MARITIME LAW
I. GENERAL CONCEPTS
A. Real and Hypothecary Nature
TEODORO YANGCO, ETC. VS. MANUEL LASERNA
KEYWORD: S.S. NEGROS/ BOAT OVERLOADED
DOCTRINE: Assuming that petitioner is liable for a breach of contract of carriage, the exclusively "real
and hypothecary nature" of maritime law operates to limit such liability to the value of the vessel, or to
the insurance thereon, if any. In the instant case it does not appear that the vessel was insured.
Whether the abandonment of the vessel sought by the petitioner in the instant case was in accordance
with law of not, is immaterial. The vessel having totally perished, any act of abandonment would be an
idle ceremony.
FACTS: The steamer S.S. Negros, belonging Yangco, left the port of Romblon on its return trip to
Manila. Typhoon signal No. 2 was then up, of which fact the captain was duly advised and his attention
thereto called by the passengers themselves before the vessel set sail. The boat was overloaded as
indicated by the load line which was 6 to 7 inches below the surface of the water. In addition, the vessel
carried thirty sacks of crushed marble and about one hundred sacks of copra and some lumber. The
passengers, numbering about 180, were overcrowded, the vessel's capacity being limited to only 123
passengers. After two hours of sailing,the boat encountered strong winds and rough seas between the
islands of Banton and Simara, and as the sea became increasingly violent, the captain ordered the
vessel to turn left, evidently to return to port, but in the manuever, the vessel was caught sidewise by a
big wave which caused it to capsize and sink. Many of the passengers died in the mishap, among them
being AntolinAldaña,Victorioso, CasianaLaserna,GenaroBasaña – all of whom were relatives of the
respondents in separate civil actions.
These respondents instituted in the Court of First Instance of Capiz separate civil actions against
petitioner here to recover damages for the death of the passengers aforementioned.
PETITIONER’S CONTENTION: After the rendition of the judgment against him, Yangco, by a verified
pleading, sought to abandon the vessel to the plainitffs in the three cases, together with all its
equipments, without prejudice to his right to appeal.
RTC: The court awarded the heirs damages for the death of the victims.The abandonment having been
denied, an appeal was taken to the Court of Appeals, wherein all the judgmnets were affirmed except
that which sums was increased to P4,000.
CA: Affirmed the trial court.
ISSUE: May the shipowner or agent, notwithstanding the total loss of the vessel as a result of the
negligence of its captain, be properly held liable in damages for the consequent death of its
passengers?
HELD:
SC: NO. This question is controlled by the provisions of article 587 of the Code of Commerce. Said
article reads:
“The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the
conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself
therefrom by abandoning the vessel with all her equipments and the freight he may have earned during
the voyage.”
The provisions accords a shipowner or agent the right of abandonment; and by necessary implication,
his liability is confined to that which he is entitled as of right to abandon — "the vessel with all her
equipment and the freight it may have earned during the voyage."
Lawful acts and obligations of the captain beneficial to the vessel may be enforced as against the agent
for the reason that such obligations arise from the contract of agency while as to any liability incurred by
the captain through his unlawful acts, the ship agent is simply subsidiarily civilly liable. This liability of
the agent is limited to the vessel and it does not extend further. For this reason the Code of Commerce
makes the agent liable to the extent of the value of the vessel, as the codes of the principal maritime
nations provide with the vessel, and not individually.
If the shipowner or agent may in any way be held civilly liable at all for injury to or death of passengers
arising from the negligence of the captain in cases of collisions or shipwrecks, his liability is merely co-
extensive with his interest in the vessel such that a total loss thereof results in its extinction.
In the light of all the foregoing, we therefore hold that if the shipowner or agent may in any way be held
civilly liable at all for injury to or death of passengers arising from the negligence of the captain in cases
of collisions or shipwrecks, his liability is merely co-extensive with his interest in the vessel such that a
total loss thereof results in its extinction. But assuming that petitioner is liable for a breach of contract of
carriage, the exclusively "real and hypothecary nature" of maritime law operates to limit such liability to
the value of the vessel, or to the insurance thereon, if any. In the instant case it does not appear that
the vessel was insured.Whether the abandonment of the vessel sought by the petitioner in the instant
case was in accordance with law of not, is immaterial. The vessel having totally perished, any act of
abandonment would be an idle ceremony. Judgement is reversed and petitioner is hereby absolved of
all the complaints.
CHUA YEK HONG vs. INTERMEDIATE APPELLATE COURT
KEYWORD: Luzviminda, doctrine of limited liability
PONENTE: Melencio-Herrera, J.
DOCTRINE: Under Art. 587 of the Code of Commerce, “The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise from the conduct of the captain in the care of the
goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel
with all the equipments and the freight it may have earned during the voyage.” (Doctrine of Limited
Liability)
FACTS:
Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private
respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise
trade from the different ports of Oriental Mindoro to the Port of Manila.
In October 1977, petitioner loaded 1,000 sacks of copra, valued at P101,227.40, on board the vessel
"M/V Luzviminda I" for shipment from Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however,
did not reach Manila because somewhere between Cape Santiago and Calatagan, Batangas, the
vessel capsized and sank with all its cargo.
Petitioner then instituted before the then CFI of Oriental Mindoro, a Complaint for damages based on
breach of contract of carriage against private respondents
PETITIONER’S CONTENTION: Private respondents as shipowners should be held liable for breach of
contract of carriage
RESPONDENT’S CONTENTION: In their answer, private respondents averred that even assuming that
the alleged cargo was truly loaded aboard their vessel, their liability had been extinguished by reason of
the total loss of said vessel.
ISSUE: Whether or not the Doctrine of Limited Liability under Article 587 of the Code of Commerce as
expounded in Yangco vs. Laserna applies in the case at bar
RULING:
1) TRIAL COURT: GRANTED
Defendants are jointly and severally liable to pay the plaintiff the sum of P101,227.40 representing the
value of the cargo belonging to the plaintiff which was lost while in the custody of the defendants and
other miscellaneous expenses
2) CA: DENIED
Under Art. 587 of the Code of Commerce and the doctrine in Yangco vs. Lasema, private respondents'
liability, as ship owners, for the loss of the cargo is merely co-extensive with their interest in the vessel
such that a total loss thereof results in its extinction.
3) SC: DENIED
The term "ship agent" as used in Art. 587 is broad enough to include the ship owner. Pursuant to said
provision, therefore, both the ship owner and ship agent are civilly and directly liable for the indemnities
in favor of third persons, which may arise from the conduct of the captain in the care of goods
transported, as well as for the safety of passengers transported. However, under the same Article, this
direct liability is moderated and limited by the ship agent's or ship owner's right of abandonment of the
vessel and earned freight. This expresses the universal principle of limited liability under maritime law.
The most fundamental effect of abandonment is the cessation of the responsibility of the ship
agent/owner. It has thus been held that by necessary implication, the ship agent's or ship owner's
liability is confined to that which he is entitled as of right to abandon the vessel with all her equipment
and the freight it may have earned during the voyage," and "to the insurance thereof if any" (Yangco
vs. Lasema, supra). In other words, the ship owner's or agent's liability is merely coextensive with his
interest in the vessel such that a total loss thereof results in its extinction. "No vessel, no liability"
expresses in a nutshell the limited liability rule.
The limited liability rule, however, is not without exceptions, namely: (1) where the injury or death to a
passenger is due either to the fault of the ship owner or to the concurring negligence of the ship owner
and the captain; (2) where the vessel is insured; and (3) in workmen's compensation claims. In this
case, there is nothing in the records to show that the loss of the cargo was due to the fault of the private
respondent as ship-owners, or to their concurrent negligence with the captain of the vessel.
In sum, it will have to be held that since the ship agent's or ship owner's liability is merely co-extensive
with his interest in the vessel such that a total loss thereof results in its extinction (Yangco vs. Laserna,
supra), and none of the exceptions to the rule on limited liability being present, the liability of private
respondents for the loss of the cargo of copra must be deemed to have been extinguished. There is no
showing that the vessel was insured in this case.
B. Limited Liability Rule
HEIRS OF AMPARO DE LOS SANTOS vs. HONORABLE COURT OF APPEALSAND COMPANIA
MARITIMA
KEYWORD: overwhelming typhoon WELMING
DOCTRINE:
The limited liability doctrine applies not only to the goods but also in all cases like death or injury
topassengers wherein the shipowner or agent may properly be held liable for the negligent or illicit acts
of thecaptain (Yangco v. Laserna, ibid).
Article 587 speaks only of situations where the fault or negligence iscommitted solely by the captain. In
cases where the shipowner is likewise to be blamed, Article 587 does notapply (see Manila Steamship
Co., Inc. v. Abdulhanan, et al., 100 Phil. 32, 38). Such a situation will becovered by the provisions of the
New Civil Code on Common Carriers.
FACTS:
M/V 'Mindoro' sailed from pier 8 North Harbor, Manila, on November 2,1967 at about 2:00 (should have
been 6:00 p.m.) in the afternoon bound for New Washington, Aklan, with many passengers aboard. It
appears that said vessel met typhoon 'Welming' on the Sibuyan Sea, Aklan, at about 5:00 in the
morning of November 4, 1967 causing the death of many of its passengers, although about 136
survived.As already stated, the boat met typhoon 'Welming' and due to the strong waves it sank
causing the drowning of many passengers among whom were Amparodelos Santos and all the
aforesaid children. The case is pending for almost 23 years.
ISSUE: Whether there was negligence on the part of Maritima and whether of Article 587 of the Code of
Commerce should apply.
PETITIONER’S CONTENTION: Negligence on the part of the shipowner.
RESPONDENT’S CONTENTION: The defendant alleges that no negligence was ever established and,
in fact, the shipowners and their officers took all the necessary precautions in operating the vessel.
Furthermore, the loss of lives as a result of the drowning of some passengers, including the relatives of
the herein plaintiff, was due to force majeure because of the strong typhoon 'Welming.'
RULING:
1. TRIAL COURT: Sustained the position of private respondent CompaniaMaritimaand issued a
decision on March 27, 1974, to wit:the Court finds that in view of lack of sufficient evidence, the case
be, as it is hereby DISMISSED. For lack of evidence, the counterclaim is also hereby
2. APPELLATE COURT: Affirmed the decision on appeal. While it found that there was concurring
negligence on the part of the captain which must be imputable to Maritima, the Court of Appeals ruled
that Maritima cannot be held liable in damages based on the principle of limited liability of the
shipowner or ship agent under Article 587 of the Code of Commerce.
3. SUPREME COURT: Under this provision, a shipowner or agent has the right of abandonment; and
by necessary implication, his liability is confined to that which he is entitled as of right to abandon-"the
vessel with all her equipments and the freight it may have earned during the voyage" (Yangco v.
Laserna, et al., 73 Phil. 330, 332). Notwithstanding the passage of the New Civil Code, Article 587 of
the Code of Commerce is still good law. The reason lies in the peculiar nature of maritime law which is
94 exclusively real and hypothecary that operates to limit such liability to the value of the vessel, or to
the insurance thereon, if any (Yangco v. Laserna, Ibid). As correctly stated by the appellate court, "(t)his
rule is found necessary to offset against the innumerable hazards and perils of a sea voyage and to
encourage shipbuilding and marine commerce. (Decision, Rollo, p. 29). Contrary to the petitioners'
supposition, the limited liability doctrine applies not only to the goods but also in all cases like death or
injury to passengers wherein the shipowner or agent may properly be held liable for the negligent or
illicit acts of the captain (Yangco v. Laserna, Ibid). It must be stressed at this point that Article 587
speaks only of situations where the fault or negligence is committed solely by the captain. In cases
where the shipowner is likewise to be blamed, Article 587 does not apply (see Manila Steamship Co.,
Inc. v. Abdulhanan, et al., 100 Phil. 32, 38). Such a situation will be covered by the provisions of the
New Civil Code on Common Carriers. Owing to the nature of their business and for reasons of public
policy, common carriers are tasked to observe extraordinary diligence in the vigilance over the goods
and for the safety of its passengers (Article 1733, New Civil Code). Further, they are bound to carry the
passengers safely as far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances (Article 1755, New Civil Code). Whenever
death or injury to a passenger occurs, common carriers are presumed to have been at fault or to have
acted negligently unless they prove that they observed extraordinary diligence as prescribed by Articles
1733 and 1755 (Article 1756, New Civil Code).
II. VESSELS
PHILIPPINE REFINING CO. INC. vs. FRANCISCO JARQUE, JOSECOROMINAS, and ABOITIZ
KEYWORD: Vessels PANDAN and ZARAGOZA
DOCTRINE: Vessels are considered personal property under the civil law. The only difference between
a chattel mortgage of a vessel and a chattel mortgage of other personalty is that it is not now necessary
for a chattel mortgage of a vessel to be noted n the registry of the register of deeds, but it is essential
that a record of documents affecting the title to a vessel be entered in the record of the Collector of
Customs at the port of entry.
FACTS:
Francisco Jarque executed three mortgages on the motor vessels Pandan and Zaragoza. These
documents were recorded in the record of transfers and incumbrances of vessels for the port of Cebu
and each was therein denominated a "chattel mortgage". Neither of the first two mortgages had
appended an affidavit of good faith. The third mortgage contained such an affidavit, but this mortgage
was not registered in the customs house until May 17, 1932, or within the period of thirty days prior to
the commencement of insolvency proceedings against Francisco Jarque; also, while the last mentioned
mortgage was subscribed by Francisco Jarque and M. N. Brink, there was nothing to disclose in what
capacity the said M. N. Brink signed. A fourth mortgage was executed by Francisco Jarque and Ramon
Aboitiz on the motorship Zaragoza and was entered in the chattel mortgage registry of the register of
deeds on May 12, 1932, or again within the thirty-day period before the institution of insolvency
proceedings. These proceedings were begun on June 2, 1932, when a petition was filed with the Court
of First Instance of Cebu in which it was prayed that Francisco Jarque be declared an insolvent debtor,
which soon thereafter was granted, with the result that an assignment of all the properties of the
insolvent was executed in favor of Jose Corominas. Judge Jose M. Hontiveros declined to order the
foreclosure of the mortgages, but on the contrary sustained the special defenses of fatal defectiveness
of the mortgages.
ISSUE: Whether or not the foreclosure of the mortgages should be approved.
PETITIONER’S CONTENTION (PHILIPPINE REFINING CO. INC.): The foreclosure of the mortgages
should be approved
RESPONDENT’S CONTENTION : foreclosure of the mortgages should be declined.
RULING:
1. TRIAL COURT: DECLINED.
2. APPELLATE COURT: AFFIRMED.
3. SUPREME COURT: AFFIRMED.
Vessels are considered personal property under the civil law. Similarly under the common law, vessels
are personal property although occasionally referred to as a peculiar kind of personal property. Since
the term "personal property" includes vessels, they are subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law. Indeed, it has heretofore been accepted without discussion
that a mortgage on a vessel is in nature a chattel mortgage. The only difference between a chattel
mortgage of a vessel and a chattel mortgage of other personalty is that it is not now necessary for a
chattel mortgage of a vessel to be noted n the registry of the register of deeds, but it is essential that a
record of documents affecting the title to a vessel be entered in the record of the Collector of Customs
at the port of entry. Otherwise a mortgage on a vessel is generally like other chattel mortgages as to its
requisites and validity.
The Chattell Mortgage Law in its section 5, in describing what shall be deemed sufficient to constitute a
good chattel mortgage, includes the requirement of an affidavit of good faith appended to the mortgage
and recorded therewith. The absence of the affidavit vitiates a mortgage as against creditors and
subsequent encumbrancers. As a consequence a chattel mortgage of a vessel wherein the affidavit of
good faith required by the Chattel Mortgage Law is lacking, is unenforceable against third persons.
III. PERSONS WHO TAKE PART IN MARITIME COMMERCE
A. Ship Owners and Ship Agents; Captains and Masters of Vessels; Officers and Crew,
Supercargoes
CHUA YEK HONG vs. INTERMEDIATE APPELLATE COURT
KEYWORD: copra
DOCTRINE: Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third
persons which may arise from the conduct of the captain in the care of the goods which he loaded on
the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipments and
the freight it may have earned during the voyage.
FACTS:
Petitioner is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, while private
respondents are the owners of the vessel, "M/V Luzviminda I," a common carrier engaged in coastwise
trade from the different ports of Oriental Mindoro to the Port of Manila.
In October 1977, petitioner loaded 1,000 sacks of copra, valued at P101,227.40, on board the vessel
"M/V Luzviminda I" for shipment from Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however,
did not reach Manila because somewhere between Cape Santiago and Calatagan, Batangas, the
vessel capsized and sank with all its cargo.
Petitioner then instituted before the then CFI of Oriental Mindoro, a Complaint for damages based on
breach of contract of carriage against private respondents
PETITIONER’S CONTENTION: Private respondents as shipowners should be held liable for breach of
contract of carriage
RESPONDENT’S CONTENTION: In their answer, private respondents averred that even assuming that
the alleged cargo was truly loaded aboard their vessel, their liability had been extinguished by reason of
the total loss of said vessel.
ISSUE: whether or not private respondents are liable for the loss of 1000 sacks of copra
RULING:
TRIAL COURT: GRANTED
Defendants are jointly and severally liable to pay the plaintiff the sum of P101,227.40 representing the
value of the cargo belonging to the plaintiff which was lost while in the custody of the defendants and
other miscellaneous expenses
CA: DENIED
Under Art. 587 of the Code of Commerce and the doctrine in Yangco vs. Lasema, private respondents'
liability, as ship owners, for the loss of the cargo is merely coextensive with their interest in the vessel
such that a total loss thereof results in its extinction.
SC: DENIED
Article 587 of the Code of Commerce provides:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which
may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but
he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it
may have earned during the voyage.
The term "ship agent" as used in Art. 587 is broad enough to include the ship owner. Pursuant to said
provision, therefore, both the ship owner and ship agent are civilly and directly liable for the indemnities
in favor of third persons, which may arise from the conduct of the captain in the care of goods
transported, as well as for the safety of passengers transported. However, under the same Article, this
direct liability is moderated and limited by the ship agent's or ship owner's right of abandonment of the
vessel and earned freight. This expresses the universal principle of limited liability under maritime law.
The most fundamental effect of abandonment is the cessation of the responsibility of the ship
agent/owner. It has thus been held that by necessary implication, the ship agent's or ship owner's
liability is confined to that which he is entitled as of right to abandon the vessel with all her equipment
and the freight it may have earned during the voyage," and "to the insurance thereof if any" (Yangco vs.
Lasema, supra). In other words, the ship owner's or agent's liability is merely co-extensive with his
interest in the vessel such that a total loss thereof results in its extinction. "No vessel, no liability"
expresses in a nutshell the limited liability rule.
In sum, it will have to be held that since the ship agent's or ship owner's liability is merely co-extensive
with his interest in the vessel such that a total loss thereof results in its extinction (Yangco vs. Laserna,
supra), and none of the exceptions to the rule on limited liability being present, the liability of private
respondents for the loss of the cargo of copra must be deemed to have been extinguished. There is no
showing that the vessel was insured in this case.
THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., vs. CA and FELMAN
SHIPPING LINES
KEYWORD/S: Coca-cola bottles; unseaworthy
DOCTRINE:The ship agent is liable for the negligent acts of the captain in the care of goods loaded on
the vessel. This liability however can be limited through abandonment of the vessel, its equipment and
freightage as provided in Art. 587. Nonetheless, there are exceptional circumstances 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 shipowner and the captain.
FACTS:
In 1983, Coca-Cola Bottlers Philippines, Inc., loaded on board “MV Asilda,” a vessel owned and
operated by Felman Shipping Lines, 7,500 cases of 1- liter Coca-Cola softdrink bottles to be
transported from Zamboanga toCebu for consignee Coca-Cola Bottlers Philippines, Inc., Cebu.
The shipment was insured with petitioner Philippine American General Insurance Co., Inc.
(PHILAMGEN) MV Asilda” . The vessel left the port of Zamboanga in fine weather at 8 in the evening of
the same day. At around 8:45 the following morning, the vessel sank in the waters of Zamboanga
delNorte bringing down her entire cargo with her including the subject 7,500 cases Coca-Cola bottles.
Hence, Coca- Cola Bottlers, Cebu plant, filed a claim with FELMAN for recovery of damages.
FELMAN denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN
which paid its claim of P755,250.00 .Claiming its right of subrogation, PHILAMGEN sought recourse
against respondent FELMAN which disclaimed any liability for the loss. Consequently, PHILAMGEN
sued the shipowner for sum of money and damages.
PETITIONER’S CONTENTION: The sinking and total loss of “MV Asilda” and its cargo were due to the
vessel’s unseaworthiness as she was put to sea in an unstable condition. It further alleged that the
vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate
measures to proceed to a nearby port or beach after the vessel started to list.
RESPONDENT’S CONTENTION: No right of subrogation in favor of PHILAMGEN was transmitted by
the shipper, and that, in any event, FELMAN had abandoned all its rights, interests and ownership over
“MV Asilda” together with her freight and appurtenances for the purpose of limiting and extinguishing its
liability under Art. 587 of the Code of Commerce.
ISSUES: (a) whether or not FELMAN is liable for the loss of the cargo –YES
(b) whether the limited liability under Art. 587 of the Code of Commerce should apply-NO
RULING:
TC: IN FAVOR OF FELMAN.It ruled that “MV Asilda” was seaworthy when it left the port of Zamboanga
as confirmed by certificates issued by the Philippine Coast Guard and the shipowner’s surveyor
attesting to its seaworthiness.
CA: MODIFIED TC’S RULING. It found “MV Asilda” unseaworthy for being top- heavy as 2,500 cases
of Coca-Cola softdrink bottles were improperly stowed on deck. In other words, while the vessel
possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the
structure of the ship itself, it was not seaworthy with respect to the cargo. Nonetheless, the appellate
court denied the claim of PHILAMGEN on the ground that the assured’s implied warranty of
seaworthiness was not complied with. Furthermore, respondent court held that the filing of notice of
abandonment had absolved the shipowner/agent from liability under the limited liability rule.
SC: RULED FOR PETITIONER
A) YES. MV Asilda” was unseaworthy when it left the port of Zamboanga. In a joint statement, the
captain as well as the chief mate of the vessel confirmed that the weather was fine when they left the
port of Zamboanga. The Elite Adjusters, Inc., submitted a report regarding the sinking of “MV Asilda.”
The report states that they found in the course of investigation that a reasonable explanation for the
series of lists experienced by the vessel that eventually led to her capsizing and sinking, was that the
vessel was top-heavy which is to say that while the vessel may not have been overloaded, yet the
distribution or stowage of the cargo on board was done in such a manner that the vessel was in top-
heavy condition at the time of her departure and which condition rendered her unstable and
unseaworthy for that particular voyage. Under Art 1733 of the Civil Code, “(c)ommon 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 the circumstances of each case x xxx" In the event of loss
of goods, common carriers are presumed to have acted negligently. FELMAN, the shipowner, was not
able to rebut this presumption.
B) NO. Art. 587 of the Code of Commerce is not applicable to the case at bar.
Simply put, the ship agent is liable for the negligent acts of the captain in the care of goods loaded on
the vessel. This liability however can be limited through abandonment of the vessel, its equipment and
freightage as provided in Art. 587. Nonetheless, there are exceptional circumstances 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 shipowner and the captain. The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a ship owner’s liability, does not apply to cases where
the injury or average was occasioned by the ship owner’s own fault. It must be stressed at this point
that Art. 587 speaks only of situations where the fault or negligence is committed solely by the captain.
Where the shipowner is likewise to be blamed, Art. 587 will not apply, and such situation will be covered
by the provisions of the Civil Code on common carrier. As such, FELMAN was equally negligent. It
cannot therefore escape liability through the expedient of filing a notice of abandonment of the vessel
by virtue of Art. 587 of the Code of Commerce.
Sweet Lines v CA
Keyword: Super delay, engine repair, dropped at Tacloban instead of Catbalogan
Doctrine: Mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier
from responsibility.
Facts:
The respondents, having first class tickets, boarded the M/V Sweet Grace to Catbalogan. The vessel
had some engine problems which led to a change of schedule and they were thus delayed for a
substantial amount of time.
Furthermore, the vessel brought the respondents to Tacloban instead of Catbalogan. This led the
respondents to purchase another set of tickets and to ride another ferryboat going to Catbalogan.
Petitioner's contention: there was casa fortuiso by reason of engine break that needs repair
Respondent's contention: sued the petitioner carrier for damages for the breach of contract of carriage.
Issue: Whether or not the petitioner is liable for damages.
Ruling:
Trial Court: Carrier In bad faith
CA: Affirmed that carrier is in bad faith
SC: The Court held that the petitioner is liable for damages specifically moral damages because there
was bad faith on its part. The Court found that such bad faith is present based on three circumstances
namely:
1. Petitioner did not give any notice to the respondents as to the change of schedule of the vessel.
2. The petitioner knew fully that it would take no less than fifteen (15) hours to effect the repairs of the
damaged engine. The petitioner also assured that the vessel will leave within a short period of time and
when the defendants wanted to leave the trip petitioner stated that the “the vessel is already leaving.”
3. The petitioner did not even offer to refund the tickets and provide for their transportation from
Tacloban to Catbalogan.
B. Arrastre Operator
Fireman’s Fund Insurance Co. vs Metro Port Services
Facts:
Vulcan Industrial and Mining Corporation imported from theUnited States several machineries and
equipment which were loaded on board the SIS Albert Maersk at the port of Philadelphia, U.S.A., and
transhipped for Manila through the vessel S/S Maersk Tempo. The cargo which was covered by a clean
bill of lading issued by Maersk Line and consisted of core drills and steel tubings. The shipment was
turned over complete and in good condition to the arrastre operator E. Razon (Metro Port Service Inc).
DaniloLibrando, tractor operator and employee of E. Razon was ordered to transport the shipment to
the Equipment Yard at Pier 3. While Librando was maneuvering the tractor (owned and provided by
Maersk Line) to the left, the cargo fell from the chassis and hit one of the container vans of American
President Lines. It was discovered that there were no twist lock at the rear end of the chassis where the
cargo was loaded. There was heavy damage to the cargo as the parts of the machineries were broken,
denied, cracked and no longer useful for their purposes. Fireman’s Fund Insurance paid the value of
the damages to Vulcan Industrial and Mining Corporation. The former now filed a suit against Maersk
Line, Compania General de Tabacos de Filipinas and E. Razon for the coverage of the insurance
policy.
Issue: May E. Razon/Metro Port Service be held liable for the damage of the Cargo since the damage
was caused while it was in their custody and that the tractor operator was their employee.
Ruling:
RTC: Judgment is rendered in favor of Fireman’s Fund Insurance against Maersk
Line, Compania General de Tabacos de Filipinas and E. Razon ordering them to pay in solidary the
amount of damages, attorney’s fee and costs of suit.
CA Ruling: E. Razon/Metro Port Service appealed, and the CA reversed the decision of the trial court.
SC: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor
and warehouseman. The relationship between the consignee and the common carrier is similar to that
of the consignee and the arrastre operator. Since it is the duty of the ARRASTRE to take good care of
the goods that are in its custody and to deliver them in good condition to the consignee, such
responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore
charged with and obligated to deliver the goods in good condition to the consignee. To carry out its
duties, the ARRASTRE is required to provide cargo handling equipment which includes among others
trailers, chassis for containers.
In some cases, however, the shipping line has its own cargo handling equipment. The records reveal
that Maersk Line provided the chassisand the tractor which carried the carried the subject shipment. It
merely requested the ARRASTRE to dispatch a tractor operator to drive the tractor inasmuch as the
foreign shipping line did not have any truck operator in its employ. Such arrangement is allowed
between the ARRASTRE and the CARRIER pursuant to the Management Contract. It was clearly one
of the services offered by the ARRASTRE. It was the arrastre that had the sole discretion and
prerogative to hire and assign Librando to operate the tractor. Since the arrastre offered its delivery for
the operation drivers for the operation of tractors in the handling of cargo and equipment, then the
ARRASTRE should see to it that the drivers under its employ must exercise due diligence in the
performance of their work. Whether or not the twist lock can be seen by the naked eye when the cargo
has been loaded on the chassis, an efficient and diligent tractor operator must nevertheless check if the
cargo is securely loaded on the chassis. Therefore, Metro Port Service Inc. is solidarily liable in the
instant case for the negligence of its employee.
INTERNATIONAL CONTAINER TERMINAL SERVICES, INC vs. PRUDENTIALGUARANTEE &
ASSURANCE CO., INC.
KEYWORD: Canned food stuff, Arrastre
DOCTRINE:When cargo is placed on a vessel at the “shipper’s load and count,” the arrastre operator is
required only to deliver to the consignee the container van received from the shipper, not to verify or to
compare the contents thereof with those declared by the shipper. A claim for reimbursement for the
loss, damage or misdelivery of goods must be filed within 15 days from the date the consignee learns of
such problem
FACTS:
On April 25, 1990, mother vessel ‘Tao He’ loaded and received on board in San Francisco, California, a
shipment of five (5) lots of canned foodstuff complete and in good order and condition for transport to
Manila in favor of Duel Food Enterprises (consignee). China Ocean Shipping Company issued the
corresponding bill of lading therefor. Consignee insured the shipment with Prudential Guarantee and
Assurance, Inc. against all risks for P1,921,827.00 under Marine Insurance Policy No. 20RN- 3011/90.
On May 30, 1990, the shipment arrived at the Port of Manila and discharged by [the] vessel MS ‘Wei
He’ in favor of International Container Terminal Services, Inc. for safekeeping.
“On June 1, 1990, A. D. Reyna Customs Brokerage (defendant brokerage) withdrew the shipment and
delivered the same to the consignee. An inspection thereof revealed that 161 cartons were missing
valued at P85,984.40.
PETITIONER’S CONTENTION: ICTSI counters that it observed extraordinary diligence over the subject
shipment while under its custody; that the loss is not attributable to its fault or its agent, representative
or employee; that consignee failed to file a formal claim against it in accordance with PPA
Administrative Order No. 10-81; and that the complaint states no cause of action.
RESPONDENT’S CONTENTION:
ISSUE
:1. Whether or not the petitioner is negligentin its duty to exercise due diligence over the shipment,
2. Whether or notthe appellate court misconstrued the liability clause printed on the dorsal side of the
Arrastre and Wharfage Bill/Receipt.
RULING:
TRIAL COURT: The trial court rendered a Decision dismissing Prudential’s Complaint against ICTSI.
CA: The appellate court found ICTSI negligent in its duty to exercise due diligence over the shipment.It
also ruled that the filing of a claim depended on the issuance of a certificate of loss by ICTSI based on
the liability clause printed on the back of the arrastre and wharfage receipt. Since ICTSI did not issue
such a certificate despite being informed of the shortage, the 15-day period given to the consignee for
filing a formal claim never began. By subrogation, Prudential, as insurer of the consignee, was entitled
to hold the ICTSI liable for the shortage.
SC:1. The legal relationship between an arrastre operator and a consignee is akin to that between a
warehouseman and a depositor. As to both the nature of the functions and the place of their
performance, an arrastre operator’s services are clearly not maritime in character.
In a claim for loss filed by a consignee, the burden of proof to show compliance with the obligation to
deliver the goods to the appropriate party devolves upon the arrastre operator. Since the safekeeping of
the goods rests within its knowledge, it must prove that the losses were not due to its negligence or that
of its employees.
2. In order to hold the arrastre operator liable for lost or damaged goods, the claimant should file with
the operator a claim for the value of said goods “within fifteen (15) days from the date of discharge of
the last package from the carrying vessel.” The filing of the claim for loss within the 15-day period is in
the nature of a prescriptive period for bringing an action and is a condition precedent to holding the
arrastre operator liable. This requirement is a defense made available to the arrastre operator, who may
use or waive it as a matter of personal discretion.
The said requirement is not an empty formality. It gives the arrastre contractor a reasonable opportunity
to check the validity of the claim, while the facts are still fresh in the minds of the persons who took part
in the transaction, and while the pertinent documents are still available. Such period is sufficient for the
consignee to file a provisional claim after the discharge of the goods from the vessel. For this reason,
we believe that the 15-day limit is reasonable. In the case at bar, the consignee had all the time to
make a formal claim from the day it discovered the shortage in the shipment, which was June 4, 1990,
as shown by the records. According to the independent adjuster, the stripping or opening of the sea
vans containing the shipped canned goods was made at the consignee’s place upon receipt of the
shipment. After discovering the loss, the consignee asked the adjuster to investigate the reason for the
short-landing of the shipment. By the time the claim for loss was filed on October 2, 1990, four months
had already elapsed from the date of delivery, June 4, 1990.
C. Pilots
Far Eastern Shipping vs. CA
Keyword: Vessel rammed into the apron of the pier wherein Capt. Gavino was the PILOT.
Doctrine: 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
Facts:
The M/V PAVLODAR, owned and operated by the Far Eastern Shipping Company (FESC), arrived at
the Port of Manila from Vancouver, British Columbia. 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.
When the vessel proceeded to the Manila International Port and eventually 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 2,000 feet from the pier, Gavino ordered the anchor dropped.
However, the anchor did not take hold as expected. The speed of the vessel did not slacken. The bow
of the vessel rammed into the apron of the pier causing considerable damage to the pier.
The vessel sustained damage too. Consequently, the Philippine Ports Authority (PPA) filed a complaint
FESC, Capt. Gavino, and the MPA.
The trial court ordered the defendants therein jointly and severally to pay PPA.
Respondent appellate court affirmed the findings of the court a quo except that if found no employer-
employee relationship existing between herein private respondents Manila Pilots' Association (MPA, for
short) and Capt. Gavino.
Petitioner FESC asserts that since the MV PAVLODAR was under compulsory pilotage at the time of
the incident, it was the compulsory pilot, Capt. Gavino, who was in command and had complete control
in the navigation and docking of the vessel. It is the pilot who supersedes the master for the time being
in the command and navigation of a ship and his orders must be obeyed in all respects connected with
her navigation. Consequently, he was solely responsible for the damage caused upon the pier apron,
and not the owners of the vessel. It claims that the master of the boat did not commit any act of
negligence when he failed to countermand or overrule the orders of the pilot because he did not see
any justifiable reason to do so. In other words, the master cannot be faulted for relying absolutely on the
competence of the compulsory pilot. If the master does not observe that a compulsory pilot is
incompetent or physically incapacitated, the master is justified in relying on the pilot.
Issue: Whether or not the pilot of a commercial vessel, under compulsory pilotage, is solely liable for
the damage caused by the vessel to the pier, at the port of destination, for his negligence.
Held: No. (Doctrine on 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. In a broad sense, the term "pilot" includes both (1) those whose duty it is to guide
vessels into or out of ports, or in particular waters and (2) those entrusted with the navigation of vessels
on the high seas. However, the term "pilot" is more generally understood as a person taken on board at
a particular place for the purpose of conducting a ship through a river, road or channel, or from a port.
Under English and American authorities, generally speaking, the pilot supersedes the master for the
time being in the command and navigation of the ship, and his orders must be obeyed in all matters
connected with her navigation.
He becomes the master pro hac vice and should give all directions as to speed, course, stopping and
reversing anchoring, towing and the like. And when a licensed pilot is employed in a place where
pilotage is compulsory, it is his duty to insist on having effective control of the vessel, or to decline to act
as pilot. Under certain systems of foreign law, the pilot does not take entire charge of the vessel, but is
deemed merely the adviser of the master, who retains command and control of the navigation even in
localities where pilotage is compulsory.
(Doctrine on Master)
While it is indubitable that in exercising his functions a pilot is in sole command of the ship and
supersedes the master for the time being in the command and navigation of a ship and that he
becomes master pro hac vice of a vessel piloted by him, there is overwhelming authority to the effect
that the master does not surrender his vessel to the pilot and the pilot is not the master. The master is
still in command of the vessel notwithstanding the presence of a pilot. There are occasions when the
master may and should interfere and even displace the pilot, as when the pilot is obviously incompetent
or intoxicated and the circumstances may require the master to displace a compulsory pilot because of
incompetency or physical incapacity. If, however, the master does nor observe that a compulsory pilot
is incompetent or physically incapacitated, the master is justified in relying on the pilot, but not blindly.
The master is not wholly absolved from his duties while a pilot is on board his vessel, and may advise
with or offer suggestions to him. He is still in command of the vessel, except so far as her navigation is
concerned, and must cause the ordinary work of the vessel to be properly carried on and the usual
precaution taken. Thus, in particular, he is bound to see that there is sufficient watch on deck, and that
the men are attentive to their duties, also that engines are stopped, towlines cast off, and the anchors
clear and ready to go at the pilot's order.
(Doctrine on Shipowner)
The owners of the vessel are responsible to the injured party for the acts of the pilot, and they must be
left to recover the amount as well as they can against him. It cannot be maintained that the
circumstance of having a pilot on board, and acting in conformity to his directions operate as a
discharge of responsibility of the owners. Except insofar as their liability is limited or exempted by
statute, the vessel or her owner are liable for all damages caused by the negligence or other wrongs of
the owners or those in charge of the vessel. Where the pilot of a vessel is not a compulsory one in the
sense that the owner or master of the vessel are bound to accept him, but is employed voluntarily, the
owners of the vessel are, all the more, liable for his negligent act. And as a general rule, the owners or
those in possession and control of a vessel and the vessel are liable for all natural and proximate
damages caused to persons or property by reason of her negligent management or navigation.
In the case at bar, it was found that Capt. Gavino as pilot, Capt. Kabancov as master are liable due to
their negligence. Petitioner FESC is also liable. Upon assuming such office as compulsory pilot, Capt.
Gavino is held to the universally accepted high standards of care and diligence required of a pilot,
whereby he assumes to have skill and knowledge in respect to navigation in the particular waters over
which his license extends superior to and more to be trusted than that of the master. A pilot should
have a thorough knowledge of general and local regulations and physical conditions affecting the
vessel in his charge and the waters for which he is licensed, such as a particular harbor or river. He is
not held to the highest possible degree of skill and care, but must have and exercise the ordinary skill
and care demanded by the circumstances, and usually shown by an expert in his profession.
Under extraordinary circumstances, a pilot must exercise extraordinary care. Here, Capt. Gavino failed
to measure up to such strict standard of care and diligence required of pilots. He was an experienced
pilot and by this time should have long familiarized himself with the depth of the port and the distance
he could keep between the vessel and port in order to berth safely.
And a perusal of Capt. Kabankov's testimony makes it apparent that he was remiss in the discharge of
his duties as master of the ship, leaving the entire docking procedure up to the pilot, instead of
maintaining watchful vigilance over the risky maneuver.
IV. CHARTER PARTIES (ARTICLES 652-718)
A. Different Kinds of Charter Parties
LITONJUA SHIPPING VS. NATIONAL SEAMEN BOARD
DOCTRINE: Kinds of Charter Parties
KEYWORD: bareboat, time and voyage charter
FACTS:
Petitioner Litonjua is the duly appointed local crewing Managing Office of the Fairwind Shipping
Corporation ('Fairwind). The M/V Dufton Bay is an ocean-going vessel of foreign registry owned by the
R.D. Mullion Ship Broking Agency Ltd. ("Mullion"). While the Dufton Bay was in the port of Cebu and
while under charter by Fairwind, the vessel's master contracted the services of, among others, private
respondent Gregorio Candongo to serve as Third Engineer for a period of twelve (12) months with a
monthly wage of US$500.00. This agreement was executed before the Cebu Area Manning Unit of the
NSB. Thereafter, private respondent boarded the vessel. Before expiration of his contract, private
respondent was required to disembark at Port Kelang, Malaysia, and was returned to the Philippines.
The cause of the discharge was described in his Seaman's Book as 'by owner's arrange".
Shortly after returning to the Philippines, private respondent filed a complaint before public respondent
NSB, for violation of contract, against Mullion as the shipping company and petitioner Litonjua as agent
of the shipowner and of the charterer of the vessel.
At the initial hearing, the NSB hearing officer held a conference with the parties, at which conference
petitioner Litonjua was represented by one of its supercargos, Edmond Cruz. Edmond Cruz asked, in
writing, that the hearing be postponed for a month upon the ground that the employee of Litonjua in
charge of the case was out of town. The hearing officer denied this request and then declared petitioner
Litonjua in default. At the hearing, private respondent testified that when he was recruited by the
Captain of the Dufton Bay, the latter was accompanied to the NSB Cebu Area Manning Unit by two (2)
supercargos sent by petitioner Litonjua to Cebu, and that the two (2) supercargos Edmond Cruz and
Renato Litonjua assisted private respondent in the procurement of his National Investigation and
Security Agency (NISA) clearance. Messrs. Cruz and Litonjua were also present during private
respondent's interview by Captain Ho King Yiu of the Dufton Bay.
NSB HEARING OFFICER:
From the evidence on record it clearly appears that there was no sufficient or valid cause for the
respondents to terminate the services of complainant prior to the expiry date of the contract. For this
reason the respondents have violated the conditions of the contract of employment which is a sufficient
justification for this Board to render award in favor of the complainant of the unpaid salaries due the
latter as damages corresponding to the unexpired portion of the contract including the accrued leave
pay.
NSB CENTRAL OFFICE:
While it appears that in the preparation of the employment papers of the complainant, what was
indicated therein was R.D. Mullion Co. (HK) Ltd. As thecompany whom Captain Ho King Yiu, the
Master of the vessel Dufton Bay, was representing to be the shipowner, the fact remains that at the
time of the recruitment of the complainant, as duly verified by the National Seamen Board, Cebu Area
Manning Unit, the Litonjua Shipping Company was the authorized agent of the vessel's charterer, the
Fairwind Shipping Corporation, and that in the recruitment process, the Litonjua Shipping Company
through its supercargos in the persons of Edmund Cruz and Renato Litonjua, had knowledge thereof
and in fact assisted in the interviews conducted by the Master of the crew applicants as admitted by
Renato Litonjua including the acts of facilitating the crew's NISA clearances as testified to by
complainant. Moreover, the participation of the Litonjua Shipping Corporation in the recruitment of
complainant, together with the other crewmembers, in Cebu can be traced to the contents of the letter
by the Fairwind Shipping Limited, thru its Director David H.L. Wu addressed to the National Seamen
Board.
The NSB then lifted the suspension of the hearing officer's decision. Petitioner Litonjua once more
moved for reconsideration. On public respondent NSB rendered a decision which affirmed its hearing
offices decision:
The master of the vessel acted for and in behalf of Fairwind Shipping Corporation who had the
obligation to pay the salary of the complainant. It necessarily follows that Fairwind Shipping Corporation
is the employer of said complainant. Moreover, it had been established by complainant that Litonjua
Shipping Company, Inc., had knowledge of and participated, through its employee, in the recruitment of
herein complainant.
ISSUE:
Whether or not the charterer Fairwind was properly regarded as the employer of private respondent
Candongo.
PETITIONER'S CONTENTION: Litonjua contends that the shipowner, not the charterer, was the
employer of private respondent; and that liability for damages cannot be imposed upon petitioner which
was a mere agent of the charterer. It is insisted that private respondent's contract of employment and
affidavit of undertaking clearly showed that the party with whom he had contracted was none other than
Mullion, the shipowner, represented by the ship's master. Petitioner also argues that its supercargos
merely assisted Captain Ho King Yiu of the Dufton Bay in being private respondent as Third Engineer.
Petitioner also points to the circumstance that the discharge and the repatriation of private respondent
was specified in his Seaman's Book as having been "by owner's arrange." Litonjua thus argues that
being the agent of the charterer and not of the shipowner, it accordingly should not have been held
liable on the contract of employment of private respondent.
SUPREME COURT:In modern maritime law and usage, there are three (3) distinguishable types of
charter parties: (a) the "bareboat" or "demise" charter; (b) the "time" charter; and (c) the "voyage" or
"trip" charter.
A bareboat or demise charter is a demise of a vessel, much as a lease of an unfurnished house is a
demise of real property. The shipowner turns over possession of his vessel to the charterer, who then
undertakes to provide a crew and victuals and supplies and fuel for her during the term of the charter.
The shipowner is not normally required by the terms of a demise charter to provide a crew, and so the
charterer gets the "bare boat", i.e., without a crew. Sometimes, of course, the demise charter might
provide that the shipowner is to furnish a master and crew to man the vessel under the charterer's
direction, such that the master and crew provided by the shipowner become the agents and servants or
employees of the charterer, and the charterer (and not the owner) through the agency of the master,
has possession and control of the vessel during the charter period.
A time charter, upon the other hand, like a demise charter, is a contract for the use of a vessel for a
specified period of time or for the duration of one or more specified voyages. In this case, however, the
owner of a time-chartered vessel (unlike the owner of a vessel under a demise or bare-boat charter),
retains possession and control through the master and crew who remain his employees.
What the time charterer acquires is the right to utilize the carrying capacity and facilities of the vessel
and to designate her destinations during the term of the charter.
A voyage charter, or trip charter, is simply a contract of affreightment, that is, a contract for the carriage
of goods, from one or more ports of loading to one or more ports of unloading, on one or on a series of
voyages. In a voyage charter, master and crew remain in the employ of the owner of the vessel.
It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of
the vessel, the charterer assuming in large measure the customary rights and liabilities of the
shipowner in relation to third persons who have dealt with him or with the vessel. In such case, the
Master of the vessel is the agent of the charterer and not of the shipowner. The charterer or owner pro
hac vice, and not the general owner of the vessel, is held liable for the expenses of the voyage
including the wages of the seamen.
It is important to note that petitioner Litonjua did not place into the record of this case a copy of the
charter party covering the M/V Dufton Bay. We must assume that petitioner Litonjua was aware of the
nature of a bareboat or demise charter and that if petitioner did not see fit to include in the record a
copy of the charter party, which had been entered into by its principal, it was because the charter party
and the provisions thereof were not supportive of the position adopted by petitioner Litonjua in the
present case, a position diametrically opposed to the legal consequence of a bareboat charter. Treating
Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it was not such, we
believe and so hold that petitioner Litonjua, as Philippine agent of the charterer, may be held liable on
the contract of employment between the ship captain and the private respondent.
There is a ethically more compelling basis for holding petitioner Litonjua liable on the contract of
employment of private respondent. The charterer of the vessel, Fairwind, clearly benefitted from the
employment of private respondent as Third Engineer of the Dufton Bay, along with the ten other Filipino
crewmembers recruited by Captain Ho in Cebu at the same occasion. If private respondent had not
agreed to serve as such Third Engineer, the ship would not have been able to proceed with its voyage.
Secondly, the scope of authority or the responsibility of petitioner Litonjua was not clearly delimited.
There is the circumstance that extreme hardship would result for the private respondent if petitioner
Litonjua, as Philippine agent of the charterer, is not held liable to private respondent upon the contract
of employment. Clearly, the private respondent, and the other Filipino crew members of the vessel,
would be defenseless against a breach of their respective contracts. While wages of crew members
constitute a maritime lien upon the vessel, private respondent is in no position to enforce that lien. If
only because the vessel, being one of foreign registry and not ordinarily doing business in the
Philippines or making regular calls on Philippine ports cannot be effectively held to answer for such
claims in a Philippine forum. Upon the other hand, it seems quite clear that petitioner Litonjua, should it
be held liable to private respondent for the latter's claims, would be better placed to secure
reimbursement from its principal Fairwind. In turn, Fairwind would be in an indefinitely better position
(than private respondent) to seek and obtain recourse from Mullion, the foreign shipowner, should
Fairwind feel entitled to reimbursement of the amounts paid to private respondent through petitioner
Litonjua.
B. Effect of Charter on Character of Carrier
Planters Products, Inc. vs. Court of Appeals
KEYWORDS: Charter-Party; UREA FERTILIZER
DOCTRINE: 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 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.
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of
New York, U.S.A., Urea 46% fertilizer which the latter shipped in bulk aboard the cargo vessel M/V
“Sun Plum” owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Alaska, U.S.A.,
to Port Point, San Fernando, La Union, Philippines.
Prior to its voyage, a time charter-party on the vessel M/V “Sun Plum” pursuant to the Uniform General
Charterwas entered into between Mitsubishi as shipper/charterer and KKKK as shipowner. ‘
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. “The vessel’s hold to be
properly swept, cleaned and dried at the vessel’s expense and the vessel to be presented clean for use
in bulk to the satisfaction of the inspector before daytime commences.”
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, the steel pontoon hatches were opened with the use of the
vessel’s boom. The hatches remained open throughout the duration of the discharge.
It took eleven (11) days for PPI to unload the cargo. The survey report submitted by CSCI (Cargo
SuperintendentsCompany Inc.) to the consignee (PPI) dated 19 July 1974 revealed a shortage in the
approximating 18 M/T was contaminated with dirt.
ISSUE: WON the charter party changed the character of the public carrier to a private carrier?
LOWER COURT: IN FAVOR OF PETITIONER. Lower Court held the carrier liable. A common carrier is
presumed negligent in case of loss or damage of the goods it contracts to transport
CA: REVERSED. 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 charterparty.
SC: NO. A “charter-party” is defined as a contract by which an entire ship, or some principal part
thereof, is let by the owner to another person for a specified time or use. A contract of affreightment by
which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person
for the conveyance of goods, on a particular voyage, in consideration of the payment of freight.
Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space
on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of which the whole vessel is left to the charterer with a
transfer to him of its entire command and possession and consequent control over its navigation,
including the master and the crew, who are his servants.
Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a
fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases,
the charter-party provides for the hire of 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 stores, pay for the wages of the
master and the crew, and defray the expenses for the maintenance of the ship.
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.
HOWEVER, 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. 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.
CALTEX VS SULPICIO
KEYWORD/S: MT VECTOR AND DOÑA PAZ COLLISION, DUMALI POINT, CONTRACT OF
AFFREIGHTMENT--VOYAGE CHARTER
FACTS:
MT VECTOR owned and operated by Vector Shipping left Limay, Bataan at about 8:00pm on Dec 19,
1987 eon route to Masbate, loaded with petroleum products shipped by CALTEX. On the other hand,
on Dec 20, 1987 at about 6:30 am passenger ship owned by SULPICIO LINES MV DOÑA PAZ left the
port of Tacloban headed for Manila with a complement of 59 crew members including the master and
his officers and passengers totaling 1,493 as indicated in the coastguard clearance.
At about 10:30 pm of Dec 20, 1987 the two vessels collided in the open sea within the vicinity of Dumali
Point between MARINDUQUE AND ORIENTAL MINDORO. All crew members of MV DOÑA PAZ died,
while 2 survivors from MT VECTOR claimed that they were sleeping at the time of the incident.
THE MV DOÑA PAZ carried an estimated 4,000 passengers; many were not in the manifest. Only 24
survived the tragedy. The BUREAU OF MARINE INQUIRY(BMI) after investigation found that MT
VECTOR, it's registered owner and operator were at fault. SULPICIO alleged that CALTEX chartered
MT VECTOR with gross and evident bad faith knowing fully well that MT VECTOR WAS IMPROPERLY
MANNED, ILLEQUIPPED, UNSEAWORTHY AND A HAZARD TO SAFE NAVIGATION.
ISSUE: WHETHER OR NOT THE CALTEX IS LIABLE
RULING :
No, 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 being
engaged in "public service". The civil code demands diligence which is required by the nature of the
obligation and that which corresponds with the circumstances of the persons, time and of the place.
In the case at bar, CALTEX AND VECTOR entered into a contract of affreightment, also known as
voyage charter wherein the ship is leased for a single voyage. The charter party provides for the hire of
the VESSEL ONLY, the ship owner to supply the ship's store, pay for wages of the master of the crew
and defray expenses for the maintenance of the ship. If the charterer is a contract of affreightment,
which leaves the general owner in possession of the ship as owner for the voyage,
THE RIGHTS AND RESPONSIBILITIES OF OWNERSHIP REST ON THE OWNER:
THECHARTERER IS FREE FROM LIABILITY TO THIRD PERSONS IN RESPECT OF THE SHIP.
THE SUPREME COURT CHARACTERIZED THE SAID SPECIE OF CHARTER PARTY AS ONE
WHICH DOES NOT AFFECT THE AT ALL THE NATURE OF THE BUSINESS OF SULPICIO LINES
AS A COMMON CARRIER.
V. COLLISIONS
Williams v Yangco
KEYWORD: Subic
DOCTRINE: Since it does NOT appear from the evidence that the perilous situation of the launch in
time to avoid the accident by the exercise of ordinary care, it is very clear that the plaintiff cannot
escape the legal consequences of the contributory negligence of his launch, even were we to hold that
the doctrine is applicable in this jurisdiction.
FACTS:
The steamer Subic, owned by the defendant, collided with the launch Euclid owned by the plaintiff, in
the Bay of Manila at an early hour on the morning of January 9, 1911, and the Euclid sank five minutes
thereafter. The findings of record disclosed that the officers on both boats were negligent in the
performance of their duties at the time of the accident, and that both vessels were to blame for the
disaster. (Yes, ito lang ang facts na nasa full text ng case)
Plaintiff’s defense
Based his contentions upon the theory of the facts as contended for by him, insists that under the
doctrine of "the last clear chance," the defendant should be held liable because, as he insists, even if
the officers on board the plaintiff’s launch were negligent in failing to exhibit proper lights and in failing
to take the proper steps to keep out of the path of the defendant’s vessel, nevertheless the officers on
defendant’s vessel, by the exercise of due precautions might have avoided the collision by a very
simple maneuver.
ISSUES:
WON plaintiff (Elucid) has a cause of action against defendant. RULING:
Trial court: Euclid was worth at a fair valuation P10,000; that both vessels were responsible for the
collision; and that the loss should be divided equally between the respective owners, P5,000 to be paid
to the plaintiff by the defendant, and P5,000 to be borne by the plaintiff himself.
The trial judge was of opinion that the vessels were jointly responsible for the collision and should be
held jointly liable for the loss resulting from the sinking of the launch. But actions for damages resulting
from maritime collisions are governed in this jurisdiction by the provisions of section 3, title 4, Book III of
the Code of Commerce, and among these provisions we find the following:
"ART. 827. If both vessels may be blamed for the collision, each one shall be liable for its own
damages, and both shall be jointly responsible for the loss and damage suffered by their cargoes."
CA: We are all agreed with the trial judge in his holding that the responsible officers on both vessels
were negligent in the performance of their duties at the time when the accident occurred, and that both
vessels were to blame for the collision.
SUPREME COURT: None. In disposing of this case the trial judge apparently had in mind that portion
of the section which treats of the joint liability of both vessels for loss or damage suffered by their
cargoes. In the case at bar, however, the only loss incurred was that of the launch Euclid itself, which
went to the bottom soon after the collision.
In cases of a disaster arising from mutual negligence of two parties, the party who has a last clear
opportunity of avoiding the accident, notwithstanding the negligence of his opponent, is considered
wholly responsible for it under the common-law rule of liability as applied in the courts of common law in
the United States. But this, is limited in its application by the further rule, that where the previous act of
negligence of one vessel has created a position of danger, the other vessel is not necessarily liable for
the mere failure to recognize the perilous situation; and it is only when in fact it does discover it in time
to avoid the casualty by the use of ordinary care, that it becomes liable for the failure to make use of
this last clear opportunity to avoid the accident
In the case at bar, the most that can be said in support of plaintiff’s contention is that there was
negligence on the part of the officers on defendant’s vessel in failing to recognize the perilous situation
created by the negligence of those in charge of plaintiff’s launch, and that had they recognized it in
time, they might have avoided the accident. But since it does NOT appear from the evidence that they
did, in fact, discover the perilous situation of the launch in time to avoid the accident by the exercise of
ordinary care, it is very clear that under the above set out limitation to the rule, the plaintiff cannot
escape the legal consequences of the contributory negligence of his launch, even were we to hold that
the doctrine is applicable in this jurisdiction, upon which point we expressly reserve our decision at this
time.
Smith Bell And Company Inc. And Tokyo Marine And Fire Insurance Co., Inc Vs. Court Of
Appeals And Carlos A. Go Thong And Co.,
KEYWORD: #DonCarlos #YotaiMaru #Banggaantayu...then selfie after XD
BONUS Key: Justice (herein CFI Judge) Bernardo P. Fernandez ^_^
DOCTRINE: CIVIL LAW; QUASI-DELICT; NEGLIGENCE; FACTORS CONSTITUTIVE THEREOF
WHICH NEGLIGENCE WAS THE PROXIMATE CAUSE OF THE COLLISION; 3 Principal Factors
FACTS:
On 3 May 1970, 3:50 a.m., on the approaches to the port of Manila near Caballo Island, a collision took
place between the M/V “Don Carlos,” an interisland vessel owned and operated by Carlos A. Go Thong
and Company (”Go Thong”), and the M/S “Yotai Maru,” a merchant vessel of Japanese registry. The
“Don Carlos” was then sailing south bound leaving the port of Manila for Cebu, while the “Yotai Maru”
was approaching the port of Manila, coming in from Kobe, Japan. The bow of the “Don Carlos” rammed
the portside (left side) of the “Yotai Maru” inflicting a 3 cm. gaping hole on her portside near Hatch 3,
through which seawater rushed in and flooded that hatch and her bottom tanks, damaging all the cargo
stowed therein. The consignees of the damaged cargo got paid by their insurance companies.
The insurance companies in turn, having been subrogated to the interests of the consignees of the
damaged cargo, commenced actions against Go Thong for damages sustained by the various
shipments in the then CFI of Manila. 2 cases were filed in the CFI of Manila.
The first case was commenced by Smith Bell and Sumitomo Marine and Fire Insurance Company Ltd.,
against Go Thong, in Branch 3, which was presided over by Judge Bernardo P. Fernandez.
The second case was filed by Smith Bell and Company, Inc. and Tokyo Marine and Fire Insurance
Company, Inc. against Go Thong in Branch 4, which was presided over by then Judge, later Associate
Justice of this Court, Serafin R. Cuevas. Civil Cases 82567 (Judge Fernandez) and 82556 (Judge
Cuevas) were tried under the same issues and evidence relating to the collision between the “Don
Carlos” and the “Yotai Maru” the parties in both cases having agreed that the evidence on the collision
presented in one case would be simply adopted in the other.
ISSUE: Whether or not M/V Don Carlos was negligent and thus shall be held liable for the collision
PETITIONER’S CONTENTION: In their Petition for Review, petitioners assail the finding and conclusion
of the Sison Decision, that the "Yotai Maru" was negligent and at fault in the collision, rather than the
"Don Carlos."
RESPONDENT’S CONTENTION:
Private respondent Go Thong, upon the other hand, argues that the Supreme Court, in rendering its
minute Resolution in G.R. No. L-48839, had merely dismissed Go Thong’s Petition for Review of the
Reyes, L.B., J. Decision for lack of merit but had not affirmed in toto that Decision. Thus, Go Thong
concludes, this Court did not hold that the "Don Carlos" had been negligent in the collision.
RULING:
1. TRIAL COURT: In favor of petitioner. In both cases, the Manila CFI held that the officers and crew of
the “Don Carlos” had been negligent, that such negligence was the proximate cause of the collision and
accordingly held Go Thong liable for damages to the insurance companies.
2. APPELLATE COURT
a) In CA-GR 61320-R, the Court of Appeals through Reyes, L.B., J., rendered affirmed the Decision of
Judge Fernandez. Go Thong moved for reconsideration, without success.
b) In CA-GR 61206-R, the Court of Appeals through Sison, P.V., J., reversed the Cuevas Decision and
held the officers of the “Yotai Maru” at fault in the collision with the “Don Carlos,” and dismissed the
insurance companies’ complaint. Smith Bell & Co. and the Tokyo Marine & Fire Insurance Co. Inc.
asked for reconsideration, to no avail. Hence, the petition for review on certiorari.
3. SUPREME COURT: M/V Don Carlos was negligent.
(a) Reyes ( √ ) J. Fernandez decision: Go Thong then went to the Supreme Court on Petition for
Review. Supreme Court denied the Petition for lack of merit. Go Thong filed a Motion for
Reconsideration; the Motion was denied by the Supreme Court .
(b) Sison ( X )Cuevas decision: The Supreme Court reversed and set aside the Decision of the Court of
Appeals in CA-GR 61206-R, and reinstated and affirmed the decision of the trial court in its entirety;
with costs against Go Thong.
The SC ruled that M/V Don Carlos was negligent and its negligence was the sole proximate cause of
the collision and of the resulting damages. The Court believes that there are three (3) principal factors
which are constitutive of negligence on the part of the "Don Carlos," which negligence was the
proximate cause of the collision.
1) The failure of the "Don Carlos" to comply with the requirements of Rule 18 (a) of the International
Rules of the Road. (page 499 footnote in Aquino transpo book 2011 ed)
2) "Don Carlos" was its failure to have on board that might a "proper look-out" as required by Rule I (B).
Under Rule 29 of the same set of Rules, all consequences arising from the failure of the "Don Carlos" to
keep a "proper look-out" must be borne by the "Don Carlos.
A "proper look-out" is one who has been trained as such and who is given no other duty save to act as
a look-out and who is stationed where he can see and hear best and maintain good communication
with the officer in charge of the vessel, and who must, of course, be vigilant.
3) The third factor constitutive of negligence on the part of the "Don Carlos" relates to the fact that
Second Mate Benito German was, immediately before and during the collision, in command of the "Don
Carlos." Second Mate German simply did not have the level of experience, judgment and skill essential
for recognizing and coping with the risk of collision as it presented itself that early morning when the
"Don Carlos," running at maximum speed and having just overtaken the "Don Francisco" then
approximately one mile behind to the starboard side of the "Don Carlos," found itself head-on or nearly
head-on vis-a-vis the "Yotai Maru." It is essential to point out that this situation was created by the "Don
Carlos" itself.
Article 633 of the Code of Commerce provides: “The second mate shall take command of the vessel in
case of the inability or disqualification of the captain and sailing mate, assuming, in such case, their
powers and liability.” National Development Company vs. Court of Appeals
KEYWORD/s: Doña Nati <3 Yasushima Maru
DOCTRINES: The laws of the Philippines will apply in case at bar and it is immaterial whether the
collision actually occurred in foreign waters. Liability of owner and agent of vessel; The agent even
though he was not the owner of the vessel, is liable to the shippers and owners of cargo transported by
it, for losses and damages to the cargo without prejudice to his rights against the owner of the ship.— It
is well settled that both the owner and agent of the offending vessel are liable for the damage done
where both are impleaded; that in case of collision, both the owner and the agent are civilly responsible
for the acts of the captain
FACTS:
* A memorandum was entered into between defendants National Development Company (NDC) and
Maritime Company of the Philippines (MCP) on September 13, 1962:
* Defendant NDC as the first preferred mortgagee of 3 ocean-going vessels including vessel “Doña
Nati” appointed defendant MCP as its agent to manage and operate said vessels in its behalf.
* February 28, 1964 - The E. Phillipp Corporation of the New York loaded on board the vessel “Doña
Nati” at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to the order
of Manila Banking Corporation and the People’s Bank and Trust Company, acting for and in behalf of
the Pan Asiatic Commercial Company,
Inc., who represents Riverside Mills Corporation
* At 6:04 a.m. on April 15, 1964 at Ise Bay, Japan - the vessel figured in a collision with a Japanese
vessel (‘SS Yasushima Maru’) as a result of which 550 bales of aforesaid cargo were lost and/or
destroyed
* The damage and lost cargo was worth P344,977.86 which amount, the Development Insurance and
Surety Corporation as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of
lading duly endorsed. The insurer filed before the CFI of Manila an action for the recovery of said
amount from NDC and MCP.
PETITIONERS’ CONTENTION: The Carriage of Goods by Sea Act should apply to the case at bar and
not the Civil Code or the Code of Commerce, in determining the liability for loss of cargos resulting from
the collision outside the territorial jurisdiction of the PH Under Section 4 (2) of said Act, the carrier is
NOT responsible for the loss or damage resulting from the "act, neglect or default of the master,
mariner, pilot or the servants of the carrier in the navigation or in the management of the ship."
Petitioners insist that based on the findings of the trial court which were adopted by the Court of
Appeals, both pilots of the colliding vessels were at fault and negligent.
PRIVATE RESPONDENT’S CONTENTION: DISC had paid as insurer the total amount of P364, 915.86
to the consignees or their successors-in-interest, for the said lost or damaged cargoes. and thus
entitled to recovery from the ship owner or carrier.
ISSUE: W/N the COGSA will apply to collision of vessels in foreign waters
RULING:
TRIAL COURT: NDC and MCP are liable to DISC; COGSA was not applied in determining the liability
of NDC and MCP
COURT OF APPEALS: affirmed in toto
SUPREME COURT: NO. The Code of Commerce is applicable in the case. It was held 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”.
Thus, the rule was specifically 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.
It appears, however, that collision falls among matters NOT specifically regulated by the Civil Code, so
that no reversible error can be found in respondent court’s application to the case at bar of Articles 826
to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels.
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 ship
owner or carrier, is not exempt from liability for damages arising from collision due to the fault or
negligence of the captain.
Primary liability is imposed on the shipowner 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.
MCP’s claim that the fault or negligence can only be attributed to the pilot of the vessel SS Yasushima
Maru and not to the Japanese Coast pilot navigating the vessel Dona Nati, need not be discussed
lengthily as said claim is not only at variance with NDC’s posture, but also contrary to the factual
findings of the trial court affirmed no less by the Court of Appeals, that both pilots were at fault for not
changing their excessive speed despite the thick fog obstructing their visibility.
Mecenas vs CA, Capt. Santisteban and Negros Navigation Co. Inc.
Key Phrase : Green Light Starboard (Chap3 keyword : mahjong)
Doctrine :"Route observance" of the International Rules of the Road (Rule18) will not relieve a vessel
from responsibility if the collision could have been avoided by proper care and skill on her part or even
by a departure from the rules.
FACTS:
1. "M/V Don Juan" sank within 10-15 min from impact causing the death of hundreds of its passengers
(the collision incident happened around 10:30pm of April 22, 1980 when the sea was calm, the weather
fair and the visibility was good)
a. Defendant PNOC's version - An interisland vessel (M/V Don Juan) owned and operated by Negros
Navigation was first sighted at about 5 or 6 miles from a bargetype oil tanker (M/T Tacloban City)
owned by the Philippine National Oil Company (PNOC) and operated PNOC Shipping
Don Juan was on the starboard (right) side of Tacloban City and as it approached, Tacloban City gave
a leeway of 10° to the left to enable Tacloban to see the direction of Don Juan.
Don Juan switched to green light, signifying that it will pass Tacloban City's right side; it will be a
starboard to starboard passing and Tacloban City's purpose in giving a leeway of 10° at this point, is to
give Don Juan more space for her passage (this leeway was increased by Tacloban City to an
additional 15° towards the left) at this time the way was clear and Don Juan has not changed its
course.When Tacloban City altered its course the second time, from 300° to 285°, Don Juan was about
4.5 miles away and despite executing a hardport maneuver, the collision nonetheless occurred as Don
Juan rammed the Tacloban City near the starboard bow
b. Negros Navigations version: Don Juan first sighted Tacloban City 4 miles away and Tacloban City
showed its red and green lights twice; it proceeded to, and will cross, the path of Don Juan (Tacloban
was on the left side of Don Juan)
Upon seeing Tacloban's red and green lights, Don Juan executed hard starboard (Tacloban was about
1,500 feet away) in conformity with the rule that "when both vessels are head on or nearly head on,
each vessel must turn to the right in order to avoid each other"; nonetheless, Tacloban appeared to be
heading towards Don Juan.
Don Juan, after execution of hard starboard, will move forward 200 meters before the vessel will
respond to such maneuver; Between 9 to 15 seconds from execution of hard starboard, collision
occurred.
2. Alleging negligence of defendants, the 7 legitimate children of Sps. Mecenas file a complaint against
Negros Navigation and the captain of the "Don Juan" (Capt. Roger Santisteban).
ISSUES: Whether or not private respondents acted recklessly (with gross negligence).
RULING:
Regional Trial Court of QC – defendants are equally negligent and liable area by visual contact at a
distance of something like 6 miles from each other and they were fully aware that if they continued on
their course, they will meet head on. They executed maneuvers inadequate, and too late, to avoid
collision thus the defendants are equally negligent and are liable for damages.
Court of Appeals: "Don Juan" was at least as negligent as the M/T "Tacloban City" in the events leading
up to the collision and the sinking of the "Don Juan."
Supreme Court – petition for review on certiorari is granted (CA = reversed & set aside)
1. Grossness of the negligence of "Don Juan" underscored in the context of the following facts:
a) "Don Juan" was more than twice as fast as the "Tacloban City" because The "Don Juan's" top speed
was 17 knots while that of the "Tacloban City" was 6.3. knots
b) "Don Juan" carried the full complement of officers and crew members specified for a passenger
vessel of her class
c) "Don Juan" was equipped with radar which was functioning that night
d) "Don Juan's" officer on-watch had sighted the "Tacloban City" on his radar screen while the latter
was still four (4) nautical miles away and visual confirmation of radar contact was established by the
"Don Juan" while the "Tacloban City" was still 2.7 miles away
2. Had "Don Juan" taken seriously its duty of extraordinary diligence, it could have easily avoided the
collision with the "Tacloban City," and indeed, the "Don Juan" might well have avoided the collision
even if it had exercised ordinary diligence merely.
3. In ordinary circumstances, a vessel discharges her duty to another by a faithful and literal
observance of the Rules of Navigation, and she cannot be held at fault for so doing even though a
different course would have prevented the collision BUT this rule is not to be applied where it is
apparent, as in the instant case, that her captain was guilty of negligence or of a want of seamanship in
not perceiving the necessity for, or in so acting as to create such necessity for, a departure from the
rule and acting accordingly.
4. "Don Juan" having sighted the "Tacloban City" when it was still a long way off was negligent in failing
to take early preventive action and in allowing the 2 vessels to come to such close quarters as to render
the collision inevitable when there was no necessity for passing so near to the "Tacloban City" as to
create that hazard or inevitability, for the "Don Juan" could choose its own distance AND it is
noteworthy that the "Tacloban City," upon turning hard to port shortly before the moment of collision,
signaled its intention to do so by giving two (2) short blasts with horn while the "Don Juan " gave no
answering horn blast to signal its own intention and proceeded to turn hard to starboard.
5. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross
negligence in connection with the collision of the "Don Juan" and "Tacloban City" and the sinking of the
"Don Juan" leading to the death of hundreds of passengers and we find no necessity for passing upon
the degree of negligence or culpability properly attributable to PNOC and PNOC Shipping or the master
of the "Tacloban City," since they were never impleaded here.
Aboitiz Shipping vs General Accident Fire and Life Insurance Corp
Keyword: sinking ship, varying decisions of the TC and CA
Facts:
Aboitiz Shipping is the owner and operator of M/V P. Aboitiz. The vessel sank while on a voyage from
Hongkong to the Philippines. Several suits for recovery of the lost cargo either by the shippers, their
successors-in-interest, or the cargo insurers like General Accident (GAFLAC) were filed. The Board of
Marine Inquiry (BMI), on its initial investigation found that such sinking was due to force majeure and
that subject vessel, at the time of the sinking was seaworthy. The trial court ruled against the carrier on
the ground that the loss did not occur as a result of force majeure. This was affirmed by the CA and
ordered the immediate execution of the full judgment award. However, other cases have resulted in the
finding that vessel was seaworthy at the time of the sinking, and that such sinking was due to force
majeure. Due to these different rulings, Aboitiz seeks a pronouncement as to the applicability of the
doctrine of limited liability on the totality of the claims vis a vis the losses brought about by the sinking of
the vessel M/V P. ABOITIZ, as based on the real and hypothecary nature of maritime law. Aboitiz
argued that the Limited
Liability Rule warrants immediate stay of execution of judgment to prevent impairment of other
creditors' shares.
Issue: Whether the Limited Liability Rule arising out of the real and hypothecary nature of maritime law
should apply in this and related cases.
Petitioner’s Contention:
1. The Limited Liability Rule warrants immediate stay of execution of judgment to prevent impairment of
other creditors' shares;
2. The finding of unseaworthiness of a vessel is not necessarily attributable to the shipowner; and
3 The principle of "Law of the Case" is not applicable to the present petition.
Respondent’s Contention:
1. There is no limited liability to speak of or applicable real and hypothecary rule under Article 587, 590,
and 837 of the Code of Commerce in the face of the facts found by the lower court (Civil Case No.
144425), upheld by the Appellate Court (CA G.R. No. 10609), and affirmed in toto by the Supreme
Court in G.R. No. 89757 which cited G.R. No. 88159 as the Law of the Case; and
2. Under the doctrine of the Law of the Case, cases involving the same incident, parties similarly
situated and the same issues litigated should be decided in conformity therewith following the maxim
stare decisis et non quieta movere.
Ruling:
Trial Court and CA: The rulings vary which prompted petitioner to file the present action.
Supreme Court: The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the guaranty for their settlement. It has its origin
by reason of the conditions and risks attending maritime trade in its earliest years when such trade was
replete with innumerable and unknown hazards since vessels had to go through largely uncharted
waters to ply their trade. It was designed to offset such adverse conditions and to encourage people
and entities to venture into maritime commerce despite the risks and the prohibitive cost of shipbuilding.
Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined
to the vessel itself, its equipment, freight, and insurance, if any, which limitation served to induce
capitalists into effectively wagering their resources against the consideration of the large profits
attainable in the trade. The Limited Liability Rule in the Philippines is taken up in Book III of the Code of
Commerce, particularly in Articles 587,590, and 837, hereunder quoted in toto :
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which
may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but
he may exempt himself there from by abandoning the vessel with all her equipment and the freight it
may have earned during the voyage.
Art. 590. The co-owners of a vessel shall be civilly liable in the proportion of their
interests in the common fund for the results of the acts of the captain referred to in
Art. 587. Each co-owner may exempt himself from this liability by the abandonment, before a notary, of
the part of the vessel belonging to him.
Art. 837. The civil liability incurred by shipowners in the case prescribed in this section (on collisions),
shall be understood as limited to the value of the vessel with all its appurtenances and freightage
served during the voyage.
The only time the Limited Liability Rule does not apply is when there is an actual finding of negligence
on the part of the vessel owner or agent.
In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from
the insurance proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss.
No claimant can be given precedence over the others by the simple expedience of having filed or
completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even
those already final and executory, must be stayed pending completion of all cases occasioned by the
subject sinking. Then and only then can all such claims be simultaneously settled, either completely or
pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims.
The petition was granted.
The Philippine American General Insurance Company v. Court of Appeals
Doctrine: The right of abandonment of vessels, as a legal limitation of a shipowner’s liability, does not
apply to cases where the injury or average was occasioned by the shipowner’s own fault. It must be
stressed at this point that Art. 587 speaks only of situations where the fault or negligence is committed
solely by the captain.
Keyword: Cocacola
Facts:
Coca-Cola Bottlers Philippines, Inc., loaded on board “MV Asilda,” a vessel owned and operated by
respondent Felman Shipping Lines (FELMAN for brevity), 7,500 cases of 1-liter Coca-Cola softdrink
bottles to be transported from Zamboanga City to Cebu City for consignee Coca-Cola Bottlers
Philippines, Inc., Cebu.[1] The shipment was insured with petitioner Philippine American General
Insurance Co., Inc. (PHILAMGEN for brevity).
“MV Asilda” left the port of Zamboanga in fine weather at eight o’clock in the evening of the same day.
At around eight forty-five the following morning, the vessel sank in the waters of Zamboanga del Norte
bringing down her entire cargo with her including the subject 7,500 cases of 1-liter Coca-Cola softdrink
bottles. The consignee Coca-Cola Bottlers Philippines, Inc. filed a claim with respondent FELMAN for
recovery of damages. Respondent denied the claim thus prompting the consignee to file an insurance
claim with PHILAMGEN.
Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which
disclaimed any liability for the loss. Consequently, PHILAMGEN sued the shipowner for sum of money
and damages. PHILAMGEN alleged that the sinking and total loss of “MV Asilda” and its cargo were
due to the vessel’s unseaworthiness as she was put to sea in an unstable condition. It further alleged
that the vessel was improperly manned and that its officers were grossly negligent in failing to take
appropriate measures to proceed to a nearby port or beach after the vessel started to list.
FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor
of PHILAMGEN was transmitted by the shipper, because it had abandoned all its rights, interests and
ownership over “MV Asilda” together with her freight and appurtenances for the purpose of limiting and
extinguishing its liability.
Issues: a) whether “MV Asilda” was seaworthy when it left the port of Zamboanga; (b) whether the
limited liability under Art. 587 of the Code of Commerce should apply.
Ruling
Trial Court: Rendered judgment in favor of FELMAN. It ruled that “MV Asilda” was seaworthy when it
left the port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the
shipowner’s surveyor attesting to its seaworthiness. Thus the loss of the vessel and its entire shipment
could only be attributed to either a fortuitous event, in which case, no liability should attach unless there
was a stipulation to the contrary, or to the negligence of the captain and his crew.
Appellate Court: Rendered judgment finding “MV Asilda” unseaworthy for being top- heavy as 2,500
cases of Coca-Cola softdrink bottles were improperly stowed on deck. In other words, while the vessel
possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the
structure of the ship itself, it was not seaworthy with respect to the cargo. Supreme Court:
a. “MV Asilda” was unseaworthy when it left the port of Zamboanga. The vessel was designed as a
fishing vessel x x x x and it was not designed to carry a substantial amount or quantity of cargo on
deck. Therefore, the cargo had been confined to those that could have been accommodated under
deck, her stability would not have been affected and the vessel would not have been in any danger of
capsizing, even given the prevailing weather conditions at that time of sinking. But from the moment
that the vessel was utilized to load heavy cargo on its deck, the vessel was rendered unseaworthy for
the purpose of carrying the type of cargo because the weight of the deck cargo so decreased the
vessel’s metacentric height as to cause it to become unstable. Considering that the ship’s hatches were
properly secured, the empty Coca-Cola cases recovered could have come only from the vessel’s deck
cargo. It is settled that carrying a deck cargo raises the presumption of unseaworthiness unless it can
be shown that the deck cargo will not interfere with the proper management of the ship. However, in
this case it was established that “MV Asilda” 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. The strong winds and waves encountered by the vessel are but the ordinary
vicissitudes of a sea voyage and as such merely contributed to its already unstable and unseaworthy
condition.
b. On the second issue, Art. 587 of the Code of Commerce is not applicable to the case at bar. Simply
put, the ship agent is liable for the negligent acts of the captain in the care of goods loaded on the
vessel. This liability however can be limited through abandonment of the vessel, its equipment and
freightage as provided in
Art. 587. Nonetheless, there are exceptional circumstances 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 shipowner
and the captain.
The international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a
shipowner’s liability, does not apply to cases where the injury or average was occasioned by the
shipowner’s own fault. It must be stressed at this point that Art. 587 speaks only of situations where the
fault or negligence is committed solely by the captain. Where the shipowner is likewise to be blamed,
Art. 587 will not apply, and such situation will be covered by the provisions of the Civil Code on
common carrier.