1.

NIKKI

Dela Torre vs. CA

DELA TORRE VS. COURT OF APPEALS
FACTS
Respondent Crisostomo G. Concepcion owned LCT-Josephine, a vessel registered with the Philippine
Coast Guard. On February 1, 1984, Concepcion entered into a Preliminary Agreement with Roland de la
Torre (Roland) for the dry-docking and repairs of the said vessel as well as for its charter afterwards.
Subsequently, Roland entered into several contracts subchartering LCT-Josephine. Then, it sub-chartered
LCT-Josephine to Ramon Larrazabal for the transport of cargo consisting of sand and gravel to Leyte
were the parties agreed upon that the SECOND PARTY (Larrazabal) is the one responsible to supervise in
loading and unloading of cargo load on the vessel. On November 23, 1984, the LCT-Josephine with its
cargo of sand and gravel arrived at Philpos, Isabel, Leyte. The vessel was beached near the NDC Wharf.
With the vessels ramp already lowered, the unloading of the vessels cargo began with the use of
Larrazabals payloader. While the payloader was on the deck of the LCT-Josephine scooping a load of the
cargo, the vessels ramp started to move downward, the vessel tilted and sea water rushed in. Shortly
thereafter, LCT-Josephine sank. Concepcion demanded that PTSC/Roland refloat LCT-Josephine. The
latter assured Concepcion that negotiations were underway for the refloating of his vessel. Unfortunately,
this did not materialize.

ISSUE: WON the limited liability rule is applicable?

RULING
No. The Limited Liability Rule has been explained to be that of the real and hypothecary doctrine in
maritime law where the shipowner or ship agents liability is held as merely co-extensive with his interest
in the vessel such that a total loss thereof results in its extinction. In this jurisdiction, this rule is provided
in three articles of the Code of Commerce. These are:

Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which
may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may
exempt himself therefrom by abandoning the vessel with all her equipment and the freight it may have earned
during the voyage.

Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of their interests in the
common fund for the results of the acts of the captain referred to in Art. 587. Each co-owner may exempt
himself from this liability by the abandonment, before a notary, of the part of the vessel belonging to him.

Art. 837. The civil liability incurred by shipowners in the case prescribed in this section, shall be
understood as limited to the value of the vessel with all its appurtenances and freightage served during the
voyage.

Article 837 specifically applies to cases involving collision which is a necessary consequence of the right to
abandon the vessel given to the shipowner or ship agent under the first provision Article 587. Similarly,
Article 590 is a reiteration of Article 587, only this time the situation is that the vessel is co-owned by
several persons. Obviously, the forerunner of the Limited Liability Rule under the Code of Commerce is
Article 587. Now, the latter is quite clear on which indemnities may be confined or restricted to the value
of the vessel pursuant to the said Rule, and these are the indemnities in favor of third persons which may
arise from the conduct of the captain in the care of the goods which he loaded on the vessel. Thus, what
is contemplated is the liability to third persons who may have dealt with the shipowner, the agent or even
the charterer in case of demise or bareboat charter. The only person who could avail of this is the
shipowner, Concepcion. He is the very person whom the Limited Liability Rule has been conceived to
protect. Citing Monarch Insurance Co., Inc. v. CA:
 No vessel, no liability, expresses in a nutshell the limited liability rule. The shipowners or agents
liability is merely coextensive with his interest in the vessel such that a total loss thereof results in its extinction.
The total destruction of the vessel extinguishes maritime liens because there is no longer any res to which it
can attach. This doctrine is based on the real and hypothecary nature of maritime law which has its origin in
the prevailing conditions of the maritime trade and sea voyages during the medieval ages, attended by
innumerable hazards and perils. To offset against these adverse conditions and to encourage shipbuilding and
maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from the
operation of a ship to the vessel, equipment, and freight, or insurance, if any.

________________________________________________________________________

2. JOTHAM
Monarch Insurance Co., Inc., Tabacalera Insurance Co., Inc., and Hon. Judge Amante
Purisima

vs.

Court of Appeals and Aboitiz Shipping Corporation

G.R. No. 92735 June 08, 2000

Facts

This is a consolidation of three cases, all of which are petitions filed by insurance companies seeking
compensation for the loss of cargoes of various shippers with the M/V P. Aboitiz, a common carrier which
sank on her voyage from Hong Kong to Manila on October 31, 1980. In its answer with counterclaim,
Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to
force majeure or an act of God. In due course, the trial court rendered judgment against Aboitiz but the
complaint against all the other defendants was dismissed. Consequently, Monarch and Tabacalera moved
for execution of judgment. The trial court granted the motion on April 4, 1989 and issued separate writs
of execution. However, on April 12, 1989, Aboitiz, invoking the real and hypothecary nature of liability in
maritime law, filed an urgent motion to quash the writs of execution. According to Aboitiz, since its
liability is limited to the value of the vessel which was insufficient to satisfy the aggregate claims of all
110 claimants, to indemnify Monarch and Tabacalera ahead of the other claimants would be prejudicial to
the latter.

Issue(s)

Can Aboitiz avail itself of the limited liability doctrine of maritime law?

Ruling

No. "No vessel, no liability," expresses in a nutshell the limited liability rule. The shipowners or agents
liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its
extinction. The total destruction of the vessel extinguishes maritime liens because there is no longer any
res to which it can attach. This doctrine is based on the real and hypothecary nature of maritime law
which has its origin in the prevailing conditions of the maritime trade and sea voyages during the
medieval ages, attended by innumerable hazards and perils. To offset against these adverse conditions
and to encourage shipbuilding and maritime commerce it was deemed necessary to confine the liability of
the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or
insurance, if any. In the immediate case, a finding that a fortuitous event was the sole cause of the loss
of the M/V P. Aboitiz would absolve Aboitiz from any and all liability pursuant to Article 1734(1) of the
Civil Code, whereas a finding that the vessel sank by the negligence of the carrier, the ship captain, or its
crew would render inapplicable the rule on limited liability. The evidence presented in the trial before the
lower court showed the vessel to be unseaworthy, and the Court attributed the same to the negligence of
the carrier, the captain, and the crew. Furthermore, the carrier failed to adduce sufficient evidence to
prove that it had exercised extraordinary diligence required of it as a common carrier. As per the rule in
cases involving the limited liability of shipowners, the initial burden of proof of negligence or
unseaworthiness rests on the claimants. However, once the vessel owner or any party asserts the right to
limit its liability, the burden of proof as to lack of privity or knowledge on its part with respect to the
matter of negligence or unseaworthiness is shifted to it. Having failed to discharge this burden, the
carrier cannot avail of the protection of limited liability.

--------------------------------------------------------------------------------------------------------------------------------

3. RHOWEE
G.R. No. 100446 January 21, 1993
ABOITIZ SHIPPING CORPORATION, petitioner,
vs.
GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, LTD., respondent.

TOPIC: Characteristics of Maritime Transactions (Hypothecary)

FACTS:

Facts showed that Aboitiz Shipping Corporation owns M/V P. ABOITIZ," a common carrier which sank on a voyage
from Hongkong to the Philippines. Private respondent GAFLAC insured several cargo which sank with the vessel and
for which it has priorly paid.

The sinking gave rise to the filing of suits for recovery of lost cargo. RTC granted private respondent's prayer for
execution for the full amount of the judgment award. The trial court in so doing swept aside petitioner's opposition
which was grounded on the real and hypothecary nature of petitioner's liability as ship owner. The application of this
established principle of maritime law would necessarily result in a probable reduction of the amount to be recovered
by private respondent, since it would have to share with a number of other parties similarly situated in the insurance
proceeds on the vessel that sank. Petitioner now seeks the applicability of the doctrine of limited liability on the
totality of the claims vis a vis the losses brought about by the sinking of the vessel, as based on the real and
hypothecary nature of maritime law.

ISSUE: WON the Limited Liability Rule arising out of the real and hypothecary nature of maritime law is applicable.

HELD: YES.

The real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with
losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which
stands as the guaranty for their settlement. It has its origin by reason of the conditions and risks attending maritime
trade in its earliest years when such trade was replete with innumerable and unknown hazards since vessels had to
go through largely uncharted waters to ply their trade. It was designed to offset such adverse conditions and to
encourage people and entities to venture into maritime commerce despite the risks and the prohibitive cost of
shipbuilding. Thus, the liability of the vessel owner and agent arising from the operation of such vessel were confined
to the vessel itself, its equipment, freight, and insurance, if any, which limitation served to induce capitalists into
effectively wagering their resources against the consideration of the large profits attainable in the trade

The rights of a vessel owner or agent under the Limited Liability Rule are akin to those of the rights of shareholders to
limited liability under our corporation law. More to the point, 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 as against it. While each individual creditor may, and in fact shall, be allowed to prove the
actual amounts of their respective claims, this does not mean that they shall all be allowed to recover fully thus
favoring those who filed and proved their claims sooner to the prejudice of those who come later.

In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insurance
proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be given
precedence over the others by the simple expedience of having filed or completed its action earlier than the rest.
Thus, execution of judgment in earlier completed cases, even those already final and executory, must be stayed
pending completion of all cases occasioned by the subject sinking. Then and only then can all such claims be
simultaneously settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to
satisfy all claims. ###

_____________________________________________________________________________________

4. JANICE
Luzon Stevedoring Corporation vs. Court of Appeals

(156 SCRA 169)

Facts: A maritime collision occurred between the tanker CAVITE owned by LSCO and MV Fernando
Escano (a passenger ship) owned by Escano, as a result the passenger ship sunk. An action in admiralty
was filed by Escano against Luzon. The trial court held that LSCO Cavite was solely to blame for the
collision and held that Luzon’s claim that its liability should be limited under Article 837 of the Code of
Commerce has not been established. The Court of Appeals affirmed the trial court. The SC also affirmed
the CA. Upon two motions for reconsideration, the Supreme Court gave course to the petition.

Issue: Whether or not in order to claim limited liability under Article 837 of the Code of Commerce, it is
necessary that the owner abandon the vessel

Held: Yes, abandonment is necessary to claim the limited liability wherein it shall be limited to the value of
the vessel with all the appurtenances and freightage earned in the voyage. However, if the injury was due
to the ship owner’s fault, the ship owner may not avail of his right to avail of limited liability by abandoning
the vessel.
The real nature of the liability of the ship owner or agent is embodied in the Code of Commerce. Articles
587, 590 and 837 are intended to limit the liability of the ship owner, provided that the owner or agent
abandons the vessel. Although Article 837 does not specifically provide that in case of collision there
should be abandonment, to enjoy such limited liability, said article is a mere amplification of the provisions
of Articles 587 and 590 which makes it a mere superfluity.

The exception to this rule in Article 837 is when the vessel is totally lost in which case there is no vessel to
abandon, thus abandonment is not required. Because of such loss, the liability of the owner or agent is
extinguished. However, they are still personally liable for claims under the Workmen’s Compensation Act
and for repairs on the vessel prior to its loss.

In case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary. In such
cases, the owner or agent may avail of Article 837 by abandoning the vessel. But if the injury is caused by
the owner’s fault as where he engages the services of an inexperienced captain or engineer, he cannot
avail of the provisions of Article 837 by abandoning the vessel. He is personally liable for such damages.

In this case, the Court held that the petitioner is a t fault and since he did not abandon the vessel, he
cannot invoke the benefit of Article 837 to limit his liability to the value of the vessel, all appurtenances
and freightage earned during the voyage.

____________________________________________________________________________________

5. KITEL

G.R. No. 156978. August 24, 2007. *

ABOITIZ   SHIPPING   CORPORATION,   petitioner, vs. NEW   INDIA

ASSURANCE COMPANY, LTD., respondent.

TOPIC: When Ship owner at fault

FACTS: 
Petitioner   owns   M/V   P.   Aboitiz   which   sank   on   her   voyage   from   Hongkong   to
Malaysia. The respondent is the insurer of the lost cargo on board the said vessel
and consigned to General Textile. After respondent indemnified General textile, it
was   subrogated   to   its   rights,   interests   and   actions   against   petitioner.   The
Respondent   filed  a   civil   action   for  recovery   of   damages   before  RTC   Manila.  The
court held petitioner liable for the total value of lost cargoes instead of applying the
Doctrine   of   Limited   Liability.  CA   affirmed   the   decision.   SC   denied   the   petition.
Hence this Motion for Reconsideration. 

 
ISSUE: Whether or not the doctrine of limited liability, which limits respondent’s
award of damages to its pro rata share in the insurance proceeds, applies in this
case

HELD: NO.

Petitioner seeks the referral of the case to the Court En Banc alleging that the SC
decision   modified   or   reversed   the   doctrines   in GAFLAC and Monarch,   where   the
Court ruled that petitioner’s liability was limited to the claimants’ pro rata share in
the insurance proceeds in view of the doctrine of limited liability. A perusal of the
records shows that the Court did not modify or reverse the doctrines in GAFLAC
and   Monarch   considering   that   the  factual   findings   of   this   case  is   different   from
GAFLAC. In the case at bar, the petitioner was found concurrently negligent with
the ship captain and crew, while in GAFLAC, there is no such finding. Then the
peculiar   circumstances   in Monarch called   for   the   application   of   the   doctrine   of
limited liability.

Common carriers, from the nature of their business and for reasons of public policy
are bound to observe extraordinary diligence over the goods they transport. In the
event of loss, destruction or deterioration of the insured goods, common carriers are
responsible, unless they can prove that the loss, destruction or deterioration was
brought about by the causes specified in Article 1743 of the Civil Code. In all other
cases,   common   carriers   are   presumed   to   have   been   at   fault   or   to   have   acted
negligently, unless they prove that they observed extraordinary diligence.

The weather was moderate when M/V P. Aboitiz sank. Both the trial and appellate
courts also ruled that the M/V P. Aboitiz sank due to its unseaworthiness and not
due   to   typhoon.   To   limit   petitioner’s   liability   to   the   amount   of   the   insurance
proceeds, it has the burden of showing that the unseaworthiness of the vessel was
not due to its fault or negligence. But it failed to do so. Where the shipowner fails to
overcome the presumption of negligence, the doctrine of limited liability cannot be
applied
 
_____________________________________________________________________________
 6. JASZ
G.R. No. 156978 May 2, 2006

ABOITIZ SHIPPING CORPORATION, Petitioner, vs. NEW INDIA ASSURANCE COMPANY, LTD., Respondent.

(Exception to Hypothecary Nature of Maritime Transactions)

Facts:

Societe Francaise Des Colloides loaded a cargo of textiles and auxiliary chemicals from France on board a
vessel owned by Franco-Belgian Services, Inc. The cargo was consigned to General Textile, Inc., in Manila and
insured by New India Assurance Company, Ltd. While in Hongkong, the cargo was transferred to M/V P. Aboitiz for
transshipment to Manila. Before departing, the vessel was advised by the Japanese Meteorological Center that it
was safe to travel to its destination. But while at sea, the vessel received a report of a typhoon moving within its
general path. To avoid the typhoon, the vessel changed its course. However, it was still at the fringe of the typhoon
when its hull leaked.

New India hired a surveyor, Perfect, Lambert and Company, to investigate the cause of the sinking. In its
report, the surveyor concluded that the cause was the flooding of the holds brought about by the vessel’s
questionable seaworthiness. Consequently, respondent filed a complaint for damages against petitioner Aboitiz,
Franco-Belgian Services and the latter’s local agent, F.E. Zuellig, Inc. (Zuellig).

On November 20, 1989, the trial court, ruled in favor of respondent. It held petitioner liable for the total
value of the lost cargo plus legal interest. Petitioner elevated the case to the Court of Appeals, however, on August
29, 2002, the appellate court affirmed in toto the trial court’s decision. Petitioner, contends that respondent’s claim
for damages should only be against the insurance proceeds and limited to its pro-rata share in view of the doctrine
of limited liability. Respondent counters that the doctrine of real and hypothecary nature of maritime law is not
applicable in the present case because petitioner was found to have been negligent. Hence, petitioner should be
held liable for the total value of the lost cargo.

Issue:

Whether the doctrine of real and hyporhecary nature of maritime law (limited liability) applies

Held:

No. An exception to the limited liability doctrine is when the damage is due to the fault of the ship owner
or to the concurrent negligence of the ship owner and the captain. In which case, the ship owner shall be liable to
the full-extent of the damage. Moreover, where the vessel is found unseaworthy, the ship owner is also presumed
to be negligent since it is tasked with the maintenance of its vessel. Though this duty can be delegated, still, the
ship owner must exercise close supervision over its men.

In the present case, petitioner has the burden of showing that it exercised extraordinary diligence in the
transport of the goods it had on board in order to invoke the limited liability doctrine. Differently put, to limit its
liability to the amount of the insurance proceeds, petitioner has the burden of proving that the unseaworthiness of
its vessel was not due to its fault or negligence. Considering the evidence presented and the circumstances
obtaining in this case, we find that petitioner failed to discharge this burden
 Where the ship owner fails to overcome the presumption of negligence, the doctrine of limited liability
cannot be applied.

_____________________________________________________________________________________________

7. SAM
DIONISIA ABUEG, ET. AL., plaintiffs-appellees vs. BARTOLOME SAN DIEGO, defendant-
appellant

TOPIC: Exception to Hypothecary Nature of Maritime Transactions – Does Not Overturn

Liability Rule Under Labor Code

Facts: Dionisia Abueg is the widow of the deceased, Amado Nunez, who was a machinist on board the
M/S San Diego II. Marciana S. De Salvacion and Rosario R. Oching are the widows of Victoriano Salvacion
and Francisco Oching, respectively. Salvacion was the machinist on board and Oching was the captain or
patron of the M/S Bartolome S. The said motor ships belong to the defendant-appellant Bartolome San
Diego.

The M/S San Diego II and M/S Bartolome, while engaged in fishing operations were caught by a typhoon
as a consequence of which they were sunk and totally lost. Amado Nunez, Victoriano Salvacion and
Francisco Oching while acting in their capacities perished in the shipwreck.

In the case filed by the plaintiffs-appellees against the defendant-appellant before the CFI-Manila, the
latter awarded to the plaintiffs the compensation provided for in the Workmen’s Compensation Act.

The defendant-appellant opposed the award of claims, citing Articles 587, 837 and 643 of the Code of
Commerce, to wit:

Art. 587 provides that if the vessel together with all her tackle and freight money earned
during the voyage are abandoned, the agent’s liability to third persons for tortious acts of
the captain in the care of the goods which the ship carried is extinguished.

Art. 837 provides that in cases of collision, the ship owners’ liability is limited to the value
of the vessel with all her equipment and freight earned during the voyage.

Art. 643 provides that if the vessel and freight are totally lost, the agent’s liability for
wages of the crew is extinguished.

From these premises defendant-appellant draw the conclusion that appellant’s liability was extinguished.

Issue: Whether or not the defendant-appellant’s liability is extinguished.

Ruling: NO. The real and hypothecary nature of the liability of the shipowner or agent embodied in the
provisions of Maritime law pertains to the liability of the owner or agent arising from the operation of a
ship to the vessel, equipment, and freight, or insurance, if any, so that if the shipowner or agent
abandoned the ship, equipment, and freight, his liability was extinguished.
The provisions of the Code of Commerce invoked by appellant have no room in the application of the
Workmen's Compensation Act which seeks to improve, and aims at the amelioration of, the condition of
laborers and employees. It is not the liability for the damage or loss of the cargo or injury to, or death of,
a passenger by or through the misconduct of the captain or master of the ship; nor the liability for the
loss of the ship as result of collision; nor the responsibility for wages of the crew, but a liability created by
a statute to compensate employees and laborers in cases of injury received by or inflicted upon them,
while engaged in the performance of their work or employment, or the heirs and dependents and
laborers and employees in the event of death caused by their employment. Such compensation has
nothing to do with the provisions of the Code of Commerce regarding maritime commerce.

_____________________________________________________________________________

8. RED

CALTEX PHILS. Vs. SULPICIO LINES

Caltex [Philippines], Inc. vs. Sulpicio Lines, Inc.

Facts:

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

Issue:

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

Held:

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.

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.

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.

_____________________________________________________________________________

9. MIGUEL

DELA TORRE vs. CA

G.R. No. 160088 July 13, 2011
AGUSTIN P. DELA TORRE, Petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CRISOSTOMO G. CONCEPCION, RAMON "BOY"
LARRAZABAL, PHILIPPINE TRIGON SHIPYARD CORPORATION, and ROLAND G. DELA TORRE,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 160565
PHILIPPINE TRIGON SHIPYARD CORPORATION and ROLAND G. DELA TORRE, Petitioners,
vs.
CRISOSTOMO G. CONCEPCION, AGUSTIN DELA TORRE and RAMON "BOY" LARRAZABAL,
Respondents.

FACTS: Respondent Crisostomo G. Concepcion, owner of LCT-Josephine (a vessel registered with the Philippine
Coast Guard. On February 1, 1984) entered into a "Preliminary Agreement" with Roland de la Torre for the dry-
docking and repairs of the said vessel as well as for its charter afterwards.

On June 20, 1984, Concepcion and the Philippine Trigon Shipyard Corporation (PTSC), represented by Roland,
entered into a "Contract of Agreement," wherein the latter would charter LCT-Josephine retroactive to May 1, 1984.

On August 1, 1984, PTSC/Roland sub-chartered LCT-Josephine to Trigon Shipping Lines (TSL), a single
proprietorship owned by Roland’s father, Agustin de la Torre.

On November 22, 1984, TSL, this time represented by Roland per Agustin’s Special Power of Attorney, sub-
chartered LCT-Josephine to Ramon Larrazabal for the transport of cargo consisting of sand and gravel to Leyte.

On November 23, 1984, the LCT-Josephine with its cargo of sand and gravel arrived at Philpos, Isabel, Leyte. The
vessel was beached near the NDC Wharf. With the vessel’s ramp already lowered, the unloading of the vessel’s
cargo began with the use of Larrazabal’s payloader. While the payloader was on the deck of the LCT-Josephine
scooping a load of the cargo, the vessel’s ramp started to move downward, the vessel tilted and sea water rushed in.
Shortly thereafter, LCT-Josephine sank. Concepcion demanded that PTSC/ Roland refloat LCT-Josephine. The latter
assured Concepcion that negotiations were underway for the refloating of his vessel. Unfortunately, this did not
materialize.

Concepcion was constrained to institute a complaint for "Sum of Money and Damages" against PTSC and Roland
before the RTC. PTSC and Roland filed their answer together with a third-party complaint against Agustin. Agustin,
in turn, filed his answer plus a fourth-party complaint against Larrazabal. The latter filed his answer and
counterclaim but was subsequently declared in default by the RTC. Eventually, the fourth-party complaint against
Larrazabal was dismissed when the RTC rendered its decision in favor of Concepcion on July 10, 1991.

The CA, on appeal, affirmed its decision in toto. Hence, these petitions for review.

ISSUE: WON the petitioners can invoke the limited liability rule and who among the parties are really liable.

HELD: NO. ‘No vessel, no liability,’ expresses in a nutshell the limited liability rule. The rule is of the real and
hypothecary doctrine in maritime law where the shipowner or ship agent’s liability is held as merely co-extensive
with his interest in the vessel such that a total loss thereof results in its extinction. This rule is provided in three
articles of the Code of Commerce.

Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise
from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself
therefrom by abandoning the vessel with all her equipment and the freight it may have earned during the voyage.

Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of their interests in the common fund
for the results of the acts of the captain referred to in Art. 587.
Each co-owner may exempt himself from this liability by the abandonment, before a notary, of the part of the vessel
belonging to him.
---
Art. 837. The civil liability incurred by shipowners in the case prescribed in this section, shall be understood as
limited to the value of the vessel with all its appurtenances and freightage served during the voyage.
Article 837 specifically applies to cases involving collision which is a necessary consequence of the right to abandon
the vessel given to the shipowner or ship agent under the first provision - Article 587. Similarly, Article 590 is a
reiteration of Article 587, only this time the situation is that the vessel is co-owned by several persons. Obviously,
the forerunner of the Limited Liability Rule under the Code of Commerce is Article 587. The latter is quite clear on
which indemnities may be confined or restricted to the value of the vessel pursuant to the said Rule, and these are
the - "indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods
which he loaded on the vessel." Thus, what is contemplated is the liability to third persons who may have dealt with
the shipowner, the agent or even the charterer in case of demise or bareboat charter.

Concepcion as the real shipowner is the one who is supposed to be supported and encouraged to pursue maritime
commerce. Thus, it would be absurd to apply the Limited Liability Rule against him who, in the first place, should
be the one benefitting from the said rule. Even if the contract is for a bareboat or demise charter where possession,
free administration and even navigation are temporarily surrendered to the charterer, dominion over the vessel
remains with the shipowner. Ergo, the charterer or the sub-charterer, whose rights cannot rise above that of the
former, can never set up the Limited Liability Rule against the very owner of the vessel.

II (the issue of the liability of the charterer and the sub-charterer.)

In the present case, the charterer and the sub-charterer through their respective contracts of agreement/charter
parties, obtained the use and service of the entire LCT-Josephine. The vessel was likewise manned by the charterer
and later by the sub-charterer’s people. With the complete and exclusive relinquishment of possession, command
and navigation of the vessel, the charterer and later the sub-charterer became the vessel’s owner pro hac vice. Now,
and in the absence of any showing that the vessel or any part thereof was commercially offered for use to the public,
the above agreements/charter parties are that of a private carriage where the rights of the contracting parties are
primarily defined and governed by the stipulations in their contract.

Although certain statutory rights and obligations of charter parties are found in the Code of Commerce, these
provisions are not applicable in the present case. None of the provisions found in the Code of Commerce deals with
the specific rights and obligations between the real shipowner and the charterer obtaining in this case. Necessarily,
the Court looks to the New Civil Code to supply the deficiency. Thus, the RTC and the CA were both correct in
applying the statutory provisions of the New Civil Code in order to define the respective rights and obligations of
the opposing parties.

Thus, Roland, who, in his personal capacity, entered into the Preliminary Agreement with Concepcion for the dry-
docking and repair of LCT-Josephine, is liable under Article 1189 of the New Civil Code. The vessel was not
returned to Concepcion after the repairs because of the provision in the Preliminary Agreement that the same
"should" be used by Roland for the first two years. Before the vessel could be returned, it was lost due to the
negligence of Agustin to whom Roland chose to sub-charter or sublet the vessel.

PTSC is liable to Concepcion under Articles 1665 and 1667 of the New Civil Code. As the charterer or lessee under
the Contract of Agreement dated June 20, 1984, PTSC was contract-bound to return the thing leased and it was
liable for the deterioration or loss of the same.

Agustin, on the other hand, who was the sub-charterer or sub-lessee of LCT-Josephine, is liable under Article 1651
of the New Civil Code. Although he was never privy to the contract between PTSC and Concepcion, he remained
bound to preserve the chartered vessel for the latter. Despite his non-inclusion in the complaint of Concepcion, it
was deemed amended so as to include him because, despite or in the absence of that formality of amending the
complaint to include him, he still had his day in court as he was in fact impleaded as a third-party defendant by his
own son, Roland - the very same person who represented him in the Contract of Agreement with Larrazabal.

Since the purpose of formally impleading a party is to assure him a day in court, once the protective mantle of due
process of law has in fact been accorded a litigant, whatever the imperfection in form, the real litigant may be held
liable as a party.
In any case, all three petitioners are liable under Article 1170 of the New Civil Code. The necessity of insuring the
LCT-Josephine, regardless of who will share in the payment of the premium, is very clear under the Preliminary
Agreement and the subsequent Contracts of Agreement dated June 20, 1984 and August 1, 1984, respectively. The
August 17, 1984 letter of Concepcion’s representative, Rogelio L. Martinez, addressed to Roland in his capacity as
the president of PTSC inquiring about the insurance of the LCT-Josephine as well as reiterating the importance of
insuring the said vessel is quite telling.
August 17, 1984
Mr. Roland de la Torre
President
Phil. Trigon Shipyard Corp.
Cebu City
Dear Sir:
In connection with your chartering of LCT JOSEPHINE effect[ive] May 1, 1984, I wish to inquire regarding the insurance of
said vessel to wit:
1. Name of Insurance Company
2. Policy No.
3. Amount of Premiums
4. Duration of coverage already paid
Please send a Xerox copy of policy to the undersigned as soon as possible.
In no case shall LCT JOSEPHINE sail without any insurance coverage.
Hoping for your (prompt) action on this regard.
Truly yours,
(sgd)ROGELIO L. MARTINEZ
Owner’s representative

The petitioners, to whom the possession of LCT Josephine had been entrusted as early as the time when it was dry-
docked for repairs, were obliged to insure the same. Unfortunately, they failed to do so in clear contravention of
their respective agreements. They should now all answer for the loss of the vessel.

Note: The fourth-party complaint against the fourth-party defendant, Ramon Larrazabal, being without
basis, is likewise DISMISSED

The chiefmate of LCT-Josephine and under the employ of TSL/Agustin, also admitted at the trial that it was
TSL/Agustin, through its crew, who was in-charge of LCT-Josephine’s operations although the responsibility of
loading and unloading the cargo was under Larrazabal. Thus, the RTC declared that the "efficient cause of the
sinking of the LCT-JOSEPHINE was the improper lowering or positioning of the ramp," which was well within the
charge or responsibility of the captain and crew of the vessel.

The contract executed on June 20, 1984, between plaintiff-appellee and defendants-appellants showed that the
services of the crew of the owner of the vessel were terminated. This allowed the charterer, defendants-appellants, to
employ their own. The sub-charter contract between defendants-appellants Philippine Trigon Shipyard Corp. and
third-party defendant-appellant Trigon Shipping Lines showed similar provision where the crew of Philippine Trigon
had to be terminated or rehired by Trigon Shipping Lines. As to the agreement with fourth-party Larrazabal, it is
silent on who would hire the crew of the vessel. Clearly, the crew manning the vessel when it sunk belonged to
third-party defendant-appellant.
Hubart Sungayan, the acting Chief Mate, testified that he was hired by Agustin de la Torre, who in turn admitted to
hiring the crew. The actions of fourth-party defendant, Larrazabal and his payloader operator did not include the
operation of docking where the problem arose.

WHEREFORE, Petitions are DENIED.

_____________________________________________________________________________

10. NIKKI

NFA vs. CA

_____________________________________________________________________________

11. JOTHAM
National Steel Corporation

vs.

Court of Appeals and Vlasons Shipping, Inc.

G.R. No. 112350 December 12, 1997

Facts

The MV Vlasons I is a vessel which renders tramping service and, as such, does not transport cargo or
shipment for the general public. As a private carrier therefore, Vlasons Shipping, Inc. entered into a
contract of affreightment or contract of voyage charter hire with National Steel Corporation whereby NSC
hired VSIs vessel to make one voyage to load steel products at Iligan City and discharge them at North
Harbor, Manila. One of the conditions in the charter party is a demurrage/dispatch fee of
P8,000.00/P4,000.00 per day. The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on
August 12, 1974. The following day, August 13, 1974, when the vessels' three hatches containing the
shipment were opened by plaintiffs agents, nearly all the skids of tinplates and hot rolled sheets were
allegedly found to be wet and rusty. The cargo was discharged and unloaded by stevedores hired by the
Charterer. Unloading was completed only on August 24, 1974 after incurring a delay of eleven (11) days
due to the heavy rain which interrupted the unloading operations. Thus, defendant claims that plaintiff is
liable to pay defendant demurrage in the total amount of P88,000.00 for the eleven-day period. This was
granted by the trial court and affirmed by the Court of Appeals.

Issue(s)

Is the charterer of a vessel liable to pay demurrage fees for delays due to weather interruption?

Ruling

No. 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. 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 in view of the WWDSHINC
qualification agreed upon by the parties. Clearly, it was error for the trial court and the Court of Appeals
to have found and affirmed respectively that NSC incurred eleven days of delay in unloading the cargo.
The trial court arrived at this erroneous finding by subtracting from the twelve days, specifically August
13, 1974 to August 24, 1974, the only day of unloading unhampered by unfavorable weather or rain
which was August 22, 1974.

_____________________________________________________________________________________

12. RHOWEE
PLANTERS PRODUCTS, INC., (PPI) petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA (KKK),
respondents.
G.R. No. 101503 September 15, 1993

TOPIC: Charter Party (Contract of Affreightment)

FACTS:

PPI purchased from Mitsubishi some metric tons of urea fertilizer which were shipped in bulk on aboard the cargo vessel M/V
"Sun Plum" owned by KKKK. Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" was entered into between
Mitsubishi as shipper/charterer and KKKK as shipowner.

The vessel arrived as the port of destination. It took eleven days for PPI to unload the cargo. A private marine and cargo surveyor
was hired to determine the "outturn" of the cargo shipped. The survey report revealed a shortage in the cargo.

PPI sent claims to KKKK. The defendant carrier argued that the strict public policy governing common carriers does not apply to
them because they have become private carriers by reason of the provisions of the charter-party.

ISSUE: WON a common carrier becomes a private carrier by reason of a charter-party.

HELD: NO. The court held:

“It is said that etymology is the basis of reliable judicial decisions in commercial cases. This being so, we find it fitting to first
define important terms which are relevant to our discussion:

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

Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or
voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of vessel
only, either for a determinate period of time or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay
for the wages of the master and the crew, and defray the expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The definition extends to
carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers
or both for compensation as a public employment and not as a casual occupation. The distinction between a "common or public
carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction,
not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation
offering such service is a private carrier.

Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe
extraordinary diligence in the vigilance over the goods they carry. In the case of private carriers, however, the exercise of
ordinary diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction or deterioration of the goods,
common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests on
them. On the contrary, no such presumption applies to private carriers, for whosoever alleges damage to or deterioration of the
goods carried has the onus of proving that the cause was the negligence of the carrier.

(Answer to issue):

It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods
indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and
compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. I

t 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 shipowner in a time or voyage
charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. ###

_____________________________________________________________________________________

13. JANICE
Coastwise Lighterage Corporation v. CA

Facts:

Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila
with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The
barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon
reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward
buoyancy compartment was damaged, and water gushed in through a hole "two inches wide and twenty-
two inches long". As a consequence, the molasses at the cargo tanks were contaminated. Pag-asa filed a
claim against Philippine General Insurance Company, the insurer of its cargo. Philgen paid P700,000 for
the value of the molasses lost.

Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to
the claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals
ruled against Coastwise.

Issues:

(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with
Pag-asa, and whether it exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the carrier

Held:

(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to
another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise
Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private
carrier, but remained a common carrier and was still liable as such. The law and jurisprudence on
common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the
subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie
case against the carrier. It follows then that the presumption of negligence that attaches to common
carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner. This
presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained
unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he
was not licensed. Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by
placing a person whose navigational skills are questionable, at the helm of the vessel which eventually
met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not
just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and
legally authorized ones. Had the patron been licensed he could be presumed to have both the skill and
the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their
way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having
failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by
proof of its exercise of extraordinary diligence.

(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured
property is destroyed or damaged through the fault or negligence of a party other than the assured, then
the insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from
the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the
assured operated as an equitable assignment to the former of all remedies which the latter may have
against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not
dependent upon, nor does it grow out of, any private of contract or upon written assignment of, claim. It
accrues simply upon payment of the insurance claim by the insurer.

_____________________________________________________________________________________

14. KITEL

No. L­49407. August 19, 1988.*
NATIONAL   DEVELOPMENT   COMPANY,   petitioner­appel­lant, vs. THE
COURT   OF   APPEALS   and   DEVELOPMENT   INSURANCE   &   SURETY
CORPORATION, respondents­appellees.

FACTS:

National Development Company (NDC) is the preferred mortgagee of three ocean
going   vessels   including   one   with   the   name  “Dona   Nati”.   In   accordance   with   the
agreement   between   NDC   and   Marine   Company   of   the   Philippines   (MCP),   NDC
appointed MCP as its agent to manage and operate the said vessel. 

On February 28, 1964, the E. Philipp Corporation of New York loaded on board the
vessel ‘Doña Nati’ at San Francisco, California, a total of 1,200 bales of American
raw cotton consigned to the order of Manila Banking Corporation, 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.   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. 

While en route to Manila the vessel collided with a Japanese vessel ‘SS Yasushima
Maru’. As a result, 550 bales of the American raw cotton were lost and/or destroyed,
535 bales  as damaged  were landed  and sold, and  15  bales  were not  landed  and
deemed lost.

The damaged and lost cargoes was worth P344,977.86. The plaintiff, Development
Insurance as insurer, paid the Riverside Mills Corporation Also considered totally
lost were the 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. Plaintiff filed a complaint
to recover the paid insurance amount from the defendants­NDC and MCP as owner
and ship agent respectively, of the said ‘Doña Nati’ vessel.

The trial court ruled in favour of the plaintiff, Development Insurance and Surety
Corporation (DISC) and also granted the cross claim filed by MCP against NDC. CA
affirmed the decision. 

ISSUE:  Whether or not COGSA should be applied to the case and NOT the civil
code of commerce

HELD: NO

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. Instead, Article 287 of the 
Code of Commerce was applied and both NDC and MCP were ordered to reimburse the 
insurance company for the amount the latter paid to the consignee.
It was previously held in Eastern Shipping Lines vs IAC that “the law of the country to 
which the goods are to be transported governs the liability of the common carrier in case of 
their loss, destruction, or deterioration”. Thus, the rule was specifically laid down that for 
cargoes transported from Japan to the Philippines, the liability of the carrier is governed 
primarily by the Civil Code and in all matters not regulated by said Code, the rights and 
obligations of common carrier shall be governed by the Code of Commerce and by special 
laws (Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is 
merely suppletory to the provisions 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 
damaged due to a collision which was found to have been caused by the negligence or fault 
of both captains of the colliding vessels. Under the above ruling, it is evident that the laws 
of the Philippines will apply, and it is immaterial that the collision actually occurred in 
foreign waters, such as Ise Bay, Japan.

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.

The Court ruled that there is 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 1 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.

_____________________________________________________________________________________

15. JASZ
G.R. No. 165647 March 26, 2009
 PHILIPPINES FIRST INSURANCE CO., INC., Petitioner,
vs. WALLEM PHILS. SHIPPING, INC., UNKNOWN OWNER AND/OR UNKNOWN CHARTERER OF THE VESSEL M/S
"OFFSHORE MASTER" AND "SHANGHAI FAREAST SHIP BUSINESS COMPANY," Respondents.

(Art. 587-610)

Facts:

Anhui Chemicals Import & Export Corporation loaded on board M/S Offshore Master a shipment
consisting of 10,000 bags of sodium sulphate anhydrous, complete and in good order for transportation to and
delivery at the port of Manila for consignee, L.G. Atkimson Import-Export, Inc. (consignee), covered by a Clean Bill
of Lading. The Owner and/or Charterer of M/V Offshore Master is unknown while the shipper of the shipment is
Shanghai Fareast Ship Business Company. Both are foreign firms doing business in the Philippines, thru its local ship
agent, respondent Wallem Philippines Shipping, Inc. (Wallem).

The shipment arrived at the port of Manila on board the vessel M/S Offshore Master from which it was
subsequently discharged. It was disclosed during the discharge of the shipment from the carrier that 2,426 poly
bags were in bad order and condition, having sustained various degrees of spillages and losses. Asia Star Freight
Services, Inc. undertook the delivery of the subject shipment from the pier to the consignee’s warehouse in Quezon
City, while the final inspection was conducted jointly by the consignee’s representative and the cargo surveyor.
During the unloading, it was found and noted that the bags had been discharged in damaged and bad order
condition. The consignee filed a formal claim with Wallem for the value of the damaged shipment. Since the
shipment was insured with petitioner Philippines First Insurance Co., Inc. the consignee filed a formal claim with
petitioner for the damage and losses sustained by the shipment. After evaluating petitioner found the claim to be
in order and compensable under the marine insurance policy. Petitioner, in the exercise of its right of subrogation,
sent a demand letter to Wallem for the recovery of the amount paid by petitioner to the consignee. However,
despite receipt of the letter, Wallem did not settle nor even send a response to petitioner’s claim.

Issue:

Whether Wallem should be held liable.

Held:

Yes. It is established that damage or losses were incurred by the shipment during the unloading. For
marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the
time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on
the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New
York v. Lopez Castelo, 42 Phil. 256 (1921), the Court interpreted the ship captain’s liability as ultimately that of the
ship owner by regarding the captain as the representative of the ship owner.

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the
custody of the carrier. In the instant case, the damage or losses were incurred during the discharge of the shipment
while under the supervision of the carrier. Consequently, the carrier is liable for the damage or losses caused to the
shipment.

_____________________________________________________________________________________
 16. MIGUEL

SADAGNOT vs. REINIER PACIFIC

____________________________________________________________________________

17. RED

TRANS-ASIA SHIPPING LINES vs. CA

Trans-Asia Shipping Lines vs. CA

Facts:

Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage
of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991.

At around 5:30 in the evening of November 12, 1991, respondent boarded the M/V Asia Thailand vessel
during which he noticed that some repairs were being undertaken on the engine of the vessel. The
vessel departed at around 11:00 in the evening with only one (1) engine running.

After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After
half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City
for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to
their request and thus the vessel headed back to Cebu City.

In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City,
were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the next
day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant.

On account of this failure of defendant to transport him to the place of destination on November 12,
1991, respondent Arroyo filed before the trial court “an action for damage arising from bad faith, breach
of contract and from tort,” against petitioner. The trial court ruled only for breach of contract. The CA
reversed and set aside said decision on appeal.

Issue:

Whether or not the petitioner Trans-Asia was negligent?

Held:

Yes.
Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head
of one of the vessel’s engines. But even before it could finish these repairs, it allowed the vessel to leave
the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning
engine was not in perfect condition as sometime after it had run its course, it conked out. This caused
the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to
drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. 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 its
vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil
Code.

____________________________________________________________________________

18. JOTHAM
E.E. Elser, Inc., and Atlantic Mutual Insurance Company

vs.

Court of Appeals, International Harvester Company of the Philippines and Isthmian

Steamship Company

G.R. No. L-6517 November 29, 1954

Facts

It appears that in the month of December, 1945 the goods specified in the Bill of Lading were shipped on
the 'S.S. Sea Hydra,' of Isthmian Steamship Company, from New York to Manila, and were received by
the consignee 'Udharam Bazar and Co.', except one case of vanishing cream valued at P159.78. The
goods were insured against damage or loss by the 'Atlantic Mutual Insurance Co.' `Udharam Bazar and
Co.' Inc., who denied having received the goods for custody, and the 'International Harvester Co. of the
Philippines,' as agent for the shipping company, who answer that the goods were landed and delivered to
the Customs authorities. Finally, 'Udaharam Bazar and Co.' claimed for indemnity of the loss from the
insurer, 'Atlantic Mutual Insurance Co.', and was paid by the latter's agent 'E. E. Elser Inc.' the amount
involved, that is, P159.78. The CFI dismissed the case, and the Court of Appeals affirmed the same,
holding that petitioners have already lost their right to press their claim against respondent because of
their failure to serve notice thereof upon the carrier within 30 days after receipt of the notice of loss or
damage as required by clause 18 of the bill of lading which was issued concerning the shipment of the
merchandise which had allegedly disappeared. In this respect, the court said that, "appellant unwittingly
admitted that they were late in claiming the indemnity for the loss of the case of the vanishing cream as
their written claim was made on April 25, 1946, or more than 30 days after they had been fully aware of
said loss," and because of this failure, the Court said the action of petitioners should, and must, fall.
Petitioners now contend that this finding is erroneous in the light of the provisions of the Carriage of
Goods by Sea Act of 1936, which apply to this case, the same having been made an integral part of the
covenants agreed upon in the bill of lading.

Issue(s)

Should the prescriptive period provided for under the bill of lading be applied in this case?

Ruling

No, the provisions of the Carriage of Goods by Sea Act should apply. According to the COGSA, a carrier
can only be discharged from liability in respect of loss or damage if the suit is not brought within one
year after the delivery of the goods or the date when the goods should have been delivered, and that,
even if a notice of loss or damage is not given as required, "that fact shall not affect or prejudice the
right of the shipper to bring suit within one year after the delivery of the goods." In other words,
regardless of whether the notice of loss or damage has been given, the shipper can still bring an action
to recover said loss or damage within one year after the delivery of the goods. Clause 18 must of
necessity yield to the provisions of the Carriage of Goods by Sea Act in view of the proviso contained in
the same Act which says: "any clause, covenant, or agreement in a contract of carriage relieving the
carrier or the ship from liability for loss or damage to or in connection with the goods . . . or lessening
such liability otherwise than as provided in this Act, shall be null and void and of no effect."

(As to the issue that the COGSA does not apply, as at the time of the contract the Philippines was still a
territory of the United States and so no international trade occurred, the COGSA also provided that:
Nothing in this Act shall be held to apply to contracts for carriage of goods by sea between any port of
the United States or its possessions, and any other port of the United States or its possessions: Provided,
however, That any bill of lading or similar document of title which evidence of a contract for the carriage
of goods by sea between such ports, containing an express statement that it shall be subject to the
provisions of this Act, shall be subjected hereto as fully as if subject hereto by the express provisions of
this Act.)

_____________________________________________________________________________________

19. NIKKI

SINGA SHIP vs. NLRC

_____________________________________________________________________________

20. KITEL

G.R. No. 94149. May 5, 1992.*
AMERICAN   HOME   ASSURANCE,   COMPANY,   petitioner, vs. THE   COURT
OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL
MARINE CORPORATION (Manila), respondents.

FACTS:

Both   American   Home   Assurance   and   National   Marine   Corporation   are   foreign
corporations licensed to do business in the Philippines. 

Cheng   Hwa   Pulp   Corporation   shipped   5,000   bales   of   bleached   kraft   pulp   from
Haulien, Taiwan on board “SS Kaunlaran”, which is owned and operated by herein
respondent   National   Marine   Corporation.   The   said   shipment   was   consigned   to
Mayleen Paper Inc. which insured the same with herein petitioner American Home
Assurance. The shipment arrived in Manila and was discharged into the custody of
the Marina Port for delivery to the consignee­assured. However, upon delivery, it
was found that 112 bales had either been damaged or lost. 

Mayleen   Paper   demanded   for   indemnification   from   National   Marine   for   the
damages but to no avail. Myleen Paper then sought payment from American Home
Assurance – who paid an adjusted amount and was subrogated of the rights and
interests   of   Myleen   Paper.   Petitioner,   then   as   subrogee,   filed   for   recovery   of
damages against respondent National Marine. 

A motion to dismiss was filed by respondent stating that American Home had no
cause of action based on Article 848 of the Code of Commerce which the petitioner
countered stating that said Article does not apply since claims for damages due to
negligence of common carriers are governed by Civil  Code provisions  of common
carriers. RTC granted the dismissal. CA dismissed the petition.  

ISSUE:  Whether   or   not   the   law   on   averages   –   Articles   806,   809   and   848   –   is
applicable in this case

HELD: NO. 

The court held that the issue had been resolved by the Court in the case of NDC vs
CA citing Eastern Shipping Lines vs IAC where it was held that  “the law of the
country to which the goods are to be transported governs the liability of the common
carrier in case of their loss, destruction or deterioration.” (Article 1753, Civil Code).
Thus, for cargoes transported to the Philippines as in the case at bar, the liability of
the carrier is governed primarily by the Civil Code and in all matters not regulated
by said Code, the rights and obligations of common carrier shall be governed by the
Code of Commerce and by special laws (Article 1766, Civil Code). 

The Court held further that under Article 1733 of the Civil Code, common carriers,
from  the nature of their  business  and for  reasons  of  public policy  is  required  to
observe extra ordinary diligence in the vigilance over the goods and safety of their
passengers. Common carriers are presumed to have been at fault or to have been
negligent unless it proves that it has observed extra ordinary diligence required.
But   more   importantly,   the   Court   ruled   that   common   carriers   cannot   limit   their
liability for injury or loss of goods where such injury or loss was caused by its own
negligence.  Otherwise  stated,  the  law  on   averages   under  the  Code of  Commerce
cannot be applied in determining liability where there is negligence. 

_____________________________________________________________________________________

21. JASZ
G.R. No. L-6393 January 31, 1955

A. MAGSAYSAY INC., plaintiff-appellee, vs. ANASTACIO AGAN, defendant-appellant.

(Averages: Rules)

Facts:

The SS "San Antonio", vessel owned and operated by A. Magsaysay, left Manila bound for Basco, Batanes,
vis Aparri, Cagayan, with general cargo belonging to different shippers, among them the defendant. The vessel
reached Aparri, 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.

Issue:
 Whether the floating of the vessel constitutes general average.

Held:

No. Tolentino, 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. 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.

As to the second requisite, we need only repeat that the expenses in question were not incurred for the common
safety of vessel and cargo, since they, or at least 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.

With respect to the third requisite, the salvage operation, it is true, was a success. But as the sacrifice was for the
benefit of the vessel — to enable it to proceed to destination — and not for the purpose of saving the cargo, the
cargo owners are not in law bound to contribute to the expenses.

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.

In conclusion we found that plaintiff not made out a case for general average, with the result that its claim for
contribution against the defendant cannot be granted.

_____________________________________________________________________________________________

22. JANICE
Philippine Home Assurance vs. Court of Appeals

(257 SCRA 468)

Facts: Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, a
shipment for carriage to Manila and Cebu freight prepaid and in good order and condition. While the
vessel is off Okinawa, Japan, a small flame was detected on the acetylene cylinder located in 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 forces the master and the
crew to abandon the ship. Thereafter, SS Eastern Explorer was found to be constructive total loss and its
voyage was declared abandoned. Several hours later, a tugboat under the control of Fukuda Salvage Co.
arrived near the vessel and commenced to tow the vessel for the port of Naha, Japan.

After the fire was extinguished, the cargoes which were saved were loaded to another vessel for delivery
for their original of port of destination. ESLI charged the consignees several amounts corresponding to
additional freight and salvage charges. The charges were all paid by Philippine Home Assurance
Corporation (PHAC) under protest for and in behalf of the consignees. PHAC, as subrogee of the
consignees, thereafter filed a complaint before the Regional Trial Court 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.

In its answer, ESLI contended that it exercised the diligence required by law in the handling, custody and
carriage of the shipment; that the fire was caused by unforeseen event; that the additional freight charges
are due and demandable pursuant to the Bill of Lading, and that salvage charges are properly collectible
under Act. No. 2616, known as the Salvage Law.

The trial court dismissed the PHAC’s complaint and ruled in favor of ESLI. The court said that the
Supreme Court has ruled in Erlanger and Galinger vs. Swedish East Asiatic Co., Ltd., 34 Phil. 178, that
three elements are (1) a marine peril (2) service voluntary rendered when not required as an existing duty
or from a special contract and (3) success in whole or in part, or that the service rendered contributed to
such success. The court said that the above elements are all present in the instant case. Salvage charges
may thus be assessed on the cargoes saved from the vessel. As provided for in Section 13 of the Salvage
Law, “The expenses of salvage, as well as the reward for salvage or assistance shall be a charge on the
things salvaged or their value.” In Manila Railroad Co. vs. Macondray Co., 37 Phil. 583. It was also held
that “When a ship and its cargo are saved together, the salvage allowance should be charged against the
ship and the cargo in the proportion of their respective values, the same as in the case of general
average…” Thus, the “compensation to be paid by the owner of the cargo is in proportion to the value of
the vessel and the value of the cargo saved.”

On appeal to the Court of Appeals, respondent court affirmed the trial court’s findings and conclusion;
hence, the present petition for review before this Court on the following error, among others:

Issue: Whether or not the respondent Court erroneously adopted with approval the Trial Court’s
conclusion that the expenses or averages incurred in saving the cargo constitute general average?

Held: On the issue whether or not respondent court committed an error in concluding that the expenses
incurred in saving the cargo are considered general average, we rule in the affirmative. As a rule, general
or gross averages include all damages and expenses which are deliberately caused in order to save
vessels, its cargo or both at the same time, from a real and known risk. While the instant case may
technically fall within the purview of the said provision, the formalities prescribed under Article 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. Consequently, respondent ESLI’s claim for contribution from the
consignees of the cargo at the time of the occurrence of the average turns to naught.

The Court reversed and set aside the judgment of the respondent court and ordered respondent Eastern
Shipping Lines. Inc. to return to petitioner Philippine Home Assurance Corporation the amount it paid
under protest in behalf of the consignees.

_____________________________________________________________________________________

23. RED

URRUTIA vs, BACO RIVER

G. Urrutia & Co. vs. Baco River Plantation Co.

Facts:

Collision between the steamship Nuestra Señora del Pilar, owned by the plaintiff, and the schooner
Mangyan owned by the defendant, which occurred in the early morning of the 8th of April, 1910, in
Verde Island North Passage. The sail vessel was sailing with a fresh breeze dead astern, her sails wing and
wing. The steamer was seen by those on board the sailing vessel some time before the actual collision,
sailing erratically. The sail vessel kept her course steadily until just before the actual contact when her
helmsman threw her hard to port in an effort to avoid the collision. The movement, however, was
unsuccessful and the sail vessel rammed the steamer on the starboard quarter well aft. The steamer
sank and eight lives were lost. The sail vessel was considerably injured.

This action was brought by the owners of the steamship against the owner of the sail vessel, to recover
the value of the destroyed steamer and the damages caused by reason of its destruction, alleging as a
basis therefor the negligence of the said vessel. The defendant denied the material allegations of the
complaint and set up a counterclaim for damages, alleging as grounds therefor that the injuries
sustained by the said vessel were due to the gross negligence of those handling plaintiff's steamer.

Issue:

Which of the vessels was negligent in failing to conform to the International Rules for the Prevention of
Collisions at Sea?

Held:

The defendant was entitled to recover upon its counterclaim.

It being clear from, the evidence that the gross negligence of those managing the steamer brought it into
such close proximity to the sail vessel that a collision was apparently inevitable, the question is whether
or not the sail vessel was negligent in continuing its course without variation up to the moment that it
found itself in extremis.

Article 20 of the International Rules for the Prevention of Collission at Sea is as follows: "If two ships, one
of which is a sailing ship and the other a steam ship, are proceeding in such directions as to involve risk
of collision, the steam ship shall keep out of the way, of the sailing ship."

Article 21 is as follows: "where by any of these rules one of two vessels is to keep out of the way, the
other shall keep her course and speed."

Generally speaking, in collisions between vessels there exist three divisions of time, or zones; The first
division covers all the time up to the moment when the risk of collision may be said to have begun.
Within this zone no rule is applicable because none is necessary. Each vessel is free to direct its course as
it deems best without reference to the movements of the other vessel. The second division covers the
time between the moment when the risk of collision begins and the moment when it has become a
practical certainty. The third division covers the time between the moment when collision has become a
practical certainty and the moment of actual contact.

It was during the time when the sail vessel was passing through the third zone that it changed its course
to port in order to avoid, if possible, the collision. This act may be said to have been done in extremis,
and, even if wrong, the sailing vessel is not responsible for the result.

Subject to the general rules of evidence in collision cases as to the burden of proof, in the case of a
collision between a steam vessel and a sail vessel, the presumption is against the steam vessel, and she
must show that she took the proper measures to avoid a collision.

_____________________________________________________________________________

24. SAM

C.B. WILLIAMS, plaintiff-appellant vs. TEODORO R. YANGCO, defendant-appellant

TOPIC: Five Cases Covered by Collision and Allision – FORTUITOUS EVENT

Facts: The steamer Subic, owned by the defendant, collided with the lunch Euclid owned by the plaintiff,
in the Bay of Manila at an early hour on the morning of January 9, 1911, and the Euclid sank five minutes
thereafter. An action was brought by C.B. Williams to recover the value of the Euclid.

The trial court, after due consideration held that the responsible officers on both vessels were negligent
in the performance of their duties at the time of the accident occurred; that both vessels were to blame
for the collision; and that the loss amounting P10,000.00 should be divided equally between the
respective owners.

From this judgment, both defendant and plaintiff appealed.

Counsel for the defendant alleged that he should not be held liable applying the provision of Art. 827 of
the Code of Commerce which provides – If both vessels may be blamed for the collision, each one shall
be liable for its own damages, and both shall be jointly responsible for the loss and damages suffered by
their cargoes.

Counsel for the plaintiff, on the other hand, insisted that under the doctrine of “the last clear chance,” he
defendant should be held liable because, as he insists, even if the officers on board the plaintiff's launch
were negligence in failing to exhibit proper lights and in failing to take the proper steps to keep out of the
path of the defendant's vessel, nevertheless the officers on defendant's vessel, by the exercise of due
precautions might have avoided the collision by a very simple maneuver.

Issue: Whether or not plaintiff should not be held liable on account of doctrine of last clear chance—the
defendant having the last opportunity to avoid the collision.

Ruling: NO. In cases of a disaster arising from the mutual negligence of two parties, the party who has
a last clear opportunity of avoiding the accident, notwithstanding the negligence of his opponent, is
considered wholly responsible for it under the common-law rule of liability as applied in the courts of
common law of the United States. But this rule which is not recognized in the courts of admiralty in the
United States, wherein the loss is divided in cases of mutual and concurring negligence, as also where
the error of one vessel has exposed her to danger of collision which was consummated by he further
rule, that where the previous application by the further rule, that where the previous act of negligence of
one vessel has created a position of danger, the other vessel is not necessarily liable for the mere failure
to recognize the perilous situation; and it is only when in fact it does discover it in time to avoid the
casualty by the use of ordinary care, that it becomes liable for the failure to make use of this last clear
opportunity to avoid the accident. So, under the English rule which conforms very nearly to the common-
law rule as applied in the American courts, it has been held that the fault of the first vessel in failing to
exhibit proper lights or to take the proper side of the channel will relieve from liability one who
negligently runs into such vessels before he sees it; although it will not be a defense to one who, having
timely warning of the danger of collision, fails to use proper care to avoid it.

In the case at bar, the most that can be said in support of plaintiff's contention is that there was
negligence on the part of the officers on defendant's vessel in failing to recognize the perilous situation
created by the negligence of those in charge of plaintiff's launch, and that had they recognized it in time,
they might have avoided the accident. But since it does not appear from the evidence that they did, in
fact, discover the perilous situation of the launch in time to avoid the accident by the exercise of ordinary
care, it is very clear that under the above set out limitation to the rule, the plaintiff cannot escape the
legal consequences of the contributory negligence of his launch, even were we to hold that the doctrine
is applicable in the jurisdiction, upon which point we expressly reserve our decision at this time .

_____________________________________________________________________________

25. MIGUEL

SULPICIO LINES vs. CA

G.R. No. 93291 March 29, 1999

SULPICIO LINES, INC. and CRESENCIO G. CASTANEDA, petitioners,
vs.
COURT OF APPEALS and AQUARIUS FISHING CO. INC., respondents.

FACTS:There was a collision on sea between the sea vessels involve in this case.

M/V "Don Sulpicio" was crossing at 15.5 knots per hour while F/B Aquarius "G" (fishing boat) was obeying a speed
limit of 7.5 knots per hour. The weather was clear and visibility was good. M/V "Don Sulpicio" was 4 miles away
when it first sighted F/B Aquarius "G" all the time up to the collision. M/V "Don Sulpicio" maintained its speed of
16 knots and it was only 2 minutes before the collision when M/V "Don Sulpicio" changed its course.

Aquarius Fishing Co. filed a complaint for damages against Sulpicio Lines Inc. On May 30, 1986, the trial court
came out with its Decision in favor of plaintiff which was affirmed by the CA upon appeal of the herein petitioner
and the motion for reconsideration met the same fate.

Hence the instant petition for review on certiorari.

ISSUE: WON the collision between M/V Don Sulpicio and F/B Aquarius "G" was due to the negligence of M/V
Don Sulpicio.

HELD: YES. Whether or not the collision sued upon occurred in a crossing situation is immaterial as the Court of
Appeals, relying on Rule 24-C, Regulations for Preventing Collisions at the Sea, ruled that the duty to keep out of
the way remained even if the overtaking vessel cannot determine with certainty whether she is forward of or abaft
more than 2 points from the vessel. It is beyond cavil that M/V "Don Sulpicio" must assume responsibility as it was
in a better position to avoid the collision. It should have blown its horn or given signs to warn the other vessel that it
was to overtake it.

Assuming argumenti ex gratia that F/B Aquarius "G" had no lookout during the collision, the omission does not
suffice to exculpate Sulpicio Lines from liability. M/V "Don Sulpicio" cannot claim that it was a privileged vessel
being in the portside which can maintain its course and speed during the collision. When it overtook F/B Aquarius
"G", it was duty bound to slacken its speed and keep away from other vessels, which it failed to do. The stance of
petitioners that F/B Aquarius "G" is a burdened vessel which should have kept out of the way of M/V "Don
Sulpicio" is not supported by facts.

Petition is DENIED

_____________________________________________________________________________
 26. RHOWEE
FAR EASTERN SHIPPING COMPANY (FESC), petitioner, vs. COURT OF APPELAS and PHILIPPINE PORTS
AUTHORITY, respondents.
[G.R. No. 130068. October 1, 1998]

TOPIC: Cases covered by Collision and Allison ( When moving vessel strikes stationary object)

FACTS:

The M/V PAVLODAR owned and operated by FESC arrived at the Port of Manila from Columbia. The vessel was
assigned a berthing space. Appellant Senen Gavino was assigned to conduct docking maneuvers for the safe
berthing of the vessel.

Gavino boarded the vessel, with the master of the vessel, Victor Kavankov, beside him. The vessel lifted anchor from
the quarantine anchorage and proceeded to the Manila International Port. The sea was calm and the wind was ideal
for docking maneuvers.

When the vessel reached the landmark, Gavino ordered the engine stopped. When the vessel was already about
2,000 feet from the pier, Gavino ordered the anchor dropped. Kavankov relayed the orders to the crew of the vessel
on the bow. The left anchor, with two shackles were dropped. However, the anchor did not take hold as expected.
The speed of the vessel did not slacken.

After Gavino noticed that the anchor did not take hold, he ordered the engines half-astern. It was noticed that the
vessel was approaching the pier fast. Kavankov likewise noticed that the anchor did not take hold. Gavino thereafter
gave the full-astern code. Before the right anchor and additional shackles could be dropped, the bow of the vessel
rammed into the apron of the pier causing considerable damage to the pier. The vessel sustained damage too.

ISSUE: Whether or not Gavino is liable of negligence and failure to exercise the standard of care and diligence
required of pilots in the performance of their duties.

HELD: YES.

On compulsory pilotage grounds, the Harbor Pilot, providing the service to a vessel shall be responsible for the
damage caused to a vessel or to life and property at ports due to his negligence or fault. He can only be absolved
from liability if the accident is caused by force majeure or natural calamities provided he has exercised prudence and
extra diligence to prevent or minimize damage.

There is a presumption of fault against a moving vessel that strikes a stationary object such as a dock or navigational
aid. The moving vessel must show that it was without fault or that the collision was occasioned by the fault of the
stationary object or was the result of inevitable accident. It has been held that such vessel must exhaust every
reasonable possibility which the circumstances admit and show that in each, they did all that reasonable care
required. In the absence of sufficient proof in rebuttal, the presumption of fault attaches to a moving vessel which
collides with a fixed object and makes a prima facie case of fault against the vessel.

Pursuant thereto, Capt. Gavino was assigned to pilot MV Pavlodar into Berth 4 of the Manila International Port. Upon
assuming such office as compulsory pilot, Capt. Gavino is held to the universally accepted high standards of care
and diligence required of a pilot, whereby he assumes to have skill and knowledge in respect to navigation in the
particular waters over which his license extends superior to and more to be trusted than that of the master. He is not
held to the highest possible degree of skill and care, but must have and exercise the ordinary skill and care
demanded by the circumstances, and usually shown by an expert in his profession. Under extraordinary
circumstances, a pilot must exercise extraordinary care.

Capt. Gavino failed to measure up to such strict standard of care and diligence required of pilots in the performance
of their duties. ###

_____________________________________________________________________________

27. SAM
HONORIO M. BARRIOS, plaintiff-appellant vs. CARLOS A. GO THONG & COMPANY,
defendant-appellee

TOPIC: Salvage Law – Derelict

Facts: Honorio Barrios was the captain and master of the MV Henry I operated by William Lines, Inc.
which plied the route from Cebu to Davao City. On its voyage on May 1, 1958 the MV Henry I intercepted
an SOS signal from the MV Don Alfredo owned and operated by Go Thong & Co. Responding to the SOS,
Henry I approached the Don Alfredo and found out that the Don Alfredo was suffering from engine
failure. After agreeing to assist the disabled ship, the crew of Henry I attached tow lines and proceeded
to tow the Don Alfredo heading towards the port of Dumaguete City. The following morning, they
encountered a sister ship of Don Alfredo, the MV Lux. Upon the request of the captain of the Don Alfredo,
the crew of the Henry I released the towlines and continued on their voyage.

After the incident, Barrios as captain of MV Henry I claimed entitlement to compensation under the
salvage law which was opposed by Go Thong and Co. who claimed that what occurred was only mere
towage.

The trial court dismissed the claim.

Issue: Whether or not, under the facts of the case, the service rendered by plaintiff to defendant
constituted "salvage" or "towage", and if so, whether plaintiff may recover from defendant compensation
for such service.

Ruling: Not all the requisites were present for the rescue to be considered as salvage under
the law, hence, Barrios et. al. was not entitled for compensation for the service.

The claim of Barrios is anchored on the provisions of the Salvage Law that stipulates that a ship that is
lost or abandoned at sea is considered as a derelict and the proper subject of salvage. A ship in a
desperate condition with passengers and persons on board but who are unable to do anything for their
own safety may be considered a quasi-derelict.

Further, the Salvage Law provides that those assisting in saving a vessel in its cargo from shipwreck shall
be entitled to a reward. There are three elements that are necessary for a salvage claim:

1. the existence of a marine peril

2. service is voluntarily rendered when not required as an existing duty or a special contract; and
 3. success in whole or in part, or that the service rendered contributed to such success.

It is therefore imperative to establish whether the MV Don Alfredo was exposed to any form of marine
peril when it was assisted by the MV Henry I. The Supreme Court however noted that the nature of its
disability and the circumstances surrounding it could be construed as a marine peril as contemplated in
the Salvage Law. When the engine failure occurred, the seas were calm and the weather was clear. In
fact, the ship did not drift too far from the location where its engines failed. Further, the captain and
crew of the MV Don Alfredo did not find it necessary to jettison the vessel’s cargo as a safety measure.
Therefore, the MV Don Alfredo cannot even be considered as a quasi-derelict.

Although the service of the defendant did not constitute as salvage, it can be considered as a quasi-
contract of towage. If the contract thus created, in this case, is one for towage, then only the owner of
the towing vessel, to the exclusion of the crew of the said vessel, may be entitled to remuneration. The
distinction between salvage and towage is of importance to the crew of the salvaging ship, for the
following reasons: If the contract for towage is in fact towage, then the crew does not have any interest
or rights in the remuneration pursuant to the contract. But if the owners of the respective vessels are of a
salvage nature, the crew of the salvaging ship is entitled to salvage, and can look to the salvaged vessel
for its share.