[G.R. No. 96453. August 4, 1999.

NATIONAL FOOD AUTHORITY, ROSELINDA GERALDEZ, RAMON SARGAN and

ADELINA A. YAP, Petitioners, v. THE HON. COURT OF APPEALS AND HONGFIL

SHIPPING CORPORATION, Respondents.

Facts:

National Food Authority (NFA), thru its officers then, Emil Ong, Roselinda

Geraldez, Ramon Sargan and Adelina A. Yap, entered into a Letter of Agreement for

Vessel /Barge Hire" with Hongfil Shipping Corporation (Hongfil) for the shipment of

200,000 bags of corn grains from Cagayan de Oro City to Manila. Hongfil sent its billing
to NFA, claiming payment for freight covering the shut-out load or deadfreight as well as
demurrage, allegedly sustained during the loading and unloading of subject shipment of
corn grains.

When NFA refused to pay the amount reflected in the billing, Hongfil brought an

action against NFA and its officers for recovery of dead freight and demurrage,

docketed as Civil Case No. 55892 before Branch 165 of the Regional Trial Court in

Pasig City. On February 29, 1989, after trial, the Regional Trial Court handed down its

decision 6 in favor of Hongfil and against NFA and its officers.

Issue:

I.WHETHER OR NOT PETITIONERS CAN BE HELD LIABLE FOR DEADFREIGHT

II.WHETHER OR NOT PETITIONERS CAN BE HELD LIABLE FOR DEMURRAGE;

AND

III.WHETHER OR NOT PERSONAL CIVIL LIABILITY MAY ATTACH TO THE

OFFICERS OF NFA.

e
Page
Resolution: The decision of the Court of Appeals, dated November 29, 1990, in CA

G.R. CV No. 21243 is hereby AFFIRMED with MODIFICATION. Petitioner NFA is

ordered to pay Hongfil Shipping Corporation the amount of P242,367.30 for deadfreight.

The award of P1,152,687.50 for demurrage is deleted and set aside for lack of proper

basis. Petitioners Roselinda Geraldez, Ramon Sargan and Adelina A. Yap are absolved

of any liability to the respondent corporation. No pronouncement as to costs. SO

ORDERED.
G.R. No. L-51910 August 10, 1989

LITONJUA SHIPPING COMPANY INC., petitioner

vs. NATIONAL SEAMEN BOARD and GREGORIO P. CANDONGO respondents.

Facts:

Petitioner Litonjua Shipping Company, Inc. seeks to annul and set aside a decision
dated, 31 May 1979 of the National Seamen Board ("NSB") in NSB Case No.
1331-77 affirming the decision dated 17 February 1977 of the NSB hearing officer which
adjudged petitioner Litonjua liable to private respondent for violation of the latter’s contract
of employment and which ordered petitioner to pay damages.

Petitioner Litonjua is the duly appointed local crewing Managing Office of the
Fairwind Shipping Corporation (“Fairwind”). The M/V Dufton Bay is an ocean-going vessel
of foreign registry owned by the R.D. Mullion Ship Broking Agency Ltd. (“Mullion”). On 11

September 1976, while the Dufton Bay was in the port of Cebu and while under charter

by Fairwind, the vessel;s master contracted the services of, among others, private

respondent Gregorio Candongo to serve as Third Engineer for a period of twelve (12)

months with a monthly wage of US$500.00. This agreement was executed before the

Cebu Area Manning Unit of the NSB. Thereafter, private respondent boarded the

vessel. On 28 December 1976, before expiration of his contract, private respondent was

required to disembark at Port Kelang, Malaysia, and was returned to the Philippines on

5 January 1977. The cause of the discharge was described in his Seaman’s Book as

Owner’s. Shortly after returning to the Philippines, private respondent filed a

complaint before public respondent NSB, which complaint was docketed as NSB-1331-

77, for violation of contract, against Mullion as the shipping company and petitioner
Litonjua as agent of the shipowner and of the charterer of the vessel.

Issue: Whether or not Litonjua may be held liable to the private respondent on the
contract of employment?

Resolution: Yes. The first basis is the charter party which existed between Mullion, the
shipowner, and Fairwind, the charterer.

It is well settled that in a demise or bare boat charter, the charterer is treated as owner
pro hac vice of the vessel, the charterer assuming in large measure the customary rights
and liabilities of the shipowner in relation to third persons who have dealt with him or with
the vessel. In such case, the Master of the vessel is the agent of the charterer and not of
the shipowner. The charterer or owner pro hac vice, and not the general owner of the
vessel, is held liable for the expenses of the voyage including the wages of the seamen

Treating Fairwind as owner pro hac vice, petitioner Litonjua having failed to show that it
was not such, we believe and so hold that petitioner Litonjua, as Philippine agent of the
charterer, may be held liable on the contract of employment between the ship captain and
the private respondent.

There is a second and ethically more compelling basis for holding petitioner Litonjua liable
on the contract of employment of private respondent. The charterer of the vessel,
Fairwind, clearly benefitted from the employment of private respondent as Third Engineer
of the Dufton Bay, along with the ten (10) other Filipino crewmembers recruited by Captain
Ho in Cebu at the same occasion.
In so doing, petitioner Litonjua certainly in effect represented that it was taking care of the
crewing and other requirements of a vessel chartered by its principal, Fairwind.The
Petition for certiorari is DISMISSED and the Decision of the then

National Seamen Board dated 31 May 1979 is hereby AFFIRMED. No pronouncement

as to costs. SO ORDERED. The decision dated 27 December 2005 and order dated 28
April 2006 of the Regional Trial Court of Las Piñas, City, Branch 255, to the extent that it
dismissed the counterclaims of defendant-appellant, are hereby reversed and set aside.
Plaintiff-appellee is ordered to pay defendant-appellant the amount of ₱306,000.00 as
actual damages and ₱30,000.00 as attorney’s fees.
G.R. No. 184215 February 9, 2011

OCEANEERING CONTRACTORS (PHILS), INC., Petitioner,

vs. NESTOR N. BARRETTO, doing business as N.N.B. LIGHTERAGE, Respondents.

Facts: On November 27, 1997, Nestor Barretto and Oceaneering Contractors (Phils.) Inc.
entered into a Time Charter Agreement for the contract price of P306,000.00. Nestor
Barretto owns Antonieta, a barge licensed and permitted to engage in coastwise trading.
The barge was hired for a renewable period of 30 calendar days for the purpose of
transporting construction materials from Manila to Ayungon, Negros Oriental. Doing
business under the name and style of N.N. B. Lighterage, respondent Nestor N. Barretto
(Barretto) is the owner of the Barge which was last licensed and permitted to engage in
coastwise trading for a period of one year expiring on 21 August 1998.4 On 27 November
1997, Barretto and petitioner Oceaneering Contractors (Phils.), Inc. (Oceaneering)
entered into a Time Charter Agreement whereby, for the contract price of ₱306,000.00,5
the latter hired the aforesaid barge for a renewable period of thirty calendar days, for the
purpose of transporting construction materials from Manila to Ayungon, Negros Oriental.
The petition before us seeks to reverse the Court of Appeals decision 1 holdingpetitioner
jointly liable with the operator of MT Vector for damages when the latter collided with
Sulpicio Lines, Inc passenger ship MV Doña Paz.

Issue: Whether Oceaneering is entitled to the disallowed amount of construction

materials pegged at P4,055,700.00 as compensatory damages

Resolution: No to P4,055,700.00 but yes to certain sums as supported by vouchers,

receipts, etc. The court finds that CA erred in awarding the full amount of P306,000.00
for what was prayed for refund by Oceaneering through its demand letters was only to
the extent of the unused charter payment in the amount of P224,400.00. For lack of
sufficient showing of bad faith on the part of Barretto, the CA erred in granting
Oceaneering’s claim for attorney’s fees. The court stated that ‘actual or compensatory
damages are those damages which the injured party is entitled to recover for the wrong
done and injuries received when none were intended.’ Actual damages are awarded for
‘injuries or losses that are actually sustained and susceptible of measurement’… intended
to put the injured party in the position in which he was before he was injured. As premises
considered, the petition is PARTIALLY GRANTED and the assailed 12 December 2007
Decision is, accordingly, MODIFIED: (a) to GRANT Oceaneering’s claim for the value of
its lost cargo in the sum of ₱2,226,620.00 with 6% interest per annum computed from the
filing of the complaint and to earn further interest at the rate of 12% per annum from finality
of the decision until full payment; (b) to REDUCE the refund of the consideration for the
Time Charter Agreement from ₱306,000.00 to ₱224,400.00, with 6% interest per annum
computed from 12 March 1998, likewise to earn further interest at the rate of 12% per
annum from finality of this decision; and, (c) to DELETE the CA’s award of salvaging
expenses and attorney’s fees, for lack of factual and legal basis.
G.R. No. 131166 September 30, 1999

CALTEX (PHILIPPINES), INC., petitioner,

vs.

SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO S. GO, CARLOS

S. GO, VICTORIANO S. GO, DOMINADOR S. GO, RICARDO S. GO, EDWARD S.

GO, ARTURO S. GO, EDGAR S. GO, EDMUND S. GO, FRANCISCO SORIANO,

VECTOR SHIPPING CORPORATION, TERESITA G. CAÑEZAL, AND SOTERA E.

CAÑEZAL, respondents.

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?

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

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

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

Second: MT Vector is a common carrier

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

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

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

The charterer of a vessel has no obligation before transporting its cargo to ensure that
the vessel it chartered complied with all legal requirements. The duty rests upon the
common carrier simply for being engaged in "public service." The relationship between
the parties in this case is governed by special laws. Because of the implied warranty of
seaworthiness, shippers of goods, when transacting with common carriers, are not
expected to inquire into the vessel’s seaworthiness, genuineness of its licenses and
compliance with all maritime laws. To demand more from shippers and hold them liable
in case of failure exhibits nothing but the futility of our maritime laws insofar as the
protection of the public in general is concerned. Such a practice would be an absurdity in
a business where time is always of the essence. Considering the nature of transportation
business, passengers and shippers alike customarily presume that common carriers
possess all the legal requisites in its operation. WHEREFORE, the petition is hereby
DENIED.
G.R. No. 150403 January 25, 2007

CEBU SALVAGE CORPORATION, Petitioner,

vs.

PHILIPPINE HOME ASSURANCE CORPORATION, Respondent.

FACTS:

The carrier and the charterer entered into a voyage charter in which the carrier would
transport tons of silica quartz from Negros Occidental to Misamis Oriental to be delivered
to consignee. The carrier received and loaded 1,100 metric tons of silica quartz on board
the M/T Espiritu Santo which is owned by ALS Timber Enterprises (ALS). The shipment
never reached its destination because the M/T Espiritu Santo sank off the beach of Opol,
Misamis Oriental, resulting in the total loss of the cargo.

The charterer filed a claim for the loss of the shipment with its insurer who paid the value
of the shipment lost and was subrogated to the rights of the charterer.

Parties:

Carrier – Cebu Salvage Corporation

Charterer – Maria Cristina Chemicals Industries, Inc. [MCCII]

Consignee – Ferrochrome Phils., Inc.

Insurer – Philippine Home Assurance Corporation

ISSUES:
May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does
not own?

Petitioner’s argument: The agreement was merely a contract of hire wherein MCCII hired
the vessel from its owner, ALS. Not being the owner of the M/T Espiritu Santo, petitioner
did not have control and supervision over the vessel, its master and crew.

Resolution:

Yes. Petitioner was a common carrier. At the time of the loss of the cargo, it was engaged
in the business of carrying and transporting goods by water, for compensation, and
offered its services to the public. Petitioner was the one which contracted with MCCII for
the transport of the cargo. It had control over what vessel it would use. All throughout its
dealings with MCCII, it represented itself as a common carrier. The fact that it did not own
the vessel it decided to use to consummate the contract of carriage did not negate its
character and duties as a common carrier.

It was shown that a contract of carriage of goods existed; the cargo was loaded on board
the vessel; loss or non-delivery of the cargo was proven; and petitioner failed to prove
that it exercised extraordinary diligence to prevent such loss or that it was due to some
casualty or force majeure. The voyage charter here being a contract of affreightment, the
carrier was answerable for the loss of the goods received for transportation.

A “voyage charter,” also known as a contract of affreightment wherein the ship was leased
for a single voyage for the conveyance of goods, in consideration of the payment of
freight. Under a voyage charter, the shipowner retains the possession, command and
navigation of the ship, the charterer or freighter merely having use of the space in the
vessel in return for his payment of freight. An owner who retains possession of the ship
remains liable as carrier and must answer for loss or non-delivery of the goods received
for transportation.