said that the towing was made to save the cargos, for the cargos were not
in danger imminent danger.

MACONDRAY & CO. v. PROVIDENT INSURANCE CORP.


G.R. No. 154305 December 9, 2004

Facts:
Canpotex Shipping Services Limited Inc (Shipper) at Vancouver Canada, shipped and loaded aboard M.V
Trade Carrier cargoes to be delivered at Toledo Cebu City in favour of Atlas Fertilizers Corporation
(Consignee). Shipment was insured with respondent against all risks by virtue of an Open Marine Policy
issued with a Certificate of Insurance. When the shipment arrived, Consignee discovered that shipment
had sustained losses/shortage. A formal claim was then filed against Trade and Transport and Macondray
but the same refused and failed to settle the same. Summons was unserved to Trade and Transport on the
grounds that the same is no longer connected with Macondray & Co. Inc. Macondray on the other hand,
denied liability over the losses having no absolute relation with defendant Trade and Transport, the alleged
operator of the vessel. They alleged that Macondray is the local representative of Trade and Transport, the
charterer of M/V Trade Carrier, and cannot be held responsible for any losses for they don’t have any
control over the crew and cap
taint hereof and that upon arrival to Toledo Cebu, the latter discharged the full amount ofthe shipment as
shown in the draft survey.

Issue:
Whether or not Macondray and Co., as an agent, is responsible for any loss sustained by any party from
the vessel owned by defendant Trade and Transport.

Ruling:
Yes. Article 586 of the Code of Commerce states that ship agent is the person entrusted with provisioning
or representing the vessel in the port in which it may be found. Evidences show that Macondray was the
entity that represented the vessel and was the ship agent within the purview of Article 586. As ship agent,
it may be held liable: Article 586: The ship owner and ship 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
that the creditor proves that the amount claimed was invested for the benefit of the same. Therefore, the
decision of the CA is affirmed and petition is denied. Petitioner Macondray, as agent of Trade
and Transport, is jointly liable for the losses.