1.

WING KEE COMPRADORING CO VS BARK MONONGAHELA GAB

G.R. No. L-19540

January 29, 1923

WING KEE COMPRADORING COMPANY, plaintiff-appellant,

vs.
THE BARK "MONONGAHELA," VICTOR S. FOX & CO., INC., owner of the bark Monongahela,
THE ADMIRAL LINE, and C. G. LOTHIGIUS, defendants-appellees.
The plaintiff in this case, Wing Kee Compradoring Company, seeks to recover from the
defendants, principally the Admiral Line, as agent for the Bark Monongahela, the sum of
P17,675.64, with interest and costs, on account of goods, wares, and merchandise sold and
delivered by the plaintiff to the defendants for the use of the crew of theBark Monongahela.
he debt was due from the Admiral Line, the agent; C. G. Lothigius, the captain of the boat; and the
owners of the boat, either Victor S. Fox & Co., Inc., or the United States Shipping Board
Emergency Fleet Corporation. Captain Lothigius and the Admiral Line answered. The owners were
not cited to appear. No action against the bark was taken. Following the trial, judgment was
rendered dismissing the complaint, without special finding as to costs. Turning next to the facts,
the exhibits of record show that beginning with March 16, 1921, and ending with August 16, 1921,
various supplies were furnished the Bark Monongahela by Wing Kee Compradoring Company.
Most of the bills for these goods are made out against the "Admiral Line, S.S. Monongahela."
The first requisitions for the supplies are on forms headed "The Admiral Line." Then follows
Manila, the date, and the name, "Wing Kee Compradoring Co." Next is the order, reading: "Please
deliver to S. S. Monongahela now lying at Bay, the following goods and send bills to the Admiral
Line:". After this goods are named. At the foot is found, "United States Shipping Board
Emergency Fleet Corporation," although these words are erased in a few of the requisitions, "The
Admiral Line (Pacific Steamship Co.) Operating Agents. By J. J. Armstrong." On the side of the
requisitions in red ink is the following: "Note: This requisition must be receipted by either Chief
Officer, Chief Steward or Chief Engineer and returned to the Admiral Line, with six copies of
invoice immediately after delivery of goods." After May 4, 1921, the requisitions seem to have
been made out by the steward and the master. We deduce from these documents that the Admiral
Line was the operating agent for Monongahela
In the Manila Daily Bulletin for August 2, 1921, appeared the following:
"Notice Bark Monongahela The undersigned hereby give notice that they are not responsible
in any manner whatsoever for any indebtedness incurred by the Bark Monongahela, its Master
and/or Crew The Admiral Line." The trial judge found as a fact that on or before August 4, 1921,
the Admiral Line had ceased to act as agent for theMonongahela. Nevertheless, supplies were
furnished the Monongahela after these dates by the plaintiff.
ISSUE: can Wing Kee sue Admiral Line?
section 1 of Title 2 of our Code of Commerce refers to"Owners of Vessels and Their Agents." The
first article in this section (art. 586), and the provision of law which in our judgment is controlling,
reads:
The owner of a vessel and the agent shall be civilly liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip, and provision the vessel, provided the
creditor proves that the amount claimed was invested therein.
By agent is understood the person intrusted with the provisioning of a vessel, or who represents
her in the port in which she happens to be.

agents buy in their own names, but really for the account of their principal, the seller has an
option to look to either for payment, unless (1) he trusted the agent exclusively; or (2) by the
usage and understanding of the business the agent only is held; or (3) unless the special
circumstances of the case show that only the agent was intended to be bound and the seller knew
it or was chargeable with knowledge of it. Although the English rule that, where the agents buys in
his own name for the account of a foreign principal, the agent only is bound appears not to have
been followed in the United States
Not only this, but the plaintiff has made no effort to bring the owner of the bark into the case and
has pushed with no enthusiasm its case against the captain of the boat. What apparently the
plaintiff wants is for the Admiral Line, as the agent for the Bark Monongahela, to pay the claim,
leaving the latter to reimburse itself, if sees fit, from the owners.
To all this appellee answers that as the agency has ceased, action cannot be brought against the
Admiral Line. To our minds this is a rather far-fetched argument, for, pursued to its logical
conclusion, every agent for a vessel could thus avoid responsibility pursuant to article 568 of the
Code of Commerce, by giving up its agency when threatened with suit to enforce the obligations
of third parties. Moreover, the bills were presented when the Admiral Line was yet the agent.
However, Admiral line is liable only with regard to the supplies furnished before the agency of
Admiral Line ceased.
2. FAR EASTERN SHIPPING CO VS CA NIKKI
3. NATIONAL STEEL CORP VS CA EM
DOCTRINE: A stevedore company engaged in discharging cargo has the duty to load the cargo in a
prudent manner, and it is liable for injury to, or loss of, cargo caused by its negligence and where the
officers and members and crew of the vessel do nothing and have no responsibility in the discharge of
cargo by stevedores, the vessel is not liable for loss of, or damage to, the cargo caused by the negligence
of the stevedores
FACTS:
National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner,
entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSIs vessel, the MV
VLASONS I to make one (1) voyage to load steel products at Iligan City and discharge them at North
Harbor, Manila. VSI carried passengers or goods only for those it chose under a special contract of
charter party.
The vessel arrived with the cargo in Manila, but when the vessels three (3) hatches containing the
shipment were opened, nearly all the skids of tin plates and hot rolled sheets were allegedly found to be
wet and rusty.
NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a
result of the act, neglect and default of the master and crew in the management of the vessel as well as
the want of due diligence on the part of the defendant to make the vessel seaworthy -- all in violation of
defendants undertaking under their Contract of Voyage Charter Hire.
In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I was
seaworthy in all respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier
inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party.
The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.

ISSUE: Whether or not the officers/crew of VLASONS are negligent. NO

HELD: The Ship owners are not liable
The court found that the ship used old tarpaulin to cover the hatches, but only in addition to the new ones
used primarily to make the hatches of the ship watertight. Due diligence was exercised by the officers and
the crew of the MV Vlasons I. It was demonstrated by the fact that, despite encountering rough weather
twice, the new tarpaulin did not give way and the ship's hatches and cargo holds remained waterproof.
NSC failed to discharge its burden to show negligence on the part of the officers and the crew of MV
Vlasons I. On the contrary, the records reveal that it was the stevedores of NSC who were negligent in
unloading the cargo from the ship. The stevedores employed only a tent-like material to cover the hatches
when strong rains occasioned by a passing typhoon disrupted the unloading of the cargo. This tent-like
covering, however, was clearly inadequate for keeping rain and seawater away from the hatches of the
ship.
The fact that NSC actually accepted and proceeded to remove the cargo from the ship during unfavorable
weather will not make VSI liable for any damage caused thereby. In passing, it may be noted that the
NSC may seek indemnification, subject to the laws on prescription, from the stevedoring company at fault
in the discharge operations.
A stevedore company engaged in discharging cargo has the duty to load the cargo in a prudent manner,
and it is liable for injury to, or loss of, cargo caused by its negligence and where the officers and members
and crew of the vessel do nothing and have no responsibility in the discharge of cargo by stevedores the
vessel is not liable for loss of, or damage to, the cargo caused by the negligence of the stevedores
The Court defined demurrage in its strict sense as the compensation provided for in the contract of
affreightment for the detention of the vessel beyond the laytime or that period of time agreed on for
loading and unloading of cargo. It is given to compensate the shipowner for the nonuse of the vessel
Laytime runs according to the particular clause of the charter party. . . . If laytime is expressed in "running
days," this means days when the ship would be run continuously, and holidays are not excepted. A
qualification of "weather permitting" excepts only those days when bad weather reasonably prevents the
work contemplated.
In this case, the contract of voyage charter hire provided for a four-day laytime; it also qualified laytime as
WWDSHINC or weather working days Sundays and holidays included.
The running of laytime was thus made subject to the weather, and would cease to run in the event
unfavorable weather interfered with the unloading of cargo.
Consequently, NSC may not be held liable for demurrage as the four-day laytime allowed it did not lapse,
having been tolled by unfavorable weather condition http://karlmagz.blogspot.ca/2011/02/case-digesttransportation-law-vlasons.html
4. SWITZERLAND GENERAL INSURANCE VS RAMIREZ EUNICE
FACTS:
On December 24, 1975, the petitioner filed an admiralty case against Oyama Shipping Co., Ltd. and its
agent Citadel Lines, Inc. through the petitioners agent F.E. Zuellig, Inc. The complaint alleged that on
December 21, 1974, 60,000 bags of urea nitrogen were shipped from Ninama, Japan on board the S/S
St. Lourdes, owned and operated by Citadel Lines, Inc. and insured by the petitioner for the sum of Php
9,319,105.00 against all risks. The shipment was discharged from the vessel S/S St. Lourdes shipside
into lighters owned by Mabuhay Brokerage Company, Inc. but when the same was subsequently
delivered to and acknowledged by the consignee, it was found out to have sustained losses and or
damage amounting to Php 38,698.94. The amount was paid by petitioner insurance company to the
consignee by virtue of which payment became subrogated to the rights of the latter.

Insurance company filed a case against Oyoma, Citadel and Manila Brokerage Co., as alternative
defendants to determine their liability.
As a defense, Citadel claimed that as an agent of Oyoma, it should not be held liable for the damages
incurred by the goods.
Oyoma on the other hand, claimed that it has no agent to represent it in the Philippines, since it has been
declared insolvent by the Tokyo court, and so the Insurance Company should file its claim there. It also
raised the defense that the negligence was attributable to the shipper, Sumitomo Shoji Kaisha, Ltd for not
having placed the goods in a seaworthy package.It also stated that it was Manila Brokerage who failed to
exercise the diligence required.
RTC: ruled that ONLY Oyoma should be held liable because Citadel is only an agent as contemplated by
the Civil Code, hence, it should not be made liable for the damages incurred. Oyoma raised the defense
of prescription, but it was not substantiated by any evidence. Insolvency would not in any way affect his
liability. Manila Brokerage had exercised diligence, as soon as they saw the damages, it tied the goods
and sewed the torn portions of the package.
ISSUE:
Whether or not Citadel Lines, Inc. may be held primarily liable for the loss/damage found to have been
sustained by subject shipment while on board and / or still in the custody of the said vessel?
HELD:
YES. The lower court erred in applying the law on agency under the Civil Code. The Code of Commerce
provides, among others that the ship agent shall also be 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 equipment and the freightage he may
have earned during the voyage. Citadel Lines, Inc. as the ship agent is liable to the petitioner, solidarily
with its principal Oyama Shipping Co, Ltd.
RATIO:
A ship agent, according to Article 586 of the Code of Commerce, is the person entrusted with the
provisioning
It is not disputed by the private respondent that it is the local representative in the Philippines of the
Oyama Shipping Co., Ltd. and, as alleged by petiti oner, upon arrival of the vessel S/S "St. Lourdes" in
Manila, it took charge of the unloading of the cargo and issued cargo receipts (or tally sheets) in its own
name, for the purpose of evidencing discharge of cargoes and the conditions thereof from the vessel to
the arrastre operators and /or unto barges/lighters, and that claims against the vessel S/S "St. Lourdes"
for losses/damages sustained by shipments were in fact filed and processed by respondent Citadel Lines,
Inc. These facts point to the inevitable conclusion that private respondent is the entity that represents the
vessel in the port of Manila and hence is a ship agent within the meaning and context of Article 586 of the
Code of Commerce.
The Code of Commerce provides, among others, that the ship agent shall also be 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 freightage he may have earned during the voyage. (Article 587).
In addition, Article 618 of the same Code states:
Art. 618. The captain shall be civilly liable to the ship agent and the latter to the third persons who may
have made contracts with the former
1. For all the damages sufferred by the vessel and its cargo by reason of want of skill or negligence on his
part. If a misdemeanor or crime has been committed he shall be liable in accordance with the Penal
Code.
2. For all the thefts and robberies committed by the crew, reserving his right of action against the guilty
parties.
3. For the losses, fines, and confiscations imposed on account of violation. of the laws and regulations of
customs, police, health, and navigation
4. For the losses and damages caused by mutinies on board the vessel or by reason of faults committed
by the crew in the service and defense of the same, if he does not prove Chat, he made full use of his
authority to prevent or avoid them.
5. For those arising by reason of a misuse of powers and non-fulfillment of the duties which pertain to him
in accordance with Articles 610 and 612.
6. For those arising by reason of his going out of his course or taking a course which, in the opinion of the
officers of the vessel, at a meeting attended by the shippers or super cargoes who may be on board, he
should not have taken without sufficient cause.
No exception whatsoever shall exempt him from his obligation.
7. For those arising by reason of his voluntarily entering a port other than his destination, with the
exception of the cases or without the formalities referred to in Article 612.
8. For those arising by reason of the non-observance of the provisions contained in the regulations for
lights and maneuvers for the purpose of preventing collisions.
At any rate, the liabilities of the ship agent are not disputed by private respondent. It appearing that the
Citadel Lines is the ship agent for the vessel S/S "St. Lourdes" at the port of Manila, it is, therefore, liable
to the petitioner, solidarily with its principal, Oyama Shipping Co., Ltd., in an amount representing the
value of the goods lost and or damaged, amounting to P38,698.94, which was likewise the amount paid
by petitioner, as insurer, to the insured consignee As found by the court a quo, there has been no proof
presented to show that the officers of the vessel, in whose custody the goods were lost or damaged, are
exempt from liability therefrom and that the damage was caused by factors and circumstances exempting
them from liability.
The insolvency of Oyama Lines has no bearing on the instant case insofar as the liability of Citadel Lines,
Inc. is concerned. The law does does not make the liability of the ship agent dependent upon the
solvency or insolvency of the ship owner.
WHEREFORE, the decision appealed from is modified, and private respondent Citadel Lines, Inc. is
hereby ordered to pay, solidarily with its principal, Oyama Lines (Oyama Shipping Co., LTD.), the amount
of P38,698.94, with interest thereon at the legal rate from the date of the filing of the complaint on
December 24, 1975 until fully paid, P5,000.00 as attorney's fees and the costs of suit. The rest of the
decision is affirmed. No pronouncement as to costs.
5. SWEET LINES VS CA VANESSA

RESOLUTION
DOCTRINE: The "interruption" was not due to fortuitous event or force majeure nor to disability of the vessel. Having been caused
by the captain upon instruction of management, the passengers' right to indemnity is evident. The owner of a vessel and the ship
agent shall be civilly liable for the acts of the captain.

FACTS:
PRs (Quintos, Bacatan Cabras and Veloso) purchased first- class tickets from petitioner at the latter's office in Cebu City. They were
to board petitioner's vessel, M/V Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing at the scheduled hour
of about midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July 9, 1972 only to be towed back to Cebu due to engine
trouble, arriving there at about 4:00 P.M. on the same day. Repairs having been accomplished, the vessel lifted anchor again on
July 10, 1972 at around 8:00 A.M.

Instead of docking at Catbalogan, which was the first port of call, the vessel proceeded direct to Tacloban at around 9:00 P.M.
of July 10, 1972. Private respondents had no recourse but to disembark and board a ferryboat to Catbalogan.
Hence, this suit for damages for breach of contract of carriage.

TC& CA: NO FORTUITOUS EVENT. MECHANICAL DEFECTS ARE NOT CONSIDERED CASO FORTUITO. Even granting
arguendo that the engine failure was a fortuitous event, it accounted only for the delay in departure. When the vessel finally left
the port of Cebu on July 10, 1972, there was no longer any force majeure that justified by-passing a port of call. The vessel was
completely repaired the following day after it was towed back to Cebu. Ordered Sweet Lines to pay PRs. MD = 175k to be divided
among them, ED = 30k, and AF = 5k.

ISSUE: Whether Sweet Lines is liable? YES.

HELD:
REASON FOR BY-PASSING CATBALOGAN: (As admitted by petitioner's General Manager) was to enable the vessel to catch up
with its schedule for the next week. The record also discloses that there were 50 passengers for Tacloban compared to 20
passengers for Catbalogan, so that the Catbalogan phase could be scrapped without too much loss for the company.
Sweet Lines cannot rely on the conditions in small bold print at the back of the ticket reading.
The passenger's acceptance of this ticket shall be considered as an acceptance of the following conditions:
3. In case the vessel cannot continue or complete the trip for any cause whatsoever, the carrier reserves the right to bring the
passenger to his/her destination at the expense of the carrier or to cancel the ticket and refund the passenger the value of his/her
ticket;
11. The sailing schedule of the vessel for which this ticket was issued is subject to change without previous notice.

Even assuming that those conditions are squarely applicable to the case at bar, petitioner did not comply with the same. It did not
cancel the ticket nor did it refund the value of the tickets to private respondents. Besides, it was not the vessel's sailing
schedule that was involved. Private respondents' complaint is directed not at the delayed departure the next day but at the bypassing of Catbalogan, their destination. Had petitioner notified them previously, and offered to bring them to their destination at its
expense, or refunded the value of the tickets purchased, perhaps, this controversy would not have arisen.

The governing provisions are found in the Code of Commerce and read as follows:

ART. 614. A captain who, having agreed to make a voyage, fails to fulfill his undertaking, without being prevented by fortuitous
event or force majeure, shall indemnify all the losses which his failure may cause, without prejudice to criminal penalties which may
be proper.

ART. 698. In case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in proportion to the
distance covered, without right to recover damages if the interruption is due to fortuitous event or force majeure, but with a right to
indemnity, if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the

disability of the vessel, and the passenger should agree to wait for her repairs, he may not be required to pay any increased fare of
passage, but his living expenses during the delay shall be for his own account.

The crucial factor then is the existence of a fortuitous event or force majeure. Without it, the right to damages and indemnity
exists against a captain who fails to fulfill his undertaking or where the interruption has been caused by the captain exclusively.

The voyage to Catbalogan was "interrupted" by the captain upon instruction of management. The "interruption" was not due
to fortuitous event or for majeure nor to disability of the vessel. Having been caused by the captain upon instruction of management,
the passengers' right to indemnity is evident. The owner of a vessel and the ship agent shall be civilly liable for the acts of the
captain.

Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract where the defendant acted fraudulently
or in bad faith.

TC & CA found that there was bad faith on the part of petitioner in that:
- did not give notice to plaintiffs- appellees as to the change of schedule of the vessel;
- despite knowing fully well that it would take no less than fifteen hours to effect the repairs of the damaged engine, Sweet Lines
instead made announcement of assurance that the vessel would leave within a short period of time, and when PRs wanted to leave
the port and gave up the trip, Sweet Lines employees would come and say, 'we are leaving, already.'
- did not offer to refund plaintiffs-appellees' tickets nor provide them with transportation from Tacloban City to Catbalogan.
Under the circumstances, however, award of MD excessive and accordingly reduce them to 3k, respectively, for each of the private
respondents.

The total award of AF of 5k is in order.

Insofar as ED are concerned, although there was bad faith, the Court is not inclined to grant them in addition to moral damages.
Exemplary damages cannot be recovered as a matter of right; the Court decides whether or not they should be adjudicated. The
objective to meet its schedule might have been called for, but petitioner should have taken the necessary steps for the protection of
its passengers under its contract of carriage.

DISPOSITIVE PORTION: ACCORDINGLY, the judgment appealed from is hereby modified in that petitioner is hereby sentenced to
indemnify private respondents in the sum of P3,000.00 each, without interest, plus P1,250.00, each, by way of att/rney's fees and
litigation expenses. Costs against petitioner.

6. INTER-ORIEN MARITIME ENTERPRISES VS NLRC KIKOY

G.R. No. 115286 August 11, 1994
INTER-ORIENT MARITIME ENTERPRISES, INC., SEA HORSE SHIP, INC. and TRENDA WORLD SHIPPING (MANILA), INC.,
petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and RIZALINO D. TAYONG, respondents.
Sorry mahaba yung facts, ang daming technical shiz kasi. Pero to cut the facts short, Si Toyong yung captain ng ship(Biyahe is
from hong kong South Africa), nagkaproblema yung ship at tumirik during the voyage, nagrequest siya ng supplies to repair
the ship, late dumating yung supplies. Sinabihan siya na pwede naman daw bumiyahe yung ship, pero di pumayag si tayong
kasi baka di kayanin. So ayun pag dating niya sa destination, tayong got fired dahil daw sa delay di nagbayad yung charterer.
Hence the Illegal dismissal case.
Doctrine: a ship's captain must be accorded a reasonable measure of discretionary authority to decide what the safety of the
ship and of its crew and cargo specifically requires on a stipulated ocean voyage. The captain is held responsible, and

properly so, for such safety. He is right there on the vessel, in command of it and (it must be presumed) knowledgeable as to
the specific requirements of seaworthiness and the particular risks and perils of the voyage he is to embark upon. The
applicable principle is that the captain has control of all departments of service in the vessel, and reasonable discretion as to
its navigation.
The captain of a vessel is a confidential and managerial employee within the meaning of the above doctrine. A master or
captain, for purposes of maritime commerce, is one who has command of a vessel. A captain commonly performs three (3)
distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical director of the vessel; and
(3) he is a representative of the country under whose flag he navigates.
Facts:

Private respondent Captain Rizalino Tayong, a licensed Master Mariner with experience in commanding ocean-going vessels,
was employed on 6 July 1989 by petitioners Trenda World Shipping (Manila), Inc. and Sea Horse Ship Management, Inc.
through petitioner Inter-Orient Maritime Enterprises, Inc. as Master of the vessel M/VOceanic Mindoro, for a period of one
(1) year, as evidenced by an employment contract.

On 15 July 1989, Captain Tayong assumed command of petitioners' vessel at the port of Hongkong. His instructions were to
replenish bunker and diesel fuel, to sail forthwith to Richard Bay, South Africa, and there to load 120,000 metric tons of coal.

On 16 July 1989, while at the Port of Hongkong and in the process of unloading cargo, Captain Tayong received a weather
report that a storm code-named "Gordon" would shortly hit Hongkong. Precautionary measures were taken to secure the
safety of the vessel, as well as its crew, considering that the vessel's turbo-charger was leaking and the vessel was fourteen
(14) years old.

Tayong followed-up the requisition by the former captain of the Oceanic Mindoro for supplies of oxygen and acetylene,
necessary for the welding-repair of the turbo-charger and the economizer.

This requisition had been made upon request of

the Chief Engineer of the vessel and had been approved by the shipowner.

the vessel sailed from Hong Kong for Singapore. In the Master's sailing message, Captain Tayong reported a water leak from
M.E. Turbo Charger No. 2 Exhaust gas casing. He was subsequently instructed to blank off the cooling water and maintain
reduced RPM unless authorized by the owners.

while the vessel was en route to Singapore, Captain Tayong reported that the vessel had stopped in mid-ocean for six (6)
hours and forty-five (45) minutes due to a leaking economizer. He was instructed to shut down the economizer and use the
auxiliary boiler instead.

On 31 July 1989 at 0607 hrs., the vessel arrived at the port of Singapore.
the oxygen and acetylene supplies had not been delivered.

The Chief Engineer reminded Captain Tayong that

Captain Tayong inquired from the ship's agent in Singapore

about the supplies. The ship agent stated that these could only be delivered at 0800 hours on August 1, 1989 as the stores
had closed.

Captain Tayong called the shipowner, Sea Horse Ship Management, Ltd., in London and informed them that the departure of
the vessel for South Africa may be affected because of the delay in the delivery of the supplies.

Sea Horse advised Captain Tayong to contact its Technical Director, Mr. Clark, who was in Tokyo and who could provide a
solution for the supply of said oxygen and acetylene.

On the night of 31 July 1989, Mr. Clark received a call from Captain Tayong informing him that the vessel cannot sail without
the oxygen and acetylene for safety reasons due to the problems with the turbo charger and economizer. Mr. Clark
responded that by shutting off the water to the turbo chargers and using the auxiliary boiler, there should be no further

problems. According to Mr. Clark, Captain Tayong agreed with him that the vessel could sail as scheduled on 0100 hours on 1
August 1989 for South Africa.

According to Captain Tayong, however, he communicated to Sea Horse his reservations regarding proceeding to South Africa
without the requested supplies,

11

and was advised by Sea Horse to wait for the supplies at 0800 hrs. of 1 August 1989,

which Sea Horse had arranged to be delivered on board the Oceanic Mindoro.

12

At 0800 hours on 1 August 1989, the

requisitioned supplies were delivered and Captain Tayong immediately sailed for Richard Bay.

When the vessel arrived at the port of Richard Bay, South Africa on 16 August 1989, Captain Tayong was instructed to turnover his post to the new captain. He was thereafter repatriated to the Philippines, after serving petitioners for a little more
than two weeks.

13

He was not informed of the charges against him.

Tayong instituted a complaint for illegal dismissal before the Philippine Overseas Employment Administration ("POEA"),
claiming his unpaid salary for the unexpired portion of the written employment contract, plus attorney's fees.

Petitioners, in their answer to the complaint, denied that they had illegally dismissed Captain Tayong. Petitioners alleged that
he had refused to sail immediately to South Africa to the prejudice and damage of petitioners. According to petitioners, as a
direct result of Captain Tayong's delay, petitioners' vessel was placed "off-hire" by the charterers for twelve (12) hours. This
meant that the charterers refused to pay the charter hire or compensation corresponding to twelve (12) hours, amounting to
US$15,500.00, due to time lost in the voyage. They stated that they had dismissed private respondent for loss of trust and
confidence.

POEA dismissed Captain Tayong's complaint and held that there was valid cause for his untimely repatriation. The decision of
the POEA placed considerable weight on petitioners' assertion that all the time lost as a result of the delay was caused by
Captain Tayong and that his concern for the oxygen and acetylene was not legitimate as these supplies were not necessary
or indispensable for running the vessel.

National Labor Relations Commission ("NLRC") reversed and set aside the decision of the POEA. The NLRC found that Captain
Tayong had not been afforded an opportunity to be heard and that no substantial evidence was adduced to establish the
basis for petitioners' loss of trust or confidence in the Captain. The NLRC declared that he had only acted in accordance with
his duties to maintain the seaworthiness of the vessel and to insure the safety of the ship and the crew.

Issue/s: Was the NLRC correct in affirming the POEA decision? - YES
Held:

It is well settled in this jurisdiction that confidential and managerial employees cannot be arbitrarily dismissed at any time,
and without cause as reasonably established in an appropriate investigation.

15

Such employees, too, are entitled to security

of tenure, fair standards of employment and the protection of labor laws.

The captain of a vessel is a confidential and managerial employee within the meaning of the above doctrine. A master or
captain, for purposes of maritime commerce, is one who has command of a vessel. A captain commonly performs three (3)
distinct roles: (1) he is a general agent of the shipowner; (2) he is also commander and technical director of the vessel; and
(3) he is a representative of the country under whose flag he navigates.

16

Of these roles, by far the most important is the

role performed by the captain as commander of the vessel; for such role (which, to our mind, is analogous to that of "Chief
Executive Officer" [CEO] of a present-day corporate enterprise) has to do with the operation and preservation of the vessel
during its voyage and the protection of the passengers (if any) and crew and cargo. In his role as general agent of the
shipowner, the captain has authority to sign bills of lading, carry goods aboard and deal with the freight earned, agree upon

rates and decide whether to take cargo. The ship captain, as agent of the shipowner, has legal authority to enter into
contracts with respect to the vessel and the trading of the vessel, subject to applicable limitations established by statute,
contract or instructions and regulations of the shipowner.
management of the vessel.

18

17

To the captain is committed the governance, care and

Clearly, the captain is vested with both management and fiduciary functions.

It is plain from the records of the present petition that Captain Tayong was denied any opportunity to defend himself.
Petitioners curtly dismissed him from his command and summarily ordered his repatriation to the Philippines without
informing him of the charge or charges levelled against him, and much less giving him a chance to refute any such charge.

a ship's captain must be accorded a reasonable measure of discretionary authority to decide what the safety of the ship and
of its crew and cargo specifically requires on a stipulated ocean voyage. The captain is held responsible, and properly so, for
such safety. He is right there on the vessel, in command of it and (it must be presumed) knowledgeable as to the specific
requirements of seaworthiness and the particular risks and perils of the voyage he is to embark upon. The applicable
principle is that the captain has control of all departments of service in the vessel, and reasonable discretion as to its
navigation.
Dispositive: ACCORDINGLY, petitioners having failed to show grave abuse of discretion amounting to loss or excess of
jurisdiction on the part of the NLRC in rendering its assailed decision, the Petition for Certiorari is hereby DISMISSED, for lack
of merit. Costs against petitioners.

7. TABACALERA INSURANCE CO VS NORTH FRONT SHIPPING JEROME

DOCTRINE: 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 x x x x
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 store, pay for the wages of the master of the
crew, and defray the expenses for the maintenance of the ship.
sacks of corn grains valued at P3,500,640.00 were shipped on board North Front 777
The cargo was consigned to Republic Flour Mills Corporation
It was insured with the herein petitioners
The vessel was inspected prior to actual loading by representatives of the shipper and was found fit to
carry the merchandise
The cargo was covered with tarpaulins and wooden boards.
The hatches were sealed and could only be opened by representatives of Republic Flour Mills
Corporation.
The vessel left Cagayan de Oro City on 2 August 1990 and arrived Manila on 16 August 1990. Republic
Flour Mills Corporation was advised of its arrival but it did not immediately commence the unloading
operations

There were days when unloading had to be stopped due to variable weather conditions and sometimes
for no apparent reason at all. When the cargo was eventually unloaded there was a shortage of 26.333
metric tons
. The remaining merchandise was already moldy, rancid and deteriorating. The unloading operations
were completed on 5 September 1990 or twenty (20) days after the arrival of the barge at the wharf of
Republic Flour Mills Corporation in Pasig City.
Precision Analytical Services, Inc., was hired to examine the corn grains and determine the cause of
deterioration A Certificate of Analysis was issued indicating that the corn grains had 18.56% moisture
content and the wetting was due to contact with salt water. The mold growth was only incipient and not
sufficient to make the corn grains toxic and unfit for consumption. In fact the mold growth could still be
arrested by drying. Republic Flour Mills Corporation rejected the entire cargo and formally demanded
from North Front Shipping Services, Inc., payment for the damages suffered by it. The demands
however were unheeded. The insurance companies were perforce obliged to pay Republic Flour Mills
Corporation P2,189,433.40.
insurance companies lodged a complaint for damages against North Front Shipping Services, Inc.,
claiming that the loss was exclusively attributable to the fault and negligence of the carrier.
The Marine Cargo Adjusters found:

found cracks in the bodega of the barge

did not notice any seals in the hatches

tarpaulins were not brand new as there were patches

bulkhead of the barge was rusty.

North Front Shipping Services, Inc defenses:

Captain Solomon Villanueva, master of the vessel, reiterated that the barge was inspected prior
to the actual loading and was found adequate and seaworthy

Was issued a permit to sail by the Coast Guard.

tarpaulins were doubled and brand new and the hatches were properly sealed.

did not encounter big waves

corn grains were farm wet and not properly dried when loaded.

court below dismissed the complaint

It ruled that the contract entered into between North Front Shipping Services, Inc., and Republic Flour
Mills Corporation was a charter-party agreement. As such, only ordinary diligence in the care of goods
was required of North Front Shipping Services, Inc.
Court of Appeals ruled that as a common carrier required to observe a higher degree of diligence North
Front 777 satisfactorily complied with all the requirements hence was issued a Permit to Sail after proper
inspection. Consequently, the complaint was dismissed and the motion for reconsideration rejected.
So dismissed parin
ISSUE: WON NORTH front 777 should be considered a private carrier due to the charter agreement? NO
Or WON the dismissal was proper? NO
HELD: WHEREFORE, the Decision of the Court of Appeals of 22 December 1994 and its Resolution of
16 February 1995 are REVERSED and SET ASIDE. Respondent North Front Shipping Services, Inc., is

ordered to pay petitioners Tabacalera Insurance Co., Prudential Guarantee & Assurance, Inc., and New
Zealand Insurance Co. Ltd., P1,313,660.00 which is 60% of the amount paid by the insurance companies
to Republic Flour Mills Corporation, plus interest at the rate of 12% per annum from the time this
judgment becomes final until full payment. SO ORDERED.
RATIO: The charter-party agreement between North Front Shipping Services, Inc., and Republic Flour
Mills Corporation did not in any way convert the common carrier into a private carrier
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 x x x x 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 store, pay for the wages of the master of the crew, and defray
the expenses for the maintenance of the ship.
Upon the other hand, the term 'common or public carrier' is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as a public employment and not as a
casual occupation x x x x
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 voyage-charter
North Front Shipping Services, Inc., proved that the vessel was inspected prior to actual loading by
representatives of the shipper and was found fit to take a load of corn grains. They were also issued
Permit to Sail by the Coast Guard. The master of the vessel testified that the corn grains were farm
wet when loaded. However, this testimony was disproved by the clean bill of lading issued by North
Front Shipping Services, Inc., which did not contain a notation that the corn grains were wet and
improperly dried. Having been in the service since 1968, the master of the vessel would have known at
the outset that corn grains that were farm wet and not properly dried would eventually deteriorate when
stored in sealed and hot compartments as in hatches of a ship. Equipped with this knowledge, the
master of the vessel and his crew should have undertaken precautionary measures to avoid or lessen the
cargo's possible deterioration as they were presumed knowledgeable about the nature of such cargo. But
none of such measures was taken.
the carrier failed to observe the required extraordinary diligence in the vigilance over the goods placed in
its care. The proofs presented by North Front Shipping Services, Inc., were insufficient to rebut the
prima facie presumption of private respondent's negligence, more so if we consider the evidence
adduced by petitioners.
It is not denied by the insurance companies that the vessel was indeed inspected before actual loading
and that North Front 777 was issued a Permit to Sail. They proved the fact of shipment and its
consequent loss or damage while in the actual possession of the carrier. Notably, the carrier failed to
volunteer any explanation why there was spoilage and how it occurred. On the other hand, it was shown
during the trial that the vessel had rusty bulkheads and the wooden boards and tarpaulins bore heavy
concentration of molds. The tarpaulins used were not new, contrary to the claim of North Front Shipping
Services, Inc., as there were already several patches on them, hence, making it highly probable for water
to enter.
Laboratory analysis revealed that the corn grains were contaminated with salt water.
Shipping Services, Inc., failed to rebut all these arguments.

North Front

However, we cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier. We
find the consignee Republic Flour Mills Corporation guilty of contributory negligence.
It was
seasonably notified of the arrival of the barge but did not immediately start the unloading operations. No
explanation was proffered by the consignee as to why there was a delay of six (6) days. Had the
unloading been commenced immediately the loss could have been completely avoided or at least
minimized. As testified to by the chemist who analyzed the corn samples, the mold growth was only at its
incipient stage and could still be arrested by drying. The corn grains were not yet toxic or unfit for
consumption. For its contributory negligence, Republic Flour Mills Corporation should share at least 40%
of the loss.[7]
8. A. MAGSAYSAY VS AGAN GAB

G.R. No. L-6393

January 31, 1955

A. MAGSAYSAY INC., plaintiff-appellee,

vs.
ANASTACIO AGAN, defendant-appellant.
The S S "San Antonio", vessel owned and operated by plaintiff, left Manila on October 6, 1949,
bound for Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging to different
shippers, among them the defendant. The vessel reached Aparri on the 10th of that month, and
after a day's stopover in that port, weighed anchor to proceed to Basco. But while still in port, it
ran aground at the mouth of the Cagayan river, and, attempts to refloat it under its own power
having failed, plaintiff have it refloated by the Luzon Stevedoring Co. at an agreed compensation.
Once afloat the vessel returned to Manila to refuel and then proceeded to Basco, the port of
destination. There the cargoes were delivered to their respective owners or consignees, who, with
the exception of defendant, made a deposit or signed a bond to answer for their contribution to
the average.
On the theory that the expenses incurred in floating the vessel constitute general average to
which both ship and cargo should contribute, plaintiff brought the present action in the Court of
First Instance of Manila to make defendant pay his contribution, which, as determined by the
average adjuster, amounts to P841.40. Defendant, in his answer, denies liability to his amount,
alleging, among other things, that the stranding of the vessel was due to the fault, negligence and
lack of skill of its master, that the expenses incurred in putting it afloat did not constitute general
average.
TC ruled in favor of plaintiff Magsaysay inc so defendant Agan appealed to SC.
ISSUE: should defendant contribute?
The law on averages is contained in the Code of Commerce. Under that law, averages are
classified into simple or particular and general or gross. Generally speaking, simple or particular
averages include all expenses and damages caused to the vessel or cargo which have not inured
to the common benefit (Art. 809), and are, therefore, to be borne only by the owner of the property
gave rise to same (Art. 810); while general or gross averages include "all the damages and
expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same
time, from a real and known risk" (Art. 811). Being for the common benefit, gross averages are to
be borne by the owners of the articles saved (Art. 812).

In classifying averages into simple o particular and general or gross and defining each class, the
Code (Art. 809 and 811) at the same time enumerates certain specific cases as coming specially
under one or the other denomination. Going over the specific cases enumerated we find that,
while the expenses incurred in putting plaintiff's vessel afloat may well come under number 2 of
article 809-which refers to expenses suffered by the vessel "by reason of an accident of the sea of
the force majuere" and should therefore be classified as particular average, the said expenses
do not fit into any of the specific cases of general average enumerated in article 811. No. 6 of this
article does mention "expenses caused in order to float a vessel," but it specifically refers to "a
vessel intentionally stranded for the purpose of saving it" and would have no application where,
as in the present case, the stranding was not intentional.
olentino, in his commentaries on the Code of Commerce, gives the following requisites for
general average:
First, there must be a common danger. This means, that both the ship and the cargo, after has
been loaded, are subject to the same danger, whether during the voyage, or in the port of loading
or unloading; that the danger arises from the accidents of the sea, dispositions of the authority, or
faults of men, provided that the circumstances producing the peril should be ascertained and
imminent or may rationally be said to be certain and imminent. This last requirement exclude
measures undertaken against a distant peril.
Second, that for the common safety part of the vessel or of the cargo or both is sacrificed
deliberately.
Third, that from the expenses or damages caused follows the successful saving of the vessel and
cargo.
Fourth, that the expenses or damages should have been incurred or inflicted after taking proper
legal steps and authority. (Vol. 1, 7th ed., p. 155.)
With respect to the first requisite, the evidence does not disclose that the expenses sought to be
recovered from defendant were incurred to save vessel and cargo from a common danger. The
vessel ran aground in fine weather inside the port at the mouth of a river, a place described as
"very shallow". It would thus appear that vessel and cargo were at the time in no imminent danger
or a danger which might "rationally be sought to be certain and imminent." It is, of course,
conceivable that, if left indefinitely at the mercy of the elements, they would run the risk of being
destroyed. But as stated at the above quotation, "this last requirement excludes measures
undertaken against a distant peril." It is the deliverance from an immediate, impending peril, by a
common sacrifice, that constitutes the essence of general average. (The Columbian Insurance
Company of Alexandria vs. Ashby & Stribling et al., 13 Peters 331; 10 L. Ed., 186). In the present
case there is no proof that the vessel had to be put afloat to save it from imminent danger. What
does appear from the testimony of plaintiff's manager is that the vessel had to be salvaged in
order to enable it "to proceed to its port of destination." But as was said in the case just cited it is
the safety of the property, and not of the voyage, which constitutes the true foundation of the
general average.
Also,the cargo, were not in imminent peril. The cargo could, without need of expensive salvage
operation, have been unloaded by the owners if they had been required to do so.
The final requisite has not been proved, for it does not appear that the expenses here in question
were incurred after following the procedure laid down in article 813 et seq.
There was no average; dEfendant need not contribute
9. STANDARD OIL CO VS CASTELO NIKKI
10. PHIL. HOME ASSURANCE CORP VS CA EM

DOCTRINE:
Where the formalities prescribed under Articles 813 and 814 of the Code of Commerce in order to incur
the expenses and cause the damage corresponding to gross average were not complied with, the carrier
cannot claim for contribution from the consignees for additional freight and salvage charges.
Fire is generally not a fortuitous event.
FACTS:
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, the following
shipment for carriage to Manila and Cebu, freight pre-paid and in good order and condition, viz: (a) two
(2) boxes internal combustion engine parts, consigned to William Lines, Inc. under Bill of Lading 042283;
(b) ten (10) metric tons (334 bags) ammonium chloride, consigned to Orcas Company under Bill of
Lading KCE-12; (c) two hundred (200) bags Glue 300, consigned to Pan Oriental Match Company under
Bill of Lading KCE-8; and (d) garments, consigned to Ding Velayo under Bills of Lading Nos. KMA-73 and
KMA-74. While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder
located in the accommodation area near the engine room on the main deck level. As the crew was trying
to extinguish the fire, the acetylene cylinder suddenly exploded sending a flash of flame throughout the
accommodation area, thus causing death and severe injuries to the crew and instantly setting fire to the
whole superstructure of the vessel. The incident forced the master and the crew to abandon the ship.
Thereafter, SS Eastern Explorer was found to be a constructive total loss and its voyage was declared
abandoned. Several hours later, a tugboat under the control of Faked Salvage Co. arrived near the vessel
and commenced to tow the vessel for the port of Naha, Japan. Fire fighting operations were again
conducted at the said port. After the fire was extinguished, the cargoes which were saved were loaded to
another vessel for delivery to their original ports of destination. ESLI charged the consignees several
amounts corresponding to additional freight and salvage charges, as follows: (a) for the goods covered by
Bill of Lading 042283, ESLI charged the consignee the sum of P1,927.65, representing salvage charges
assessed against the goods; (b) for the goods covered by Bill of Lading KCE-12, ESLI charged the
consignee the sum of P2,980.64 for additional freight and P826.14 for salvage charges against the
goods; (c) for the goods covered by Bill of Lading KCE-8, ESLI charged the consignee the sum of
P3,292.26 for additional freight and P4,130.68 for salvage charges against the goods; and (d) for the
goods under Bills of Lading KMA-73 and KMA-74, ESLI charged the consignee the sum of P8,337.06 for
salvage charges against the goods. The charges were all paid Philippine Home Assurance Corporation
(PHAS) under protest for and in behalf of the consignees.
PHAC, as subrogee of the consignees, thereafter filed a complaint before the RTC of Manila, Branch 39,
against ESLI to recover the sum paid under protest on the ground that the same were actually damages
directly brought about by the fault, negligence, illegal act and/or breach of contract of ESLI.
The trial court dismissed PHACs complaint and ruled in favor of ESLI.
The Court of Appeals affirmed the trial courts findings and conclusions.
Hence, the present petition for review.
ISSUES:
Whether or not fire is a fortuitous event. NO
Whether or not the loss was a general average. NO
HELD:
The Supreme Court reversed and set aside the judgment appealed from, and order Eastern Shipping
Lines, Inc. to return to Philippine Home Assurance Corporation the amount it paid under protest in behalf
of the consignees herein.
There is sufficient evidence to show that that the cylinder caught fire because of the fault/negligence of
ESLI, its master and its crew. The cylinder should not have been near the engine room as the heat

generated therefrom could cause an explosion. It follows therefore that the loss was not caused by a
fortuitous event.
As a rule, general or gross averages include all damages and expenses which are deliberately caused in
order to save the vessel, its cargo, or both at the same time, from a real and known risk (Art. 811)
While the instant case may technically fall within the purview of Art 811, the formalities prescribe under
Articles 813 1and 814 of the Code of Commerce in order to incur the expenses and cause the damage
corresponding to gross average were not complied with. Consequently, ESLI's claim for contribution from
the consignees of the cargo at the time of the occurrence of the average must be denied.
It follows therefore that the cargo consignees cannot be made liable to the carrier for additional freight
and salvage charges. Consequently, carrier must refund to the insurer the amount it paid under protest
for additional freight and salvage charges in behalf of the consignees.
11. MECENAS VS CA EUNICE
**same story with negros case (case no. 11 week 12)
Facts:
M/T Tacloban (barge-type oil tanker) collided with M/V Don Juan ( inter-island vessel carrying 750
passengers). When the collision occurred, the sea was calm, the weather fair and visibility good. As a
result, M/V Don Juan sank and the passengers perished.
Petitioners are the children of the Macenas spouses who perished due to the coliision. They file an action
for damages alleging the negligence of Capt. Santisteban (captain of Don Juan) and Negros Navigation
(owner of Don Juan).
RTC:
M/ V Don Juan and Tacloban City became aware of each other's presence in the area by visual contact at
a distance of something like 6 miles from each other. They were fully aware that if they continued on their
course, they will meet head on. Don Juan - steered to the right; Tacloban City continued its course to the
left. There can be no excuse for them not to realize that, with such maneuvers, they will collide. They
executed maneuvers inadequate, and too late, to avoid collision.
The Court is of the considered view that the defendants are equally negligent and are liable for damages.
(p. 4, decision). RTC ordered Negros Navigation and its capital jointly and severally liable to pay
damages to the petitioners.
The Court of Appeals, for its part, reached the same conclusion. However, the CA deducted the damages
awarded from 400k to 100k.

Issue:
1. Who was negligent?
2. Whether or not Capt. Santisteban and Negros Navigation was negligent.
Held:
1. Both vessels were at fault.
Rule 18 of the International Rules of the Road which requires 2 power-driven vessels meeting end on or
nearly end on each to alter her course to starboard so that each vessel may pass on the port side of each
other.

In the case, M/V Tacloban, as held by the report of the Commandant of the Philippine Coast Guard, failed
to follow the Rules. Hence, she was deemed negligent.
However, route observance of the International Rules of the Road will not relieve a vessel from
responsibility if the collision could have been avoided by proper skill on her part or even a departure from
the rules.
M/V Don Juan having sighted M/V Tacloban 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 into close quarters as to render the
collision inevitable when there was no necessity for passing so near M/V Tacloban for Don Juan could
choose its own distance. It is noteworthy that M/V Tacloban upon turning hard to port shortly before the
moment of collision, signaled its intention to do so by giving 2 short blasts with its horn. Don Juan gave no
answering horn blast to signal it's own intention and proceeded to turn hard to starboard.
In an action based upon a breach of the contract of carriage, the carrier under our civil law is liable for the
death of passengers arising from the negligence or wilful act of the carrier's employees although such
employees may have acted beyond the scope of their authority or even in violation of the instructions of
the carrier, which liability may include liability for moral damages. It follows that petitioners would be
entitled to moral damages so long as the collision with the "Tacloban City" and the sinking of the "Don
Juan" were caused or attended by negligence on the part of private respondents.
Whether petitioners are entitled to exemplary damages as claimed must depend upon whether or not
private respondents acted recklessly, that is, with gross negligence. We believe that the behaviour of the
captain of the "Don Juan" in this instance playing mahjong "before and up to the time of collision"
constitutes behaviour that is simply unacceptable on the part of the master of a vessel to whose hands
the lives and welfare of at least seven hundred fifty (750) passengers had been entrusted. There is also
evidence that the "Don Juan" was carrying more passengers than she had been certified as allowed to
carry. We conclude that Capt. Santisteban and Negros Navigation are properly held liable for gross
negligence )capacity was only 864, BUT it carried 1004 passengers). 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.
2. Yes. The behavior of the captain -playing mahjong "before and up to the time of collision" constituted
gross negligence. This behavior is unacceptable on the part of the master of a vessel to whose hands the
lives of at least 750 passengers were entrusted.
It does not matter that the Captain was off-duty or on-duty. Realistically speaking, there is no such thing
as off-duty hours for the master of the vessel at sea that is a common carrier who is required
extraordinary diligence. Hence, Negros Navigation in permitting or in failing to discover and correct such
behavior is also grossly negligent.
ON DAMAGES
the Court of Appeals apparently relying upon Manchester Development Corporation V. Court of Appeals
27 reduced the P400,000.00 lump sum award into a P100,000.00 for actual and compensatory damages
only.

SC believes that the Court of Appeals erred in doing so, It is true that the petitioners' complaint before the
trial court had in the body indicated that the petitioner-plaintiffs believed that moral damages in the
amount of at least P1,400,000.00 were properly due to them (not P12,000,000.00 as the Court of Appeals
erroneously stated) as well as exemplary damages in the sum of P100,000.00 and that in the prayer of
their complaint, they did not specify the amount of moral and exemplary damages sought from the trial
court. We do not believe, however, that the Manchester doctrine, which has been modified and clarified in
subsequent decision by the Court in Sun Insurance Office, Ltd. (SIOL), et al. v. Asuncion, et al. 28 can be
applied in the instant case so as to work a striking out of that portion of the trial court's award which could
be deemed nationally to constitute an award of moral and exemplary damages. Manchester was
promulgated by the Court on 7 May 1987. Circular No. 7 of this Court, which embodied the doctrine in
Manchester, is dated 24 March 1988. Upon the other hand, the complaint in the case at bar was filed on
29December 1980, that is, long before either Manchester or Circular No. 7 of 24 March 1988 emerged.
The decision of the trial court was itself promulgated on 17 July 1986, again, before Manchester and
Circular No. 7 were promulgated. We do not believe that Manchester should have been applied
retroactively to this case where a decision on the merits had already been rendered by the trial court,
even though such decision was then under appeal and had not yet reached finality. There is noindication
at all that petitioners here sought simply to evade payment of the court's filing fees or to mislead the court
in the assessment of the filing fees. In any event, we apply Manchester as clarified and amplified by Sun
Insurance Office Ltd. (SIOL), by holding that the petitioners shall pay the additional filing fee that is
properly payable given the award specified below, and that such additional filing fee shall constitute a lien
upon the judgment.
We consider, finally, the amount of damages-compensatory, moral and exemplary-properly imposable
upon private respondents in this case. The original award of the trial court of P400,000.00 could well have
been disaggregated by the trial court and the Court of Appeals in the following manner:
1.

actual or compensatory damages proved in the course of trial consisting of actual expenses

incurred by petitioners
in their search for their
parents' bodies- -P126,000.00
2.

actual or compensatory

damages in case of
wrongful death
(P30,000.00 x 2) -P60,000.00 29
(3) moral damages -P107,000.00
(4) exemplary damages -P107,000.00
Total -P400,000.00
Considering that petitioners, legitimate children of the deceased spouses Mecenas, are seven (7) in
number and that they lost both father and mother in one fell blow of fate, and considering the pain and
anxiety they doubtless experienced while searching for their parents among the survivors and the corpses
recovered from the sea or washed ashore, we believe that an additional amount of P200,000.00 for moral
damages, making a total of P307,000.00 for moral damages, making a total of P307,000.00 as moral
damages, would be quite reasonable.
Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is
socially deleterious in its consequence by creating negative incentives or deterrents against such

behaviour. In requiring compliance with the standard of extraordinary diligence, a standard which is in fact
that of the highest possible degree of diligence, from common carriers and in creating a presumption of
negligence against them, the law seeks to compel them to control their employees, to tame their reckless
instincts and to force them to take adequate care of human beings and their property. Both the demands
of substantial justice and the imperious requirements of public policy compel us to the conclusion that the
trial court's implicit award of moral and exemplary damages was erroneously deleted and must be
restored and augmented and brought more nearly to the level required by public policy and substantial
justice.
SC: damages restored to 400k, other damages augmented as follows
(a) P 126,000.00 for actual damages;
(b) P 60,000.00 as compensatory damages for wrongful death;
(c) P 307,000.00 as moral damages;
(d) P 307,000.00 as exemplary damages making a total of P 800,000.00; and
(e) P 15,000.00 as attorney's fees

12. SMITH BELL VS CA VANESSA

FACTS:

In the early morning of 3 May 1970at exactly 0350 hours, on the approaches to the port of Manila near Caballo Island, a collision
took place between the M/V "Don Carlos," an inter-island vessel owned and operated by private respondent Carlos A. Go Thong
and Company, 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
No. 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 private respondent Go Thong for
damages sustained by the various shipments in the then Court of First Instance of Manila.
Two cases were filed in the CFI of Manila.

FIRST case, Civil Case No. 82567, was commenced on 13 March 1971 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.

SECOND case, Civil Case No. 82556, was filed on 15 March 1971 by Smith Bell and Tokyo Marine and Fire Insurance Company,
Inc. Go Thong in Branch 4, which was presided over by then Judge, later Associate Justice of this Court, Serafin R. Cuevas.

BOTH 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.

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 held Go Thong liable for damages to the plaintiff insurance companies.

Judge Fernandez awarded the insurance companies P19,889.79 with legal interest plus 3K as AF;;

Judge Cuevas awarded the plaintiff insurance companies on two claims US $ 68,640.00 or its equivalent in Philippine
currency plus AF 30k and P19,163.02 plus 5k AF, respectively.

Both cases were appealed to the CA.

FERNANDEZ CASE: (Presided by REYES, L.B., J.) affirmed the decision of the TC. MoR denied! Go Thong went to the SC via
Petition for Review denied for lack of merit. MoR denied! Became final and executory.

CUEVAS CASE: (2 years after the Fernandez case. Now through SISON P.V., J.) reversed the TC and held that it was the officers
of Yotai Maru which was at fault. It dismissed the insurance companies complaint. MoR no avail.

ISSUE:

W/N Don Carlos is the proximate cause of the collision? YES. Sisons decision is reversed and set aside. Cuevas decision (RTC)
reinstated.

HELD: (yung main issue nasa pinaka dulo. linagyan ko lang ng iba para if ever magtanong si sir.)

****as to res judicata****

Go Thong argues also that the rule of res judicata cannot be invoked in the instant case for the reason that there was no identity of
parties and no identity of cause of action between the two cases.

Petitioners

Respondent

1st Case (Fernandez)

Smith Bell & Sumitomo Marine and

Fire Insurance

Go Thong

2nd Case (Cuevas)

Smith Bell & Tokyo Marine and Fire

Insurance

Go Thong

In other words, there was a common petitioner in the 2 cases, although the co-petitioner in one was an insurance company
different from the insurance company co-petitioner in the other case. It should be noted, moreover, that the co-petitioner in both
cases was an insurance company arid that both petitioners in the 2 cases represented the same interest cargo owners interest
as against the hull interest or the interest of the shipowner). More importantly, both cases had been brought against the same
defendant, private respondent Go Thong, the owner of the vessel "Don Carlos." In sum, BOTH exhibited substantial identity of
parties.

It is conceded by petitioners that the subject matters of the 2 suits were not identical, in the sense that the cargo which had been
damaged in the one case and for which indemnity was sought, was not the very same cargo which had been damaged in the
other case indemnity for which was also sought.

The cause of action was, however, the same in the 2 cases, i.e., the same right of the cargo owners to the safety and integrity of
their cargo had been violated by the same casualty, the ramming of the "Yotai Maru" by the "Don Carlos."

SC: Under the circumstances, the absence of identity of subject matter, there being substantial identity of parties and identity
of cause of action, will not preclude the application of res judicata.

The doctrine of res judicata has two aspects.

The first is the effect of a judgment as a bar to the prosecution of a second action upon the same claim, demand or cause of action.

The second aspect is that it precludes the relitigation of a particular fact or issues in another action between the same parties on a
different claim or cause of action.

The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in former action are
commonly applied to all matters essentially connected with the subject matter of the litigation. Thus, it extends to questions
"necessarily involved in an issue, and necessarily adjudicated, or necessarily implied in the final judgment, although no specific
finding may have been made in reference thereto, and although such matters were directly referred to in the pleadings and were not
actually or formally presented. Under this rule, if the record of the former trial shows that the judgment could not have been rendered
without deciding the particular matter it will be considered as having settled that matter as to all future actions between the parties,
and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself. Reasons for the rule are
that a judgment is an adjudication on all the matters which are essential to support it, and that every proposition assumed or decided
by the court leading up to the final conclusion and upon which such conclusion is based is as effectually passed upon as the
ultimate question which is finally solved.

The Reyes Decision became final and executory approximately 2 years before the Sison Decision, which is assailed in the case at
bar, was promulgated. Applying the rule of conclusiveness of judgment, the question of which vessel had been negligent in the
collision between the 2 vessels, had long been settled by this Court and could no longer be relitigated in C.A.-G.R. No. 61206- R.
Private respondent Go Thong was certainly bound by the ruling or judgment of Reyes, L.B., J. and that of this Court.

**** as to the alleged COMPROMISE AGREEMENT****

Private respondent Go Thong also argues that a compromise agreement entered into between Sanyo Shipping Company as owner
of the "Yotai Maru" and Go Thong as owner of the "Don Carlos," under which the former paid P268,000.00 to the latter, effectively
settled that the "Yotai Maru" had been at fault. argument is wanting in both factual basis and legal substance.

True, it is that by virtue of the compromise agreement, the owner of the "Yotai Maru" paid a sum of money to the owner of the "Don
Carlos." Nowhere, however, in the compromise agreement did the owner of the "Yotai Maru " admit or concede that the
"Yotai Maru" had been at fault in the collision.

RULE: "an offer of compromise is not an admission that anything is due, and is not admissible in evidence against the
person making the offer."

A compromise is an agreement between 2 or more persons who, in order to forestall or put an end to a law suit, adjust their
differences by mutual consent, an adjustment which everyone of them prefers to the hope of gaining more, balanced by the danger
of losing more. An offer to compromise does not, in legal contemplation, involve an admission on the part of a defendant that he is
legally liable, nor on the part of a plaintiff that his claim or demand is groundless or even doubtful, since the compromise is arrived at
precisely with a view to avoiding further controversy and saving the expenses of litigation. It is of the very nature of an offer of
compromise that it is made tentatively, hypothetically and in contemplation of mutual concessions. The above rule on compromises
is anchored on public policy of the most insistent and basic kind; that the incidence of litigation should be reduced and its duration
shortened to the maximum extent feasible.

****main issue****
Examining the facts as found by Judge Cuevas, the Court believes that there are 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. Failure of the "Don Carlos" to comply with the requirements of Rule 18 (a) of the International Rules of the Road:
(a) When two power-driven vessels are meeting end on, or nearly end on, so as to involve risk of collision, each shall alter her
course to starboard, so that each may pass on the port side of the other.

This Rule only applies to cases where vessels are meeting end on or nearly end on, in such a manner as to involve risk of collision,
and does not apply to two vessels which must, if both keep on their respective course, pass clear of each other. The only cases to
which it does apply are when each of two vessels is end on, or nearly end on, to the other; in other words, to cases in which, by day,
each vessel sees the masts of the other in a line or nearly in a line with her own; and by night to cases in which each vessel is in
such a position as to see both the sidelights of the other. It does not apply, by day, to cases in which a vessel sees another ahead
crossing her own course; or, by night, to cases where the red light of one vessel is opposed to the red light of the other or where the
green light of one vessel is opposed to the green light of the other or where a red light without a green light or a green light without a
red light is seen ahead, or Where both green and red lights are seen anywhere but ahead.

EVIDENCE: Each vessel made a visual sighting of each other ten minute before the collision which occurred at 0350.
German's version of the incident that followed, was that "Don Carlos" was proceeding directly to a meeting on an "end-on or nearly
end-on situation". He also testified that "Yotai Maru's' headlights were "nearly in line at 0340 A.M clearly indicating that both vessels
were sailing on exactly opposite paths. Rule 18 (a) of the International Rules of the Road provides as follows:
As the "Yotai Maru" found herself on an "end-on" or a "nearly end-on" situation vis-a-vis the "Don Carlos, " and as the distance
between them was rapidly shrinking, the "Yotai Maru" turned starboard (to its right) and at the same time gave the required signal
consisting of one short horn blast. The "Don Carlos" turned to portside (to its left), instead of turning to starboard as demanded by
Rule 18 (a). The "Don Carlos" also violated Rule 28 (c) for it failed to give the required signal of two (2) short horn blasts
meaning "I am altering my course to port." When the "Yotai Maru" saw that the "Don Carlos" was turning to port, the master of
the "Yotai Maru" ordered the vessel turned "hard starboard" at 3:45 a.m. and stopped her engines; at about 3:46 a.m. the "Yotai
Maru" went "full astern engine." The collision occurred at exactly 3:50 a.m.

2. Failure to have on board that night 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." Judge
Cuevas' summary of the evidence said:

EVIDENCE: "Don Carlos" did not have "look-out" whose sole and only duty is only to act as such.

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.

In the case at bar, the failure of the "Don Carlos" to recognize in a timely manner the risk of collision with the "Yotai Maru" coming in
from the opposite direction, was at least in part due to the failure of the "Don Carlos" to maintain a proper look-out.

3. Second Mate Benito German was, immediately before and during the collision, in command of the "Don Carlos."

EVIDENCE: A second mate although its captain, Captain Rivera, was very much in the said vessel at the time. The
defendant's evidence appears bereft of any explanation as to why second mate German was at the helm of the aforesaid vessel
when Captain Rivera did not appear to be under any disability at the time. Worst still, aside from German's being only a second
mate, is his apparent lack of sufficient knowledge of the basic and generally established rules of navigation. For instance, he
appeared unaware of the necessity of employing a "look- out" which is manifest even in his testimony before the BMI. There is,
therefore, every reasonable ground to believe that his inability to grasp actual situation and the implication brought about by
inadequacy of experience and technical know-how was mainly responsible and decidedly accounted for the collision of the vessels
involved in this case

ART 663 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.

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.

NOTE: What Sison, P.V., J. actually did was to disregard all the facts found by Judge Cuevas, and found a duty on the
"Yotai Maru" alone to avoid collision with and to give way to the "Don Carlos.

SISON: At a distance of 8 miles and with 10minutes before the impact, [Katoh] and Chonabayashi had ample time to adopt effective
precautionary measures to steer away from the Philippine vessel, particularly because both [Katoh] and Chonabayashi also
deposed that at the time they had first eyesight of the "Don Carlos" there was still "no danger at all" of a collision. Having sighted the
"Don Carlos" at a comparatively safe distance"no danger at all" of a collisionthe Japanese ship should have observed with the
highest diligence the course and movements of the Philippine interisland vessel as to enable the former to adopt such precautions
as will necessarily present a collision, or give way, and in case of a collision, the former is prima facie at fault. Four minutes after first
sighting the "Don Carlos", or 6 minutes before contact time, Chonabayashi revealed that the "Yotai Maru" gave a one-blast whistle
to inform the Philippine vessel that the Japanese ship was turning to starboard or to the right and that there was no blast or a proper
signal from the "Don Carlos".The absence of a reply signal from the "Don Carlos" placed the "Yotai Maru" in a situation of doubt as
to the course the "Don Carlos" would take. Such being the case, it was the duty of the Japanese officers "to stop, reverse or come to
a standstill until the course of the "Don Carlos" has been determined and the risk of a collision removed.

The Court is unable to agree with the view thus taken by Sison, P.V., J. By imposing an exclusive obligation upon one of the
vessels, the "Yotai Maru, " to avoid the collision, the Court of Appeals not only chose to overlook all the above facts constitutive of
negligence on the part of the "Don Carlos;" it also in effect used the very negligence on the part of the "Don Carlos" to absolve it
from responsibility and to shift that responsibility exclusively onto the "Yotai Maru" the vessel which had observed carefully the
mandate of Rule 18 (a).

DISPOSITIVE PORTION: FOR ALL THE FOREGOING, the Decision of the Court of Appeals dated 26 November 1980 in C.A.-G.R.
No. 61206-R is hereby REVERSED and SET ASIDE. The decision of the trial court dated 22 September 1975 is hereby
REINSTATED and AFFIRMED in its entirety. Costs against private respondent.

13. MANILA STEAMSHIP VS ABDULHAMAN KIKOY

[G.R. No. L-9534. September 29, 1956.]
MANILA STEAMSHIP CO., INC., Petitioner, vs. INSA ABDULHAMAN (MORO) and LIM HONG TO,Respondents.

Doctrine: The international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a shipowners liability, does
not apply to cases where the injury or the average is due to shipowners own fault.

Facts:

Respondent Abdulhaman filed a case against Manila Steamship Co Inc, owner of MS Bowline Knot, and Lim Hong To, owner of M/L Consuelo
V to recover damages for the death of his 5 children and loss of personal properties on board the M/L Consuelo V as a result of a maritime
collision between the 2 vessels

In 1948, the M/L Consuelo V left the port of Zamboanga City for Siokon. On the same night, The M/S Bowline Knot was heading to
Zamboanga City. The weather was good and fair. Abdulhaman, his wife and 5 children had paid their fare beforehand

It began raining and there were strong winds for an hour. This weather lasted for an hour then it became fair although it was showering and
the visibility was good enough.

The two vessels collided while the passengers were sleeping. M/L Consuelo V capsized quickly (before the passengers realized it, they were
already floating and swimming) 9 died and the cargo was lost.

Before the collision, none of the passengers were warned or informed of the impending danger as the collision was so sudden and
unexpected. All those rescued at sea were brought by the M/V Bowline Knot to Zamboanga City.

The Board of Marine Inquiry found that the commanding officer of the colliding vessels had both been negligent in operating their respective
vessels. It held the owners of both vessels solidarily liable to Abdulhaman for the damages caused to him by the collision, under Article 827
of the Code of Commerce; but exempted Defendant Lim Hong To from liability by reason of the sinking and total loss of his vessel, the M/L
Consuelo V. CA affirmed.

Manila Steamship appealed because it was the one who was ordered to pay damages.
o it is exempt from any liability under Article 1903 of the Civil Code because it had exercised the diligence of a good father
of a family in the selection of its employees, particularly Third Mate Simplicio Ilagan, the officer in command of its
vessels, the M/S Bowline Knot, at the time of the collision.
o It shouldnt be liable for the actions of its agent (captain) and employees

Issue: WON Manila Steamship is liable YES

Ratio:
DUE DILIGENCE

The defense of due diligence is untenable. While it is true that Plaintiffs action is based on a tort or quasi-delict, the tort in question is not a
civil tort under the Civil Code but a maritime tort resulting in a collision at sea, governed by Articles 826-939 of the Code of Commerce.
Under Article 827 of the Code of Commerce, in case of collision between two vessels imputable to both of them, each vessel shall suffer her
own damage and both shall be solidarily liable for the damages occasioned to their cargoes. The characteristic language of the law in making
the vessels solidarily liable for the damages due to the maritime collision emphasizes the direct nature of the responsibilities on account of
the collision incurred by the shipowner under maritime law, as distinguished from the civil law and mercantile law in general. This direct
responsibility is recognized in Article 618 of the Code of Commerce under which the captain shall be civilly liable to the ship agent, and the
latter is the one liable to third persons

It is a general principle, well established maritime law and custom, that shipowners and ship agents are civilly liable for the acts of the
captain (Code of Commerce, Article 586) and for the indemnities due the third persons (Article 587); so that injured parties may immediately
look for reimbursement to the owner of the ship, it being universally recognized that the ship master or captain is primarily the
representative of the owner. This direct liability, moderated and limited by the owners right of abandonment of the vessel and earned
freight (Article 587), has been declared to exist, not only in case of breached contracts, but also in cases of tortious negligence

It is proven that the agents and employees, through whose negligence the explosion and fire in question occurred, were agents, employees
and mandatories of Manila Steamship. Where the vessel is one of freight, a public concern or public utility, its owner or agents is liable for
the tortious acts of his agents (Articles 587, 613, & 618 Code of Commerce; & Article 1902, 1903, 1908, Civil Code).

Manila Steamship cites cases which are about principals and agents in general BUT this case is about the relations between ship agent and his
agents and employees.

It is easy to see that to admit the defense of due diligence of a bonus paterfamilias (in the selection and vigilance of the officers and crew) as
exempting the shipowner from any liability for their faults, would render nugatory the solidary liability established by Article 827 of the
Code of Commerce for the greater protection of injured parties. Shipowners would be able to escape liability in practically every case,
considering that the qualifications and licensing of ship masters and officers are determined by the State, and that vigilance is practically
impossible to exercise over officers and crew of vessels at sea. To compel the parties prejudiced to look to the crew for indemnity and
redress would be an illusory remedy for almost always its members are, from captains down, mere wage earners.

ACT OF AGENT

Liability of Lim Hong To HE IS LIABLE

Both the master and the engineer of the motor launch Consuelo V were not duly licensed as such. In applying for permission to operate,
despite the lack of properly trained and experienced, crew, Lim Hong To gave as a reason that the income derived from the vessel is
insufficient to pay licensed officers who demand high salaries, and expressly declared That in case of any accident, damage or loss, I shall
assume full risk and responsibility for all the consequences thereof.

His permit to operate, in fact, stipulated that in case of any accident, damage or loss, the registered owner thereof shall assume full risk
and responsibility for all the consequences thereof, and that said vessel shall be held answerable for any negligence, disregard or violation of
any of the conditions herein imposed and for any consequence arising from such negligence, disregard or violations.

CA held that his permit and letter didnt contain waivers of his right to limit his liability to the value of his motor launch and that he did not
lose the statutory right to limit his liability by abandonment of the vessel. WRONG

By operating with an unlicensed master, Lim Hong To deliberately increased the risk to which the passengers and shippers of cargo aboard
the Consuelo V would be subjected. In his desire to reap greater benefits in the maritime trade, Lim Hong To willfully augmented the
dangers and hazards to his vessels unwarry passengers, who would normally assume that the launch officers possessed the necessary skill
and experience to evade the perils of the sea. Hence, the his liability cannot be the identical to that of a shipowner who bears in mind the
safety of the passengers and cargo by employing duly licensed officers.

The international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a shipowners liability, does not apply
to cases where the injury or the average is due to shipowners own fault.

Lim Hong To expressly assumed the full risk and responsibility of such a collision

14. CALTEX OHILS VS SULPICIO LINES JEROME

DOCTRINE: the conversion of a common carrier to a private carrier will depend on the kind of the charter
agreement agreed upon
FACTS:
On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., enroute to
Masbate, loaded with 8,800 barrels of petroleum products shipped by petitioner Caltex
MT Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation
During that particular voyage, the MT Vector carried on board gasoline and other oil products owned by
Caltex by virtue of a charter contract between them
On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doa Paz left the port of Tacloban
headed for Manila
The MV Doa Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the
route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week.
At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the vicinity of
Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers of MV Doa Paz died,
while the two survivors from MT Vector claimed that they were sleeping at the time of the incident.
The MV Doa Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger
manifest. Only 24 survived the tragedy after having been rescued from the burning waters by vessels
[5]
that responded to distress calls. Among those who perished were public school teacher Sebastian
Caezal (47 years old) and his daughter Corazon Caezal (11 years old), both unmanifested passengers
but proved to be on board the vessel.
the board of marine inquiry found that the MT Vector were at fault
, Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother respectively, filed with
the Regional Trial Court, Branch 8, Manila, a complaint for Damages Arising from Breach of Contract of
Carriage against Sulpicio
Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping Corporation and
Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector with gross and evident bad
faith knowing fully well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to
safe navigation; as a result, it rammed against MV Doa Paz in the open sea setting MT Vectors highly
flammable cargo ablaze
the trial court rendered decision dismissing the third party complaint against petitioner.

On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on April 15, 1997, the Court of
Appeal modified the trial courts ruling and included petitioner Caltex as one of the those liable for
damages
Issue: Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered
vessel and a passenger ship? NO.
HELD: First: The charterer has no liability for damages under Philippine Maritime laws.
The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public
or private, but on whether the contract of carriage is a bill of lading or equivalent shipping documents on
the one hand, or a charter party or similar contract on the other.[9]
Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.[10]
A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to
another person for a specified time or use; a contract of affreightment is one by which the owner of a ship
or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods,
on a particular voyage, in consideration of the payment of freight.[11]
A contract of affreightment may be either time charter, wherein the leased vessel is leased to the
charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In
both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of
time or for a single or consecutive voyage, the ship owner to supply the ships store, pay for the wages of
the master of the crew, and defray the expenses for the maintenance of the ship.[12]
Under a demise or bareboat charter on the other hand, the charterer mans the vessel with his own people
and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages
caused by negligence.
If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as
owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is
free from liability to third persons in respect of the ship.[13]
Second : MT Vector is a common carrier
Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage
charter. Does a charter party agreement turn the common carrier into a private one? We need to answer
this question in order to shed light on the responsibilities of the parties.
In this case, the charter party agreement did not convert the common carrier into a private carrier. The
parties entered into a voyage charter, which retains the character of the vessel as a common carrier.
In Planters Products, Inc. vs. Court of Appeals,[14] we said:
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 voyage charter. It is only when the charter includes both the vessel and its
crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter
retains possession and control of the ship, although her holds may, for the moment, be the property of the
charterer.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals:[15]
Although a charter party may transform a common carrier into a private one, the same however is not
true in a contract of affreightment xxx
Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to (a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

xxx

xxx

xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of
competent officers and crew. The failure of a common carrier to maintain in seaworthy condition the
vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil
Code.[18]
The provisions owed their conception to the nature of the business of common carriers. This business is
impressed with a special public duty. The public must of necessity rely on the care and skill of common
carriers in the vigilance over the goods and safety of the passengers, especially because with the modern
development of science and invention, transportation has become more rapid, more complicated and
somehow more hazardous.[19] For these reasons, a passenger or a shipper of goods is under no
obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly
warrant its seaworthiness.
This aside, we now rule on whether Caltex is liable for damages under the Civil Code.
Third: Is Caltex liable for damages under the Civil Code?
We rule that it is not.
Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an unseaworthy
vessel such as the MT Vector when Caltex:
1. Did not take steps to have M/T Vectors certificate of inspection and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by Mr. Carlos Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector to transport its cargo despite these deficiencies:
1. The master of M/T Vector did not posses the required Chief Mate license to command and navigate
the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor Patron, authorized to navigate only in
bays and rivers when the subject collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate the engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and a lookout; and
5. The vessel had a defective main engine.[20]
As basis for the liability of Caltex, the Court of Appeals relied on Articles 20 and 2176 of the Civil Code,
which provide:
Article 20. - Every person who contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same.
Article 2176. - Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.
And what is negligence?
The Civil Code provides:
Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions of Article 1171 and 2201
paragraph 2, shall apply.
If the law does not state the diligence which is to be observed in the performance, that which is expected
of a good father of a family shall be required.

In Southeastern College, Inc. vs. Court of Appeals,[21] we said that negligence, as commonly
understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the
failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand,
or the omission to do something which ordinarily regulate the conduct of human affairs, would do.
The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it
chartered complied with all legal requirements. The duty rests upon the common carrier simply for being
engaged in public service.[22] The Civil Code demands diligence which is required by the nature of the
obligation and that which corresponds with the circumstances of the persons, the time and the place.
Hence, considering the nature of the obligation between Caltex and MT Vector, the liability as found by
the Court of Appeals is without basis.
The relationship between the parties in this case is governed by special laws. Because of the implied
warranty of seaworthiness,[23] shippers of goods, when transacting with common carriers, are not
expected to inquire into the vessels seaworthiness, genuineness of its licenses and compliance with all
maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but
the futility of our maritime laws insofar as the protection of the public in general is concerned. By the
same token, we cannot expect passengers to inquire every time they board a common carrier, whether
the carrier possesses the necessary papers or that all the carriers employees are qualified. Such a
practice would be an absurdity in a business where time is always of the essence. Considering the
nature of transportation business, passengers and shippers alike customarily presume that common
carriers possess all the legal requisites in its operation.
Thus, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping
his cargoes.
A cursory reading of the records convinces us that Caltex had reasons to believe that MT Vector could
legally transport cargo that time of the year.
Atty. Poblador: Mr. Witness, I direct your attention to this portion here containing the entries here under
VESSELS DOCUMENTS
1. Certificate of Inspection No. 1290-85, issued December 21, 1986, and Expires December 7, 1987,
Mr. Witness, what steps did you take regarding the impending expiry of the C.I. or the Certificate of
Inspection No. 1290-85 during the hiring of MT Vector?
Apolinar Ng: At the time when I extended the Contract, I did nothing because the tanker has a
valid C.I. which will expire on December 7, 1987 but on the last week of November, I called the attention
of Mr. Abalos to ensure that the C.I. be renewed and Mr. Abalos, in turn, assured me they will renew the
same.
Q: What happened after that?
A: On the first week of December, I again made a follow-up from Mr. Abalos, and said they were
going to send me a copy as soon as possible, sir.[24]
xxx

xxx

xxx

Q: What did you do with the C.I.?

A: We did not insist on getting a copy of the C.I. from Mr. Abalos on the first place, because of
our long business relation, we trust Mr. Abalos and the fact that the vessel was able to sail indicates that
the documents are in order. xxx[25]
On cross examination Atty. Sarenas: This being the case, and this being an admission by you, this Certificate of
Inspection has expired on December 7. Did it occur to you not to let the vessel sail on that day because
of the very approaching date of expiration?

Apolinar Ng: No sir, because as I said before, the operation Manager assured us that they were
able to secure a renewal of the Certificate of Inspection and that they will in time submit us a copy.[26]
Finally, on Mr. Ngs redirect examination:
Atty. Poblador: Mr. Witness, were you aware of the pending expiry of the Certificate of
Inspection in the coastwise license on December 7, 1987. What was your assurance for the record that
this document was renewed by the MT Vector?
Atty. Sarenas: xxx
Atty. Poblador: The certificate of Inspection?
A: As I said, firstly, we trusted Mr. Abalos as he is a long time business partner; secondly,
those three years, they were allowed to sail by the Coast Guard. That are some that make me believe
that they in fact were able to secure the necessary renewal.
Q: If the Coast Guard clears a vessel to sail, what would that mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross examination to the effect that if it was allowed,
referring to MV Vector, to sail, where it is loaded and that it was scheduled for a destination by the Coast
Guard, it means that it has Certificate of Inspection extended as assured to this witness by Restituto
Abalos. That in no case MV Vector will be allowed to sail if the Certificate of Inspection is, indeed, not to
be extended. That was his repeated explanation to the cross-examination. So, there is no need to clarify
the same in the re-direct examination.[27]
Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years
before the tragic incident occurred in 1987. Past services rendered showed no reason for Caltex to
observe a higher degree of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as
even the Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we find
no legal basis to hold petitioner liable for damages.
As Vector Shipping Corporation did not appeal from the Court of Appeals decision, we limit our ruling to
the liability of Caltex alone. However, we maintain the Court of Appeals ruling insofar as Vector is
concerned .
WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court of
Appeals in CA-G. R. CV No. 39626, promulgated on April 15, 1997, insofar as it held Caltex liable under
the third party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. the damages the latter is
adjudged to pay plaintiffs-appellees. The Court AFFIRMS the decision of the Court of Appeals insofar as
it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Caezal and Corazon Caezal damages as
set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are
held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys fees and
costs the latter is adjudged to pay plaintiffs-appellees in the case.

15. NATIONAL DEVELOPMENT COMPANY VS CA GAB

G.R. No. L-49407 August 19, 1988
NATIONAL DEVELOPMENT COMPANY, petitioner-appellant,

vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY CORPORATION,
respondents-appellees.
No. L-49469 August 19, 1988
MARITIME COMPANY OF THE PHILIPPINES, petitioner-appellant,
vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY CORPORATION,
respondents- appellees.
The evidence before us shows that in accordance with a memorandum agreement entered into
between defendants NDC and MCP on September 13, 1962, defendant NDC as the first preferred
mortgagee of three ocean going vessels including one with the name 'Dona Nati' appointed
defendant MCP as its agent to manage and operate said vessel for and in its behalf and account
(Exh. A). Thus, on February 28, 1964 the E. Philipp Corporation of New York loaded on board the
vessel "Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton
consigned to the order of Manila Banking Corporation, Manila 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 (Exhs. K-2 to K7-A & L-2 to L-7-A). Also loaded on the same vessel at
Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila
Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum
foil (Exhs. M & M-1). En route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m. on
April 15, 1964 at Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which
550 bales of aforesaid cargo of American raw cotton were lost and/or destroyed, of which 535
bales as damaged were landed and sold on the authority of the General Average Surveyor for Yen
6,045,-500 and 15 bales were not landed and deemed lost (Exh. G). The damaged and lost cargoes
was worth P344,977.86 which amount, the plaintiff as insurer, paid to the Riverside Mills
Corporation as holder of the negotiable bills of lading duly endorsed (Exhs. L-7-A, K-8-A, K-2-A, K3-A, K-4-A, K-5-A, A- 2, N-3 and R-3}. Also considered totally lost were the aforesaid shipment of
Kyokuto, Boekui Kaisa Ltd., consigned to the order of Manila Banking Corporation, Manila, acting
for Guilcon, Manila, The total loss was P19,938.00 which the plaintiff as insurer paid to Guilcon as
holder of the duly endorsed bill of lading (Exhibits M-1 and S-3). Thus, the plaintiff 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. Hence, plaintiff filed this complaint to recover said amount from the
defendants-NDC and MCP as owner and ship agent respectively, of the said 'Dofia Nati' vessel.
Development insurance and surety co. filed a case for recovery vs MCP (maritime co. of the
Phils.) of 364k
MCP filed its answer with counterclaim and cross-claim against NDC. TC ordered MCP and
NDC(National development Corp.) to pay NDC jointly and solidarily. It also ordered NDC to pay
MCP.
ISSUE:
1. which laws govern loss or destruction of goods due to collision of vessels outside Philippine
waters, and the extent of liability as well as the rules of prescription provided thereunder. - Code
of Commerce
2.w/n MCP and NDC should be solidarily liable to DISC - Yes
HELD:

The main thrust of NDC's argument is to the effect that the Carriage of Goods by Sea Act should
apply to the case at bar and not the Civil Code or the Code of Commerce. 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." Thus, NDC insists 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, NDC would have been relieved of liability under the Carriage of Goods by Sea Act.
that the law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code). Thus,
the rule was 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 laws (Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a
special law, is merely suppletory to the provision of the Civil Code.
In the case at bar, it has been established that the goods in question are transported from San
Francisco, California and Tokyo, Japan to the Philippines and that they were lost or due to a
collision which was found to have been caused by the negligence or fault of both captains of the
colliding vessels.
Hence,laws of the philippines will apply. the fact that collission occurred in foreign waters is
immaterial
Common carriers are presumed negligent unless they proved they exercise extra ordinary
diligence
Since there is no provision with regard to collission in the civil code, resort to Articles 826 to 839,
Book Three of the Code of Commerce, which deal exclusively with collision of vessels, will be had
More specifically, Article 826 of the Code of Commerce provides that where collision is imputable
to the personnel of a vessel, the owner of the vessel at fault, shall indemnify the losses and
damages incurred after an expert appraisal. But more in point to the instant case is Article 827 of
the same Code, which provides that if the collision is imputable to both vessels, each one shall
suffer its own damages and both shall be solidarily responsible for the losses and damages
suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the
shipowner or carrier, is not 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 (Y'eung Sheng Exchange and Trading Co. v. Urrutia & Co., 12 Phil. 751 [1909]).
There is, therefore, no room for NDC's interpretation that the Code of Commerce should apply
only to domestic trade and not to foreign trade. Aside from the fact that the Carriage of Goods by
Sea Act (Com. Act No. 65) does not specifically provide for the subject of collision, said Act in no
uncertain terms, restricts its application "to all contracts for the carriage of goods by sea to and
from Philippine ports in foreign trade." Under Section I thereof, it is explicitly provided that
"nothing in this Act shall be construed as repealing any existing provision of the Code of
Commerce which is now in force, or as limiting its application." By such incorporation, it is

obvious that said law not only recognizes the existence of the Code of Commerce, but more
importantly does not repeal nor limit its application.
The records show that the Riverside Mills Corporation and Guilcon, Manila are the holders of the
duly endorsed bills of lading covering the shipments in question and an examination of the
invoices in particular, shows that the actual consignees/subrogers of the said goods are the
aforementioned companies. Moreover, no less than MCP itself issued a certification attesting to
this fact.
MCP next contends that it can not be liable solidarity with NDC because it is merely the manager
and operator of the vessel Dona Nati not a ship agent. As the general managing agent, according
to MCP, it can only be liable if it acted in excess of its authority.
As found by the trial court and by the Court of Appeals, the Memorandum Agreement of
September 13, 1962 (Exhibit 6, Maritime) shows that NDC appointed MCP as Agent, a term broad
enough to include the concept of Ship-agent in Maritime Law. In fact, MCP was even conferred all
the powers of the owner of the vessel, including the power to contract in the name of the NDC
It is well settled that both the owner and agent of the offending vessel are liable for the damage
done where both are impleaded (Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281 [1906]);
that in case of collision, both the owner and the agent are civilly responsible for the acts of the
captain (Yueng Sheng Exchange and Trading Co. v. Urrutia & Co., supra citing Article 586 of the
Code of Commerce; Standard Oil Co. of New York v. Lopez Castelo, 42 Phil. 256, 262 [1921]); that
while it is true that the liability of the naviero in the sense of charterer or agent, is not expressly
provided in Article 826 of the Code of Commerce, it is clearly deducible from the general doctrine
of jurisprudence under the Civil Code but more specially as regards contractual obligations in
Article 586 of the Code of Commerce. Moreover, the Court held that both the owner and agent
(Naviero) should be declared jointly and severally liable, since the obligation which is the subject
of the action had its origin in a tortious act and did not arise from contract (Verzosa and Ruiz,
Rementeria y Cia v. Lim, 45 Phil. 423 [1923]). Consequently, the agent, even though he may not be
the owner of the vessel, is liable to the shippers and owners of the cargo transported by it, for
losses and damages occasioned to such cargo, without prejudice, however, to his rights against
the owner of the ship, to the extent of the value of the vessel, its equipment, and the freight.
As to the extent of their liability, MCP insists that their liability should be limited to P200.00 per
package or per bale of raw cotton as stated in paragraph 17 of the bills of lading.
common carriers, in the language of the court in Juan Ysmael & Co., Inc. v. Barrette et al., (51 Phil.
90 [1927]) "cannot limit its liability for injury to a loss of goods where such injury or loss was
caused by its own negligence." Negligence of the captains of the colliding vessel being the cause
of the collision, and the cargoes not being jettisoned to save some of the cargoes and the vessel,
the trial court and the Court of Appeals acted correctly in not applying the law on averages
(Articles 806 to 818, Code of Commerce).
16. KRAMER JR. VS CA - NIKKI