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15. Yu Con vs. Ipil, Lauron and Solamo 41 Phil.

770
(TOPIC: LIABILITY OF MASTER AND SUPERCARGO OF VESSEL FOR LOSS OF MONEY ENTRUSTED TO THEIR CARE;
WHAT CONSTITUTES A VESSEL; LIABILITY OF SHIPOWNER FOR LOSSES CAUSED BY CAPTAIN)

Facts: A sum of P450 was delivered by Yucon to Ipil and Solamo, master and supercargo, respectively, of a banca named Maria
owned by Lauron, engaged in the coastwise trade in the waters of the Philippine Islands, to be carried together with various
merchandise from the port of Cebu to the town of Catmon of the Province of Cebu, upon payment of a fixed sum. This money
disappeared from said craft, while it was anchored in the port of Cebu and ready to sail for its destination. It was not proven nor
was there any indication that it was stolen by persons not belonging to the boat, nor that its disappearance or loss was due to a
fortuitous cause or to force majeure.

The trial court held that the sole cause of the disappearance of the money from the said banca was the negligence of the master
and the supercargo, the defendants Ipil and Solamo, respectively, and that the defendant Lauron was responsible for that
negligence, as owner of the banca, pursuant to articles 589, 587, and 618 of the Code of Commerce, the plaintiff therefore being
entitled to recover the amount lost. Judgment was rendered in favor of the plaintiff and against the defendants jointly and severally
for the sum of P450, with interest thereon at the rage of 6 per cent per annum from the date of filing of the complaint. The plaintiff
was absolved from the defendant's counterclaim. Hence this appeal before the Supreme Court.

Issues: W/N the trial court erred in sentencing the defendants jointly and severally to pay Yu Con the amount mentioned in the
judgment;

Ruling: No. In order that a thing may be transported, it must be delivered to the carrier, as the Code says. From the time it is
delivered to the carrier or shipper until it is received by the consignee, the carrier has it in his possession, as a necessary condition
for its transportation, and is obliged to preserve and guard it; wherefore it is but natural and logical that he should be responsible
for it.

Ipil and Solamo as depositaries

It is unquestionable that the defendants Ipil and Solamo were the carriers of the said P450 belonging to Yu Con, and that they
received this sum from the latter for the purpose of delivering it to the store of the town of Catmon, to which it had been consigned.
Under such circumstances, said defendants were the depositaries of the money.

Being the depositaries of the P450 in question, and they having failed to exercise for its safekeeping the diligence required by the
nature of the obligation assumed by them and by the circumstances of the time and the place, it is evident that, in pursuance of
the provisions of articles 1601 and 1602, in their relation to articles 1783 and 1784, and as prescribed in article 1770, of the Civil
Code, they are liable for its loss or misplacement and must restore it to the plaintiff, together with the corresponding interest thereon
as an indemnity f or the losses and damages caused him through the loss of the said sum.

Lauron as the shipowner

In maritime commerce, the shippers and passengers in making contracts with the captain do so through the confidence they have
in the shipowner who appointed him; they presume that the owner made a most careful investigation before appointing him, and,
above all, they themselves are unable to make such an investigation, and even though they should do so, they could not obtain
complete security, inasmuch as the shipowner can, whenever he sees fit, appoint another captain instead.

"The shipowner is in the same case with respect to the members of the crew, for, though he does not appoint directly, yet, expressly
or tacitly, he contributes to their appointment. On the other hand, if the shipowner derives profits from the results of the choice of
the captain and the crew, when the choice turns out successful, it is also just that he should suffer the consequences of an
unsuccessful appointment, by application of the rule of natural law contained in the Partidas, viz., that he who enjoys the benefits
derived from a thing must likewise suffer the losses that ensue therefrom.

Captains and Masters of the Vessel

For legal purposes, that is, for the determination of the nature and effect of the relations created between the plaintiff, as owner of
the merchandise laden on said craft and of the money that was delivered to the master, Ipil, and the defendant Lauron, as owner
of the craft, the latter was a vessel, according to the meaning and construction given to the word vessel in the Mercantile Code, in
treating of maritime commerce, under Title 1, Book 3.

"The word vessel serves to designate every kind of craft by whatever particular or technical name it may now be known or which
nautical advancements may give it in the future." According to the foregoing definitions, then, we hold that the banca called Maria,
chartered by Yu Con from Lauron, was a "vessel", pursuant to the meaning this word has in mercantile law, that is, in accordance
with the provisions of the Code of Commerce in force.

Glicerio Ipil, the master of the said banca Maria, must also be considered as its captain, in the legal acceptation of this word.

The name of captain or master is given, according to the kind of vessel, to the person in charge of it. "The first denomination is
applied to those who govern vessels that navigate the high seas or ships of large dimensions and importance, although
they be engaged in the coastwise trade. "Masters are those who command smaller ships engaged exclusively in the
coastwise trade. "For the purposes of maritime commerce, the words 'captain' and 'master' have the same meaning; both
being the chiefs or commanders of ships."

It is therefore evident that, in accordance with the provisions of the Code of Commerce, Lauron, as the proprietor and owner of the
craft of which Ipil was the master and in which, through the fault and negligence of the latter and of the supercargo Solamo, there
occurred the loss, theft, or robbery of the P450 that belonged to Yu Con. A theft which as shown by the evidence, does not appear
to have been committed by a person not belonging to the craft. Thus, for said loss or theft, Yu Con cannot be held civilly liable for
having executed with Lauron the contract for the transportation of the merchandise and money between the port of Cebu and the
town of Catmon, by means of the said craft.

Therefore, the trial court did not err in so holding in the judgment appealed from.

16. Manila Steamship vs. Adbulhaman, 100 Phil. 32


Topic: MARITIME TORTS; LIABILITY OF SHIPOWNERS, SOLIDARY; LIABILITY OF SHIPOWNER WHERE OFFICERS OF THE
SHIP ARE UNLICENSED

FACTS: Insa Abdulhaman together with his wife and five children boarded M/L Consuelo V in Zamboanga City. The said ship was
bound for Siokon under the command of Faustino Macrohon. The weather was good and fair.On that same night, M/S Bowline
Knot was navigating from Marijoboc towards Zamboanga. Between 9:30 to 10:00 in the evening the dark clouds bloated with rain
began to fall and the gushing strong wind began to blow steadily harder, lashing the waves into a choppy and roaring sea. Such
weather lasted for about an hour and then it became ex air although it was showering and the visibility was good enough.

While some of the passengers of the M/L Consuelo V were then sleeping and some lying down awake, a shocking collision
suddenly occurred. The ship that collided was later on identified as the M/V Bowline Knot. M/L Consuelo V capsized that resulted
to the death of 9 passengers and the loss of the cargoes on board.

The Court of Appeals, affirming the findings of Board of Marine Inquiry, held the owners of both vessels solidarily liable to
plaintiff for damages caused to the latter under Article 827 of the Code of Commerce but exempted defendant Lim Hong To, the
owner of M/V Consuelo V, from liability due to the sinking and total loss of his vessel. While the Manila Steamship, owner
of the Bowline Knot was ordered to pay all of plaintiff’s damages.

Petitioner Manila Steamship Co. pleads that 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 the officer in command of the M/S
Bowline Knot.

Issue: 1. W/N Manila Steamship Co. is exempt from any liability under Art. 1903 of the Civil Code
2. W/N Lim Tong Ho, the ship owner of M/V Consuelo V should be exempt also from any liability

Held: 1. NO. Petitioner is not exempted from liabilities. While it is true that plaintiff’s action against petitioner 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 Art. 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. 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 agent is the one liable to third persons.

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 ship owners 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. Ship owners 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.

2. NO. The CA erred in declaring Lim Hong To, owner of the M/L “Consuelo V", exempt from liability to the original Abdulhaman,
in view of the total loss of his own vessel, that sank as a result of the collision. It is to be noted that both the master and the
engineer of the motor launch “Consuelo V” were not duly licensed. In applying for permission to operate, despite the lack of
properly trained and experienced, crew, Lim Hong To reasoned that that the income derived from the vessel is insufficient to pay
licensed officers who demand high salaries and expressly declared full assumption of risk and responsibility for the consequences
in case of accident, damage or loss.

To disregard the question whether mere inability to meet the salary demands of duly licensed masters and engineers constitutes
non-availability thereof that would excuse noncompliance with the law and authorize operation without licensed officers, the fact
remains that 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 increased the dangers and hazards to his vessel’s passengers. Hence, the liability of Lim Hong To cannot be
liken to that of a ship owner who bears in mind the safety of the passengers and cargo by employing duly licensed officers. To hold
that Lim Hong To may limit his liability to the value of his vessels, is to erase all difference between compliance with law and the
deliberate disregard thereof.
The international rule is to the effect that the right of abandonment of vessels, as a legal limitation of a ship owner’s liability, does
not apply to cases where the injury or the average is due to ship owner’s own fault.

17. Yangco vs. Laserna, 73 Phil. 330


(TOPIC: SHIPS AND SHIPPING; COLLISIONS OR SHIPWRECKS; CIVIL LIABILITY OF SHIP-OWNER FOR INJURY TO OR
DEATH OF PASSENGERS ARISING FROM NEGLIGENCE OF CAPTAIN.)

Facts: On the afternoon of May 26, 1927, the steamer SS Negros owned by Yangco left the port of Romblon on its return trip to
Manila. Typhoon signal no. 2 was then up and in fact, the passengers duly advised the captain before sailing. The boat was
overloaded. In addition, the vessel carried thirty sacks of crushed marble and about one hundred sacks of copra and some lumber.
The passengers, numbering about 180, were overcrowded, the vessel's capacity being limited to only 123 passengers. After 2
hours of sailing, the boat encountered strong winds and rough seas between the islands of Banton and Simara. While in the act of
maneuvering, the vessel was caught sidewise by a big wave which caused it to capsize and sink. Many of the passengers died on
the mishap. Civil actions were instituted in the CFI of Capiz by the heirs to recover damages for the death of the victims. The CFI
awarded the heirs a sum of money. After the rendition of the judgment to this effect, Yangco sought to abandon the vessel to the
plaintiffs (heirs) in the three cases (before the CFI), together with all its equipment, without prejudice to his right to appeal. Yangco
sought to abandon the vessel to the plaintiffs in three cases.

Issue: Whether the shipowner or agent is liable for damages for the consequent death of its passengers notwithstanding the total
loss of the vessel?

Held: The petitioner is absolved from all complaints.

Under Article 587 – “the ship agent shall also be civilly liable for indemnities in favor of third persons which arise from the conduct
of the captain in the vigilance over the goods which the vessels carried; BUT he may exempt himself therefrom by abandoning the
vessel with all her equipment and the freight he may have earned during the voyage.”

In the light of all the foregoing, we therefore hold that if the shipowner or agent may in any way be held civilly liable at all for injury
to or death of passengers arising from the negligence of the captain in cases of collisions or shipwrecks, his liability is merely co-
extensive with his interest in the vessel such that a total loss thereof results in its extinction.

In arriving at this conclusion, we have not been unmindful of the fact that the ill-fated steamship Negros, as a vessel engaged in
interisland trade, is a common carrier, and that the relationship between the petitioner and the passengers who died in the mishap
rests on a contract of carriage. But assuming that petitioner is liable for a breach of contract of carriage, the exclusively "real and
hypothecary nature" of maritime law operates to limit such liability to the value of the vessel, or to the insurance thereon, if any.

In the instant case it does not appear that the vessel was insured. Whether the abandonment of the vessel sought by the petitioner
in the instant case was in accordance with law or not, is immaterial. The vessel having totally perished, any act of abandonment
would be an idle ceremony. - “NO VESSEL, NO LIABILITY.”

18. Heirs of Amparo de los Santos vs. CA and COMPANIA MARITIMA 186 SCRA 649

RATIO DECIDENDI
The limited liability doctrine applies not only to goods but also in all cases like death or injury to passengers wherein the shipowner
or agent may properly be held liable for the negligent or illicit acts of the captain and it only applies in situations where the fault or
negligence is committed solely by the captain.

FACTS: M/V Mindoro sailed from Manila to New Washington, Aklan with many passengers aboard. The vessel met typhoon
Welming and it sank. Many of its passengers died. One of them was Amparo delos Santos.In a decision by the Board of Marine
Inquiry, it was found that the captain and some officers of the crew were negligent in operating the vessel. However, this decision
cannot be executed against the captain who perished with the vessel. Compania Maritima claimed that there was no negligence
was ever established. The shipowner and their officers took all the necessary precautions in operating the vessel. The loss of the
lives of passengers was due to force majeure. It claimed that M/V Mindoro was in seaworthy condition for it was given clearance
by the Bureau of Customs a clearance after its inspection.

ISSUE: [1] WoN Compania Maritima was negligent – YES


[2] WoN Art. 587 is applicable in this case – NO

RULING:
[1] Compania Maritima was negligent.
Modern technology belies the claim of Compania Maritima that it did not have any information about typhoon Welming
until after the boat was already at sea.The Weather Bureau is equipped with modern apparatus which enables it to detect any
incoming atmospheric disturbances. It is highly improbable due to the late departure of the ship that the Weather Bureau had not
yet issued any typhoon bulletin at any time during the day to the shipping companies. Maritima displayed lack of foresight and
minimum concern for the safety of its passengers. The ship was delayed for 4 hours and it did not check from the captain the
reasons behind the delay nor send its representative to inquire into the cause of the delay. A closer supervision could have
prevented the overloading of the vessel. Maritima also did not install a radar which could have allowed the ship to navigate safely
for shelter during the storm. The vessel was left at the mercy of Welming.

[2] Art. 587 is inapplicable because the shipowner was also negligent.

Under Art. 587 of the Code of Commerce, a shipowner or agent has the right of abandonment; and by
necessary implication, his liability is confined to that which he is entitled of right to abandon – the vessel with
all her equipments and the freight it may have earned during the voyage.

This rule is necessary to offset against the innumerable hazards and perils of sea voyage and to encourage shipbuilding and
maritime commerce. The limited liability doctrine applies not only to goods but also in all cases like death or injury to passengers
wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain. Art. 587 speaks only of
situations where the fault or negligence is committed solely by the captain. In cases where the shipowner is likewise to be blamed,
Art. 587 does not apply. Such a situation will be covered by the New Civil Code provisions on common carriers.

19. Aboitiz Shipping vs. General Accident Fire and Life Assurance Corp., Ltd., 217 SCRA 359

RATIO DECIDENDI
The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to
maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as guaranty for their
settlement.

FACTS: Aboitiz Corporation operated M/V P. Aboitiz, a common carrier which sank on a voyage from Hong Kong to the Philippines
on 31 October 1980. General Accident Fire and Life Assurance Corporation, Ltd. Is a foreign insurance company pursuing its
remedies as subrogee of several cargo consignees whose cargo sank with the said vessel. The sinking gave rise to several suits
against Aboitiz. The sinking was initially investigated by the Board of Marine Inquiry which found that the sinking was due to force
majeure and that the vessel was sea worthy. Notwithstanding such finding, the trial court found against the carrier on the basis
that the loss was not due to force majeure. The attempted execution of the judgment award in said case gave rise to this case.
Aboitiz contends that the Limited Liability Rule warrants immediate stay of execution of judgment to prevent impairment of other
creditor’s shares.

ISSUE: WoN the Limited Liability Rule arising out of the real and hypothecary nature of maritime law should apply in
this case - YES

RULING:
The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses
related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as guaranty for
their settlement. The liability of the vessel owner and agent arising from the operation of such vessel were confined to the vessel
itself, its equipment, freight, and insurance, if any.

The Limited Liability Rule in the Philippines cover only liability for injuries to third parties, acts of the captain and collisions.
The only time the Limited Liability Rule does not apply is when there is an actual finding of negligence on the part of the vessel
owner or agent. In this case, there has been no actual finding of negligence on the part of Aboitiz. The rights of parties to claim
against an agent or owner of a vessel may be compared to those of creditors against an insolvent corporation whose assets are
not enough to satisfy the totality of claims against it. Each individual creditor may prove the actual amount of their respective claims
but this does not mean that they shall be allowed to recover fully. The claimants or creditors are limited in their recovery to the
remaining value of accessible assets. No claimant can be given precedence over the others by the simple expedience of having
filed or completed its action than the rest. Thus, execution of judgment must be stayed pending completion of all cases occasioned
by the subject sinking.

20. Inter-Orient Maritime Ent., Inc. vs. NLRC, 235 SCRA 268

FACTS: Capt. Tayong, a licensed Master Mariner with experience in commanding oceangoing vessels, was employed Trenda
World Shipping (Manila), Inc. and Sea Horse Ship Management, Inc. through petitioner Inter-Orient Maritime Enterprises, Inc. as
Master of the vessel M/V Oceanic Mindoro.

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. On 21 July 1989, Captain 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 vessel’s leaking turbo-charger and the economizer.
While the vessel was en route from Hongkong 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.

When the vessel arrived at the port of Singapore, the Chief Engineer reminded Captain Tayong that the oxygen and
acetylene supplies had not been delivered. 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. He was advised to contact Mr. Clark, the Technical Director, for a solution for the supply of said oxygen and acetylene.
Mr. Clark responded that by shutting off the water to the turbo chargers and using the auxiliary boiler, there should be no further
problems. Captain Tayong, however, communicated to Sea Horse his reservations regarding proceeding to South Africa without
the requested supplies, and was advised to wait for the supplies.

On August 1, 1989, the supplies were delivered and they immediately sailed for Richard Bay. When the vessel arrived at the port
of Richard Bay, South Africa on August 16, 1989, Captain Tayong was instructed to turn-over his post to the new captain. He was
thereafter repatriated to the Philippines, without being informed of the charges against him.

Capt. Tayong filed a complaint with the POEA against petitioners for alleged illegal dismissal. Petitioners denied the allegationby
Capt. Tayong. Petitioners alleged that Capt. Tayong had refused to sail immediately to South Africa to the prejudice and damage
of petitioners. 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.

The POEA dismissed the complaint for illegal dismissal filed by Captain Tayong, holding that there was valid cause for his untimely
repatriation. The NLRC reversed and set aside the decision of the POEA and directed petitioners to pay the Captain (a) his salary
for the unexpired portion of the contract at US$1,900.00 a month, plus one (1) month leave benefit; and (b) attorney's fees
equivalent to ten percent (10%) of the total award due.

ISSUE: W/N the NLRC erred in reversing the findings of the POEA

RULING: 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. 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.

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. To the captain is committed the governance, care and
management of the vessel. Clearly, the captain is vested with both management and fiduciary functions.

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. More importantly, 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. It is the right and duty of the captain, in the exercise of sound discretion and in good faith, to do all
things with respect to the vessel and its equipment and conduct of the voyage which are reasonably necessary for the protection
and preservation of the interests under his charge, whether those be of the shipowners, charterers, cargo owners or of underwriters.

It is a basic principle of admiralty law that in navigating a merchantman, the master must be left free to exercise his own
best judgment. The requirements of safe navigation compel us to reject any suggestion that the judgment and discretion of the
captain of a vessel may be confined within a straitjacket, even in this age of electronic communications.

Indeed, if the ship captain is convinced, as a reasonably prudent and competent mariner acting in good faith that the
shipowner’s or ship agent’s instructions (insisted upon by radio or telefax from their offices thousands of miles away) will result, in
the very specific circumstances facing him, in imposing unacceptable risks of loss or serious danger to ship or crew, he cannot
casually seek absolution from his responsibility, if a marine casualty occurs, in such instructions.

In the view of the NLRC, that decision of Captain Tayong did not constitute a legal basis for the summary dismissal of
Captain Tayong and for termination of his contract with petitioners prior to the expiration of the term thereof. We cannot hold this
conclusion of the NLRC to be a grave abuse of discretion amounting to an excess or loss of jurisdiction; indeed, we share that
conclusion and make it our own.
21. Caltex (Phils.), Inc. vs. Sulpicio Lines, Inc., 315 SCRA 709

FACTS: Vector Shipping Corporation is the owner and operator of MT Vector. Caltex entered into a special contract of charter
party with VSC wherein it shipped 8,000 barrels of petroleum from Bataan to Masbate on Dec 19, 1987 at 8PM. On the other
hand, on Dec 20, 1987 at 6:30AM MV Dona Paz left Tacloban port headed to Manila with complements of 59 crew members and
passengers totaling 1,493 as indicated in the Coast Guard Clearance. At about 10:30PM, the two vessels collided with each other;
all of the passengers and crew of MV Dona Paz died while 2 crews MT Vector who were sleeping at the time of incident survived.
MV Dona Paz carried an estimated 4000 passenger which is beyond what is indicated in the clearance. Among those passengers
are Sebastian Canezal and daughter Corazon.

The Board of Marine Inquiry found that MT Vector, its registered operator Francisco Soriano and VSC were at fault and responsible
for its collision with MV Dona Paz. The heirs of Canezal filed a complaint for damages arising from breach of contract of carriage
against Sulpicio Lines, Inc, owner of MV Dona Paz. In turn, Sulpicio filed a third-party complaint against VSC and Caltex.

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

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

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

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

Second: MT Vector is a common carrier

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

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

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

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

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